TIDMNMD
RNS Number : 5840N
North Midland Construction PLC
10 August 2017
10 August 2017
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
NORTH MIDLAND CONSTRUCTION PLC
UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS
North Midland Construction PLC (the "Company"), the UK provider
of Power, Construction, mechanical and electrical services to
public and private organisations, announces interim results for the
six months ended 30 June 2017.
Highlights:-
Six Months Six Months
Ended Ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Revenue 135,134 129,580
----------- -----------
Profit Before
Tax 1,220 512
Total Comprehensive
Income 982 476
----------- -----------
Earnings per
Share 9.67p 4.69p
----------- -----------
Proposed Dividends 3.0p 1.5p
----------- -----------
o Revenue increased by 4.3% compared with H1 2016.
o Profit before tax increased by 138.3% to GBP1.22 million (H1
FY16: GBP0.51 million).
o Return to profitability of GBP0.03 million in the
Telecommunications division (H1 FY16: loss of GBP1.56 million).
o Cash of GBP7.93 million an increase of 175.4% (H1 FY16:
GBP2.88 million), inclusive of one off early receipt of GBP1.63
million (H1 FY16: GBPNIL).
o Increased proposed dividend to 3.0p (H1 FY16: 1.5p)
John Homer - Chief Executive - Commented:
"These results demonstrate the continued strategic advancement
made in the business during the trading period. Our focus on
enhanced margins and cash generation is beginning to become
apparent and is anticipated to continue going forwards.
We continue to invest significantly in the development of our
talent pool as we believe that our people are the overarching
differentiator and the driver for our continued success.
The outlook for our future trading remains positive and provides
the opportunity to further improve the earnings from our
operations. The Board is anticipating enhanced like-for-like
revenue growth in the second half of the year, coupled with an
enhanced operating margin percentage."
For further information:-
John Homer, Chief
Executive
Daniel Taylor, Group
Finance Director
01623 518008
North Midland Construction
PLC
CHAIRMAN'S STATEMENT
It is pleasing to report that the momentum generated in the
first quarter, reported at the Annual General Meeting on 18 May
2017 has been maintained. A half-year profit before tax of GBP1.22
million (H1 FY16: GBP0.51 million) was generated from revenues
which increased by 4.3% to GBP135.13 million (H1 FY16: GBP129.58
million).
The half-year result for Construction was affected by delays in
secured projects getting underway, so both revenue and
profitability were impacted. Revenue declined by 3.4% to GBP11.20
million (H1 FY16: GBP11.59 million) and profitability by 68.5% to
GBP78,000 (H1 FY16: GBP248,000). The aforementioned projects are
now well underway and the remaining order book to be completed this
year currently stands at GBP23.50 million giving confidence that
the full year's targets will be achieved. Secured revenues for 2018
currently are GBP15.00 million.
Power has suffered from a shortage of orders with revenues in
the period declining by 46.0% to GBP7.47 million (H1 FY16: GBP13.83
million) and has consequently produced a loss of GBP151,000 (H1
FY16: GBP127,000 profit). A return to profitability is forecast for
the second half-year.
Highways, on the back of resilient infrastructure expenditure,
has increased revenues by 6.3% to GBP21.30 million (H1 FY16:
GBP20.04 million) and profitability by 18.8% to GBP0.26 million (H1
FY16: GBP0.22 million). Secured workload to date for the remainder
of the year is circa GBP16 million.
The Telecommunications market remains buoyant and revenues
increased by 16.6% to GBP18.04 million (H1 FY16: GBP15.47 million)
and a return to profitability was achieved, amounting to GBP32,000
(H1 FY16: GBP1.56 million loss). The return to profitability is
encouraging, but the turnaround and reorganisation is not yet
complete. A cautious perspective to the year-end out-turn is being
adopted.
The Water sector continues to be a major market for the Group
and several major projects are currently being undertaken either
directly or in collaboration with partners. The most recent being
the award of a new joint venture infrastructure contract for Severn
Trent Water on the Birmingham Resilience Project worth in excess of
GBP100 million. The AMP6 cycle is now well underway and
consequently revenues escalated by 12.3% to GBP77.13 million (H1
FY16: GBP68.65 million). However, due to a cautious perspective
being adopted on the out-turn of several newly commenced projects
combined with the initial start-up costs of these projects,
profitability declined by 30.3% to GBP1.11 million (H1 FY16:
GBP1.59 million). Confidence is high that our internal forecast for
the year will be achieved.
