NMCN.L Regulatory News (NMCN)

24 May 2006 10:41

North Midland Construction PLC24 May 2006 North Midland Construction plcAGM Statement24 May 2006 North Midland Constructions plc, the UK provider of civil engineering, building,mechanical and electrical services to public and private organisations, will beholding its Annual General Meeting at 12.00 noon today. Robert Moyle, Chairman, will update shareholders on current trading and futureprospects, saying: "It is very gratifying to report that the momentum of the last few years hasbeen maintained in the first quarter of 2006, with Group profits of £1.069m andrevenue of £43.5m, 12.4% and 29.9% respectively ahead of the comparable periodlast year. As in previous years, a breakdown of the individual subsidiary anddivisional performance and prospects, will provide a more detailed insight intothe business. "Civil Engineering is the largest individual sector of business that the Groupis engaged upon and the growth of the division, in conjunction with the Nomencasubsidiary, is a core element in the strategy of organic growth. The year hasstarted somewhat slowly, primarily due to the tardy commencement of the watercompanies AMP4 programme, most particularly in the North West. However, all theindications are that the projects will come on stream later during the year toensure that the revenue targets for the year are attained. As you are aware,both the Civil Engineering Division and Nomenca were particularly successful inthe AMP4 procurement process and they are soon to commence on circa £100m ofcontracts at Minworth Sewerage Works for Severn Trent Water in a joint venturewith Biwater. To be entrusted with a scheme of this magnitude is a furtherdemonstration of the confidence that the Company is generating with its clientsand the capability developed over the past few years to undertake largerprojects. A further endorsement are the two major schemes currently beingundertaken for Yorkshire Water at Bridlington and Halifax, valued at £9.50m and£6.30m respectively. The power sector continues to be a growth sector for thedivision and the push into the waste and industrial sectors is being maintained.The Company now possesses a Contractors Assurance Case for Network Rail, whichenables it to secure work directly and not through a framework contractor. Thefirst contract is currently successfully underway at Eskmills in the North West. "The Highways division has returned to former levels of profitability, after adisappointing performance in 2005, and is anticipating record revenue levelsthis year. The AmScott consortium, of which the division is a member, has hadits' current contract with the Highways Agency extended by three years to 2009and this provides a fundamental platform of revenue to build upon. The divisionis currently undertaking its largest ever two individual contracts in WestBromwich for Sandwell MBC and Kirkby-in-Ashfield for Bovis Homes. As with CivilEngineering, this increase in notational value of contracts being undertakenbodes well for future expansion. The Utilities division revenue has fallen during the first quarter, with aconsequent deterioration in profitability due to a reduction in expenditure byBT on the term contracts. Fixed costs are very high on these contracts, by theirvery nature, and thus any significant decline in volumes damages the net return.However, the division has been successful in obtaining term contracts with twonew clients in GEO, part of the Hutchinson Whampoa group, and Easynet and boththese have commenced very promisingly. Further opportunities with the MOD havebeen secured in partnership with both BT and Telent and the provision of fibrecable services is being expanded. The performance of North Midland Building Ltd has surpassed expectations and thesubsidiary is heading for a record performance. Profitability and revenue are up1500% and 227% respectively on the comparable quarter last year. The Pavilionscontract in Lincoln, the largest individual scheme the company has everundertaken, continues to progress very successfully and is on programme for thehandover of the next critical phase. Other projects in Loughborough, Sheffield,Everthorpe and West Bromwich are also progressing satisfactorily. The requiredworkload has largely been secured for 2006 and this enables the management toconcentrate its efforts on next year. "Nomenca Ltd has reported first quarter profits 31% up on last year on a revenueincreased by 67.0%. The dependence upon the water industry has decreased, butnevertheless the company was incredibly successful in the AMP4 procurementround. Two major new clients, Anglian and Wessex Water, were acquired and aregional office has recently been opened in East Anglia to accommodate thisgrowth. The ability to offer a full turnkey approach to clients, whether it bein the industrial or water sectors, is still very