TIDMPCH
RNS Number : 9322O
Pochin's PLC
26 September 2013
Pochin's PLC
("Pochin" or "the group")
Preliminary Results for the year ending 31 May 2013
Pochin's PLC (PCH.L), the construction and property group,
announces its preliminary results for the year ending 31 May
2013.
Chairman's statement
The group result for the year ended 31 May 2013 shows a loss
after tax of GBP7.1m (2012: GBP3.3m) which includes a GBP0.2m loss
(2012: GBP2.0m loss) arising from discontinued activities. There
was an operating profit of GBP2.4m (2012: GBP2.0m) before adverse
property revaluations and impairments of investments and
inventories, which in total amounted to GBP8.2m (2012: GBP2.7m).
The directors do not recommend the payment of a final dividend.
The revaluations and impairments referred to above reflect the
ongoing weakness in the regional property market, particularly in
the retail and office sectors. They also incorporate a reduction in
the carrying value of the group's only remaining significant joint
venture. By contrast, certain of the group's land assets have
increased in value by GBP3.4m, although their classification as
inventories prevents this from being reflected in the accounts.
During 2012 the UK construction industry suffered a fall of over
8% in total new (non housing) work, and the decline was steeper in
the North West region. The region's commercial property market
experienced continuing weakness with yields widening for all but
prime real estate. Bank finance remained restricted generally to
investments with long unexpired lease periods. It is therefore good
to be able to report some improvement nationally in the third
quarter of the current calendar year, with the industrial sector in
particular seeing increased levels of activity. The Government's
claimed determination to rebalance the economy, in terms of both
activity and geography, is to be welcomed, and the group has made a
successful application to the Regional Growth Fund.
Given the context of the region in which it primarily operates,
the construction division performed creditably during the year
under review with turnover increased from GBP68.4m to GBP73.7m.
Contracts for work outside the region contributed significantly as
the division sought to mitigate lower local activity, albeit at
some cost to margins. It is striking to note that, nonetheless,
almost two-thirds of the division's turnover was repeat business,
which validates the Pochin claim to deliver good, reliable service
to its clients.
The further deterioration in the group's property values is
disappointing, with the secondary offices in the portfolio being
particularly affected in the year. Overall the investment portfolio
maintained high levels of occupancy at 91.5%, a modest fall from
the previous exceptional achievement. There was successful
development activity during the year, including the completion of
an office building for TATA Chemicals Europe Limited in Northwich,
Cheshire. The current year has seen the start of the construction
of the Altrincham Hospital scheme for Central Manchester University
Hospital NHS Foundation Trust. The division continues to seek such
non-speculative development opportunities to supplement the rental
income from the investment portfolio.
Encouragement can be drawn from the positive outcome of the
revaluation of certain land assets which, as noted above, cannot be
reflected in the group accounts. It is a recognition, in part, of
the underlying strength of Midpoint 18, the group's Middlewich
estate close to Junction 18 of the M6 motorway, which is the
proposed location for the recently announced rural business hub, to
be known as "Cheshire Fresh". Midpoint 18 is well located for
motorway dependent logistics development which is currently the
subject of heightened demand, partly resulting from the burgeoning
"click and collect" internet based retailing market.
Since the year end, the group has disposed of its interest in
the assets and business of Keele Park Developments Limited and has
discharged its associated guarantee obligations within the
previously reported provision. The carrying value of the only
remaining significant joint venture, at Deeside, has been reduced
to reflect the recently undertaken valuation. Despite this, the
joint venture's complicated development proposals have considerable
potential were they to gain the necessary local and regional
authorities' support.
The group now employs 158 people (2012: 266) following the
disposal of the concrete pumping business in July 2012. The cost
cutting which accompanied that business leaving the group, together
with the additional pressure on the construction division resulting
from major projects out of its local region, have combined to make
increased demands on all employees. Their efforts in these
circumstances, and in the continuing difficult trading conditions,
are greatly appreciated. While all costs remain under regular
review, the central overhead is now at a minimum level consistent
with the obligations of a listed public company.
The group's level of indebtedness fell during the year and
further progress has been made since the year end. Bank facilities
were renewed in October 2012 with The Royal Bank of Scotland plc,
the group's principal banker, and with Nationwide Building Society
in July this year. Despite the falls in asset values determined by
the recent property revaluations, the overall loan to value ratio
remains relatively modest and in accordance with covenant
obligations.
In recent years the group has endured unrelentingly tough
conditions in its markets, with consequential painful outcomes for
both employees and shareholders. Though considerably reduced in
size, having taken radical measures to extract itself from loss
making activities and damaging joint ventures, the group is now in
a position to take advantage of the improved sentiment which is
emerging in its remaining areas of activity.
