Annual Report • Jul 31, 2013
Annual Report
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ANNUAL REPORT AND STATEMENT OF ACCOUNTS TO 31s t JULY 2013
J. M. Smart, Chairman and Managing Director D. W. Smart A. H. Ross J. R. Smart
P. Sweeney
28 Cramond Road South, Edinburgh, EH4 6AB
McGowan & Co. (Contractors) Limited Cramond Real Estate Company Limited Thomas Menzies (Builders) Limited Concrete Products (Kirkcaldy) Limited C. & W. Assets Limited Edinburgh Industrial Estates Limited
Equiniti Limited, 34 South Gyle Crescent, South Gyle Business Park, Edinburgh, EH12 9EB
Bank of Scotland, 38 St Andrew Square, Edinburgh, EH2 2YR
French Duncan LLP, Chartered Accountants, 375 West George Street, Glasgow, G2 4LW
Russel & Aitken LLP, 27 Rutland Square, Edinburgh, EH1 2BU
Anderson Strathern LLP, 1 Rutland Court, Edinburgh, EH3 8EY
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of the Company will be held at the Registered Office, 28 Cramond Road South, Edinburgh on 19th December 2013 at 12 noon, for the following purposes:
A member entitled to attend and vote at this Meeting is entitled to appoint one or more proxies to attend and vote on a poll instead of him. A proxy need not be a member. Forms of proxy, if used, must be lodged with the Registrars of the Company at least 48 hours before the time fixed for the Meeting. Forms of proxy may also be lodged electronically by submitting a duly completed scanned copy of the proxy card to [email protected] may not use the electronic address provided either in this Notice of Meeting or any related documents (including the Form of Proxy) to communicate with the Company for any purpose other than that expressly stated.
In accordance with section 311A of the Companies Act 2006, the contents of this Notice of Meeting, details of the total number of shares in respect of which members are entitled to exercise voting rights at the AGM and, if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this Notice will be available on the Company's website www.jsmart.co.uk.
Pursuant to section 319A of the Companies Act 2006, the Company must cause to be answered at the AGM any question relating to the business being dealt with at the AGM which is put by a member attending the meeting, except in certain circumstances, including if it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered or if to do so would involve the disclosure of confidential information.
BY ORDER OF THE BOARD P. Sweeney, Secretary 28 Cramond Road South, Edinburgh EH4 6AB
19th November 2013
Profit for the year was again adversely affected by a reduction in the value of our property portfolio as dictated by the International Financial Reporting Standards. Headline profit turned out at £829,000 which compares with a headline profit of £55,000 last year. If the impact of revalued property on the figures is disregarded then a truer reflection of Group performance emerges in the form of an underlying profit before tax for the year under review of £3,956,000 (including £2,244,000 profit from property sales and a contribution from joint ventures relating to property sales) which compares with the figure for underlying profit last year of £4,097,000 (no property sales). As forecast in the interim report, once property sales are stripped out of the figures, underlying profit is well below that of last year.
The Board is recommending a Final Dividend of 2.01p nett making a total for the year of 2.93p nett which compares with 2.90p nett for the previous year. After waivers by members holding over 50% of the shares, the Final Dividend will cost the Company £430,000.
Profit adjusted for pension scheme surplus, dividends paid and fair value reserve adjustment when added to opening shareholders' funds brings the total equity of the Group to £91,125,000.
Group construction work carried out decreased by 20%, own work capitalised decreased by 33%. Group revenue decreased by 19% and headline Group profit increased fifteenfold. Underlying Group profit excluding the unrealised reduction in revalued property decreased by 3%.
Turnover in contracting was less than last year and a loss was sustained. Private dwelling sales were down on the previous year, although there has been a revival in sales since July 2013. Sales in precast concrete manufacture remained static, although the loss was reduced.
The Robertson Avenue development in Edinburgh is all but complete and while the office block is so far unlet, residential sales are currently proceeding satisfactorily.
Occupancy levels at our established industrial and commercial properties remain stable and we are seeing increased interest in our recent unlet developments.
In January 2013 Mr L. E. Glenday, having attained his seniority, retired from the Board. Mr Glenday served our Company for 41 years, 12 as a Director, during which time his hard work, loyalty, dedication and the negotiating skills he demonstrated in his role as Quantity Surveying Director, were major factors in the Group's success. My sincere personal thanks go to Lionel for his tenacious and determined efforts on the Company's behalf, together with my wishes for a long and happy retirement.
Work in hand in contracting is less than at this time last year and while there is work in the pipeline it seems clear that turnover in contracting during the current year will approximate to half that of last year.
Residential sales are currently promising. We are about to commence Phase I of an industrial development at South Gyle, Edinburgh. South Gyle is a very well established industrial and commercial area where we believe letting prospects are favourable.
It is too early to forecast the outcome of the current year with any degree of accuracy. However, notwithstanding that leased property values and occupation levels are currently stable and residential sales satisfactory, it is evident that the anticipated reduction in contracting turnover will significantly limit the recovery of overhead costs, leading to a substantial impairment in profitability for the current year.
J.M. SMART
J.M. Smart, Chairman and Managing Director Aged 69 Joined the Company in 1967 Appointed Director in 1978 and appointed Chairman in 1988
L.E. Glenday Aged 65 Joined the Company in 1972 Appointed Director in 2001 Retired as a Director on 22nd January 2013
D.W. Smart Aged 40 Joined the Company in 1998 Appointed Director in 2010
A.H. Ross Aged 51 Joined the Company in 1989 Appointed Director in 2012
J. R. Smart Aged 43 Joined the Company in 2002 Appointed Director on 23rd January 2013
| The Directors submit their Annual Report and Statement of Accounts for the year ended 31st July 2013. | ||
|---|---|---|
| RESULTS AND DIVIDENDS | ||
| The profit of the Group for the year after charging taxation amounted to | £384,000 | |
| Dividends paid in the year were: | ||
| Paying a Final Dividend for 2012 of 1.98p per 2p share (2011, 9.70p per 10p share) | £968,000 | |
| Paying an Interim Dividend for 2013 of 0.92p per 2p share (2012, 0.92p per 2p share) | 435,000 | |
| £1,403,000 |
The Directors recommend a Final Dividend for the year of 2.01p per share, making a total for the year of 2.93p.
The Final Dividend, if approved, will be paid to all Members on the Share Register of the Company at the close of business on 29th November 2013. Dividend warrants will be posted on 20th December 2013.
The principal activities of the Company and its Subsidiaries are building and civil engineering contracting of all types, building for sale of private houses, carrying out of industrial and commercial developments and redevelopments for sale or lease. Other activities of Subsidiaries are the manufacture for sale of concrete building products and investment holding.
The company has interests in Joint Venture Companies as follows:
| Name of Joint Venture Company | Percentage of interest held | Joint Venture Party |
|---|---|---|
| Prestonfield Development Company Limited | 50% | Westerwood Limited |
| Northrigg Limited | 50% | William Sanderson |
| Duff Street Limited | 50% | Kiltane Developments Limited |
| Invertiel Developments Limited | 50% | Macdonald Estates PLC |
Full details of the Joint Venture companies are given in note 14 to the accounts.
Group operations during the year were as follows:
The Company continues to undertake the construction of social housing for several housing associations within the Edinburgh area.
Thomas Menzies (Builders) Limited continues to undertake small to medium sized civil engineering contracts for Local Authorities, Enterprise Companies and private sector clients.
Concrete Products (Kirkcaldy) Limited continues to manufacture and sell hydraulically pressed concrete products for the building and home improvement industries.
McGowan & Co (Contractors) Limited continues to support Group companies with the provision of plumbing and heating services.
Rent, service charges recoverable and insurance premiums recharged are the main sources of investment income received by the Group on investment properties owned and managed by the subsidiary, C. & W. Assets Limited. The investment properties are located throughout the central belt of Scotland primarily within the Edinburgh area.
Other investing activities of the Group consists of dividends and interest received on a portfolio of equity investments and cash deposits.
Rents and service charges on industrial and residential properties and land sales remain the sources of income earned by the Joint Venture companies. During the year there was no change in the development activities of the Joint Ventures.
| Profit/(Loss) excluding unrealised deficit |
||||||
|---|---|---|---|---|---|---|
| Profit/ | on revalued | |||||
| Revenue | (Loss) | property | ||||
| £000 | £000 | £000 | ||||
| Construction activities | 20,595 | (2,698) | (2,698) | |||
| Investment activities | 5,383 | 1,089 | 4,216 | |||
| Joint Ventures | - | 2,438 | 2,438 | |||
| 25,978 | 829 | 3,956 |
Group external construction revenue decreased from £22,586,000 to £18,381,000 a decrease of £4,205,000 and internal own work capitalised decreased from £3,329,000 to £2,214,000. Rental income from investment properties, excluding that from Joint Ventures, together with service charges and insurance receivable decreased from £5,518,000 to £5,383,000.
The net deficit on valuation of investment properties as at 31st July 2013 amounted to £3,127,000 as compared to a net deficit for the previous year of £4,042,000.
During the year investment property sales generated profits of £124,000, there were no sales in the previous year.
The above movements have resulted in an Operating Loss for the Group for the year of £2,111,000 as compared to £685,000 in the previous year.
The Group's share of profits in Joint Ventures amounted to £2,438,000 as compared to a loss of £15,000 in the previous year.
Income from financial assets including profit arising on sale of financial assets together with finance income less finance costs amounted to £502,000 as compared to £755,000 for the previous year.
Group Profit before tax amounted to £829,000 for the year as compared to £55,000 for the previous year. If the unrealised net deficit on valuation of investment properties is excluded, the Group Profit before tax for the year would be £3,956,000 as compared to £4,097,000 for the previous year.
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| £000 | £000 | ||||
| Revenue | 18,381 | 22,586 | |||
| Own work capitalised | 2,214 | 3,329 | |||
| Other operating income . | 5,383 | 5,518 | |||
| Share of Joint Ventures' profits/(losses) | 2,438 | (15) | |||
| Group investment income including profit on sale of available for | |||||
| sale financial assets | 502 | 755 | |||
| Profit before tax . | 829 | 55 | |||
| Profit excluding unrealised deficit in revalued property | 3,956 | 4,097 | |||
| Net Assets | 91,125 | 91,309 |
Main focus in contracting is on social housing which can be highly competitive putting pressure on turnover and margins (there have been material but unquantifiable increases in the risk and impact).
We believe the above measures ensure a high standard of service, quality and progress which permits our clients to employ us on a partnering "best value" basis where price is not the only criterion and repeat business results.
Cuts in funding reduce or suspend the social housing programme resulting in reduced contracting workload and substantial redundancies (there have been material but unquantifiable increases in the risk and impact).
Inability to find tenants for new development space and loss of existing tenants leads to reduction of revenue and capital resources.
Free availability of credit leads to rise in cost of developable land and property to unsustainable levels resulting in heavy losses or insolvency when the "bubble" bursts and credit is withdrawn.
Possible failure of bank threatens the Group's existence due to loss of cash reserves.
Reduction in bank interest rates results in loss of Group revenue from cash on deposit.
Effect of recession and restriction on mortgage lending results in stalling of private house sales.
Note 27 to the accounts gives details of the most recent actuarial review of the Group's defined benefit pension scheme.
Full details of the movements in Property, plant and equipment and Investment properties during the year are given in notes 12 and 13 to the accounts.
At 31st July 2013 a valuation of the Group's non-investment heritable properties was carried out by Group Directors. This valuation, which has not been incorporated into these accounts, showed a net surplus over the cost of these properties after depreciation of £1,704,000 as at 31st July 2013.
It is not anticipated that the activities of the Company and its Subsidiaries, as described above, will substantially change in the immediate future.
It is Company policy that there should be effective communication with employees at all levels, on matters which affect their current jobs or future prospects. In achieving this policy, the Directors are aware of the need to take account of the practical and commercial considerations of the Company, and of the needs of employees.
The policy of the Company with regard to disabled persons is to give full and fair consideration to all applicants for employment and to all employees in relation to promotion. Wherever possible, employees who become disabled during their employment and are unable to fulfil current duties are offered suitable alternative employment.
