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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nth.Mid.Cons | LSE:NMD | London | Ordinary Share | GB0006452857 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 530.00 | 510.00 | 550.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMNMD
RNS Number : 0926B
North Midland Construction PLC
31 March 2017
NORTH MIDLAND CONSTRUCTION PLC
FINAL RESULTS
North Midland Construction PLC ("the Company" or "the Group" or NM Group"), the UK provider of civil engineering, building, mechanical and electrical services to public and private organisations, announces its final results for the year ended 31 December 2016.
Highlights from the results:-
Hot Features
Premium
Year ended Year ended
31 December 31 December
2016 2015
GBP'000 GBP'000
Revenue 250,489 217,612
Operating profit 2,241 847
Unadjusted profit before tax 2,062 606
Adjusted profit before tax* 5,912 4,447
Total comprehensive profit for
the year 2,634 1,251
Earnings per share 25.95p 12.32p
Interim dividend per share 1.5p NIL
Final dividend per share (proposed) 3.0p NIL
* Before charges relating to legacy contracts. Legacy contracts are construction contracts entered into at the height of the recession, before 31 December 2013, and which carried a high commercial and contracted risk. These contracts have negatively impacted the Group's income statement in 2013 and subsequent years.
For further information:-
John Homer, Chief Executive - 01623 515008 Daniel Taylor, Finance Director - 01623 515008
Financial Highlights
-- Operating profit up in the year to GBP2.24 million (increase of 164.6%) -- Revenue increased to GBP250.49 million (increase of 15.11%).
-- Underlying profit before tax, excluding legacy contracts, increased to GBP5.91 million (increase of 32.9%).
-- Secured workload for 2017 at circa GBP225 million (2015 Secured workload for 2016 - GBP181 million), which equates to circa 80% of 2017 budgeted revenue.
-- Re-established an interim (1.5p) and proposed a final (3.0p) dividend payable.
-- Cash position remains strong. Year-end balance of GBP11.41 million (2015 GBP6.62 million, (increase of 72.3%).
John Homer - Chief Executive - Commented:
"These results demonstrate the considerable strategic advancement made in the business over the last year. Progress is being made to strengthen the quality of the service that we provide to our customers. We continue to receive positive feedback on our operational performance from across our stakeholder base.
There are positive signs of continued growth in our chosen market sectors. Our strategy is focused on realising the potential that exists for us to prosper through careful selection and execution of the work that we take on. Our forward order book is at 80% of this year's budgeted turnover with a healthy pipeline of future opportunities visible.
Our people are the overarching differentiator and the driver for our continued success. We will maintain our investment in the development of our talent pool.
The outlook for our future trading remains positive and provides the opportunity to further improve the earnings from our operations."
OUR OPERATING AND FINANCIAL REVIEW
Overview of 2016
This year has been a period of strengthening the business in preparation for a sustainable growth in quality of earnings and respectable dividend yields. Further significant investment has been made in implementing governance controls to manage risk and into the development of our people to meet the increasing demands of our customers for a high-quality service.
The group is now well positioned to take advantage of the increase in infrastructure spending plans that prevail.
Group Structure
Our operational activities are divided into six operating divisions working in five distinct market sectors (our segments). Each segment has a clear focused offering to the customers that they serve. These divisions have the skills and experience to meet the needs of the customers and work effectively in these markets. This allows them to provide expert contribution and innovation to achieve added value to the work streams.
Overall co-ordination of our activities is carried out through the Executive Administration Board (EAB) which is chaired by the Chief Executive. Membership consists of the Directors of the divisions and the central services functions.
The overarching purpose of this body is to ensure consistency of best practice and to drive performance improvement across all of our activities.
Group Financial Performance
The growth in turnover of 15.11% to GBP250.49 million (2015: GBP217.61 million) is encouraging and is borne from our vision of growing revenues in 'Our' chosen markets with our repeat and framework clients. It is also very encouraging to see the level of new customers and enquiries in 2016 achieved through the quality of customer experience NM Group deliver.
Although not at the level the Board finds acceptable, the operating profit of GBP2.24 million (2015: 0.85 million) is a significant increase on the previous year. The impact of the Legacy contracts has once again reduced the net margin return to shareholders as highlighted above.
The confidence of the Board in the Group continuing to report periods of profitability has led to the full recognition of the previous years' losses as a deferred tax asset. This has been the contributing factor on the current tax credit of GBP0.57 million (2015: 0.65 million).
The increased performance and recognition of the brought forward losses has meant the total comprehensive income for the year has more than doubled to GBP2.63 million (2015: GBP1.25 million) and in turn the earnings per share increased to 25.95p (2015: 12.32p).
It is therefore with great pleasure that the Board is proposing a restoration of the final dividend at 3.0p, taking the total dividend for the year to 4.5p. In the current period the total dividend for the year is covered 5.8 times (2015: N/A) by the total comprehensive income for the year.
The board anticipate an improving performance for 2017 and beyond.