Richard Fildes
Chairman
26 September 2013
Enquiries:
Pochin's PLC
John Moss, Chief Executive 01606 833 333
Nigel Rawlings, Finance Director 01606 833 333
Charles Stanley Securities
Russell Cook/Carl Holmes 020 7149 6476
Business review
Group overview
The decision made last year to streamline the group into two
core operating divisions has been vindicated by delivering
consistent performance, enabling the business to be more
competitive and minimising the risk to its stakeholders. The
decision to maintain core skills and capabilities has also paid
dividends, allowing the group to continue to provide the high level
of service and added value to all clients and stakeholders, a
reputation for which it is well recognised and rightly proud. The
high level of repeat business in the construction business (64%)
has been achieved by maintaining the Pochin values of quality,
safety and sustainability, in addition to delivering a first class
product.
This strategy has proven successful despite the continued
downturn in the wider property and construction markets, with group
turnover increasing from GBP71.6m to GBP78.0m (excluding the
concrete pumping business sold in July 2012) whilst reducing
overheads. Activity in the property division improved due chiefly
to the sale of non-income producing assets, delivering improved
revenues of GBP6.5m (2012: GBP4.9m). Construction also delivered
improved revenues of GBP73.7m (2012: GBP68.4m).
The two core divisions of construction and property are now set
up to react quickly and independently to rapidly changing market
conditions, but can work together to deliver an integrated product
in order to meet client needs.
As part of the declared group strategy to reduce the risk
associated with joint venture commitments, the Keele Park
Developments Limited joint venture has been exited since the year
end and full control has been taken of the Hawarden Business Park
Limited joint venture. This leaves only the Pochin Goodman
(Northern Gateway) Limited joint venture at Deeside, which has no
external debt and therefore the risk is controlled.
As always, the values and principles of the business can only be
upheld through the loyalty and dedication of our staff who remain
the key asset to the business. The group recognises the
contribution made by its employees through what continue to be
difficult trading conditions and is grateful for all their efforts.
The number of employees is now 158 (2012: 266), reflecting the sale
of the concrete pumping business in July 2012.
The UK construction industry statistics showed a drop of 8.1% in
total new (non-housing) work in 2012 and this trend is set to
continue into 2013, with a further drop forecast of 3%. Beyond
that, most forecasters are predicting only a modest return to
growth. The forecasts for the North West region are not as positive
as those for the whole of the UK, reflecting the widely publicised
North-South divide. The decision has therefore been made to
continue to work outside the preferred North West and North Wales
areas for known and valued clients and it is worth noting that
during the year the construction division has generated 50% of its
revenue from work undertaken in London, Edinburgh and the
Midlands.
There was an underlying operating profit before tax from
continuing activities of GBP2.4m (2012: GBP2.0m) on revenues of
GBP78.0m (2012: GBP71.6m), as detailed in the table below.
Unfortunately, the performance of the property division has
suffered as a result of falling valuations in its investment
portfolio. Whilst yields on primary stock have held firm, secondary
stock yields have risen. It is this deterioration in secondary
property values that has generated reduced valuations in the
property portfolio and has resulted in a declared loss before tax
from continuing operations of GBP6.7m (2012: GBP1.1m loss).
GBPm 2013 2012
-------------------------------------------- -------- ---------
Revenue 78.0 71.6
Underlying operating profit from
continuing activities 2.4 2.0
Investment property revaluation deficit (4.5) (1.1)
Adjustments to inventories and investments (3.7) (1.5)
Finance costs (net) and share of
profits in joint ventures (0.9) (0.5)
Loss before taxation from continuing
operations (6.7) (1.1)
Divisional review
Construction
After a relatively slow start to the year, the performance of
the division improved rapidly as large student accommodation
refurbishment schemes in Nottingham and Leeds were executed over
the summer months. Thereafter, a steady workload avoided peaks and
troughs in performance and the careful management of key resources
avoided the need to employ staff with no return between contracts.
The Edinburgh student accommodation scheme for 770 apartments was
the anchor project in the year, generating turnover of GBP22m. It
is noticeable that large schemes of this nature are becoming harder
to identify and secure, but through good client relationships the
division has won several schemes in the GBP10m - GBP15m turnover
range that have secured the majority of its forecast turnover in
the current financial year. These include a GBP10m project for a
hotel refurbishment and extension in Nantwich, Cheshire, a GBP14m
student accommodation scheme and a GBP12m residential refurbishment
scheme in Liverpool, and a project for Christies Hospital in
Manchester.
One disappointment to note in this year's trading has been the
number of failures within the supply chain, affecting the profit
margin on some contracts. Whilst there are robust systems in place
to check the credit status of subcontractors and suppliers, these
have not always been capable of anticipating or identifying the
problems experienced in the supply chain. It is only through
diligent management and long established relationships across the
wider supply chain that the effect of such failures has been
limited. In a similar vein, a limited number of clients have
defaulted on their payments, requiring more careful analysis of a
client's status during the tendering process.
Despite these setbacks and in a shrinking market, the division
broke even (2012: GBP0.4m profit).
