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Final Results

Released 10:53 25-Oct-2018

RNS Number : 1905F
Smart(J.)&Co(Contractors) PLC
25 October 2018
 

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2018

PRELIMINARY STATEMENT

 

ACCOUNTS

 

Headline Group profit for the year before tax, including an unrealised surplus in revalued property and a profit on unforeseen sales in a joint venture company, was £5,253,000 compared with £4,037,000 last year 

 

As forecast, underlying profit before tax for the year of £2,394,000 (including £460,000 profit from sales in a joint venture company) was less than last year's figure of £3,423,000 (including £613,000 profit from property sales).  As before, our view is that 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 2.21p making a total of 3.16p which compares with 3.12p for the previous year.  After waivers by members holding over 50% of the shares, the Final Dividend will cost the Company no more than £402,000.

 

TRADING ACTIVITIES

 

Group construction activities including private residential sales decreased by 51%.  Own work capitalised decreased by 28% and headline Group profit increased by 30%.  If you disregard the unexpected property sales in a joint venture company, headline Group profit would have increased by 19%.  Underlying Group profit decreased by 30%.  If you disregard the unexpected property sales in a joint venture company, underlying Group profit would have decreased by 44%.

 

Turnover in contracting was less than last year and the loss increased.  As forecast there were no private residential sales this year.  Sales in precast concrete manufacture have decreased and a substantial loss has been incurred.

 

The social housing contracts at Fleming Place, Edinburgh are now both complete.  The social housing contract at Ferrymuir, as predicted, did not commence in April 2018.  Construction has now commenced at Ferrymuir, albeit after the end of the financial year.

 

The build contract for the Affordable Housing at the West Bowling Green Street development did commence prior to the end of the financial year.

 

Progress at the mixed development at West Bowling Green Street has been satisfactory and reservations for the private residential sale element of the development have been encouraging.  The first completions and private residential sales should occur in the current financial year.

 

Through the joint venture company, Duff Street Limited, as alluded to above, an unanticipated profit was realised through the sale of 15 no. private residential flats.  These flats had been let to tenants for a number of years and following an off-market approach from a prospective purchaser, it was agreed to sell the flats.  The joint venture company will be wound up in due course.

 

The occupancy levels at our industrial estates, across all size brackets, remain positive.  Rental growth has continued over the range of different sized industrial units and locations through lettings of new stock and re-lettings/rent review settlements of existing stock.

 

The second phases at Inchwood Park, Bathgate and West Edinburgh Business Park, South Gyle are now complete.  The second phase at Inchwood Park is now 100% let and the second phase of West Edinburgh Business Park is 75% let.  The joint venture company, Gartcosh Estates LLP, has been formed and work has commenced on the first medium sized industrial unit at Gartcosh, with completion in early 2019.  Two other medium sized industrial units may follow at Gartcosh, depending on the outcome of the letting of the first unit.

 

Whilst not quite as prolific as our industrial stock, the voids in our office properties have been reduced through new lettings and prospects for further lettings look promising.  The first serviced office suite at Links Place, Leith, Edinburgh through our subsidiary company, Smart Serviced Offices Limited, is now fully let.  A second suite at Links Place has been converted to co-working space, and whilst letting in this suite has been slow, this and the serviced office operation has continued to assist in attracting prospective tenants to the building.

 

The planning application for the third phase of industrial development at West Edinburgh Business Park has been concluded positively and will be issued shortly.  The planning application for a residential development at Rosyth has been submitted, but will take time to be determined.

 

 

FUTURE PROSPECTS

 

Work in hand in contracting is less than last year.  Whilst we have some potential site acquisitions and tender work on the horizon in the Housing Association sector, it is by no means certain whether new contracting work will be secured this financial year.

 

There will be private housing sales this year, and as mentioned above, the level of reservations at West Bowling Green Street is promising.  Property valuation levels, yet again, have continued to improve since last year.  It is difficult to gauge, due to the current political uncertainty, quite whether the confidence in the housing market and the commercial property market will continue or at some point may stall.

 

At this stage it is difficult to make an informed forecast for the outcome for the current year, however it seems unlikely that the underlying profit will improve.

