24th Sep 2007 07:01
Pochin's PLC24 September 2007 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 PLCDavid Shaw, Chief Executive 01606 833 333John Edwards, Finance Director Charles Stanley SecuritiesPhilip 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 withthe interim dividend of 3.0p (2006: 2.75p), will total 9.25p (2006: 8.75p) forthe full year. It is pleasing to be able to report a good outcome for the year following theprevious year's outstanding results. The Property division has again made themajor contribution, and improved performances from the Contracting andResidential divisions have combined to produce a sound result. As reported in the interim statement, the group has taken action to reduce thedeficit in the final salary scheme. The welcome support of all stakeholders tothe revised benefits, together with cash contributions from the group andmovements in forecasted investment returns, have combined to produce a credit inthe year. This has principally benefited the Contracting and ConstructionServices divisions, where most of the scheme's members are employed. This is my first Annual Report and Accounts statement to the shareholders ofPochin's PLC, following my appointment as Chairman on 1 January this year. Asthe group's first non-executive chairman, I have been well supported by my boardcolleagues and in particular by David Shaw, the group's Chief Executive. Inlearning about the various activities undertaken by the four main divisions, Ihave been struck by the high standards of service which Pochin's offers to itsclients, by the proper regard which it pays to the issues of health & safety inthe workplace and by its commitment as a responsible and considerate employer.These qualities stem from the values of the founding families who remain closelyinvolved with the company, despite its being listed on the Stock Exchange forover forty years. From a recent exercise carried out by the Contractingdivision, the following extracted feedback from clients is instructive: "Pochin's is a respected long established contractor with a reputation forhonesty, reliability, and good work.... small enough that every job counts butlarge enough to handle multi-million pound projects .... a family orientatedbusiness with a hands on approach at senior level". While these comments applied to the Contracting division, they succinctlydescribe the style of the group as a whole. The reports of the Chief Executive and the Finance Director set out in detailthe achievements of the year. In summary, the Contracting division has shownimproved results with margins up on the previously inadequate level, whilst theConstruction Services business, in competitive market conditions, has yet todemonstrate a similar performance. Property investment and developmentactivities made another strong contribution, and the relatively new Residentialdivision made further progress during the year. Even greater determination toimprove margins in Contracting and Construction Services will be necessary forthe group to sustain acceptable levels of profitability, particularly in themore difficult climate for commercial property generally. Dramatic recent events in financial markets make commenting on the group'scurrent prospects unusually perilous. Specifically, a valuable planningpermission at Ellesmere, Shropshire, should prove particularly beneficial duringthe year, and proposals for the expansion of Midpoint 18, Middlewich, which arethe subject of a planning application, offer significant opportunities for thefuture. Generally, the adverse movement in property yields, resulting largelyfrom the re-pricing of credit risk, is likely to mean that the Property divisionwill be operating in significantly tougher conditions. The strength of thevarious joint venture relationships, highly valued by the division, will standthe group in good stead in these changed circumstances, as will the goodrelations enjoyed with suppliers, professional advisors, and The Royal Bank ofScotland, 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 ofthe group's balance sheet, and assuming reasonable economic conditions, Pochin'slooks 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 activitiesand, on behalf of the board and shareholders, I would like to thank allemployees for their considerable part in achieving the year's results. Richard FildesChairman24 September 2007 Chief Executive's Review Overview Pochin's PLC operates in the property and construction sectors. The groupcomprises four divisions: - Property- Contracting- Construction Services- Residential Property activities are focused in the North West and North Wales, and areconducted both wholly within the group and also within joint ventures. Thegroup has continued its balanced approach to portfolio management and todevelopment opportunity, based on a spread across the group's geographical areaof operations and across commercial, industrial and retail projects. Contracting activities