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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 : 1471J
North Midland Construction PLC
28 March 2018
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
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 2017.
Highlights from the results:-
Hot Features
Premium
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Revenue 291,770 250,489
Operating profit 1,191 2,241
Profit before tax 1,004 2,062
Underlying profit before tax* 8,296 5,913
Total comprehensive profit for
the year 742 2,634
Earnings per share 7.31p 25.95p
Interim dividend per share 3.0p 1.5p
Final dividend per share (proposed) 3.0p 3.0p
------------- -------------
Total dividend per share 6.0p 4.5p
* 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 contractual 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
-- Underlying profit before tax increased to GBP8.30 million (increase of 40.4%). -- Revenue increased to GBP291.77 million (increase of 16.5%).
-- Secured workload for 2018 at circa GBP299 million (2016 Secured workload for 2017: GBP225 million), which equates to circa 90% of 2018 budgeted revenue (2016 proportion of 2017 budgeted revenue: 80%).
-- Increased total dividend proposed to 6.0p (2016: 4.5p).
-- Cash position remains strong. Year-end balance of GBP17.01 million (2016: GBP11.41 million, increase of 49.2%).
John Homer - Chief Executive - Commented:
"It is disappointing that focus on a healthy underlying Group performance from our continuing operations appears to continue to be diverted by the outcome on the remaining legacy contract.
We are pleased by the underlying position and in particular the success achieved on driving our cash balance and the quality of the forward order book.
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 just over 90% 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 2017
This year has been a period of continuing to strengthen 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. The net return is disappointing and has been significantly impacted by the remaining legacy contract. The underlying profitability, cash generation and secured workload for 2018 are the significant positives which give the Board confidence for the Group's future.
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 our customers and work effectively in these markets. This allows them to provide expert contribution and innovation to achieve added value to the work streams. From 1 January 2018 the Civils division will be absorbed into the NMCNomenca division, which in turn forms part of the Water segment. From 1 January 2018 the Board will review the Group's operational performance via two segments; the Water segment (NMCNomenca and Nomenca divisions) and the Built Environment segment (Telecommunications, Highways and Construction divisions).
Overall co-ordination of our activities is carried out through the Executive Leadership Team (ELT) which is chaired by the Chief Executive. Membership consists of the Finance Director, 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 16.48% to GBP291.77 million (2016: GBP250.49 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 2017 achieved through the quality of customer experience that the Group delivers.
Although not at the level the Board finds acceptable, an operating profit of GBP1.19 million (2016: GBP2.24 million) has been achieved in the year. The underlying profitability in the year of GBP8.30 million (2016: GBP5.91 million) is a significant increase on the previous year and shows the exceptional performance, in the main, of the continuing business segments. The impact of the legacy contract has once again reduced the net margin return.
The current tax debit of GBP0.26 million (2016: GBP0.57 million credit) arises due to current tax on profits at 19.25% in addition to a reduction in the deferred tax rate applicable to taxable temporary differences. Total comprehensive income for the year has reduced to GBP0.74 million (2016: GBP2.63 million) and in turn earnings per share has reduced to 7.31p (2016: 25.95p).
The Board is proposing to retain the final dividend at 3.0p, taking the total dividend for the year to 6.0p (2016: 4.5p). The total dividend is only covered 1.22 times (2016: 5.80 times) and has been proposed as an exceptional dividend, as per the Group's dividend policy, and is due to the underlying performance of the Group, the cash generation and the secured workload for 2018. The Board anticipates an improving performance for 2018 and beyond.
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 2017, there is only one legacy contract remaining.