With public (non-housing) work in the construction industry down
21% over the year, the policy to maintain close relationships with
the private sector has paid dividends, with over 80% of work coming
from private sector clients. With the predicted upturn in public
sector spending being concentrated on infrastructure and support
for housing projects, it is recognised that private sector funding
will continue to dominate in the short term. To this end, the
division has worked hard to achieve a balanced portfolio of private
sector work, including projects across the leisure, commercial,
industrial, residential, health and education sectors. In the
meantime, relationships with public sector clients and the track
record of delivery are being maintained. The heavy bias towards
residential in the year is due to the large turnover from the
student accommodation schemes, most notably at Edinburgh.
Regional fortunes have varied in the construction industry over
the year, with one of the hardest hit areas being the North of
England. To maintain revenue and margins, the division has
continued to pursue work for known clients away from its
traditional home territory. The volume of these contacts has been
limited intentionally to one third of annual turnover in order to
minimise overexposure and to ensure sufficient staff are available
to travel to these locations and uphold the Pochin values.
Whilst the need to deliver small projects for regular clients is
still recognised, it was decided during the year to close Special
Projects as an entity and deliver these smaller projects through
general operations. This has delivered savings through improved
sharing of resources and yet has still provided continuity for
clients that require both small and large projects.
The Pochin values that go beyond just doing a good job continue
to provide a focus on safety, sustainability, corporate social
responsibility and, most of all, staff wellbeing. It is therefore
pleasing to note that once more these efforts have been recognised
with the following achievements secured during the year:
-- a RoSPA Gold Award for Safety and a Gold Medal in recognition
of five consecutive annual gold awards;
-- advancing from Standard to Bronze accreditation with Investors in People;
-- a gold Considerate Constructors "National Site Award Winner" at Buxton;
-- placed in the top 10% of Considerate Constructors in the country; and
-- completion of two contracts to "excellent" BREEAM standards
and five contracts to "very good" BREEAM standards.
Property
Throughout the year, secondary property values continued to
weaken in the North West where the market remains poor. Development
opportunities were similarly weak, although there were some
promising signs of recovery in the industrial sector in the latter
part of the year. With this backdrop, a cautious strategy has been
maintained and the focus has remained on the reduction of debt
through the selective disposal of non-income producing assets.
Disposals in the year included a further tranche of land to
Bloor Homes Limited at Ellesmere, Shropshire and another contracted
to Persimmon Homes Limited at the same location. The strategy to
sell residential property at Trinity Court, Holyhead and at
Cockshutt and Whitchurch in Shropshire has continued, with these
sites being actively marketed. Planning permission for residential
use has also been secured for a total of 83 units at Stanley
Pottery, Burslem, allowing for the marketing of this site to
commence.
Two major initiatives are underway at Midpoint 18 in Middlewich,
one for the construction of the Middlewich bypass and the other to
create a rural business hub, branded as "Cheshire Fresh". With
regard to the first, Regional Growth Funding of GBP4.1m has been
secured and other opportunities for funding are now being explored,
with a view to opening up development opportunities at the southern
end of the site. The second is an exciting scheme to bring together
two local auctioneers and agents, to create a rural business hub
that would then support other retail and agriculture related
businesses. Efforts are currently being made to secure planning
permission and raise funds to deliver this project.
In the year, the office development for TATA Chemicals Europe at
Northwich was completed and it is hoped future work will be secured
on the same site. Work also started on the Altrincham Hospital
scheme for Central Manchester University Hospital NHS Foundation
Trust, with the construction division acting as the main
contractor. This GBP9m project demonstrates the benefits of working
jointly across the group in order to maximise value and quality for
clients. Other schemes are being reviewed, but only where an end
user has been secured.
Underlying these development initiatives, a solid investment
portfolio with 91.5% occupancy levels has been maintained through
good property management.
Property valuation
At the year end, a full independent valuation of the group's
property held as premises, investments and inventories was
undertaken by Knight Frank. Properties held as inventories were
marked down by GBP2.2m and a deficit arose on revaluation of
premises and investment properties of GBP4.5m. This reduction was
partly offset by an excess over book value of GBP3.4m in the value
of certain land assets, however, because these are held as
inventory items their revaluation cannot be reflected in the
accounts. Property valuations have been impacted adversely by a
number of factors most of which arose in the year ended 31 May
2013, including a single occupier vacating the Emperor Court office
building in Crewe and a weak local office market, the impact of
short term leases, rent free periods and stepped rents generally,
planning delays at the Stanley Pottery site and the Enterprise Zone
created in Anglesey, which is in competition with the group's Bryn
Cegin site near Bangor.
Joint ventures
After the year end, the group disposed of its interest in the
assets and business of Keele Park Developments Limited and
discharged its associated guarantee obligations in line with the
previously reported provision of GBP1.2m. This leaves only one
remaining significant joint venture of value on the group balance
sheet, namely Pochin Goodman (Northern Gateway) Limited. The
property held in this joint venture was independently valued by
Jones Lang Lasalle at the year end, resulting in an impairment of
value of GBP1.5m in the carrying value of the group's interest in
the joint venture.
