27th Aug 2009 07:00
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
27 August 2009
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 2009.
Highlights from the results and the Chairman's Statement:-
|
Six Months Ended |
Six Months Ended |
||||
|
30 June 2009 |
30 June 2008 |
||||
|
£'000 |
£'000 |
||||
|
Revenue |
71,263 |
103,533 |
|||
|
Profit before Tax |
1,367 |
792 |
|||
|
Net Profit after Tax |
984 |
554 |
|||
|
Earnings per Share |
9.51p |
4.8p |
|||
|
Proposed Dividends |
2.5p |
2.5p |
Group profit before tax up by 72.6% compared with previous year
Interim dividend maintained at 2.5p
Cash position improved
All divisions and subsidiaries currently trading profitably
For further information:-
|
Robert Moyle, Chairman |
- |
01623 518812 |
|
North Midland Construction PLC |
||
CHAIRMAN'S STATEMENT
The second quarter has delivered an improved performance. Group revenue for the half year declined to £71.26 million, from £103.53 million for the comparable period last year, but profitability climbed to £1.37 million from £0.79 million, an increase of 72.6%.
A significant enhanced performance was achieved by the parent company, with profitability rising to £0.98 million from £0.14 million. All three divisions were profitable, with the Utilities division providing a creditable performance, after the problems experienced during the previous year. The Civil Engineering division suffered from decreased revenue and profitability, due to cutbacks in expenditure by major clients during the current economic recession, whilst the Highways division produced a result comparable to that of last year.
North Midland Building has been the Group member to be the most severely affected by the economic situation and profitability declined to £0.09 million from £0.17 million the previous year. However, the subsidiary has recently secured £12 million of orders, which will be constructed in the second half of this financial year.
Profitability at Nomenca, the Mechanical & Engineering subsidiary, fell to £0.29 million from £0.48 million, on revenue reduced by 4%, due to reduced expenditure primarily by the water sector. An improved performance is anticipated for the second half of the year.
Progress has been made on the resolution of problematical accounts and, as previously reported, the negotiations with A E & E Lentjes Limited at Fiddler's Ferry and Ferrybridge have been satisfactorily concluded. The anticipated outturn on the Halifax Sewerage Treatment Works contract remains the same as at 31 December 2008. As a result of these resolutions, there has been a cash inflow to the Group of £1.39 million in the half year.
The economic situation continues to remain very difficult and whilst many tenders have been submitted, few contracts are being commenced. Across the Group cutbacks in expenditure on framework contracts are also being experienced, particularly in the water sector. There is a requirement, therefore, to secure further workload. However, the AMP5 framework for Severn Trent Water and South Yorkshire Digital Scheme have recently been won and both of these contracts will provide significant revenue in the forthcoming years. Current revenue for this year is £150 million and already £70 million has been attained for 2010. The overall cost base of the Group has been reduced to align with current revenues. In view of this, a result similar to the previous year is anticipated.
In order to maintain a return to shareholders, the Board recommends an interim dividend of 2.5p (2008 - 2.5p) per share, which will be paid on 2 October 2009 to the shareholders on the register on 11 September 2009.
R Moyle
Chairman
North Midland Construction PLC
UNAUDITED CONDENSED GROUP INCOME STATEMENT
The unaudited Group results for the half year ended 30 June 2009 are shown below together with the unaudited Group results for the half year ended 30 June 2008 and the audited Group results for the year ended 31 December 2008.