In the year to 31 December 2017, the total loss before tax recognised on legacy contracts was GBP7.29 million (2016: GBP3.85 million). During the year to 31 December 2016 the Group completed all onsite works for the one remaining legacy contract, thereby 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 2017 of the amount recoverable from the client, with an amount outstanding included within trade receivables. Following a High Court ruling towards the end of 2017, which did not support the application of the well-established 'prevention principle' in relation to this contract, the Company has been granted leave to appeal this decision by the Court of Appeal. On the advice of the Company's lawyers the Directors will vigorously pursue this appeal, but have decided to make a further provision against the outstanding debt. This matter will be kept under constant review and further announcements will be made if appropriate. The Group is and will be pursuing claims with the client for sums greater than the carrying value. 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 is 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 GBP17.01 million (2016: GBP11.41 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 16.48% increase in revenue the Group has reduced the average credit period taken by its customers to 32 days (2016: 33 days), leading to a slight outflow of cash across construction contracts and trade and other receivables of GBP0.64 million (2016: GBP0.94 million). The average credit period taken on credit purchases has also reduced to 43 days (2016: 52 days) due to shorter terms being offered to maintain the best supply chain and achieve the most commercial pricing. The inflow of cash of GBP7.58 million (2016: GBP4.56 million) due to the increase in trade and other payables to GBP68.72 million (2016: GBP61.15 million) is also due to the increase in revenue and increase in cash collection in the fourth quarter, giving a higher other taxes and social security costs creditor of GBP6.73 million (2016: GBP4.67 million). The Group ensures it has a sustainable working capital mix to support our growth across all contracts and segments and has secured increased banking facilities in early 2018 to allow us to do this. We are also targeting reducing creditor payment terms further to allow our supply chain to grow with us.
It is also pleasing to report that the net cash has increased to GBP12.04 million (2016: GBP7.43 million) which is due to the increase in cash above and despite an increase in finance lease borrowings. As a result of the Group's growth the net investment during the year on property, plant and equipment increased to GBP2.90 million (2016: GBP1.30 million), in line with the Company's strategy to purchase equipment where possible, rather than expense through operating leases. Following this investment in capital assets the closing net book value of non-current assets stood at GBP17.12 million (2016: GBP13.65 million), which positions the Group to deliver its targeted growth through 2018 and beyond.
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.
In excess of 90% of our 2018 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 the outlook for the Group and expect the positive progress achieved to continue into 2018 and beyond.
Construction
Overall segment performance
Our Building division has grown rapidly over the past three years, and is anticipated to be a GBP40m plus turnover business. With our key senior staff now in place, we have clearly set out our growth plans and have a real opportunity to progress our business through 2018 and beyond.
Trading in 2017 has seen us reach our profit target, with turnover exceeding budget. We currently have a number of projects on site: Denby Street, Sheffield - a GBP24m student accommodation development with the second site at GBP8.5m for Host Student Operators and at Grove Park, Leicester a GBP1.7m new office project for Stephen George and Partners (Architects). This is another scheme for us on this business complex. We also completed the GBP4m Selly Oak student accommodation project in Birmingham during 2017. These schemes, coupled with exciting enquiries means that we are set to have a successful 2018.
We have plenty of opportunities available to us as the market is relatively settled and should be able to support our planned growth. Both the student accommodation sector and residential markets are still strong with regular opportunities being received. Equally, enquiries from the health sector are still encouraging and university funding for site development is still at a high enabling us to target schemes in both areas.
Financial performance during the year (excluding legacy contracts)
2017 2016 Increase
GBP'000's GBP'000's %
Construction
Revenue 33,712 23,812 41.58%
Operating Profit 1,509 1,005 50.15%
Operating Margin
% 4.48% 4.22% 0.26%
Outlook for 2018
Our intention is to strengthen our brand within the construction marketplace to ensure our offering is visible to all our customers to encourage new opportunities and repeat business. We continue to foster relationships with developers operating locally, including a series of opportunities with our joint venture partner Earl and Pelham Limited across the region. The first scheme of this nature, Enderleigh Mews in Nottingham, is a development of 10, four-bedroom houses in the picturesque grounds of the house formerly known as Enderleigh. The partnership will bring high quality, bespoke developments to Nottingham and the wider area.
Key targets for 2018 include:
-- Enhancement of customer experience and support -- Develop supply chain relationships and management -- Continue with our positive staff culture, supporting all our team in their development
Power
Overall segment performance
The current financial year has been challenging operationally in many aspects with a downturn in customer spend which is forecast to continue.
With an eye to the future we have made changes to our operational teams and have overhauled our strategy in accordance with customer spend profile and marketplace funding. We intend to fully incorporate Civil Engineering projects and work into the NMCNomenca delivery division. This refocused and rebranded approach will enable us to target, secure and deliver major schemes from the power, energy and water sectors. The new structure will continue to deliver our current framework commitments within the small works team.
