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15 May 2008 15:08
North Midland Construction plc
Interim Management Statement
15 May 2008
North Midland Construction PLC is today issuing its first Interim Management Statement, covering the period between 1 January 2008 and 31 March 2008, as required by the UK Listing Authority's Disclosure and Transparency Rules.
The new financial year has commenced satisfactorily with revenue increased over the comparable quarter last year and profitability in line with the Board's expectations. However, the current economic climate is causing some projects to be delayed and others to be cancelled. This is primarily affecting North Midland Building Limited, where there is a need to secure some contracts to achieve the budgeted revenue. Volumes in the utilities, highways and civil engineering divisions and the Nomenca, M & E subsidiary, are being maintained due to a large presence on frameworks contracts in more robust sectors such as waste and water. Whilst the client's budgets on the BT contracts with Telent remain constrained, the utilities division has returned to profitability. The non performing contract at Fiddler's Ferry has now been completed, but the final resolution of the account, along with that of the other loss-making contract last year, still remains outstanding. An increased offer has been tabled, but has been rejected on the grounds of insufficiency. The considerable amounts of money tied up in these contracts are having a significant effect on cash flow, particularly within the civil engineering division.
The economic picture has deteriorated, but the Group entered the year with a record order book and whilst this needs to be supplemented during this year, the Group is operating in some robust markets.
The OFT recently concluded an investigation into the construction industry and this company has been on their list of 112 companies under further investigation. The company has been helping the OFT with their enquiries and will be defending the allegations made against it. Of the six initial allegations, three have been dropped and three remain, two applicable to North Midland Building Limited and one to the civil engineering division.
The company has decided to purchase the outstanding minority shareholding in North Midland Building Limited, as detailed in the recent circular to shareholders. This will be subject to an EGM to he held on 29 May 2008.
Contacts:
North Midland Construction plc 01623 515008
Robert Moyle, Chairman
Mike Garratt, Finance Director
Brewin Dolphin Investment Banking 0845 270 8610
Andrew Emmott
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