TIDMPCH
RNS Number : 3909N
Pochin's PLC
28 September 2012
Pochin's PLC
Preliminary Results for the year ending 31 May 2012
Pochin's PLC ("Pochin" or "the group") the construction and
property group announces its preliminary results for the year
ending 31 May 2012.
Chairman's statement
The group result for the year ended 31 May 2012 shows a loss of
GBP3.3m after tax (2011: GBP3.4m), of which GBP2.0m (2011: GBP4.4m)
arose from discontinued activities. There was an operating profit
on continuing activities of GBP1.7m (2011: GBP4.5m) before adverse
property revaluations and impairments of investments and
inventories, which in total amounted to GBP2.9m. The directors do
not recommend payment of a final dividend.
In my statement a year ago, I referred to two key steps which
were prerequisites for restoring the group's fortunes. First, there
was the implementation of the board's decision to dispose of the
concrete pumping division. This took longer than the board
intended, and the division remained part of the group for the whole
of the year under review but, as has been separately reported, the
disposal was finally achieved with the sale of Pochin Concrete
Pumping Limited to Alcedo Limited, announced on 31 July 2012. The
business continues under new ownership and it is appropriate to
thank the 108 employees, transferred with it, for their forbearance
over a long period of uncertainty.
The second key step was the settling of the group's liabilities
arising out of the Liverpool office joint ventures. This was
achieved in September 2011. There has been a need for impairments
in other joint venture investments in the year to 31 May 2012, but
the settlement of the Liverpool exposure represented an important
turning point for the group.
Looking forward, the group now consists of two core divisions,
namely construction and property development and investment.
The group's construction activity, in contrast to that of the
concrete pumping business, stems mainly from the private sector. It
is to be hoped that recent Government announcements aimed at
stimulating the construction industry, within the confines of
restricted public expenditure, will have some effect in
re-invigorating the market in which the construction business
principally operates. It seems inevitable that the group's property
development and investment division will have to endure a further
period of subdued market conditions. The combination of reduced
demand for commercial property, notably in the retail sector,
together with the tightened criteria now applied by banks to
property lending, has taken its well-publicised toll both on values
and on development activity in the regional property market.
In the context of the above, each of the two remaining divisions
has performed creditably during the year. Construction revenue
increased during the year, and the current order book suggests a
maintained level of activity. While the majority of its contracts
are in North West England, work for established regular clients has
taken the division further afield, including to London and
Edinburgh. In uncertain times, the group's reputation for quality
and service continues to be of the greatest importance in winning
new business.
In property, the division's rental income, which underpins the
group, has been successfully maintained. The group's investment
portfolio is well managed and there is a wide spread of tenants
from whom the core income is derived. Development activity,
however, remains at a low level given the necessary resistance to
speculative risk. Nonetheless, some modest schemes in both the
office and retail sectors have been successfully undertaken in the
year. It remains difficult to achieve the division's programme of
planned property disposals given the lack of liquidity in the
regional market, and this represents an impediment to the
profitable re-investment of funds which will be important to the
future success of the division.
It is encouraging to be in a position to report that new and
extended group banking facilities have been agreed with The Royal
Bank of Scotland plc, principal bankers to the group over many
years. This confirmed ongoing support is reassuring in a sector
where such commitment is not readily forthcoming. These new
facilities should enable the group to look forward with renewed
confidence to a period of stability following the steps taken
regarding concrete pumping and joint ventures described above.
There is an increasing appreciation that urgent steps need to be
taken by the Government to stimulate construction activity,
particularly in the country's regions. It is to be hoped that new
Government initiatives, designed to encourage demand and to
increase the availability of construction finance, will start to
have the much needed beneficial effects. These are difficult times
for a construction and property business, and the group has had to
take steps which have been painful for employees and shareholders
alike.
Given the ongoing strong client relationships together with the
renewed banking arrangements, and provided that there is no further
decline in the market in which it operates, the group looks forward
to being able to repay the loyalty of both employees and
shareholders, which is greatly appreciated.
Richard Fildes
Chairman
28 September 2012
Enquiries:
Pochin's PLC
John Moss, Chief Executive 01606 833 333
John Edwards, Group Finance Director 01606 833 333
Charles Stanley Securities
Russell Cook/Carl Holmes 020 7149 6476
Business review
Group overview
The UK construction and property markets have again failed to
recover during the year. The Office of National Statistics shows a
continued slowdown, with a 40% reduction in public sector non-house
building work and a flat private sector.