Health and Safety
Unfortunately, we have seen an increase in our Accident Incident rate due to the number of RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995) incidents during the year which is disappointing for the Group. These incidents have not shown any particular trend in cause or type other than the challenges faced by our industry as a whole as a consequence of the increase in demand for suitable labour. Corrective action was immediately taken to address any specific issues in the divisions concerned. We continue to focus on this as the subject of utmost priority with ongoing awareness and training programmes being provided.
These incidents all occurred in the first seven months of the year and since then we have seen a marked improvement in our performance.
To complement the traditional policing approach to health and safety we have embarked on a Behavioural Culture approach with representatives from across the business being trained and acting as advocates. This is to encourage people to think about the approach to inherent hazards that they come across in a much more proactive and conscious way. It is expected that this programme will further enhance our overall performance in this field.
People
There is no doubt that our people and our culture are the largest influence in the way that we serve our customers and ultimately to the overall success of the business. During the year we recruited a total of 413 new employees to the group. Against the backdrop of a very competitive market for resources we have managed to hold a steady position on our employee stability ratio. We continue to invest heavily in the development of our people across the complete spectrum of skills and experience. Our training and development academy approach continues to be refined and is delivering the results that are required. Our leadership across the business is clear that we constantly need to put people at the top of the agenda in order to achieve the best results.
Segment Performance
We continue to maintain our strong position of market leadership in the water sector. Both turnover and margin growth has been achieved and great potential exists for further progress. Our customers in this sector include Severn Trent Water, United Utilities, South West Water and Yorkshire Water. Notable project carried out in the period are the Elan Valley tunnel and the Ambergate reservoir both for Severn Trent. Investment is being made in our design capability, off-site manufacture and our product supply offering. Preparations are underway for the AMP7 renewal cycle which will come to the market in the next two years. We are well positioned to take advantage of this potential stream of work to fuel our future growth.
The Construction division has performed well in the year. We are now in a period of consolidation to ensure that we have the correct people and management systems in place to continue with this success. Notable projects undertaken in the year include the completion of the Allen House student accommodation scheme in the centre of Leicester. The division is well placed for further controlled growth in the regional building market.
Our activities in the power sector have achieved an improvement in performance over the year. Work continues to be carried out on our Western Power Distribution framework and key projects for Alstom and Siemens. Growth potential exists for the services that we provide into this market on a national basis.
Our Highways division has continued to improve performance over the year. Notable schemes completed include the Leeds to Bradford Cycle Superhighway and the Bristol Western relief road improvements. We have been successful in securing a place on a number of notable framework arrangements including Highways England Area 7 and Lincolnshire County Council.
The Utilities division has undergone considerable restructuring and change following several years of unsatisfactory performance. A new management structure is in place and relationships with all of the customers have been reviewed. Notable works have been carried out for Virgin Media on both their regular and strategic expansion programmes. The market is very strong in this sector with significant spending plans in place across the whole country. The performance of this division is under careful scrutiny to ensure that the changes made achieve the desired results and achieve an acceptable margin return.
Legacy
Legacy contracts are construction contracts entered into at the height of the recession, before 31 December 2013, and which carried a high contractual and commercial risk. These contracts have negatively impacted the Group's income statement in 2013 and subsequent years. As at 31 December 2016, there is only one legacy contract remaining.
In the year to 31 December 2016, the total loss before tax recognised on legacy contracts was GBP3.85 million (2015: GBP3.84 million). As at 31 December 2015, onsite works were still ongoing and therefore there was uncertainty over costs to complete and a further loss was recognised in 2016. However, during the year the Group completed all onsite works for the one remaining legacy contract, therefore removing any further uncertainty around costs to fulfil the contract.
Contract revenue on the one remaining legacy contract has been recognised based on the prudent best estimate of the Directors as at 31 December 2016 of the amount recoverable from the client, with an amount outstanding included with construction contract assets. The Group is and will be pursuing claims with the client for sums greater that the carrying value and is in negotiations to settle this balance. The Directors have sought to make the estimate as precise as possible by reflecting the views of independent quantum and legal experts who were appointed by the Directors for their ability, qualifications and experience in this field.
The independent quantum and legal experts, in conjunction with management, considered a number of factors when making their assessment, such as contractual terms, work performed, claims for variations, submissions for extensions of time, claims for loss and expense and expected time frames in which settlement in likely.
Whilst the Directors are making every effort to seek a swift resolution to the matter, they are committed to achieving the best possible result for the Group. The ultimate settlement of this matter may take in excess of 12 months to achieve.
Group Financial Position
It is very pleasing to report that our key strategic focus around driving cash is evident in the increase in the year end cash balance of GBP11.41 million (2015: GBP6.62 million). The Group has integrated further visibility for the divisions highlighting the importance of cash and improved discipline around cash collection and upfront agreement of contractual terms.
