TIDMMAR
RNS Number : 7379R
Mar City PLC
16 September 2014
MAR CITY PLC
('Mar City', 'the Group' or 'the Company')
Interim results for the six months ended 30 June 2014
Mar City (AIM: MAR.L) the London and Midlands focused
housebuilder today announces its interim results for the six months
ended 30 June 2014.
2014 2013 Change
H1 H1 %
GBPk GBPk
Revenue 25,528 8,745 +192%
Underlying operating
profit * 3,422 1,097 +212%
Underlying PBT * 3,210 1,053 +205%
Share based charges * 600 -
Operating profit reported 2,822 1,097
PBT reported 2,610 1,053
Basic EPS adjusted* 2.33p 3.52p
Basic EPS 1.79p 3.52p
* Adjusted for share based payment charges of GBP600k relating
to share options granted on 16 December 2013
Summary of results
-- Further excellent progress made in first half of 2014.
-- Revenue up 192% to GBP25.5m and underlying operating profit* increased by 212% to GBP3.4m.
-- Ground-breaking new modular construction methodology launched in London and Midlands.
-- Land bank increased to 1,656 units and new GBP40m debt facility signed on 31(st) July.
Commenting on the results and outlook, Tony Ryan, CEO of Mar
City plc, said:
"Mar City made excellent progress in the first half of 2014, as
we achieved further significant growth in turnover and profits,
following the transformational equity raise and land acquisitions
completed in December 2013.
The Group launched its ground-breaking new modular construction
methodology on sites in London and the Midlands and has received
widespread critical acclaim. One of the many benefits of this
system is certainty on costs and insulation against traditional
cost inflation, combined with an ability to significantly improve
the speed of construction.
The Group has also started to benefit from the strength in the
UK housing market, as the first open market sales completed using
the Help to Buy scheme and have combined with strong social housing
sales completions.
The Company's financial resources have also been further
strengthened with the agreement of the new GBP40m Revolving Credit
Facility announced on 31 July, and we are well positioned to
continue to secure additional sites in the second half of the year.
It is our intention to remain highly selective in all future land
acquisitions, ensuring we are purchasing the right sites, in the
right location, off market, at the right price.
We have acquired a further 1,215 plots across London and the
Midlands in the first half, adding to the 512 plots secured in
December 2013 and this should enable the significant growth
forecast in the second half of 2014 to continue into 2015. We will
continue to build our land bank this year and with newly emerging
opportunities, the target is now to create a land bank of at least
5,000 units by the end of the current year.
Outlook
As originally forecast, the growth profile for 2014 carries a
second half weighting, as all of the sites acquired in December
2013 were due to start generating sales in the second half of the
year. Accordingly, having delivered in the first half, we remain
confident that we can achieve full year market expectations.
We continue to position Mar City to take full advantage of a
strong housing market and to deliver significant sustainable growth
for the Company over the foreseeable future. We believe we are
insulated against any geopolitical events, as we are at the
affordable end of the market and we believe we can deliver strong
returns to our shareholders".
Enquiries:
Mar City PLC www.marcityplc.com www.marcityhomes.com
Hamilton Anstead, Chairman
Tony Ryan, Chief Executive +44 (0) 20 7408 1102
Marcus Jones, Finance Director
Shore Capital, NOMAD and Joint www.shorecap.co.uk
Broker
Pascal Keane / Jamie Cameron +44 (0)20 7408 4090
WH Ireland Limited, Joint Broker www.wh-ireland.co.uk
Mike Coe +44 (0) 117 945 3470
Gable Communications marcity@gablecommunications.com
John Bick +44 (0) 20 7193 7463
+44 (0) 7872 061007
Business operating review
Further excellent progress was made in the first half of 2014,
following the transformational equity raise and land acquisition of
December 2013. Significant growth in turnover and profits have been
achieved, the first of our open market sales have been completed
and combined with strong levels of social sales. In addition, H1
saw the launch of our ground-breaking modular construction
methodology which has received excellent feedback, leading to a
number of new opportunities with our Housing Association and Local
Authority partners.
Mar City is now a substantial national housebuilder and has the
platform for significant further growth. The land-bank has
increased significantly in the first half, as a further 1,215 plots
were acquired, whist the management team and the business'
processes were further strengthened, to ensure that Mar City is
suitably structured to deliver the further significant growth
planned for the second half of 2014 and into 2015.
