1st Apr 2016 07:00
NORTH MIDLAND CONSTRUCTION PLC
FINAL RESULTS
North Midland Construction PLC ("the Company"), the UK provider of civil engineering, building, mechanical and electrical services to public and private organisations, announces its final results for the year ended 31 December 2015.
Highlights from the results:-
Year ended 31 December 2015 £'000 | Year ended 31 December 2014 £'000 | |
Revenue Operating profit / (loss) Unadjusted profit / (loss) before tax Adjusted profit before tax* Total comprehensive profit / (loss) for the year Earnings / (loss) per share | 217,612 847 606 4,447 1,251 12.32p | 193,175 (2,846) (2,970) 4,353 (2,991) (29.47p) |
* Before charges relating to increased provisions on legacy contracts
For further information:-
Robert Moyle, Chairman - 01623 518812
Daniel Taylor, Finance Director - 01623 515008
· Operating profit in the year of £0.85m (2014: £2.85 million loss).
· Revenue increased by 12.7% to £217.61 million.
· Underlying profit before tax, excluding legacy contracts, increased to £4.45 million.
· All the Joint Operations are progressing satisfactorily.
· Positive first year for devolved Building division
· 85% of revenues derived from ongoing frameworks.
· Secured workload for 2016 at circa £181 million (2015 £155 million).
· Cash position remains strong. Year-end balance of £6.62 million (2014 £5.28 million).
OPERATING AND FINANCIAL REVIEW
BUILDING:-
The division was devolved from the old Building and Civil Engineering division at the beginning of the year into a standalone division. On the back of improving market conditions, it is pleasing to report a profit of £0.19 million generated from a revenue of £11.25 million for this financial year. A £15 million scheme for student accommodation in Leicester was successfully commenced during the year and the current order book for completion in 2016 is £16.5 million. These give us confidence for the future.
CIVIL ENGINEERING:-
This year has not been without its challenges. Closing out major legacy contracts has taken a toll, not only financially but in diverting resource and staff away from the key focus of rebuilding the division. Settlement and completion of the old legacy contracts resulted in the division incurring a loss for the year of £0.83 million on revenues of £7.80 million.
The concentration on legacy contract resolution has affected Business Development input. A lower risk approach to tender opportunities has been adopted and as a result of this, tender opportunities to the value of £35 million were turned down during the year.
HIGHWAYS:-
Highway infrastructure spend continues to increase across both the public and private sectors, delivering greater opportunities for the division. Profit increased by 31.8% to £0.44 million (2014 £0.34 million) on revenues enhanced by 55.3% to £38.79 million (2014 £24.97 million).
The Division continues to grow its reputation for the delivery of public realm and highway projects of a high quality and increased notational value. The Southern region now has a number of projects progressing and additional opportunities to review, whilst the East and West regions continue to perform to expectations.
The secured order book for 2016 is currently 70% of the budget which is encouraging and gives a positive outlook for 2016.
UTILITIES:-
2015 was a year of consolidation with the strengthening of the management team to improve the delivery of the commercial and operational initiatives. 2016 promises to deliver a return to profitability on the back of the increased secured workload.
As a result of the award of two frameworks for Virgin Media in the North West and Yorkshire during the year revenue increased significantly by 48.6% to £32.58 million (2014 £21.92 million). However, the resolution of a number of legacy contracts has resulted in a loss for the year of £2.04 million (2014 £0.75 million).
NMCNOMENCA:-
The division has again delivered a strong performance during the year, with Severn Trent awarding NMCNomenca 'Supplier of the Year' and 'Team of the Year' as recognition for our efforts on the framework.
We have further developed our opportunities within Joint Ventures with the formation of the Barhale (Barhale Limited) North Midland Alliance (BNM Alliance) and the successful tender for the upgrade of the Elan Valley Aqueduct. Our stake in the Severn Trent Asset Maintenance framework continues to grow. After a slow start, we are now expanding into other areas of opportunity outside the regulated water business.
Profitability was maintained at £2.94 million (2014 £2.89 million) on revenues which were marginally higher at £88.70 million (2014 £86.91 million).
Developing our people remains a high priority and as we continue to inspire excellence in our people, 26
NMCNomenca staff have attended and successfully passed various levels of the Management and Leadership Development Course.
With all work streams now delivering to expectations and continuing to increase their market share with the framework, we have built a great platform to take the business to the next level.