|
Six Months Ended 30 June |
Year Ended |
||||
|
2009 |
2008 |
31 December 2008 |
|||
|
£'000 |
£'000 |
£'000 |
|||
|
Revenue |
71,263 |
103,533 |
202,215 |
||
|
Other operating income |
78 |
115 |
178 |
||
|
71,341 |
103,648 |
202,393 |
|||
|
Raw material and consumables |
(13,756) |
(19,881) |
(35,972) |
||
|
Other external charges |
(34,635) |
(56,114) |
(116,447) |
||
|
22,950 |
27,653 |
49,974 |
|||
|
Employee costs |
(19,192) |
(24,081) |
(41,923) |
||
|
Depreciation of property, plant & equipment |
(845) |
(945) |
(1,860) |
||
|
Other operating charges |
(1,440) |
(1,679) |
(2,856) |
||
|
Group operating profit |
1,473 |
948 |
3,335 |
||
|
Finance costs |
(106) |
(156) |
(460) |
||
|
Profit before tax |
1,367 |
792 |
2,875 |
||
|
Tax (Note 4) |
(383) |
(238) |
(841) |
||
|
Profit for the period |
984 |
554 |
2,034 |
||
|
Attributed to:- |
|||||
|
Minority interest |
52 |
84 |
206 |
||
|
Equity holders of the parent |
932 |
470 |
1,828 |
||
|
984 |
554 |
2,034 |
|||
|
Earnings per share basic and diluted (Note 3) |
9.51p |
4.80p |
18.65p |
||
|
Dividend per share (Note 5) |
6.00p |
6.00p |
8.50p |
||
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Six Months ended 30 June 2009 |
Six Months to |
Year Ended |
|||||||
|
30 June |
31 December |
||||||||
|
2008 |
2008 |
||||||||
|
Total Attributable |
Minority |
Total |
Total |
Total |
|||||
|
to Equity Holder |
Interest |
Equity |
Equity |
Equity |
|||||
|
of the Parent |
|||||||||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||
|
Balance at 31 December 2008 |
18,805 |
654 |
19,459 |
19,069 |
19,069 |
||||
|
Profit for the half year |
932 |
52 |
984 |
554 |
2,034 |
||||
|
Dividends |
(588) |
(100) |
(688) |
(768) |
(1,013) |
||||
|
Purchase of minority interest |
- |
- |
- |
(631) |
(631) |
||||
|
Balance at 30 June 2009 |
19,149 |
606 |
19,755 |
18,224 |
19,459 |
||||
The total attributable to equity holders of the parent is the aggregate of share capital, capital redemption reserve and retained earnings. Share capital of £980,000 and capital redemption reserve of £20,000 have not changed during the half year ended 30 June 2009.
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets at 30 June 2009 and 30 June 2008 are shown below together with the audited Group Balance Sheet at 31 December 2008.
|
30 June |
31 Dec |
||||||
|
2009 |
2008 |
2008 |
|||||
|
£'000 |
£'000 |
£'000 |
|||||
|
Assets |
|||||||
|
Non-Current Assets |
|||||||
|
Goodwill |
1,267 |
1,267 |
1,267 |
||||
|
Property, plant and equipment |
10,307 |
11,347 |
11,014 |
||||
|
11,574 |
|
12,614 |
|
12,281 |
|||
|
Current Assets |
|||||||
|
Inventories |
1,444 |
1,138 |
1,481 |
||||
|
Construction contracts |
8,621 |
11,185 |
9,841 |
||||
|
Trade and other receivables |
35,356 |
44,059 |
48,656 |
||||
|
45,421 |
|
56,382 |
|
59,978 |
|||
|
Total Assets |
56,995 |
68,996 |
72,259 |
||||
|
Equity & Liabilities |
|||||||
|
Capital & Reserves attributable to equity holders of the Parent |
|||||||
|
Share capital |
980 |
980 |
980 |
||||
|
Capital redemption reserve |
20 |
20 |
20 |
||||
|
Retained earnings |
18,149 |
16,692 |
17,805 |
||||
|
19,149 |
17,692 |
18,805 |
|||||
|
Minority interest |
606 |
532 |
654 |
||||
|
19,755 |
18,224 |
19,459 |
|||||
|
Liabilities |
|||||||
|
Non-current Liabilities |
|||||||
|
Obligation under finance leases - due after one year |
533 |
1,216 |
785 |
||||
|
Provisions |
494 |
396 |
496 |
||||
|
Deferred tax |
65 |
110 |
65 |
||||
|
1,092 |
1,722 |
1,346 |
|||||
|
Current Liabilities |
|||||||
|
Trade & other payables |
32,679 |
43,320 |
45,972 |
||||
|
Current tax payable |
371 |
252 |
900 |
||||
|
Obligations under finance leases - due within one year |
928 |
1,139 |
1,018 |
||||
|
Bank overdrafts |
2,170 |
4,339 |
3,564 |
||||
|
36,148 |
49,050 |
51,454 |
|||||
|
Total Liabilities |
37,240 |
50,772 |
52,800 |
||||
|
Total Equity & Liabilities |
56,995 |
68,996 |
72,259 |
||||
UNAUDITED CONDENSED GROUP CASH FLOW STATEMENT
|
Six Months Ended 30 June |
Year Ended |
|||||
|
2009 |
2008 |
31 December 2008 |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Cash flows from operating activities |
||||||
|
Operating profit |
1,473 |
948 |
3,335 |
