Last checked at 25 Mar 2011 12:25
J. SMART & CO. (CONTRACTORS) PLC
INTERIM REPORT
6 MONTHS TO 31st JANUARY 2011
CHAIRMAN'S REVIEW
INTERIM REPORT
Unaudited Group profits for the six months to 31st January 2011 amounted to £3,376,000 (including £1,872,000 profit from property sales) compared with profits of £2,250,000 (no property sales) for the corresponding period last year. Group turnover decreased by 39%. Own work capitalised decreased by 9%.
In accordance with our normal practice there has been no revaluation of our investment properties at the end of the half year. Had a revaluation been carried out then we believe there would have been a reduction in the profit figure.
Private dwelling sales were nil in the period under review. Our speculative office developments in Perth and McDonald Road, Edinburgh are complete but remain unlet.
Margins in contracting were hit by the adverse weather conditions, the redundancy programme now completed and the effect of reduced turnover.
INTERIM DIVIDEND
The Board announces an interim dividend of 4.60p per share (2010, 4.50p) to be paid on 6th June 2011 to shareholders on the register at the close of business on 13th May 2011. The interim dividend will cost the Company £464,000.
FUTURE PROSPECTS
We have substantially more work in hand in contracting than at this time last year, albeit at challenging prices, and we are starting to gear up again although turnover for the year is again expected to be less than last year.
Notwithstanding the bleak experience of the first six months of the current financial year, private house sales have slowly picked up in the last two months. Whether or not this trend will continue, only time will tell.
Insofar as our property portfolio is concerned, we are now losing tenants slightly quicker than we can replace them. Finding tenants for new space continues to be a struggle.
Bearing in mind the likelihood of a reduction in the value of our property portfolio at the year end, I expect that headline Group profits for the year, including an anticipated deficit in revalued property as required by the International Financial Reporting Standards, will be less than the corresponding figure for last year. However, subject to unforeseen circumstances, I anticipate that underlying profits for the year, including profits from property sales, will exceed last year's underlying profits.
25th March 2011 | J.M. SMART Chairman |
CONSOLIDATED INCOME STATEMENT
Notes | 6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
|
|
|
| |
Group construction work carried out and share of Joint Ventures' turnover |
7,746 |
12,711 |
23,690 | |
Less: Share of Joint Ventures' turnover | - | - | - | |
Less: Own construction work capitalised | (1,393) | (1,529) | (2,668) | |
REVENUE
Cost of sales | 6,353
(5,065) | 11,182
(9,188) | 21,022
(16,662) | |
GROSS PROFIT | 1,288 | 1,994 | 4,360 | |
Other operating income |
|
2,772 |
2,678 |
5,521 |
Net operating expenses
| (2,788) | (2,707) | (5,490) | |
OPERATING PROFIT BEFORE PROFIT ON SALE AND NET VALUATION DEFICIT OF INVESTMENT PROPERTIES |
|
1,272 |
1,965 |
4,391 |
Profit arising on sale of investment properties |
1,872 | - | - | |
Net deficit on valuation of investment properties |
- |
- |
(604) | |
OPERATING PROFIT | 3,144 | 1,965 | 3,787 | |
Share of profits in Joint Ventures |
116 |
130 | 201 | |
Income from available for sale financial assets | 55 | 39 | 89 | |
Profit on sale of available for sale financial assets | - |
57 | 95 | |
Finance income | 61 | 59 | 120 | |
Finance costs | - | - | (308) | |
PROFIT BEFORE TAX | 3,376 | 2,250 | 3,984 | |
Taxation |
4 |
(945) |
(630) |
(250) |
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
2,431 |
1,620 |
3,734 | |
EARNINGS PER SHARE - BASIC AND DILUTED |
6 |
24.11p |
16.07p |
37.04p |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| 6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
PROFIT FOR THE PERIOD |
2,431 |
1,620 |
3,734 | |
