Source - LSE Regulatory
RNS Number : 5403M
Smart(J.)&Co(Contractors) PLC
30 April 2018
 

 

 

 

 

 

J. SMART & CO. (CONTRACTORS) PLC

 

 

  

 

 

 

INTERIM REPORT

 

FOR THE SIX MONTHS TO

 

31st JANUARY 2018



J SMART & CO. (CONTRACTORS) PLC

 

CHAIRMAN'S REVIEW

 

 

INTERIM REPORT

 

Unaudited Group profit for the six months to 31st January 2018 amounted to £921,000 compared with £652,000 for the corresponding period last year.  Group turnover decreased by 31%.

 

In accordance with our normal practice, there has been no revaluation of our investment properties at the end of the half year.  We believe that a half year revaluation would have had no substantial effect on the figures.

 

There were no private residential sales this half year as the first completions at our current private housing development at West Bowling Green Street, Edinburgh are not due until after the end of the current financial year.

 

The second phases of the industrial developments at Inchwood Park, Bathgate and West Edinburgh Business Park are now complete.

 

Our serviced office company, Smart Serviced Offices Limited, has refurbished a further suite at Links Place, Leith, Edinburgh to provide co-working accommodation.

 

The current site progress is satisfactory.

 

 

INTERIM DIVIDEND

 

The Board announces an interim dividend of 0.95p per share (2017, 0.95p) to be paid on 1st June 2018 to shareholders on the register at the close of business on 11th May 2018.  The interim dividend will cost the Company no more than £423,000.

 

 

FUTURE PROSPECTS

 

We have less work in hand in contracting than the same time last year.  Margins are no better than last year.  Our social housing contract at Ferrymuir, as predicted, has been unnecessarily delayed, but will start imminently.

 

There will be no private residential sales this financial year, but the interest in the first release of flats at West Bowling Green Street has been positive.

 

The letting and re-letting of the majority of our industrial properties continues to be buoyant. The first phase of our joint venture industrial development at Gartcosh is due to start in the near future. Lettings of our office properties has seen a welcome, but marginal, improvement.

 

It is not possible to make an accurate forecast of the year end figures, but it is evident that our reduced turnover will result in the underlying profit for the financial year being less than the previous year.

 

 

 

 

 

 

 

30th April 2018

D.W. SMART

Chairman

 



CONSOLIDATED INCOME STATEMENT

 


 

 

 

Notes

6 Months

ended

31.1.18

(Unaudited)

6 Months

ended

31.1.17

(Unaudited)

Year

ended

31.7.17

(Audited)



£000 

£000 

£000 

 

 

 

 


 

 

 

 

Group construction activities


8,390 

12,195 

25,419 

Less:  Own construction work capitalised


 (1,623)

 (209)

 (2,559)

REVENUE


6,767 

11,986 

22,860 

 

Cost of sales


(5,246)

(11,240)

(19,406)






GROSS PROFIT


1,521 

746 

3,454 

 

Other operating income

 

 

2,898 

2,941 

 

6,090 

Net operating expenses


 (3,569)

 (3,119)

  (6,925)






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

 

 

 

850 

568 

2,619

Profit arising on sale of investment properties


613 

Net surplus on valuation of investment properties


614 






OPERATING PROFIT


850 

568 

3,846 

 

Share of profits in Joint Ventures


14 

20 

42 

Income from available for sale financial assets


16 

10 

32 

Profit on sale of available for sale financial assets


22 

Finance income


41 

48 

95 






PROFIT BEFORE TAX


921 

652 

4,037 

 

Taxation

 

5

 (180)

 (135)

 

   (310)

 

PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS


741 

517 

3,727 

 

EARNINGS PER SHARE - BASIC AND DILUTED

 

 

7

 

 

1.66p

 

 

1.14p

 

 

8.26p

 

 

                                                                                             

 

 

 



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


 

 

 

6 Months

ended

31.1.18

(Unaudited)

6 Months

ended

31.1.17

(Unaudited)

Year

ended

31.7.17

(Audited)



£000 

£000 

£000 

Profit for the period


 

741 

 

517 

3,727 






Other comprehensive income





Items that may be subsequently reclassified to Income Statement:



Fair value adjustment of available for sale financial assets

38 

34 

65 






Total items which may be subsequently reclassified to Income Statement


38 

34 

65 






Items that will not be subsequently reclassified to Income Statement:



Actuarial gain recognised in defined benefit

pension scheme

 

 

3,306 

Deferred taxation on actuarial gain


 (680)

Total items that will not be subsequently reclassified to Income Statement


2,626 

 

Total other comprehensive income


38 

34 

2,691 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX


779 

551 

6,418 

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

779 

551 

6,418 

 

