North Midland profits up as contract rows are settled

North Midland Construction has resolved disputes on a pair of problem contracts as profits at the group increased despite a slump in turnover.

The civil engineering specialist said contract rows have now been resolved at Fiddlers Ferry power station near Warrington and Ferrybridge power station in West Yorkshire where the firm was involved in installing Flue Gas Desulphurisation plants.

Settling the disputes led to a £1.39m cash inflow during the first half of this year but a third row at Halifax sewerage works is still ongoing.

Results for the half year to 30 June 2009 show turnover fell to £71.3m from £103.5m last time but profitability climbed to £1.4 m from £0.8m.

The utilities division performed well following a tough year in 2008 following major losses on a lump sum contract in Kent and losing out on a major round of work for BT via Telent.

This year the firm has secured the South Yorkshire Digital Scheme with K.COM which is worth £30m.

The civil engineering division suffered from decreased revenue and profitability due to cutbacks in expenditure by major clients but has recently secured the AMP5 framework with Severn Trent Water.
 
North Midland Building has been hit hardest by the recession and profitability declined to £0.09m from £0.17m the previous year. The subsidiary has recently secured £12m of new orders and construction work will begin on these contracts in the second half of this financial year.

Profitability at Nomenca, the mechanical & engineering subsidiary, fell to £0.29m from £0.48m, on revenue reduced by 4%, due to reduced expenditure primarily by the water sector. 

Robert Moyle, chairman and chief executive, said: "The economic situation remains very difficult and, whilst many tenders have been submitted, few contracts are starting.

"Across the group cutbacks in expenditure on framework contracts are also being experienced, particularly in the water sector and we therefore need to secure further workload but we are confident that this can be achieved.

"In the meantime the AMP5 framework for Severn Trent Water and the South Yorkshire Digital Scheme recently secured will provide significant revenue in the forthcoming years.

"Current revenue for this financial year is £150m and £70m has already been secured for 2010 and the overall cost base of the group has been reduced to align with current revenues therefore we anticipate a result similar to the previous year."