23rd Aug 2013 08:45
CORRECTION. THIS RNS REPLACES THE ANNOUNCEMENT OF 7AM THIS MORNING. THE COMPANY CONFIRMS THE INTERIM DIVIDEND TO BE 1.0P. ALL OTHER INFORMATION REMAINS THE SAME.
23 August 2013
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
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 2013.
Highlights:-
Six Months Ended | Six Months Ended | ||||
30 June 2013 | 30 June 2012 | ||||
£'000 | £'000 | ||||
Revenue | 89,387 | 74,873 | |||
(Loss)/profit Before Tax | (480) | 115 | |||
Total Comprehensive Income | (369) | 86 | |||
(Loss)/earnings per Share | (3.64p) | 0.23p | |||
Proposed Dividends | 1.0p | 1.5p |
Revenue increased by 19% compared with previous year.
NMCNomenca has returned a profit of £0.87 on revenues of £37.29 million (2012: profit of £0.79 million on revenues of £26.0 million).
Significant £1.58 million loss in Building & Civil Engineering division (2012: loss of £0.67 million).
For further information:-
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Robert Moyle, Chairman | - | 01623 518812 |
North Midland Construction PLC
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CHAIRMAN'S STATEMENT
The result for the half year is a major disappointment with ongoing problems in the Building & Civil Engineering division (B & CE) negating the results of the remainder of the Group. A group loss of £0.48 million before tax was delivered on a Group revenues that increased by 19.4% year on year to £89.39 million. This compares with a profit of £0.12 million on revenues of £74.87 million in the previous year.
Major problems have been experienced within the B & CE division during the period, with the division recording a loss of £1.58 million (2012: £0.67 million) on a revenue of £16.81 million (2012: £13.08 million). Completion on the major problematical contract has still not been achieved and there were significant cost overruns on two other projects. The current market remains extremely competitive with the result that tendering failed to produce the required return.
Restructuring of the division had already been instigated and redundancy costs have been incurred. Further cost reduction measures have been implemented. The division is being scaled back to accord with current market conditions and the primary focus is to complete the major loss-making contract, which, as previously reported, will be the subject of a major contractual claim, which offers the opportunity of a potential significant recovery. Once this contract is completed, the division's performance will progress.
The NMCNomenca division has returned a profit of £0.87 million on revenues of £37.29 million, compared with £0.79 million and £26.00 million for the previous year respectively. The division is delivering increased revenues, due to the recently incorporated frameworks of Anglian Water, the Southern division for Severn Trent Water and a contract for Ostara in Slough. The division's performance and total turnkey capability is developing an enviable reputation in the water industry and should hold it in good stead for the AMP6 bidding process. The E5 consortium, which is undertaking a collection of major projects for Severn Trent Water, continues to progress and the overall prospects are encouraging. The division will deliver a return for the year in excess of budget, and the overall progress is very encouraging.
This is the first year that Nomenca, the mechanical and electrical subsidiary, will be reporting on a stand alone basis, with none of the revenue or profit emanating from NMCNomenca being repatriated into Nomenca. The six months results up to 30 June 2012 have been adjusted, so that this year's figures can be judged on a comparative basis. The subsidiary continues to progress on the back of robust expenditure in the water sector. Whilst revenue reduced by 9.4% to £19.77 million (2012: £21.83 million), profitability increased by 75.0% to £0.18 million (2012: £0.10 million). The majority of revenue is secured through frameworks and this year, on a proportional basis, it is weighted towards the second half of the year, hence the reduction in first half revenue compared with the previous year. The Nomenca subsidiary is on course to achieve its budget forecast for the year.
NMCNomenca and Nomenca are effectively the Group's water business and are able to serve that industry's requirements from design through construction and installation and ultimately onto service and maintenance. As a resource, they really need to be viewed as one entity, and in the future will be employing their combined capabilities with the aim to expand their business in the AMP6 programme, the procurement process for which is just commencing.
