J. Smart & Co. Contractors PLC Annual Report 2009

FY2009 Annual Report · J. Smart & Co. Contractors PLC

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J. SMART & CO. (CONTRACTORS) PLC

A N N U A L R E P O R T
A N D
S T A T E M E N T O F A C C O U N T S
T O
3 1s t J U L Y 2 0 0 9

J. Smart & Co. (Contractors) PLC

DIRECTORS
J. M. SMART, Chairman and Managing Director
K. H. HASTINGS
A. D. MCCLURE, Secretary
L. E. GLENDAY

REGISTERED OFFICE
28 CRAMOND ROAD SOUTH,
EDINBURGH
EH4 6AB

SUBSIDIARY COMPANIES
MCGOWAN & CO. (CONTRACTORS) LIMITED
CRAMOND REAL ESTATE COMPANY LIMITED
THOMAS MENZIES (BUILDERS) LIMITED
CONCRETE PRODUCTS (KIRKCALDY) LIMITED
C. & W. ASSETS LIMITED

REGISTRARS AND TRANSFER OFFICE
EQUINTI LIMITED,
34 SOUTH GYLE CRESCENT,
SOUTH GYLE BUSINESS PARK,
EDINBURGH
EH12 9EB

BANKERS
BANK OF SCOTLAND,
38 ST ANDREW SQUARE,
EDINBURGH,
EH2 2YR.

AUDITORS
FRENCH DUNCAN LLP,
CHARTERED ACCOUNTANTS,
375 WEST GEORGE STREET,
GLASGOW,
G2 4LW.

SOLICITORS
RUSSEL & AITKEN LLP,
27 RUTLAND SQUARE,
EDINBURGH,
EH1 2BU.

BELL & SCOTT LLP,
16 HILL STREET,
EDINBURGH,
EH2 3LD.

J. Smart & Co. (Contractors) PLC

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 17th December 2009 at 12 noon, for the following
purposes:

1. To receive and consider the Annual Report and Statement of Accounts for the year ended 31st July 2009.

2. To receive and consider the Report on Directors’ Remuneration for the year ended 31st July 2009.

3. To declare a Dividend.

4. To re-elect L. E. Glenday as a Director, who retires by rotation.

5. To authorise fees payable to the Directors.

6. To re-elect the Auditors.

7. To authorise the Directors to determine the remuneration of the Auditors.

8. To transact any other business of an Annual General Meeting.

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 at the
Registered Office at least 24 hours before the time fixed for the Meeting.

There are no Directors’ service contracts in existence.

BY ORDER OF THE BOARD
A. D. McCLURE, SECRETARY
28 Cramond Road South,
Edinburgh EH4 6AB

17th November 2009

Note: The Dividend, if approved, will be paid on 21st December 2009 to shareholders on the Register at the
close of business on 4th December 2009.

J. Smart & Co. (Contractors) PLC

CHAIRMAN’S REVIEW

ACCOUNTS
As forecast and due to the requirement of the International Financial Reporting Standards that any unrealised
deficit in revalued property be included in the Income Statement, I am obliged to report for the first time in the
Company’s history a headline group loss before tax of £1,208,000. This compares with a profit for last year of
£5,871,000 which also included an unrealised deficit in revalued property. 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 of £4,468,000 (no property sales) for the year under review which compares with a figure for
the previous year of £8,526,000 (including £3,890,000 profit from property sales).

The value of investment properties at the beginning of the year was £68,148,000 (cost £35,452,000). Additions
during the year cost £3,577,000. The net deficit on the year end valuation was £5,779,000 leaving a value of
£65,946,000 (cost £39,029,000).

The Board is recommending a Final Dividend of 9.35p nett making a total for the year of 13.85p nett which
compares with 13.50p nett for the previous year. The dividends will cost the Company £1,165,000.

Loss adjusted for pension scheme deficit, dividends paid and fair value reserve when deducted from opening
shareholders’ funds brings the total equity of the Group to £92,307,000.

TRADING ACTIVITIES
Group construction work carried out and share of Joint Ventures’ turnover increased by 2%, own work
capitalised increased by 88% and other operating income increased by 7%. Group revenue remained the same.
Total Group profit decreased by 121%. Underlying Group profit excluding an unrealised deficit in revalued
property decreased by 48%.

Turnover in contracting increased and a small profit was achieved. Private housing sales were negligible. Sales
in precast concrete manufacture decreased and a small loss was made.

The mixed commercial and residential development in McDonald Road, Edinburgh and the second phase of our
industrial development at Bilston Glen near Edinburgh are almost finished. The second office block at
Glenbervie Business Park, Larbert is complete and 75% let.

FUTURE PROSPECTS
In spite of a slight erosion in tenant numbers our occupation levels are holding up quite well considering the
general economic situation, and rental income is expected to increase slightly in the current year. There appears
to be genuine interest in the commercial and industrial space we have built recently. Only time will tell if this
interest translates into tenancies.

At McDonald Road the 25% affordable portion of the residential development has been handed over to a
Housing Association. It is too early to say whether or not the promising start made to private house sales here
will be maintained.

The amount of contract work in hand is less than at this time last year, prices have tumbled and it is clear that
prospective contracts are thin on the ground.

Bearing the foregoing in mind, there are too many uncertainties to forecast the outcome for the current year
with any degree of accuracy at this stage.

17th November 2009

J. M. SMART
Chairman

J. Smart & Co. (Contractors) PLC

DIRECTORS

J.M. Smart, Chairman and Managing Director Aged 65
Joined the Company in 1967
Appointed Director in 1978 and appointed Chairman in 1988

K.H. Hastings Aged 63
Joined the Company in 1974
Appointed Director in 1985

A.D. McClure Aged 63
Joined the Company in 1964
Appointed Director in 1987

L.E. Glenday Aged 61
Joined the Company in 1972
Appointed Director in 2001

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS

31st JULY 2009

The Directors submit their Annual Report and Statement of Accounts for the year ended 31st July 2009.

RESULTS AND DIVIDENDS

The loss of the Group for the year after charging taxation amounted to

£1,158,000

The Directors have made the following appropriations:

Paying a Final Dividend for 2008 of 10.50p per share (2007, 10.15p) after waivers £517,000
Paying an Interim Dividend for 2009 of 4.50p per share (2008, 3.00p) after waivers 222,000

£739,000

Certain shareholders have waived the Final Dividend for 2008 and the Interim Dividend for 2009 aggregating
£773,000.
The Directors recommend a Final Dividend for the year of 9.35p per share, making a total for the year of
13.85p.
The Final Dividend, if approved, will be paid to all Members on the Share Register of the Company at the close
of business on 4th December 2009. Dividend warrants will be posted on 18th December 2009.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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 financial statements for each financial year which give a true
and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. Under
that law they are required to prepare the Group 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 period.

In preparing those financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– for the Group and Parent Company financial statements, state whether they have been prepared in

accordance with IFRS as adopted by the EU; and

– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Group and to enable them to ensure that the financial statements
comply with the Companies Act 2006 and IFRS as adopted by the European Union. 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 the Report of the
Directors, Report on Directors’ Remuneration and Corporate Governance Statement that comply with that law
and 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.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

DIRECTORS’ STATEMENT PURSUANT TO DISCLOSURE AND TRANSPARENCY RULE 4.1.12

Each of the Directors confirms, to the best of their knowledge:
That the Consolidated Financial Statements, which have been prepared in accordance with IFRS as adopted by
the EU, give a true and fair view of assets, liabilities, financial position and profit or loss of the Group and
Company; and
That the Business Review contained in this report includes a fair review of the development and performance
of the business and the position of the Group and Company, together with a description of the principal risks
and uncertainties that they face.

PRINCIPAL ACTIVITIES

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

Edinburgh Industrial Estates Limited
Prestonfield Development Company Limited
Northrigg Limited
Duff Street Limited
Invertiel Developments Limited
Primrose Developments Limited

50%
50%
50%
50%
50%
50%

EDI (Industrial) Limited
Walker Holdings (Scotland) Limited
William Sanderson
Kiltane Developments Limited
Macdonald Estates PLC
Macdonald Estates PLC

Full details of the Joint Venture companies are given in note 14 to the accounts.

BUSINESS REVIEW

Group operations during the year were as follows:

BUILDING

Several housing contracts for housing associations and contracts for industrial units for our Joint Venture
company Prestonfield Development Company Limited. Private housing development at McDonald Road,
Edinburgh.

PLUMBING

All plumbing and domestic heating sub-contract work in above projects.

CIVIL ENGINEERING

Small to medium sized civil engineering contracts for Local Authorities, Enterprise Companies, private
housebuilders, private clients and emergency call-out and remedial works for the Coal Authority.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

BUSINESS REVIEW (contd.)

INVESTMENT PROPERTY

Income from rent and service charges received from tenants of industrial and commercial properties owned in
the central belt of Scotland. Property sales amounted to £nil. Acquired a commercial site and two industrial
properties. Continued with office development at McDonald Road, Edinburgh. Completed our second
speculative office block at Glenbervie Business Park, Larbert now 75% let. Commenced the second phase of
our industrial development at Bilston Glen near Edinburgh.

PRECAST CONCRETE

Manufacture and sale of hydraulically pressed concrete products (kerbs, paving slabs, etc.). Sales to builders
merchants, contractors, housebuilders and private individuals.

FINANCIAL

Income from interest on cash deposits and dividends and profits from sale of equity investments. The
Company’s equity investment portfolio was affected by the fall in stock market values resulting in certain shares
suffering permanent or long term impairment.

