Half-year Report

RNS Number : 5938C

Smart(J.)&Co(Contractors) PLC

18 April 2017

 

J. SMART & CO. (CONTRACTORS) PLC

INTERIM REPORT

FOR THE SIX MONTHS TO

31st JANUARY 2017

 

J SMART & CO. (CONTRACTORS) PLC

CHAIRMAN'S REVIEW

INTERIM REPORT

Unaudited Group profit for the six months to 31st January 2017 amounted to £652,000 compared with £531,000 for the corresponding period last year.  Group turnover increased by 13%.  Own work capitalised decreased by 83%.

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 no material effect on the figures.

Residential sales were substantially less than the previous half year due to a hiatus between development starts.  Private residential construction activity should recommence by the end of this financial year.

We have commenced construction of the second phases of our industrial developments at West Edinburgh Business Park, South Gyle, Edinburgh and Inchwood Business Park, Bathgate.  This follows successful lettings at both sites and pre-lets at Bathgate.

Current site progress in contracting is satisfactory.

INTERIM DIVIDEND

The Board announces an interim dividend of 0.95p per share (2016, 0.92p) to shareholders on the register at the close of business on 5th May 2017.  The interim dividend will cost the Company no more than £429,000.

FUTURE PROSPECTS

We have considerably less work in hand in contracting compared with the same time last year.  Margins remain disappointing.

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

Occupation and re-letting levels in our industrial properties remain buoyant.  Letting of our office properties continues to be difficult. 

Uncertainties generated by the ongoing political/economic situation may well reduce property values by the end of the current financial year which, under the rules of the International Financial Reporting Standards, would have a negative effect on headline results for the year.

While it is not possible to make an accurate forecast of the year end figures it is evident that because of costs arising from redundancies and reduced turnover in the second half of the financial year we will not achieve last year's underlying profit.

18th April 2017

J.M. SMART Chairman

 

CONSOLIDATED INCOME STATEMENT

	Notes	6 Months ended 31.1.17 (Unaudited)	6 Months ended 31.1.16 (Unaudited)	Year ended 31.7.16 (Audited)
		£000	£000	£000
Group construction activities		12,195	10,746	30,682
Less:  Own construction work capitalised		(209)	(1,254)	(1,655)
REVENUE		11,986	9,492	29,027
Cost of sales		(11,240)	(8,949)	(25,260)
GROSS PROFIT		746	543	3,767
Other operating income		2,941	2,744	5,520
Net operating expenses		(3,119)	(2,842)	(6,095)
OPERATING PROFIT BEFORE PROFIT ON SALE AND NET SURPLUS ON VALUATION OF INVESTMENT PROPERTIES		568	445	3,192
Profit arising on sale of investment properties		-	-	186
Net surplus on valuation of investment properties		-	-	136
OPERATING PROFIT		568	445	3,514
Share of profits in Joint Ventures		20	15	33
Income from available for sale financial assets		10	7	14
Profit on sale of available for sale financial assets		6	-	-
Finance income		48	64	191
PROFIT BEFORE TAX		652	531	3,752
Taxation	5	(135)	(105)	(264)
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS		517	426	3,488
EARNINGS PER SHARE - BASIC AND DILUTED	7	1.14p	0.93p	7.61p

 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		6 Months ended 31.1.17 (Unaudited)	6 Months ended 31.1.16 (Unaudited)	Year ended 31.7.16 (Audited)
		£000	£000	£000
Profit for the period		517	426	3,488
Other comprehensive income/(loss)
Items that may be subsequently reclassified to Income Statement:
Fair value adjustment of available for sale financial assets		34	(57)	(10)
Total items which may be subsequently reclassified to Income Statement		34	(57)	(10)
Items that will not be subsequently reclassified to Income Statement:
Actuarial loss recognised in defined benefit pension scheme		-	-	(2,256)
Deferred taxation on actuarial loss		-	-	215
Total items that will not be subsequently reclassified to Income Statement		-	-	(2,041)
Total other comprehensive income/(loss)		34	(57)	(2,051)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX		551	369	1,437
ATTRIBUTABLE TO EQUITY SHAREHOLDERS		551	369	1,437