This has meant that despite the 15.11% increase in revenue the Group has reduced the average credit period taken by its customers to 33 days (2015: 41 days) and the inflow of cash to GBP0.69 million (2015: GBP1.88 million). This inflow is due to trade and other receivables reducing to GBP30.71 million (2015: GBP31.40 million). The average credit period taken on credit purchases has also reduced to 52 days (2015: 60 days) due to shorter terms being offered to maintain the best supply chain and achieve the most commercial pricing. The inflow of cash of GBP4.56 million (2015: GBP5.12 million) due to the increase in trade and other payables to GBP61.15 million (2015: GBP56.59 million) is also due to the increase in revenue. The Group ensures it has a sustainable working capital mix for all contracts across all segments.
It is also pleasing to report that the net cash has increased to GBP7.43 million (2015: GBP2.39 million) which is due to the increase in cash above and a reduction in finance lease borrowings. The net investment during the year on fixed assets increased to GBP1.30 million (2015: GBP1.03 million) as a result of the Group's growth.
The investment in capital assets increased during the year with the closing net book value of GBP13.65 million (2015: GBP12.78 million), which again is down to the required growth and the company strategy to purchase equipment where possible rather than expense through operating leases.
Outlook
The UK construction industry is struggling to keep up with the demand to maintain the existing infrastructure and the need for investment to support future economic growth. The group has established positions in these markets and is well situated to take advantage of the potential for further growth.
A significant proportion of our 2017 turnover has already been secured and it is expected that the balance will be achieved from carefully selected projects during the first half of this year.
We remain confident in in the outlook and expect the positive progress achieved to continue into 2017 and beyond. Key successes will continue in water and improvement will be seen in the other divisions. The strategic focus in utilities will enhance the performance of the group in the short term.
Construction
Overall segment performance
Within the construction sector, the building division has had a good trading year with improved profitability on the back of a rapid period of growth over the last three years.
Notable schemes completed in 2016 have included: the GBP16 million Allen House student accommodation project for Victoria Halls, GBP3 million refurbishment of the North Laboratory for the University of Nottingham, the GBP2 million extension and external refurbishment for CARE partnerships in Edgbaston and a GBP1 million new training centre and kennels block for Nottinghamshire Police.
The pipeline of opportunities for this sector is increasing across our existing customer base and is also supported by a range of new customer prospects to strengthen the division's portfolio.
Our area of operation is predominantly in the Midlands region offering new build and refurbishment to the public and private sectors. Main contract capability for schemes to GBP50 million, focused general works operation for projects from GBP200k to GBP2 million.
Financial performance during the year
2016 2015 Increase
GBP'000's GBP'000's %
Construction
Revenue 23,386 11,253 107.82%
Operating Profit 575 186 209.14%
Operating Margin
% 2.46% 1.65% 0.81%
Key market trends
We have an expertise in delivering student accommodation projects and this market is still buoyant with a regular stream of enquiries for a variety of projects being received. Currently both university and further education providers have significant investments to make in their facilities and a general increase in student numbers is fuelling further need for suitable accommodations. This is a key target across the region moving forward.
Many education projects are carried out via regional or national frameworks, and the intent is to engage with a view to bidding for a place on such frameworks in the future to provide a robust stream of enquiries.
From a commercial and industrial perspective, there is activity within the regional market which we are well placed to bid for, with opportunities presenting themselves regularly.
Leisure providers are active and, with a shortage of regional contractors, this is an area of exploration which we are well placed to target.
Outlook for 2017
In line with our strategic focuses; the current actions to realise our potential to grow in this market include:
-- Becoming a more prominent regional contractor by improving the divisions visibility within the locality
-- Further grow the team with recruitment and the development of current staff
-- Expanding client base with commercial opportunities, balancing the portfolio with public sector opportunities and enhancing existing relationships.
Power
Overall segment performance
The past financial year has seen the continued efforts in rejuvenating this part of the business to fulfil its true potential. This has included continued efficiencies in overhead and re-establishing a delivery model which complements the sectors in which the division operates. Our offering now also incorporates a full turnkey delivery model including design broadening the scope of opportunity greatly.
A fully implemented risk analysis procedure with regards to proposals, contract management and commercial assurance is ensuring that the financial return is optimised.
The successful delivery of the GBP13 million Biomethane to Grid project awarded by Severn Trent Green Power. The project was a fully integrated design and build contract delivered on 3 sites and is testament to the new delivery model now embedded in the division.
Financial performance during the year
2016 2015 Increase
GBP'000's GBP'000's %
Power
Revenue 30,427 7,794 290.39%
Operating Profit 256 -826 n/a
Operating Margin
% 0.84% -10.60% 11.44%
Key market trends
The Power and Energy market is poised to rapidly expand and with core 'blue chip' clients currently in our portfolio we should be able to improve our client base and enhance our return to the business.
Within the power market we have identified a significant spend forecast with Regional Electricity Contractors, electricity distribution and network operators, Wind Energy and Engineering Procurement Contractors. This is currently visible until 2025 and we are well placed to compete in this arena.
