28th Sep 2005 15:39
Pochin's PLC28 September 2005 Highlights Profit before tax increased 14% to £5.8m.Turnover at record high of £96.1m.Dividend up 10% to 7.6p.Diluted earnings per share increased by 8% to 16.5p.Net assets increased to £50.0m.Pochin Homes returns its first profit to the group.Concrete pumping wins "Plant Hirer of the Year" for the third time.Healthy order book for 05/06. Enquiries: John H WoodcockJohn EdwardsPochin's PLC 01606 833 333 Philip DaviesRichard ThompsonCharles Stanley & Co. Limited 020 7739 8200 CHAIRMAN'S STATEMENT Results and dividends We are celebrating our 70th year with record results and I am pleased toannounce a growth in turnover to £96.1m (2004: £65.9m) and a 14% increase inpre-tax profits to £5.8m (2004: £5.1m). A final dividend of 5.1p per share(2004: 4.65p) is proposed giving a total dividend for the year of 7.6p (2004:6.9p), a 10% increase on the previous year. Operations Property and joint ventures The property division had an excellent year. In particular our major developmentsite at Crewe Green is progressing well, where I am pleased to report the sale, on 23 September 2005, of a 790 student bedroom project occupied by ManchesterMetropolitan University. This sale will make a strong contribution to theresults for the current financial year. I indicated at the interim stage that we were in the process of selling a number of properties. I am pleased to reportthat these planned disposals have now been achieved contributing an operating profit of £3.3m to the overall result. Speculative office units have been completed on Midpoint 18 in Middlewich, themajority of which have been sold. We are now proceeding with the second phasecomprising offices and some industrial units. Pochin Homes Limited is at an early stage in its planned growth strategy andcompleted 28 sales in the year, contributing a small profit to the group. Thisis an encouraging performance from the division and, not withstanding a generalslowdown in the housing market, we anticipate sales of 78 homes in the currentyear. Keele Park Developments Limited has now completed its third building andlettings are proceeding. This building has been designed for use by healthtechnology (med-tech) companies and has received grant funding from AdvantageWest Midlands. In light of the continued success at Keele, we are proceedingwith the construction of a fourth building. Our policy of forming joint venture companies to expand our developmentactivities is ongoing and recent commitments include an office development inHeald Green, Manchester, a refurbishment scheme for a block of apartments inLiverpool, and a town centre redevelopment in Birkenhead, with plans for a75,000 square feet food retail unit. Although we do not anticipate theseimmediately reflecting in group profits, we are confident they will come tofruition over the next few years. Manchester Technopark Limited has had a difficult year, but I am pleased toreport that further lettings in one building have been completed in the secondhalf, thereby reducing the overall amount of vacant space in the development by29% and increasing the rent roll by £220,000 p.a., equivalent to c.50% of totalrental capacity. Negotiations are underway with other potential occupiers. Contracting The strategy to seek larger projects has proved worthwhile with an increase inturnover, from £48.9m to £59.2m. Profits were up by 10.6% to £864,000, althoughthere was a reduction in margin due to higher than anticipated costs ofcompleting certain projects. The order book is looking very healthy with £68m ofwork secured into the current year, including a high proportion of repeatbusiness from existing clients. Management has been strengthened during the year and is focused on animprovement in margins. The major student accommodation project for ManchesterMetropolitan University in Crewe was completed to a demanding timetable and I amdelighted to record this great team effort. I am also pleased to congratulatethe division on receiving an industry award for high standards of quality and aRoSPA Gold Award for site safety. Construction services I am pleased to report that construction services has improved its profitperformance by £1.2m in the year. However, this was a challenging year for thedivision. Avoidatrench Limited and Pipeline Drillers Limited were seriouslyaffected by a lack of infrastructure works across the country and the concretepumping division had a disappointing final quarter as workload became scarce. This