Half-year Report

RNS Number : 8233U
Smart(J.)&Co(Contractors) PLC
11 April 2016
 

 

 

 

 

 

J. SMART & CO. (CONTRACTORS) PLC

 

 

 

 

 

 

 

 

 

 

 

INTERIM REPORT

 

FOR THE SIX MONTHS TO

 

31st JANUARY 2016  

 

 

 

 

J SMART & CO. (CONTRACTORS) PLC

 

CHAIRMAN'S REVIEW

 

 

INTERIM REPORT

Unaudited Group profit for the six months to 31st January 2016 amounted to £531,000 compared with £559,000 for the corresponding period last year.  Group turnover increased by 14%.  Own work capitalised increased by 156%.

 

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 little effect on the figures.

 

Residential forward sales and reservations have been buoyant at our City Park Development at Pilton Drive, Edinburgh, but will have no effect on revenue until the second half of the current year.

 

The first phase of our speculative industrial development at Bellshill Industrial Estate, Glasgow is making good progress with promising initial interest.

 

Current site progress in contracting is satisfactory.

 

 

INTERIM DIVIDEND

The Board announces an interim dividend of 0.92p per share (2015, 0.92p) to be paid on 31st May 2016 to shareholders on the register at the close of business on 6th May 2016.  The interim dividend will cost the Company no more than £422,000.

 

 

FUTURE PROSPECTS

We have approximately the same amount of work in hand in contracting compared with this time last year.  Margins are no better.

 

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

 

Occupancy levels and letting prospects in our industrial properties generally remain healthy.  While there is a slight improvement in our office property occupancy levels, void levels here remain unacceptably high.

 

The Scottish Government's decision to levy rates on empty industrial property, together with the uncertain political and economic climate, may have a negative effect on the year end valuation of our property portfolio, which would in turn reduce the potential headline profit for the current financial year.

 

Bearing in mind that there is at present no prospect of a repeat of last year's profit of £1,318,000 on property sales and joint venture property sales, underlying profit for the year is unlikely to achieve last year's figure of £3,755,000.

 

 

 

 

 

 

 

 

11th April 2016

J.M. SMART

Chairman

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

 

 

Notes

6 Months

ended

31.1.16

(Unaudited)

6 Months

ended

31.1.15

(Unaudited)

Year

ended

31.7.15

(Audited)

 

 

£000 

£000 

£000 

 

 

 

 

 

 

 

 

 

Group construction work carried out

 

10,746 

9,443 

21,556 

Less:  Own construction work capitalised

 

 (1,254)

 (489)

 (737)

REVENUE

 

9,492 

8,954 

20,819 

 

Cost of sales

 

(8,949)

(8,402)

(18,061)

 

 

 

 

 

GROSS PROFIT

 

543 

552 

2,758 

 

Other operating income

 

 

2,744 

2,588 

 

5,241 

Net operating expenses

 

 (2,842)

 (2,811)

  (5,839)

 

 

 

 

 

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

 

 

 

445 

329 

2,160

Profit arising on sale of investment properties

 

11 

60 

Net deficit on valuation of investment properties

 

  (211)

 

 

 

 

 

OPERATING PROFIT

 

445 

340 

2,009 

 

Share of profits in Joint Ventures

 

15 

142 

1,306 

Income from available for sale financial assets

 

15 

28 

Profit on sale of available for sale financial assets

 

Finance income

 

64 

61 

200 

 

 

 

 

 

PROFIT BEFORE TAX

 

531 

559 

3,544 

 

Taxation

 

5

 (105)

 (87)

 

   (546)

 

PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS

 

426 

472 

2,998 

 

EARNINGS PER SHARE - BASIC AND DILUTED

 

 

7

 

 

0.93p

 

 

1.01p

 

 

6.45p

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

6 Months

ended

31.1.16

(Unaudited)

6 Months

ended

31.1.15

(Unaudited)

Year

ended

31.7.15

(Audited)

 

 

£000 

£000 

£000 

Profit for the period

 

 

426 

 

472 

2,998 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

Items that may be subsequently reclassified to Income Statement:

 

 

Fair value adjustment of available for sale financial assets

(57)

(24)

(46)

Tax adjustment on fair value reserve

 

 

 

 

 

 

Total items which may be subsequently reclassified to Income Statement

 

 (57)

 (24)

 (46)

 

 

 

 

 

Items that will not be subsequently reclassified to Income Statement:

 

 

Actuarial loss recognised in defined benefit

pension scheme

 

 

 (1,003)

Deferred taxation on actuarial loss

 

201 

Total items that will not be subsequently reclassified to Income Statement

 

 (802)

 