Other comprehensive income Actuarial gain recognised on defined benefit pension scheme Deferred taxation on actuarial gain |
|
- - |
- - |
2,489 (767) |
Total other comprehensive income |
- |
- |
1,722 | |
TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
2,431 |
1,620 |
5,456 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Notes | 6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD |
2,431 |
1,620 |
5,456 | |
Fair value adjustment | 252 | 160 | 217 | |
Tax adjustment on fair value reserve | (71) | (45) | (42) | |
Dividends | 5 | (968) | (943) | (1,397) |
1,644 | 792 | 4,234 | ||
Opening shareholders' funds |
96,541 |
92,307 |
92,307 | |
Closing shareholders' funds |
98,185 |
93,099 |
96,541 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
NON-CURRENT ASSETS |
| |||
Property, plant and equipment | 1,312 | 6,970 | 1,391 | |
Investment properties | 75,097 | 67,665 | 74,560 | |
Investments in Joint Ventures | 1,086 | 1,563 | 1,635 | |
Available for sale financial assets | 2,981 | 2,169 | 2,604 | |
Deferred tax assets | 719 | 1,534 | 719 | |
81,195 | 79,901 | 80,909 | ||
CURRENT ASSETS | ||||
Inventories | 8,074 | 8,246 | 7,324 | |
Trade and other receivables | 7,494 | 9,194 | 6,632 | |
Corporation tax asset | - | - | 26 | |
Cash at bank and in hand | 19,529 | 21,845 | 22,197 | |
35,097 | 39,285 | 36,179 | ||
TOTAL ASSETS | 116,292 | 119,186 | 117,088 | |
NON-CURRENT LIABILITIES | ||||
Retirement benefit obligations | 1,344 | 4,468 | 1,344 | |
Deferred tax liabilities | 4,072 | 4,563 | 4,001 | |
5,416 | 9,031 | 5,345 | ||
CURRENT LIABILITIES | ||||
Trade and other payables | 2,970 | 6,579 | 5,068 | |
Current tax liabilities | 619 | 442 | - | |
Bank overdraft | 9,102 | 10,035 | 10,134 | |
12,691 | 17,056 | 15,202 | ||
TOTAL LIABILITIES | 18,107 | 26,087 | 20,547 | |
NET ASSETS |
98,185 |
93,099 |
96,541 | |
EQUITY | ||||
Called up share capital | 1,008 | 1,008 | 1,008 | |
Fair value reserve | 397 | 156 | 216 | |
Retained earnings | 96,780 | 91,935 | 95,317 | |
TOTAL EQUITY | 98,185 | 93,099 | 96,541 |
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes | 6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
CASH FLOWS FROM OPERATING ACTIVITIES |
7 |
(2,218) |
1,940 |
5,672 |
Tax paid on profits |
(300) |
(350) |
(950) | |
NET CASH FLOW FROM OPERATING ACTIVITIES |
(2,518) |
1,590 |
4,722 | |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Additions to property, plant and equipment | (101) | (159) | (304) | |
Additions to investment properties | (1,226) | (514) | (1,418) | |
Sale of property, plant and equipment | 15 | 36 | 77 | |
Sale of investment properties | 3,954 | - | - | |
Expenditure on own work capitalised - investment properties |
(1,393) |
(84) |
(2,668) | |
Expenditure on own work capitalised - property under construction | - |
(1,445) | - | |
Purchase of available for sale financial assets | (125) | (258) | (597) | |
Proceeds of sale of available for sale financial assets | - |
219 |
219 | |
Interest received | 61 | 59 | 120 | |
Interest paid | - | - | - | |
Dividends received from Joint Venture | 665 | 850 | 850 | |
NET CASH FROM/(USED IN) INVESTING ACTIVITIES |
1,850 |
(1,296) |
(3,721) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Dividends paid | (968) | (943) | (1,397) | |
NET CASH USED IN FINANCING ACTIVITIES |
(968) |
(943) |
(1,397) | |
DECREASE IN CASH, CASH EQUIVALENTS AND BANK |
(1,636) |
(649) |
(396) | |
CASH, CASH EQUIVALENTS AND BANK AT BEGINNING OF PERIOD |
12,063 |
12,459 |
12,459 | |
CASH, CASH EQUIVALENTS AND BANK AT END OF PERIOD |
|
10,427 |
11,810 |
12,063 |
NOTES TO INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.
The statutory financial statements for the year to 31st July 2010 have been filed with the Registrar of Companies and a copy may be obtained from Companies House. These have been audited and contain an unqualified audit opinion and do not contain a statement under Section 498 of the Companies Act 2006.
2. ACCOUNTING POLICIES
The interim financial statements have been prepared under the historical cost convention.
