Source - LSE Regulatory
RNS Number : 7063U
Smart(J.)&Co(Contractors) PLC
26 October 2017
 

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2017

PRELIMINARY STATEMENT

 

ACCOUNTS

Headline Group profit for the year before tax, including an unrealised surplus in revalued property and a profit on the unforeseen sale of property, was £4,037,000 compared with £3,752,000 last year. 

 

As forecast underlying profit before tax for the year of £3,423,000 (including £613,000 profit from property sales) was less than last year's figure of £3,616,000 (including £186,000 profit from property sales).  In our view discounting the increase in the revaluation of the commercial property portfolio provides a truer reflection of Group performance.

 

The Board is recommending a Final Dividend of 2.17p making a total of 3.12p which compares with 3.07p for the previous year.  The Final Dividend will cost the Company no more than £973,000.

 

TRADING ACTIVITIES

Group construction activities including private residential sales decreased by 17%.  Own work capitalised increased by 55% and headline Group profit increased by 8%.  If you disregard the unexpected property sale headline Group profit would have decreased by 9%.  Underlying Group profit decreased by 5%.

 

Turnover in contracting was less than last year and the loss was increased.  As forecast private residential sales were less than the previous year.  Sales in precast concrete manufacture have increased marginally, but profit has decreased.

 

The two large mixed social housing and private residential developments at Seafield Street and Pilton Drive, Edinburgh are now complete.  The social housing contracts at Fleming Place, Edinburgh continue to make progress, but will be fully complete by April 2018.  A further social housing contract at Ferrymuir, South Queensferry is to commence by April 2018, but this is by no means certain due to the continuing and unwelcome drawn out statutory approval process.

 

A mixed private housing and affordable housing development at West Bowling Green Street, Edinburgh, started after the financial year end, will provide 98 residential units and 4 commercial units.  First completions will not be achieved during the current financial year.

 

The occupancy levels at our industrial estates, especially in the smaller size bracket, continue to be robust.  We have finally encountered rental growth across all sizes of industrial units.  This has partly been caused by a dearth of new build industrial development exacerbated in the Edinburgh area by a lack of industrial land supply. 

 

The second phases at Inchwood Park, Bathgate and West Edinburgh Business Park, South Gyle, Edinburgh are progressing well and letting prospects are encouraging.  The joint venture industrial development at Gartcosh, near Glasgow, has been delayed, but is still likely to proceed.

 

The voids in our office properties were reduced by the sale of CityWest, Robertson Avenue, Edinburgh.  We launched a serviced office centre at our multi-let office building at Links Place, Leith, Edinburgh with our new subsidiary company, Smart Serviced Offices Limited.  This has taken time to let but has assisted in attracting tenants to other vacant suites in the building. 

 

FUTURE PROSPECTS

Work in hand in contracting, as alluded to above, is considerably less than last year.  All of our contracting work, in the Housing Association sector, in the past five years has been site acquisition led and due to increasing land values opportunities in this regard have decreased.  This, coupled with a highly competitive tender market, means the likelihood of future contracting work in this sector does not look promising at present.

 

There will be no private housing sales this year.  Property valuation levels have improved since last year, but it remains to be seen if this trend will continue.  Planning applications will be submitted this year for a residential development at Rosyth and a third phase of industrial development at West Edinburgh Business Park.

 

Due to reduced turnover, which will impact on the recovery of fixed overhead costs, and the cost of redundancies it is likely that underlying profit will be less than this year's underlying profit.

 

 


DAVID W. SMART


Chairman

 


CONSOLIDATED INCOME STATEMENT

for the year ended 31st JULY 2017

 

 

 



2017 


2016 



Unaudited


Audited



£000 


£000 






Group construction activities


25,419 


30,682 

Less: Own construction work capitalised


(2,559)


(1,655)

 

 





REVENUE


22,860 


29,027 






Cost of sales


(19,406)


(25,260)











GROSS PROFIT


3,454 


3,767 






Other operating income


6,090 


5,520 

Net operating expenses


(6,925)


(6,095)











