TIDMNMD
RNS Number : 4602D
North Midland Construction PLC
28 March 2014
NORTH MIDLAND CONSTRUCTION PLC
2013 UNAUDITED 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 2013.
Highlights from the results:-
Year ended Year ended
31 December 31 December
2013 2012
GBP'000 GBP'000
Revenue 177,555 168,928
Operating (loss)/profit (5,855) 775
(Loss)/profit before tax (5,972) 710
Total comprehensive (loss)/income for
the year (5,901) 536
(Loss)/earnings per share (58.14p) 4.75p
-- Revenue increased by 5.11% to GBP177.56 million.
-- Loss before tax GBP5.97 million.
-- Losses of GBP9.55 million in the Building and Civil
Engineering division as a result of further delays and cost
overruns on problematic contracts and unfavourable commercial
contract settlements due to client financial instability.
-- Building and Civil Engineering division completely restructured.
-- Utilities division returns to profitability.
-- Strong performance in the water businesses (Nomenca and
NMCNomenca), with further combined increases in revenues and
profitability.
-- The E5 Joint Venture with three other framework contractors
is circa 77% complete and the projected outturn remains
encouraging.
-- AMP 6 framework with Severn Trent Water secured.
-- 80% of Group revenues derived from frameworks going forward.
-- Secured workload for 2014 at circa GBP150 million.
-- Cash position remains strong. Year end balance of GBP4.88 million.
For further information:-
Robert Moyle, Chairman - 01623 518812
Daniel Taylor, Finance Director - 01623 515008
OPERATIONAL PERFORMANCE
UTILITIES:-
Increased activity in the telecommunications sector, due to an
escalation in the roll-out of broadband, and the power sector,
contributed to an increase in revenue of 21.3% to GBP19.71 million
(2012: GBP16.25 million). This resulted in a return to
profitability with operating profit of GBP0.22 million (2012:
GBP0.50 million loss).
The division currently executes framework contracts for BT,
Carillion/Telent, Electricity North West, Vodafone and KCom and
revenue levels are in line with forecast. The division has
successfully completed a GBP1.18 million individual project in
Yorkshire for KCom early, and work continues on the Nottingham Tram
Extension and A453 dualling.
An order from City Fibre Holding Ltd has recently been received
for the construction of the Peterborough Metro Network, valued at
circa GBP4.30 million. This will commence in April 2014 for
completion this calendar year.
NMCNOMENCA:-
The division has had an exceptional year delivering operating
profit of GBP2.46 million (2012: GBP1.91 million) on revenue of
GBP79.62 million (2012: GBP56.86 million). This is the first year
that the division is reporting as an individual entity.
The division is currently engaged on AMP5 frameworks for both
Severn Trent and Anglian Water and individual water related
projects. It is also a member of the E5 consortium, which is
engaged on the GBP200 million programme of major projects for
Severn Trent Water. At 31 December 2013 the programme was
approximately 77% complete and the projected outturn remains
encouraging.
The division continues to deliver exceptional service and
innovative cost reduction solutions to its clients. As testament to
this, Severn Trent Water has reappointed NMCNomenca as a partner to
deliver its 2015-2020 investment programme (AMP6 - Asset Management
Period Number Six). This appointment maintains the relationship
between the two companies that has been established over many
years. It will also underpin both revenue and growth going forward
for the next five years.
BUILDING & CIVIL ENGINEERING:-
Failure to achieve budgeted revenue, coupled with further delays
in the completion of two major problematical contracts and the
unfavourable settlement of old projects where reduced payment was
accepted to avoid the potential risk of client commercial failure,
has resulted in an operating loss of GBP9.55 million (2012: GBP1.14
million) on a revenue of GBP26.06 million (2012: GBP32.45
million).
The division has been totally restructured and the risk profile
of new contracts has been reduced. Significant claims for losses on
the problematical contracts are currently being completed and
pursued, but conclusion will not be achieved until completion has
been finalised. The market remains extremely competitive, but the
level of enquiries is increasing.