centre on our ability to work in partnership withclients, subcontractors and suppliers throughout the North West and North Waleswhilst focusing on the management of risk and the maintenance of quality andvalue. Construction Services activities are based on the hire of concrete pumps tocustomers in the UK and on the internal hire of general plant to the Contractingdivision. Residential activities are concentrated in the North West, and continue toexpand 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 ismore a reflection of the disposal last year of a single significant developmentrather than any decline in activity. In fact, our property activities have expanded. The value of investmentproperty, owned by the group or by joint ventures, now totals £68m, withcorresponding debt of £26m. Property developments currently in progress have acarrying value of £78m and corresponding debt of £53m. During the year, a 30.5 acre plot on our Midpoint 18 development, here inMiddlewich, was sold to The Midpoint Partnership, (in which Pochin DevelopmentsLimited has retained a 25% interest). The partnership has recently completedthe construction of a 350,000 sq.ft. high bay warehouse on the site, which isnow being marketed to national distribution operators. A planning application has been submitted for the development of the remainingland on Midpoint 18, Middlewich, including the provision of a long contemplatedby-pass extension. Further land assembly and considerable road andinfrastructure work will be necessary to bring this scheme to fruition in themedium term. Meanwhile, some smaller industrial units and offices have beenbuilt for sale or to let on the older part of the estate and these have provedsuccessful. Planning permission has been obtained for a mixed use scheme on a 34 acre siteadjacent to the town centre in Ellesmere, Shropshire. A new entrance road andassociated infrastructure work must be provided, but there is alreadyencouraging interest from national housebuilders and food retail operators. At Crewe, the next phase of the Gateway scheme is being considered, a smallretail scheme now being fully let. A nearby site of 5.5 acres on the CreweGates Business Park has been acquired and development is under way with a hoteland a phased office scheme. The fourth and final building at Keele University Science Park has beencompleted by Keele Park Developments Limited and is already fully occupied.Demand for the laboratories built into the previous building has notmaterialised and we are reviewing the Science Park's Medtech strategy with KeeleUniversity and Advantage West Midlands Development Agency. Joint ventures Further investment in the group's partnership with UK Land & Property Limitedhas resulted in a number of schemes being taken forward throughout the NorthWest and North Wales. Some new schemes will commence in the current financial year but, in the yearunder review, the main feature was a substantial investment in the acquisitionand refurbishment of Horton House in Liverpool city centre. With over 120,000sq.ft. of office space and associated ground floor retail and underground carparking, this represents a landmark opportunity in an outstanding location. Therefurbishment was completed after the year end and over two thirds of the totalspace has already been let to good quality tenants. The success with Horton House has encouraged us to go ahead with our partner inacquiring, since the year end, the connected building named Walker House and toproceed with the refurbishment of that property. Walker House is considerablylarger than Horton House with over 230,000 sq ft of office space but thedecision was underpinned by the securing of a substantial pre-let, under anAgreement for Lease, to a government department for some 30% of the total space. The partnership's development at Hawarden Business Park has continued with theconstruction of a speculative 25,000 sq.ft. unit, which has now been let.Planning permission has been obtained for the next phase of developmentinvolving a total of 140,000 sq.ft. of industrial space. The Park has beensupplemented by the acquisition of an adjoining 22 acres of land. The land andexisting hangar buildings on this site have been let for use as storage. Elsewhere in North Wales, the sale of apartments and commercial space by TrinityCourt Developments Limited at Holyhead Marina has proceeded steadily and thestrategic land holding at Deeside with Goodman International Limited (formerlyRosemound Developments Limited) is a longer term opportunity. The project with Castlewood Developments Limited in Birkenhead town centre isproceeding. Agreements with the local authority and a retail operator are stillto be finalised whilst planning issues are resolved. In Manchester Technopark Limited, lettings in Reynolds House were completedleading 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. Tradingprofits before the pension scheme credit have also improved significantly fromlast year to £0.8m (2006: £0.5m), reflecting the strong recovery in the secondhalf. The level of opportunities remains high and we have a strong order book of £64mfor the current year (2006: £62.0m). The division is particularly pleased tohave secured a £34m contract for the redevelopment of the former policeheadquarters in Chester, awarded by HQ Chester Limited, which will be spreadover two years. Much of our work in the year has been derived as a result of our closerelationships with previous clients. 