Balance sheet
The impact of the above on the group balance sheet is shown
below:
GBPm 2013 2012
------------------------------- --------- ---------
Property, plant and equipment 1.5 3.8
Investment properties 29.2 32.2
Investments 2.4 3.7
Deferred tax
asset 1.9 1.9
------------------------------- --------- ---------
35.0 41.6
------------------------------- --------- ---------
Inventories 17.1 19.3
Other net current assets (10.2) (9.0)
Net debt (24.0) (26.6)
Long term payables excluding
debt (5.4) (6.1)
Net assets 12.5 19.2
If the land assets referred to above were to be shown on the
balance sheet at their fair value rather than at their historical
cost, then the net assets would increase by GBP3.4m to GBP15.9m at
31 May 2013.
Long term payables include the liability for defined benefit
pension scheme obligations amounting to GBP2.2m (2012: GBP3.0m),
which is calculated in accordance with IFRS.
Earnings per share and dividends
Basic and diluted earnings per share was -35.2p (2012: -16.0p).
Basic and diluted earnings per share from continuing activities was
-34.0p (2012: - 6.3p).
No final dividend is proposed resulting in a nil dividend for
the year (2012: nil).
Cash flow and borrowings
Net debt reduced in the year as indicated below:
GBPm 2013 2012
------------------------------------ ----- -------------
Operating activities (continuing) 1.3 0.5
Operating activities (discontinued) 0.1 (1.2)
Repayment of existing loans 3.1 4.1
Increase in development loans (1.0) (0.9)
Settlement of guarantee liabilities - (5.0)
Net interest
paid (0.9) (1.1)
Movement in net borrowings 2.6 (3.6)
At 31 May 2013 total group borrowings were GBP25.8m (2012:
GBP28.4m) and cash held on deposit was GBP1.8m (2012: GBP1.8m),
resulting in a net debt position of GBP24.0m (2012: GBP26.6m).
Going concern
During the year, the group's borrowing facilities with its
principal banker, The Royal Bank of Scotland plc, (RBS) were
renewed until October 2014 and facilities with Nationwide Building
Society (NBS) were renewed until March 2018.
The new facilities comprise investment loans of GBP17.9m (RBS)
and GBP1.2m (NBS), an asset disposal loan of GBP4.4m (previously
GBP5.4m and reduced on repayments since the year end to GBP2.75m)
and an overdraft/multi-option facility of GBP4.1m (temporarily
increased to GBP6.6m until December 2013). The loan agreement with
RBS required the company, inter alia, to ensure that the net assets
of the group did not fall below GBP19m at any time. As a result of
the investment property revaluation deficit and fair value
adjustments to inventories and investments, net assets did fall
below this figure as at 31 May 2013. Subsequent to the year end,
RBS has agreed that the net asset covenant test is amended to
GBP12m. The board is comfortable that the covenant tests, as
amended with the principal banker's agreement, will be complied
with going forward. These facilities are secured against the
group's assets.
Treasury and financing risk
The group continues to fund its operations through the use of
cash, loans and various liquid resources such as debtors and trade
creditors. Treasury management is performed by the finance
department through implementation of the group's treasury policy,
which is the responsibility of the finance committee. This remit
includes development of relationships with principal funders,
management of interest rates and liquidity risk. The finance
committee is responsible to the main board.
The group has no fixed interest rate borrowings and reviews the
need to hedge against interest rate movements continually. There
are currently no swap arrangements fixing LIBOR exposure. This
allows the group to benefit across all of its facilities from the
continued low floating rate of LIBOR, which in part, compensates
for the higher commercial rates being charged by the banks and is
appropriate given the relatively short term nature of the group's
debt.
There remain no external loans relating to joint venture
entities, to which the group has exposure. As a consequence, the
group regularly reviews the risk of exposure to interest rate
movements with its partners and, where appropriate, hedges against
that risk on a project by project basis.
The group continues to have minimal exposure to foreign currency
exchange risk and accordingly does not require a policy to hedge
such exposure.
Pensions
The defined benefit (DB) pension scheme obligations are shown in
the group balance sheet and movement during the year is reflected
in the statement of comprehensive income. The actuarial surplus
arising in the year, calculated in accordance with IAS19, is
reported as GBP0.7m (2012: GBP2.2m deficit). Unlike the triennial
valuation, IAS19 requires the scheme liabilities to be valued on
the basis of corporate bond yields as at 31 May 2013 with the
scheme assets being taken at market value.
Total contributions paid during the year to the DB scheme
recovery plan were GBP0.1m (2012: GBP0.1m). Payments to the defined
contribution scheme for existing employees were GBP0.3m (2012:
GBP0.3m).
Financial reporting
The consolidated financial statements have been produced in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. There have been no changes to the
IFRS requirements this year that have a material impact on the
group results.
