RNS Number : 2301C
North Midland Construction PLC
29 August 2008
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
29 August 2008
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 2008.
Highlights from the results and the Chairman*s Statement:-
Six Months Ended Six Months Ended
30 June 2008 30 June 2007
£'000 £'000
Revenue 103,533 107,259
Profit before Tax 792 1,978
Net Profit after Tax 554 1,385
Earnings per Share 4.80p 11.74p
Proposed Dividends 2.5p 2.5p
· Overall profitability adversely affected by the economic downturn.
· North Midland Building Limited results affected by the cancellation of projects.
· Nomenca Limited maintaining profitability.
· Full year will fall below expectations.
· Interim dividend 2.5p (2007 * 2.5p)
For further information:-
Robert Moyle, Chairman - 01623 518812
North Midland Construction PLC
CHAIRMAN*S STATEMENT
The second quarter has delivered a disappointing result, as economic conditions begin to affect Group performance and most particularly that
of North Midland Building Limited. Group revenue for the half year declined to £103.5 million from £107.3 million for the comparable period
last year, with profitability reduced to £0.79 million from £1.98 million. The results include non-recurring losses of £0.97 million
incurred in the closure of the Telent/BT contract in the Eastern Region.
A marginally improved, but unsatisfactory, performance was delivered by the parent company with overall profits up by 67.5% to £0.14 million
on revenue of £67.14 million (2007 - £71.1 million), in spite of the Utilities Division returning a loss of £0.39 million, due to the
closure of the aforementioned contract. Due to decreasing volumes and increased operating costs, this company decided to terminate the
contract and forego the extensions offered. The Highways and Civil Engineering Divisions delivered results comparable to those of last year.North Midland Building Limited, however, was severely affected by the economic downturn, with the cancellation of projects and profitability
fell to £0.17 million from £1.4 million in the previous year, on revenue of £14.55 million (2007 - £21.4 million). Nomenca, the M & E
subsidiary, performed well and produced a profit of £0.48 million on revenue of £21.8 million (2007 - £19.5 million), a result which was in
line with forecast.
As ratified at the Annual General Meeting, the purchase of the minority interest in North Midland Building Limited was completed in this
period.
Cash flow in the first half showed a substantial outflow of £6.84 million, resulting in a closing overdraft of £4.34 million, which is well
within the Group*s bank facilities. Of the outflow, £1.79 million related to the purchase of the minority interest in North Midland Building
Limited, £0.77 million to the payment of dividends and £0.9 million in taxation liabilities with the balance largely representing an
increase in working capital. In the light of the current economic climate, certain clients are extending payment terms wherever possible,
whereas we are endeavouring to maintain payments to our supply chain in accordance with our normal terms.
As reported in my previous statement, negotiations continue with regard to the contractual problems on the schemes at Fiddlers Ferry Power
Station and Halifax Sewerage Treatment Works, but it is too early to predict what the eventual outcome on these contracts will be. The
current anticipated outturn remains the same as at 31 December 2007
The overall economic picture is becomingly increasingly difficult, with a general decline in tendering opportunities, project cancellations
due to funding problems and rapidly increasing costs, most particularly in energy and materials. However, the Group order book is still
adequate and to a certain extent insulated by the number of framework contracts currently secured, although volumes on these are being
lowered. There is a need to enhance the size of the order book in the immediate future to achieve targets. The overall cost base has been
reviewed and, sadly, a redundancy programme has been implemented.
In view of the economic conditions currently prevailing, the result for the full year will not meet the current market forecast of £5
million. Based on current trading and orders on hand, the result for the full year is anticipated to fall short of the result achieved in
2007. However, the Group balance sheet remains strong and the Group would expect to exit the current economic downturn in a stronger
relative market position.
In order to maintain a return to shareholders, the Board recommends an interim dividend of 2.5p (2007 * 2.5p) per share, which will be paid
on 3 October 2008 to the shareholders on the register on 12 September 2008.
R Moyle
Chairman
North Midland Construction PLC
UNAUDITED CONDENSED GROUP INCOME STATEMENT
The unaudited Group results for the half year ended 30 June 2008 are shown below together with the unaudited Group results for the half year
ended 30 June 2007 and the audited Group results for the year ended 31 December 2007.
Six Months Ended 30 June Year Ended
2008 2007 31 December 2007
£'000 £'000 £'000
Revenue 103.533 107,259 211,294
Other operating income 115 217 276
103,648 107,476 211,570
Raw material and consumables (19,881) (17,332) (35,482)
Other external charges (56,114) (64,763) (127,639)
27,653 25,381 48,449
Employee costs (24,081) (20,984) (40,637)
Depreciation of property, plant & (945) (808) (1,695)
equipment
Other operating charges (1,679) (1,554) (2,816)
Group operating profit 948 2,035 3,301
Finance costs (156) (57) (181)
Profit before tax 792 1,978 3,120
Tax (Note 3) (238) (593) (928)
Profit for the period 554 1,385 2,192
Attributed to:-
Minority interest 84 234 571
Equity holders of the parent 470 1,151 1,621
554 1,385 2,192
Earnings per share (Note 2) 4.80p 11.74p 16.54p
Dividend per share (Note 4) 6.00p 6.00p 8.50p
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six Months ended 30 June 2008 Six Months to Year Ended
30 June 31 December
2007 2007
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 2007 17,810 1,259 19,069 17,935 17,935
Profit for the half year 470 84 554 1,385 2,192
Dividends (588) (180) (768) (743) (1,058)
Purchase of minority interest - (631) (631) - -
Balance at 30 June 2008 17,692 532 18,224 18,577 19,069
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 2008.