The resolution of the outstanding legacy contract is still
ongoing, but progressing slowly. The Directors are striving to seek
a satisfactory resolution.
The improved performance has resulted in a significant
enhancement of the half-year bank position, albeit that this has
been inflated due to a major one-off early receipt. Current cash at
30 June 2017 was GBP7.93 million (H1 FY16: GBP2.88 million).
As a result of increased revenues emanating from both the
Birmingham Resilience Project award and a robust construction
market, the results for the year to 31 December 2017 are expected
to be ahead of management expectations. The Board has the
confidence, therefore, to propose a doubling of the interim
dividend to 3.0p per share (H1 FY16: 1.5p per share). The dividend
will be paid on 15 September 2017 to shareholders on the register
at 18 August 2017.
Robert Moyle
Chairman
North Midland Construction PLC
10 August 2017
UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
The unaudited condensed Group results for the half year ended 30
June 2017 are shown below together with the unaudited Group results
for the half year ended 30 June 2016 and the audited Group results
for the year ended 31 December 2016.
Six Months Ended
30 June Year Ended
31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Revenue 135,134 129,580 250,489
Other operating income 133 219 325
--------- --------- ------------
135,267 129,799 250,814
Raw material and consumables (22,838) (22,007) (39,291)
Other external charges (73,048) (75,286) (143,564)
Employee costs (33,799) (28,403) (58,738)
Depreciation of property,
plant & equipment (1,489) (1,186) (2,400)
Other operating charges (2,768) (2,294) (4,580)
--------- --------- ------------
Operating profit 1,325 623 2,241
Finance costs (105) (111) (179)
--------- --------- ------------
Profit before tax 1,220 512 2,062
Tax (Note 4) (238) (36) 572
--------- --------- ------------
Profit for the period 982 476 2,634
Other comprehensive
income - - -
--------- --------- ------------
Total comprehensive
income for the period 982 476 2,634
========= ========= ============
Attributed to:-
Equity holders of
the parent 982 476 2,634
--------- --------- ------------
982 476 2,634
========= ========= ============
Earnings per share
basic and diluted
(Note 3) 9.67p 4.69p 25.95p
Dividend per share
(Note 5) 3.0p 1.5p 1.5p
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Capital
Share Merger Redemption Retained
Capital Reserve Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2016 1,015 455 20 8,727 10,217
Profit and total
comprehensive
income for the
period - - - 476 476
Dividends paid - - - - -
-------- -------- ----------- --------- --------
Balance at 30
June 2016 1,015 455 20 9,203 10,693
Profit and total
comprehensive
income for the
period - - - 2,158 2,158
Dividends paid - - - (152) (152)
Balance at 31
December 2016 1,015 455 20 11,209 12,699
Profit and total
comprehensive
income for the
period - - - 982 982
Dividends paid - - - (303) (303)
-------- -------- ----------- --------- --------
Balance at 30
June 2017 1,015 455 20 11,888 13,378
======== ======== =========== ========= ========
UNAUDITED CONDENSED GROUP BALANCE SHEET
The unaudited condensed Group Balance Sheets as at 30 June 2017
and 30 June 2016 are shown below together with the audited Group
Balance Sheet as at 31 December 2016.
30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Assets
Non-Current Assets
Property, plant and
equipment 14,975 13,011 13,651
Deferred tax asset 1,201 705 1,411
16,176 13,716 15,062
-------- -------- ------------
Current Assets
Inventories 1,950 1,964 2,065
Construction contracts 18,048 15,801 19,165
Trade and other receivables 40,943 39,433 30,705
Cash and cash equivalents 7,925 2,878 11,405
-------- -------- ------------
68,866 60,076 63,340
-------- -------- ------------
Total Assets 85,042 73,792 78,402
======== ======== ============
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 11,888 9,203 11,209
-------- -------- ------------
Total Equity 13,378 10,693 12,699
======== ======== ============
Liabilities
Non-current Liabilities
Obligation under
finance leases
- due after one year 2,703 2,004 1,785
Provisions 394 394 394
3,097 2,398 2,179
-------- -------- ------------
Current Liabilities
Trade & other payables 66,048 58,626 61,145
Current income tax
payable 219 54 194
Obligations under
finance leases
- due within one
year 2,300 2,021 2,185
68,567 60,701 63,524
-------- -------- ------------
Total Liabilities 71,664 63,099 65,703
-------- -------- ------------
Total Equity & Liabilities 85,042 73,792 78,402
======== ======== ============
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
The unaudited condensed Group statement of cash flows for the
periods ended 30 June 2017 and 30 June 2016 are shown below
together with the audited Group statement of cash flows for the
year ended 31 December 2016.
