REG - Smart(J)Contractrs - Half-year Report
18/04/2023 12:30
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230418:nRSR6191Wa&default-theme=true
RNS Number : 6191W Smart(J.)&Co(Contractors) PLC 18 April 2023
J. SMART & CO. (CONTRACTORS) PLC
INTERIM REPORT
FOR THE SIX MONTHS TO
31st JANUARY 2023
J. SMART & CO. (CONTRACTORS) PLC
CHAIRMAN'S REVIEW
INTERIM REPORT
Unaudited Group profit for the six months to 31st January 2023 amounted to
£260,000 compared with £6,334,000 for the corresponding period last year.
This decrease in profit was largely due to there being no profit from
investment sales of commercial property as was the case in the previous year.
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 may have had a
detrimental effect on the headline figures, due to a decrease in yields.
The private housing development at Winchburgh, Canal Quarter, is progressing
well on site and there have been sales completed. However, whilst
reservations were encouraging until the end of 2022, there have been next to
no reservations in 2023. The majority of the development will be complete at
the end of the current financial year.
The construction of the second phase at Belgrave Point, Bellshill continues
apace, with completion due later in 2023, after the financial year end.
Interest is promising at present.
The residential development at Clovenstone Gardens has commenced and as the
first completions are not due until the middle of 2024, no marketing has taken
place yet.
We continue to see rises in the prices of construction materials, which still
affects the viability of all types of potential projects. The erosion of
profits of recently completed and soon to be completed projects has not
abated. Moreover, this erosion of profit on our private housing developments
will be exacerbated by the recent lull in reservations. The delays in
processing contracting work and commencing new private housing work continue.
INTERIM DIVIDEND
The Board announces an interim dividend of 0.96p per share (2022, 0.96p) to be
paid on 5th June 2023 to shareholders on the register at the close of business
on 5th May 2023. The interim dividend will cost the Company no more than
£389,000.
FUTURE PROSPECTS
There will be further private housing sales this year, albeit not as many as
had been expected. As predicted, the current economic issues of interest
rate rises, high inflation and the cost of living crisis, have had an impact
on consumer confidence in the housing sector, which has resulted in a near
standstill in reservations.
Whilst commercial property values may fall, as predicted, due to the decrease
in investment yields, lettings of both our industrial stock and office stock
remain steady. Rental levels, more so in the industrial sector than the
office sector, have not fallen yet and are still robust.
Whilst no external contracts with housing associations have been secured, we
have agreed a contract with a manufacturing company for a new office facility
and an industrial unit extension. This contract will likely commence prior
to the end of the financial year.
Whilst we might make an underlying profit, it is unlikely to be better than
the underlying profit last year, due to the aforementioned reasons and the
lack of recovery of overhead costs.
It is evident that due to the potential decrease in commercial property
values, as described above, we may make a minimal headline profit or indeed a
headline loss.
