RNS Number:3410E
Pochin's PLC
24 September 2007
Pochin's PLC
Amendment to announcement of Annual Results released today
In the paragraph headed "Earnings per share and dividends" in the Financial
Review, the final dividend was incorrectly shown as being 6.0p rather than
6.25p. The amended paragraph is set out in full below, followed by the whole of
the update announcement. This replaces the announcement released at 7.03 a.m.
today, RNS Number: 3209E.
"Subject to approval at the AGM, a final dividend of 6.25p per share (2005:
6.0p) will be paid on 2 November 2007. This will result in a full year dividend
of 9.25p per share (2006: 8.75p) and shows an annual increase of 5.7%. Dividend
cover is 3.5 times (2006: 2.0 times). This apparent higher level of cover is
distorted by the impact of the one off pension credit, which is a non-cash
item."
Pochin's PLC
Annual Results for the year ending 31 May 2007
Highlights
Financial Highlights
- Turnover, #116.6 million
- Profit before tax from continuing operations, #9.1 million
- Net assets employed up by 12%, #51.5 million
- Diluted EPS (continuing operations) up by 17%, 33.4p
- Dividend per share up by 6%, 9.25p
Operating Highlights
- Solid performance from continuing operations
- Another good result from property activities
- Improved profits from contracting
- Construction Services refocused on concrete pumping
- Growth of Residential continues
- Further investment in joint venture projects and in group development
activities
- Pension deficit significantly reduced
Enquiries:
Pochin's PLC
David Shaw, Chief Executive 01606 833 333
John Edwards, Finance Director
Charles Stanley Securities
Philip Davies/Rick Thompson 020 7149 6457
Chairman's Statement
The results for the group for the year ending 31 May 2007 are satisfactory.
Profits before taxation were #9.1m (2006: #9.4m), derived from turnover of
#116.6m (2006: #124.3m).
The final dividend proposed is 6.25p per share (2006: 6.0p) which, combined with
the interim dividend of 3.0p (2006: 2.75p), will total 9.25p (2006: 8.75p) for
the full year.
It is pleasing to be able to report a good outcome for the year following the
previous year's outstanding results. The Property division has again made the
major contribution, and improved performances from the Contracting and
Residential divisions have combined to produce a sound result.
As reported in the interim statement, the group has taken action to reduce the
deficit in the final salary scheme. The welcome support of all stakeholders to
the revised benefits, together with cash contributions from the group and
movements in forecasted investment returns, have combined to produce a credit in
the year. This has principally benefited the Contracting and Construction
Services divisions, where most of the scheme's members are employed.
This is my first Annual Report and Accounts statement to the shareholders of
Pochin's PLC, following my appointment as Chairman on 1 January this year. As
the group's first non-executive chairman, I have been well supported by my board
colleagues and in particular by David Shaw, the group's Chief Executive. In
learning about the various activities undertaken by the four main divisions, I
have been struck by the high standards of service which Pochin's offers to its
clients, by the proper regard which it pays to the issues of health & safety in
the workplace and by its commitment as a responsible and considerate employer.
These qualities stem from the values of the founding families who remain closely
involved with the company, despite its being listed on the Stock Exchange for
over forty years. From a recent exercise carried out by the Contracting
division, the following extracted feedback from clients is instructive:
"Pochin's is a respected long established contractor with a reputation for
honesty, reliability, and good work.... small enough that every job counts but
large enough to handle multi-million pound projects .... a family orientated
business with a hands on approach at senior level".
While these comments applied to the Contracting division, they succinctly
describe the style of the group as a whole.
The reports of the Chief Executive and the Finance Director set out in detail
the achievements of the year. In summary, the Contracting division has shown
improved results with margins up on the previously inadequate level, whilst the
Construction Services business, in competitive market conditions, has yet to
demonstrate a similar performance. Property investment and development
activities made another strong contribution, and the relatively new Residential
division made further progress during the year. Even greater determination to
improve margins in Contracting and Construction Services will be necessary for
the group to sustain acceptable levels of profitability, particularly in the
more difficult climate for commercial property generally.
Dramatic recent events in financial markets make commenting on the group's
current prospects unusually perilous. Specifically, a valuable planning
permission at Ellesmere, Shropshire, should prove particularly beneficial during
the year, and proposals for the expansion of Midpoint 18, Middlewich, which are
the subject of a planning application, offer significant opportunities for the
future. Generally, the adverse movement in property yields, resulting largely
from the re-pricing of credit risk, is likely to mean that the Property division
will be operating in significantly tougher conditions. The strength of the
various joint venture relationships, highly valued by the division, will stand
the group in good stead in these changed circumstances, as will the good
relations enjoyed with suppliers, professional advisors, and The Royal Bank of
Scotland, principal bankers to the group over many years.