Due to senior management retirements and the requirement to further reduce the cost base, the Highways and Utilities divisions were merged at the start of the financial year, under the managing directorship of Geoff Poyzer. However, both divisions have continued to report on an individual segmental basis.
The Utilities section has benefited from increased expenditure by BT on the BDUK expansion and the commencement of work for the recently secured Project Maximus for Vodafone, although volumes on the latter have been slower than originally envisaged, as the programme period has been extended. Revenue increased by 13.7% to £9.52 million (2012: £8.37 million) with a return to a nominal profit of £4,000, compared with a loss of £0.22 million in the previous year.
The Highways section has suffered from a delay in the commencement of several projects and the liquidation of a client on a completed contract. However, revenue increased by 7.2% to £6.01 million (2012: £5.60 million), but profitability declined by 47.0% to £0.07 million (2012: £0.13 million). Revenue will increase in the second half and an improved performance is forecast.
There was a net inflow of cash, compared with 30 June 2012, of £4.27 million, although cash collection in certain areas remains both difficult and protracted, and the major problematical building contract is currently cash negative. Extended payment terms are becoming the norm, although the Group continues to operate well within its banking facilities.
The results are extremely disappointing, particularly in view of the increase in Group revenue. Restructuring to reduce the overall cost base is continuing, most particularly in the B & CE division. The cost of this, incurred in the first half year, totalled £0.12 million. The secured workload to be constructed in this financial year currently stands at £160 million and the Group is well represented across the construction sector, most particularly in the water sector. The market remains extremely competitive and challenging, but a return to profitability is forecast in the second half year, and accordingly the Directors feel it is appropriate to pay an interim dividend of 1.0p (2012: 1.5p), which will be paid on 27 September 2013 to the shareholders on the register on 6 September 2013. The principal risks and challenges for the future are outlined above and remain as fully disclosed in the annual report to 31 December 2012.
Robert Moyle
Chairman
North Midland Construction PLC
22 August 2013
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30 June 2013 are shown below together with the unaudited Group results for the half year ended 30 June 2012 and the audited Group results for the year ended 31 December 2012.
Six Months Ended 30 June | Year Ended | ||||
2013 | 2012 | 31 December 2012 | |||
£'000 | £'000 | £'000 | |||
Revenue | 89,387 | 74,873 | 168,928 | ||
Other operating income | 23 | 39 | 77 | ||
89,410 | 74,912 | 169,005 | |||
Raw material and consumables | (13,542) | (14,299) | (30,418) | ||
Other external charges | (52,365) | (38,122) | (92,695) | ||
Employee costs | (21,632) | (20,086) | (40,657) | ||
Depreciation of property, plant & equipment | (851) | (798) | (1,627) | ||
Other operating charges | (1,469) | (1,472) | (2,833) | ||
Operating (loss)/profit | (449) | 135 | 775 | ||
Interest received | 2 | 11 | 12 | ||
Finance costs | (33) | (31) | (77) | ||
(Loss)/profit before tax | (480) | 115 | 710 | ||
Tax (Note 4) | 111 | (29) | (174) | ||
(Loss)/profit for the period | (369) | 86 | 536 | ||
Other comprehensive income | - | - | - | ||
Total comprehensive (loss)/income for the period | (369) | 86 | 536 | ||
Attributed to:- | |||||
Non-controlling interest | - | 63 | 63 | ||
Equity holders of the parent | (369) | 23 | 473 | ||
(369) | 86 | 536 | |||
Earnings per share basic and diluted (Note 3) | (3.64p) | 0.23p | 4.75p | ||
Dividend per share (Note 5) | 3.00p | 3.00p | 4.50p | ||
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital | Non- | ||||||||||
Share | Merger | Redemption | Retained | Controlling | |||||||
Capital | Reserve | Reserve | Earnings | Interest | Total | ||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
Balance at 1 January 2012 | 980 | 20 | 17,268 | 573 | 18,841 | ||||||
Profit and total comprehensive income for the period | - | - | - | 23 | 63 | 86 | |||||
Dividends paid | - | - | - | (294) | (43) | (337) | |||||
Balance at 30 June 2012 | 980 | - | 20 | 16,997 | 593 | 18,590 | |||||
Profit and total comprehensive income for the period | - | - | - | 450 | - | 450 | |||||
Dividends paid | - | - | - | (152) | - | (152) | |||||
Acquisition of a non-controlling interest | - | - | - | (520) | (593) | (1,113) | |||||
Shares issued | 35 | 455 | - | - | - | 490 | |||||
Balance at 31 December 2012 | 1,015 | 455 | 20 | 16,775 | - | 18,265 | |||||
(Loss) and total comprehensive income for the period | - | - | - | (369) | - | (369) | |||||
Dividends paid | - | - | - | (304) | - | (304) | |||||
Balance at 30 June 2013 | 1,015 | 455 | 20 | 16,102 | - | 17,592 |
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets as at 30 June 2013 and 30 June 2012 are shown below together with the audited Group Balance Sheet as at 31 December 2012.