Total other comprehensive loss

 

 (57)

 (24)

 (848)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX

 

369 

448 

2,150 

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

369 

448 

2,150 

 

 

 

 

 

 

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 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 2014

 

936 

72 

87,474

88,482

 

 

 

 

 

 

 

Profit for the period

 

472

472

Other comprehensive loss

(24)

(24)

Total comprehensive (loss)/income for period

(24)

472

448

 

 

 

 

 

 

 

TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(5)

(228)

(233)

Transfer to Capital Redemption Reserve

(5)

Dividends

6

(428)

(428)

TOTAL TRANSACTIONS WITH OWNERS

(5)

(661)

(661)

 

 

 

 

 

 

 

As at 31st January 2015

 

931 

77 

(24)

87,285

88,269

                 

 

 

 

 

 

 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total

 

 

£000 

£000 

£000

£000

£000

 

 

 

 

 

 

 

As at 1st August 2014

 

936 

72 

87,474

88,482

 

 

 

 

 

 

 

Profit for the period

 

2,998

2,998

Other comprehensive loss

(46)

(802)

(848)

Total comprehensive (loss)/income for period

(46)

2,196

2,150

 

 

 

 

 

 

 

TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(17)

(814)

(831)

Transfer to Capital Redemption Reserve

17

(17)

Dividends

6

(852)

(852)

TOTAL TRANSACTIONS WITH OWNERS

(17)

17 

(1,683)

(1,683)

 

 

 

 

 

 

 

As at 31st July 2015

 

919 

89 

(46)

87,987

88,949

                 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

 

 

 

 

6 Months

ended

31.1.16

(Unaudited)

6 Months

ended

31.1.15

(Unaudited)

Year

ended

31.7.15

(Audited)

 

 

£000 

£000 

£000 

 

NON-CURRENT ASSETS

 

 

 

 

 

Property, plant and equipment

 

1,347

1,281

1,382

Investment properties

 

64,516

63,286

63,231

Investments in Joint Ventures

 

282

1,428

267

Available for sale financial assets

 

280

354

337

Retirement benefit surplus

 

1,472

1,629

1,472

Deferred tax assets

 

      27

      23

     27

 

 

  67,924

  68,001

66,716

 

CURRENT ASSETS

 

 

 

 

Inventories

 

 8,521

 7,133

5,735

Trade and other receivables

 

6,338

8,086

4,508

Current tax asset

 

6

758

995

Monies held on deposit

 

4,508

3,502

Cash at bank and in hand

 

  20,013

  21,143

 26,047

 

 

  39,386

  37,120

 40,787

 

 

 

 

 

TOTAL ASSETS

 

107,310

105,121

107,503

 

NON-CURRENT LIABILITIES

 

 

 

 

Deferred tax liabilities

 

   1,830

   1,707

   1,830

 

CURRENT LIABILITIES

 

 

 

 

Trade and other payables

 

5,441

5,177

4,000

Bank overdraft

 

   11,288

   9,968

 12,724

 

 

 16,729

 15,145

 16,724

 

 

 

 

 

TOTAL LIABILITIES

 

 18,559

 16,852

 18,554

 

NET ASSETS

 

 

 88,751

 

 88,269

 

 88,949

 

EQUITY

 

 

 

 

Called up share capital

 

     916

     931

919

Capital redemption reserve

 

     92

     77

89

Fair value reserve

 

(103)

(24)

(46)

Retained earnings

 

  87,846

  87,285

 87,987

TOTAL EQUITY

 

  88,751

  88,269

 88,949

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

Notes

6 Months

ended

31.1.16

(Unaudited)

6 Months

ended

31.1.15

(Unaudited)

Year

ended

31.7.15

(Audited)

 

 

£000 

£000 

£000 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

9

 

 

(2,554)

 

 

(332)

 

   4,991

 

Tax received/(paid)

 

884 

143 

 

   (233)

 

NET CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

  (1,670)

 

 

  (189)

 

   4,758

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to property, plant and equipment

 

(154)

(79)

(483)

Additions to investment properties

 

(31)

(177)

(236)

Expenditure on own work capitalised - investment properties

 

 

(1,254)

 

(489)

 

(737)

Sale of property, plant and equipment

 

20 

18 

78 

Sale of investment properties

 

1,000 

1,000 

Purchase of available for sale financial assets

 

(378)

(383)

Proceeds of sale of available for sale financial assets

3,997 

3,997 

Increase in monies held on deposit

 

(1,006)

(3,502)

Interest received

 

64 

61 

117 

Dividend received from Joint Venture

 

2,327 

NET CASH FROM INVESTING ACTIVITIES

 

(2,361)

3,955 

2,178 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Purchase of own shares

 

   (142)

   (233)

   (831)

Dividends paid

 

   (425)

   (428)

   (852)

NET CASH FROM FINANCING ACTIVITIES

 

 

   (567)

 

   (661)

 

   (1,683)

 

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

 

   (4,598)

3,105 

5,253 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

 

13,323 

 

 

8,070 

 

 

8,070 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

 

 

8,725 

 

 

11,175 

 

 

13,323 

 

 

 

 

 

 

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 2016 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 2016 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 2016 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 2015, 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 2015 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 and available for sale financial assets.

