29th Sep 2010 16:26
Pochin's PLC
Audited Annual Results for the year ending 31 May 2010
The Board of Pochin's PLC is pleased to announce the audited annual results for the year ending 31 May 2010.
Chairman's statement
In its principal activities of construction and commercial property investment the group performed creditably during the year, but the results have been affected by the need to take substantial provisions in relation to current and former joint ventures. In addition, the concrete pumping business has incurred significant losses and further write downs have been necessary in the value of residential work in progress. In the year to 31 May 2010, the group made a loss before taxation of £16.2m (2009: £9.4m), and again the directors are unable to recommend the payment of a final dividend.
The group's property assets have been valued at the year end by Knight Frank LLP. With the exception of the residential division, this external valuation has largely confirmed the group's book values. At the year end, the group's net asset value stood at £25.9m (2009: £38.3m) equivalent to 125p per share (2009: 184p per share). It should be noted that the group balance sheet does not incorporate the market valuation of land held for development, were it to do so, the net asset value per share would stand at 165p.
Given the sound performances from construction activities and the wholly-owned property portfolio, and reflecting the fact that most of the year's losses arise from the need to take provisions, it has been possible to reduce bank borrowings from £28.3m to £26.9m during the period.
Over the last two years, significant management changes and reductions in cost have been undertaken in the group's construction division. These enabled it to remain profitable in the difficult trading conditions which characterised the year and despite the anticipated reduction in turnover. The business review which follows this statement describes a number of the valuable contracts, and fine buildings, which were successfully completed during the year, and which have contributed to an acceptable result for the division.
By contrast, the concrete pumping division has been unable to contain the effect of over capacity in its market, which was exacerbated by the general reduction in public sector infrastructure activity during the period. Pochin Concrete Pumping remains the only national supplier of concrete pumps and can only maintain this service if clients are prepared to properly recognise its value. A significant re-organisation of this division has been undertaken since the year end.
The group's wholly-owned properties performed well in terms of both capital value and income generation with tenant occupancy increasing slightly from the previously high levels reported last year. This has been achieved in the face of generally weak occupational demand for commercial property and it speaks well for both the underlying quality of the portfolio and the diligence of the division's property management team. There has been little development of the group's considerable land holdings, given the less than propitious conditions prevailing in the regional commercial property market, though a number of small schemes have been successfully completed.
In the residential division, where the group continues to reduce its commitment, further losses have been suffered mainly in the form of value write downs of partially completed sites, and of building land. The group's remaining residential investments will now be managed within the construction and property divisions with a concomitant saving in overheads.
It is in the property joint ventures where most of the group losses have arisen, including a large development site in Birkenhead, now wholly-owned, but formerly jointly held. Contracts for the sale of this painfully assembled land have recently been exchanged on terms which have been designed to avoid further losses in the current year. Similarly, action has been taken in connection with two large refurbished properties in Liverpool where the group's joint venture partner has been unable to bear its share of the holding costs. This has been aggravated by the continuing significant level of void space referred to in the interim management statement. A conditional agreement has been entered into whereby Pochin's would be released from further involvement in these properties, the cost of which has been provided in the group's results.
Shareholders will be disappointed to learn, for the second successive year, of a considerable fall in the group's value. Although there was a significant upward revaluation of prime commercial property during the year, particularly in London, this improvement was much less marked in secondary stock, particularly in the regions. Here too, the problem of letting void space persists over the three sectors of retail, office and industrial property. This makes the performance of the group's owned portfolio the more noteworthy, but is unfortunately the context in which Pochin's is having to give support to large, only partially let, office developments. It is believed that the cost of these exposures has been accounted for.
In the group's trading activities, the losses on concrete pumping are now being stemmed but not yet eliminated. The re-organisation of this division, referred to above, involved the resignation of David Pochin who has served the company which bears his name for 22 years, of which 6 were as a director on the group board. David has many friends in the company and in the industry and I would like to wish him well for the future.
In previous statements, I have referred to the strength of the group's balance sheet and Pochin's well deserved reputation for the quality of its service. The former has been tested over the last two years but, given the action which has been taken in connection with the main problem areas described above, it should now be able to offer a firm platform to support the group's ongoing core activities.
The latter, namely the esteem with which Pochin's is held in construction markets, is helping to confirm the group's position in the region, and increasingly further afield, as a sound and reliable business with which to trade. The renewed concentration on the construction businesses, and on the focussed management of the commercial property portfolio, is supported by the group's bankers, The Royal Bank of Scotland, who have indicated their continuing support through the agreement of new facilities.
