REG - Smart(J)Contractrs - Half-year Report
19/04/2022 14:30
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RNS Number : 6261I Smart(J.)&Co(Contractors) PLC 19 April 2022
J. SMART & CO. (CONTRACTORS) PLC
INTERIM REPORT
FOR THE SIX MONTHS TO
31st JANUARY 2022
J. SMART & CO. (CONTRACTORS) PLC
CHAIRMAN'S REVIEW
INTERIM REPORT
Unaudited Group profit for the six months to 31st January 2022 on continuing
and discontinued operations amounted to £6,334,000 compared with £829,000
for the corresponding period last year. This increase in profit was largely
due to the completion of the sale of the industrial estates: Bilston Glen
Industrial Estate, Loanhead, Inchwood Park, Bathgate and West Edinburgh
Business Park, South Gyle, Edinburgh.
In accordance with our normal practice, there has been no revaluation of our
investment properties at the end of the half year. If a half year
revaluation had taken place, we believe that the valuation would have been no
worse than last year, with no detrimental effect on the headline figures.
The small private housing development at Winchburgh, The Courtyard, completed
with all sales concluded.
The larger private housing development at Winchburgh, Canal Quarter, is
progressing well and reservations are currently encouraging. The majority of
the completions will be after the end of the current financial year, albeit we
may have a limited number of completions prior to then.
The second phase of Gartcosh Industrial Park, developed through the joint
venture company, Gartcosh Estates LLP, is now complete. Interest in both
units at the second phase is promising.
Whilst the restrictions covering the coronavirus pandemic are nearly at an
end, we continue to see delays in the supply chain and rises in the price of
construction materials. This has continued to affect the viability of all
types of potential projects and eroded the profits of recently completed and
soon to be completed projects. As such, the delays in procuring contracting
work and commencing new private housing work continue.
INTERIM DIVIDEND
The Board announces an interim dividend of 0.96p per share (2021, 0.95p) to be
paid on 6th June 2022 to shareholders on the register at the close of business
on 6th May 2022. The interim dividend will cost the Company no more than
£400,000.
FUTURE PROSPECTS
We are hopeful that our residential development at Clovenstone Gardens,
Edinburgh will start prior to the end of the financial year, which will
provide a mixture of private housing for sale and affordable housing.
As mentioned above, there may be some limited further private housing sales
this financial year.
Commercial property valuation levels have continued to improve since last year
in the industrial sector, but to a lesser extent in the office sector.
Lettings of both our industrial and office stock remain robust, albeit we have
recently experienced a slowing in the take up of space in both sectors.
However, it seems likely that the inexorable rise in investment yields,
especially in the industrial sector, will plateau and may fall.
We intend to start the second phase at Belgrave Point, Bellshill in the near
future, with a large speculative single user industrial unit, but it remains
to be seen if this will commence prior to the end of the financial year.
Construction costs continue to rise. This, coupled with inflation, rising
utility prices and the general cost of living increases, may have an impact on
the demand in the property sectors we trade in.
At this stage, it is difficult to make an accurate forecast for the year end
figures. It is unlikely that the headline profit will increase this
financial year, and it remains to be seen what the underlying profit will be.
