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North Midland Construction to restructure after diving into the red

22 Nov 11 North Midland Construction is the latest contractor to suffer from the deteriorating economy, after losing £300,000 during the three months to the end of the September.

Turnover was over £38 million, but project delays and cost overruns in the building division resulted in the Nottinghamshire contractor making a loss for the period.

It plans to restructure the building business as a result.

In an interim statement, the firm warned: "The deterioration in the economic climate is having a significant adverse effect on certain sectors of the group's business.

"We do not anticipate a significant improvement in the trend rate of underlying trading performance during the final quarter."

The problems surround the building subsidiary of North Midland.

In August, chairman Robert Moyle, revealed that these delays had cost the business almost £2 million.

The firm has also had to make a small number of job losses on the back of problems with contracts in Derbyshire and Yorkshire.

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It said in the latest statement that the building division was undergoing "radical restructuring".

North Midland has had to write down the goodwill value of the division totalling £1.27 million – cancelling out a £1.25 million exceptional profit which came from a refund on a fine levied by the Office of Fair Trading.

North Midland also revealed that it had been awarded £50,000 compensation for the legal costs it incurred appealing against its OFT fine.

Nomenca, the group's mechanical and electrical engineering subsidiary, is set for a profit in excess of that for 2010.

Its highways division is also set to beat last year's profit, while its civil engineering subsidiary will return a similar profit to last year despite reduced revenue.

North Midland concluded: "The current group order book for 2012 stands at £70 million, compared with £89 million at the same time last year, reflecting the challenging trading environment."

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