The wet summer weather has not been helpful to the start of the current year,
but the Contracting division's order book is encouraging. Given the strength of
the group's balance sheet, and assuming reasonable economic conditions, Pochin's
looks well placed to produce another good result this year.
There are 425 people directly employed by the group. As I have indicated above,
I have been impressed by the standards which pervade all the group's activities
and, on behalf of the board and shareholders, I would like to thank all
employees for their considerable part in achieving the year's results.
Richard Fildes
Chairman
24 September 2007
Chief Executive's Review
Overview
Pochin's PLC operates in the property and construction sectors. The group
comprises four divisions:
- Property
- Contracting
- Construction Services
- Residential
Property activities are focused in the North West and North Wales, and are
conducted both wholly within the group and also within joint ventures. The
group has continued its balanced approach to portfolio management and to
development opportunity, based on a spread across the group's geographical area
of operations and across commercial, industrial and retail projects.
Contracting activities centre on our ability to work in partnership with
clients, subcontractors and suppliers throughout the North West and North Wales
whilst focusing on the management of risk and the maintenance of quality and
value.
Construction Services activities are based on the hire of concrete pumps to
customers in the UK and on the internal hire of general plant to the Contracting
division.
Residential activities are concentrated in the North West, and continue to
expand its delivery of a quality product, offering value to homebuyers.
Highlights
- Solid performance from continuing operations
- Another good result from Property activities
- Improved profits from Contracting
- Construction Services refocused on concrete pumping
- Growth of Residential continues
- Further investment in joint venture projects and in group development
activities
- Pension deficit significantly reduced
Property
The apparent decline in turnover and profitability of our property activities is
more a reflection of the disposal last year of a single significant development
rather than any decline in activity.
In fact, our property activities have expanded. The value of investment
property, owned by the group or by joint ventures, now totals #68m, with
corresponding debt of #26m. Property developments currently in progress have a
carrying value of #78m and corresponding debt of #53m.
During the year, a 30.5 acre plot on our Midpoint 18 development, here in
Middlewich, was sold to The Midpoint Partnership, (in which Pochin Developments
Limited has retained a 25% interest). The partnership has recently completed
the construction of a 350,000 sq.ft. high bay warehouse on the site, which is
now being marketed to national distribution operators.
A planning application has been submitted for the development of the remaining
land on Midpoint 18, Middlewich, including the provision of a long contemplated
by-pass extension. Further land assembly and considerable road and
infrastructure work will be necessary to bring this scheme to fruition in the
medium term. Meanwhile, some smaller industrial units and offices have been
built for sale or to let on the older part of the estate and these have proved
successful.
Planning permission has been obtained for a mixed use scheme on a 34 acre site
adjacent to the town centre in Ellesmere, Shropshire. A new entrance road and
associated infrastructure work must be provided, but there is already
encouraging interest from national housebuilders and food retail operators.
At Crewe, the next phase of the Gateway scheme is being considered, a small
retail scheme now being fully let. A nearby site of 5.5 acres on the Crewe
Gates Business Park has been acquired and development is under way with a hotel
and a phased office scheme.
The fourth and final building at Keele University Science Park has been
completed by Keele Park Developments Limited and is already fully occupied.
Demand for the laboratories built into the previous building has not
materialised and we are reviewing the Science Park's Medtech strategy with Keele
University and Advantage West Midlands Development Agency.
Joint ventures
Further investment in the group's partnership with UK Land & Property Limited
has resulted in a number of schemes being taken forward throughout the North
West and North Wales.
Some new schemes will commence in the current financial year but, in the year
under review, the main feature was a substantial investment in the acquisition
and refurbishment of Horton House in Liverpool city centre. With over 120,000
sq.ft. of office space and associated ground floor retail and underground car
parking, this represents a landmark opportunity in an outstanding location. The
refurbishment was completed after the year end and over two thirds of the total
space has already been let to good quality tenants.
The success with Horton House has encouraged us to go ahead with our partner in
acquiring, since the year end, the connected building named Walker House and to
proceed with the refurbishment of that property. Walker House is considerably
larger than Horton House with over 230,000 sq ft of office space but the
decision was underpinned by the securing of a substantial pre-let, under an
Agreement for Lease, to a government department for some 30% of the total space.
The partnership's development at Hawarden Business Park has continued with the
construction of a speculative 25,000 sq.ft. unit, which has now been let.
