TIDMPCH
RNS Number : 3361P
Pochin's PLC
30 September 2011
Pochin's PLC
Preliminary Results for the year ending 31 May 2011
Pochin's PLC ("Pochin" or "the group") the construction and
property group announces its preliminary results for the year
ending 31 May 2011.
Chairman's statement
The group result for the year ended 31 May 2011 shows a profit
on continuing activities before taxation of GBP0.7m (2010
re-presented: GBP13.7m loss). Additionally, there was a loss before
taxation on discontinued activities of GBP4.8m (2010: GBP2.9m
loss). The directors do not recommend the payment of a final
dividend.
It is pleasing to report a return to profit on continuing
activities, albeit modest and partly arising from the favourable
resolution of previously estimated liabilities.
In assessing the performance of the group during the year,
regard has to be given to the economic climate in the region in
which the group principally operates, namely North West England,
and to the general conditions pertaining to the property and
construction industries. With the single exception of the London
area, there has been no recovery in commercial property values
during the year, and the level of activity in the construction
industry has been recently stated by the Office of National
Statistics to be at its lowest for 30 years. In the North West,
commercial rental values are weak and falling in some areas,
notably in retail property. Flagging occupier demand lies behind
this trend, and it continues to result in low levels of privately
funded development activity. Few schemes can be appraised as profit
making, and fewer still can be undertaken speculatively as a result
of bank funding being, understandably, available only on the
strictest criteria. These restricting influences in the private
sector combine with the much publicised retrenchment of publicly
funded infrastructure projects to make for tough conditions for the
group's principal activities. Deflationary forces continue to stalk
the property industry and, with the prevailing moods of anxiety and
pessimism, they are unlikely to be successfully resisted without
some form of renewed fiscal or monetary stimulus.
It is in this context that the decision was taken during the
year to dispose of the group's concrete pumping subsidiary. It has
been loss making for many years, and although acknowledgement
should be given to the efforts in recent times to bear down on
costs and to the successfully increased levels of plant
utilisation, the economic conditions described above do not permit
its continuation as a core group activity. This gives rise to
considerable uncertainty for the 118 employees engaged in this
activity and great thanks are due to them for their commitment
during the year to improve the division's performance in
increasingly competitive market conditions. It is therefore
re-assuring to be able to report that discussions with a
prospective purchaser of the concrete pumping corporate entity have
reached an advanced stage.
For this reason, the results for the division have been treated
as a discontinued activity in the accounts, and best estimates of
the costs of the proposed disposal have been provided for in the
balance sheet at the year end. As a result, the 2010 results have
been re-presented.
The decision to dispose of the concrete pumping business will
return the group to its original model of combining building and
construction with (principally commercial) property investment and
development. In the year to 31 May 2011, although construction
turnover fell significantly, its contribution to the group's
results did not deteriorate markedly thanks to careful estimating
and tight cost control. Valuable contracts of acceptable size and
margin continue to be won, and current clients include Rolls Royce,
Nestle,Liberty Properties and Robinsons Brewery. The group retains
its good reputation for quality building and reliable service in
the region. It continues to work closely and successfully with an
established group of subcontractors and professional advisers who
support the in-house team, and all parties have risen to the
challenge of winning and successfully completing construction
contracts in a fiercely competitive market. These combined efforts
are greatly appreciated.
The group's core commercial property investment portfolio
continues to perform steadily with few voids and solid rental
income. Traditionally this has underpinned a degree of profitable
development activity which, as outlined above, current conditions
do not permit. Commercial and residential land values have fallen
over the last three years, and there will come a point where
profitable development becomes viable once again. Meanwhile the
group's land bank is largely retained, being valued in the accounts
at the lower of cost or net realisable value. It should eventually
enable the resumption of the profitable development activity which
has served the group well in the past.
In my statement last year, and in subsequent updates, references
were made to the financial exposure arising in our joint venture
activities. It is of some comfort to be able to report that the
principal liabilities, namely those which arose from the group's
involvement in the two large refurbished Liverpool office
properties, and in an office scheme at Heald Green, Manchester,
have now been settled and accounted for as at the year end.
Having now achieved the resolution of the joint venture
liabilities, to secure the group's stability and a resumption to
overall profitability it remains necessary to complete the proposed
disposal of the concrete pumping business. In addition, the
disposal of a number of non-core properties is being targeted so
that a more appropriate level of gearing may be restored to the
balance sheet, which inevitably reflects the exposure to
speculative development, largely in joint venture, committed some
years ago in buoyant market conditions. It is right here to
acknowledge the steadfast support of the group's principal bankers,
The Royal Bank of Scotland PLC, who have worked closely with the
group while it adjusts to the imperatives of the market in which it
operates.
In recent months significant steps have been taken to ensure
that the group is best placed to weather the economic storm which
continues to gather. In particular, the settling of the main joint
venture liabilities and the proposed sale of the concrete pumping
business will each help to secure a sound future for the core
activities. Inevitably and regrettably, the prevailing conditions
make for unsettling times for employees and inadequate returns for
shareholders. The continuing loyal support of all stakeholders is
greatly appreciated.