 

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 2016			906	102	(56)	87,884	88,836
Profit for the period			-	-	-	517	517
Other comprehensive income			-	-	34	-	34
Total comprehensive income for period			-	-	34	517	551
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled			(3)	-	-	(178)	(181)
Transfer to Capital Redemption Reserve			-	3	-	(3)	-
Dividends	6		-	-	-	(418)	(418)
Total transactions with owners			(3)	3	-	(599)	(599)
As at 31st January 2017			903	105	(22)	87,802	88,788

	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	-	(3)	-
Dividends	6		-	-	-	(425)	(425)
Total transactions with owners			(3)	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 2015			919	89	(46)	87,987	88,949
Profit for the period			-	-	-	3,488	3,488
Other comprehensive loss			-	-	(10)	(2,041)	(2,051)
Total comprehensive (loss)/income for period			-	-	(10)	1,447	1,437
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled			(13)	-	-	(691)	(704)
Transfer to Capital Redemption Reserve			-	13	-	(13)	-
Dividends	6		-	-	-	(846)	(846)
Total transactions with owners			(13)	13	-	(1,550)	(1,550)
As at 31st July 2016			906	102	(56)	87,884	88,836

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		6 Months ended 31.1.17 (Unaudited)	6 Months ended 31.1.16 (Unaudited)	Year ended 31.7.16 (Audited)
		£000	£000	£000
NON-CURRENT ASSETS
Property, plant and equipment		1,365	1,347	1,382
Investment properties		64,937	64,516	64,728
Investments in Joint Ventures		283	282	263
Available for sale financial assets		1,003	280	326
Retirement benefit surplus		33	1,472	33
Deferred tax assets		41	27	41
		67,662	67,924	66,773
CURRENT ASSETS
Inventories		2,804	8,521	2,684
Trade and other receivables		6,557	6,338	6,369
Current tax asset		-	6	-
Monies held on deposit		4,529	4,508	5,519
Cash and cash equivalents		26,013	20,013	26,785
		39,903	39,386	41,357
TOTAL ASSETS		107,565	107,310	108,130
NON-CURRENT LIABILITIES
Deferred tax liabilities		1,389	1,830	1,389
CURRENT LIABILITIES
Trade and other payables		4,731	5,441	5,134
Corporation tax liability		121	-	143
Bank overdraft		12,536	11,288	12,628
		17,388	16,729	17,905
TOTAL LIABILITIES		18,777	18,559	19,294
NET ASSETS		88,788	88,751	88,836
EQUITY
Called up share capital		903	916	906
Capital redemption reserve		105	92	102
Fair value reserve		(22)	(103)	(56)
Retained earnings		87,802	87,846	87,884
TOTAL EQUITY		88,788	88,751	88,836

 CONSOLIDATED STATEMENT OF CASH FLOWS

	Notes	6 Months ended 31.1.17 (Unaudited)	6 Months ended 31.1.16 (Unaudited)	Year ended 31.7.16 (Audited)
		£000	£000	£000
CASH FLOWS FROM OPERATING ACTIVITIES	9	34	(2,554)	5,197
Tax (paid)/received		(157)	884	634
NET CASH FLOWS FROM OPERATING ACTIVITIES		(123)	(1,670)	5,831
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(189)	(154)	(488)
Additions to investment properties		-	(31)	(45)
Expenditure on own work capitalised - investment properties		(209)	(1,254)	(1,655)
Sale of property, plant and equipment		39	20	70
Sale of investment properties		-	-	525
Purchase of available for sale financial assets		(674)	-	-
Proceeds of sale of available for sale financial assets		37	-	1
Decrease/(increase) in monies held on deposit		990	(1,006)	(2,017)
Interest received		48	64	125
Dividend received from Joint Venture		-	-	37
NET CASH FLOWS FROM INVESTING ACTIVITIES		42	(2,361)	(3,447)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of own shares		(181)	(142)	(704)
Dividends paid		(418)	(425)	(846)
NET CASH FLOWSFROM FINANCING ACTIVITIES		(599)	(567)	(1,550)
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(680)	(4,598)	834
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		14,157	13,323	13,323
CASH AND CASH EQUIVALENTS AT END OF PERIOD		13,477	8,725	14,157

 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 2017 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 2017 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 2017 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 2016, 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 2016 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, available for sale financial assets and assets held by defined benefit pension scheme.

