RNS Number:5678R
North Midland Construction PLC
04 April 2008
NORTH MIDLAND CONSTRUCTION PLC
2007 PRELIMINARY RESULTS
North Midland Construction PLC ("the Company") the UK provider of civil
engineering, building, mechanical and electrical services to public and private
organisations, announces preliminary results for the year ended 31 December
2007.
Highlights from the results and the Chairman's Statement:-
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Revenue 211,294 175,543
Profit before Tax 3,120 5,497
Profit for the Year 2,192 3,781
Earnings per Share 16.54p 33.38p
Dividends 8.5p 8.5p
- Another record year in terms of Revenue
- North Midland Building and Nomenca have achieved excellent results
- Disappointing result for Civil Engineering and Utilities divisions
- �90 million workload being carried forward into the New Year
- Proposed final dividend of 6.0p (2006 : 6.0p)
For further information:-
Robert Moyle, Chairman
North Midland Construction PLC - 01623 518812
Chairman's Statement
The results produced this year are a major disappointment, with a record revenue
of �211.3m, a very encouraging achievement, an increase of 20.4% over the
previous year, being negated by a decline in profit before tax to �3.1m, a
decrease of 43.3%.
The Group picture illustrates a Curate's Egg with exceptional figures being
delivered by both subsidiaries, North Midland Building and Nomenca, but problems
being experienced in the parent company within the Civil Engineering and
Utilities divisions.
At the Annual General Meeting last year it was reported that the Civil
Engineering division, the largest single entity within the Group, had a record
workload with several major contracts being secured in both the water and power
sectors. Major contractual problems have been experienced on the schemes at
Fiddlers Ferry Power Station and Halifax Sewage Treatment Works, the latter
scheme being in association with Black & Veatch Ltd. Both projects have
experienced major delays for a variety of reasons and the contractual situation
has become very complex, with a large divergence currently being recorded
between monies claimed and those certified. An anticipation of the eventual
out-turn is reflected in the accounts. On a positive note, both contracts have
been delivered and coupled with other major schemes at Minworth and Ferrybridge,
demonstrate the division's ability to deliver projects of major notational
value. The contract at Minworth, valued at circa �120m over a four year
construction period, in a joint venture with Biwater Treatment Limited for
Severn Trent Water has been particularly successful both in terms of budgets and
programme. Annual revenue for the division increased to �88.2m and this
demonstrates the ambition to achieve an organic growth target of 10% per annum.
Extracting the two problematical contracts, the margin on revenue would have
been in line with management expectations.
The Highways division has produced yet another satisfactory year, with
profitability at a similar level to the previous year, albeit on a reduced
revenue, due to a paucity of tendering opportunities in the critical summer
period. The highways market continues to be difficult, but the division is
successfully being considered for schemes of a higher notational value than
previously and further new clients were secured during the year. Revenue of
�13m was generated for the year.
The Utilities division experienced a very difficult and disappointing year, due
to a cutback in the BT contracts for Telent and major losses being incurred on a
lump sum contract in Kent, which was recorded in the interim statement. On
framework contracts, such as those with Telent, there is a very high fixed cost
and overhead required to deliver operationally. The contracts are at the end of
their duration and prices are consequently under pressure. Any decreases in
volumes, such as those experienced during the year, consequently leads to losses
on a large scale. Management did not react quickly enough to the downturn, and
both operational and management changes have been implemented. The divisional
revenue was �32.1m for the year and operating losses were �2.0m.
North Midland Building had another exceptional year with revenue climbing to
�37.4m and with margins slightly declining, a profit of �3.2m was returned for
the year. Further successful student accommodation projects were completed and
a diverse portfolio of schemes was undertaken during the year including offices,
prisons, refurbishments and defence work. The subsidiary has ably demonstrated
its technical and commercial capability to deliver large projects across the
country and this bodes well for the future in a market that will become more
difficult, due to the current economic problems being experienced.
Nomenca, the mechanical and electrical subsidiary, produced a record result with
revenue climbing to �45.3m and profitability increasing to �1.3m. Expansion has
continued both inside and outside the water industry, with a significant
breakthrough being made in Scotland in the production of chemical dosing rigs
and the South West with a minor works framework for South West Water. The
relationship with the Civil Engineering division in providing full turnkey
solutions within the water and allied industries is still a key element in the
strategy for growth, but increasingly opportunities are being secured in other
sectors such as building services, rail, defence and the waste sector. The
company can now be classified as a truly national contractor.
The Group takes its corporate and social responsibilities very seriously and for
the first time a separate report has been included in the accounts to provide
details of the progress being made. Health & safety, quality and environmental
performances, coupled with impeccable customer service are the key mantras of
the mission statement, along with the maintenance and development of the key
resource, our staff. It is very gratifying to report that the Group's health
and safety performance still continues to be better than the published industry
statistics.
To facilitate the continued expansion of the Group, extra office accommodation
has been constructed at the Head Office site at a cost of �1.7m to the highest
environmental standards. This will provide an improved and more efficient
working environment for the staff, improved environmental performance and space
to accommodate an increased design capability, as this is an area of targeted
expansion for the future, because clients are increasingly outsourcing this
element of their contracts.
The significant decline in the share price is of great concern to your Board,
but to a major extent simply reflects the downward spiral of prices for the
whole construction sector. The current economic situation is of concern.