30 June | 31 December | ||||||
2013 | 2012 | 2012 | |||||
£'000 | £'000 | £'000 | |||||
Assets | |||||||
Non-Current Assets | |||||||
Property, plant and equipment | 10,408 | 10,734 | 10,622 | ||||
Deferred tax asset | 77 | 140 | 77 | ||||
10,485 | 10,874 | 10,699 | |||||
Current Assets | |||||||
Inventories | 1,683 | 1,476 | 1,496 | ||||
Construction contracts | 18,930 | 12,373 | 16,768 | ||||
Trade and other receivables | 31,762 | 33,380 | 32,403 | ||||
Cash and cash equivalents | 2,430 | - | 5,065 | ||||
54,805 | 47,229 | 55,732 | |||||
Total Assets | 65,290 | 58,103 | 66,431 | ||||
Equity & Liabilities | |||||||
Capital & Reserves attributable to equity holders of the Parent | |||||||
Share capital | 1,015 | 980 | 1,015 | ||||
Merger reserve | 455 | - | 455 | ||||
Capital redemption reserve | 20 | 20 | 20 | ||||
Retained earnings | 16,102 | 16,997 | 16,775 | ||||
17,592 | 17,997 | 18,265 | |||||
Non-controlling interest | - | 593 | - | ||||
Total Equity | 17,592 | 18,590 | 18,265 | ||||
Liabilities | |||||||
Non-current Liabilities | |||||||
Obligation under finance leases - due after one year | 787 | 771 | 877 | ||||
Provisions | 242 | 470 | 350 | ||||
1,029 | 1,241 | 1,227 | |||||
Current Liabilities | |||||||
Trade & other payables | 45,943 | 35,509 | 45,898 | ||||
Current income tax payable | 7 | 33 | 115 | ||||
Obligations under finance leases - due within one year | 719 | 890 | 926 | ||||
Current borrowings | - | 1,840 | - | ||||
46,669 | 38,272 | 46,939 | |||||
Total Liabilities | 47,698 | 39,513 | 48,166 | ||||
Total Equity & Liabilities | 65,290 | 58,103 | 66,431 | ||||
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
The unaudited condensed Group statement of cash flows for the periods ended 30 June 2013 and 30 June 2012 are shown below together with the audited Group statement of cash flow for the year ended 31 December 2012.