Richard Fildes
Chairman
30 September 2011
Business review
Group overview
The construction and property markets in which the group
operates have seen little or no improvement during the year. The
recent UK Construction Purchasing Managers' Index survey has
confirmed the slowing of growth in the construction sector and
property values remain subdued, again with limited signs of
recovery.
With these factors in mind, the policy of exiting joint ventures
to reduce group liabilities has continued. The concrete pumping
division has been recognised as no longer core to group activities
and negotiations to dispose of the business are well advanced. In a
similar way, speculative residential developments are no longer
being pursued. The legacy schemes within the residential division
are now controlled by the property division.
The continued downturn in the construction sector had an adverse
effect on group revenues in the year, with turnover down by 10% to
GBP59.3m (2010 re-presented: GBP65.7m). Turnover in the
construction division fell by 32% to GBP41.6m (2010: GBP61.0m),
however it is reassuring to report that it has a firm order book of
GBP53.0m secured at the date of this report. The property division,
benefiting from the sale of the Birkenhead site, had a turnover of
GBP14.7m (2010: GBP1.2m). Despite the reduced turnover, net profit
before tax, excluding the pumping division, was GBP0.7m (2010:
re-presented GBP13.7m loss). This was chiefly due to improving
margins on current contracts, successful completion of existing
projects and a significantly reduced requirement for further
impairments.
GBPm Continuing Discontinued Total 2011 2010
---------------------------- ----------- ------------- ----------- -------
Operating profit/(loss)
- own 3.8 (1.2) 2.6 0.6
Operating profit/(loss)
- joint ventures 0.7 - 0.7 (1.9)
Property revaluations (0.1) - (0.1) 0.5
Impairment of investments (2.7) - (2.7) (11.2)
Impairment of inventories (0.8) - (0.8) (3.5)
Costs of
restructure/remeasurement (0.2) (2.6) (2.8) (0.7)
Cost of disposal - (1.0) (1.0) -
---------------------------- ----------- ------------- ----------- -------
Group profit/(loss) before
taxation 0.7 (4.8) (4.1) (16.2)
Staff levels have reduced during the year in line with the
reduced turnover and the number of employees fell by 15% to 262 at
the year end (2010: 308). Despite this reduction, the group has
retained its core skills and capabilities to allow it to continue
to provide a first class service to its customers. This is evident
in the group's strong reputation and the volume of repeat business
secured from our loyal clients. The core values of the group remain
unchanged and it is these that will provide the platform for a
better focused, restructured group in the future. As always,
employees remain the key asset to the group and they have shown
their continued support to the group in testing times. The group
looks forward to being able to repay that support as and when
markets recover.
Group outlook
The actions taken in the last year in reducing outstanding
liabilities and the proposed disposal of the concrete pumping
business will leave the group better placed to control its future.
A more streamlined group will be able to focus on the core
activities of property (development and investment) and
construction, without the distraction of legacy issues and loss
making entities. The strong reputation and capabilities of these
two businesses will allow the group to leverage opportunities from
existing and new clients, with the intention of seeking out further
opportunities for growth in other parts of the UK through existing
client relationships. The restructured group will allow it to be
more flexible, responsive and better able to capitalise on
opportunities as the market recovers.
Divisional review
Construction
Following a positive start to the year, the construction
division suffered from reduced turnover as contracts secured when
the market was more buoyant came to an end and were not replaced.
Some previously secured contracts never started on site as
customers either withdrew or delayed the start date for various
reasons, including lack of funding and constraints on planning.
Public sector clients delayed projects before and after last year's
government spending review in anticipation of the unknown or as a
result of cuts in public spending. The reduction in turnover was
therefore due mainly to the reduction in public sector work.
However, as a result of the good relationships maintained with
private sector clients, approximately 80% of work secured in the
current financial year will be from the private sector.
Although total turnover fell to GBP41.6m (2010: GBP61.0m), as a
result of good final account negotiations on completed contracts
and improved margins on current contracts the division delivered a
profit of GBP0.2m before restructuring costs of GBP0.2m. The result
also reflected the good mix of clients and lack of dependency on
any one particular sector, which also provides for a balanced
portfolio moving forward.
As part of the division's growth strategy, work has been
tendered and secured out of traditional areas, including a
residential redevelopment at Hyde Park, London, industrial premises
for Nestle in Buxton and a retail store at Egham, Surrey. Current
tendering opportunities also include a project for student
accommodation in Edinburgh.
The special projects team has continued to grow and having
profitably completed approximately GBP3.5m of work last year, it
has in excess of this figure already secured in the current
financial year.
Despite difficult trading conditions, the business has
maintained its reputation for excellence in performance and this
has been acknowledged by a RoSPA Gold Award for safety, a CSS
National Site "Considerate Contractor" Silver Award and winning the
2011 Insider Property North West "Contractor of the Year"
Award.
Property (including Residential)
Due to continued uncertainty in the property market, there have
been no speculative development schemes and a commitment only to
limited investment where an end user and exit strategy are in
place.