 

 

 

 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 


 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total



£000 

£000 

£000

£000

£000








As at 1st August 2017


896 

112 

9

92,841

93,858








Profit for the period


741

741

Other comprehensive income

38

38

Total comprehensive income for period

38

741

779








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(5)

(256)

(261)

Transfer to Capital Redemption Reserve

(5)

Dividends

6

(967)

(967)

Total transactions with owners

(5)

(1,228)

(1,228)








As at 31st January 2018


891 

117 

47

92,354

93,409

           

 


 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total



£000 

£000 

£000

£000

£000








As at 1st August 2016


906 

102 

(56)

87,884

88,836








Profit for the period


517

517

Other comprehensive income

34

34

Total comprehensive income for period

34

517

551








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(3)

(178)

(181)

Transfer to Capital Redemption Reserve

(3)

Dividends

6

(418)

(418)

Total transactions with owners

(3)

(599)

(599)








As at 31st January 2017


903 

105 

(22)

87,802

88,788

 

 



 


 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total



£000 

£000 

£000

£000

£000








As at 1st August 2016


906 

102 

(56)

87,884

88,836








Profit for the period


3,727

3,727

Other comprehensive income

65

2,626

2,691

Total comprehensive income for period

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

6

(846)

(846)

Total transactions with owners

(10)

10 

(1,396)

(1,396)








As at 31st July 2017


896 

112 

9

92,841

93,858

 

 

 



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 


 

 

 

 

6 Months

ended

31.1.18

(Unaudited)

6 Months

ended

31.1.17

(Unaudited)

Year

ended

31.7.17

(Audited)



£000 

£000 

£000 

 

NON-CURRENT ASSETS



 

 


Property, plant and equipment


1,406

1,365

1,431

Investment properties


66,435

64,937

64,799

Investments in Joint Ventures


319

283

305

Available for sale financial assets


1,041

1,003

1,000

Retirement benefit surplus


3,862

33

3,862

Deferred tax assets


      58

      41

     58



  73,121

  67,662

71,455

 

CURRENT ASSETS





Inventories


 5,241

 2,804

2,881

Trade and other receivables


5,500

6,557

5,723

Monies held on deposit


4,045

4,529

2,536

Cash and cash equivalents


  24,734

  26,013

 26,524



  39,520

  39,903

 37,664






TOTAL ASSETS


112,641

107,565

109,119

 

NON-CURRENT LIABILITIES





Deferred tax liabilities


   1,926

   1,389

   1,923

 

CURRENT LIABILITIES





Trade and other payables


4,297

4,731

4,385

Corporation tax liability


151

121

162

Bank overdraft


   12,858

   12,536

 8,791



 17,306

 17,388

 13,338






TOTAL LIABILITIES


 19,232

 18,777

 15,261

 

NET ASSETS


 

 93,409

 

 88,788

 

 93,858

 

EQUITY





Called up share capital


     891

     903

896

Capital redemption reserve


     117

     105

112

Fair value reserve


     47

(22)

9

Retained earnings


  92,354

  87,802

 92,841

TOTAL EQUITY


  93,409

  88,788

 93,858

 

 

 

 

 

 



CONSOLIDATED STATEMENT OF CASH FLOWS

 


 

 

 

Notes

6 Months

ended

31.1.18

(Unaudited)

6 Months

ended

31.1.17

(Unaudited)

Year

ended

31.7.17

(Audited)



£000 

£000 

£000 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

9

(1,208)

34 

 

   2,205

 

Tax paid


(191)

(157)

(454)

 

NET CASH FLOWS FROM OPERATING ACTIVITIES


 

 

  (1,399)

 

 

  (123)

 

   1,751

 

CASH FLOWS FROM INVESTING ACTIVITIES





Additions to property, plant and equipment


(183)

(189)

(487)

Additions to investment properties


(13)

(20)

Expenditure on own work capitalised - investment properties


 

(1,623)

 

(209)

 

(2,559)

Sale of property, plant and equipment


57 

39 

70 

Sale of investment properties


3,735 

Purchase of available for sale financial assets


(674)

(674)

Proceeds of sale of available for sale financial assets

37 

87 

(Increase)/decrease in monies held on deposit


(1,509)

990 

2,983 

Interest received


41 

48 

86 

NET CASH FLOWS FROM INVESTING ACTIVITIES


 

(3,230)

42 

3,221 

 

CASH FLOWS FROM FINANCING ACTIVITIES





Purchase of own shares


   (261)

   (181)

   (550)

Dividends paid


   (967)

   (418)

   (846)

NET CASH FLOWS FROM FINANCING ACTIVITIES


 

   (1,228)

 

   (599)

 

   (1,396)

 

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS


 

   (5,857)

 

   (680)

3,576 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


 

 

17,733 

 

 

14,157 

 

 

14,157 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

 

 

11,876 

 

 

13,477 

 

 

17,733 

 

 

 

 

 



NOTES TO INTERIM FINANCIAL STATEMENTS

 

1.         BASIS OF PREPARATION

 

J. Smart & Co. (Contractors) PLC is a company domiciled in the United Kingdom.  The condensed consolidated interim financial statements of the Company for the six months ended 31st January 2018 comprise the Company and its Subsidiaries, together referred to as the Group, and the Group's interest in jointly controlled entities.