The corrective action taken over the last two years has been painful for both employees and shareholders. In that time, the number on the group payroll has reduced by more than a quarter, and in such circumstances both leavers and those who remain suffer in various ways. I would therefore like to thank all employees for their efforts and loyalty in a testing period. I would also like to thank shareholders for their patience while the group endeavours to restore its fortunes. Provided that the economic conditions in the UK do not deteriorate further, and that the forthcoming public sector cuts are not too damaging to the construction industry, it should now be possible for Pochin's to progress once again.
Richard Fildes
Chairman
29 September 2010
Business review
The trading conditions in the construction and property markets have not improved over the last year and the group's performance has been mixed across the divisions. The opportunity has therefore been taken to consolidate the business and focus on its core activities by exiting some joint ventures and dealing with legacy issues. This action has allowed the group to free itself of outstanding risks and liabilities, providing a stable financial platform on which to go forward.
The group continues to uphold its traditional values, which have allowed it to maintain the standards for which it is recognised in the industry. The group's skills and strengths have been utilised and adapted to match the ever changing markets, and that has maintained the group's reputation with our clients and stakeholders.
As the market changes, it is recognised that the key to the group's recovery lies with its biggest asset, its people. The group encourages the development of its staff and they in turn, even through these difficult times, remain enthusiastic and loyal, working to the group's core values. This will undoubtedly be the differentiator that will take the group forward as markets recover.
Group overview
Economic uncertainty, cuts in public spending and reduced mortgage availability all contributed to a further reduction in activity across the markets in which the group operates. In anticipation of these conditions persisting, the group took action to reduce its cost base. Staff numbers fell by 10% to 308 and total overheads were reduced by 18% in the year. Average gross margins were maintained in line with the prior year. However, in certain areas such as concrete pumping, where direct costs are largely fixed for the short term, the sharp decline in activity, down 27% for the group to £74.8m (2009: £102.0m), resulted in a reduced operating profit from its in-house activities of £0.6m (2009: £2.8m profit). The group continues actively to explore ways to further reduce its cost base without damaging its ability to generate new work.
In addition to reducing the cost base and maximising cash flow, the group's key objective in the period has been to extricate itself from certain joint venture projects and thereby protect itself from exposure to obligations and contingent liabilities that could prove materially damaging in future years. Significant progress has been made in these areas, which has resulted in substantial impairment provisions of £11.2m in operating expenses being charged in the period in addition to a £1.9m operating loss (2009: £3.1m loss) from joint venture and associate activity. This represents the principal reason behind the reported loss of £16.2m (2009: £9.4m).
|
|
2010 £m |
2009 £m |
|
|
|
|
|
Operating profit - own |
0.6 |
2.8 |
|
Operating (loss) - joint ventures and associates |
(1.9) |
(3.1) |
|
Property revaluations |
0.5 |
(3.2) |
|
Impairment of investments |
(11.2) |
(4.1) |
|
Impairment of inventories |
(3.5) |
(1.1) |
|
Costs of restructure |
(0.7) |
(0.7) |
|
Group loss before tax |
(16.2) |
(9.4) |
Divisional review
Construction
There was a strong performance from the construction division despite significant market contraction and intensified competition. Accordingly, from a reduced turnover of £61.0m (2009: £79.8m), a creditable profit before tax of £0.7m (2009: £1.1m) was achieved. This performance was possible by making reductions to the base cost of the business as it entered the economic downturn and by maintaining a balanced portfolio of public and private sector work. Extremely good relationships have been maintained with key clients, providing repeat orders and secured turnover of £53.0m for 2010/11. At this time last year, the figure was £47.0m.
Major completed projects have included the Welsh Assembly Government offices at Llandudno, Winsford Learning Zone, HQ Chester, Stobart's distribution centre at Widnes and offices at Centenary Way in Salford. All were completed on time and within budget and demonstrate the division's ability to operate successfully across the public and private sectors, as well as across commercial, industrial, educational and leisure areas of operation. The special projects division, formed to take advantage of refurbishment and extension work in the absence of capital spend on new projects, continues to grow and has completed many successful projects in the year. Safety remains paramount to the business and it is pleasing to report that the division achieved a Gold ROSPA award for the second year running. The accident incident rate has been maintained at the low level of 675 against an industry average of 1600.
