Half Yearly Report

RNS Number : 5704I
Smart(J.)&Co(Contractors) PLC
26 March 2015
 



  

 

J. SMART & CO. (CONTRACTORS) PLC

 

  

 

 

  

 

 

 

 

 

 

INTERIM REPORT

 

FOR THE SIX MONTHS TO

 

31st JANUARY 2015



J SMART & CO. (CONTRACTORS) PLC

 

CHAIRMAN'S REVIEW

 

 

INTERIM REPORT

Unaudited Group profit for the six months to 31st January 2015 amounted to £559,000 compared with a profit of £441,000 for the corresponding period last year.  Group turnover increased by 5%.  Own work capitalised decreased by 2%.

 

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 sales were well down on the previous half year due to a lull between development starts.  However, forward sales and reservations at our City Park Development at Pilton Drive, Edinburgh are promising.

 

There are no commercial or industrial developments underway at present, although we anticipate recommencing industrial development by the Autumn.

 

Current site progress in contracting is satisfactory.

 

 

INTERIM DIVIDEND

The Board announces an interim dividend of 0.92p per share (2014, 0.92p) to be paid on 1st June 2015 to shareholders on the register at the close of business on 8th May 2015.  The interim dividend will cost the Company no more than £429,000.

 

 

FUTURE PROSPECTS

We have substantially more work in hand in contracting than at this time last year. Margins continue to be a challenge.

 

Private residential sales prospects are good.  However, sales numbers for the current financial year will be substantially less than the previous year.

 

Occupancy levels and letting prospects with regard to our industrial properties are healthy.  Void levels in our office properties remain unacceptably high although letting prospects here appear slightly brighter.

 

There are too many uncertainties to forecast the headline profit for the current year with any degree of accuracy.  However, I estimate that underlying profit for the year should at least approximate to last year's underlying profit of £1,764,000.

 

 

 

  

 

 

 

26th March 2015

J.M. SMART

Chairman

 



CONSOLIDATED INCOME STATEMENT

 


 

 

 

Notes

6 Months

ended

31.1.15

(Unaudited)

6 Months

ended

31.1.14

(Unaudited)

Year

ended

31.7.14

(Audited)



£000 

£000 

£000 

 

 

 

 


 

 

 

 

Group construction work carried out


9,443 

9,029 

24,805 

Less:  Own construction work capitalised


 (489)

 (497)

 (1,994)

REVENUE


8,954 

8,532 

22,811 

 

Cost of sales


(8,402)

(8,373)

(22,521)






GROSS PROFIT


552 

159 

290 

 

Other operating income

 

 

2,588 

2,725 

 

5,253 

Net operating expenses


 (2,811)

 (2,639)

  (5,652)






OPERATING PROFIT/(LOSS) BEFORE PROFIT ON SALE AND NET DEFICIT ON VALUATION OF INVESTMENT PROPERTIES

 

 

 

329 

245 

  (109)

Profit arising on sale of investment properties


11 

Net deficit on valuation of investment properties


  (782)






OPERATING PROFIT/(LOSS)


340 

245 

   (891)

 

Share of profits in Joint Ventures


142 

121 

469 

Income from available for sale financial assets


15 

66 

143 

Profit/(loss) on sale of available for sale financial assets


 (22)

1,299 

Finance income


61 

31 

187 






PROFIT BEFORE TAX


559 

441 

1,207 

 

Taxation

 

5

 (87)

 (72)

 

   (182)

 

PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS


472 

369 

1,025 

 

EARNINGS PER SHARE - BASIC AND DILUTED

 

 

7

 

 

1.01p

 

 

0.78p

 

 

2.18p

 

 

 

 

 

 



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


 

 

 

6 Months

ended

31.1.15

(Unaudited)

6 Months

ended

31.1.14

(Unaudited)

Year

ended

31.7.14

(Audited)



£000 

£000 

£000 

Profit for the period


 

472 

 

369 

1,025 






Other comprehensive loss





Items that may be subsequently reclassified to Income Statement:



Fair value adjustment of available for sale financial assets

 (24)

 (87)

 (1,266)

Tax adjustment on fair value reserve


19 

180 






Total items which may be subsequently reclassified to Income Statement


 (24)

 (68)

 (1,086)






Items that will not be subsequently reclassified to Income Statement:



Actuarial loss recognised in defined benefit

pension scheme

 

 

 (1,793)

Deferred taxation on actuarial loss


358 

Total items that will not be subsequently reclassified to Income Statement


 (1,435)

 

Total other comprehensive loss


 (24)

 (68)

 (2,521)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD, NET OF TAX


448 

301 

 (1,496)

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

448 

301 

 (1,496)

 

 

 

 

 



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 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 2013


942 

66 

1,086 

89,031

91,125








Profit for the period


369

369

Other comprehensive loss

(68)

