RNS Number:1793Q
Pochin's PLC
25 September 2003
POCHIN'S PLC
PRELIMINARY
ANNOUNCEMENT
Audited results for the
year ended 31 May 2003
Pochin group highlights
Year ended 31 May 2003
"We have continued to focus on improving performance in the trading divisions...."
(Nick Pochin, chairman)
* Turnover up 41% to #66.1m (2002 : #46.8m)
* Profit before tax up 7% to #4.5m (2002 : #4.2m)
* Earnings per share up 19% from 12.5p to 14.9p
* Final dividend of 4.25p, making a total of 6.25p, up 12.6% on last year
* Net asset value per share up 4% from 2.07p to 2.16p
* Net debt reduced by #1.1m
* Secured orders for the current year #42m
"We have a healthy order book and, with further benefits from reorganisation
anticipated, I am confident that the current year will add to our continuing
success...."
(Nick Pochin, chairman)
Pochin Group
Chairman's statement
Results and dividends
This is the first full year of trading since our reorganisation of the group's
businesses and management. We have made good progress, although much of this
improvement is not yet fully reflected in the group's financial results. I am
pleased to report that profit before tax has increased by 7% to #4.49m (2002:
#4.20m) on turnover up by 41% to #66.1m (2002: #46.8m.).
We have continued to focus on improving performance in the trading divisions by
targeting higher quality contracts and improving operating margins. As a result
the contracting and plant divisions have both improved their performance, with
contracting returning to profit and plant increasing its contribution.
The property division has again produced substantial profits, both from our own
and from joint venture projects. Rental income during the year was lower,
following various sales, but it is pleasing to note that new rental streams will
generate higher investment income in the current year.
The board is recommending a final dividend of 4.25p per share (2002: 3.55p),
which will make a total dividend for the year of 6.25p (2002: 5.55p), an
increase of 12.6%. This increase reflects the board's intention to adopt a more
progressive dividend policy providing it is justified by trading performance and
underpinned by a prudent level of dividend cover.
Operations
Construction
The improvement in contracting is particularly pleasing and rewarding for the
new management team. There is a secured order book for the current year of
#42.4m (2002: #40.7m) and there are some good quality enquiries in hand. However
conditions in the marketplace remain competitive and low returns continue to be
a fact of life within the industry.
Plant
The plant division has also improved its contribution. Prospects are good with
the new Pumi pumping equipment gaining increasing acceptance within the UK
concrete delivery market. This provides the company with an avenue for growth
without the need for significant increases in overheads. Avoidatrench Limited
has had another good year and has acquired Pipeline Drillers Limited to increase
the range of its services to utility and other contractors. The new company has
met its initial targets and we are confident that it will prove a sound
investment for the future.
Property
There were fewer disposals than in the previous year. The principal transaction
in this year was the sale of the property at Bolton for #5.9m, which generated a
profit in excess of #1m. The development division is working on a number of new
projects which will underpin contributions to group profits in the current and
future years.
Rental income has been supplemented at Prosperity Court on Midpoint 18, here in
Middlewich, by the development of smaller units. These have been added to the
group investment property portfolio and are already fully let. Further lettings
in the second innovation centre building at Keele Park have been secured and the
next phase of development, involving the construction of two further innovation
/ incubation units is about to start.
Joint Ventures
The Bushwing group, now including Castello Developments Limited, had a
successful year with three substantial sales contributing #0.75m to group
profits. Pochin Homes Limited, its new subsidiary, is off to a good start with
the first houses already under construction, and our plan for the current year
is to secure land with planning permission to build at least 100 units. We are
already well on the way to meeting this target.
Sales in Weston Gate Developments Limited, at Crewe, and Limefort Two Limited,
at Tyldesley in Greater Manchester, were also profitable contributors to the
group result. However these gains were largely offset by continuing losses of
#0.5m in Manchester Technopark Limited, including our share of interest costs.
