TIDMSMJ
RNS Number : 0218R
Smart(J.)&Co(Contractors) PLC
24 October 2019
J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES
ACCOUNTS FOR THE YEARED 31st JULY 2019
PRELIMINARY STATEMENT
ACCOUNTS
Headline Group profit for the year before tax, including an
unrealised surplus in revalued property and a minor deficit in
revalued available for sale financial assets, was GBP6,643,000
compared with GBP5,357,000 last year after accounting for the prior
year adjustment resulting from implementation of IFRS 9.
Underlying profit before tax for the year of GBP2,600,000 was
unexpectedly marginally more than last year's figure of
GBP2,392,000 (including GBP460,000 profit from property sales in a
joint venture company and a prior year adjustment increasing the
profit by GBP104,000). As before, our view is that discounting the
increase in the revaluation of the commercial property portfolio
and adjusting for the revaluation movement on available for sale
financial assets provides a truer reflection of Group
performance.
The Board is recommending a Final Dividend of 2.24p making a
total of 3.19p which compares with 3.16p for the previous year.
After waivers by members holding almost 60% of the shares, the
Final Dividend will cost the Company no more than GBP390,000.
TRADING ACTIVITIES
Group construction activities including private residential
sales on continuing operations increased by 56%. Own work
capitalised decreased by 92% and headline Group profit on
continuing operations increased by 25%. Underlying Group profit on
continuing operations increased by 13%.
As reported in post balance sheet events in the last Annual
Report and in my Statement in the last Interim Report, due to a
substantial loss in that financial year and losses in previous
years, the decision was taken to cease trading in the subsidiary
company, Concrete Products (Kirkcaldy) Limited, based at Hayfield
Industrial Estate, Kirkcaldy. Trading has now ceased and the
majority of the company assets have now been sold. The demolition
of the production buildings has now commenced and post demolition
the property assets will be transferred to our commercial property
subsidiary company, C. & W. Assets Limited. The remaining
property and yard space will be used by other group companies,
mainly for storage purposes. The loss for Concrete Products
(Kirkcaldy) Limited stated in these accounts reflects the majority
of the final cost of cessation.
Turnover in contracting was more than last year but the loss was
increased. The build contract for the Affordable Housing at the
mixed development at West Bowling Green Street continues and will
be finished prior to the end of 2019. The social housing build
contract at Ferrymuir is progressing and is due to complete after
the end of the current financial year.
The first private residential sales completed in the year under
review at West Bowling Green Street. Sales will continue in the
current financial year with the overall development due to complete
prior to the end of the current financial year.
Interest in the commercial property units at West Bowling Green
Street is positive, with potential sales due this financial
year.
Occupancy levels in our industrial and office portfolio have
improved. The total rent roll from our commercial property
portfolio has increased by 15% since the last financial year
end.
Interest in our industrial estates remains robust, with
continued rental growth through lettings of new stock and
re-lettings/rent review settlements of existing stock.
The first unit at Gartcosh through our joint venture company,
Gartcosh Estates LLP, has now been completed and interest is
promising. Due to the strong performance of the first two phases at
our industrial development at West Edinburgh Business Park, South
Gyle we commenced the third and final phase of development, after
the end of the last financial year. Similarly at Inchwood Park,
Bathgate the third and final phase of this development may commence
this financial year. The first unit at our industrial development
at Bellshill has now been successfully let.
Lettings of the office stock were encouraging this year.
Bridgeside House in Edinburgh is now 100% let after lying mainly
vacant for a number of years. A public sector related tenant let
the majority of this building. Our office building at Links Place,
Leith, Edinburgh has seen a number of lettings with occupancy up to
just over 80% by the end of the financial year. As this building
was sitting at less than 50% occupied only a few years ago, tribute
must be paid to the staff involved with this successful
turnaround.
FUTURE PROSPECTS
Work in hand in contracting is less than last year. Potential
site acquisitions and tender work in the Housing Association sector
continue to be progressed, but there will probably be no new
contracting work this financial year. This will influence the year
end figures due to reduced turnover, which will impact on the
recovery of fixed overhead costs.
