Pochin's PLC 18 February 2005 Interim results of Pochin's PLC for the 6 months ended 30 November 2004 Chairman's statement RESULTS AND DIVIDENDS I am pleased to report interim profits before tax of £870,000 (2003: £751,000) on turnover of £45.2m (2003: £32.7m). The interim dividend is increased to 2.5p per share (2003: 2.25p). TRADING Contracting This division is making solid progress, demonstrated by the increased turnover and contribution to profits in this half year. The level of forward orders has been maintained, and there is an encouraging level of repeat and negotiated work. Construction services I am delighted that the acquisition and successful integration of Raynesway Concrete Pumping, combined with improved efficiencies, has increased turnover and profits in the concrete pumping division in this period. The level of current trading indicates that this improvement is being maintained. It is, however, disappointing to report that the recovery in Avoidatrench Limited at the start of this financial year proved to be short lived and losses have arisen in the second quarter. We have scaled down the business to meet reduced demand evident in the market and, with a lower operational cost base, some improvement is anticipated in the second half. Property and joint ventures Pochin Homes Limited is making good progress, notwithstanding the delays caused by planning issues. Construction is under way on two sites in the Potteries and the level of reservations to date encourages me to believe that completions in the second half will produce an overall profit for the year. Following successful lettings in the latest medical incubator building, completed by Keele Park Developments Limited in October 2004, we have commenced the next building, which is due for completion in early 2006. This will be the fourth of the buildings developed by our unique public / private partnership with Keele University. Whilst there were no material disposals in the period, negotiations for the disposal of a number of completed developments are in progress. I anticipate that some of these disposals will be completed by 31 May 2005. GROUP FINANCE The acquisitions of Raynesway Concrete Pumping and of the remaining interests in the Bushwing group of companies were both completed early in this half year. The former transaction was largely financed by debt and the Bushwing transaction was financed from group resources. Expenditure on property developments currently in progress has increased debt during the period and further expenditure will continue to be financed by short-term borrowings over the coming months, notwithstanding receipts from planned disposals. Short-term development finance of £9m on the first three buildings at Keele Park has been converted into a long-term loan facility, with repayments commencing in November 2006. PROSPECTS Profits arising from planned property disposals, together with the overall improvement in the performance of the trading divisions, lead me to anticipate a satisfactory outcome for this financial year. J H Woodcock Chairman 18 February 2005 Consolidated Profit and Loss Account 6 months ended 6 months ended 12 months ended 30 November 30 November 31 May 2004 2004 2003 Notes £'000 £'000 £'000 ----------------- ------- ---------- ---------- ----------- Turnover Group and share of joint ventures 45,174 33,141 78,307 Less: share of joint ventures - (454) (12,397) ---------- ---------- ----------- 3 45,174 32,687 65,910 ---------- ---------- ----------- ---------- ---------- ----------- Cost of sales (40,220) (29,081) (58,178) ---------- ---------- ----------- Gross profit 4,954 3,606 7,732 Operating expenses (5,483) (4,297) (8,931) Other operating income 1,775 1,766 3,359 ---------- ---------- ----------- Operating profit 1,246 1,075 2,160 Share of operating (loss)/profit in joint ventures (138) (165) 3,270 Share of operating profit in associates 167 180 365 Net interest (405) (339) (715) ---------- ---------- ----------- Profit on ordinary activities before taxation 3 870 751 5,080 Tax on profit on ordinary activities 4 (331) (279) (1,938) ---------- ---------- ----------- Profit on ordinary activities after taxation 539 472 3,142 Equity minority interest (13) (13) (28) ---------- ---------- ----------- Profit