Six Months Ended Year
30 June Ended
31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating profit 1,325 623 2,241
Adjustments for:
Depreciation of property,
plant and equipment 1,489 1,185 2,400
Gain on disposal of
property, plant and
equipment (130) (215) (317)
Increase in provisions - 33 33
Operating cash flows
before movements in
working capital 2,684 1,626 4,357
Decrease in inventories 115 371 270
Decrease/(increase)
in construction contracts 1,117 1,736 (1,628)
(Increase)/decrease
in receivables (10,238) (8,039) 690
Increase in payables 4,903 2,040 4,557
Cash (used in)/generated
from operations (1,419) (2,266) 8,246
Income tax received - 21 78
Interest paid (105) (111) (61)
--------- -------- ------------
Net cash (used in)/generated
from operating activities (1,524) (2,356) 8,263
--------- -------- ------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (444) (477) (1,303)
Proceeds on disposal of
property, plant and equipment 132 353 475
Net cash used in financing
activities (312) (124) (828)
--------- -------- ------------
Cash flows from financing
activities
Equity dividends paid (303) - (152)
Repayments of obligations
under finance leases (1,341) (1,263) (2,381)
Interest payable under
finance leases - - (118)
--------- -------- ------------
Net cash used in financing
activities (1,644) (1,263) (2,651)
Net (decrease)/increase
in cash and cash equivalents (3,480) (3,743) 4,784
Cash and cash equivalents
at 1 January 2017 11,405 6,621 6,621
--------- -------- ------------
Cash and cash equivalents
at 30 June 2017 7,925 2,878 11,405
========= ======== ============
1. Basis of preparation
The unaudited condensed Group 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 (IFRSs) as adopted by the European Union
that are effective for the full year ending 31
December 2016. 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 2016. The
comparative figures for the year ended 31 December
2016 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 unaudited
condensed Group half yearly financial statements.
The accounting policies adopted in the preparation
of the unaudited condensed Group half-yearly financial
statements to 30 June 2017 are consistent with
the policies applied by the Group in its consolidated
financial statements as at, and for the year ended
31 December 2016. The Group has considered amendments
to existing standards and interpretations that
are effective for the year ending 31 December
2017 and is of the view that they have no impact
on the unaudited condensed Group half-yearly accounts,
except for as noted below with IFRS 15 'Revenue
from Contracts with Customers'.
The preparation of unaudited condensed Group 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 unaudited condensed Group 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 2016.
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 2016.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 introduces a single, principles based,
five-step model to measuring and recognising revenue
from contracts with customers, based on the transfer
of control of goods and services to customers.
It replaces the separate models for goods, services
and construction contracts currently included
in IAS 18 'Revenue', IAS 11 'Construction Contracts',
and several revenue-related interpretations. IFRS
15 will be adopted by the Group with effect from
1 January 2018.
The Group is continuing to undertake its assessment
of the impact of IFRS 15, through a review of
existing major contracts. The quantitative impact
of the initial application of IFRS 15 is not known
or reasonably estimable at the time of preparation
of these interim financial statements.
2. Segment reporting
Business segments
The Group is composed of the following operating
markets which are conducted in the UK and are
effectively market sectors:
-- Construction
-- Power
-- Highways
-- Water
-- Telecommunications
The Group manages its operating segments' trading
performance and working capital by monitoring
operating profit and centrally manages Group taxation,
capital structure and expenditure including net
equity and net debt.