During the year the Group made total charitable donations amounting to £35,000 (2012, £35,000). Donations to local causes amounted to £16,000 (2012, £17,000) and donations to national charities amounted to £19,000 (2012, £18,000).
It is the policy of the Group not to make donations for political purposes to EU Political Parties or incur EU Political Expenditure and accordingly neither the Company nor its Subsidiaries made donations or incurred such expenditure in the year.
The Companies Act 2006 prohibits companies from making any political donations to EU political organisations, independent candidates or incurring EU political expenditure unless authorised by shareholders in advance. The Company does not make, and does not intend to make, donations to EU political organisations or independent election candidates, nor does it incur any EU political expenditure.
The definitions of political donations, political organisations and political expenditure used in the Companies Act 2006 are very wide and can cover activities such as sponsorship, subscriptions, payment of expenses, paid leave for employees fulfilling certain public duties, and support for bodies representing the business community in policy review or reform. Shareholder approval is therefore being sought on a precautionary basis only, to allow the Company, and any Subsidiary Company, to continue to support the community and put forward its views to wider business and Government interests, without running the risk of being in breach of the legislation.
The Board has been granted, by a resolution at the 2011 Annual General Meeting, authority to make political donations to EU political organisations and independent election candidates not exceeding £5,000 in total and to incur EU political expenditure not exceeding £5,000 in total. This authority remains valid until the conclusion of the Company's Annual General Meeting to be held in 2015.
The Group's policy concerning payment of trade creditors is to settle in accordance with accepted best practice in the building industry, i.e. payment is made by the end of the month following the month of supply or delivery. Further information relating to the policy on payment of creditors may be obtained from the Group's registered office. The average number of days taken to pay creditors is 18, based on the average daily amount invoiced by suppliers during the year and the creditors balance at the year end.
(i) The Directors at 31st July 2013 and their beneficial interests in the share capital of the Company were as follows:
| 1st August 2012 | 31st July 2013 | |
|---|---|---|
| Ordinary shares of 2p each | Ordinary shares of 2p each | |
| Beneficial holdings | Beneficial holdings | |
| J. M. Smart | 1,198,500 | 1,198,500 |
| D. W. Smart | 11,863,500 | 11,863,500 |
| A. H. Ross | 100,000 | 100,000 |
| J. R. Smart | 11,863,500 | 11,863,500 |
L. E. Glenday retired as a Director on 22nd January 2013. As at 1st August 2012 he had a beneficial holding in 225,000 Ordinary Shares of 2p in the Company.
The Company's authorised and issued ordinary share capital as at 31st July 2013 comprises a single class of ordinary shares. The Company was authorised by shareholders, at the 2012 Annual General Meeting, to purchase in the market up to 10% of the Company's issued share capital, as permitted under the Company's Articles of Association. During the year the Company made market purchases of 2,354,000 Ordinary Shares of 2p under this authority, for a total consideration of £1,845,000. The purpose of the market purchase is to enhance the earnings per share and/or the equity shareholders' funds per share. The shares purchased were subsequently cancelled. The shares purchased and cancelled represented 5% of the Company's issued share capital at the start of the year.
This authority is renewable and the Directors will seek renewal of this authority at the 2017 Annual General Meeting.
As far as the Directors are aware, other than the Directors, the Company has been notified that as at 31st July 2013 and as at 25th October 2013, the following have interests of more than 3% in the Company's issued share capital:
| Number | % | |||||
|---|---|---|---|---|---|---|
| Octet Investments Limited | 1,622,400 | 3.44 | ||||
| A. J. Whitehead | 1,579,485 | 3.35 |
All members who hold ordinary shares are entitled to attend and vote at General Meetings. On a show of hands at a General Meeting every member present in person and every duly appointed proxy shall have one vote and on a poll, every member present in person or by proxy shall have one vote for every ordinary share held or represented. The Company is not aware of any agreements between shareholders that may result in restrictions on voting rights of shareholders.
Rights attached to ordinary shares may only be varied by special resolution at a General Meeting.
There are no specific restrictions on the transfer of securities in the Company, other than those imposed by prevailing legislation and the requirements of the Listing Rules in respect of Company Directors. The Company is not aware of any agreements between shareholders that may result in restrictions of the transfer of securities.
Initial appointments may be approved by the Board of Directors but anyone so appointed must be re-elected by ordinary resolution at the next Annual General Meeting of the Company. Directors, excluding the Managing Director, in accordance with the provision B.7.1 of UK Corporate Governance Code, must retire and offer themselves for re-election at the Annual General Meeting at least every three years.
The Company's Articles of Association can only be amended by a special resolution at a General Meeting.
The Company is not party to any significant agreements which take effect, alter or terminate upon the change of control of the Company following a takeover bid.
The Company does not have any agreements with any Director or employee that would provide compensation for loss of office or employment, whether through resignation, purported redundancy or otherwise resulting from a takeover bid.
On the information available, the Directors are of the opinion that the Company is not a Close Company within the provisions of the Corporation Tax Act 2010.
This statement details how your Company has applied the main and supporting principles of corporate governance as set out in the Financial Reporting Council's UK Corporate Governance Code issued in June 2010 (the Code). A copy of the Code can be found on the Financial Reporting Council's website, www.frc.org.uk. The Board is committed to the principles of openness, integrity and accountability in dealing with the Company's affairs and believes it has always acted with probity in the best interests of the Company, its employees and shareholders without recourse to guidance or instruction from others and fully intends to continue to do so in the future.
The Board recognises that it has not complied throughout the year in whole or in part with the following provisions set out in Section 1 of the Code – A.1.1- A.1.2, A.2.1, A.3.1, A.4.1-A.4.3, B.1.1-B.1.2, B.2.1-B.2.4, B.3.1-B.3.2, B.6.1-B.6.3, B.7.1-B.7.2, C.3.1-C.3.6, D.1.1, D.1.5, D.2.1-D.2.2, E.1.1 and E.2.2-E.2.3, details and explanations for non-compliance are given below.
The Company is led by a Board of Directors which comprises the executive management of the Company, being the Chairman and three executive directors, and thus maintains full control of the Company. All the Directors worked for the Company prior to their appointments as Director. During the year L.E.Glenday retired from the Company, and J.R.Smart was appointed as Director. Decisions are taken by the Board quickly and effectively following ad hoc consultation among the Directors concerned when any matter arises. Your Board takes the view that this direct and flexible approach is preferable to the more cumbersome procedures prevalent in larger organisations and has made a considerable contribution to your Company's continuing success and ensures that this approach best serves the interests of the Company and its shareholders.
The Board held 4 formal Board Meetings in the year, attendance at these meetings was as follows:
| J. M. Smart | 4 |
|---|---|
| L. E. Glenday (retired 22nd January 2013) | 2 |
| D. W. Smart | 4 |
| A. H. Ross | 4 |
| J.R. Smart (appointed 23rd January 2013) | 1 |
Given that the Board is the executive management of the Company and takes decisions on all material matters and thereby exercises full direction and control, there is no formal schedule of matters reserved for the Board's decision.
The Chairman of the Company is also the Managing Director. Bearing in mind the size of the Company, the Board sees no value in splitting the role of the Chairman and Managing Director, a policy which has served your Company well over many years. The Chairman is responsible for the leadership of the Board, ensuring that all the Directors receive accurate, timely and clear information on issues arising at Board meetings, setting Board agendas and ensuring adequate time is given to discussion of the agenda points. The members of the Board have complete freedom to seek independent professional advice, at the Company's expense, when they feel it is appropriate to do so. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. All Directors openly express their views and make a valuable contribution to the running of the Company.
The Board considers that increasing the manning level of the Board by 50% by the appointment of two nonexecutive Directors would increase costs and impose an additional administrative burden for no discernible benefit and, accordingly, would serve no useful purpose. As a result of not appointing non-executive Directors, the Company has not established Nomination, Remuneration or Audit Committees.
As the Company does not have a Nomination Committee, nominations for appointment of new Directors to the Board are submitted by the Chairman for approval by the other members of the Board. As all the Directors of the Company were long-serving employees of the Company at the date of appointment, no formal tailored induction upon joining the Board was necessary. As the Directors are all full-time employees of the Company they are fully committed to the Company and to the discharge of their duties. The Directors are encouraged by the Board to receive any training they consider necessary to ensure they remain up-to-date with their skills, knowledge and familiarity of the Company's business and they remain aware of the risks associated with the Company and are also aware of regulatory, legal and financial and other developments to enable them to fulfil their role effectively.
There is no formal system of performance evaluation of the Board or its members.
The Company's Articles of Association do not require that Directors retire by rotation, however, in accordance with provision B.7.1 of the Code all Directors, with the exception of the Managing Director, seek re-election at intervals of no more than three years at the Annual General Meeting. Also in accordance with provision B.7.1 of the Code all new Directors are subject to re-election at the first Annual General Meeting following their appointment.
As the Company does not have a Remuneration Committee, the Chairman is responsible for fixing the remuneration packages of the Directors which are based on their performance and the scope of their duties and responsibilities. No Director has a service contract with the Company and accordingly periods of notice and termination payments would be construed in accordance with Employment Law. There is no scheme in place for Directors to receive entitlement to share options nor are there any long term incentive schemes.
The Directors have sole responsibility for the preparation of the Annual Report and Statement of Accounts, the Half Yearly Financial Report, the Interim Management Reports and other price-sensitive public reports in a balanced and understandable manner.
In order to ensure that the Company and Group have adequate resources to ensure the continuing operations of the Company and Group for the foreseeable future the Directors consider future trading, investment property acquisitions and cash requirements. The Directors take account of market conditions in all areas of the Group's activities and using their knowledge and experience relating to the Group's investment property portfolio. The Directors' opinion is that the Company and Group have adequate financial resources to allow the Company and Group to continue in operational existence for the foreseeable future and therefore considers the adoption of the going concern basis as appropriate for the preparation of the Accounts.
The Board is responsible for and annually reviews the Group's system of internal controls in relation to financial, operational, compliance and risk management to ensure their continued effectiveness. The systems adopted by the Board are designed to manage the risk of failure to achieve the Company's business objectives as opposed to eliminate them as any system of control can only provide reasonable but not absolute assurance against material misstatement or loss.
The Board, in accordance with the Code, has reviewed the effectiveness of the internal controls from the commencement of the accounting period to the date of approval of the Annual Report and Statement of Accounts. No significant failings or weaknesses have been identified in that period. There has also been a continual process of identification by the Directors of key areas of risk within the Group and appropriate action taken to mitigate and monitor such risks.
The main features of the Group's internal control and risk management systems in relation to the financial reporting process are:
As the Company does not have an Audit Committee, it is the responsibility of the Chairman and Company Secretary on a continuing basis to consider how the financial reporting and internal control principles apply to the Company, to maintain an appropriate relationship with the Group's Auditors and to review the scope and results of the audit and its cost effectiveness. The Board is responsible for setting the remuneration of the Auditors. In order to ensure the continued independence and objectivity of the Group's Auditors, the Board has established policies regarding the provision of non-audit services by the Auditors. In some cases, the nature of the non-audit advice may make it more timely and cost effective to select the Group's Auditors, who already have a good understanding of the Group. In other circumstances the decisions on the allocation of work are made on the basis of competence and cost effectiveness. The Group's Auditors are subject to professional standards which safeguard the integrity of the auditing role performed on behalf of the shareholders.
The Board has considered and for the time being has concluded that an internal audit function is not necessary. The Board will continue to review the need for such a function. As such there is no internal audit of the risks identified by the Board and the controls established by the Board to mitigate and monitor these risks.
The Board has in the past and will in the future continue to enter into dialogue with the shareholders wherever possible. The Chairman is responsible for ensuring that the views and concerns of the shareholders are communicated to the Board. The Chairman is also responsible for discussing governance and strategy matters with the shareholders.
As the Company has no non-executive Directors there is no opportunity for shareholders to meet with these Directors.
All shareholders have an opportunity at the Annual General Meeting to participate in questions and answers with the Board on matters relating to the Company.
At the Annual General Meeting separate resolutions will be proposed on each substantially separate issue and the number of proxy votes received for, against, and withheld for each resolution will be announced.