We remain confident that our investment is sound but clearly it is taking longer
to justify our view than we originally anticipated. There are, however, some
positive indications that more tenants will be in occupation over the coming
months. In addition the board of Manchester Technopark Limited has taken the
decision to commence the marketing of Lovell House, one of the three completed
buildings, which is fully let. This disposal will reduce the joint venture's
borrowings significantly.
Board
A fundamental part of the reorganisation of the management of the business has
been the succession plan for the group board. We have implemented the first
stage of this with the appointment in April of Richard Buck, as business
development director, and Jim Nicholson, as property development director. I
welcome them onto the board and I am confident that they will contribute
substantially to the group's progress over the coming years.
The composition of the board was further changed by the sad death of Ron Verity
in July. Ron joined the company in 1948 and became chairman in 1982. He stood
down in 1987 but continued as a non-executive director until his death. I know
my colleagues join me in recording our gratitude for his outstanding
contribution to the group's growth and success over this 55 year period.
Prospects
We have a healthy order book and, with further benefits from reorganisation
anticipated, I am confident that the current year will add to our continuing
success, especially if some of the possible development sales we are currently
negotiating are finalised and completed in the year.
I am pleased to acknowledge the hard work put in by everyone in the group, and
to thank them for their contribution in achieving the progress evident from
these results.
Nicholas J. Pochin
Chairman
25 September 2003
Consolidated Profit and Loss
Account
For the year ended 31 May 2003
2003 2002
Notes #'000 #'000
------------------------------ ------ ----- -------- ---- -------- ----
Turnover
Group and share of joint ventures 69,656 48,522
and associates
Less: share of joint ventures and (3,516) (1,704)
associates
-------- --------
2 66,140 46,818
Cost of sales (57,617) (37,849)
-------- --------
Gross profit 8,523 8,969
Operating expenses (7,620) (7,827)
Other operating income 4 3,063 3,552
-------- --------
Operating profit 3,966 4,694
Share of operating profit in 983 78
joint ventures
Share of operating profit in 311 479
associates
Net interest (769) (1,046)
-------- --------
Profit on ordinary activities 2 4,491 4,205
before taxation
Tax on profit on ordinary 5 (1,442) (1,569)
activities
-------- --------
Profit on ordinary activities 3,049 2,636
after taxation
Equity minority interests (6) (62)
-------- --------
Profit for the financial year 3,043 2,574
Dividends 6 (1,300) (1,154)
-------- --------
Retained profit for the year 1,743 1,420
-------- --------
Earnings per share (basic and 7 14.9p 12.5p
diluted)
The above figures are for
continuing operations.
Statement of Total Recognised
Gains and Losses
2003 2002
#'000 #'000
------------------------------ ------ ----- -------- ---- -------- ----
Profit for the financial year 3,043 2,574
Unrealised (deficit) / surplus on (38) 1,933
revaluation of investment
properties - group
Unrealised surplus / (deficit) on 386 (41)
revaluation of investment properties -
joint ventures
-------- --------
Total gains recognised for the 3,391 4,466
year
Prior year adjustment relating to - (504)
deferred tax
-------- --------
Total gains recognised since last 3,391 3,962
annual report -------- --------
Note of Historical Cost Profits
and Losses ------ ----- -------- ---- -------- ----
------------------------------
Reported profit on ordinary 4,491 4,205
activities before taxation
Realisation of revaluation 440 583
surpluses of previous years
Difference between historical
cost depreciation charge and
depreciation charge based on 223 143
revalued amounts
-------- --------
Historical cost profit on 5,154 4,931
ordinary activities before -------- --------
taxation
Historical cost profit retained
for the year after taxation,
minority interests and 2,406 2,146
dividends -------- --------
Consolidated Balance Sheet
As at 31 May 2003
2003 2002
Notes #'000 #'000
