In a trading update, North Midland Construction (NMC) said continuing problems in its Building & Civil Engineering division had contributed to a further group loss in the July-to-September third quarter of £430,000 (Q3 2012: loss £340,000). This was despite a 4.3% increase in revenue to £39.85m for the third quarter on the back of what it called ‘a modest upturn’ in UK construction activity.
However, September brought a return to profitability, with the group making a £230,000 profit in the month.
NMC’s Building & Civil Engineering division has now been restructured, but performance is still suffering from the legacy of old loss-making contracts, the company said. Further delays have been experienced on two major projects and these have had a significant effect on profitability. Aside from these, all other contracts are trading profitably, it said.
NMCNomenca is performing ahead of management expectations and will deliver an improved result for the year. The board also has high hopes for AMP6 programme water industry work coming through soon.
The Highways division has seen more tender opportunities and has secured two new frameworks. However, project starts have been delayed so revenues are down for the year so far. Just like last year, a loss of £60,000 was delivered in Q3.
The Utilities division is meeting expectations, making £90,000 for the quarter. Settlement of a significant outstanding account has been satisfactorily achieved, with a consequent improvement in cash flow, the board said. A framework with Carillion/Telent for BT work has been extended for a further two years.
Other new business won includes a three-year SEMD framework for Nomenca with United Utilities.
The board still expects the second half to show an improvement on the first half of the year, but uncertainty remains over the completion costs and the outturn claim value of the two big problem contracts.