North Midland Construction PLC has returned to proft, according to its interim results for the six months ended 30 June 2016.
Overall revenue increased by 20.8% to £129.58 million (H1 FY15 £107.25 million), while profit before tax increased to £0.512 million (H1 FY15: £0.136 million). However, the Group has suffered a significant £1.559 million loss in Utilities division (H1 FY15: loss of £0.829 million).
The civil engineering division, which operates predominantly in the power sector, returned to profitability as problematical legacy contracts have now been resolved. The profit for the period was £0.13 million (H1 FY15 £0.24 million loss) on revenues increased by 301.7% to £13.83 million (H1 FY15 £3.44 million). The division has expanded its capabilities into the waste to energy market and this sector offers promising future growth opportunities. Recent contract awards include a crop digester in Nottingham and a pumping station for the Doncaster Drainage Board.
However, significant losses have continued in the utilities division and the division is currently undergoing a major restructure. Losses increased to £1.56 million (H1 FY15 £0.83 million loss) on revenues increased by 16.8% to £15.47 million (H1 FY15 £13.24 million) - £0.36 million of these losses emanated from the cessation of old legacy contracts. The Group is anticipating that the restructuring will not produce a return to profitability before the end of this financial year, although the losses in the second half will be of a significantly reduced scale.
In the water sector, the AMP6 programme for Severn Trent Water and the joint venture projects with Laing O'Rourke for the construction of a reservoir at Ambergate and with Barhale for works on the Elan Valley Aqueduct are now well underway. As a result NMCNomenca has managed to increase profitability by 91.7% to £1.38 million (H1 FY15 £0.72 million) on revenues that rose by 18.2% to £49.59 million (H1 FY15 £41.97 million). NMCNomenca’s joint venture with Barhale, the BNM Alliancehas recently received a £54.6 million order for the Newark Sewer Strategy. Secured workload to date for the remainder of the year stands at £39.4 million.
The Group said its Nomenca subsidiary has suffered from orders being delayed during the water industry transition from the AMP5 to the AMP6 programme, despite increasing the number of frameworks secured. Consequently revenues declined by 20.3% to £19.06 million (H1 FY15 £23.91 million), and profitability by 7.0% to £0.21 million (H1 FY15 £0.23 million). Recent order levels have improved and the secured workload for construction for the remainder of the year is £25.28 million.
Commenting on the results, Chairman Robert Moyle said:
“With the exception of the utilities division, the Group has delivered a well earned return to profitability. The Board is confident that this progress can be maintained and therefore propose a dividend of 1.5p per share. The dividend will be paid on 23 September 2016 to shareholders on the register at 26 August 2016.”
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