Pochin confident despite profit erosion
Cheshire-based property group Pochin reported a pre-tax profit of £600,000 for the six months to the end of November 2008 compared to £2.1m in the same period of 2007.
Turnover was also down at £49.9m for the six months, against £54.4m in the same half of 2007.
The group managed an interim dividend of 1.5p, albeit down from 3p a year earlier. Net debt was reduced to £37.3m, equivalent to gearing of 77%, compared to 89% at the same stage of 2007. Write-downs on the value of properties in Pochin's portfolio amounted to £2.4m.
Chairman Richard Fildes said while "each of the group's areas of activity is affected by the sharply deteriorating conditions" in the property market and wider economy, the early action to reduce costs and conserve cash was paying off.
Pochin's increased net cash during the period by £5.7m and the group's banking facilities were recently "satisfactorily renewed".
Fildes said the company had a "strong balance sheet" and is "well positioned to face the problems being experienced by all those involved in property".
The construction division was restructured last year with reduced overheads and "performed creditably under adverse trading conditions". Margins had improved, although on reduced turnover.
The concrete pumping division was hit by weakening demand and higher fuel prices for much of the period. Fildes said falling oil prices "have now brought some welcome relief" but demand for concrete pumping "remains subdued". The division won business in connection with infrastructure works for Olympic Games projects in London and Weymouth.
The property development division achieved profitable disposals during the period, which helped offset "the necessary write-downs" in the value of the group's portfolio.
The firm's joint venture with UK Land & Property at Exchanges Flags in Liverpool completed its latest phase at the end of 2008. Nearly 100,000 sq ft was handed over to the Ministry of Defence in Walker House on a 25-year lease.
The residential division was inevitably "badly affected by the collapse in the housing market", Fildes said. He added: "Steps have been taken to reduce fixed costs to a minimum and no speculative activity is being undertaken. The division's objective is now to realise the group's investment in residential property in a controlled manner, and similarly to dispose of its interest in sites with the benefits of planning permission as opportunities allow. Fortunately, the exposure to the housing market is relatively modest in the context of the group as a whole."
