SMART (J.) & CO. (CONTRACTORS) PLC

Quarterly Report • Oct 31, 2013

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RNS Number : 8604R

Smart(J.)&Co(Contractors) PLC

31 October 2013

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2013

PRELIMINARY STATEMENT

ACCOUNTS

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.

TRADING ACTIVITIES

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.

FUTURE PROSPECTS

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
	Chairman

CONSOLIDATED INCOME STATEMENT for the year ended 31st JULY 2013

		2013		2012
		£000		£000
Group construction work carried out		20,595		25,915
Less: Own construction work capitalised		(2,214)		(3,329)
Revenue1 2		18,381		22,586
Cost of sales2		(17,313)		(18,645)
Gross Profit		1,068		3,941
Other operating income		5,383		5,518
Net operating expenses		(5,559)		(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		124		-
Net deficit on valuation of investment properties		(3,127)		(4,042)
Operating Loss		(2,111)		(685)
Share of profits/(losses) in Joint Ventures		2,438		(15)
Income from available for sale financial assets		138		128
Profit on sale of available for sale financial assets		8		34
Finance income		356		593
Profit before tax		829		55
Taxation		(445)		(586)
Profit/(Loss) attributable to equity shareholders		384		(531)
Earnings/(Loss) per share - Basic and Diluted		0.80p		(1.06)p

1.   Group Revenue excludes the share of Joint Ventures' revenue of £6,523,000 (2012, £67,000).

2.   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 the reported profit.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2013

		2013		2012
		£000		£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)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2013

	Share Capital	Capital Redemption Reserve	Fair Value Reserve	Retained Earnings		Total
	£000	£000	£000	£000		£000
At 1st August 2011	1,008	-	407	96,145		97,560
Loss for the year	-	-	-	(531)		(531)
Other comprehensive income/(loss)	-	-	51	(3,580)		(3,529)
Total comprehensive income/(loss)	-	-	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	-	-	-	384		384
Other comprehensive income	-	-	628	2,052		2,680
Total comprehensive income	-	-	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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31st JULY 2013

	2013		2012
	£000		£000
Non-current assets
Property, plant and equipment	1,279		1,122
Investment properties	62,325		70,437
Investments in Joint Ventures	819		997
Available for sale financial assets	3,817		2,988
Retirement benefit surplus	2,567		-
Deferred tax asset	109		557
	70,916		76,101
Current assets
Inventories	13,620		10,654
Trade and other receivables	6,650		6,921
Current tax assets	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	-		1,490
Deferred tax liabilities	2,049		2,180
	2,049		3,670
Current liabilities
Trade and other payables	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	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

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31st JULY 2013

	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)
	(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 from Joint Venture	2,115		-
Net cash flows 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 flows from financing activities	(3,248)		(2,191)
Increase/(Decrease) in cash and cash equivalents	197		(5,454)
Cash and cash equivalents at beginning of period	5,296		10,750
Cash and cash equivalents at end of period	5,493		5,296

NOTES TO THE PRELIMINARY STATEMENT

1.         Basis of Preparation

This preliminary statement is an abridged version of the Company's full consolidated accounts, which have not yet been filed with the Registrar of Companies and have not yet been reported on by the Company's auditors.

The financial information included in this preliminary statement does not include all of the disclosures required by International Financial Reporting Standards (IFRS) or the Companies Act 2006 and accordingly does not itself comply with IFRS or the Companies Act 2006.

The company prepares its annual consolidated financial statements in accordance with IFRS and its interpretations issued by the International Accounting Standards Board as adopted by the European Union.  There are no differences in the accounting policies applied in the preparation of the consolidated financial statements for the year to 31st July 2013 and the financial information included in this preliminary statement and the accounting policies disclosed in the 2012 Annual Report and Statement of Accounts.

The consolidated financial statements are prepared under the historical cost convention with the exception of investment properties and available for sale financial assets which are recognised at fair value.

The financial information for the year to 31st July 2012 is derived from the statutory accounts for that year which were submitted to the Registrar of Companies and upon which the Company's auditors provided an unqualified audit report and which did not contain a statement under S498 of the Companies Act 2006.

2.         Dividends

	2013		2012
	£000		£000
Ordinary 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

The Company is proposing a final dividend of 2.01p per share for the year to 31st July 2013 which, after waivers, will cost the Company £430,000.

The dividend if approved will be paid on 23rd December 2013 to shareholders on the Register at the close of business on 29th November 2013.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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