REG - Smart(J)Contractrs - Final Results
21/11/2025 11:45
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RNS Number : 5677I Smart(J.)&Co(Contractors) PLC 21 November 2025
J. SMART & CO. (CONTRACTORS) PLC ANNOUNCES TODAY, FRIDAY 21 NOVEMBER 2025,
ITS FULL YEAR RESULTS FOR THE YEAR TO 31st JULY 2025
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
CHAIRMAN'S REVIEW
ACCOUNTS
Headline Group profit for the year before tax including an unrealised surplus
in revalued property and a surplus in revalued financial assets was
£6,868,000 compared with £2,365,000 last year.
As in previous years, our view is that disregarding the movement in the
revaluation of the commercial property and financial assets provides a truer
reflection of the Group's performance, which we refer to as underlying
profit. The underlying profit before tax for the year was £866,000,
compared with last year's figure of £1,248,000, as detailed in note 10 to the
financial statements.
The Board is recommending a Final Dividend of 2.29p, making a total of
3.25p. The Final Dividend will cost the company no more than £890,000.
TRADING ACTIVITIES
Group construction activities, including residential sales, increased by
14%. Headline Group profit increased this financial year, due to the rise in
the value of the commercial property portfolio. Underlying profit before tax
decreased this year, mainly due to poor performance of some of our subsidiary
companies and increased loss provisions in some of our private housing
developments.
All our construction sites and future developments continue to experience
significant issues with delays in infrastructure, utility and statutory
approvals. The prolonging of programmes together with the relentless
increase in the cost of construction materials is still placing a downward
pressure on trading margins.
There has been no change to the lack of contract work in the housing
association sector, with no significant movement by central government on
raising funding levels.
Sales at the residential development at Clovenstone Gardens have been better
than expected with the majority of the private housing element being sold to
local housing associations. The whole development will complete at the end
of this month, but for the reasons detailed above, profit margins will be
worse than expected, despite the welcome sales.
The sales at Winchburgh, Canal Quarter, despite being sporadic in nature due
to the lack of confidence by home buyers, have been better than expected, with
incentives, less than anticipated. There is less than a quarter of the units
left to be sold and sales prospects look promising. However, holding costs
due to the prolonged sales period continue to erode the profitability of this
development.
As mentioned in the Interim Report, at the end of 2024 we entered into a new
joint venture company, St Andrews 1413 Limited, with Knowe Properties
Limited. The refurbishment of the 15 flats completed just after the
financial year end and all properties were let soon thereafter. The absence
of the requirement for statutory/utility approvals contributed to this
contract experiencing next to no programme delays. I would like to pay
tribute to all the people involved in this project who, set with a tight
completion deadline, managed to finish the project timeously with all
properties refurbished to a high standard, enabling all properties to be let
on completion.
Construction of the speculative industrial development at Inchmuir Park,
Bathgate continues to progress well. Completion is still due in mid-2026,
and it is too early to gauge the level of tenant interest.
The value of our commercial property portfolio has increased substantially,
due to both rental growth and an improvement in investment yields. Lettings
of our industrial stock continue to improve as does rental growth. Our office
properties do not show the same rate of rental growth and lettings continue,
albeit at a slower pace.
A start was made just prior to the financial year end at our residential
development at Primrose Lane, Rosyth. The development will provide 107
residential units for private sale and 36 residential units as the obligatory
Affordable Housing element. This development is predominantly for detached
and semi-detached homes, a sector of the housing market we have not dealt in
for a number of years. Major infrastructure works on the site are nearly
complete and construction of the first phase of units for private sale, 16
houses in total, is well underway. First completions will not be until
mid-2026, with sales marketing not due to commence until the New Year.
Negotiations are on-going for the Affordable Housing element with a Local
Registered Social Landlord, and we are hopeful this contract may start in
mid-2026.
FUTURE PROSPECTS
We have less work in hand in our own private housing than we did last year.
Apart from the contract mentioned above at Primrose Lane, Rosyth, there are no
real prospects of further external contract work at present. The long
awaited Housing (Scotland) Bill has finally been passed and we are hopeful we
will be able to bring forward one of our potential residential developments
for new build private rent.
We will provide further detail in our Interim Report on two substantial
industrial developments that both transacted after the financial year end.
One is through another Joint Venture and the other is a site acquisition.
There will be private housing sales this year, but not as many as the reported
year and margins will be affected due to the reasons outlined above.
Letting and rental levels in our commercial property portfolio will remain
steady. Rental growth will occur in our industrial properties, although not
at such a marked rate as this year. It is difficult to predict whether
investment yields will decline or increase, but we expect our property values
to remain at least static in the current financial year.
Work on our Sustainability Strategy progresses through the Sustainability
Committee and the continued alignment with the Task Force on Climate-Related
Financial Disclosures (TCFD). We aim to be a leading developer/contractor
for low carbon and climate resilient developments by setting ambitious
strategic objectives across the Group's property development, construction and
internal operations at the Head Office. My continued thanks go to all on the
Sustainability Committee, all employees involved in sustainability matters and
our consultant, Beyond Green.
It remains to be seen what impact the impending Budget will have on the
economy and consumer confidence, which is already at a low.