JOINT VENTURES

Income from rent and service charges received from tenants of industrial and residential properties owned in
Edinburgh. Prestonfield Development Company Limited completed the second and final phase of five
industrial units at Prestonfield Business Park, Edinburgh, which are 90% let. Duff Street Limited’s flatted
development at Duff Street, Edinburgh is 100% sold or let.

SUMMARY

Construction activities .
.
Investment activities
.
Joint Ventures

.
.
.

Profit
excluding
unrealised
(deficits)/gains
in revalued
property
£000
140
4,214
114

Revenue (Loss)/Profit
£000
140
(1,565)
217

£000
29,451
5,568
165

35,184

(1,208)

4,468

Group revenue during the year decreased by £15,000, rental income excluding Joint Ventures, increased by
£340,000, profit from property sales decreased by £3,890,000 and net deficit on valuation of properties
increased by £3,124,000, resulting in an Operating Loss of £1,747,000. The Group’s share of profits in Joint
Ventures increased by £145,000 and finance and investment income including loss on sale and impairment of
equity investments less finance costs decreased by £989,000 resulting in Loss before Taxation of £1,208,000
compared with the profit of £5,871,000 for the previous year. Excluding unrealised (deficits)/gains in revalued
property results in a profit of £4,468,000 before tax for the year under review compared with a profit of
£8,526,000 for the previous year.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

BUSINESS REVIEW (contd.)

GROUP FINANCIAL PERFORMANCE INDICATORS

.
.

25,401
Revenue
Own work capitalised
4,050
Other operating income (Group rental income including service charges) 5,568
(1,208)
(Loss)/Profit before tax
.
4,468
Profit excluding unrealised (deficits)/gains in revalued property
Profit excluding unrealised (deficits)/gains in revalued property
and profit from property sales .
Group investment income including (loss)/profit on sale of available for
sale financial assets and impairment
.
Share of Joint Ventures’ profits excluding unrealised gain in
.
revalued property
.
Group Balance Sheet

114
92,307

4,468

322

.
.

2009
£000 Movement
–
88%
7%
(121%)
(48%)

(4%)

(75%)

58%
(5%)

2008
£000
25,416
2,157
5,228
5,871
8,526

4,636

1,311

72
97,314

PRINCIPAL RISK FACTORS

RISK AND IMPACT
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).

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).

MEASURE
(cid:129) Genuine “All Trades” Contractor employing own plant and

directly employed operatives to carry out all basic trades.

(cid:129) No “labour-only” sub-contractors.
(cid:129) Long serving site supervisory staff promoted through the ranks.
(cid:129) Specialist trades sub-contracted to pool of tried and tested

sub-contractors who are paid in full on or ahead of time.

(cid:129) Clients receive pre-contract design advice to resolve potential

technical problems.

(cid:129) As property and private residential developers we identify sites
unsuitable for private development and offer them to Housing
Associations to negotiate package.

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.

(cid:129) Take up slack by diverting staff and workforce to private

commercial and residential developments held in reserve.

(cid:129) Unlike a pure “contractor” we can take the portion of affordable
housing required by the Planning Authority on a private
residential development to a Housing Association resulting in
reciprocal business and increased workload.

(cid:129) We now have six Joint Ventures in private development four of
which we carry out the work for and are actively pursuing more.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

BUSINESS REVIEW (contd.)
PRINCIPAL RISK FACTORS (contd.)

RISK AND IMPACT
Inability to find tenants for new
development space and loss of existing
tenants leads to reduction of revenue
and capital resources.

MEASURE
(cid:129) By restricting our operations to the central belt of Scotland we

are only involved in familiar locations we understand.
(cid:129) Secure a pre-let before commencement of development.
(cid:129) Only commence speculative development after a careful
assessment of the local market and once we are reasonably
certain of securing tenants.

(cid:129) Freshen up existing developments from time to time in order to

retain and attract tenants and maintain market interest.

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.

(cid:129) Avoid overpaying for land or property.
(cid:129) Do not over extend resources by over committing to

development while the market hots up.

(cid:129) Build up liquidity for the tough times ahead by selective selling
of land and/or developed property at or near the top of the
market.

Possible failure of bank threatens the
Group’s existence due to loss of cash
reserves.

(cid:129) Spread cash reserves among several banks placing more with

the strongest.

(cid:129) Invest a proportion of cash in equities.

Massive reduction in bank and interest
rates results in significant loss of Group
revenue from cash on deposit.

(cid:129) Seek out best interest rates obtainable from banks consistent

with security of borrower.

(cid:129) Consider investing a proportion of cash in high yielding

property with strong covenant.

(cid:129) Increase investment in equities paying attention to yield,

high/low price history and security of investment.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

RETIREMENT BENEFIT OBLIGATIONS
Note 27 to the accounts gives details of the most recent actuarial review of the Group’s defined benefit pension
scheme.

PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES
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 2005 a valuation of the Group’s non-investment heritable properties was carried out by Mr. K. H.
Hastings, a Director of the Parent Company. This valuation, which has not been incorporated into these
accounts, showed a net surplus over the cost of these properties before depreciation of £1,299,000. In the
opinion of the Directors there has been no material change in the value of these properties as at 31st July 2009.

FUTURE DEVELOPMENTS
It is not anticipated that the activities of the Company and its Subsidiaries, as described above, will substantially
change in the immediate future.

EMPLOYEE INVOLVEMENT
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.

DISABLED 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.

CHARITABLE DONATIONS
During the year the Group made total charitable donations amounting to £27,000 (2008, £27,000). Donations
to local causes amounted to £18,000 (2008, £18,000) and donations to national charities amounted to £9,000
(2008, £9,000).

POLITICAL DONATIONS
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.
Under the provisions of the Political Parties, Elections, and Referendums Act 2000 a wider definition of what
constitutes political donations and expenditure is given. It includes sponsorship, subscriptions, payments of
expenses, paid leave for employees fulfilling public duties and support for bodies representing the community in
policy review or reform. To enable the Company and its Subsidiaries to continue to support the community and
such organisations and avoid breaching the legislation, authority was obtained at the 2007 Annual General Meeting
to allow the Company and its Subsidiaries to make donations or incur expenditure in the EU up to an aggregate not
exceeding £5,000 for each Company until the conclusion of the Annual General Meeting to be held in 2011.

CREDITOR STATEMENT POLICY
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 21, based on the average daily amount invoiced by
suppliers during the year and the creditors balance at the year end.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

DIRECTORS AND THEIR INTERESTS

(i)

The Directors at 31st July 2009 and their beneficial interests in the share capital of the Company were
as follows:

J. M. Smart
K. H. Hastings
A. D. McClure
L. E. Glenday

1st August 2008
Ordinary shares of 10p each
Beneficial holdings
4,711,700
63,000
55,000
45,000

31st July 2009
Ordinary shares of 10p each
Beneficial holdings
4,711,700
63,000
55,000
45,000

(ii) Mr L. E. Glenday retires by rotation and, being eligible, offers himself for re-election.

(iii) There are no Directors’ service contracts in existence.

(iv) Between 31st July 2009 and 4th September 2009 J. M. Smart transferred 3,681,800 of his holding to
family members and trusts thus reducing his beneficial holding to 1,029,900. There were no other
movements by the Directors of their beneficial holding within the period to 21st October 2009.

SUBSTANTIAL SHAREHOLDERS
As far as the Directors are aware, other than the Directors, the Company has been notified that as at 21st
October 2009, the following have interests of more than 3% in the Company’s issued share capital:

Octet Investments Limited
Mr A. J. Whitehead
Mr J. R. Smart
Mr D. W. Smart

.
.
.

.
.

.
.
.
.

Number
324,480
312,542
1,972,700
1,972,700

.
.
.
.

%
3.22
3.10
19.57
19.57

CLOSE COMPANY STATUS

On the information available, the Directors are of the opinion that the Company is not a Close Company
within the provisions of the Income and Corporation Taxes Act 1988, as amended.

1111

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

CORPORATE GOVERNANCE

STATEMENT OF COMPLIANCE
This statement details how your Company has applied the main and supporting principles of corporate
governance as set out in Section 1 of the June 2008 FRC Combined Code on Corporate Governance and gives
reasons for any non-compliance. 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 provisions A.1.1 to A.1.4, A.2.1, A.2.2, A.3.1 to A.3.3, A.4.1
to A.4.4, A.4.6, A.5.1, A.6.1, A.7.1, A.7.2, B.1.1, B.1.3, B.1.5, B.2.1 to B.2.3, C.3.1 to C.3.6, D.1.1 and D.2.3
of the Code, details of and explanations for which are given below.

THE BOARD

Your Board consists entirely of working Directors who aggregate 159 years’ service with the Company, 85 of
those as Directors. The Board comprises the executive management of the Company, being the Chairman and
three Executive Directors, and thus maintains full control of the Company. Decisions are accordingly taken
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 three formal meetings during the year. Two meetings were attended by all Directors and one by
three Directors. A formal schedule of reserved matters is not required since the Board is the executive
management of the Company, takes the decisions on all material matters and thereby exercises full direction
and control.

The members of the Board have complete freedom to seek independent professional advice, at the Company’s
expense, when any member feels it appropriate to do so. All Directors have access to the advice and services
of the Company Secretary, who is also a Director and is responsible for ensuring that Board procedures are
followed and that applicable rules and regulations are complied with. All Directors express their views and
make a valuable contribution to the running of the Company.

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 Chairman and Managing Director, a policy which has served your
Company well over very many years.

The Board considers that increasing the manning level of the Board by 50% by the appointment of two non-
executive Directors would increase costs and impose an additional administrative burden for no discernible
benefit and, accordingly, would serve no useful purpose. As the Board is the executive management of the
Company, it ensures that all information is supplied timeously and in a form suitable to enable it to discharge
its duties. All Directors are properly briefed on all issues arising at Board meetings. As a result of the Company
not appointing non-executive Directors, the Company has not established Nomination, Remuneration or Audit
Committees.

