Leading civil engineering and building specialists North Midland Construction plc has reported a return to profitability in the first quarter of 2014 – with a secured workload of £160m to be constructed this year.
The Nottingham group’s annual general meeting heard that despite a number of outstanding legacy contracts in the building and civil engineering division, the board remained cautiously optimistic about the coming year.
An Interim Management Statement reported 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.
The Group’s Chairman, Robert Moyle, said: “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 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.”
Once again, NMCNomenca 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. This 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.
Meanwhile, the separate 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.
Around 90% of Nomenca’s revenue is generated from frameworks and it is currently engaged on twenty one different projects throughout the country. This includes those for fabrication and the manufacture of chemical dosing equipment. Currently 69% of the required revenue to achieve the forecast has been secured.
The main problems experienced in the building and civil engineering division were responsible for the previous year’s major loss, the AGM heard.
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, with a reduction in the risk profile of future projects to be tendered for.
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 and 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.
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 considered 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.
Mr Moyle continued: “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.”
Meanwhile, several ambitious initiatives are under way to develop and enhance both the technical skills and leadership capabilities of employees.
“Construction remains an extremely competitive industry,” Mr Moyles said. “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.
“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.”
