25th Aug 2011 07:00
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
25 August 2011
North Midland Construction PLC ("the Company") the UK provider of civil engineering, building, mechanical and electrical services to public and private organisations, announces interim results for the six months ended 30 June 2011.
Highlights from the results and the Chairman's Statement:-
Six Months Ended | Six Months Ended | ||||
30 June 2011 | 30 June 2010 | ||||
£'000 | £'000 | ||||
Revenue | 91,314 | 77,897 | |||
Profit before Tax | 1,312 | 2,037 | |||
Total Comprehensive Income | 1,283 | 1,467 | |||
Earnings per Share | 12.52p | 14.54p | |||
Proposed Dividends | 2.50p | 2.50p |
·; Revenue increased by 17.2% compared with previous year.
·; Significant loss in North Midland Building Limited.
·; All other divisions are profitable.
·; The reduction in fine by the Office of Fair Trading (£1,203,000) has been taken to operating profit as an exceptional item and is not subject to taxation.
·; Interim dividend maintained at 2.50p.
For further information:-
| ||
Robert Moyle, Chairman | - | 01623 518812 |
North Midland Construction PLC | ||
CHAIRMAN'S STATEMENT
The result for the half-year is a disappointment with profit before tax reduced by 35.6% to £1.31 million on a revenue increased by 17.2% at £91.30 million over the comparable period last year. This reversal is due to a loss generated within North Midland Building Limited of £1.94 million. The Nomenca subsidiary and all the other divisions traded profitably during the period. An exceptional item profit of £1.20 million is included in the result. This has emanated from the successful appeal to and subsequent reduction in the OFT fine.
The Building subsidiary has delivered a significant loss of £1.94 million on revenue reduced by 3% at £11 million. Its major contract is in serious delay and will result in a claim for losses incurred. Unforeseen operational problems on two further contracts have resulted in losses of £0.91 million. Both projects have now been completed. In accordance with best practice the predicted outturn losses on these three contracts have been incorporated into the half-year result. Market conditions remain extremely difficult with very competitive margins. The workload for the remainder of the year currently is £7 million. Reorganisation of the subsidiary is currently underway and this will result in significant overhead reduction and improved performance.
Conversely, Nomenca Limited, the Mechanical & Electrical subsidiary, has benefited from the escalation in expenditure of the water companies under the AMP5 programme. Revenue has increased by 63.0% to £29.31 million. Profitability, also, increased by 95.7% to £0.46 million. The forecast for this year will be achieved and prospects for the ensuing years are encouraging. Current workload for the second half of the year stands at £27 million.
Revenue within the Civil Engineering division remained static at £22.9 million, with profitability declining by 4.1% to £0.76 million. Both the Civil Engineering division and Nomenca Limited are beneficiaries of the performance of NMC/Nomenca, the sub division formed to deliver the AMP5 programme for Severn Trent Water. NMC/Nomenca performed well and will deliver its forecast for the full year.
In spite of the public sector expenditure cuts, the Highways division increased both revenue and profit by 21.7% and 78.7% respectively. Geographical consolidation has continued and the division has a strong presence with several public sector frameworks. Year end forecasts will be achieved and the current workload for the second half of the year is £10 million.
Revenue in the Utilities Division increased by 5.5% to £20.3 million, but profit declined by 33.7% to £0.60 million due to margin pressure on the existing frameworks. Price increases in both materials and more significantly fuel have been considerable and are non-recoverable on these contracts.
Virgin Media have reviewed their supply chain arrangements and the division was unsuccessful in securing the revised contract. Replacement frameworks are actively being pursued and with the major South Yorkshire Digital Region contract finishing within this financial year, replacement revenue is a priority.
There was a net cash outflow during the period, particularly due to high levels of work in progress within the Utilities division. However, a positive cash balance was maintained at the end of the period.
