RNS Number:9529H
Pochin's PLC
25 February 2003
Chairman's statement
Results and dividends
I am pleased to report profits before tax of #1.251m (2001: #1.248m) on turnover
of #34m (2001: #17m). The interim dividend remains unaltered at 2p per share.
Trading and property developments
Turnover in the period has been distorted by the sale of a development property
at Bolton for #5.9m but is nonetheless significantly increased from last year.
This reflects higher activity across our businesses and I am heartened by the
steady progress towards acceptable levels of profits in the trading divisions
during this period.
Contracting, having started off in the same negative vein as last year, ended
the period with a return to positive contributions to group profits - the reward
for some hard work put in by the new management team over the last 12 months.
Concrete Pumping has returned a steady result but continues to face the
challenge of increasing its income from customers who operate in an extremely
competitive market. I am optimistic, however, that the new Pumi pumps will be a
valuable addition to the fleet and a new source of revenues.
Avoidatrench suffered in this period from client led delays in the commencement
of a number of projects, a symptom of general uncertainty prevailing in the
economy. Substantial increases in the cost of liability insurances will affect
profitability until these additional costs can be passed on to customers through
quotations for future work.
The sale of the Bolton development contributed substantially to the result in
this half year. As a result of this sale, and of the sales reported in the
second half of last year, rental income is down. I do not, however, anticipate
any further major disposals in the second half-year and we are set on replacing
this income by undertaking new development projects. I rest content that
currently our exposure within the group to empty space in speculative
developments is restricted to Keele Park, and even here the second Innovation
Centre, completed towards the end of 2002, already has some 50% of its available
space occupied, confirming the successful experience in the first building,
which has been fully let for some time.
Joint ventures
There have been no significant joint venture property sales in this period and,
indeed, our share of ongoing overheads has resulted in a negative contribution
overall, some #0.5m down on the same period last year. However, whilst it is
always impossible to predict the exact timing of property transactions, I am
aware of several profitable disposals, likely to be completed by joint venture
companies before the year-end, which may change this picture.
Borrowings
The proceeds of the Bolton sale have helped towards a healthy reduction of group
debt in the period and group interest charges have reduced accordingly.
Unfortunately we are still bearing our share of the shortfall of interest costs
at Manchester Technopark, but we remain hopeful of securing the additional
lettings that will generate the rental income required to cover this shortfall.
Acquisition
In October Avoidatrench completed the acquisition of Pipeline Drillers Limited
for a maximum consideration of #1.277m. Pipeline Drillers Limited operates a
complementary auger boring operation that will extend the range of solutions we
can offer in the trenchless market. The new business has historic annual
turnover in excess of #1m and profits averaging over #100,000.
New venture
I have referred in previous reports to our joint venture with Bushwing Plc and
last year we took steps to increase our commitment to this venture, which
specialises in "brownfield" sites identified for retail, commercial and, in
particular, housing development. The success of this strategy has encouraged us
to form a new company within the Bushwing group, Pochin Homes Limited, which
will take advantage of some of the residential opportunities we create by
building and marketing new homes in our region. We have recruited an executive
with the appropriate experience and knowledge to lead this exciting initiative,
independently of the group's traditional construction activities.
Prospects
Over the years we have operated in a prudent manner and our solid balance sheet
is testimony to this. Trading is improving in our traditional operations and
there should be further contributions from our joint ventures in the second half
of the year. Despite the uncertainty in the economy, faced by all our
businesses, we are well placed to take advantage of the opportunities that will
inevitably arise.