In accordance with section 489 of the Companies Act 2006, a resolution is to be proposed at the forthcoming Annual General Meeting for the re-appointment of French Duncan LLP as Auditors of the Company.
In the case of each of the Directors who were Directors at the date this Report was approved:
APPROVED BY THE BOARD OF DIRECTORS AND SIGNED ON ITS BEHALF BY P. SWEENEY, 19th November 2013 Secretary.
The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they have prepared the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that year.
In preparing those financial statements, the Directors are required to:
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Group and Parent Company to enable them to ensure that the financial statements comply with the Companies Act 2006 and IFRS as adopted by the EU. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Report of the Directors, Report on Directors' Remuneration and Corporate Governance Statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors confirms, to the best of their knowledge:
APPROVED BY THE BOARD OF DIRECTORS AND SIGNED ON ITS BEHALF BY P. SWEENEY, 19th November 2013 Secretary.
The Directors' Remuneration Report for the year to 31st July 2013 is set out below, in compliance with current Listing Rules and statutory reporting requirements.
The Listing Rules require a Company to include a statement in its Annual Report and Statement of Accounts as to whether or not it has complied with Section B of the Code of Best Practice annexed to the Listing Rules. These provisions require the Company to set up a Remuneration Committee consisting exclusively of non-executive Directors to determine the executive Directors' remuneration.
For reasons set out under Corporate Governance above, your Board has appointed no non-executive Directors and therefore no Remuneration Committee.
The Company's policy on Directors' remuneration for the current and future years is that individual rewards should reflect performance and the scope of their duties and responsibilities.
The following tables show an analysis of the various elements of remuneration receivable by those Directors who served during the year ended 31st July 2013.
| Salary and | Taxable | Total | Total | |||
|---|---|---|---|---|---|---|
| Fees | Benefits | 2013 | 2012 | |||
| £000 | £000 | £000 | £000 | |||
| J. M. Smart | 123 | 10 | 133 | 130 | ||
| A. D. McClure1 | – | – | – | 200 | ||
| L. E. Glenday2 | 209 | 5 | 214 | 130 | ||
| D. W. Smart | 90 | 6 | 96 | 88 | ||
| A. H. Ross | 90 | 6 | 96 | 53 | ||
| J. R. Smart3 | 44 | 3 | 47 | – |
A.D. McClure retired from the Board on 19th December 2011. Included in the total for 2012 above is £150,000 being a gratuity payment on retiral.
L. E. Glenday retired from the Board on 22nd January 2013. Included in Salary and fees above is £150,000 being a gratuity payment on retiral.
J. R. Smart was appointed to the Board on 23rd January 2013.
| Transfer Value Transfer Value | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Gross increase | Total accrued | of accrued | of accrued Total change | |||||||
| in accrued | pension | pension at | pension at | in value | ||||||
| pension | 31/7/13 | 31/7/13 | 31/7/12 during period | |||||||
| £000 | £000 | £000 | £000 | £000 | ||||||
| D. W. Smart | 5 | 18 | 207 | 118 | 45 | |||||
| A. H. Ross | 6 | 26 | 369 | 266 | 59 |
J. R. Smart is a member of the Group Personal Pension Plan and the Company made a contribution to the Plan during the period of his directorship of £3,000.
No Director receives fees or bonuses.
No Director holds share options and there is no scheme in place which could give such an entitlement, nor is there any long term incentive scheme.
No Director has a service contract with the Company and accordingly periods of notice and termination payments would be construed in accordance with Employment Law.
The graph below shows the total shareholder return performance of the Company's shares in comparison with the FTSE EPRA/NAREIT UK Index for the five years to 31st July 2013. For the purposes of the graph, total shareholder return has been calculated as the percentage change during the five year period in the market price of the shares, assuming that Dividends are reinvested.
This graph shows the value of £100 invested in J. Smart & Co. (Contractors) PLC over the last five financial years compared to £100 invested in the FTSE EPRA/NAREIT UK Index which the Directors believe is the most appropriate comparative index.
APPROVED BY THE BOARD OF DIRECTORS AND SIGNED ON ITS BEHALF BY P. SWEENEY, 19th November 2013 Secretary.
We have audited the financial statements of J. Smart & Co. (Contractors) PLC for the year ended 31st July 2013 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated and Company Statement of Changes in Equity, Consolidated and Company Statement of Financial Position, Consolidated and Company Statement of Cash Flows and related notes to the accounts. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company's shareholders, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the Directors' Responsibilities Statement (set out on page 15), the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the Parent Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion:
INDEPENDENT REPORT OF THE AUDITORS (continued) 31st JULY 2013
In our opinion:
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
Paula Galloway 375 West George Street, Senior Statutory Auditor Glasgow G2 4LW. for and on behalf of FRENCH DUNCAN LLP 19th November 2013 Statutory Auditor and Chartered Accountants
| Notes | 2013 £000 |
2012 £000 |
|
|---|---|---|---|
| Group construction work carried out Less: Own construction work capitalised |
20,595 (2,214) |
25,915 (3,329) |
|
| REVENUE 1 2 Cost of sales 2 |
18,381 (17,313) |
22,586 (18,645) |
|
| GROSS PROFIT | 1,068 | 3,941 | |
| Other operating income . Net operating expenses . |
3 | 5,383 (5,559) |
5,518 (6,102) |
| OPERATING PROFIT BEFORE PROFIT ON SALE AND NET DEFICIT ON VALUATION OF INVESTMENT PROPERTIES . |
892 | 3,357 | |
| Profit on sale of investment properties . Net deficit on valuation of investment properties |
124 (3,127) |
– (4,042) |
|
| OPERATING LOSS Share of profits/(losses) in Joint Ventures Income from available for sale financial assets Profit on sale of available for sale financial assets Finance income |
5 14 6 7 |
(2,111) 2,438 138 8 356 |
(685) (15) 128 34 593 |
| PROFIT BEFORE TAX | 829 | 55 | |
| Taxation | 8 | (445) | (586) |
| PROFIT/(LOSS) ATTRIBUTABLE TO EQUITY SHAREHOLDERS | 9 | 384 | (531) |
| EARNINGS/(LOSS) PER SHARE – BASIC AND DILUTED . | 11 | 0.80p | (1.06)p |
All activities in both the current and previous year relate to continuing operations.
Revenue excludes the share of Joint Ventures' revenue of £6,523,000 (2012, £67,000).
2012 Revenue and Cost of sales have been amended to revise income recognition on private housing in accordance with the requirements of IAS18: Revenue. There is no impact on reported profit.
| 2013 £000 |
2012 £000 |
|
|---|---|---|
| Profit/(Loss) for the year | 384 | (531) |
| Other comprehensive income | ||
| Items that may be reclassified subsequently to Income Statement: | ||
| Fair value adjustment of available for sale financial assets | 736 | 46 |
| Tax adjustment on fair value reserve | (108) | 5 |
| Total items which may be reclassified subsequently to | ||
| Income Statement | 628 | 51 |
| Items that will not be reclassified subsequently to Income Statement: | ||
| Actuarial gain/(loss) recognised in defined benefit pension scheme | 2,926 | (4,517) |
| Deferred taxation on actuarial (gain)/loss | (874) | 937 |
| Total items that will not be reclassified subsequently to | ||
| Income Statement | 2,052 | (3,580) |
| Total other comprehensive income/(loss) | 2,680 | (3,529) |
| TOTAL COMPREHENSIVE INCOME/(LOSS) | ||
| FOR THE YEAR, NET OF TAX | 3,064 | (4,060) |
| ATTRIBUTABLE TO EQUITY SHAREHOLDERS | 3,064 | (4,060) |
| Share Capital £000 |
Capital Redemption Reserve £000 |
Fair Value Reserve £000 |
Retained Earnings £000 |
Total £000 |
|
|---|---|---|---|---|---|
| At 1st August 2011 | 1,008 | – | 407 | 96,145 | 97,560 |
| Loss for the year . Other comprehensive income/(loss) TOTAL COMPREHENSIVE INCOME/ |
– – |
– – |
– 51 |
(531) (3,580) |
(531) (3,529) |
| (LOSS) FOR THE YEAR | – | – | 51 | (4,111) | (4,060) |
| TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY | |||||
| Shares purchased and cancelled | (19) | – | – | (732) | (751) |
| Transfer to Capital Redemption Reserve | – | 19 | – | (19) | – |
| Dividends | – | – | – | (1,440) | (1,440) |
| TOTAL TRANSACTIONS WITH OWNERS . | (19) | 19 | – | (2,191) | (2,191) |
| At 31st July 2012 | 989 | 19 | 458 | 89,843 | 91,309 |
| Profit for the year Other comprehensive income |
– – |
– – |
– 628 |
384 2,052 |
384 2,680 |
| TOTAL COMPREHENSIVE INCOME FOR | |||||
| THE YEAR | – | – | 628 | 2,436 | 3,064 |
| TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY | |||||
| Shares purchased and cancelled | (47) | – | – | (1,798) | (1,845) |
| Transfer to Capital Redemption Reserve | – | 47 | – | (47) | – |
| Dividends | – | – | – | (1,403) | (1,403) |
| TOTAL TRANSACTIONS WITH OWNERS . | (47) | 47 | – | (3,248) | (3,248) |
| At 31st July 2013 | 942 | 66 | 1,086 | 89,031 | 91,125 |
| Capital | ||||
|---|---|---|---|---|
| Share | Redemption | Retained | ||
| Capital | Reserve | Earnings | Total | |
| £000 | £000 | £000 | £000 | |
| At 1st August 2011 | 1,008 | – | 22,760 | 23,768 |
| Profit for the year | – | – | 590 | 590 |
| Other comprehensive loss | – | – | (3,580) | (3,580) |
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | – | – | (2,990) | (2,990) |
| TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY | ||||
| Shares purchased and cancelled | (19) | – | (732) | (751) |
| Transfer to Capital Redemption Reserve | – | 19 | (19) | – |
| Dividends | – | – | (1,440) | (1,440) |
| TOTAL TRANSACTIONS WITH OWNERS | (19) | 19 | (2,191) | (2,191) |
| At 31st July 2012 | 989 | 19 | 17,579 | 18,587 |
| Profit for the year | – | – | 766 | 766 |
| Other comprehensive income | – | – | 2,052 | 2,052 |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | – | – | 2,818 | 2,818 |
| TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY | ||||
| Shares purchased and cancelled | (47) | – | (1,798) | (1,845) |
| Transfer to Capital Redemption Reserve | – | 47 | (47) | – |
| Dividends | – | – | (1,403) | (1,403) |
| TOTAL TRANSACTIONS WITH OWNERS | (47) | 47 | (3,248) | (3,248) |
| At 31st July 2013 | 942 | 66 | 17,149 | 18,157 |
| Notes | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | £000 | £000 | ||||
| Property, plant and equipment | 12 | 1,279 | 1,122 | |||
| Investment properties | 13 | 62,325 | 70,437 | |||
| Investments in Joint Ventures | 14 | 819 | 997 | |||
| Available for sale financial assets | 16 | 3,817 | 2,988 | |||
| Retirement benefit surplus | 27 | 2,567 | – | |||
| Deferred tax assets | 22 | 109 | 557 | |||
| 70,916 | 76,101 | |||||
| CURRENT ASSETS | ||||||
| Inventories | 17 | 13,620 | 10,654 | |||
| Trade and other receivables | 18 | 6,650 | 6,921 | |||
| Current tax asset | 90 | – | ||||
| Cash at bank and in hand | 15,157 | 9,761 | ||||
| 35,517 | 27,336 | |||||
| TOTAL ASSETS | 106,433 | 103,437 | ||||
| NON-CURRENT LIABILITIES | ||||||
| Retirement benefit obligations | 27 | – | 1,490 | |||
| Deferred tax liabilities | 22 | 2,049 | 2,180 | |||
| 2,049 | 3,670 | |||||
| CURRENT LIABILITIES | ||||||
| Trade and other payables | 20 | 3,595 | 3,961 | |||
| Current tax liabilities | – | 32 | ||||
| Bank overdraft | 9,664 | 4,465 | ||||
| 13,259 | 8,458 | |||||
| TOTAL LIABILITIES | 15,308 | 12,128 | ||||
| NET ASSETS | 91,125 | 91,309 | ||||
| EQUITY | ||||||
| Called up share capital | 23 | 942 | 989 | |||
| Capital redemption reserve | 66 | 19 | ||||
| Fair value reserve | 1,086 | 458 | ||||
| Retained earnings | 89,031 | 89,843 | ||||
| TOTAL EQUITY | 91,125 | 91,309 | ||||
| Approved by the Board on 19th November 2013 |
D. W. SMART, Director | J. M. SMART, Director | ||||
Company Registration No. SC025130
| Notes | 2013 £000 |
2012 £000 |
||||
|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||||
| Property, plant and equipment | 12 | 760 | 596 | |||
| Investments in Subsidiaries and Joint Ventures | 14 | 1,235 | 733 | |||
| Retirement benefit surplus | 27 | 2,567 | – | |||
| Deferred tax assets | 22 | 20 | 387 | |||
| 4,582 | 1,716 | |||||
| CURRENT ASSETS | ||||||
| Inventories | 17 | 13,380 | 10,336 | |||
| Trade and other receivables | 18 | 7,538 | 9,032 | |||
| Current tax asset . | 1,993 | 776 | ||||
| Cash at bank and in hand | 1 | 1,045 | ||||
| 22,912 | 21,189 | |||||
| TOTAL ASSETS | 27,494 | 22,905 | ||||
| NON-CURRENT LIABILITIES | ||||||
| Retirement benefit obligations | 27 | – | 1,490 | |||
| Deferred tax liabilities | 22 | 571 | 68 | |||
| 571 | 1,558 | |||||
| CURRENT LIABILITIES | ||||||
| Trade and other payables | 20 | 2,278 | 2,760 | |||
| Bank overdraft | 6,488 | – | ||||
| 8,766 | 2,760 | |||||
| TOTAL LIABILITIES | 9,337 | 4,318 | ||||
| NET ASSETS | 18,157 | 18,587 | ||||
| EQUITY | ||||||
| Called up share capital | 23 | 942 | 989 | |||
| Capital redemption reserve | 66 | 19 | ||||
| Retained earnings | 17,149 | 17,579 | ||||
| TOTAL EQUITY | 18,157 | 18,587 |
Approved by the Board on J. M. SMART, Director