As the exceptional item is not subject to tax, it is the Board's intention to maintain the return to shareholders. The payment of an interim dividend of 2.5p per share, which will be paid on 30 September 2011 to the shareholders on the register on 9 September 2011, is recommended by the Board.
Robert Moyle
Chairman
North Midland Construction PLC
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30 June 2011 are shown below together with the unaudited Group results for the half year ended 30 June 2010 and the audited Group results for the year ended 31 December 2010.
Six Months Ended 30 June | Year Ended | ||||
2011 | 2010 | 31 December 2010 | |||
£'000 | £'000 | £'000 | |||
Revenue | 91,314 | 77,897 | 164,523 | ||
Other operating income | 54 | 69 | 90 | ||
91,368 | 77,966 | 164,613 | |||
Raw material and consumables | (16,393) | (14,381) | (27,162) | ||
Other external charges | (52,202) | (40,852) | (92,355) | ||
Employee costs | (19,389) | (18,497) | (36,954) | ||
Depreciation of property, plant & equipment | (818) | (792) | (1,647) | ||
Other operating charges | (1,235) | (1,371) | (2,683) | ||
Operating profit | 1,331 | 2,073 | 3,812 | ||
Analysed as:- | |||||
Operating profit before exceptional item | 128 | 2,073 | 3,812 | ||
Exceptional item (Note 3) | 1,203 | - | - | ||
Operating profit | 1,331 | 2,073 | 3,812 | ||
Interest received | 18 | 0 | 9 | ||
Finance costs | (37) | (36) | (108) | ||
Profit before tax | 1,312 | 2,037 | 3,713 | ||
Tax (Note 5) | (29) | (570) | (1,064) | ||
Profit for the period | 1,283 | 1,467 | 2,649 | ||
Other comprehensive income | - | - | - | ||
Total comprehensive income for the period | 1,283 | 1,467 | 2,649 | ||
Attributed to:- | |||||
Non-controlling interest | 56 | 42 | 131 | ||
Equity holders of the parent | 1,227 | 1,425 | 2,518 | ||
1,283 | 1,467 | 2,649 | |||
Earnings per share basic and diluted (Note 4) | 12.52p | 14.54p | 25.69p | ||
Dividend per share (Note 6) | 6.00p | 6.00p | 8.50p | ||
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital | Non- | ||||||||
Share | Redemption | Retained | Controlling | ||||||
Capital | Reserve | Earnings | Interest | Total | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | |||||
At 1 January 2010 | 980 | 20 | 17,403 | 720 | 19,123 | ||||
Comprehensive income for the period | - | - | 1,425 | 42 | 1,467 | ||||
Dividends paid | - | - | (588) | (82) | (670) | ||||
At 30 June 2010 | 980 | 20 | 18,240 | 680 | 19,920 | ||||
Comprehensive income for the period | - | - | 1,093 | 89 | 1,182 | ||||
Dividends paid | - | - | (245) | (21) | (266) | ||||
Acquisition of non-controlling interest | - | - | (230) | (249) | (479) | ||||
At 1 January 2011 | 980 | 20 | 18,858 | 499 | 20,357 |
Comprehensive income for the period | - | - | 1,227 | 56 | 1,283 | ||||
Dividends paid | - | - | (588) | (30) | (618) | ||||
At 30 June 2011 | 980 | 20 | 19,497 | 525 | 21,022 |
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets at 30 June 2011 and 30 June 2010 are shown below together with the audited Group Balance Sheet at 31 December 2010.