50% of our turnover again came from repeatbusiness and 77% percent from partnered or negotiated contracts (2006: 70%). Considerable investment has been made in new management information systems andcost/value reconciliation procedures have been overhauled. We remain keen to retain client satisfaction and surveys indicate our continuingsuccess, with an average 92% rating (2006: 90%). We are also pleased to reportthat the division received two awards in recognition of our high standards ofconstruction and workmanship with regards to projects carried out in Cheshireand North Wales. Construction Services Following the decision to dispose of several non-core businesses at the end oflast year, the division has focused on its concrete pumping hire operations.Support management has been reorganised and new processes introduced to enable agreater customer focus within the business. Consolidation in the concrete market has adversely affected the operationalmodel for the Pumi fleet. With a number of machines being returned from theready-mix operators and with evidently disproportionate costs and resourcesrequired to run the fleet on our own account, management has concluded thatthese operations should be wound down. The costs associated with this decisionhave affected the divisional result for the year, masking the steady underlyingperformance of the mobile concrete pumping fleet. The rising cost of fuel has impacted on the underlying operating profit and thedivision 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 tocompete profitably. The group's commitment to national concrete pumping hire remains and isdemonstrated by the expansion of activity through a venture in Northern Irelandand the introduction of a 63 metre boom concrete pump to the fleet in September2007. Residential The division has done well to retain its growth in a difficult market. It sold69 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 theHalifax House Price Index average for the North West of £152,500 and below theequivalent average on the website Rightmove of £180,500. Despite increasing competition for land acquisition, the division has increasedits land bank to 136 plots with full planning permission and a further 66 plotssecured awaiting planning permission. The division has adopted a policy over the next 5 years to introduce energy andenvironmental features in future developments by way of a step-change to achievethe required standards of energy efficiency by Year 2013 in advance of thesestandards 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 harmfulimpact of our activities. Health and Safety All divisions report to the director responsible for health and safety on amonthly basis to ensure that all matters are properly addressed. We strive continuously to raise the profile and importance of health and safetyissues throughout the group. During the year we achieved a 25% reduction in allaccidents. It is pleasing to report that this trend has been continuous overthe last five years despite a significant increase in turnover. Following the success of the Construction Services, division the Contractingdivision has made good progress towards receiving formal accreditation to OHSAS18001 (Occupational Health and Safety). External auditors have confirmed thatwe operate a sound management system and we expect to achieve certificationlater in the year. Awareness is critical in matters relating to health and safety and we regularlyissue circulars and bulletins to our employees. We also provide significanttraining to improve knowledge and understanding. For example, we distributedover 3,000 safety rules and guidance booklets to our employees, and those of oursubcontractors, during the year. The Contracting and Construction Services divisions introduced updated inductionfilms to refresh the presentation of our safety culture to individuals who maynot have worked with us before. The films are available in a number oflanguages to cater for an increasing number of foreign workers. The Construction Services division is pleased to be associated with the recentpublication and adoption of a new British Standard (BS 8476) for the safeoperation of concrete pumps. The new standard formalises and replaces thepreviously voluntary code of practice written principally by ourselves and theContractors Plant Hire Association in 2003. This is a major step forward inimproving 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 anticipationof