John Moss Nigel Rawlings
Chief Executive Finance Director
26 September 2013
Consolidated income statement
For the year ended 31 May 2013
2013 2012
GBP'000 GBP'000
Note
Revenue 2 77,958 71,601
Cost of sales (76,116) (67,956)
---------- ---------
Gross profit 1,842 3,645
Operating expenses (6,343) (6,530)
Other operating income 3,144 3,327
Losses on revaluation of investment
properties (4,457) (1,099)
Operating loss 2 (5,814) (657)
Share of profit after taxation
in joint ventures 45 439
Finance income 1,074 1,335
Finance cost (2,023) (2,225)
Loss before taxation from continuing
operations 2 (6,718) (1,108)
Taxation (177) (167)
---------- ---------
Loss for the year from continuing
operations (6,895) (1,275)
Discontinued operations
Loss for the year from discontinued
operations 3 (236) (1,987)
Loss for the year (7,131) (3,262)
---------- ---------
Attributable to:
Equity holders of the company (7,163) (3,299)
Non-controlling interests 32 37
---------- ---------
Loss for the year (7,131) (3,262)
Basic and diluted loss per share
from continuing operations 4 (34.0p) (6.3p)
from discontinued operations 4 (1.2p) (9.7p)
---------- ---------
Total 4 (35.2p) (16.0p)
---------- ---------
Consolidated statement of comprehensive income
For the year ended 31 May 2013
Group
2013 2012
GBP'000 GBP'000
Loss for the year (7,131) (3,262)
Other comprehensive income:
Actuarial gains and losses 733 (2,177)
Deferred tax on actuarial gains and
losses (244) 501
Cash flow hedging:
Current period fair value movement - (300)
Reclassification adjustment - discontinued
cash flow hedge - 880
Deferred tax on cash flow hedging - (151)
Revaluation of property, plant and equipment (60) (20)
--------- ---------
Total comprehensive loss for the year (6,702) (4,529)
--------- ---------
Attributable to non controlling interests 32 37
Attributable to equity holders of the
company (6,734) (4,566)
--------- ---------
(6,702) (4,529)
--------- ---------
Consolidated statement of changes in equity
For the year ended 31 May 2013
Share Own Revaluation Hedge Retained Total Non-controlling Total
capital shares reserve reserve earnings attributable interest
to owners
of the GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 parent GBP'000
GBP'000
At 1 June 2011 5,200 (745) 2,265 (580) 17,428 23,568 216 23,784
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Share based payments - - - - 2 2 - 2
Equity dividend - - - - - - (56) (56)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Transactions with owners - - - - 2 2 (56) (54)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Loss for the year - - - - (3,299) (3,299) 37 (3,262)
Other comprehensive income
Actuarial losses - - - - (2,177) (2,177) - (2,177)
Deferred tax on actuarial
losses - - - - 501 501 - 501
Revaluation of property,
plant & equipment - - (20) - - (20) - (20)
Cash flow hedging:
Current period
fair
value movements - - - (300) - (300) - (300)
Reclassification
adjustment
-
Discontinued
cash flow
hedge - - - 880 - 880 - 880
Deferred tax on cash
flow hedging - - - - (151) (151) - (151)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Total comprehensive income
for the year - - (20) 580 (5,126) (4,566) 37 (4,529)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
At 31 May 2012 5,200 (745) 2,245 - 12,304 19,004 197 19,201
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Share based payments - - - - (13) (13) - (13)
Equity dividend - - - - - - (28) (28)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Transactions with owners - - - - (13) (13) (28) (41)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Loss for the year - - - - (7,163) (7,163) 32 (7,131)
Other comprehensive income
Actuarial gains - - - - 733 733 - 733
Deferred tax on actuarial
gains - - - - (244) (244) - (244)
Revaluation of property,
plant & equipment - - (60) - - (60) - (60)
Realisation of revaluation
reserve on disposal - - (38) - 38 - - -
Realisation of revaluation
reserve on reclassification - - 20 - (20) - - -
Total comprehensive income
for the year - - (78) - (6,656) (6,734) 32 (6,702)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
At 31 May 2013 5,200 (745) 2,167 - 5,635 12,257 201 12,458
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Consolidated balance sheet
As at 31 May 2013
2013 2012
GBP'000 GBP'000
Non current assets
Property, plant and equipment 1,541 3,773
Investment properties 29,198 32,231
Investments
Joint ventures 2,370 3,632
Deferred tax assets 1,939 1,939
-------- --------
Total non current assets 35,048 41,575
-------- --------
Current assets
Inventories 17,136 19,286
Trade and other receivables 11,250 12,085
Corporation tax recoverable - 330
Cash and cash equivalents 1,790 1,765
Total current assets 30,176 33,466
Assets classified as held-for-sale - 1,965
Total assets 65,224 77,006
-------- --------
Current liabilities
Trade and other payables 21,490 20,527
Corporation tax 41 -
Bank loans 22,357 24,342
Bank overdrafts 2,355 2,864
Obligations under finance leases 29 30
Total current liabilities 46,272 47,763
Liabilities classified as held-for-sale - 2,730
