TIDMNMD
RNS Number : 1345B
North Midland Construction PLC
28 March 2013
NORTH MIDLAND CONSTRUCTION PLC
2012 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 2012.
Highlights from the results and the Chairman's Statement:-
Year ended Year ended
31 December 31 December
2012 2011
GBP'000 GBP'000
Revenue 168,928 167,220
Operating profit/(loss) before exceptional 775 (706)
items
Exceptional items (Note 3) - (10)
Profit/(loss) before tax 710 (783)
Total comprehensive income for the year 536 (636)
Earnings/(loss) per share 4.75p (7.72)p
Dividends per share 4.50p 5.50p
-- Revenue increased by 1% to GBP168.9 million.
-- Profit before tax GBP0.71 million.
-- The E5 Joint Venture with three other framework contractors
has commenced on the GBP200 million Severn Trent Water major
capital schemes programme and is progressing well.
-- The Utilities division has experienced a difficult year due
to reduced investment in the sector.
-- Problems, resulting in continuing losses, have been
experienced on a major building contract.
-- Restructuring of the Building subsidiary has taken place with
its incorporation into the Civil Engineering division under new
management.
-- Secured workload for 2013 at GBP130 million.
-- The Group has numerous long term framework agreements in place.
-- Proposed final dividend of 3.0p (2011 - 3.0p) giving a full
year dividend of 4.50p (2011 - 5.50p).
For further information:-
Robert Moyle, Chairman - 01623 518812
Michael Garratt, Finance Director - 01623 518816
Chairman's Statement
In spite of the continual downturn in construction activity
during the year, it is gratifying to be able to report that the
Group returned to profitability. A profit of GBP0.71 million (2011
: GBP0.78 million loss) was delivered on a revenue increased by
1.0% to GBP168.9 million. Margins remain extremely tight and tender
opportunities are scarce, but the Group's diversity of capability
across the whole construction sector has held it in good stead.
During the year the minority interest in the Nomenca subsidiary
was purchased and this has enabled an element of restructuring to
take place, which will produce a reduction in cost and more focus
on key delivery areas.
A detailed breakdown of the performance of the individual Group
divisions and subsidiary is provided below.
Building & Civil Engineering
Due to the losses previously incurred in the Building subsidiary
and the prevailing constraints in the market, it was decided to
merge the non-water civil engineering business with the Building
subsidiary into one PLC division. The major building project being
undertaken, which resulted in major losses for the Building
subsidiary in the last financial year, unfortunately suffered
further delays to the programmed completion date with consequent
cost overruns. This project will not now be completed until later
in 2013. A significant claim for losses incurred on this particular
contract is currently being pursued, but will not be able to be
concluded until after completion. This problematical contract has
had a significant further impact on the results of the division,
but the overall loss has been reduced to GBP0.19 million (2011 :
GBP3.17 million) on revenue increased by 17.0% to GBP60.88 million
(2011 : GBP52.03 million). The building market in particular
continues to be very difficult and extremely tight credit
conditions, coupled with poor market confidence, have restricted
the number of developer promoted projects. Only building projects
of discernible risk in core areas of expertise are currently being
considered. However, during the year the division has been
successful in securing new clients such as Mars Petcare and seven
frameworks in the power sector. A major project in Sleaford for
Danish company BWSC A/S for the construction of a power station
generating energy from the incineration of straw is progressing
well.
Highways
Cutbacks in public expenditure had a major impact on the
performance of the Highways division during the year. Success, both
in geographical expansion and securing new clients such as Bath and
North East Somerset District Council has continued, but expenditure
on existing frameworks was severely curtailed. This resulted in
revenue declining by 32.5% to GBP12.71 million (2011 : GBP18.84
million) with a consequent decline in profitability of 83.0% to
GBP0.14 million (2011 : GBP0.84 million). It is unlikely that
public expenditure on highways will significantly increase in the
foreseeable future and, therefore, for the division to prosper
going forward costs must be reduced and new clients secured. Senior
Executive Directors in both the Highways and Utilities divisions
have indicated their desire to retire in the current financial year
and, therefore, it has been decided to merge the two divisions,
operating in the future as two work streams under one senior
management team. This was effected from 1 January 2013. As
previously mentioned, success has been achieved in securing new
clients, with an award to construct car parks for Transport for
Manchester being a particular example.
Utilities
Activity in the telecommunications sector suffered a serious
decline during the year and this had a major impact on the
Utilities division. This coupled with price erosion on the existing
term contracts and extremely tight margins resulted in the division
becoming loss-making for the year. Revenue declined by 49.5% to
GBP16.25 million (2011 : GBP32.20 million) and a loss of GBP0.50
million (2011 : GBP0.60 million profit) was recorded.
Activity in the sector remains low and the division has been
restructured and merged with the Highways division to realign the
cost base to the current prevailing market. The existing term
contract with Cable & Wireless Worldwide has recently been
renewed and a term contract for Vodafone secured, alongwith utility
work on the Nottingham Tram Extension. Existing term contracts are
being undertaken for B.T., Carillion/Telent, Electricity North West
and KCom.
NMCNomenca
The division delivered an enhanced performance over the previous
year on increased revenue. Both the revenue and profit have been
incorporated equally into the Nomenca subsidiary and the Building
& Civil Engineering division. As the minority shareholding in
Nomenca has now been purchased, effected from 1 January 2013,
NMCNomenca will operate as an individual division with both profit
and revenue being reported as a separate segment. The existing
framework for Severn Trent Water continues to deliver successfully
and the division has recently been awarded further opportunities in
the Southern Area, which will result in increased revenues of
between GBP6 - GBP10 million per annum. The E5 consortium continues
to make headway on the GBP200 million programme of major projects
for Severn Trent Water and although there is still a long way to
completion, the projected outturn is encouraging. The original
concept of an integrated water business providing clients with a
full turnkey capability has delivered exceptional service. To
expand on this capability the existing frameworks for Anglian Water
previously undertaken individually by both Nomenca and the Building
& Civil Engineering division have now been transferred into
NMCNomenca.
Nomenca
The mechanical and electrical subsidiary continues to benefit
from escalating expenditure by the water industry on the AMP5
programme. Revenue increased 23.3% to a record GBP79.09 million
(2011 : GBP64.16 million) with profitability climbing by 28.4% to
GBP1.32 million (2011 : GBP1.03 million). The outlook for the
business is encouraging with 32 No. frameworks currently being
serviced from the regional office network.
As the company grows, higher value and more technically complex
projects are being successfully undertaken. A particular example of
this is the GBP20 million contract for J Murphy & Sons Ltd at
Deephams, a Thames Water plant in London, where complex large
capacity pipework and pumping equipment is being installed into
deep structures.
The company has recently been successful in winning capital
maintenance frameworks for United Utilities in the North West for a
potential duration of ten years with a projected total expenditure
of GBP300 million.
Mr D Bleakley
Doug Bleakley has expressed his desire to retire from both the
chairmanship of Nomenca Ltd and from the Board, to be effective
from 21 March 2013. He is to be replaced by Andy Langman, the
current Managing Director of Nomenca Ltd, who has worked for the
Group for 15 years.
Doug Bleakley was one of the founder members of Nomenca and it
is testament to his hard work and strategic vision that Nomenca has
grown to be a significant presence in the water industry. He has
also made a major contribution to the Board.
We all wish him a long, happy and well deserved retirement.
Non-Financial Performance
In the prevailing increasingly competitive environment with
every tender opportunity being pursued by numerous companies, it is
essential that non-financial performance is maintained at the
highest level.
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