Outlook for 2017
We have a strong opportunity to work in the non-regulated water market focusing on the waste to energy sector; taking waste products and converting to gas.
Additionally there is an emerging design capability that can be offered which broadens the scope of opportunities greatly.
In line with our strategic focuses; immediate actions for 2017 include:
-- Continue to build successfully on our current contracts and relationships with existing key clients
-- Develop current framework opportunities and reinforce our expertise -- Dedicated business development resource -- Effective debt collection
Highways
Overall segment performance
Work within this sector is based on the specialisms of highway construction and maintenance, public realm works, structures, drainage and environmental capabilities. We also provide specialist pre-construction Early Contractor Involvement (ECI) services to individual clients, as well as value engineering services during construction. Our work is currently a mixture of public and private sector with whom we have strong relationships.
Our particular area of expertise is focused on projects with logistical challenges. The Bristol City Centre public realm project required delicate coordination of pedestrian and traffic management interfaces.
We have experienced an imbalance of work, with the West region in particular, experiencing a slight downturn whereas planned activity in the East and South regions remains high.
Overall these regional variances are levelled out through the portfolio effect in the divisional structure.
Financial performance during the year
Increase/
2016 2015 (decrease)
GBP'000's GBP'000's %
Highways
Revenue 32,751 38,789 -15.57%
Operating Profit 453 444 2.03%
Operating Margin 1.38% 1.14% 0.24%
Key market trends
There is initial short term evidence of private sector investment caution due to Brexit and it is still early days in terms of gauging the impact of the referendum on the economy - it is generally accepted that any effects of Brexit on the UK economy will take months and possibly years to emerge. There are some concerns over the viability of some schemes without European funding, particularly in Northern cities. However, current outlook based on recent data is optimistic, with economists raising GDP growth forecasts and latest figures showing that the construction sector is growing.
Increased national infrastructure spend was reinforced by recent publication of the Government's 'National Infrastructure Delivery Plan 2016', together with the 'Roads Investment Strategy' (RIS) in 2014, which outlines a 25 year investment plan (2015-2040) for Britain's Strategic Road Network.
This details plans for GBP483 billion of investment in over 600 infrastructure projects across all sectors to 2020-21 and beyond, with GBP300 billion specifically committed to a pipeline of schemes to be delivered within the next five years.
Outlook for 2017
In line with our strategic focuses; immediate actions for 2017 include:
-- Further geographical expansion in the North-West and into the Northern Home Counties
-- Form strategic partnerships with the supply chain and consultants to improve collaboration and innovation.
-- Secure existing frameworks due for renewal. -- Target new frameworks, whilst optimising the delivery of existing ones.
Telecommunications
Overall segment performance
The performance of the Utilities Division has been less than satisfactory for a significant number of years. Following careful review we have taken decisive action to address the underlying problems. A number of changes have taken place during 2016; seeing us reflect, assess and make the necessary improvements in which to take us forward.
There are a great many strengths to the division and a real drive to turn the situation to that of profitability. A significant restructure has taken place with the recruitment of key staff who are driven to bring about the necessary change. A business improvement specialist has been brought in to review and re-organise processes to create efficiency and introduce best practice. The trading relationship with each customer has been carefully reviewed to ensure we continue to deliver a high level of service. The Division is under the direct leadership of John Homer until we are confident of successful turnaround.
Currently we provide telecoms infrastructure services inclusive of network cable and small business installations in the Midlands, North West & North East predominantly to high profile customers. The market is currently rich with opportunities, and management are currently turning down some work to allow the necessary changes to be implemented.
Once the business has confidence that the processes and controls are right, then controlled growth of turnover and increased margins will be achievable. There is a strong belief in the market which has longevity, due to the insatiable demand for faster internet connectivity.
Financial performance during the year
Increase/
2016 2015 (decrease)
GBP'000's GBP'000's %
Telecommunications
Revenue 29,556 32,578 -9.28%
Operating Profit -2,591 -2,117 22.39%
Operating Margin -8.77% -6.50% -2.27%
Key market trends
Significant spend and legislation in the communications market demonstrates a buoyant industry that we are well placed to serve.
The UK Government are to implement the broadband Universal Service Obligation, making it a legal entitlement to have access to broadband at minimum 10Mbps. In addition the publicly available specification (PAS) 2016 provides a framework of requirements to install digital infrastructure into all new build domestic dwellings.
There are also significant investments to be made in the rural broadband programme from 2016-2021 and Project Lightning; which will see 17 million UK premises having access to 30Mbps by 2020.
Outlook for 2017
2017 is a year of consolidation with the following strategic aims:
-- Grow our offering through relationships with existing customers -- Explore opportunities within the power distribution market -- Embed our refined systems and procedures to increase operational performance -- Closely monitor performance to ensure turnaround targets are achieved
Water
Total Water Segment Financial Performance during the year
2016 2015 Increase
GBP'000's GBP'000's %
Water
Revenue 134,369 127,199 5.64%
Operating Profit 3,548 3,160 12.25%
Operating Margin 2.64% 2.48% 0.16%
We have two operating divisions called NMCNomenca and Nomenca.
