TIDMNMD
RNS Number : 8604P
North Midland Construction PLC
22 August 2014
22 August 2014
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 2014.
Highlights:-
Six Months Six Months
Ended Ended
30 June 2014 30 June 2013
GBP'000 GBP'000
Revenue 90,976 89,387
------------- -------------
Profit/(loss) Before
Tax 371 (480)
Total Comprehensive
Income 332 (369)
------------- -------------
Earnings/(loss) per
Share 3.27p (3.64p)
------------- -------------
Proposed Dividends Nil 3.00p
------------- -------------
o Revenue increased by 1.7% compared with previous year.
o Profit/(loss) before tax increased to a GBP0.37 million profit
(2013: loss of GBP0.48 million).
o Underlying profits, excluding provisions relating to
problematic contracts, increased to GBP1.78 million (2013: GBP1.24
million).
o Significant GBP0.84 million loss in Building & Civil
Engineering division (2013: GBP1.58 million).
o Current order book for work to be undertaken in this financial
year is GBP178 million (2013: GBP160 million).
For further information:-
Robert Moyle, Chairman - 01623 518812
North Midland Construction
PLC
Chairman's Statement
The result for the half-year demonstrates the further progress
that has been made since our Interim Management Statement released
on 19 May 2014. A reported profit before tax of GBP0.37 million (H1
FY13 loss before tax GBP0.48 million) was delivered on revenues up
by 1.5% to GBP90.98 million (H1 FY13 GBP89.39 million) for the
period. Excluding movements in provisions relating to problematic
contracts the underlying profit before tax of the business was
GBP1.78 million (H1 FY13 GBP1.24 million) for the period.
Problems still remain in the B & CE division, which has been
completely restructured under new management, with the resolution
of three legacy contracts. This has resulted in further provisions
being taken, with a consequent operating loss of GBP0.84 million
for the period (H1 FY13 GBP1.58 million loss), on a revenue reduced
by 31.3% to GBP11.72 million (H1 FY13 GBP16.81 million). Progress
is being made in the resolution of these contracts, but the timing
of which is proving to be problematical. Pleasingly, the underlying
business is now trading profitably and the division continues to
perform well for longstanding clients such as Tata Steel, Western
Power Distribution (WPD) and East Midlands Housing Association with
one recent award being for a GBP3 million office block in Grove
Park, Leicester, which is due to commence in September.
The NMCNomenca division has had a very encouraging first
half-year, with operating profitability increasing by 7.9% to
GBP0.94 million (H1 FY13 GBP0.87 million), on revenue increased by
10.8% to GBP41.31 million (H1 FY13 GBP37.29 million). The AMP5
programme is drawing to a conclusion with the inevitable pressure
on margins, but costs have been controlled and the division is
performing to expectations. Severn Trent Water have recently
awarded the division the Asset Maintenance Framework covering their
Eastern Area, at a value of approximately GBP6 million per annum.
The framework is of a five year duration, with the option of a two
year extension. Also, in conjunction with Laing O'Rourke, the
division has been the recipient of an order to reconstruct
Ambergate Reservoir, valued at GBP16.5 million. Preparatory work
has already commenced on the Severn Trent Water AMP6 programme,
which was secured in December 2013. The E5 programme for Severn
Trent Water, for which NMCNomenca has a 25% share of the
construction consortium, will be virtually complete by the end of
the year and the projected outturn continues to remaining
encouraging.
Nomenca, the mechanical and electrical subsidiary, has had a
slow start to the year, with revenue declining by 3.7% to GBP19.04
million (H1 FY13 GBP19.77 million). However, operating
profitability was maintained at GBP0.18 million (H1 FY13 GBP0.18
million). The reduction in revenues was caused by the delayed award
of a major project and reduced expenditure on one particular
framework. Revenue is expected to increase in the second half of
the year and a further GBP24 million of orders have already been
secured for completion this year. Although this means that the
performance of this division will be weighted towards the second
half of the year, we are confident that the division will perform
in line with our expectations.
Whilst operationally the Utilities and Highways divisions
deliver under one management structure, financially they continue
to report segmentally. The Highways division has suffered a slower
start to the year than originally forecast, with delays in
anticipated expenditure on the secured frameworks and in the award
of a major project. In spite of this, revenue escalated to GBP7.71
million (H1 FY13 GBP6.00 million), but this was insufficient to
cover the overheads, which had been increased in anticipation of
the projected increased revenue. Therefore, an operating divisional
loss of GBP0.01 million (H1 FY13 GBP0.07 million operating profit)
was incurred. Secured revenue for this year currently stands at
GBP24.60 million, so the second half-year will show a significant
increase and a return to profitability.