Planning permission has been obtained for the next phase of development
involving a total of 140,000 sq.ft. of industrial space. The Park has been
supplemented by the acquisition of an adjoining 22 acres of land. The land and
existing hangar buildings on this site have been let for use as storage.
Elsewhere in North Wales, the sale of apartments and commercial space by Trinity
Court Developments Limited at Holyhead Marina has proceeded steadily and the
strategic land holding at Deeside with Goodman International Limited (formerly
Rosemound Developments Limited) is a longer term opportunity.
The project with Castlewood Developments Limited in Birkenhead town centre is
proceeding. Agreements with the local authority and a retail operator are still
to be finalised whilst planning issues are resolved.
In Manchester Technopark Limited, lettings in Reynolds House were completed
leading to the decision to market the building for disposal.
Contracting
Turnover for the year, including work on projects for our property division, was
#84.0m (2006: #76.4m), approximately ten percent higher than the previous year,
despite the deferral of a number of schemes in the first quarter. Trading
profits before the pension scheme credit have also improved significantly from
last year to #0.8m (2006: #0.5m), reflecting the strong recovery in the second
half.
The level of opportunities remains high and we have a strong order book of #64m
for the current year (2006: #62.0m). The division is particularly pleased to
have secured a #34m contract for the redevelopment of the former police
headquarters in Chester, awarded by HQ Chester Limited, which will be spread
over two years.
Much of our work in the year has been derived as a result of our close
relationships with previous clients. 50% of our turnover again came from repeat
business and 77% percent from partnered or negotiated contracts (2006: 70%).
Considerable investment has been made in new management information systems and
cost/value reconciliation procedures have been overhauled.
We remain keen to retain client satisfaction and surveys indicate our continuing
success, with an average 92% rating (2006: 90%). We are also pleased to report
that the division received two awards in recognition of our high standards of
construction and workmanship with regards to projects carried out in Cheshire
and North Wales.
Construction Services
Following the decision to dispose of several non-core businesses at the end of
last year, the division has focused on its concrete pumping hire operations.
Support management has been reorganised and new processes introduced to enable a
greater customer focus within the business.
Consolidation in the concrete market has adversely affected the operational
model for the Pumi fleet. With a number of machines being returned from the
ready-mix operators and with evidently disproportionate costs and resources
required to run the fleet on our own account, management has concluded that
these operations should be wound down. The costs associated with this decision
have affected the divisional result for the year, masking the steady underlying
performance of the mobile concrete pumping fleet.
The rising cost of fuel has impacted on the underlying operating profit and the
division remains vulnerable to fluctuations in fuel prices in the future,
however with the actions taken to date it is now in a much stronger position to
compete profitably.
The group's commitment to national concrete pumping hire remains and is
demonstrated by the expansion of activity through a venture in Northern Ireland
and the introduction of a 63 metre boom concrete pump to the fleet in September
2007.
Residential
The division has done well to retain its growth in a difficult market. It sold
69 homes in the year (2006: 48) from 6 sites operating across the region.
The average selling price has been #159,500 (2006: #161,000), which is above the
Halifax House Price Index average for the North West of #152,500 and below the
equivalent average on the website Rightmove of #180,500.
Despite increasing competition for land acquisition, the division has increased
its land bank to 136 plots with full planning permission and a further 66 plots
secured awaiting planning permission.
The division has adopted a policy over the next 5 years to introduce energy and
environmental features in future developments by way of a step-change to achieve
the required standards of energy efficiency by Year 2013 in advance of these
standards becoming compulsory by Year 2016.
Corporate Responsibility
We endeavour to conduct our business in a manner which ensures that the public,
clients and employees are at all times protected from any potentially harmful
impact of our activities.
Health and Safety
All divisions report to the director responsible for health and safety on a
monthly basis to ensure that all matters are properly addressed.
We strive continuously to raise the profile and importance of health and safety
issues throughout the group. During the year we achieved a 25% reduction in all
accidents. It is pleasing to report that this trend has been continuous over
the last five years despite a significant increase in turnover.
Following the success of the Construction Services, division the Contracting
division has made good progress towards receiving formal accreditation to OHSAS
18001 (Occupational Health and Safety). External auditors have confirmed that
we operate a sound management system and we expect to achieve certification
later in the year.
Awareness is critical in matters relating to health and safety and we regularly
issue circulars and bulletins to our employees. We also provide significant
training to improve knowledge and understanding. For example, we distributed
over 3,000 safety rules and guidance booklets to our employees, and those of our
subcontractors, during the year.