for the financial period 526 459 3,114 Dividends 5 (520) (468) (1,435) ---------- ---------- ----------- Retained profit/(loss) for the period 6 (9) 1,679 ---------- ---------- ----------- Earnings per share (basic) 6 2.6p 2.3p 15.3p Earnings per share (diluted) 6 2.6p 2.2p 15.3p Statement of Total Recognised Gains and Losses ----------------- ------- ---------- ---------- ----------- Profit for the financial period 526 459 3,114 Unrealised deficit on revaluation of investment properties - group - (2) (104) Unrealised deficit on revaluation of investment properties - joint ventures - (13) - ---------- ---------- ----------- ---------- ---------- ----------- Total gains recognised since last period 526 444 3,010 ---------- ---------- ----------- Note of Historical Cost Profits and Losses ----------------- ------- ---------- ---------- ----------- Reported profit on ordinary activities before taxation 870 751 5,080 Realisation of revaluation surpluses of previous years - group 52 52 242 Realisation of revaluation surpluses of previous years - joint ventures - - 641 Difference between historical cost depreciation charge and depreciation charge 30 101 155 based on revalued amounts ---------- ---------- ----------- Historical cost profit on ordinary activities before taxation 952 904 6,118 ---------- ---------- ----------- Historical cost profit retained for the period after taxation, minority 88 144 2,717 interest and dividends ---------- ---------- ----------- Consolidated Balance Sheet As at As at As at 30 November 30 November 31 May 2004 2003 2004 Notes £'000 £'000 £'000 ----------------- ------- ---------- ---------- ----------- Fixed assets Intangible assets 990 552 443 Tangible assets 38,697 30,119 32,466 Investments ---------- ---------- ----------- Joint ventures Share of gross assets 9,228 24,106 20,228 Share of gross liabilities (6,943) (15,901) (11,182) Goodwill 925 78 988 ---------- ---------- ----------- 3,210 8,283 10,034 Associates 2,564 2,488 2,547 Other 2,157 1,500 2,157 Own shares 847 607 607 ---------- ---------- ----------- 8,778 12,878 15,345 ---------- ---------- ----------- 48,465 43,549 48,254 ---------- ---------- ----------- Current assets Stocks and work in progress 32,593 16,603 20,077 Debtors 16,538 11,076 11,342 Investments and deposits 11,518 10,773 10,776 Cash in hand 3 5 4 ---------- ---------- ----------- 60,652 38,457 42,199 ---------- ---------- ----------- Creditors: amounts falling due within one year Borrowings (27,536) (21,367) (23,313) Trade and other creditors (18,941) (11,656) (15,485) ---------- ---------- ----------- (46,477) (33,023) (38,798) ---------- ---------- ----------- Net current assets 14,175 5,434 3,401 ---------- ---------- ----------- Total assets less current liabilities 62,640 48,983 51,655 Creditors: amounts falling due after more than one year Borrowings (10,964) (790) (695) Other - (233) (233) Provisions for liabilities and charges (1,631) (1,159) (1,714) Accruals and deferred income (3,464) (1,836) (2,441) ---------- ---------- ----------- Net assets 3 46,581 44,965 46,572 ---------- ---------- ----------- Capital and reserves Called up share capital 5,200 5,200 5,200 Revaluation reserve 8,725 9,781 8,807 Profit and loss account 32,445 29,784 32,357 ---------- ---------- ----------- Equity shareholders' funds 46,370 44,765 46,364 Equity minority interest 211 200 208 ---------- ---------- ----------- 46,581 44,965 46,572 ---------- ---------- ----------- Consolidated Cash Flow Statement 6 months ended 6 months ended 12 months ended 30 November 30 November 31 May 2004 2004 2003 Notes £'000 £'000 £'000 £'000 £'000 £'000 ----------------- ------- ------ ------- ------ ------- ----- ------ Net cash (outflow)/infl ow from operating activities 7 (4,285) 867 2,804 Income received from joint ventures 31 270 528 Returns on investments and servicing of finance Interest received 349 161 289 Interest paid (455) (190) (427) Interest paid on finance leases (47) (23) (34) ------ ------ ----- Net cash outflow from returns on investment and servicing of finance (153) (52) (172) Taxation (1,213) (791) (1,191) Capital expenditure and financial investment Purchase of tangible fixed assets (4,038) (1,333) (4,627) Receipt of government grant 354 - 605 Sale of tangible fixed assets 199 521 835 ------ ------ ----- Net cash outflow from capital expenditure and financial investment (3,485) (812) (3,187) Acquisitions and disposals Purchase of subsidiary undertaking (2,398) - (13) Net (overdraft)/cash from purchase of subsidiary undertaking (276) - 13 Decrease/(increase) in interest in joint ventures and associates 450 (1,630) (1,531) Purchase of goodwill (645) - - Purchase of other fixed asset investment - - (657) Purchase of own shares (240) - - ------ ------ ----- Net cash outflow from acquisitions and disposals (3,109) (1,630) (2,188) Equity dividends paid (967) (884) (1,352) ------- ------- ------ Net cash outflow before financing and management of liquid resources (13,181) (3,032) (4,758) ------ ------ ----- Net cash inflow/ (outflow) from management of liquid resources Cash deposited/(withdrawn) at call and short notice 3,080 (171) (161) Financing New loan capital 10,430 800 800 Repayment of loan capital (310) (310) (510) Repayment of principal under finance leases (113) (115) (224) and hire purchase ------ ------ ----- contracts Net cash inflow from financing 10,007 375 66 ------- ------- ------ Decrease in cash in the period (94) (2,828) (4,853) ------- ------- ------ Reconciliation of net cash flow to movement in net debt -------------------------------- Decrease in cash in the period (94) (2,828) (4,853) Cash inflow from increase in debt and lease financing (10,007) (375) (66) Cash (inflow)/outfl ow from (increase)/dec rease in liquid resources (3,080) 171 161 ------- ------- ------ Change in net debt resulting from cash flows (13,181) (3,032) (4,758) Inception of finance leases (570) (152) (275) ------- ------- ------ Movement in net debt in the period (13,751) (3,184) (5,033) Opening net debt (13,228) (8,195) (8,195) ------- ------- ------ Closing net debt (26,979) (11,379) (13,228) ------- ------- ------ Notes 1 The interim report was approved by the board on 18 February 2005. 2 The figures for the six months ended 30 November 2004 and 30 November 2003 are unaudited. These figures have been prepared using accounting policies consistent with those adopted in the 2004 annual report and accounts. 3 Segmental information by activity: 6 months ended 6 months ended 12 months ended 30 November 30 November 31 May 2004 2004 2003 £'000 £'000 £'000 Turnover Contracting 33,553 24,374 48,927 Construction 9,725 8,178 15,625 services Property 1,896 135 1,358 ------- -------- ------ 45,174 32,687 65,910 Joint ventures Property - 454 12,397 ------- -------- ------ 45,174 33,141 78,307 ------- -------- ------ Profit/(loss) on ordinary activities before taxation Contracting 593 49 781 Construction 207 (163) (1,085) services Property 457 1,274 2,333 Group management (487) (361) (723) cost Group 324 227 682 interest ------- -------- ------ 1,094 1,026 1,988 Joint ventures and associates Property - joint (268) (335) 2,962 ventures Property - 44 60 130 associates ------- -------- ------ 870 751 5,080 ------- -------- ------ Net assets Contracting (5,112) (1,856) (3,177) Construction 10,714 8,409 8,249 services Property 22,345 15,441 16,043 Group 12,860 12,200 12,876 interest ------- -------- ------ 40,807 34,194 33,991 Joint ventures and associates Property - joint 3,210 8,283 10,034 ventures Property - 2,564 2,488 2,547 associates ------- -------- ------ 46,581 44,965 46,572 ------- -------- ------ Turnover, profit/(loss) before taxation and net assets are derived from operations within the United Kingdom. 4 The taxation charge is calculated by applying the estimated effective annual tax rate to the profit for the period. The tax assessed for the period is higher than the standard rate of corporation tax in the United Kingdom as a result of expenses not deductible for tax purposes and interest charges and losses in joint venture companies not utilised. 5 The interim dividend of 2.5p per share (2003 : 2.25p per share) will be paid on 7 April 2005 to shareholders on the register at 11 March 2005. 