NM Construction announces interim results

Posted on August 13th, 2015

North Midland Construction PLC (NM Group), the Nottinghamshire-based UK provider of civil engineering, building, mechanical and electrical services to public and private organisations, has announced its interim results for the six months ended 30 June 2015.

They show a return to profitability for the half-year compared with the last full financial year result.

Revenues increased by 17.9% to £107.25m compared to £90.98m for the first half of 2014 and profits before tax reached £0.136m.

The civils division, which is primarily engaged in the power and industrial sectors and now part of NMCNomenca, is trading profitably and its current order book, which is due to be completed in this financial year, is £7m. It has experienced ongoing problems with two legacy contracts, however, one of these contracts will be concluded on site in mid September and the finalisation of contractual matters on the other is imminent. Opportunities are buoyant, tender opportunities remain positive and there is confidence that further work will be secured before the year end.

The building division has delivered an encouraging performance, with operating profitability of £0.14m on a revenue of £5.9m. The current workload to be constructed this financial year is £13.4m and contracts to the value of £6m are expected to be awarded imminently. Orders received for completion in 2016 already total £8.5m.

Revenues in the highways division increased by 20.4% to £13.24m compared to £7.72m for the first half of 2014, with operating profitability improving to £0.17m from a loss in the comparable period last year. There have been increased opportunities for this division on the back of its proven track record, increased government expenditure and geographical expansion into the South West. The forecast revenues for 2015 will exceed current budgets and advanced orders for 2016 are £17.2m.

The utilities division increased revenues by 20.4% to £13.24m from £11m for the comparable period in 2014, but further losses on the BDUK contract for Carillion Telent resulted in an operating loss for the period of £0.83m. The division has now terminated its contracts for Carillion Telent in Lincolnshire, Shropshire and Yorkshire and is focusing solely on the core East Midlands area, which is profitable. As announced at the company’s last AGM, the division was recently successful in securing the Virgin Media framework for works in the North West and Yorkshire, a contract that has commenced satisfactorily. This, coupled with the existing frameworks and the termination of the loss-making Carillion Telent contracts, is expected to lead to a return to profitability for the division in the near future.

NMCNomenca has commenced work on the AMP6 programme for Severn Trent Water and revenues increased marginally to £41.97m, however operating profitability declined by 22.4% to £0.72m.

The results for the previous year included a major contribution from the E5 consortium engaged on the AMP5 capital programme for Severn Trent Water which has now concluded.

The division has recently been awarded a £64m contract by Severn Trent Water in a joint venture project with Barhale PLC for the Elan Valley Aqueduct and the multi-million project for the construction of a reservoir at Ambergate in conjunction with Laing O’Rourke is progressing well.

Nomenca increased revenues by 25.6% to £23.91m and operating profitability by 27.7% to £0.23m. The subsidiary has been particularly successful in securing frameworks on the AMP6 programme and has recently been awarded the MEICA Direct Delivery Framework by Yorkshire Water. Commencement on the AMP6 programme nationally for Nomenca has been slow and the current order level for construction this year is £43.09m.

“The return to profitability is encouraging and the underlying trading position is progressive and in line with management expectations,” said Robert Moyle, Chairman of North Midland Construction.

“Positive progress has been made in the resolution and settlement of the few remaining legacy contracts, but there is still potential risk in their final resolution. We are nevertheless, pleased to see the increased growth of the group.”

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