TIDMNMD
RNS Number : 3714M
North Midland Construction PLC
23 August 2013
CORRECTION. THIS RNS REPLACES THE ANNOUNCEMENT OF 7AM THIS
MORNING. THE COMPANY CONFIRMS THE INTERIM DIVIDEND TO BE 1.0P. ALL
OTHER INFORMATION REMAINS THE SAME.
23 August 2013
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
North Midland Construction PLC (the "Company") the UK provider
of civil engineering, building, mechanical and electrical services
to public and private organisations, announces interim results for
the six months ended 30 June 2013.
Highlights:-
Six Months Six Months
Ended Ended
30 June 30 June
2013 2012
GBP'000 GBP'000
Revenue 89,387 74,873
----------- -----------
(Loss)/profit
Before Tax (480) 115
Total Comprehensive
Income (369) 86
----------- -----------
(Loss)/earnings
per Share (3.64p) 0.23p
----------- -----------
Proposed Dividends 1.0p 1.5p
----------- -----------
Revenue increased by 19% compared with previous year.
NMCNomenca has returned a profit of GBP0.87 on revenues of
GBP37.29 million (2012: profit of GBP0.79 million on revenues of
GBP26.0 million).
Significant GBP1.58 million loss in Building & Civil
Engineering division (2012: loss of GBP0.67 million).
For further information:-
Robert Moyle, Chairman - 01623 518812
North Midland Construction
PLC
CHAIRMAN'S STATEMENT
The result for the half year is a major disappointment with
ongoing problems in the Building & Civil Engineering division
(B & CE) negating the results of the remainder of the Group. A
group loss of GBP0.48 million before tax was delivered on a Group
revenues that increased by 19.4% year on year to GBP89.39 million.
This compares with a profit of GBP0.12 million on revenues of
GBP74.87 million in the previous year.
Major problems have been experienced within the B & CE
division during the period, with the division recording a loss of
GBP1.58 million (2012: GBP0.67 million) on a revenue of GBP16.81
million (2012: GBP13.08 million). Completion on the major
problematical contract has still not been achieved and there were
significant cost overruns on two other projects. The current market
remains extremely competitive with the result that tendering failed
to produce the required return.
Restructuring of the division had already been instigated and
redundancy costs have been incurred. Further cost reduction
measures have been implemented. The division is being scaled back
to accord with current market conditions and the primary focus is
to complete the major loss-making contract, which, as previously
reported, will be the subject of a major contractual claim, which
offers the opportunity of a potential significant recovery. Once
this contract is completed, the division's performance will
progress.
The NMCNomenca division has returned a profit of GBP0.87 million
on revenues of GBP37.29 million, compared with GBP0.79 million and
GBP26.00 million for the previous year respectively. The division
is delivering increased revenues, due to the recently incorporated
frameworks of Anglian Water, the Southern division for Severn Trent
Water and a contract for Ostara in Slough. The division's
performance and total turnkey capability is developing an enviable
reputation in the water industry and should hold it in good stead
for the AMP6 bidding process. The E5 consortium, which is
undertaking a collection of major projects for Severn Trent Water,
continues to progress and the overall prospects are encouraging.
The division will deliver a return for the year in excess of
budget, and the overall progress is very encouraging.
This is the first year that Nomenca, the mechanical and
electrical subsidiary, will be reporting on a stand alone basis,
with none of the revenue or profit emanating from NMCNomenca being
repatriated into Nomenca. The six months results up to 30 June 2012
have been adjusted, so that this year's figures can be judged on a
comparative basis. The subsidiary continues to progress on the back
of robust expenditure in the water sector. Whilst revenue reduced
by 9.4% to GBP19.77 million (2012: GBP21.83 million), profitability
increased by 75.0% to GBP0.18 million (2012: GBP0.10 million). The
majority of revenue is secured through frameworks and this year, on
a proportional basis, it is weighted towards the second half of the
year, hence the reduction in first half revenue compared with the
previous year. The Nomenca subsidiary is on course to achieve its
budget forecast for the year.