downturn, reflected in a fall in the number of jobs carried out, continuedinto the first three months of the current year, although I am able to reportthat there have been signs of improvement in the latest weekly sales levels. Despite these uncertain times, the quality of the division has been recognisedand I congratulate everyone involved in winning the Contract Journal "Plant Hirerof the Year" Award for the third time, in addition to achieving RoSPA safety awards for Cheshire Concrete Products (gold), Avoidatrench Limited (gold)and Pochin Concrete Pumping (silver). Board and senior management changes In accordance with the group's planned strategic development and board evolutionpreviously reported I am pleased to announce the appointments of three newdirectors to the board. I am pleased to welcome John Edwards, following his appointment on 22 Septemberas group finance director. John is a Fellow of The Chartered Institute ofManagement Accountants and joined the group as company secretary on 1 August2005. I would also like to welcome two new non-executive directors, Nicholas Fry andMichael Chadwick, who were both appointed with effect from 22 September 2005. It is the intention that Nicholas Fry, as an independent non-executive director,will succeed William Underwood as chairman of the audit committee next year.Michael Chadwick is a substantial shareholder in the company and we therefore donot regard him as an independent non-executive director, however he brings withhim a wealth of experience from within our industry that I am sure will prove tobe invaluable to the group. Andrew Waugh, our former company secretary, has moved on to pastures new. Iwould like to thank him for his contribution to the company over the last fouryears and to wish him well in his future career. Employees I would like to recognise the invaluable contribution made by everyone acrossthe group and to express my sincere thanks to my fellow directors and to allemployees for their enormous efforts. Without their outstanding energy, effortand enthusiasm across every department these excellent results would not havebeen achieved. Prospects Looking to the future we are entering a new financial year having completed thedisposal of the major development at Crewe and with further strong developmentopportunities, a healthy contracting order book and, despite some softening inthe housing market, there is the expectation of further growth in Pochin HomesLimited. The construction services division is operating in a difficult marketbut is well placed to take full advantage of any upturn. We are continually reviewing its operations to ensure that it will make satisfactory returns over the longer term. I am confident that we are well positioned for the challenges ahead and lookforward to reporting further progress in this coming year. Consolidated Profit and Loss AccountFor the year ended 31 May 2005 2005 2004 Notes £'000 £'000------------------------------------ ------- -------- -------- TurnoverGroup and share of joint ventures 96,750 78,307Less: share of joint ventures (624) (12,397) -------- -------- 2 96,126 65,910 -------- -------- Continuing operations 89,566 65,910Acquired operations 3 6,560 - -------- -------- 96,126 65,910 Cost of sales (82,121) (58,178) -------- --------Gross profit 14,005 7,732 Operating expenses (11,133) (8,931)Other operating income 5 3,633 3,359 -------- -------- Operating profitContinuing operations 5,177 2,160Acquired operations 3 1,328 - -------- -------- 6,505 2,160 Share of operating (loss) / profit in joint (177) 3,270venturesShare of operating profit in associates 496 365 Net interest (1,020) (715) -------- --------Profit on ordinary activities before taxation 2 5,804 5,080 Tax on profit on ordinary activities 6 (2,422) (1,938) -------- --------Profit on ordinary activities after taxation 3,382 3,142 Equity minority interests (27) (28) -------- --------Profit for the financial year 3,355 3,114 Dividends 7 (1,581) (1,435) -------- --------Retained profit for the year 1,774 1,679 -------- -------- Earnings per share (basic) 8 16.6p 15.3pEarnings per share (diluted) 8 16.5p 15.3p The above figures are for continuing operations. Statement of Total Recognised Gains and LossesFor the year ended 31 May 2005 2005 2004 £'000 £'000----------------------------------------------- -------- -------- Profit for the financial year 3,355 3,114 Unrealised surplus / (deficit) on revaluation of 2,409 (104)investment properties - groupUnrealised surplus on revaluation of