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DJ St Mark Homes Plc Annual Financial Report

 
TIDMSMAP 
 
31 May 2019 
 
                               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 2018. 
 
Strategic report 
 
The directors present their strategic report for the year ended 31 December 
2018. 
 
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. 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 GBP117,442 (2017:GBP383,738). 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 St Mark Contracts Limited and successful bond raising 
in late 2017/early 2018, the Board are 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 2018 with a capital base just over GBP5.87m (2017: GBP5.79m). 
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 
Crowdstacker Limited in September 2017.   The 30 month bond (which carries a 6% 
coupon) closed in February 2019 having raised GBP3.465m gross.   The Directors 
are delighted with the success of the bond raising. 
 
NEX Exchange Listing 
 
The market mid-price on 30 May 2019 of GBP0.875 represents a discount of 33% to 
the net asset value of GBP1.30 per share reported at 31 December 2018.  The 2018 
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 
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 Sutton, Hounslow, 
Battersea and Wembley which we anticipate will deliver profits in 2019 and 
2020. As these projects are completed we will seek replacement schemes. 
 
Completed Developments 
 
St Margarets Waterside, Richmond, London: 
 
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 GBP35,258 (2017: GBP46,316) and project management fees of GBPnil (2017: GBP 
13,500) during 2018. 
 
Continuing Developments 
 
Sutton High Street, Sutton: 
 
The Group 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 for a mixed use scheme (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 have appealed that decision to the Planning 
Inspectorate and a two day hearing is scheduled to commence on 18 June 2019 
with a formal decision expected during summer 2019. 
 
Gwynne Road, London SW11: 
 
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 GBP7,643 (2017: GBP123,520 profit) and project 
management fees of GBP43,200 (2017: GBP43,200) during 2018.   Since the year end 
the entire private residential housing sector of the project has been legally 
completed and sold. 
 
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 15 residential units had 
either legally exchanged or legally completed at 31 December 2018.  In 
accordance with our revenue recognition policy we have recognised a profit of GBP 
134,703 (2017: GBP119,895) and project management fees of GBP43,200 (2017: GBP43,200) 
during 2018.   Sales progress has been strong since the year end with a further 
10 units legally completed with the remaining 9 units all now sale agreed. 
 
Heron House, Wembley 
 
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 GBP208,000 
were recognised during 2018 (2017: GBP16,000). 
 
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 Gwynne Road both generating profit in the first half of 2019. 
 
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. 
 
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 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. 
 

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DJ St Mark Homes Plc Annual Financial Report -2-

On behalf of the Board 
 
Barry Tansey 
Chief Executive 
Date: 30 May 2019 
 
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 8903 2442 
 
                                                       seanryan@stmarkhomes.com 
 
Alfred Henry Corporate Finance Ltd, NEX 
Exchange 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 2018 
 
                                                                    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 31 December 2018 
 
                                             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 31 December 2018 
 
                     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 the           -           -          -          -          -    323,174    323,174 
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 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 
 
                  ________    ________    _______     ______   ________   ________   ________ 
 
 
Consolidated statement of cashflows 
for the year ended 31 December 2018 
 
                                                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 31 December 2018 
 
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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DJ St Mark Homes Plc Annual Financial Report -3-

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 2019. 
 
      The preliminary announcement of the results for the year ended 31 
December 2018 was approved by the board of directors on 31 May 2019. 
 
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 GBP102,069 
(2017: GBP323,174). 
 
                                                              2018      2017 
 
                                                               GBP       GBP 
 
Numerator 
 
Earnings used as the calculation of basic and diluted      102,069   323,174 
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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