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DJ St Mark Homes Plc Final Results

 
TIDMSMAP 
 
22 May 2020 
 
                               St Mark Homes Plc 
 
                          ("SMH" or "the Company") 
 
                                 Final results 
 
St Mark Homes (AQSE: SMAP), the housebuilder operating mainly in London and the 
South of England, today announces its Final Results for the year ended 31 
December 2019. 
 
Strategic report 
 
The directors present their strategic report for the year ended 31 December 
2019. 
 
Review of the business 
 
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 Group to generate profits and increase distributions to 
shareholders in recent years. With customers being slower to commit to property 
purchases and property prices and volumes under pressure 2019 has been a 
testing year. Notwithstanding these market challenges the directors are pleased 
to report a profit before tax for the current year amounted of GBP113,977 (2018: 
GBP117,442). Dividend distributions to shareholders were maintained at 5.5p per 
share. 
 
Our strategic priorities 
 
The Board remain keen to grow the Group into a significant regional house 
builder. We have an established and profitable method of operation and 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 2019 with a capital base just over GBP5.73m (2018: GBP5.87m). 
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 2019 we 
achieved a pre-tax profit of 2% (2018: 2%) on opening shareholders' funds 
during testing market conditions . 
 
The Group will be repaying the 30  month bond (which carries a 6% coupon) in 
2020. . 
 
AQSE Growth Market Listing 
 
The market mid-price on 20 May 2020 of GBP0.875 represents a discount of 33% to 
the net asset value of GBP1.27 per share reported at 31 December 2019. The 2019 
dividend yield based on this market mid price is 6.28%. 
 
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 
2019 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 Sutton, Battersea 
and Hanwell which we anticipate will deliver profits in 2020 through to 2022. 
As these projects are completed we will seek replacement schemes. 
 
Completed Developments 
 
London Road, Hounslow TW3: 
 
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 July 2018. A total of 33 residential units had either 
legally exchanged or legally completed at 31 December 2019.  In accordance with 
our revenue recognition policy we have recognised a profit of GBP260,179 (2018: GBP 
134,703) and project management fees of GBPnil (2018: GBP43,200) during 2019. The 
final remaining unit on the project sold in early 2020. 
 
Heron House, Wembley: 
 
The Group had a joint venture interest of up to 40% in the development of 40 
flats and commercial space in Wembley.  Project management fees of GBP216,000 
were recognised during 2019 (2018: GBP208,000). The site was sold to a Housing 
association in December 2019 and the company capital committed to the project 
has been repaid. 
 
Continuing Developments 
 
Sutton High Street, Sutton: 
 
The Group retains a 40% interest in a development site at Sutton High Street. 
Planning has been challenging on the project with an appeal failing in July 
2019. This did however provide clarity on development that would be acceptable 
and following extensive consultation with the local authority our joint venture 
partner has submitted a new application for a comprehensive redevelopment of 
the site for a mixed use scheme (i.e. residential and commercial) in April 2020 
- a decision is expected later in the summer of 2020. 
 
Gwynne Road, London SW11: 
 
The Group has a 40% interest in the redevelopment of this site with its joint 
venture partner. The initial phase of the project was completed in 2019 
providing a mixed use development of commercial/retail at ground and mezzanine 
levels and 33 residential flats above. The next planned phase of development is 
to obtain D1 planning consent on the ground floor and as well as consent for an 
additional penthouse on the top of the building. 
 
At 31 December 2019 sale contracts have been legally exchanged on all 
residential units.  In accordance with our revenue recognition policy we have 
recognised a loss of GBP33,198 (2018: GBP7,643 loss) and project management fees of 
GBP18,000 (2018: GBP43,200) during 2019. 
 
Uxbridge Road, Hanwell, London W7: 
 
The Group has a 50% interest in the redevelopment of this site with full 
planning permission in place to provide 43 residential units (7 Houses and 36 
Apartments) and ground floor retail fronting Uxbridge Road, Hanwell, West 
London. In accordance with our revenue recognition policy we have recognised 
project management fees of GBP90,000 (2018: GBPnil) during 2019. 
 
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 2019 the annual pre-tax 
return on shareholders' funds was 2% (2018:  2%). The sales market remained 
challenging in 2019 and extended sales periods have impacted profit recognition 
in 2019 and our ability to reutilise capital. The early part of 2020 remains 
challenging for different reasons and in the current environment the board 
believe a return of 2% on capital is an acceptable return. 
 
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 2019 the 
maximum exposure of capital to any one project was less than 40% of the Group 
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. Loans have been funded by 
the cash income from previous development projects.  In 2018 and 2019 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 
 
Barry Tansey 
 
Chief Executive 
 
Date: 22 May 2020 
 
The Directors of St Mark Homes PLC accept responsibility for this announcement. 
 