government legislation which will make this a statutory requirement in thenear future. We have adopted the Department for Business, Enterprise andRegulatory Reform voluntary code of practice. All senior managers within theContracting division have attended one or more workshops which have beenorganised with the help of government sponsorship over the last 12 months. Good progress has been made throughout the group in improving the accuracy ofdata collection for the reporting of environmental key performance indicators.In the meantime we have raised awareness of the relevant issues and highlightedthe importance of energy saving, recycling and waste reduction in all areas. We are increasingly involving ourselves in the construction of more energyefficient buildings and the use of sustainable building products. We aredeveloping an environmental checklist for the use of our design teams at theoutset of new projects. All of our construction sites are registered with theConsiderate Constructors Scheme and we achieved many certificates of compliancewith their standards throughout the year. Awareness is again a critical factor in improving environmental performance andwe have introduced appropriate signage at the entrance to all constructionsites, so that it is clearly visible alongside the traditional health and safetyguidance. The updated induction film introduced by our Construction Servicesdivision also includes specific guidance on environmental matters to all usersincluding customers and subcontractors. Our Residential division is taking active steps to meet new standards in housingconstruction in advance of their compulsory implementation. In a further effort to reduce waste we are proposing to increase our use ofelectronic communication including the publication of future annual reports onour website. People We are pleased to report that during the year our Contracting division wasofficially recognised as an "Investor in People". This followed a rigorousassessment 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 somekey positions, we have nevertheless continued to strengthen our resources tomatch our increasing workload. Many of our employees have had to cope this year with the disruption and extrawork caused by the introduction of a new management information and accountingsystem. They dealt with this challenge admirably and we wish to thank them fortheir hard work and patience. The health of our employees is very important to us and this year we introducedregular site visits by a qualified nurse who is available privately to advise onany 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 ShawChief Executive24 September 2007 FINANCIAL REVIEW Trading Results Total group sales were £116.6m (2006: 124.3m) resulting in a profit before taxfor the year from continuing operations of £9.1m (2006: £9.4m). Growth wasachieved from Contracting, Construction Services and Residential divisions. Theunderlying performance of Property remains strong although the division did notimprove on its prior year performance, which last year was dominated by theexceptional contribution from the sale of the student accommodation project atCrewe. The Contracting division showed a healthy growth of 10% in activity, completinga 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 operatingperformance and a one off net gain of £1.6m following changes made to pensionfund 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 developmentactivity and property investment income. It continued to invest in schemes bothwithin the group and through joint ventures for delivery of profit in futureyears. Construction Services division generated sales of £14.2m (2006: £13.8m) showinga modest underlying growth of 3%. At the same time it continued itsrestructuring programme to focus on its core activity of concrete pumping. Itgenerated a profit before tax of £0.1m (2006: £0.1m loss), after one offrestructure 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 69units (2006: 48 units) which produced a turnover of £11.0m (2006: £7.7m) and aprofit 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 theeffective tax rate to 24.8% (2006: 37.8%) and had a positive effect on earningsper share. Subject to approval at the AGM, a final dividend of 6.0p per share (2005: 6.0p)will be paid on 2 November 2007. This will result in a full year dividend of9.0p per share (2006: 8.75p) and shows an annual increase of 2.9%. Dividendcover is 3.6 times (2006: 2.0 times). This apparent higher level of cover isdistorted 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 248pper share (2006: 220p). Investment in properties owned by the group increased by £1.6m to £43.0m. Newadditions included a fourth business unit at Keele Park and retail units inCrewe. Investments in joint ventures and associates increased by £1.9m to £13.4mfollowing the group's participation in the acquisition of Horton House,Liverpool. Development work in progress increased by £10.4m