 

   

 

 

DAVID W. SMART

 

Chairman

 

CONSOLIDATED INCOME STATEMENT

for the year ended 31st JULY 2018

 

 

 

 

 

2018 

 

2017 

 

 

Unaudited

 

Audited

 

 

£000 

 

£000 

 

 

 

 

 

Group construction activities

 

12,502 

 

25,419 

Less: Own construction work capitalised

 

(1,847)

 

(2,559)

 

 

 

 

 

 

REVENUE

 

10,655 

 

22,860 

 

 

 

 

 

Cost of sales

 

(8,118)

 

(19,406)

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

2,537 

 

3,454 

 

 

 

 

 

Other operating income

 

6,352 

 

6,090 

Net operating expenses

 

(7,185)

 

(6,925)

 

 

 

 

 

 

 

 

 

 

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

 

1,704 

 

2,619 

 

 

 

 

 

Profit on sale of investment properties

 

 

613 

Net surplus on valuation of investment properties

 

2,859 

 

614 

 

 

 

 

 

OPERATING PROFIT

 

4,563 

 

3,846 

 

 

 

 

 

Share of profits in Joint Ventures

 

463 

 

42 

Income from available for sale financial assets

 

43 

 

32 

Profit on sale of available for sale financial assets

 

 

22 

Finance income

 

180 

 

95 

 

 

 

 

 

PROFIT BEFORE TAX

 

5,253 

 

4,037 

 

 

 

 

 

Taxation

 

(402)

 

(310)

 

 

 

 

 

 

 

 

 

 

PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS

 

4,851 

 

3,727 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC AND DILUTED

 

10.90p

 

8.26p

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2018

                                                                                                                          

 

 

 

 

 

2018 

 

2017 

 

Unaudited

 

Audited

 

£000 

 

£000 

 

 

 

 

PROFIT FOR THE YEAR

4,851 

 

3,727 

 

 

 

 

OTHER COMPREHENSIVE INCOME

 

 

 

Items that may be subsequently reclassified to the Income Statement:

 

 

 

Fair value adjustment of available for sale financial assets

104 

 

65 

Tax adjustment on fair value reserve

(13)

 

 

 

 

 

TOTAL ITEMS WHICH MAY BE SUBSEQUENTLY RECLASSIFIED TO INCOME STATEMENT

91 

 

65 

 

 

 

 

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

 

 

 

Actuarial gain recognised in defined benefit pension scheme

111 

 

3,306 

Deferred taxation on actuarial gain

(19)

 

(680)

 

 

 

 

TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFIED TO INCOME STATEMENT

92 

 

2,626 

 

 

 

 

TOTAL OTHER COMPREHENSIVE INCOME

183 

 

2,691 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX

5,034

 

6,418

 

 

 

 

 

 

 

 

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

5,034

 

6,418

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2018

 

 

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

 

Total 

 

£000 

£000 

£000 

£000 

 

£000 

 

 

 

 

 

 

 

At 1st August 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 (audited)

896 

112

92,841 

 

93,858

 

 

 

 

 

 

 

Profit for the year

4,851 

 

4,851 

Other comprehensive income

91 

92 

 

183 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

91 

4,943 

 

5,034 

 

 

 

 

 

 

 

TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

 

 

Shares purchased and cancelled

(16)

(892)

 

(908)

Transfer to capital redemption reserve

16

(16)

 

Dividends

(1,391)

 

(1,391)

TOTAL TRANSACTIONS WITH OWNERS

(16)

16

(2,299)

 

(2,299)

 

 

 

 

 

 

 

At 31st July 2018 (unaudited)

880 

128

100 

95,485 

 

96,593

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31st JULY 2018

 

 

2018 

 

2017 

 

Unaudited

 

Audited

 

£000 

 

£000 

NON-CURRENT ASSETS

 

 

 

Property, plant and equipment

1,308 

 

1,431 

Investment properties

69,532 

 

64,799 

Investments in Joint Ventures

68 

 

305 

Trade and other receivables

857 

 

Available for sale financial assets

1,099 

 

1,000 

Retirement benefit surplus

4,205 

 

