Final Results

NORTH MIDLAND CONSTRUCTION PLC

2012 PRELIMINARY RESULTS

North Midland Construction PLC ("the Company") the UK provider of civil engineering, building, mechanical and electrical services to public and private organisations, announces preliminary results for the year ended 31 December 2012.

Highlights from the results and the Chairman's Statement:-

·; Revenue increased by 1% to £168.9 million.

·; Profit before tax £0.71 million.

·; The E5 Joint Venture with three other framework contractors has commenced on the £200 million Severn Trent Water major capital schemes programme and is progressing well.

·; The Utilities division has experienced a difficult year due to reduced investment in the sector.

·; Problems, resulting in continuing losses, have been experienced on a major building contract.

·; Restructuring of the Building subsidiary has taken place with its incorporation into the Civil Engineering division under new management.

·; Secured workload for 2013 at £130 million.

·; The Group has numerous long term framework agreements in place.

·; Proposed final dividend of 3.0p (2011 - 3.0p) giving a full year dividend of 4.50p (2011 - 5.50p).

For further information:-

Robert Moyle, Chairman - 01623 518812

Michael Garratt, Finance Director - 01623 518816

Chairman's Statement

In spite of the continual downturn in construction activity during the year, it is gratifying to be able to report that the Group returned to profitability. A profit of £0.71 million (2011 : £0.78 million loss) was delivered on a revenue increased by 1.0% to £168.9 million. Margins remain extremely tight and tender opportunities are scarce, but the Group's diversity of capability across the whole construction sector has held it in good stead.

During the year the minority interest in the Nomenca subsidiary was purchased and this has enabled an element of restructuring to take place, which will produce a reduction in cost and more focus on key delivery areas.

A detailed breakdown of the performance of the individual Group divisions and subsidiary is provided below.

Building & Civil Engineering

Due to the losses previously incurred in the Building subsidiary and the prevailing constraints in the market, it was decided to merge the non-water civil engineering business with the Building subsidiary into one PLC division. The major building project being undertaken, which resulted in major losses for the Building subsidiary in the last financial year, unfortunately suffered further delays to the programmed completion date with consequent cost overruns. This project will not now be completed until later in 2013. A significant claim for losses incurred on this particular contract is currently being pursued, but will not be able to be concluded until after completion. This problematical contract has had a significant further impact on the results of the division, but the overall loss has been reduced to £0.19 million (2011 : £3.17 million) on revenue increased by 17.0% to £60.88 million (2011 : £52.03 million). The building market in particular continues to be very difficult and extremely tight credit conditions, coupled with poor market confidence, have restricted the number of developer promoted projects. Only building projects of discernible risk in core areas of expertise are currently being considered. However, during the year the division has been successful in securing new clients such as Mars Petcare and seven frameworks in the power sector. A major project in Sleaford for Danish company BWSC A/S for the construction of a power station generating energy from the incineration of straw is progressing well.

Highways

Cutbacks in public expenditure had a major impact on the performance of the Highways division during the year. Success, both in geographical expansion and securing new clients such as Bath and North East Somerset District Council has continued, but expenditure on existing frameworks was severely curtailed. This resulted in revenue declining by 32.5% to £12.71 million (2011 : £18.84 million) with a consequent decline in profitability of 83.0% to £0.14 million (2011 : £0.84 million). It is unlikely that public expenditure on highways will significantly increase in the foreseeable future and, therefore, for the division to prosper going forward costs must be reduced and new clients secured. Senior Executive Directors in both the Highways and Utilities divisions have indicated their desire to retire in the current financial year and, therefore, it has been decided to merge the two divisions, operating in the future as two work streams under one senior management team. This was effected from 1 January 2013. As previously mentioned, success has been achieved in securing new clients, with an award to construct car parks for Transport for Manchester being a particular example.

Utilities

Activity in the telecommunications sector suffered a serious decline during the year and this had a major impact on the Utilities division. This coupled with price erosion on the existing term contracts and extremely tight margins resulted in the division becoming loss-making for the year. Revenue declined by 49.5% to £16.25 million (2011 : £32.20 million) and a loss of £0.50 million (2011 : £0.60 million profit) was recorded.

Activity in the sector remains low and the division has been restructured and merged with the Highways division to realign the cost base to the current prevailing market. The existing term contract with Cable & Wireless Worldwide has recently been renewed and a term contract for Vodafone secured, alongwith utility work on the Nottingham Tram Extension. Existing term contracts are being undertaken for B.T., Carillion/Telent, Electricity North West and KCom.