Following the sale of the retail scheme at Birkenhead, a number
of smaller retail schemes have been secured during the year.
The investment portfolio, consisting of over 40 income
generating properties located in the North West and North Wales,
was valued at the year end at GBP33.0m (2010: GBP29.1m). The
increased value during the year is attributable to acquiring full
control of Lincoln House Properties Limited and Manchester House
Properties Limited (previously held in joint venture). Investment
properties have been valued at the same levels as prior years by
the directors having regard to property yields data for the region
supported by advice obtained by external professional valuers. The
main focus has been on the good management and retention of tenants
and it is therefore pleasing to report that occupancy levels have
been maintained at 96%.
Throughout the year, assets have been sold in order to continue
to reduce debt and, at Ellesmere, sales to McCarthy & Stone,
Shropshire County Council and Bloor Homes have become
unconditional. Planning permission for Midpoint 18 Phase 3 has been
renewed and work continues on securing the Middlewich bypass in
order to create development and investment opportunities for the
future.
Some progress has been made during the year on residential
schemes by completing and selling units at Burslem and Winsford.
However, the market continues to be depressed and difficulties with
Homes and Communities Agency funding has meant that some affordable
housing schemes have been cancelled and land bank sales have been
slow. No new speculative work is being undertaken and completion of
historical residential schemes is being carried out within the
property division (including residential).
Of the joint ventures, Manchester Technopark Limited and Keele
Park Developments Limited continue to perform well given current
market conditions. Aside from these, other joint venture schemes
have struggled financially and therefore the focus has been to
extricate group involvement from these schemes. To this end,
agreements have been successfully concluded with external funders
to settle the guarantee liabilities associated with the schemes at
Heald Green, Manchester and Exchange Flags, Liverpool.
Since the year end, the group has acquired full control of UKLP
(BrynCegin) Limited, which has allowed the group to take full
control of the development of land at Park Bryn Cegin, Bangor. Good
progress has also been made at Hawarden Business Park, Deeside,
with further lettings achieved to Airbus.
The group's strategy remains to exit joint ventures on
acceptable terms wherever possible and to develop and manage new
opportunities through the group's own in-house property team.
The property division (including residential) made a net profit
before tax of GBP2.5m (2010: GBP13.0m loss).
Concrete Pumping
The continued downturn of the construction market and lack of
public sector funded infrastructure and utility projects led to a
further fall in revenues during the year, down to GBP8.8m (2010:
GBP9.1m). Further cost cutting measures were therefore introduced,
reducing the operating loss for the year to GBP1.2m (2010: GBP2.9m
loss). This was slightly worse than anticipated due to the severe
winter weather, when a loss of GBP0.3m was suffered in the month of
December 2010.
Every effort has been made to increase both job price and
utilisation and significant progress has been achieved in moving
from historic lows. Average job price for the year rose to GBP581
from GBP570 in the previous year and utilisation rose from 72% to
73%. Unfortunately, over capacity in the market has restricted
further improvement, although the current financial year is showing
better progress as more infrastructure and utility work is
commenced.
Despite the considerable efforts made to improve operating
performance, the concrete pumping division continues to be a cash
drain on the group's limited resources and as it is no longer
regarded as being a core business in the future strategy of the
group, it is being treated as a discontinued activity and a
business held for sale.
Results by division (before taxation)
GBPm Trading Adjustments* Total 2011 2010
------------------------- -------- ------------- ----------- ----------
Continuing Activities
Construction 0.2 (0.2) 0.0 0.7
Property (including
Residential) 6.2 (3.7) 2.5 (13.1)
Group (1.8) - (1.8) (1.0)
------------------------- -------- ------------ ----------- --------
4.6 (3.9) 0.7 (13.4)
Discontinued Activities
Concrete Pumping (1.2) (3.6) (4.8) (2.9)
------------------------- -------- ------------ ----------- --------
Group profit/(loss)
before taxation 3.4 (7.5) (4.1) (16.2)
*Adjustments represent restructuring costs and impairments
Earnings per share and dividend
Allowing for the result from discontinued operations the total
diluted earnings per share was
-16.9p (2010: -76.2p). Diluted earnings per share for continuing
operations was 4.6p (2010:
-62.3p).
No final dividend is proposed, consequently the dividend for the
full year is nil (2010: nil).
Balance sheet
Following provisions made for the disposal of discontinued
operations the net asset value reduced to GBP23.8m (2010:
GBP25.9m). This is equivalent to 117p per share (2010: 127p).
Investment property values increased to GBP33.0m (2010:
GBP29.1m) largely due to the addition of properties held in the
newly acquired subsidiaries of Lincoln House Properties Limited and
Manchester House Properties Limited, which had previously been held
in joint venture.
Investment in joint ventures and associates decreased by GBP5.8m
to GBP5.0m. This was in part due to the transfer out of the above
mentioned acquisitions and to further impairments and settlement of
outstanding liabilities in remaining joint venture interests.
Inventories reduced by GBP4.1m to GBP17.8m mainly as a result of
disposal of housing stock and a reduction in the number of active
construction projects.