---------------------------- ------ -------- --------- -------- ---------
Fixed assets
Intangible assets 723 365
Tangible assets 29,592 30,009
Investments
Joint ventures
--------- ---------
Share of gross assets 21,982 16,557
Share of gross liabilities (14,843) (11,057)
Goodwill 94 125
---------
7,233 5,625
Associates 2,428 2,397
Other 1,500 1,500
Own shares 607 304
--------- ---------
11,768 9,826
--------- ---------
42,083 40,200
--------- ---------
Current assets
Stocks and work in progress 15,870 17,517
Debtors 12,462 7,645
Investments and deposits 10,602 10,159
Cash at bank and in hand 5 9
--------- ---------
38,939 35,330
--------- ---------
Creditors: amounts falling
due within one year
Borrowings (18,333) (18,885)
Trade and other creditors (13,927) (9,726)
--------- ---------
(32,260) (28,611)
--------- ---------
Net current assets 6,679 6,719
--------- ---------
Total assets less current 48,762 46,919
liabilities
Creditors: amounts falling
due after more
than one year
--------- ---------
Borrowings (469) (531)
Other creditors (233) -
--------- ---------
(702) (531)
Provisions for liabilities (1,131) (1,219)
and charges
Accruals and deferred (1,936) (2,008)
income
--------- ---------
Net assets 2 44,993 43,161
--------- ---------
Capital and reserves
Called up share capital 5,200 5,200
Revaluation reserve 9,949 10,264
Profit and loss account 29,640 27,234
--------- ---------
Equity shareholders' funds 44,789 42,698
Equity minority interests 204 463
--------- ---------
44,993 43,161
--------- ---------
Consolidated Cash Flow Statement
For the year ended 31
May 2003
2003 2003 2002 2002
#'000 #'000 #'000 #'000
---------------------- ------ ---- ------- ------- ---- ------- ------- ----
Notes
Net cash inflow from 8 5,749 7,189
operating activities
Income received from 60 81
joint ventures
Returns on investments and servicing of
finance
Interest received 295 313
Interest paid (335) (688)
Interest paid on finance (21) (31)
leases ------- -------
Net cash outflow from returns on investments and (61) (406)
servicing of finance
Taxation (1,195) (1,556)
Capital expenditure and
financial investment
Purchase of tangible (1,108) (4,755)
fixed assets
Sale of tangible fixed 988 2,025
assets ------- -------
Net cash outflow from capital expenditure and (120) (2,730)
financial investment
Acquisitions and
disposals
Purchase of subsidiary 3 (824) -
undertaking
Increase in interest in (1,008) (1,237)
joint ventures and
associates
Purchase of other fixed - (1,500)
asset investment
Purchase of own shares (303) (304)
------- -------
(2,135) (3,041)
Equity dividends paid (1,154) (1,154)
------- -------
-------
Net cash inflow / (outflow) before financing and 1,144 (1,617)
management of liquid resources
Management of liquid
resources
Sale of corporate - 3,480
bonds
Cash deposited at call 8 (2,803)
and short notice ------- -------
Net cash inflow from
management of
liquid resources 8 677
Financing
Repayment of loan (940) (400)
capital
Repayment of principal under finance (146) (218)
leases and hire purchase contracts ----- -------
------- -------
Net cash outflow from (1,086) (618)
financing
------- -------
Increase / (decrease) in 66 (1,558)
cash in the year ------- -------
Reconciliation of net cash flow to movement in net debt
------------------------------------- ---- ------- ------- ----
---- ------- ------- ----
Increase / (decrease) in 66 (1,558)
cash in the year
Cash outflow from decrease in 1,086 618
debt and lease financing
Cash inflow from (8) (677)
decrease in liquid
resources
------- -------
------- -------
Change in net debt resulting from 1,144 (1,617)
cash flows
Inception of finance (321) (195)
leases
Finance lease acquired (1) -
with subsidiary
Deposits acquired with 451 -
subsidiary
Deferred consideration (220) (540)
------- -------
Movement in net debt in 1,053 (2,352)
the year
Opening net debt (9,248) (6,896)
------- -------
Closing net debt (8,195) (9,248)
------- -------
Notes
1 Basis of preparation
The financial information has been prepared in accordance with applicable accounting standards
and under the historical cost convention except that certain tangible fixed assets are shown at
their revalued amounts. The accounting policies have remained unchanged from the previous year.