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 time of their appointment, no formal tailored induction upon joining the Board was necessary. However,
all Directors are free to receive any training they require for the furtherance of their duties, and the Board’s
policy is to encourage this.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

CORPORATE GOVERNANCE (contd.)

THE BOARD (contd.)

The Company’s Articles of Association require that new Directors are subject to re-election at the first Annual
General Meeting after their appointment and that one-third of eligible Directors with the exception of the
Managing Director seek re-election at the AGM each year.

There is no formal system of performance evaluation of the Board or its members.

As the Company has no Remuneration Committee the Chairman is responsible for fixing the remuneration
packages of the Directors based on their performance and the scope of their duties and responsibilities.

ACCOUNTABILITY AND AUDIT

The Directors have sole responsibility for preparing the Annual Report and Statement of Accounts, the Interim
Report, the Management Statements and other price-sensitive public reports in a balanced and understandable
manner.

GOING CONCERN

The Directors consider that the Group has adequate resources to continue in operational existence for the
foreseeable future and therefore continue to adopt the going concern basis in preparing the accounts.

INTERNAL CONTROL

The Board is responsible for and annually reviews the Group’s system of internal financial control and monitors
its effectiveness. The Board’s system of internal control is designed to manage the risk of failure to achieve
business objectives rather than to eliminate it. By its nature any system of internal control can provide only
reasonable and not absolute assurance against material misstatement or loss.

The Directors have established an organisational structure with clear lines of responsibility and appropriate
reporting procedures, the effectiveness of which is continually reviewed by the Directors. The main features of
the Group’s system of internal financial control are:

– contracts, development projects, land purchase and acquisition of fixed assets are proceeded with after due

consideration by the Directors;

– monthly reports are prepared for every contract and development project for review by the Directors;

– monthly Subsidiary Company reports are also prepared for consideration by the Directors; and

– treasury operations are carried out in accordance with policies and procedures approved by the Board.

During the year under review and up to the approval of the Annual Report and Statement of Accounts there has
been, and continues to be, an ongoing process of identification by the Directors of the key areas of risk within
the Group and of appropriate action to mitigate and monitor such risk.

INTERNAL AUDIT

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 on a regular basis.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT OF THE DIRECTORS (contd.)

31st JULY 2009

CORPORATE GOVERNANCE (contd.)

AUDIT COMMITTEE AND AUDITORS

As stated above, the Company has not established 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 Company’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 shareholders.

RELATIONS WITH SHAREHOLDERS

The Company has in the past and will in the future continue to enter into dialogue with institutional
shareholders wherever possible and the Chairman is responsible for communications with institutional
shareholders and to ensure that their views and concerns are communicated to the Board.

As no non-executive Directors are appointed to the Board there is no opportunity for shareholders to meet 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 and against each resolution will be announced.

AUDITORS

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.

STATEMENT OF DISCLOSURE TO AUDITORS

In the case of each of the Directors who were Directors at the date this Report was approved:

So far as the Directors are aware; there is no relevant audit information (as defined in the Companies Act
2006) of which the Company’s auditors are unaware, and

Each of the Directors has taken all steps that they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the Company’s auditors are aware
of that information.

17th November 2009

APPROVED BY THE BOARD OF DIRECTORS

AND SIGNED ON ITS BEHALF BY
A. D. MCCLURE,
Secretary.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT ON DIRECTORS’ REMUNERATION

31st JULY 2009

The Directors’ Remuneration Report for the year to 31st July 2009 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.

REMUNERATION POLICY

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.

DIRECTORS’ REMUNERATION

The following tables show an analysis of the various elements of remuneration receivable by those
Directors who served during the year ended 31st July 2009.

Directors’ Remuneration

(Audited Information)

J. M. Smart
K. H. Hastings
A. D. McClure
L. E. Glenday

.
.
.
.

Directors’ Pension Benefits

(Audited Information)

K. H. Hastings
A. D. McClure
L. E. Glenday

.
.
.

.
.
.
.

.
.
.

Salary and
Fees
£000
112
115
112
112

Taxable
Benefits
£000
9
9
9
9

Total
2009
£000
121
124
121
121

Total
2008
£000
114
119
116
116

.
.
.
.

Transfer Value Transfer Value

Gross increase Total accrued
pension at
31/7/09
£
67,928
65,949
62,876

in accrued
pension
£
6,201
5,058
5,174

of accrued
pension at
31/7/09
£
1,175,206
1,102,352
1,024,455

of accrued Total change
in value
pension at
31/7/08 during period
£
271,638
256,835
257,726

£
900,197
842,236
763,448

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.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

REPORT ON DIRECTORS’ REMUNERATION (contd.)

31st JULY 2009

PERFORMANCE GRAPH

The graph below shows the total shareholder return performance of the Company’s shares in comparison
with the FTSE Real Estate Index for the five years to 31st July 2009. 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.

Total Shareholder Return over the last five financial years

200

180

160

140

120

100

2004

2005

2006

2007

2008

2009

J Smart & Co (Contractors) PLC

FTSE Real Estate Index

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 Real Estate Index which the Directors believe is
the most appropriate comparative index.

17th November 2009

APPROVED BY THE BOARD OF DIRECTORS

AND SIGNED ON ITS BEHALF BY
A. D. MCCLURE,
Secretary.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

INDEPENDENT REPORT OF THE AUDITORS

31st JULY 2009

INDEPENDENT REPORT OF THE AUDITORS

TO THE SHAREHOLDERS OF J. SMART & CO. (CONTRACTORS) PLC

We have audited the financial statements of J. Smart & Co. (Contractors) PLC for the year ended 31st July 2009
which comprise Consolidated Income Statement, Consolidated Statement of Recognised Income and Expense,
Consolidated and Company Balance Sheets, Consolidated and Company Cash Flow Statements 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.

This report is made solely to the Company’s shareholders, as a body, in accordance with sections 495 and 496
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.

RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND AUDITORS

As explained more fully in the Directors’ Responsibilities Statement (set out on page 5), 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 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.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

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.

OPINION ON FINANCIAL STATEMENTS

In our opinion:

(cid:129)

the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs at 31st July 2009 and of the Group’s loss and the Group’s and Parent Company’s Cash Flow for the
year then ended;

the financial statements have been properly prepared in accordance with IFRS as adopted by the European
Union; and

the financial statements have been prepared in accordance with the requirements of the Companies Act
2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

INDEPENDENT REPORT OF THE AUDITORS (contd.)

31st JULY 2009

OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion:

(cid:129)

the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006; and

the information given in the Report of the Directors for the financial year for which the financial statements
are prepared is consistent with the financial statements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

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:

(cid:129)

adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or

the Parent Company’s financial statements and the part of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and returns; or

certain disclosures of Directors’ remuneration specified by law are not made; or

(cid:129) we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

(cid:129)

the Directors’ statement set out on page 13 in relation to the going concern basis; and

the part of the Corporate Governance Statement relating to the Company’s compliance with the nine
provisions of the June 2008 Combined Code specified for our review.

375 WEST GEORGE STREET,
GLASGOW G2 4LW.
17th November 2009

KEVIN G BOOTH
Senior Statutory Auditor
for and on behalf of FRENCH DUNCAN LLP
Statutory Auditor and Chartered Accountants

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

CONSOLIDATED INCOME STATEMENT for the year ended 31st JULY 2009

2009
£000

29,616
(165)
(4,050)

2008
£000

29,169
(1,596)
(2,157)

25,401

25,416

(21,707)

(22,290)

3,694

3,126

5,568
(5,230)

5,228
(5,101)

4,032

3,253

—
(5,779)

(1,747)

217
66
(55)
(365)
677
(1)

(1,208)

(1,158)

3,890
(2,655)

4,488

72
79
33
—
1,257
(58)

5,871

(540)

5,331

(11.49)p

52.88p

Group construction work carried out and share of Joint Ventures’ turnover
Less: Share of Joint Ventures’ turnover
Less: Own construction work capitalised

.
.

Notes

REVENUE

Cost of sales

GROSS PROFIT

Other operating income .
Net operating expenses .

.
.

OPERATING PROFIT BEFORE PROFIT ON SALE AND
NET REVALUATION DEFICIT ON INVESTMENT PROPERTIES

Profit arising on sale of investment properties
Net deficit on valuation of investment properties

OPERATING (LOSS)/PROFIT

Share of profits in Joint Ventures
.
Income from available for sale financial assets
(Loss)/Profit on sale of available for sale financial assets
Impairment of available for sale financial assets
.
Finance income .
.
.
Finance costs

.
.
.

.
.

(LOSS)/PROFIT BEFORE TAX

Taxation

.
.

.
.
.
.
.
.

(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS .

(LOSS)/EARNINGS PER SHARE – BASIC AND DILUTED .

.
.

.
.
.
.
.
.

14
6

7
7

All activities in both the current and previous year relate to continuing operations.

The notes on pages 25 to 51 form an integral part of these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
AND CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED
31ST JULY 2009

Actuarial (loss)/gain recognised on defined benefit pension scheme

Deferred taxation on actuarial loss/(gain)

NET (DEFICIT)/SURPLUS RECOGNISED DIRECTLY IN EQUITY .