Property
Due to cash constraints and market uncertainty there was little opportunity for development activity, however, there was a modest investment in a small number of new schemes with an end user and exit strategy in place, thereby avoiding any speculative risk. Rental income from the investment portfolio held up well with occupation levels at 96% (2009: 92%). In excess of 45,000 sq.ft. has been let in the year and the emphasis is now on tenant retention through proactive property management.
The principal focus for the property division has been to bring existing schemes to completion in order to bolster cash generation and to work towards extricating the group from onerous joint venture commitments. This has resulted in a positive cash inflow, but considerable one-off charges to income that has severely impacted on the performance of the group in the period. Net operating profit for the division was £2.2m (2009: £4.4m), however, after impairments and provisions this reduces to a net loss before tax of £9.7m (2009: £4.3m loss).
Several land sales were achieved in the year and the division continues to seek out other land opportunities. The mixed use scheme at Ellesmere, Shropshire has received significant interest from retirement/care home operators, with sales to McCarthy & Stone and Shropshire County Council and interest has also been received from traditional housebuilders. At Midpoint 18, interest has been expressed in a new development and discussions continue with landowners and Cheshire East Council to secure funding that will see the Middlewich bypass completed, and open further land at Midpoint 18 for continued expansion.
Residential
There was no speculative investment in the residential division and the business continued to work out existing sites in the region, albeit in a market where selling prices continued to deteriorate. The strategy to pursue social housing work continued, but lack of Government funding delayed projects of this type. As a result, previously committed schemes have not been started and future work looks uncertain.
In view of these factors, the decision has been made to reorganise the residential division. Responsibility for completing outstanding units is being transferred to the construction division and sales of remaining units to the property division.
Total revenue was £3.5m (2009: £3.9m). Further write down in realisable value of land and housing stock resulted in a loss before tax of £3.3m (2009: £3.2m).
Concrete pumping
Revenues fell by 16% to £9.1m (2009: £10.8m) as activity in the general construction market contracted. The division was particularly hard hit by delays and cancellations of publicly funded infrastructure projects, which have traditionally provided a base workload for the larger high earning pumps.
The reduction in market activity has resulted in overcapacity in the market, which has reduced utilisation and selling prices. Since the year end, there has been some increase in selling prices brought about by negotiation with customers and the exit from the market of some competitors.
In response to these difficult conditions, action has been taken to reduce overheads, including a reduction in pump numbers and operating districts, and closure of the PUMI division. As a result of these events, the net loss for the division was £2.9m (2009: £1.5m).
|
Analysis of profit/(loss) by division |
|||
|
|
Operating Profit/(loss) £m |
Impairments & provisions £m |
Total £m |
|
|
|
|
|
|
Construction |
0.7 |
- |
0.7 |
|
Property - own |
4.0 |
(11.9) |
(7.9) |
|
Property - joint ventures |
(1.8) |
- |
(1.8) |
|
Residential |
(0.4) |
(2.9) |
(3.3) |
|
Concrete Pumping |
(2.2) |
(0.7) |
(2.9) |
|
Group |
(1.0) |
- |
(1.0) |
|
Group loss before tax |
(0.7) |
(15.5) |
(16.2) |
|
|
|
|
|
Joint venture review
Contributions from joint venture activities in the period were mixed. Some of the more established schemes, such as Keele Park Developments, performed creditably in a challenging economic environment. However, more recent schemes that commenced at the height of the market have struggled to achieve planned sales values or occupancy rates. Consequently, these have required additional financial support, which has been a drain on the group's finances. With no clear sign of market improvement and if left unchecked, this ongoing additional financial support is becoming onerous for the group and would impair its performance in future years. Therefore, action is being taken to mitigate the financial burden of these schemes through negotiation with partners and associated funders. The cost of this action has been reflected in the accounts of the group.
Progress has been made at Birkenhead where, having acquired full control of Castlewood Developments (Birkenhead) Ltd since the year end, contracts were exchanged for the sale of the site. Completion of this sale will provide a significant cash injection for the business.
Joint ventures at Exchange Flags Liverpool, in partnership with UK Land & Property Ltd (UKLP Ltd), have been the most challenging schemes. Some progress has been made with lettings during the year, however occupancy levels, particularly at Walker House, fall below that required to generate sufficient income. Negotiations therefore continue with partners and funders to extricate group involvement from these schemes.
Other UKLP Ltd joint venture schemes have progressed well. At Hawarden Business Park, lettings to Airbus, Aerotec and Gardner Aerospace have been achieved, and at Heald Green, an office park in South Manchester, the first unit sale has taken place and interest has been received in a further three.