Six Months Ended 30 June | Year Ended | |||||
2013 | 2012 | 31 December 2012 | ||||
£'000 | £'000 | £'000 | ||||
Cash flows from operating activities | ||||||
Operating (loss)/profit | (449) | 135 | 775 | |||
Adjustments for: | ||||||
Depreciation of property, plant and equipment | 851 | 798 | 1,627 | |||
(Gain) on disposal of property, plant and equipment | (23) | (39) | (77) | |||
(Decrease) in provisions | (108) | (109) | (229) | |||
Operating cash flows before movements in | ||||||
working capital | 271 | 785 | 2,096 | |||
(Increase)/decrease in inventories | (187) | 75 | 55 | |||
(Increase)/decrease in construction contracts | (2,162) | (186) | (4,581) | |||
Decrease/(increase) in receivables | 641 | (1,316) | (339) | |||
Increase/(decrease) in payables | 45 | (9,070) | 1,319 | |||
Cash (used in) operations | (1,392) | (9,712) | (1,450) | |||
Income Tax paid | - | - | - | |||
Interest received | 2 | 11 | 12 | |||
Interest paid | (33) | (31) | (77) | |||
Net cash (used in) operating activities | (1,423) | (9,732) | (1,515) | |||
Cash flows from investing activities | ||||||
Purchase of property, plant and equipment | (423) | (558) | (634) | |||
Proceeds on disposal of property, plant and equipment | 48 | 39 | 99 | |||
Purchase of non-controlling interest | - | - | (623) | |||
Net cash (used in) investing activities | (375) | (519) | (1,158) | |||
Cash flows from financing activities | ||||||
Equity dividend paid | (304) | (294) | (446) | |||
Dividend paid to non-controlling interest | - | (43) | (43) | |||
Repayments of obligations under finance leases | (533) | (481) | (1,002) | |||
Net cash (used in) investing activities | (837) | (818) | (1,491) | |||
Net (decrease) in cash and cash equivalents | (2,635) | (11,069) | (4,164) | |||
Cash and cash equivalents at 1 January 2013 | 5,065 | 9,229 | 9,229 | |||
Cash and cash equivalents/(current borrowings) at 30 June 2013 | 2,430 | (1,840) | 5,065 | |||
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 2012. 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 2012. The comparative figures for the year ended 31 December 2012 are not the Group's statutory accounts for that financial year. Those accounts have been reported upon by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor 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 Board regularly reviews financial statements, cash balances and forecasts and the Directors confirm that they consider the Group has adequate resources to continue to operate for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the condensed half yearly financial statements. | |
The accounting policies adopted in the preparation of the condensed consolidated half-yearly financial statements to 30 June 2013 are consistent with the policies applied by the Group in its consolidated financial statements as at, and for the year ended 31 December 2012. The Group has considered amendments to existing standards and interpretations that are effective for the year ending 31 December 2013 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 2012. | |
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 2012. | |
2. | Segment reporting |
Following the reorganisation in January 2013 when the trade from the NMCNomenca was treated as a separate division rather than being split equally between the Nomenca subsidiary and the Building & Civil Engineering division, the business segment reporting format reflects the Group's management and internal reporting structure. The six months ended 30 June 2012 have been adjusted accordingly.
Business segments The Group is comprised of the following business segments:-
- 'PLC' - comprising building and civil engineering, highways, utilities and NMCNomenca divisions - Nomenca - mechanical and electrical engineering products and services
Segment revenue and profit |
Six Months Ended 30 June 2013 | |||||||||||
Building & Civil Engineering | Highways | Utilities | NMCNomenca | Nomenca | Total | ||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
Revenue | |||||||||||
External sales | 16,807 | 6,005 | 9,523 | 37,287 | 19,765 | 89,387 | |||||
Result before | |||||||||||
corporate expenses | (726) | 343 | 156 | 2,307 | 1,264 | 3,344 | |||||