30 June | 31 December | ||||||
2011 | 2010 | 2010 | |||||
£'000 | £'000 | £'000 | |||||
Assets | |||||||
Non-Current Assets | |||||||
Property, plant and equipment | 10,872 | 10,182 | 10,234 | ||||
Goodwill | 1,267 | 1,267 | 1,267 | ||||
12,139 | 11,449 | 11,501 | |||||
Current Assets | |||||||
Inventories | 1,820 | 1,733 | 1,939 | ||||
Construction contracts | 13,921 | 10,519 | 12,293 | ||||
Trade and other receivables | 35,347 | 26,810 | 28,735 | ||||
Cash and cash equivalents | 1,122 | 564 | 8,911 | ||||
52,210 | 39,626 | 51,878 | |||||
Total Assets | 64,349 | 51,075 | 63,379 | ||||
Equity & Liabilities | |||||||
Capital & Reserves attributable to equity holders of the Parent | |||||||
Share capital | 980 | 980 | 980 | ||||
Capital redemption reserve | 20 | 20 | 20 | ||||
Retained earnings | 19,497 | 18,240 | 18,858 | ||||
20,497 | 19,240 | 19,858 | |||||
Non-controlling interest | 525 | 680 | 499 | ||||
Total Equity | 21,022 | 19,920 | 20,357 | ||||
Liabilities | |||||||
Non-current Liabilities | |||||||
Obligation under finance leases - due after one year | 1,083 | 474 | 858 | ||||
Provisions | 614 | 561 | 560 | ||||
Deferred tax | 15 | 38 | 15 | ||||
1,712 | 1,073 | 1,433 | |||||
Current Liabilities | |||||||
Trade & other payables | 40,770 | 28,913 | 39,761 | ||||
Current income tax payable | 25 | 571 | 1,088 | ||||
Obligations under finance leases - due within one year | 820 | 598 | 740 | ||||
41,615 | 30,082 | 41,589 | |||||
Total Liabilities | 43,327 | 31,155 | 43,022 | ||||
Total Equity & Liabilities | 64,349 | 51,075 | 63,379 | ||||
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOW
The unaudited condensed Group statement of cash flows for the periods ended at 30 June 2011 and 30 June 2010 are shown below together with the audited Group statement of cash flow for the year ended 31 December 2010.
Six Months Ended 30 June | Year Ended | |||||
2011 | 2010 | 31 December 2010 | ||||
£'000 | £'000 | £'000 | ||||
Cash flows from operating activities | ||||||
Operating profit | 1,331 | 2,066 | 3,812 | |||
Adjustments for: | ||||||
Depreciation of property, plant and equipment | 818 | 792 | 1,647 | |||
(Gain) on disposal of property, plant and equipment | (56) | (58) | (87) | |||
Increase in provisions | 54 | 42 | 41 | |||
Operating cash flows before movements in | ||||||
working capital | 2,147 | 2,842 | 5,413 | |||
Decrease/(increase) in inventories | 119 | (156) | (362) | |||
(Increase) in construction contracts | (1,628) | (2,089) | (3,863) | |||
(Increase)/decrease in receivables | (6,612) | 4,210 | 2,285 | |||
Increase/(decrease) in payables | 1,009 | (8,027) | 2,821 | |||
Cash (used in)/generated from operations | (4,965) | (3,220) | 6,294 | |||
Income Tax paid | (1,092) | (620) | (621) | |||
Interest received | 18 | 7 | 9 | |||
Interest paid | (37) | (36) | (108) | |||
Net cash (used in)/generated from operating activities | (6,076) | (3,869) | 5,574 | |||
Cash flows from investing activities | ||||||
Purchase of property, plant and equipment | (742) | (669) | (634) | |||
Proceeds on disposal of property, plant and equipment | 59 | 65 | 108 | |||
Purchase of non-controlling interest | - | - | (478) | |||
Net cash (used in) investing activities | (683) | (604) | (1,004) | |||
Cash flows from financing activities | ||||||
Equity dividend paid | (588) | (588) | (833) | |||
Dividend paid to non-controlling interest | (30) | (82) | (103) | |||
Repayments of obligations under finance leases | (412) | (466) | (896) | |||
Net cash (used in) investing activities | (1,030) | (1,136) | (1,832) | |||
Net (decrease)/increase in cash and cash equivalents | (7,789) | (5,609) | 2,738 | |||
Cash and cash equivalents at 1 January 2011 | 8,911 | 6,173 | 6,173 | |||
Cash and cash equivalents at 30 June 2011 | 1,122 | 564 | 8,911 | |||
1. | Basis of preparation |