The group acquired full control of Trinity Court Developments Ltd in the year, which has allowed it to take full responsibility for marketing the remaining apartments in the Holyhead Marina development.
In future, there will be a shift towards investment in opportunities developed and managed by the group's in-house property team and away from a reliance on joint venture partners. Consequently, no investment has been made in the period in new joint venture activity.
Earnings per share and dividend
Earnings per share were -76.4p (2009: -43.0p). A tax credit of £0.7m resulted in an effective tax rate of 4.7%. This credit arose from relief taken on the operating losses and investment impairments recognised in the period.
It is proposed that no final dividend will be paid (2009: nil per share). As no interim dividend was paid, the dividend for the full year is also nil (2009: 1.5p).
Balance sheet
Net asset value fell to £25.9m (2009: £38.3m) equivalent to 125p per share (2009: 184p).
At the end of the period all group properties were valued by Knight Frank LLP, an independent firm of professional valuers, which resulted in investment properties being revalued upwards by £0.5m, whilst a revaluation of own occupied properties added £2.2m to carrying values, the latter being reflected through the revaluation reserve. The gross value of investment properties increased by £3.2m to £29.1m (2009: £25.9m) following the addition of Emperor Court office development in Crewe, which was let to Cheshire East County Council.
Impairments taken against joint venture investments of £5.2m and associated provisions held in other payables of £5.8m were the principal cause of the reduction in net asset value.
Inventories reduced by £7.9m to £21.9m (2009: £29.8m) following completion of the Emperor Court development and its transfer into investment property, the disposal of residential units and write down of remaining residential stock.
Cashflow and borrowings
Cash generation remained the principal financial focus during the period. Scope for this was limited as the group remained committed to support its joint venture obligations and loss making operations until such times as both can be eliminated contractually. However, through progressive cost cutting, reductions in working capital and the sale of non-income producing assets, in addition to positive cash flow from its operating activities, the group generated £1.6m (2009: £4.2m). There was net expenditure on investments and joint ventures of £1.0m (2009: £2.3m) comprising direct support of £2.2m, partially offset by loan repayments of £1.2m.
An overall reduction in net borrowings was achieved of £1.4m (2009: £1.4m), summarised as follows:
|
|
2010 |
2009 |
|
|
£m |
£m |
|
|
|
|
|
Operating activities |
0.6 |
3.8 |
|
Sale of assets |
1.0 |
0.4 |
|
Joint ventures & investments |
(1.0) |
(2.3) |
|
Interest and dividend |
(0.1) |
(0.3) |
|
Taxation |
0.9 |
(0.2) |
|
Decrease in net borrowings |
1.4 |
1.4 |
Recently, the group has been in detailed discussions with its principal banker, The Royal Bank of Scotland (RBS), to restructure its borrowing facilities. The aim of the restructure is to ensure that the group is adequately and appropriately funded to meet its forecasted obligations and cash requirements for the foreseeable future, whilst providing sufficient headroom to invest in future profitable opportunities as they arise. Agreement has been reached on a new suite of facilities, which have been designed to achieve these aims.
During the period, the group's existing facilities, comprising a £10.0m overdraft facility, a rolling credit facility of £16.3m and various project specific development loans of £15.8m, were rolled over by RBS.
At 31 May 2010 group borrowings were £35.2m (2009: £36.8m) with £8.3m cash held on deposit (2009: £8.5m), resulting in a net debt position of £26.9m (2009: £28.3m).
Treasury and financing risk
The group continues to fund its operations through the use of cash, loans and various liquid resources such as receivables and trade payables. 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. It is in the final year of a three year swap arrangement to fix its LIBOR exposure to 4.98% on £15m of a rolling credit facility with RBS. All other facilities have benefited from the low floating rate of LIBOR experienced during the period, which has largely compensated for the higher commercial rates now being charged by the banks.
The group has formally adopted 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. Owing to a reduction in joint venture hedging commitments there was a favourable movement in financial derivatives of £1.3m (2009: £2.5m adverse). This is shown against the hedge reserve in the group balance sheet.
There are 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 has minimal exposure to foreign currency exchange risk and accordingly does not require a policy to hedge such exposure.
Pensions
Following consultation with members, the defined benefit (DB) pension scheme was closed to future accrual on 31 December 2009 and active members transferred to a defined contribution (DC) scheme. This action will significantly reduce the group's potential exposure to future deficits. A recovery plan was agreed with the pension trustees and approved by the Pensions Regulator during the period to correct the £1.4m deficit reported last year. This agreement has been accommodated without the need for additional contributions.
