13th Aug 2015 07:00
13 August 2015
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 2015.
Highlights:-
Six Months Ended | Six Months Ended | ||||
30 June 2015 | 30 June 2014 | ||||
£'000 | £'000 | ||||
Revenue | 107,249 | 90,976 | |||
Profit Before Tax | 136 | 371 | |||
Total Comprehensive Income | 136 | 332 | |||
Earnings per Share | 1.34p | 3.27p | |||
Proposed Dividends | Nil | Nil |
o Revenue increased by 17.89% compared with H1 2014.
o Profit before tax decreased to £0.136 million (H1 FY14: £0.332 million).
o Significant £0.829 million loss in Utilities division (H1 FY14: £0.140 million profit).
o Current bank borrowings of £1.51 million (H1 FY14: £3.7 million)
For further information:-
| ||
Robert Moyle, Chairman | - | 01623 518812 |
North Midland Construction PLC | ||
Chairman's Statement
Chairman's Statement
It is gratifying to report a return to profitability for the half-year compared with the last full financial year result. A reported profit before tax of £0.13 million (H1 FY14 £0.37 million) was delivered on revenues increased by 17.9% to £107.25 million (H1 FY14 £90.98 million).
The civils division, now a stand-alone entity under the senior management of NMCNomenca has experienced ongoing problems with two legacy contracts, contributing to a loss of £0.24 million on revenue of £3.44 million. One contract will be concluded on site in mid September and the finalisation of contractual matters on the other is imminent. The underlying business is trading profitably and the current order book to be completed this financial year is £7.0 million. The division is primarily engaged in the power and industrial sectors, where opportunities are quite buoyant, however there is a requirement to secure more orders in the short term to achieve the yearly forecast. The current shortfall is circa £5 million, however tender opportunities remain positive and there is confidence further work will be secured before the year end.
The building division has delivered an encouraging performance with operating profitability of £0.14 million on revenue of £5.90 million. The current workload to be constructed this financial year is £13.40 million and contracts to the value of £6.0 million are expected to be awarded imminently. Orders received for completion in 2016 already total £8.5 million.
The building and civils divisions previously reported as one division, so comparative results are inapplicable.
Revenues in the highways division increased by 143.4% to £18.79 million (H1 FY14 £7.72 million) with operating profitability improving to £0.17 million from a loss in the comparable period last year (H1 FY14 £0.01 million loss). The highways division has experienced increased opportunities on the back of a proven track record, increased government expenditure and geographical expansion into the South West. The forecast revenues for 2015 will exceed current budgets and advanced orders for 2016 are £17.2 million.
The utilities division increased revenues by 20.4% to £13.24 million (H1 FY14 £11.0 million) but further losses on the BDUK contract for Carillion Telent resulted in an operating loss for the period of £0.83 million (H1 FY14 £0.14 million). The division has now terminated its contracts for Carillion Telent in the Lincolnshire, Shropshire and Yorkshire areas and has retrenched solely to the core East Midlands area, which is profitable. As announced at the Annual General Meeting, the division was recently successful in receiving the Virgin Media framework for works in the North West and Yorkshire and this contract has commenced satisfactorily. This, coupled with the existing frameworks, and the termination of the loss-making Carillion Telent contracts, is expected to lead to a return to profitability in the near future.
NMCNomenca has commenced on the AMP6 programme for Severn Trent Water and revenues increased marginally to £41.97 million (H1 FY14 £41.31 million). Operating profitability declined by 23.4% to £0.72 million (H1 FY14 £0.94 million). The results for the previous year included a major contribution from the E5 consortium engaged on the AMP5 capital programme for Severn Trent Water which has concluded. The division has recently been awarded a £64.0 million contract for the Elan Valley Aqueduct by Severn Trent Water in a joint venture with Barhale PLC and the multi-million project for the construction of a reservoir at Ambergate in conjunction with Laing O'Rourke is progressing well.
Nomenca increased revenues by 25.6% to £23.91 million (H1 FY14 £19.04 million) and operating profitability by 27.7% to £0.23 million (H1 FY14 £0.18 million). The subsidiary has been particularly successful in securing frameworks on the AMP6 programme and has recently been awarded the MEICA Direct Delivery Framework by Yorkshire Water. Commencement on the AMP6 programme nationally for Nomenca has been slow and the current order level for construction this year is £43.09 million, which is below our previous internal forecasts.