D.W. SMART
18th April 2023 Chairman
CONSOLIDATED INCOME STATEMENT
6 Months 6 Months Year
ended ended ended
31.1.23 31.1.22 31.7.22
Notes (Unaudited) (Unaudited) (Audited)
£000 £000 £000
Group construction activities 5,438 6,231 9,597
Less: Own construction work capitalised (3,318) (1,072) (2,167)
REVENUE 2,120 5,159 7,430
Cost of sales (2,083) (4,712) (5,853)
GROSS PROFIT 37 447 1,577
3,528 3,596
Other operating income 7,012
Net operating expenses (3,471) (3,813) (7,295)
OPERATING PROFIT BEFORE PROFIT ON SALE AND NET SURPLUS ON VALUATION OF 94 230 1,294
INVESTMENT PROPERTIES
Profit on sale of investment properties - 6,055 6,055
Net surplus on valuation of investment properties - - 473
OPERATING PROFIT 94 6,285 7,822
(17) 27 254
Share of (losses)/profits in Joint Ventures
Income from financial assets 28 31 63
(Loss)/profit on sale of financial assets (15) 4 17
Net surplus/(deficit) on valuation of financial assets 113 (8) (121)
Finance income 63 1 141
Finance costs (6) (6) (12)
Gain on measurement of subsidiary company - - 28
PROFIT BEFORE TAX 260 6,334 8,192
(30) (1,268)
Taxation 5 (1,571)
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 230 5,066 6,621
EARNINGS PER SHARE
7
Basic and diluted 0.56p 12.12p 15.90p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 Months 6 Months Year
ended ended ended
31.1.23 31.1.22 31.7.22
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
PROFIT FOR THE PERIOD 6,621
230 5,066
OTHER COMPREHENSIVE INCOME
Items that will not be subsequently reclassified to Income Statement:
Remeasurement gains on defined benefit pension scheme - - 7,219
Deferred taxation on remeasurement gains on defined benefit pension scheme - - (1,804)
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFED TO INCOME STATEMENT - - 5,415
- - 5,415
TOTAL OTHER COMPREHENSIVE INCOME
230 5,066 12,036
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX
ATTRIBUTABLE TO EQUITY SHAREHOLDERS 230 5,066 12,036
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Capital Redemption Reserve Retained Earnings Total
Notes
£000 £000 £000 £000
As at 1st August 2022 818 190 123,668 124,676
Profit for the period - - 230 230
Other comprehensive income - - - -
Total comprehensive income for period - - 230 230
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (4) - (305) (309)
Transfer to Capital Redemption Reserve - 4 (4) -
Dividends 6 - - (923) (923)
Total transactions with owners (4) 4 (1,232) (1,232)
As at 31st January 2023 814 194 122,666 123,674
As at 1st August 2021 - as previously reported 840 168 112,376 113,384
Restatement relating to pension surplus 10 - - 2,353 2,353
As at 1st August 2021 - restated 840 168 114,729 115,737
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 6 - - (948) (948)
Total transactions with owners (4) 4 (1,212) (1,212)
As at 31st January 2022 836 172 118,583 119,591
As at 1st August 2021 840 168 114,729 115,737
Profit for the period - - 6,621 6,621
Other comprehensive income - - 5,415 5,415
Total comprehensive income for period - - 12,036 12,036
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (22) - (1,727) (1,749)
Transfer to Capital Redemption Reserve - 22 (22) -
Dividends 6 - - (1,348) (1,348)
Total transactions with owners (22) 22 (3,097) (3,097)
As at 31st July 2022 818 190 123,668 124,676
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
6 Months 6 Months Year
ended ended ended
31.1.23 31.1.22 31.7.22
(Unaudited) (Unaudited) (Audited)
Restated
Note 10
£000 £000 £000
NON-CURRENT ASSETS
Property, plant and equipment 1,315 1,256 1,207
Investment properties 81,140 76,175 77,777
Investments in Joint Ventures 1,515 1,294 1,532
Financial assets 1,357 1,183 1,069
Trade and other receivables 3,010 3,010 3,010
Retirement benefit surplus 15,096 7,863 15,096
Deferred tax assets 13 179 13
103,446 90,960 99,704
CURRENT ASSETS
Inventories 16,760 7,999 12,454
Contract assets 150 52 16
Corporation tax asset 322 - -
Trade and other receivables 2,196 2,925 2,442
Monies held on deposit 49 48 48
Cash and cash equivalents 25,803 38,907 31,796
45,280 49,931 46,756
TOTAL ASSETS 148,726 140,891 146,460
NON-CURRENT LIABILITIES
Deferred tax liabilities 8,172 5,956 8,172
Lease liabilities 212 213 212
8,384 6,169 8,384
CURRENT LIABILITIES
Trade and other payables 4,511 2,839 2,306
Lease liabilities 1 - 1
Corporation tax liability - 983 44
Bank overdraft 12,156 11,309 11,049
16,668 15,131 13,400
TOTAL LIABILITIES 25,052 21,300 21,784
NET ASSETS 123,674 119,591 124,676
EQUITY
Called up share capital 814 836 818
Capital redemption reserve 194 172 190
Retained earnings 122,666 118,583 123,668
TOTAL EQUITY 123,674 119,591 124,676
CONSOLIDATED STATEMENT OF CASH FLOWS
6 Months 6 Months Year
