25th May 2007 12:07
North Midland Construction PLC25 May 2007 North Midland Construction Plc25 May 2007 AGM Statement North Midland hold its annual general meeting today at 12.00noon at its headoffice. At the meeting, the Chairman, Robert Moyle, will make the followingstatement: It is very gratifying to report that the organic growth of the last few yearshas been maintained in the first quarter of 2007, with Group profits of £1.113million and revenue of £50.372 million, 4.1% and 15.8% respectively ahead of thecomparable period last year. As in previous years, a breakdown of the individualsubsidiary and divisional performances and prospects, will provide a moredetailed insight into the business. The results for the Civil Engineering division are in advance of the previousyear's at the comparable stage and the current secured workload for this yearstands at £56 million, 11.2% below the required annual revenue. The division isengaged on a variety of schemes, generally of a higher financial value thanpreviously undertaken. The improvements to Minworth Sewerage Works inBirmingham, valued at circa £100 million for Severn Trent Water, beingundertaken in a joint venture with Biwater, are now underway and the Bridlingtonpipeline has been successfully delivered for Yorkshire Water and received manyplaudits. In the power sector two major desulphurisation schemes for Lentjes atFiddlers Ferry and Ferrybridge are progressing to a very tight programme afterinitial design delays. All of the aforementioned schemes are technically complexand amply demonstrate the division's skills and the increasing confidence ofclients to engage the division on larger and more demanding projects. The returnfrom the rail division in 2006 was below budget, due to insufficient revenue andtight margins. However, it is pleasing to note that the current year has startedwell with healthy orders and more contracts being received directly from NetworkRail on the back of the Company's Contractor Assurance Case. Exacting targets have been set for the Highways division this year and currentlythe level of profitability and revenue exceeds that of last year. 54% of therequired revenue has already been secured with several good prospects still tobe adjudicated upon. Operationally, an enviable reputation is being forged bothwithin the AmScott consortium and with many councils and private developers, forquality workmanship and delivery. The restoration and upgrade of the Victorian,listed, King's Bridge in Huddersfield is testament to this. To facilitate therequired growth, geographical expansion outside the heartland of the Midlands isrequired and the division is commencing to acquire new clients both in the northand further west. The telecommunications industry continues to experience constant change andperiods of flux, due to clients' reorganisation and takeovers. Most revenuethese days comes from term contracts and in this respect the Utilities divisionis particularly well positioned. Current term contract clients include VirginMedia, ntl Telewest, Atkins Telecom, on behalf of Cable and Wireless, Easynet,Kingston Communications, GEO, part of Hutchinson Whampoa and Telent. AtkinsTelecom has renewed our current contracts for a further three years commencing 1April 2007 and we are hopeful that the current round of re-bidding with BT willbe fruitful for Telent and ultimately ourselves as one of their key suppliers.The first quarter has produced a result in excess of last year's on the back ofmore stable volumes and the division is well positioned to maintain itsexpansion. The performance of North Midland Building Limited last year was exceptional andthe company will not deliver a comparable result in 2007. However, £35 millionof revenue has already been acquired for the current year, which represents 83%of the budgeted total and confidence is high that a very satisfactory resultwill be delivered this year. After the highly successful delivery of thePavillions student accommodation scheme in Lincoln, a further phase has beennegotiated with the developer. A variety of projects are currently successfullybeing undertaken in Loughorough, Sheffield, Chesterfield and York for bothprivate and public clients. The management team is now concentrating its effortson securing the required opportunities and revenue for 2008. Nomenca Limited has reported profits 50% up on last year on a revenue increasedby 12%, which demonstrates that the management drive to increase margins ispaying dividends. The water industry continues to provide the highest percentageof the company's workload, but diversification is being pursued. Buildingservices are currently being provided very successfully to Anchor Housing inboth the Midlands and South West and a chemical dosing framework has beenobtained in Scotland. Inroads are also being made into the rail industry. The company's growth hasbeen maintained by the development of a network of regional offices servicingtheir local market. To maintain the momentum of growth and to capitalise uponthe framework with Thames Water and other opportunities, a further regionaloffice is to be opened in the Thames Valley area later in the year. The keyrelationship with the Civils division in providing a full turnkey solution toclients is of paramount importance and currently the secured workload stands at£28 million, compared with a budget requirement of £37 million. Success in the construction industry requires top class delivery and quality,tight cost control and exemplary health & safety and environmental performance.I am delighted to report that during 2006 and 2007 great strides have been takenin performance and practices. Accidents have been reduced and statistically theGroup out performs the industry. However, the performance could be improvedstill further. Initiatives are being introduced throughout the Group and keyperformance objectives and targets have been implemented to measureeffectiveness both in environmental and health & safety delivery. To sustain the declared target of 10% per annum growth requires a quality, loyaland committed workforce. The Group has been particularly blessed in this regardwith tremendous loyalty being established over many years. One of the keyelements that impressed the judges in the successful Nottinghamshire Company ofthe Year award was the length of service demonstrated by so many employees andthe low churn rate. However, growth in an organisation, whose philosophy is thatof a contractor and not a management contractor, requires more staff. To attractthe calibre of recruit, a strategy has been established to develop close linkswith preferred universities, colleges and schools. Birmingham University haveincluded the Group on it's Respect scheme and two scholarships have been offeredto undergraduates, alongwith opportunities for summer placements. Smiliararrangements are being pursued elsewhere. An improved apprentice programme isalso currently being developed with Stephenson College. The entire humanresources programme is being reviewed internally to ensure that attractive andbeneficial training is being provided and in the development of appropriatesuccession management. Increasing staff numbers necessitates more accommodation. The new workshops andamenity facilities were completed last year and this has delivered improvedefficiency and environmental performance, coupled with enhanced workingconditions. Training facilities have been upgraded, along with a gym to enablestaff to exercise during and outside working hours. Phase three of the fivephase development plan for the Huthwaite site is currently underway, as you haveno doubt noticed as you arrived. This will provide further office accommodationand environmental improvements are being undertaken on the existing complex atthe same time. Water recycling and solar energy usage have both beenincorporated into the new building. Terence House in Warrington was purchasedlast year to facilitate expansion in the North West. That expansion has been sosuccessful, that North Midland Building's architects department are currentlydeveloping proposals to increase office capacity and workshop capability. We areconfident that this extra capital expenditure can be funded from existingresources. As I stated earlier, the loyalty and commitment to this Group demonstrated byits employees is immense and the continued success is validation of their hardwork. I should also like to thank my Board of Directors, without whose visionand wisdom none of what we have achieved would have been possible. It has beenparticularly gratifying to your Board to monitor the escalation in the shareprice and thus reward our shareholders for their faith in this Group. Ambitionsand exacting targets have been designated for this year and subsequent ones, butconfidence is high that they will be achieved. R MOYLECHAIRMANNORTH MIDLAND CONSTRUCTION 25 MAY 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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