19th November 2013 D. W. SMART, Director
Company Registration No. SC025130
| Notes | 2013 £000 |
2012 £000 |
|||
|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | 24 (a) | (1,842) | 984 | ||
| Tax paid on profits | (1,232) | (823) | |||
| NET CASH FLOWS FROM OPERATING ACTIVITIES | (3,074) | 161 | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Additions to property, plant and equipment | (544) | (230) | |||
| Additions to investment properties | (879) | (94) | |||
| Sale of property, plant and equipment . | 51 | 16 | |||
| Sale of investment properties | 8,202 | – | |||
| Expenditure on own work capitalised - investment properties | (2,214) | (3,329) | |||
| Purchase of available for sale financial assets | (277) | (49) | |||
| Proceeds of sale of available for sale financial assets | 192 | 159 | |||
| Acquisition of investment in subsidiary, net of cash acquired | (227) | – | |||
| Interest received . | 100 | 103 | |||
| Dividend received from Joint Venture . | 2,115 | – | |||
| NET CASH FROM INVESTING ACTIVITIES | 6,519 | (3,424) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Purchase of own shares . | (1,845) | (751) | |||
| Dividends paid | (1,403) | (1,440) | |||
| NET CASH FROM FINANCING ACTIVITIES | (3,248) | (2,191) | |||
| INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 197 | (5,454) | |||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 24 (b) | 5,296 | 10,750 | ||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 24 (b) | 5,493 | 5,296 |
| Notes | 2013 £000 |
2012 £000 |
|||
|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | 25 (a) | (3,033) | (4,894) | ||
| Tax (paid)/received | (426) | 354 | |||
| NET CASH FLOWS FROM OPERATING ACTIVITIES | (3,459) | (4,540) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Purchase of property, plant and equipment | (427) | (211) | |||
| Sale of property, plant and equipment . | 59 | 9 | |||
| Acquisition of investment in subsidiary | (463) | – | |||
| Interest received . | 6 | 7 | |||
| NET CASH FROM INVESTING ACTIVITIES | (825) | (195) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Purchase of own shares . | (1,845) | (751) | |||
| Dividends paid | (1,403) | (1,440) | |||
| NET CASH FROM FINANCING ACTIVITIES | (3,248) | (2,191) | |||
| DECREASE IN CASH AND CASH EQUIVALENTS | (7,532) | (6,926) | |||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 25 (b) | 1,045 | 7,971 | ||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 25 (b) | (6,487)) | 1,045 |
J. Smart & Co. (Contractors) PLC which is the ultimate Parent Company of the J. Smart & Co. (Contractors) PLC Group is a public limited company registered in Scotland, incorporated in the United Kingdom and listed on the London Stock Exchange.
The accounts are prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) Interpretations endorsed by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
There was only one new standard which was mandatory for the first time for the year to 31st July 2013, being IAS 1 (amended), Presentation of Financial Statements which has resulted in a change to the presentation of the Consolidated Statement of Comprehensive Income. The comparative amounts in the Consolidated Statement of Comprehensive Income have been reclassified to conform with the current year's presentation.
In the year to 31st July 2012 the Company and Group adopted early IAS 12 (revised) Income tax relating to Deferred Tax and the recovery of underlying assets, although mandatory adoption was not required until the year to 31st July 2013.
Also there have been changes to standards resulting from the International Accounting Standards Board's 2010 Annual Improvement Programme, none of the amendments had a material impact on the Group and Company financial statements.
The following new Standards, Amendments to Standards and Interpretations relevant to the Group have been issued by the International Accounting Standard Board but are not yet effective for the Group and Company at the date of these financial statements, and have not been adopted early:
The Directors are to fully consider the implications of these Standards, Amendments to Standards and Interpretations and their relevance and impact on the financial statements of the Company and Group. The Directors anticipate that there will be no material effect on the financial statements, other than with regards to IAS 19 (amended): Employee Benefits as noted below.
In the year to 31st July 2014, IAS 19 (amended): Employee Benefits will be adopted for the first time and will result in a change to the measurement and presentation of defined benefit pension expense/ income and other disclosures relating to defined benefit pensions. The change to the measurement of the pension expense/income will result in replacing the interest cost and expected return on scheme assets with a single net finance cost or return which is determined by applying the same discount rate used to determine the defined benefit obligations to the net defined benefit liability or asset. The Directors are still assessing the implication of applying the revised standard on the results and financial position of the Group.
The accounts have been prepared on a going concern basis and under the historical cost convention except where the measurement of balances at fair value is required as noted below for investment properties and available for sale financial assets.
The accounting policies set out below have been consistently applied to all periods presented in these accounts.
The preparation of 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 and 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.
Investment properties are revalued annually by the Directors in accordance with the RICS Valuation Standards. The valuations are subjective due to, among other factors, the individual nature of the property, its location and the expected future rental income. As a result, the valuation of the Group's investment property portfolio incorporated into the financial statements is subject to a degree of uncertainty and is made on the basis of assumptions which may prove to be inaccurate.
The assumptions used by the Directors are market standard assumptions in accordance with the RICS Valuation Standards and include matters such as tenure and tenancy details, ground conditions of the properties and their structural conditions, prevailing market yields and comparable market conditions. If any of the assumptions used by the Directors prove to be incorrect this could result in the valuation of the Group's investment property portfolio differing from the valuation incorporated into the financial statements and the difference could have a material effect on the financial statements.
Judgement is required in the area of provisions for losses on long-term contracts. The Directors consider adequate, but not excessive provisions have been made in this respect.
The valuation of the retirement benefit obligation is dependent upon a series of assumptions, mainly discount rates, mortality rates, investment returns, salary inflation and the rate of pension increases, which are determined after taking expert advice from the Group's Actuary. These are set out in note 27 to the financial statements.
The Group accounts consolidate the accounts of J. Smart & Co. (Contractors) PLC and all of its Subsidiaries made up to 31st July each year. Subsidiaries are entities controlled by the Company. Control is assumed where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Intra-group balances and any income or expenses arising from intra-group transactions are eliminated in preparing the Group accounts.
No income statement is presented for the Parent Company as provided by section 408 of the Companies Act 2006.
Subsidiaries acquired in the year are accounted for using the acquisition method of accounting. Identifiable assets acquired and liabilities assumed are measured at their fair values at the acquisition date. The consideration transferred for the acquisition is the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the acquisition date. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable assets acquired and liabilities assumed, the difference is recognised directly in the Income Statement. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised and is subject to annual impairment review.
Acquisition related costs are expensed as incurred.
Group objectives in managing capital are to safeguard the interests of the Company to operate as a net debt-free going concern, of its employees to maintain wherever possible security of employment, remuneration and retirement provisions and of its shareholders to maintain continuity of dividends and stability of share price.
The capital structure of the Group consists of issued share capital, reserves and retained earnings represented predominantly by investment properties, financial investments and cash.
These assets are purchased, managed and maintained by the Group's management and employees, advised where appropriate by independent outside professionals. Refer to pages 7 and 8 of this report for details of relevant risk factors and management measures.
The Group has sufficient cash reserves and readily realisable assets available to meet its foreseeable commitments.
Joint Ventures are those entities over which the Company has a 50% holding and exercises joint control under a contractual arrangement. The results of Joint Venture undertakings are accounted for using the equity method of accounting. Under this method the investment is initially recorded at cost and is subsequently adjusted to reflect the Group's share of the net profit or loss in the Joint Venture.
The Accounts of the Group's Joint Ventures have been prepared in accordance with UK GAAP. The Group's interest in the assets and liabilities of the Joint Ventures have only been restated in accordance with International Financial Reporting Standards where such restatement is considered material to an understanding of the Group's interest.
Investment properties are properties, either owned by the Group or where the Group is a lessee under a finance lease, which are held for long-term rental income or for capital appreciation or both. Also, properties held under operating leases are accounted for as investment properties when the rest of the definition of an investment property is met. In such cases, the operating leases concerned are accounted for as if they were finance leases.
Investment properties, whether completed or under development, are initially recognised at cost and revalued at the Balance Sheet date to fair value as determined by the Directors in accordance with the RICS Valuation Standards.
Gains or losses arising from the changes in fair value are included in the Income Statement in the year in which they arise. In accordance with IAS 40: Investment Property, as the Group uses the fair value model, no depreciation is provided in respect of investment properties including integral plant.
Additions to investment properties consist of costs of a capital nature and, in the case of investment properties under development, includes certain internal staff and associated costs directly attributable to the management of the developments under construction.
Items of property, plant and equipment are stated at cost less accumulated depreciation.
Subsequent costs are included in the asset's carrying value or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of them can be measured reliably. All other repairs and maintenance expenditure is charged to the Income Statement as incurred.
Depreciation is provided on all items of property, plant and equipment, other than investment properties and freehold land, at rates calculated to write off the cost of each asset over its expected useful life, as follows:
| Freehold buildings | - | over 40 to 66 years |
|---|---|---|
| Plant and machinery | - | 25% to 33 1 ⁄3% reducing balance |
| Office furniture and fittings | - | 20% to 33 1 ⁄3% reducing balance |
| Motor vehicles | - | 33 1 ⁄3% reducing balance |
Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash inflows independent of the cash inflows of other groups of assets.
The Group assesses at each Balance Sheet date whether there is an indication that an asset may be impaired. If an indication exists the Group makes an estimate of the recoverable amount of each asset group, being the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. An impairment loss is recognised where the recoverable amount is lower than the carrying value of assets.
If there is an indication that previously recognised impairment losses may have decreased or no longer exist, a reversal of the loss may be made. The carrying amount of the asset is increased to its recoverable amount only up to the carrying amount that would have resulted, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Impairment losses and any subsequent reversals are recognised in the Income Statement.
Goodwill is reviewed for impairment annually. Impairment is determined by reference to the recoverable amount of the operating segment, where this is less than the carrying value of the operating segment an impairment loss is recognised immediately in the Income Statement. This loss cannot be reversed in future periods.