NOMENCA:-
We maintain our drive to deliver industry leading Health and Safety, Environmental and Quality performance with another ROSPA Gold Medal, 2 Green Apple awards: Gold and Silver, and the North of England Marque of excellence respectively.
Financial Performance during 2015 has been disappointing due to the reduced order input associated with the Water Industry five year Asset Management Programme transition and the settlement of the legacy contracts.
Consequently profitability declined by 75.8% to £0.22 million (2014 £0.90 million) on revenues reduced by 11.7% to £38.50 million (2014 £43.61 million).
The company has been very successful during the year in securing a Chemical Dosing design and manufacturing framework for United Utilities and the extension of Yorkshire Water's Chemical Dosing Framework.
A brand new framework has also been secured with South East Water in a 50/50 Joint Venture between BAM and Nomenca with the potential for a fifteen year agreement.
Another great success has been securing a five plus five year direct delivery framework with Yorkshire Water and three frameworks secured with Wessex Water.
Our project management and engineering team, based at St Austell, has been involved in the successful establishment of a new £130m tungsten and tin mine at Hemerdon on the edge of Dartmoor. This is the first metal ore mine to open in the UK for 40 years.
DIVIDENDS
Due to the losses incurred in previous two years and the forecast level of growth this financial year, the Directors do not recommend a final dividend for the year ended 31 December 2015 (2014: £nil). The Board is committed in the near future, subject to a sustained return to profitability, to the payment of dividends.
FINANCING
The Group credit facilities continue to remain adequate for the foreseeable future and the Group has sufficient funds to support its growth going forward. At the year end the cash balance was £6.62 million (2014: £5.28 million).
OUTLOOK
The secured order book for the current financial year is circa £181 million and this represents a significant proportion of the 2016 budget. This level of secured revenue, along with the forecasted level of orders likely to be received under the existing frameworks, coupled with the underlying performance, is encouraging. This leads the Board to be cautiously optimistic for the future.
Group Statement of Comprehensive Income
Year Ended | Year Ended | ||
31 December 2015 | 31 December 2014 | ||
£'000 | £'000 | ||
Revenue | 217,612 | 193,175 | |
Other operating income | 162 | 36 | |
217,774 | 193,211 | ||
Raw materials and consumables | (36,094) | (34,747) | |
Other external changes | (121,439) | (106,848) | |
Employee costs | (53,350) | (48,919) | |
Depreciation of property, plant and equipment | (1,961) | (1,689) | |
Other operating charges | (4,083) | (3,854) | |
Operating profit/( loss) | 847 | (2,846) | |
Interest received | - | 1 | |
Finance costs | (241) | (125) | |
Profit/(loss) before tax | 606 | (2,970) | |
Tax | 645 | (21) | |
Profit/(loss) and total comprehensive income for the year | 1,251 | (2,991) | |
Attributable to:- | |||
Equity holders of the Parent | 1,251 | (2,991) | |
Profit/(loss) per share - basic | 12.32p | (29.47p) | |
Profit/(loss) per share - fully diluted | 12.32p | (29.47p) |
The company has elected to take exemption under Section 408(3) of the Companies Act 2006 to not present the Parent Company's Statement of Comprehensive Income. The profit of the Parent Company for the year was £1,514,000 (2014 loss: £3,293,000).