There was significant improvement in the half-year bank position at £1.51 million overdrawn (H1 FY14 £3.72 million overdrawn). This has been achieved despite a net outflow of cash in H1 due to the increased working capital requirement of the Group's increased revenues and the start-up costs associated with the new Virgin Media framework. Resolution of the remaining outstanding legacy contracts remains ongoing and progress is being made. Significant outstanding cash, most particularly in the major problematical building contract, continues to be withheld within these contracts.
The return to profitability is encouraging and the underlying trading position is progressive and in line with management expectations. Positive progress has been made in the resolution and settlement of the few remaining legacy contracts, but there is still potential risk in their final resolution. This coupled with the increased growth of the Group leads the Directors to adopt a prudent approach. Therefore, the payment of an interim dividend is considered to be inappropriate. The principal risks and challenges for the future are outlined above and remain as fully disclosed in the annual report to 31st December 2014.
Robert Moyle
Chairman
North Midland Construction PLC
13 August 2015
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30 June 2015 are shown below together with the unaudited Group results for the half year ended 30 June 2014 and the audited Group results for the year ended 31 December 2014.
Six Months Ended 30 June | Year Ended | ||||
2015 | 2014 | 31 December 2014 | |||
£'000 | £'000 | £'000 | |||
Revenue | 107,249 | 90,976 | 193,175 | ||
Other operating income | 75 | 36 | 36 | ||
107,324 | 91,012 | 193,211 | |||
Raw material and consumables | (15,900) | (17,268) | (34,747) | ||
Other external charges | (61,251) | (46,951) | (106,848) | ||
Employee costs | (26,814) | (23,608) | (48,919) | ||
Depreciation of property, plant & equipment | (929) | (871) | (1,689) | ||
Other operating charges | (2,242) | (1,907) | (3,854) | ||
Operating profit/(loss) | 188 | 407 | (2,846) | ||
Interest received | 1 | ||||
Finance costs | (52) | (36) | (125) | ||
Profit/(loss) before tax | 136 | 371 | (2,970) | ||
Tax (Note 4) | - | (39) | (21) | ||
Profit/(loss) for the period | 136 | 332 | (2,991) | ||
Other comprehensive income | - | - | - | ||
Total comprehensive income/(loss) for the period | 136 | 332 |
(2,991) | ||
Attributed to:- | |||||
Equity holders of the parent | 136 | 332 | (2,991) | ||
136 | 332 | (2,991) | |||
Earnings per share basic and diluted (Note 3) | 1.34p | 3.27p | (29.47p) | ||
Dividend per share (Note 5) | NIL | NIL | NIL | ||
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital | |||||||||
Share | Merger | Redemption | Retained | ||||||
Capital | Reserve | Reserve | Earnings | Total | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | |||||
Balance at 1 January 2014 | 1,015 | 455 | 20 | 10,467 | 11,957 | ||||
Profit and total comprehensive income for the period | - | - | - | 332 | 332 | ||||
Dividends paid | - | - | - | - | - | ||||
Balance at 30 June 2014 | 1,015 | 455 | 20 | 10,799 | 12,289 | ||||
(Loss) and total comprehensive income for the period |
- |
- |
- | (3,323) | (3,323) | ||||
Dividends paid | - | - | - | - | - | ||||
Balance at 31 December 2014 | 1,015 | 455 | 20 | 7,476 | 8,966 | ||||
Profit and total comprehensive income for the period | - | - | - | 136 | 136 | ||||
Dividends paid | - | - | - | - | - | ||||
Balance at 30 June 2015 | 1,015 | 455 | 20 | 7,612 | 9,102 |
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets as at 30 June 2015 and 30 June 2014 are shown below together with the audited Group Balance Sheet as at 31 December 2014.
