Thursday, May 28, 2009

North Midland Construction £420,000 profit in Q1

North Midland Construction (NMC) reports that workload in the construction sector “is at an all-time low” Despite that, NMC’s first quarter trading delivered a £420,000 pre-tax profit on turnover of £36m.

In Q1 2008 there was a ВЈ970,000 profit figure although this did include a ВЈ300,000 exceptional item. Turnover in those three months was ВЈ51m.

Robert Moyle, chairman, told shareholders at today’s annual meeting: “Share prices in the construction sector declined dramatically in 2008, and it was small consolation to note in a report undertaken by Contract Journal that your company's share was the second best performer in the sector in 2008.”

NMC is sub-divided into three operating divisions: civil engineering, highways and utilities.

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North Midland Construction £420,000 profit in Q1


Experiencing “an unprecedented downturn” in revenue in the first quarter due to deferred expenditure by the water companies, a major sector for the division, and the postponement of several other non-water selected projects.

A loss of ВЈ190,000 was run up on a turnover of ВЈ13m in Q1.

In the same period last year, the division made a ВЈ290,000 profit on a ВЈ20m turnover.

Workload currently stands at 52% of budget, but orders are only booked once secured. An estimated ВЈ10m of water-related orders are currently being negotiated under the framework agreements and should be delivered during the current financial year.

The results for the previous two years have been affected by two problematic contracts and their lack of resolution has left the division “extremely cash negative”.

Slow progress is being made and some payments have been forthcoming.

Highways division

First-quarter profit of ВЈ52,000 on a revenue of ВЈ3m represents a decline in profit of 64%.

Current secured workload stands at ВЈ10m which is 56% of the year's budget.

Public sector tender opportunities remain at reasonable levels.

Utilities division

Successful in securing framework contracts for a range of telecommunications providers and operators. This has provided an element of insulation against the downturn.

For the first quarter, the division produced a profit of ВЈ360,000 on a revenue of ВЈ8m, compared with 2008 figures of ВЈ160,000 and ВЈ10m respectively.

Moyle commented: “The group target is to grow the business organically at the rate of 10% per annum. In the present economic climate, that is not going to happen.

“Therefore, a review of the structure of the business has been undertaken to implement cost-cutting measures.”

A redundancy programme has been drawn up to reduce overheads by 12.5%. Both site staff and operatives are affected.