At this stage it is uncertain as to whether there will be a headline profit
for the year to 31st July 2026.
It is with considerable regret and sadness that I pay tribute to Brian Sharp
who passed away in July this year after a brave battle with cancer. Brian
served your Company for just under fourteen years and worked diligently as an
Architectural Technologist. Not only was he a valued colleague to all at the
Company, but also a true friend to many. Our thoughts continue to be with
his friends and dear family.
DAVID W SMART
20th November 2025
Chairman
PERFORMANCE REVIEW
Construction activities
2025 2024
£000 £000
Revenue 16,354 14,350
Operating loss (3,097) (3,968)
Construction revenue in the year has increased overall due to the progress of
contracts in the year and number of private house sales in the year.
Work has continued in the year on the social housing contract at our
Clovenstone development, being the 24 flats for Prospect Community Housing and
was completed in October 2025 and handed over to the housing association.
The work on the private housing at this development has also progressed
throughout the year and was completed in November 2025. The sale of all 45
flats have either occurred in the year or are due to conclude by the end of
November 2025. All the flats have been sold in 3 tranches to various social
housing providers. For both the social housing and private housing elements
at this site the Directors considered the carrying value of the contract asset
and inventory balances in the financial statements and made required
provisions against both amounts.
Sales continue to be made at our private housing development at Canal View,
Winchburgh but not at the levels we had anticipated this being due to
continuing uncertainties in the housing market. In the year to 31st July
2025 we sold 21 properties, giving a total sold of 46 as at 31st July 2025 out
of a total of 64 dwellings in the development. Post year end we have sold a
further 3 dwellings with a further 4 reserved. Due to the reduced sales
prices and incentives introduced in previous years and the duration of time
since the completion of this housing development, the Directors considered the
carrying value of the inventory balance at the year end and made a required
provision against the balance.
The work for a third party for a commercial and industrial property was
finished in the year and handed over to the customer.
Our civil engineering subsidiary, Thomas Menzies (Builders) Limited, has seen
a decrease in revenue of £1,163,000 being a decrease of 25% this is due to a
lack of work. The level of revenue generated by this subsidiary is
insufficient to cover its overheads and therefore a significant loss was
suffered by this company.
Full details of construction revenue is given in note 3 of the financial
statements.
Construction material costs continue to remain high for various reasons,
including global unrest, inflation rate increases and the overall demand for
goods and services causing increases in material and labour costs. The Group
continues to monitor costs on construction contracts, with the finance and
surveyor teams liaising to ensure accurate recording of cost to contracts and
monitoring of actual costs against anticipated costs and anticipated revenue
to ensure projects remain on course and reviewing the impact on future costs
to complete contracts. The Directors continue to fully appraise contracts,
at various stages, prior to acceptance to ascertain the likely outcome of the
contract. These appraisals are conducted prior to land bank acquisitions,
commencement of construction and then during the lifetime of the contract to
its completion.
Overheads continue to remain relatively constant in nature over time,
however they have increased in monetary terms due to inflationary increases.
The Directors do continue to monitor these with a view to achieving any
savings on costs where possible. With our revenue levels the recoverability
of overhead is difficult.
The increased material construction costs together with increased labour costs
has resulted in margins being reduced and the impact on the recoverability of
overheads incurred by the Group has resulted in the operating loss incurred in
the year.
Investment activities
2025 2024
£000 £000
Revenue from investment properties 6,886 7,670
Net surplus on valuation of investment properties 5,816 994
Loss on sale of investment properties (49) -
Operating profit from investment properties 8,345 4,634
Income from financial assets 43 49
Loss on sale of financial assets (6) (123)
Net surplus on valuation of financial assets 186 123
Share of profit in Joint Ventures 48 320
Overall revenue for investment properties has decreased in the year by 10%.
Rental income has decreased by 6% which is mainly due to loss of rent at the
properties at Bellshill and Cardonald which were sold in at the start of the
financial year. There has been rental growth throughout the portfolio,
mainly within our industrial properties, which has mitigated the loss of rent
from the properties sold and other vacancies which occurred in the year.
Throughout the year, as expected there have been movements of tenants in and
out of properties but overall occupancy levels have remained fairly static.
Recoverability of rental income continues to remain high and the Group has
suffered little in the way of defaulting tenants.
Income from service charges and insurance receivable varies from year to year
depending on actual expenditure incurred in the year, overall in the year
there has been a decrease of 30% in this income.
The sale of the two investment properties in the year at Bellshill and
Cardonald, which at 31st July 2024 had been transferred to Assets held for
sale, resulted in a loss of £49,000 being recognised
This year the Group has earned a surplus on the revaluation of investment
property portfolio of £5,816,000, due to combined improvement in yields and
increased rental.
Although there has been a significant increase in operating profit compared to
the previous year this is due to the large surplus on revaluation of
investment property portfolio, if this was to be excluded then the Group has
earned an operating profit of £2,529,000 compared to £3,640,000. This
decrease is due to the decrease in revenue of £784,000 and an increase in
costs mainly around non-domestic rates which the subsidiary C. & W. Assets
Limited has to pay on all vacant properties following the removal of the
relief for vacant listed building properties.