Net current liabilities 16,096 15,062
-------- --------
Non current liabilities
Bank loans 1,104 1,186
Obligations under finance leases 26 55
Retirement benefit obligation 2,214 3,008
Other payables 891 887
Provisions 2,259 2,176
-------- --------
Total non current liabilities 6,494 7,312
-------- --------
Total liabilities 52,766 57,805
-------- --------
Net assets 12,458 19,201
-------- --------
Equity
Share capital 5,200 5,200
Own shares (745) (745)
Revaluation reserve 2,167 2,245
Retained earnings 5,635 12,304
-------- --------
Total shareholders' equity 12,257 19,004
Non-controlling interest 201 197
-------- --------
Total equity 12,458 19,201
-------- --------
Consolidated cash flow statement
For the year ended 31 May 2013
2013 2013 2012 2012
GBP'000 GBP'000 GBP'000 GBP'000
Net cash from operating activities
Loss for the year (7,131) (3,262)
Loss for the year from discontinued
operations 236 1,987
Income tax 177 167
Finance income (1,074) (1,335)
Finance cost 2,023 2,225
Share of profit in joint ventures (45) (439)
Depreciation charge 92 120
Goodwill written off - 10
(Credit)/charge in respect of share
based payments (13) 2
Profit on sale of property, plant
and equipment (4) -
Profit on sale of investment properties - (145)
Losses on revaluation of investment
properties 4,457 1,099
Losses on revaluation of property,
plant & equipment 60 -
Loss on disposal of joint ventures
and associates - 142
Loss on disposal of available for
sale financial assets - 84
Provision against investments in
joint ventures 1,534 1,022
Provision against investment in available
for sale financial assets - 284
Income from joint ventures 45 35
Operating profit before changes
in working capital 357 1,996
Decrease/(increase) in inventories 2,875 (2,186)
Decrease in receivables 835 22
(Decrease)/Increase in payables (307) 1,256
Cashflows from/(used in) operating
activities (discontinued) 74 (1,246)
-------- --------
3,834 (158)
Interest paid (888) (1,006)
Income taxes received/(paid) 14 (46)
Net cash from/(used in) operating
activities 2,960 (1,210)
Investing activities
Interest received 9 23
Purchase of property, plant and
equipment (70) (105)
Proceeds from sale of investment
properties - 520
Proceeds from sale of property,
plant and equipment 5 -
Proceeds from disposal of joint
ventures - 837
Proceeds from disposal of available
for sale financial assets - 876
(Increase/)decrease in interest
in joint ventures (272) 244
Settlement of guarantee liabilities
in joint ventures - (5,000)
Net cash used in investing activities (328) (2,605)
Financing activities
Proceeds from new loans 985 925
Repayment of loans (3,052) (4,116)
Net cash used in financing activities (2,067) (3,191)
Net increase/(decrease) in cash
and cash equivalents 565 (7,006)
Cash and cash equivalents at beginning
of year (1,130) 5,876
Cash and cash equivalents at end
of year (565) (1,130)
--------------------------------------------- ---------- -------- --- -------- --------
Cash and cash equivalents at end
of year (continuing) (565) (1,099)
Cash and cash equivalents at end
of year (discontinued) - (31)
Total (565) (1,130)
--------------------------------------------- ---------- -------- --- -------- --------
Notes to the preliminary results
1 Basis of preparation
The preliminary announcement is prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union. This announcement does not itself contain
sufficient information to comply with IFRS. The accounting policies
used in preparation of this preliminary announcement have remained
unchanged from those set out in the 2012 annual report. They are
also consistent with those in the full financial statements which
have yet to be published.
The Board of Directors approved the preliminary announcement on
26 September 2013.
The financial information set out in this preliminary
announcement does not constitute the group's financial statements
for the years ended 31 May 2013 and 2012. The financial information
for the year ended 31 May 2012 is derived from the statutory
accounts for that year which have been delivered to the Registrar
of Companies. The statutory annual accounts for the year ended 31
May 2013, upon which an unqualified audit opinion has been given
and which did not contain a statement under sections 498 (2) and
498 (3) of the Companies Act 2006, will be sent to the Registrar of
Companies following the Company's annual general meeting.
Going concern
The directors continued to take steps during the year to settle
the group's exposure to a significant parent company guarantee
arrangement with a joint venture party and subsequent to the year
end this exposure has been discharged in full at a cost in line
with the previously taken provision of GBP1.2m.
During the year, and following the disposal of Pochin Concrete
Pumping Limited, the group successfully renegotiated its borrowing
facilities with RBS to October 2014 and the board are comfortable
that covenant tests, as amended with the group's principal bankers
agreement, will be complied with going forward.