D.W. SMART
19th April 2022 Chairman
CONSOLIDATED INCOME STATEMENT
6 Months 6 Months Year
ended ended ended
31.1.22 31.1.21 31.7.21
Notes (Unaudited) (Unaudited) (Audited)
£000 £000 £000
CONTINUING OPERATIONS
Group construction activities 6,231 7,272 12,308
Less: Own construction work capitalised (1,072) (1,518) (1,901)
REVENUE 5,159 5,754 10,407
Cost of sales (4,712) (5,270) (8,977)
GROSS PROFIT 447 484 1,430
3,592 3,554
Other operating income 7,446
Net operating expenses (3,792) (3,333) (6,745)
OPERATING PROFIT BEFORE PROFIT ON SALE AND NET SURPLUS ON VALUATION OF 247 705 2,131
INVESTMENT PROPERTIES
Profit on sale of investment properties 6,055 - 37
Net surplus on valuation of investment properties - - 12,105
OPERATING PROFIT 6,302 705 14,273
27 4 264
Share of profits in Joint Ventures
Income from financial assets 31 11 36
Profit on sale of financial assets 4 1 1
Net (deficit)/surplus on valuation of financial assets (8) 173 312
Finance income 1 2 4
Finance costs (6) (6) (25)
PROFIT BEFORE TAX 6,351 890 14,865
(1,271) (133)
Taxation 5 (3,802)
5,080 757 11,063
PROFIT FROM CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
Loss from discontinued operations 6 (14) (49) (93)
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 5,066 708 10,970
EARNINGS/(LOSS) PER SHARE
8
From continuing operations - basic and diluted 12.15p 1.78p 26.16p
From discontinued operations - basic and diluted (0.03)p (0.11)p (0.22)p
From continuing and discontinued operations - basic and diluted 12.12p 1.67p 25.94p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 Months 6 Months Year
ended ended ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
PROFIT FOR THE PERIOD 10,970
5,066 708
OTHER COMPREHENSIVE INCOME
Items that will not be subsequently reclassified to Income Statement:
Remeasurement gains on defined benefit pension scheme - - 5,988
Deferred taxation on remeasurement gains on defined benefit pension scheme - - (691)
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFED TO INCOME STATEMENT - - 5,297
- - 5,297
TOTAL OTHER COMPREHENSIVE INCOME
5,066 708 16,267
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX
ATTRIBUTABLE TO EQUITY SHAREHOLDERS 5,066 708 16,267
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Capital Redemption Reserve Retained Earnings Total
Notes
£000 £000 £000 £000
As at 1st August 2021 840 168 112,376 113,384
Profit for the period - - 5,066 5,066
Other comprehensive income - - - -
Total comprehensive income for period - - 5,066 5,066
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (4) - (260) (264)
Transfer to Capital Redemption Reserve - 4 (4) -
Dividends 7 - - (948) (948)
Total transactions with owners (4) 4 (1,212) (1,212)
As at 31st January 2022 836 172 116,230 117,238
As at 1st August 2020 853 155 98,252 99,260
Profit for the period - - 708 708
Other comprehensive income - - - -
Total comprehensive income for period - - 708 708
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (6) - (364) (370)
Transfer to Capital Redemption Reserve - 6 (6) -
Dividends 7 - - - -
Total transactions with owners (6) 6 (370) (370)
As at 31st January 2021 847 161 98,590 99,598
As at 1st August 2020 853 155 98,252 99,260
Profit for the period - - 10,970 10,970
Other comprehensive income - - 5,297 5,297
Total comprehensive income for period - - 16,267 16,267
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (13) - (769) (782)
Transfer to Capital Redemption Reserve - 13 (13) -
Dividends 7 - - (1,361) (1,361)
Total transactions with owners (13) 13 (2,143) (2,143)
As at 31st July 2021 840 168 112,376 113,384
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
6 Months 6 Months Year
ended ended ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
NON-CURRENT ASSETS
Property, plant and equipment 1,256 1,203 1,245
Investment properties 76,175 80,246 93,060
Investments in Joint Ventures 1,294 905 1,267
Financial assets 1,183 1,045 1,184
Trade and other receivables 3,010 250 1,570
Retirement benefit surplus 4,725 - 4,725
Deferred tax assets 179 313 179
87,822 83,962 103,230
CURRENT ASSETS
Inventories 7,999 6,383 7,531
Contract assets 52 273 246
Corporation tax asset - 178 35
Trade and other receivables 2,925 2,867 2,945
Monies held on deposit 48 48 48
Cash and cash equivalents 38,907 23,685 19,355
49,931 33,434 30,160
TOTAL ASSETS 137,753 117,396 133,390
NON-CURRENT LIABILITIES
Deferred tax liabilities 5,171 1,265 5,171
Lease liabilities 213 212 213
Retirement benefit deficit - 1,076 -
5,384 2,553 5,384
CURRENT LIABILITIES
Trade and other payables 2,839 2,715 3,050