NMCNomenca and Nomenca are effectively the Group's water
business and are able to serve that industry's requirements from
design through construction and installation and ultimately onto
service and maintenance. As a resource, they really need to be
viewed as one entity, and in the future will be employing their
combined capabilities with the aim to expand their business in the
AMP6 programme, the procurement process for which is just
commencing.
Due to senior management retirements and the requirement to
further reduce the cost base, the Highways and Utilities divisions
were merged at the start of the financial year, under the managing
directorship of Geoff Poyzer. However, both divisions have
continued to report on an individual segmental basis.
The Utilities section has benefited from increased expenditure
by BT on the BDUK expansion and the commencement of work for the
recently secured Project Maximus for Vodafone, although volumes on
the latter have been slower than originally envisaged, as the
programme period has been extended. Revenue increased by 13.7% to
GBP9.52 million (2012: GBP8.37 million) with a return to a nominal
profit of GBP4,000, compared with a loss of GBP0.22 million in the
previous year.
The Highways section has suffered from a delay in the
commencement of several projects and the liquidation of a client on
a completed contract. However, revenue increased by 7.2% to GBP6.01
million (2012: GBP5.60 million), but profitability declined by
47.0% to GBP0.07 million (2012: GBP0.13 million). Revenue will
increase in the second half and an improved performance is
forecast.
There was a net inflow of cash, compared with 30 June 2012, of
GBP4.27 million, although cash collection in certain areas remains
both difficult and protracted, and the major problematical building
contract is currently cash negative. Extended payment terms are
becoming the norm, although the Group continues to operate well
within its banking facilities.
The results are extremely disappointing, particularly in view of
the increase in Group revenue. Restructuring to reduce the overall
cost base is continuing, most particularly in the B & CE
division. The cost of this, incurred in the first half year,
totalled GBP0.12 million. The secured workload to be constructed in
this financial year currently stands at GBP160 million and the
Group is well represented across the construction sector, most
particularly in the water sector. The market remains extremely
competitive and challenging, but a return to profitability is
forecast in the second half year, and accordingly the Directors
feel it is appropriate to pay an interim dividend of 1.0p (2012:
1.5p), which will be paid on 27 September 2013 to the shareholders
on the register on 6 September 2013. The principal risks and
challenges for the future are outlined above and remain as fully
disclosed in the annual report to 31 December 2012.
Robert Moyle
Chairman
North Midland Construction PLC
22 August 2013
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30
June 2013 are shown below together with the unaudited Group results
for the half year ended 30 June 2012 and the audited Group results
for the year ended 31 December 2012.
Six Months Ended
30 June Year Ended
31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
Revenue 89,387 74,873 168,928
Other operating income 23 39 77
--------- --------- ------------
89,410 74,912 169,005
Raw material and consumables (13,542) (14,299) (30,418)
Other external charges (52,365) (38,122) (92,695)
Employee costs (21,632) (20,086) (40,657)
Depreciation of property,
plant & equipment (851) (798) (1,627)
Other operating charges (1,469) (1,472) (2,833)
--------- --------- ------------
Operating (loss)/profit (449) 135 775
Interest received 2 11 12
Finance costs (33) (31) (77)
--------- --------- ------------
(Loss)/profit before
tax (480) 115 710
Tax (Note 4) 111 (29) (174)
--------- --------- ------------
(Loss)/profit for
the period (369) 86 536
Other comprehensive
income - - -
--------- --------- ------------
Total comprehensive
(loss)/income for
the period (369) 86 536
========= ========= ============
Attributed to:-
Non-controlling interest - 63 63
Equity holders of
the parent (369) 23 473
--------- --------- ------------
(369) 86 536
========= ========= ============
Earnings per share
basic and diluted
(Note 3) (3.64p) 0.23p 4.75p
Dividend per share
(Note 5) 3.00p 3.00p 4.50p
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital Non-
Share Merger Redemption Retained Controlling
Capital Reserve Reserve Earnings Interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January 2012 980 20 17,268 573 18,841
Profit and
total comprehensive
income for
the period - - - 23 63 86
Dividends paid - - - (294) (43) (337)
-------- -------- ----------- --------- ------------ --------
Balance at
30 June 2012 980 - 20 16,997 593 18,590
Profit and
total comprehensive
income for
the period - - - 450 - 450
Dividends paid - - - (152) - (152)
Acquisition
of a non-controlling
interest - - - (520) (593) (1,113)
Shares issued 35 455 - - - 490
-------- -------- ----------- --------- ------------ --------
Balance at
31 December
2012 1,015 455 20 16,775 - 18,265
(Loss) and
total comprehensive
income for
the period - - - (369) - (369)
Dividends paid - - - (304) - (304)
-------- -------- ----------- --------- ------------ --------
Balance at
30 June 2013 1,015 455 20 16,102 - 17,592
======== ======== =========== ========= ============ ========
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets as at 30 June 2013
and 30 June 2012 are shown below together with the audited Group
Balance Sheet as at 31 December 2012.