Divisional segment performance - NMCNomenca
We have successfully developed a broad range of specialist services, specifically in Non-Infrastructure Clean Water where our skills are used across the Severn Trent Water (STW) region. We work closely and collaboratively with STW Operations from conception through construction to completion, delivering efficiency driving Water Quality Monitoring Services, Temporary Dosing Points, and Chemical Dosing Upgrades, SEMD services (Security) Borehole Refurbishment and ICA Services. The latest area we have expanded into is in Small Works/Asset Maintenance. We now, successfully provide a reactive and proactive service along with the upgrade and maintenance of private drains and pumping stations.
Key market trends
With a forecast sector spend of GBP4 billion per annum for the period of 2015-2020 excluding the Thames Tideway, there is a commitment to spend circa GBP2billion per annum on off-site build solutions, GBP1.2 billion per annum on Capital Maintenance and GBP500 million per annum on Infrastructure schemes. The water retail market opens in April 2017 to businesses, charities and public sector organisations. In 2016 STW entered into a joint venture agreement with United Utilities, combining their non-household water and wastewater retail businesses, principally comprising billing and customer service activities. This JV will deliver an attractive proposition for large and small business customers across England and Scotland.
Outlook for 2017
The first half of 2017 has seen the AMP7 procurement process begin for STW which will be a key focus. Operationally however we have good visibility of current and future workload with actions 2017 including:
-- Exploring further opportunities for operation and maintenance -- Continue to deliver high quality, great value solutions to STW -- Develop the maturity of our processes and in house design capabilities.
Divisional segment performance - Nomenca
This year has seen profitable trading but below our own expectation for the expertise that we bring to our projects. Clear strategies are in place to improve the margin returns from our specialist area of expertise. We have a broad client base within the water sector and have been successful in gaining further frameworks with key water clients over the course of 2016 including Yorkshire Water, Affinity Water and South Staffordshire Water.
Although our current focus is UK Water Industry frameworks we experience downturns through the transition between AMP's. We have a drive and focus on business development in non-water opportunities and plant service and refurbishment for this period.
We are driving improvements and expanding our design capabilities such that we can capitalise on industry demand for engineering services and total expenditure (TOTEX) based solutions, both with existing customers and new market sectors.
Key market trends
Within the water industry there is a commitment to spend circa GBP2 billion per annum on upgrades and new works including circa 40% through off-site build solutions, GBP1.2 billion per annum on Capital Maintenance and GBP500 million per annum on Infrastructure schemes. Clearly the 'off-site build' element has to date not delivered to Government and OfWAT expectations. This is a concern which will probably only materialise towards the back end of AMP6 when greater efficiencies are required and proposals for PR19 need to be submitted, and provides a fantastic business opportunity.
The 4 regions of the Environment Agency spend circa GBP30 million per annum on MEICA works with the larger regions being the Northern and Midlands areas. The process for re-bidding the Northern area will commence in Quarter 2 of 2017.
Outlook for 2017
Development of high performing teams quickly and recruitment of skilled resources are proving a challenge to accommodate the water industry peaks and troughs. Our key focus areas are:
-- Developing alternative business streams in products, service and design -- Further develop our existing business processes
Group Statement of Comprehensive Income
Year Ended Year Ended
31 December 31 December
2016 2015
GBP'000 GBP'000
-------------------------------- ------------ ------------
Revenue 250,489 217,612
Other operating income 325 162
250,814 217,774
Raw materials and consumables (39,291) (36,094)
Other direct charge (143,564) (121,439)
Employee costs (58,738) (53,350)
Depreciation of property,
plant and equipment (2,400) (1,961)
Other operating charges (4,580) (4,083)
Operating profit 2,241 847
Finance costs (179) (241)
-------------------------------- ------------ ------------
Profit before tax 2,062 606
Tax 572 645
-------------------------------- ------------ ------------
Profit and total comprehensive
income for the year 2,634 1,251
Attributable to:-
Equity holders of the
Parent 2,634 1,251
-------------------------------- ------------ ------------
Profit per share - basic 25.95p 12.32p
-------------------------------- ------------ ------------
Profit per share - fully
diluted 25.95p 12.32p
-------------------------------- ------------ ------------
Statements of changes in equity
Capital
Share Merger Redemption Retained
Capital Reserve Reserve Earnings Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- ----------- --------- --------
Balance at 1 January 2015 1,015 455 20 7,476 8,966
------------------------------- -------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year - - - 1,251 1,251
------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2015 1,015 455 20 8,727 10,217
------------------------------- -------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year - - - 2,634 2,634
------------------------------- -------- -------- ----------- --------- --------
