Smart(J)Contractrs - Half-year Report

J Smart & Co (Contractors)

15/04/2025 10:22

RNS Number : 0980F

Smart(J.)&Co(Contractors) PLC

15 April 2025

 

 

 

 

 

 

J. SMART & CO. (CONTRACTORS) PLC

 

 

 

 

 

 

INTERIM REPORT

 

FOR THE SIX MONTHS TO

 

31st JANUARY 2025

 

 

 

J. SMART & CO. (CONTRACTORS) PLC

 

CHAIRMAN'S REVIEW

 

INTERIM REPORT

Unaudited Group profit for the six months to 31st January 2025 amounted to £128,000 compared with £205,000 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 volume of sales at our private housing development at Winchburgh, Canal Quarter, has been better than expected, albeit at a price level that continues to affect the profitability of the development.

 

Construction at our residential development at Clovenstone Gardens continues and the first block of private housing was completed, at the end of March this year, with an unanticipated but welcome sale of the entire block to a local housing association.  The remaining blocks will be finished later in 2025.

 

The speculative industrial development at Inchmuir Park, Bathgate, started in the financial year and is progressing well.  This development will provide four blocks of small to medium sized industrial units, with completion in mid-2026.

 

Just prior to the end of 2024, we entered into a new Joint Venture Company, St. Andrews 1413 Limited, with a joint venture partner, Knowe Properties Limited.  This Joint Venture Company purchased a block of 15 flats from a housing association at Marine Place, St. Andrews.  The flats are to be refurbished and then marketed for private rental.  The refurbishment work commenced shortly after acquisition and completions are expected in mid-2025.  Marketing will progress in the near future.

 

The rise in the price of construction materials has not abated, and the pre-contract process continues to be unnecessarily protracted.  Both affect the viability of all projects and delay site starts.

 

 

 

INTERIM DIVIDEND

The Board announces an interim dividend of 0.96p per share (2024, 0.96p) to be paid on 2nd June 2025 to shareholders on the register at the close of business on 2nd May 2025. 

 

FUTURE PROSPECTS

It is uncertain as to what the eventual outcome will be from recent global uncertainty on an already fragile UK economy.  Consumer confidence in the housing market had started to improve, but in the short term this may stall again.

 

There will be private housing sales this year, but for the reasons mentioned above, it remains to be seen whether current reservations will convert and what the level of new reservations will be.

 

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 is still difficult to predict what the headline profit will be for the year to 31st July 2025.  We expected property values to remain steady in this current financial year, but that is now in question. 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, the cost of holding private housing stock and the reduction in rental income received due to investment sales.

 

I am delighted to announce the appointment of Jane Oliver as a Director to the Board.  Jane has worked tirelessly for your Company for 25 years and will continue to help the Company prosper in her new role as Development Director.

 

 

15th April 2025
D.W. SMART
Chairman

CONSOLIDATED INCOME STATEMENT

 

Notes
6 Months
ended
31.1.25
(Unaudited)
6 Months
ended
31.1.24
(Unaudited)
Year
ended
31.7.24
(Audited)
£000
£000
£000
REVENUE
9,006
8,591
22,020
Cost of sales
(6,652)
(6,407)
(17,993)
GROSS PROFIT
2,354
2,184
4,027
Other operating income
43
140
163
Administrative expenses
(2,403)
(2,307)
(4,518)
OPERATING (LOSS)/PROFIT BEFORE LOSS ON SALE AND NET SURPLUS ON VALUATION OF INVESTMENT PROPERTIES
(6)
17
(328)
Loss on sale of investment properties held for sale
(49)
-
-
Net surplus on valuation of investment properties
-
-
994
OPERATING (LOSS)/PROFIT
(55)
17
666
Share of (losses)/profits in Joint Ventures
(16)
55
320
Income from financial assets
19
23
49
Loss on sale of financial assets
-
(13)
(123)
Net surplus/(deficit) on valuation of financial assets
73
(34)
123
Finance income
113
164
1,346
Finance costs
(6)
(7)
(16)
PROFIT BEFORE TAX
128
205
2,365
Taxation
5
(60)
(57)
(692)
PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS
68
148
1,673
EARNINGS PER SHARE
7
Basic and diluted
0.17p
0.37p
4.22p