30 June 31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
Assets
Non-Current Assets
Property, plant and
equipment 10,408 10,734 10,622
Deferred tax asset 77 140 77
10,485 10,874 10,699
--------- -------- ------------
Current Assets
Inventories 1,683 1,476 1,496
Construction contracts 18,930 12,373 16,768
Trade and other receivables 31,762 33,380 32,403
Cash and cash equivalents 2,430 - 5,065
--------- -------- ------------
54,805 47,229 55,732
--------- -------- ------------
Total Assets 65,290 58,103 66,431
========= ======== ============
Equity & Liabilities
Capital & Reserves
attributable to equity
holders of the Parent
Share capital 1,015 980 1,015
Merger reserve 455 - 455
Capital redemption
reserve 20 20 20
Retained earnings 16,102 16,997 16,775
--------- -------- ------------
17,592 17,997 18,265
Non-controlling interest - 593 -
--------- -------- ------------
Total Equity 17,592 18,590 18,265
========= ======== ============
Liabilities
Non-current Liabilities
Obligation under
finance leases
- due after one year 787 771 877
Provisions 242 470 350
1,029 1,241 1,227
--------- -------- ------------
Current Liabilities
Trade & other payables 45,943 35,509 45,898
Current income tax
payable 7 33 115
Obligations under
finance leases
- due within one
year 719 890 926
Current borrowings - 1,840 -
--------- -------- ------------
46,669 38,272 46,939
--------- -------- ------------
Total Liabilities 47,698 39,513 48,166
--------- -------- ------------
Total Equity & Liabilities 65,290 58,103 66,431
========= ======== ============
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
The unaudited condensed Group statement of cash flows for the
periods ended 30 June 2013 and 30 June 2012 are shown below
together with the audited Group statement of cash flow for the year
ended 31 December 2012.
Six Months Ended
30 June Year Ended
31 December
2013 2012 2012
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating (loss)/profit (449) 135 775
Adjustments for:
Depreciation of property,
plant and equipment 851 798 1,627
(Gain) on disposal of
property, plant and
equipment (23) (39) (77)
(Decrease) in provisions (108) (109) (229)
Operating cash flows
before movements in
-------- --------- ------------
working capital 271 785 2,096
(Increase)/decrease
in inventories (187) 75 55
(Increase)/decrease
in construction contracts (2,162) (186) (4,581)
Decrease/(increase)
in receivables 641 (1,316) (339)
Increase/(decrease)
in payables 45 (9,070) 1,319
Cash (used in) operations (1,392) (9,712) (1,450)
Income Tax paid - - -
Interest received 2 11 12
Interest paid (33) (31) (77)
-------- --------- ------------
Net cash (used in) operating
activities (1,423) (9,732) (1,515)
-------- --------- ------------
Cash flows from investing
activities
Purchase of property,
plant and equipment (423) (558) (634)
Proceeds on disposal
of property, plant and
equipment 48 39 99
Purchase of non-controlling
interest - - (623)
-------- --------- ------------
Net cash (used in) investing
activities (375) (519) (1,158)
-------- --------- ------------
Cash flows from financing
activities
Equity dividend paid (304) (294) (446)
Dividend paid to non-controlling
interest - (43) (43)
Repayments of obligations
under finance leases (533) (481) (1,002)
Net cash (used in) investing
activities (837) (818) (1,491)
-------- --------- ------------
Net (decrease) in cash
and cash equivalents (2,635) (11,069) (4,164)
Cash and cash equivalents
at 1 January 2013 5,065 9,229 9,229
-------- --------- ------------
Cash and cash equivalents/(current
borrowings) at 30 June
2013 2,430 (1,840) 5,065
======== ========= ============
1. Basis of preparation
The unaudited condensed consolidated half-yearly
financial statements have been prepared in accordance
with International Accounting Standard (IAS) 34,
Interim Financial Reporting, and have been prepared
on the basis of International Financial Reporting
Standards (IFRS's) as adopted by the European
Union that are effective for the full year ending
31 December 2012. They do not include all of the
information required for full annual financial
statements. These condensed consolidated half-yearly
financial statements have not been subject to
audit or review in accordance with International
Standard on Review Engagements (UK and Ireland)
2410 by the company's auditor, do not comprise
statutory accounts within the meaning of Section
435 of the Companies Act 2006, and should be read
in conjunction with the Annual Report 2012. The
comparative figures for the year ended 31 December