For continuity of service for our customers we are utilising the existing teams from Civil Engineering to deliver new projects.
Financial performance during the year (excluding legacy contracts)
Increase/
2017 2016 (decrease)
GBP'000's GBP'000's %
Power
Revenue 15,311 30,427 (49.68%)
Operating Profit 285 919 (68.99%)
Operating Margin
% 1.86% 3.02% (1.16%)
Outlook for 2018
Development of a fully integrated Power business servicing the following areas whilst continuing to foster relationships with our key customers:
-- Power Distribution and Transmission -- Wind -- Combined Heat Power -- Anaerobic Digestion -- Waste to Energy -- Biomass Fuel Handling
Highways
Overall segment performance
The trading performance of our Highways division has seen budgeted targets exceeded. Work volumes were ahead of the forecast for the year at GBP45m and delivery margins were also ahead of budget projections at GBP639k. The division operates in three regions: East, West and South. Whilst planned activity in the East and West regions remains high, there is a current imbalance of work in the Southern region. Growth for the division has been very encouraging over the course of the year with key successes on frameworks coupled with wins of public realm and highway contracts.
The YORcivil2 construction framework win was a key success; covering civil engineering works for North and South Yorkshire, including major flood defence projects and highway and bridge works. It combines East Riding of Yorkshire Council, located in the North and East of the region, with Leeds City Council and Sheffield City Council in the South and West and includes projects ranging up to a value of GBP10m.
Another significant success is the Manchester City Council, four year supplier framework for highways and infrastructure projects. The entire framework is expected to deliver works to a value of GBP240m across the Greater Manchester region, including highways development, bridge construction and other civils works. This framework can also be used by other Association of Greater Manchester Authorities (AGMA) and having secured a place on all eight lots will see us work across the region through to 2022.
We have also successfully gained access to the following regional highways frameworks: Bristol City Council's Highways and Associated Works Framework; Lincolnshire County Council; and Nottingham and Derby Frameworks for Highway Works.
From a public realm perspective we have successfully delivered prestigious public realm schemes in Bristol, Stoke-on-Trent and Lincoln to improve roads and pavements in the cities' retail and commercial centres. We have also completed a number of large infrastructure projects for IKEA providing vital access to their new store in Sheffield and a GBP17m infrastructure project for York Potash in Whitby.
Financial performance during the year (excluding legacy contracts)
2017 2016 Increase
GBP'000's GBP'000's %
Highways
Revenue 45,084 32,751 37.66%
Operating Profit 639 441 44.90%
Operating Margin 1.42% 1.35% 0.07%
Outlook for 2018
Following the success of our key wins during 2017 we are looking forward to maximising our opportunities under these frameworks over the course of the coming year and have identified further areas of development:
-- Highway maintenance for routine works in core geographical regions -- Further geographical expansion in the North--West and into the Northern Home Counties
Telecommunications
Overall segment performance
This year has been focused on improving operational performance of the division. Network expansion projects are performing well with the necessary levels of control and governance in place to ensure targets are monitored and achieved.
Our framework contracts do have their challenges in terms of work volumes and process consistency, however we are working to improve this performance across the division to increase customer service. Due to the high volume of orders from existing telecoms customers, this work has been our focus. It remains a priority for the management team to diversify by developing our design and build capability.
At the interim update we announced that the division achieved a break even position for the first six months trading. Since that date we have experienced serious difficulties on the work stream undertaken for Virgin Media on the term contract for telecoms work. Our activities have become embroiled in the difficulties that this customer has been experiencing and this has led to fragmented and inefficient working patterns. The division is heavily engaged with dialogue with this customer to achieve a satisfactory resolution of this problem.
Our health and safety record and culture has significantly improved through an increase in and higher quality of reporting enabling us to make changes to keep our people safe. We have also been working hard on our customer experience; implementing new processes and procedures following external reviews. This has seen us restore our position as a partner of choice for Virgin Media which has in turn provided the opportunity for additional works particularly in the Midlands region.