Cash flow and borrowings
Cash generation and debt repayment remained the principal
financial focus during the year and although profitable trading was
restricted by the difficult market conditions, positive cash flow
was enhanced through further reductions in working capital and the
sale of non-income producing assets.
An overall reduction in net borrowings was achieved of GBP3.9m
(2010: GBP1.4m), with major movements summarised as follows:
GBPm 2011 2010
------------------------------ ------ ------
Operating activities 6.7 2.6
Joint ventures & investments (1.7) (2.0)
Net interest paid (1.0) (0.1)
Taxation (0.1) 0.9
------------------------------ ------ ------
Decrease in net borrowings 3.9 1.4
Going concern
During the year the group successfully concluded negotiations
with its principal banker, The Royal Bank of Scotland PLC (RBS), to
restructure its borrowing facilities. The aim of the restructure
was to ensure that the group is adequately and appropriately funded
to meet its forecasted obligations and cash requirements for the
foreseeable future. The new facilities at the year end comprised an
investment loan of GBP17.9m, asset disposal loans of GBP9.2m and an
overdraft/multi option facility of GBP4.1m. These facilities are
secured against assets in the business and are in place until March
2012.
Based on the latest forecasts for the restructured group,
further negotiations are in progress with RBS to extend its
facilities to 30 November 2012 and re-set covenants accordingly.
RBS have engaged independent external advisors who have recommended
the revised covenants and extended facilities are put to the credit
committee for approval; however this advice is subject to reaching
satisfactory arrangements in relation to the disposal of the
concrete pumping business.
Significant progress has been made by the directors towards
disposing of Pochin Concrete Pumping Limited and they are currently
in advanced discussions with a prospective purchaser of the
corporate entity. Notwithstanding these ongoing discussions, the
directors have also received confirmation from RBS of its intention
to continue to support the group through their existing funding
arrangement, subject to usual review and approval procedures, for a
period of 12 months from 30 September 2011.
During the period the group acquired 100% holdings in Manchester
House Properties Limited and Lincoln House Properties Limited
(previously 50% joint ventures). Loans of GBP1.7m associated with
these two companies are now recognised on the group balance sheet
and represent outstanding property mortgages with the Nationwide
Building Society.
At 31 May 2011 total group borrowings were GBP29.3m (2010:
GBP35.2m). Cash held on deposit was GBP6.3m (2010: GBP8.3m),
resulting in a net debt position of GBP23.0m (2010: GBP26.9m).
Treasury and financing risk
The group continues to fund its operations through the use of
cash, loans and various liquid resources such as debtors and trade
creditors. Treasury management is performed by the finance
department through implementation of the group's treasury policy,
which is the responsibility of the Finance Committee. This remit
includes development of relationships with principal funders,
management of interest rates and liquidity risk. The Finance
Committee is responsible to the main board.
The group has minimal fixed interest rate borrowings and reviews
the need to hedge against interest rate movements continually. A
three year swap arrangement fixing LIBOR exposure to 4.98% on
GBP15m of debt expired in March 2011. This now allows the group to
benefit across all of its facilities from the continued low
floating rate of LIBOR and in part compensates for the higher
commercial rates being charged by the banks.
The group continues to formally operate an effective interest
rate hedging policy, which states that the sole purpose of any
financial instrument employed by the group to fix interest rates is
to protect the group from fluctuations in interest rates charged on
its borrowings. As a consequence, any changes in the fair value of
such hedging instruments are recognised directly in equity and not,
unless deemed to be ineffective, through the income statement. Due
to expiry of a number of hedging facilities during the year there
was a favourable movement in financial derivatives of GBP0.6m
(2010: GBP1.3m). This is shown against hedge reserve in the group
balance sheet.
There remains both long term repayment loans and short to medium
term development borrowings relating to associated companies and
joint venture entities respectively, to which the group has
exposure. As a consequence, the group regularly reviews the risk of
exposure to interest rate movements with its partners and, where
appropriate, hedges against that risk on a project by project
basis.
The group continues to have minimal exposure to foreign currency
exchange risk and accordingly does not require a policy to hedge
such exposure.
Pensions
The group continues to contribute to the recovery plan agreed
with the Pensions Regulator for the now closed defined benefit (DB)
pension scheme. The next triennial valuation is due in November
2011.
As a result of a potential debt crystallising under section 75
of the Pensions Act 1995 on the sale of the concrete pumping
business, it will be necessary to apportion the pension liability
relating to
that business across the remaining group employers ahead of any
sale. Following consultation between the group and the scheme
trustees, the trustees have indicated their willingness in
principle to approve such an apportionment. Accordingly, the
liability has not been classified as held for sale.
Total contributions paid in the period to the DB scheme were
GBP0.1m (2010: GBP0.2m). Payments to the defined contribution
scheme were GBP0.4m (2010: GBP0.3m). The DB pension scheme
obligations
are shown in the group balance sheet and movement in the period
reflected in the income statement and statement of comprehensive
income. The actuarial deficit, calculated in accordance with IAS19,
is reported as GBP1.0m (2010: GBP2.7m).
