28th Mar 2018 11:23
LONDON (Alliance News) - Building, civil engineering and utilities company North Midland Construction PLC said on Wednesday pretax profit halved in 2017 due to the negative impact from legacy contracts.
The company's profit before tax halved to GBP1.0 million from GBP2.1 million in the prior year, while undelying pretax profit rose to GBP8.3 million from GBP5.9 million. The profit matches the company's expectations, reduced in January.
"It is disappointing that focus on a healthy underlying group performance from our continuing operations appears to continue to be diverted by the outcome on the remaining legacy contract," said North Midland Chief Executive John Homer.
Legacy contracts are construction contracts entered into at the height of the recession, before December 31, 2013, and carried a high contractual and commercial risk.
The total loss before tax recognised on legacy contracts was GBP7.29 million, up from GBP3.85 million. During the year prior, the group completed all onsite works for the one remaining legacy contract, thereby removing any further uncertainty around costs to fulfil the contract.
North Midland reported an increase in revenue to GBP291.8 million from GBP250.5 million thanks to growth in "chosen markets with our repeat and framework clients", the company said.
North Midland also declared a final dividend unchanged year-over-year to 3.0 pence per share, bringing the total dividend to 6.0 pence from 4.5 in the previous year.
Looking ahead, "in excess of 90% of our 2018 turnover has already been secured and it is expected that the balance will be achieved from carefully selected projects during the first half of this year. We remain confident in the outlook for the group and expect the positive progress achieved to continue into 2018 and beyond," said the company.
"The UK construction industry is struggling to keep up with the demand to maintain the existing infrastructure and the need for investment to support future economic growth. The group has established positions in these markets and is well situated to take advantage of the potential for further growth," North Midland added.
North Midland shares were up 3.3% at 310.00 pence per share on Wednesday.
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