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DJ St Mark Homes Plc Final Results

 
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 
 

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DJ St Mark Homes Plc Final Results -2-

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 
 

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DJ St Mark Homes Plc Final Results -3-

                                                           ________   ________ 
 
 
        There are no share options in issue than can dilute the earnings per 
share. 
 
 
 
END 
 

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