Financial reporting
The consolidated financial statements have been produced in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU. There have been no changes to the IFRS
requirements this year that have a material impact on the group
results.
John Moss John Edwards
Chief Executive Group Finance Director
30 September 2011
Consolidated income statement
For the year ended 31 May 2011
2010
2011 (re-presented)
GBP'000 GBP'000
Revenue 59,283 65,725
Cost of sales (52,580) (64,617)
--------- ----------------
Gross profit 6,703 1,108
Operating expenses (8,501) (16,273)
Other operating income 2,891 3,242
(Losses)/gains on revaluation
of investment properties (135) 530
--------- ----------------
Operating profit/(loss) 958 (11,393)
Share of profit/(loss) after
taxation in joint ventures 587 (1,948)
Share of profit after taxation
in associates 87 121
Finance income 1,115 2,074
Finance cost (2,103) (2,235)
Profit/(loss) before taxation
from continuing operations 644 (13,381)
Taxation 289 702
--------- ----------------
Profit/(loss) for the year from
continuing operations 933 (12,679)
Discontinued Operations
Loss for the year from discontinued
operations (4,372) (2,829)
Loss for the year (3,439) (15,508)
--------- ----------------
Attributable to:
Equity holders of the company (3,477) (15,545)
Non controlling interests 38 37
--------- ----------------
Loss for the year (3,439) (15,508)
Basic and diluted earnings/(loss)
per share
from continuing operations 4.6p (62.3p)
from discontinued operations (21.5p) (13.9p)
--------- ----------------
Total (16.9p) (76.2p)
--------- ----------------
Consolidated statement of comprehensive income
For the year ended 31 May 2011
Group
2011 2010
GBP'000 GBP'000
Loss for the year (3,439) (15,508)
Other comprehensive income:
Actuarial gains and losses 1,521 (312)
Deferred tax on actuarial gains and
losses (449) 88
Cash flow hedging:
Current period fair value movement 1,662 4,613
Reclassification adjustment-disposal
of cash flow hedge (1,013) (3,322)
Deferred tax on cash flow hedging (350) (204)
Revaluation of property, plant and
equipment - 2,258
Total comprehensive income for the
year (2,068) (12,387)
--------- ---------
Attributable to non controlling interests 38 37
Attributable to equity holders of
the Company (2,106) (12,424)
--------- ---------
(2,068) (12,387)
--------- ---------
Consolidated statement of changes in equity
For the year ended 31 May 2011
Total
attributable
Share Own Revaluation Hedge Retained to owners of Non-controlling
capital shares reserve reserve earnings the parent Interest
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 June 2009 5,200 (745) 75 (2,520) 36,112 38,122 214
-------- -------- ------------ -------- --------- ------------- ----------------
Cost of share based
payments - - - - (5) (5) -
Equity dividend - - - - - - (32)
-------- -------- ------------ -------- --------- ------------- ----------------
Transactions with
owners - - - - (5) (5) (32)
-------- -------- ------------ -------- --------- ------------- ----------------
Loss for the year - - - - (15,545) (15,545) 37
Other comprehensive
income
Actuarial gains &
losses - - - - (312) (312) -
Deferred tax on
pension scheme
deficit - - - - 88 88 -
Realisation of
revaluation reserve
on disposal - - (68) - 68 - -
Revaluation of
property, plant and
equipment - - 2,258 - - 2,258 -
Cash flow hedging:
current period fair
value movements - - - 4,613 - 4,613 -
reclassification
adjustment-disposal
of cash flow hedge - - - (3,322) - (3,322) -
Deferred tax on cash
flow hedging - - - - (204) (204) -
-------- -------- ------------ -------- --------- ------------- ----------------
Total comprehensive
income for the
year - - 2,190 1,291 (15,905) (12,424) 37
-------- -------- ------------ -------- --------- ------------- ----------------
At 31 May 2010 5,200 (745) 2,265 (1,229) 20,202 25,693 219
-------- -------- ------------ -------- --------- ------------- ----------------
Cost of share based
payments - - - - (19) (19) -
Equity dividend - - - - - - (41)
-------- -------- ------------ -------- --------- ------------- ----------------
Transactions with
owners - - - - (19) (19) (41)
-------- -------- ------------ -------- --------- ------------- ----------------
Loss for the year - - - - (3,477) (3,477) 38
Other comprehensive
income
Actuarial gains &
losses - - - - 1,521 1,521 -
Deferred tax on
pension scheme
deficit - - - - (449) (449) -
Cash flow hedging:
current period fair
value movements - - - 1,662 - 1,662 -
reclassification
adjustment-disposal
of cash flow hedge - - - (1,013) - (1,013) -
Deferred tax on cash
flow hedging - - - - (350) (350) -
-------- -------- ------------ -------- --------- ------------- ----------------
Total comprehensive
income for the
year - - - 649 (2,755) (2,106) 38
-------- -------- ------------ -------- --------- ------------- ----------------