(Loss)/Profit for the period

TOTAL RECOGNISED INCOME AND EXPENSE FOR THE PERIOD

ATTRIBUTABLE TO EQUITY SHAREHOLDERS

Notes

2009
£000

(4,553)

1,275

(3,278)

(1,158)

(4,436)

2008
£000

1,381

(387)

994

5,331

6,325

(4,436)

6,325

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY AS AT 31ST JULY 2009

Share
Capital
£000

Fair Value
Reserve
£000

Retained
Earnings
£000

Total
£000

92,135
6,325
(499)
(647)

90,755
6,325
—
(647)

96,433

97,314

(4,436)
—

—
(739)

(4,436)
(197)

365
(739)

91,258

92,307

372
—
(499)
—

(127)

—
(197)

365
—

As at 1st August 2007 .
.
Total recognised Income and Expense .
.
Fair value adjustment net of tax
.
.
Dividends

As at 31st July 2008

.
.
.
.

.
Total recognised Income and Expense
Fair value adjustment net of tax
.
Impairment of available for sale financial assets taken
.
in Income Statement
.
Dividends

.
.

1,008
—
—
—

1,008

—
—

As at 31st July 2009

1,008

The notes on pages 25 to 51 form an integral part of these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

CONSOLIDATED BALANCE SHEET as at 31st JULY 2009

NON-CURRENT ASSETS
Property, plant and equipment .
.
Investment properties
Investments in Joint Ventures
.
Available for sale financial assets
Trade and other receivables
Deferred tax asset

.
.

CURRENT ASSETS
Inventories
.
Trade and other receivables
Cash at bank and in hand

TOTAL ASSETS

.
.
.

NON-CURRENT LIABILITIES
Retirement benefit obligations .
.
Deferred tax liabilities .

CURRENT LIABILITIES
Trade and other payables
.
Current tax liabilities
.
Bank overdraft

TOTAL LIABILITIES .

NET ASSETS

EQUITY
Called up share capital
Fair value reserve
Retained earnings

TOTAL EQUITY

.
.
.

.
.
.
.
.
.

.
.
.

.
.

.
.
.

.
.
.
.
.
.

.
.
.

.
.

.
.
.

.
.
.
.
.
.

.
.
.

.
.

.
.
.

.
.
.
.
.
.

.
.
.

.
.

.
.
.

Notes

12
13
14
15
17
21

16
17

27
21

22
23
23

.
.
.
.
.
.

.
.
.

.
.

.
.
.

2009
£000

6,715
65,946
2,284
1,914
—
1,778

78,637

8,476
7,001
23,234

38,711

2008
£000

4,331
68,148
2,067
1,533
3,176
936

80,191

8,184
3,833
26,883

38,900

117,348

119,091

4,468
4,763

9,231

4,872
163
10,775

15,810

1,089
5,944

7,033

5,518
733
8,493

14,744

25,041

21,777

92,307

97,314

1,008
41
91,258

92,307

1,008
(127)
96,433

97,314

Approved by the Board on
17th November 2009
Company Registration No. SC025130
The notes on pages 25 to 51 form an integral part of these accounts.

J. M. SMART, Director
A. D. McCLURE, Director

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

COMPANY BALANCE SHEET as at 31st JULY 2009

NON-CURRENT ASSETS
Property, plant and equipment .
.
Investments in Subsidiaries and Joint Ventures
.
Trade and other receivables
.
Deferred tax asset

.
.

CURRENT ASSETS
Inventories
.
Trade and other receivables
.
Current tax assets
Cash at bank and in hand

TOTAL ASSETS

.
.
.
.

NON-CURRENT LIABILITIES
Retirement benefit obligations .
.
Deferred tax liabilities .

CURRENT LIABILITIES
Trade and other payables
.
Bank overdraft

TOTAL LIABILITIES

NET ASSETS

EQUITY
Called up share capital
Retained earnings

TOTAL EQUITY

.
.

.
.
.
.

.
.

.
.
.
.

.
.

Notes

12
14
17
21

16
17

27
21

22
23

.
.
.
.

.
.

.
.
.
.

.
.

.
.
.
.

.
.

2009
£000

738
733
—
1,615

3,086

8,182
12,296
1,053
2,744

24,275

2008
£000

852
733
3,176
837

5,598

7,835
7,872
1,737
1

17,445

27,361

23,043

4,468
99

4,567

3,951
—

3,951

1,089
84

1,173

4,654
8,465

13,119

8,518

14,292

18,843

8,751

1,008
17,835

18,843

1,008
7,743

8,751

Approved by the Board on
17th November 2009
Company Registration No. SC025130

J. M. SMART, Director
A. D. McCLURE, Director

The notes on pages 25 to 51 form an integral part of these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

CONSOLIDATED CASH FLOW STATEMENT for the year ended 31st JULY 2009

CASH FLOWS FROM OPERATING ACTIVITIES .

Tax paid on profits

NET CASH FLOW TO/(FROM) OPERATING ACTIVITIES .

Notes

24(a)

2009
£000

2,632

2008
£000

543

(1,333)

(2,066)

1,299

(1,523)

(493)
(2,044)
64
—
(1,533)
(2,517)
(580)
11
602
(1)

(6,491)

(739)

(758)
(6)
69
6,188
(550)
(1,607)
(639)
145
1,257
(7)

4,092

(647)

(5,931)

1,922

18,390

12,459

16,468

18,390

CASH FLOWS FROM INVESTING ACTIVITIES
.
.
Additions to property, plant and equipment
.
.
.
Additions to investment properties
.
.
Sale of property, plant and equipment .
.
Sale of investment properties
.
.
Expenditure on own work capitalised - investment properties
.
Expenditure on own work capitalised - property under construction
.
Purchase of available for sale financial assets
.
.
Proceeds of sale of available for sale financial assets
.
.
Interest received .
.
.
.
Interest paid

.
.
.
.

.
.

NET CASH (USED IN)/FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid .

NET CASH USED IN FINANCING ACTIVITIES

(DECREASE)/INCREASE IN CASH, CASH EQUIVALENTS AND BANK

CASH, CASH EQUIVALENTS AND BANK AT BEGINNING OF PERIOD .

24(b)

CASH, CASH EQUIVALENTS AND BANK AT END OF PERIOD

24(b)

The notes on pages 25 to 51 form an integral part of these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

COMPANY CASH FLOW STATEMENT for the year ended 31st JULY 2009

CASH FLOWS FROM OPERATING ACTIVITIES .

Tax received/(paid) on profits .

NET CASH FLOW TO/(FROM) OPERATING ACTIVITIES .

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Sale of property, plant and equipment .
Repayment of capital from dissolved Subsidiaries
.
Interest received .
.
.
Interest paid

.
.

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid .

NET CASH USED IN FINANCING ACTIVITIES

.
.
.
.
.

INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND BANK

Notes

25(a)

2009
£000

11,029

1,124

2008
£000

(989)

(242)

12,153

(1,231)

(266)
37
—
23
—

(206)

(739)

(481)
43
13
5
(6)

(426)

(647)

11,208

(2,304)

.
.
.
.
.

CASH, CASH EQUIVALENTS AND BANK AT BEGINNING OF PERIOD .

25(b)

(8,464)

(6,160)

CASH, CASH EQUIVALENTS AND BANK AT END OF PERIOD

25(b)

2,744

(8,464)

The notes on pages 25 to 51 form an integral part of these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES

GENERAL INFORMATION
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.

STATEMENT OF COMPLIANCE
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.

(cid:129)
(cid:129)
(cid:129)

STANDARDS, AMENDMENTS AND INTERPRETATIONS EFFECTIVE IN THE YEAR ENDED 31ST JULY 2009
The following standards, amendments and interpretations to existing standards became mandatory for
the accounts for the year to 31st July 2009:
(cid:129)

IAS 39 (Amended) – Financial Instruments: Recognition and Measurement relating to amendments
for embedded derivatives which reclassified financial instruments.
IFRIC 12 – Service Concession Arrangements.
IFRIC 13 – Customer Loyalty Programmes.
IFRIC 14 – IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirement and
their Interaction.
IFRIC 17 – Distributions of Non-cash Assets to Owners.
IFRIC 18 – Transfers of Assets from Customers.

(cid:129)
(cid:129)
The adoption of these Standards and Interpretation have had no impact on the results of the Group or
Company.

STANDARDS, AMENDMENTS AND INTERPRETATIONS THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN
ADOPTED EARLY
The following standards, amendments and interpretations have been published and are mandatory for
the accounts for the year to 31st July 2010 or later:
(cid:129)

IFRS 1 (Amended) – First-time Adoption of International Financial Reporting Standards relating to
cost of investment on first-time adoption and relating to oil and gas assets.
IFRS 2 (Amended) – Share-based Payment relating to vesting conditions and cancellations, group
cash-settled share-based payments transactions and resulting from April 2009 Annual Improvements
to IFRSs.
IFRS 3 (Amended) – Business Combinations relating to comprehensive revision on applying the
acquisition method.
IFRS 5 (Amended) – Non-current Assets Held for Sale and Discontinued Operations resulting from
May 2008 and April 2009 Annual Improvements to IFRSs.
IFRS 7 (Amended) – Financial Instrument: Disclosures relating to enhancing disclosures about fair
value and liquidity risk.
IFRS 8 – Operating Segments.
IFRS 8 (Amended) – Operating Segments resulting from April 2009 Annual Improvements to IFRSs.
IAS 1 (Amended) – Presentation of Financial Statements resulting from comprehensive revision
including a statement of comprehensive income, disclosure of puttable instruments and obligations
arising on liquidation and resulting from May 2008 and April 2009 Annual Improvements to IFRSs.
IAS 7 (Amended) – Statement of Cash Flows resulting from April 2009 Annual Improvements to
IFRSs.
IAS 16 (Amended) – Property, Plant and Equipment resulting from May 2008 Annual Improvements
to IFRSs.
IAS 17 (Amended) – Leases resulting from April 2009 Annual Improvements to IFRSs.

(cid:129)

(cid:129)
(cid:129)
(cid:129)

(cid:129)

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES (contd.)