The Contracting and Construction Services divisions introduced updated induction
films to refresh the presentation of our safety culture to individuals who may
not have worked with us before. The films are available in a number of
languages to cater for an increasing number of foreign workers.
The Construction Services division is pleased to be associated with the recent
publication and adoption of a new British Standard (BS 8476) for the safe
operation of concrete pumps. The new standard formalises and replaces the
previously voluntary code of practice written principally by ourselves and the
Contractors Plant Hire Association in 2003. This is a major step forward in
improving SHE standards and best practice within the industry.
It is pleasing to report that we have achieved three further awards this year:
ROSPA Gold - Pochin (Contractors) Limited
ROSPA Gold - Pochin Concrete Pumping
ROSPA Silver - Pochin Homes Limited
This brings the total to 20 awards in the last seven years.
Environmental
We operate site waste management plans on all construction sites in anticipation
of government legislation which will make this a statutory requirement in the
near future. We have adopted the Department for Business, Enterprise and
Regulatory Reform voluntary code of practice. All senior managers within the
Contracting division have attended one or more workshops which have been
organised with the help of government sponsorship over the last 12 months.
Good progress has been made throughout the group in improving the accuracy of
data collection for the reporting of environmental key performance indicators.
In the meantime we have raised awareness of the relevant issues and highlighted
the importance of energy saving, recycling and waste reduction in all areas.
We are increasingly involving ourselves in the construction of more energy
efficient buildings and the use of sustainable building products. We are
developing an environmental checklist for the use of our design teams at the
outset of new projects. All of our construction sites are registered with the
Considerate Constructors Scheme and we achieved many certificates of compliance
with their standards throughout the year.
Awareness is again a critical factor in improving environmental performance and
we have introduced appropriate signage at the entrance to all construction
sites, so that it is clearly visible alongside the traditional health and safety
guidance. The updated induction film introduced by our Construction Services
division also includes specific guidance on environmental matters to all users
including customers and subcontractors.
Our Residential division is taking active steps to meet new standards in housing
construction in advance of their compulsory implementation.
In a further effort to reduce waste we are proposing to increase our use of
electronic communication including the publication of future annual reports on
our website.
People
We are pleased to report that during the year our Contracting division was
officially recognised as an "Investor in People". This followed a rigorous
assessment process which independently confirmed that our culture of training,
development, communication and reward is properly and successfully implemented.
Although recruiting the right people remains difficult and competitive for some
key positions, we have nevertheless continued to strengthen our resources to
match our increasing workload.
Many of our employees have had to cope this year with the disruption and extra
work caused by the introduction of a new management information and accounting
system. They dealt with this challenge admirably and we wish to thank them for
their hard work and patience.
The health of our employees is very important to us and this year we introduced
regular site visits by a qualified nurse who is available privately to advise on
any health issues.
We continue to implement the policy that all employees, or potential employees,
receive fair and equal treatment regardless of gender, age, ethnic origin,
nationality, religion, belief, race, sexual orientation or disability.
David Shaw
Chief Executive
24 September 2007
FINANCIAL REVIEW
Trading Results
Total group sales were #116.6m (2006: 124.3m) resulting in a profit before tax
for the year from continuing operations of #9.1m (2006: #9.4m). Growth was
achieved from Contracting, Construction Services and Residential divisions. The
underlying performance of Property remains strong although the division did not
improve on its prior year performance, which last year was dominated by the
exceptional contribution from the sale of the student accommodation project at
Crewe.
The Contracting division showed a healthy growth of 10% in activity, completing
a number of major contracts to deliver a profit before tax of #2.1m (2006:
#0.1m). This strong result was a combination of an improved operating
performance and a one off net gain of #1.6m following changes made to pension
fund benefits of which they were a major beneficiary.
The Property division remained the major profit contributor to the Group, #7.4m
(2006: #9.7m) for the year coming in broadly equal measure from development
activity and property investment income. It continued to invest in schemes both
within the group and through joint ventures for delivery of profit in future
years.
Construction Services division generated sales of #14.2m (2006: #13.8m) showing
a modest underlying growth of 3%. At the same time it continued its
restructuring programme to focus on its core activity of concrete pumping. It
generated a profit before tax of #0.1m (2006: #0.1m loss), after one off
restructure costs of #0.3m and a net gain on pension deficit movement of #0.5m.
The Residential division continued to grow despite a slow market, completing 69
units (2006: 48 units) which produced a turnover of #11.0m (2006: #7.7m) and a
profit of #0.8m (2006: #0.5m).
Earnings Per Share and Dividend
Diluted earnings per share from continuing activities were 33.4p (2006: 28.5p).