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DJ St Mark Homes Plc Final Results -2-

For further information, please contact: 
 
St Mark Homes Plc 
 
Sean Ryan, Finance Director                           Tel: +44 (0) 20 8903 2442 
 
                                                       seanryan@stmarkhomes.com 
 
Alfred Henry Corporate Finance Ltd, AQSE 
Growth Market Corporate Adviser 
 
Jon Isaacs / Nick Michaels                            Tel: +44 (0) 20 3772 0021 
 
                                                            www.alfredhenry.com 
 
Consolidated statement of comprehensive income 
for the year ended 31 December 2019 
 
                                                                    2019         2018 
 
                                                                       GBP            GBP 
 
Turnover                                                         324,000      294,400 
 
Cost of sales                                                   (28,945)     (27,079) 
 
                                                                ________     ________ 
 
Gross profit                                                     295,055      267,321 
 
Administrative expenses                                        (447,756)    (412,937) 
 
Negative goodwill release                                              -       37,993 
 
                                                                ________     ________ 
 
Operating loss                                                 (152,701)    (107,623) 
 
Share of operating profit of joint ventures                      188,708      162,318 
 
Interest receivable and similar income                           286,626      266,471 
 
Interest payable and similar charges                           (208,656)    (203,724) 
 
                                                                ________     ________ 
 
Profit on ordinary activities before taxation                    113,977      117,442 
 
Taxation on ordinary activities                                 (24,454)     (15,373) 
 
                                                                ________     ________ 
 
Profit on ordinary activities after taxation                      89,523      102,069 
 
Other comprehensive income                                                          - 
 
                                                                ________     ________ 
 
Total comprehensive income                                        89,523      102,069 
 
                                                               ________     ________ 
 
Earnings per share - basic and diluted 
 
Ordinary shares                                                    2.03p        2.31p 
 
Consolidated Balance sheet 
at 31 December 2019 
 
                                                 2019          2019           2018           2018 
 
                                                    GBP             GBP              GBP              GBP 
 
Non Current assets 
 
Tangible fixed assets                                           592                           789 
 
Investments in joint                                        344,123                       374,974 
ventures 
 
                                                           ________                      ________ 
 
                                                            344,715                       375,763 
 
Current assets 
 
Debtors                                     3,991,840                    7,881,758 
 
Cash at bank and in hand                    4,799,690                    1,023,754 
 
                                             ________                     ________ 
 
                                            8,791,530                    8,905,512 
 
Creditors: amounts falling 
 
 due within one year                      (3,550,233)                     (76,914) 
 
                                             ________                     ________ 
 
Net current assets                                        5,241,297                     8,828,598 
 
                                                           ________                      ________ 
 
Total assets less current                                 5,586,012                     9,204,361 
liabilities 
 
Creditors: amounts falling 
 
due in more than one year                                         -                   (3,465,157) 
 
                                                           ________                      ________ 
 
Net assets                                                5,586,012                     5,793,204 
 
                                                           ________                      ________ 
 
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                                   1,455,823                     1,609,015 
 
                                                           ________                      ________ 
 
Shareholders' funds                                       5,586,012                     5,793,204 
 
                                                    ________                       ________ 
 
 
Statement of changes in equity 
For the year ended 31 December 2019 
 
                     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  1,749,661  5,879,850 
31 December 
2017 
 
Profit for the           -           -          -          -          -    102,069    102,069 
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 
 
Profit for the           -           -          -          -          -     89,523     89,523 
year 
 
                  ________    ________    _______    _______   ________   ________   ________ 
 
Total                    -           -          -          -          -     89,523     89,523 
comprehensive 
income for the 
year 
 
Dividend                 -           -          -          -          -  (242,715)  (242,715) 
 
                  ________    ________    _______    _______   ________   ________  _________ 
 
Balance at       2,206,501   1,009,560    211,822    327,060    375,246  1,455,823  5,586,012 
31 December 
2019 
 
                  ________    ________    _______     ______   ________   ________   ________ 
 
Consolidated statement of cashflows 
for the year ended 31 December 2019 
 
                                                2019        2019        2018         2018 
 
                                                   GBP           GBP           GBP            GBP 
 
Cash flows from 
 
operating activities 
 
Cash expended from operations                          3,965,135                (378,124) 
 
Interest paid                                          (208,656)                (203,724) 
 
Corporation tax                                         (24,454)                 (54,501) 
 
                                                        ________                 ________ 
 
Net cash outflow from 
 
operating activities                                   3,732,025                (636,349) 
 
Investing activities 
 
Interest received                            286,626                 266,471 
 
                                            ________                ________ 
 
Net cash generated from 
investing 
 
activities                                               286,626                  266,471 
 
Financing activities 
 
Increase in loans                                  -               1,122,680 
 
Dividend paid                              (242,715)               (242,715) 
 