The unaudited condensed consolidated half-yearly financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, and have been prepared on the basis of International Financial Reporting Standards (IFRS's) as adopted by the European Union that are effective for the full year ending 31 December 2010. They do not include all of the information required for full annual financial statements. These condensed consolidated half-yearly financial statements have not been subject to audit or review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 by the company's auditor, do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006, and should be read in conjunction with the Annual Report 2010. The comparative figures for the year ended 31 December 2010 are not the Group's statutory accounts for that financial year. Those accounts have been reported upon by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 435 and 498 (2) or (3) respectively of the Companies Act 2006. | |
The accounting policies adopted in the preparation of the condensed consolidated half-yearly financial statements to 30 June 2011 are consistent with the policies applied by the Group in its consolidated financial statements as at, and for the year ended 31 December 2010. The Group has considered amendments to existing standards and interpretations that are effective for the year ending 31 December 2011 and is of the view that they have no impact on the half-yearly accounts. | |
The preparation of consolidated half-yearly financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. | |
In preparing these condensed half-yearly financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2010. | |
The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2010. | |
2. | Segment reporting |
The business segment reporting format reflects the Group's management and internal reporting structure.
Business segments The Group is comprised of the following business segments:-
- 'PLC' - comprising civil engineering, highways and utilities divisions - Building - construction of commercial and residential property - Nomenca - mechanical and electrical engineering products and services
Segment revenue and profit |
Six Months Ended 30 June 2011 | |||||||||||
Civil Engineering | Highways | Utilities | Building | Nomenca | Total | ||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
Revenue | |||||||||||
External sales | 22,892 | 7,799 | 20,314 | 10,998 | 29,311 | 91,314 | |||||
Result before | |||||||||||
corporate expenses | 3,404 | 881 | 1,614 | (1,317) | 1,933 | 6,515 | |||||
Corporate expenses | (2,641) | (629) | (1,019) | (625) | (1,473) | (6,387) | |||||
Operating profit before exceptional item |
763 |
252 |
595 |
(1,942) |
460 |
128 | |||||
Exceptional item (Note 3) |
|
|
|
|
|
1,203 | |||||
Operating profit | 1,331 | ||||||||||
Net finance costs | (19) | ||||||||||
Profit before tax | 1,312 | ||||||||||
Tax | (29) | ||||||||||
Total comprehensive income for the period |
1,283 | ||||||||||
Six Months Ended 30 June 2010 | |||||||||||
Civil Engineering | Highways | Utilities | Building | Nomenca | Total | ||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
Revenue | |||||||||||
External sales | 22,913 | 6,410 | 19,259 | 11,336 | 17,979 | 77,897 | |||||
Result before | |||||||||||
corporate expenses | 1,830 | 453 | 1,405 | 775 | 1,874 | 6,337 | |||||
Corporate expenses | (1,034) | (312) | (508) | (771) | (1,639) | (4,264) | |||||
Operating profit | 796 | 141 | 897 | 4 | 235 | 2,073 | |||||
Net finance costs | (36) | ||||||||||
Profit before tax | 2,037 | ||||||||||
Tax | (570) | ||||||||||
Total comprehensive income for the period | 1,467 | ||||||||||
Segment assets | ||||||||
30 June | ||||||||
2011 | 2010 | |||||||
£'000 | £'000 | |||||||
Civil engineering | 20,890 | 17,123 | ||||||
Highways | 7,117 | 4,791 | ||||||
Utilities | 18,538 | 14,392 | ||||||
46,545 | 36,306 | |||||||
Building | 8,132 | 4,991 | ||||||
Nomenca | 9,672 | 9,778 | ||||||
Total segment assets and consolidated total assets | 64,349 | 51,075 | ||||||
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. Goodwill has been allocated to reportable segments to which it relates. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments. | ||||||||