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets at 30 June 2008 and 30 June 2007 are shown below together with the audited Group Balance Sheet
at 31 December 2007.
30 June 31 Dec
2008 2007 2007
£'000 £'000 £'000
Non-Current Assets
Goodwill (Note 5) 1,267 106 106
Property, plant and equipment 11,347 9,195 11,135
12,614 9,301 11,241
Current Assets
Inventories 1,138 1,296 1,714
Construction contracts 11,185 9,543 9,850
Trade and other receivables 44,059 43,643 44,532
Cash and cash equivalents - - 2,501
56,382 54,482 58,597
Total Assets 68,996 63,783 69,838
Equity & liabilities
Equity attributable to equity holders of the Parent
Share capital 980 980 980
Capital redemption reserve 20 20 20
Retained earnings 16,692 16,585 16,810
17,692 17,585 17,810
Minority interest 532 992 1,259
Total equity 18,224 18,577 19,069
Non-current liabilities
Obligation under finance leases* due 1,216 952 1,041
after one year
Provisions 396 452 429
Deferred tax 110 70 110
1,722 1,474 1,580
Current liabilities
Trade & other payables 43,320 39,461 47,061
Current tax payable 252 600 895
Obligations under finance leases- 1,139 1,015 1,233
due within one year
Bank overdrafts 4,339 2,656 -
49,050 43,732 49,189
Total liabilities 50,772 45,206 50,769
Total equity & liabilities 68,996 63,783 69,838
UNAUDITED CONDENSED GROUP CASH FLOW STATEMENT
Six Months Ended 30 June Year Ended
2008 2007 31 December2007
£'000 £'000 £'000
Cash flows from operating
activities
Operating profit 948 2,035 3,301
Adjustments for:
Depreciation of property, 945 808 1,695
plant and equipment
(Gain) on disposal of (100) (29) (108)
property, plant and equipment
(Decrease) in provisions (33) (9) (32)
Operating cash flows before
movements in
working capital 1,760 2,805 4856
Decrease/(increase) in 576 (250) (668)
inventories
(Increase) in construction (1,335) (2,534) (2,841)
contracts
Decrease/(increase) in 473 (10,798) (11,687)
receivables
(Decrease)/increase in (3,741) 2,462 10,062
payables
Cash (used in) operations (2,267) (8,315) (278)
Tax paid (882) (963) (963)
Interest paid (156) (57) (181)
Net cash (used in) from (3,305) (9,335) (1,422)
operating activities
Cash flows from investing
activities
Purchase of property, plant and equipment (443) (655) (2,509)
Proceeds on disposal of property, plant and 117 35 120
equipment
Purchase of minority (1,791) - -
Net cash (used in) investing (2,117) (620) (2,389)
activities
Cash flows from financing
activities
Equity dividend paid (588) (588) (833)
Dividend paid to minority (180) (155) (225)
interests
Repayments of obligations (650) (610) (1,282)
under finance leases
Net cash (used in) financing (1,418) (1,353) (2,340)
activities
Net (decrease) in cash and cash equivalents (6,840) (11,308) (6,151)
Cash and cash equivalents at 1 2,501 8,652 8,652
January 2008
(Bank overdrafts)/cash and (4,339) (2,656) 2,501
cash equivalents at30 June
2008
NOTES
1. Basis of preparation
The unaudited condensed Group financial statements for the half year ended 30 June 2008 included in this report have been
prepared in accordance with the International Financial Reporting Standards (IAS34 **Interim Financial Reporting*).
The unaudited condensed Group financial statements were approved for issue by the Board on 28 August 2008. The full year
figures for 2007 included in this report do not constitute statutory accounts for the purposes of Section 240 of the Companies Act 1985. A
copy of the Company*s statutory accounts for the year ended 31 December 2007 has been delivered to the Registrar of Companies. The
independent auditors* report on those accounts was unqualified.
The unaudited condensed Group financial statements have been prepared on the basis of the accounting policies set out in the
Annual Report and Accounts 2007.
2. Earnings per share
The basic and diluted earnings per share are the same and have been calculated on profits of £470,000 (2007 - £1,151,000)
and 9,800,000 shares in issue.
3. Taxation
In respect of the six months ended 30 June 2008, corporation tax has been provided at 30% (2007 * 30%) of the profit without
deferment.
4. Dividends
During the half year ended 30 Jun 2008 the company paid the previous period final dividend of 6.0p per share, total £588,000
(half year ended 30 June 2007 6.0p per share, total £588,000).
5. Goodwill
At the Extraordinary General Meeting held on 29 May 2008 an ordinary resolution to purchase the 15% minority interest in the
subsidiary North Midland Building Limited for £1,730,202 was approved.
The purchase price, together with related costs, over the fair value of assets acquired, gave rise to goodwill of
£1,161,000. All consideration and related costs were satisfied in cash.
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.
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.
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 2008 incorporate the following relating to the
joint operation:-
Six Months to 30 June Year Ended
31 December
2008 2007 2007
£*000 £*000 £*000
Revenue 14,594 - 11,038
Expenses 13,604 - 10,300
Assets 5,591 - 1,093
Liabilities 5,591 - 1,093
7. Contingent Liabilities
The Office of Fair Trading (OFT) has concluded its initial investigation into the construction industry and this 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 has defended its position and the result is still pending.
8. Seasonality
The Group*s activities are not subject to significant seasonal variations.
A copy of this circular will be sent to all shareholders on 29 August 2008 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).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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