As mentioned above, private housing sales will continue this
financial year at West Bowling Green Street and reservations to
date have remained steady. In relation to site acquisitions/future
development we currently have either legal agreements in place on
potential sites or sites within our control that would provide a
total of approximately 200 private residential sale units. Due to
the, frequently prolonged, planning and building control processes,
it is unlikely that development will commence on any of these sites
in the current financial year.
Property valuation levels have improved again and we expect
lettings to continue this financial year. It remains to be seen how
the continuing political uncertainty will affect the confidence of
house purchasers and commercial property occupiers.
At this stage it is difficult to make an informed forecast for
the outcome of the current year. However, due to the lull in
contracting work and new private housing work this financial year,
it seems unlikely that the underlying profit will improve.
DAVID W. SMART
Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 31st JULY 2019
2019 2018
Unaudited Audited
Restated
(Note 1
& 2)
Note GBP000 GBP000
CONTINUING OPERATIONS
Group construction activities 16,182 10,402
Less: Own construction work capitalised (147) (1,847)
---------- ---------
REVENUE 16,035 8,555
Cost of sales (14,416) (6,209)
---------- ---------
GROSS PROFIT 1,619 2,346
Other operating income 7,560 6,344
Net operating expenses (6,264) (6,521)
---------- ---------
OPERATING PROFIT BEFORE NET SURPLUS ON VALUATION
OF INVESTMENT PROPERTIES 2,915 2,169
Net surplus on valuation of investment properties 4,052 2,859
OPERATING PROFIT 6,967 5,028
Share of profits in Joint Ventures 48 463
Income from available for sale financial assets 53 43
Profit on sale of available for sale financial
assets 26 2
Net (deficit)/surplus on valuation of available
for sale financial assets (9) 106
Finance income 185 180
PROFIT BEFORE TAX 7,270 5,822
Taxation (529) (500)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 6,741 5,322
DISCONTINUED OPERATIONS
Loss for the year from discontinued operations 2 (505) (380)
---------- ---------
PROFIT FOR YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS 6,236 4,942
---------- ---------
EARNINGS/(LOSS) PER SHARE
From continuing operations - basic and diluted 15.47p 11.96p
---------- ---------
From discontinued operations - basic and diluted (1.16)p (0.85)p
---------- ---------
From continuing and discontinued operations
- basic and diluted 14.31p 11.11p
---------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31st JULY 2019
2019 2018
Unaudited Audited
Restated
(Note
1)
GBP000 GBP000
PROFIT FOR THE YEAR 6,236 4,942
OTHER COMPREHENSIVE (LOSS)/INCOME
Items that will not be subsequently reclassified
to the Income Statement:
Actuarial (loss)/gain recognised in defined benefit
pension scheme (1,118) 111
Deferred taxation on actuarial loss/(gain) 190 (19)
---------- ---------
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFIED
TO INCOME STATEMENT (928) 92
---------- ---------
TOTAL OTHER COMPREHENSIVE (LOSS)/INCOME (928) 92
---------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF
TAX 5,308 5,034
---------- ---------
ATTRIBUTABLE TO EQUITY SHAREHOLDERS 5,308 5,034
---------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31st July 2019
Capital
Share Redemption Retained
Capital Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000
At 1st August 2017 (audited)
(Restated Note 1) 896 112 92,850 93,858
Profit for the year - - 4,942 4,942
Other comprehensive income - - 92 92
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR - - 5,034 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 (audited)
(Restated Note 1) 880 128 95,585 96,593
--------- ------------ ---------- --------
Profit for the year - - 6,236 6,236
Other comprehensive loss - - (928) (928)
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR - - 5,308 5,308
--------- ------------ ---------- --------
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (14) - (792) (806)
Transfer to capital redemption
reserve - 14 (14) -
Dividends - - (813) (813)
--------- ------------ ---------- --------
TOTAL TRANSACTIONS WITH OWNERS (14) 14 (1,619) (1,619)
At 31st July 2019 (unaudited) 866 142 99,274 100,282
--------- ------------ ---------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31st JULY 2019
