Pochin’s outlook positive despite another loss

Falling values across the group's development portfolio contributed to a £7.1m post-tax loss in the year to June, Pochin said on Thursday.

The group loss compared to a loss of £3.3m in 2012. Revaluations and impairments of investments and inventories totalled £8.2m. Before this, there was an operating profit of £2.4m.

Pochin has been steadily disposing of loss-making assets and its stakes in stalled joint ventures. There remains only one significant joint venture of value on the group balance sheet, namely Pochin Goodman (Northern Gateway), 200 acres acquire from Corus in Deeside before the financial crash. The property held in this joint venture was independently valued by Jones Lang Lasalle at the year end, resulting in an impairment of value of £1.5m in the carrying value of the group's interest in the joint venture.

Chairman Richard Fildes said: "The revaluations and impairments referred to above reflect the ongoing weakness in the regional property market, particularly in the retail and office sectors…By contrast, certain of the group's land assets have increased in value by £3.4m, although their classification as inventories prevents this from being reflected in the accounts."

The construction division broken even on increased turnover of £73.7m, up from £68.4m last time.

Fildes said of the construction order book: "Contracts for work outside the region contributed significantly as the division sought to mitigate lower local activity, albeit at some cost to margins. It is striking to note that, nonetheless, almost two-thirds of the division's turnover was repeat business, which validates the Pochin claim to deliver good, reliable service to its clients."

The investment portfolio maintained 91.5% occupancy but "further deterioration in the group's property values was disappointing, with the secondary offices in the portfolio being particularly affected in the year".

Of development work Fildes said: "There was successful development activity during the year, including the completion of an office building for TATA Chemicals Europe in Northwich, Cheshire. The current year has seen the start of the construction of the Altrincham Hospital scheme for Central Manchester University Hospital NHS Foundation Trust. The division continues to seek such non-speculative development opportunities to supplement the rental income from the investment portfolio.

Fildes continued: "Encouragement can be drawn from the positive outcome of the revaluation of certain land assets which, as noted above, cannot be reflected in the group accounts. It is recognition, in part, of the underlying strength of Midpoint 18, the group's Middlewich estate close to Junction 18 of the M6 motorway, which is the proposed location for the recently announced rural business hub, to be known as Cheshire Fresh. Midpoint 18 is well located for motorway dependent logistics development which is currently the subject of heightened demand, partly resulting from the burgeoning click-and-collect internet based retailing market."

At 31 May 2013 total group borrowings were £25.8m (2012: £28.4m) and cash held on deposit was £1.8m (2012: £1.8m), resulting in a net debt position of £24.0m (2012: £26.6m).

Bank facilities were renewed in October 2012 with the Royal Bank of Scotland, the group's principal banker, and with Nationwide Building Society in July this year.

Since the year end, Pochin's has acquired a controlling interest in joint venture Hawarden Business Park from UK Land & Property. Since the year end, Pochin's received £2.6m in dividends from subsidiary companies.

Shares in Pochin's fell 4.5p to 25p by mid-morning. No dividend was recommended.