(68)

Total comprehensive (loss)/income for period

(68)

369

301








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(2)

(121)

(123)

Transfer to Capital Redemption Reserve

(2)

Dividends

6

(430)

(430)

TOTAL TRANSACTIONS WITH OWNERS

(2)

(553)

(553)








As at 31st January 2014


940 

68 

1,018

88,847

90,873

 

 

 


 

 

Notes

Share Capital

Capital Redemption Reserve

Fair Value Reserve

Retained Earnings

Total



£000 

£000 

£000

£000

£000








As at 1st August 2013


942 

66 

1,086

89,031

91,125








Profit for the period


1,025

1,025

Other comprehensive loss

(1,086)

(1,435)

(2,521)

Total comprehensive loss for period

(1,086)

(410)

(1,496)








TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY

 

Shares purchased and cancelled

(6)

(279)

(285)

Transfer to Capital Redemption Reserve

6

(6)

Dividends

6

(862)

(862)

TOTAL TRANSACTIONS WITH OWNERS

(6)

(1,147)

(1,147)








As at 31st July 2014


936 

72 

87,474

88,482

 

 

 

 

 

  



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 


 

 

 

 

6 Months

ended

31.1.15

(Unaudited)

6 Months

ended

31.1.14

(Unaudited)

Year

ended

31.7.14

(Audited)



£000 

£000 

£000 

 

NON-CURRENT ASSETS



 

 


Property, plant and equipment


1,281

1,208

1,380

Investment properties


63,286

62,873

63,609

Investments in Joint Ventures


1,428

940

1,288

Trade and other receivables


1,055

Available for sale financial assets


354

3,902

Retirement benefit surplus


1,629

2,567

1,629

Deferred tax assets


      23

      109

     23



  68,001

  72,654

67,929

 

CURRENT ASSETS





Inventories


 7,133

 13,425

6,246

Trade and other receivables


8,086

7,413

11,099

Current tax asset


758

316

988

Cash at bank and in hand


  21,143

  12,786

 16,802



  37,120

  33,940

  35,135






TOTAL ASSETS


105,121

106,594

103,064

 

NON-CURRENT LIABILITIES





Deferred tax liabilities


   1,707

   2,030

   1,707

 

CURRENT LIABILITIES





Trade and other payables


5,177

3,824

4,143

Bank overdraft


   9,968

   9,867

 8,732



 15,145

 13,691

 12,875






TOTAL LIABILITIES


 16,852

 15,721

 14,582

 

NET ASSETS


 

 88,269

 

 90,873

 

 88,482

 

EQUITY





Called up share capital


     931

     940

936

Capital redemption reserve


     77

     68

72

Fair value reserve


(24)

1,018

Retained earnings


  87,285

  88,847

 87,474

TOTAL EQUITY


  88,269

  90,873

 88,482

 

 

 

  



CONSOLIDATED STATEMENT OF CASH FLOWS

 


 

 

 

Notes

6 Months

ended

31.1.15

(Unaudited)

6 Months

ended

31.1.14

(Unaudited)

Year

ended

31.7.14

(Audited)



£000 

£000 

£000 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

8

 

 

(332)

 

 

(883)

 

   7,208

 

Tax received/(paid)


143 

 

   (298)

 

   (798)

 

NET CASH FLOW FROM OPERATING ACTIVITIES


 

 

  (189)

 

 

  (1,181)

 

   6,410

 

CASH FLOWS FROM INVESTING ACTIVITIES





Additions to property, plant and equipment


(79)

(99)

(582)

Additions to investment properties


(177)

(51)

(72)

Sale of property, plant and equipment


18 

85 

Sale of investment properties


1,000 

Expenditure on own work capitalised - investment properties


 

(489)

 

(497)

 

(1,994)

Purchase of available for sale financial assets


(378)

(406)

(406)

Proceeds of sale of available for sale financial assets


3,997 

212 

260 

Acquisition of investment in subsidiary, net of cash acquired


(39)

(39)

Interest received


61 

31 

62 

Dividend received from Joint Venture


NET CASH FROM INVESTING ACTIVITIES


3,955 

 

 (840)

 

(2,686)

 

CASH FLOWS FROM FINANCING ACTIVITIES





Purchase of own shares


   (233)

   (123)

   (285)

Dividends paid


   (428)

   (430)

   (862)

NET CASH FROM FINANCING ACTIVITIES


 

   (661)

 

   (553)

 

   (1,147)

 

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


3,105 

 

 

  (2,574)

2,577 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


 

 

8,070 

 

 

5,493 

 

 

5,493 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

 

 

 

11,175 

 

 

2,919 

 

 

8,070 

 

 

 

 

 

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 2015 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 2015 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 2015 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 2014, 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 2014 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.

