NMCN Nmcn Plc

RNS Number:2559X
North Midland Construction PLC
25 May 2007


North Midland Construction Plc
25 May 2007 AGM Statement


North Midland hold its annual general meeting today at 12.00noon at its head
office. At the meeting, the Chairman, Robert Moyle, will make the following
statement:


It is very gratifying to report that the organic growth of the last few years
has been maintained in the first quarter of 2007, with Group profits of #1.113
million and revenue of #50.372 million, 4.1% and 15.8% respectively ahead of the
comparable period last year. As in previous years, a breakdown of the individual
subsidiary and divisional performances and prospects, will provide a more
detailed insight into the business.


The results for the Civil Engineering division are in advance of the previous
year's at the comparable stage and the current secured workload for this year
stands at #56 million, 11.2% below the required annual revenue. The division is
engaged on a variety of schemes, generally of a higher financial value than
previously undertaken. The improvements to Minworth Sewerage Works in
Birmingham, valued at circa #100 million for Severn Trent Water, being
undertaken in a joint venture with Biwater, are now underway and the Bridlington
pipeline has been successfully delivered for Yorkshire Water and received many
plaudits. In the power sector two major desulphurisation schemes for Lentjes at
Fiddlers Ferry and Ferrybridge are progressing to a very tight programme after
initial design delays. All of the aforementioned schemes are technically complex
and amply demonstrate the division's skills and the increasing confidence of
clients to engage the division on larger and more demanding projects. The return
from the rail division in 2006 was below budget, due to insufficient revenue and
tight margins. However, it is pleasing to note that the current year has started
well with healthy orders and more contracts being received directly from Network
Rail on the back of the Company's Contractor Assurance Case.


Exacting targets have been set for the Highways division this year and currently
the level of profitability and revenue exceeds that of last year. 54% of the
required revenue has already been secured with several good prospects still to
be adjudicated upon. Operationally, an enviable reputation is being forged both
within the AmScott consortium and with many councils and private developers, for
quality workmanship and delivery. The restoration and upgrade of the Victorian,
listed, King's Bridge in Huddersfield is testament to this. To facilitate the
required growth, geographical expansion outside the heartland of the Midlands is
required and the division is commencing to acquire new clients both in the north
and further west.


The telecommunications industry continues to experience constant change and
periods of flux, due to clients' reorganisation and takeovers. Most revenue
these days comes from term contracts and in this respect the Utilities division
is particularly well positioned. Current term contract clients include Virgin
Media, ntl Telewest, Atkins Telecom, on behalf of Cable and Wireless, Easynet,
Kingston Communications, GEO, part of Hutchinson Whampoa and Telent. Atkins
Telecom has renewed our current contracts for a further three years commencing 1
April 2007 and we are hopeful that the current round of re-bidding with BT will
be fruitful for Telent and ultimately ourselves as one of their key suppliers.
The first quarter has produced a result in excess of last year's on the back of
more stable volumes and the division is well positioned to maintain its
expansion.


The performance of North Midland Building Limited last year was exceptional and
the company will not deliver a comparable result in 2007. However, #35 million
of revenue has already been acquired for the current year, which represents 83%
of the budgeted total and confidence is high that a very satisfactory result
will be delivered this year. After the highly successful delivery of the
Pavillions student accommodation scheme in Lincoln, a further phase has been
negotiated with the developer. A variety of projects are currently successfully
being undertaken in Loughorough, Sheffield, Chesterfield and York for both
private and public clients. The management team is now concentrating its efforts
on securing the required opportunities and revenue for 2008.


Nomenca Limited has reported profits 50% up on last year on a revenue increased
by 12%, which demonstrates that the management drive to increase margins is
paying dividends. The water industry continues to provide the highest percentage
of the company's workload, but diversification is being pursued. Building
services are currently being provided very successfully to Anchor Housing in
both the Midlands and South West and a chemical dosing framework has been
obtained in Scotland.

Inroads are also being made into the rail industry. The company's growth has
been maintained by the development of a network of regional offices servicing
their local market. To maintain the momentum of growth and to capitalise upon
the framework with Thames Water and other opportunities, a further regional
office is to be opened in the Thames Valley area later in the year. The key
relationship with the Civils division in providing a full turnkey solution to
clients is of paramount importance and currently the secured workload stands at
#28 million, compared with a budget requirement of #37 million.


Success in the construction industry requires top class delivery and quality,
tight cost control and exemplary health & safety and environmental performance.
I am delighted to report that during 2006 and 2007 great strides have been taken
in performance and practices. Accidents have been reduced and statistically the
Group out performs the industry. However, the performance could be improved
still further. Initiatives are being introduced throughout the Group and key
performance objectives and targets have been implemented to measure
effectiveness both in environmental and health & safety delivery.


To sustain the declared target of 10% per annum growth requires a quality, loyal
and committed workforce. The Group has been particularly blessed in this regard
with tremendous loyalty being established over many years. One of the key
elements that impressed the judges in the successful Nottinghamshire Company of
the Year award was the length of service demonstrated by so many employees and
the low churn rate. However, growth in an organisation, whose philosophy is that
of a contractor and not a management contractor, requires more staff. To attract
the calibre of recruit, a strategy has been established to develop close links
with preferred universities, colleges and schools. Birmingham University have
included the Group on it's Respect scheme and two scholarships have been offered
to undergraduates, alongwith opportunities for summer placements. Smiliar
arrangements are being pursued elsewhere. An improved apprentice programme is
also currently being developed with Stephenson College. The entire human
resources programme is being reviewed internally to ensure that attractive and
beneficial training is being provided and in the development of appropriate
succession management.


Increasing staff numbers necessitates more accommodation. The new workshops and
amenity facilities were completed last year and this has delivered improved
efficiency and environmental performance, coupled with enhanced working
conditions. Training facilities have been upgraded, along with a gym to enable
staff to exercise during and outside working hours. Phase three of the five
phase development plan for the Huthwaite site is currently underway, as you have
no doubt noticed as you arrived. This will provide further office accommodation
and environmental improvements are being undertaken on the existing complex at
the same time. Water recycling and solar energy usage have both been
incorporated into the new building. Terence House in Warrington was purchased
last year to facilitate expansion in the North West. That expansion has been so
successful, that North Midland Building's architects department are currently
developing proposals to increase office capacity and workshop capability. We are
confident that this extra capital expenditure can be funded from existing
resources.


As I stated earlier, the loyalty and commitment to this Group demonstrated by
its employees is immense and the continued success is validation of their hard
work. I should also like to thank my Board of Directors, without whose vision
and wisdom none of what we have achieved would have been possible. It has been
particularly gratifying to your Board to monitor the escalation in the share
price and thus reward our shareholders for their faith in this Group. Ambitions
and exacting targets have been designated for this year and subsequent ones, but
confidence is high that they will be achieved.


R MOYLE
CHAIRMAN
NORTH MIDLAND CONSTRUCTION

25 MAY 2007



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