Other segment information | ||||||||
Depreciation and | Additions to | |||||||
amortisation | non-current assets | |||||||
30 June | 30 June | |||||||
2011 | 2010 | 2011 | 2010 | |||||
£'000 | £'000 | £'000 | £'000 | |||||
Civil engineering | 354 | 358 | 652 | 595 | ||||
Highways | 121 | 100 | 222 | 167 | ||||
Utilities | 314 | 302 | 579 | 500 | ||||
Building | 15 | 18 | - | - | ||||
Nomenca | 14 | 14 | 6 | 5 | ||||
818 | 792 | 1,459 | 1,267 | |||||
There were no impairment losses recognised in respect of property, plant and equipment or goodwill. | ||||||||
All of the above relates to continuing operations and arose in the United Kingdom. | ||||||||
Information about major customer | ||||||||
Revenues of approximately £26,557,000 (2010 : £24,155,000) were derived from a single external customer. These revenues are attributable to the Civil Engineering and Nomenca segments. | ||||||||
3. | Exceptional item | |||
The exceptional item represents the release of the provision previously made in respect of the fine levied by the Office of Fair Trading following the successful appeal where the fine levied was reduced by £1,203,000. | ||||
4. | Earnings per share | |||
The basic and diluted earnings per share are the same and have been calculated on profits of £1,227,000 (2010 : £1,425,000) and the weighted average number of shares in issue of 9,800,000 (2010 : 9,800,000) shares in issue. | ||||
5. | Taxation | |||
In respect of the six months ended 30 June 2011, corporation tax has been provided at 27% (2010 : 28%) of the profit without deferment. The low taxation charge results from the exceptional item not being subject to tax. | ||||
6. | Dividends | |||
Amounts recognised as distributions to equity holders in the half year:- | ||||
Six Months to June | ||||
2011 | 2010 | |||
£'000 | £'000 | |||
Final dividend for the year ended 31 December 2010 of 6p (2009 : 6p) per share | 588 | 588 | ||
The Directors propose an interim dividend of 2.5p per share (2010 : 2.5p per share), total £245,000 (2010 : £245,000), which will be paid on 30 September 2011 to the shareholders on the register on 9 September 2011. | ||||
7. | Goodwill | |||||
An impairment review of the goodwill figure has been carried out in the light of past performance and forecast future performance. Based on this review, the directors consider that no provision for impairment is necessary. | ||||||
8. | 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. | ||||||
9. | Contingent liabilities | |||||
Euler Hermes Guarantee plc, Lloyds TSB and HCC International Insurance Co. Ltd have given Performance Bonds to a value of £4,121,745 (2010 : £4,005,974) on the Group's behalf. These bonds have been made with recourse to the Group. | ||||||
10. | Seasonality | |||||
The Group's activities are not subject to significant seasonal variations. | ||||||
11. | Principal risks and uncertainties | |||||
The Board consider the principal risks and uncertainties relating to the Group for the next six months to be the same as detailed in the last Annual Report and Accounts to 31 December 2010. | ||||||
12. | Responsibility Statement of the Directors in respect of the half-yearly financial report | |||||
We confirm that to the best of our knowledge: | ||||||
·; | the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; | |||||
·; | the interim management report includes a fair review of the information required by: | |||||
(a) | DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and | |||||
(b) | DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. | |||||
A copy of this circular will be sent to all shareholders on 25 August 2011 and copies will be available from the registered office, Nunn Close, The County Estate, Huthwaite, Sutton-in-Ashfield, Nottinghamshire, NG17 2HW, for 14 days from today's date. This report will also be available on the Group's website (www.northmid.co.uk).
R Moyle | |
Chairman | |
M S Garratt | |
Finance Director |
25 August 2011
Related Shares:
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