Diluted earnings per share after discontinued activities were 33.2p (2006:
18.2p).
Utilisation of brought forward tax credits of #0.8m helped to reduce the
effective tax rate to 24.8% (2006: 37.8%) and had a positive effect on earnings
per share.
Subject to approval at the AGM, a final dividend of 6.25p per share (2005: 6.0p)
will be paid on 2 November 2007. This will result in a full year dividend of
9.25p per share (2006: 8.75p) and shows an annual increase of 5.7%. Dividend
cover is 3.5 times (2006: 2.0 times). This apparent higher level of cover is
distorted by the impact of the one off pension credit, which is a non-cash item.
Balance Sheet
Net assets have increased by 12.4% to #51.5m (2006: #45.8m) equivalent to 248p
per share (2006: 220p).
Investment in properties owned by the group increased by #1.6m to #43.0m. New
additions included a fourth business unit at Keele Park and retail units in
Crewe. Investments in joint ventures and associates increased by #1.9m to #13.4m
following the group's participation in the acquisition of Horton House,
Liverpool.
Development work in progress increased by #10.4m driven by the growth in
residential activity and a major investment in the development of the former
creamery site at Ellesmere in Shropshire.
In accordance with IAS19 the pension deficit of #0.6m (2006: #5.2m) is included
in non-current liabilities.
Cashflow and Borrowings
Total net borrowings increased by #2.8m in the year to #31.0m.
The group continued to invest in new opportunities by following conservative
principles using:
- retained earnings and long term funding for investment activities
- short term project based funding for asset backed short term
development projects, and
- short term unsecured facilities for other activity
2007 2006
Operating activities 5.2 25.8
Interest and dividends (1.3) (1.6)
Taxation (2.4) (3.5)
Sale/purchase of property and assets (1.1) (7.5)
Increase in interest in joint ventures (3.2) (6.8)
Acquisitions/disposals - 0.5
Other - (0.1)
_____ _____
Net cash movement (#m) (2.8) 7.0
Long term borrowing commitments of #9.2m (2006: #9.5m) include remaining
balances on acquisition loans and the principle sum outstanding on the funding
for Keele Park Developments Limited where repayment commences in 2008. There
were no new long-term borrowing arrangements made in the year, although there
was a specific, short-term development loan of #10m arranged to facilitate the
purchase of the land at Ellesmere.
Joint Ventures and Investments
The group has continued its commitment to the development of future business
through its strategic relationships with joint venture partners. During 2007
the group's net investment in joint ventures and associated companies increased
to #13.4m (2006: #11.5m). As in previous years, the group has taken a prudent
approach in writing down, where appropriate, initial investment values to
reflect the risk associated with fluctuations in timescales and projected
outcomes on certain projects. The impact of these adjustments in the year is a
charge to operating expenses of #1.5m (2006: #2.5m).
As at 31 May 2007 the principal joint venture and associate interests of the
group are in Castlewood Developments (Birkenhead) Limited (#3.8m), Pochin
Rosemound (Deeside) Limited (#2.1m), Hawarden Business Park Limited (#0.9m),
UKLP Developments Limited (#1.0m), Manchester Technopark Limited (#1.1m), UKLP
Exchange Flags Limited (#1.5m), Lincoln House Properties Limited (#1.4m) and
Manchester House Properties Limited (#0.6m).
The group continues to have investment interests in Manchester Science Park
Limited (#1.5m) and UK Land & Property Limited (#0.7m). The group also has
interests in The Prosperity Court Partnership and Keele Park Developments
Limited, which are treated as subsidiaries in these accounts, both having third
party minority interests that are reflected in the income statement.
Pensions
The group operates a defined benefit scheme (DB scheme) and a defined
contribution scheme for its employees. The DB scheme has been closed to new
members since 31 December 2001. The last full actuarial valuation of that scheme
was carried out on 1 July 2005 and updated on an approximate basis on 31 May
2007. The next full valuation is scheduled for 1 July 2008.
To ensure the long term viability of the DB scheme and to protect the benefits
of its members, last year the group proposed a number of changes to the benefits
of members together with an additional contribution of #1.2m to the scheme's
fund. These proposals were approved by the scheme members on 1 November 2006.
The first tranche of the additional contribution, #0.5m, was paid in May 2006
and the balance of #0.7m paid in December following the approval of the benefit
changes.
Total contributions paid in the year to the DB scheme, including the special
contribution, were #1.2m (2006: #1.0m).
