Smart (J) & Co Regulatory News (SMJ)

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2017

PRELIMINARY STATEMENT

ACCOUNTS

Headline Group profit for the year before tax, including an unrealised surplus in revalued property and a profit on the unforeseen sale of property, was £4,037,000 compared with £3,752,000 last year.

As forecast underlying profit before tax for the year of £3,423,000 (including £613,000 profit from property sales) was less than last year's figure of £3,616,000 (including £186,000 profit from property sales). In our view discounting the increase in the revaluation of the commercial property portfolio provides a truer reflection of Group performance.

The Board is recommending a Final Dividend of 2.17p making a total of 3.12p which compares with 3.07p for the previous year. The Final Dividend will cost the Company no more than £973,000.

TRADING ACTIVITIES

Group construction activities including private residential sales decreased by 17%. Own work capitalised increased by 55% and headline Group profit increased by 8%. If you disregard the unexpected property sale headline Group profit would have decreased by 9%. Underlying Group profit decreased by 5%.

Turnover in contracting was less than last year and the loss was increased. As forecast private residential sales were less than the previous year. Sales in precast concrete manufacture have increased marginally, but profit has decreased.

The two large mixed social housing and private residential developments at Seafield Street and Pilton Drive, Edinburgh are now complete. The social housing contracts at Fleming Place, Edinburgh continue to make progress, but will be fully complete by April 2018. A further social housing contract at Ferrymuir, South Queensferry is to commence by April 2018, but this is by no means certain due to the continuing and unwelcome drawn out statutory approval process.

A mixed private housing and affordable housing development at West Bowling Green Street, Edinburgh, started after the financial year end, will provide 98 residential units and 4 commercial units. First completions will not be achieved during the current financial year.

The occupancy levels at our industrial estates, especially in the smaller size bracket, continue to be robust. We have finally encountered rental growth across all sizes of industrial units. This has partly been caused by a dearth of new build industrial development exacerbated in the Edinburgh area by a lack of industrial land supply.

The second phases at Inchwood Park, Bathgate and West Edinburgh Business Park, South Gyle, Edinburgh are progressing well and letting prospects are encouraging. The joint venture industrial development at Gartcosh, near Glasgow, has been delayed, but is still likely to proceed.

The voids in our office properties were reduced by the sale of CityWest, Robertson Avenue, Edinburgh. We launched a serviced office centre at our multi-let office building at Links Place, Leith, Edinburgh with our new subsidiary company, Smart Serviced Offices Limited. This has taken time to let but has assisted in attracting tenants to other vacant suites in the building.

FUTURE PROSPECTS

Work in hand in contracting, as alluded to above, is considerably less than last year. All of our contracting work, in the Housing Association sector, in the past five years has been site acquisition led and due to increasing land values opportunities in this regard have decreased. This, coupled with a highly competitive tender market, means the likelihood of future contracting work in this sector does not look promising at present.

There will be no private housing sales this year. Property valuation levels have improved since last year, but it remains to be seen if this trend will continue. Planning applications will be submitted this year for a residential development at Rosyth and a third phase of industrial development at West Edinburgh Business Park.

Due to reduced turnover, which will impact on the recovery of fixed overhead costs, and the cost of redundancies it is likely that underlying profit will be less than this year's underlying profit.

CONSOLIDATED INCOME STATEMENT

for the year ended 31st JULY 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31st JULY 2017

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31st JULY 2017

NOTES TO THE PRELIMINARY STATEMENT

1. BASIS OF PREPARATION

The financial information set out in this unaudited preliminary statement does not constitute the Group's statutory financial statements. The financial statements for the year to 31st July 2017 have not yet been filed with the Registrar of Companies and have not yet been reported on by the Company's auditors.

The unaudited financial information included in this preliminary statement does not include all of the disclosures required by International Financial Reporting Standards (IFRS) or the Companies Act 2006 and accordingly does not itself comply with IFRS or the Companies Act 2006.

The Group prepares its annual consolidated financial statements in accordance with IFRS and its interpretations issued by the International Accounting Standards Board as adopted by the European Union. There are no differences in the accounting policies applied in the preparation of the unaudited consolidated financial statements for the year to 31st July 2017 and the unaudited financial information included in this preliminary statement and the accounting policies disclosed in the 2016 Annual Report and Statement of Accounts. The following standards, amendments to standards and interpretations became mandatory for the first time for the financial year to 31st July 2017 but these have had no material impact on the financial statements:

· IAS 1 (amended): Presentation of financial statements.

· IAS 19 (amended): Employee Benefits.

The unaudited consolidated financial statements are prepared under the historical cost convention with the exception of investment properties and available for sale financial assets which are recognised at fair value and are prepared on a going concern basis.

The financial information for the year to 31st July 2016 is derived from the statutory accounts for that year which were submitted to the Registrar of Companies and upon which the Company's auditors provided an unqualified audit report. The audit report did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report and did not contain a statement under S498 (2) or S498 (3) of the Companies Act 2006.

2. DIVIDENDS

The Company is proposing a final dividend of 2.17p per share for the year to 31st July 2017 which will cost the Company no more than £973,000.

The dividend if approved will be paid on 20th December 2017 to shareholders on the Register at the close of business on 24th November 2017.