STANDARDS, AMENDMENTS AND INTERPRETATIONS THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN
ADOPTED EARLY (contd.)
(cid:129)
(cid:129)

IAS 19 (Amended) – Employee Benefits resulting from April 2009 Annual Improvements to IFRSs.
IAS 20 (Amended) – Government Grants and Disclosure of Government Assistance resulting from
May 2008 Annual Improvements to IFRSs.
IAS 23 - Borrowing Costs relating to prohibiting immediate expensing and resulting from May 2008
Annual Improvements to IFRSs.
IAS 27 (Amended) – Consolidated and Separate Financial Statements resulting from consequential
amendments arising from amendments to IFRS 3 and to cost of an investment on first-time adoption
and resulting from May 2008 Annual Improvements to IFRSs.
IAS 28 (Amended) – Investments in Associates resulting from May 2008 Annual Improvements to
IFRSs.
IAS 29 (Amended) – Financial Reporting in Hyperinflationary Economies resulting from May 2008
Annual Improvements to IFRSs.
IAS 31 (Amended) – Interests in Joint Ventures resulting from consequential amendments arising
from amendments to IFRS 3 and to cost of an investment on first-time adoption and resulting from
May 2008 Annual Improvements to IFRSs.
IAS 32 (Amended) – Financial Instruments: Presentation amendments relating to puttable
instruments and obligations arising on liquidation.
IAS 36 (Amended) – Impairment of Assets resulting from May 2008 and April 2009 Annual
Improvements to IFRSs.
IAS 38 (Amended) – Intangible Assets resulting from May 2008 and April 2009 Annual
Improvements to IFRSs.
IAS 39 (Amended) – Financial Instruments: Recognition and Measurement relating to amendments
for eligible hedged items and resulting from May 2008 and April 2009 Annual Improvements to
IFRSs.
IAS 41 (Amended) – Agriculture resulting from May 2008 and April 2009 Annual Improvements to
IFRSs.

(cid:129)

The Directors anticipate that the adoption of these standards and interpretations in future periods will
have no material impact on the financial statements of the Group or Company but full consideration
will be given to them in due course.

BASIS OF PREPARATION
The accounts have been prepared 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.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Investment Properties
Investment properties are revalued annually by the Group Directors in accordance with the Appraisal
and Valuation Manual of the R.I.C.S. The Directors use yields which they consider to be appropriate to
the circumstances and nature of the Group’s investment property portfolio. The Directors consider that
any variances in yields would not result in significant movement of revaluation movements.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES (contd.)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (contd.)
Long-Term Contract Provisions
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.

Retirement Benefit Obligation
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.
These are set out in note 27 to the financial statements.

BASIS OF CONSOLIDATION
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.

CAPITAL MANAGEMENT
Group objectives in managing capital are to safeguard the interests of the Company to operate as a 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 8 and 9 of this report
for details of relevant risk factors and management measures.
The Group is currently free of debt with sufficient cash reserves and readily realisable assets available
to meet its foreseeable commitments.

INVESTMENT IN JOINT VENTURES
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
Investment properties are properties owned by the Group which are held for long-term rental income or
for capital appreciation or both. Investment properties are initially recognised at cost and revalued at
the Balance Sheet date to fair value as determined by Group Directors in accordance with the Appraisal
and Valuation Manual of the R.I.C.S..
Properties under development are stated at cost including attributable overheads.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES (contd.)
INVESTMENT PROPERTIES (contd.)
Gains or losses arising from the changes in fair value are included in the Income Statement in the period
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.
Where the Group redevelops an existing property for continued future use as an investment property, the
property remains an investment property measured at fair value through the Income Statement.
Cost of construction of new investment properties are accounted for under Property, plant and
equipment in accordance with IAS 16: Property, plant and equipment. Once the construction is
complete the property is transferred into investment properties.

PROPERTY, PLANT AND EQUIPMENT
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.
The Group assesses at each Balance Sheet date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the
Group makes an estimate of the asset’s recoverable amount. Where the carrying value exceeds its
recoverable amount the asset is considered impaired and written down accordingly.

DEPRECIATION
Depreciation is provided on all items of property, plant and equipment, other than investment properties
including those under construction and freehold land, at rates calculated to write off the cost of each
asset over its expected useful life, as follows:

Freehold buildings
Plant and machinery
Office furniture and fittings
Motor vehicles

-
-
-
-

over 40 to 66 years
25% to 33 1⁄3% reducing balance
20% to 33 1⁄3% reducing balance
33 1⁄3% reducing balance

INVENTORIES AND WORK IN PROGRESS
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.

LONG-TERM CONTRACTS
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.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES (contd.)

INCOME TAX
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 TAXATION
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.

PENSIONS
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 periods 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 Statement of Recognised Income and Expense.
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
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.
GROUP AS A LESSEE
In accordance with IAS 40: Investment Property, leases of investment property are assessed on a
property by property basis. The Group’s investment 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.
GROUP AS A LESSOR
Properties leased out under operating leases are included in investment property, with rental income
recognised on a straight line basis over the lease term.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES (contd.)

REVENUE
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 sales value of work done in the year. The
measurement and stage of completion of revenue of long-term contracts are based on external valuations
issued by the 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 and other recoveries, and
is disclosed as other operating income in the Consolidated financial statements.
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.
Surrender premiums received from tenants vacating the property are deferred and released to revenue
over the original lease term. When the unit is re-let all deferred amounts are released to revenue at that
point.

FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Group’s Balance Sheet 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.
AVAILABLE FOR SALE FINANCIAL ASSETS
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
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
Cash and cash equivalents comprise cash in hand, deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
TRADE AND OTHER PAYABLES
Trade and other payables are non-interest bearing and are recognised at invoiced amount.

DIVIDENDS
Final Dividends are recognised as a liability in the period in which they are approved by the Company’s
shareholders. Interim Dividends are recognised when they are paid.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

SEGMENTAL INFORMATION

The Group’s primary basis of segmentation is by activities and all construction work relates to activities
in Scotland.

Total
Revenue

Inter
Segment
Revenue

External
Revenue

2009
Construction activities .
.
Investment activities
.
Joint Ventures

2008
Construction activities .
.
Investment activities
.
Joint Ventures

.
.
.

£000

29,451
5,568
165
35,184

27,573
5,228
1,596
34,397

£000

(4,050)
—
—
(4,050)

(2,157)
—
—
(2,157)

.
RESULT
Finance and investment income
.
Finance and investment costs

.
.
.

(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAX

Tax on Loss/(Profit) on Ordinary Activities

.
.
.

(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS .

£000

25,401
5,568
165
31,134

25,416
5,228
1,596
32,240

.
.
.

Construction activites
Investment activities
Investment in Joint Ventures

.
.

OTHER INFORMATION
Construction activites
Investment activities

.
.

OTHER OPERATING INCOME

Rental income
Less: Joint Ventures’ income

.
.
.

.
.

.
.
.

.
.

Service charges and insurance receivable

Direct property costs

Net rental income

2009
£000

2008
£000

Segment Assets

22,514
92,671
2,259
117,444

7,896
98,923
2,042
108,861

Capital Additions
758
485
2,163
6,102

.
.

.
.
.

.
.

.
.
.

.
.

(Loss)/Profit
attributable to
Equity shareholders
2008
2009
£000
£000

39
(1,786)
217
(1,530)

—
—
—
—

(1,530)
743
(421)

(1,208)

(1,158)

—
—
—
—

(14)
4,502
72
4,560

4,560
1,369
(58)

5,871

(540)

5,331

2008
2009
£000
£000
Segment Liabilities
4,517
9,236
6,297
15,738
—
—
10,814
24,974

Depreciation

521
—

533
—

5,191
(228)

4,963
605

5,568
(1,562)

4,006

4,821
(97)

4,724
504

5,228
(1,976)

3,252

Direct property costs included £206,000 (2008, £379,000) in respect of investment properties that did not
generate rental income in the year.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

STAFF COSTS AND DIRECTORS’ REMUNERATION

Staff costs during the year amounted to:

Wages, salaries and short term benefits
.
.
Social security costs
.
Post-employment benefits

.
.

.
.
.

2009
£000

10,465
947
720

12,132

The average weekly number of employees during the year was made up as follows:

Construction and related services
Office and management .

Directors’ remuneration:

– Salaries and short term benefits
– Post-employment benefits
– Fees

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.

2008
£000

9,354
848
730

10,932

No.

295
23

318

No.

317
24

341

£000

487
70
—

557

465
91
—

556

All of the Directors except J. M. Smart are members of the Group’s defined benefit pension scheme.

Key management is comprised solely of the Directors of the Company.

OPERATING (LOSS)/PROFIT

This is stated after charging/(crediting):
.
Cost of inventories recognised as an expense .
.
.
Staff costs (per note 4) .
.
.
Hire of plant and machinery
Depreciation of owned assets
.
.
Loss/(Profit) on disposal of property, plant and equipment .
.
Auditors’ remuneration and expenses – audit services

.
.
.
.

.
.
.

.
.
.
.
.
.

15,861
12,132
545
521
41
112

14,806
10,932
758
533
(31)
99

The auditors’ fees for the Parent Company are £47,000 (2008, £45,000).

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

INCOME FROM INVESTMENTS

Available for sale financial assets

FINANCE INCOME AND FINANCE COSTS

Receivable:

Interest on short term deposits
Other interest
Pension scheme

Payable:

Bank interest
Other interest
Pension scheme

TAXATION

UK Corporation Tax
Current tax on income for the period .
Corporation tax over provided in previous years

Deferred taxation (note 21)

Current Tax Reconciliation
(Loss)/Profit on ordinary activities before tax
.
Less: Share of profits of Joint Ventures

.
.