Total contributions paid in the period to the DB scheme were £0.3m (2009: £0.3m). Payments to the DC scheme were £0.3m (2009: £0.3m). 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 £2.7m (2009: £2.4m). Full DB pension disclosure is set out in Note 7 to the accounts.
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 Finance Director
29 September 2010 29 September 2010
Consolidated income statement
For the year ended 31 May 2010
|
|
|
2010 £'000 |
|
2009 £'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
74,819 |
|
101,961 |
|
Cost of sales |
|
(73,316) |
|
(94,247) |
|
Gross profit |
|
1,503 |
|
7,714 |
|
|
|
|
|
|
|
Operating expenses |
|
(19,520) |
|
(14,349) |
|
Other operating income |
|
3,268 |
|
2,719 |
|
Gains/(losses) on revaluation of investment properties |
|
530 |
|
(3,219) |
|
Operating loss |
|
(14,219) |
|
(7,135) |
|
Share of loss after taxation in joint ventures |
|
(1,948) |
|
(2,962) |
|
Share of profit/(loss) after taxation in associates |
|
121 |
|
(149) |
|
Finance income |
|
2,074 |
|
2,815 |
|
Finance cost |
|
(2,260) |
|
(1,948) |
|
|
|
|
|
|
|
Loss before taxation |
|
(16,232) |
|
(9,379) |
|
Taxation |
|
724 |
|
662 |
|
Loss for the year |
|
(15,508) |
|
(8,717) |
|
Attributable to: |
|
|
|
|
|
Equity holders of the company |
|
(15,545) |
|
(8,749) |
|
Minority interest |
|
37 |
|
32 |
|
Loss for the year |
|
(15,508) |
|
(8,717) |
|
|
|
|
|
|
|
Earnings per share (basic) |
|
(76.4p) |
|
(43.0p) |
|
Earnings per share (diluted) |
|
(76.4p) |
|
(43.0p) |
Consolidated statement of comprehensive income
For the year ended 31 May 2010
|
|
Group |
||
|
|
2010 £'000 |
|
2009 £'000 |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
(15,508) |
|
(8,717) |
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Actuarial gains and losses |
(312) |
|
(3,675) |
|
Deferred tax on actuarial gains and losses |
88 |
|
1,028 |
|
|
|
|
|
|
Cash flow hedging |
|
|
|
|
Current period fair value movement |
4,613 |
|
(2,050) |
|
Reclassification to profit and loss |
(3,322) |
|
(470) |
|
Deferred tax on cash flow hedging |
(204) |
|
127 |
|
Revaluation of property, plant and equipment |
2,258 |
|
- |
|
Total comprehensive income for the year |
12,387 |
|
(13,757) |
|
Attributable to non controlling interests |
37 |
|
32 |
|
Attributable to owners of the parent |
(12,424) |
|
(13,789) |
|
|
(12,387) |
|
(13,757) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in equity
For the year ended 31 May 2010
|
|
Share capital £'000 |
Own shares £'000 |
Revaluation reserve £'000 |
Hedge reserve |
Retained earnings £'000 |
Total £'000 |
Minority interest £'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 June 2008 |
5,200 |
(954) |
178 |
- |
48,419 |
52,843 |
211 |
|
Cost of share based payments |
- |
- |
- |
- |
(16) |
(16) |
- |
|
Transfer of own shares |
- |
209 |
- |
- |
(209) |
- |
- |
|
Equity dividend |
- |
- |
- |
- |
(916) |
(916) |
(29) |
|
Transactions with owners |
- |
209 |
- |
- |
(1,141) |
(932) |
(29) |
|
Loss for the year |
- |
- |
- |
- |
(8,749) |
(8,749) |
32 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Actuarial gains & losses |
- |
- |
- |
- |
(3,675) |
(3,675) |
- |
|
Deferred tax on pension scheme deficit |
- |
- |
- |
- |
1,028 |
1,028 |
- |
|
Realisation of revaluation reserve on disposal |
- |
- |
(103) |
- |
103 |
- |
- |
|
|
|
|
|
|
|
|
|
|
Cash flow hedging |
|
|
|
|
|
|
|
|
current period fair value movements |
- |
- |
- |
(2,050) |
- |
(2,050) |
- |
|
reclassification to profit and loss |
- |
- |
- |
(470) |
- |
(470) |
- |
|
Deferred tax on cash flow hedging |
- |
- |
- |
- |
127 |
127 |
- |
|
Total comprehensive income for the year |
- |
- |
(103) |
(2,520) |
(11,166) |
(13,789) |
32 |
|