investment properties 50 -- joint ventures -------- --------Total recognised gains and losses for the year 5,814 3,010Prior year adjustment 1 (607) - -------- --------Total gains recognised for the year 5,207 3,010 -------- -------- Note of Historical Cost Profits and LossesFor the year ended 31 May 2005 2005 2004 £'000 £'000------------------------------------------ -------- -------- Reported profit on ordinary activities before taxation 5,804 5,080 Realisation of revaluation surpluses of previous years - 378 242groupRealisation of revaluation surpluses of previous years - - 641joint venturesDifference between historical cost depreciation charge and 40 155depreciation charge based on revalued amounts -------- --------Historical cost profit on ordinary activities before 6,222 6,118taxation -------- -------- Historical cost profit retained for the year after 2,192 2,717taxation, minority interests and dividends -------- -------- Consolidated Balance SheetAs at 31 May 2005 2005 2004 (restated) Notes £'000 £'000-------------------------- ------- -------- -------- Fixed assetsIntangible assets 1,164 443Tangible assets 38,253 32,466Investments Joint venturesShare of gross assets 10,286 20,228Share of gross liabilities (6,006) (11,182)Goodwill 925 988 -------- -------- 5,205 10,034Associates 2,585 2,547Other 2,157 2,157 -------- -------- 9,947 14,738 -------- -------- 49,364 47,647 -------- -------- Current assetsStocks and work in progress 38,251 20,077Debtors 22,583 11,342Investments and deposits 12,901 10,776Cash at bank and in hand 5 4 -------- -------- 73,740 42,199 -------- -------- Creditors: amounts falling due within one yearBorrowings (37,604) (23,313)Trade and other creditors (19,262) (15,485) -------- -------- (56,866) (38,798) -------- -------- Net current assets 16,874 3,401 -------- --------Total assets less current liabilities 66,238 51,048 Creditors: amounts falling due after more thanone year Borrowings (10,570) (695)Other creditors - (233) -------- -------- (10,570) (928) Provisions for liabilities and charges (2,020) (1,714) Accruals and deferred income (3,675) (2,441) -------- --------Net assets 2 49,973 45,965 -------- -------- Capital and reservesCalled up share capital 5,200 5,200Own shares (847) (607)Revaluation reserve 10,848 8,807Profit and loss account 34,549 32,357 -------- --------Equity shareholders' funds 49,750 45,757 Equity minority interests 223 208 -------- -------- 49,973 45,965 -------- -------- Consolidated Cash Flow StatementFor the year ended 31 May 2005 2005 2005 2004 2004 Notes £'000 £'000 £'000 £'000 -------------------------------- ------- ------- ------- ------- -------Net cash (outflow) / inflow from 9 (8,726) 2,804operating activities Income received from joint ventures 284 528 Returns on investments and servicingof financeInterest received 396 289Interest paid (807) (427)Interest paid on finance leases (79) (34) ------ ------ Net cash outflow from returns on (490) (172)investments and servicing of finance TaxationUK corporation tax paid (2,052) (1,191) Capital expenditure and financialinvestmentPurchase of tangible fixed assets (3,677) (4,627)Receipt of government grants 585 605Sale of tangible fixed assets 827 835 ------- ------- Net cash outflow from capital (2,265) (3,187)expenditure and financial investment Acquisitions and disposalsPurchase of subsidiary undertaking 3 (2,741) (13)Net cash on purchase of subsidiary 3 2,972 -undertakingIncrease in interest in joint ventures (1,602) (1,531)and associatesPurchase of goodwill and tangible 4 (2,445) -fixed assetsPurchase of other fixed asset - (657)investmentPurchase of own shares (240) - ------- ------- Net cash outflow from acquisitions and (4,056) (2,201)disposals Equity dividends paid (1,487) (1,352) -------- ------- Net cash outflow before financing and (18,792) (4,771)management of liquid resources Management of liquid resourcesCash withdrawn at call and short (1,275) (161)notice ------- ------ Net cash outflow from management of (1,275) (161)liquid resources FinancingNew loan capital 11,000 800Repayment of loan capital (4,832) (510)Repayment of principal under finance (192) (224)leases and hire purchase contracts ------- ------ Net cash inflow from financing 5,976 66 -------- -------Decrease in cash in the year (14,091) (4,866) -------- ------- Reconciliation of net cash flow tomovement in net debt---------------------------------- Decrease in cash in the year (14,091) (4,866) Cash inflow from increase in debt and (5,976) (66)lease financingCash