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leaders 2015 33 MWH takes AMP6 by storm NMC sees growth despite tight margins MWH Gregge House Gregge Street Heywood Lancashire OL10 2DX T: 01706 367555 www.mwhglobal.com NOrTH MiDLaND CONSTruCTiON Nunn Close The County Estate Huthwaite Sutton-in-Ashfield Nottinghamshire NG17 2HW T: 01623 515008 www.northmid.co.uk the LeADeRS 2015 AMP6 has proved to be one of MWH's most successful – its wins include becoming strategic solutions partner for Southern Water, and programme manager for Thames Water as part of the eight2O alliance. Add to that being appointed to the capital delivery programmes of Anglian Water, Severn Trent Water, and its involvement with a number of joint ventures. Plus, MWH is part of the ESD joint venture appointed as the preferred bidder for Scottish Water. MWH UK managing director Cath Schefer puts this success down to planning. She says: "There are a couple of things. firstly, we planned well ahead and we thought about it well in advance of AMP6 – we're actually thinking about AMP7 and AMP8 now – and how we position ourselves to make sure that we're successful. We North Midland Construction (NMC), parent of NMC Nomenca and Nomenca, says there has been encouraging growth in the construction market during the past year, although "margins remain extremely tight". As a result, the group result was severely affected by the necessity to make further provisions against legacy contracts, secured at the height of the recession, in the building and civil engineering division (B&CE). Group chairman Robert Moyle said the utilities division had a poor year due to losses incurred on the BDUK broadband roll-out programme for Carillion Telent. However, the overall group underlying profitability of £4.35M and revenue for the year exceeded expectations. However, extra legacy provisions contributed to a group loss before tax of £2.97M on a revenue that increased by 8.8% to £193.2M. The secured order book for the current financial year is £155M, and represents a put a lot of thought into listening to everybody out there, listening to what the regulator's saying; listening to what water companies are saying and understanding how they might differ." Schefer says that some- thing changes in every AMP. This time the focus has been on the customer. "This AMP is the big change to the customer promises rather than the project outputs and the whole totex approach." significant proportion of the 2015 budget. This level of secured revenue, along with the forecasted level of orders likely to be received under the existing frameworks, coupled with the underlying perfor- mance, is encouraging. The resolution of the few remaining legacy contracts still remains challenging, but progress is being made. NMC says the AMP5 programme had drawn to a conclusion with "the inevitable pressure" on margins, but costs have been controlled and the division is performing to expectations. Schefer says the new cycle is "the most exciting AMP that I've worked in", because it is so very different. "If you are going to achieve a 20-30% saving, and that's what most of the companies are looking for, you do need a different way of thinking. You're not going to achieve that just by carrying on as normal. You're going to have to stop and think and change the way you do it." The figures below relate to MWH UK. Preparatory work has started on the Severn Trent Water AMP6 programme, which was secured in December 2013. The E5 programme for Severn Trent Water, for which NMCNomen- ca has a 25% share of the construction consortium, was expected to be completed by the year-end and the projected outturn remained encouraging. Nomenca, the mechanical and electrical subsidiary, had a slow start the 2014 financial year but the second half was expected to perform in line with the group's expectations. THE NuMBErS 2011 2012 2013 % CHaNGE Sales £M 94.4 101.4 98.9 -2 Gross profit £M 30.4 32.5 34.3 5 Operating profit £M 7 6.2 4.6 -26 Pre-tax profit £M 7.1 6.3 4.8 -24 Staff 1,174 1,122 1,086 -3 Net assets £M 26 28.4 27.7 -3 THE raTiOS 2011 2012 2013 % CHaNGE Return on capital % 27.4 22 17.2 -22 Gross margin % 32.2 32.1 34.6 8 Operating margin % 7.4 6.1 4.6 -24 Net margin % 7.5 6.2 4.8 -22 Sales/employee £K 80.4 90.4 91.1 1 THE NuMBErS 2011 2012 2013 % CHaNGE Sales £M 167.2 168.9 177.6 5 Gross profit £M 40.5 45.8 41.9 -9 Operating profit £M -0.7 0.8 -5.9 -855 Pre-tax profit £M -0.8 0.7 -6 -941 Staff 993 1,007 1,067 6 Net assets £M 18.3 18.3 12 -35 THE raTiOS 2011 2012 2013 % CHaNGE Return on capital % -4.3 3.9 -49.9 -1,385 Gross margin % 24.2 27.1 23.6 -13 Operating margin % -0.4 0.5 -3.3 -819 Net margin % -0.5 0.4 -3.4 -900 Sales/employee £K 168.4 167.8 166.4 -1

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