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RNS

Half-year Report

Released 11:25 18-Apr-2017

RNS Number : 5938C
Smart(J.)&Co(Contractors) PLC
18 April 2017
 

 

 

J. SMART & CO. (CONTRACTORS) PLC

 

 

 

 

INTERIM REPORT

 

FOR THE SIX MONTHS TO

 

31st JANUARY 2017

 

 

 

 

 

J SMART & CO. (CONTRACTORS) PLC

 

CHAIRMAN'S REVIEW

 

 

INTERIM REPORT

 

Unaudited Group profit for the six months to 31st January 2017 amounted to £652,000 compared with £531,000 for the corresponding period last year.  Group turnover increased by 13%.  Own work capitalised decreased by 83%.

 

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 material effect on the figures.

 

Residential sales were substantially less than the previous half year due to a hiatus between development starts.  Private residential construction activity should recommence by the end of this financial year.

 

We have commenced construction of the second phases of our industrial developments at West Edinburgh Business Park, South Gyle, Edinburgh and Inchwood Business Park, Bathgate.  This follows successful lettings at both sites and pre-lets at Bathgate.

 

Current site progress in contracting is satisfactory.

 

 

INTERIM DIVIDEND

 

The Board announces an interim dividend of 0.95p per share (2016, 0.92p) to shareholders on the register at the close of business on 5th May 2017.  The interim dividend will cost the Company no more than £429,000.

 

 

FUTURE PROSPECTS

 

We have considerably less work in hand in contracting compared with the same time last year.  Margins remain disappointing.

 

Private residential sales numbers for the current financial year will be substantially less than the previous year.

 

Occupation and re-letting levels in our industrial properties remain buoyant.  Letting of our office properties continues to be difficult. 

 

Uncertainties generated by the ongoing political/economic situation may well reduce property values by the end of the current financial year which, under the rules of the International Financial Reporting Standards, would have a negative effect on headline results for the year.

 

While it is not possible to make an accurate forecast of the year end figures it is evident that because of costs arising from redundancies and reduced turnover in the second half of the financial year we will not achieve last year's underlying profit.

 

 

 

18th April 2017

J.M. SMART

Chairman

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

Notes

6 Months

ended

31.1.17

(Unaudited)

6 Months

ended

31.1.16

(Unaudited)

Year

ended

31.7.16

(Audited)

 

 

£000 

£000 

£000 

 

 

 

 

 

 

 

 

 

Group construction activities

 

12,195 

10,746 

30,682 

Less:  Own construction work capitalised

 

 (209)

 (1,254)

 (1,655)

REVENUE

 

11,986 

9,492 

29,027 

 

Cost of sales

 

(11,240)

(8,949)

(25,260)

 

 

 

 

 

GROSS PROFIT

 

746 

543 

3,767 

 

Other operating income

 

 

2,941 

2,744 

 

5,520 

Net operating expenses

 

 (3,119)

 (2,842)

  (6,095)

 

 

 

 

 

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

 

 

 

568 

445 

3,192

Profit arising on sale of investment properties

 

186 

Net surplus on valuation of investment properties

 

136 

 

 

 

 

 

OPERATING PROFIT

 

568 

445 

3,514 

 

Share of profits in Joint Ventures

 

20 

15 

33 

Income from available for sale financial assets

 

10 

14 

Profit on sale of available for sale financial assets

 

Finance income

 

48 

64 

191 

 

 

 

 

 

PROFIT BEFORE TAX

 

652 

531 

3,752 

 

Taxation

 

5

 (135)

 (105)

 

   (264)

 

PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS

 

517 

426 

3,488 

 

EARNINGS PER SHARE - BASIC AND DILUTED

 

 

7

 

 

1.14p

 

 

0.93p

 

 

7.61p

 

 

                                                                                             

 

 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

6 Months

ended

31.1.17

(Unaudited)

6 Months

ended

31.1.16

(Unaudited)

Year

ended

31.7.16

(Audited)

 

 

£000 

£000 

£000 

Profit for the period

 

 

517 

 

426 

3,488 

 

 

 

 

 

Other comprehensive income/(loss)

 

 

 

 

Items that may be subsequently reclassified to Income Statement:

 

 

Fair value adjustment of available for sale financial assets

34 

(57)

(10)

 

 

 

 

 

Total items which may be subsequently reclassified to Income Statement

 

34 

 (57)

 (10)

 

 

 

 

 

Items that will not be subsequently reclassified to Income Statement:

 

 

Actuarial loss recognised in defined benefit

pension scheme

 