driven by the growth inresidential activity and a major investment in the development of the formercreamery site at Ellesmere in Shropshire. In accordance with IAS19 the pension deficit of £0.6m (2006: £5.2m) is includedin 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 conservativeprinciples 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 2006Operating activities 5.2 25.8Interest 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 - 0.5Other - (0.1) _____ _____Net cash movement (£m) (2.8) 7.0 Long term borrowing commitments of £9.2m (2006: £9.5m) include remainingbalances on acquisition loans and the principle sum outstanding on the fundingfor Keele Park Developments Limited where repayment commences in 2008. Therewere no new long-term borrowing arrangements made in the year, although therewas a specific, short-term development loan of £10m arranged to facilitate thepurchase of the land at Ellesmere. Joint Ventures and Investments The group has continued its commitment to the development of future businessthrough its strategic relationships with joint venture partners. During 2007the group's net investment in joint ventures and associated companies increasedto £13.4m (2006: £11.5m). As in previous years, the group has taken a prudentapproach in writing down, where appropriate, initial investment values toreflect the risk associated with fluctuations in timescales and projectedoutcomes on certain projects. The impact of these adjustments in the year is acharge to operating expenses of £1.5m (2006: £2.5m). As at 31 May 2007 the principal joint venture and associate interests of thegroup are in Castlewood Developments (Birkenhead) Limited (£3.8m), PochinRosemound (Deeside) Limited (£2.1m), Hawarden Business Park Limited (£0.9m),UKLP Developments Limited (£1.0m), Manchester Technopark Limited (£1.1m), UKLPExchange Flags Limited (£1.5m), Lincoln House Properties Limited (£1.4m) andManchester House Properties Limited (£0.6m). The group continues to have investment interests in Manchester Science ParkLimited (£1.5m) and UK Land & Property Limited (£0.7m). The group also hasinterests in The Prosperity Court Partnership and Keele Park DevelopmentsLimited, which are treated as subsidiaries in these accounts, both having thirdparty minority interests that are reflected in the income statement. Pensions The group operates a defined benefit scheme (DB scheme) and a definedcontribution scheme for its employees. The DB scheme has been closed to newmembers since 31 December 2001. The last full actuarial valuation of that schemewas carried out on 1 July 2005 and updated on an approximate basis on 31 May2007. The next full valuation is scheduled for 1 July 2008. To ensure the long term viability of the DB scheme and to protect the benefitsof its members, last year the group proposed a number of changes to the benefitsof members together with an additional contribution of £1.2m to the scheme'sfund. 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 2006and the balance of £0.7m paid in December following the approval of the benefitchanges. Total contributions paid in the year to the DB scheme, including the specialcontribution, were £1.2m (2006: £1.0m). The DB scheme also benefited from favourable movements in investment values andbond yields during the year, which when combined with reduced benefitliabilities 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 balancesheet and the movement in the year reflected in the income statement and thestatement of recognised income and expense. Financial Instruments The group uses financial instruments, which include cash, loans and variousliquid resources, such as trade debtors and trade creditors, arising directlyfrom its operations. The main purpose of these financial instruments is tofinance the cost of the group's operations. The ongoing operations of the group are principally funded through a mixture ofretained profits and bank borrowings. Funding availability and the managementof interest rates and liquidity risks are the responsibility of the FinanceCommittee, which is responsible to the board for implementing the group'streasury policy. The group continues to have minimal exposure to foreign currency exchange risksand accordingly does not require a policy to hedge such exposure. The group has minimal fixed rate borrowings and continually reviews the need tohedge against interest rate movements. The only interest rate hedge enteredinto by the group is in respect of borrowings in Keele Park DevelopmentsLimited. 