TIDMNMCN
RNS Number : 5720K
NMCN PLC
23 April 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
nmcn PLC
2019 FINAL RESULTS & FURTHER COVID-19 UPDATE
nmcn PLC ("the Company" or "the Group" or "nmcn"), is a leading
engineering and construction company, delivering major water, built
environment and critical national infrastructure projects across
the UK. Before reporting and discussing the final results for the
financial year ending December 31(st) 2019, we would like to
provide a further update on the implications of the COVID-19
situation for the Company.
COVID-19 Update
As stated in our announcement of 14(th) April, nmcn is
endeavouring to take all appropriate steps to protect the health
and wellbeing of its staff, customers and suppliers and to fully
comply with Government requirements and requests. Furthermore, we
continue to seek to be a responsible member of the communities in
which we operate and serve, whilst positioning our business to
emerge from this unprecedented period in the strongest possible
condition.
Current Position
Where it is safe to do so, we continue to work on those projects
that are deemed to be in areas of critical national significance to
the COVID-19 response. Presently such activities represent up to
70% of the workload we would anticipate in a more normal operating
environment. Our services in Building have been disrupted with a
temporary cessation of works at the majority of sites.
We have also implemented a number of initiatives to minimise
costs and preserve cash. These include a temporary and voluntary
reduction in the remuneration of the Directors of 20% and a 10%
reduction for the senior managers, deferral of all non-essential
capital and overhead expenditure and a hiring freeze. Measures
taken to reduce cash outflows include the deferral of VAT payment,
utilisation of the Government's Job Retention Scheme and the
decision not to recommend a final dividend for 2019.
Looking Ahead
As the statement below will emphasise, we entered the current
year with a robust operational and financial platform from which to
address promising market opportunities. However, over recent weeks
we have had to adjust to the rapidly evolving challenges of
COVID-19 and our response will continue to balance self-help with
Government initiatives in a holistic and fair manner.
The Board is confident of the Company's ability to survive such
unprecedented circumstances and to emerge as a strong contender in
its chosen markets, yet at this stage we are not able to quantify
the likely impact on the 2020 full year results and consequently
the Board does not believe it appropriate to provide forward
looking financial guidance until greater visibility is available.
The evolving position of COVID-19 and its impact on the business is
reviewed and communicated to all our colleagues daily whilst we are
engaging collaboratively with our customers and our supply chain
partners as part of our business continuity plans.
Final Results for Year Ended 31 December 2019
As restated Year on
year
Year ended Year ended* Movement
31-Dec 31-Dec
2019 2018
GBP'000 GBP'000 %
Revenue 404,658 340,450 18.9
Profit before tax 7,441 6,008 23.9
Profit before tax and non-recurring items 10,389 7,873 32.0
Earnings per share (basic) 57.36p 47.50p 20.8
Earnings per share before non-recurring
items 80.53p 62.42p 29.0
Cash balance 25,814 33,353 (22.6)
Interim dividend per share 9.0p 6.0p 50.0
Final dividend per share (proposed) 0.0p 12.0p -
----------- ------------ ---------
Total dividend per share 9.0p 18.0p (50.0)
*Restatement in relation to IFRS 16 - Leases
For further information:
John Homer, Chief Executive - 01623 515008
Daniel Taylor, Chief Financial Officer - 01623 515008
Financial Highlights
-- Revenue increased by 18.9% to GBP404.66m (GBP340.45m)
-- Profit before tax increased to GBP7.44m, from GBP6.01m an increase of 23.9%
-- Profit before tax and non-recurring items totalled GBP10.39m
(GBP7.87m); solid progress across most business units
-- Full year dividend of 9.0p (2018: 18.0p), based upon interim
dividend paid and no recommended final dividend
-- Cash position remains positive with year-end balance of GBP25.81m
-- Secured workload, as at 31 March 2020, for work to be
constructed during 2020 stood at GBP293.64m which represented just
under 80% of anticipated revenue for 2020, and was in line with
management's expectations for a transitional year in the Water
Segment. This is currently under review due to the impact of
COVID-19.