                                            ________                ________ 
 
Net cash generated from 
 
financing activities                                   (242,715)                  879,965 
 
                                                        ________                 ________ 
 
Net increase in cash and cash                          3,775,936                  510,087 
equivalents 
 
Cash and cash equivalents at 
 
beginning of year                                      1,023,754                  513,667 
 
                                                        ________                 ________ 
 
Cash and cash equivalents at 
 
end of year                                            4,799,690                1,023,754 
 
                                                        ________                 ________ 
 
Relating to: 
 
Cash at bank and in hand                               4,799,690                1,023,754 
 
                                                                                 ________ 
                                                        ________ 
 
Notes to Preliminary Results for the Period Ended 31 December 2019 
 
1.   The financial information set out above does not constitute statutory 
accounts for the purpose of Section 434 of the Companies Act 2006.   The 

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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 22 May 2020. 
 
      The preliminary announcement of the results for the year ended 31 
December 2019 was approved by the board of directors on 22 May 2020. 
 
 1. Accounting policies 
 
Company information 
 
St Mark Homes Plc is a public limited company domiciled and incorporated in 
England and Wales. The registered office is No 1 Railshead Road, St Margarets, 
Old Isleworth, Middlesex TW7 7EP. 
 
Accounting convention 
 
These financial statements have been prepared in accordance with FRS 102 "The 
Financial Reporting Standard applicable in the UK and Republic of Ireland" 
("FRS 102") and the requirements of the Companies Act 2006. 
 
The financial statements are prepared in sterling, which is the functional 
currency of the company. Monetary amounts in these financial statements are 
rounded to the nearest pound. 
 
Going concern 
 
The financial statements are prepared on the going concern basis.  The 
directors have a reasonable expectation that the Group and Company will 
continue in operational existence for the foreseeable future. 
 
The directors have considered the impact of the COVID-19 pandemic, and the 
measures taken to contain it, on the Group and because of the nature of the 
Group's activities they do not consider that there will be any significant 
effect on the ability of the Group to continue in business and meet its 
liabilities as they fall due. Thus they continue to adopt the going concern 
basis of accounting in preparing these financial statements. 
 
The financial statements have been prepared on the historical cost convention. 
The principal accounting policies adopted are set out below. 
 
Basis of consolidation 
 
The consolidated financial statements incorporate the results of St Mark Homes 
Plc and its subsidiary undertaking, St Mark Contracts Limited as at 31 December 
2019 using the acquisition method of accounting. Under this method the results 
of subsidiary undertakings are included from the date of acquisition. 
 
Jointly controlled operations and interests in joint ventures are accounted for 
using the equity method of accounting. A jointly controlled operation is an 
entity that is a joint venture that involves the establishment of a 
corporation, partnership or other entity in which each venture has an interest. 
A subsidiary is an entity controlled by the company. Control is the power to 
govern the financial and operating policies of the entity so as to benefit from 
its activities. 
 
Turnover 
 
Turnover represents the amounts recoverable on contracts with developers. 
 
Turnover arising from developments is recognised on exchanged sale contracts: 
 
  * when costs and revenues associated with the transaction can be reliably 
    measured; and 
  * where the probability of non-performance is considered negligible such that 
    the risks and rewards of ownership have passed to the buyer. 
 
The return on loans provided for the development of residential property is 
shown under interest receivable and similar income. 
 
Investments in subsidiaries 
 
Interests in subsidiaries are initially measured at cost and subsequently 
measured at cost less any accumulated impairment losses. The investments are 
assessed for impairment at each reporting date and any impairment losses or 
reversals of impairment losses are recognised immediately in the profit or loss 
account. A subsidiary is an entity controlled by the company. Control is the 
power to govern the financial and operating policies of the entity so as to 
obtain benefits from its activities. 
 
Intangible fixed assets - goodwill 
 
Negative goodwill represents the discount on the cost of acquisition over the 
fair value of assets acquired. It is initially recognised as a liability and is 
subsequently measured at cost less accumulated amortisation. Negative goodwill 
is being amortised over the useful life of the assets acquired on a systematic 
basis which is expected to be no more than two years. Negative goodwill arose 
on the acquisition of St Mark Contracts Limited by the Company on 10 August 
2016. The fair value of consideration paid was calculated based on the bid 
price of the shares issued by the Company as consideration for the entire net 
assets of St Mark Contracts Limited. The discount in the value of the assets 
resulted in negative goodwill of GBP287,125 arising on consolidation. This 
negative goodwill was fully amortised by 31 December 2018. 
 
Property development loans 
 
Interest receivable on property loans is recognised in the period in which it 
accrues.  Profit share returns are only recognised when there is sufficient 
evidence and the project is sufficiently progressed to assess the likely 
profitability with a reasonable level of accuracy. 
 