 

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 2014, 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 and amendments to standards and interpretations relevant to the Group have been issued by the International Accounting Standards Board and are mandatory for the first time for the financial year to 31st July 2015:

·     IAS 32(amended): Offsetting financial assets and financial liabilities (effective for accounting periods beginning on or after 1st January 2014)

·     IAS 36 (amended):  Recoverable Amounts Disclosures for Non-Financial Assets (effective for accounting periods beginning on or after 1st January 2014)

·     IAS 39 (amended):  Financial Instruments recognition and measurement on novation of derivatives and hedge accounting (effective for accounting periods beginning on or after 1st January 2014)

·     Amendments to IFRS 10: Consolidated Financial Statements, IFRS 11: Joint Ventures and IFRS 12: Disclosures of Interests in Other Entities in relation to Investment Entities (transition guidance).

 

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

 

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.

 

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 2014.

 

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)

31.1.15

31.1.14

31.7.14


£000 

£000 

£000

£000 

£000 

£000

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 JANUARY 2014

(Unaudited)







Construction activities

8,532

497

9,029

(1,700)

Investment activities

 2,725

  2,725

 1,945 


11,257

497

11,754

245 








31st JULY 2014

(Audited)







Construction activities

22,811

1,994

24,805

(3,547)

Investment activities

  5,253

  5,253

 2,656 


28,064

1,994

30,058

(891)

 

OPERATING PROFIT/(LOSS)

 

 



340 

245 

(891)

Share of results of Joint Ventures




142 

121 

469 

Finance and investment income and profit on sale of available for sale financial assets

77 

97 

1,629

Finance costs and loss on sale of available for sale financial assets

(22)

PROFIT BEFORE TAX ON ORDINARY ACTIVITIES

559 

441 

1,207 

 

5.         TAXATION

 

The tax charge for the 6 months to 31st January 2015 is based on the corporation tax rate at 20.67% (2014, 22.33%).

 

6.         DIVIDENDS


6 Months

Ended

31.1.15

(Unaudited)

6 Months

Ended

31.1.14

(Unaudited)

Year

Ended

31.7.14

(Audited)


£000 

£000 

£000 

 

ORDINARY DIVIDENDS




2014 Final dividend of 2.04p, after waivers

428 

2014 Interim dividend of 0.92p

432 

2013 Final dividend of 2.01p, after waivers

430 

430 


 428 

 430 

862 

 

The interim dividend of 0.92p per share for the year to 31st July 2015 will be paid on 1st June 2015 to shareholders on the register at 8th May 2015.  The interim dividend will cost the Company no more than £429,000.

 

7.         EARNINGS PER SHARE


Profit

attributable

to equity

shareholders

 

Basic

Earnings per share


£000 


 

6 months to 31st January 2015

 

 472 

 

 1.01p

 

6 months to 31st January 2014

 

 369 

 

 0.78p

 

Year to 31st July 2014

 

 1,025 

 

2.18p

 

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 2015 the Company purchased for immediate cancellation 250,000 Ordinary Shares of 2p.

 

The earnings per share for the 6 months to 31st January 2015 is based on weighted average number of shares amounting to 46,769,057, the earnings per share for the 6 months to 31st January 2014 is based on a weighted average number of shares amounting to 47,098,504 and the earnings per share for the year to 31st July 2014 is based on a weighted average number of shares amounting to 47,023,219.

 

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

 

8.         RECONCILIATION OF PROFIT BEFORE TAX TO CASH FLOWS FROM

            OPERATING ACTIVITIES


6 Months

ended

31.1.15

(Unaudited)

6 Months

ended

31.1.14

(Unaudited)

Year

ended

31.7.14

(Audited)


£000 

£000 

£000 





Profit before tax

559 

441 

1,207 

Share of profits from Joint Ventures

(142)

(121)

(469)

Depreciation

167 

165 

446 

Unrealised valuation deficit on investment properties

782 

Profit on sale of property, plant and equipment

(7)

(4)

(50)

Profit on sale of investment properties

(11)

(Profit)/loss on sale of available for sale financial assets

(1)

22 

(1,299)

Change in retirement benefits

(855)

Interest received

(61)

(31)

(62)

Change in inventories

(887)

195 

7,374 

Change in non-current receivables

(1,055)

Change in current receivables

(983)

(763)

(453)

Change in payables

1,034 

268 

587 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

    (332)

 

    (883)

7,208 

 

9.         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 2014.

 

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 2015 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 DTR 4.2.8, being:

 

·     an indication of important events that have occurred during the six months to 31st January 2015 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 2015 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 2014. 

 

 

By order of the Board




 






J.M. SMART, Director

D.W. SMART, Director



26th March 2015


 

 

 

 

 

 

 

 


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