Financial results for the year
The Group generated a profit before taxation of GBP2.6m (2013
H1: GBP1.0m) after charging GBP600k of share based costs (relating
to share options granted in December 2013) on revenue of GBP25.5m
(2013 H1: GBP8.7m). This has resulted in basic earnings per share
of 1.79 pence (2013 H1: 3.52 pence). As at 30 June 2014 the Group
had net assets of GBP68.3m (2013 H1: GBP4.0m).
Revenues grew by a further 192% compared to 2013 H1, whilst
underlying operating profits showed a 212% increase to GBP3.4m
(2013 H1: GBP1.1m), which represents a 13.4% return on
revenues.
The figures for H1 still include a significant element of
contracting income, with the Colindale contract by far the biggest
contribution, but there were also 71 sales reported (2013 H1: nil)
at an Average Selling Price of GBP131k, reflecting the new income
stream for the Group from the land acquired in 2013.
Gross margin of GBP5.7m (2013 H1: GBP1.7m) generated a return on
turnover of 22.5% (2013 H1: 20.1%), whilst overhead of GBP2.3m
(2013 H1: GBP0.7m) reflected the increased investment in staff and
systems required to deliver the growth. Finance costs of GBP212k
were incurred (2013 H1: GBP44k) reflecting the debt acquired in
December 2013 as part of the acquisition of Mar City Land Ltd.
Cash and cash equivalents at 30 June were reported at GBP4.1m
(2013 H1: GBP1.7m), whilst debt was reported at GBP9.2m (2013 H1:
GBP1.2m). Net debt at 30 June was therefore GBP5.1m (2013 H1: net
cash GBP0.5m), which equates to a cash outflow of GBP23.1m in H1.
The cash has been used to fund land acquisitions and work in
progress on sites acquired in 2013 which will translate into the
sales that underpin the further growth forecast in H2.
Additionally, we announced on 31 July 2014 that the Company's
financial resources have been further strengthened with the signing
of a new five year GBP40m Revolving Credit Facility, which will
facilitate the acquisition of further additional sites in the
coming year.
Dividend
It is the Board's intention to announce the implementation of
its dividend policy in the second half of the year in line with the
growth in the performance of the Company. At this stage, there will
not be the payment of an interim dividend (2013: nil).
Key performance indicators
The Directors consider that the key performance indicator
('KPI') of the Group over the longer term will be the total return
to shareholders. Financial KPIs currently used by the Board are
revenue, operating profits, profit before tax and net assets.
KPI's 2014 2013 H1 Movement
H1 GBP000
GBP000
------------------------------ -------- -------- ---------
Revenue 25,528 8,745 + 192%
Underlying operating profit* 3,422 1,097 +212%
Profit before taxation 2,610 1,053 +148%
Net assets 68,280 3,958
Basic EPS ** 1.79p 3.52p
*Operating profit before share based payment charges of
GBP600k
** Following 1 for 10 share consolidation in Dec 2013
Non-financial KPIs related to the number of sites in progress,
headcount and Health & Safety. The Group significantly
increased the number of sites and headcount in the year and had
only 1 reportable accident.
Market conditions
The Group continues to benefit from the improvement in the UK
housing market, especially in its areas of focus in the Midlands,
Midlands-London corridor and London and the South East. In
particular, the first sales under the Government's 'Help to Buy'
scheme completed in the first half and with 950 units registered to
Mar City, this scheme is expected to underpin open market sales in
the future.
An increasing supply of new and affordable homes remains
essential in order to address the chronic shortage of homes across
the UK. Mar City is well placed to help tackle this issue and
remains focused on delivering quality homes to the segment of the
market where demand is highest. Relationships with Housing
Associations and other affordable housing providers continue to
develop and have been further enhanced with the launch of the
modular construction methodology, which meets all of their
demanding standards.
The goal remains to run Mar City in a prudent and sustainable
manner, minimising financial risk and creating quality homes, in
vibrant local communities. Further excellent progress has been made
in the first half of 2014, especially with the launch of our
ground-breaking modular construction methodology. One of the many
benefits of this system is certainty on costs and insulation
against traditional cost inflation, combined with an ability to
significantly improve the speed of construction.
