Result of AGM

North Midland Construction PLC ("the Group")

Results of AGM

The Group is pleased to announce that all that all resolutions were duly passed at the Group's Annual General Meeting held earlier today.

At the Annual General Meeting the Group's Chairman, Robert Moyle, made the following statement:

"On 19 May an Interim Management Statement was issued reporting a first quarter profit of £234,000 on a revenue decreased by 1.5% to £44.5 million over the comparable first quarter last year.

This return to profitability is extremely gratifying and whilst the Group still has its problems, most particularly the resolution of problematical legacy contracts within the building & civil engineering (B&CE) division, progress is being made and overall market conditions are improving. The general upturn in construction activity is still predominantly being driven by the housing sector, but this has a secondary impact on both highways and utilities expenditure, where the Group is a beneficiary.

The main problems experienced in the B&CE division were responsible for the previous year's major loss. As previously reported, the division has been entirely restructured under new management and whilst the resolution of the legacy contracts continue to impact, there is an underlying return to profitability. In the quarter a loss of £228,000 was delivered, compared with a £482,000 loss for the previous year. Revenue declined by 39.2% to £5.97 million from £9.82 million. Future concentration is upon the power, general non-highway civil engineering and building sectors. The risk profile of future projects to be tendered for has been reduced. The division has a successful framework for WPD Networks in the power sector and new clients, such as East Midlands Housing Association and the Diocese of Southwell have recently been secured. A £2.3 million project for Tata Steel at Stocksbridge is currently under construction. 64% of the required revenue to achieve this year's budget has already been secured.

The highways and utilities division has experienced a slow start to the year, with revenue falling below the forecast, albeit showing an increase of 6.8% over the previous year's depressed figure, at £8.13 million. This has resulted in a loss for the period of £142,000, compared with a loss of £158,000 in 2013. Management, however, is confident that the full year will be profitable as revenues escalate. A spate of recent awards in the highways sector for Bradford MDC and Barnsley & Wakefield MBCs, amongst others, means that 93% of this year's budgeted revenue has already been secured, alongwith a further £6 million of contracts expected to be awarded in the near future.

The utilities side of the division is predominantly engaged on frameworks for clients such as Carillion/Telent, BT, Vodafone, KCom and Electricity North West. Volumes on these frameworks can fluctuate so, therefore, the recent award of a £4.0 million contract by City Fibre Holdings for a new network in Peterborough, £3.8 million of which should be constructed this financial year is excellent. Provided that the forecasted revenues on the frameworks contracts are fulfilled, the utilities side of the division has already 90% of its budgeted revenue in place.

Once again, NMCNomenca has delivered a strong performance producing a profit increased by 7.0% to £456,000 on a revenue increased by 19.5% to £21.02 million. The division undertakes frameworks for both Severn Trent and Anglian Water and associated water related schemes for other clients. NMCNomenca has consistently been delivering high level KPIs for its clients and testament of this was the award of the AMP6 programme by Severn Trent Water. This will provide continuity of work and employment for a further five years. The division has developed its capability and expertise to provide a fully integrated capability of design, construction, procurement and installation. This concept has proved to be attractive to clients and the next key driver must be further development of the model to maximise the opportunities in AMP7 in five to six years' time. Good visibility of the future expenditure programme has been made available and preparatory work has already commenced on the Severn Trent Water AMP6 programme. To date this year, firm orders have been received for 67% of the required revenue. Completion of the E5 programme for Severn Trent Water, for which NMCNomenca has a 25% share of the construction consortium, is now circa 85% and the projected outturn remains encouraging.

The Nomenca subsidiary has delivered a promising first quarter result with profitability escalating by 41.0% to £148,000 on a revenue reduced by 8.9% to £9.37 million. Circa 90% of Nomenca's revenue is generated from frameworks and it is currently engaged on twenty one different frameworks throughout the country. This includes those for fabrication and the manufacture of chemical dosing equipment, which are also benefiting from high levels of current expenditure by the water companies. Currently 69% of the required revenue to achieve the forecast has been secured. The network of regional offices are providing a high level of client focused customer service and a key element of the strategy for the growth of Nomenca is to capitalise on the further opportunities available in AMP6. To achieve this, particular alliances have been formed with other companies to bid for work. The percentage of mechanical and electrical installation over civil engineering construction increases in each successive AMP, due to technological change and the simple fact that the structures and pipework last longer than the equipment. To secure future growth it is essential, therefore, that the potential of Nomenca and NMCNomenca are maximised, as they have both developed a strong position in the market place.

The green shoots of economic recovery are now starting to appear and the Group needs to ensure that it has in place the correct processes to maintain, develop and attract employees, at all levels, of the right calibre to sustain growth. We are justifiably proud of our emphasis on core values and this has held us in good stead over the last few difficult years. The ethos of a family company where individuals matter has still been retained.