Nicholas J. Pochin
Chairman
25 February 2003
Consolidated profit and loss account
6 months ended 6 months ended 12 months ended
30 November 2002 30 November 2001 31 May 2002
Notes #'000 #'000 #'000
Turnover
Group and share of joint ventures 34,234 18,030 48,522
Less: share of joint ventures - 1,296 1,704
4 34,234 16,734 46,818
Cost of sales (30,015) (13,353) (37,849)
Gross profit 4,219 3,381 8,969
Operating expenses (3,919) (3,751) (7,827)
Other operating income 1,427 1,720 3,552
Operating profit 1,727 1,350 4,694
Share of operating (loss)/profit in joint (180) 282 78
ventures
Share of operating profit in associates 154 176 479
Net interest (450) (560) (1,046)
Profit on ordinary activities before taxation 4 1,251 1,248 4,205
Tax on profit on ordinary activities 5 (550) (381) (1,569)
Profit on ordinary activities after taxation 701 867 2,636
Equity minority interest 3 (26) (62)
Profit for the financial period 704 841 2,574
Dividends 6 (416) (416) (1,154)
Retained profit for the period 288 425 1,420
Earnings per share (basic and diluted) 7 3.5p 4.0p 12.5p
Statement of total recognised gains and losses
Profit for the period 704 841 2,574
Unrealised (deficit)/surplus on revaluation of (21) - 1,933
investment properties - group
Unrealised deficit on revaluation of investment - - (41)
properties - joint ventures
Total gains recognised since last period 683 841 4,466
Prior year adjustment relating to deferred tax - - (504)
Total gains recognised since last period 683 841 3,962
Note of historical cost profits and losses
Reported profit on ordinary activities before 1,251 1,248 4,205
taxation
Realisation of revaluation surpluses of 108 121 583
previous years
Difference between historical cost depreciation
charge and
depreciation charge based on revalued amounts 105 146 143
Historical cost profit on ordinary activities 1,464 1,515 4,931
before taxation
Historical cost profit retained for the period
after taxation,
minority interest and dividends 501 692 2,146
Consolidated balance sheet
As at As at As at
30 November 30 November 31 May
2002 2001 2002
Notes #'000 #'000 #'000
Fixed assets
Intangible assets 888 471 365
Tangible assets 29,853 27,601 30,009
Investments
Joint ventures
Share of gross assets 17,985 16,069 16,557
Share of gross liabilities (12,622) (10,133) (11,057)
Goodwill 109 154 125
5,472 6,090 5,625
Associates 2,416 2,458 2,397
Other 1,500 1,500 1,500
Own shares 607 - 304
9,995 10,048 9,826
40,736 38,120 40,200
Current assets
Stocks and work in progress 13,632 23,974 17,517
Debtors 10,827 7,154 7,645
Investments and deposits 10,625 10,304 10,159
Cash in hand 10 8 9
35,094 41,440 35,330
Creditors: amounts falling due within one year
Borrowings (15,864) (24,957) (18,885)
Trade and other creditors (13,133) (10,723) (9,726)
(28,997) (35,680) (28,611)
Net current assets 6,097 5,760 6,719
Total assets less current liabilities 46,833 43,880 46,919
Creditors: amounts falling due after more
than one year
Borrowings (377) (681) (531)
Other (233) - -
Provisions for liabilities and charges (1,062) (957) (1,219)
Accruals and deferred income (2,000) (1,508) (2,008)
Net assets 43,161 40,734 43,161
Capital and reserves
Called up share capital 5,200 5,200 5,200
Revaluation reserve 10,030 8,831 10,264
Profit and loss account 27,735 26,284 27,234
Equity shareholders' funds 42,965 40,315 42,698
Equity minority interest 196 419 463
43,161 40,734 43,161
Consolidated cash flow statement
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May
2002 2001 2002
#'000 #'000 #'000 #'000 #'000 #'000
Notes
Net cash 8 6,546 (2,798) 7,189
inflow/(outflow) from
operating activities
Income received from 31 28 81
joint ventures
Returns on investments
and servicing of
finance
Interest received 113 101 313
Interest paid (192) (327) (688)
Interest paid on (11) (17) (31)
finance leases
Net cash outflow from
returns on investments
and servicing of (90) (243) (406)
finance
Taxation (605) (550) (1,556)
Capital expenditure
and financial
investment
Purchase of tangible (572) (2,091) (4,755)
fixed assets
Sale of tangible fixed 214 632 2,025
assets
Net cash outflow from
capital expenditure
and financial (358) (1,459) (2,730)
investment
Acquisitions and
disposals
Purchase of subsidiary 9 (824) - -
undertaking
Net cash on purchase 451 - -
of subsidiary
undertaking
Increase in interest (247) (1,261) (1,237)
in joint ventures and
associates
Purchase of other - (1,500) (1,500)
fixed asset investment
Purchase of own shares (303) - (304)
(923) (2,761) (3,041)
Equity dividends paid (738) - (1,154)
Net cash
inflow/(outflow)
before financing and
management of liquid 3,863 (7,783) (1,617)
resources
Management of liquid
resources
Sale of corporate - 3,481 3,480
bonds
Cash deposited at call (16) (2,948) (2,803)
and short notice
Net cash
(outflow)/inflow from
management of
liquid resources (16) 533 677
Financing
Repayment of loan (740) (200) (400)
capital
Repayment of principal
under finance leases
and
hire purchase (65) (130) (218)
contracts
Net cash outflow from (805) (330) (618)
financing
Increase/(decrease) in 3,042 (7,580) (1,558)
cash in the period
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in 3,042 (7,580) (1,558)
cash in the period
Cash outflow from 805 330 618
decrease in debt and
lease financing
Cash outflow/(inflow) 16 (533) (677)
from
decrease/(increase) in
liquid resources
Change in net debt 3,863 (7,783) (1,617)
resulting from cash
flows
Hire purchase (1) - -
commitments on
acquisition of
subsidiary
Inception of finance - (107) (195)
leases
Deferred consideration (220) (540) (540)
Movement in net debt 3,642 (8,430) (2,352)
in the period
Opening net debt (9,248) (6,896) (6,896)
Closing net debt (5,606) (15,326) (9,248)