Current tax at 28% (2008, 29.33%)
Effects of:
.
Expenses not deductible for tax purposes
.
Non taxable income
.
IBA adjustment
Effect of change on tax rate
.
Adjustments to tax charge in respect of prior periods

.
.
.
.

.
.
.

.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

.
.
.
.
.

2009
£000

576
26
75

677

—
(1)
—

(1)

793
(30)

763
(813)

(50)

(1,208)
(217)

(1,425)

2008
£000

1,196
61
—

1,257

(7)
—
(51)

(58)

2,082
(151)

1,931
(1,391)

540

5,871
(72)

5,799

(399)

1,701

87
(19)
311
—
(30)

(50)

—
(48)
(604)
(358)
(151)

540

In addition to amounts charged to the Income Statement, a deferred tax credit of £1,275,000 (2008,
charge of £387,000) relating to actuarial gains on defined benefit scheme has been recognised directly
to Equity.
Also a deferred tax charge of £65,000 (2008, credit £190,000) relating to the movement in fair value of
available for sale financial assets has been recognised directly to Equity.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

Dealt with in the accounts of the Parent Company
.
Retained by Subsidiary and Joint Venture Companies

10.

DIVIDENDS

Ordinary Dividends
2007 Final Dividend of 10.15p per share
2008 Interim Dividend of 3.00p per share
2008 Final Dividend of 10.50p per share
2009 Interim Dividend of 4.50p per share

.
.
.
.

.
.

.
.
.
.

.
.

.
.
.
.

.
.

.
.
.
.

2009
£000

14,109
(15,267)

(1,158)

—
—
517
222

739

Proposed 2009 Final Dividend of 9.35p per share (2008, 10.50p), after waivers

943

2008
£000

(425)
5,756

5,331

500
147
—
—

647

517

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.

Certain shareholders have waived Dividends as follows:
Ordinary Dividends
2007 Final Dividend of 10.15p per share
2008 Interim Dividend of 3.00p per share
2008 Final Dividend of 10.50p per share
2009 Interim Dividend of 4.50p per share

.
.
.
.

11.

(LOSS)/EARNINGS PER SHARE

Year to 31st July 2009 .

Year to 31st July 2008 .

.
.
.
.

—
—
541
232

773

523
155
—
—

678

(Loss)/Profit

attributable Basic (loss)/
earnings
per share

to Equity
shareholders
£000

(1,158)

(11.49)p

5,331

52.88p

Basic (loss)/earnings per share are calculated by dividing the (loss)/profit attributable to Equity
shareholders by the number of ordinary shares in issue, being 10,082,000 shares at the beginning and end
of the financial year.

There is no difference between basic and diluted (loss)/earnings per share.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

12.

PROPERTY, PLANT AND EQUIPMENT

(a) GROUP

Investment
Land and
buildings properties under
construction
Freehold
£000
£000

Plant,
equipment
and vehicles
£000

Cost:

At 1st August 2008 .
.
Additions
.
Disposals

.
.

At 31st July 2009

Depreciation:

At 1st August 2008
Provided during year
Disposals

At 31st July 2009

Net book value:

At 31st July 2009

Cost:

At 1st August 2007 .
.
Additions
.
Disposals

.
.

At 31st July 2008

Depreciation:

At 1st August 2007 .
Provided during year
Disposals

At 31st July 2008

Net book value:

At 31st July 2008

.
.
.

738
1
—

739

414
16
—

430

2,607
2,525
—

5,132

—
—
—

—

Total
£000

9,923
3,010
(1,227)

6,578
484
(1,227)

5,835

11,706

5,178
505
(1,122)

5,592
521
(1,122)

4,561

4,991

309

5,132

1,274

6,715

738
—
—

738

398
16
—

414

1,000
1,607
—

2,607

—
—
—

—

6,202
758
(382)

6,578

5,005
517
(344)

5,178

7,940
2,365
(382)

9,923

5,403
533
(344)

5,592

324

2,607

1,400

4,331

As referred to in the Report of the Directors, the Group’s non-investment heritable properties were
revalued at 31st July 2005. This revaluation has not been incorporated into these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

12.

PROPERTY, PLANT AND EQUIPMENT (contd.)

(b) COMPANY

Cost:

Land and
buildings
Freehold
£000

Plant,
equipment
and vehicles
£000

At 1st August 2008 .
.
Additions
.
Group transfer
.
Disposals

At 31st July 2009

Depreciation:

At 1st August 2008 .
Provided during year .
.
Group transfer
.
Disposals

At 31st July 2009

Net book value:

At 31st July 2009

Cost:

At 1st August 2007 .
.
Additions
.
Disposals

.
.

At 31st July 2008

Depreciation:

At 1st August 2007 .
Provided during year .
.
Disposals

At 31st July 2008

Net book value:

At 31st July 2008

.
.
.
.

.
.
.

.
.
.
.

.
.
.

.
.
.
.

.
.
.

.
.
.
.

.
.
.

.
.
.
.

.
.
.

179
—
—
—

179

83
3
—
—

179
—
—

179

80
3
—

Total
£000

3,505
265
11
(1,093)

3,326
265
11
(1,093)

2,509

2,688

2,570
280
10
(996)

1,864

2,653
283
10
(996)

1,950

645

738

3,092
481
(247)

3,326

2,507
288
(225)

2,570

3,271
481
(247)

3,505

2,587
291
(225)

2,653

756

852

As referred to in the Report of the Directors, the Company’s non-investment heritable properties were
revalued at 31st July 2005. This revaluation has not been incorporated into these accounts.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

13.

INVESTMENT PROPERTIES

Cost or valuation:

At 1st August 2008 .
.
Additions
.
Transfers
Disposals
.
Deficits on valuation .

.
.
.

At 31st July 2009

Cost or valuation:

At 1st August 2007 .
Additions
.
.
Disposals
Deficits on valuation .

.
.

At 31st July 2008

.
.
.
.
.

.
.
.
.

.
.
.
.
.

.
.
.
.

.
.
.
.
.

.
.
.
.

.
.
.
.
.

.
.
.
.

.
.
.
.
.

.
.
.
.

Land and
buildings
Freehold
£000

55,610
3,559
4,461
—
(5,777)

57,853

59,463
213
(2,298)
(1,768)

Land and
buildings
Leasehold
£000

12,538
18
(4,461)
—
(2)

Total
£000

68,148
3,577
—
—
(5,779)

8,093

65,946

13,082
343
—
(887)

72,545
556
(2,298)
(2,655)

55,610

12,538

68,148

The Group’s completed investment properties were valued on the basis of market value on 31st July
2009 in accordance with the Appraisal and Valuation Manual of the R.I.C.S. by Mr. J. M. Smart,
M.R.I.C.S. and Mr. K. H. Hastings, 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, completed 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 company had obligations of £1,795,000 in respect of development and repair costs of investment
properties at the Balance Sheet date.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

14.

INVESTMENTS

Group

Company

2009
£000

—
2,284

2,284

2008
£000

—
2,067

2,067

2009
£000

708
25

733

Shares in Subsidiaries at Cost
Joint Ventures

.
.

(a) JOINT VENTURES

Share of Assets:

Share of Non Current Assets
Share of Current Assets

Share of Liabilities:

Share of Non Current Liabilities
Share of Current Liabilities .

Share of Net Assets

.
.

.
.
Turnover .
.
.
.
.
Cost of Sales
.
Net rental incomes
.
Net operating expenses .
.
Net gain on valuation of investment properties

.
.
.
.

Operating profit .
Finance income .
.
Finance costs

Profit before tax .
.
Taxation .

.
.
.

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

.
.
.
.
.

.
.
.

.
.

2008
£000

708
25

733

2008
£000

2,596
3,522

6,118

3,250
801

4,051

Group

2009
£000

3,241
3,017

6,258

—
3,974

3,974

2,284

2,067

165
(192)
228
(54)
103

250
8
(10)

248
(31)

217

1,596
(1,372)
97
(276)
—

45
101
(96)

50
22

The Group’s share of retained profits in the Joint Ventures at 31st July 2009 amounted to £2,259,000
(2008, £2,042,000).

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

14.

INVESTMENTS (contd.)

(a) JOINT VENTURES (contd.)

Name of Joint Venture

Registered in and
Principal Country
of Operation

J. Smart & Co. (Contractors) PLC
Interest in Joint Venture’s Capital

Edinburgh Industrial Estates Limited
Prestonfield Development Company Limited
Northrigg Limited
Duff Street Limited
Invertiel Developments Limited
Primrose Developments Limited

Scotland
Scotland
Scotland
Scotland
Scotland
Scotland

Name of Joint Venture

Jointly managed with

Issued Share capital

Edinburgh Industrial
Estates Limited

EDI (Industrial) Limited

Prestonfield Development
Company Limited

Walker Holdings
(Scotland) Limited

Northrigg Limited

William Sanderson

Duff Street Limited

Kiltane Developments
Limited

Invertiel Developments
Limited

Macdonald Estates PLC

Primrose Developments
Limited

Macdonald Estates PLC

50,000 ordinary £1
shares split equally
into A & B shares
and ranking equally
in all respects

2 ordinary £1 shares
split equally into A & B
shares and ranking
equally in all respects

2 ordinary £1
shares split equally
into A & B shares
and ranking equally
in all respects

100 ordinary £1
shares split equally
into A & B shares
and ranking equally
in all respects

50%
50%
50%
50%
50%
50%

Issued shares held
by J. Smart & Co.
(Contractors) PLC

25,000 B Shares

1 B Share

1 A Share

50 A Shares

All of the Joint Venture companies were established for the purposes of property development and all
have accounting periods ending on 31st July.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

14.