Against the backdrop of these difficult market conditions, the
group has been working towards a business model comprising two core
trading divisions that can operate with a degree of autonomy,
whilst being able to deliver an integrated property development and
construction product where appropriate. To this end, the group has
continued to reduce exposure to joint venture liabilities and
dispose of non-core activities. Following protracted negotiations
with several interested parties, Pochin Concrete Pumping Limited
was sold on 31 July 2012 to Alcedo Limited. In addition, since the
year end, the contracting activities of the residential division
have now been integrated within the construction division.
With only a limited number of joint venture commitments
remaining, the group has achieved its goal of streamlining the
business into the two core operating divisions of construction and
property.
The strategy to maintain core capabilities and skills through
the prolonged downturn leaves the two operating divisions well
placed to grow profitably as the economy recovers. Pochin's has
established a first class reputation in both the private and public
sectors and offers added value to all of its clients and
stakeholders through a focus on sustainable practices, timely
completion and quality of service. To maintain margins,
relationships with these reliable, well funded key clients are
being used to expand geographically, in a controlled manner. The
existing supply chain is being utilised for much of this
geographical expansion, thereby maintaining the standards of
delivery for which Pochin's is held in high regard.
Despite the continued downturn in the wider construction market,
group revenues improved to GBP71.6m (2011: GBP59.3m) from
continuing activities. Activity in the property division was mainly
restricted to the sale of surplus assets, the pace of which was
heavily influenced by the general market. Property (including
residential) turnover was GBP4.9m (2011: GBP17.7m). Turnover in
construction was the biggest contributor to the recovery in group
activity delivering revenues of GBP66.7m (2011: GBP41.6m), a year
on year growth of 60%. This justifies the decision made last year,
in the face of a major drop in activity, to retain the group's core
capabilities in property and construction with staff numbers at the
year end maintained at 266 (2011: 262).
The increase in group activity, against the national trend,
highlights the value of the Pochin brand in securing repeat work
from existing clients in difficult times. The principles and values
of the group have been upheld and these have ensured continued
support from clients, professionals and the supply chain. In all
cases, these values and principles can only be upheld through the
actions of our employees and they remain the key asset of the
business. The group recognises the contribution made by its
employees through these difficult trading conditions and looks
forward to providing them with increased opportunities as the
market recovers.
There was an underlying operating profit before tax from
continuing activities of GBP1.7m (2011: GBP4.5m), which reduces to
a loss before tax of GBP1.2m (2011: GBP0.7m profit) after
investment and property impairments mainly associated with the
anticipated exit from the Keele Park Developments Limited joint
venture.
The delays encountered in disposing of the concrete pumping
business resulted in an additional full year of trading losses and
further costs of disposal. Classified as a "discontinued activity",
the charge to the group before tax was GBP2.0m (2011: GBP4.8m).
GBPm Continuing Discontinued Total 2012 2011
---------------------------- ----------- ------------- ----------- ------
Operating profit 1.7 (1.3) 0.4 3.4
Property revaluations (1.1) - (1.1) (0.1)
Impairment of investments (1.2) - (1.2) (2.7)
Impairment of inventories (0.6) - (0.6) (0.8)
Costs of restructure - - - (2.8)
Cost of disposal - (0.7) (0.7) (1.0)
---------------------------- ----------- ------------- ----------- ------
Group loss before taxation (1.2) (2.0) (3.2) (4.0)
Divisional review
Construction
The division started the year slowly, but as previously secured
contracts finally commenced, turnover increased throughout the year
to GBP66.7m. The profit generated of GBP0.4m (2011: GBPnil)
although modest, is considered a success in these difficult
conditions. It is through the use of tried and tested suppliers and
active risk management that the division has delivered this
positive result. However, the business is aware that the supply
chain has been under strain and there have been a number of
significant subcontractor failures.
During the year, revenues continued to shift towards the private
sector (84%) as public sector spending reduced in all areas other
than major infrastructure. Maintaining good client relationships
and effective key account management, supported by delivery of
quality projects on time and to budget, has allowed the division to
increase revenue in a shrinking market.
The divisional strategy to maintain a presence in all sectors
has stood the business in good stead. A balanced portfolio has been
maintained that will provide a good platform for growth, whichever
sectors recover soonest.
As a result of the controlled expansion outside the North West,
the business secured a GBP27m student accommodation project in
Edinburgh, a GBP12m scheme in Hyde Park, London and smaller
contracts in Leeds and Nottingham. Several more opportunities in
both Scotland and the South East can now be delivered using
existing teams.