Corporate expenses | (853) | (273) | (152) | (1,433) | (1,082) | (3,793) | |||||
Operating (loss)/profit | (1,579) | 70 | 4 | 874 | 182 | (449) | |||||
Net finance costs | (31) | ||||||||||
(Loss) before tax | (480) | ||||||||||
Tax | 111 | ||||||||||
Total comprehensive income for the period | (369) | ||||||||||
Six Months Ended 30 June 2012 | |||||||||||
Building & Civil Engineering | Highways | Utilities | NMCNomenca | Nomenca | Total | ||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
Revenue | |||||||||||
External sales | 13,076 | 5,602 | 8,372 | 25,998 | 21,825 | 74,873 | |||||
Result before | |||||||||||
corporate expenses | (15) | 453 | (48) | 1,862 | 1,343 | 3,595 | |||||
Corporate expenses | (659) | (321) | (171) | (1,070) | (1,239) | (3,460) | |||||
Operating profit/(loss) | (674) | 132 | (219) | 792 | 104 | 135 | |||||
Net finance costs | (20) | ||||||||||
Profit before tax | 115 | ||||||||||
Tax | (29) | ||||||||||
Total comprehensive income for the period | 86 | ||||||||||
Segment assets | ||||||||
30 June | ||||||||
2013 | 2012 | |||||||
£'000 | £'000 | |||||||
Building & Civil Engineering | 12,170 | 11,036 | ||||||
Highways | 4,348 | 4,728 | ||||||
Utilities | 6,895 | 7,067 | ||||||
NMCNomenca | 26,998 | 21,942 | ||||||
Nomenca | 14,879 | 13,330 | ||||||
Total segment assets and consolidated total assets | 65,290 | 58,103 | ||||||
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 | Additions to | |||||||
amortisation | non-current assets | |||||||
30 June | 30 June | |||||||
2013 | 2012 | 2013 | 2012 | |||||
£'000 | £'000 | £'000 | £'000 | |||||
Building & Civil engineering | 202 | 193 | 159 | 232 | ||||
Highways | 114 | 83 | 57 | 100 | ||||
Utilities | 73 | 124 | 90 | 148 | ||||
NMCNomenca | 448 | 385 | 353 | 461 | ||||
Nomenca | 14 | 13 | - | 18 | ||||
851 | 798 | 659 | 959 | |||||
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. | ||||||||
Information about major customer | ||||||||
Revenues of approximately £32,256,000 (2012: £27,620,000) were derived from a single external customer. These revenues are attributable to the NMCNomenca and Nomenca segments. | ||||||||
3. | Earnings per share | ||||||||
The basic and diluted earnings per share are the same and have been calculated on losses of £369,000 (2012: profit of £23,000) and the weighted average number of shares in issue of 10,150,000 (2012: 9,800,000) shares in issue. | |||||||||
4. | Taxation | ||||||||
In respect of the six months ended 30 June 2013, corporation tax has been provided at 23.25% (2012: 24.5%) of the loss without deferment. | |||||||||
5. | Dividends | ||||||||
Amounts recognised as distributions to equity holders in the half year:- | |||||||||
Six Months to June | |||||||||
2013 | 2012 | ||||||||
£'000 | £'000 | ||||||||
Final dividend for the year ended 31 December 2012 of 3p (2011: 3p) per share | 304 | 294 | |||||||
The Directors propose an interim dividend of 1.0p per share (2012: 1.5p) total £101,500 (2012: £152,250), which will be paid on the 27 September 2013 to the shareholders on the register on 6 September 2013. | |||||||||
6. | 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. | |||||||||
7. | Contingent liabilities | ||||||||
Euler Hermes Guarantee plc, Lloyds TSB, Aviva Insurance Limited and HCC International Insurance Co. Ltd have given Performance Bonds to a value of £4,774,793 (2012 : £5,337,879) on the Group's behalf. These bonds have been made with recourse to the Group. | |||||||||
8. | Seasonality | ||||||||
The Group's activities are not subject to significant seasonal variations. | |||||||||
9. | 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 2012. | |||||||||
10. | 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 IAS 34 and the ASB's 2007 statement of Half Year Reports, 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. | ||||||||
R Moyle | |
Chairman | |
M S Garratt | |
Finance Director |
23 August 2013
A copy of this interim report will be sent to all shareholders on 23 August 2013 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). The interim report will also shortly be available for inspection at the UK Listing Authority's National Storage Mechanism website: http://www.hemscott.com/nsm.do.
Related Shares:
NMCN.L