Financial performance during the year (excluding legacy contracts)
2017 2016 Increase
GBP'000's GBP'000's %
Telecommunications
Revenue 35,343 29,556 19.58%
Operating Loss (518) (1,510) 65.70%
Operating Margin (1.47%) (5.11%) 3.64%
Outlook for 2018
In order to drive further business improvement during the course of 2018, we have identified the following key areas we regard as critical to success:
-- People - Ensuring the morale of our teams remains high -- Quality - Continue with implementing processes with continual review -- Programme - Balancing our standalone projects and our framework commitments -- Customer - Focus on our customer relationships and commercial performance
Water
Total Water Segment Financial Performance during the year (excluding legacy contracts)
2017 2016 Increase
GBP'000's GBP'000's %
Water
Revenue 168,169 134,618 24.92%
Operating Profit 6,568 5,237 25.42%
Operating Margin 3.91% 3.89% 0.02%
We have two operating divisions called NMCNomenca and Nomenca.
Divisional segment performance - NMCNomenca
The NMCNomenca division has had another strong year being cash positive and turnover standing at GBP114m with notable progress on flagship schemes and significant wins.
We were successful in securing a new joint venture infrastructure contract for Severn Trent Water on the Birmingham Resilience Project. The design and construction of a new water treatment plant at Frankley is worth in excess of GBP100m over the duration of the contract and is being built out with our partner Doosan Enpure Limited. The scheme commenced on site in the third quarter of 2017 and will be delivered over the next three years.
The Elan Valley Aqueduct scheme, another key project for Severn Trent in the AMP6 programme of works, celebrated 365 days accident free and completed the first tunnelling phase of the project. This has culminated in being awarded the New Civil Engineer Tunnelling Award in the category of Specialist Tunnelling Project of the Year. It was a blend of the complex nature of the construction of three tunnels along with sustainability, community engagement and logistics that won the accolade.
Tunnelling also commenced on the Newark improvement scheme; Severn Trent's largest investment in the East Midlands to protect their customers from flooding. The new 4.5km of pipeline has a diameter of 3.2 metres and is the backbone of the scheme which runs underneath the town.
Outlook for 2018
To further build on the NMCNomenca foundation and operational model, the amalgamation of the Civil Engineering business into NMCNomenca will allow the continued delivery of non-regulatory projects.
-- We have good visibility of Severn Trent Water's programme of work going forward
-- Major Schemes Pipeline of work is well under way with a number of projects currently being tracked and tendered
-- Fully incorporating Civil Engineering into the division to deliver major schemes -- Continuing with the AMP7 procurement process for Severn Trent Water.
Divisional segment performance - Nomenca
Due to improved order input in the second half of 2017 we have achieved our turnover of GBP55m. We instigated improvement plans across the division to improve our financial performance, to which we have seen a positive impact and the leadership team remain focused on continuous improvement. It is also heartening to note that we have seen a significant improvement in debtor day performance.
Prompted by a sustained increase in workload in the Yorkshire area we relocated our regional Yorkshire office to a larger complex in Normanton, south east Leeds. The facility comprises two-storey offices and warehouse, centrally located in our client's region, and will accommodate the ongoing team expansion.
To support company growth, we have also welcomed a new member to the Nomenca Board: Gavin Stonard, as Engineering Director. Gavin will lead and develop our technical services offering internally and externally and develop our full asset life cycle capabilities to provide a holistic asset life cycle service to our customers.
Our significant award wins for this year include the British Construction Industry Application of Technology Award 2017 for an Affinity Water Project. The pioneering Off Site Build Modular approach to a potable water treatment and pumping station upgrade minimised asset downtime, disruption and overall programme. We combined virtual design technology with modular offsite manufacturing - shifting the mainstay of the construction work to a controlled factory environment. The achievement is testament to our entire team including design, engineering and operations.