As part of the refinancing process, the directors prepared a
business plan together with forecasts to May 2015. These forecasts
take account of reasonable changes in trading performance, the
satisfaction of remaining parent company guarantee arrangements and
other potential liabilities and show that the group should be able
to operate within the level of its revised facilities.
On this basis and after making enquires, the directors have a
reasonable expectation that the group and company has adequate
resources to continue in operational existence for the foreseeable
future, develop its property portfolio and advance its agreed
business plan. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
2 Segmental information
Operating segments have been determined based on the reports
regularly reviewed by the group board and which are used to make
strategic and operational decisions. The group board, excluding
non-executive directors, is considered to be the CODM and reviews
the segments based on the nature of the services provided.
The group is organised into two operating business segments
based on the different services provided by each division:
Construction and Property development and investment. The concrete
pumping segment was previously classified as discontinued.
As operations are carried out entirely within the UK, there is
no further consideration of information on geographical areas in
determining the groups operating segments. The measurement policies
used for segment reporting reflect those used for internal
reporting and for the group's financial statements. Inter-segmental
pricing is done on an arms length open market basis.
Construction Property Group Total Discontinued
development operations continuing operations
Year ended 31 May 2013 & investment operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 71,430 6,528 - 77,958 1,392
Inter-segment sales 2,293 - - 2,293 -
Eliminations (2,293) - - (2,293) -
------------ ------------- ----------- ----------- ------------
Total revenue 71,430 6,528 - 77,958 1,392
Segment result
Operating profit/(loss) 32 (4,841) (1,005) (5,814) (45)
Loss on remeasurement
and cost of disposal - - - - (191)
Share of profit after
taxation in joint ventures - 45 - 45 -
Net finance cost - (949) - (949) -
------------ ------------- ----------- ----------- ------------
Profit/(loss) before
taxation 32 (5,745) (1,005) (6,718) (236)
------------ ------------- ----------- ----------- ------------
Taxation (177) -
----------- ------------
Loss for the year (6,895) (236)
----------- ------------
Within the construction segment, external sales of GBP21,888,000
(31%) arise from customer A, that individually account for more
than 10 per cent of the entity's revenues. This one customer is
also considered to be a major customer.
Construction Property Elimination Total Discontinued
development of inter-company continuing operations
& investment balances operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets and liabilities
Segment assets 26,190 121,619 (84,955) 62,854 -
Investment in equity
accounted joint ventures - 2,370 - 2,370 -
------------ ------------- ----------------- ----------- ------------
Total assets 26,190 123,989 (84,955) 65,224 -
Segment liabilities (20,496) (117,225) 84,955 (52,766) -
------------ ------------- ----------------- ----------- ------------
Net assets 5,694 6,764 - 12,458 -
Other information
Capital expenditure 70 - - 70 -
Depreciation 67 25 - 92 -
Provision against investment
in joint ventures - 1,534 - 1,534 -
Impairment of inventories - 2,210 - 2,210 -
Construction Property Group Total Discontinued
development operations continuing operations
Year ended 31 May 2012 & investment operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 66,663 4,938 - 71,601 8,929
Inter-segment sales 1,727 - - 1,727 90
Eliminations (1,727) - - (1,727) (90)
------------ ------------- ----------- ----------- ------------
Total revenue 66,663 4,938 - 71,601 8,929
Segment result
Operating profit/(loss) 277 386 (1,320) (657) (1,235)
Loss on remeasurement
and cost of disposal - - - - (671)
Share of profit after
taxation in joint ventures - 439 - 439 -
Net finance income/(cost) 78 (977) 9 (890) (81)
------------ ------------- ----------- ----------- ------------
Profit/(loss) before
taxation 355 (152) (1,311) (1,108) (1,987)
------------ ------------- ----------- ----------- ------------
Taxation (167) -
----------- ------------
Loss for the year (1,275) (1,987)
----------- ------------
Within the construction segment, external sales of GBP28,360,000
(43%) arise from customer A GBP6,900,000 (10%), customer B
GBP7,800,000 (12%) and customer C GBP13,660,000 (21%) that
individually account for more than 10 per cent of the entity's
revenues.
Construction Property Elimination Total Discontinued
development of inter-company continuing operations
& investment balances operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets and liabilities
Segment assets 25,822 91,063 (45,476) 71,409 1,965
Investment in equity
accounted joint ventures - 3,632 - 3,632 -
------------ ------------- ----------------- ----------- ------------
Total assets 25,822 94,695 (45,476) 75,041 1,965
Segment liabilities (20,842) (79,709) 45,476 (55,075) (2,730)
------------ ------------- ----------------- ----------- ------------
Net assets/(liabilities) 4,980 14,986 - 19,966 (765)
Other information
Capital expenditure 105 - - 105 -
Depreciation 57 63 - 120 -
Provision against investment
in joint ventures and
available for sale financial
assets - 877 - 877 -
Impairment of inventories - 686 - 686 -
3 Disposal group classified as held for sale
Pochin Concrete Pumping Limited has been treated as a
discontinued operation and the business was sold as a going concern
on 31 July 2012. The results of this operation are summarised
below:
All below amounts are attributable to owners of the parent.