At 31 May 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 to profit and loss |
- |
- |
- |
(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 |
Consolidated balance sheet
As at 31 May 2010
|
|
|
2010 |
|
2009 |
|
|
|
£'000 |
|
£'000 |
|
Non current assets |
|
|
|
|
|
Property, plant and equipment |
|
4,648 |
|
2,929 |
|
Investment properties |
|
29,116 |
|
25,917 |
|
Investments |
|
|
|
|
|
Joint ventures |
|
8,855 |
|
13,782 |
|
Associates |
|
2,033 |
|
2,626 |
|
Available for sale |
|
2,190 |
|
2,730 |
|
Deferred tax assets |
|
1,946 |
|
1,284 |
|
Total non current assets |
|
48,788 |
|
49,268 |
|
Current assets |
|
|
|
|
|
Inventories |
|
21,891 |
|
29,824 |
|
Trade and other receivables |
|
12,618 |
|
25,183 |
|
Cash and cash equivalents |
|
8,328 |
|
8,470 |
|
Corporation tax recoverable |
|
305 |
|
570 |
|
Total current assets |
|
43,142 |
|
64,047 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
25,956 |
|
31,502 |
|
Bank loans |
|
12,904 |
|
15,178 |
|
Bank overdrafts |
|
22,370 |
|
21,541 |
|
Financial derivatives |
|
621 |
|
991 |
|
Total current liabilities |
|
61,851 |
|
69,212 |
|
|
|
|
|
|
|
Net current liabilities |
|
(18,709) |
|
(5,165) |
|
Non current liabilities |
|
|
|
|
|
Bank loans |
|
- |
|
104 |
|
Retirement benefit obligation |
|
2,709 |
|
2,441 |
|
Provisions |
|
- |
|
481 |
|
Other payables |
|
1,458 |
|
2,741 |
|
Total non current liabilities |
|
4,167 |
|
5,767 |
|
|
|
|
|
|
|
Net assets |
|
25,912 |
|
38,336 |
|
Equity |
|
|
|
|
|
Share capital |
|
5,200 |
|
5,200 |
|
Own shares |
|
(745) |
|
(745) |
|
Revaluation reserve |
|
2,265 |
|
75 |
|
Hedge reserve |
|
(1,229) |
|
(2,520) |
|
Retained earnings |
|
20,202 |
|
36,112 |
|
Total shareholders' equity |
|
25,693 |
|
38,122 |
|
Minority interest |
|
219 |
|
214 |
|
Total equity |
|
25,912 |
|
38,336 |
Consolidated cash flow statement
For the year ended 31 May 2010
|
|
|
|
|
|
|
|
|
2010 |
2010 |
|
2009 |
2009 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
Net cash from operating activities |
|
|
|
|
|
|
Loss for the year |
|
(15,508) |
|
|
(8,717) |
|
Income tax |
|
(724) |
|
|
(662) |
|
Finance income |
|
(2,074) |
|
|
(2,815) |
|
Finance cost |
|
2,260 |
|
|
1,948 |
|
Share of results of joint ventures and associates |
|
1,827 |
|
|
3,111 |
|
Cashflow hedge movement in joint ventures |
|
(657) |
|
|
1,391 |
|
Depreciation charge |
|
209 |
|
|
357 |
|
Credit in respect of share based payments |
|
(5) |
|
|
(16) |
|
Profit on sale of property, plant and equipment |
|
(28) |
|
|
(103) |
|
Profit on sale of investment properties |
|
(655) |
|
|
- |
|
(Gains)/losses on revaluation of investment properties |
|
(530) |
|
|
3,219 |
|
Provision against investments in joint ventures |
|
4,215 |
|
|
3,315 |
|
Provision against investment in other investments |
|
998 |
|
|
657 |
|
Income from joint ventures and associates |
|
53 |
|
|
34 |
|
|
|
|
|
|
|
|
Operating (loss)/profit before changes in working capital |
|
(10,619) |
|
|
1,719 |
|
Decrease in inventories |
|
7,933 |
|
|
2,353 |
|
Decrease/(increase) in receivables |
|
12,565 |
|
|
(1,126) |
|
Decrease in payables |
|
(7,194) |
|
|
(590) |
|
|
|
2,685 |
|
|
2,356 |
|
Interest paid |
|
(914) |
|
|
(544) |
|
Income taxes received/(paid) |
|
876 |
|
|
(240) |
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
2,647 |
|
|
1,572 |
|
Investing activities |
|
|
|
|
|
|
Interest received |
792 |
|
|
1,124 |
|
|
Purchase of investment properties |
(2,645) |
|
|
- |
|
|
Purchase of property, plant and equipment |
(45) |
|
|
(17) |
|
|
Proceeds from sale of investment properties |
890 |
|
|
- |
|
|
Proceeds from sale of property, plant and equipment |
144 |
|
|
441 |
|
|
Net movement on disposal of subsidiary undertaking |
- |
|
|
1,462 |
|
|
Net movement on disposal of joint ventures |