2 Turnover, profit before taxation and net assets
Segmental analysis of the results is set out below:
Turnover Profit / (loss) before tax Net assets
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
By activity:
Group:
Construction 44,948 22,844 335 (403) (1,846) (2,324)
Plant* 15,127 14,189 564 165 8,553 8,829
Property 6,065 9,785 2,860 4,635 16,437 16,733
Group management - - (590) (695) - -
cost
Group interest** - - 735 586 12,188 11,901
------ ------ ------ ------ ------ -----
66,140 46,818 3,904 4,288 35,332 35,139
------ ------ ------ ------ ------ -----
Joint ventures and associates***
Property - joint 3,516 1,379 542 (282) 7,233 5,625
ventures
Property - - 325 45 199 2,428 2,397
associates
------ ------ ------ ------ ------ -----
3,516 1,704 587 (83) 9,661 8,022
------ ------ ------ ------ ------ -----
------ ------ ------ ------ ------ -----
Totals 69,656 48,522 4,491 4,205 44,993 43,161
------ ------ ------ ------ ------ -----
Turnover, profits before tax and net assets are derived from operations within the United
Kingdom
* Plant operations include plant hire, concrete block manufacture and directional drilling
services.
** Borrowings and related interest charges are included under each activity only where they are
identifiable with that activity, principally property. Group interest includes group investments,
cash resources and those borrowings that are not readilly identifiable with individual
activities.
*** Borrowings and related interest charges in joint ventures and associates are included under
property activities.
3 Acquisition
On 25 October 2002, the group acquired 2 ordinary shares of #1 each in Pipeline Drillers Limited,
being 100% of its nominal share capital for a consideration of #1,277,000 (including professional
fees), satisfied by the issue of loan notes of #220,000, #800,000 in cash and deferred
consideration of #233,000. The purchase has been accounted for by the acquisition method of
accounting. The profit after taxation of Pipeline Drillers Limited for the period from 1 August
2001, the beginning of the subsidiary's financial period, to the date of acquisition was
#398,000. The profit after taxation for the year to 31 July 2001 was #118,000.
The assets and liabilities of Pipeline Drillers Limited acquired were as follows:
Fair value
#'000
Tangible fixed assets 168
Current assets
Stocks 13
Debtors 315
Deposits 451
-----
Total assets 947
-----
Creditors
Trade creditors 105
Other creditors 186
Accruals 31
Provisions
Deferred taxation (asset) (5)
-----
Total 317
liabilites -----
Net assets 630
Purchased 647
goodwill
-----
1,277
-----
Satisfied by:
Cash 800
Loan notes 220
Deferred consideration 233
Professional fees 24
-----
1,277
-----
The directors consider that the book value of assets and liabilities acquired are not materially
different from their fair value. The deferred consideration is contingent upon one of the two
vendors of the business remaining in the employment of the group at the third anniversary of the
completion of the acquisition.