Lease liabilities - - -
Corporation tax liability 983 - -
Bank overdraft 11,309 12,530 11,572
15,131 15,245 14,622
TOTAL LIABILITIES 20,515 17,798 20,006
NET ASSETS 117,238 99,598 113,384
EQUITY
Called up share capital 836 847 840
Capital redemption reserve 172 161 168
Retained earnings 116,230 98,590 112,376
TOTAL EQUITY 117,238 99,598 113,384
CONSOLIDATED STATEMENT OF CASH FLOWS
6 Months 6 Months Year
ended ended ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax - continuing and discontinued operations 6,334 829 14,784
Share of profits from Joint Ventures (27) (4) (264)
Depreciation 169 151 349
Unrealised valuation surplus on investment properties - - (12,105)
Unrealised valuation deficit/(surplus) on financial assets 8 (173) (312)
Profit on sale of property, plant and equipment (5) (31) (35)
Profit on sale of investment property (6,055) - (37)
Profit on sale of financial assets (4) (1) (1)
Change in retirement benefits - - 187
Interest received (1) (2) (4)
Interest paid 6 6 12
Change in inventories (468) (202) (1,350)
Change in contract assets 194 150 177
Change in receivables - current 20 (44) (122)
Change in payables (211) (357) (22)
(40) 322 1,257
Tax paid (250) (160) (361)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (290) 162 896
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (184) (88) (336)
Additions to investment properties (20) (89) (439)
Expenditure on own work capitalised - investment properties
(1,072) (1,518) (1,901)
Proceeds of sale of property, plant and equipment 9 33 45
Proceeds of sale of investment property 24,032 - 62
Purchase of financial assets (47) - -
Proceeds of sale of financial assets 44 15 15
Interest received 1 2 4
Loan to Joint Venture (1,440) - (1,320)
Investment in Joint Ventures - - (133)
Dividend received from Joint Ventures - - 31
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES (3,972)
21,323 (1,645)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest costs on leases (6) (6) (12)
Purchase of own shares (264) (370) (782)
Dividends paid (948) - (1,361)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(1,218) (376) (2,155)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 19,815 (1,859) (5,231)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
7,783 13,014 13,014
CASH AND CASH EQUIVALENTS AT END OF PERIOD
27,598 11,155 7,783
NOTES TO INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
J. Smart & Co. (Contractors) PLC is a company domiciled in the United
Kingdom. The condensed consolidated interim financial statements of the
Company for the six months ended 31st January 2022 comprise the Company and
its Subsidiaries, together referred to as the Group, and the Group's interest
in jointly controlled entities.
The condensed consolidated interim financial statements for the six months to
31st January 2022 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34: Interim
Financial Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union.
The condensed consolidated interim financial statements for the six months to
31st January 2022 do not constitute statutory accounts as defined in Section
434 of the Companies Act 2006. The condensed consolidated interim financial
statements should be read in conjunction with the annual financial statements
for the year to 31st July 2021, which have been prepared in accordance with
International Financial Reporting Standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
The statutory financial statements for the year to 31st July 2021 have been
filed with the Registrar of Companies and a copy may be obtained from
Companies House. These have been audited and contain an unqualified audit
opinion, did not draw attention to any matters by way of emphasis and did not
contain a statement under Section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have not been audited
or reviewed by the Company's auditor. A copy of the interim financial
statements will be available on the Company's website www.jsmart.co.uk.
2. ACCOUNTING POLICIES
The condensed consolidated interim financial statements have been prepared
under the historical cost convention except where the measurement of balances
at fair value is required for investment properties, financial assets and
assets held by defined benefit pension scheme.
The accounting policies adopted are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 31st
July 2021, with the exception of the policies regarding the accounting for
pension scheme obligations and investment properties revaluations.
