North Midland Construction PLC (NM Group) has announced a record £250 million turnover for 2016 with a 165% increase in profits over 2015 with the publication today of its 2016 financial results.

Operating profit went up to £2.24 million in 2016 from £847,000 in 2015 – described as “although not at the level the Board finds acceptable… (this)…. is a significant increase on the previous year.”

The Group has a secured workload for 2017 of circa £225 million (2015 Secured workload for 2016 - £181 million), which equates to circa 80% of 2017 budgeted revenue.

The company has six main operational divisions – Building, Civil Engineering, Highways, NMCNomenca, Nomenca and Utilities.

In water, which consists of the two operating divisions of  NMCNomenca and Nomenca, the Group said it was continuing to maintain its “strong position of market leadership in the water sector ….Both turnover and margin growth has been achieved and great potential exists for further progress.”

In NMCNomenca, the Group said it has successfully developed a broad range of specialist services, specifically in Non-Infrastructure Clean Water where its capabilities 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 results say. The first half of 2017 has seen the AMP7 procurement process begin for STW which will be a key focus.

The latest area NM Group has expanded into is in Small Works/Asset Maintenance – it now provides a reactive and proactive service along with the upgrade and maintenance of private drains and pumping stations. Operationally the Group said it has good visibility of current and future workload.

Commenting on its Nomenca division, the Group said:

“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.”

NM Group said that although the current focus is UK Water Industry frameworks it experienced downturns through the transition between AMPs and that it had a drive and focus on business development in non-water opportunities and plant service and refurbishment for this period.

The Group is also driving improvements and expanding its design capabilities in order to capitalise on industry demand for engineering services and total expenditure (TOTEX) based solutions, both with existing customers and new market sectors.

NM Group also had some interesting comments on key market trends:

“Within the water industry there is a commitment to spend circa £2 billion per annum on upgrades and new works including circa 40% through off-site build solutions, £1.2 billion per annum on Capital Maintenance and £500 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 £30 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.