Inventories are valued at the lower of cost and net realisable value.
Land held for development is included at the lower of cost and net realisable value.
Work in progress other than long-term contract work in progress is valued at the lower of cost and net realisable value.
Cost includes materials, on a first-in first-out basis and direct labour plus attributable overheads based on normal operating activity, where applicable. Net realisable value is the estimated selling price less anticipated disposal costs.
Variations and claims are included in Revenue where it is probable that the amount, which can be measured reliably, will be recovered from the customer.
Amounts recoverable on contracts which are included in debtors are stated at cost as defined above, plus attributable profit to the extent that this is reasonably certain after making provision for maintenance costs, less any losses incurred or foreseen in bringing contracts to completion, and less amounts received as progress payments.
For any contracts where receipts exceed the book value of work done, the excess is included in trade and other payables as payments on account.
The charge for current UK corporation tax is based on results for the year as adjusted for items that are non-assessable or disallowed and any adjustments for tax payable in respect of previous years. It is calculated using rates that have been enacted or substantially enacted at the Balance Sheet date.
Deferred tax is provided using the liability method in respect of temporary differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax is provided on all temporary differences, except in respect of investments in Subsidiaries and Joint Ventures where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the Balance Sheet date and are expected to apply when the deferred tax asset is realised or the deferred tax liability is settled. It is recognised in the Income Statement except when it relates to items credited or charged directly to Equity, in which case the deferred tax is also dealt with in Equity.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The Group operates a defined benefit pension scheme, which was closed to new members during the year to 31st July 2003 and which requires contributions to be made to an administered fund.
The obligations of the scheme represent benefits accruing to employees and are measured at discounted present value while scheme assets are measured at their fair value. The discount rate used is the yield on AA credit rated corporate bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit credit method.
The operating and financial costs of such plans are recognised separately in the Income Statement, service costs are spread systematically over the working lives of the employees concerned and financing costs are recognised in the year in which they arise. Actuarial gains and losses, arising from either experience, differing from previous actuarial assumptions, or changes to those assumptions, are recognised immediately in the Consolidated Statement of Comprehensive Income.
The Group also operates a defined contribution Group Personal Pension Plan for eligible employees. The plan is externally administered and professionally managed. Contributions payable are expensed to the Income Statement as incurred.
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
In accordance with IAS 40: Investment Property, leases of investment property are assessed on a property by property basis. Where future rentals are material, the properties are capitalised and treated as finance leases in accordance with IAS 17: Leases, otherwise properties are classified as operating leases and rentals payable are charged to the Income Statement on a straight line basis over the term of the lease.
Other leases are classified as operating leases and rentals payable are charged to the Income Statement on a straight line basis over the term of the lease.
Properties leased out under operating leases are included in investment property, with rental income recognised on a straight line basis over the lease term.
Revenue, which is stated net of value added tax, represents the invoiced value of goods sold, except in the case of long-term contracts where revenue represents the amounts received and receivable for work done in the year. The measurement and stage of completion of long-term contracts are based on external valuations issued by third party surveyors.
Profits on long-term contracts are calculated in accordance with International Financial Reporting Standards and do not relate directly to revenue. Profit on current contracts is only taken at a stage near enough to completion for that profit to be reasonably certain after making provision for contingencies, whilst provision is made for all losses incurred to the accounting date together with any further losses that are foreseen in bringing contracts to completion. The value of construction work transferred to investment properties is excluded from revenue.
Revenue from investment properties comprises rental income, service charges, insurance receivable and other recoveries, and is disclosed as other operating income in the Income Statement.
Rental income from investment property leased out under an operating lease is recognised in the Income Statement on a straight line basis over the term of the lease.
Revenue from private housing sales is recognised when transactions are legally completed.
Revenue from private house sales under shared ownership scheme are accounted for as instalments are received.
Financial assets and financial liabilities are recognised on the Group's Statement of Financial Position when the Group becomes a party to the contractual provision of the instrument. The principal treasury objective is to provide sufficient liquidity to meet operational cash requirements. The Group operates controlled treasury policies which are monitored by the Board to ensure that the needs of the Group are met as they arise.
Financial assets available for sale represent investments in quoted shares which are recognised at fair value at the year end. The movement in fair value is transferred directly to Equity and shown in a separately designated Fair Value Reserve.
Trade and other receivables are recognised at invoiced value less provisions for impairment. A provision for impairment of trade receivables is established where there is objective evidence that the Group will not be able to collect all amounts due according to the terms of the receivables concerned.
Cash and cash equivalents comprise cash in hand, deposits with banks and other short-term highly liquid investments with original maturities of three months or less. For the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Trade and other payables are non-interest bearing and are recognised at invoiced amount.
Final Dividends are recognised as a liability in the year in which they are approved by the Company's shareholders. Interim Dividends are recognised when they are paid.
IFRS 8: Operating Segments requires operating segments to be identified on the basis of internal reporting about components of the Group that are regularly reviewed by the chief operating decision maker to allow the allocation of resources to the segments and to assess their performance. The chief operating decision maker has been identified as the Board of Directors.
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 Loss |
||
|---|---|---|---|---|---|
| £000 | £000 | £000 | 2013 £000 |
2012 £000 |
|
| 2013 | |||||
| Construction activities | 18,381 | 2,214 | 20,595 | (2,961) | – |
| Investment activities | 5,383 | – | 5,383 | 850 | – |
| 23,764 | 2,214 | 25,978 | (2,111) | – | |
| 2012 | |||||
| Construction activities | 22,586 | 3,329 | 25,915 | – | (25) |
| Investment activities | 5,518 | – | 5,518 | – | (660) |
| 28,104 | 3,329 | 31,433 | – | (685) | |
| OPERATING LOSS | (2,111) | (685) | |||
| Share of results of Joint Ventures | 2,438 | (15) | |||
| Finance and investment income | 502 | 755 | |||
| PROFIT ON ORDINARY ACTIVITIES BEFORE TAX | 829 | 55 |
Internal revenue relates to own work capitalised, all other internal transactions are eliminated on consolidation. The Group had sales under construction activities from three customers amounting to £11,000,000, (2012, two customers - £10,721,000).
| Non-Current | Segment | Segment | |||
|---|---|---|---|---|---|
| Asset Additions | Depreciation | Assets | Liabilities | ||
| £000 | £000 | £000 | £000 | ||
| 2013 | |||||
| Construction activities | 544 | 360 | 32,089 | 11,202 | |
| Investment activities | 3,093 | – | 75,444 | 6,025 | |
| Joint Ventures | – | – | 819 | – | |
| 108,352 | 17,227 | ||||
| Allocation of corporation tax debtor | (1,919) | (1,919) | |||
| 106,433 | 15,308 | ||||
| 2012 | |||||
| Construction activities | 230 | 363 | 26,223 | 5,016 | |
| Investment activities | 3,423 | – | 77,022 | 7,917 | |
| Joint Ventures | – | – | 997 | – | |
| 104,242 | 12,933 | ||||
| Allocation of corporation tax debtor | (805) | (805) | |||
| 103,437 | 12,128 | ||||
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| £000 | £000 | |||||
| Rental income | 4,901 | 5,000 | ||||
| Service charges and insurance receivable | 482 | 518 | ||||
| 5,383 | 5,518 | |||||
| Direct property costs | (1,495) | (2,121) | ||||
| Net rental income | 3,888 | 3,397 |
Direct property costs included £513,000 (2012, £620,000) in respect of investment properties that did not generate rental income in the year.
Staff costs during the year amounted to:
| Wages, salaries and short term benefits. | 9,496 | 9,005 | |||
|---|---|---|---|---|---|
| Social security costs | 982 | 877 | |||
| Post-employment benefits | 852 | 822 | |||
| 11,330 | 10,704 | ||||
| The average weekly number of employees during the year was made up as follows: | |||||
| No. | No. | ||||
| Construction and related services. | 258 | 244 | |||
| Office and management . | 25 | 25 | |||
| 283 | 269 | ||||
| Directors' remuneration: | |||||
| £000 | £000 | ||||
| – Salaries and short term benefits | 586 | 601 | |||
| – Post-employment benefits | 58 | 67 | |||
| 644 | 668 | ||||
D. W. Smart and A. H. Ross are members of the Group's defined benefit pension scheme.
J. R. Smart is a member of the Group's defined contribution Group Personal Pension Plan.
Key management is comprised solely of the Directors of the Company.
| This is stated after charging/(crediting): Cost of inventories recognised as an expense . 15,965 21,210 |
|
|---|---|
| Staff costs (per note 4) 11,330 10,704 |
|
| 332 Hire of plant and machinery 547 |
|
| Contingent rents . 73 |
71 |
| Depreciation of owned assets 360 363 |
|
| Profit on disposal of property, plant and equipment (24) |
(6) |
| Auditors' remuneration and expenses – audit services 114 120 |
The auditors' fees for the Parent Company are £50,000 (2012, £52,000).
2012 Revenue and Cost of sales have been equally amended by £2,098,000 to revise for income recognition on private housing in accordance with IAS 18: Revenue. There was no impact on reported profit for that year.
| 6. | INCOME FROM INVESTMENTS | 2013 £000 |
2012 £000 |
|---|---|---|---|
| Dividend income from available for sale financial assets | 138 | 128 | |
| 7. | FINANCE INCOME | ||
| Receivable: Interest on short term deposits . Other interest Pension scheme . |
69 31 256 356 |
96 7 490 593 |
|
| 8. | TAXATION | ||
| UK Corporation Tax Current tax on income for the year Corporation tax over provided in previous years |
1,113 (3) |
620 – |
|
| Deferred taxation (note 22) | 1,110 (665) |
620 (34) |
|
| Current Tax Reconciliation Profit on ordinary activities before tax . Share of (profits)/losses of Joint Ventures |
445 829 (2,438) |
586 55 15 |
|
| (1,609) | 70 | ||
| Current tax at 23.67% (2012, 25.33%). Effects of: |
(381) | 18 | |
| Expenses not deductible for tax purposes Depreciation in excess of capital allowances . Non taxable income Deferred tax asset not recognised Effect of indexation allowances. |
16 16 (34) 1,197 (112) |
15 1 (32) – 915 |
|
| Effect of change in tax rate Adjustments to tax charge in respect of prior years |
(254) (3) |
(331) – |
|
| 445 | 586 |
The Finance Act 2013, which received Royal Ascent on 17th July 2013 states that the UK corporation tax rate will reduce to 23% for financial years commencing 1st April 2013 with further reductions to 21% for financial years commencing 1st April 2014 and to 20% for financial years commencing 1st April 2015.
The effective corporation tax rate is 23.67% (2012, 25.33%) being the average rate applicable over the period. Deferred tax provisions have been calculated using the 20% rate.
In addition to amounts charged to the Income Statement, a deferred tax charge of £874,000 (2012, credit – £937,000) relating to actuarial gains/(losses) on defined benefit pension scheme has been recognised directly to Equity. Also a deferred tax charge of £108,000 (2012, credit – £5,000) relating to the movement in fair value of available for sale financial assets has been recognised directly to Equity.
The value of the deferred tax asset in respect of Capital Losses not recognised in the financial statements amounted to £1,197,000 (2012, £nil).
36 37 There are no income tax consequences attached to dividends paid or proposed by the Company to its shareholders.
| 2013 £000 |
2012 £000 |
|||
|---|---|---|---|---|
| Dealt with in the accounts of the Parent Company | 766 | 590 | ||
| Retained by Subsidiary and Joint Venture Companies | (382) | (1,121) | ||
| 384 | (531) | |||
| 10. | DIVIDENDS | |||
| 2011 Final Dividend of 9.70p per 10p share | – | 978 | ||
| 2012 Interim Dividend of 0.92p per 2p share . | – | 462 | ||
| 2012 Final Dividend of 1.98p per 2p share | 968 | – | ||
| 2013 Interim Dividend of 0.92p per 2p share . | 435 | – | ||
| 1,403 | 1,440 | |||
| Proposed 2013 Final Dividend of 2.01p per 2p share (2012, 1.98p per 2p share), after wavers. |
430 | 980 | ||
The proposed Final Dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
| Profit/(Loss) attributable to Equity shareholders £000 |
Basic Earnings/ (Loss) per share |
|||||
|---|---|---|---|---|---|---|
| Year to 31st July 2013 | 384 | 0.80p | ||||
| Year to 31st July 2012 | (531) | (1.06)p |
Basic earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to equity shareholders by the weighted average number of shares in issue during the year.