However, the Group operates within some growth sectors such as waste and other
areas such as water with a maintained spend profile. The secured workload for
2008 is �90m and this gives your Board confidence that the budgets for 2008 will
be attained. In spite of the diminished result, your Board is keen to maintain
the yield and, therefore, recommend a maintained final dividend of 6.0p, making
a total of 8.5p for the year.
R Moyle
Chairman
3 April 2008
Consolidated Income Statement for the Year Ended 31 December 2007
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Revenue 211,294 175,543
Operating Profit 3,301 5,591
Finance Costs (181) (94)
Profit before Tax 3,120 5,497
Tax (928) (1,716)
Profit for the Year 2,192 3,781
Attributed to:
Minority Interest 571 510
Equity Holders of the Parent 1,621 3,271
Earnings per share 16.54p 33.38p
Amount of actual final dividend on 6.00p 6.00p
ordinary shares proposed to the
Shareholders on the register at
the close of business on 2 May
2008, which will be paid on 30 May
2008.
The calculation of earnings per share is based on 9,800,000 shares (2006 :
9,800,000) being the number of shares in issue throughout the period and on a
profit of �1,621,000 (2006 : �3,271,000).
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2007
Total Attributable to Minority Interest Total
Equity Holders of the Equity
Parent
�'000 �'000 �'000
Balance at 31 December 17,022 913 17,935
2006
Profit for the year 1,621 571 2,192
Dividends Paid (833) (225) (1,058)
Balance at 31 December 17,810 1,259 19,069
2007
Consolidated Balance Sheet as at 31 December 2007
2007 2006
�'000 �'000
ASSETS
Non-current Assets
Property, Plant and Equipment 11,135 8,534
Goodwill 106 106
11,241 8,640
Current Assets
Inventories 1,714 1,046
Construction Contracts 9,850 7,009
Trade and Other Receivables 44,532 32,845
Cash and Cash Equivalents 2,501 8,652
58,597 49,552
TOTAL ASSETS 69,838 58,192
EQUITY AND LIABILITIES
Equity Attributable to Equity Holders of
the Parent
Share Capital 980 980
Capital Redemption Reserve 20 20
Retained Earnings 16,810 16,022
17,810 17,022
Minority Interest 1,259 913
Total Equity 19,069 17,935
Non-current Liabilities
Obligations Under Finance Leases -
Due after One Year 1,041 735
Provisions 539 531
1,580 1,266
Current Liabilities
Trade and Other Payables 47,061 36,999
Current Tax Payable 895 970
Obligations Under Finance Lease -
Due within One Year 1,233 1,022
49,189 38,991
Total Liabilities 50,769 40,257
TOTAL EQUITY AND LIABILITIES 69,838 58,192
Consolidated Cash Flow for the Year Ended 31 December 2007
2007 2006
�'000 �'000
Cash Flows from Operating Activities
Operating Profit 3,301 5,591
Adjustments for:
Depreciation of Property, Plant & Equipment 1,695 1,430
(Gain) on Disposal of Property, Plant & Equipment (108) (117)
(Decrease)/Increase in Reinstatement Reserve (32) 77
Operating Cash Flows before Movement in Working
Capital
(Increase) in Inventories 4,856 6,981
(Increase) in Construction Contracts (668) (176)
(Increase)/Decrease in Receivables (2,841) (548)
Increase in Payables (11,687) 461
10,062 1,654
Cash (used in)/Generated from Operations (278) 8,372
Tax Paid (963) (1,484)
Interest Paid (181) (94)
Net Cash (used in)/from Operating Activities (1,422) 6,794
Cash Flows from Investing Activities
Purchase of Property, Plant & Equipment (2,509) (3,173)
Proceeds on disposal of Property, Plant & Equipment
120 133
Net Cash (used in) Investing Activities (2,389) (3,040)
Cash Flows from Financing Activities
Equity Dividends Paid (833) (735)
Dividends Paid to Minority Interests (225) (200)
Repayment of Obligations Under Finance Leases (1,282) (1,037)
Net cash (used in) Financing Activities (2,340) (1,972)
Net (Decrease)/Increase in Cash and Cash Equivalents
(6,151) 1,782
Cash and Cash Equivalents at 1 January 2007 8,652 6,870
Cash and Cash Equivalents at 31 December 2007 2,501 8,652
The accounting policies used in arriving at the preliminary figures are
consistent with those which will be published in the full financial statements
and which were set out in the Group's Annual Report and Accounts for 2006.
The accounts have been prepared in accordance with International Financial
Reporting Standards (IFRSs) and are presented in sterling.
The abridged financial information presented is based on the full accounts of
the Group for the year ended 31 December 2007, on which the auditors have given
an unqualified report.
The accounts have yet to be filed with the Registrar of Companies.
The Annual report and Accounts for the year ended 31 December 2007 will be
despatched to the Shareholders on 30 April 2008 and will be available on the
company's website: www.northmid.co.uk.
The Annual General Meeting will be held on 29 May 2008 at 12 noon at the Group's
Head Office at Nunn Close, The County Estate, Huthwaite, Sutton-in-Ashfield,
Nottinghamshire NG17 2HW.
This information is provided by RNS
The company news service from the London Stock Exchange
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