Final Results

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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 group

Their interests

How management and/or Directors engage

 

Investors

  • Comprehensive review of financial performance of the business
  • Business sustainability
  • High standard of governance
  • Awareness of long-term strategy and direction
  • Annual and interim reports
  • Company website
  • Shareholder circulations
  • Company announcements
  • AGM
  • AQSE growth exchange announcements

 

Employees

  • Job satisfaction and fulfilment
  • Health and safety on site
  • Training and development
  • Career progression
  • Inclusion
  • Formal policies and procedures
  • Regular dialogue with key management
  • Company culture which 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 environment

  • Sustainability
  • Energy usage
  • Recycling and waste management

 

 

  • Products promote energy reduction
  • Corporate and social 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 assets

 

 

 

653

 

 

 

871

Investments in joint ventures

 

 

 

159,396

 

 

 

60,273

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

160,049

 

 

 

61,144

Current assets

 

 

 

 

 

 

 

 

Debtors

 

3,490,184

 

 

 

5,121,624

 

 

Cash at bank and in hand

 

   169,043

 

 

 

131,142

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

3,659,227

 

 

 

5,252,766

 

 

Creditors: amounts falling

 

 

 

 

 

 

 

 

 due within one year

 

(55,573)

 

 

 

(50,478)

 

 

 

 

________

 

 

 

________

 

 

Net current assets

 

 

 

3,603,654

 

 

 

5,202,288

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

Total assets less current liabilities

 

 

 

3,763,703

 

 

 

5,263,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Creditors: amounts falling

 due in more than one year

 

 

 

 

(22,491)

 

 

 

 

(33,140)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

3,741,212

 

 

 

5,230,292

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

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

 

 

 

(388,977)

 

 

 

1,100,103

 

 

 

 

________

 

 

 

________

Shareholders’ funds

 

 

 

3,741,212

 

 

 

5,230,292

 

 

 

 

________

 

 

 

________

 

 

 

 

Consolidated Statement of Changes in Equity
For the year ended 31 December 2022

 

 

 

Share Capital

 

Capital Redemption Reserve

 

Other

Reserve

 

Merger

Reserve

 

Share

Premium

 

Profit and loss reserves

 

Total

 

 

£

 

£

 

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

31 December 2020

 

2,206,501

 

1,009,560

 

211,822

 

327,060

 

375,246

 

1,317,977

 

5,448,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

 

-

 

-

 

-

 

-

 

(85,484)

 

(85,484)

 

 

________

 

________

 

_______

 

_______

 

________

 

________

 

   ________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

(85,484)

 

(85,484)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

 

 

(132,390)

 

(132,390)

 

 

________

 

________

 

_______

 

_______

 

________

 

________

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

31 December 2021

 

2,206,501

 

1,009,560

 

211,822

 

327,060

 

375,246

 

1,100,103

 

5,230,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

-

 

-

 

-

 

-

 

-

 

(1,489,080)

 

(1,489,080)

 

 

________

 

________

 

_______

 

_______

 

________

 

________

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

-

 

(1,489,080)

 

(1,489,080)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

________

 

________

 

_______

 

_______

 

________

 

________

 

_________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

31 December 2022

 

2,206,501

 

1,009,560

 

211,822

 

327,060

 

375,246

 

(388,977)

 

3,741,212

 

 

________

 

________

 

_______

 

   ______

 

________

 

________

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of cashflows
for the year ended 31 December 2022

 

 

 

2022

 

2022

 

2021

 

2021

 

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

Cash flows from

 

 

 

 

 

 

 

 

operating activities

 

 

 

 

 

 

 

 

 

Cash generated from/(used in) operations

 

 

 

 

32,973

 

 

 

 

(529,311)

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 Loan

 

(10,648)

 

 

 

(6,213)

 

 

Dividend paid

 

-

 

 

 

(132,390)

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

 

 

Net cash used in

 

 

 

 

 

 

 

 

financing activities

 

 

 

(10,648)

 

 

 

(138,603)

 

 

 

 

________

 

 

 

________

 

 

 

 

 

 

 

 

 

Net (decrease) in cash and cash equivalents

 

 

 

37,901

 

 

 

(577,923)

 

 

 

 

 

 

 

 

 

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 hand

 

 

 

169,043

 

 

 

131,142

 

 

 

 

  ________

 

 

 

________

 

 

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.

 

  1. Accounting policies

 

Company information

 

St Mark Homes Plc is a public limited company domiciled and incorporated in England and Wales. The registered office is No 1 Railshead Road, St Margarets, Old Isleworth, Middlesex TW7 7EP.

 

Accounting convention

 

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

 

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound.

 

Going concern

 

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 shares used in basic and diluted EPS

4,413,002

4,413,002

 

________

________

 

There are no share options or other potentially dilutive equity instruments in issue than can dilute the earnings per share.

 

 

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