ended ended ended
31.1.23 31.1.22 31.7.22
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax 230 5,066 6,621
Tax charge for year 30 1,268 1,571
Profit after tax 260 6,334 8,192
Adjustment for:
Share of losses/(profits) from Joint Ventures 17 (27) (254)
Depreciation 194 169 399
Unrealised valuation surplus on investment properties - - (473)
Unrealised valuation (surplus)/deficit on financial assets (113) 8 121
Profit on sale of property, plant and equipment (60) (5) (29)
Profit on sale of investment property - (6,055) (6,055)
Loss/(profit) on sale of financial assets 15 (4) (17)
Gain on remeasurement of subsidiary company - - (28)
Change in retirement benefits - - (14)
Increase on monies held on deposit (1) - -
Interest received (63) (1) (20)
Interest paid 6 6 12
Change in inventories (4,306) (468) (4,584)
Change in contract assets (134) 194 230
Change in receivables - current 246 20 503
Change in payables 2,205 (211) (1,113)
CASH OUTFLOW FROM OPERATING ACTIVITIES (1,734) (40) (3,130)
Tax paid (396) (250) (914)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (2,130) (290) (4,044)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (323) (184) (380)
Additions to investment properties (45) (20) (54)
Expenditure on own work capitalised - investment properties
(3,318) (1,072) (2,167)
Proceeds of sale of property, plant and equipment 81 9 48
Proceeds of sale of investment property - 24,032 24,032
Purchase of financial assets (368) (47) (47)
Proceeds of sale of financial assets 178 44 58
Acquisition of investment in Subsidiary - net cash acquired - - 97
Interest received 63 1 20
Loan to Joint Venture - (1,440) (1,440)
Investment in Joint Ventures - - (50)
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES 20,117
(3,732) 21,323
CASH FLOWS FROM FINANCING ACTIVITIES
Interest costs on leases (6) (6) (12)
Purchase of own shares (309) (264) (1,749)
Dividends paid (923) (948) (1,348)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(1,238) (1,218) (3,109)
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (7,100) 19,815 12,964
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
20,747 7,783 7,783
CASH AND CASH EQUIVALENTS AT END OF PERIOD
13,647 27,598 20,747
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 2023 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 2023 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34: Interim
Financial Reporting under UK adopted International Accounting Standards.
The condensed consolidated interim financial statements for the six months to
31st January 2023 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 2022, which have been prepared in accordance with UK
adopted International Accounting Standards.
The statutory financial statements for the year to 31st July 2022 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 2022, 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 37 (amended): Provisions, Contingent Liabilities and Contingent
Assets.
· IFRS 3 (amended): Business Combinations.
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. 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
£123,674,000 at 31st January 2023 and the Group's net current assets amount
to £28,612,000. Taking all of the information the Directors currently have
they are of the opinion that the Group is well placed to manage its financial
and business risks and have a reasonable expectation that the Group has
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 2022. The Directors regularly review
the risks and uncertainties facing the Group and their impact on the trading
performance of the Group and take appropriate actions to help mitigate their
impact 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
31.1.23 31.1.22 31.7.22
£000 £000 £000 £000 £000 £000 £000
31st JANUARY 2023 (Unaudited)
Construction activities 2,120 3,318 5,438 4 (2,099) - -
Investment property activities - - - 3,464 2,193 - -
2,120 3,318 5,438 3,468 94 - -
31st JANUARY 2022 (Unaudited)
Construction activities 5,159 1,072 6,231 4 - (1,628) -
Investment property activities - - - 3,587 - 7,913 -
5,159 1,072 6,231 3,591 - 6,285 -
31st JULY 2022 (Audited)
Construction activities 7,430 2,167 9,597 7 - - (2,487)
Investment property activities - - - 6,976 - - 10,309
7,430 2,167 9,597 6,983 - - 7,822
94 6,285 7,822
OPERATING PROFIT
Share of results of Joint Ventures (17) 27 254
Finance and investment income 204 36 221
Finance and investment costs (21) (14) (133)
Gain on remeasurement of subsidiary company - - 28
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES 260 6,334 8,192
5. TAXATION
The tax charge for the six months to 31st January 2023 is based on the
corporation tax rate at 21.01% (2022, 19.00%).