 

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 2015, 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 2016.

 

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 2015.

 

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)

31.1.16

31.1.15

31.7.15

 

£000 

£000 

£000

£000 

£000 

£000

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 JANUARY 2015

(Unaudited)

 

 

 

 

 

 

Construction activities

8,954

489

9,443

(1,213)

Investment activities

 2,588

  2,588

 1,553 

 

11,542

489

12,031

340 

 

 

 

 

 

 

 

31st JULY 2015

(Audited)

 

 

 

 

 

 

Construction activities

20,819

737

21,556

(949)

Investment activities

  5,241

  5,241

 2,958 

 

26,060

737

26,797

 2,009 

 

OPERATING PROFIT

 

 

 

 

445 

340 

 2,009 

Share of results of Joint Ventures

 

 

 

15 

142 

1,306 

Finance and investment income and profit on sale of available

for sale financial assets

71 

77 

229 

PROFIT BEFORE TAX ON ORDINARY ACTIVITIES

531 

559 

3,544 

 

5.         TAXATION

 

The tax charge for the 6 months to 31st January 2016 is based on the corporation tax rate at 20.00% (2015, 20.67%).

 

 

6.         DIVIDENDS

 

6 Months

Ended

31.1.16

(Unaudited)

6 Months

Ended

31.1.15

(Unaudited)

Year

Ended

31.7.15

(Audited)

 

£000 

£000 

£000 

 

ORDINARY DIVIDENDS

 

 

 

2015 Final dividend of 2.10p, after waivers

425 

2015 Interim dividend of 0.92p

424 

2014 Final dividend of 2.04p, after waivers

428 

428 

 

 425 

 428 

852 

 

The interim dividend of 0.92p per share for the year to 31st July 2016 will be paid on 31st May 2016 to shareholders on the register at 6th May 2016.  The interim dividend will cost the Company no more than £422,000.

 

7.         EARNINGS PER SHARE

 

Profit

attributable

to equity

shareholders

 

Basic

Earnings per share

 

£000 

 

 

6 months to 31st January 2016

 

 426 

 

 0.93p

 

6 months to 31st January 2015

 

 472 

 

 1.01p

 

Year to 31st July 2015

 

 2,998 

 

6.45p

 

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 2016 the Company purchased for immediate cancellation 135,000 Ordinary Shares of 2p.

 

The earnings per share for the 6 months to 31st January 2016 is based on weighted average number of shares amounting to 45,956,844, the earnings per share for the 6 months to 31st January 2015 is based on a weighted average number of shares amounting to 46,769,057 and the earnings per share for the year to 31st July 2015 is based on a weighted average number of shares amounting to 46,515,809.

 

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

 

 

 8.         FAIR VALUE ASSETS

 

The Group's investment properties and available for sale financial assets 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.  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

31.1.16

(Unaudited)

6 Months

ended

31.1.15

(Unaudited)

Year

ended

31.7.15

(Audited)

 

£000 

£000 

£000 

 

 

 

 

Profit before tax

531 

559 

3,544 

Share of profits from Joint Ventures

(15)

(142)

(1,306)

Depreciation

184 

167 

450 

Unrealised valuation deficit on investment properties

211 

Profit on sale of property, plant and equipment

(15)

(7)

(47)

Profit on sale of investment properties

(11)

(60)

Profit on sale of available for sale financial assets

(1)

(1)

Change in retirement benefits

(846)

Interest received

(64)

(61)

(117)

Change in inventories

(2,786)

(887)

711 

Change in current receivables

(1,830)

(983)

2,595 

Change in payables

1,441 

1,034 

(143)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

    (2,554)

 

    (332)

4,991 

 

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 2015.

 

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' RESPONSIBILITES

 

 

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 2016 have been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the European Union.  The condensed consolidated interim financial statement includes 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 2016 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 2016 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 2015. 

 

 

By order of the Board

 

 

 

 

 

 

 

 

 

J.M. SMART, Director

D.W. SMART, Director

 

 

11th April 2016

 

 

 

 

 

 

 

 

 


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