People
The Group continues to develop its presence and reputation in
London and the South East and our centrally based London office is
now established in line with the strategy of increasing the number
of developments in these areas. The significant majority of the
design, construction and support staff remain located at our office
in central Birmingham and the Board recognises and are extremely
grateful for the outstanding commitment and hard work of all staff
in 2014, which underpins the Group's excellent progress.
Outlook
Going forward, the objective is to increase the land bank
considerably by the end of 2014, whilst continuing to deliver the
planned growth in H2 2014, 2015 and beyond.
It remains our intention to be highly selective in all future
land acquisitions, ensuring we are purchasing the right sites, in
the right locations, off market, at the right price. We have a
strong pipeline and as a result of new opportunities emerging from
our modular construction initiative, we are now seeking to secure a
land-bank of at least 5,000 plots by the end of this year.
As originally forecast, the growth profile for 2014 carries a
second half weighting, as all of the sites acquired in December
2013 were due to start generating sales in the second half of the
year. Accordingly, having delivered in the first half, we remain
confident that we can achieve full year market expectations.
We continue to position Mar City to take full advantage of a
strong housing market and to deliver significant sustainable growth
for the Company over the foreseeable future. We believe we are
insulated against any geopolitical events, as we are at the
affordable end of the market and we believe we can deliver strong
returns to our shareholders.
ON BEHALF OF THE BOARD
Tony Ryan, Chief Executive
16 September 2014
Consolidated statement of comprehensive income
For the 6 months ended 30 June 2014
Note 2014 2013 2013
H1 H1 Full yr
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
-------------------------------------------- ----- ------------- ----------- ---------
Revenue 25,528 8,745 24,823
Cost of sales (19,791) (6,987) (18,927)
-------------------------------------------- ----- ------------- ----------- ---------
Gross profit 5,737 1,758 5,896
Administrative expenses (2,315) (661) (2,341)
Share based payment charge 3 (600) - -
Exceptional costs - - (211)
-------------------------------------------- ----- ------------- ----------- ---------
Profit from operations 2,822 1,097 3,344
Finance charges (212) (44) (123)
-------------------------------------------- ----- ------------- ----------- ---------
Profit on ordinary activities before
taxation 2,610 1,053 3,221
Income tax 4 (639) - (797)
-------------------------------------------- ----- ------------- ----------- ---------
Profit on ordinary activities after
taxation 1,971 1,053 2,424
Other comprehensive income - - -
-------------------------------------------- ----- ------------- ----------- ---------
Total comprehensive income attributable
to owners 1,971 1,053 2,424
-------------------------------------------- ----- ------------- ----------- ---------
Total and continuing earnings per share
Basic 5 1.79p 3.52p 6.46p
------------------------------------------- ----------- -------- ----------- ---------
Diluted 5 1.79p 3.52p 6.46p
------------------------------------------- ----------- -------- ----------- ---------
All of the Group's operations are continuing.
Consolidated statement of changes in equity
For the 6 months ended 30 June 2014
Share premium Merger relief
Share capital account GBP000 Other reserve reserve GBP000 Retained Total equity
Group GBP000 GBP000 earnings GBP000
GBP000
As at 31
December 2013 2,757 3,197 (1,732) 60,171 1,316 65,709
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Issue of shares - - - - - -
Issue costs - - 600 - - 600
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Transactions
with owners - - 600 - - 600
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Profit for the
year and total
comprehensive
income - - - - 1,971 1,971
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
As at 30 June
2014 2,757 3,197 (1,132) 60,171 3,287 68,280
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Consolidated statement of financial position
As at 30 June 2014 Group
Note 30 June 30 June 2013 31 Dec
2014 GBP000 2013
GBP000 Unaudited GBP000
Unaudited Audited
--------------------------------- ----- ----------- ------------- ---------
Non-current assets
Intangible assets 715 733 728
Plant, property and equipment 150 37 67
Trade and other receivables 8,019 - 6,984
Current assets
Inventories 6 50,840 200 42,872
Trade and other receivables 36,783 5,864 18,561
Cash and cash equivalents 4,125 1,694 27,273
--------------------------------- ----- ----------- ------------- ---------
Total assets 100,632 8,528 96,485