Dividends Payable - - - (152) (152)
------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2016 1,015 455 20 11,209 12,699
------------------------------- -------- -------- ----------- --------- --------
Capital
Share Merger Redemption Retained
Capital Reserve Reserve Earnings Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- ----------- --------- --------
Balance at 1 January 2015 1,015 455 20 4,550 6,040
------------------------------- -------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year - - - 1,514 1,514
------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2015 1,015 455 20 6,064 7,554
------------------------------- -------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year - - - 2,126 2,126
------------------------------- -------- -------- ----------- --------- --------
Dividends Payable - - - (152) (152)
------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2016 1,015 455 20 8,039 9,529
------------------------------- -------- -------- ----------- --------- --------
Balance sheets as at 31 December 2016
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Assets
----------------------------------- -------- -------- ------------ ----------
Non-current assets
Property, plant and equipment 13,651 12,781 13,640 12,766
Investments in subsidiaries - - 2,437 2,437
Deferred tax asset 1,411 705 1,411 702
------------------------------------ -------- -------- ------------ ----------
15,062 13,486 17,488 15,905
----------------------------------- -------- -------- ------------ ----------
Current assets
Inventories 2,065 2,335 1,544 2,036
Construction contracts 19,165 17,537 16,270 14,054
Trade and other receivables 30,705 31,395 26,753 31,662
Current income tax receivable - 21 - 22
Cash and cash equivalents 11,405 6,621 10,614 5,707
------------------------------------ -------- -------- ------------ ----------
63,340 57,909 55,181 53,481
----------------------------------- -------- -------- ------------ ----------
Total assets 78,402 71,395 72,669 69,386
==================================== ======== ======== ============ ==========
Equity and liabilities
Capital and reserves attributable
to equity holders of the
Parent
Share capital 1,015 1,015 1,015 1,015
Merger reserve 455 455 455 455
Capital redemption reserve 20 20 20 20
Retained earnings 11,209 8,728 8,039 6,066
------------------------------------ -------- -------- ------------ ----------
Total equity 12,699 10,218 9,529 7,556
------------------------------------ -------- -------- ------------ ----------
Liabilities
Non-current liabilities
Obligations under finance
leases 1,785 2,263 1,785 2,263
Provisions 394 361 394 361
------------------------------------ -------- -------- ------------ ----------
2,179 2,624 2,179 2,624
----------------------------------- -------- -------- ------------ ----------
Current liabilities
Trade and other payables 61,145 56,588 58,709 57,241
Current income tax payable 194 - 67 -
Obligations under finance
leases 2,185 1,965 2,185 1,965
------------------------------------ -------- -------- ------------ --------
63,524 58,553 60,961 59,206
----------------------------------- -------- -------- ------------ ----------
Total liabilities 65,703 61,177 63,140 61,830
------------------------------------ -------- -------- ------------ ----------
Total equity and liabilities 78,402 71,395 72,669 69,386
==================================== ======== ======== ============ ==========
Statement of cash flows for the year ended 31 December 2016
Group Company
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
Cash flows from operating
activities
Operating profit 2,241 847 1,607 703
Adjustment for:
Depreciation of property,
plant and equipment 2,400 1,964 2,395 1,958
Gain on disposal of property,
plant and equipment (317) (131) (317) (131)
Increase in reinstatement
reserve 33 32 33 32
-------------------------------------- -------- -------- -------- --------
Operating cash flows before
movement in working capital 4,357 2,712 3,718 2,562
Decrease / (Increase) in
inventories 270 (613) 491 (518)
(Increase) in construction
contracts (1,628) (4,699) (2,216) (3,433)
Decrease in receivables 690 1,880 4,909 2,144
Increase in payables 4,557 5,122 1,468 4,627
-------------------------------------- -------- -------- -------- --------
Cash generated from operations 8,246 4,402 8,370 5,382
Income Tax received 78 25 78 176
Interest paid (61) (119) (61) (119)
-------------------------------------- -------- -------- -------- --------
Net cash generated from operations 8,263 4,308 8,387 5,439
-------------------------------------- -------- -------- -------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment (1,303) (1,034) (1,303) (1,034)
Proceeds on disposal of property,
plant and equipment 475 180 474 180
Dividends received from subsidiaries - - - 400
Net cash (used in) investing
activities (828) (853) (829) (454)
-------------------------------------- -------- -------- -------- --------
Cash flows from financing
activities
Equity dividends paid (152) - (152) -
Repayment of obligations
under finance leases (2,381) (1,988) (2,381) (1,988)
Interest payable under finance
leases (118) (122) (118) (122)
-------------------------------------- -------- -------- -------- --------
Net cash (used in) financing
activities (2,651) (2,110) (2,651) (2,110)
-------------------------------------- -------- -------- -------- --------
Net increase in cash and
cash equivalents 4,784 1,345 4,907 2,875
Cash and cash equivalents
at 1 January 2016 6,621 5,276 5,707 2,832
Cash and cash equivalents
at 31 December 2016 11,405 6,621 10,614 5,707
====================================== ======== ======== ======== ========
Cash and cash equivalents comprise funds held at the bank which are immediately accessible.