Operational performance has improved, as a result of the
restructure and the ongoing projects, which are now predominantly
in the power and construction sector, have returned to profit at
site level. The emphasis going forward is to secure blue chip
clients with a high level of repeat business. This strategy has
been successful with East Midlands Housing Association for whom two
projects in Leicester valued at GBP1.9 million have recently been
secured.
HIGHWAYS:-
As previously reported, due to the retirement of Senior
Executive Directors, the Highways & Utilities divisions were
merged into one division, operating as two work streams, under one
senior management team. This has resulted in both cost savings and
increased operational efficiency.
Public expenditure cutbacks were maintained during the year and
activity on the existing secured frameworks was generally reduced
and in some cases non-existent. This resulted in a nominal increase
in revenue to GBP12.82 million (2012: GBP12.71 million) over the
previous year's significantly reduced level. Operating profit,
however, increased by 55.6% to GBP0.22 million (2012: GBP0.14
million). The division also incurred a bad debt on a major
development project, which is included in the result.
As a result of the successful consolidation of the geographical
expansion previously undertaken and increased levels of public
expenditure now coming on stream, the current level of secured
orders is GBP21 million. GBP17 million of this amount is to be
constructed in 2014 and the balance in the following year. This,
coupled with the higher value of contracts that the division, on
the back of past performance, is now being considered for, leads to
optimism for the future.
NOMENCA:-
The mechanical and electrical subsidiary delivered a creditable
result for the year with profitability of GBP0.79 million (2012:
GBP0.37 million) on a revenue of GBP39.35 million (2012: GBP50.66
million).
Circa 90% of Nomenca's revenue is generated from frameworks and
the subsidiary is currently actively engaged on twenty one
different framework contracts throughout the country.
There has been another good year of growth in the design
services capability, most particularly in supplying whole life cost
efficient designs to the water and mining industries. The St
Austell office is currently supporting an Australian company, G R
Engineering Services Limited, in the design for a proposed new
tungsten mine near Plymouth.
Nomenca is also engaged in manufacturing steelwork and chemical
dosing plant for the water industry. The steel fabrication
operation has grown well this year and has recently been successful
in securing a five year access steelwork framework for Yorkshire
Water.
The development of the in-house capability to serve clients'
repair and maintenance requirements has continued and is viewed as
a key area of expansion for the future. To secure the Environment
Agency MEICA Planned and Reactive Maintenance Contract for the
North of England for the next five years, at a value of circa GBP4
million per annum, is particularly pleasing.
Nomenca has developed an enviable reputation for both design and
operational delivery in both the water and water related sectors.
The future prospects for growth, built off the back of this, are
very promising.
DIVIDENDS
Due to the loss reported, the Directors do not recommend a final
dividend for the year ended 31 December 2013 (2012: 3p per share,
total GBP305,000).
OUTLOOK
The secured order book for the current financial year is circa
GBP150 million and at this stage only includes firm orders placed
under the framework contracts. These orders are expected to
increase and there is good visibility of the projected level of
expenditure on the major frameworks.
The restructuring of the Building and Civil Engineering
division, coupled with the completion of the two major
problematical contracts, along with the expansion of the water
business and improving market conditions, leads to confidence in a
return to profitability in the next financial year.
Group Statement of Comprehensive Income (unaudited)
Year Ended Year Ended
31 December 2013 31 December 2012
GBP'000 GBP'000
------------------------------------- ----------------- -----------------
Revenue 177,555 168,928
------------------------------------- ----------------- -----------------
Operating (loss)/profit (5,855) 775
Interest received 4 12
Finance costs (121) (77)
------------------------------------- ----------------- -----------------
(Loss)/profit before tax (5,972) 710
Tax 71 (174)
------------------------------------- ----------------- -----------------
(Loss)/profit for the year (5,901) 536
Other comprehensive income - -
------------------------------------- ----------------- -----------------
Total comprehensive income for
the year (5,901) 536
------------------------------------- ----------------- -----------------
Attributable to:-
Non-controlling interests - 63
Equity holders of the Company (5,901) 473
------------------------------------- ----------------- -----------------
(Loss)/earnings per share (basic
and diluted) (58.14p) 4.75p
------------------------------------- ----------------- -----------------
Final dividend proposed (per share) - 3.00p
------------------------------------- ----------------- -----------------
Earnings per share, both basic and diluted, is calculated on the
loss attributable to equity holders of the parent of GBP5,901,000
(2012: profit GBP473,000) and the weighted average of 10,150,000
(2012: 9,959,699) shares in issue during the year.