 

The condensed consolidated interim financial statements for the six months to 31st January 2018 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34: Interim Financial Reporting as adopted by the European Union. 

 

The condensed consolidated interim financial statements for the six months to 31st January 2018 do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year to 31st July 2017, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

The statutory financial statements for the year to 31st July 2017 have been filed with the Registrar of Companies and a copy may be obtained from Companies House.  These have been audited and contain an unqualified audit opinion, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 of the Companies Act 2006.

 

The condensed consolidated interim financial statements have not been audited or reviewed by the Company's auditor.  A copy of the interim financial statements will be available on the Company's website www.jsmart.co.uk.

 

2.         ACCOUNTING POLICIES

 

The condensed consolidated interim financial statements have been prepared under the historical cost convention except where the measurement of balances at fair value is required for investment properties, available for sale financial assets and assets held by defined benefit pension scheme.

 

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31st July 2017, with the exception of the policies regarding the accounting for pension scheme obligations and investment properties revaluations.

 

For the condensed consolidated interim financial statements the assets and liabilities of the pension scheme are estimated to be unchanged from the values included at the previous year end.  Also, in accordance with long standing practice, the Group's investment properties are revalued annually on 31st July each year.  No revaluation adjustment is made in the condensed consolidated interim financial statements.

 

Interpretations effective in period

The following new standards, amendments to standards and interpretations relevant to the Group were issued by the International Accounting Standards Board and are mandatory for the Group for the first time in the financial year to 31st July 2018:

·     IAS 7 (amended): Statement of Cash Flows.

·     IAS 12 (amended): Income Taxes.

 

The Directors anticipate that there will be no material effect on the financial statements from these Standards.

 

 


Estimates and assumptions

The preparation of the condensed consolidated interim financial statements requires management to make estimates and assumptions concerning the future that may affect the application of accounting policies and the reported amounts of assets, liabilities and income and expenses.  Management believes that the estimates and assumptions used in the preparation of these accounts are reasonable.  However, actual outcomes may differ from those anticipated.

 

Going concern

The Directors have a reasonable expectation that the Company and Group as a whole have adequate resources to continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of these accounts.  For this reason, the Directors continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.

 

3.         PRINCIPAL RISKS AND UNCERTAINTIES

 

The principal risks and uncertainties which could have a material impact on the Group's performance for the remainder of the current financial year remain the same as those detailed in the Group's Annual Report and Financial Statements for the year to 31st July 2017.

 

4.         SEGMENTAL INFORMATION

 

The Group has identified operating segments on the basis of internal reporting components that are regularly reviewed by the chief operating decision maker to allow the allocation of resources to segments and assess their performance.  The Board of Directors has been recognised as the chief operating decision maker.

 

All revenue arises from activities within the UK and therefore the Board of Directors does not consider the business from a geographical perspective.  The operating segments are based on activity and performance of an operating segment is based on a measure of operating results.

 


External

Revenue

Internal

Revenue

Total

Revenue

Operating Profit/(Loss)

31.1.18

31.1.17

31.7.17


£000 

£000 

£000

£000 

£000 

£000

31st JANUARY 2018

(Unaudited)







Construction activities

6,767

1,623

8,390

(632)

Investment activities

 2,898

  2,898

 1,482 


9,665

1,623

11,288

850 








31st JANUARY 2017

(Unaudited)







Construction activities

11,986

209

12,195

(1,158)

Investment activities

 2,941

  2,941

 1,726 


14,927

209

15,136

568 








31st JULY 2017

(Audited)







Construction activities

22,860

2,559

25,419

(673)

Investment activities

  6,090

  6,090

 4,519 


28,950

2,559

31,509

 3,846 

 

OPERATING PROFIT

 

 



850 

568 

 3,846 

Share of results of Joint Ventures




14 

20 

42 

Finance and investment income and profit on sale of available

for sale financial assets

57 

64 

149 

PROFIT BEFORE TAX ON ORDINARY ACTIVITIES

921 

652 

4,037 



5.         TAXATION

 

The tax charge for the 6 months to 31st January 2018 is based on the corporation tax rate at 19.00% (2017, 19.67%).