6. DIVIDENDS
6 Months 6 Months Year
Ended Ended Ended
31.1.23 31.1.22 31.7.22
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
ORDINARY DIVIDENDS
2021 Final Dividend of 2.27p per share - 948 948
2022 Interim Dividend of 0.96p per share - - 400
2022 Final Dividend of 2.27p per share 923 - -
923 948 1,348
The interim dividend of 0.96p per share for the year to 31st July 2023 will be
paid on 5th June 2023 to shareholders on the register at 5th May 2023. The
interim dividend will cost the Company no more than £389,000.
7. EARNINGS PER SHARE
6 Months 6 Months Year
Ended Ended Ended
31.1.23 31.1.22 31.7.22
(Unaudited) (Unaudited) (Audited)
Profit attributable to Equity Shareholders £000 230 5,066 6,621
Basic and diluted Earnings per share 0.56p 12.12p 15.90p
Weighted average number of shares
40,758,094 41,810,610 41,638,109
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 period.
During the six months to 31st January 2023 the Company purchased for immediate
cancellation 189,034 Ordinary Shares of 2p.
There is no difference between basic and diluted earnings per share.
8. 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 bonds 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.
9. 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 2022.
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.
10. PRIOR YEAR ADJUSTMENT
During the year to 31st July 2022 the Group sought further advice on the
Group's right to a surplus arising on the pension scheme 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. This revised advice impacted on the accounts for the
year to 31st July 2021 and resulted in the accounts for that year being
revised.
The impact of this new advice is that it is now clear to the Group that the
full surplus arising on the pension scheme should be accounted for and should
not have been reduced by the asset ceiling adjustment to reduce the surplus to
the present value of economic benefits available in the form of reductions in
future contributions to the plan.
There has been no impact on the Consolidated Income Statement as the asset
ceiling adjustment was only accounted for in the Consolidated Statement of
Comprehensive Income. The pension scheme asset in the Consolidated Statement
of Financial Position has increased as has deferred tax liability on the
asset. It is only the financial statements for the six months to 31st
January 2022, disclosed in this interim report, which are impacted upon by the
prior year adjustment, details of which are given below:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
£000
Retirement benefit surplus - as previously stated 4,725
Retirement benefit surplus - as restated 7,863
Increase in asset 3,138
Increase in deferred tax adjustment based on above increase (785)
Increase in net assets of the Group 2,353
Increase in retained earnings of Group 2,353
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 2023 have been prepared in
accordance with IAS 34: Interim Financial Reporting under UK adopted
International Accounting Standards. 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 2023 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
2023 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 2022.
By order of the Board
D.W. SMART, Director J.R. SMART, Director
18th April 2023
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFLLSDITLIVRecent news on J Smart & Co (Contractors)
See all newsREG - Smart(J)Contractrs - Total Voting Rights
AnnouncementREG - Smart(J)Contractrs - Transaction in Own Shares
AnnouncementREG - Smart(J)Contractrs - Dividend Declaration
AnnouncementREG - Smart(J)Contractrs - Half-year Report
AnnouncementREG - Smart(J)Contractrs - Directorate Change
Announcement