Group statement of changes in equity (unaudited)
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 year - - - 473 63 536
--------------------------------- -------- -------- ----------- --------- ------------ --------
Dividends paid - - - (446) - (446)
--------------------------------- -------- -------- ----------- --------- ------------ --------
Dividend paid to non-controlling
interest - - - - (43) (43)
--------------------------------- -------- -------- ----------- --------- ------------ --------
Acquisition of 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
--------------------------------- -------- -------- ----------- --------- ------------ --------
Profit and total comprehensive
income for the year - - - (5,901) - (5,901)
--------------------------------- -------- -------- ----------- --------- ------------ --------
Dividends paid - - - (407) - (407)
--------------------------------- -------- -------- ----------- --------- ------------ --------
Balance at 31 December 2013 1,015 455 20 10,467 - 11,957
--------------------------------- -------- -------- ----------- --------- ------------ --------
Group balance sheet as at 31 December 2013 (unaudited)
2013 2012
GBP'000 GBP'000
Assets
----------------------------------- -------- --------
Non-current assets
Property, plant and equipment 10,984 10,622
Investments in subsidiaries - -
Deferred tax asset 103 77
----------------------------------- -------- --------
11,087 10,699
----------------------------------- -------- --------
Current assets
Inventories 1,529 1,496
Construction contracts 16,214 16,768
Trade and other receivables 30,692 32,403
Current income tax receivable 33 -
Cash and cash equivalents 4,877 5,065
----------------------------------- -------- --------
53,345 55,732
----------------------------------- -------- --------
Total assets 64,432 66,431
=================================== ======== ========
Equity and liabilities
Capital and reserves attributable
to equity holders of the Parent
Share capital 1,015 1,015
Merger reserve 455 455
Capital redemption reserve 20 20
Retained earnings 10,467 16,775
----------------------------------- -------- --------
Total equity 11,957 18,265
----------------------------------- -------- --------
Liabilities
Non-current liabilities
Obligations under finance leases 685 877
Provisions 242 350
----------------------------------- -------- --------
927 1,227
----------------------------------- -------- --------
Current liabilities
Trade and other payables 50,782 45,898
Current income tax payable - 115
Obligations under finance leases 766 926
----------------------------------- -------- --------
51,548 46,939
----------------------------------- -------- --------
Total liabilities 52,475 48,166
----------------------------------- -------- --------
Total equity and liabilities 64,432 66,431
=================================== ======== ========
Group statement of cash flows for the year ended 31 December
2013 (unaudited)
2013 2012
GBP'000 GBP'000
----------------------------------------------- -------- --------
Cash flows from operating activities
Operating (loss)/profit (5,855) 775
Adjustment for:
Depreciation of property, plant and equipment 1,711 1,627
Gain on disposal of property, plant and
equipment (30) (77)
(Decrease)/increase in reinstatement reserve (108) (229)
----------------------------------------------- -------- --------
Operating cash flows before movement in
working capital (4,282) 2,096
(Increase)/decrease in inventories (33) 55
Decrease/(increase) in construction contracts 554 (4,581)
Decrease/(Increase) in receivables 1,711 (339)
Increase in payables 4,884 1,319
----------------------------------------------- -------- --------
Cash generated/(used in) from operations 2,834 (1,450)
Income Tax (paid)/received (103) -
Interest received 4 12
Interest paid (121) (77)
----------------------------------------------- -------- --------
Net cash generated from / (used in) operating
activities 2,614 (1,515)
----------------------------------------------- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (1,472) (634)
Proceeds on disposal of property, plant
and equipment 56 99
Purchase of non-controlling interest - (623)
----------------------------------------------- -------- --------
Net cash (used in) investing activities (1,416) (1,158)
----------------------------------------------- -------- --------
Cash flows from financing activities
Equity dividends paid (407) (446)
Dividends paid to non-controlling interest - (43)
Repayment of obligations under finance leases (979) (1,002)
----------------------------------------------- -------- --------
Net cash (used in) financing activities (1,386) (1,491)
----------------------------------------------- -------- --------
Net decrease in cash and cash equivalents (188) (4,164)
Cash and cash equivalents at 1 January 2013 5,065 9,229
Cash and cash equivalents at 31 December
2013 4,877 5,065
=============================================== ======== ========
Cash and cash equivalents comprise funds held at the bank which
are immediately accessible.