The Utilities division has been the beneficiary of increased
expenditure by the telecoms companies on broadband infrastructure
and this has caused revenue to rise by 15.5% to GBP11.0 million (H1
FY13 GBP9.52 million) with operating profitability increasing to
GBP0.14 million (H1 FY13 GBP0.004 million). The division is well
represented with frameworks for the major telecom companies and all
the indications are that expenditure on these frameworks will
remain robust.
There was a net outflow of cash, compared with the figure of 31
December 2013, of GBP8.59 million, and cash collection in certain
areas remains both difficult and protracted. The major
problematical legacy building contract remains cash negative and
the resolution of final accounts of legacy contracts within the B
& CE division remains protracted and this, coupled with an
increase in working capital as revenue increases, have contributed
to this outflow. The Company's current banking facilities are
sufficient to meet the anticipated needs of the business going
forward.
The return to profitability is encouraging and orders received
to date to be executed this financial year stand at GBP178 million.
Maximum effort is being expended to bring the legacy contracts to
conclusion and settlement, and whilst the Group continues to trade
profitably, there is still potential risk in the resolution of
these legacy contracts. Accordingly, the Directors feel that a
prudent approach has to be adopted and feel, therefore, that the
payment of an interim dividend is inappropriate. The principal
risks and challenges for the future are outlined above and remain
as fully disclosed in the annual report to 31 December 2013.
Robert Moyle
Chairman
North Midland Construction PLC
22 August 2014
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30
June 2014 are shown below together with the unaudited Group results
for the half year ended 30 June 2013 and the audited Group results
for the year ended 31 December 2013.
Six Months Ended
30 June Year Ended
31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Revenue 90,976 89,387 177,555
Other operating income 36 23 31
--------- --------- ------------
91,012 89,410 177,586
Raw material and consumables (17,268) (13,542) (27,590)
Other external charges (46,951) (52,365) (108,060)
Employee costs (23,608) (21,632) (42,905)
Depreciation of property,
plant & equipment (871) (851) (1,711)
Other operating charges (1,907) (1,469) (3,175)
--------- --------- ------------
Operating profit/(loss) 407 (449) (5,855)
Interest received 2 4
Finance costs (36) (33) (121)
--------- --------- ------------
Profit/(loss) before tax 371 (480) (5,972)
Tax (Note 4) (39) 111 71
--------- --------- ------------
Profit/(loss) for the period 332 (369) (5,901)
Other comprehensive income - - -
--------- --------- ------------
Total comprehensive (loss)/income
for the period 332 (369) (5,901)
========= ========= ============
Attributed to:-
Equity holders of the parent 332 (369) (5,901)
--------- --------- ------------
332 (369) (5,901)
========= ========= ============
Earnings per share basic
and diluted (Note 3) 3.27p (3.64p) (58.14p)
Dividend per share (Note 3.00p
5) NIL NIL
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital
Share Merger Redemption Retained
Capital Reserve Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2013 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
(Loss) and total
comprehensive income
for the period - - - (5,532) (5,532)
Dividends paid - - - (103) (103)
Balance at 31 December
2013 1,015 455 20 10,467 11,957
Profit and total
comprehensive income
for the period - - - 332 332
Dividends paid - - - -
-------- -------- ----------- --------- --------
Balance at 30 June
2014 1,015 455 20 10,799 12,289
======== ======== =========== ========= ========
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets as at 30 June 2014
and 30 June 2013 are shown below together with the audited Group
Balance Sheet as at 31 December 2013.
30 June 31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Assets
Non-Current Assets
Property, plant and equipment 11,136 10,408 10,984
Deferred tax asset 103 77 103
11,239 10,485 11,087
--------- -------- ------------
Current Assets
Inventories 1,534 1,683 1,529
Construction contracts 19,573 18,930 16,214
Trade and other receivables 33,609 31,762 30,692
Current income tax receivable - - 33
Cash and cash equivalents - 2,430 4,877
--------- -------- ------------
54,716 54,805 53,345
--------- -------- ------------
Total Assets 65,955 65,290 64,432
========= ======== ============
Equity & Liabilities
Capital & Reserves attributable
to equity holders of the
Parent
Share capital 1,015 1,015 1,015
Merger reserve 455 455 455
Capital redemption reserve 20 20 20
Retained earnings 10,799 16,102 10,467
--------- -------- ------------
Total Equity 12,289 17,592 11,957
========= ======== ============
Liabilities
Non-current Liabilities
Obligation under finance
leases
- due after one year 912 787 685
Provisions 270 242 242
1,182 1,029 927
--------- -------- ------------
Current Liabilities
Trade & other payables 47,862 45,943 50,782
Current income tax payable 6 7 -
Obligations under finance
leases
- due within one year 901 719 766
Current borrowings 3,715 - -
--------- -------- ------------
52,484 46,669 51,548
--------- -------- ------------
Total Liabilities 53,666 47,698 52,475
--------- -------- ------------
Total Equity & Liabilities 65,955 65,290 64,432
========= ======== ============
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
The unaudited condensed Group statement of cash flows for the
periods ended 30 June 2014 and 30 June 2013 are shown below
together with the audited Group statement of cash flow for the year
ended 31 December 2013.
