J Smart Contractors : Interim Accounts for 6 months to 31 January 2023

SMART

I N T E R I M R E P O R T

F O R T H E S I X M O N T H S T O

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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.

18th April 2023	D.W. SMART
	Chairman

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J . SMART & CO . (CONTRACTORS) PLC

CONSOLIDATED INCOME STATEMENT

				6 Months	6 Months		Year
						ended			ended		ended
				31.1.23		31.1.22		31.7.22
				(Unaudited)	(Unaudited)	(Audited)
		Notes	£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
Other operating income		3,528		3,596		7,012
Net operating expenses			(3,471)	(3,813)	(7,295)
OPERATING PROFIT BEFORE PROFIT ON
SALE AND NET SURPLUS ON VALUATION						230		1,294
OF INVESTMENT PROPERTIES		94
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
Share of (losses)/profits in Joint Ventures		(17)	27		254
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
Taxation			5	(30)		(1,268)	(1,571)
PROFIT ATTRIBUTABLE TO							5,066			6,621
EQUITY SHAREHOLDERS		230
EARNINGS PER SHARE	7
Basic and diluted						0.56p			12.12p		15.90p

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J . SMART & CO . (CONTRACTORS) PLC

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	230		5,066	6,621
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				-	5,415
RECLASSIFIED TO INCOME STATEMENT		-
TOTAL OTHER COMPREHENSIVE INCOME		-			-	5,415
TOTAL COMPREHENSIVE INCOME					5,066		12,036
FOR THE PERIOD, NET OF TAX		230
ATTRIBUTABLE TO EQUITY SHAREHOLDERS		230		5,066		12,036

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