John Homer - Chief Executive - commented:
" The 2019 results reflected a strong underlying performance
with good progress towards achieving the targets of our strategic
plan and building a solid platform for further growth. The strength
of our ongoing operations allowed us to continue to exercise rigour
in the work that we chose to take on whilst our people remained the
overarching differentiator and their performance in delivering our
strategy continues to vindicate investment in the development of
our talent pool.
Our focus on cash maintained positive balances throughout the
year and culminated with a year-end balance of over GBP25m. This
has enabled us to continue investing in our own development
pipeline and complete our first acquisition for many years.
In the near-term we need collectively to focus on confronting
the implications of COVID-19 and I am convinced that the commitment
of our highly skilled and dedicated workforce will once again be a
major factor in achieving this as a priority. But equally, we
should not lose sight of the fact that the Company is increasingly
well placed to address the growing opportunities that lie ahead in
the markets it chooses to serve."
OUR OPERATING AND FINANCIAL REVIEW
Overview of 2019
The Group has delivered an acceptable financial performance
within difficult market conditions for construction and the
uncertainty that prevailed in the UK economy generally. Good
progress has been made against our strategic plans.
Revenue has increased significantly, compared to the previous
period, however the net return on these revenues has been impacted
by non-recurring items in the Built Environment segment, where the
Board has taken a considered approach to likely recoveries. The
Water segment has seen significant growth in the second half of the
year as Asset Management Period ("AMP") 6 Framework comes to its
natural conclusion. Reduced returns in the segment reflect the
tunnelling cost overruns on a major infrastructure scheme.
Further investment has been made in adherence of governance
controls to manage risk, and into the development of our people to
meet the increasing demands of our customers for a high-quality
service. The Group is therefore well positioned to take advantage
of the increase in infrastructure spending plans that is
anticipated in the medium-term.
The continuing successes in securing framework places for all
our business units, ongoing profitability and our cash position are
further significant positives which give the Board confidence in
the Group's long-term sustainable future.
Our operating structure
Our operational activities are divided into two operating
segments, Water and Built Environment ("Our segments"). These
segments are clearly defined, based on the differing services they
provide to the distinct clients that they serve.
During 2019, the operating segments were serviced by five
business units. Each business unit has a clear, focused offering to
their customers. These business units have the skills and
experience to meet the needs of our customers and work effectively
in these markets. They provide expertise and innovation to deliver
added-value to the projects they undertake.
From 1 January 2020 our two Water business units were
amalgamated under one senior leadership team to provide a
co-ordinated and cohesive approach, focused on the products and
services which they provide to our customers. This structure will
maximise the opportunities available to us in the Water industry
and aligns to our strategic goals and direction. This will be
complemented by the three existing business units in the Built
Environment segment, and one additional business unit to service
our Power & Industrial clients.
Our financial performance
The Group has delivered a significant increase in revenue of
18.9% year on year from GBP340.45m in 2018 to GBP404.66m in 2019.
The revenue increase reflects additional turnover in both the Water
and Built Environment segments of the Group and was in excess of
management's expectations for the period.
Profit before tax for the year totalled GBP7.44m compared to a
restated figure of GBP6.01m in 2018, an increase of 23.9%, and in
line with the Board's expectations. The Group has implemented
IFRS16 using the full retrospective method, which has had
negligible impact on the prior year. Profit before tax and
non-recurring items for the year ended 31 December 2019 amounted to
GBP10.39m compared to GBP7.87m for 2018, as restated for IFRS 16,
an encouraging 32.0% increase. Basic earnings per share reflected a
20.8% increase to 57.36p (2018: 47.50p) on an unchanged tax rate of
19%.
Solid progress has been achieved across most business units and
sectors. The Telecoms business unit results were a significant
improvement from 2018, with excellent opportunities for 2020 and
beyond. Overall, the Board is satisfied with the results for 2019,
however further improvements can be made to the net return on sales
and this continues to be a key strategic focus.
Water segment
As restated
Year ended Year ended Year on year
31 Dec 2019 31 Dec 2018 movement
GBP'000 GBP'000 %
Revenue 282,625 244,580 15.6%
Operating profit 7,581 8,096 (6.4%)
Operating profit margin 2.7% 3.3% (0.6%)
Secured workload 157,542 211,319 (25.4%)
The growth in revenue within the Water segment has been
significant in the year and is up 15.6% on last year, an increase
of GBP38.05m. The growth principally reflects our focus on
delivering exceptional customer service and has been achieved
through new framework awards, an increase in major infrastructure
works, and the ongoing performance on our Asset Management Period
("AMP") 6 Frameworks.