outflow from increase in liquid 1,275 161resources --------- -------Change in net debt resulting from cash (18,792) (4,771)flows Inception of finance leases - (275)Bank loans acquired with subsidiary (4,098) -Deposits acquired with subsidiary 850 13 --------- -------Movement in net debt in the year (22,040) (5,033) Opening net debt (13,228) (8,195) --------- --------Closing net debt (35,268) (13,228) --------- -------- Notes 1 Basis of preparation The financial information has been prepared in accordance with applicable accounting standards and under the historical cost convention except that certain tangible fixed assets are shown at their revalued amounts. The accounting policies have remained unchanged from the previous year apart from the adoption of UITF38 which results in a prior year adjustment and the restatement of certain figures. 2 Turnover, profit before taxation and net assets Segmental analysis of the results is set out below: Turnover Profit / (loss) before tax Net assets 2005 2004 2005 2004 2005 2004 (restated) £'000 £'000 £'000 £'000 £'000 £'000 By activity: Group: Contracting 59,185 48,927 864 781 (1,898) (3,177) Construction 18,691 15,625 111 (1,085) 9,424 8,249 services* Property 18,250 1,358 5,756 2,333 22,346 16,043 Group management cost - - (975) (723) - - Group interest** - - 262 682 12,311 12,269 -------- ------- ------- ------ ------- ------- 96,126 65,910 6,018 1,988 42,183 33,384 -------- ------- ------- ------ ------- ------- Joint ventures and associates*** Property - joint 624 12,397 (458) 2,962 5,205 10,034 ventures Property - associates - - 244 130 2,585 2,547 ------- -------- ------- ------- ------ ------- 624 12,397 (214) 3,092 7,790 12,581 ------- -------- ------- ------- ------ ------- ------- -------- ------- ------- ------ ------- Totals 96,750 78,307 5,804 5,080 49,973 45,965 ------- -------- ------- ------- ------ ------- Turnover, profits before tax and net assets are derived from operations within the United Kingdom. * Construction services operations include plant hire, concrete block manufacture and trenchless technology services. ** Borrowings and related interest charges are included under each activity only where they are identifiable with that activity, principally property. Group interest includes group investments, cash resources and those borrowings that are not readily identifiable with individual activities. *** Borrowings and related interest charges in joint ventures and associates are included under property activities. 3 Acquisition of subsidiary undertaking On 31 May 2004, the group owned 75% of the ordinary share capital of Bushwing Plc which, due to the nature of the shareholders agreement governing the operations of Bushwing Plc, was included on the balance sheet at 31 May 2004 as a joint venture. On 4 June 2004 the group acquired the remaining 25% ordinary share capital of Bushwing Plc for a cash consideration of £2,398,000 (including professional fees) and settlement of loan accounts of £343,000. The assets and liabilities of Bushwing Plc acquired were as follows: Book value Adjustments Fair value £'000 £'000 £'000 Tangible fixed assets 2,226 410 2,636 Current assets Stocks 4,663 2,060 6,723 Debtors 4,503 - 4,503 Cash at bank and in hand 2,972 - 2,972 Deposits 850 - 850 ------- ------- ------- Total assets 15,214 2,470 17,684 ------- ------- ------- Creditors Other 4,153 - 4,153 Borrowings 4,098 - 4,098 Corporation tax 872 - 872 Deferred tax 16 420 436 ------- ------- ------ Total liabilities 9,139 420 9,559 ------- ------- ------ ------- ------- ------ Net assets 6,075 2,050 8,125 ------- ------- ------ Goodwill 483 Net assets included in investment in joint ventures as at 31 May 2004 (5,867) ------ 2,741 ------ Satisfied by: Cash 2,375 Settlement of loan accounts 343 Professional fees 23 ------ 2,741 ------ Bushwing Plc made the following contribution to, and utilisation of, group cashflow: Net cash outflow from operating activities (8,455) Returns on investment and servicing of finance 32 Taxation (992) Capital expenditure and financial investment 3,244 ------- Decrease in cash in the period (6,171) ------- Net cash inflow in respect of the purchase of Bushwing Plc: Cash consideration 2,375 Settlement of loan accounts 343 Professional fees 23 Cash at bank and in hand (2,972) ------- (231) ------- Turnover and operating profit The amounts shown include the following in respect of the acquisition of Bushwing Plc: Turnover 6,560 Cost of sales (4,051) Operating expenses (1,181) ------- Operating profit 1,328 ------- 4 Other acquisition On 18 June 2004, the group acquired the concrete pumping business of Balfour Beatty Group Limited, Raynesway Concrete Pumping, for a cash consideration of £2,445,000 (including professional fees) representing £1,800,000 in respect of tangible fixed assets and £645,000 in respect of goodwill. The Raynesway acquisition was successfully integrated into the business of Pochin Plant Limited and the directors are of the opinion that its financial impact cannot be assessed on its own. 5 Other operating income 2005 2004 £'000 £'000 Income from property 3,612 3,086 Profit on disposal of land and buildings 21 273 ------ ------ 3,633 3,359 ------ ------ 6 Tax on profit on ordinary activities 2005 2004 £'000 £'000 The tax charge is based on the profit for the year and comprises: United Kingdom corporation tax at 30% (2004 : 30%) 2,322 706 Adjustments in respect of prior years 9 32 Share of tax charge of joint ventures 1 1,164 Share of tax charge of associates 80 11 ------- ------- 2,412 1,913 Deferred tax 10 25 ------- ------- 2,422 1,938 ------- ------- The tax assessed for the period is higher than the standard rate of corporation tax in the United Kingdom. The differences are explained below: 2005 2004 £'000 £'000 Profit on ordinary activities before taxation 5,804 5,080 ------ ------- Profit on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 30% (2004 : 30%) 1,741 1,524 Effects of: Expenses not deductible for tax purposes 262 282 Impact of fair value adjustment 300 - Non taxable income in period (31) (86) Capital allowances for period in excess of (106) (8) depreciation Other short term timing differences 96 (17) Adjustments to tax charge in respect of previous years 9 32 Losses not utilised 141 186 ------- ------- Current tax charge for the year 2,412 1,913 ------- ------- 7 Dividends 2005 2004 £'000 £'000 Interim paid - 2.5p (2004 : 2.25p) 520 468 Final proposed - 5.1p (2004 : 4.65p) 1,061 967 ------- ------- 1,581 1,435 ------- ------- Dividend record date : 7 October 2005. If the dividend is approved, warrants will be posted on Monday, 7 November 2005, and paid on Tuesday, 8 November 2005. 8 Earnings per share The calculation of earnings per share (basic and diluted) is based on group profit after taxation and minority interests of £3,355,000 (2004 : £3,114,000) and the 20,800,000 ordinary shares of 25p in issue at 31 May 2005 and 31 May 2004. The number of shares used in the calculation has been reduced at 31 May 2005 for the 589,000 (2004 : 442,000) shares held in the Employee Share Trust. Basic earnings per share is 16.6p (2004: 15.3p). The assumed conversion of dilutive options increases the number of shares by 94,000 (2004: 47,000) shares and so diluted earnings per share decreases to 16.5p (2004: 15.3p). 2005 2004 Weighted Weighted average average Earnings no. of shares Per share Earnings no. of shares Per share £'000 000 p £'000 000 p Basic EPS 3,355 20,262 16.6 3,114 20,358 15.3 Effect of share - 94 0.1 - 47 - options ------- ------- ------- ------- ------- -------- Diluted EPS 3,355 20,356 16.5 3,114 20,405 15.3 ------- ------- ------- ------- ------- -------- 9 Reconciliation of operating profit to net cash (outflow) / inflow from operating activities: 2005 2004 £'000 £'000 Operating profit 6,505 2,160 Depreciation charge 1,576 1,482 Amortisation of goodwill 407 280 Profit on sale of fixed assets (94) (393) Increase in stocks and work in progress (9,025) (4,207) (Increase) / decrease in debtors (6,738) 1,120 (Decrease) / increase in creditors (1,357) 2,362 ------- -------- Net cash (outflow) / inflow from operating activities (8,726) 2,804 ------- -------- 10 Additional information (i) The financial information set out in this announcement does not constitute the company's statutory accounts for the years ended 31 May 2005 and 2004. The figures for year ended 31 May 2005 and 31 May 2004 are extracted from the statutory accounts which contain an unqualified audit report and which did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The 31 May 2004 accounts have been filed with the Registrar of Companies, however, the 31 May 2005 accounts are yet to be filed. (ii)The Annual General Meeting will be held at the company's offices at Brooks Lane, Middlewich, Cheshire at 12.00 noon on Friday, 4 November 2005. The full report will be posted to shareholders on 6 October 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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