REG - Smart(J)Contractrs - Half-year Report
16/04/2024 14:45
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RNS Number : 8449K Smart(J.)&Co(Contractors) PLC 16 April 2024
J. SMART & CO. (CONTRACTORS) PLC
INTERIM REPORT
FOR THE SIX MONTHS TO
31st JANUARY 2024
J. SMART & CO. (CONTRACTORS) PLC
CHAIRMAN'S REVIEW
INTERIM REPORT
Unaudited Group profit for the six months to 31st January 2024 amounted to
£205,000 compared with £260,000 for the corresponding period last 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
positive effect on the headline figures, due to rental growth, but with no
substantial change in investment yields.
The private housing development at Winchburgh, Canal Quarter is now
complete. Whilst reservations have picked up since the end of 2023, a
substantial number of residential units remain unsold.
The construction of the second phase at Belgrave Point, Bellshill is now
complete with the unit let to a single occupier, both after the half year end.
The three let industrial units at Gartcosh Industrial Park, developed through
our joint venture company Gartcosh Estates LLP with Fusion Assets Limited,
have been sold as an investment property disposal, after the half year end.
The residential development at Clovenstone Gardens continues with the first
private housing completions now not until the end of 2024/start of 2025, due
to delays in utility infrastructure, and accordingly no marketing has taken
place yet.
The construction contract with a manufacturing company for a new office
facility and an industrial unit extension, just outside Stirling, is
progressing well, but with some delays due to less than timeous local
authority approvals.
Prices of construction materials are still rising, which continues to affect
the viability of all types of potential projects. The slow nature of the
pre-contract process continues to cause delays in starting contract work,
private housing and commercial property developments.
INTERIM DIVIDEND
The Board announces an interim dividend of 0.96p per share (2023, 0.96p) to be
paid on 3rd June 2024 to shareholders on the register at the close of business
on 3rd May 2024. The interim dividend will cost the Company no more than
£379,000.
FUTURE PROSPECTS
There will be private housing sales this year, albeit not as many as had been
expected. As predicted, the continuing economic issues of high interest
rates, inflation and the cost of living crisis, have had an impact on consumer
confidence in the housing sector, resulting in limited reservations in the
latter part of 2023, although there has been a slight improvement in 2024.
The lettings of both our industrial and office properties continue to be
robust. We have experienced rental growth in our commercial property, more
so in our industrial stock than our office stock. It remains to be seen
whether investment yields will improve or not and in turn how the commercial
property values will be affected.
It is still difficult to predict what the headline and underlying figures will
be for the year to 31st July 2024. It is uncertain whether commercial
property values will fall or rise. However, there will definitely be profit
erosion due to lack of external contracts, the lack of recovery of overhead
costs, the continued increase in material costs, prolonged programmes due to
utility infrastructure and statutory authority delays and the cost of holding
private housing stock.
