STRATEGIC REPORT

Business review, results and dividends

The Consolidated Results of the year's trading, presented on the basis of accounting, are shown below. The Consolidated loss for the year amounted to £ 619,106 (2014: Loss £305,049).

Principal risks & uncertainties

Set out below are certain risk factors which could have an impact on the Group's long term performance. The factors discussed below should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties facing the Group.

The principal risks and uncertainties facing the Group are:

1. Any possibility that lending criteria from the Group's bankers may harden with little prior notice.
2. Construction costs may escalate and eat into gross profit margins.
3. Heavy overheads may be incurred especially when projects have been completed and before others have been commenced.
4. The Group could pay too much for land acquisitions.
5. The Group might fail to adhere to good corporate governance policies.
6. The Group's reliance on key members of staff.

The Group considers that it mitigates these risks with the following policies and actions:

1. The Group affords its bankers and other lenders a strong level of asset and income cover and maintains good relationships with a range of funding sources from which it is able to secure finance on favourable terms.
2. Construction costs are outsourced on a fixed price contract basis, thereby passing on to the contractor all risk of development cost overspend, including from increased material, labour or other costs.
3. Most other professional services are also outsourced, thus providing a known fixed cost before any project is taken forward and avoiding the risk that can arise in employing in-house professionals of a high unproductive overhead at times when activity is slack.
4. Land buying decisions are taken at board level, after careful research by the Directors personally, who have substantial experience of the house building industry, potential construction issues and the local market.

The Group focuses on a niche market sector of new home developments in the range of 4 to 20 units. Within this unit size, competition to purchase development sites from land buyers is relatively weak, as this size is unattractive to major national and regional house builders who require a larger scale to justify their administration and overheads, whilst being too many units for the jobbing builder to finance or undertake as a project. Within this market, there are opportunities to negotiate land acquisitions on favourable terms. Many competitors who also focus on this niche have yet to recapitalise and are unable to raise finance.

1. The Group has a rigorous corporate governance policy appropriate for a publicly quoted company now listed on AIM.
2. Many of the activities are outsourced and each of the Directors is fully aware of the activities of all members of staff enabling adequate cover when needed.

Operations review

The expected turnover of the Group during the year was based upon the completion of the construction and sale of all eight of the remaining houses at its site at Oakhurst Park Gardens, Bank Lane, Hildenborough, Kent. In the event, seven of the eight were sold, leaving one house unsold at the year end.

A summary of the results for the year is as follows:-

The revenue from the sales during the year of £ 3,898,250, reflects a gross sales income on the Oakhurst Park Gardens site of £ 6,498,250 and since the year end the final unit has been transferred to Christopher Johnson for £525,000 for repayment on his outstanding loans. It is anticipated that the gross sales revenue from this development will be circa £ 7,023,250, which is in excess of that anticipated at the outset.

Unfortunately, and as previously reported, the profitability of the site was substantially reduced because of the factors outlined in my previous Strategic Report which accompanied our results for the year ended 31/3/2014. The Group incurred a substantial increase in construction cost (due to the liquidation of the building contractor and the requirement to replace it with others to complete the development) and an additional and substantial increase in the financing cost of the development due to the time delays. The banking finance cost of this development amounted to circa £ 1,300,000, a figure considerably greater than anticipated.

As a result of the above, the Company recorded a loss for the year of £619,106.

On a positive note, work is well under way on our sites at Ticehurst, East Sussex and Borough Green, Kent and will shortly commence on our site at Tunbridge Wells, Kent. We have secured funding for all three sites on sensible commercial terms with the development funders (Coutts/Commercial Acceptances/Ratesetter) and having funded the early build stages on the Ticehurst site out of our own resources, we now have arrangements in place giving us 100% build finance on all three of the ongoing development sites mentioned above.

On the Sheerness site we have secured bank funding (Lloyds) for the construction of the development, again on a 100% of the build cost basis, and work will commence when we have chosen a building contractor for this site.

As can be seen our development programme (which will result in a mix of houses and luxury apartments in this current financial year) is well under way and fully funded which is encouraging and should result in a successful year.

Looking ahead, on our flagship site situated in Staplehurst, Kent, we have experienced severe planning delays/refusals and non-determinations which has been very frustrating. We are currently working on a further application for planning permission for residential development on this site and, provided we are successful, this site will contribute to the profitability of the Group over the two years ending 31/03/2017 and 31/03/2018.

For 2017 and beyond, in addition to the Staplehurst and Sheerness sites, we have agreed to purchase a site in Edenbridge, Kent which has a planning permission for residential development of three houses. We continue to make offers for other sites on a regular basis, as we have no shortness of opportunities presented to us.

As before, though, we are concerned to ensure that any site we are interested in, shows a sensible return on capital employed and our offers for such sites are pitched accordingly. All of the sites we consider fall within our chosen area of operation, i.e. Kent, Sussex, Surrey and the southern outer London M25 ring, our favoured area of operation.

Again, we are unable to pay a dividend this year but the Group remains committed to the declaration and payment of a dividend as soon as possible. As before, the losses carried forward from previous year will continue to be available to mitigate future tax charges.

Our bankers continue their financial support for the Group and that, coupled with the loans from our private investors and your Directors, means that we have sufficient funds to fulfil our development programme to generate profitability for the Group going forward.

Financial instruments

The Group's principal financial instruments comprise cash at bank, bank loans, other loans and various items within current assets and current liabilities that arise directly from its operations. The Directors consider that the key financial risk is liquidity. This risk is explained in the section headed Principal Risks and Uncertainties in the annual report and accounts.

Christopher Johnson

Director

16th July 2015