£2.3 MILLION PROFIT FOR POCHIN
Pochin PLC has announced its figures for the year ending 31st May 2008. The group has recorded a turnover of £115.3m (2007: £116.6 million). Profits are £2.3m (2007: £9.0 million).
Group Summary
- Profits before tax on group companies, joint ventures and associate company income were £2.3m (2007: £9.0m) derived from turnover of £115.3m (2007: £116.6 million).
- A final dividend of 3.0p per share (2007: 6.25p) is proposed which, combined with the interim dividend of 3.0p (2007: 3.0p), will total 6.0p (2007: 9.25p) for the full year.
- Net assets to £53.1million (2007: £51.5million) equivalent to 255p per share (2007: 248p).
- Group banking facilities increased to provide liquidity
The group has generated operating profits in the second half of the year. However, in the current climate, a prudent and cautious approach has been taken. The values of land holdings and investments in the commercial and residential divisions have been reassessed and, where appropriate, written down to reflect the general downturn in the sector.
Divisional Summaries
Contracting
Following the reorganisation of the division over the
past 12 months, the Contracting division maintained a turnover of
£85m (2007: £85m), including work on development projects
for Pochin's Property division.
Approximately 71% of turnover (2007: 77%) was achieved as a result of negotiated or partnered contracts and approximately 52% (2007: 50%) of the division's revenue came by way of repeat business. Surveys indicate that customer satisfaction ratings have been maintained at 92% (2007: 92%).
A strong performance in the second half resulted in a profitable outcome for the year as a whole, before accounting for reorganisation costs. Jonathan Pochin has been appointed as managing director of the division to oversee the restructure. Operational and support management teams have also been reorganised to focus on the key issues identified in the review, including further improvements to bid management processes and an expansion of the business development resource.
A number of key projects were delivered in the year including the Environmental Science Building for Bangor University, which received the LABC (Wales) award for Best Sustainable Development 2008 and has been nominated to go forward to the National Awards.
- An encouraging level of enquiries and a strong order book of £55 million for the current year (2007: £64million).
- Contracting profits at £0.8m before reorganisation costs
- Strong performance in the education sector, demonstrated by the division securing a £7million project to build a new Learning Zone building for Mid-Cheshire College in Winsford.
Construction Services
Overall, the results for Construction Services improved, with sales
for Concrete Pumping rising by 7% to £15m (2007: £14m).
After a solid first half, the second half started slowly and the
price of fuel became the most significant factor affecting
margin.
There has been a noticeable decline in activity in the Northern and Midlands areas of England. However, the rest of the UK has not been affected to the same degree, where there are a number of public sector projects in the pipeline. Pumi operations were reduced in line with the policy set out last year and the division is currently operating 12 machines.
- Concrete Pumping sales rose by some 7% to £15m (2007: £14m), achieved from 21,206 jobs (2007: 20,795 jobs) at an average price per job of £648 (2007: £621), with 1.44m cubic metres of concrete pumped (2007: 1.38m cubic metres).
- Utilisation averaged 77% (2007: 76%) and site reliability remained in excess of 99%.
Property
The year has seen a general market adjustment to
property values, which has impacted on the assets and trading
operations of the division. Investment values have fallen and
development activity has suffered further due to the effects of the
credit crunch.
- Property division's profits were £4.9million after provisions of £7.7million.
- The value of investment property now totals £46 million (2007: £41million).
- Joint venture contribution of £2.8million, in house operations of £2.1million
Although activity is reduced and property disposals have been extremely difficult to achieve, the property division has completed two significant profitable transactions:
- At Ellesmere, Shropshire, 3 acres of land were sold to Tesco Stores Ltd, following completion of a new road and associated infrastructure works. A further 17 acres of land on this development has planning permission for health and leisure uses and disposals of these parcels are being pursued.
- The group's interest in remaining industrial units at Valley Court and office units at Verity Court, both recent developments on Pochin's Midpoint 18 Business Park in Middlewich, has been sold to Lincoln House Properties Ltd.
Despite the generally challenging climate, Pochin's has continued its commitment to its joint venture projects and maintained its strategic relationships with partners to provide future business when the market improves. Manchester Technopark has successfully exchanged contracts for the disposal of Reynolds House for £12million and Pochin's share of the resulting surplus has contributed significantly to this year's results.
In addition, Pochin has continued to work on joint venture projects in Liverpool, Manchester and North Wales in conjunction with UK Land & Property Ltd. These include the £15m refurbishment of Walker House, in Liverpool city centre, the development of Ash Brook Office Park in Heald Green near Manchester Airport and the development of Hawarden Business Park in North Wales.
In a joint venture with Castlewood Developments Ltd in Birkenhead, following the completion of a revised development agreement with Wirral Borough Council to deliver a 95,000 sq ft foodstore in the town centre, the joint venture has secured an Agreement to Lease with ASDA Stores Ltd.
Residential
The housing market, particularly in Pochin's region, has
suffered from the well-publicised combination of a collapse in
consumer confidence and an inability of buyers to obtain
satisfactory mortgages. The downturn in the market has led to a
review of the carrying value of land and work in progress, with
write-downs in values being made where appropriate. Trading losses
have therefore been incurred.
The growth path of the division has been halted and the number of sales completions was down on last year at 60 (2007: 69), achieved from 7 sites across the region. There are just 4 reservations carried forward into the new financial year (2007: 21 reservations), an exceptionally low level, indicating the severity of current market conditions.
- Sales for the year were £8.1m (2007: £11.0m) from 7 operating sites.
- Following reappraisal of existing developments and write down of land values, there was a loss for the division of £1.6m (2007: £0.8m profit).
- The land bank stands at 104 plots (2007:136 plots) with full planning permission
- A further 112 plots (2007: 66 plots) secured and awaiting planning permission, excluding strategic land held under option.
Chairman's statement
Comments Chairman Richard Fildes: "The
group's future prospects depend on more stable conditions in
financial markets. We must focus now on careful cost control and
due regard for the importance of maintained liquidity. Fortunately
the group enjoys close relations with its bankers, notably The
Royal Bank of Scotland, who have demonstrated their strong support
with the renewal and extension of facilities sufficient to sustain
the group's various activities during the current year and
beyond. The group's prudent approach to speculative
development, and its strong balance sheet, will prove increasingly
important until improved market conditions begin to be
re-established.
"Pochin's is a fine company with a well-deserved reputation among its clients, tenants, suppliers and employees. This will sustain it through the current adverse circumstances enabling it to benefit from the many opportunities which diligent and hard work will identify as confidence and credit gradually return to the property market."