Work commenced in the year on a new speculative industrial development at
Whitehill Industrial Estate, Bathgate consisting of four terraces of
industrial units of 14,657 square feet each. Completion of the development
will occur in the current financial year.
Income from our financial assets has decreased from that of the previous
year. There were a number of acquisitions in the year to our portfolio of
financial assets along with a number of disposals on which the Group suffered
a loss of £6,000. Improvements in the world financial markets resulted
in a surplus of £186,000 on the fair value of our financial assets being
recorded this year.
The share of the results in our Joint Ventures is a profit of £48,000 which
is significantly less than that of the previous year but in that year there
was a profit recognised on the sale of investment properties held by Gartcosh
Estates LLP.
Group results and financial position
2025 2024
£000 £000
Profit before tax 5,112 2,365
Net bank position 14,980 7,552
Total assets 158,335 146,498
Net assets 130,603 126,313
Overall the Group has earned a profit before tax in the year which has
significantly increased due to the impact of the surplus on revaluation of the
investment properties earned this year as opposed that of the previous year.
However, if the surplus on the revaluation of investment properties and
financial assets are excluded then the profit before tax is £866,000 compared
to £1,248,000 in the previous year, as detailed in note
6.
Construction activities continue to suffer operating losses but the level
suffered this year has fallen. The profit earned in investing activities
has fallen due to loss of rental income and increased cost including the
increased cost of rates of vacant property rates.
Our net bank position, which comprises monies held on deposit, cash and cash
equivalents and the netting of our bank overdraft has increased in the year.
This is due to the cash inflow from the sale of the investment properties at
the start of the financial year, we have incurred various other inflows and
outflows relating to sale proceeds from sales of our private housing and
expenditure on construction activities on housing and investment properties
for the Group property portfolio. We also, provided loan financing to our
new joint venture in the year to allow it to acquire and refurbish the
properties in St Andrews, Fife. Overall, the Group continues to be net
debt-free.
The Group's net assets have increased by £4,290,000, the main impact being
the profits earned in the year, the movement in the Group's pension scheme
surplus of £2,744,000. The accounting for share buy backs and dividends
paid to shareholders in the year also impact on the net assets.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced by the Group and the mitigating
factors taken by the Group against these risks are detailed below. The
principal risks noted below are not all of the risks faced by the Group but
are those risks which the Group perceives as those which could have a
significant impact on the Group's performance and future prospects.
Area of principal risk or uncertainty and impact Mitigating actions and controls
By focusing external construction activities in the social housing sector, • Maintain long-term relationships with social housing providers,
which is a competitive market, failure to win new contracts would impact on resulting from high standards of service, quality and post construction care
our volume of work and therefore the workforce required by the Group. thus giving the Group an advantage over other builders when contracts are
awarded on criteria other than cost only.
• Identify potential build sites or include the provider within
private housing developments in relation to the element of affordable housing
required.
• When workload is reduced workforce can be diverted to the
Group's own commercial and private residential developments.
• Continue to acquire land for development for either private
housing developments or for resale to social housing providers as part of a
construction contract.
• Develop new areas of construction activities.
• Develop new joint venture opportunities.
Decline in home buyer confidence, due to bank interest rates, availability of • Building developments in popular residential areas.
affordable mortgages and cost of living crisis resulting in stalling of
private house sales. • Building high quality specification homes with attention to
detail which sets them apart from other new build homes and therefore makes
them more attractive to buyers.
• Building a range of homes within a development thus providing
choice to buyers.
• Programming commencement of new build housing projects to market
conditions.
• Providing sales incentives.
• Considering the letting of built homes at market rates.
Social housing sector and the housing market in general is highly competitive • We are an 'all trades' contractor who employs our own personnel
with tight margins. in all basic building trades who are supervised by site agents who are long
serving employees of the Group and who have been promoted through their
trades, thus ensuring control of labour costs on contracts.
• We have invested heavily in plant and the maintenance thereof
and therefore limit our costs on contracts by utilising own plant as opposed
to incurring higher costs of hiring plant.
• Subcontractors employed by the Group are specialists in their
fields and in the main subcontractors have previously been used by the Group
therefore quality of work and reliability is known.
• In house architectural technicians and surveyors provide
pre-contract design advice to resolve potential technical problems with the
build and therefore potential costs.
• Detailed appraisals of contract pre-land acquisition and
pre-construction.
Reduction in rental demand for investment properties may result in a fall in • Only commence speculative developments after careful assessment
property valuations. of the market.
• Continue to invest in property sectors which are robust.
• Restricting our operations to the central belt of Scotland being
the area of the country with which we are most familiar.
• Continually maintain and refurbish existing properties to retain
existing tenants and attract new tenants and improvements to our properties
for improved economic and climate efficiencies.
• Provide necessary financial incentives to retain existing
tenants at end of current leases and attract new tenants.
Reduction in demand for UK real estate from investors may result in a fall in • The Directors regularly review the property market to ascertain
valuations within our investment property portfolio, this could result in if changes in the overall market present specific risks or opportunities to
delays in investment decisions which could impact on our activities. the Group.