--------------------------------- ----- ----------- ------------- ---------
Current liabilities
Trade and other payables 15,101 3,291 13,482
Non-current liabilities
HCA GBB funding 9 8,019 - 6,984
Amounts due under hire purchase - 27 -
Borrowings 9,232 1,252 10,310
--------------------------------- ----- ----------- ------------- ---------
Total liabilities 32,352 4,570 30,776
--------------------------------- ----- ----------- ------------- ---------
Equity
Called up share capital 7 2,757 816 2,757
Merger relief reserve 60,171 - 60,171
Other reserve (1,132) - (1,732)
Share premium 3,197 3,197 3,197
Retained earnings 3,287 (55) 1,316
--------------------------------- ----- ----------- ------------- ---------
Total equity 68,280 3,958 65,709
--------------------------------- ----- ----------- ------------- ---------
Total liabilities and equity 100,632 8,528 96,485
--------------------------------- ----- ----------- ------------- ---------
Consolidated statements of cash flows
For the 6 months ended 30 June 2014 Group
2014 2013 2013
H1 H1 Full yr
GBP000 GBP000 GBP000
Unaudited Unaudited Audited
-------------------------------------------------------- ----------- ----------- ---------
Cash flows from operating activities
Profit before taxation and finance charges 2,822 1,097 3,344
Amortisation and depreciation 39 24 57
Increase in trade and other receivables (19,025) (4,175) (14,935)
Increase in trade and other payables 2,383 1,890 9,733
(Increase) / decrease in inventories (7,968) 147 (1,134)
-------------------------------------------------------- ----------- ----------- ---------
Net cash (outflow) from operating activities (21,749) (1,017) (2,935)
-------------------------------------------------------- ----------- ----------- ---------
Cash flows from investing activities
Acquisition of subsidiary - - (5,000)
Payments to acquire tangible assets (109) (9) (83)
Net cash flow from investing activities (109) (9) (5,083)
Cash flows from financing activities
Finance charge (212) (44) (123)
Issue of share capital - 1,586 34,236
Repayment of bank debt (1,078) - -
Net cash flow from financing activities (1,290) 1,542 34,113
-------------------------------------------------------- ----------- ----------- ---------
Net (decrease) / increase in cash and cash equivalents (23,148) 516 26,095
Cash and cash equivalents at beginning of year 27,273 1,178 1,178
-------------------------------------------------------- ----------- ----------- ---------
Cash and cash equivalents at end of year 4,125 1,694 27,273
-------------------------------------------------------- ----------- ----------- ---------
Notes to the interim financial information
For the 6 months ended 30 June 2014
1. General information
The information for the period ended 30 June 2014 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The figures for the year ended 31 December 2013
have been extracted from the 2013 statutory financial statements
prepared under International Financial Reporting Standards ("IFRS")
as adopted by the European Union. The auditors' report on these
accounts was unqualified and did not contain a statement under
Section 498 of the companies Act 2006. A copy of the statutory
accounts for that period has been delivered to the Registrar of
Companies.
Copies of this statement will be available on the Group's
website (www.marcityplc.com) and from Mar City PLC, 113-115 Great
Hampton Street, Birmingham, B18 6ES.
2. Basis of preparation
Basis of preparation
The financial statements have been prepared under the historical
cost convention and in accordance with International Financial
Reporting Standards adopted by the European Union (IFRSs). The
Company's shares are traded on the AIM market of the London Stock
Exchange.
The principal accounting policies are set out below and are
consistent with those applied in the 2013 financial statements.
Going concern
At 30 June 2014 the Group had cash resources available of
GBP4.1m and debt with HSBC Bank PLC of GBP9.2m, equating to a net
debt position of GBP5.1m.
Additionally, on 31 July 2014, the Group signed a five year
GBP40m Revolving Credit Facility with HSBC.
The Directors have given full consideration to the cash flow
forecasts of the Group extending to December 2015 (which are
updated on a monthly basis), and the timing of the residential
house building projects which the Group expects to undertake during
the balance of the coming financial year. After completing this
review, the Directors believe it remains appropriate to prepare the
financial statements on a going concern basis.
3. Share based payment charges / exceptional costs
The GBP600k of share based payment charges (2013 H1: GBPnil) in
H1, relates to the cost of share options granted in December 2013,
when an equity-settled unapproved share option scheme was
introduced and options were awarded to Tony Ryan and Maggie Ryan.