Outlook for 2018
We will look to continually enhance the current business to serve the UK Water Industry and other similar industries by:
-- Focusing on providing additional technical services across all business streams -- Embedding a Factory Thinking process within the current frameworks -- Delivering further efficiency for clients and stakeholders
Group Statement of Comprehensive Income
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Underlying Legacy Total Underlying Legacy Total
------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Revenue 297,619 (5,849) 291,770 251,164 (675) 250,489
Other operating income 451 - 451 325 - 325
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
298,070 (5,849) 292,221 251,489 (675) 250,814
Raw materials and consumables (44,698) - (44,698) (39,291) - (39,291)
Other direct charges (167,019) (1,443) (168,462) (140,388) (3,176) (143,564)
Employee costs (69,486) - (69,486) (58,738) - (58,738)
Depreciation of property, plant and equipment (3,057) - (3,057) (2,400) - (2,400)
Other operating charges (5,327) - (5,327) (4,580) - (4,580)
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Operating profit 8,483 (7,292) 1,191 6,092 (3,851) 2,241
Finance costs (187) - (187) (179) - (179)
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Profit before tax 8,296 (7,292) 1,004 5,913 (3,851) 2,062
Tax (1,665) 1,403 (262) (198) 770 572
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Profit and total comprehensive income for the year 6,631 (5,889) 742 5,715 (3,081) 2,634
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Attributable to:
Equity holders of the Parent 742 2,634
-------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
Profit per share - basic 7.31p 25.95p
-------------------------------------------------- ---------- -------- --------- ---------- -------- --------- Profit per share - fully diluted 7.31p 25.95p -------------------------------------------------- ---------- -------- --------- ---------- -------- ---------
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 2016 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
Profit and total comprehensive income for the year - - - 742 742
Dividends payable - - - (608) (608)
--------------------------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2017 1,015 455 20 11,343 12,833
--------------------------------------------------- -------- -------- ----------- --------- --------
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 2016 1,015 455 20 6,064 7,554
Profit and total comprehensive income for the year - - - 2,127 2,127
Dividends payable - - - (152) (152)
--------------------------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2016 1,015 455 20 8,039 9,529
Profit and total comprehensive income for the year - - - 248 248
Dividends payable - - - (608) (608)
--------------------------------------------------- -------- -------- ----------- --------- --------
Balance at 31 December 2017 1,015 455 20 7,679 9,169
--------------------------------------------------- -------- -------- ----------- --------- --------
Balance sheets as at 31 December 2017
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ -------- -------- -------- --------
Assets Restated Restated
Non-current assets
Property, plant and equipment 17,122 13,651 17,116 13,640
Investments in subsidiaries - - 2,437 2,437
Deferred tax asset 1,223 1,411 1,222 1,411
------------------------------------------------------------------- -------- -------- -------- --------
18,345 15,062 20,775 17,488
------------------------------------------------------------------ -------- -------- -------- --------
Current assets
Inventories 1,820 2,065 1,387 1,544
Construction contracts 14,707 12,175 11,575 9,280
Trade and other receivables 35,227 37,695 31,455 33,743
Cash and cash equivalents 17,006 11,405 16,355 10,614
------------------------------------------------------------------- -------- -------- -------- --------
68,760 63,340 60,772 55,181
------------------------------------------------------------------ -------- -------- -------- --------
Total assets 87,105 78,402 81,547 72,669
------------------------------------------------------------------- -------- -------- -------- --------
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 11,343 11,209 7,679 8,039
------------------------------------------------------------------- -------- -------- -------- --------
Total equity 12,833 12,699 9,169 9,529
------------------------------------------------------------------- -------- -------- -------- --------
Liabilities
Non-current liabilities
Obligations under finance leases 2,514 1,785 2,514 1,785
Provisions 404 394 404 394
------------------------------------------------------------------- -------- -------- -------- --------
2,918 2,179 2,918 2,179
------------------------------------------------------------------ -------- -------- -------- --------
Current liabilities
Trade and other payables 68,726 61,145 67,009 58,709
Current income tax payable 177 194 - 67