• Restricting our operations to the central belt of Scotland being
the area of the country with which we are most familiar.
Political events and policies result in uncertainty until final decisions have • Before any decisions are taken by the Directors in any area of
been made and the impact of decisions are known, this could result in delays the Group's activities the level of uncertainty and range of potential
in investment decisions which could impact on our activities. Including outcomes arising from political events and policies are considered.
Local Government processes slowing down our ability to commence new building
projects. • Monitor Government guidelines and new legislations announcements
to ensure the Group remains up to date with legislation.
• Continue to pursue contacts at Local Government to obtain
necessary consents and planning approval.
Reduction of financial resources. • Ensure resources are not over committed and only undertake
commercial and private housing developments after due consideration of the
financial impact on the Group's financial resources.
• Build up resources to ensure the Group
has sufficient finance for working capital requirements and financing of
commercial and private housing developments.
• Spread cash reserves over several banks
taking account of the strength of the bank and interest rates attainable.
• Invest resources in equities also taking
account of the security of the investment and the yields attainable.
Failure to evolve business practices and operations in response to climate • Continue to monitor all requirements relating to the
change. construction industry in relation to improvements in buildings to ensure they
comply with current and emerging requirements.
• Review of designs for new buildings to ensure they are as
energy efficient as possible.
• Procurement of building materials from sustainable sources.
• Investment in energy saving measures within our investment
property portfolio.
• Establishment of Sustainability Committee to develop the
Group's sustainability strategy with the commitment to reduce the Group's
carbon emissions in line with science-based carbon reduction targets.
• Employ the services of external specialists and consultants
for their expertise.
Unforeseen national and global events including world conflicts and natural • Establish strong relationships with suppliers and subcontractors to
disasters. ascertain impact on their potential supply chains.
• Build up financial resources to ensure the Group has sufficient funds
for future working capital requirements.
• Establish continuity plans for all areas of operations.
Impact of cost of living crisis, increased inflation and bank interest rates. • Retain strong control over costs on construction contracts.
• Remunerate onsite and office based employees with competitive rates of
pay and benefits.
Emerging Risks
The Group faces a number of emerging risks which could have a significant
impact on the Group's performance and future prospects. These risks are
discussed by the Directors and appropriate actions taken to mitigate these
risks as soon as they are considered to be a principal risk of the Group.
CONSOLIDATED INCOME STATEMENT
for the year ended 31st July 2025
Notes 2025 2024
£000 £000
REVENUE 3 23,240 22,020
Cost of sales (18,910) (17,993)
GROSS PROFIT 4,330 4,027
Other operating income 4 83 163
Administrative expenses (4,932) (4,518)
OPERATING LOSS BEFORE LOSS ON SALE OF INVESTMENT PROPERTIES AND NET SURPLUS ON (519) (328)
VALUATION OF INVESTMENT PROPERTIES
Loss on sale of investment properties (49) -
Net surplus on valuation of investment properties 5,816 994
OPERATING PROFIT 5,248 666
Share of profit in Joint Ventures 48 320
Income from financial assets 43 49
Loss on sale of financial assets (6) (123)
Net surplus on valuation of financial assets 186 123
Finance income 1,361 1,346
Finance costs (12) (16)
PROFIT BEFORE TAX 6 6,868 2,365
Taxation 5 (1,756) (692)
PROFIT FOR YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS 5,112 1,673
EARNINGS PER SHARE
Basic and diluted 8 13.07p 4.22p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31st July 2025
2025 2024
£000 £000
PROFIT FOR YEAR 5,112 1,673
OTHER COMPREHENSIVE INCOME
Items that will not be subsequently reclassified to Income Statement:
Remeasurement gains on defined benefit pension scheme 1,464 1,802
Deferred taxation on remeasurement gains on defined benefit pension scheme (366) (450)
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIED TO INCOME STATEMENT 1,098 1,352
TOTAL OTHER COMPREHENSIVE INCOME 1,098 1,352
TOTAL COMPREHENSIVE INCOME FOR YEAR, NET OF TAX 6,210 3,025
ATTRIBUTABLE TO EQUITY SHAREHOLDERS 6,210 3,025
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31st July 2025
Share Capital Capital Redemption Reserve Retained Earnings Total
£000 £000 £000 £000
As at 1st August 2023 802 206 124,459 125,467
Profit for year - - 1,673 1,673
Other comprehensive income - - 1,352 1,352
TOTAL COMPREHENSIVE INCOME FOR YEAR - - 3,025 3,025
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (13) - (889) (902)
Transfer to Capital Redemption Reserve - 13 (13) -
Dividends - - (1,277) (1,277)
TOTAL TRANSACTIONS WITH OWNERS (13) 13 (2,179) (2,179)
As at 31st July 2024 789 219 125,305 126,313
Profit for year - - 5,112 5,112
Other comprehensive income - - 1,098 1,098
TOTAL COMPREHENSIVE INCOME FOR YEAR - - 6,210 6,210
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (10) - (646) (656)
Transfer to Capital Redemption Reserve - 10 (10) -
Dividends - - (1,264) (1,264)
TOTAL TRANSACTIONS WITH OWNERS (10) 10 (1,920) (1,920)