D.W. SMART
16th April 2024 Chairman
CONSOLIDATED INCOME STATEMENT
6 Months 6 Months Year
ended ended ended
31.1.24 31.1.23 31.7.23
Notes (Unaudited) (Unaudited) (Audited)
£000 £000 £000
REVENUE 8,591 5,588 12,972
Cost of sales (6,407) (2,083) (6,922)
GROSS PROFIT 2,184 3,505 6,050
140 60
Other operating income 74
Administrative expenses (2,307) (3,471) (4,617)
OPERATING PROFIT BEFORE NET DEFICIT ON VALUATION OF INVESTMENT PROPERTIES 17 94 1,507
Net deficit on valuation of investment properties - - (2,164)
OPERATING PROFIT/(LOSS) 17 94 (657)
55 (17) (36)
Share of profits/(losses) in Joint Ventures
Income from financial assets 23 28 58
Loss on sale of financial assets (13) (15) (15)
Net (deficit)/surplus on valuation of financial assets (34) 113 (19)
Finance income 164 63 786
Finance costs (7) (6) (12)
PROFIT BEFORE TAX 205 260 105
Taxation 5 (57) (30) 95
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 148 230 200
EARNINGS PER SHARE
7
Basic and diluted 0.37p 0.56p 0.49p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 Months 6 Months Year
ended ended ended
31.1.24 31.1.23 31.7.23
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
PROFIT FOR THE PERIOD 200
148 230
OTHER COMPREHENSIVE INCOME
Items that will not be subsequently reclassified to Income Statement:
Remeasurement gains on defined benefit pension scheme - - 4,330
Deferred taxation on remeasurement gains on defined benefit pension scheme - - (1,083)
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFED TO INCOME STATEMENT - - 3,247
- - 3,247
TOTAL OTHER COMPREHENSIVE INCOME
148 230 3,447
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX
ATTRIBUTABLE TO EQUITY SHAREHOLDERS 148 230 3,447
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Capital Redemption Reserve Retained Earnings Total
Notes
£000 £000 £000 £000
As at 1st August 2023 802 206 124,459 125,467
Profit for the period - - 148 148
Other comprehensive income - - - -
Total comprehensive income for period - - 148 148
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (10) - (756) (766)
Transfer to Capital Redemption Reserve - 10 (10) -
Dividends 6 - - (898) (898)
Total transactions with owners (10) 10 (1,664) (1,664)
As at 31st January 2024 792 216 122,943 123,951
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 2022 818 190 123,668 124,676
Profit for the period - - 200 200
Other comprehensive income - - 3,247 3,247
Total comprehensive income for period - - 3,447 3,447
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled (16) - (1,329) (1,345)
Transfer to Capital Redemption Reserve - 16 (16) -
Dividends 6 - - (1,311) (1,311)
Total transactions with owners (16) 16 (2,656) (2,656)
As at 31st July 2023 802 206 124,459 125,467
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
6 Months 6 Months Year
ended ended ended
31.1.24 31.1.23 31.7.23
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
NON-CURRENT ASSETS
Property, plant and equipment 2,872 1,315 1,670
Investment properties 82,833 81,140 81,389
Investments in Joint Ventures 1,551 1,515 1,496
Financial assets 1,144 1,357 1,225
Trade and other receivables - 3,010 3,010
Retirement benefit surplus 19,998 15,096 19,998
Deferred tax assets 13 13 13
108,411 103,446 108,801
CURRENT ASSETS
Inventories 18,455 16,760 17,760
Contract assets 304 150 33
Corporation tax asset - 322 274
Trade and other receivables 5,622 2,196 2,352
Monies held on deposit 50 49 49
Cash and cash equivalents 15,182 25,803 18,656
39,613 45,280 39,124
TOTAL ASSETS 148,024 148,726 147,925
NON-CURRENT LIABILITIES
Deferred tax liabilities 8,842 8,172 8,842
Lease liabilities 212 212 212
9,054 8,384 9,054
CURRENT LIABILITIES
Trade and other payables 4,231 4,511 2,912
Lease liabilities 1 1 1
Corporation tax liability 30 - -
Bank overdraft 10,757 12,156 10,491
15,019 16,668 13,404
TOTAL LIABILITIES 24,073 25,052 22,458
NET ASSETS 123,951 123,674 125,467
EQUITY
Called up share capital 792 814 802
Capital redemption reserve 216 194 206
Retained earnings 122,943 122,666 124,459
TOTAL EQUITY 123,951 123,674 125,467
CONSOLIDATED STATEMENT OF CASH FLOWS
6 Months 6 Months Year
ended ended ended
31.1.24 31.1.23 31.7.23
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax 148 230 200
Tax charge/(credit) for year 57 30 (95)
Profit before tax 205 260 105
Adjustment for:
Share of (profits)/losses from Joint Ventures (55) 17 36
Depreciation 224 194 445
Unrealised valuation deficit on investment properties - - 2,164
Unrealised valuation deficit/(surplus) on financial assets 34 (113) 19
Profit on sale of property, plant and equipment (97) (60) (74)
Loss on derecognition of asset - - 42
Loss on sale of financial assets 13 15 15