Revenue from the special projects team has continued to grow,
reaching GBP3.9m for the year (2011: GBP3.5m). Whilst small in
terms of overall revenue, it enables the division to offer a range
of services to clients large and small.
The division's continued aim is to deliver exceptional projects
for its clients that reflect the group's core values. Despite the
economic pressures, a high performing team has been maintained
across all disciplines and this has been recognised in its
achievements, which include:
-- a RoSPA Gold Award for Safety;
-- completion of two contracts to "exceptional" BREEAM standards;
-- completion of six contracts to "very good" BREEAM standards;
-- placed in the top 10% considerate contractors in the country; and
-- a Blackpool Civic Trust Community Award.
Property (including Residential)
The commercial property and investment markets in the UK
continue to show a reduction year on year in both activity and
capital values. Market reports indicate investment activity for the
first half of 2012 was GBP14.9bn, down from GBP17.3bn for the same
period a year ago. In view of this economic background, the
strategy to limit developments to only those where an end user has
been secured has been maintained. No speculative development is
being undertaken either by the division or in joint venture,
thereby reducing the risk and demands on the group's cash
reserves.
In the year, the division commenced an office development for
TATA Chemicals Europe Limited in Northwich, Cheshire and progressed
interest in a number of other schemes, including several small
retail opportunities for delivery in the coming financial year.
The division has continued its programme of asset disposal for
the purpose of debt reduction, but only where a fair market value
can be achieved. During the year, further disposals were concluded
at Ellesmere, Shropshire to Bloor Homes Limited and McCarthy &
Stone Retirement Lifestyles Limited. Also, two small investment
property sales were secured in Middlewich. Progress towards
creating future investment and development opportunities at
Midpoint 18 in Middlewich received a boost in the year, following
nomination for a grant from the Regional Growth Fund.
The investment portfolio continues to perform well maintaining
occupancy levels at 96% at the year end. Income was also maintained
through good property management and a high level of tenant
retention. Given the current market conditions, these levels will
be difficult to maintain.
Following the decision to cease all residential development
activity, the house building capability retained within the group
was transferred to the construction division after the year end and
will only carry out future work as a house building contractor.
Sales of existing housing stock were sufficient to repay the
outstanding residential development loans in full. This included
all remaining units at Burslem, Staffordshire and stock at
Cockshutt, Shropshire.
Small parcels of land at Anglesey and Winsford were also
sold.
Concrete Pumping
Following the decision to dispose of the concrete pumping
business, as reported last year, it was classified as a
"discontinued activity". It has continued to be reported in this
way, due to the protracted sale process.
Throughout this period, the division recorded a trading loss of
GBP1.3m (2011: GBP1.2m). Despite further efforts to reduce the cost
base and improve efficiencies, public infrastructure spending
failed to recover and further losses were unavoidable. This
reinforced the group's decision to progress with the disposal of
the business, which was completed on 31 July 2012.
GBPm Trading Adjustments* Total 2012 2011
---------------------------- -------- ------------- ------------ -----------------
Continuing Activities
Construction 0.4 - 0.4 -
Property 2.6 (2.9) (0.3) 2.6
Group (1.3) - (1.3) (1.8)
---------------------------- -------- ------------ ------------ ---------------
1.7 (2.9) (1.2) 0.8
Discontinued Activities
Concrete Pumping (1.3) (0.7) (2.0) (4.8)
---------------------------- -------- ------------ ------------ ---------------
Group profit/(loss) before
taxation 0.4 (3.6) (3.2) (4.0)
*Adjustments for impairments and restructuring
Joint ventures and associates
The group made progress with its policy of withdrawing from
joint venture activity thereby limiting its financial exposure. As
a consequence, contributions to operating profit from these
ventures reduced significantly during the year.
There was a successful outcome to the asset sale process at
Hawarden Business Park, where all financial obligations were fully
settled. There remains future development opportunities for the
group at this location.
The group also acquired full control of its associate UKLP
(BrynCegin) Limited during the year, which will allow it to take
full advantage of development opportunities at Parc Bryn Cegin,
Bangor, North Wales.
The group's investment holding in Manchester Science Park
Limited and 50% shareholding in Manchester Technopark Limited were
also sold successfully during the year.
Despite near full occupancy of properties at Keele Park, open
market values have fallen and additional financial support has been
required to meet capital repayments, which has been a drain on
group funds. Action is being taken to crystallise the financial
burden of this scheme through negotiation with our joint venture
partner and associated funder. The cost of this action has been
reflected in the accounts of the group, amounting to GBP1.2m.