As at 31st July 2025 779 229 129,595 130,603
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31st July 2025
Notes 2025 2024
£000 £000
NON-CURRENT ASSETS
Property, plant and equipment 3,026 2,743
Investment properties 9 79,401 70,038
Investments in Joint Ventures 113 65
Financial assets 1,693 1,032
Trade and other receivables 2,155 -
Retirement benefit surplus 25,784 23,040
Deferred tax assets 211 54
112,383 96,972
CURRENT ASSETS
Assets held for sale - 14,199
Inventories 16,408 18,710
Contract assets 455 944
Corporation tax asset 700 255
Trade and other receivables 2,570 2,435
Monies held on deposit 53 51
Cash and cash equivalents 25,766 12,932
45,952 49,526
TOTAL ASSETS 158,335 146,498
NON-CURRENT LIABILITIES
Deferred tax liabilities 12,107 9,828
Lease liabilities 212 212
12,319 10,040
CURRENT LIABILITIES
Trade and other payables 4,573 4,713
Lease liabilities 1 1
Bank overdraft 10,839 5,431
15,413 10,145
TOTAL LIABILITIES 27,732 20,185
NET ASSETS 130,603 126,313
EQUITY
Called up share capital 779 789
Capital redemption reserve 229 219
Retained earnings 129,595 125,305
TOTAL EQUITY 130,603 126,313
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31st July 2025
2025 2024
£000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax 5,112 1,673
Tax charge for year 1,756 692
Profit before tax 6,868 2,365
Adjustments for:
Share of profits from Joint Ventures (48) (320)
Depreciation 590 455
Unrealised surplus on valuation of investment properties (5,816) (994)
Loss on sale of investment properties 49 -
Unrealised surplus on valuation of financial assets (186) (123)
Profit on sale of property, plant and equipment (83) (114)
Loss on sale of financial assets 6 123
Change in retirement benefits (123) (154)
Interest received (1,361) (1,346)
Interest paid 12 16
Change in inventories 2,302 (950)
Change in contract assets 489 (911)
Change in receivables (135) (180)
Change in payables (140) 1,801
CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 2,424 (332)
Tax paid (445) (178)
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 1,979 (510)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (897) (1,554)
Additions to investment properties (183) (81)
Expenditure on own work capitalised - investment properties (3,364) (1,765)
Proceeds of sale of property, plant and equipment 107 132
Proceeds of sale on investment properties 14,150 -
Purchase of financial assets (518) (51)
Proceeds of sale of financial assets 37 244
Monies held on deposit (2) (2)
Interest received 204 357
Interest paid - (4)
Loan (to)/repaid from Joint Venture (2,155) 3,010
Return of capital contribution to Joint Ventures - 1,040
Dividend received from Joint Venture - 711
NET CASH INFLOW FROM INVESTING ACTIVITIES 7,379 2,037
CASH FLOWS FROM FINANCING ACTIVITIES
Interest costs on leases (12) (12)
Purchase of own shares (656) (902)
Dividends paid (1,264) (1,277)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (1,932) (2,191)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 7,426 (664)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,501 8,165
CASH AND CASH EQUIVALENTS AT END OF YEAR 14,927 7,501
1. 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.
BASIS OF PREPARATI0N
The financial information in this announcement has been extracted from the
Group's Annual Report and Statement of Accounts for the year to 31st July 2025
and is prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and in accordance
with UK adopted international accounting standards. Whilst the financial
information included in this preliminary announcement has been computed in
accordance with International Financial Reporting Standards (IFRS), this
announcement does not itself contain sufficient information to comply with
IFRS and the financial information set out does not constitute the Company or
Groups statutory accounts for the years to 31st July 2025 or 31st July 2024.
The statutory consolidated accounts for the year to 31st July 2025 have been
reported on by the Independent Auditor, their report was unqualified and did
not draw attention to any matters by way of emphasis and it does not contain a
statement under S498 (2) or S498 (3) of the Companies Act 2006. The
statutory consolidated accounts for the year to 31st July 2025 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
The financial information for the year to 31st July 2024 is derived from the
statutory accounts for that year which were submitted to the Registrar of
Companies and upon which the Company's auditor provided an unqualified audit
report. The audit report did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying its report
and did not contain a statement under S498 (2) or S498 (3) of the Companies
Act 2006.
STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS EFFECTIVE IN THE YEAR
TO 31st JULY 2025
The following new standards and amendments to standards and interpretations
relevant to the Group have been issued by the International Accounting
Standards Board and are mandatory for the first time for the financial year to
31st July 2025:
• IAS 1 (amended): Presentation of Financial Statements
The above standard has had no significant impact on the Company's financial
statements other than regarding disclosures to be made in the financial
statements.
NEW STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS NOT YET APPLIED
There have been no new standards, amendments to standards and interpretations
relevant to the Company that have been issued by the International Accounting
Standards Board but are not yet effective for the Company at the date of these
financial statements.