 

 (2,256)

Deferred taxation on actuarial loss

 

215 

Total items that will not be subsequently reclassified to Income Statement

 

 (2,041)

 

Total other comprehensive income/(loss)

 

34 

 (57)

 (2,051)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX

 

551 

369 

1,437 

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

551 

369 

1,437 

 

 

  

 

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 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 2015

 

919 

89 

(46)

87,987

88,949

 

 

 

 

 

 

 

Profit for the period

 

426

426

Other comprehensive loss

(57)

(57)

Total comprehensive (loss)/income for period

(57)

426

369

 

 

 

 

 

 

 

TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(3)

(139)

(142)

Transfer to Capital Redemption Reserve

(3)

Dividends

6

(425)

(425)

Total transactions with owners

(3)

(567)

(567)

 

 

 

 

 

 

 

As at 31st January 2016

 

916 

92 

(103)

87,846

88,751

                 

 

 

 

 

 

 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total

 

 

£000 

£000 

£000

£000

£000

 

 

 

 

 

 

 

As at 1st August 2015

 

919 

89 

(46)

87,987

88,949

 

 

 

 

 

 

 

Profit for the period

 

3,488

3,488

Other comprehensive loss

(10)

(2,041)

(2,051)

Total comprehensive (loss)/income for period

(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

6

(846)

(846)

Total transactions with owners

(13)

13 

(1,550)

(1,550)

 

 

 

 

 

 

 

As at 31st July 2016

 

906 

102 

(56)

87,884

88,836

                 

 

 

 

  

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

 

 

6 Months

ended

31.1.17

(Unaudited)

6 Months

ended

31.1.16

(Unaudited)

Year

ended

31.7.16

(Audited)

 

 

£000 

£000 

£000 

 

NON-CURRENT ASSETS

 

 

 

 

 

Property, plant and equipment

 

1,365

1,347

1,382

Investment properties

 

64,937

64,516

64,728

Investments in Joint Ventures

 

283

282

263

Available for sale financial assets

 

1,003

280

326

Retirement benefit surplus

 

33

1,472

33

Deferred tax assets

 

      41

      27

     41

 

 

  67,662

  67,924

66,773

 

CURRENT ASSETS

 

 

 

 

Inventories

 

 2,804

 8,521

2,684

Trade and other receivables

 

6,557

6,338

6,369

Current tax asset

 

6

Monies held on deposit

 

4,529

4,508

5,519

Cash and cash equivalents

 

  26,013

  20,013

 26,785

 

 

  39,903

  39,386

 41,357

 

 

 

 

 

TOTAL ASSETS

 

107,565

107,310

108,130

 

NON-CURRENT LIABILITIES

 

 

 

 

Deferred tax liabilities

 

   1,389

   1,830

   1,389

 

CURRENT LIABILITIES

 

 

 

 

Trade and other payables

 

4,731

5,441

5,134

Corporation tax liability

 

121

143

Bank overdraft

 

   12,536

   11,288

 12,628

 

 

 17,388

 16,729

 17,905

 

 

 

 

 

TOTAL LIABILITIES

 

 18,777

 18,559

 19,294

 

NET ASSETS

 

 

 88,788

 

 88,751

 

 88,836

 

EQUITY

 

 

 

 

Called up share capital

 

     903

     916

906

Capital redemption reserve

 

     105

     92

102

Fair value reserve

 

(22)

(103)

(56)

Retained earnings

 

  87,802

  87,846

 87,884

TOTAL EQUITY

 

  88,788

  88,751

 88,836

 

 

 

 

 CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

Notes

6 Months

ended

31.1.17

(Unaudited)

6 Months

ended

31.1.16

(Unaudited)

Year

ended

31.7.16

(Audited)

 

 

£000 

£000 

£000 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

9

34 

 

 

(2,554)

 

   5,197

 

Tax (paid)/received

 

(157)

884 

 

  634

 

NET CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

  (123)

 

 

  (1,670)

 

   5,831

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to property, plant and equipment

 

(189)

(154)

(488)

Additions to investment properties

 

(31)

(45)

Expenditure on own work capitalised - investment properties

 

 

(209)

 

(1,254)

 

(1,655)

Sale of property, plant and equipment

 

39 

20 

70 

Sale of investment properties

 

525 

Purchase of available for sale financial assets

 

(674)

Proceeds of sale of available for sale financial assets

37 

Decrease/(increase) in monies held on deposit

 

990 

(1,006)

(2,017)

Interest received

 