The DB scheme also benefited from favourable movements in investment values and
bond yields during the year, which when combined with reduced benefit
liabilities and special contributions, have reduced the reported deficit to
#0.6m (2006: #5.2m).
In accordance with IAS19 the pension deficit is shown in the company balance
sheet and the movement in the year reflected in the income statement and the
statement of recognised income and expense.
Financial Instruments
The group uses financial instruments, which include cash, loans and various
liquid resources, such as trade debtors and trade creditors, arising directly
from its operations. The main purpose of these financial instruments is to
finance the cost of the group's operations.
The ongoing operations of the group are principally funded through a mixture of
retained profits and bank borrowings. Funding availability and the management
of interest rates and liquidity risks are the responsibility of the Finance
Committee, which is responsible to the board for implementing the group's
treasury policy.
The group continues to have minimal exposure to foreign currency exchange risks
and accordingly does not require a policy to hedge such exposure.
The group has minimal fixed rate borrowings and continually reviews the need to
hedge against interest rate movements. The only interest rate hedge entered
into by the group is in respect of borrowings in Keele Park Developments
Limited. At 31 May 2007, there was a recognised gain on this hedge of #0.3m
(2006: #0.2m loss). Under IFRS, the favourable movement in the year of #0.5m
has been recognised in the income statement of the group.
Certain associated companies are financed by long term repayment loans to
finance investment property assets and other joint venture companies are
financed by short term bank borrowings. The group regularly reviews the risk of
exposure to interest rate increases with its partners and where appropriate,
hedges against that risk on a project by project basis.
Financial Reporting
There have been no changes to the accounting policies of the group in 2007,
unlike 2006 when International Financial Reporting Standards were adopted for
the first time.
John Edwards
Finance Director
24 September 2007
Consolidated income statement
For the year ended 31 May 2007
2007 2006
#'000 #'000
Continuing operations
Revenue 116,554 124,295
Cost of sales (102,219) (104,096)
Gross profit 14,335 20,199
Operating expenses (10,621) (14,343)
Other operating income 3,839 3,212
Gains on revaluation of investment properties 707 509
Operating profit 8,260 9,577
Share of profit/(loss) after taxation in joint 45 (379)
ventures
Share of profit after taxation in associates 241 153
Finance income 2,801 1,898
Finance cost (2,212) (1,866)
Profit before taxation 9,135 9,383
Taxation (2,270) (3,551)
Profit for the year from continuing operations 6,865 5,832
Discontinued operations
Loss for the year from discontinued operations (59) (2,094)
Profit for the year 6,806 3,738
Attributable to:
Equity holders of the company 6,775 3,708
Minority interest 31 30
Retained profit for the year 6,806 3,738
Earnings per share (basic) 33.4p 18.4p
Earnings per share (diluted) 33.2p 18.2p
Earnings per share (basic) from continuing 33.6p 28.8p
operations
Earnings per share (diluted) from continuing 33.4p 28.5p
operations
Dividend proposed for the year 6.25p 6.0p
Consolidated statement of recognised income and expense
For the year ended 31 May 2007
2007 2006
#'000 #'000
Actuarial gains/(losses) on defined benefit 1,028 (834)
pension scheme
Deferred taxation on pension scheme deficit (310) 250
Net income/(expense) recognised directly in 718 (584)
equity
Profit for the financial year 6,806 3,738
Total gains recognised since last year 7,524 3,154
Attributable to:
Equity holders of the company 7,493 3,124
Minority interest 31 30
7,524 3,154
Consolidated balance sheet
As at 31 May 2007
2007 2006
#'000 #'000
Non current assets
Intangible assets - 323
Property, plant and equipment 4,400 9,544
Investment properties 41,090 34,923
Investments
Joint ventures 11,414 9,128
Associates 2,037 2,378
Other 2,157 2,157
15,608 13,663
Total non current assets 61,098 58,453
Current assets
Inventories 35,638 26,215
Trade and other receivables 19,283 19,931
Cash and cash equivalents 223 791
Corporation tax recoverable 55 -
Assets classified included in disposal group - 990
Total current assets 55,199 47,927
Current liabilities
Trade and other payables 24,202 17,948
Corporation tax - 1,245
Bank loans 10,618 815
Bank overdrafts 11,409 18,672
Financial derivatives - 174
Liabilities included in disposal groups - 665
Total current liabilities 46,229 39,519
Net current assets 8,970 8,408
Non current liabilities
Bank loans 9,207 9,536
Retirement benefit obligation 577 5,179
Deferred tax liabilities 2,413 1,422
Long term provisions 1,632 1,050
Other payables 4,757 3,856
Total non current liabilities 18,586 21,043
Net assets 51,482 45,818
Shareholders' equity
Share capital 5,200 5,200
Own shares (954) (954)