IFRS 18: Presentation and Disclosures in Financial Statements is replacing IAS
1: Presentation of Financial Statements and will be effective for the Company
as from the accounting year ending 31st July 2028. This standard will result
in significant changes to the presentation of the Income Statement and the
reporting of financial performance. The impact of this Standard is still
being assessed and it is not yet practical to quantify the effect it will have
on the financial statements.
BASIS OF PREPARATION
The financial statements 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, financial assets and assets held by
the defined benefit pension scheme.
The accounting policies set out below have been consistently applied to all
periods presented in these financial statements.
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 financial statements are reasonable. However,
actual outcomes may differ from those anticipated.
GOING CONCERN
The financial statements have been prepared on a going concern basis. The
Directors have prepared a number of cashflows scenarios taking account of
future trading activities around construction projects in hand and anticipated
projects, land acquisitions, rental income, investment property acquisitions
and disposals and other capital expenditure. In each scenario reviewed by
the Directors the Group remains cash positive with no reliance on external
funding and therefore remains net debt-free. The net assets of the Group are
£130,603,000 at 31st July 2025 and the Group's net current assets amount to
£30,539,000. The Directors have also taken account of the impact of climate
changes on the activities of the Group. Taking all of the information the
Directors currently have they are of the opinion that the Company and Group
are well placed to manage their financial and business risks and have a
reasonable expectation that the Company and Group have adequate financial
resources to continue in operational existence for a period of at least twelve
months from the date of approval of these financial statements and therefore
consider the adoption of the going concern basis as appropriate for the
preparation of these financial statements.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
ACCOUNTING ESTIMATES
INVESTMENT PROPERTIES
Investment properties are revalued annually by the Directors in accordance
with the RICS Valuation Standards. The valuations are subjective due to, among
other factors, the individual nature of the property, its location and the
expected future rental income. As a result, the valuation of the Group's
investment property portfolio incorporated into the financial statements is
subject to a degree of uncertainty and is made on the basis of assumptions
which may prove to be inaccurate, particularly in periods of volatility or low
transaction flow in the property market. The Directors have requested a
third party external valuer to value the Group's investment property
portfolio. The valuations prepared by the Director and the external valuers
are compared to ensure that there are no material variations between the
valuations.
The assumptions used by the Directors are market standard assumptions in
accordance with the RICS Valuation Standards and include matters such as
tenure and tenancy details, ground conditions of the properties and their
structural conditions, prevailing market yields and comparable market
conditions. If any of the assumptions used by the Directors prove to be
incorrect this could result in the valuation of the Group's investment
property portfolio differing from the valuation incorporated into the
financial statements and the difference could have a material effect on the
financial statements.
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, which are determined after
taking expert advice from the Group's Actuary. If different assumptions were
used then this could materially affect the results disclosed in the financial
statements.
ACCOUNTING JUDGEMENTS
CASH AND CASH EQUIVALENTS
As the Group has a pooling arrangement with its bankers and the bank has been
granted guarantees and letters of offset by certain members of the Group in
favour of the bank on account of all these members as continuing security for
all monies, obligations and liabilities owing or incurred to the bank then,
for the purposes of the Statement of Cash Flows and the calculation of cash
and cash equivalents, the bank overdraft is netted against positive bank
balances. The Directors consider the bank balances whether positive or
negative to be part of the Group's ordinary working capital cycle. In
accordance with IAS 7: Statement of Cash Flows, the Directors deem the bank
overdraft to be cash and cash equivalents and not borrowings as this balance
is being used for working capital and other trading activities. Overall the
Group is not allowed to be in an overdrawn bank position in the pooling
arrangement, however individual companies within the arrangement may have an
overdrawn bank balance. The Group and Company present positive and negative
bank balances separately on the face of the Statement of Financial Position
and do not offset these balances for presentation purposes. Companies
not in the pooling arrangement do not have an overdraft facility and therefore
their bank balances cannot be overdrawn. Note 22 of the financial statements
details the cash and cash equivalent calculation for the Consolidated and
Company Statement of Cash Flows.
RECOVERABILITY OF WORK IN PROGRESS
The Group takes account of all anticipated losses on work in progress contacts
at the year end and therefore considers that the value of work in progress
included in the financial statements is recoverable.
DEFINED BENEFIT RETIREMENT PENSION SCHEME SURPLUS
The Group has concluded that the trust deed relating to the defined benefit
retirement pension scheme grants the unconditional right to any surplus of the
scheme on the full settlement of the scheme liabilities to the Group and
therefore has concluded that any surplus on the scheme can be incorporated
into the Group and Company financial statements. Advice on the Group's right
to a surplus arising on the pension scheme was sought in the year to 31st July
2022 from a firm of lawyers who specialise in this area. Their advice was
that the Group had an unconditional right to the surplus based on the original
Trust Deed and Deed of Variation and therefore the full surplus arising on the
calculation thereof under IAS 19 (amended): Employee Benefits should be
accounted for in the financial statements.
2. SEGMENTAL INFORMATION
IFRS 8: Operating Segments requires operating segments to be identified on the
basis of internal reporting about components of the Group that are regularly
reviewed by the chief operating decision maker to allow the allocation of
resources to the segments and to assess their performance. The chief operating
decision maker has been identified as the Board of Directors. The chief
operating decision maker has identified two distinct areas of activities in
the Group being construction activities and investment property activities.