Notes
1 The interim report was approved by the board on 25 February 2003.
2 The figures for the six months ended 30 November 2002 and 30 November 2001 are unaudited. These figures
have been prepared using accounting policies consistent with those adopted in the 2002 annual report and
accounts.
3 The results for the year ended 31 May 2002 are an abridged version of the statutory accounts for that
period on which the auditors gave an unqualified report and which have been filed with the Registrar of
Companies.
4 The group's turnover and profit before tax arise from one class of business, construction.
5 The taxation charge is calculated by applying the estimated effective annual tax rate to the profit for the
period.
The tax assessed for the period is higher than the standard rate of corporation tax in the United Kingdom as
a result of expenses not deductible for tax purposes and interest charges and losses in joint venture companies
not utilised.
6 The interim dividend of 2.0p per share (2001 : 2.0p per share) will be paid on 10 April 2003 to shareholders
on the register at 14 March 2003.
7 For the six months ended 30 November 2002, earnings per share (basic and diluted) have been calculated on
#704,000 (2001 : #841,000) profit after taxation and 20,358,000 (2001 : 20,800,000) shares in issue. The
number of shares used in the calculation has been reduced at 30 November 2002 for the 442,000 shares
held in the Employee Share Trust. Basic and diluted earnings per share are the same as the company has
no dilutive options or other dilutive potential ordinary shares.
8 Reconciliation of operating profit to net cash inflow/(outflow) from operating activities:
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May 2002
2002 2001
#'000 #'000 #'000
Operating profit 1,727 1,350 4,694
Depreciation charge 712 840 1,648
Amortisation of 117 123 213
goodwill
Profit on sale of fixed (51) (174) (98)
assets
Amounts written off fixed - - 75
assets investments
Decrease/(increase) in stocks and 3,898 (1,490) 4,967
work in progress
(Increase)/decrease in (2,871) 215 (276)
debtors
Increase/(decrease) in 3,014 (3,662) (4,034)
creditors
Net cash inflow/(outflow) from 6,546 (2,798) 7,189
operating activities
9 On 25 October 2002, the group acquired the entire share capital of Pipeline Drillers Limited, a
company specialising in contract drilling and boring services, activities complementing those of the group's
existing subsidiary company, Avoidatrench Limited. The consideration of #1,277,000 (including professional fees)
was satisfied by the issue of loan notes of #220,000 and #824,000 in cash, with a further cash payment of
#233,000 deferred until 25 October 2005.
The profit after taxation of Pipeline Drillers Limited for the 15 month period to the date of
acquisition was #406,000. The profit after taxation for the year ended 31 July 2001 was #118,000.
The acquired operation made no significant contribution to group profit or cash flow in the
period to 30 November 2002.
The assets and liabilities of Pipeline Drillers Limited acquired were as follows:
Fair value
#'000
Tangible fixed assets 168
Current assets
Stocks 13
Debtors 316
Deposits 451
Total assets 948
Creditors
Borrowings 1
Other 310
Total liabilities 311
Net assets 637
Purchased goodwill 640
1,277
Satisfied by:
Cash 800
Deferred consideration - loan notes 220
Deferred consideration - contingent 233
Professional fees 24
1,277
The directors consider that the book value of assets and liabilities acquired are not materially different
from their fair value. The contingent deferred consideration is payable on 25 October 2005 subject to
conditions precedent.
10 Copies of this interim report are being sent to shareholders on 26 February 2003. Further copies of the
interim report are available from the Company Secretary, Pochin's PLC, Brooks Lane, Middlewich, Cheshire, CW10
0JQ.
This interim report will also be available on the group's website (www.pochins.plc.uk).
This information is provided by RNS
The company news service from the London Stock Exchange
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