The accounting policies adopted are consistent with those followed in the preparation of the group's annual financial statements for the year ended 31st July 2010, with the exception of the following policies regarding the accounting for pension scheme deficits and investment properties revaluations.
For the interim accounts the assets and liabilities of the pension scheme are estimated to be unchanged from the values included at the previous year end.
In accordance with long standing practice, the group's investment properties are revalued annually on 31st July each year. No revaluation adjustment is made in the interim financial statements.
3. SEGMENTAL INFORMATION
The group's primary basis of segmentation is by activities, all construction work relates to activities in Scotland.
External Revenue £000 | Internal Revenue £000 | Total Revenue £000 | Operating Profit/(Loss) | |||
31.1.11 £000 | 31.1.10 £000 | 31.7.10 £000 | ||||
31st JANUARY 2011 (Unaudited) | ||||||
Construction activities | 6,353 | 1,393 | 7,746 | (544) | - | - |
Investment activities | 2,772 | - | 2,772 | 3,688 | - | - |
9,125 | 1,393 | 10,518 | 3,144 | - | - | |
31st JANUARY 2010 (Unaudited) | ||||||
Construction activities | 11,182 | 1,529 | 12,711 | - | 118 | - |
Investment activities | 2,678 | - | 2,678 | - | 1,847 | - |
13,860 | 1,529 | 15,389 | - | 1,965 | - | |
31st JULY 2010 (Audited) | ||||||
Construction activities | 21,022 | 2,668 | 23,690 | - | - | 679 |
Investment activities | 5,521 | - | 5,521 | - | - | 3,108 |
26,543 | 2,668 | 29,211 | - | - | 3,787 | |
OPERATING PROFIT |
|
3,144 |
1,965 |
3,787 | ||
Share of results of Joint Ventures | 116 | 130 | 201 | |||
Finance and investment income | 116 | 155 | 304 | |||
Finance and investment costs | - | - | (308) | |||
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES | 3,376 | 2,250 | 3,984 | |||
4. TAXATION
The tax charge for the 6 months to 31st January 2011 is based on the corporation tax rate at 28% (2010, 28%).
5. DIVIDENDS
6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
ORDINARY DIVIDENDS | |||
2010 Final dividend of 9.60p per share | 968 | - | - |
2010 Interim dividend of 4.50p per share | - | - | 454 |
2009 Final dividend of 9.35p per share | - | 943 | 943 |
968 | 943 | 1,397 |
The interim dividend of 4.60p per share for the year to 31st July 2011 will be paid on 6th June 2011 to shareholders on the register at 13th May 2011. The interim dividend will cost the company £464,000.
6. EARNINGS PER SHARE
Profit attributable to equity shareholders £000 |
Basic Earnings per share | |
6 months to 31st January 2011 |
2,431 |
24.11p |
6 months to 31st January 2010 |
1,620 |
16.07p |
Year to 31st July 2010 |
3,734 |
37.04p |
Basic earnings per share are calculated by dividing the profit attributable to equity shareholders by 10,082,000 shares, the number of ordinary shares in issue during the period.
There is no difference between basic and diluted earnings per share.
7. RECONCILIATION OF OPERATING PROFIT TO CASH FLOWS FROM
OPERATING ACTIVITIES
6 Months ended 31.1.11 (Unaudited) £000 | 6 Months ended 31.1.10 (Unaudited) £000 | Year ended 31.7.10 (Audited) £000 | |
Profit before tax | 3,376 | 2,250 | 3,984 |
Share of profits from Joint Ventures | (116) | (130) | (201) |
Depreciation | 171 | 207 | 456 |
Unrealised valuation deficits on investment properties | - | - | 604 |
Profit on sale of property, plant and equipment | (6) | (15) | (37) |
Profit on sale of investment properties | (1,872) | - | - |
Profit on sale of available for sale financial assets | - | (57) | (95) |
Change in retirement benefits | - | - | (635) |
Interest received | (61) | (59) | (120) |
Interest paid | - | - | - |
Change in inventories | (750) | 230 | 1,152 |
Change in receivables | (862) | (2,193) | 369 |
Change in payables | (2,098) | 1,707 | 195 |
NET CASH GENERATED FROM OPERATIONS |
(2,218) |
1,940 |
5,672 |