The weighted average number of shares in issue as at 31st July 2013 amounted to 48,299,000 (2012, 50,201,000).
There is no difference between basic and dilutedearnings/(loss) per share.
| Land and buildings Freehold £000 |
Plant, equipment and vehicles £000 |
Total £000 |
|||
|---|---|---|---|---|---|
| Cost: | |||||
| At 1st August 2012 | 714 | 5,546 | 6,260 | ||
| Additions | 182 | 362 | 544 | ||
| Disposals | – | (348) | (348) | ||
| At 31st July 2013 | 896 | 5,560 | 6,456 | ||
| Depreciation: | |||||
| At 1st August 2012 | 478 | 4,660 | 5,138 | ||
| Provided during year . | 18 | 342 | 360 | ||
| Disposals | – | (321) | (321) | ||
| At 31st July 2013 | 496 | 4,681 | 5,177 | ||
| Net book value: At 31st July 2013 |
400 | 879 | 1,279 | ||
| Cost: | |||||
| At 1st August 2011 | 739 | 5,452 | 6,191 | ||
| Additions | – | 230 | 230 | ||
| Transfer to investment properties | (25) | – | (25) | ||
| Disposals | – | (136) | (136) | ||
| At 31st July 2012 | 714 | 5,546 | 6,260 | ||
| Depreciation: | |||||
| At 1st August 2011 | 462 | 4,439 | 4,901 | ||
| Provided during year . | 16 | 347 | 363 | ||
| Disposals | – | (126) | (126) | ||
| At 31st July 2012 | 478 | 4,660 | 5,138 | ||
| Net book value: | |||||
| At 31st July 2012 | 236 | 886 | 1,122 |
As referred to in the Report of the Directors, the Group's non-investment heritable properties were revalued at 31st July 2013. This revaluation which has not been incorporated into these accounts, showed a net surplus over the cost of those properties after depreciation of £1,704,000 as at 31st July 2013.
Included within Freehold Land and Buildings is land costing £13,000 (2012, £13,000) which is not depreciated.
(b)COMPANY
| Land and buildings Freehold £000 |
Plant, equipment and vehicles £000 |
Total £000 |
||||
|---|---|---|---|---|---|---|
| Cost: | ||||||
| At 1st August 2012 | 179 | 2,591 | 2,770 | |||
| Additions | 182 | 245 | 427 | |||
| Disposals | – | (241) | (241) | |||
| Group transfer disposals | – | (42) | (42) | |||
| At 31st July 2013 | 361 | 2,553 | 2,914 | |||
| Depreciation: | ||||||
| At 1st August 2012 | 95 | 2,079 | 2,174 | |||
| Provided during year . | 5 | 226 | 231 | |||
| Disposals | – | (219) | (219) | |||
| Group transfer disposals | – | (32) | (32) | |||
| At 31st July 2013 | 100 | 2,054 | 2,154 | |||
| Net book value: | ||||||
| At 31st July 2013 | 261 | 499 | 760 | |||
| Cost: | ||||||
| At 1st August 2011 | 179 | 2,516 | 2,695 | |||
| Additions | – | 211 | 211 | |||
| Disposals | – | (122) | (122) | |||
| Group transfer disposals | – | (14) | (14) | |||
| At 31st July 2012 | 179 | 2,591 | 2,770 | |||
| Depreciation: | ||||||
| At 1st August 2011 | 92 | 1,990 | 2,082 | |||
| Provided during year . | 3 | 214 | 217 | |||
| Disposals | – | (113) | (113) | |||
| Group transfer disposals | – | (12) | (12) | |||
| At 31st July 2012 | 95 | 2,079 | 2,174 | |||
| Net book value: At 31st July 2012 |
84 | 512 | 596 |
As referred to in the Report of the Directors, the Company's non-investment heritable properties were revalued at 31st July 2013. This revaluation which has not been incorporated into these accounts, showed a net surplus over the cost of those properties after depreciation of £1,421,000 as at 31st July 2013.
| Cost or valuation: | Land and buildings Freehold £000 |
Land and buildings Leasehold £000 |
Total £000 |
|||
|---|---|---|---|---|---|---|
| At 1st August 2012 | 63,834 | 6,603 | 70,437 | |||
| Additions Disposals (Deficit)/surplus on valuation |
2,914 (8,060) (3,149) |
179 (18) 22 |
3,093 (8,078) (3,127) |
|||
| At 31st July 2013 | 55,539 | 6,786 | 62,325 | |||
| Cost or valuation: | ||||||
| At 1st August 2011 | 64,699 | 7,887 | 72,586 | |||
| Additions | 3,400 | 23 | 3,423 | |||
| Transfer from property, plant and equipment | 25 | – | 25 | |||
| Transfer to inventories | (1,555) | – | (1,555) | |||
| Transfers | 1,035 | (1,035) | – | |||
| Deficit on valuation | (3,770) | (272) | (4,042) | |||
| At 31st July 2012 | 63,834 | 6,603 | 70,437 |
The Group's investment properties were valued on the basis of market value on 31st July 2013 in accordance with the RICS Valuation Standards by J. M. Smart, MRICS and D. W. Smart, MRICS both of whom are Directors of the Parent Company. Open market value represents the estimated amount for which property should exchange on the date of valuation between a willing buyer and willing seller in an arm's length transaction, and does not account for costs of disposals.
In accordance with IAS 40: Investment Property, investment properties are revalued annually and the aggregate surplus or deficit is taken to the Income Statement and no depreciation is provided in respect of these properties.
The Group had obligations of £1,230,000 in respect of developments and repair costs of investment properties at the Balance Sheet date.
| Group | Company | ||||||
|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||||
| £000 | £000 | £000 | £000 | ||||
| Shares in Subsidiaries at Cost | – | – | 1,235 | 708 | |||
| Joint Ventures | 819 | 997 | – | 25 | |||
| 819 | 997 | 1,235 | 733 | ||||
| (a) JOINT VENTURES | |||||||
| Group | |||||||
| 2013 | 2012 | ||||||
| £000 | £000 | ||||||
| Share of Assets: | |||||||
| Share of Non-Current Assets | 3,241 | 3,241 | |||||
| Share of Current Assets . | 1,837 | 1,693 | |||||
| 5,078 | 4,934 | ||||||
| Share of Liabilities: | |||||||
| Share of Non-Current Liabilities . | – | – | |||||
| Share of Current Liabilities. . | 4,259 | 3,937 | |||||
| 4,259 | 3,937 | ||||||
| Share of Net Assets | 819 | 997 | |||||
| Turnover . | 6,523 | 67 | |||||
| Cost of Sales | (3,746) | (328) | |||||
| Net rental income | 315 | 316 | |||||
| Net operating expenses . | (30) | (25) | |||||
| Operating profit . | 3,062 | 30 | |||||
| Finance income | 4 | 1 | |||||
| Finance costs | (3) | (3) | |||||
| Profit before tax . | 3,063 | 28 | |||||
| Taxation | (625) | (43) | |||||
| Share of post tax results. | 2,438 | (15) | |||||
| Dividends paid | (2,115) | – | |||||
| 323 | (15) |
The Group's share of retained profits in the Joint Ventures at 31st July 2013 amounted to £819,000 (2012, £972,000).
Included in share of net assets at 31st July 2012 is £501,000 relating to Edinburgh Industrial Estates Limited (refer to note 15). On 6th March 2013, the Group acquired all of the issued share capital of Edinburgh Industrial Estates Limited thus making that company a wholly owned subsidiary of J Smart & Co (Contractors) PLC.
During the year, the Group transferred land into Invertiel Developments Limited which, with the exception of one piece thereof, was then subsequently sold to a third party. This generated a profit after tax in Invertiel Developments Limited of £4,240,000 of which J Smart & Co (Contractors) PLC received half thereof.
| Registered in and | ||||
|---|---|---|---|---|
| Principal Country | J. Smart & Co. (Contractors) PLC | |||
| Name of Joint Venture | of Operation | Interest in Joint Venture's Capital | ||
| Prestonfield Development Company Limited | Scotland | 50% | ||
| Northrigg Limited | Scotland | 50% | ||
| Duff Street Limited | Scotland | 50% | ||
| Invertiel Developments Limited | Scotland | 50% | ||
| Issued shares held | ||||
| by J. Smart & Co. | ||||
| Name of Joint Venture | Jointly managed with | Issued Share capital | (Contractors) PLC | |
| Prestonfield Development | Westerwood | 2 ordinary £1 shares | 1 B Share | |
| Company Limited | Limited | split equally into A & B | ||
| shares and ranking | ||||
| equally in all respects | ||||
| Northrigg Limited | William Sanderson | 2 ordinary £1 | 1 A Share | |
| shares split equally | ||||
| into A & B shares | ||||
| and ranking equally | ||||
| in all respects | ||||
| Duff Street Limited | Kiltane Developments | 100 ordinary £1 | 50 A Shares | |
| Limited | shares split equally | |||
| into A & B shares | ||||
| and ranking equally | ||||
| in all respects | ||||
| Invertiel Developments Macdonald Estates PLC |
100 ordinary £1 | 50 A Shares | ||
| Limited | shares split equally | |||
| into A & B shares | ||||
| and ranking equally | ||||
| in all respects |
All of the Joint Venture companies were established for the purposes of property development and all have accounting years ending on 31st July.
On 6th March 2013 the Company acquired the shares held by The EDI Group Limited in Edinburgh Industrial Estates Limited. As of that date, Edinburgh Industrial Estates Limited became a wholly owned subsidiary of the Company. Refer to Note 15 for details of the Business Combination.
| 2012 |
|---|
| £000 |
| 708 |
| – |
| – |
| 708 |
At 31st July 2013 the Company held the entire issued share capital of the following companies, all of which are registered in and operate in Scotland:
McGowan & Co. (Contractors) Limited Plumbing contractors Cramond Real Estate Company Limited Investment holding Thomas Menzies (Builders) Limited Civil Engineering contractors C. & W. Assets Limited Property company Edinburgh Industrial Estates Limited Property development
Concrete Products (Kirkcaldy) Limited Manufacture of concrete building products
On 6th March 2013 the Company acquired the entire issued 'A' Ordinary Shares of property development company, Edinburgh Industrial Estates Limited. Edinburgh Industrial Estates Limited was prior to the above acquisition a Joint Venture investment of the Company. Following the acquisition on 6th March 2013, Edinburgh Industrial Estates Limited became a wholly owned subsidiary of the Company.
The business combination was to allow the Company to gain total control over Edinburgh Industrial Estates Limited.
| Fair value of assets acquired: | £000 | |||
|---|---|---|---|---|
| Inventories | 725 | |||
| Other receivables | 40 | |||
| Cash and cash equivalents | 236 | |||
| Fair value of net assets acquired | 1,001 | |||
| Fair value of previously held interest | 501 | |||
| 500 | ||||
| Goodwill | 2 | |||
| Consideration | 502 | |||
| Fair value of consideration: | ||||
| Cash | 463 | |||
| Deferred consideration | 39 | |||
| Total consideration | 502 |
| Cash impact: | £000 | ||
|---|---|---|---|
| Total cash consideration. | 502 | ||
| Cash acquired. | (236) | ||
| 266 | |||
| Deferred consideration. . | (39) | ||
| 227 |
Goodwill has arisen due to excess of the consideration given over the fair value of assets acquired at date of acquisition. The goodwill was written off in the Income Statement in the year.
The deferred consideration is payable on receipt by Edinburgh Industrial Estates Limited of amounts included in Other Receivables acquired at the acquisition date.