30 June | 31 December | |||||||
2015 | 2014 | 2014 | ||||||
£'000 | £'000 | £'000 | ||||||
Assets | ||||||||
Non-Current Assets | ||||||||
Property, plant and equipment | 12,655 | 11,136 | 11,141 | |||||
Deferred tax asset | 82 | 103 | 82 | |||||
12,737 | 11,239 | 11,223 | ||||||
Current Assets | ||||||||
Inventories | 1,697 | 1,534 | 1,722 | |||||
Construction contracts | 16,162 | 19,573 | 12,838 | |||||
Trade and other receivables | 34,614 | 33,609 | 33,275 | |||||
Current income tax receivable | - | - | 13 | |||||
Cash and cash equivalents | - | - | 5,276 | |||||
52,473 | 54,716 | 53,124 | ||||||
Total Assets | 65,210 | 65,955 | 64,347 | |||||
Equity & Liabilities | ||||||||
Capital & Reserves attributable to equity holders of the Parent | ||||||||
Share capital | 1,015 | 1,015 | 1,015 | |||||
Merger reserve | 455 | 455 | 455 | |||||
Capital redemption reserve | 20 | 20 | 20 | |||||
Retained earnings | 7,612 | 10,799 | 7,476 | |||||
Total Equity | 9,102 | 12,289 | 8,966 | |||||
Liabilities | ||||||||
Non-current Liabilities | ||||||||
Obligation under finance leases - due after one year | 2,396 | 912 | 2,054 | |||||
Provisions | 344 | 270 | 329 | |||||
2,740 | 1,182 | 2,383 | ||||||
Current Liabilities | ||||||||
Trade & other payables | 50,269 | 47,862 | 51,453 | |||||
Current income tax payable | - | 6 | - | |||||
Obligations under finance leases - due within one year | 1,587 | 901 | 1,545 | |||||
Current bank borrowings | 1,512 | 3,715 | ||||||
53,368 | 52,484 | 52,998 | ||||||
Total Liabilities | 56,108 | 53,666 | 55,381 | |||||
Total Equity & Liabilities | 65,210 | 65,955 | 64,347 | |||||
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
The unaudited condensed Group statement of cash flows for the periods ended 30 June 2015 and 30 June 2014 are shown below together with the audited Group statement of cash flow for the year ended 31 December 2014.
Six Months Ended 30 June | Year Ended | |||||
2015 | 2014 | 31 December 2014 | ||||
£'000 | £'000 | £'000 | ||||
Cash flows from operating activities | ||||||
Operating profit | 188 | 407 | (2,846) | |||
Adjustments for: | ||||||
Depreciation of property, plant and equipment | 929 | 871 | 1,689 | |||
Gain on disposal of property, plant and equipment | (74) | (25) | (31) | |||
Increase in provisions | 15 | 28 | 87 | |||
Operating cash flows before movements in | ||||||
working capital | 1,058 | 1,281 | (1,101) | |||
Decrease/(increase) in inventories | 25 | (5) | (193) | |||
(Increase)/decrease in construction contracts | (3,324) | (4,908) | 151 | |||
Increase in receivables | (1,340) | (2,014) | (2,583) | |||
(Decrease)/increase in payables | (1,183) | (2,233) | 3,896 | |||
Cash (used in)/generated from operations | (4,764) | (7,879) | 170 | |||
Income Tax received | 13 | - | 20 | |||
Interest received | - | - | 1 | |||
Interest paid | (53) | (36) | (125) | |||
Net cash (used in)/generated from operating activities | (4,804) | (7,915) | 66 | |||
Cash flows from investing activities | ||||||
Purchase of property, plant and equipment | (1,093) | (267) | (763) | |||
Proceeds on disposal of property, plant and equipment | 90 | 33 | 46 | |||
Net cash used in financing activities | (1,003) | (234) | (717) | |||
Cash flows from financing activities | ||||||
Repayments of obligations under finance leases | (981) | (443) | 1,050 | |||
Net cash (used in)/generated from financing activities | (981) | (443) | 1,050 | |||
Net (decrease)/increase in cash and cash equivalents | (6,788) | (8,592) | 399 | |||
Cash and cash equivalents at 1 January 2015 | 5,276 | 4,877 | 4,877 | |||
(Current borrowings)/cash and cash equivalents at 30 June 2015 | (1,512) | (3,715) | 5,276 | |||
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 2014. 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 2014. The comparative figures for the year ended 31 December 2014 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 2015 are consistent with the policies applied by the Group in its consolidated financial statements as at, and for the year ended 31 December 2014. The Group has considered amendments to existing standards and interpretations that are effective for the year ending 31 December 2015 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 2014. | |
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 2014. | |
2. | Segment reporting |
Business segments 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
From 1 January 2015 the building and civil engineering division has been split in to two separate divisions, Building, and Civil Engineering due to the growth opportunities both divisions have. As the divisions were previously reported as one division, comparative results are inapplicable.