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 £0.5mhas been recognised in the income statement of the group. Certain associated companies are financed by long term repayment loans tofinance investment property assets and other joint venture companies arefinanced by short term bank borrowings. The group regularly reviews the risk ofexposure 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 forthe first time. John EdwardsFinance Director24 September 2007 Consolidated income statementFor the year ended 31 May 2007 2007 2006 £'000 £'000Continuing operations Revenue 116,554 124,295Cost of sales (102,219) (104,096)Gross profit 14,335 20,199 Operating expenses (10,621) (14,343)Other operating income 3,839 3,212Gains on revaluation of investment properties 707 509Operating profit 8,260 9,577Share of profit/(loss) after taxation in joint 45 (379)venturesShare of profit after taxation in associates 241 153Finance income 2,081 1,898Finance cost (2,212) (1,866) Profit before taxation 9,135 9,383Taxation (2,270) (3,551)Profit for the year from continuing operations 6,865 5,832 Discontinued operationsLoss for the year from discontinued operations (59) (2,094) Profit for the year 6,806 3,738Attributable to:Equity holders of the company 6,775 3,708Minority interest 31 30Retained profit for the year 6,806 3,738 Earnings per share (basic) 33.4p 18.4pEarnings per share (diluted) 33.2p 18.2pEarnings per share (basic) from continuing 33.6p 28.8poperationsEarnings per share (diluted) from continuing 33.4p 28.5poperationsDividend proposed for the year 6.0p 6.25p Consolidated statement of recognised income and expenseFor the year ended 31 May 2007 2007 2006 £'000 £'000Actuarial gains/(losses) on defined benefit 1,028 (834)pension schemeDeferred taxation on pension scheme deficit (310) 250Net income/(expense) recognised directly in 718 (584)equityProfit for the financial year 6,806 3,738 Total gains recognised since last year 7,524 3,154Attributable to:Equity holders of the company 7,493 3,124Minority interest 31 30 7,524 3,154 Consolidated balance sheetAs at 31 May 2007 2007 2006 £'000 £'000Non current assetsIntangible assets - 323Property, plant and equipment 4,400 9,544Investment properties 41,090 34,923Investments Joint ventures 11,414 9,128 Associates 2,037 2,378 Other 2,157 2,157 15,608 13,663Total non current assets 61,098 58,453Current assetsInventories 35,638 26,215Trade and other receivables 19,283 19,931Cash and cash equivalents 223 791Corporation tax recoverable 55 -Assets classified included in disposal group - 990Total current assets 55,199 47,927Current liabilitiesTrade and other payables 24,202 17,948Corporation tax - 1,245Bank loans 10,618 815Bank overdrafts 11,409 18,672Financial derivatives - 174Liabilities included in disposal groups - 665Total current liabilities 46,229 39,519 Net current assets 8,970 8,408Non current liabilitiesBank loans 9,207 9,536Retirement benefit obligation 577 5,179Deferred tax liabilities 2,413 1,422Long term provisions 1,632 1,050Other payables 4,757 3,856Total non current liabilities 18,586 21,043 Net assets 51,482 45,818Shareholders' equityShare capital 5,200 5,200Own shares (954) (954)Revaluation reserve 240 270Retained earnings 46,785 41,093Equity shareholders' funds 51,271 45,609Minority interest 211 209Total equity 51,482 45,818 Consolidated cash flow statementFor the year ended 31 May 2007 2007 2007 2006 2006 £'000 £'000 £'000 £'000Net cash from operating activitiesOperating profit for the year 8,260 9,577Depreciation charge 908 1,381Impairment of intangible assets 323 547Charge in respect of share based payments 41 54Profit on sale of fixed assets (243) (313)Gains on revaluation of investment properties (707) (509)Provision against investments in joint ventures 1,500 2,516Income from joint ventures and associates 246 44 Operating profit before changes in working 10,328 13,297capital(Increase)/decrease in inventories (9,423) 14,079Decrease/(increase) in receivables 1,638 (3,438)Increase in payables 2,611 1,842 5,154 25,780Interest paid (2,212) (1,866)Income taxes paid (2,414) (3,469) Net cash from operating activities 528 20,445Investing activitiesInterest received 2,801 1,898Disposal of businesses - 527Purchase of investment properties - (4,473)Purchase of property, plant and equipment (1,880) (3,789)Proceeds from sale of property, plant and 728 808equipmentReceipt of government grants 150 427Repayment of government grants - (237)Increase in interest in joint ventures and (3,234) (6,831)associatesPurchase of shares by EST - (107)Net cash used in investing activities (11,777) (1,435) Financing activitiesProceeds 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 InternationalFinancial Reporting Standards. The Board of Directors approved the preliminary announcement on 20 September2007. The announcement represents non-statutory accounts within the meaning of section240 of the Companies Act 1985. The statutory annual accounts for the year ended31 May 2007, upon which an unqualified audit opinion has been given and whichdid not contain a statement under section 235, 237 (2) or 237 (3) of theCompanies 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 operatingbusiness segments: Contracting, Property, Residential and Construction Services. As operations are carried out entirely within the UK, there is no secondarysegmental 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 RevenueExternal