Contractor blames project cancellations and extension of payment terms as shares plunge 37%

Pre-tax profit at North Midland Construction has plummeted 60% due to the credit crunch.

In the six months ended 30 June 2008 the figure dropped from 拢2m to 拢792,000. The company鈥檚 share price fell 37% in early trading to 105p.

Robert Moyle, chairman and chief executive, said: 鈥淭he overall economic picture is becoming increasingly difficult, with a general decline in tendering opportunities, project cancellations due to funding problems and rapidly increasing costs, most particularly in energy and materials.鈥�

Turnover over the period was down slightly from 拢107.3m to 拢103.5m.

The firm blamed the poor figures on the closure of its Telent/BT contract in the eastern region, which produced a hit of 拢970,000, and the pulling of residential schemes.

It also said the extension of payment terms by clients had hit its bottom line. It said: 鈥淚n the light of the current economic climate, certain clients are extending payment terms wherever possible, whereas we are endeavouring to maintain payments to our supply chain in accordance with our normal terms.鈥�

Despite the tougher environment, it said its borrowings of 拢4.3m were 鈥渨ell within鈥� its banking debt facilities.

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