The operating profit of GBP7.58m is a slight decrease on last
year's GBP8.10m with operating margins also lower as a result of
the conclusion of the AMP cycle and close out of the remaining
schemes. Tunnelling overrun costs on a major infrastructure scheme
had an adverse effect in the year on the operating margin of the
segment. The operating profit performance was in line with our
anticipated strategic plans for the financial year.
There has been further investment in organisational capability
during 2019, to maintain our competitive advantage and to ensure
that we are best placed to deliver on the new major frameworks we
have been awarded. This investment and the new Group operating
structure will benefit risk management, project management and our
customer focus.
The continued investment in our people and their development, to
ensure the sustainability of the business, means the segment is
cautiously optimistic for 2020, with a stronger outlook for future
years when AMP7 is at full capacity. The number of water frameworks
that have been retained and the increase in new frameworks awarded,
with both new and existing customers, is extremely encouraging.
The acquisition of Lintott Environmental Technologies Limited
("LET") which has a wholly owned trading subsidiary called Lintott
Control Systems Limited ("LCS"), was our first acquisition in
recent years and one that offers an excellent opportunity for nmcn
to strengthen and expand an already established offering to the UK
water industry and potentially other markets in the future. A Cash
consideration of GBP1 was paid on the acquisition, however further
consideration may be due and an initial estimate of GBP2.18m has
been recognised for contingent consideration, which is reflective
of fair value as at the acquisition date. By providing off-site
build, chemical dosing systems, motor control centres, and control
systems, the acquisition complements our full asset lifecycle
management offering to the water sector in offsite manufacture,
production and maintenance of assets. LCS contributed positively to
the Group's result in the final quarter of 2019.
As at 31 March 2020, the secured workload for construction
during 2020 stood at GBP157.54m. This was behind the position for
2019 and in line with revenues achieved in 2018, but would still
represent in excess of 70% of management's expectations for revenue
in 2020. Opportunities are available for our people in the Built
Environment segment due to the growth profile and additional
potential workload. The anticipated reduction in revenue for 2020
is due to the current visibility of workload for the AMP
transitional year, but we expect this to increase over the medium
term. This is currently under review due to the impact of
COVID-19.
Built Environment segment
As restated
Year ended Year ended Year on year
31 Dec 31 Dec movement
2019 2018
GBP'000 GBP'000 %
Revenue* 122,783 95,870 28.1%
Operating profit / (loss)* 3,037 (69) n/a
Operating profit margin* 2.5% (0.1%) 2.6%
Secured workload 136,099 108,952 24.9%
*Before non-recurring items as defined
The Built Environment segment saw an increase in revenue in 2019
of 28.1% to GBP122.78m, which coupled with a significant turnaround
in the Telecoms business unit to produce an operating profit before
non-recurring items of GBP3.04m, compared to a marginal loss in
2018.
As anticipated last year, a restructure of the Telecoms business
unit, which included a new operating structure and a change in
leadership to improve operating performance, was implemented. The
restructuring also involved new commercial terms being agreed with
the business unit's major client and a more appropriate cost base
alignment. The benefits of these changes are evident, and we have
seen an increase in operating profit for the business unit to
GBP1.43m from a loss of GBP2.8m in 2018. The current operating
performance has provided a better quality of earnings for the
segment. The new frameworks agreed for both new build schemes and
the ongoing maintenance of existing networks gives the Board the
confidence in a positive outlook.
The Building business unit has continued to perform strongly in
challenging market sectors, where delays from our customers due to
the uncertainty surrounding Brexit have undoubtedly had an impact.
The underlying performance of the business has been strong,
excluding the non-recurring item outlined below relating to the
administration of a member of our supply chain.
The nmcn Investments development portfolio has grown in 2019,
however currently this is on hold and all sites suspended due to
the impact of COVID-19.