2019 2018
Unaudited Audited
Restated
(Note 1)
GBP000 GBP000
NON-CURRENT ASSETS
Property, plant and equipment 1,304 1,308
Investment properties 73,874 69,532
Investments in Joint Ventures 57 68
Available for sale financial assets 1,309 1,099
Trade and other receivables 1,107 857
Retirement benefit surplus 2,899 4,205
Deferred tax asset 101 94
---------- ----------
80,651 77,163
---------- ----------
CURRENT ASSETS
Inventories 8,643 8,807
Contract assets 549 770
Trade and other receivables 2,835 3,770
Monies held on deposit 48 48
Cash and cash equivalents 25,699 23,586
---------- ----------
37,774 36,981
---------- ----------
TOTAL ASSETS 118,425 114,144
---------- ----------
NON-CURRENT LIABILITIES
Deferred tax liabilities 1,735 1,995
---------- ----------
CURRENT LIABILITIES
Trade and other payables 3,394 3,580
Current tax liability 154 118
Bank overdraft 12,860 11,858
16,408 15,556
TOTAL LIABILITIES 18,143 17,551
---------- ----------
NET ASSETS 100,282 96,593
---------- ----------
EQUITY
Called up share capital 866 880
Capital redemption reserve 142 128
Retained earnings 99,274 95,585
---------- ----------
TOTAL EQUITY 100,282 96,593
---------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31st JULY 2019
2019 2018
Unaudited Audited
Restated
(Note
1)
GBP000 GBP000
Profit before tax 6,643 5,357
Share of profits from Joint Ventures (48) (463)
Depreciation 376 427
Impairment of assets - 116
Unrealised valuation surplus on investment properties (4,052) (2,859)
Unrealised valuation deficit/(surplus) on available
for sale financial assets 9 (106)
Profit on sale of property, plant and equipment (141) (59)
Profit on sale of available for sale financial
assets (26) (2)
Change in retirement benefits 188 (232)
Interest received (71) (80)
Change in inventories 164 (5,926)
Change in contract assets 221 86
Change in receivables - non-current (250) (857)
Change in receivables - current 935 1,097
Change in payables (186) (805)
---------- ---------
3,762 (4,306)
Tax paid (448) (442)
---------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES 3,314 (4,748)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (424) (454)
Additions to investment properties (143) (27)
Expenditure on own work capitalised - investment
properties (147) (1,847)
Sale of property, plant and equipment 193 93
Purchase of available for sale financial assets (380) -
Proceeds of sale of available for sale financial
assets 187 9
Decrease on monies held on deposit - 2,488
Interest received 71 80
Dividend from Joint Ventures 59 700
NET CASH FLOWS FROM INVESTING ACTIVITIES (584) 1,042
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of own shares (806) (908)
Dividends paid (813) (1,391)
---------- ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES (1,619) (2,299)
---------- ---------
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,111 (6,005)
---------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,728 17,733
---------- ---------
CASH AND CASH EQUIVALENTS AT OF YEAR 12,839 11,728
---------- ---------
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 2019
have not yet been filed with the Registrar of Companies and have
not yet been reported on by the Company's auditor.
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 2019 and the unaudited
financial information included in this preliminary statement and
the accounting policies disclosed in the 2018 Annual Report and
Statement of Accounts, with the exception of the policy regarding
revenue recognition resulting from the application of IFRS 15:
Revenue from Contracts with Customers and IFRS 9: Financial
Instruments relating to the accounting of revaluation surpluses or
deficits on the Group's available for sale financial assets. The
impact of these standards is detailed below.
The following standards, amendments to standards and
interpretations became mandatory for the first time for the
financial year to 31st July 2019:
-- IFRS 9: Financial Instruments
-- IFRS 15: Revenue from Contracts with Customers
-- IAS 40 (amended): Investment Properties
These standards had no material impact on the financial
statements but the application on IFRS 9: Financial Instruments
resulted in the restatement of prior year figures as detailed
below.
IFRS 9: Financial Instruments became effective as from 1st
August 2018. This standard changes the accounting for revaluation
surpluses or deficits on available for sale financial assets.