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 2016, 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 2017.

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 2016.

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)
				31.1.17	31.1.16	31.7.16
	£000	£000	£000	£000	£000	£000
31st JANUARY 2017 (Unaudited)
Construction activities	11,986	209	12,195	(1,158)	-	-
Investment activities	2,941	-	2,941	1,726	-	-
	14,927	209	15,136	568	-	-
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 JULY 2016 (Audited)
Construction activities	29,027	1,655	30,682	-	-	(102)
Investment activities	5,520	-	5,520	-	-	3,616
	34,547	1,655	36,202	-	-	3,514
OPERATING PROFIT				568	445	3,514
Share of results of Joint Ventures				20	15	33
Finance and investment income and profit on sale of available for sale financial assets				64	71	205
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES				652	531	3,752

5.         TAXATION

The tax charge for the 6 months to 31st January 2017 is based on the corporation tax rate at 19.67% (2016, 20.00%).

 

6.         DIVIDENDS

	6 Months Ended 31.1.17 (Unaudited)	6 Months Ended 31.1.16 (Unaudited)	Year Ended 31.7.16 (Audited)
	£000	£000	£000
ORDINARY DIVIDENDS
2016 Final dividend of 2.15p, after waivers	418	-	-
2016 Interim dividend of 0.92p	-	-	421
2015 Final dividend of 2.10p, after waivers	-	425	425
	418	425	846

The interim dividend of 0.95p per share for the year to 31st July 2017 will be paid on 5th June 2017 to shareholders on the register at 5th May 2017.  The interim dividend will cost the Company no more than £429,000.

7.         EARNINGS PER SHARE

	6 Months Ended 31.1.17 (Unaudited)	6 Months Ended 31.1.16 (Unaudited)	Year Ended 31.7.16 (Audited)
Profit attributable to equity shareholders (£000)	517	426	3,488
Basic earnings per share	1.14p	0.93p	7.61p
Weighted average number of shares	45,216,991	45,956,844	45,845,272

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 2017 the Company purchased for immediate cancellation 170,000 Ordinary Shares of 2p.

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

8.         FAIR VALUE ASSETS

The Group's investment properties, available for sale financial assets and assets held by defined benefit pension scheme 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.  Assets held by defined benefit pension scheme consist of equities and bond of companies listed on quoted markets and cash which all 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 31.1.17 (Unaudited)	6 Months ended 31.1.16 (Unaudited)	Year ended 31.7.16 (Audited)
	£000	£000	£000
Profit before tax	652	531	3,752
Share of profits from Joint Ventures	(20)	(15)	(33)
Depreciation	185	184	465
Unrealised valuation surplus on investment properties	-	-	(136)
Profit on sale of property, plant and equipment	(18)	(15)	(47)
Profit on sale of investment properties	-	-	(186)
Profit on sale of available for sale financial assets	(6)	-	-
Change in retirement benefits	-	-	(817)
Interest received	(48)	(64)	(125)
Change in inventories	(120)	(2,786)	3,051
Change in receivables	(188)	(1,830)	(1,861)
Change in payables	(403)	1,441	1,134
CASH FLOWS FROM OPERATING ACTIVITIES	34	(2,554)	5,197

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 2016.

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' RESPONSIBILITIES

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 2017 have been prepared in accordance with IAS 34: Interim Financial Reporting as adopted by the European Union.  The condensed consolidated interim financial statements include 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 2017 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 2017 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 2016. 

By order of the Board
J.M. SMART, Director	D.W. SMART, Director
18th April 2017

 

END

 

 

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