TIDMSMAP
6 June 2023
St Mark Homes Plc
("SMH" or "the Company")
Final results
St Mark Homes Plc (AQSE: SMAP), the housebuilder operating mainly in London and
the South of England, today announces its Final Results for the year ended 31
December 2022.
Review of the business
The Group continues to develop residential led projects located in London and
the Southern regions of the United Kingdom. The Group typically undertakes its
business within special purpose vehicles and on a joint venture/profit sharing
basis with other house builders.
2022 has been our most difficult year in business. The negative impacts of Covid
and Brexit continued and sales and production were further hampered by
inflation, contractor failure, and rising interest rates. The loss by project is
detailed within our Project Portfolio update on pages 3-4. The Group made a loss
before tax of £1,472,180 (2021 loss: £105,529).
While our immediate focus is in getting the business back on track, we do not
anticipate continuing to develop apartments and will seek to increase our
exposure to family housing in the next development cycle. The Group paid no
dividend during the year (2021: £132,390).
Our strategic priorities
The current priority is to complete the development of the projects on site at
Sutton and Finchley. Completion and sale of these along with unsold units on our
Hanwell project will generate cash. We then need to consider how best to deploy
shareholders' funds in the current inflationary environment.
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 2022 with a capital base just over £5.23m (2021: £5.49m). 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 2022 we had a
pre-tax loss of 28% (2021: loss 2%) on opening shareholders' funds during
particularly testing market conditions.
AQSE Growth Market Listing
The market mid-price on 20 May 2022 of £0.875 represents a gain of 3% to the net
asset value of £0.848 per share reported at 31 December 2022.
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
2022 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,
Hanwell, Muswell Hill and Finchley which we anticipate will complete in 2023
through to 2024. As these projects are completed we will seek replacement
investments.
Continuing Developments
Sutton High Street, Sutton:
The Group retains a 40% interest in a development site at Sutton High Street.
The Group, in association with its joint venture partner, successfully secured
planning consent from the London Borough of Sutton in November 2020 for the
extension of the ground floor retail space at its previous developed
scheme at 324 - 340 High Street, Sutton, together with approval for a new six
-storey building comprising 30 residential apartments over ground floor retail
space and basement car park on the adjacent land at 342 - 346 High Street.
Construction works commenced in February 2021, with completion of the scheme
expected in the 4th quarter 2023.
The Group has agreed with a FTSE 100 retailer for the letting of the ground
floor retail space and is hopeful that this will lead to the securing of a long
lease for this element of the scheme. Unfortunately, rising interest rates have
impacted commercial yields.
The Group plans to commence marketing of the residential element of this scheme
in the summer of 2023. Projected total costs on the project now exceed revenue
and in accordance with our revenue recognition policy we have recognised a loss
of £126,624 (2021: £nil) during 2022 and project management fees of £43,200
with a bad debt of £86,400 recognised due to expected losses. There was also
interest of £51,314 (2021: £61,133) recognised in the year with a bad debt of
£111,439 (2021: £nil) recognised.
Gwynne Road, London SW11:
The Group retains a 40% interest in the development at Gwynne Road, Battersea
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 apartments have all been
sold and planning permission has been secured since the year end to provide an
additional two flats at mezzanine level. The developer has also entered
discussions with a serviced office provider for the remaining commercial space
at the development. The developer also intends to seek consent for an
additional penthouse on the top of the building.
In accordance with our revenue recognition policy we have recognised a loss of
£35,634 (2021: £37,239) during 2022.
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. The development is located just 200m from the new Crossrail station at
Hanwell. Construction of the project was delayed until December 2022 as our main
contractor entered a CVA.
This rising interest rate environment has increased pressure on sales prices and
has also impacted on our sales program.
As the project is now projecting a loss we have created a provision against
stock of £585,000 and project management fees of £216,000 (2021: £216,000), with
a bad debt provision of £738,000 (2021: £nil) recognised due to potential losses
on the project.