Several ambitious initiatives are underway to develop and enhance both the technical skills and leadership capabilities of the employees. Succession management plans and improved flexible working schemes are being introduced. Close ties with both selected universities and colleges and the apprenticeship scheme have been maintained. Currently 48 No. young people are engaged on either undergraduate or further education courses and 19 No. on apprenticeships. We were delighted that this year Simon Reeve, a twenty four year old from Mansfield who works in NMCNomenca, was awarded the Construction News 2014 Specialist Awards Apprentice of the Year. Quote "The standard of entrants in this category was exceptional. Winner Simon Reeve impressed the judges for several reasons, not least his passion and dedication to even the smallest aspects of his role. Simon is a great ambassador for North Midland Construction".

A high proportion of training days expended in the construction industry are driven by legislation and this is particularly true this year with the imminent imposition of new rules for drivers emanating from the EU. However, there is also a constant drive to improve the skill sets and performance of the employees. Thus, 823 No. training days were undertaken in the first quarter.

Health & Safety and Environmental performance of the highest level are of paramount importance and an enviable culture of awareness and behaviour has been engendered over the past few years. All the data demonstrates that the Group continues to outperform the industry. The Group has set itself the ambitious target of zero RIDDORS, so it is sad to report 1 No. in Nomenca to date this year. However, in recognition of this high level of performance achieved, the Group has recently been the recipient of the British Safety Council International Safety Award with distinction, of which there were only 43 No. worldwide awards this year. 5 No. ROSPA Gold Awards have also been received across the Group to date this year. We are hopeful too of some environmental awards in the near future. Significant advances have been made in the area of Supply Chain Management and this is a key driver for the business going forward. One of the challenges, is for the supply chain to attain parity of performance with the Group's own workforce, particularly in the area of Health & Safety.

Construction remains an extremely competitive industry and the pre-qualification process to be selected for inclusion upon tender lists is particularly onerous. It is paramount, therefore, that the Group is constantly improving and updating its systems and processes and is up to speed with the latest technological advances. To ensure that this is the case, an executive management board has been created to firstly identify and then incorporate a strategy to implement the necessary processes within the Group. For example, the Government is pushing very hard for the industry to implement Business Information Modelling (BIM). Currently, the Group is behind the major companies in the industry in this area, but a programme has been instigated to address the situation.

The Group is actively engaged with the communities within its operating areas, both on an ad hoc basis and with Business in the Community. The CSR report documents the commitments and achievements.

There is a desire to broaden and expand the scope of the involvement to embrace community action with leadership training for employees. Thus, a three year partnership to provide training and support has been launched with Brunts Academy in Mansfield under the Business in the Community (BITC) "Business Class" scheme. There is a definite need to encourage more young people into engineering as a profession and this partnership will provide an excellent forum to promote engineering as an attractive career. Further collaborations with BITC, working in deprived communities, are being considered as a leadership training tool.

The maintenance of cash flow is an ongoing problem with extended payment terms becoming the norm coupled with the obviously highly detrimental impact of the major problematical B&CE projects. The settlement of final accounts and resolution of contractual claims continues to be a protracted process. Supply chain pressures, particularly in the utilities division, where to ensure small sub contractors survival, more favourable payment terms have to be agreed than those prescribed under the main contract, also affect cash flow. The cash position is closely monitored and in spite of the aforementioned pressures, the Group continues to operate within its facilities.

The problems in the B&CE division have been well documented and were the contributors to last year's major loss. One major contract in particular has had a significant impact on the last three years' results, due to time and consequent cost overruns. The physical work on site is nearly complete, but practical completion has still to be granted. Contractually, the situation is extremely complex and a very capable team of external advisors have been employed.

Once practical completion has been secured, the final account needs to be finalised and submitted and this should occur in the autumn. Resolution will then be pursued.

The failure to pay a final dividend for the year ending 31 December 2013 was the prudent approach to take. However, your Board is extremely disappointed that it had to take this action as shareholder return and value is a key issue. The restoration of the dividend as soon as possible is of paramount importance. The Group has returned to profitability in the first quarter and a secured workload to be constructed this year of £160 million, is promising and represents 83.7% of the budgeted figure. In spite of the fact that resolution of certain legacy contracts from the B&CE division remain outstanding, the Board is cautiously optimistic for the year.

Finally, therefore, may I take this opportunity to thank all the shareholders for their continued support for the Group during these challenging times and all the employees for their continued loyalty and commitment."

Contacts:-

North Midland Construction PLC 01623 515 008

Robert Moyle, Chairman

Dan Taylor, Finance Director

N + 1 Singer 0113 388 4789

Richard Lindley