NMCN Nmcn Plc

RNS Number:9336Y
North Midland Construction PLC
20 May 2004



NORTH MIDLAND CONSTRUCTION PLC
AGM STATEMENT

North Midland Construction plc, the UK provider of civil engineering, building,
mechanical and electrical services to public and private organisations, today
held its Annual General Meeting. At the meeting, the Chairman, Robert Moyle,
made the following statement:

"Last year I welcomed you all into our new offices, which have proved to be an
excellent investment for the company and have provided an enhanced working
environment. I am delighted to report that the Phase 2 landscaping improvements
have now been completed and they are emblematic of what the Group is aspiring to
achieve. The project displays innovation in it's engineering, whilst massively
improving the local environment and the working conditions for the employees. It
also projects a forward looking image for the company to its clients, both
existing and potential. Financially, it has theoretically been self-financing,
as at least an acre of previously unusable land has been reclaimed. It is our
intention to commence on Phase 3, which involves significant improvements to the
workshops, in the last quarter of the year.

This year is critical to your company, with the AMP4 selection process being
undertaken by all the water companies and the BT and NTL term contracts also
being subject to retendering. I was hopeful that some news may have been
forthcoming to enable me to update you on the current position, but our clients
have still to announce their final decisions. Suffice it to say that we are
cautiously optimistic that we will retain the status quo and hopeful that we may
actually secure some new business. The Civils division and Nomenca have made the
final stages of adjudication for five water companies and are in negotiations to
secure tier one supplier status, where we have been unsuccessful with the main
bid such as Welsh Water. Decisions on the telecoms contracts are imminent and I
would not wish to pre-empt the situation any further. The AMP4 programme
involves high levels of capital expenditure by the water companies over the next
five years. Therefore, to secure one extra framework to our current quota would
significantly increase the turnover of both the Civils division and Nomenca and
provide the springboard for future growth. Similarly, if we were to secure the
NTL business contract for the next two years, it would provide the doorway into
the installation of cabling and equipment in business premises, which is an area
of activity not currently undertaken by the division.

However, this is for the future and to revert to the current year, happily I can
report that the first quarter has provided a promising platform with the Group's
profit ahead by 10% on a similar turnover to the comparable period last year.
This portents well for the full year with circa 70% of the budgeted Group
turnover already secured.

The performance of the individual constituents of the Group are key to the
stated pursuit of organic growth. As you are aware, the parent company trades as
three divisions and there are two main subsidiaries North Midland Building
Limited and Nomenca Limited, and I will update you on them all individually.

The expansion of the Civils division is of paramount importance and the budget
for this year includes for a 16% increase in turnover over 2003. The first
quarter has been profitable and the current order book stands at #23m with a
further #4m in the pipeline. The water industry is still key to the success of
the division, but significant orders have also been received in the power, rail
and steel industries. Expansion of the existing client base is of paramount
importance and this is being achieved by developing the template that has worked
so successfully in the Midlands for the other satellite offices.

The Highways, or Special Projects as it is known, division has enjoyed a very
favourable start to the year, with results for the first quarter in excess of
the comparable period last year. Turnover is forecast to advance to #9.5m this
year and secured orders currently stand at #4.5m. As a consequence of the
successful participation with the AmScott consortium and the successful delivery
of other varied projects, increased opportunities are becoming available to
tender for highway schemes of a higher value than previously. This will enable
the division to expand more rapidly.

Volumes in the telecommunications market still remain low, with very little new
capital spend and most of the available work being of a reactive nature, which
causes particular logistical problems. However, by employing a large in-house
workforce, this company is able to cater to the clients' requirements and the
division is well represented and trading profitably with all the major telecom
companies. Successful projects have been undertaken and are actively being
sought in related areas, such as CCTV and the division is currently developing
an in-house cabling capability.

The continuing success of the two subsidiary companies, North Midland Building
Limited and Nomenca Limited, in becoming major forces in their respective
sectors is particularly satisfying. As stated previously, it enables the Group
to be able to offer a full turnkey service to clients and this has been
admirably demonstrated with the successful delivery of two biomass schemes at
Ironbridge and Kingsnorth Power Stations.

North Midland Building is currently trading in excess of 2003 and orders in hand
total #17.5m. It's largest ever individual contract for 569 student flats in
Lincoln has been undertaken very successfully so far and is on programme for
completion in the Autumn. Other current projects are an eclectic mix of schemes
for developers, the prison service, the MOD and private clients. The building
market continues to remain buoyant and North Midland Building is more than
capitalizing upon it.

Nomenca Limited has expanded at a rapid rate over the last two years and this
expansion will continue this year, albeit at a more measured rate. The regional
offices have been further developed and allied markets to the water industry,
the traditional main source of workload, have been successfully pursued, both in
terms of major projects and minor works. Whilst the result for the first quarter
is less than that for the heady previous year, further progress in terms of both
turnover and profit is anticipated for the full year.

In spite of the rapid organic growth, the Group still remains cash positive and
the balance sheet is strong. The share price has significantly out-performed the
market over the last year and it's elevation to new levels is of particular
satisfaction to your Board. Today it stands at a level of 148.5p, which is a
record high. Increased shareholder value is the mission and with both the
increase in share price and dividend, the Board is confident that it is
delivering. However, we are all very mindful that the focus has to be
maintained.

As I elaborated earlier, the prospects for the Group are very positive and yet
very challenging. There is evidence that clients in its major areas of
operations are actively seeking contractors with an in-house capability to
undertake contracts. A Company such as this prospers through the quality,
loyalty and skills of its workforce. Over the last year more than one hundred
additional staff have been welcomed and sixteen gold watches presented for
twenty one years service. A workforce needs nurturing and the recent
accreditation to the Investors in People standard and consequent improvements in
training are assisting in this. It is the quality and commitment of this
workforce that provides the confidence that our twin missions of organic growth
and increased shareholder value will be achieved."



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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