Joint ventures at Exchange Flags (Horton House and Walker House)
in Liverpool, in partnership with UK Land & Property Limited,
have been the most challenging schemes. However, it is pleasing to
report that the group has settled its guarantee obligations, at a
cost of GBP5m, and is working with its partner and associated
funder towards the disposal of both properties and complete
withdrawal from these schemes.
Strategically, the group will continue the shift towards
investment in opportunities developed and managed by its own
in-house property team and away from a reliance on joint venture
partners. Consequently, no new joint venture investment activity
has been made in the period.
Earnings per share and dividend
Basic and diluted earnings per share was -16.0p (2011: -16.9p).
Basic and diluted earnings per share for continuing activities was
-6.3p (2011: 4.6p).
No final dividend is proposed resulting in a nil dividend for
the year (2011: nil).
Balance sheet
The further losses incurred caused by the delay in disposing of
the concrete pumping business, provisions for settlement of
remaining joint venture obligations and IAS19 pension adjustments
were the major contributing factors to a fall in net asset value of
the group. Net asset value reduced to GBP19.2m (2011: GBP23.8m).
This is equivalent to 92p per share (2011: 114p).
The total value of investment properties on the balance sheet is
now GBP32.2m (2011: GBP33.0m). There were two small property
disposals and relatively minor adjustments to values to reflect
market yields, including the group's exposure to the Travelodge
company voluntary arrangement after the year end.
Investment in joint ventures, associates and assets available
for sale reduced by GBP2.7m to GBP3.6m due to the transfer of value
in Parc Bryn Cegin to inventories following acquisition of the
remaining shares from UKLP (Wales) Limited, the write down of
investment value in Keele Park Developments Limited pending
withdrawal from the venture and the disposal of holdings in
Manchester Science Park Limited and Manchester Technopark
Limited.
Inventories increased to GBP19.3m (2011: GBP17.8m). This was due
to the recovery in construction activity during the year and partly
offset by the continued disposal of remaining housing stock.
The liability for defined benefit pension obligations,
reportable under IAS19, increased by GBP2.0m to GBP3.0m. This
adverse movement resulted from the depressed corporate bond yields
used to measure the scheme liabilities under IFRS.
Cash flow and borrowings
Cash generation was restricted by a continuation of difficult
market conditions and ongoing losses from concrete pumping.
However, underlying cash flow from operations and receipts from
further disposals of non-income producing assets facilitated
repayment of GBP4.1m of outstanding loans. A new loan was arranged
to fund specific development activity and this was drawn down by
GBP0.9m at the year end. The group also paid GBP5.0m from existing
cash deposits in settlement of onerous joint venture guarantee
liabilities.
At 31 May 2012 total group borrowings were GBP28.4m (2011:
GBP29.3m) and cash held on deposit was GBP1.8m (2011: GBP6.3m),
resulting in a net debt position of GBP26.6m (2011: GBP23.0m).
GBPm 2012 2011
Operating activities (continuing) 0.5 5.9
Operating activities (discontinued) (1.2) (2.1)
Repayment of existing loans 4.1 2.0
Increase in development loans (0.9) -
Settlement of guarantee liabilities (5.0) (0.8)
Net interest paid (1.1) (1.0)
Taxation - (0.1)
Movement in net borrowings (3.6) 3.9
Going concern
As previously reported, existing borrowing facilities of the
group with its principal banker, The Royal Bank of Scotland plc
(RBS), were extended pending disposal of the concrete pumping
business. This entity was sold successfully on 31 July 2012 and
based on a revised business plan for the restructured group, new
facilities have been agreed with RBS to October 2014, with
covenants accordingly re-set. Renewal and term extension of the RBS
facilities provides the group with funding security and ensures
that it is adequately funded to meet its forecasted obligations and
cash requirements for the facility term.
The new facilities comprise an investment loan of GBP17.9m, an
asset disposal loan of GBP5.4m and an overdraft/multi-option
facility of GBP4.1m. These facilities are secured against assets in
the business.
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.
Despite the absence of specialist financial instruments, the
group continues to operate an effective interest rate hedging
policy, which states that the sole purpose of any financial
instrument employed by the group to fix interest rates is to
protect the group from fluctuations in interest rates charged on
its borrowings. As a consequence, any changes in the fair value of
such hedging instruments when they arise are recognised directly in
equity and not, unless deemed to be ineffective, through the income
statement. The only remaining hedge exposure during the year was
the group's share of the interest rate hedge on borrowings relating
to the joint venture of Keele Park Developments Limited. However,
as the hedge has been effectively discontinued it is no longer
recognised.