Obligations under finance leases 2,451 2,185 2,451 2,185
------------------------------------------------------------------- -------- -------- -------- --------
71,354 63,524 69,460 60,961
------------------------------------------------------------------ -------- -------- -------- --------
Total liabilities 74,272 65,703 72,378 63,140
------------------------------------------------------------------- -------- -------- -------- --------
Total equity and liabilities 87,105 78,402 81,547 72,669
------------------------------------------------------------------- -------- -------- -------- --------
Statement of cash flows for the year ended 31 December 2017
Group Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------------------- -------- -------- -------- --------
Cash flows from operating activities Restated Restated
Operating profit 1,191 2,241 190 1,607
Adjustment for:
Depreciation of property, plant and equipment 3,057 2,400 3,052 2,395
Gain on disposal of property, plant and equipment (448) (317) (448) (317)
Increase in reinstatement provision 10 33 10 33
-------------------------------------------------------- -------- -------- -------- --------
Operating cash flows before movement in working capital 3,810 4,357 2,804 3,718
Decrease in inventories 245 270 157 491
Increase in construction contracts (2,532) (1,182) (2,295) (2,216)
Decrease in receivables 2,468 244 2,288 4,909
Increase in payables 7,581 4,557 8,300 1,468
-------------------------------------------------------- -------- -------- -------- --------
Cash generated from operations 11,572 8,246 11,254 8,370
Income tax (paid) / received (91) 78 17 78
Interest paid (79) (61) (79) (61) -------------------------------------------------------- -------- -------- -------- -------- Net cash generated from operations 11,402 8,263 11,192 8,387 -------------------------------------------------------- -------- -------- -------- -------- Cash flows from investing activities Purchase of property, plant and equipment (2,897) (1,303) (2,897) (1,303) Proceeds in disposal of property, plant and equipment 580 475 580 474 Dividends received from subsidiaries - - 350 - Net cash used in investing activities (2,317) (828) (1,967) (829) -------------------------------------------------------- -------- -------- -------- -------- Cash flows from financing activities Equity dividends paid (608) (152) (608) (152) Repayment of obligations under finance leases (2,768) (2,381) (2,768) (2,381) Interest payable under finance leases (108) (118) (108) (118) -------------------------------------------------------- -------- -------- -------- -------- Net cash used in financing activities (3,484) (2,651) (3,484) (2,651) -------------------------------------------------------- -------- -------- -------- -------- Net increase in cash and cash equivalents 5,601 4,784 5,741 4,907 -------------------------------------------------------- -------- -------- -------- -------- Cash and cash equivalents at 1 January 2017 11,405 6,621 10,614 5,707 -------------------------------------------------------- -------- -------- -------- -------- Cash and cash equivalents at 31 December 2017 17,006 11,405 16,355 10,614 -------------------------------------------------------- -------- -------- -------- --------
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 2017 included in this report
do not constitute the Group's statutory accounts
for the year ended 31 December 2017 but 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, with
the exception of the change of accounting policy
described in note 2 below.
The Group expects to publish statutory financial
statements for the year ended 31 December 2017
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 27 March 2018.
Audited statutory accounts for the year ended
31 December 2016 have been delivered to the registrar
of companies. The Independent Auditors' Report
on the Annual Report and Financial Statements
for 2016 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. Change of Accounting Policy
The Directors have restated the 2016 construction
contracts and trade receivables figures to better
reflect the classification of those assets in
line with the Company policy and to provide reliable
and more relevant information to users of the
financial statements. Trade receivables includes
unpaid applications both certified and uncertified,
which are reduced accordingly based on the stage
of completion of a contract when compared to the
cash received at the balance sheet date.
Construction contract balances are amounts recoverable
over and above any application values included
in trade receivables. Comparative amounts as at
31 December 2016 have been restated to reflect
an increase in trade and other receivables of
GBP7.0m in the Group and Company balance sheets
and statements of cash flows, with a corresponding
decrease in the construction contracts balance
at that date. There has been no effect on profit
or retained earnings as a result of the restatement.