All revenue from construction and investment property arises from activities
within the UK and therefore the Board of Directors does not consider the
business from a geographical perspective. The operating segments are based on
activity and performance of an operating segment is based on a measure of
operating results.
Revenue Operating Profit/(Loss)
2025 2024 2025 2024
£000 £000 £000 £000
Construction activities 16,354 14,350 (3,097) (3,968)
Investment property activities 6,886 7,670 8,345 4,634
23,240 22,020 5,248 666
Share of results in Joint Ventures 48 320
Finance and investment income 1,590 1,518
Finance and investment costs (18) (139)
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 6,868 2,365
The Group had sales from construction activities from one customer amounting
to £1,945,000 (2024, sales from construction activities from two customers
amounting to £4,269,000 and £1,671,000 respectively).
OTHER SEGMENTAL INFORMATION
Non-Current Asset Segment Assets Segment Liabilities
Additions Depreciation
£000 £000 £000 £000
2025
Construction activities 897 544 52,451 20,646
Investment property activities 3,547 46 106,588 7,903
Joint Ventures - - 113 -
159,152 28,549
Allocation of corporation tax creditor (817) (817)
158,335 27,732
2024
Construction activities 1,554 409 49,959 14,898
Investment property activities 1,854 46 97,562 6,375
Joint Ventures - - 65 -
147,586 21,273
Allocation of corporation tax creditor (1,088) (1,088)
146,498 20,185
3. REVENUE
The Group derives its revenue from contracts with customers for the transfer
of goods over time in relation to construction contracts and also at point in
time in relation to housing sales. This is consistent with the revenue
information that is disclosed for Construction Activities segment under IFRS
8: Operating Segments.
Construction contracts are generally for social housing or industrial and
commercial properties. The Group provides a complete service including
architectural and surveyor services from the pre-contract design through to
completion.
2025 2024
£000 £000
Disaggregation of Revenue
Construction activities
Social housing 1,945 1,617
Civil engineering 3,482 4,646
Industrial 60 2,079
Commercial 2,081 2,232
General construction 35 59
Private house sales 8,751 3,717
16,354 14,350
Investment property activities
Rental income 5,958 6,366
Service charges and insurance receivable 913 1,299
Sundry income 15 5
6,886 7,670
Total Revenue 23,240 22,020
The transaction price allocated to unsatisfied performance obligations in
respect of construction activities as at 31st July 2025 are as set out below:
Social housing 1,102 2,509
Civil engineering 359 604
Industrial - 59
Commercial - 734
The Directors expect that 100% (2024, 91%) of the transaction price allocated
to the unsatisfied contracts as at 31st July 2025 will be recognised as
revenue in the year to 31st July 2026.
The Group does not include in Revenue the value of work done in the year which
relates to own work capitalised on the Group's Investment Properties, in the
year to 31st July 2025 amounting to £3,364,000 (2024, £1,765,000).
4. OTHER OPERATING INCOME
2025 2024
£000 £000
Profit on disposal of property, plant and equipment 83 114
Other income - 49
83 163
5. TAXATION
2025 2024
£000 £000
UK Corporation Tax
Current tax on income for the year - 225
Corporation tax under provided in previous years - (28)
- 197
Deferred taxation (note 25) 1,756 495
1,756 692
Current Tax Reconciliation
Profit on ordinary activities before tax 6,868 2,365
Share of profit of Joint Ventures (48) (320)
6,820 2,045
Current tax at 25.00% (2024, 25.00%) 1,705 511
Effects of:
Expenses not deductible for tax purposes 144 440
Non-taxable income including revaluation surplus (55) (621)
Chargeable gains - 380
Effect of change in tax rate - -
Adjustment to corporation tax charge in respect of prior years - (28)
Adjustment to deferred tax charge in respect of prior years - 5
Deferred tax not recognised (38) 5
1,756 692
The Finance (No 2) Act 2024, which received Royal assent on 24th May 2024,
states that the corporation tax rate for the financial year commencing 1st
April 2024 is 25% and The Finance Act 2025, which received Royal assent on
20th March 2025, states that the corporation tax rate for the financial year
commencing 1st April 2025 is 25%.
Deferred tax provisions have been calculated using the 25% rate.
In addition to amounts charged to the Consolidated Income Statement, a
deferred tax charge of £366,000 (2024, £450,000) relating to actuarial gains
on the defined benefit pension scheme has been recognised in the
Consolidated Statement of Comprehensive Income.
There are no income tax consequences attached to dividends paid or proposed by
the Company to its shareholders.