Twyford Avenue, Muswell Hill, London, N2,
The Group invested in a 50% joint venture stake in a new build housing scheme
in Muswell Hill, North London in 2020. This development involved the
construction of seven new houses with off street parkingwhich was completed in
June 2022. Six of the seven houses sold during the year with the sale of final
unit completing after the year end in February 2023. We have recognised a profit
of £434,757 from this project during the year.
553 - 563 High Road, Finchley, N12
The Company has aken a 50% joint venture stake in a new build housing scheme in
Finchley, North London. This development will see the construction of five
houses. Construction work has been delayed and is now projected to complete in
August 2023. In accordance with our revenue recognition policy, we have provided
for a loss of £118,921 on this project during 2022.
Future Developments
As capital is released from the current project portfolio the Board will seek
out further opportunities. The Group's schemes have historically largely been in
the outer London Boroughs and apartment led. We do not anticipate continuing to
develop apartments and will seek to increase our exposure to family housing in
the next development cycle. Additionally it is intended that the Group will
broaden its focus from this geographic area and also seek new construction
partners.
Board Decision Making: Section 172 Statement
The Board regularly considers the impact of their decision making on the key
stakeholders of the business. For this purpose the Board have identified the
following groups of stakeholders with details of how they have engaged with
those stakeholders and the effect this has had on St Mark Homes' decisions and
strategies during the year.
Stakeholder Their interests How management and/or Directors
group engage
Investors
· Comprehensive review of · Annual and interim reports
financial performance of the · Company website
business · Shareholder circulations
· Business sustainability · Company announcements
· High standard of governance · AGM
· Awareness of long-term · AQSE growth exchange
strategy and direction announcements
Employees
· Job satisfaction and · Formal policies and
fulfilment procedures
· Health and safety on site · Regular dialogue with key
· Training and development management
· Career progression · Company culture which
· Inclusion promotes inclusion and sharing
of ideas
· Management Incentive Scheme
Joint Venture
Partners · Mutually rewarding outcomes · Formal development
agreements
· Learning from joint
experiences to seek continual
improvement
· Pre commitment project due
diligence
· Project Monitoring
Community and
the · Sustainability · Products promote energy
environment · Energy usage reduction
· Recycling and waste · Corporate and social
management responsibility policy
· Environmental policy
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%. Given the difficult environment we
revised this to 2% for 2022. During 2022 the annual pre-tax return on
shareholders' funds was - 28% (2021: -2%). Production was challenging in 2022
and has impacted profit recognition in 2022 and our ability to reutilise
capital.
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 2022 the maximum
exposure of capital to any one project was less than 40% of 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.
On behalf of the Board
Barry Tansey
Chief Executive
5 June 2023
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,
AQSE Growth Market Corporate Adviser
Nick Michaels Tel: +44 (0) 20 7309 2203
www.alfredhenry.com
Consolidated statement of comprehensive income
for the year ended 31 December 2022
2022 2021
£ £
Turnover 559,200 259,200
Cost of sales (29,197) (28,800)
________ ________
Gross profit 530,003 230,400
Administrative expenses (1,316,897) (368,637)
________ ________
Operating loss (786,894) (138,237)
Share of operating loss of joint ventures (731,422) (37,238)
Interest receivable and similar income 51,349 70,447
Interest payable and similar charges (5,213) (501)
________ ________
Loss on ordinary activities before taxation (1,472,180) (105,529)
Taxation on ordinary activities (16,900) 20,045
________ ________
Loss on ordinary activities after taxation (1,489,080) (85,484)
Other comprehensive income - -
________ ________
Total comprehensive income (1,489,080) (85,484)
________ ________
Earnings per share - basic and diluted
Ordinary shares (33.74)p (1.93)p
Consolidated Balance sheet
at 31 December 2022
2022 2022 2021 2021
£ £ £ £
Non Current assets
Tangible fixed 653 871
assets
Investments in 159,396 60,273
joint ventures
________ ________
160,049 61,144
Current assets
Debtors 3,490,184 5,121,624