There remains both long term repayment loans and short to medium
term development borrowings 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
During the year the closed defined benefit (DB) pension scheme
underwent a full triennial actuarial valuation, which resulted in a
deficit of GBP3.3m. A revised recovery plan has been agreed with
the trustees and is awaiting final approval from the Pensions
Regulator. Annual contributions to the new recovery plan will be
consistent with those currently made under the existing plan,
albeit over a greater number of years.
As reported last year and following agreement with the DB scheme
trustees, the pension liability relating to the concrete pumping
business was apportioned across the remaining employers within the
scheme. This was done to facilitate the disposal of that business
by preventing the crystallisation of a debt arising under section
75 of the Pensions Act 1995.
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 GBP3.0m (2011:
GBP1.0m). Unlike the triennial valuation, IAS19 requires the scheme
liabilities to be valued on the basis of corporate bond yields as
at 31 May 2012 with the scheme assets being taken at market value.
At that time, corporate bond yields were at an historic low, which
has resulted in a significant increase in the calculated
liabilities of the scheme under IAS19 reporting rules and a
subsequent adverse movement in the retirement benefit obligation
reported in the balance sheet.
Total contributions paid in the period to the DB scheme recovery
plan were GBP0.1m (2011: GBP0.1m). Payments to the defined
contribution scheme for existing employees were GBP0.4m (2011:
GBP0.4m).
Financial reporting
The consolidated financial statements have been produced in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU. There have been no changes to the IFRS
requirements this year that have a material impact on the group
results.
John Moss John Edwards
Chief Executive Group Finance Director
28 September 2012
Consolidated income statement
For the year ended 31 May 2012
2012 2011
Note GBP'000 GBP'000
Revenue 2 71,601 59,283
Cost of sales (67,956) (52,580)
---------- ---------
Gross profit 3,645 6,703
Operating expenses (6,530) (8,501)
Other operating income 3,327 2,891
Losses on revaluation of investment
properties (1,099) (135)
---------- ---------
Operating (loss)/profit 2 (657) 958
Share of profit after taxation
in joint ventures 439 587
Share of profit after taxation
in associates - 87
Finance income 1,335 1,115
Finance cost (2,225) (2,103)
(Loss)/profit before taxation
from continuing operations (1,108) 644
Taxation (167) 289
---------- ---------
(Loss)/profit for the year from
continuing operations (1,275) 933
Discontinued operations
Loss for the year from discontinued
operations 3 (1,987) (4,372)
Loss for the year (3,262) (3,439)
---------- ---------
Attributable to:
Equity holders of the company (3,299) (3,477)
Non controlling interests 37 38
---------- ---------
Loss for the year (3,262) (3,439)
Basic and diluted (loss)/earnings
per share
from continuing operations 4 (6.3p) 4.6p
from discontinued operations 4 (9.7p) (21.5p)
---------- ---------
Total 4 (16.0p) (16.9p)
---------- ---------
Consolidated statement of comprehensive income
For the year ended 31 May 2012
Group
2012 2011
GBP'000 GBP'000
Loss for the year (3,262) (3,439)
Other comprehensive income:
Actuarial gains and losses (2,177) 1,521
Deferred tax on actuarial gains and
losses 501 (449)
Cash flow hedging:
Current period fair value movement (300) 1,662
Reclassification adjustment - discontinued
cash flow hedge 880 (1,013)
Deferred tax on cash flow hedging (151) (350)
Revaluation of property, plant and equipment (20) -
--------- ---------
Total comprehensive income for the year (4,529) (2,068)
--------- ---------
Attributable to non controlling interests 37 38
Attributable to equity holders of the
Company (4,566) (2,106)
--------- ---------
(4,529) (2,068)
--------- ---------
Consolidated statement of changes in equity
For the year ended 31 May 2012
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 2010 5,200 (745) 2,265 (1,229) 20,202 25,693 219 25,912
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Share based payments - - - - (19) (19) - (19)
Equity dividend - - - - - - (41) (41)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Transactions with owners - - - - (19) (19) (41) (60)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Loss for the year - - - - (3,477) (3,477) 38 (3,439)
Other comprehensive income
Actuarial gains - - - - 1,521 1,521 - 1,521
Deferred tax on actuarial
gains - - - - (449) (449) - (449)
Cash flow hedging:
Current period
fair value
movements - - - 1,662 - 1,662 - 1,662
Reclassification
adjustment
-