At 31 May 2011 5,200 (745) 2,265 (580) 17,428 23,568 216
-------- -------- ------------ -------- --------- ------------- ----------------
Consolidated balance sheet
As at 31 May 2011
2011 2010
GBP'000 GBP'000
Non current assets
Property, plant and equipment 3,808 4,648
Investment properties 32,980 29,116
Investments
Joint ventures 4,544 8,855
Associates 500 2,033
Available for sale 1,244 2,190
Deferred tax assets 1,939 1,946
--------- ---------
Total non current assets 45,015 48,788
--------- ---------
Current assets
Inventories 17,825 21,891
Trade and other receivables 12,107 12,618
Cash and cash equivalents 6,320 8,328
Corporation tax recoverable 319 305
Total current assets 36,571 43,142
Assets classified as held-for-sale 4,554 -
Total assets 86,140 91,930
--------- ---------
Current liabilities
Trade and other payables 28,960 25,956
Bank loans 9,277 12,904
Bank overdrafts 18,499 22,370
Financial derivatives - 621
Total current liabilities 56,736 61,851
Liabilities classified as held-for-sale 2,071 -
Net current liabilities (17,682) (18,709)
--------- ---------
Non current liabilities
Bank loans 1,565 -
Retirement benefit obligation 1,041 2,709
Other payables 943 1,458
--------- ---------
Total non current liabilities 3,549 4,167
--------- ---------
Total liabilities 62,356 66,018
--------- ---------
Net assets 23,784 25,912
--------- ---------
Equity
Share capital 5,200 5,200
Own shares (745) (745)
Revaluation reserve 2,265 2,265
Hedge reserve (580) (1,229)
Retained earnings 17,428 20,202
--------- ---------
Total shareholders' equity 23,568 25,693
Non-controlling interest 216 219
--------- ---------
Total equity 23,784 25,912
--------- ---------
Consolidated cash flow statement
For the year ended 31 May 2011
2011 2011 2010 2010
Re-presented Re-presented
GBP'000 GBP'000 GBP'000 GBP'000
Net cash from operating
activities
Loss for the year (3,439) (15,508)
Loss for the year from
discontinued operations 4,372 2,829
Income tax (289) (702)
Finance income (1,115) (2,074)
Finance cost 2,103 2,260
Share of profit/(loss) in
joint ventures and
associates (674) 1,827
Cash flow hedge movement
in joint ventures (15) (657)
Depreciation charge 289 160
Release of gain on bargain
purchase (1,175) -
Credit in respect of share
based payments (19) (5)
Profit on sale of
property, plant and
equipment (12) (4)
Profit on sale of
investment properties (57) (655)
Losses/(gains) on
revaluation of investment
properties 135 (530)
Provision against
investments in joint
ventures 1,537 4,215
Provision against
investment in other
investments 1,478 998
Income from joint ventures
and associates 298 53
Operating profit/(loss)
before changes in working
capital 3,417 (7,818)
Decrease in inventories 3,796 7,986
(Increase)/decrease in
receivables (1,997) 12,182
Increase/(decrease) in
payables 11,543 (7,765)
Cash flows used in
operating activities
(discontinued) (5,437) (1,910)
--------- -------------
11,322 2,675
Interest paid (1,036) (902)
Income taxes
(paid)/received (123) 874
Net cash from operating
activities 10,163 2,647
Investing activities
Interest received 26 792
Purchase of investment
properties (3,896) (2,645)
Purchase of property,
plant and equipment (26) (13)
Proceeds from sale of
investment properties 264 4
Proceeds from sale of
property, plant and
equipment 144 144
Purchase of subsidiary
undertakings (50) -
Net movement on disposal
of joint ventures - 649
Decrease/(increase) in
interest in joint
ventures and associates 10 (567)
Increase in interest in
other investments (532) (458)
Cash flows (used in)/from
investing activities
(discontinued) (1,005) 108
-------- -------------
Net cash used in investing
activities (5,065) (1,240)
Financing activities
Repayment of loans (3,915) (2,320)
Cash flows from financing
activities
(discontinued) 858 (58)
--------
Net cash used in financing
activities (3,057) (2,378)
Net increase/(decrease) in
cash and cash
equivalents 2,041 (971)
Cash and cash equivalents
at beginning of year (14,042) (13,071)
Cash and cash equivalents
at end of year (12,001) (14,042)
--------------------------- -------- --------- ------------- -------------
Cash and cash equivalents
at end of year
(continuing) (12,179) (14,195)
Cash and cash equivalents
at end of year
(discontinued) 178 153
Total (12,001) 14,042
--------------------------- -------- --------- ------------- -------------
Notes to the preliminary results
Basis of preparation
The preliminary announcement is prepared in accordance with
International Financial Reporting Standards, this announcement does
not itself contain sufficient information to comply with IFRS. The
accounting policies used in preparation of this preliminary
announcement have remained unchanged from those set out in the 2010
annual report. They are also consistent with those in the full
financial statements which have yet to be published.