Statements of changes in equity
Group | Share Capital £'000 | Merger Reserve £'000 | Capital Redemption Reserve £'000 | Retained Earnings £'000 | Total £'000 |
Balance at 1 January 2014 | 1,015 | 455 | 20 | 10,467 | 11,957 |
(Loss) and total comprehensive income for the year | - | - | - | (2,991) | (2,991) |
Balance at 31 December 2014 | 1,015 | 455 | 20 | 7,476 | 8,966 |
Profit and total comprehensive income for the year | - | - | - | 1,251 | 1,251 |
Balance at 31 December 2015 | 1,015 | 455 | 20 | 8,727 | 10,217 |
Company | Share Capital £'000 | Merger Reserve £'000 | Capital Redemption Reserve £'000 | Retained Earnings £'000 | Total £'000 |
Balance at 1 January 2014 | 1,015 | 455 | 20 | 7,843 | 9,333 |
(Loss) and total comprehensive income for the year | - | - | - | (3,293) | (3,293) |
Balance at 31 December 2014 | 1,015 | 455 | 20 | 4,550 | 6,040 |
Profit and total comprehensive income for the year | - | - | - | 1,514 | 1,514 |
Balance at 31 December 2015 | 1,015 | 455 | 20 | 6,064 | 7,554 |
Balance sheets as at 31 December 2015
Group | Company | ||||
|
| 2015
| 2014 | 2015 | 2014 |
£'000 | £'000 | £'000 | £'000 | ||
Assets | |||||
Non-current assets | |||||
Property, plant and equipment | 12,781 | 11,141 | 12,766 | 11,119 | |
Investments in subsidiaries | - | - | 2,437 | 2,437 | |
Deferred tax asset | 705 | 82 | 702 | 75 | |
13,486 | 11,223 | 15,905 | 13,631 | ||
Current assets | |||||
Inventories | 2,335 | 1,722 | 2,036 | 1,517 | |
Construction contracts | 17,537 | 12,838 | 14,054 | 10,621 | |
Trade and other receivables | 31,395 | 33,275 | 31,662 | 33,805 | |
Current income tax receivable | 21 | 13 | 22 | 173 | |
Cash and cash equivalents | 6,621 | 5,276 | 5,707 | 2,832 | |
57,909 | 53,124 | 53,481 | 48,948 | ||
Total assets | 71,395 | 64,347 | 69,386 | 62,579 | |
Equity and liabilities | |||||
Capital and reserves attributable to equity holders of the Parent | |||||
Share capital | 1,015 | 1,015 | 1,015 | 1,015 | |
Merger reserve | 455 | 455 | 455 | 455 | |
Capital redemption reserve | 20 | 20 | 20 | 20 | |
Retained earnings | 8,728 | 7,476 | 6,066 | 4,550 | |
Total equity | 10,218 | 8,966 | 7,556 | 6,040 | |
Liabilities | |||||
Non-current liabilities | |||||
Obligations under finance leases | 2,263 | 2,054 | 2,263 | 2,054 | |
Provisions | 361 | 329 | 361 | 329 | |
2,624 | 2,383 | 2,624 | 2,383 | ||
Current liabilities | |||||
Trade and other payables | 56,588 | 51,453 | 57,241 | 52,611 | |
Obligations under finance leases | 1,965 | 1,545 | 1,965 | 1,545 | |
58,553 | 52,998 | 59,206 | 54,156 | ||
Total liabilities | 61,177 | 55,381 | 61,830 | 56,539 | |
Total equity and liabilities | 71,395 | 64,347 | 69,386 | 62,579 | |
Statement of cash flows for the year ended 31 December 2015
Group | Company | |||
2015 | 2014 | 2015 | 2014 | |
£'000 | £'000 | £'000 | £'000 | |
Cash flows from operating activities | ||||
Operating profit/(loss) | 847 | (2,846) | 703 | (3,311) |
Adjustment for: | ||||
Depreciation of property, plant and equipment | 1,964 | 1,689 | 1,958 | 1,683 |
Gain on disposal of property, plant and equipment | (131) | (31) | (131) | (31) |
Increase in reinstatement reserve | 32 | 87 | 32 | 87 |
Operating cash flows before movement in working capital | 2,712 | (1,101) | 2,562 | (1,572) |
(Increase) in inventories | (613) | (193) | (518) | (298) |
(Increase)/decrease in construction contracts | (4,699) | 151 | (3,433) | 342 |
Decrease/(increase) in receivables | 1,880 | (2,583) | 2,144 | (4,558) |
Increase in payables | 5,122 | 3,896 | 4,627 | 4,946 |
Cash generated from/(used in) operations | 4,402 | 170 | 5,382 | (1,140) |
Income Tax received | 25 | 20 | 176 | 158 |
Interest received | - | 1 | - | 1 |
Interest paid | (241) | (125) | (241) | (125) |
Net cash generated from / (used in) operations | 4,186 | 66 | 5,317 | (1,106) |
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (1,034) | (763) | (1,034) | (763) |
Proceeds on disposal of property, plant and equipment | 180 | 46 | 180 | 46 |
Dividends received from subsidiaries | 400 | 350 | ||
Net cash (used in) investing activities | (854) | (717) | (454) | (367) |
Cash flows from financing activities | ||||
(Repayment)/receipt of obligations under finance leases | (1,988) | 1,050 | (1,988) | 1,050 |
Net cash (used in)/from financing activities | (1,988) | 1,050 | (1,988) | 1,050 |
Net increase/(decrease) in cash and cash equivalents | 1,344 | 399 | 2,875 | (423) |
Cash and cash equivalents at 1 January 2015 | 5,276 | 4,877 | 2,832 | 3,255 |
Cash and cash equivalents at 31 December 2015 | 6,620 | 5,276 | 5,707 | 2,832 |
Cash and cash equivalents comprise funds held at the bank which are immediately accessible.