Segment revenue and profit
Six Months Ended
30 June 2017
Construction Power Highways Telecoms Water Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External
sales 11,201 7,468 21,297 18,039 77,129 135,134
============= ======== ========= ========= ======== ========
Result
before
corporate
expenses 699 409 1,234 943 5,811 9,096
Corporate
expenses (621) (560) (975) (911) (4,704) (7,771)
Operating
profit/(loss) 78 (151) 259 32 1,107 1,325
============= ======== ========= ========= ========
Net finance
costs (105)
--------
Profit
before
tax 1,220
Tax (238)
--------
Total comprehensive income
for the period 982
========
Six Months Ended
30 June 2016
Construction Power Highways Telecoms Water Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External
sales 11,593 13,827 20,038 15,469 68,653 129,580
============= ======== ========= ========= ======== ========
Result
before
corporate
expenses 910 640 821 (852) 5,323 6,842
Corporate
expenses (662) (513) (603) (707) (3,734) (6,219)
Operating
profit/(loss) 248 127 218 (1,559) 1,589 623
============= ======== ========= ========= ========
Net finance
costs (111)
--------
Profit
before
tax 512
Tax (36)
--------
Total comprehensive income
for the period 476
========
Segment assets
30 June
2017 2016
GBP'000 GBP'000
Construction 8,765 11,464
Power 12,261 6,703
Highways 14,714 15,048
Telecommunications 21,911 17,081
Water 27,391 23,496
Total segment assets and consolidated
total assets 85,042 73,792
======== ========
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.
Other segment information
Depreciation Additions
and to
amortisation non-current
assets
30 June 30 June
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Construction 154 124 290 163
Power 103 148 194 194
Highways 293 215 552 281
Telecommunications 248 166 467 217
Water 691 532 1,300 696
1,489 1,185 2,803 1,551
========= ======== ======== ========
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 GBP52,346,000 (2016:
GBP55,483,000) were derived from a single external
customer. These revenues are attributable to the
Power and Water segments.
3. Earnings per share
The basic and diluted earnings per share are the
same and have been calculated on profits of GBP982,000
(2016: profits of GBP476,000) and a weighted average
number of shares in issue of 10,150,000 (2016:
10,150,000).
4. Taxation
In respect of the six months ended 30 June 2017,
the corporation tax effective rate was 19.5% (2016:
20%). A corporation tax provision has been included
in relation to the taxable profits of the company.
5. Dividends
Amounts recognised as distributions to equity
holders in the half year:-
Six Months
to June
2017 2016
GBP'000 GBP'000
Final dividend for the year ended 31 303 -
December 2016 of GBP3.0p (2015: GBPNil)
per share.
======== ========
The Directors propose an interim dividend of 3.0p
(2016: 1.5p) per share, total GBP305,000 (2016:
GBP152,000), which will be paid on 15 September
2017 to the shareholders on the register at 18
August 2017.
6. Related parties
The Group's related parties are key management
personnel who are the executive directors, non-executive
directors and divisional managers.
The Company previously advised that on 29 March
2017, SPARK Advisory Partners Limited ("SPARK"),
the Company's sponsor (in respect of this matter
only), notified the Financial Conduct Authority
(the "FCA") of a breach of the Listing Rules in
relation to the related party transactions. SPARK
also notified the FCA that the Company has a "controlling
shareholder" (being the Moyle family and its associates)
for the purposes of the Listing Rules in respect
of which there is no agreement in place as required
by Listing Rule 9.
The Company has now received a formal response
from the FCA in respect of these breaches of the
Listing Rules. The FCA's review has now been concluded
and they do not intend to take any further action
in relation to these matters at the present time.
The basis of the FCA's decision was due to the
following confirmations having been made:
1. SPARK has confirmed to the FCA that the transactions
entered into between the Company and Mr R Moyle
were fair and reasonable as far as the shareholders
of the Company were concerned; and
2. SPARK has confirmed to the FCA that agreements,
as required by LR 9.2.2AR(2)(a), have been put
in place between the Company, Mr R Moyle and the
Moyle family trusts
7. Contingent liabilities
Lloyds Bank PLC, Aviva Insurance Limited and HCC
International Insurance Co. Ltd have given Performance
Bonds to a value of GBP9,360,000 (2016 : GBP6,521,000)
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 2016.
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.
J Homer
Chief Executive
D A Taylor
Group Finance
Director
10 August 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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