OPERATING PROFIT BEFORE PROFIT ON SALE AND NET SURPLUS ON VALUATION OF INVESTMENT PROPERTIES


2,619 


3,192 






Profit on sale of investment properties


613 


186 

Net surplus on valuation of investment properties


614 


136 











OPERATING PROFIT


3,846 


3,514 






Share of profits in Joint Ventures


42 


33 

Income from available for sale financial assets


32 


14 

Profit on sale of available for sale financial assets


22 


Finance income


95 


191 






PROFIT BEFORE TAX


4,037 


3,752 






Taxation


(310)


(264)











PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS


3,727 


3,488 
















EARNINGS PER SHARE - BASIC AND DILUTED


8.26p


7.61p






 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2017

                                                                                                                          






2017 


2016 


Unaudited


Audited


£000 


£000 





PROFIT FOR THE YEAR

3,727 


3,488 





OTHER COMPREHENSIVE INCOME/(LOSS)




Items that may be subsequently reclassified to the Income Statement:




Fair value adjustment of available for sale financial assets

65 


(10)





TOTAL ITEMS WHICH MAY BE SUBSEQUENTLY RECLASSIFIED TO INCOME STATEMENT

65 


(10)





Items that will not be subsequently reclassified to the Income Statement:




Actuarial gain/(loss) recognised in defined benefit pension scheme

3,306 


(2,256)

Deferred taxation on actuarial (gain)/loss

(680)


215 





TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFIED TO INCOME STATEMENT

2,626 


(2,041)





TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)

2,691 


(2,051)









TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX

6,418


1,437









ATTRIBUTABLE TO EQUITY SHAREHOLDERS

6,418


1,437









 

 

 

 

 

 

 

 

 

 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2017

 


Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings


Total 


£000 

£000 

£000 

£000 


£000 








At 1st August 2015

919 

89

(46)

87,987 


88,949








Profit for the year

3,488 


3,488 

Other comprehensive loss

(10)

(2,041)


(2,051)

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR

(10)

1,447 


1,437 








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY




Shares purchased and cancelled

(13)

(691)


(704)

Transfer to capital redemption reserve

13

(13)


Dividends

(846)


(846)

TOTAL TRANSACTIONS WITH OWNERS

(13)

13

(1,550)


(1,550)








At 31st July 2016

906 

102

(56)

87,884 


88,836








Profit for the year

3,727 


3,727 

Other comprehensive income

65 

2,626 


2,691 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

65 

6,353 


6,418 








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY




Shares purchased and cancelled

(10)

(540)


(550)

Transfer to capital redemption reserve

10

(10)


Dividends

(846)


(846)

TOTAL TRANSACTIONS WITH OWNERS

(10)

10

(1,396)


(1,396)








At 31st July 2017 (unaudited)

896 

112

92,841 


93,858









CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31st JULY 2017

 


2017 


2016 


Unaudited


Audited


£000 


£000 

NON-CURRENT ASSETS




Property, plant and equipment

1,431 


1,382 

Investment properties

64,799 


64,728 

Investments in Joint Ventures

305 


263 

Available for sale financial assets

1,000 


326 

Retirement benefit surplus

3,862 


33 

Deferred tax asset

58 


41 






71,455 


66,773 









CURRENT ASSETS




Inventories

2,881 


2,684 

Trade and other receivables

5,723 


6,369 

Monies held on deposit

2,536 


5,519 

Cash and cash equivalents

26,524 


26,785 






37,664 


41,357 









TOTAL ASSETS

109,119 


108,130 













NON-CURRENT LIABILITIES




Deferred tax liabilities

1,923 


1,389 









CURRENT LIABILITIES




Trade and other payables

4,385 


5,134 

Current tax liability

162 


143 

Bank overdraft

8,791 


12,628 






13,338 


17,905 









TOTAL LIABILITIES

15,261 


19,294 













NET ASSETS

93,858 


88,836 

















EQUITY




Called up share capital

896 


906 

Capital redemption reserve

112 


102 

Fair value reserve


(56)

Retained earnings

92,841 


87,884 





TOTAL EQUITY

93,858 


88,836 

                                                                                                                          


CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31st JULY 2017

 