1. | Basis of preparation |
The condensed Group financial statements for the year ended 31 December 2015 included in this report do not constitute the Group's statutory accounts for the year ended 31 December 2015 but are derived from those accounts. The auditor has reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation. | |
While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. | |
The condensed Group financial statements have been prepared on a basis consistent with that adopted in the previous year's published financial statements and in accordance with IFRSs. | |
The Group expects to publish statutory financial statements for the year ended 31 December 2015 that comply with both IFRSs as adopted for use in the European Union and IFRSs as compliant with the Companies Act 2006 and Article 4 of the EU IAS Regulations based on the information presented in this announcement. | |
The condensed financial statements were approved by the Board on 31 March 2016. | |
Audited statutory accounts for the year ended 31 December 2014 have been delivered to the registrar of companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2014 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. | |
2. | Segment reporting |
The business segment reporting format reflects the Group's management and internal reporting structure.
The group is comprised of the following business segments:-
- 'PLC' - comprising building, civil engineering, highways, utilities and NMCNomenca divisions - Nomenca - mechanical and electrical engineering products and services |
Segment revenue and profit
Year ended 31 December 2015
Building | Civil | Highways | NMCNomenca | Nomenca | Utilities | Total | |
£'000 | Engineering
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Revenue | |||||||
External sales | 11,253 | 7,794 | 38,789 | 88,701 | 38,497 | 32,578 | 217,612 |
Result before corporate expenses | 1,002 | (366) | 1,576 | 6,518 | 3,796 | (909) | 11,617 |
Corporate expenses | (816) | (460) | (1,132) | (3,576) | (3,578) | (1,208) | (10,770) |
Operating profit/(loss) | 186 | (826) | 444 | 2,942 | 218 | (2,117) | 847 |
Net finance costs | (241) | ||||||
Profit before tax | 606 | ||||||
Tax | 645 | ||||||
Profit for the year | 1,251 |
Year ended 31 December 2014
Building | Civil | Highways | NMCNomenca | Nomenca | Utilities | Total | |
£'000 | Engineering
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Revenue | |||||||
External sales | 7,886 | 7,886 | 24,970 | 86,905 | 43,608 | 21,920 | 193,175 |
Result before corporate expenses | (2,950) | (2,951) | 1,071 | 5,859 | 4,165 | (203) | 4,991 |
Corporate expenses | (159) | (158) | (734) | (2,974) | (3,265) | (547) | (7,837) |
Operating profit/(loss) | (3,109) | (3,109) | 337 | 2,885 | 900 | (750) | (2,846) |
Net finance costs | (124) | ||||||
Profit before tax | (2,970) | ||||||
Tax | (21) | ||||||
Profit for the year | (2,991) |
From the 1st January 2015, the building division was devolved in to its own separate division. For the purposes of illustrating a comparable previous period the results, assets, depreciation and amortisation and additions to non-current assets of the combined Building & Civil Engineering division have been split equally.
Segment assets
2015
£'000 | 2014
£'000 | |
Building | 9,337 | 5,666 |
Civil Engineering | 5,225 | 5,666 |
Highways | 8,119 | 7,352 |
Utilities | 21,394 | 16,550 |
NMCNomenca | 12,144 | 10,839 |
Nomenca | 15,176 | 18,275 |
Total segment assets and consolidated total assets | 71,395 | 64,347 |
For the purpose of monitoring segment performance and allocating resources between segments, the Group's Chief Executive monitors the tangible and financial assets attributable to each segment. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments. |
Other segment information
| ||||||
Depreciation and amortisation | Additions to non-current assets | |||||
2015 £'000 | 2014 £'000 |
2015 £'000 | 2014 £'000 |
| ||
Building | 123 | 98 | 229 | 109 |
| |
Civil Engineering | 85 | 99 | 159 | 109 |
| |
Highways | 424 | 277 | 791 | 307 |
| |
Utilities | 356 | 243 | 664 | 269 |
| |
NMCNomenca | 969 | 966 | 1,808 | 1,067 |
| |
Nomenca | 4 | 5 | - | - |
| |
Total | 1,961 | 1,689 | 3,651 | 1,861 |
| |
| There were no impairment losses recognised in respect of property, plant and equipment. All of the above relates to continuing operations and arose in the United Kingdom.
