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Sun September 27 2020

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Revenue and pre-tax profit up at North Midland despite ongoing problems

26 Aug 14 North Midland Construction (NMC) has reported group revenue of £90.98m for the first half of this year.

The figure is up 1.5% on the revenue for the same period in 2013. Profits before tax for the first half of 2014 are £0.37m compared to a loss before tax of £0.48m for the same period last year. In addition, the underlying profit before tax of the business - prior to problematic contract provisions - was £1.78m, compared to £1.24m for the first half of 2013.

Problems still remain in the building and civil engineering division, particularly in connection with the resolution of three legacy contracts, said the company. This has resulted in an operating loss of £0.84m for the period, however, this compares to a £1.58m loss for the same period last year. The division’s revenue has reduced by 31.3% to £11.72m too.

Progress is being made to resolve the problematic contracts and the division has been completely restructured under new management.

NMC chairman Robert Moyle said: “The return to profitability is encouraging and orders received to date to be executed this financial year stand at £178m. Maximum effort is being expended to bring the legacy contracts to conclusion and settlement and whilst the Group continues to trade profitably, there is still potential risk in the resolution of legacy contracts.”       

The NMCNomenca division has reported profitability increasing by 8.4% to £0.94m from £0.87m for the same period last year, on revenue increased by 10.8% to £41.31m.

The AMP5 programme is drawing to a conclusion with the inevitable pressure on margins, but costs have been controlled and the division is performing to expectations. In addition, Severn Trent Water has recently awarded the division the asset maintenance framework for its Eastern area, at a value of £6m a year. The framework has a five year duration, with the option of a two-year extension.

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Preparatory work has already started on the Severn Trent Water AMP6 programme, which was secured in December 2013.

Nomenca, the group’s mechanical and electrical subsidiary, has had a relatively slow start to the year, with revenue declining by 3.7% to £19.04m from £19.76m for the same period last year.  However, operating profitability was maintained at £0.18m.

The reduction in revenues was caused by the delayed award of a major project and reduced expenditure on one particular framework.  Revenue is expected to increase in the second half of the year and a further £24m worth of orders has already been secured for completion this year. NMC is confident it will achieve its full-year target.

The highways division has suffered a slower start to the year than originally forecast, with delays in anticipated expenditure and the award of a major project.  In spite of this, revenue escalated to £7.71m but this was insufficient to cover the overheads, which had been increased in anticipation of the projected increased revenue. Therefore, an operating divisional loss of £0.01m was incurred.  Secured revenue for the division for this year currently stands at £24.60m, so the second half-year is expected to show a significant increase and a return to profitability.

The utilities division has benefited from increased expenditure by telecoms companies on broadband infrastructure, causing revenue to rise by 15.5% to £10.99m with improved operating profitability which has increased to £0.14m.

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