3,862 

Deferred tax asset

94 

 

58 

 

 

 

 

 

77,163 

 

71,455 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

Inventories

8,807 

 

2,881 

Trade and other receivables

4,540 

 

5,723 

Monies held on deposit

48 

 

2,536 

Cash and cash equivalents

23,586 

 

26,524 

 

 

 

 

 

36,981 

 

37,664 

 

 

 

 

 

 

 

 

TOTAL ASSETS

114,144 

 

109,119 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

Deferred tax liabilities

1,995 

 

1,923 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

Trade and other payables

3,580 

 

4,385 

Current tax liability

118 

 

162 

Bank overdraft

11,858 

 

8,791 

 

 

 

 

 

15,556 

 

13,338 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

17,551 

 

15,261 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

96,593 

 

93,858 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

Called up share capital

880 

 

896 

Capital redemption reserve

128 

 

112 

Fair value reserve

100 

 

Retained earnings

95,485 

 

92,841 

 

 

 

 

TOTAL EQUITY

96,593 

 

93,858 

                                                                                                                          

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31st JULY 2018

 

 

2018 

 

2017 

 

Unaudited

 

Audited

 

£000 

 

£000 

 

 

 

 

Profit before tax

5,253 

 

4,037 

Share of profits from Joint Ventures

(463)

 

(42)

Depreciation

427 

 

407 

Impairment of assets

116 

 

Unrealised valuation surplus on investment properties

(2,859)

 

(614)

Profit on sale of property, plant and equipment

(59)

 

(39)

Profit on sale of investment properties

 

(613)

Profit on sale of available for sale financial assets

(4)

 

(22)

Change in retirement benefits

(232)

 

(523)

Interest received

(80)

 

(86)

Change in inventories

(5,926)

 

(197)

Change in receivables - non-current

(857)

 

Change in receivables - current

1,183 

 

646 

Change in payables

(805)

 

(749)

 

 

 

 

 

(4,306)

 

2,205 

Tax paid

(442)

 

(454)

 

 

 

 

NET CASH FLOWS FROM OPERATING ACTIVITIES

(4,748)

 

1,751 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Additions to property, plant and equipment

(454)

 

(487)

Additions to investment properties

(27)

 

(20)

Expenditure on own work capitalised - investment properties

(1,847)

 

(2,559)

Sale of property, plant and equipment

93 

 

70 

Sale of investment properties

 

3,735 

Purchase of available for sale financial assets

 

(674)

Proceeds of sale of available for sale financial assets

 

87 

Decrease on monies held on deposit

2,488 

 

2,983 

Interest received

80 

 

86 

Dividend from Joint Ventures

700 

 

 

 

 

 

NET CASH FLOWS FROM INVESTING ACTIVITIES

1,042 

 

3,221 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Purchase of own shares

(908)

 

(550)

Dividends paid

(1,391)

 

(846)

 

 

 

 

NET CASH FLOWS FROM FINANCING ACTIVITIES

(2,299)

 

(1,396)

 

 

 

 

 

 

 

 

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(6,005)

 

3,576 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

17,733 

 

14,157 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

11,728 

 

17,733 

 

 

 

 

 

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 2018 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 2018 and the unaudited financial information included in this preliminary statement and the accounting policies disclosed in the 2017 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 2018 but these have had no material impact on the financial statements:

 

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

·      IAS 12 (amended): Income Taxes

 

 

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 2017 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

 

 

2018 

 

2017 

 

£000 

 

£000 

 

Unaudited

 

Audited

Ordinary dividends

 

 

 

2016 Final dividend of 2.15p per share, after waivers

 

418 

2017 Interim dividend of 0.95p per share

 

428 

2017 Final dividend of 2.17p per share

968 

 

2018 Interim dividend of 0.95p per share

423 

 

 

 

 

 

 

1,391 

 

846 

 

 

 

 

 

The Company is proposing a final dividend of 2.21p per share for the year to 31st July 2018 which, after waivers, will cost the Company no more than £402,000.

 

The dividend if approved will be paid on 19th December 2018 to shareholders on the Register at the close of business on 23rd November 2018.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Final Results - RNS