649 |
|
|
- |
|
|
Increase in interest in joint ventures and associates |
(567) |
|
|
(1,027) |
|
|
Increase in interest in other investments |
(458) |
|
|
(1,230) |
|
|
Net cash (used in)/from investing activities |
|
(1,240) |
|
|
753 |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Proceeds from new loans |
- |
|
|
5,949 |
|
|
Repayment of loans |
(2,378) |
|
|
(499) |
|
|
Dividends paid |
- |
|
|
(916) |
|
|
|
|
|
|
|
|
|
Net cash (used in)/from financing activities |
|
(2,378) |
|
|
4,534 |
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(971) |
|
|
6,859 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
(13,071) |
|
|
(19,930) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
(14,042) |
|
|
(13,071) |
Notes
The preliminary announcement is prepared in accordance with International Financial Reporting Standards.
The Board of Directors approved the preliminary announcement on 29 September 2010 .
The announcement represents non-statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory annual accounts for the year ended 31 May 2009, upon which an unqualified audit opinion has been given and which did not contain a statement under section 235, 237 (2) or 237 (3) of the Companies Act 1985, will be sent to the Registrar of Companies.
Turnover, profit before taxation and net assets
Segmental information
For management purposes, the group is currently organised into four operating business segments based on the different services provided by each division:
Construction, Property, Residential and Concrete Pumping.
As operations are carried out entirely within the UK, there is no secondary segmental information or geographical considerations in determining the groups operating segments.
Inter segmental pricing is done on an arms length open market basis.
Segment information about these businesses is presented below.
|
Year ended 31 May 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
Property |
Residential |
Concrete pumping |
Group management |
Group Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
External sales |
60,999 |
1,230 |
3,496 |
9,094 |
- |
74,819 |
|
Inter-segment sales |
554 |
- |
- |
73 |
- |
627 |
|
Eliminations |
(554) |
- |
- |
(73) |
- |
(627) |
|
Total revenue |
60,999 |
1,230 |
3,496 |
9,094 |
- |
74,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
|
|
|
|
|
|
Operating profit/(loss) |
730 |
(7,795) |
(3,298) |
(2,826) |
(1,030) |
(14,219) |
|
Share of results of joint ventures and associates |
- |
(1,827) |
- |
- |
- |
(1,827) |
|
Net finance income |
(39) |
(116) |
- |
(25) |
(6) |
(186) |
|
Profit/(loss) before taxation |
691 |
(9,738) |
(3,298) |
(2,851) |
(1,036) |
(16,232) |
|
Taxation |
|
|
|
|
|
724 |
|
Loss for the year |
|
|
|
|
|
(15,508) |
Within the construction segment, external sales of £23.384m arise from two contracts that individually account for more than 10 percent of the entity's revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
Property |
Residential |
Concrete Pumping |
Elimination of inter- segment items |
Group Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Asset and liabilities |
|
|
|
|
|
|
|
Segment assets |
21,778 |
59,556 |
6,036 |
4,624 |
(10,952) |
81,042 |
|
Investment in equity accounted joint ventures and associates |
- |
10,888 |
- |
- |
- |
10,888 |
|
Total assets |
21,778 |
70,444 |
6,036 |
4,624 |
(10,952) |
91,930 |
|
Segment liabilities |
16,085 |
54,303 |
3,556 |
3,026 |
(10,952) |
66,018 |
|
Net assets/(liabilities) |
5,693 |
16,141 |
2,480 |
1,598 |
- |
25,912 |
|
|
|
|
|
|
|
|
|
|
||||||
|
Other information |
|
|
|
|
|
|
|
Capital expenditure |
13 |
- |
- |
32 |
- |
45 |
|
Depreciation |
89 |
71 |
- |
49 |
- |
209 |
|
Provision against investment in joint ventures and other investments |