Six Months Ended
30 June Year Ended
31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Operating profit/(loss) 407 (449) (5,855)
Adjustments for:
Depreciation of property, plant
and equipment 871 851 1,711
Gain on disposal of property,
plant and equipment (25) (23) (30)
Increase/(Decrease) in provisions 28 (108) (108)
Operating cash flows before
movements in
--------- -------- ------------
working capital 1,281 271 (4,282)
(Increase)/decrease in inventories (5) (187) (33)
(Increase)/decrease in construction
contracts (4,908) (2,162) 554
(Increase)/decrease in receivables (2,014) 641 1,711
(Decrease)/increase in payables (2,233) 45 4,884
Cash (used in) operations (7,879) (1,392) 2,834
Income Tax paid - - (103)
Interest received - 2 4
Interest paid (36) (33) (121)
--------- -------- ------------
Net cash (used in) operating
activities (7,915) (1,423) 2,614
--------- -------- ------------
Cash flows from investing activities
Purchase of property, plant
and equipment (267) (423) (1,472)
Proceeds on disposal of property,
plant and equipment 33 48 56
Net cash (used in) financing
activities (234) (375) (1,416)
--------- -------- ------------
Cash flows from financing activities
Equity dividend paid - (304) (407)
Repayments of obligations under
finance leases (443) (533) (979)
Net cash (used in) financing
activities (443) (837) (1,386)
--------- -------- ------------
Net (decrease) in cash and cash
equivalents (8,592) (2,635) (188)
Cash and cash equivalents at
1 January 2014 4,877 5,065 5,065
--------- -------- ------------
Cash and cash equivalents/(current
borrowings) at 30 June 2014 (3,715) 2,430 4,877
========= ======== ============
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 2013. 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 2013. The comparative figures
for the year ended 31 December 2013 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 2014
are consistent with the policies applied by the Group in its consolidated
financial statements as at, and for the year ended 31 December
2013. The Group has considered amendments to existing standards
and interpretations that are effective for the year ending 31
December 2014 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
2013.
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 2013.
2. Segment reporting
Following the reorganisation in January 2014 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 2013 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 2014
Building Highways Utilities NMCNomenca Nomenca Total
& Civil
Engineering
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 11,721 7,712 10,995 41,311 19,037 90,776
============= ========= ========== =========== ======== ========
Result before
corporate expenses (488) 382 447 2,281 1,914 4,536
Corporate expenses (355) (396) (307) (1,338) (1,733) (4,129)
Operating profit/(loss) (843) (14) 140 943 181 407
============= ========= ========== =========== ========
Net finance
costs (36)
--------
Profit before
tax 371
Tax (39)
--------
Total comprehensive income for
the period 332
========
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)
========
Segment assets
30 June
2014 2013
restated
GBP'000 GBP'000
Building & Civil Engineering 22,608 24,258
Highways 6,018 4,504
Utilities 16,028 13,323
NMCNomenca 8,527 7,492
Nomenca 12,774 15,713
---------- ---------
Total segment assets and consolidated total assets 65,955 65,290
========== =========
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.
The previous year's segment assets have been restated to show a
more appropriate allocation across the segments, on a consistent
basis with the current period.
Other segment information
Depreciation Additions to
and
amortisation non-current assets
30 June 30 June
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
Building & Civil engineering 142 202 175 159
Highways 94 114 115 57
Utilities 133 73 164 90
NMCNomenca 492 448 618 353
Nomenca 10 14 - -
--------- --------- ---------- ---------
871 851 1,073 659
========= ========= ========== =========
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 GBP35,281,000 (2013 : GBP32,256,000)
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 profits of GBP332,000 (2013: losses of GBP369,000)
and a weighted average number of shares in issue of 10,150,000
(2013: 10,150,000).
4. Taxation
In respect of the six months ended 30 June 2014, the corporation
tax effective rate was 21.5% (2013: 23.25%). A corporation tax
provision has been included in relation to the taxable profits
of Nomenca Limited. No provision has been made for the six months
ended 30 June 2014 for any other Group taxable profits due to
the bought forward tax losses within the group.
5. Dividends
Amounts recognised as distributions to equity holders in the half
year:-
Six Months
to June
2014 2013
GBP'000 GBP'000
Final dividend for the year ended 31 December 2013
of GBPNil (2012: 3p) per share - 304
============== ========
The Directors propose an interim dividend of GBPNil per share
(2013: 1p, total GBP101,500).
6. Related parties
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 GBP3,835,907 (2013 : GBP4,774,793) 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 2013.
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
D A Taylor
Finance Director
22 August 2014
A copy of this interim report will be sent to all shareholders
on 22 August 2014 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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