6 The calculation of earnings per share (basic and diluted) is based on group profit after taxation and minority interests of £526,000 (2003 : £459,000) and the 20,800,000 ordinary shares of 25p in issue at 30 November 2004 and 30 November 2003. The number of shares in the calculation has been reduced at 30 November 2004 for the 589,000 (2003 : 442,000) shares held in the Employee Share Trust. Basic earnings per share is 2.6p (2003: 2.3p). The assumed conversion of dilutive options increases the number of shares by 80,000 (2003: 49,000) shares and so diluted earnings per share is also 2.6p (2003:2.2p). 6 months ended 30 November 2004 Earnings No. of shares Per share £'000 '000 p Basic EPS 526 20,211 2.6 Effect of share - 80 - options -------- ------- ------ Diluted EPS 526 20,291 2.6 -------- ------- ------ 6 months ended 30 November 2003 Earnings No. of shares Per share £'000 '000 p Basic EPS 459 20,358 2.3 Effect of share - 49 - options -------- ------- ------ Diluted EPS 459 20,407 2.2 -------- ------- ------ 12 months ended 31 May 2004 Earnings No. of shares Per share £'000 '000 p Basic EPS 3,114 20,358 15.3 Effect of share - 47 - options -------- ------- ------ Diluted EPS 3,114 20,405 15.3 -------- ------- ------ 7 Reconciliation of operating profit to net cash (outflow)/inflow from operating activities: 6 months 6 months ended 12 months ended ended 30 30 November 31 May 2004 November 2003 2004 £'000 £'000 £'000 Operating 1,246 1,075 2,160 profit Deferred income 450 - - Depreciation 817 753 1,482 charge Amortisation of 161 171 280 goodwill Profit on sale of (3) (316) (393) fixed assets Increase in stocks and (5,793) (733) (4,207) work in progress (Increase)/decrease in (693) 1,386 1,120 debtors (Decrease)/increase in (470) (1,469) 2,362 creditors ------- -------- ------ Net cash (outflow)/ (4,285) 867 2,804 inflow from operating ------- -------- ------ activities 8 On 31 May 2004, the group owned 75% of the ordinary share capital of Bushwing Plc and its subsidiaries which, due to the nature of the shareholders agreement governing the operations of Bushwing Plc and its subsidiaries, was included on the balance sheet at 31 May 2004 as a joint venture. On 4 June 2004 the group acquired the remaining 25% ordinary share capital of Bushwing Plc and its subsidiaries for a cash consideration of £2,398,000 (including professional fees) and settlement of loan accounts of £343,000. The assets and liabilities of Bushwing Plc and its subsidiaries acquired were as follows: Book value Adjustments Fair value £'000 £'000 £'000 Tangible fixed 2,226 410 2,636 assets Current assets Stocks 4,459 2,264 6,723 Debtors 4,503 - 4,503 Deposits 3,822 - 3,822 -------- ------- ------ Total 15,010 2,674 17,684 assets -------- ------- ------ Creditors Other 3,726 - 3,726 Borrowings 4,098 - 4,098 Corporation tax 867 - 867 Deferred 16 - 16 tax -------- ------- ------ Total 8,707 - 8,707 liabilities -------- ------- ------ -------- ------- ------ Net assets 6,303 2,674 8,977 -------- ------- ------ Net assets included in investment in joint ventures as at 31 May (6,236) 2004 ------ 2,741 ------ Satisfied by: Cash 2,375 Settlement of loan 343 accounts Professional 23 fees ------ 2,741 ------ Bushwing Plc and its subsidiaries made the following contribution to, and utilisation of, group cashflow: Net cash inflow from operating activities 162 Returns on investment and (11) servicing of finance Taxation (861) Capital expenditure and (10) financial investment ------ Decrease in cash in the (720) period ------ Net cash outflow in respect of the purchase of Bushwing Plc and its subsidiaries: Cash 2,375 consideration Professional fees 23 ------ 2,398 ------ Turnover and operating loss The amounts shown include the following in respect of the acquisition of Bushwing Plc and its subsidiaries: Turnover 284 Cost of (149) sales Operating (476) expenses ------ Operating (341) loss ------ 9 The results for the year ended 31 May 2004 are an abridged version of the statutory accounts for that period on which the auditors gave an unqualified report and which have been filed with the Registrar of Companies. 10 Copies of this interim report are being sent to shareholders on 25 February 2005. Further copies of the interim report are available from the Company Secretary, Pochin's PLC, Brooks Lane, Middlewich, Cheshire, CW10 0JQ. This interim report will also be available on the group's website (www.pochins.plc.uk). This information is provided by RNS The company news service from the London Stock Exchange