disposal of cash
flow
hedge - - - (1,013) - (1,013) - (1,013)
Deferred tax on cash
flow hedging - - - - (350) (350) - (350)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Total comprehensive income
for the year - - - 649 (2,755) (2,106) 38 (2,068)
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
At 31 May 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
-------- -------- ------------ -------- --------- ------------- ---------------- ------------
Consolidated balance sheet
As at 31 May 2012
2012 2011
GBP'000 GBP'000
Non current assets
Property, plant and equipment 3,773 3,808
Investment properties 32,231 32,980
Investments
Joint ventures 3,632 4,544
Associates - 500
Available for sale - 1,244
Deferred tax assets 1,939 1,939
-------- --------
Total non current assets 41,575 45,015
-------- --------
Current assets
Inventories 19,286 17,825
Trade and other receivables 12,085 12,107
Corporation tax recoverable 330 319
Cash and cash equivalents 1,765 6,320
Total current assets 33,466 36,571
Assets classified as held-for-sale 1,965 2,163
Total assets 77,006 83,749
-------- --------
Current liabilities
Trade and other payables 20,612 25,219
Bank loans 6,465 9,277
Bank overdrafts 20,741 18,499
Total current liabilities 47,818 52,995
Liabilities classified as held-for-sale 2,730 3,021
Net current liabilities 15,117 17,282
-------- --------
Non current liabilities
Bank loans 1,186 1,565
Retirement benefit obligation 3,008 1,041
Other payables 887 943
Provisions 2,176 400
-------- --------
Total non current liabilities 7,257 3,949
-------- --------
Total liabilities 57,805 59,965
-------- --------
Net assets 19,201 23,784
-------- --------
Equity
Share capital 5,200 5,200
Own shares (745) (745)
Revaluation reserve 2,245 2,265
Hedge reserve - (580)
Retained earnings 12,304 17,428
-------- --------
Total shareholders' equity 19,004 23,568
Non-controlling interest 197 216
-------- --------
Total equity 19,201 23,784
-------- --------
Consolidated cash flow statement
For the year ended 31 May 2012
2012 2012 2011 2011
GBP'000 GBP'000 GBP'000 GBP'000
Net cash from operating activities
Loss for the year (3.262) (3,439)
Loss for the year from discontinued
operations 1,987 4,372
Income tax 167 (289)
Finance income (1,335) (1,115)
Finance cost 2,225 2,103
Share of profit in joint ventures
and associates (439) (674)
Depreciation charge 120 130
Release gain on bargain purchase - (1,175)
Goodwill written off 10 -
Charge/(credit) in respect of share
based payments 2 (19)
Profit on sale of property, plant
and equipment - (12)
Profit on sale of investment properties (145) (57)
Losses on revaluation of investment
properties 1,099 135
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 1,022 1,537
Provision against investment in available
for sale financial assets 284 1,478
Income from joint ventures and associates 35 298
Operating profit before changes
in working capital 1,996 3,273
(Increase)/decrease in inventories (2,186) 3,796
Decrease/(increase) in receivables 22 (1,997)
Increase in payables 1,256 11,687
Cash flows used in operating activities
(discontinued) (1,246) (5,437)
--------- ---------
(158) 11,322
Interest paid (1,006) (1,036)
Income taxes paid (46) (123)
Net cash (used in)/from operating
activities (1,210) 10,163
Investing activities
Interest received 23 26
Purchase of investment properties - (3,896)
Purchase of property, plant and
equipment (105) (26)
Proceeds from sale of investment
properties 520 264
Proceeds from sale of property,
plant and equipment - 144
Purchase of subsidiary undertakings - (50)
Proceeds from disposal of joint
ventures 837 -
Proceeds from disposal of available
for sale financial assets 876 -
Decrease in interest in joint ventures
and associates 244 10
Increase in interest in available
for sale financial assets - (532)
Settlement of guarantee liabilities
in joint ventures (5,000) -
Cash flows used in investing activities
(discontinued) - (1,005)
---------- --------
Net cash used in investing activities (2,605) (5,065)
Financing activities
Proceeds from new loans 925 -
Repayment of loans (4116) (3,915)
Cash flows from financing activities
(discontinued) - 858
----------
Net cash used in financing activities (3,191) (3,057)
Net (decrease)/increase in cash
and cash equivalents (7,006) 2,041
Cash and cash equivalents at beginning
of year (12,001) (14,042)
Cash and cash equivalents at end
of year (19,007) (12,001)
---------------------------------------------- ---------- --------- --- -------- ---------
Cash and cash equivalents at end
of year (continuing) (18,976) (12,179)
Cash and cash equivalents at end
of year (discontinued) (31) 178
Total (19,007) (12,001)
---------------------------------------------- ---------- --------- --- -------- ---------