The Highways business unit has suffered from a delay in local
infrastructure expenditure against management's expectations for
the year, but has nonetheless contributed positively.
The Built Environment segment, as at 31 March 2020, had secured
work to be constructed during 2020 of GBP136.10m, an increase of
24.9% on the position last year. This represented slightly above
85% of management's revenue expectation, but is currently under
review due to the impact of COVID-19. In 2020 it is anticipated
that the Group will reflect a more balanced mix of turnover and
profitability across the two business segments.
Non-recurring items
The non-recurring items in 2019 related to the issues described
below and in total amounted to GBP2.95m (2018: GBP1.87m) before
tax. These items are not attributed to the ongoing trading of the
Group and are explained in the following paragraphs accordingly.
The profit before non-recurring items is deemed by the Board to be
an alternative performance measure ("APM"). The Group has used this
APM to aid comparability of its performance and position between
periods, but these metrics are not comparable with other businesses
as they are specific to nmcn.
Legacy contract losses (see below) accounted for GBP1.49m of
non-recurring costs and revenue adjustments in the period, GBP0.74m
and GBP0.75m respectively (2018: GBP0.51m, solely costs).
Non-recurring direct costs of GBP1.86m (2018: GBPNil) relating
to the administration process of a member of the Group's supply
chain have been included as non-recurring. The Board has
categorised these costs as non-recurring due to the size of the
impact and the infrequent nature of the event. The Board continues
to enhance the procedures and controls around the financial
viability of its supply chain.
During 2018, the Group rectified significant defective work
resulting from a substandard product of an aggregate supplier, at a
cost of GBP0.47m. This situation is unlikely to be repeated and
recovery is being progressed. In the previous year a contingent
asset was not recognised in line with applicable accounting
standards. In the current year the Board is satisfied, based on
expert opinion, that the recovery of the direct costs of the asset
should be recognised at GBP0.39m. For consistency with the prior
year, the Board has classified this item as non-recurring.
Further details of non-recurring items can be found in note
2.5.
Legacy contract
Legacy contracts are construction contracts entered into at the
height of the recession, before 31 December 2013, and which carried
a higher than normal contractual and commercial risk. These
contracts negatively impacted the Group's income statement in 2013
and subsequent years. Only one legacy contract now remains to be
resolved.
The Group has been pursuing claims on this contract with the
client for sums greater than the carrying value and will continue
to do so until the situation is resolved. The Directors have sought
to make the estimate as precise as possible by reflecting the views
of independent quantum and legal experts who were appointed by the
Directors for their ability, qualifications and experience in this
field.
The independent quantum and legal experts, in conjunction with
management, considered a number of factors when making their
assessment, such as contractual terms, work performed, claims for
variations, submissions for extensions of time, claims for loss and
expense and expected time frames in which settlement is likely.
Whilst the Directors are making every effort to seek a swift
resolution to the matter, they are committed to achieving the best
possible result for the Group. The ultimate settlement of this
matter may take in excess of twelve months to achieve based on
current expectations on Court hearing dates.
Risk
Operating in the construction industry presents inherent risks
as one of the key components, by its nature. We therefore have
robust risk identification, assessment and control processes to
manage both material and day-to-day circumstances.
The Group's risk and governance model is designed so that the
Board maintains overall responsibility for risk. Each business unit
identifies, controls and mitigates threats within their own
operations. The reporting structure ensures that once the risk
appetite is determined by the Board, risks are managed within
acceptable tolerance levels.
Tendering opportunities, including pre-qualification
questionnaires and framework submissions, are assessed subject to
the strategic objectives of the business units. Governance levels
are set according to risk appetite, with significant involvement of
the Chief Executive and Chief Financial Officer. At each Board
meeting high risk opportunities are presented and if appropriate,
ratified for the Company to progress.
The Chief Executive and Chief Financial Officer meet with the
business units on a monthly basis throughout the year with an
established agenda and reporting format covering a range of
metrics. This allows the Executive to maintain oversight and
control over the material aspects of strategy, financing,
operations and risk.