Edinburgh Industrial Estates Limited has contributed £nil and £nil to the Group's revenue and profit, respectively from the acquisition date. Had the acquisition occurred on 1st August 2012, the impact on the Group's revenue for the year to 31st July 2013 would have been £nil and the profit for the year would have increased £180,000.
| Group | ||||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | |||||
| £000 | £000 | |||||
| Listed investments | 3,817 | 2,988 |
Fair value movement on shares held at 31st July 2013 before tax amounted to £754,000 (2012, £57,000).
There has been no impairment adjustment on available for sale financial assets in this or the previous year.
Fair value of listed investments is determined by the unadjusted quoted prices of these investments in active markets as at the balance sheet date. Any changes in quoted prices in an active market at the balance sheet date will have an immediate impact on the value of the listed investments.
| Group | Company | |||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | |||
| £000 | £000 | £000 | £000 | |||
| Long-term contract balances | 58 | 201 | – | 130 | ||
| Work in progress. | 11,644 | 8,472 | 11,644 | 8,472 | ||
| Land held for development | 1,708 | 1,708 | 1,708 | 1,708 | ||
| Raw materials and consumables | 138 | 182 | 28 | 26 | ||
| Finished goods | 72 | 91 | – | – | ||
| 13,620 | 10,654 | 13,380 | 10,336 | |||
| CONTRACTS IN PROGRESS AT THE BALANCE SHEET DATE: |
||||||
| Aggregate amount of costs incurred and | ||||||
| recognised profits less recognised losses to date | 3,781 | 15,011 | 2,702 | 13,339 | ||
| Retentions outstanding | 101 | 481 | 98 | 446 | ||
| Advances received | (3,581) | (15,133) | (2,730) | (13,600) | ||
| Net value of contracts in progress | 301 | 359 | 70 | 185 | ||
| 18. | TRADE AND OTHER RECEIVABLES | |||||
| CURRENT ASSETS: | ||||||
| Trade receivables | 1,493 | 1,411 | 462 | 330 | ||
| Amounts owed by Subsidiaries. | – | – | 2,250 | 3,358 | ||
| Other receivables | 73 | 400 | – | 419 | ||
| Prepayments and accrued income | 406 | 455 | 322 | 373 | ||
| Amounts recoverable on contracts | 1,007 | 664 | 833 | 561 | ||
| Loans to Joint Venture companies | 3,671 | 3,991 | 3,671 | 3,991 | ||
| 6,650 | 6,921 | 7,538 | 9,032 |
Trade receivables are shown net of provision for doubtful debts of £26,000 (2012, £4,000).
The aging of past due but not impaired trade debtors is as follows:
| Less than 30 days | 1,136 | 987 | 409 | 291 |
|---|---|---|---|---|
| 30 to 60 days | 354 | 355 | 53 | 31 |
| Greater than 60 days | 3 | 69 | – | 8 |
| 1,493 | 1,411 | 462 | 330 |
Trade receivables includes £509,000 (2012, £341,000) in respect of outstanding retentions.
The loans to Joint Venture companies (note 14(a)) are repayable on demand. The Group has charged interest on one loan to a Joint Venture Company at a rate of 1% above the Group's banker's base rate.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
The bank has been granted guarantees and letters of offset by each member of the Group in favour of the bank on account of all other members of the Group as a continuing security for all monies, obligations and liabilities owing or incurred to the bank.
| Group | Company | ||||
|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | ||
| CURRENT LIABILITIES: | £000 | £000 | £000 | £000 | |
| Trade payables | 1,386 | 1,701 | 1,045 | 1,346 | |
| Amounts owed to Subsidiaries . | – | – | 96 | 188 | |
| Other taxes and social security costs | 469 | 299 | 189 | 171 | |
| Other creditors and accruals | 1,740 | 1,961 | 948 | 1,055 | |
| 3,595 | 3,961 | 2,278 | 2,760 |
The Group's financial instruments comprise of bank balances and cash, available for sale financial assets, trade receivables and trade payables. The amounts presented in relation to trade receivables are net of allowances for doubtful receivables.
The carrying amount of these assets approximates to their fair value.
In relation to the Group's financial assets, the Group has no significant concentration of credit risk, as exposure is spread over a large number of counterparties and customers.
There is no significant impairment loss recognised or significant receivables that are past due but not impaired.
The Group has assessed that there is no significant credit risk in relation to loans to Joint Venture companies given the underlying value of the assets held by these entities.
IFRS7: Financial Instrument Disclosures requires a company to undertake a sensitivity analysis on its financial instruments which are affected by changes in interest rates. The Group financial instruments affected by interest rate fluctuations are bank deposits and bank overdrafts. Based on the Group's net position at the year end, a 1% increase or decrease in the interest rates would change the Group's profit before tax by approximately £49,000 and £55,000 respectively (2012, £75,000 and £42,000 respectively).
| DEFERRED TAX ASSETS | Retirement Benefit |
||||
|---|---|---|---|---|---|
| GROUP | Obligations | Other | Total | ||
| £000 | £000 | £000 | |||
| At 1st August 2011 | – | 253 | 253 | ||
| Charged to Income Statement | (1,874) | (39) | (1,913) | ||
| Credited to Equity | 2,217 | – | 2,217 | ||
| At 31st July 2012 | 343 | 214 | 557 | ||
| Credited/(Charged) to Income Statement | 1,874 | (105) | 1,769 | ||
| Charged to Equity | (2,217) | – | (2,217) | ||
| At 31st July 2013 | – | 109 | 109 | ||
| COMPANY | |||||
| At 1st August 2011 | – | 56 | 56 | ||
| Charged to Income Statement | (1,874) | (12) | (1,886) | ||
| Credited to Equity | 2,217 | – | 2,217 | ||
| At 31st July 2012 | 343 | 44 | 387 | ||
| Credited/(Charged) to Income Statement | 1,874 | (24) | 1,850 | ||
| Charged to Equity | (2,217) | – | (2,217) | ||
| At 31st July 2013 | – | 20 | 20 |
Deferred tax assets arising in respect of valuation surpluses on Investment Properties of £1,197,000 have not been recognised because it is not probable that relevant future taxable profits will be available against which the Group can use the benefits therefrom.
| GROUP | Valuation | |||||
|---|---|---|---|---|---|---|
| Accelerated Capital |
Fair Value | Surplus on Investment |
Retirement Benefit |
Other Timing |
||
| Allowances £000 |
Reserve £000 |
Properties £000 |
Obligations £000 |
Differences £000 |
Total £000 |
|
| At 1st August 2011 | 1,530 | 77 | 720 | 415 | 110 | 2,852 |
| Charged /(Credited) to Equity | – | (5) | – | 1,280 | – | 1,275 |
| Credited to Income Statement | (83) | – | (155) | (1,695) | (14) | (1,947) |
| At 31st July 2012 | 1,447 | 72 | 565 | – | 96 | 2,180 |
| Charged/(Credited) to Equity Charged/(Credited) to Income |
– | 108 | – | (1,343) | – | (1,235) |
| Statement | (162) | – | (565) | 1,856 | (25) | 1,104 |
| At 31st July 2013 | 1,285 | 180 | – | 513 | 71 | 2,049 |
| DEFERRED TAX LIABILITIES (continued) COMPANY |
Retirement Benefit |
Other Timing |
||||
|---|---|---|---|---|---|---|
| Obligations | Differences | Total | ||||
| £000 | £000 | £000 | ||||
| At 1st August 2011 | 415 | 81 | 496 | |||
| Charged to Equity | 1,280 | – | 1,280 | |||
| Credited to Income Statement | (1,695) | (13) | (1,708) | |||
| At 31st July 2012 | – | 68 | 68 | |||
| Credited to Equity | (1,343) | – | (1,343) | |||
| Charged/ (Credited) to Income Statement | 1,856 | (10) | 1,846 | |||
| At 31st July 2013 | 513 | 58 | 571 |
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Number | £000 | Number | £000 | ||||
| Issued and fully paid ordinary shares of 2p each | |||||||
| At 1st August 2012 | 49,472,000 | 989 | 50,410,000 | 1,008 | |||
| Purchased and cancelled | (2,354,000) | (47) | (938,000) | (19) | |||
| At 31st July 2013 | 47,118,000 | 942 | 49,472,000 | 989 |
During the year to 31st July 2013 the Company purchased for cancellation 2,354,000 ordinary shares of 2p each with a nominal value of £47,000 for a consideration of £1,845,000.
All shareholders of ordinary shares have a right to receive dividends paid by the Company in accordance with their shareholding. Each shareholder has the right to attend and vote at a General Meeting and each share attracts one vote. There are no restrictions on the distribution of dividends or repayment of capital.
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| £000 | £000 | |||||
| Profit before tax . | 829 | 55 | ||||
| Share of (profits)/losses from Joint Ventures . | (2,438) | 15 | ||||
| Depreciation | 360 | 363 | ||||
| Unrealised valuation deficit on investment properties. | 3,127 | 4,042 | ||||
| Profit on sale of property, plant and equipment | (24) | (6) | ||||
| Profit on sale of investment properties . | (124) | – | ||||
| Profit on sale of available for sale financial assets | (8) | (34) | ||||
| Change in retirement benefits | (1,131) | (1,367) | ||||
| Interest received . | (100) | (103) | ||||
| Change in inventories | (2,235) | (2,021) | ||||
| Change in receivables | 311 | 454 | ||||
| Change in payables | (409) | (414) | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | (1,842) | 984 |
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| (b) CASH AND CASH EQUIVALENTS FOR STATEMENT OF CASH FLOWS | £000 | £000 | ||||
| Cash and cash equivalents | 15,157 | 9,761 | ||||
| Bank overdraft | (9,664) | (4,465) | ||||
| Net position | 5,493 | 5,296 | ||||
| (c) ANALYSIS OF NET FUNDS | ||||||
| At 1st | Cash | At 31st | ||||
| August 2012 | Flow | July 2013 | ||||
| £000 | £000 | £000 | ||||
| Cash and cash equivalents | 9,761 | 5,396 | 15,157 | |||
| Bank overdraft | (4,465) | (5,199) | (9,664) | |||
| Net funds | 5,296 | 197 | 5,493 |
| 2013 £000 |
2012 £000 |
||||||
|---|---|---|---|---|---|---|---|
| (Loss)/Profit before tax . | (30) | 581 | |||||
| Depreciation | 231 | 217 | |||||
| (Profit)/Loss on sale of property, plant and equipment | (27) | 2 | |||||
| Change in retirement benefits | (1,131) | (1,367) | |||||
| Interest received . | (6) | (7) | |||||
| Change in inventories | (3,044) | (3,556) | |||||
| Change in receivables | 1,494 | (790) | |||||
| Change in payables | (520) | 26 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | (3,033) | (4,894) | |||||
| (b) CASH AND CASH EQUIVALENTS FOR STATEMENT OF CASH FLOWS Cash and cash equivalents Bank overdraft |
1 (6,488) |
1,045 – |
|||||
| Net funds | (6,487) | 1,045 | |||||
| (c) ANALYSIS OF NET FUNDS | At 1st | Cash | At 31st | ||||
| August 2012 | Flow | July 2013 | |||||
| £000 | £000 | £000 | |||||
| Cash and cash equivalents Bank overdraft |
1,045 – |
(1,044) (6,488) |
1 (6,488) |
||||
| Net Funds | 1,045 | (7,532) | (6,487) |
There were no amounts of Capital Expenditure relating to Property, plant and equipment contracted for at 31st July 2013 or 31st July 2012.
The Group's share of Capital Expenditure contracted for by its Joint Ventures as at 31st July 2013 amounted to £nil (2012, £nil).
The Group operates a defined benefit scheme for its employees which was closed to new members during the year to 31st July 2003. The scheme's assets are held separately from the assets of the Group and are administered and managed professionally. The last completed triennial actuarial valuation of the scheme was made at 31st October 2012 by an independent qualified Actuary. A Statement of Funding Principles has been agreed with the scheme trustees and based on these principles the technical provisions at this valuation reveals a deficit of £3,092,000, representing a funding level of 89.7%. It has also been agreed with the scheme trustees that the employer contributions to the scheme will increase to a level of 68.8% of pensionable salaries and employee contributions will remain at 3%. The total net pension charge for the year was £632,000 (2012, £608,000). The actuarial valuation has been updated to take account of the requirements of IAS 19: Employee Benefits, in order to assess the assets and liabilities of the scheme at 31st July 2013.
