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34 Leaders 2016 Non-repeat bidding compensates risk elsewhere NMC moves back into the black 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 Tel: 01623 515008 www.northmid.co.uk the LeADeRS 2016 MWH is benefiting from being a member of some significant AMP6 frameworks, such as Southern Water, Thames Water and Severn Trent Water, where work is allocated without the need for repeat competitive bidding, according to chief executive Catherine Schefer. And she said because this accounts for a significant proportion of the company's revenue throughout AMP6, MWH is well placed to face the risk posed elsewhere in the business where repeat competitive tendering is necessary. Schefer said she also expected revenue opportunity to continue through MWH's current financial year on existing AMP5 frameworks "as some existing AMP6 procurement processes are delayed and new projects are released on existing con- tracts". AMP6 has been successful for MWH with capital delivery programme wins at Anglian NMC, parent to NMCNomenca and Nomenca, has returned to profitability, which chairman and chief executive Robert Moyle described as "hearten- ing" as it was achieved in spite of the resolution of certain legacy contracts having a negative impact on the underlying position. The group returned a profit of £0.6M before tax (2014: £2.97M loss) on a revenue that increased by 12.7% to £217.6M (2014: £193.18M). The combined impact of the legacy contract resolutions and extra provisions taken was £3.84M. Only one legacy contract now remains to be resolved, said Moyle Looking forward, Moyle said the resolution of the majority of the outstanding legacy contracts has significantly reduced the level of risk within the business. This coupled with a secured order book of £181M (2014: £155M), which represents a significant proportion of the 2016 budget, will lead to Water, Severn Trent Water, and its involvement with a number of joint ventures. Plus, MWH is part of the ESD joint venture at Scottish Water. Schefer puts this success down to planning. She said: "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." further growth in this financial year. He added that the net return on revenue remains low and the concentration this year is upon improvement. The underlying trend in profitability in 2015 was positive and the perpetuation of this trend, coupled with the size of the order book, leads the Board to be cautiously optimistic for an improved performance this financial year. Recent schemes include Schefer continued: "We 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 said that some- thing changes in every AMP. This time the focus has been on the customer. She said: "This AMP is the big change to the customer promises rather than the project outputs and the whole totex approach." the Ambergate Reservoir project, where the team arranged for a series of site visits for local pupils. Also, Severn Trent Water and NMCNomenca held a special event to thank 200 residents from Newhall Court in Birmingham for their patience and co-operation during the execution of a £1M flood alleviation scheme, which seriously affected them. The work was completed on schedule and without any complaints, which was an exceptional performance. THE NuMBErS 2012 2014 2015 % CHaNGE Sales £M 101.4 98.9 92.3 -7 Gross profit £M 32.5 32.3 31.5 -2 Operating profit £M 6.2 4.6 5.8 27 Pre-tax profit £M 6.3 4.8 6.7 41 Staff 1,122 1,086 1,032 -5 Net assets £M 28.4 27.7 29.2 6 THE raTiOS 2012 2014 2015 % CHaNGE Return on capital % 22.0 17.2 23.0 34 Gross margin % 32.1 32.6 34.2 5 Operating margin % 6.1 4.6 6.3 36 Net margin % 6.2 4.8 7.3 51 Sales/employee £K 90.4 91.1 89.4 -2 THE NuMBErS 2012 2013 2014 % CHaNGE Sales £M 168.9 177.6 193.2 9 Gross profit £M 45.8 41.9 51.6 23 Operating profit £M 0.8 -5.9 -2.8 51 Pre-tax profit £M 0.7 -6.0 -3.0 50 Staff 1,007 1,067 1,149 8 Net assets £M 18.3 12.0 9.0 -25 THE raTiOS 2012 2013 2014 % CHaNGE Return on capital % 3.9 -49.9 -33.1 34 Gross margin % 27.1 23.6 26.7 13 Operating margin % 0.5 -3.3 -1.5 55 Net margin % 0.4 -3.4 -1.5 54 Sales/employee £K 167.8 166.4 168.1 1

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