For the condensed consolidated interim financial statements, the assets and
liabilities of the pension scheme are estimated to be unchanged from the
values included at the previous year end. Also, in accordance with long
standing practice, the Group's investment properties are revalued annually on
31st July each year and therefore, no revaluation adjustment is made in the
condensed consolidated interim financial statements.
Standards, Amendments to Standards and Interpretations effective in period
The following new standards, amendments to standards and interpretations,
which are relevant to the Group, were issued by the International Accounting
Standards Board and are mandatory for the Group for the first time in the
financial year to 31st July 2022:
· IAS 39 (amended): Financial Instruments: Recognition and Measurement.
· IFRS 7 (amended): Financial Instruments: Disclosures.
· IFRS 9 (amended): Financial Instruments.
· IFRS 16 (amended): Leases.
· IAS 37 (amended): Provisions, Contingent Liabilities and Contingent
Assets.
The Directors anticipate that there will be no material impact of these
amendments to standards on the financial statements.
Estimates and assumptions
The preparation of the condensed consolidated interim 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, 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.
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
trading activities around construction projects in hand and anticipated
projects, land acquisitions, rental income, investment property acquisitions
and disposals and other capital expenditure. The Directors also have taken
account of the continuing impact of the coronavirus on the construction and
investment activities of the Group. 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
£117,238,000 at 31st January 2022 and the Group's net current assets amount
to £34,800,000. Taking all of the information the Directors currently have
they are of the opinion that the Company and Group are well placed to manage
its 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.
3. PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties which could have a material impact on
the Group's performance for the remainder of the current financial year remain
the same as those detailed in the Group's Annual Report and Financial
Statements for the year to 31st July 2021, including the ongoing situation
relating to the coronavirus pandemic. The Directors are closely monitoring
the situation as it develops and the impact it is having on the trading
performance of the Group and will continue to do so. The Directors will take
appropriate actions to help mitigate the impact of the situation on the
Group's performance and future prospects.
4. SEGMENTAL INFORMATION
IFRS 8: Operating Segments requires operating segments to be identified on the
basis of internal reporting about components of the Group and they 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 distant
areas of activities in the Group being construction activities and investment
property activities.
All revenue and investment property income 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.
External Internal Total Other Operating Income Operating Profit/(Loss)
Revenue Revenue Revenue
31.1.22 31.1.21 31.7.21
£000 £000 £000 £000 £000 £000 £000
31st JANUARY 2022 (Unaudited)
Construction 5,159 1,072 6,231 - (1,611) - -
- continuing operations
Construction - - - - (17) - -
- discontinued operations
Investment property - - - 3,587 7,913 - -
- continuing operations
Investment property - - - 4 - - -
- discontinued operations
5,159 1,072 6,231 3,591 6,285 - -
31st JANUARY 2021 (Unaudited)
Construction 5,754 1,518 7,272 - - (1,345) -
- continuing operations
Construction - - - - - (61) -
- discontinued operations
Investment property - - - 3,554 - 2,050 -
- continuing operations
Investment property - - - 4 - - -
- discontinued operations
5,754 1,518 7,272 3,558 - 644 -
31st JULY 2021 (Audited)
Construction 10,407 1,901 12,308 - - - (2,305)
- continuing operations
Construction - - - - - - (81)
- discontinued operations
Investment property - - - 7,411 - - 16,578
- continuing operations
Investment property - - - 7 - - -
- discontinued operations
10,407 1,901 12,308 7,418 - - 14,192
6,285 644 14,192
OPERATING PROFIT (continuing and discontinued activities)
Share of results of Joint Ventures 27 4 264
Finance and investment income 36 187 353
Finance and investment costs (14) (6) (25)
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES 6,334 829 14,784
(continuing and discontinued activities)
5. TAXATION
The tax charge for the six months to 31st January 2022 is based on the
corporation tax rate at 19.00% (2021, 19.00%).