1. Basis of preparation
The condensed Group financial statements for the
year ended 31 December 2016 included in this report
do not constitute the Group's statutory accounts
for the year ended 31 December 2016 are derived
from those accounts. The auditor has reported
on those accounts; their report was unqualified,
did not draw attention to any matters by way of
emphasis without qualifying their report and did
not contain statements under s498(2) or (3) Companies
Act 2006 or equivalent preceding legislation.
While the financial information included in this
announcement has been prepared in accordance with
the recognition and measurement criteria of International
Financial Reporting Standards (IFRSs), this announcement
does not itself contain sufficient information
to comply with IFRSs.
The condensed Group financial statements have
been prepared on a basis consistent with that
adopted in the previous year's published financial
statements and in accordance with IFRSs.
The Group expects to publish statutory financial
statements for the year ended 31 December 2016
that comply with both IFRSs as adopted for use
in the European Union and IFRSs as compliant with
the Companies Act 2006 and Article 4 of the EU
IAS Regulations based on the information presented
in this announcement.
The condensed financial statements were approved
by the Board on 30 March 2017
Audited statutory accounts for the year ended
31 December 2015 have been delivered to the registrar
of companies. The Independent Auditors' Report
on the Annual Report and Financial Statements
for 2015 was unqualified, did not draw attention
to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
2. Segment reporting
The operating segment reporting format reflects
the Group's management and internal reporting
structure.
Operating segments
The Group is comprised of the following operating
segments which are conducted in the UK, and are
effectively market sectors:
* Construction
* Power
* Highways
* Water
* Telecommunications
Further details of the operating segments activities
is provided in our operational and financial review.
Segment revenue and profit
Year ended 31 December 2016
Telecom-
Construction Power Highways Water munications Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Revenue
External sales 23,386 30,427 32,751 134,369 29,556 250,489
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Result before corporate expenses 1,872 1,549 2,036 11,671 (294) 16,834
Corporate expenses (1,297) (1,293) (1,583) (8,123) (2,297) (14,593)
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Operating profit/(loss) 575 256 453 3,548 (2,591) 2,241
Net finance costs (179)
---------
Profit before tax 2,062
Tax 572
---------
Profit for the year 2,634
---------
Year ended 31 December 2015
Telecom-
Construction Power Highways Water munications Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Revenue
External sales 11,253 7,794 38,789 127,198 32,578 217,612
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Result before corporate expenses 1,002 (366) 1,576 10,314 (909) 11,617
Corporate expenses (816) (460) (1,132) (7,154) (1,208) (10,770)
---------------------------------- ------------- ---------- --------- -------- ------------- ---------
Operating profit/(loss) 186 (826) 444 3,160 (2,117) 847
Net finance costs (241)
---------
Profit before tax 606
Tax 645
---------
Profit for the year 1,251
---------
Segment assets
2016 2015
GBP'000 GBP'000
-------------------------------------------- -------- --------
Construction 11,220 9,337
-------------------------------------------- -------- --------
Power 9,240 5,225
-------------------------------------------- -------- --------
Highways 12,037 8,119
-------------------------------------------- -------- --------
Telecommunications 18,351 21,394
-------------------------------------------- -------- --------
Water 27,554 27,320
-------------------------------------------- -------- --------
Total segment assets and consolidated total
assets 78,402 71,395
-------------------------------------------- -------- --------
Other segment information
Depreciation Additions
and to
amortisation non-current
assets
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- --------- --------
Construction 273 123 390 229
---------------------------- --------- -------- --------- --------
Power 355 89 507 159
---------------------------- --------- -------- --------- --------
Highways 382 424 546 791
---------------------------- --------- -------- --------- --------
Telecommunications 345 356 493 664
---------------------------- --------- -------- --------- --------
Water 1,045 969 1,491 1,808
---------------------------- --------- -------- --------- --------
Total 2,400 1,961 3,427 3,651
---------------------------- --------- -------- --------- --------
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.
The results of each segment are not materially
affected by seasonality.
3. Information about major customer
Revenues of approximately GBP101,076,000 (2015:
GBP78,159,000) were derived from a single external
customer. These revenues are attributable to the
Water segment. No other customer accounted for
more than 10% of revenues.
4. Earnings per share
Earnings per share, both basic and diluted, is
calculated on the profit attributable to equity
holders of the parent of GBP2,634,000 (2015: GBP1,251,000)
and the weighted average of 10,150,000 (2015:
10,150,000) shares in issue during the year.
5. Taxation
The provision for deferred tax is calculated based
on the tax rates enacted or substantially enacted
at the balance sheet date. The tax credit in the
year arises from a deferred tax asset from short
term timing differences and trading losses now
recognised. There are trading losses carried forward
of GBPNIL (2015: 4,842,000).
