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21 Feb 2014 07:00
North Midland Construction PLC ("the Group")
TRADING UPDATE
21 FEBRUARY 2014
North Midland Construction PLC provides a trading update for the year ended 31 December 2013.
On 19 November 2013, the Group issued an interim management statement highlighting that uncertainty over the completion costs and outturn claim values on two major problematical contracts within the building and civil engineering division were expected to have a material effect on the year end results. As a result of further reviews of the status of these contracts and the unfavourable settlement of other old projects where reduced payment had to be accepted, as there was a significant risk of client commercial failure, the Group expects to report an operating loss of circa £6 million. The highways division also incurred bad debts on a major project, which are reflected in the overall result.
Challenging conditions in the construction industry predominated during the year, with the consequent impact on margins and profitability. As stated previously, the problematical building & civil engineering division has been re-organised and the risk profile severely reduced. Cash flow was maintained, in spite of the loss incurred and the year-end total was £4.8 million in credit, which is significantly ahead of expectations. The underlying trading position in the last quarter was profitable, as previously forecast, but has been seriously impacted upon by the revised positions taken upon the aforementioned contracts.
The water business (NMCNomenca and Nomenca) performed very well and both the utilities and highways divisions delivered in line with expectations.
The 2014 opening order level is strong and market conditions in some areas are improving. This, coupled with the re-organisation and re-profiling of the building and civil engineering division, where improved performance has already been experienced, will deliver a return to growth this year.
Contacts:-
North Midland Construction PLC 01623 515008
Robert Moyle, Chairman
Dan Taylor, Finance Director
N+1 Singer 0113 388 4789
Richard Lindley
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