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

6 Months
ended
31.1.25
(Unaudited)
6 Months
ended
31.1.24
(Unaudited)
Year
ended
31.7.24
(Audited)
£000
£000
£000
PROFIT FOR THE PERIOD
68
148
1,673
OTHER COMPREHENSIVE INCOME
Items that will not be subsequently reclassified to Income Statement:
Remeasurement gains on defined benefit pension scheme
-
-
1,802
Deferred taxation on remeasurement gains on defined benefit pension scheme
-
-
(450)
TOTAL ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFED TO INCOME STATEMENT
-
-
1,352
TOTAL OTHER COMPREHENSIVE INCOME
-
-
1,352
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX
68
148
3,025
ATTRIBUTABLE TO EQUITY SHAREHOLDERS
68
148
3,025

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Notes
Share Capital
Capital Redemption Reserve
Retained Earnings
Total
£000
£000
£000
£000
As at 1st August 2024
789
219
125,305
126,313
Profit for the period
-
-
68
68
Other comprehensive income
-
-
-
-
Total comprehensive income for period
-
-
68
68
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Shares purchased and cancelled
(6)
-
(370)
(376)
Transfer to Capital Redemption Reserve
-
6
(6)
-
Dividends
6
-
-
(889)
(889)
Total transactions with owners
(6)
6
(1,265)
(1,265)
As at 31st January 2025
783
225
124,108
125,116


           

 

 

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 2023
802
206
124,459
125,467
Profit for the period
-
-
1,673
1,673
Other comprehensive income
-
-
1,352
1,352
Total comprehensive income for period
-
-
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
6
-
-
(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


 

 

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

6 Months
ended
31.1.25
(Unaudited)
6 Months
ended
31.1.24
(Unaudited)
Year
ended
31.7.24
(Audited)
£000
£000
£000
NON-CURRENT ASSETS
Property, plant and equipment
2,743
2,872
2,743
Investment properties
70,988
82,833
70,038
Investments in Joint Ventures
49
1,551
65
Financial assets
1,263
1,144
1,032
Trade and other receivables
1,565
-
-
Retirement benefit surplus
23,040
19,998
23,040
Deferred tax assets
54
13
54
99,702
108,411
96,972
CURRENT ASSETS
Assets held for sale
-
-
14,199
Inventories
20,008
18,455
18,710
Contract assets
507
304
944
Corporation tax asset
390
-
255
Trade and other receivables
2,882
5,622
2,435
Monies held on deposit
52
50
51
Cash and cash equivalents
27,261
15,182
12,932
51,100
39,613
49,526
TOTAL ASSETS
150,802
148,024
146,498
NON-CURRENT LIABILITIES
Deferred tax liabilities
9,828
8,842
9,828
Lease liabilities
212
212
212
10,040
9,054
10,040
CURRENT LIABILITIES
Trade and other payables
4,473
4,231
4,713
Lease liabilities
1
1
1
Corporation tax liability
-
30
-
Bank overdraft
11,172
10,757
5,431
15,646
15,019
10,145
TOTAL LIABILITIES
25,686
24,073
20,185
NET ASSETS
125,116
123,951
126,313
EQUITY
Called up share capital
783
792
789
Capital redemption reserve
225
216
219
Retained earnings
124,108
122,943
125,305
TOTAL EQUITY
125,116
123,951
126,313

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

6 Months
ended
31.1.25
(Unaudited)
6 Months
ended
31.1.24
(Unaudited)
Year
ended
31.7.24
(Audited)
£000
£000
£000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after tax
68
148
1,673
Tax charge for year
60
57
692
Profit before tax
128
205
2,365
Adjustment for:
Share of losses/(profits) from Joint Ventures
16
(55)
(320)
Depreciation
209
224
455
Unrealised valuation surplus on investment properties
-
-
(994)
Unrealised valuation (surplus)/deficit on financial assets
(73)
34
(123)
Profit on sale of property, plant and equipment
(29)
(97)
(114)
Loss on sale of investment properties held for sale
49
-
-
Loss on sale of financial assets
-
13
123
Change in retirement benefits
-
-
(154)
Interest received
(113)
(164)
(1,346)
Interest paid
6
7
16
Change in inventories
(1,298)
(695)
(950)
Change in contract assets
437
(271)
(911)
Change in receivables
(447)
(237)
(180)
Change in payables
(240)
1,319
1,801
CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
(1,355)
283
(332)
Tax (paid)/refund
(195)
247
(178)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
(1,550)
530
(510)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
(215)
(1,453)
(1,554)
Additions to investment properties
(158)
(59)
(81)
Expenditure on own work capitalised - investment properties
(792)
(1,385)
(1,765)
Proceeds of sale of property, plant and equipment
35
124
132
Proceeds of sale of investment properties held for sale
14,150
-
-
Purchase of financial assets
(158)
-
(51)
Proceeds of sale of financial assets
-
34
244
Increase on monies held on deposit
(1)
(1)
(2)
Interest received
113
141
357
Interest paid
-
(1)
(4)
Loan to Joint Venture
(1,565)
-
-
Loan to Joint Venture repaid
-
-
3,010
Return of capital contribution to Joint Ventures
-
-
1,040
Dividend received from Joint Venture
-
-
711
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES
11,409
(2,600)
2,037