2012 are not the Group's statutory accounts for
that financial year. Those accounts have been
reported upon by the Group's auditor and delivered
to the Registrar of Companies. The report of the
auditor was unqualified, did not include a reference
to any matters to which the auditor drew attention
by way of emphasis without qualifying their report
and did not contain statements under Section 435
and 498 (2) or (3) respectively of the Companies
Act 2006.
The Board regularly reviews financial statements,
cash balances and forecasts and the Directors
confirm that they consider the Group has adequate
resources to continue to operate for the foreseeable
future. Accordingly they continue to adopt the
going concern basis in preparing the condensed
half yearly financial statements.
The accounting policies adopted in the preparation
of the condensed consolidated half-yearly financial
statements to 30 June 2013 are consistent with
the policies applied by the Group in its consolidated
financial statements as at, and for the year ended
31 December 2012. The Group has considered amendments
to existing standards and interpretations that
are effective for the year ending 31 December
2013 and is of the view that they have no impact
on the half-yearly accounts.
The preparation of consolidated half-yearly financial
statements requires management to make judgements,
estimates and assumptions that affect the application
of accounting policies and the reported amounts
of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed half-yearly financial
statements, the significant judgements made by
management in applying the Group's accounting
policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated
financial statements as at and for the year ended
31 December 2012.
The Group's financial risk management objectives
and policies are consistent with those disclosed
in the consolidated financial statements as at
and for the year ended 31 December 2012.
2. Segment reporting
Following the reorganisation in January 2013 when
the trade from the NMCNomenca was treated as a
separate division rather than being split equally
between the Nomenca subsidiary and the Building
& Civil Engineering division, the business segment
reporting format reflects the Group's management
and internal reporting structure. The six months
ended 30 June 2012 have been adjusted accordingly.
Business segments
The Group is comprised of the following business
segments:-
- 'PLC' - comprising building and civil engineering,
highways, utilities and NMCNomenca divisions
- Nomenca - mechanical and electrical engineering
products and services
Segment revenue and profit
Six Months Ended 30 June
2013
Building Highways Utilities NMCNomenca Nomenca Total
& Civil
Engineering
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External
sales 16,807 6,005 9,523 37,287 19,765 89,387
============= ========= ========== =========== ======== ========
Result before
corporate
expenses (726) 343 156 2,307 1,264 3,344
Corporate
expenses (853) (273) (152) (1,433) (1,082) (3,793)
------------- --------- ---------- ----------- -------- --------
Operating
(loss)/profit (1,579) 70 4 874 182 (449)
============= ========= ========== =========== ========
Net finance
costs (31)
--------
(Loss) before
tax (480)
Tax 111
--------
Total comprehensive income
for the period (369)
========
Six Months Ended 30 June
2012
Building Highways Utilities NMCNomenca Nomenca Total
& Civil
Engineering
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External
sales 13,076 5,602 8,372 25,998 21,825 74,873
============= ========= ========== =========== ======== ========
Result before
corporate
expenses (15) 453 (48) 1,862 1,343 3,595
Corporate
expenses (659) (321) (171) (1,070) (1,239) (3,460)
------------- --------- ---------- ----------- -------- --------
Operating
profit/(loss) (674) 132 (219) 792 104 135
============= ========= ========== =========== ========
Net finance
costs (20)
--------
Profit before
tax 115
Tax (29)
--------
Total comprehensive income
for the period 86
========
Segment assets
30 June
2013 2012
GBP'000 GBP'000
Building & Civil Engineering 12,170 11,036
Highways 4,348 4,728
Utilities 6,895 7,067
NMCNomenca 26,998 21,942
Nomenca 14,879 13,330
-------- --------
Total segment assets and consolidated
total assets 65,290 58,103
======== ========
For the purpose of monitoring segment performance
and allocating resources between segments, the
Group's Chief Executive monitors the tangible
and financial assets attributable to each segment.