2017 


2016 


Unaudited


Audited


£000 


£000 





Profit before tax

4,037 


3,752 

Share of profits from Joint Ventures

(42)


(33)

Depreciation

407 


465 

Unrealised valuation surplus on investment properties

(614)


(136)

Profit on sale of property, plant and equipment

(39)


(47)

Profit on sale of investment properties

(613)


(186)

Profit on sale of available for sale financial assets

(22)


Change in retirement benefits

(523)


(817)

Interest received

(86)


(125)

Change in inventories

(197)


3,051 

Change in receivables

646 


(1,861)

Change in payables

(749)


1,134 






2,205 


5,197 

Tax (paid)/received

(454)


634 





NET CASH FLOWS FROM OPERATING ACTIVITIES

1,751 


5,831 









CASH FLOWS FROM INVESTING ACTIVITIES




Additions to property, plant and equipment

(487)


(488)

Additions to investment properties

(20)


(45)

Expenditure on own work capitalised - investment properties

(2,559)


(1,655)

Sale of property, plant and equipment

70 


70 

Sale of investment properties

3,735 


525 

Purchase of available for sale financial assets

(674)


Proceeds of sale of available for sale financial assets

87 


Decrease/(increase) on monies held on deposit

2,983 


(2,017)

Interest received

86 


125 

Dividend from Joint Ventures


37 





NET CASH FLOWS FROM INVESTING ACTIVITIES

3,221 


(3,447)









CASH FLOWS FROM FINANCING ACTIVITIES




Purchase of own shares

(550)


(704)

Dividends paid

(846)


(846)





NET CASH FLOWS FROM FINANCING ACTIVITIES

(1,396)


(1,550)









INCREASE IN CASH AND CASH EQUIVALENTS

3,576 


834 









CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

14,157 


13,323 









CASH AND CASH EQUIVALENTS AT END OF YEAR

17,733 


14,157 






NOTES TO THE PRELIMINARY STATEMENT

 

1.         BASIS OF PREPARATION

 

The financial information set out in this unaudited preliminary statement does not constitute the Group's statutory financial statements.  The financial statements for the year to 31st July 2017 have not yet been filed with the Registrar of Companies and have not yet been reported on by the Company's auditors.

 

The unaudited financial information included in this preliminary statement does not include all of the disclosures required by International Financial Reporting Standards (IFRS) or the Companies Act 2006 and accordingly does not itself comply with IFRS or the Companies Act 2006.

 

The Group prepares its annual consolidated financial statements in accordance with IFRS and its interpretations issued by the International Accounting Standards Board as adopted by the European Union.  There are no differences in the accounting policies applied in the preparation of the unaudited consolidated financial statements for the year to 31st July 2017 and the unaudited financial information included in this preliminary statement and the accounting policies disclosed in the 2016 Annual Report and Statement of Accounts.  The following standards, amendments to standards and interpretations became mandatory for the first time for the financial year to 31st July 2017 but these have had no material impact on the financial statements:

 

·      IAS 1 (amended): Presentation of financial statements.

·      IAS 19 (amended): Employee Benefits.

 

The unaudited consolidated financial statements are prepared under the historical cost convention with the exception of investment properties and available for sale financial assets which are recognised at fair value and are prepared on a going concern basis.

 

The financial information for the year to 31st July 2016 is derived from the statutory accounts for that year which were submitted to the Registrar of Companies and upon which the Company's auditors provided an unqualified audit report.  The audit report did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report and did not contain a statement under S498 (2) or S498 (3) of the Companies Act 2006.

 

 

 

2.         DIVIDENDS

 


2017 


2016 


£000 


£000 


Unaudited


Audited

Ordinary dividends




2015 Final dividend of 2.10p per share, after waivers


425 

2016 Interim dividend of 0.92p per share


421 

2016 Final dividend of 2.15p per share, after waivers

418 


2017 Interim dividend of 0.95p per share

428 







846 


846 





 

The Company is proposing a final dividend of 2.17p per share for the year to 31st July 2017 which will cost the Company no more than £973,000.

 

The dividend if approved will be paid on 20th December 2017 to shareholders on the Register at the close of business on 24th November 2017.


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