The financial assumptions used to calculate scheme liabilities under IAS 19 are:
| 2013 | 2012 | 2011 | |||
|---|---|---|---|---|---|
| Valuation method | Projected Unit | Projected Unit | Projected Unit | ||
| Discount rate | 4.3% | 3.9% | 5.3% | ||
| Inflation rate - Retail price index | 3.1% | 2.4% | 3.5% | ||
| Inflation rate - Consumer price index | 2.3% | 1.6% | 3.0% | ||
| Salary increases . | 3.3% | 2.6% | 4.0% | ||
| Pension increases | . 2.2% – 3.1% | 1.5%–2.6% | 2.4%–3.5% |
The mortality assumptions imply the following expectations of years of life from age 65:
| Man currently aged 65 | 22.1 | 22.2 | 22.1 | ||
|---|---|---|---|---|---|
| Woman currently aged 65 | 24.4 | 24.4 | 24.2 | ||
| Man currently aged 45 | 23.4 | 23.5 | 23.5 | ||
| Woman currently aged 45 | 25.9 | 25.9 | 25.8 |
The expected rates of return on scheme assets are determined as the aggregate weighted return for the various classes of assets held by the scheme.
The rates of return for each class were determined as follows:
As at 31st July 2013 the actual return on plan assets amounted to £3,752,000 (2012, £131,000).
The assets of the scheme are invested in funds managed by Newton Investment Management Limited, in direct investments via Speirs & Jeffery, in insurance policies with companies belonging to the AEGON UK Group and in bank accounts. The assets do not include any directly owned ordinary shares issued by J Smart & Co (Contractors) PLC. The analysis of the underlying investments in these policies, the expected rates of returns and reconciliation of scheme assets and liabilities to the Balance Sheet were:
| Long term rate of return expected at |
Value at | Long term rate of return expected at |
Value at | Long term rate of return expected at |
Value at | ||
|---|---|---|---|---|---|---|---|
| 31st July 2013 | 31st July 2013 £000 |
31st July 2012 | 31st July 2012 £000 |
31st July 2011 | 31st July 2011 £000 |
||
| Equities | 7.3% | 20,349 | 6.5% | 17,366 | 8.3% | 19,706 | |
| Bonds | 4.3% | 2,115 | 3.9% | 1,712 | 5.3% | 1,726 | |
| Gilts | 3.3% | 2,157 | 2.5% | 1,985 | 3.9% | 1,006 | |
| Other | 0.5% | 4,030 | 0.5% | 4,014 | 0.5% | 2,172 | |
| Market value | |||||||
| of assets | 28,651 | 25,077 | 24,610 | ||||
| Present value of | |||||||
| scheme liabilities | (26,084) | (26,567) | (22,950) | ||||
| Scheme surplus/(deficit) | 2,567 | (1,490) | 1,660 | ||||
| Related deferred tax | (513) | 343 | (415) | ||||
| Net pension | |||||||
| Surplus/(deficit) . | 2,054 | (1,147) | 1,245 | ||||
Investments are in mixed management funds, split being 71% equity investments and 29% bonds, gilts, cash and other assets.
The following amounts are incorporated into the financial statements:
| £000 Amounts included in operating loss: Current service cost (488) Past service cost . – Total included within operating loss (488) Amounts included in finance income: |
|
|---|---|
| £000 | |
| (520) | |
| – | |
| (520) | |
| Expected return on assets 1,272 |
1,705 |
| Interest cost (1,016) |
(1,215) |
| Total included as net finance income 256 |
490 |
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Amounts included in Consolidated Statement of Comprehensive Income: | £000 | £000 | ||||
| Actual return less assumed return on assets | 2,480 | (1,574) | ||||
| Experience gains and losses arising on scheme liabilities | (130) | 122 | ||||
| Changes in assumptions underlying the valuation of liabilities | 576 | (3,065) | ||||
| Total actuarial gain/(loss) | 2,926 | (4,517) | ||||
| Changes in the present value of the defined benefit obligations are as follows: | ||||||
| At 1st August 2012 | 26,567 | 22,950 | ||||
| Current service cost | 488 | 520 | ||||
| Interest cost | 1,016 | 1,215 | ||||
| Charges paid | (36) | (34) | ||||
| Benefit payments. | (1,505) | (1,027) | ||||
| Actuarial (gain)/loss . | (446) | 2,943 | ||||
| At 31st July 2013 | 26,084 | 26,567 | ||||
| Changes in the fair value of plan assets are as follows: | ||||||
| At 1st August 2012 | 25,077 | 24,610 | ||||
| Employer contributions . | 1,308 | 1,334 | ||||
| Employee contributions . | 55 | 63 | ||||
| Benefits paid | (1,505) | (1,027) | ||||
| Charges paid | (36) | (34) | ||||
| Expected return on plan assets . | 1,272 | 1,705 | ||||
| Actuarial gain/(loss) | 2,480 | (1,574) | ||||
| At 31st July 2013 | 28,651 | 25,077 | ||||
| Analysis of movement in scheme surplus / (deficit): | ||||||
| At 1st August 2012 | (1,490) | 1,660 | ||||
| Current service cost | (488) | (520) | ||||
| Past service cost . | – | – | ||||
| Contributions | 1,363 | 1,397 | ||||
| Other finance income | 256 | 490 | ||||
| Actuarial gain/(loss) | 2,926 | (4,517) | ||||
| At 31st July 2013 | 2,567 | (1,490) | ||||
| Cumulative actuarial gains and losses recognised in Equity: | ||||||
| At 1st August 2012 | (3,171) | 1,346 | ||||
| Net actuarial gain/(loss) recognised in year | 2,926 | (4,517) | ||||
| At 31st July 2013 | (245) | (3,171) |
| History of experience gains and losses: Difference between actual return and assumed |
2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| return on assets | |||||
| Amount (£000) | 2,480 | (1,574) | 1,315 | 1,284 | (1,086) |
| Percentage of market value of scheme assets | 8.7% | 6.3% | 5.3% | 5.9% | 5.9% |
| Experience gains and losses arising on scheme | |||||
| liabilities | |||||
| Amount (£000) | (130) | 122 | (480) | 1,736 | (166) |
| Percentage of market value of scheme liabilities . | 0.5% | 0.5% | 2.1% | 7.6% | 0.7% |
| Total amounts included in Consolidated Statement of | |||||
| Comprehensive Income | |||||
| Amount (£000) | 2,926 | (4,517) | 1,847 | 2,489 | (4,553) |
| Percentage of market value of scheme liabilities . | 11.2% | 17.0% | 8.1% | 10.8% | 19.8% |
The contribution expected to be paid by the Group during the financial year ending 31st July 2014 amounts to £1,131,000.
In the year to 31st July 2003 the Group commenced operation of a defined contribution Group Personal Pension Plan for eligible employees. The plan is externally administered and managed professionally by AEGON UK. The net contribution to the plan for the year was £132,000 (2012, £132,000).
The Company and certain of its Subsidiaries have, in the normal course of business, entered into counter-indemnities in respect of performance bonds relating to their contracts. As at 31st July 2013 these amounted to £317,000.
Future minimum lease payments payable under non-cancellable operating leases:
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| £000 | £000 | ||||
| Within one year . | 71 | 72 | |||
| In two – five years exclusively . | 214 | 233 | |||
| After five years | 58 | 65 | |||
| 343 | 370 |
Gross property rental income earned in the year amounted to £4,901,000 (2012, £5,000,000). At the Balance Sheet date, the Group had contracted with its tenants for the following future minimum lease payments:
| Within one year . | 4,758 | 4,806 | |||
|---|---|---|---|---|---|
| In two – five years exclusively . | 13,458 | 13,806 | |||
| After five years | 7,236 | 7,601 | |||
| 25,452 | 26,213 |
Transactions between the Company and its Subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Details of transactions between the Company and Subsidiaries are as follows:
| 2013 | 2012 | 2013 | 2012 | |
|---|---|---|---|---|
| £000 | £000 | £000 | £000 | |
| SUBSIDIARY | Sale of goods and services |
Purchase of goods and services |
||
| McGowan & Co. (Contractors) Limited | 137 | 112 | 1,615 | 892 |
| Cramond Real Estate Company Limited | – | – | – | – |
| Thomas Menzies (Builders) Limited | 78 | 79 | 50 | 20 |
| Concrete Products (Kirkcaldy) Limited | 39 | 43 | 39 | 19 |
| C. & W. Assets Limited . | 710 | 954 | – | – |
| Edinburgh Industrial Estates Limited | – | – | 725 | – |
| Amounts owed | Amounts owed | |||
| SUBSIDIARY | by Subsidiaries | to Subsidiaries | ||
| McGowan & Co. (Contractors) Limited | – | – | 90 | 183 |
| Cramond Real Estate Company Limited | – | – | – | – |
| Thomas Menzies (Builders) Limited | – | – | 4 | 1 |
| Concrete Products (Kirkcaldy) Limited | – | – | 2 | 4 |
| C. & W. Assets Limited . | 2,250 | 3,358 | – | – |
| Edinburgh Industrial Estates Limited | – | – | – | – |
The amounts outstanding are unsecured and will be settled for cash. No expense has been recognised in the year for bad or doubtful debts in respect of the amounts owed by Subsidiaries.
Transactions between the Company and its Joint Ventures were as follows:
Prestonfield Development Company Limited – construction costs invoiced in the year to Prestonfield Development Company Limited amounted to £4,000 (2012, £nil). During the year the Company was repaid £200,000 (2012, £200,000) of the loan due from the Joint Venture company. As at 31st July 2013 the loan outstanding due from Prestonfield Development Company Limited amounted to £2,575,000 (2012, £2,775,000).
Northrigg Limited – during the year there were no transactions with this company. As at 31st July 2013 the loan outstanding due from Northrigg Limited amounted to £176,000 (2012, £176,000).
Duff Street Limited – during the year the Company received interest from the Joint Venture company amounting to £6,000 (2012, £6,000) on the loan to Duff Street Limited. As at 31st July 2013, £3,000 of this interest remained outstanding (2012, £3,000). Construction costs invoiced in the year to Duff Street Limited amounted to £1,000 (2012, £1,000). During the year the Company was repaid £nil (2012, £180,000) of the loan due from the Joint Venture company. As at 31st July 2013 the loan outstanding due from Duff Street Limited amounted to £920,000 (2012, £920,000).
Invertiel Developments Limited – during the year the Company was repaid £130,000 (2012, £nil) and advanced £10,000 (2012, £10,000) of the loan due from the Joint Venture company. As at 31st July 2013 the loan outstanding due from Invertiel Developments Limited amounted to £nil (2012, £120,000). The Company received a dividend of £2,115,000 (2012, £nil) in the year from the Joint Venture Company.
The amounts outstanding are unsecured and will be settled for cash. No expense has been recognised in the year for bad or doubtful debts in respect of the amounts owed by Joint Ventures.
D. W. Smart and J. R. Smart, throughout the year had material beneficial interests in Plean Precast Limited, Sterling Precast Limited and The Roofing and Building Supply Co. Limited, which have interests in continuing contracts for the purchase of materials and services from and for the sale of materials and services to the Group.
During the year to 31st July 2013 the Group purchased materials amounting to £393,000 (2012, £653,000) from these companies and sold materials and services amounting to £75,000 (2012, £271,000) to these companies.
During the year the Group sold property to The Roofing and Building Supply Co. Limited for £1,000,000 and also purchased from the same company property costing £180,000.
All transactions were at normal commercial rates.
As at 31st July 2013 the Group owed these companies £19,000 (2012, £54,000) and was owed £31,000 (2012, £157,000).
The remuneration of the Directors, who are the only key management of the Company, is set out in note 4 to the accounts with further information contained in the audited part of the Report on Directors' Remuneration.
During the year the Directors received dividends from the Company as follows:
| 2012 | |||||
|---|---|---|---|---|---|
| £000 | |||||
| 34 | |||||
| 4 | 6 | ||||
| 344 | 339 | ||||
| 3 | 1 | ||||
| 109 | – | ||||
| 2013 £000 34 |
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