6. DISCONTINUED OPERATIONS
In the year to 31st July 2019 Concrete Products (Kirkcaldy) Limited ceased
trading.
The results of the discontinued operation, which have been included in the
profit, were as follows:
6 Months 6 Months Year
Ended Ended Ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Other operating income 4 4 7
Net operating expenses (21) (65) (88)
Loss before tax (17) (61) (81)
Taxation
Corporation tax 3 12 (12)
Net loss attributable to discontinued operations (14) (49) (93)
The company had cashflows amounting to:
Operating activities (40) (57) (64)
Investing activities - - -
7. DIVIDENDS
6 Months 6 Months Year
Ended Ended Ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
ORDINARY DIVIDENDS
2020 Final Dividend of 2.27p per share - - 961
2021 Interim Dividend of 0.95p per share - - 400
2021 Final Dividend of 2.27p per share 948 - -
948 - 1,361
The interim dividend of 0.96p per share for the year to 31st July 2022 will be
paid on 6th June 2022 to shareholders on the register at 6th May 2022. The
interim dividend will cost the Company no more than £400,000.
8. EARNINGS/(LOSS) PER SHARE
6 Months 6 Months Year
Ended Ended Ended
31.1.22 31.1.21 31.7.21
(Unaudited) (Unaudited) (Audited)
CONTINUING OPERATIONS
Profit attributable to Equity Shareholders £000 5,080 757 11,063
Basic and diluted Earnings per share 12.15p 1.78p 26.16p
DISCONTINUED OPERATIONS
Loss attributable to Equity Shareholders £000 (14) (49) (93)
Basic and diluted Loss per share (0.03)p (0.11)p (0.22)p
CONTINUING AND DISCONTINUED OPERATIONS
Profit attributable to Equity Shareholders £000 5,066 708 10,970
Basic and diluted Earnings per share 12.12p 1.67p 25.94p
Weighted average number of shares
41,810,610 42,452,302 42,284,057
Basic earnings/(loss) per share are calculated by dividing the profit/(loss)
attributable to equity shareholders by the weighted average number of shares
in issue during the period.
During the six months to 31st January 2022 the Company purchased for immediate
cancellation 198,000 Ordinary Shares of 2p.
There is no difference between basic and diluted earnings per share.
9. FAIR VALUE ASSETS
The Group's investment properties, financial assets and assets held by defined
benefit pension scheme are measured at fair value after initial recognition.
Investment properties are only valued annually by the Directors at the year
end and not for the purposes of the interim financial statements. 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.
The Group's financial assets consisted entirely of equities of companies
listed on quoted markets which fall within 'Level 1' of the fair value
hierarchy. Assets held by defined benefit pension scheme consist of equities
and bond of companies listed on quoted markets and cash which all fall within
'Level 1' of the fair value hierarchy. Level 1 valuations are those using
inputs which are quoted prices (unadjusted) in active markets for identical
assets or liabilities the Group can access at the period end date.
10. RELATED PARTY TRANSACTION
Related parties are consistent with those disclosed in the Group's Annual
Report and Statement of Accounts for the year to 31st July 2021.
Related party transactions, including salary and benefits provided to
Directors and key management, were not material to the financial position or
performance of the Group for the period.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors named below, confirm on behalf of the Board of Directors that to
the best of their knowledge that the condensed consolidated interim financial
statements for the six months to 31st January 2022 have been prepared in
accordance with IAS 34: Interim Financial Reporting adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. The
condensed consolidated interim financial statements include a fair review of
the information required by Disclosure and Transparency Rules 4.2.7 and 4.2.8,
being:
· an indication of important events that have occurred during the six
months to 31st January 2022 and their impact on the condensed consolidated
interim financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year, and
· material related party transactions in the six months to 31st January
2022 and any material changes in the related party transactions described in
the last annual report.
The Directors of the Company are listed in the Annual Report and Statement of
Accounts for the year to 31st July 2021.
By order of the Board
D.W. SMART, Director J.R. SMART, Director
19th April 2022
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