INVESTMENTS (contd.)

(b) SUBSIDIARIES
At 31st July 2009 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
Cramond Real Estate Company Limited
Thomas Menzies (Builders) Limited
Concrete Products (Kirkcaldy) Limited
C. & W. Assets Limited

Nature of business
Plumbing contractors
Investment holding
Civil Engineering contractors
Manufacture of concrete building products
Property company

15.

AVAILABLE FOR SALE FINANCIAL ASSETS

Listed investments

Fair value movement before tax amounted to (£189,000) (2008, (£667,000)).

16.

INVENTORIES

Group

2009
£000

1,914

2008
£000

1,533

Long-term contract balances
.
.
Land held for development
Raw materials and consumables
.
Finished goods

Group

Company

2009
£000

3,122
5,110
154
90

8,476

2008
£000

2,428
5,445
193
118

8,184

2009
£000

3,049
5,110
23
—

8,182

2008
£000

2,346
5,445
44
—

7,835

.
.
.
.

CONTRACTS IN PROGRESS AT
THE BALANCE SHEET DATE:
Aggregate amount of costs incurred and
recognised profits less recognised losses to date
.
Advances received

18,758
(19,340)

2,241
(3,036)

18,747
(19,340)

2,212
(3,036)

Net value of contracts in progress

(582)

(795)

(593)

(824)

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

17.

TRADE AND OTHER RECEIVABLES

Group

Company

NON-CURRENT ASSETS:
Loans to Joint Venture companies

CURRENT ASSETS:
Trade debtors
.
.
Amounts owed by Subsidiaries .
Other receivables
.
Prepayments and accrued income
Amounts recoverable on contracts
Loans to Joint Venture companies

.
.
.
.
.
.

2009
£000

—

1,658
—
217
470
570
4,086

7,001

2008
£000

3,176

2,636
—
229
629
339
—

3,833

2009
£000

—

538
6,565
181
367
559
4,086

12,296

2008
£000

3,176

1,051
5,921
63
527
310
—

7,872

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.

18.

BANK

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.

19.

TRADE AND OTHER PAYABLES

CURRENT LIABILITIES:
.
Payments received on account .
.
Trade creditors
.
.
Amounts owed to Subsidiaries .
.
Other taxes and social security costs
Other creditors and accruals
.
Loans from Joint Venture companies .

.
.
.
.
.
.

374
1,414
—
214
2,020
850

4,872

146
1,906
—
320
2,296
850

5,518

374
1,064
268
184
1,211
850

3,951

146
1,510
511
174
1,463
850

4,654

Certain members of the Group have granted Standard Securities over certain investment properties. The
Directors consider that there are no material restrictions which affect the realisability of these properties.

The loans from Joint Venture companies (note 14(a)) are interest free and repayable on demand.

20.

FINANCIAL INSTRUMENTS

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.

CREDIT RISK
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.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

21.

DEFERRED TAXATION
DEFERRED TAX LIABILITIES
GROUP

Accelerated
Capital
Allowances
£000

Fair Value
Reserve
£000

Valuation
Surplus on
Investment Other Timing
Properties Differences
£000

£000

115

—
(115)

—

5,998

(1,706)
—

4,292

(1,306)

2,986

31
—

116

136

Total
£000

7,843

(1,784)
(115)

5,944

(1,181)

4,763

Other Timing
Differences
£000

.
.

.
.
.

.
.

Retirement
Benefit
Obligations
£000

Fair Value
Reserve
£000

1,584
(892)
(387)

305

(329)
1,275

1,251

—
—
75

—
(65)

Other
£000

57
499
—

556

(39)
—

517

58
26

Total
£000

1,641
(393)
(312)

936

(368)
1,210

1,778

As at 1st August 2007 .
Charged/(Credited) to
Income Statement
Credited to Equity

.
.

As at 31st July 2008

Charged/(Credited) to
Income Statement

As at 31st July 2009

COMPANY

As at 1st August 2007 .
Charged to Income Statement

As at 31st July 2008

Charged to Income Statement

As at 31st July 2009

DEFERRED TAX ASSETS
GROUP

.
.

1,645

(109)
—

1,536

105

1,641

.
.

As at 1st August 2007 .
(Charged)/Credited to Income Statement
(Charged)/Credited to Equity .

As at 31st July 2008

.
Charged to Income Statement
Credited/(Charged) to Equity .

As at 31st July 2009

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

21.

DEFERRED TAXATION (contd.)
DEFERRED TAX ASSETS (contd.)
COMPANY

Retirement
Benefit
Obligations
£000

1,584
(892)
(387)

305

(329)
1,275

1,251

.
.
.

.
.

As at 1st August 2007 .
(Charged)/Credited to Income Statement
Charged to Equity

As at 31st July 2008

Charged to Income Statement
Credited to Equity

As at 31st July 2009

.
.

22.

SHARE CAPITAL

Authorised
12,000,000 (2008, 12,000,000) ordinary shares of 10p each

Allotted called up and fully paid
10,082,000 (2008, 10,082,000) ordinary shares of 10p each

23.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

GROUP

Other
£000

33
499
—

532

(168)
—

364

2009
£000

1,200

Total
£000

1,617
(393)
(387)

837

(497)
1,275

1,615

2008
£000

1,200

1,008

Share
Capital
£000

Fair Value
Reserve
£000

Retained
Earnings
£000

At 1st August 2007
.
Total recognised Income and Expense .
.
Fair value adjustment net of tax
.
.
Dividends.

At 31st July 2008

Total recognised Income and Expense .
.
Fair value adjustment net of tax
Impairment of available for sale financial
assets taken to Income Statement
.
.
Dividends.

.
.

At 31st July 2009

372
—
(499)
—

(127)

—
(197)

365
—

.
.
.
.

.
.

1,008
—
—
—

1,008

—
—

1,008

Total
£000

92,135
6,325
(499)
(647)

90,755
6,325
—
(647)

96,433

97,314

(4,436)
—

—
(739)

(4,436)
(197)

365
(739)

91,258

92,307

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

23.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (contd.)

COMPANY

Share
Capital
£000

1,008
—
—

1,008

Retained
Earnings
£000

7,821
569
(647)

7,743

Total
£000

8,829
569
(647)

8,751

–
–

10,831
(739)

1,008

17,835

18,843

Notes
9
27
21

14,109
(4,553)
1,275

10,831

.
.
.

.
.

.
.
.

.
.

.
.
.

At 1st August 2007
.
Total recognised Income and Expense .
.
Dividends.

At 31st July 2008

Total recognised Income and Expense .
.
Dividends.

At 31st July 2009

.
.
.

.
.

Profit for financial year .
Actuarial loss on defined benefit pension scheme
Deferred taxation on actuarial loss

Total recognised Income and Expense .

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

24. NOTES TO THE CASH FLOW STATEMENT

GROUP

(a) RECONCILIATION OF OPERATING PROFIT TO CASH FLOWS FROM OPERATING ACTIVITIES

2009
£000

(1,208)
(217)
521
5,779
41
—
55
365
(1,174)
(602)
1
(292)
8
—
(645)

2,632

2008
£000

5,871
(72)
533
2,655
(31)
(3,890)
(33)
—
(2,810)
(1,257)
7
(549)
(133)
(1,000)
1,252

543

23,234
(10,775)

26,883
(8,493)

12,459

18,390

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

.
.

.
.
.

(Loss)/Profit before tax .
Share of profits from Joint Ventures
Depreciation
.
Unrealised revaluation deficits on investment properties
Loss/(Profit) on sale of property, plant and equipment
.
Profit on sale of investment properties
Loss/(Profit) on sale of available for sale financial assets
Impairment of available for sale financial assets
Change in retirement benefits .
.
Interest received .
.
Interest paid
.
Change in inventories
.
Change in receivables – current
Change in receivables – non current
Change in payables

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.

.
.
.

.
.

NET CASH GENERATED FROM OPERATIONS

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

(b) CASH AND CASH EQUIVALENTS FOR THE CASH FLOW STATEMENT
.
Cash and cash equivalents
.
Bank overdraft

.
.

Net position

Cash and cash equivalents
Bank overdraft

Net funds

.
.

At 1st August
2008
£000

26,883
(8,493)

18,390

Cash
Flow
£000

(3,649)
(2,282)

(5,931)

Other
£000

At 31st July
2009
£000

—
—

—

23,234
(10,775)

12,459

(d) NON CASH MOVEMENTS
During the year the loans due from Joint Venture companies were reclassified as repayable on demand
and as such have been moved from Non Current Assets to Current Assets.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

25. NOTES TO THE CASH FLOW STATEMENT (contd.)

COMPANY

(a) RECONCILIATION OF OPERATING PROFIT TO CASH FLOWS FROM OPERATING ACTIVITIES

.
.

.
Profit/(Loss) before tax
Depreciation
.
Loss/(Profit) on sale of property, plant and equipment
.
Write off of investment in Subsidiaries
.
.
Change in retirement benefits .
.
.
.
Interest received .
.
.
.
Interest paid
.
.
.
Change in inventories
.
.
.
Change in receivables – current
.
.
Change in receivables – non current
.
.
Change in payables

.
.
.
.
.
.
.
.

.
.
.

NET CASH GENERATED FROM OPERATIONS

.
.
.
.
.
.
.
.
.
.
.

(b) CASH AND CASH EQUIVALENTS FOR THE CASH FLOW STATEMENT
.
Cash and cash equivalents
.
Bank overdraft

.
.

2009
£000

14,182
283
60
—
(1,174)
(23)
—
(347)
(1,248)
—
(704)

11,029

2,744
—

2,744

.
.
.
.
.
.
.
.
.
.
.