1. Basis of preparation
The condensed Group financial statements for the year ended 31
December 2013 included in this report do not constitute the Group's
statutory accounts for the year ended 31 December 2013, or the
year ended 31 December 2012. The results for 2013 are unaudited.
While the financial information included in this preliminary announcement
has been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRSs),
this announcement does not itself contain sufficient information
to comply with IFRSs.
The condensed Group financial statements have been prepared on
a basis consistent with that adopted in the previous year's published
financial statements and in accordance with IFRSs.
The Group expects to publish statutory financial statements for
the year ended 31 December 2013 that comply with both IFRSs as
adopted for use in the European Union and IFRSs as compliant with
the Companies Act 2006 and Article 4 of the EU IAS Regulations
based on the information presented in this announcement. The independent
Auditors' Report will be based on those statutory accounts once
they are complete.
The condensed financial statements were approved by the Board
on 27 March 2014.
Audited statutory accounts for the year ended 31 December 2012
have been delivered to the registrar of companies. The Independent
Auditors' Report on the Annual Report and Financial Statements
for 2012 was unqualified, did not draw attention to any matters
by way of emphasis, and did not contain a statement under 498(2)
or 498(3) of the Companies Act 2006.
2. Segment reporting
The business segment reporting format reflects the Group's management
and internal reporting structure.
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
Year ended 31 December 2013
Building Highways Utilities NMCNomenca Nomenca Total
& Civil
Engineering
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------------ --------- ---------- ----------- -------- --------
Revenue
External sales 26,064 12,816 19,709 79,620 39,346 177,555
---------------------------------- ------------ --------- ---------- ----------- -------- --------
Result before corporate expenses (9,266) 465 681 5,518 2,624 22
Corporate expenses (282) (244) (461) (3,055) (1,835) (5,877)
---------------------------------- ------------ --------- ---------- ----------- -------- --------
Operating profit/(loss) (9,548) 221 220 2,463 789 (5,855)
Net finance costs (117)
--------
Loss before tax (5,972)
Tax 71
--------
Loss for the year (5,901)
--------
In the previous period the NMCNomenca segment was reported 50%
within Building and Civil Engineering and 50% within the Nomenca
segment. The 2012 comparative figures have been restated to show
the NMC Nomenca segment separately to allow comparison.
The Highways & Utilities divisions were merged into one division
under one senior management team in 2013 but are still monitored
and reported as separate segments.
Year ended 31 December 2012 (restated to show NMCNomenca as a
separate segment)
Building Highways Utilities NMCNomenca Nomenca Total
& Civil
Engineering
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ --------- ---------- ----------- -------- --------
Revenue
External sales 32,453 12,706 16,251 56,862 50,656 168,928
------------------------- ------------ --------- ---------- ----------- -------- --------
Result before corporate
expenses (545) 779 (32) 4,282 2,748 7,232
Corporate expenses (597) (637) (469) (2,372) (2,382) (6,457)
------------------------- ------------ --------- ---------- ----------- -------- --------
Operating profit (1,142) 142 (501) 1,910 366 775
Net finance costs (65)
--------
Profit before tax 710
Tax (174)
--------
Profit for the year 536
--------
Segment assets (2012 restated to show NMCNomenca as a separate
segment)
2013 2012
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Building and Civil Engineering 20,210 31,368
--------------------------------------------------- -------- --------
Highways 4,633 9,541
--------------------------------------------------- -------- --------
Utilities 14,145 7,460
--------------------------------------------------- -------- --------
NMCNomenca 8,491 8,755
--------------------------------------------------- -------- --------
Nomenca 16,953 9,307
--------------------------------------------------- -------- --------
Total segment assets and consolidated total assets 64,432 66,431
--------------------------------------------------- -------- --------
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.