sales 82,755 8,613 11,004 14,182 - 116,554Inter-segment sales 1,201 - - 928 - 2,129Eliminations (1,201) - - (928) - (2,129)Total revenue 82,755 8,613 11,004 14,182 - 116,554 Segment resultOperating profit/(loss) 2,108 6,468 752 154 (1,222) 8,260Share of results of joint - 286 - - - 286ventures and associatesNet finance income/(cost) - 658 - (69) - 589Profit/(loss) before taxation 2,108 7,412 752 85 (1,222) 9,135Taxation (2,270)Profit for the year from 6,865continuing operations Year ended 31 May 2007 Discontinued operations Contracting Property Residential Construction Group Group Services management Total £'000 £'000 £'000 £'000 £'000 £'000 Segment resultOperating loss - - - (534) - (534)Taxation 475Loss for the year from (59)discontinued operations The loss on discontinued activities which has arisen in the year has resultedfrom costs incurred in the current year in respect of activities discontinued inthe prior year. Year ended 31 May 2007 Contracting Property Residential Construction Elimination Group Services of inter Total segment items £'000 £'000 £'000 £'000 £'000 £'000 Asset and liabilitiesSegment assets 25,553 90,865 11,789 7,797 (33,158) 102,846Investment in equity accounted - 13,451 - - - 13,451joint ventures and associatesSegment assets 25,553 104,316 11,789 7,797 (33,158) 116,297Segment liabilities 19,864 39,919 3,137 1,461 (33,158) 31,223Borrowings - 23,102 7,843 289 - 31,234Taxation 82 1,787 225 264 - 2,358Net assets 5,607 39,508 584 5,783 - 51,482 Other informationCapital expenditure 331 1,253 - 296 - 1,880Depreciation 78 93 - 737 - 908Impairment of investment in - 1,500 - - - 1,500joint venturesImpairment of inventories - 207 - - - 207Impairment of intangible assets - - - 323 - 323 Borrowings and taxation are reported within segments as, in the opinion of thedirectors, this gives a more accurate utilisation of the group's assets andliabilities. Year ended 31 May 2006 Continuing operations Contracting Property Residential Construction Group Group Services management Total £'000 £'000 £'000 £'000 £'000 £'000 RevenueExternal sales 67,317 35,443 7,738 13,797 - 124,295Inter-segment sales 9,085 - - 1,066 - 10,151Eliminations (9,085) - - (1,066) - (10,151)Total revenue 67,317 35,443 7,738 13,797 - 124,295 Segment resultOperating profit/(loss) 123 9,836 499 4 (885) 9,577Share of results of joint - (226) - - - (226)ventures and associatesNet finance income/(cost) - 135 - (103) - 32Profit/(loss) before taxation 123 9,745 499 (99) (885) 9,383Taxation (3,551)Profit for the year from 5,832continuing operations Year ended 31 May 2006 Discontinued operations Contracting Property Residential Construction Group Group Total Services management £'000 £'000 £'000 £'000 £'000 £'000 RevenueExternal sales - - - 6,490 - 6,490Inter-segment sales - - - 152 - 152Eliminations - - - (152) - (152)Total revenue - - - 6,490 - 6,490 Segment resultOperating 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 groupTaxation 105Loss for the year from (2,094)discontinued operations Year ended 31 May 2006 Contracting Property Residential Construction Elimination Group of inter Total Services segment items £'000 £'000 £'000 £'000 £'000 £'000 Asset and liabilitiesSegment assets 19,393 86,747 6,541 10,484 (28,291) 94,874Investment in equity accounted - 11,506 - - - 11,506joint ventures and associatesSegment assets 19,393 98,253 6,541 10,484 (28,291) 106,380Segment liabilities 16,467 33,035 2,974 4,687 (28,291) 28,872Borrowings - 25,166 3,400 457 - 29,023Taxation (686) 3,313 97 (57) - 2,667Net assets 3,612 36,739 70 5,397 - 45,818 Other informationCapital expenditure 37 7,661 - 564 - 8,262Depreciation 44 109 - 1,228 - 1,381Impairment of investment in - 2,516 - - - 2,516joint venturesImpairment of inventories - 570 - - - 570Impairment of intangible assets - 386 - 161 - 547 Earnings per share (continuing activities) The calculation of earnings per share (basic and diluted) for continuingactivities is based on group profit after taxation from continuing activitiesand minority interests of £6,834,000 (2006: £5,802,000) and the 20,800,000ordinary shares of 25p in issue at 31 May 2007 and 31 May 2006. The number ofshares 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 pershare are 33.6p (2006: 28.8p). The assumed conversion of dilutive optionsincreases the number of shares by 118,000 (2006: 169,000) shares and so dilutedearnings per share decreases to 33.4p (2006: 28.5p). 2007 2006 Weighted Weighted average average no. of no. of Earnings shares Per share Earnings shares Per share £'000 000 p £'000 000 p Basic EPS 6,834 20,313 33.6 5,802 20,154 28.8Effect 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 yearending 31 May 2007 of 6.25p per share. It will be paid on 2 November 2007 toshareholders who are on the register of members on 5 October 2007. The finaldividend 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 toshareholders on 3 October 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Pacific Global