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

Earnings Release • Oct 30, 2014

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RNS Number : 7044V

Smart(J.)&Co(Contractors) PLC

30 October 2014

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2014

PRELIMINARY STATEMENT

ACCOUNTS

Headline Group profit for the year before tax, including an unrealised deficit in revalued property as required by the International Financial Reporting Standards was £1,207,000 compared with a restated headline profit for last year of £533,000.  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 £1,764,000 (no property sales but including £1,299,000 profit from the sale of our listed stock market investment portfolio) which compares with the figure for the restated underlying profit last year of £3,660,000 (including £2,244,000 profit from property sales and a contribution from joint ventures relating to property sales).

The Board is recommending a Final Dividend of 2.04p nett making a total for the year of 2.96p nett which compares with 2.93p nett for the previous year.  After waivers by members holding over 50% of the shares, the Final Dividend will cost the Company no more than £430,000.

TRADING ACTIVITIES

Group construction activities carried out including private residential sales increased by 20%.  Disregarding private residential sales Group construction activities decreased by 26%.  Own work capitalised decreased by 10%.  Group revenue increased by 24% and headline Group profit increased by 126%.  Underlying Group profit excluding the unrealised deficit in revalued property decreased by 52%.

As forecast, turnover in contracting was substantially less than last year and a loss was again sustained.  Private residential sales were well up on last year.  Sales in precast concrete manufacture increased and the loss was reduced.

Inter alia two large mixed social housing and private residential developments commenced at Seafield Street and Pilton Drive, Edinburgh, although too late to have any significant bearing on revenue for the year under review.

Occupancy levels at our industrial estates are satisfactory with Inchwood Business Park, Bathgate now filling up.  Occupancy levels at our commercial office premises continue to disappoint.

FUTURE PROSPECTS

Work in hand in contracting is substantially more than at this time last year, albeit obtained at highly competitive rates.

Private residential sales will be considerably less than last year.  Phase 1 of our industrial development at South Gyle, Edinburgh is now complete and has current interest.  Property values continue to hold up, however should we fail to reduce the rental voids in our office properties further write downs in value will be inevitable.

Bearing in mind the foregoing and the current uncertain economic climate too many imponderables exist at this stage to permit even an approximate forecast of the outcome for the current year.

	JOHN M SMART
	Chairman

CONSOLIDATED INCOME STATEMENT for the year ended 31st JULY 2014

		2014		2013
				Restated
				(note 1)
		£000		£000
Group construction activities		24,805		20,595
Less: Own construction work capitalised		(1,994)		(2,214)
Revenue1		22,811		18,381
Cost of sales		(22,521)		(17,313)
Gross Profit		290		1,068
Other operating income		5,253		5,383
Net operating expenses		(5,652)		(5,559)
Operating (Loss)/Profit before profit on sale and net deficit on valuation of investment properties		(109)		892
Profit on sale of investment properties		-		124
Net deficit on valuation of investment properties		(782)		(3,127)
Operating Loss		(891)		(2,111)
Share of profits in Joint Ventures		469		2,438
Income from available for sale financial assets		143		138
Profit on sale of available for sale financial assets		1,299		8
Finance income		187		100
Finance costs		-		(40)
Profit before tax		1,207		533
Taxation		(182)		(385)
Profit attributable to equity shareholders		1,025		148
Earnings per share - Basic and Diluted		2.18p		0.31p

1.   Group Revenue excludes the share of Joint Ventures' revenue of £nil (2013, £6,523,000).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2014

	2014		2013
			Restated
			(note 1)
	£000		£000
Profit for the year	1,025		148
Other comprehensive (loss)/income
Items that may be subsequently reclassified to the Income Statement:
Fair value of available for sale financial assets reclassified to Income Statement	(1,266)		736
Tax adjustment on fair value reserve	180		(108)
Total items which may be subsequently reclassified to the Income Statement	(1,086)		628
Items that will not be subsequently reclassified to the Income Statement:
Actuarial (loss)/gain recognised in defined benefit pension scheme	(1,793)		3,222
Deferred taxation on actuarial loss/(gain)	358		(934)
Total items that will not be subsequently reclassified to the Income Statement	(1,435)		2,288
Total other comprehensive (loss)/income	(2,521)		2,916
Total comprehensive (loss)/income for the year, net of tax	(1,496)		3,064
Attributable to equity shareholders	(1,496)		3,064

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2014

	Share Capital	Capital Redemption Reserve	Fair Value Reserve	Retained Earnings		Total
				Restated		Restated
				(note 1)		(note 1)
	£000	£000	£000	£000		£000
At 1st August 2012	989	19	458	89,843		91,309
Profit for the year	-	-	-	148		148
Other comprehensive income	-	-	628	2,288		2,916
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
Profit for the year	-	-	-	1,025		1,025
Other comprehensive loss	-	-	(1,086)	(1,435)		(2,521)
Total comprehensive loss	-	-	(1,086)	(410)		(1,496)
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled	(6)	-	-	(279)		(285)
Transfer to capital redemption reserve	-	6	-	(6)		-
Dividends	-	-	-	(862)		(862)
Total transactions with owners	(6)	6	-	(1,147)		(1,147)
At 31st July 2014	936	72	-	87,474		88,482

