Firm said it had been hit by 鈥渦nfavourable鈥� settlements
North Midland Construction has said it will make an operating loss of 拢6m in its annual accounts for 2013, after 鈥渦nfavourable settlements鈥� and 鈥減roblematical contracts鈥�.
In November 2013, the firm forecast that 鈥渢wo major problematical contracts within the building and civil engineering division鈥� were expected to have negative effect on its annual results, because of 鈥渦ncertainty over the completion costs and outturn claim values鈥�.
Today, in a statement to the City, it said: 鈥淎s a result of further reviews of the status of these contracts and the unfavourable settlement of other old projects where reduced payment had to be accepted, as there was a significant risk of client commercial failure, the group expects to report an operating loss of circa 拢6m.鈥�
It added that its highways division had also 鈥渋ncurred bad debts on a major project鈥� which would also drag down its results.
North Midland also said that 鈥渃hallenging conditions鈥� in the industry had resulted in an 鈥渋mpact on margins and profitability鈥�.
But it said it had reorganised its building and civil engineering division to reduce its exposure to risk.
It said its underlying trading in the last three months of 2013 was profitable and that its water, utilities and highways businesses 鈥渄elivered in line with expectations鈥�.
It said: 鈥淭he 2014 [group] opening order level is strong and market conditions in some areas are improving. This, coupled with the re-organisation and re-profiling of the building and civil engineering division, where improved performance has already been experienced, will deliver a return to growth this year.鈥�
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