Previously these surpluses or deficits were accounted for in the
Consolidated Statement of Comprehensive Income together with the
taxation impact of these surpluses or deficits. Under IFRS 9 these
surpluses or deficits are accounted for in the Consolidated Income
Statement together with taxation impact. There is no impact on the
valuation of the available for sale financial assets or the
deferred tax provision in relation to their valuation in the
Consolidated Statement of Financial Position. Within the Equity
section of the Consolidated Statement of Financial Position the
Fair value reserve no longer exists as the fair value movement is
included in Retained earnings.
The application of IFRS 9: Financial Instruments has been
applied retrospectively and accordingly the comparative figures
have been restated for the year to 31st July 2018.
The table below details the impact of the application of IFRS 9:
Financial Instruments on the Consolidated Income Statement and the
Consolidated Statement of Comprehensive Income for the year to 31st
July 2018:
CONSOLIDATED INCOME STATEMENT
GBP000
PROFIT BEFORE TAX (as previously reported) 5,253
Impact of net surplus on valuation of available
for sale financial assets 104
---------
5,357
---------
TAX (as previously reported) (402)
Impact of deferred tax adjustment
on fair value reserve (13)
---------
(415)
---------
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS - REVISED 4,942
---------
Impact on profit attributable to equity shareholders 91
---------
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (as previously
reported) 5,034
Impact on profit for the period -
increase (as above) 91
--------
5,125
Other comprehensive income relating to fair value
of available for sale financial assets - no longer
accounted for in Statement of Comprehensive Income (91)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 5,034
--------
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 5,034
--------
IFRS 15: Revenue from Contracts with Customers became effective
from 1st August 2018. It replaces IAS 11: Construction Contracts
and IAS 18: Revenue and sets out the criteria for revenue
recognition with regards to performance obligations. As stated in
the Group's 2018 Annual Report and Statement of Accounts the
implementation of this standard has not had a material impact on
the revenue or cash flows reported by the Group for the year to
31st July 2019. In respect of construction contracts this standard
has no impact on revenue from customers. The standard allows for
the recognition of revenue over time for the performance obligation
based on stage of completion of the contracts which is in line with
the Group's policy. The recognition of revenue from private house
sales or sales of land was not impacted by the new standard as this
revenue is recognised on completion of the performance obligation
of the supply of the housing or the land. This standard does not
apply to rental income from our investment properties but does
apply to service charge income and other property related income
and income from sale of investment properties. The new standard
does not impact on the Group's current policy of recognition of
these income types.
IAS 40 (amended): Investment Properties became effective from
1st August 2018. The amendment to this standard relating to the
transfer of properties to and from Investment Properties has no
impact on the Group's financial statements for the year.
The unaudited consolidated financial statements are prepared on
a going concern basis and 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 the defined benefit pension scheme.
The financial information for the year to 31st July 2018 is
derived from the statutory accounts for that year which were
submitted to the Registrar of Companies and upon which the
Company's auditor 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. DISCONTINUED OPERATIONS
On 9th November 2018 the Group Directors took the decision that
the subsidiary company, Concrete Products (Kirkcaldy) Limited
should cease trading.
The results of the discontinued operation, which have been
included in the profit for the year, were as follows:
2019 2018
GBP000 GBP000
Unaudited Audited
Revenue 645 2,100
Cost of sales (817) (1,909)
---------- --------
Gross (Loss)/Profit (172) 191
Other operating income 6 8
Net operating expenses (461) (664)
---------- --------
Loss before tax (627) (465)
Taxation 122 85
---------- --------
Net loss attributable to discontinued operations
(attributable to owners of the Company) (505) (380)
---------- --------
3. DIVIDENDS
Ordinary dividends
2017 Final dividend of 2.17p per share - 968
2018 Interim dividend of 0.95p per share - 423
2018 Final dividend of 2.21p per share, after 402 -
waivers
2019 Interim dividend of 0.95p per share 411 -
---- ------
813 1,391
---- ------
The Company is proposing a final dividend of 2.24p per share for
the year to 31st July 2019 which, after waivers, will cost the
Company no more than GBP390,000.
The dividend if approved will be paid on 30th December 2019 to
shareholders on the Register at the close of business on 6th
December 2019.
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.
END
FR USAKRKWARURA
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