The Board has taken action to enhance further its risk
management processes and controls around the financial viability of
its supply chain, to mitigate any future instances of loss as far
as possible. The procurement and supply chain function has been
strengthened by recruiting an experienced director to lead this
significant central function and become part of the Executive
Administration Board (EAB). The strategic direction of the function
is to engage in longer term partnerships with key supply chain
disciplines, as well as additional governance around significant
work packages at the tender stage. Currently enhancements are being
developed to the Approved Vendor List (AVL) and to introduce a
balanced scorecard approach to our supply chain partners.
Financing
The Group seeks to maintain cash availability to support growth
across all contracts and segments. It also targets further
improvement to receivable payment terms to allow greater headroom.
Where short-term fluctuations exist, opportunities to make early
payments to our supply chain are explored. There is currently no
overnight pooling or investment due to the small returns
achievable.
The Company has an asset hire purchase facility in place to
enable the ongoing capital expenditure for the Group's core assets,
which it utilises across a large number of its contracts.
Taxation
The current tax charge of GBP1.53m (2018: GBP1.19m) relates to
tax on profits at 19% in addition to a reduction in the deferred
tax rate applicable to taxable temporary differences. All Group
trading companies will continue to pay tax as quarterly payments on
account.
Dividend
As part of a review of capital allocation across the business,
and recognising the uncertainties posed by the COVID-19 crisis, in
particular the possibility of further restrictions or extended time
frames, the Board will not be recommending a final dividend for
2019 (2018: 12p). The Board is very mindful of the importance of
dividends to all shareholders and, should circumstances permit, a
special interim dividend may be made later this year.
Cash generation and working capital
The year-end cash balance remains positive and in line with the
Board's expectations at GBP25.81 m (2018: GBP33.35m), a reduction
from the previous year due to: significant revenue growth in the
period; the mix of contract and client payment terms; and the
continued strategic investment in nmcn Investments. There is also
greater emphasis on cash management due to market conditions and
high-profile mid-market failures in the construction industry.
The main drivers in relation to the reduction in operating cash
flows relate to revenue increasing by 18.9% and an increase in
contract assets during the final quarter, taking the average credit
period extended to our customers to 33 days (2018: 28 days). The
outflow of cash from the increased revenue and changes in average
terms amounted to GBP11.39m (2018: GBP1.29m inflow) across trade
and other receivables. Average receivable days increased during the
year, as a reduction in favourable payment terms prevailed. This
coupled with the growth in the Telecoms business unit, which due to
the nature of the work and framework terms, has a longer cash
conversion cycle, required an investment in working capital.
The Board's strategy to invest in nmcn Investments continued in
2019 with an outflow through investments in joint ventures of
GBP5.83m (2018: GBP8.48m) which has also impacted operating cash
flows. The ongoing schemes are anticipated to increase the quality
of earnings going forwards. However, currently this is on hold and
all sites suspended due to the impact of COVID-19.
The average credit period taken on purchases has remained
consistent at 39 days (2018: 38 days) as we continue to ensure
sufficient payment terms are offered to maintain the best supply
chain and achieve the most commercial pricing. The inflow of cash
of GBP4.29m (2018: GBP19.67m) is due to the increase in trade and
other payables, excluding the acquisition of LCS.
As a result of the Group's continued growth, the net investment
during the year on property, plant and equipment remained
consistent at GBP3.07m (2018: GBP3.26m), in line with the Group's
strategy to purchase equipment where possible. Following this
investment in capital assets the closing net book value of
property, plant and equipment stood at GBP28.78m (2018 restated:
GBP22.59m), which positions the Group to deliver its targeted
growth through 2020 and beyond.
The non-cash charge for share-based payment expense of GBP0.87m
(2018: GBP1.07m) has added to the operating cash generation. This
was an expense in the year through the statement of comprehensive
income, and the same amount has been credited directly to equity in
line with applicable accounting standards, increasing the Group's
reserves. A cash outflow of GBP1.67m (2018: GBPNil) to settle the
tax liabilities due to net settling of the scheme was made during
the year.
Cash allocation
The Group's approach to cash allocation continues to be a blend
of investing in the business to support organic growth
opportunities, preserving a prudent capital structure, and
delivering returns to shareholders via a progressive dividend
policy.
Our operating model requires investment in the purchase of our
own assets to ensure additional returns are made from the
utilisation of the fleet across all business unit contracts. We
therefore continue to invest in our fleet to provide both capacity
and reliability.