Change in retirement benefits - - (41)
Interest received (164) (63) (786)
Interest paid 7 6 12
Change in inventories (695) (4,306) (5,306)
Change in contract assets (271) (134) (17)
Change in receivables (237) 246 187
Change in payables 1,319 2,205 606
CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 283 (1,733) (2,593)
Tax refund/(paid) 247 (396) (636)
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 530 (2,129) (3,229)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (1,453) (323) (978)
Additions to investment properties (59) (45) (48)
Expenditure on own work capitalised - investment properties
(1,385) (3,318) (5,728)
Proceeds of sale of property, plant and equipment 124 81 102
Purchase of financial assets - (368) (368)
Proceeds of sale of financial assets 34 178 178
Increase on monies held on deposit (1) (1) (1)
Interest received 141 63 158
Interest paid (1) - -
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (6,685)
(2,600) (3,733)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest costs on leases (6) (6) (12)
Purchase of own shares (766) (309) (1,345)
Dividends paid (898) (923) (1,311)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(1,670) (1,238) (2,668)
DECREASE IN CASH AND CASH EQUIVALENTS (3,740) (7,100) (12,582)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
8,165 20,747 20,747
CASH AND CASH EQUIVALENTS AT END OF PERIOD
4,425 13,647 8,165
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 2024 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 2024 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 2024 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 2023, which have been prepared in accordance with UK
adopted International Accounting Standards.
The statutory financial statements for the year to 31st July 2023 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 2023, 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 2024:
· IAS 1 (amended): Presentation of Financial Statements.
· IAS 8 (amended): Accounting Policies, Changes in Accounting Estimates
and Errors.
· IAS 12 (amended): Income Taxes.
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
£123,951,000 at 31st January 2024 and the Group's net current assets amount
to £24,594,000. 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 2023. 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 from construction 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.
Revenue Operating Profit/(Loss)
31.1.24 31.1.23 31.7.23
£000 £000 £000 £000
31st JANUARY 2024 (Unaudited)
Construction activities 4,919 (1,964) - -
Investment property activities 3,672 1,981 - -
8,591 17 - -
31st JANUARY 2023 (Unaudited)
Construction activities 2,124 - (2,099) -
Investment property activities 3,464 - 2,193 -
5,588 - 94 -
31st JULY 2023 (Audited)
Construction activities 5,961 - - (2,720)
Investment property activities 7,011 - - 2,063
12,972 - - (657)
17 94 (657)
OPERATING PROFIT/(LOSS)
Share of results of Joint Ventures 55 (17) (36)
Finance and investment income 187 204 844
Finance and investment costs (54) (21) (46)
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES 205 260 105
5. TAXATION
The tax charge for the six months to 31st January 2024 is based on the
corporation tax rate at 25.00% (2023, 21.01%).
6. DIVIDENDS
6 Months 6 Months Year
Ended Ended Ended
31.1.24 31.1.23 31.7.23
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
ORDINARY DIVIDENDS
2022 Final Dividend of 2.27p per share - 923 923
2023 Interim Dividend of 0.96p per share - - 388
2023 Final Dividend of 2.27p per share 898 - -
898 923 1,311
The interim dividend of 0.96p per share for the year to 31st July 2024 will be
paid on 3rd June 2024 to shareholders on the register at 3rd May 2024. The
interim dividend will cost the Company no more than £379,000.
7. EARNINGS PER SHARE
6 Months 6 Months Year
Ended Ended Ended
31.1.24 31.1.23 31.7.23
(Unaudited) (Unaudited) (Audited)
Profit attributable to Equity Shareholders £000 148 230 200
Basic and diluted Earnings per share 0.37p 0.56p 0.49p
Weighted average number of shares
39,748,231 40,758,094 40,571,925
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 2024 the Company purchased for immediate
cancellation 527,787 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 2023.
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 2024 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 2024 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
2024 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 2023.
By order of the Board
D.W. SMART, Director J.R. SMART, Director
16th April 2024
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