Revaluation reserve 240 270
Retained earnings 46,785 41,093
Equity shareholders' funds 51,271 45,609
Minority interest 211 209
Total equity 51,482 45,818
Consolidated cash flow statement
For the year ended 31 May 2007
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Net cash from operating activities
Operating profit for the year 8,260 9,577
Depreciation charge 908 1,381
Impairment of intangible assets 323 547
Charge in respect of share based payments 41 54
Profit on sale of fixed assets (243) (313)
Gains on revaluation of investment properties (707) (509)
Provision against investments in joint ventures 1,500 2,516
Income from joint ventures and associates 246 44
Operating profit before changes in working 10,328 13,297
capital
(Increase)/decrease in inventories (9,423) 14,079
Decrease/(increase) in receivables 1,638 (3,438)
Increase in payables 2,611 1,842
5,154 25,780
Interest paid (2,212) (1,866)
Income taxes paid (2,414) (3,469)
Net cash from operating activities 528 20,445
Investing activities
Interest received 2,801 1,898
Disposal of businesses - 527
Purchase of investment properties - (4,473)
Purchase of property, plant and equipment (1,880) (3,789)
Proceeds from sale of property, plant and 728 808
equipment
Receipt of government grants 150 427
Repayment of government grants - (237)
Increase in interest in joint ventures and (3,234) (6,831)
associates
Purchase of shares by EST - (107)
Net cash used in investing activities (11,777)
(1,435)
Financing activities
Proceeds from new loans 10,000 -
Repayment of loans (526) (725)
Payment of finance lease liabilities - (395)
Dividends paid (1,872) (1,633)
Net cash from/(used in) financing activities 7,602 (2,753)
Net increase in cash and cash equivalents 6,695 5,915
Cash and cash equivalents at beginning of year (17,881) (23,796)
Cash and cash equivalents at end of year (11,186) (17,881)
Notes
The preliminary announcement is prepared in accordance with International
Financial Reporting Standards.
The Board of Directors approved the preliminary announcement on 20 September
2007.
The announcement represents non-statutory accounts within the meaning of section
240 of the Companies Act 1985. The statutory annual accounts for the year ended
31 May 2007, upon which an unqualified audit opinion has been given and which
did not contain a statement under section 235, 237 (2) or 237 (3) of the
Companies Act 1985, will be sent to the Registrar of Companies.
Turnover, profit before taxation and net assets
Segmental information
For management purposes, the group is currently organised into four operating
business segments:
Contracting, Property, Residential and Construction Services.
As operations are carried out entirely within the UK, there is no secondary
segmental information.
Inter segmental pricing is done on an arms length open market basis.
Segment information about these businesses is presented below.
Year ended 31 May 2007
Continuing operations
Contracting Property Residential Construction Group Group
Services management Total
#'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 82,755 8,613 11,004 14,182 - 116,554
Inter-segment sales 1,201 - - 928 - 2,129
Eliminations (1,201) - - (928) - (2,129)
Total revenue 82,755 8,613 11,004 14,182 - 116,554
Segment result
Operating profit/(loss) 2,108 6,468 752 154 (1,222) 8,260
Share of results of joint - 286 - - - 286
ventures and associates
Net finance income/(cost) - 658 - (69) - 589
Profit/(loss) before taxation 2,108 7,412 752 85 (1,222) 9,135
Taxation (2,270)
Profit for the year from 6,865
continuing operations
Year ended 31 May 2007
Discontinued operations
Contracting Property Residential Construction Group Group
Services management Total
#'000 #'000 #'000 #'000 #'000 #'000
Segment result
Operating loss - - - (534) - (534)
Taxation 475
Loss for the year from (59)
discontinued operations
The loss on discontinued activities which has arisen in the year has resulted
from costs incurred in the current year in respect of activities discontinued in
the prior year.
Year ended 31 May 2007
Contracting Property Residential Construction Elimination Group
of inter
Services segment items Total
#'000 #'000 #'000 #'000 #'000 #'000
Asset and liabilities
Segment assets 25,553 90,865 11,789 7,797 (33,158) 102,846
Investment in equity accounted - 13,451 - - - 13,451
joint ventures and associates
Segment assets 25,553 104,316 11,789 7,797 (33,158) 116,297
Segment liabilities 19,864 39,919 3,137 1,461 (33,158) 31,223
Borrowings - 23,102 7,843 289 - 31,234
Taxation 82 1,787 225 264 - 2,358
Net assets 5,607 39,508 584 5,783 - 51,482
Other information
Capital expenditure 331 1,253 - 296 - 1,880
Depreciation 78 93 - 737 - 908
Impairment of investment in - 1,500 - - - 1,500
joint ventures
Impairment of inventories - 207 - - - 207
Impairment of intangible assets - - - 323 - 323
Borrowings and taxation are reported within segments as, in the opinion of the
directors, this gives a more accurate utilisation of the group's assets and
liabilities.