.
.

2008
£000

(486)
291
(21)
(3)
(2,810)
(5)
6
(481)
1,684
(1,000)
1,836

(989)

1
(8,465)

(8,464)

Cash and cash equivalents
Bank overdraft

At 1st August
2008
£000

.
.

1
(8,465)

Cash
Flow
£000

2,743
8,465

(8,464)

11,208

Other
£000

At 31st July
2009
£000

—
—

—

2,744
—

2,744

(d) NON CASH MOVEMENTS
During the year the loans due from Joint Venture companies were reclassified as repayable on demand
and as such have been moved from Non Current Assets to Current Assets.

26.

FUTURE CAPITAL EXPENDITURE

There were no amounts of Capital Expenditure relating to Property, plant and equipment contracted for
at 31st July 2009 or 31st July 2008.
The Group’s share of Capital Expenditure contracted for by its Joint Ventures as at 31st July 2009
amounted to £nil (2008, £nil).

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

27.

RETIREMENT BENEFIT OBLIGATIONS

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 valuation of the scheme
was made at 1st November 2006 by an independently qualified actuary. This valuation, on the minimum
funding requirement basis, revealed a deficit of £6,833,000, representing a funding level of 68.5%.
Following the results of the valuation it was agreed with the scheme trustees that with effect from 1st
November 2007 the employer contributions would increase to 63.6% of pensionable salaries and
employee contributions would increase to 3%. These rates will continue to be paid pending completion
of the 1st November 2009 triennel valuation of the scheme. The total net pension charge for the period
was £603,000 (2008, £678,000). 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 2009.

The financial assumptions used to calculate scheme liabilities under IAS 19 are:

Valuation method
.
Discount rate
Inflation rate
.
Salary increases .
Pension increases.

.
.
.
.

2008

2009

2007
Projected Unit Projected Unit Projected Unit
5.8%
3.4%
4.9%
2.1%–3.4%

6.0%
3.8%
5.3%
2.4%–3.8%

6.8%
4.1%
5.6%
2.2%–4.1%

The assets of the scheme are invested in insurance policies. 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
31st July 2009

Equities
Bonds
Other

.
.
.

Market value
of assets .

.
.
.

Present value of
scheme liabilities

Scheme deficit

Related deferred tax

Net pension
liability

7.9%
6.0%
0.5%

Long term rate
of return
expected at
31st July 2008

9.3%
6.8%
5.0%

Long term rate
of return
expected at
31st July 2007

8.1%
5.8%
5.5%

Value at
31st July 2008
£000
10,509
2,873
3,879

Value at
31st July 2009
£000
12,329
2,177
4,015

Value at
31st July 2007
£000
11,501
1,942
1,025

18,521

(22,989)

(4,468)

1,251

(3,217)

17,261

(18,350)

(1,089)

305

(784)

14,468

(19,748)

(5,280)

1,584

(3,696)

Investments are in a mixed management fund, split being 66% equity investments and 34% bonds and
cash.

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

27.

RETIREMENT BENEFIT OBLIGATIONS (contd.)

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:
Equity returns are based on yields on Gilts Index plus a margin to allow for expected outperformance;
Bonds returns are based on yields and Government and corporate debt as appropriate to the Scheme’s
holdings in these instruments; and
Cash returns are based on short term returns on cash deposits based on current base rates.

As at 31st July 2009 the actual return on plan assets amounted to £251,000 (2008, £10,000)

The following amounts are incorporated into the financial statements:

Amounts included in operating profit:

Current service cost
Past service cost .

.
.

Total included within operating profit .

Amounts included in finance income/(costs):

Expected return on assets
.
Interest cost

.
.

Total included as net finance income/(costs) .

.
.

Amounts included in Consolidated Statement of
Recognised Income and Expense:

Actual return less assumed return on assets
Experience gains and losses arising on scheme liabilities
Changes in assumptions underlying the valuation of liabilities

.
.

Total actuarial (loss)/gain

.
.

.
.
.

.
.

.
.
.

Changes in the present value of the defined benefit obligations are as follows:

Present value of obligations at beginning of period .
.
Current service cost
.
.
Interest cost
.
Charges paid
.
.
Benefit payments
.
Actuarial loss/(gain)

.
.
.
.
.

Present value of obligations at end of period .

.
.
.
.
.
.

2009
£000

(517)
—

(517)

2008
£000

(551)
—

(551)

1,337
(1,262)

1,203
(1,254)

(51)

(1,086)
(166)
(3,301)

(4,553)

18,350
517
1,262
(33)
(574)
3,467

(1,193)
(140)
2,714

1,381

19,748
551
1,254
(24)
(605)
(2,574)

22,989

18,350

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

27.

RETIREMENT BENEFIT OBLIGATIONS (contd.)

Changes in the fair value of plan assets are as follows:

Fair value of plan assets at beginning of period
Employer contributions .
.
Employer contribution - additional lump sum.
.
.
Employee contributions .
.
.
.
Benefits paid
.
Charges paid
.
.
.
Expected return on plan assets .
.
.
Actuarial loss

.
.
.
.
.

.
.

Fair value of plan assets at end of period

Analysis of movement in scheme deficit:

As at 1st August 2008 .
.
Current service cost
.
Past service cost .
Contributions
.
.
Other finance income/(costs)
Actuarial (loss)/gain

As at 31st July 2009

.
.
.
.
.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.

Cumulative actuarial gains and losses recognised in Equity:

At beginning of period .
Net actuarial (loss)/gain recognised in period

Cumulative (loss)/gain .

History of experience gains and losses:

Difference between actual return and assumed
return on assets

Amount (£000)
Percentage of market value of scheme assets

.
.

Experience gains and losses arising on scheme
liabilities

.
Amount (£000)
Percentage of market value of scheme liabilities .

Total amounts included in Consolidated Statement of
Recognised Income and Expense
.

.
Amount (£000)
Percentage of market value of scheme liabilities .

.
.
.
.
.
.
.
.

.
.
.
.
.
.

.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.

.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.

.
.

2009
£000
17,261
1,543
—
73
(574)
(33)
1,337
(1,086)

2008
£000
14,468
1,341
2,000
71
(605)
(24)
1,203
(1,193)

18,521

17,261

(1,089)
(517)
—
1,616
75
(4,553)

(4,468)

1,563
(4,553)

(2,990)

(5,280)
(551)
—
3,412
(51)
1,381

(1,089)

182
1,381

1,563

2009

2008

2007

2006

2005

(1,086)
5.9%

(1,193)
6.9%

969
6.7%

219

1,331
1.8% 12.2%

(166)
0.7%

(140)
0.8%

(290)
1.5%

(708)
3.4%

12
0.1%

(4,553)
19.8%

1,381
2,755
7.5% 14.0%

(1,538)
7.4%

(1,035)
5.8%

The contribution expected to be paid by the Group during the financial period ending 31st July 2010
amounts to £1,491,000.

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
Scottish Equitable plc. The net contribution to the plan for the year was £78,000 (2008, £52,000).

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

28.

CONTINGENT LIABILITIES

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.

29. OPERATING LEASE ARRANGEMENTS

GROUP – AS LESSEE
Future minimum lease payments payable under non-cancellable operating leases:

.
Within one year .
In two – five years exclusively .
.
After five years .

.
.
.

2009
£000

70
209
127

406

2008
£000

99
310
158

567

GROUP – AS LESSOR
Gross property rental income earned in the year amounted to £5,191,000 (2008, £4,821,000). At the
Balance Sheet date, the Group had contracted with its tenants for the following future minimum lease
payments:

.
Within one year .
In two – five years exclusively .
.
After five years .

.
.
.

4,912
15,288
12,579

32,779

4,902
15,323
11,485

31,710

30.

RELATED PARTY TRANSACTIONS

(a) SUBSIDIARIES
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:

Sale of goods
and services

Purchase of goods
and services

2008
£000

83
—
19
16
1,059

2009
£000

1,365
—
459
50
—

2008
£000

1,210
—
6
50
—

SUBSIDIARY

McGowan & Co. (Contractors) Limited
Cramond Real Estate Company Limited
Thomas Menzies (Builders) Limited .
Concrete Products (Kirkcaldy) Limited
.
C. & W. Assets Limited

.
.
.
.
.

2009
£000

89
—
66
36
794

J. Smart & Co. (Contractors) PLC and Subsidiary Companies

NOTES TO THE ACCOUNTS (contd.)

31st JULY 2009

30.

RELATED PARTY TRANSACTIONS (contd.)

(a) SUBSIDIARIES (contd.)

Amounts owed
by Subsidiaries

Amounts owed
to Subsidiaries

SUBSIDIARY

McGowan & Co. (Contractors) Limited
Cramond Real Estate Company Limited
Thomas Menzies (Builders) Limited .
Concrete Products (Kirkcaldy) Limited
.
C. & W. Assets Limited

.
.
.
.
.

2009
£000

—
352
51
9
6,153

2008
£000

—
349
98
—
5,474

2009
£000

268
—
—
—
—

2008
£000

510
—
—
1
—

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.

(b) JOINT VENTURE COMPANIES
During the year to 31st July 2009, the Group carried out the following transactions with related parties:

Name of Joint Venture

Nature of transaction

Edinburgh Industrial
Estates Limited

Prestonfield Development
Company Limited

Loan
Construction Costs

Working Capital Loan
Construction Costs

Northrigg Limited

Working Capital Loan

Duff Street Limited

Working Capital Loan
Construction Costs

Amount
£000

Amount owed by/(to) Joint
Venture Company
£000

—
36

150
1,247

—

760
76

(850)
—

2,750
33

176

1,160
17

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.

(c) DIRECTORS’ REMUNERATION
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.

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