Nth.Mid.Cons Share Discussion Threads

[qs99] 15/6/2017 11:41

Yup great post. More to come in here
GLA

[owenski] 14/6/2017 09:36

Great post IC2, thanks

[interceptor2] 14/6/2017 09:31

As already mention NMD give a great deal of information in their results statements, which is very helpful when researching the potential here.

Worth mentioning that the Water sector is the largest division which accounts for 53% of the revenue figure and it achieved net margins (no tax in calculation) of 2.65% and 2.48% the previous year. So yesterdays contract win is likely to enhance the groups overall margin level.

Reading again the last full year results and particularly the section on legacy issues is very interesting. So we know that the last work on the last remaining legacy contract was completed during 2016 and that a £3.85m provision was used in the full year results that reduced the PBT to £2,062m. Management also stressed that they have used independent quantum and legal experts, so it would seem that they have made a fair assessment of the provision.

Without the provision the PBT would have been £5,912m, without calculations tax the EPS would be 58.2p, if management have allowed enough in their last provisions then we shouldn't see any more allowances for these old legacy contacts.

And NMD are pursuing claims with the client, so some of the provisions are likely to to be credited to the balance sheet, but not within 12 months.

I believe the above does shows the potential here, ending of legacy contracts along with higher revenues and margins is likely to be a strong combination imv.

[ileeman] 14/6/2017 08:42

More interest this morning, no surprise.

[battlebus2] 14/6/2017 08:31

Indeed, I'd have thought they'd have priced for a substantially greater margin giving them a little leeway.

[interceptor2] 14/6/2017 08:18

"The net margin, whilst showing a significant improvement, is 0.93%, which the board continues to consider an unsatisfactory return."

The above is from last month's AGM statement, so management are fully aware that historic margin levels are unsatisfactory, and I would find it very unlikely that they would take on a significant contract that won't improve their net margins levels.

[qs99] 14/6/2017 07:40

indeed, so there in lies the opportunity, business IMO is cheap BEFORE they get into margin improvements...

[owenski] 14/6/2017 07:38

In fairness, NMD have stated they're not happy with their margins and are looking at improving them.

[qs99] 14/6/2017 07:30

you have to work on the basis IMO/DYOR that the board of NMD are comfortable with the margins implied by the contract otherwise they wouldn't take it on....happens all the time, there has to be a winner! Results likely IMO to be materially ahead and yet these have not moved much at all and IMO were very cheap on an EV/EBITDA basis anyway.

GLA

[battlebus2] 13/6/2017 23:22

Interserve's results for 2016 not impressive either

[rhomboid] 13/6/2017 23:20

Interesting background, I'm going to mull it over

[battlebus2] 13/6/2017 23:14

Kier are having their own internal troubles.
This contract for Severn is only the first part of a total £300 million Birmingham contract so every chance we can secure more of that cake.

[battlebus2] 13/6/2017 22:55

I believe there are other reasons why Severn and Kier parted company.

[rhomboid] 13/6/2017 22:41

Take your point, I took the same stance with SFR, their legacy contracts also nearly sunk the ship but they've reacted appropriately. I was just struck by bigger contractors turning stuff down being an unlikely precursor to fat margins 🤔

[battlebus2] 13/6/2017 22:22

No I'm not concerned given they have learnt the lessons with the previous legacy issues so to make the same mistakes again would be very unlikely imv. Could be the other contractors had overpriced the contract?

[rhomboid] 13/6/2017 22:09

Anyone slightly concerned that 2 larger contractors turned the gig down?



I like the story here but wafer thin margins & big contracts is a combustible mix.

[battlebus2] 13/6/2017 21:57

Yes it is owenski. Corrected 👍

[owenski] 13/6/2017 21:49

Isn't it a 100m contract value split between NMD and a JV partner, so not 33m PA to NMD.

[battlebus2] 13/6/2017 20:50

a100million contract over three years equates to 33mm a year. Secured workload before today's announcement was 224mm so at 33mm split between joint partner 16.5mm that's a 7% increase and a increase and from 180mm last year it's a 33% increase. Operating profit last year was 2.24 and net margins 0.93 which will hopefully increase making these still relatively cheap given more contracts are in the pipeline and we've proved we can win the big ones

[qs99] 13/6/2017 20:26

Agreed, needs to get on a few people's radar tho and then off we go...

[ileeman] 13/6/2017 20:25

Thanks CC2014.

29% free float out of 10million shares is insane lol 2.5-3million freefloat say...

Looks like a hidden gem this company. £30-£35mil cap is way to low.

[qs99] 13/6/2017 20:22

Any signs of margin improvements and IMO this is going much much higher....GLA and DYOR

[cc2014] 13/6/2017 19:58

So what's most interesting is what the 100m order says about confidence in the company and the direction the directors are taking this company inI perceive with the change in senior management the company has become more ambitious and extremely selective in its markets. Take a look at its accounts. The sector analysis and detail is there for all to see. They report a level of detail far beyond what's usual for a company this size. Take a look at their markets. This isn't just spraying quotes anywhere and everywhere. They are very focussedTo be completely open my average is around 115, I have a sizeable amount and I'm wondering just how far this company can grow because the balance sheet is more than adequate. No pension issues, no debt apart from a few leases of which there aren't that manyA good balance sheet means capacity to expand plus increased dividends. Is it conceivable they could get to a turnover of 500m within 3 years? Bit of a stretch probably but 400-450m looks easily doable. What's not to like? I'm happy to hold

[cc2014] 13/6/2017 19:43

Free float is 29%. See post 201Although I suspect actual free float will be lower as there will be a number of shareholders below 3% who will be long term holders too and I'm not selling