Factors that may affect future tax charges
In November 2015 an amendment to the Finance Act
2015 was enacted, setting the main rate of corporation
tax in the UK to 19% from 1 April 2017. In September
2016 the Finance Act 2016 reduced the corporation
tax rate applicable from 1 April 2020 to 17%.
6. Dividends
Amounts recognised as distributions to equity
holders in the year:-
2016 2015
GBP'000 GBP'000
Final dividend for the year ended 31 December - -
2015 of 0p (2014: 0p) per share
Interim dividend for the year ended 31 152 -
December 2016 of 1.5p (2015: 0p) per share
--------- --------
152 -
========= ========
The Directors recommend a final dividend of 3p
per share for the year ended 31 December 2016
(2015: GBPNIL).
7. 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. The only transactions
with these individuals comprise remuneration under
service contracts, other than the following;
During the year the Company carried out construction
work for Mr R Moyle, the Executive Chairman of
the Company. The Company engaged in a commercial
agreement to provide services at an appropriate
mark-up on costs, which was agreed on an arm's
length basis. Revenues amounting to GBP110,000
(2015: GBP108,000) are included in the financial
statements in relation to the work completed.
At the year-end GBP178,000 (2015: GBP68,000),
excluding VAT, was included in trade receivables.
The balance has been paid in full subsequent to
the year end. The aggregate revenue for this transaction
was GBP262,000 (including VAT).
During the financial years ended 31 December 2014
and 31 December 2015 the Company carried out construction
work for Mrs M Moyle, Mr R Moyle's mother. Mr
R Moyle entered into the transaction on his mother's
behalf. The Company engaged in a commercial agreement
to provide services at an appropriate mark-up
on costs, which was agreed on an arm's length
basis. The aggregate revenue for this transaction
was GBP151,000 (including VAT).
All amounts outstanding in respect of each of
the transactions referred to above have been paid
in full subsequent to the financial year ended
31 December 2016, together with interest of GBP15,000.
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 above 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 is awaiting the formal response of
the FCA in respect of these breaches of the Listing
Rules and will provide an update as and when it
is able to do so. The Company will co-operate
fully with the FCA with regard to any subsequent
enquiries or steps taken by the FCA in relation
to reporting these matters.
In the meantime, the Company has conducted a formal
investigation in respect of these matters and
Mr R Moyle has been disciplined by the Company
for breach of internal policies and the Listing
Rules Whilst the Company has already put in place
certain measures to avoid similar issues arising,
it is taking additional measures including, among
other things, the commissioning of a governance
audit of its current policies for compliance with
the Listing Rules, Disclosure Requirements and
Transparency Rules.
Additionally, the Group has the following interests
in joint operations;
The E5 Joint Venture - (Waste Water Major Projects,
Coventry UK)
25% interest in a joint operation with MWH Treatment
Limited, Mott MacDonald Bentley Limited and Costain
Limited.
Ambergate Working Alliance - (Construction of
reinforced concrete covered storage reservoir,
Ambergate UK)
50% interest in a joint operation with Laing O'Rourke
Imtech.
BAMNomenca - (Water projects for South East Water)
50% interest in a joint operation with Bam Nuttall
Limited.
BNM Alliance - (Construction of Elan Valley Aqueduct
scheme and Newark Sewer Strategy scheme)
50% interest in a joint operation with Barhale
Limited.
The ASP Batch Joint Venture - (Waste Water Major
Projects, Coventry UK)
33% interest in a joint operation with Mott MacDonald
Bentley Limited and Costain Limited.
All joint operation activities are strategic to
the company and its Water operating segment.
The condensed Group financial statements for the
year ended 31 December 2016 incorporate the following
relating to the joint operations:-
Year ended Year ended
31 December 31 December
2016 2015
GBP'000 GBP'000
Revenue 19,519 13,947
Expenses 18,316 12,968
Assets 2,907 1,245
Liabilities 2,907 1,245
8. Share capital
2016 2015
GBP'000 GBP'000
Authorised:-
12,500,000 ordinary shares of 10p each 1,250 1,250
Allotted, issued and fully paid:-
10,150,000 (2015 - 10,150,000) ordinary
shares of 10p 1,015 1,015
9. Contingent liabilities
Aviva Insurance Limited, Lloyds Bank PLC, and
HCC International Insurance Company Plc have given
Performance Bonds to a value of GBP4,490,000 (2015:
GBP4,703,000) on the Group's behalf. These bonds
have been made with recourse to the Group.
10. The Annual Report and Accounts for the year ended
31 December 2016 will be despatched to shareholders
on or around 18 April 2017 and will be available
on the Company's website - www.northmid.co.uk.
11. The Annual General Meeting will be held on Thursday
18 May 2017 at 12.00 noon at the Group's Head
Office at Nunn Close, The County Estate, Huthwaite,
Sutton-in-Ashfield, Nottinghamshire NG17 2HW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDDFMSFWSEID
(END) Dow Jones Newswires
March 31, 2017 02:00 ET (06:00 GMT)
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