We have renewed our existing banking facilities for a further
year on similar terms, with the opportunity to increase for an
agreed 6 month period should there be a requirement.
The Water Segment, and the majority of the Built Environment
segment, excluding the Building business, have been designated by
the Government to be critical to the COVID-19 response. There is a
clear commitment and ongoing demand for our directly delivered
products and services from our customers. Key considerations around
anticipated revenues and the covenants of our major customers, have
driven additional scenario planning. These scenarios have taken
into account the current and potential impacts of COVID-19 on the
business. We seek to retain a sufficient cash balance to provide
the business with a level of balance sheet resilience that the
Board believes to be appropriate during these uncertain times.
As outlined above, different business segments reflect changes
in average credit periods and prior to the emergence of COVID-19 we
were seeing growing working capital requirements as a consequence
of increasing organic growth opportunities.
Since the escalation of the COVID-19 pandemic, the Board has
been focussed on taking actions to preserve cash and protect
liquidity in a way that does not compromise the long-term prospects
of the business. To this end we have implemented a temporary and
voluntary reduction in the remuneration of the Executive Directors
of 20% and a 10% reduction for the senior management team
(effective 1 April 2020). All non-essential capital and overhead
expenditure has now been deferred, and a hiring freeze has been
implemented along with various other cost reduction initiatives.
Measures taken to reduce cash outflows include the deferral of VAT
payment, financing costs, and utilisation of the Government's Job
Retention Scheme. Additional borrowing facilities are being
considered by the Board and discussions are progressing with Lloyds
Bank, and should it be required, to utilise the recently announced
Coronavirus Large Business Interruption Loan Scheme (CLBILS).
The investments made in funding and constructing residential
developments are due to crystallise in 2021 and beyond. However,
this programme is currently on hold until clarity can be given on
the COVID-19 position.
The Board seeks to maintain its policy of a progressive
dividend, subject to COVID-19, and in line with shareholder
expectations.
Restatements
During the year, the Group implemented IFRS 16 and has restated
its 2018 results using the full retrospective approach. There was
no significant impact on opening retained earnings as at 1 January
2018 or the income statement for the year ending 31 December
2018.
Details of the restatement are set out in note 2.
Summary and outlook
We identify our work carefully, from our chosen markets and in
line with our vision and strategy, to ensure we deliver
exceptionally for our customers.
Our continued focus on ensuring rigorous governance in contract
selection and effective risk management coupled with the
advancement of being an employer of choice for existing and new
people will ensure that the momentum we have generated on achieving
our goals, is maintained.
Concentration on the type of work to be undertaken will continue
to build on the core strengths and capabilities of the Group. It is
intended that we persist in playing to our strengths in the water
sector while looking for growth in other areas to reduce our
reliance on this market and mitigate the cyclical effects of the
Asset Management Programme (AMP) procurement cycle.
The Board has taken a cautious view on the upcoming AMP
transition year for our Water business segment which will give us
the opportunity to position the Group to address the significant
opportunities that are available to us in the medium to long term.
The level of water frameworks that have been retained and the
increase in new frameworks achieved with new and existing customers
is extremely encouraging.
The stated Government commitment to investment in national
infrastructure gives us confidence in the medium-term workload
opportunities for us to address. Of particular interest to us is
the well published strategy for the immediate investment in
broadband technology. We are very well positioned as one of a few
companies with the necessary skill, critical mass and balance sheet
strength to be able to leverage the potential for growth in this
market in the immediate future.
We entered the current year with a robust operational and
financial platform from which to address promising market
opportunities. However, over recent weeks we have had to adjust to
the rapidly evolving challenges of COVID-19 and our response will
continue to balance self-help with Government initiatives in a
holistic and fair manner. We are closely monitoring the COVID-19
situation, and following Government guidelines closely whilst
communicating and collaborating with our colleagues, our customers,
our supply chain partners and other stakeholders.
The Board is confident of the Company's ability to survive such
unprecedented circumstances and to emerge as a strong contender in
its chosen markets, yet at this stage we are not able to quantify
the likely impact on the 2020 full year results and consequently
the Board does not believe it appropriate to provide forward
looking financial guidance until greater visibility is
available.