Segment revenue and profit |
Six Months Ended 30 June 2015 | ||||||||||||||
Building | Civil Engineering | Highways | Utilities | NMCNomenca | Nomenca | Total | ||||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||||
Revenue | ||||||||||||||
External sales | 5,897 | 3,442 | 18,790 | 13,244 | 41,971 | 23,905 | 107,249 | |||||||
Result before | ||||||||||||||
corporate expenses | 569 | 90 | 821 | (207) | 2,049 | 2,204 | 5,526 | |||||||
Corporate expenses | (426) | (328) | (655) | (622) | (1,331) | (1,976) | (5,338) | |||||||
Operating profit/(loss) | 143 | (238) | 166 | (829) | 718 | 228 | 188 | |||||||
Net finance costs | (52) | |||||||||||||
Profit before tax | 136 | |||||||||||||
Tax | - | |||||||||||||
Total comprehensive income for the period | 136 | |||||||||||||
Six Months Ended 30 June 2014 |
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| ||||||||||||||||
Building & Civil Engineering | Highways | Utilities | NMCNomenca | Nomenca | Total |
| ||||||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| ||||||||||
Revenue |
| |||||||||||||||
External sales | 11,921 | 7,712 | 10,995 | 41,311 | 19,037 | 90,976 |
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Result before |
| |||||||||||||||
corporate expenses | (488) | 382 | 447 | 2,281 | 1,914 | 4,536 |
| |||||||||
| ||||||||||||||||
Corporate expenses | (355) | (396) | (307) | (1,338) | (1,733) | (4,129) |
| |||||||||
| ||||||||||||||||
Operating profit/(loss) | (843) | (14) | 140 | 943 | 181 | 407 |
| |||||||||
Net finance costs | (36) |
| ||||||||||||||
Profit before tax | 371 |
| ||||||||||||||
Tax | (39) |
| ||||||||||||||
Total comprehensive income for the period | 332 |
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Segment assets | ||||||||||||||||
30 June | ||||||||||||||||
2015 | 2014 | |||||||||||||||
£'000 | £'000 | |||||||||||||||
Building | 12,441 | 22,608 | ||||||||||||||
Civil Engineering | 4,577 | - | ||||||||||||||
Highways | 7,279 | 6,018 | ||||||||||||||
Utilities | 17,629 | 16,028 | ||||||||||||||
NMCNomenca | 7,130 | 8,527 | ||||||||||||||
Nomenca | 16,154 | 12,774 | ||||||||||||||
Total segment assets and consolidated total assets | 65,210 | 65,955 | ||||||||||||||
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. The previous year's segment assets have been restated to show a more appropriate allocation across the segments, on a consistent basis with the current period. | ||||||||||||||||
Other segment information | ||||||||||||||||
Depreciation and | Additions to | |||||||||||||||
amortisation | non-current assets | |||||||||||||||
30 June | 30 June | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
£'000 | £'000 | £'000 | £'000 | |||||||||||||
Building | 66 | 142 | 174 | 175 | ||||||||||||
Civil Engineering | 38 | - | 102 | - | ||||||||||||
Highways | 210 | 94 | 555 | 115 | ||||||||||||
Utilities | 148 | 133 | 391 | 164 | ||||||||||||
NMCNomenca | 467 | 492 | 1,237 | 619 | ||||||||||||
Nomenca | - | 10 | - | - | ||||||||||||
929 | 871 | 2,459 | 1,073 | |||||||||||||
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 £39,105,000 (2014: £35,281,000) 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 profits of £136,000 (2014: profits of £332,000) and a weighted average number of shares in issue of 10,150,000 (2014: 10,150,000). | |||||||||
4. | Taxation | ||||||||
In respect of the six months ended 30 June 2015, the corporation tax effective rate was 21.5% (2014: 21.5%). A corporation tax provision has been included in relation to the taxable profits of Nomenca Limited. No provision has been made for the six months ended 30 June 2015 for any other Group taxable profits due to the bought forward tax losses within the group. | |||||||||
5. | Dividends | ||||||||
Amounts recognised as distributions to equity holders in the half year:- | |||||||||
Six Months to June | |||||||||
2015 | 2014 | ||||||||
£'000 | £'000 | ||||||||
Final dividend for the year ended 31 December 2014 of £Nil (2013: £Nil) per share. | - | - | |||||||
The Directors propose an interim dividend of £Nil (2014: £Nil) per share. | |||||||||
6. | Related parties | ||||||||
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 £6,437,232 (2014 : £3,835,907) 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 2014. | |||||||||
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 | |
D A Taylor | |
Finance Director |
13 August 2015
A copy of this interim report will be sent to all shareholders on 22 August 2015 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