Year ended 31 May 2006
Continuing operations
Contracting Property Residential Construction Group Group
Services management Total
#'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales 67,317 35,443 7,738 13,797 - 124,295
Inter-segment sales 9,085 - - 1,066 - 10,151
Eliminations (9,085) - - (1,066) - (10,151)
Total revenue 67,317 35,443 7,738 13,797 - 124,295
Segment result
Operating profit/(loss) 123 9,836 499 4 (885) 9,577
Share of results of joint - (226) - - - (226)
ventures and associates
Net finance income/(cost) - 135 - (103) - 32
Profit/(loss) before taxation 123 9,745 499 (99) (885) 9,383
Taxation (3,551)
Profit for the year from 5,832
continuing operations
Year ended 31 May 2006
Discontinued operations
Contracting Property Residential Construction Group Group Total
Services management
#'000 #'000 #'000 #'000 #'000 #'000
Revenue
External sales - - - 6,490 - 6,490
Inter-segment sales - - - 152 - 152
Eliminations - - - (152) - (152)
Total revenue - - - 6,490 - 6,490
Segment result
Operating loss - - - (333) - (333)
Net finance cost - - - (17) - (17)
Loss before taxation - - - (350) - (350)
Loss on disposal of operation (72)
Provision against assets held in (1,777)
disposal group
Taxation 105
Loss for the year from (2,094)
discontinued operations
Year ended 31 May 2006
Contracting Property Residential Construction Elimination Group
of inter
Services segment items Total
#'000 #'000 #'000 #'000 #'000 #'000
Asset and liabilities
Segment assets 19,393 86,747 6,541 10,484 (28,291) 94,874
Investment in equity accounted - 11,506 - - - 11,506
joint ventures and associates
Segment assets 19,393 98,253 6,541 10,484 (28,291) 106,380
Segment liabilities 16,467 33,035 2,974 4,687 (28,291) 28,872
Borrowings - 25,166 3,400 457 - 29,023
Taxation (686) 3,313 97 (57) - 2,667
Net assets 3,612 36,739 70 5,397 - 45,818
Other information
Capital expenditure 37 7,661 - 564 - 8,262
Depreciation 44 109 - 1,228 - 1,381
Impairment of investment in - 2,516 - - - 2,516
joint ventures
Impairment of inventories - 570 - - - 570
Impairment of intangible assets - 386 - 161 - 547
Earnings per share (continuing activities)
The calculation of earnings per share (basic and diluted) for continuing
activities is based on group profit after taxation from continuing activities
and minority interests of #6,834,000 (2006: #5,802,000) and the 20,800,000
ordinary shares of 25p in issue at 31 May 2007 and 31 May 2006. The number of
shares used in the calculation has been reduced at 31 May 2007 for the 449,500
(2006: 517,000) shares held in the Employee Share Trust. Basic earnings per
share are 33.6p (2006: 28.8p). The assumed conversion of dilutive options
increases the number of shares by 118,000 (2006: 169,000) shares and so diluted
earnings per share decreases to 33.4p (2006: 28.5p).
2007 2006
Weighted Weighted
average average
Earnings no. of Per share Earnings no. of Per share
shares shares
#'000 000 p #'000 000 p
Basic EPS 6,834 20,313 33.6 5,802 20,154 28.8
Effect of share options - 118 (0.2) - 169 (0.3)
Diluted EPS 6,834 20,431 33.4 5,802 20,323 28.5
Dividends
2007 2006
#'000 #'000
Interim paid - 3.0p per share (2006 : 2.75p) 624 572
Final paid - 6.0p (2006 : 5.1p) 1,248 1,061
1,872 1,633
The Directors are proposing a final dividend in respect of the financial year
ending 31 May 2007 of 6.25p per share. It will be paid on 2 November 2007 to
shareholders who are on the register of members on 5 October 2007. The final
dividend has not been included as a liability as at 31 May 2007.
The Annual General Meeting will be held at Mere Golf and County Club, Knutsford,
Cheshire on Friday 26 October 2007. The full report will be posted to
shareholders on 3 October 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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