Africa-focused mining engineer and project manager MDM Engineering remains positive, despite a squeeze on margins and the resignation of chief executive Grant Lowman, who will step down when a new appointment is made early next year.
The downturn resulted in some of MDM's projects being cancelled or postponed, which along with higher site costs incurred on behalf of clients caused gross margin to fall to 32.1 per cent from 51.0 per cent a year earlier. But the company is now seeing signs of improvement with more expressions of interest for project work. MDM has secured two execution projects and four studies (initial stages of work that are often the precursor to execution projects) since the year end and the period end value of projects under execution totalled $338m (£205m).
Staff remained at full utilisation during the period and in fact the company had to hire staff to accommodate the workload. Despite the signs of improvement, management continues to seek cost containment and greater operational efficiencies. An execution pipeline that remains "healthy" should keep the team fully utilised well into next year, and the company is examining a number of opportunities outside its traditional African market.
Broker Numis expects full-year pre-tax profits of $8.2m and EPS of 16¢ (2009: $11.1m/21¢).
| MDM ENGINEERING (MDM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 166p | MARKET VALUE: | £61.8m | |
| TOUCH: | 162-170p | 12-MONTH HIGH: | 171p | LOW: 39p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 55¢ | NET CASH: | $13.3m* | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 17.3 | 6.81 | 13.2 | 3.75 |
| 2009 | 22.4 | 5.05 | 9.96 | 3.75 |
| % change | +29 | -26 | -24 | - |
Ex-div: 9 Dec Payment: 31 Dec *Includes $4.2m of restricted cash £1=$1.648 | ||||