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31st JULY 2014

	2014		2013
	£000		£000
Non-current assets
Property, plant and equipment	1,380		1,279
Investment properties	63,609		62,325
Investments in Joint Ventures	1,288		819
Available for sale financial assets	-		3,817
Retirement benefit surplus	1,629		2,567
Deferred tax asset	23		109
	67,929		70,916
Current assets
Inventories	6,246		13,620
Trade and other receivables	11,099		6,650
Current tax assets	988		90
Cash at bank and in hand	16,802		15,157
	35,135		35,517
Total Assets	103,064		106,433
Non-current liabilities
Deferred tax liabilities	1,707		2,049
Current liabilities
Trade and other payables	4,143		3,595
Bank overdraft	8,732		9,664
	12,875		13,259
Total Liabilities	14,582		15,308
Net Assets	88,482		91,125
Equity
Called up share capital	936		942
Capital redemption reserve	72		66
Fair value reserve	-		1,086
Retained earnings	87,474		89,031
Total Equity	88,482		91,125

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31st JULY 2014

	2014		2013
			Restated
			(note 1)
	£000		£000
Profit before tax	1,207		533
Share of profits from Joint Ventures	(469)		(2,438)
Depreciation	446		360
Unrealised valuation deficit on investment properties	782		3,127
Profit on sale of property, plant and equipment	(50)		(24)
Profit on sale of investment properties	-		(124)
Profit on sale of available for sale financial assets	(1,299)		(8)
Change in retirement benefits	(855)		(835)
Interest received	(62)		(100)
Change in inventories	7,374		(2,235)
Change in receivables	(453)		311
Change in payables	587		(409)
	7,208		(1,842)
Tax paid on profits	(798)		(1,232)
Net cash flows from operating activities	6,410		(3,074)
Cash flows from investing activities
Additions to property, plant and equipment	(582)		(544)
Additions to investment properties	(72)		(879)
Sale of property, plant and equipment	85		51
Sale of investment properties	-		8,202
Expenditure on own work capitalised - investment properties	(1,994)		(2,214)
Purchase of available for sale financial assets	(406)		(277)
Proceeds of sale of available for sale financial assets	260		192
Acquisition of investment in subsidiary, net of cash acquired	(39)		(227)
Interest received	62		100
Dividend from Joint Venture	-		2,115
Net cash flows from investing activities	(2,686)		6,519
Cash flows from financing activities
Purchase of own shares	(285)		(1,845)
Dividends paid	(862)		(1,403)
Net cash flows from financing activities	(1,147)		(3,248)
Increase in cash and cash equivalents	2,577		197
Cash and cash equivalents at beginning of year	5,493		5,296
Cash and cash equivalents at end of year	8,070		5,493

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 2014 and the financial information included in this preliminary statement and the accounting policies disclosed in the 2013 Annual Report and Statement of Accounts, with the exception of the policy regarding the accounting for pension scheme obligations resulting from the application of IAS 19 (amended): Employee Benefits, the impact of which is detailed below.

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 2013 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.

Restatement of prior year

In the current financial year the application of IAS 19 (amended): Employee Benefits impacts the measurement of the various components representing movements in retirement benefit obligations and associated disclosures, but not the Group's total retirement benefit obligations.  Following the replacement of expected returns on pension scheme assets with a net finance cost in the Consolidated Income Statement, the profit for the period reduces and accordingly the actuarial gain in Other comprehensive income increases in the Consolidated Statement of Comprehensive Income.

This change has been applied retrospectively and accordingly the comparative figures have been restated for the year ended 31st July 2013.  The effect is to increase the interest expense by £40,000 and reduce the interest income by £256,000 on retirement benefit obligations recognised in the Consolidated Income Statement, resulting in a total reduction to profit before tax of £296,000 and to increase the actuarial gain recognised in the Consolidated Statement of Comprehensive Income also by £296,000.  Deferred taxation is also impacted upon and as a result the credit to the Consolidated Income Statement is increased by £60,000 and the charge to the Consolidated Statement of Comprehensive Income is also increased by £60,000.  There has been no impact on the Group's retirement benefit surplus position recorded in the Balance Sheet at 31st July 2013.

The table below details the impact of the application of IAS 19 (amended): Employee Benefits on the accounts for the year to 31st July 2013:

				£000
CONSOLIDATED INCOME STATEMENT
Finance income and finance cost (as previously reported)
Expected return on pension scheme assets				1,272
Interest cost of pension scheme liabilities				(1,016)
Net finance income of pension scheme assets				256
Finance income and finance costs (as restated)
Net interest expense on retirement benefit obligation				(40)
Impact on finance income/(costs) and profit before taxation				(296)
Tax
Adjustment to deferred tax thereon				60
Impact on profit for the year - reduction				(236)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Actuarial gain on defined benefit pension scheme
Previously shown as				2,926
Now shown as				3,222
Impact on actuarial gain on defined benefit pension scheme				296
Tax
Adjustment to deferred tax thereon				(60)
Impact on Other comprehensive income for the year - increase				236

2.         Dividends

	2014		2013
	£000		£000
Ordinary dividends
2012 Final dividend of 1.98p per share	-		968
2013 Interim dividend of 0.92p per share	-		435
2013 Final dividend of 2.01p per share, after waivers	430		-
2014 Interim dividend of 0.92p per share	432		-
	862		1,403

The Company is proposing a final dividend of 2.04p per share for the year to 31st July 2014 which, after waivers, will cost the Company no more than £430,000.

The dividend if approved will be paid on 22nd December 2014 to shareholders on the Register at the close of business on 28th November 2014.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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