Smart(J.)&Co(Contractors) PLC Final Results

Data : 24/10/2019 @ 11:22
Fonte : UK Regulatory (RNS & others)
Titolo : Smart (j.) & Co. (contractors) Plc (SMJ)
Quotazione : 118.5  0.0 (0.00%) @ 09:00
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Smart(J.)&Co(Contractors) PLC Final Results

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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

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