The subsidiary undertaking acquired during the year made the following contribution to, and
utilisation of, group cash flow:
#'000
Net cash outflow from operating activites (50)
Servicing of finance 5
Capital expenditure (21)
Management of liquid resources 67
Financing (1)
-----
-----
Decrease in cash -
-----
Net cash outflow in respect of the purchase of the subsidiary undertaking:
Cash consideration (800)
Professional fees (24)
-----
-----
(824)
-----
Turnover and operating
profit
The amounts shown for continuing operations include the following in respect of the acquisition
of Pipeline Drillers Limited:
Sales 508
Cost of (354)
sales
Operating expenses (69)
-----
Operating profit 85
-----
4 Other operating income
2003 2002
#'000 #'000
Income from property 3,063 3,467
Profit on disposal of land and - 69
buildings
Profit on disposal of subsidiary - 16
undertaking
------ -----
3,063 3,552
------ -----
5 Tax on profit on ordinary activities
2003 2002
#'000 #'000
The tax charge is based on the profit for the year and comprises:
United Kingdom corporation tax at 30% (2002 : 30%) 1,041 1,388
Adjustments in respect of prior years (32) 81
Share of tax charge of joint ventures 268 23
Share of tax charge of associates 13 45
------ -----
1,290 1,537
Deferred tax 152 32
------ -----
-----
1,442 1,569
------ -----
The tax assessed for the period is lower /(2002 : higher) than the standard rate of corporation
tax in the United Kingdom.
The differences are explained below:
2003 2002
#'000 #'000
Profit on ordinary activities before taxation 4,491 4,205
Profit on ordinary activities multiplied by standard rate 1,347 1,261
of corporation tax in the United Kingdom of 30% (2002 :
30%)
Effects of:
Expenses not deductible for tax purposes 157 162
Non taxable sales in period (166) (121)
Capital allowances for period in excess of depreciation (119) (6)
Other short term timing differences (51) 65
Adjustments to tax charge in respect of previous years (32) 81
Losses not utilised 154 125
Difference in tax rates in joint ventures and associates - (30)
------ -----
------ -----
Current tax charge for the year 1,290 1,537
------ -----
------ -----
6 Dividends
2003 2002
#'000 #'000
Interim paid - 2.0p (2002 : 2.0p) 416 416
Final proposed - 4.25p (2002 : 3.55p) 884 738
------ -----
1,300 1,154
------ -----
Dividend record date : 3 October 2003.
If the dividend is approved, warrants will be posted on Monday, 10 November 2003, and paid on
Tuesday, 11 November 2003.
7 Earnings per share
The calculation of earnings per share (basic and fully diluted) is based on group profit after
taxation and minority interests of #3,043,000 (2002 : #2,574,000) and the 20,800,000 ordinary
shares of 25p in issue at 31 May 2003 and 31 May 2002. The number of shares used in the
calculation has been reduced at 31 May 2003 for the 442,000 shares (2002 : 202,000) shares held
in the Employee Share Trust.
Basic earnings per share is 14.9p. The assumed conversion of dilutive options increases the
number of shares by only 8,000 shares and so diluted earnings per share is also 14.9p.
8 Reconciliation of operating profit to net cash inflow from operating activities:
2003 2002
#'000 #'000
Operating profit 3,966 4,694
Depreciation charge 1,434 1,648
Amortisation of goodwill 289 213
Profit on sale of fixed assets (96) (98)
Amounts written back on cost of investment (350) -
property
Amounts written off fixed assets investments - 75
Decrease in stocks and work in progress 1,660 4,967
Increase in debtors (4,502) (276)
Increase / (decrease) in creditors 3,348 (4,034)
------ -----
------ -----
Net cash inflow from operating activities 5,749 7,189
------ -----
------ -----
9 Additional information
(i) The financial information set out in this announcement does not constitute the company's
statutory accounts for the years ended 31 May 2003 and 2002. The figures for year ended 31 May
2003 and 31 May 2002 are extracted from the statutory accounts which contain an unqualified audit
report and which did not contain a statement under section 237 (2) or (3) of the Companies Act
1985. The 31 May 2002 accounts have been filed with the Registrar of Companies, however, the 31
May 2003 accounts are yet to be filed.
(ii) The Annual General Meeting will be held at the company's offices at Brooks Lane, Middlewich,
Cheshire at 12.00 noon on Friday, 7 November 2003. The full report will be posted to shareholders
on 9 October 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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