North Midland Construction PLC (NMC), has announced increased revenues and pre-tax profits for the six months ending 30 June 2014, compared with the same period last year, despite continuing problems in its BCE division.
Group revenue is up 1.5% to £90.98m compared to £89.39m for the first half of 2013. Profits before tax for the first half of 2014 are £0.37 million compared to a loss before tax of £0.48 million for the same period last year. In addition, the underlying profit before tax of the business, prior to problematic contract provisions was £1.78 million, compared to £1.24 million for the first half of 2013.
However, North Midland said problems still remain in its Building & Civil Engineering (BCE) division, particularly in connection with the resolution of three legacy contracts which has resulted in an operating loss of £0.84 million for the period, compared to a £1.58 million loss for FH2013. The division’s revenue has also reduced by 31.3% to £11.72 million. The firm said progress is being made to resolve the problematic contracts and the division has been completely restructured under new management.
The NMCNomenca division has had a very encouraging first half-year, with operating profitability increasing by 8.4% to £0.94 million from £0.87 million for the same period last year, on revenue increased by 10.8% to £41.31 million.
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 which covers their Eastern Area, at a value of £6 million per annum. The framework has a five year duration, with the option of a two year extension.
Preparatory work has already started on the Severn Trent Water AMP6 programme, which was secured in December 2013. The E5 programme for Severn Trent Water, for which NMCNomenca has a 25% share of the construction consortium, will be virtually complete by the end of the year and the projected outturn remains encouraging.
The division has also secured a lucrative £16.5 million order to reconstruct Ambergate Reservoir, in conjunction with Laing O’Rourke.
Nomenca, the group’s mechanical and electrical subsidiary, has had a relatively slow start to the year, with revenue declining by 3.7% to £19.04 million from £19.76 million for the same period last year. However, operating profitability was maintained at £0.18 million.
The firm attributed the reduction in revenues to 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 £24 million worth of orders has already been secured for completion this year.
Commenting on the results, NMC Chairman Robert Moyle said:
“The results demonstrate the further progress that has been made since our Interim Management Statement released on 19 May 2014. The return to profitability is encouraging and orders received to date to be executed this financial year stand at £178 million.
“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.”