48 

64 

125 

Dividend received from Joint Venture

 

37 

NET CASH FLOWS FROM INVESTING ACTIVITIES

 

42 

(2,361)

 

(3,447)

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Purchase of own shares

 

   (181)

   (142)

   (704)

Dividends paid

 

   (418)

   (425)

   (846)

NET CASH FLOWSFROM FINANCING ACTIVITIES

 

 

   (599)

 

   (567)

 

   (1,550)

 

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

 

   (680)

 

   (4,598)

834 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

 

14,157 

 

 

13,323 

 

 

13,323 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

 

 

13,477 

 

 

8,725 

 

 

14,157 

 

 

 

 

 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 2017 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 2017 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 2017 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 2016, 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 2016 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 auditors.  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 2016, 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

There are no new standards or amendments to standards or interpretations issued by the International Accounting Standards Board which are mandatory for the Group for the first time in the financial year to 31st July 2017.

 

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 2016.

 

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)

31.1.17

31.1.16

31.7.16

 

£000 

£000 

£000

£000 

£000 

£000

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 JANUARY 2016

(Unaudited)

 

 

 

 

 

 

Construction activities

9,492

1,254

10,746

(1,190)

Investment activities

 2,744

  2,744

 1,635 

 

12,236

1,254

13,490

445 

 

 

 

 

 

 

 

31st JULY 2016

(Audited)

 

 

 

 

 

 

Construction activities

29,027

1,655

30,682

(102)

Investment activities

  5,520

  5,520

 3,616 

 

34,547

1,655

36,202

 3,514 

 

OPERATING PROFIT

 

 

 

 

568 

445 

 3,514 

Share of results of Joint Ventures

 

 

 

20 

15 

33 

Finance and investment income and profit on sale of available

for sale financial assets

64 

71 

205 

PROFIT BEFORE TAX ON ORDINARY ACTIVITIES

652 

531 

3,752 

 

5.         TAXATION

 

The tax charge for the 6 months to 31st January 2017 is based on the corporation tax rate at 19.67% (2016, 20.00%).

 

 

6.         DIVIDENDS

 

6 Months

Ended

31.1.17

(Unaudited)

6 Months

Ended

31.1.16

(Unaudited)

Year

Ended

31.7.16

(Audited)

 

£000 

£000 

£000 

 

ORDINARY DIVIDENDS

 

 

 

2016 Final dividend of 2.15p, after waivers

418 

2016 Interim dividend of 0.92p

421 

2015 Final dividend of 2.10p, after waivers

425 

425 

 

 418 

 425 

846 

 

The interim dividend of 0.95p per share for the year to 31st July 2017 will be paid on 5th June 2017 to shareholders on the register at 5th May 2017.  The interim dividend will cost the Company no more than £429,000.

 

7.         EARNINGS PER SHARE

 

6 Months

Ended

31.1.17

(Unaudited)

6 Months

Ended

31.1.16

(Unaudited)

Year

Ended

31.7.16

(Audited)

 

Profit attributable to equity shareholders (£000)

 

 517 

 

 426 

 

 3,488 

 

Basic earnings per share

 

 1.14p

 

 0.93p

 

7.61p

 

Weighted average number of shares

 

 45,216,991

 

45,956,844

 

45,845,272

 

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 2017 the Company purchased for immediate cancellation 170,000 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

31.1.17

(Unaudited)

6 Months

ended

31.1.16

(Unaudited)

Year

ended

31.7.16

(Audited)

 

£000 

£000 

£000 

 

 

 

 

Profit before tax

652 

531 

3,752 

Share of profits from Joint Ventures

(20)

(15)

(33)

Depreciation

185 

184 

465 

Unrealised valuation surplus on investment properties

(136)

Profit on sale of property, plant and equipment

(18)

(15)

(47)

Profit on sale of investment properties

(186)

Profit on sale of available for sale financial assets

(6)

Change in retirement benefits

(817)

Interest received

(48)

(64)

(125)

Change in inventories

(120)

(2,786)

3,051 

Change in receivables

(188)

(1,830)

(1,861)

Change in payables

(403)

1,441 

1,134 

 

CASH FLOWS FROM OPERATING ACTIVITIES

34 

 

    (2,554)

5,197 

 

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 2016.

 

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 2017 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 2017 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 2017 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 2016. 

 

 

By order of the Board

 

 

 

 

 

 

 

 

 

J.M. SMART, Director

D.W. SMART, Director

 

 

18th April 2017

 

 

 

 

 

 

 

 

 


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