19th May 2016 09:09
LONDON (Alliance News) - North Midland Construction PLC on Thursday said it had continued to post profit in the first quarter of 2016, as its chairman and chief executive officer said "the time was right" to split the two roles.
North Midland, which provides civil engineering, building, mechanical and electrical services, said, since returning to profitability in 2015, it has continued to perform well and group profit stood at GBP234,000 for the first quarter to March 31, up from a loss of GBP125,000 a year earlier. North Midland said revenue rose to GBP59.4 million for the quarter, up 10% on the same period the previous year.
In a statement to be made at its annual general meeting on Thursday, North Midland Chairman and Chief Executive Robert Moyle said unprofitable legacy contracts, together with the cost of professional services engaged in their resolution, have proved "extremely costly" over the last two years.
North Midland said only one legacy contract remains to be resolved, but Moyle said it is "unlikely that settlement will be achieved in this case in the immediate future".
Moyle added that there has been "a general improvement in the construction market, with greater opportunities being available and an increased expenditure on national infrastructure".
North Midland's current order book for work to be executed in this financial year currently stands at around GBP200.0 million, and Moyle said that further orders will "will emanate from the existing frameworks and therefore the forecasted revenue for the year will be achieved".
North Midland said its building division has implemented its strategy to concentrate on operations within a fifty mile radius of its head office in Nottinghamshire and said the divisional outstanding order book for completion this year is currently GBP14.3 million and two new clients have recently been secured.
However, Moyle noted that the performance of its utilities division continues to be "a major problem", although he added that losses have been reduced on increased revenue. A complete restructure of the division is currently underway, Moyle said, and contractual reviews of the existing contracts are currently being undertaken.
Moyle said the focus going forward will be on maximising return on revenue throughout the business and a lower risk approach to pursuing potential tenders has been adopted. However, North Midland noted that "skill shortages have become again a major topic as the industry climbs out of recession and house building is on the increase. This is a problem that the group has to resolve itself."
As such, North Midland said it has expanded its relationships with selected universities and increased its apprentice intake.
Elsewhere the chairman said "the time is now right to devolve the roles of chairman and chief executive".
"It is my intention to continue in the role of executive chairman and to assist the new appointee in every way I can in maintaining the growth and improving the profitability of the group. The process has already commenced and the decision will be announced in the near future," Moyle added.
Shares in North Midland were down 1.7% at 138.05 pence on Thursday.
By Hannah Boland; [email protected]; @Hannaheboland
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