Assets used jointly by reportable segments are
allocated on the basis of the revenues earned
by individual reportable segments.
Other segment information
Depreciation Additions
and to
amortisation non-current
assets
30 June 30 June
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
Building & Civil engineering 202 193 159 232
Highways 114 83 57 100
Utilities 73 124 90 148
NMCNomenca 448 385 353 461
Nomenca 14 13 - 18
-------- -------- -------- --------
851 798 659 959
======== ======== ======== ========
There were no impairment losses recognised in
respect of property, plant and equipment.
All of the above relates to continuing operations
and arose in the United Kingdom.
Information about major customer
Revenues of approximately GBP32,256,000 (2012:
GBP27,620,000) were derived from a single external
customer. These revenues are attributable to the
NMCNomenca and Nomenca segments.
3. Earnings per share
The basic and diluted earnings per share are the
same and have been calculated on losses of GBP369,000
(2012: profit of GBP23,000) and the weighted average
number of shares in issue of 10,150,000 (2012:
9,800,000) shares in issue.
4. Taxation
In respect of the six months ended 30 June 2013,
corporation tax has been provided at 23.25% (2012:
24.5%) of the loss without deferment.
5. Dividends
Amounts recognised as distributions to equity
holders in the half year:-
Six Months
to June
2013 2012
GBP'000 GBP'000
Final dividend for the year ended 31
December 2012 of 3p (2011: 3p) per share 304 294
======================== ========================
The Directors propose an interim dividend of 1.0p
per share (2012: 1.5p) total GBP101,500 (2012:
GBP152,250), which will be paid on the 27 September
2013 to the shareholders on the register on 6
September 2013.
6. Related parties and joint operations
The Group's related parties are key management
personnel who are the executive directors, non-executive
directors and divisional managers.
7. Contingent liabilities
Euler Hermes Guarantee plc, Lloyds TSB, Aviva
Insurance Limited and HCC International Insurance
Co. Ltd have given Performance Bonds to a value
of GBP4,774,793 (2012 : GBP5,337,879) on the Group's
behalf. These bonds have been made with recourse
to the Group.
8. Seasonality
The Group's activities are not subject to significant
seasonal variations.
9. Principal risks and uncertainties
The Board consider the principal risks and uncertainties
relating to the Group for the next six months
to be the same as detailed in the last Annual
Report and Accounts to 31 December 2012.
10. Responsibility Statement of the Directors in respect
of the half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements,
which has been prepared in accordance with
IAS 34 and the ASB's 2007 statement of Half
Year Reports, gives a true and fair view of
the assets, liabilities, financial position
and profit or loss of the Group;
-- the interim management report includes a fair
review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency
Rules, being an indication of important
events that have occurred during the first
six months of the financial year and their
impact on the condensed set of financial
statements; and a description of the principal
risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency
Rules, being related party transactions
that have taken place in the first six
months of the current financial year and
that have materially affected the financial
position or performance of the entity during
that period; and any changes in the related
party transactions described in the last
annual report that could do so.
R Moyle
Chairman
M S Garratt
Finance
Director
23 August 2013
A copy of this interim report will be sent to all shareholders
on 23 August 2013 and copies will be available from the registered
office, Nunn Close, The County Estate, Huthwaite,
Sutton-in-Ashfield, Nottinghamshire, NG17 2HW, for 14 days from
today's date. This report will also be available on the Group's
website (www.northmid.co.uk). The interim report will also shortly
be available for inspection at the UK Listing Authority's National
Storage Mechanism website: http://www.hemscott.com/nsm.do.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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