The results of each segment are not materially affected by seasonality. |
3. |
Information about major customer
Revenues of approximately £78,159,000 (2014: £79,300,000) were derived from a single external customer. These revenues are attributable to the NMCNomenca and Nomenca segments.
|
4. | Earnings per share |
Earnings per share, both basic and diluted, is calculated on the profit attributable to equity holders of the parent of £1,251,000 (2014: £2,991,000 loss) and the weighted average of 10,150,000 (2014: 10,150,000) shares in issue during the year. | |
5. | Taxation |
The tax credit in the year arises from a deferred tax asset from short term timing differences and trading losses now recognised. There are trading losses carried forward of £4,841,535 (2014: £8,380,941). The provision for deferred tax is calculated based on the tax rates enacted or substantially enacted at the balance sheet date. |
6. | Dividends | |||
Amounts recognised as distributions to equity holders in the year:- | ||||
2015 | 2014 | |||
£'000 | £'000 | |||
Final dividend for the year ended 31 December 2014 of 0p (2013: 0p) per share | - | - | ||
Interim dividend for the year ended 31 December 2015 of 0p (2014: 0p) per share | - | - | ||
| - | - | ||
Due to the losses incurred in previous two years and the forecast level of growth this financial year, the Directors do not recommend a final dividend for the year ended 31 December 2015 (2014: £nil). The Board is committed in the near future, subject to a sustained return to profitability, to the payment of dividends.
| ||||
7. | Related parties and joint operations |
The Group's related parties are key management personnel who are the executive directors, non-executive directors and divisional managers. The only transactions with these individuals comprise remuneration under service contracts. | |
Additionally, the Group has the following interests in joint operations;
The E5 Joint Venture - (Waste Water Major Projects, Coventry UK) 25% interest in a joint operation with MWH Treatment Limited, Mott MacDonald Bentley Limited and Costain Limited.
Ambergate Working Alliance - (Construction of reinforced concrete covered storage reservoir, Ambergate UK) 50% interest in a joint operation with Laing O'Rourke Imtech.
BAMNomenca - (Water projects for South East Water) 50% interest in a joint operation with Bam Nuttall Limited.
BNM Alliance - (Construction of Elan Valley Alleviation scheme) 50% interest in a joint operation with Barhale Limited.
All joint operation activities are strategic to the company and its operating divisions NMCNomenca and Nomenca Limited. | |
The condensed Group financial statements for the year ended 31 December 2015 incorporate the following relating to the joint operations:- | |
Year ended | Year ended | ||||
31 December 2015 | 31 December 2014 | ||||
£'000 | £'000 | ||||
Revenue | 13,947 | 13,609 | |||
Expenses | 12,968 | 12,108 | |||
Assets | 1,245 | 375 | |||
Liabilities | 1,245 | 375 | |||
8. | Share capital | ||||||
2015 | 2014 | ||||||
£'000 | £'000 | ||||||
Authorised:- | |||||||
12,500,000 ordinary shares of 10p each | 1,250 | 1,250 | |||||
Allotted, issued and fully paid:- | |||||||
10,150,000 (2014 - 10,150,000) ordinary shares of 10p | 1,015 | 1,015 | |||||
9. | Contingent liabilities | ||||||
Aviva Insurance Limited, Lloyds Bank PLC, Euler Hermes Europe S.A. (N.V.) and HCC International Insurance Company Plc have given Performance Bonds to a value of £4,703,442 (2014: £4,726,472) on the Group's behalf. These bonds have been made with recourse to the Group. | |||||||
| |||||||
10. | The Annual Report and Accounts for the year ended 31 December 2015 will be despatched to shareholders on or around 20 April 2016 and will be available on the Company's website - www.northmid.co.uk. | ||||||
11. | The Annual General Meeting will be held on Thursday 19 May 2016 at 12.00 noon at the Group's Head Office at Nunn Close, The County Estate, Huthwaite, Sutton-in-Ashfield, Nottinghamshire NG17 2HW. | ||||||
Related Shares:
NMCN.L