Notes to the preliminary results
1 Basis of preparation
The preliminary announcement is prepared in accordance with
International Financial Reporting Standards, this announcement does
not itself contain sufficient information to comply with IFRS. The
accounting policies used in preparation of this preliminary
announcement have remained unchanged from those set out in the 2011
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
27 September 2012.
The financial information set out in this preliminary
announcement does not constitute the group's financial statements
for the years ended 31 May 2012 and 2011. The financial information
for the year ended 31 May 2011 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 2012, 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 have taken steps during the year to settle the
group's exposure to various significant parent company guarantee
arrangements with joint venture parties.
Since the year end, and following the disposal of Pochin
Concrete Pumping Limited, the group successfully renegotiated its
borrowing facilities with RBS to October 2014.
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.
During the year, the group was reorganised into two operating
business segments based on the different services provided by each
division: Construction and Property development and investment. The
residential segment has been transferred to the property division
during the year and comparative figures have been restated. The
concrete pumping segment was classified as discontinued during the
prior year.
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 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. These three are also considered to be major
customers.
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
and associates - 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 -
Construction Property Group Total Discontinued
Year ended 31 May 2011 development operations continuing operations
As restated & investment operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 41,569 17,714 - 59,283 8,821
Inter-segment sales 1,006 310 - 1,316 67
Eliminations (1,006) (310) - (1,316) (67)
------------ ------------- ----------- ----------- ------------
Total revenue 41,569 17,714 - 59,283 8,821
Segment result
Operating profit/(loss) 12 2,726 (1,780) 958 (1,170)
Loss on remeasurement
and cost of disposal - - - - (3,569)
Share of profit after
taxation of joint ventures
and associates - 674 - 674 -
Net finance income/(cost) 18 (1,008) 2 (988) (26)
------------ ------------- ----------- ----------- ------------
Profit/(loss) before
taxation 30 2,392 (1,778) 644 (4,765)
------------ ------------- ----------- ----------- ------------
Taxation 289 393
----------- ------------
Profit/(loss) for the
year 933 (4,372)
----------- ------------
Within the construction segment in 2011, external sales of
GBP18,250,000 (44%) arise from customer A GBP4,750,000 (11%),
customer B GBP4,900,000 (12%) and customer C GBP8,600,000 (21%)
that individually account for more than 10 per cent of the entity's
revenues.
As restated Construction Property Elimination Discontinued
development of inter-company Total continuing operations
& investment balances operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Asset and liabilities
Segment assets 20,932 86,453 (30,843) 76,542 2,163
Investment in equity
accounted joint ventures
and associates - 5,044 - 5,044 -
------------ ------------- ------------------- ---------------- ------------
Total assets 20,932 91,497 (30,843) 81,586 2,163
Segment liabilities 14,781 73,006 (30,843) 56,944 3,021
Net assets/(liabilities) 6,151 18,491 - 24,642 (858)
------------ ------------- ------------------- ---------------- ------------
Other information
Capital expenditure 26 - - 26 1,149
Depreciation 67 63 - 130 -
Provision against
investment in joint
ventures and available
for sale financial
assets - 3,015 - 3,015 -
Impairment of inventories - 793 - 793 -
3 Disposal group classified as held for sale
Pochin Concrete Pumping Limited has been treated as a
discontinued operation as the business was sold as a going concern
on 31 July 2012. The results of this operation are summarised below
(with all amounts attributable to owners of the parent):
2012 2011
GBP'000 GBP'000
Revenue 8,929 8,821
Cost of sales (7,893) (8,007)
--------- ---------
Gross profit 1,036 814
Operating expenses (2,271) (1,996)
Other operating income - 12
--------- ---------
Operating loss (1,235) (1,170)
Finance income - 192
Finance cost (81) (218)
--------- ---------
Loss from discontinued operations
before taxation (1,316) (1,196)
Tax credit - 393
--------- ---------
Net operating result from discontinued
operations (1,316) (803)
Remeasurement and disposal of
assets held for sale