attractive. "The Group operates in an increasingly regulatory environment and claimsconscious society, where sometimes it is very hard to understand the relevanceof the legislation to our core business and it feels that the general publicview us as a potential contributor to their next foreign holiday. Gratifyingly,in spite of these external pressures, the increase in overhead has beenmaintained at acceptable levels. Also, by centralising all of the keyadministrative functions at Head Office, it has permitted the individualmanagements to concentrate on the organic growth of their business. Health &Safety is of major concern to the Group and I am delighted to report asignificantly improved performance in accident reduction, which is made all themore encouraging considering both the increase in revenue and the number ofstaff employed. "It is essential, in a very competitive market, that operational efficiency andenvironmental performance are continuously improved. Two major areas of capitalexpenditure have thus been embarked upon. The workshop facilities at Head Officehave become outdated and too small for the current sizes of both the vehicle andplant fleets. Also, the welfare facilities needed significant upgrading. Two newworkshops and significant improvements to the existing facilities are currentlyunderway at a cost of £1.5m. The North West regional office currently consistsof two rented industrial units in Warrington, which have been outgrown andpossess a minimal parking capacity. An opportunity arose to purchase a premisevery close by and this was completed in March at a total cost with improvementsof £1.2m. This will enable the Group to consolidate all operations in the NorthWest onto one site and provide both an enhanced working environment and thefacility for future expansion. It, also, demonstrates a firm commitment to allof our clients in the region. "Over many years, I have been the beneficiary of magnificent support and loyaltyby my fellow members of the PLC Board. They have also shared in my vision forthe growth of this Group and provided erudite and considered comment on the pathto achievement. Additionally, they have been extremely mindful of shareholdersinterests. However, to progress is to renew and I wish to announce to youdetails in advance of the Board Meeting this afternoon, of two changes to thecurrent Board structure. "Gerry Beetles has decided to retire after 10 years in a non-executive role. Hehas brought wisdom to the table, alongwith very useful guidelines on corporategovernance issues, but I should particularly like to thank him for his supportof myself personally and his almost paternal protectionism. "Mark Blakeway has been with the Company for over 21 years and has trod the wellworn path from Site Engineer to his current position of Managing Director of theCivil Engineering division. It is important that such a key element of the Groupis represented at Main Board level and Mark will provide the operationalexpertise and give a better balance to the Board. "Since the last Annual General Meeting, Trevor Kayes also decided he wished totake life more easily and retired from the Main Board to assume a part timemanagement role. Trevor originally fulfilled the role of Chief Engineer and thenbecame Engineering Director. Both these roles he filled with distinction and washighly respected by clients. Latterly, his role mutated to that of OperationsDirector, with a particular responsibility for Health & Safety and themanagement system. Most appropriate really, as he both devised and establishedthe systems in the first place. It would be no exaggeration to say that theGroup would not be where it is today without Trevor's enormous impact, dexterityand attention to detail. "To compensate for the impending loss of Gerry Beetles, we were extremely luckyto persuade Ian Elliott to serve as a Non-Executive Director upon his retirementas Director of Engineering at Severn Trent. Ian brings to the Board a wealth ofengineering experience, particularly in the water industry, but also anexpansive knowledge of Health & Safety and general business acumen. "Directors, however, can only provide some pieces of the jigsaw, and I would notwish to let the moment pass without wishing to convey my gratitude to all thestaff of the Group, now over 900 strong, for all their hard work and loyalty. Ahighly skilled, driven, motivated workforce is key to a successful future and inthis capacity North Midland is particularly blessed. "As I illustrated in my Chairman's Statement in the Accounts, ambitious growthtargets have been designated for this financial year. The overall order bookstands at record levels and confidence is high, therefore, that the correctstrategy has been implemented to achieve these ambitions." END This information is provided by RNS The company news service from the London Stock Exchange