North Midland Construction PLC Pre-close Trading update & Notice of Final Results (8526C)
25 Gennaio 2018 - 8:00AM
UK Regulatory
TIDMNMD
RNS Number : 8526C
North Midland Construction PLC
25 January 2018
North Midland Construction PLC
25 January 2018
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
North Midland Construction PLC
("North Midland Construction" or the "Group" or the
"Company")
Pre-close Trading update and Notice of Final Results
North Midland Construction announces an unaudited trading update
ahead of its close period prior to the announcement of its audited
final results for the year ended 31 December 2017.
Trading update
The Directors of North Midland Construction ("the Directors")
believe that unaudited revenue for the year 31 December 2017 will
be in line with their expectations, and approximately 18 per cent
ahead of last year. However, a post year-end review of the
continuing operating segments' performance for 2017, following on
from a review started in the previous year of the potential outcome
of all work in progress and, in particular, the legacy contractual
dispute (which is the subject of continued court action, explained
further below) has meant that the Directors have decided to reduce
their earnings expectations for the year-ended 31 December 2017.
The Directors now believe that the Group will break even in the
second half, but be profitable for the year as a whole at the
pre-tax level. Unaudited underlying profit (*see note below) is
significantly ahead of 2016, due to an exceptional performance in
the continuing operating segments for the year.
The Group's unaudited cash balance, as at 31 December 2017, is
approximately GBP17.0M (2016: GBP11.4M), and is testament to the
strength of the continuing operating segments. In addition, the
current order book for construction in 2018, stands at
approximately GBP257M which is just under 80% of the Directors'
revenue expectations for the current year. The Group is targeting
net margins of between 1.5 to 2.0 per cent for the full year and is
committed to returning a steady dividend flow should these targets
be met.
Legacy contractual dispute
As we have announced previously, the Group has been involved in
a legacy contractual dispute. This dispute is with Cyden Homes
Limited. Following a High Court ruling towards the end of last
year, which did not support the application of the well-established
'prevention principle' in relation to this contract; the Company
has been granted leave to appeal this decision by the Court of
Appeal. On the advice of the Company's lawyers the Directors will
vigorously pursue this appeal, but have decided to make a further
provision against the outstanding debt. This matter will be kept
under constant review and further announcements will be made if
appropriate.
Contract with Carillion Telent
The Group has noted the announcement made by Carillion plc, that
on 15 January 2018 it has been placed into compulsory liquidation.
The Group's Telecommunications Division has a term contract with
Carillion Telent (an unincorporated joint venture) in the East
Midlands valued at approximately GBP3M per annum. Under the terms
of the contract, money is owed to North Midland Construction for
work in progress, outstanding debt and retention. The Group has had
confirmation that Telent Technology Services Limited ("Telent") is
taking over Carillion's share of the joint venture and that any
money owed to North Midland Construction will remain the
responsibility of Telent. The Group has had confirmation that
contract and payment terms will remain unaltered and, to date,
there has been no disruption to payments due to North Midland
Construction.
The Group has no other contracts or projects with Carillion
plc.
Notice of Final Results
The Company intends to announce its audited final results for
the year ended 31 December 2017 on 28 March 2018.
John Homer, Chief Executive of North Midland Construction,
commented:
"It is disappointing that focus on a healthy underlying Group
performance from our continuing operations, which we expect to
report on in late March 2018, appears to continue to be diverted by
the outcome of this remaining legacy contract.
Going forward we have a good order book and a positive cash flow
profile. We remain confident that our emphasis on careful contract
selection, effective governance and continued investment in our
employer brand will deliver the results required."
Note:
* - "underlying profit"
Annual Report & Accounts for the year ended 31 December
2016:
"Underlying profit is profit before tax, excluding legacy
contract losses. Legacy contracts are construction contracts
entered into at the height of the recession, before 31 December
2013, and which carried a high commercial and contracted risk.
These contracts have negatively impacted the Group's income
statement in 2013 and subsequent years."
Enquiries:
North Midland Construction PLC
John Homer, Chief Executive 01623 515 008
Dan Taylor, Finance Director 01623 515 008
This information is provided by RNS
The company news service from the London Stock Exchange
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