Loss on remeasurement and cost
of disposal (671) (3,569)
--------- ---------
Loss for the year from discontinued
operations (1,987) (4,372)
--------- ---------
Net cash flows from discontinued
operations
Net cash flow from operating activities (1,246) (5,437)
Net cash flow from investing activities - (1,005)
Net cash flow from financing activities - 858
--------- ---------
(1,246) (5,584)
--------- ---------
Net cash flow from discontinued
operating activities
Loss for the year (1,987) (4,372)
Income tax - (393)
Finance income - (192)
Finance cost 81 218
Impairment of assets held for
sale - 158
Profit on sale of property, plant
and equipment - (12)
--------- ---------
Operating cash flow before movement
in working capital (1,906) (4,593)
Decrease in inventories 62 52
Decrease/(increase) in receivables 20 (55)
Increase/(decrease) in payables 566 (1,761)
Increase in provisions 155 950
Net interest paid (81) (30)
--------- ---------
(1,906) (5,437)
Assets of disposal group classified
as held for sale
Trade and other receivables 1,965 1,985
Cash and cash equivalents - 178
--------- ---------
1,965 2,163
--------- ---------
Liabilities of disposal of group
classified as held for sale
Trade and other payables 794 904
Obligations under hire purchase
agreements 595 962
Bank overdraft 31 -
Deferred tax liabilities 205 205
Provisions 1,105 950
--------- ---------
2,730 3,021
--------- ---------
Included within the loss on remeasurement and cost of disposal
are impairments amounting to GBP671,000 (2011: GBP2,383,000)
4 Earnings per share
The calculation of earnings per share (basic and diluted) is
based on group loss after taxation and non-controlling interest of
GBP3,262,000 (2011: GBP3,439,000) and the 20,800,000 ordinary
shares of 25p in issue at 31 May 2012 and 31 May 2011. The number
of shares used in the calculation has been reduced at 31 May 2012
for the 440,500 (2011: 440,500) shares held in the Employee Share
Trust. The assumed conversion of dilutive options has no impact on
the number of shares and so diluted earnings per share is equal to
basic earnings per share.
2011
2012 Weighted Weighted
average average
no. of no. of
Earnings shares Per share Earnings shares Per share
Continuing operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (1,275) 20,360 (6.3) 933 20,360 4.6
Effect of share options - - - - - -
Diluted EPS (1,275) 20,360 (6.3) 933 20,360 4.6
-------- ------------- --------- -------- --------- ---------
2011
2012 Weighted Weighted
average average
no. of no. of
Earnings shares Per share Earnings shares Per share
Discontinued operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (1,987) 20,360 (9.7) (4,372) 20,360 (21.5)
Effect of share options - - - - - -
Diluted EPS (1,987) 20,360 (9.7) (4,372) 20,360 (21.5)
-------- ------------- --------- -------- --------- ---------
2011
2012 Weighted Weighted
average average
no. of no. of
Earnings shares Per share Earnings shares Per share
Total operations GBP'000 '000 p GBP'000 '000 p
Basic EPS (3,262) 20,360 (16.0) (3,439) 20,360 (16.9)
Effect of share options - - - - - -
Diluted EPS (3,262) 20,360 (16.0) (3,439) 20,360 (16.9)
-------- ------------- --------- -------- --------- ---------
Dividends paid in the year
No dividends were paid during the year (2011: nil).
The Directors are not proposing a final dividend in respect of
the financial year ending 31 May 2012.
5 Post balance sheet event
Pochin Concrete Pumping Limited was sold as a going concern on
31 July 2012 for the sum of GBP1. It will continue to operate from
Pochin group properties as a tenant for which it has entered into
commercial lease arrangements that include a rent free period of 2
years. This cost has been taken into account when determining the
fair value less cost to sell for the year ended 31 May 2012.
The fair value of the assets and liabilities at the date of
disposal are not materially different from those detailed, as at 31
May 2012.
Following announcement in previous years that the concrete
pumping business was no longer part of the group strategy, the
continual requirement to re-invest in the pump fleet combined with
its ongoing losses reinforced the decision to dispose of the
business. To facilitate the sale as a going concern, a series of
pre-sale cost saving measures were undertaken and the group agreed
to retain exposure to existing lease payment guarantees, which
reduce to nil by 2015.
6 Annual general meeting
The Annual General Meeting will be held at Mere Golf and County
Club, Knutsford, Cheshire at 10.30 a.m. on Thursday 1 November
2012. The full annual report will be posted to shareholders on or
before 10 October 2012. 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
FR KDLFLLKFZBBQ
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