Depreciation 
 
Depreciation is provided to write off the cost, less estimated residual values, 
of all tangible fixed assets on a reducing balance basis over their expected 
useful lives.  It is calculated at the following rates: 
 
Office equipment             - 25% per annum 
 
Taxation 
 
The tax expense represents the sum of the tax currently payable and deferred 
tax. 
 
Current tax 
 
The tax currently payable is based on taxable profit for the year. Taxable 
profit differs from net profit as reported in the profit and loss account 
because it excludes items of income or expense that are taxable or deductible 
in other years and it further excludes items that are never taxable or 
deductible. The company's liability for current tax is calculated using tax 
rates that have been enacted or substantively enacted by the reporting end 
date. 
 
Deferred tax 
 
Deferred tax liabilities are generally recognised for all timing differences 
and deferred tax assets are recognised to the extent that it is probable that 
they will be recovered against the reversal of deferred tax liabilities or 
other future taxable profits. The carrying amount of deferred tax assets is 
reviewed at each reporting end date and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all 
or part of the asset to be recovered. Deferred tax is calculated at the tax 
rates that are expected to apply in the year when the liability is settled or 
the asset is realised. Deferred tax is charged or credited in the profit and 
loss account, except when it relates to items charged or credited directly to 
equity, in which case the deferred tax is also dealt with in equity. Deferred 
tax assets and liabilities are offset when the company has a legally 
enforceable right to offset current tax assets and liabilities and the deferred 
tax assets and liabilities relate to taxes levied by the same tax authority. 
 
Leased assets 
 
Leases are classified as finance leases whenever the terms of the lease 
transfer substantially all the risks and rewards of ownership to the lessees. 
All other leases are classified as operating leases. 
 
Assets held under finance leases are recognised as assets at the lower of the 
assets fair value at the date of inception and the present value of the minimum 
lease payments. The related liability is included in the balance sheet as a 
finance lease obligation. Lease payments are treated as consisting of capital 
and interest elements. The interest is charged to the profit and loss account 
so as to produce a constant periodic rate of interest on the remaining balance 
of the liability. 
 
Liquid resources 
 
For the purposes of the cash flow statement, liquid resources are defined as 
short term bank deposits. 
 
Cash and cash equivalents 
 
Cash and cash equivalents include cash in hand, deposits held at call with 
banks, other short-term liquid investments with original maturities of three 
months or less, and bank overdrafts. Bank overdrafts are shown within 
borrowings in current liabilities. 
 
Financial assets 
 
The Company has elected to apply the provisions of Section 11 'Basic Financial 
Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to 
all of its financial instruments. Financial assets are recognised in the 
company's balance sheet when the company becomes party to the contractual 
provisions of the instrument. 
 
Financial assets are classified into specified categories. The classification 
depends on the nature and purpose of the financial assets and is determined at 
the time of recognition. Basic financial assets, which include trade and other 
receivables and cash and bank balances, are initially measured at transaction 
price including transaction costs and are subsequently carried at amortised 
cost using the effective interest method, unless the arrangement constitutes a 
financing transaction, where the transaction is measured at the present value 
of the future receipts discounted at a market rate of interest. 
 
Financial liabilities and equity 
 
Financial liabilities and equity are classified according to the substance of 
the financial instrument's contractual obligations, rather than the financial 
instrument's legal form.  Basic financial liabilities are initially measured at 
transaction price, unless the arrangement constitutes a financing transaction, 
where the debt instrument is measured at the present value of the future 
receipts discounted at a market rate of interest. Other financial liabilities 
are initially recognised at fair value and are subsequently re-measured at 
their fair value with changes recognised through the profit and loss account. 
 
Equity instruments 
 
Equity instruments issued by the company are recorded at the proceeds received, 
net of direct issue costs. Dividends payable on equity instruments are 
recognised as liabilities once they are no longer at the discretion of the 
company. 
 
Dividends 
 
Equity dividends are recognised when they become legally payable.  Interim 
equity dividends are recognised when paid.  Final equity dividends are 

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DJ St Mark Homes Plc Final Results -4-

recognised when approved by the shareholders at an annual general meeting. 
Dividends on shares wholly recognised as liabilities are recognised as expenses 
and classified within interest payable. 
 
3.   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 (2018: 4,413,002) and the 
earnings being profit after tax attributable to ordinary shares was GBP89,253 
(2018: GBP102,069). 
 
                                                              2019      2018 
 
                                                                 GBP         GBP 
 
Numerator 
 
Earnings used as the calculation of basic and diluted       89,523   102,069 
EPS 
 
                                                          ________  ________ 
 
 
 
                                                            Number    Number 
 
Denominator 
 
Weighted average number of ordinary shares used in basic 4,413,002 4,413,002 
and diluted EPS 
 
                                                          ________  ________ 
 
      There are no share options or other potentially dilutive equity 
instruments in issue than can dilute the earnings per share. 
 
 
 
END 
 

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