|||
|
Adjustments for: |
||||||
|
Depreciation of property, plant and equipment |
845 |
945 |
1,860 |
|||
|
(Gain) on disposal of property, plant and equipment |
(77) |
(100) |
(144) |
|||
|
(Decrease)/increase in provisions |
(2) |
(33) |
67 |
|||
|
Operating cash flows before movements in |
|
|
||||
|
working capital |
2,239 |
1,760 |
5118 |
|||
|
Decrease in inventories |
37 |
576 |
233 |
|||
|
Decrease/(Increase) in construction contracts |
1,220 |
(1,335) |
9 |
|||
|
Decrease/(increase) in receivables |
13,300 |
473 |
(4,124) |
|||
|
(Decrease)/increase in payables |
(13,293) |
(3,741) |
(1,089) |
|||
|
|
|
|
||||
|
Cash generated from/(used in) operations |
3,503 |
(2,267) |
147 |
|||
|
Income Tax paid |
(912) |
(882) |
(881) |
|||
|
Interest paid |
(106) |
(156) |
(460) |
|||
|
|
|
|||||
|
Net cash generated from/(used in) operating activities |
2,485 |
(3,305) |
(1,194) |
|||
|
Cash flows from investing activities |
||||||
|
Purchase of property, plant and equipment |
(41) |
(442) |
(997) |
|||
|
Proceeds on disposal of property, plant and equipment |
175 |
117 |
202 |
|||
|
Purchase of minority |
- |
(1,792) |
(1,792) |
|||
|
|
|
|||||
|
Net cash generated from/(used in) investing activities |
134 |
(2,117) |
(2,587) |
|||
|
Cash flows from financing activities |
||||||
|
Equity dividend paid |
(588) |
(588) |
(833) |
|||
|
Dividend paid to minority interests |
(100) |
(180) |
(180) |
|||
|
Repayments of obligations under finance leases |
(537) |
(650) |
(1,271) |
|||
|
Net cash (used in) financing activities |
(1,225) |
(1,418) |
(2,284) |
|||
|
Net Increase/(decrease) in cash and cash equivalents |
1,394 |
(6,840) |
(6,065) |
|||
|
(Bank overdrafts) and cash equivalents at 1 January 2009 |
(3,564) |
2,501 |
2,501 |
|||
|
(Bank overdrafts) and cash equivalents at 30 June 2009 |
(2,170) |
(4,339) |
(3,564) |
|||
|
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 Reporting Standards (IFRS’s) as adopted by the European Union that are effective for the full year ending 31 December 2009. They do not include all of the information required for full annual financial statements. These condensed consolidated half-yearly financial statements 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 2008. The comparative figures for the year ended 31 December 2008 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 237(2) or (3) of the Companies Act 1985.
|
|
|
|
|
|
The accounting policies adopted in the preparation of the condensed consolidated half-yearly financial statements to 30 June 2009 are consistent with the policies applied by the Group in its consolidated financial statements as at, and for the year ended 31 December 2008. The Group has considered amendments to existing standards and interpretations that are effective for years ending 31 December 2009 and is of the view that they have no impact on the half-yearly accounts.
|
|
|
|
|
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 2009
|
|
|
|
|
|
|
|
|
|||||
|
|
Civil
Engineering
|
|
Highways
|
|
Utilities
|
|
Building
|
|
Nomenca
|
|
Total
|
||
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
||
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||
|
External sales
|
26,982
|
|
6,101
|
|
15,305
|
|
1,898
|
|
20,977
|
|
71,263
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Result before
|
|
|
|
|
|
|
|
|
|
|
|
||
|
corporate expense
|
1,545
|
|
529
|
|
1,372
|
|
799
|
|
1,673
|
|
5,918
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Corporate expenses
|
(1,348)
|
|
(342)
|
|
(675)
|
|
(702)
|
|
(1,378)
|
|
(4,445)
|
||
|
Operating profit
|
197
|
|
187
|
|
697
|
|
97
|
|
295
|
|
1,473
|
||
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
(106)
|
||
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
1,367
|
||
|
Tax
|
|
|
|
|
|
|
|
|
|
|
(383)
|
||
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
984
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Six Months Ended 30 June 2008
|
|
|
|
|
|
|
|
|
|||||
|
|
Civil
Engineering
|
|
Highways
|
|
Utilities
|
|
Building
|
|
Nomenca
|
|
Total
|
||
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
||
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||
|
