In a trading update for the year to 31st December 2014, North Midland Construction (NMC) said that it was having to make further provisions against contracts booked several years ago.
The full statement said: “An ongoing review of the few remaining outstanding legacy contracts, which were secured at the height of the recession, is expected to result in further provisions being required.
“These expected further provisions reflect a prudent approach with commercial negotiations and contractual claims ongoing in respect of these outstanding legacy contracts. Management now expects a materially larger loss before tax for the full year as a result of these increased accounting provisions.
“However, the underlying profitability and revenue of the business for the year is likely to exceed management's expectations. At year end net cash was £1.7m and cash balances were £5.3m. The business has sufficient funds to support its growth going forward. The current level of secured revenue and underlying performance is very encouraging and whilst the resolution of the outstanding legacy contracts continues to be challenging, progress is being made.
NMC will publish its 2014 audited figures on 20th April 2015. In the first half of the year it made a £371,000 pre-tax profit on revenue of £91m.
More positive news is that NMC has opened a new office in Leicester to accommodate the group’s building division. Chairman and chief executive Robert Moyle said: "We have opened this new office in response to the volume of work that we currently have in the county. It also forms part of our ongoing business strategy of expanding our regional office network. We are looking to increase our workforce and will be recruiting at all levels.”