The Board of Directors approved the preliminary announcement on
30 September 2011.
The financial information set out in this preliminary
announcement does not constitute the group's financial statements
for the years ended 31 May 2011 and 2010. The financial information
for the year ended 31 May 2010 is derived from the statutory
accounts for that year which have been delivered to the Registrar
of Companies. The statutory annual accounts for the year ended 31
May 2011, upon which an unqualified audit opinion has been given
and which did not contain a statement under sections 498 (2) and
498 (3) of the Companies Act 2006, will be sent to the Registrar of
Companies following the Company's annual general meeting.
Segmental information
Operating segments have been determined based on the reports
regularly reviewed by the group board which are used to make
strategic and operational decisions. The group board is considered
to be the CODM and reviews the segments based on the nature of the
services provided.
During the year, the group was organised into three operating
business segments based on the different services provided by each
division: Construction, Property and Residential. The residential
segment has been transferred to the construction division during
the period for operational purposes. The concrete pumping segment
has been classified as discontinued during the year and
comparatives re-presented.
As operations are carried out entirely within the UK, there is
no further consideration of information on geographical areas in
determining the groups operating segments. The measurements
policies used for segment reporting reflect those used for internal
reporting and for the group's financial statements. Inter-segmental
pricing is done on an arms length open market basis.
Total
Year ended 31 Group continuing Discontinued
May 2011 Construction Property Residential management operations operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 41,569 14,679 3,035 - 59,283 8,821
Inter-segment
sales 1,006 310 - - 1,316 67
Eliminations (1,006) (310) - - (1,316) (67)
------------ -------- ----------- ---------- ---------- ------------
Total revenue 41,569 14,679 3,035 - 59,283 8,821
Segment result
Operating
profit/(loss) 12 3,129 (403) (1,780) 958 (1,170)
Loss on
remeasurement
and cost of
disposal - - - - - (3,569)
Share of
results of
joint
ventures and
associates - 674 - - 674 -
Net finance
income/(cost) 18 (1,008) - 2 (988) (26)
------------ -------- ----------- ---------- ---------- ------------
Profit/(loss)
before
taxation 30 2,795 (403) (1,778) 644 (4,765)
------------ -------- ----------- ---------- ---------- ------------
Taxation 289 393
---------- ------------
Loss for the
year 933 (4,372)
---------- ------------
Within the construction segment, external sales of GBP18,250,000
arise from three customers that individually account for more than
10 percent of the entity's revenues; these are also considered to
be major customers.
Elimination of Total
inter-company continuing Discontinued
Construction Property Residential balances operations operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Asset and
liabilities
Segment assets 20,932 83,455 2,998 (30,843) 76,542 4,554
Investment in
equity accounted
joint ventures
and associates - 5,044 - - 5,044 -
------------ -------- ----------- --------------- ---------- ------------
Total assets 20,932 88,499 2,998 (30,843) 81,586 4,554
Segment
liabilities 14,781 75,074 1,273 (30,843) 60,285 2,071
Net assets 6,151 13,425 1,725 - 21,301 2,483
------------ -------- ----------- --------------- ---------- ------------
Other information
Capital
expenditure 26 - - - 26 1,149
Depreciation 67 63 - - 130 159
Provision against
investment in
joint ventures,
associates and
other
investments - 3,015 - - 3,015 -
Impairment of
inventories - 393 400 - 793 -
Year ended 31
May 2010
Total
Group continuing Discontinued
Construction Property Residential management operations operations
Re-presented GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 60,999 1,230 3,496 - 65,725 9,094
Inter-segment
sales 554 - - - 554 73
Eliminations (554) - - - (554) (73)
------------ -------- ----------- ---------- ---------- ------------
Total revenue 60,999 1,230 3,496 - 65,725 9,094
Segment result
Operating
profit/(loss) 730 (7,795) (3,298) (1,030) (11,393) (2,826)
Share of
results of
joint
ventures and
associates - (1,827) - - (1,827) -
Net finance
cost (39) (116) - (6) (161) (25)
------------ -------- ----------- ---------- ---------- ------------
Profit/(loss)
before
taxation 691 (9,738) (3,298) (1,036) (13,381) (2,851)
------------ -------- ----------- ---------- ---------- ------------
Taxation 702 22
---------- ------------
Loss for the
year (12,679) (2,829)
---------- ------------
Within the construction segment in 2010, external sales of
GBP23,384,000 arise from two contracts that individually account
for more than 10 percent of the entity's revenues.
Elimination
of Total
inter-company continuing Discontinued
Construction Property Residential balances operations operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment
assets 21,778 59,556 6,036 (10,952) 76,418 4,624
Investment in
equity
accounted
joint
ventures and
associates - 10,888 - - 10,888 -
------------ -------- ----------- ------------- ---------- ------------
Total assets 21,778 70,444 6,036 (10,952) 87,306 4,624
Segment
liabilities 16,085 54,303 3,556 (10,952) 62,992 3,026
Net assets 5,693 16,141 2,480 - 24,314 1,598
------------ -------- ----------- ------------- ---------- ------------
Other
information
Capital
expenditure 13 - - - 13 32
Depreciation 89 71 - - 160 49
Provision
against
investment
in joint
ventures and
other
investments - 5,213 - - 5,213 -
Impairment of
inventories - 691 2,858 - 3,549 -
Disposal group classified as held for sale
Pochin Concrete Pumping Limited has been treated as a
discontinued operation as the business is being sold as a going
concern and is expected to complete by 30 November 2011.