 

6.         DIVIDENDS


6 Months

Ended

31.1.18

(Unaudited)

6 Months

Ended

31.1.17

(Unaudited)

Year

Ended

31.7.17

(Audited)


£000 

£000 

£000 

 

ORDINARY DIVIDENDS




2017 Final dividend of 2.17p

967 

2017 Interim dividend of 0.95p

428 

2016 Final dividend of 2.15p, after waivers

418 

418 


 967 

 418 

846 

 

The interim dividend of 0.95p per share for the year to 31st July 2018 will be paid on 1st June 2018 to shareholders on the register at 11th May 2018.  The interim dividend will cost the Company no more than £423,000.

 

7.         EARNINGS PER SHARE


6 Months

Ended

31.1.18

(Unaudited)

6 Months

Ended

31.1.17

(Unaudited)

Year

Ended

31.7.17

(Audited)

 

Profit attributable to equity shareholders (£000)

 

 741 

 

 517 

 

 3,727 

 

Basic earnings per share

 

 1.66p

 

 1.14p

 

8.26p

 

Weighted average number of shares

 

 44,624,268

 

 45,216,991

 

45,098,697

 

Basic earnings per share are calculated by dividing the profit attributable to equity shareholders by the weighted average number of shares in issue during the period.

 

During the 6 months to 31st January 2018 the Company purchased for immediate cancellation 236,000 Ordinary Shares of 2p.

 

There is no difference between basic and diluted earnings per share.

 

 



8.         FAIR VALUE ASSETS

 

The Group's investment properties, available for sale financial assets and assets held by defined benefit pension scheme are measured at fair value after initial recognition.

 

Investment properties are only valued annually by the Directors at the year end and not for the purposes of the interim financial statements.  The Group considers all of its investment properties fall within 'Level 3' of the fair value hierarchy as described by IFRS 13: Fair Value Measurement.  Level 3 valuations are those using inputs for the asset or liability that are not based on observable market data.  The main unobservable inputs relate to estimated rental value and equivalent yield.

 

The Group's available for sale financial assets consisted entirely of equities of companies listed on quoted markets which fall within 'Level 1' of the fair value hierarchy.  Assets held by defined benefit pension scheme consist of equities and bond of companies listed on quoted markets and cash which all fall within 'Level 1' of the fair value hierarchy.  Level 1 valuations are those using inputs which are quoted prices (unadjusted) in active markets for identical assets or liabilities the Company can access at the period end date.

 

 

9.         RECONCILIATION OF PROFIT BEFORE TAX TO CASH FLOWS FROM

            OPERATING ACTIVITIES


6 Months

ended

31.1.18

(Unaudited)

6 Months

ended

31.1.17

(Unaudited)

Year

ended

31.7.17

(Audited)


£000 

£000 

£000 





Profit before tax

921 

652 

4,037 

Share of profits from Joint Ventures

(14)

(20)

(42)

Depreciation

188 

185 

407 

Unrealised valuation surplus on investment properties

(614)

Profit on sale of property, plant and equipment

(37)

(18)

(39)

Profit on sale of investment properties

(613)

Profit on sale of available for sale financial assets

(6)

(22)

Change in retirement benefits

(523)

Interest received

(41)

(48)

(86)

Change in inventories

(2,360)

(120)

(197)

Change in receivables

223 

(188)

646 

Change in payables

(88)

(403)

(749)

 

CASH FLOWS FROM OPERATING ACTIVITIES

(1,208)

34 

2,205 

 

10.       RELATED PARTY TRANSACTION

 

Related parties are consistent with those disclosed in the Group's Annual Report and Statement of Accounts for the year to 31st July 2017.

 

Related party transactions, including salary and benefits provided to Directors and key management, were not material to the financial position or performance of the Group for the period.

 

 

 

 

 

 

 



STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

 

The Directors named below, confirm on behalf of the Board of Directors that to the best of their knowledge that the condensed consolidated interim financial statements for the six months to 31st January 2018 have been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the European Union.  The condensed consolidated interim financial statements include a fair review of the information required by Disclosure and Transparency Rules 4.2.7 and 4.2.8, being:

 

·     an indication of important events that have occurred during the six months to 31st January 2018 and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year, and

 

·     material related party transactions in the six months to 31st January 2018 and any material changes in the related party transactions described in the last annual report.

 

The Directors of the Company are listed in the Annual Report and Statement of Accounts for the year to 31st July 2017. 

 

 

By order of the Board










D.W. SMART, Director

J.R. SMART, Director



30th April 2018


 

 

 

 

 

 

 

 


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