Cash at bank and 169,043 131,142
in hand
________ ________
3,659,227 5,252,766
Creditors: amounts
falling
due within one (55,573) (50,478)
year
________ ________
Net current assets 3,603,654 5,202,288
________ ________
Total assets less 3,763,703 5,263,432
current
liabilities
(22,491) (33,140)
Creditors: amounts
falling
due in more than
one year
________ ________
Net assets 3,741,212 5,230,292
________ ________
Capital and
reserves
Called up share 2,206,501 2,206,501
capital
Capital redemption 1,009,560 1,009,560
reserve
Other reserve 211,822 211,822
Merger reserve 327,060 327,060
Share premium 375,246 375,246
account
Profit and loss (388,977) 1,100,103
account
________ ________
Shareholders' 3,741,212 5,230,292
funds
________ ________
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Capital Other Merger Share
Profit and Total
Capital Redemption
loss
Reserve Reserve Reserve Premium
reserves
£ £ £ £ £ £
£
Balance at 2,206,501 1,009,560 211,822 327,060 375,246
1,317,977 5,448,166
31 December
2020
Loss for the - - - - -
(85,484) (85,484)
year
________ ________ _______ _______ ________
________ ________
Total - - - - -
(85,484) (85,484)
comprehensive
income for
the year
Dividend
(132,390) (132,390)
________ ________ _______ _______ ________
________ ________
Balance at 2,206,501 1,009,560 211,822 327,060 375,246
1,100,103 5,230,292
31 December
2021
Loss for the - - - - -
(1,489,080) (1,489,080)
year
________ ________ _______ _______ ________
________ ________
Total - - - - -
(1,489,080) (1,489,080)
comprehensive
income for
the year
________ ________ _______ _______ ________
________ _________
Balance at 2,206,501 1,009,560 211,822 327,060 375,246
(388,977) 3,741,212
31 December
2022
________ ________ _______ ________
________ ________
______
Consolidated statement of cashflows
for the year ended 31 December 2022
2022 2022 2021 2021
£ £ £ £
Cash flows from
operating activities
Cash generated 32,973 (529,311)
from/(used in)
operations
Interest paid (5,213) (501)
Corporation tax (30,560) 20,045
________ ________
Net cash
(outflow)/inflow from
operating activities (2,800) (509,767)
Investing activities
Fixed asset additions -
Interest received 51,349 70,447
________ ________
Net cash generated
from investing
activities 51,349 70,447
Financing activities
Repayment of Bank (10,648) (6,213)
Loan
Dividend paid - (132,390)
________ ________
Net cash used in
financing activities (10,648) (138,603)
________ ________
Net (decrease) in 37,901 (577,923)
cash and cash
equivalents
Cash and cash
equivalents at
beginning of year 131,142 709,065
________ ________
Cash and cash
equivalents at
end of year 169,043 131,142
________ ________
Relating to:
Cash at bank and in 169,043 131,142
hand
________ ________
Notes to Preliminary Results for the Period Ended 31 December 2022
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 5 June 2023.
The preliminary announcement of the results for the year ended 31 December 2022
was approved by the board of directors on 5 June 2023.
2. 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
These financial statements are prepared on the going concern basis. The
directors have a reasonable expectation that the Group and parent company will
continue in operational existence for the foreseeable future.
The directors have considered the impact of the current economic factors
including cost inflation, longer sales cycles, residential and commercial market
trends. They believe that 2023 will continue to be challenging for operations
and cashflow but that the company will 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
2022 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 developer
Including project management fees arising under development agreement.
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.
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
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
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 (2021: 4,413,002) and the loss after
tax attributable to ordinary shares was £1,489,080 loss (2021: £85,484 loss).
2022 2021
£ £
Numerator
Earnings used as the calculation of basic and diluted EPS (1,489,080) (85,484)
________ ________
Number Number
Denominator
Weighted average number of ordinary 4,413,002 4,413,002
shares used in basic and diluted EPS
________ ________
There are no share options or other potentially dilutive equity instruments in
issue than can dilute the earnings per share.
This information was brought to you by Cision http://news.cision.com
https://news.cision.com/st-mark-homes-plc/r/final-results,c3781918
END
(END) Dow Jones Newswires
June 06, 2023 08:15 ET (12:15 GMT)
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