NMCNomenca

The division delivered an enhanced performance over the previous year on increased revenue. Both the revenue and profit have been incorporated equally into the Nomenca subsidiary and the Building & Civil Engineering division. As the minority shareholding in Nomenca has now been purchased, effected from 1 January 2013, NMCNomenca will operate as an individual division with both profit and revenue being reported as a separate segment. The existing framework for Severn Trent Water continues to deliver successfully and the division has recently been awarded further opportunities in the Southern Area, which will result in increased revenues of between £6 - £10 million per annum. The E5 consortium continues to make headway on the £200 million programme of major projects for Severn Trent Water and although there is still a long way to completion, the projected outturn is encouraging. The original concept of an integrated water business providing clients with a full turnkey capability has delivered exceptional service. To expand on this capability the existing frameworks for Anglian Water previously undertaken individually by both Nomenca and the Building & Civil Engineering division have now been transferred into NMCNomenca.

Nomenca

The mechanical and electrical subsidiary continues to benefit from escalating expenditure by the water industry on the AMP5 programme. Revenue increased 23.3% to a record £79.09 million (2011 : £64.16 million) with profitability climbing by 28.4% to £1.32 million (2011 : £1.03 million). The outlook for the business is encouraging with 32 No. frameworks currently being serviced from the regional office network.

As the company grows, higher value and more technically complex projects are being successfully undertaken. A particular example of this is the £20 million contract for J Murphy & Sons Ltd at Deephams, a Thames Water plant in London, where complex large capacity pipework and pumping equipment is being installed into deep structures.

The company has recently been successful in winning capital maintenance frameworks for United Utilities in the North West for a potential duration of ten years with a projected total expenditure of £300 million.

Mr D Bleakley

Doug Bleakley has expressed his desire to retire from both the chairmanship of Nomenca Ltd and from the Board, to be effective from 21 March 2013. He is to be replaced by Andy Langman, the current Managing Director of Nomenca Ltd, who has worked for the Group for 15 years.

Doug Bleakley was one of the founder members of Nomenca and it is testament to his hard work and strategic vision that Nomenca has grown to be a significant presence in the water industry. He has also made a major contribution to the Board.

We all wish him a long, happy and well deserved retirement.

Non-Financial Performance

In the prevailing increasingly competitive environment with every tender opportunity being pursued by numerous companies, it is essential that non-financial performance is maintained at the highest level.

A vigorous Health & Safety culture is a pre-requisite and it is gratifying to report that the British Safety Council 4 star rating has been retained, alongwith the ROSPA Gold standard throughout the Group. The overall accident rate continues to be considerably below the national average and a major point of focus for the last year, has been collaboration with the supply chain to harmonize its performance. The Group was also the recipient of six national awards for environmental performance during the year.

The attraction, development and retention of high quality employees are of paramount importance to the Group. The Staff Stability Index of 87.40% is impressive. In spite of the difficult economic conditions, the focus has to be to the future and both the graduate and apprenticeship programmes have been maintained, alongwith the levels of training. 2940 training days were undertaken during the year, equating to an average of 2.92 days per employee (2011 : 2.19).

The Board is committed to improving the Group's performance year on year and takes its responsibility very seriously. The Group is a member of the Business In The Community. Last year's performance and data are detailed in the CSR report.

Financing

The Group's credit facilities continue to remain adequate for the foreseeable future. Cash at the year end stands at £5.07 million (2011 : £9.23 million), which is an outflow from the previous year of £4.16 million. This is largely due to the cash outflow on the major problematical building contract.

Outlook

The secured order book for the current financial year is circa £130 million and this excludes the recent capital maintenance framework that has been awarded to Nomenca by United Utilities. This coupled with the restructuring and cost reduction programme already implemented, gives the Board the confidence to recommend the final dividend at 3.0 pence per share, making a total of 4.5 pence for the year.

Condensed Group statement of comprehensive income for the year ended 31 December 2012

The calculation of earnings per share is based on the weighted average of 9,959,699 shares (2011 : 9,800,000) in issue during the year and on a profit attributable to the equity shareholders of the parent of £473,000 (2011 : loss £757,000).

Group statement of changes in equity

Group balance sheet as at 31 December 2012

Group statement of cash flows for the year ended 31 December 2012