External sales
|
39,913
|
|
8,328
|
|
17,653
|
|
15,796
|
|
21,843
|
|
103,533
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Result before
|
|
|
|
|
|
|
|
|
|
|
|
||
|
corporate expense
|
1,723
|
|
580
|
|
109
|
|
1,090
|
|
1,675
|
|
5,177
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Corporate expenses
|
(1,217)
|
|
(406)
|
|
(499)
|
|
(916)
|
|
(1,191)
|
|
(4,229)
|
||
|
Operating
profit/(loss)
|
506
|
|
174
|
|
(390)
|
|
174
|
|
484
|
|
948
|
||
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
(156)
|
||
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
792
|
||
|
Tax
|
|
|
|
|
|
|
|
|
|
|
(238)
|
||
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
554
|
||
|
Segment assets
|
|
|
|
||||||
|
|
30 June
|
||||||||
|
|
2009
|
|
2008
|
||||||
|
|
£’000
|
|
£’000
|
||||||
|
Civil engineering
|
21,505
|
|
31,620
|
||||||
|
Highways
|
4,863
|
|
6,598
|
||||||
|
Utilities
|
12,198
|
|
13,984
|
||||||
|
|
38,566
|
|
52,202
|
||||||
|
Building
|
6,560
|
|
7,202
|
||||||
|
Nomenca
|
11,869
|
|
9,592
|
||||||
|
Total segment assets and consolidated total assets
|
56,995
|
|
68,996
|
||||||
|
|
|
|
|
||||||
|
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
|
||||||
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
||
|
|
£’000
|
|
£’000
|
|
£’000
|
|
£’000
|
||
|
Civil engineering
|
451
|
|
548
|
|
129
|
|
695
|
||
|
Highways
|
102
|
|
114
|
|
29
|
|
145
|
||
|
Utilities
|
256
|
|
243
|
|
74
|
|
307
|
||
|
Building
|
21
|
|
30
|
|
-
|
|
12
|
||
|
Nomenca
|
15
|
|
10
|
|
4
|
|
16
|
||
|
|
845
|
|
945
|
|
236
|
|
1,175
|
||
|
|
|
|
|
|
|
|
|
||
|
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 £20,788,000 (2008 : £31,906,000) were derived from a single external customer. These revenues are attributable to the Civil Engineering and Nomenca segments.
|
|||||||||
|
3.
|
Earnings per share
|
|||
|
|
The basic and diluted earnings per share are the same and have been calculated on profits of £932,000 (2008 : £470,000) and 9,800,000 shares in issue.
|
|||
|
|
|
|||
|
4.
|
Taxation
|
|||
|
|
In respect of the six months ended 30 June 2009, corporation tax has been provided at 28% (2008 : 30%) of the profit without deferment.
|
|||
|
|
|
|||
|
5.
|
Dividends
|
|||
|
|
Amounts recognised as distributions to equity holders in the half year:-
|
|||
|
|
|
Six Months to June
|
||
|
|
|
2009
|
|
2008
|
|
|
|
£’000
|
|
£’000
|
|
|
Final dividend for the year ended 31 December 2008 of 6p (2007 : 6p) per share
|
588
|
|
588
|
|
|
|
|
|
|
|
|
The Directors propose an interim dividend of 2.5p per share (2008 : 2.5p per share), total £245,000 (2008 : £245,000), which will be paid on 2 October 2009 to the shareholders on register on 11 September 2009.
|
|||
|
6.
|
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.
|
|||
|
|
|
|||
|
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.
|
|||
|
|
|
|||
|
|
Additionally, the Group has a 50% interest in a joint operation with Biwater Treatment Limited.
|
|||
|
|
|
|||
|
|
The condensed Group financial statements for the half year ended 30 June 2009 incorporate the following relating to the joint operation:-
|
|||
|
|
|
|||
|
|
|
Six Months to
|
|
Six Months to
|
|
|
|
30 June 2009
|
|
30 June 2008
|
|
|
|
|
|
|
|
|
Revenue
|
9,072
|
|
14,594
|
|
|
Expenses
|
8,181
|
|
13,604
|
|
|
Assets
|
3,574
|
|
5,591
|
|
|
Liabilities
|
3,574
|
|
5,591
|
|
|
|
|
|
|
|
8.
|
Contingent liabilities
|
|||
|
|
Euler Hermes Guarantee plc, Lloyds TSB and HCC International Insurance Co. Ltd have given Performance Bonds to a value of £5,168,032 (2008 : £7,323,798) on the Group’s behalf. These bonds have been made with recourse to the Group.
|
|||
|
|
|
|||
|
|
The Office of Fair Trading (OFT) has concluded its initial investigation into the construction industry and the Group is on their list of 112 companies under further investigation. Three outstanding allegations remain against the Group. A hearing was attended with the OFT in July 2008. The Group strongly refutes these allegations and the outcome is still pending.
|
|||
|
|
|
|||
|
9.
|
Seasonality
|
|||
|
|
The Group’s activities are not subject to significant seasonal variations.
|
|||
Related Shares:
NMCN.L