.
Depreciation
and Additions to
Other segment information amortisation non-current assets
2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- ----------- -----------
Building and Civil Engineering 323 1,085 396 1,132
------------------------------- -------- -------- ----------- -----------
Highways 159 226 195 236
------------------------------- -------- -------- ----------- -----------
Utilities 244 290 299 302
------------------------------- -------- -------- ----------- -----------
NMCNomenca 967 - 1,209 -
------------------------------- -------- -------- ----------- -----------
Nomenca 18 26 - 28
------------------------------- -------- -------- ----------- -----------
1,711 1,627 2,099 1,698
------------------------------- -------- -------- ----------- -----------
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.
The results of each segment are not materially affected by seasonality.
3. Information about major customer
Revenues of approximately GBP68,800,000 (2012: GBP40,400,000)
were derived from a single external customer. These revenues are
attributable to the NMC Nomenca and Nomenca segments.
4. Earnings per share
Earnings per share, both basic and diluted, is calculated on the
loss attributable to equity holders of the parent of GBP5,901,000
(2012: profit GBP473,000) and the weighted average of 10,150,000
(2012: 9,959,699) shares in issue during the year.
5. Taxation
In respect of the year ended 31 December 2013, as a result of
the pre-tax losses no corporation tax is payable (2012: provided
at 24.5% of the taxable profit). The tax credit in the period
arises from a carry back of tax losses and a deferred tax asset
arising from short term timing differences. There are trading
losses carried forward of GBP5,686,000 (2012: GBPNil), a deferred
tax asset relating to the losses has not been recognised.
6. Dividends
Amounts recognised as distributions to equity holders in the year:-
2013 2012
GBP'000 GBP'000
Final dividend for the year ended 31 December 2012
of 3p (2011: 3p) per share 305 294
Interim dividend for the year ended 31 December 2013
of 1.0p (2012: 1.5p) per share 102 152
-------- --------
407 446
======== ========
7. 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. The only transactions with these individuals comprise
remuneration under service contracts.
Additionally, the Group has a 25% interest in a joint operation
with MWH Treatment Limited, Mott MacDonald Bentley Limited and
Costain Limited.
The condensed Group financial statements for the year ended 31
December 2013 incorporate the following relating to the joint
operations:-
Year ended Year ended
31 December 2013 31 December 2012
GBP'000 GBP'000
Revenue 17,500 12,483
Expenses 16,243 11,828
Assets 937 266
Liabilities 937 266
8. Share capital
2013 2012
GBP'000 GBP'000
Authorised:-
12,500,000 ordinary shares of 10p each 1,250 1,250
Allotted, issued and fully paid:-
10,150,000 (2012 - 10,150,000) ordinary shares of 10p 1,015 1,015
9. Contingent liabilities
Aviva Insurance Limited, Lloyds TSB Bank PLC, Euler Hermes Europe
S.A. (N.V.) and HCC International Insurance Company Plc have given
Performance Bonds to a value of GBP4,533,973 (2012: GBP5,592,000)
on the Group's behalf. These bonds have been made with recourse
to the Group.
10. The Annual Report and Accounts for the year ended 31 December
2013 will be despatched to shareholders on 25 April 2014 and will
be available on the Company's website - www.northmid.co.uk.
11. The Annual General Meeting will be held on Thursday 22 May 2014
at 12.00 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
END
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