Each received an option over 2,757,323 ordinary shares at an
exercise price of 80p per share. There is a three year vesting
period and the options are only exercisable if the Company's share
price is equal to or greater than 150p per share. The options
expire on 20 December 2023 and none of the options were exercisable
at 30 June 2014.
4. Income tax
The tax assessed for the period differs from the standard rate
of corporation tax in the UK as follows:
2014 2013 2013
H1 H1 Full yr
GBP000 GBP000 GBP000
--------------------------------------------------------------------------------------- -------- -------- ---------
Profit on ordinary activities before taxation 2,610 1,053 3,221
Profit multiplied by standard rate of corporation tax in the UK of 23% and 21% (2013:
23%) 691 242 749
Expenses not deductible for tax purposes - - 50
Differences between capital allowances and depreciation - - (9)
Other adjustments - - 7
Utilisation of brought forward losses (52) (242) -
Losses carried forward - - -
Tax charge for the period 639 - 797
--------------------------------------------------------------------------------------- -------- -------- ---------
The Group has unrelieved tax losses of GBP708k (2013 H1:
GBP981k) remaining available to offset against future taxable
trading profits in the PLC company.
5. Earnings per share
The calculation of the basic continuing earnings per share is
based on the profit on ordinary activities after tax of GBP1,971k
(2013 H1: GBP1,053k) divided by the weighted average number of
ordinary shares in issue during the year of 110,292,924 (2013 H1
restated: 29,903,372). The comparative number has been restated to
reflect the consolidation of shares which took place in December
2013 in order to make the data comparable.
The share options in issue are considered anti-dilutive as the
exercise price is greater than the average share price during the
period ended 30 June 2014.
6. Inventories
2014 2013 2013
H1 H1 Full yr
GBP000 GBP000 GBP000
------------------ -------- -------- ---------
Land 38,207 - 31,216
Work In Progress 12,633 200 11,656
At 30 June 50,840 200 42,872
------------------ -------- -------- ---------
7. Share Capital
2014 2013 2013
H1 H1 Full yr
GBP000 GBP000 GBP000
------------------------------------------------------- ------------ ----------- ------------
Allotted, issued and fully paid
Ordinary shares of 2.5p 2,757 816 2,757
Ordinary shares of 2.5p
2014 2013 2013
H1 H1 Full yr
Shares issued and fully paid at the end of the period
------------------------------------------------------- ------------ ----------- ------------
* ordinary shares of 2.5p 110,292,925 29,903,372 110,292,925
------------------------------------------------------- ------------ ----------- ------------
The movement on share capital is detailed below. All ordinary
shares have the same rights and there are no restrictions on the
distribution of dividends or repayment of capital.
8. Related party transactions
The Group has earned revenue from MCDL, a related party under
the common control of Maggie Ryan and Tony Ryan of GBP16.2m (2013
H1: GBP8.7m) in relation to contract work performed. The Group
carries out work with MCDL under a Business Co-operation Agreement,
which sets out work to be carried out and invoiced under design and
build agreements.
The Group had net debtor balances of GBP31.2m (2013 H1: GBP
3.4m) owing from MCDL at 30 June 2014. This is supported by a
signed agreement to repay the debtor in 2014, based mainly upon the
completion of the Colindale development contract, which Mar City
Homes Ltd is currently building under a JCT contract.
The GBB Funding liability acquired within Mar City Land Ltd of
GBP8.93m is also supported by a signed agreement for MCDL to repay
the amounts, as and when they fall due to the HCA.
GBP166k has been charged to the Group by MCDL in relation to
administration overheads (2013 H1: GBP81k), including rental costs
of GBP119k (2013 H1: GBP45k), whilst supplier costs of GBP16k
relating to contracts were recharged by MCDL (2013 H1:
GBP1.3m).
Maggie Ryan and Tony Ryan were granted share options in December
2013, as per Note 3.
9. Non-current liabilities - HCA GBB funding
The HCA Get Britain Building funding acquired with Mar City Land
Ltd in December 2013 is due to be repaid in line with an agreed
schedule of completion of housing units. There is a back-to-back
agreement in place with Mar City Developments Ltd, who will repay
the debtor on the due date as they had received the benefit of the
initial funding received prior to the novation of the agreement, to
enable the Company to satisfy this liability.
10. Post balance sheet event
On 31 July 2014, a five year GBP40m Revolving Credit Facility
was signed with HSBC Bank Plc.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LAMFTMBBBBAI
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