Smart (J) & Co Regulatory News (SMJ)

J SMART & CO (CONTRACTORS) PLC AND SUBSIDIARY COMPANIES

ACCOUNTS FOR THE YEAR ENDED 31st JULY 2018

PRELIMINARY STATEMENT

ACCOUNTS

Headline Group profit for the year before tax, including an unrealised surplus in revalued property and a profit on unforeseen sales in a joint venture company, was £5,253,000 compared with £4,037,000 last year

As forecast, underlying profit before tax for the year of £2,394,000 (including £460,000 profit from sales in a joint venture company) was less than last year's figure of £3,423,000 (including £613,000 profit from property sales). As before, our view is that 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 2.21p making a total of 3.16p which compares with 3.12p for the previous year. After waivers by members holding over 50% of the shares, the Final Dividend will cost the Company no more than £402,000.

TRADING ACTIVITIES

Group construction activities including private residential sales decreased by 51%. Own work capitalised decreased by 28% and headline Group profit increased by 30%. If you disregard the unexpected property sales in a joint venture company, headline Group profit would have increased by 19%. Underlying Group profit decreased by 30%. If you disregard the unexpected property sales in a joint venture company, underlying Group profit would have decreased by 44%.

Turnover in contracting was less than last year and the loss increased. As forecast there were no private residential sales this year. Sales in precast concrete manufacture have decreased and a substantial loss has been incurred.

The social housing contracts at Fleming Place, Edinburgh are now both complete. The social housing contract at Ferrymuir, as predicted, did not commence in April 2018. Construction has now commenced at Ferrymuir, albeit after the end of the financial year.

The build contract for the Affordable Housing at the West Bowling Green Street development did commence prior to the end of the financial year.

Progress at the mixed development at West Bowling Green Street has been satisfactory and reservations for the private residential sale element of the development have been encouraging. The first completions and private residential sales should occur in the current financial year.

Through the joint venture company, Duff Street Limited, as alluded to above, an unanticipated profit was realised through the sale of 15 no. private residential flats. These flats had been let to tenants for a number of years and following an off-market approach from a prospective purchaser, it was agreed to sell the flats. The joint venture company will be wound up in due course.

The occupancy levels at our industrial estates, across all size brackets, remain positive. Rental growth has continued over the range of different sized industrial units and locations through lettings of new stock and re-lettings/rent review settlements of existing stock.

The second phases at Inchwood Park, Bathgate and West Edinburgh Business Park, South Gyle are now complete. The second phase at Inchwood Park is now 100% let and the second phase of West Edinburgh Business Park is 75% let. The joint venture company, Gartcosh Estates LLP, has been formed and work has commenced on the first medium sized industrial unit at Gartcosh, with completion in early 2019. Two other medium sized industrial units may follow at Gartcosh, depending on the outcome of the letting of the first unit.

Whilst not quite as prolific as our industrial stock, the voids in our office properties have been reduced through new lettings and prospects for further lettings look promising. The first serviced office suite at Links Place, Leith, Edinburgh through our subsidiary company, Smart Serviced Offices Limited, is now fully let. A second suite at Links Place has been converted to co-working space, and whilst letting in this suite has been slow, this and the serviced office operation has continued to assist in attracting prospective tenants to the building.

The planning application for the third phase of industrial development at West Edinburgh Business Park has been concluded positively and will be issued shortly. The planning application for a residential development at Rosyth has been submitted, but will take time to be determined.

FUTURE PROSPECTS

Work in hand in contracting is less than last year. Whilst we have some potential site acquisitions and tender work on the horizon in the Housing Association sector, it is by no means certain whether new contracting work will be secured this financial year.

There will be private housing sales this year, and as mentioned above, the level of reservations at West Bowling Green Street is promising. Property valuation levels, yet again, have continued to improve since last year. It is difficult to gauge, due to the current political uncertainty, quite whether the confidence in the housing market and the commercial property market will continue or at some point may stall.

At this stage it is difficult to make an informed forecast for the outcome for the current year, however it seems unlikely that the underlying profit will improve.

CONSOLIDATED INCOME STATEMENT

for the year ended 31st JULY 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31st JULY 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 31st July 2018

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31st JULY 2018

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31st JULY 2018

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 2018 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 2018 and the unaudited financial information included in this preliminary statement and the accounting policies disclosed in the 2017 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 2018 but these have had no material impact on the financial statements:

· IAS 7 (amended): Statement of Cash Flows.

· IAS 12 (amended): Income Taxes

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 2017 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 2.21p per share for the year to 31st July 2018 which, after waivers, will cost the Company no more than £402,000.

The dividend if approved will be paid on 19th December 2018 to shareholders on the Register at the close of business on 23rd November 2018.