 

CASH FLOWS FROM FINANCING ACTIVITIES
Interest costs on leases
(6)
(6)
(12)
Purchase of own shares
(376)
(766)
(902)
Dividends paid
(889)
(898)
(1,277)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(1,271)
(1,670)
(2,191)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
8,588
(3,740)
(664)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
7,501
8,165
8,165
CASH AND CASH EQUIVALENTS AT END OF PERIOD
16,089
4,425
7,501

 

 

 

 

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 2025 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 2025 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 2025 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 2024, which have been prepared in accordance with UK adopted International Accounting Standards.

 

The statutory financial statements for the year to 31st July 2024 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 2024, 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 2025:

·    IAS 1 (amended): Presentation of Financial Statements.

·    IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

·    IFRS S2: Climate-related Disclosures

 

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 £125,116,000 at 31st January 2025 and the Group's net current assets amount to £35,454,000.  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 2024.  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)
31.1.25
31.1.24
31.7.24
£000
£000
£000
£000
31st JANUARY 2025 (Unaudited)
Construction activities
5,756
(1,277)
-
-
Investment property activities
3,250
1,222
-
-
9,006
(55)
-
-
31st JANUARY 2024 (Unaudited)
Construction activities
4,919
-
(1,964)
-
Investment property activities
3,672
-
1,981
-
8,591
-
17
-
31st JULY 2024 (Audited)
Construction activities
14,350
-
-
(3,968)
Investment property activities
7,670
-
-
4,634
22,020
-
-
666
OPERATING (LOSS)/PROFIT
(55)
17
666
Share of results of Joint Ventures
(16)
55
320
Finance and investment income
205
187
1,518
Finance and investment costs
(6)
(54)
(139)
PROFIT BEFORE TAX ON ORDINARY ACTIVITIES
128
205
2,365


 

5.         TAXATION

 

The tax charge for the six months to 31st January 2025 is based on the corporation tax rate at 25.00% (2024, 25.00%).

 

 

6.         DIVIDENDS

6 Months
Ended
31.1.25
(Unaudited)
6 Months
Ended
31.1.24
(Unaudited)
Year
Ended
31.7.24
(Audited)
£000
£000
£000
ORDINARY DIVIDENDS
2023 Final Dividend of 2.27p per share
-
898
898
2024 Interim Dividend of 0.96p per share
-
-
379
2024 Final Dividend of 2.27p per share
889
-
-
889
898
1,277

 

The interim dividend of 0.96p per share for the year to 31st July 2025 will be paid on 2nd June 2025 to shareholders on the register at 2nd May 2025. 

 

 

7.         EARNINGS PER SHARE

6 Months
Ended
31.1.25
(Unaudited)
6 Months
Ended
31.1.24
(Unaudited)
Year
Ended
31.7.24
(Audited)
Profit attributable to Equity Shareholders £000
68
148
1,673
Basic and diluted Earnings per share
0.17p
0.37p
4.22p
Weighted average number of shares
39,233,025
39,748,231
39,607,931


 

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 2025 the Company purchased for immediate cancellation 296,288 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 2024.

 

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 2025 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 2025 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 2025 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 2024.  Jane Oliver was appointed to the Board as an Executive Director on 4th April 2025.

 

 

By order of the Board
D.W. SMART, Director
J.R. SMART, Director
15th April 2025


 

 

 

 

 

 

 

 

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