2013 2012
GBP'000 GBP'000
Revenue 1,392 8,929
Cost of sales (1,182) (7,893)
--------- ---------
Gross profit 210 1,036
Operating expenses (242) (2,271)
Operating loss (32) (1,235)
Finance cost (13) (81)
--------- ---------
Loss from discontinued operations
before taxation (45) (1,316)
Tax credit - -
--------- ---------
Net operating result from discontinued
operations (45) (1,316)
Remeasurement and disposal of
assets held for sale
Loss on remeasurement and cost
of disposal (191) (671)
--------- ---------
Loss for the year from discontinued
operations (236) (1,987)
--------- ---------
Net cash flows from discontinued
operations
Net cash flow from operating activities 74 (1,246)
74 (1,246)
--------- ---------
Net cash flow from discontinued
operating activities
Loss for the year (236) (1,987)
Finance cost 13 81
Operating cash flow before movement
in working capital (223) (1,906)
Decrease in receivables 1,965 20
(Decrease)/increase in payables (1,655) 566
Increase in provisions - 155
Net interest paid (13) (81)
--------- ---------
74 (1,246)
Assets of disposal group classified
as held for sale
Trade and other receivables - 1,965
- 1,965
--------- ---------
Liabilities of disposal of group
classified as held for sale
Trade and other payables - 855
Obligations under hire purchase
agreements - 595
Bank overdraft - 31
Deferred tax liabilities - 205
Provisions - 1,044
--------- ---------
- 2,730
--------- ---------
Included within the profit on remeasurement and cost of disposal
above are impairments amounting to GBPnil (2012: GBP671,000).
2013 2012
GBP'000 GBP'000
Loss from discontinued operations before
taxation is stated after charging:
Auditors' remuneration:
Audit services - 5
Non audit services:
Tax services - 3
Corporate finance - 163
------------- ---------
- 171
------------- ---------
4 (Losses)/earnings per share
The calculation of earnings per share (basic and diluted) is
based on group loss after taxation and non-controlling interest of
GBP7,163,000 (2012: GBP3,262,000) and the 20,800,000 ordinary
shares of 25p in issue at 31 May 2013 and 31 May 2012. The number
of shares used in the calculation has been reduced at 31 May 2013
for the 440,500 (2012: 440,500) shares held in the Employee Share
Trust. The assumed conversion of dilutive options has no impact on
the earnings per share because their conversion would reduce the
loss per share from continuing operations and so diluted earnings
per share is equal to basic earnings per share.
2012
2013 Weighted Weighted
average average
no. of no. of
Losses shares Per share Losses shares Per share
Continuing operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (6,927) 20,360 (34.0) (1,275) 20,360 (6.3)
Effect of share options - - - - - -
Diluted EPS (6,927) 20,360 (34.0) (1,275) 20,360 (6.3)
------- ------------- --------- ------- --------- ---------
2012
2013 Weighted Weighted
average average
no. of no. of
Losses shares Per share Losses shares Per share
Discontinued operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (236) 20,360 (1.2) (1,987) 20,360 (9.7)
Effect of share options - - - - - -
Diluted EPS (236) 20,360 1.2 (1,987) 20,360 (9.7)
------- ------------- --------- ------- --------- ---------
2012
2013 Weighted Weighted
average average
no. of no. of
Losses shares Per share Losses shares Per share
Total operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (7,163) 20,360 (35.2) (3,262) 20,360 (16.0)
Effect of share options - - - - - -
Diluted EPS (7,163) 20,360 (35.2) (3,262) 20,360 (16.0)
------- ------------- --------- ------- --------- ---------
Dividends paid in the year
No dividends were paid during the year (2012: nil). The
directors are not proposing a final dividend in respect of the
financial year ending 31 May 2013.
5 Post balance sheet event
Since the year end, Pochin's PLC has acquired controlling
interests in joint venture companies Hawarden Business Park Limited
and Keele Park Developments Limited. Subsequently, Keele Park
Developments Limited has been put in voluntary liquidation.
Since the year end, Pochin's PLC discharged its joint venture
guarantee obligations in respect of Keele Park Developments Limited
at a cost in line with the previously taken provision of
GBP1.2m.
Since the year end, Pochin's PLC has received GBP2,600,000 in
dividends from subsidiary companies.
6 Annual general meeting
The Annual General Meeting will be held at Mere Golf and Country
Club (Riley Room), Chester Road, Mere, Knutsford, Cheshire WA16 6LJ
on Thursday, 31 October 2013 at 10.30 am. The full annual report
will be posted to shareholders on or before 9 October 2013. Copies
will be available from the Company's website
(www.pochins.plc.uk).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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