- |
5,213 |
- |
- |
- |
5,213 |
|
Impairment of inventories |
- |
691 |
2,858 |
- |
- |
3,549 |
|
Year ended 31 May 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
Property |
Residential |
Concrete Pumping |
Group management |
Group Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
External sales |
79,829 |
7,418 |
3,903 |
10,811 |
- |
101,961 |
|
Inter-segment sales |
405 |
- |
- |
790 |
- |
1,195 |
|
Eliminations |
(405) |
- |
- |
(790) |
- |
(1,195) |
|
Total revenue |
79,829 |
7,418 |
3,903 |
10,811 |
- |
101,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
|
|
|
|
|
|
Operating profit/(loss) |
900 |
(1,771) |
(3,153) |
(1,505) |
(1,606) |
(7,135) |
|
Share of results of joint ventures and associates |
- |
(3,111) |
- |
- |
- |
(3,111) |
|
Net finance income |
164 |
628 |
- |
51 |
24 |
867 |
|
Profit/(loss) before taxation |
1,064 |
(4,254) |
(3,153) |
(1,454) |
(1,582) |
(9,379) |
|
Taxation |
|
|
|
|
|
662 |
|
Loss for the year |
|
|
|
|
|
(8,717) |
Within the construction segment in 2009, external sales of £48.682m arise from three contracts that individually account for more than 10 percent of the entity's revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
Property |
Residential |
Concrete Pumping |
Elimination of inter- segment items |
Group Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Asset and liabilities |
|
|
|
|
|
|
|
Segment assets |
33,910 |
77,376 |
3,084 |
6,259 |
(23,722) |
96,907 |
|
Investment in equity accounted joint ventures and associates |
- |
16,408 |
- |
- |
- |
16,408 |
|
Total assets |
33,910 |
93,784 |
3,084 |
6,259 |
(23,722) |
113,315 |
|
Segment liabilities |
28,669 |
62,475 |
5,800 |
1,757 |
(23,722) |
74,979 |
|
Net assets/(liabilities) |
5,241 |
31,309 |
(2,716) |
4,502 |
- |
38,336 |
|
|
|
|
|
|
|
|
|
|
||||||
|
Other information |
|
|
|
|
|
|
|
Capital expenditure |
17 |
- |
- |
- |
- |
17 |
|
Depreciation |
74 |
87 |
- |
196 |
- |
357 |
|
Provision against investment in joint ventures and other investments |
- |
3,972 |
- |
- |
- |
3,972 |
|
Impairment of inventories |
- |
500 |
625 |
- |
- |
1,125 |
Earnings per share
The calculation of earnings per share (basic and diluted) is based on group loss after taxation and minority interests of £15,545,000 (2009: £8,749,000) and the 20,800,000 ordinary shares of 25p in issue at 31 May 2010 and 31 May 2009. The number of shares used in the calculation has been reduced at 31 May 2010 for the 440,500 (2009: 438,000) shares held in the Employee Share Trust. Basic earnings per share is -76.4p (2009: -43.0p). 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.
|
|
|
2010 |
2009 |
||||||
|
|
|
|
Weighted |
|
|
|
|
Weighted |
|
|
|
|
|
average |
|
|
|
|
average |
|
|
|
|
Earnings |
no. of shares |
Per share |
Earnings |
no. of shares |
Per share |
||
|
|
|
£'000 |
'000 |
p |
£'000 |
'000 |
p |
||
|
Basic EPS |
|
(15,545) |
20,360 |
(76.4) |
(8,749) |
20,359 |
(43.0) |
||
|
Effect of share options |
- |
- |
- |
- |
- |
- |
|||
|
Diluted EPS |
(15,545) |
20,360 |
(76.4) |
(8,749) |
20,359 |
(43.0) |
|||
Dividends paid in the year
|
|
|
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
Interim paid - nil per share (2009 : 1.5p) |
|
- |
|
305 |
|||
|
Final paid - nil per share (2009 : 3.0p) |
|
- |
|
611 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
916 |
The Directors are not proposing a final dividend in respect of the financial year ending 31 May 2010.
The Annual General Meeting will be held at Mere Golf and County Club, Knutsford, Cheshire at 10.30 a.m. on Wednesday 24 November 2010. The full report will be posted to shareholders on or before 1 November 2010.
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
Related Shares:
Pacific Global