3. 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 2017
Construction Power Highways Water Telecommu-nications Underlying Legacy Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Revenue
External sales 33,712 15,311 45,084 168,169 35,343 297,619 (5,849) 291,770
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Result before
corporate
expenses 2,971 1,345 2,828 15,254 752 23,150 (7,292) 15,858
Corporate
expenses (1,462) (1,060) (2,189) (8,686) (1,270) (14,667) - (14,667)
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Operating
profit/(loss) 1,509 285 639 6,568 (518) 8,483 (7,292) 1,191
Net finance
costs (187) - (187)
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Profit before
tax 8,296 (7,292) 1,004
Tax (1,665) 1,403 (262)
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Profit for the
year 6,631 (5,889) 742
-------------- ------------ ------- -------- -------- ------------------- ---------- ---------------- --------
Year ended 31 December 2016
Telecommu-
Construction Power Highways Water nications Underlying Legacy Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Revenue
External sales 23,812 30,427 32,751 134,618 29,556 251,164 (675) 250,489
------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Result before corporate
expenses 5,222 1,799 2,036 11,922 (294) 20,685 (3,851) 16,834
Corporate expenses (4,217) (880) (1,595) (6,685) (1,216) (14,593) - (14,593)
------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Operating profit/(loss) 1,005 919 441 5,237 (1,510) 6,092 (3,851) 2,241
Net finance costs (179) - (179)
------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Profit before tax 5,913 (3,851) 2,062
Tax (198) 770 572
------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Profit for the year 5,715 (3,081) 2,634 ------------------------------ ------------ -------- -------- -------- ---------- ---------- -------- --------
Segment assets
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- --------
Construction 6,195 11,220
Power 10,841 9,240
Highways 14,297 12,037
Telecommunications 15,737 18,351
Water 40,035 27,554
-------------------------------------- -------- --------
Total segment assets and consolidated
total assets 87,105 78,402
-------------------------------------- -------- --------
Other segment information
Additions to non-current
Depreciation and amortisation assets
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------------- -------------- ------------ ------------
Construction 424 273 924 390
Power 192 355 420 507
Highways 567 382 1,236 546
Telecommunications 444 345 969 493
Water 1,430 1,045 3,111 1,491
------------------- --------------- -------------- ------------ ------------
Total 3,057 2,400 6,660 3,427
------------------- --------------- -------------- ------------ ------------
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.
4. Information about major customer
Revenues of approximately GBP118,872,000 (2016:
GBP101,076,000) 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.
5. Earnings per share
Earnings per share, both basic and diluted, is
calculated on the profit attributable to equity
holders of the parent of GBP742,000 (2016: GBP2,634,000)
and the weighted average of 10,150,000 (2016:
10,150,000) shares in issue during the year.
6. 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 no unrecognised trading
losses carried forward (2016: GBPnil).
Factors that may affect future tax charges
A reduction in the UK corporation tax rate from
21% to 20% (effective from 1 April 2015) was substantively
enacted on 2 July 2013. Further reductions to
19% (effective from 1 April 2017) and to 18% (effective
1 April 2020) were substantively enacted on 26
October 2015, and an additional reduction to 17%
(effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group's
future current tax charge accordingly. The deferred
tax asset at 31 December 2017 has been calculated
based on these rates.
7. Dividends
Amounts recognised as distributions to equity
holders in the year:
2017 2016
GBP'000 GBP'000
Final dividend for the year ended 31 December 303 -
2016 of 3p (2015: 0p) per share
Interim dividend for the year ended 31
December 2017 of 3p (2016: 1.5p) per share 305 152
--------- --------
608 152
========= ========
The Directors recommend a final dividend of 3p
per share for the year ended 31 December 2017
(2016: 3p).
8. 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.
Additionally, the Group has the following interests
in joint operations;
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.
DNM Alliance - (Water Projects for Severn Trent
Water)
50% interest in a joint operation with Doosan
Enpure 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 2017 incorporate the following
relating to the joint operations:
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Revenue 45,206 19,519
Expenses 43,046 18,316
Assets 2,025 2,907
Liabilities 2,025 2,907
9. Share capital
2017 2016
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
10. Contingent liabilities
Aviva Insurance Limited, Lloyds Bank PLC, and
HCC International Insurance Company Plc have given
Performance Bonds to a value of GBP6,010,000 (2016:
GBP4,490,000) on the Group's behalf. These bonds
have been made with recourse to the Group.
11. Dividend timetable
The Company is pleased to confirm, in accordance
with LR9.7A.2 that a final dividend of 3.0p per
share will be paid on 1 June 2018. The ex-dividend
date is 10 May 2018 and the record date for the
final dividend will be 11 May 2018.
12. The Annual Report and Accounts for the year ended
31 December 2017 will be despatched to shareholders
on or around 19 April 2018 and will be available
on the Company's website - www.northmid.co.uk.
13. The Annual General Meeting will be held on Thursday
17 May 2018 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 SEFFMWFASEED
(END) Dow Jones Newswires
March 28, 2018 02:00 ET (06:00 GMT)
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