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19 Nov 2013 07:00
North Midland Construction PLC ("the Group")
19 November 2013
Interim Management Statement
The Group is today issuing its Interim Management Statement covering the period from 1 July 2013 to 19 November 2013, as required by the UK Listing Authority's Disclosure and Transparency Rules.
There has been a modest upturn in UK construction activity in the last quarter and it is heartening to report a 4.3% increase in Q3 revenue, over the comparable period in 2012, to £39.85 million. Continuing problems in the Building and Civil Engineering division have contributed to a further Group loss in Q3 of £0.43 million (Q3 2012 loss £0.34 million). However, September returned to profitability, delivering a Group profit of £0.23 million in the month.
The Building and Civil Engineering division has been totally restructured, but performance is still suffering from the legacy of old loss-making contracts. Further delays have been experienced on two major projects and these have had a significant effect on profitability. Current contracts, with the exception of these two major schemes, which are still ongoing, are trading profitably.
The Nomenca subsidiary continues to perform well and is delivering in line with expectation.
NMCNomenca is performing ahead of management expectations and will deliver an enhanced result for the year compared with 2012. The division is hopeful of a significant order for the AMP6 programme in the near future. The E5 consortium has now completed circa 70% of the programme and the prospects continue to look favourable.
The Highways division has experienced a significant increase in tender opportunities and has been successful in securing two new frameworks. However, delays in commencement of projects have had a material effect and revenues are currently down for the year so far. A loss of £0.06 million was delivered in Q3 (Q3 2012 loss £0.06 million).
The Utilities division has delivered in accordance with expectations and a profit of £0.09 million was declared for the quarter. Settlement of a significant outstanding account has been satisfactorily achieved, with a consequent improvement in cash flow. The current framework with Carillion/Telent for BT work has been extended for a further two years and will incorporate the BDUK programme, which should lead to enhanced revenues.
Cash collection remains particularly difficult in certain sectors of the business and is being exacerbated by the contractual situation being experienced on some contracts. There has been a net cash outflow during the quarter, but the Group continues to operate well within its bank facilities.
Nomenca Limited has recently been successful in securing a SEMD framework for United Utilities for a 3 year + 2 period. Co-location is required for the staff from both organizations. To accommodate this and further anticipated expansion, new premises closely sited near to the Group's existing premises, have been purchased in Warrington, for £1.0 million.
An improvement on the half year result is still anticipated. However, there is considerable uncertainty over the completion costs and the outturn claim value of the two major problematical contracts and these could have a material effect on the result for the year.
Contacts:-
North Midland Construction PLC 01623 515008
Robert Moyle, Chairman
Dan Tayor, Finance Director
N + 1 Singer 0113 2410126
Richard Lindley
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