6. PROFIT BEFORE TAX FOR THE FINANCIAL
YEAR
The Group uses underlying profit before tax as an alternative performance
measure, which is the profit before tax excluding net surplus or deficit on
valuation of investment properties and financial assets accounted for through
the Income Statement. As the net surplus or deficit on valuation of investment
properties and financial assets can fluctuate from year to year and is not a
realised surplus or deficit by excluding this amount, the Directors consider
that a truer reflection of actual Group performance is obtained. Analysis of
this alternative performance measure is as follows:
2025 2024
£000 £000
Profit before tax 6,868 2,365
Surplus on valuation of investment properties (5,816) (994)
Surplus on valuation of financial assets (186) (123)
866 1,248
7. DIVIDENDS
2025 2024
£000 £000
2023 Final Dividend of 2.27p per share - 898
2024 Interim Dividend of 0.96p per share - 379
2024 Final Dividend of 2.27p per share 889 -
2025 Interim Dividend of 0.96p per share 375 -
1,264 1,277
The Board is proposing a Final Dividend of 2.29p per share (2024, 2.27p) which
will cost the Company no more than £890,000.
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.
8. EARNINGS PER SHARE
2025 2024
Profit attributable to Equity shareholders £000 5,112 1,673
Basic earnings per share 13.07p 4.22p
Basic earnings per share are calculated by dividing the profit attributable to
equity shareholders by the weighted average number of shares in issue during
the year.
The weighted average number of shares for the year to 31st July 2025 amounted
to 39,111,000 (2024, 39,608,000). There is no difference between basic and
diluted earnings per share.
9. INVESTMENT PROPERTIES
Land and buildings Freehold Land and buildings Leasehold Right-of-use Asset Total
£000 £000 £000 £000
Cost or valuation:
At 1st August 2024 60,426 9,399 213 70,038
Additions 3,547 - - 3,547
Surplus on valuation 4,466 1,350 - 5,816
At 31st July 2025 68,439 10,749 213 79,401
Land and buildings Freehold Land and buildings Leasehold Right-of-use Asset Total
£000 £000 £000 £000
Cost or valuation:
At 1st August 2023 71,991 9,185 213 81,389
Additions 1,846 - - 1,846
Transfer from Property, Plant and Equipment 8 - - 8
Transfer to Assets Held for Sale (14,199) - - (14,199)
Surplus on valuation 780 214 - 994
At 31st July 2024 60,426 9,399 213 70,038
Right-of-use Asset relates to a ground lease on which the Group has built
investment properties. The rent paid by the Group to the lessor for the
ground is a set annual rent and is not contingent on rents received by the
Group from tenants and therefore the lease falls within the definition of IFRS
16: Leases.
Valuation Process
The Group's investment properties are valued by David W Smart, MRICS, who is a
Director of the Parent Company, on the basis of fair value, in accordance with
the RICS Valuation - Global Standards 2017, incorporating the International
Valuations Standards, and RICS Professional Standards UK January 2014 (revised
April 2015). The Directors also requested a third party external valuer to
value the Group's investment property portfolio. The valuations prepared by
the Director and the external valuers are compared to ensure that there are no
variations outside of acceptable valuation differences.
Investment properties, excluding ongoing developments, are valued using the
investment method of valuation. This approach involves applying capitalisation
yields to current and estimated future rental streams and then allowing for
voids arising from vacancies and rent free periods and associated running
costs. The capitalisation yields and rental values are based on comparable
property and leasing transactions in the market, using the valuers'
professional judgement and market observations. Other factors taken into
account in the valuations include the tenure of the property, tenancy details
and ground and structural conditions.
In the case of ongoing developments, the approach applied is the residual
method of valuation, which is the same as the investment method, as described
above, with a deduction for all costs necessary to complete the development,
together with a further allowance for remaining risk.
In accordance with IAS 40: Investment Property, net annual surpluses or
deficits are taken to the Income Statement and no depreciation is provided in
respect of these properties.
The Group considers all of its investment properties fall within 'Level 3' of
the fair value hierarchy as described by IFRS 13: Fair Value Measurement.
Level 3 valuations are those using inputs for the asset or liability that are
not based on observable market data. The main unobservable inputs relate to
estimated rental value and equivalent yield. There have been no transfers of
properties in the fair value hierarchy in the financial year.
The table below summarises the key unobservable inputs used in the valuation
of the Group's Freehold and Leasehold investment properties:
Estimated Rental Value Equivalent Yield
£ per sq ft %
£000 Low Average High Low Average High
Fair Value at 31st July 2025
Investment
Commercial 21,080 11.00 17.50 24.00 8.27 10.35 13.50
Industrial 58,108 4.75 8.87 13.00 7.00 8.98 10.09
Fair Value at 31st July 2024
Investment
Commercial 21,136 11.00 16.70 22.40 8.50 10.19 13.39
Industrial 48,689 4.75 7.82 10.89 6.55 9.07 10.97
The following table illustrates the impact of changes in the key unobservable
inputs (in isolation) on the fair value of the Group's Freehold and Leasehold
investment properties:
5% change in estimated rental value 25bps change in equivalent yield
Increase Decrease Decrease Increase
£000 £000 £000 £000 £000
Fair Value at 31st July 2025
Investment
Commercial 21,080 1,133 (1,133) 609 (578)
Industrial 58,108 2,857 (2,857) 1,974 (1,847)
Fair Value at 31st July 2024
Investment
Commercial 21,136 1,130 (1,130) 609 (578)
Industrial 48,689 2,516 (2,516) 1,665 (1,619)
The Group had commitments of £nil (2024, £nil) in respect of future
developments and repair costs of investment properties at the Statement of
Financial Position date.
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