Consequently, the comparatives within the income statement have
been re-presented. The results of this operation are summarised
below:
2011 2010
GBP'000 GBP'000
Revenue 8,821 9,094
Cost of sales (8,007) (8,699)
--------- ---------
Gross profit 814 395
Operating expenses (1,996) (3,247)
Other operating income 12 26
--------- ---------
Operating loss (1,170) (2,826)
Finance income 192 -
Finance cost (218) (25)
--------- ---------
Loss from discontinued operations
before taxation (1,196) (2,851)
Tax credit 393 22
--------- ---------
Net operating result from discontinued
operations (803) (2,829)
Remeasurement and disposal of
assets held for sale
Loss on remeasurement and cost
of disposal (3,569) -
--------- ---------
Loss for the year from discontinued
operations (4,372) (2,829)
--------- ---------
Net cash flow from discontinued
operations
Net cash flow from operating activities (5,437) (1,910)
Net cash flow from investing activities (1,005) 108
Net cash flow from financing activities 858 (58)
--------- ---------
(5,584) (1,860)
--------- ---------
Net cash flow from discontinued
operating activities
Loss for the year (4,372) (2,829)
Income tax (393) (22)
Finance income (192) -
Finance cost 218 25
Depreciation charge 158 49
Profit on sale of property, plant
and equipment (12) (24)
--------- ---------
Operating cash flow before movement
in working capital (4,593) (2,801)
Decrease/(increase) in inventories 52 (53)
(Increase)/decrease in receivables (55) 383
(Decrease)/increase in payables (811) 571
Interest paid (30) (12)
Income tax received - 2
--------- ---------
(5,437) (1,910)
--------- ---------
Assets of disposal group classified 2011
as held for sale GBP'000
Property, plant and equipment 1,594
Inventories 218
Trade and other receivables 2,564
Cash and cash equivalents 178
---------
4,554
---------
Liabilities of disposal group
classified as held for sale
Trade and other payables 904
Obligations under hire purchase
agreements 962
Deferred tax 205
2,071
---------
Earnings per share
The calculation of earnings per share (basic and diluted) is
based on group loss after taxation and non-controlling interest of
GBP3,439,000 (2010: GBP15,508,000) and the 20,800,000 ordinary
shares of 25p in issue at 31 May 2011 and 31 May 2010. The number
of shares used in the calculation has been reduced at 31 May 2011
for the 440,500 (2010: 440,500) shares held in the Employee Share
Trust. The assumed conversion of dilutive options has no impact on
the number of shares and so diluted earnings per share is equal to
basic earnings per share.
2011 2010
Weighted Weighted
average Average
no. of no. of
Earnings shares Per share Earnings shares Per share
Continuing
operations GBP'000 '000 p GBP'000 '000 p
Basic EPS 933 20,360 4.6 (12,679) 20,360 (62.3)
Effect of
share
options - - - - - -
Diluted EPS 933 20,360 4.6 (12,679) 20,360 (62.3)
-------- -------- --------- -------- --------- ---------
2011 2010
Weighted Weighted
average Average
no. of Per no. of
Earnings shares share Earnings shares Per share
Discontinued
operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (4,372) 20,360 (21.5) (2,829) 20,360 (13.9)
Effect of
share
options - - - - - -
Diluted EPS (4,372) 20,360 (21.5) (2,829) 20,360 (13.9)
-------- -------- -------- -------- -------- ---------
2011 2010
Weighted Weighted
average Average
no. of no. of
Earnings shares Per share Earnings shares Per share
Total
operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (3,439) 20,360 (16.9) (15,508) 20,360 (76.2)
Effect of
share
options - - - - - -
Diluted EPS (3,439) 20,360 (16.9) (15,508) 20,360 (76.2)
-------- -------- --------- -------- --------- ---------
Dividends paid in the year
No dividends were paid during the year (2010: nil).
The Directors are not proposing a final dividend in respect of
the financial year ending 31 May 2011.
Post balance sheet event
Since the year end the company has increased its shareholding in
UKLP (BrynCegin) Limited to 100%.
Annual general meeting
The Annual General Meeting will be held at Mere Golf and County
Club, Knutsford, Cheshire at 10.30 a.m. on Thursday 3 November
2011. The full annual report will be posted to shareholders on or
before 12 October 2011. Copies will be available from the Company's
website (www.pochins.plc.uk).
Enquiries:
Pochin's PLC
John Moss, Chief Executive 01606 833 333
John Edwards, Finance Director
Charles Stanley Securities
Russell Cook/Carl Holmes 020 7149 6476
This information is provided by RNS
The company news service from the London Stock Exchange
END
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