Half-year Report

J. SMART & CO. (CONTRACTORS) PLC

INTERIM REPORT

FOR THE SIX MONTHS TO

31st JANUARY 2025

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.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

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.

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

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

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.