Group Statement of Comprehensive Income
2019 2019 2019 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Total Non-recurring Total Total before Non-recurring Total
before items non-recurring items
non-recurring Note 2.3 items Note 2.3
items
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Restated Restated
Revenue 405,408 (750) 404,658 340,450 - 340,450
Other operating income 1,190 - 1,190 1,277 - 1,277
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
406,598 (750) 405,848 341,727 - 341,727
Raw materials and consumables (71,821) - (71,821) (48,930) - (48,930)
Other direct charges (227,079) (2,198) (229,277) (195,740) (1,865) (197,605)
Employee costs (84,867) - (84,867) (78,633) - (78,633)
Amortisation of intangible
assets (43) - (43) - - -
Depreciation of property, plant
and equipment (5,475) - (5,475) (4,677) - (4,677)
Other operating charges (6,695) - (6,695) (5,720) - (5,720)
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Operating profit 10,618 (2,948) 7,670 8,027 (1,865) 6,162
Finance income 49 - 49 31 - 31
Finance costs (278) - (278) (185) - (185)
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Profit before tax 10,389 (2,948) 7,441 7,873 (1,865) 6,008
Tax (2,089) 560 (1,529) (1,538) 351 (1,187)
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Profit and total comprehensive
income for the year 8,300 (2,388) 5,912 6,335 (1,514) 4,821
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Attributable to:
Equity holders of the Parent 8,300 5,912 6,335 4,821
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Profit per share - basic 80.53p 57.36p 62.42p 47.50p
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Profit per share - fully diluted 78.48p 55.90p 57.90p 44.06p
-------------------------------- -------------- ------------- --------- -------------- ------------- ---------
Statements of changes in equity
Share
Treasury Based Capital
Share Merger share Payment Redemption Retained
Capital Reserve Reserve Reserve Reserve Earnings Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Balance at 31 December 2017
as previously reported 1,015 455 - - 20 11,343 12,833
Adjustment on adoption of IFRS
16 (Note 2) - - - - - (21) (21)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Balance at 1 January 2018 as
restated 1,015 455 - - 20 11,322 12,812
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year as restated - - - - - 4,821 4,821
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Share based payment expense - - - 1,069 - - 1,069
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Share based payment expense
- deferred tax - - - 381 - - 381
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Dividends paid - - - - - (914) (914)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Balance at 31 December 2018 1,015 455 - 1,450 20 15,229 18,169
Profit and total comprehensive
income for the year - - - - - 5,912 5,912
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Shares issued on exercise of
share options 29 - - 948 - (977) -
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Tax settlement of share options - - - (1,644) - - (1,644)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Treasury shares repurchased - - (220) - - - (220)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Share based payment expense - - - 866 - - 866
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Share based payment expense
- current tax - - - 282 - - 282
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Share based payment expense
- deferred tax - - - (268) - - (268)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Dividends paid - - - - (2,151) (2,151)
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Balance at 31 December 2019 1,044 455 (220) 1,634 20 18,013 20,946
--------------------------------- -------- -------- ---------- -------- ----------- --------- --------
Treasury Share
share Based Capital
Share Merger Reserve Payment Redemption Retained
Capital Reserve GBP'000 Reserve Reserve Earnings Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December 2017
as previously reported 1,015 455 - - 20 7,679 9,169
Adjustment on adoption of IFRS
16 (Note 2) - - - - - (21) (21)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Balance at 1 January 2018 as
restated 1,015 455 - - 20 7,658 9,148
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Profit and total comprehensive
income for the year as restated - - - - - 4,233 4,233
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Share based payment expense - - - 1,069 - - 1,069
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Share based payment expense
- deferred tax - - - 381 - - 381
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Dividends paid - - - - - (914) (914)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December 2018 1,015 455 - 1,450 20 10,977 13,917
Profit and total comprehensive
income for the year - - - - - 5,433 5,433
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Shares issued on exercise of
share options 29 - - 948 - (977) -
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Tax settlement of share options - - - (1,644) - - (1,644)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Treasury shares repurchased - - (220) - - (220)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Share based payment expense - - - 866 - - 866
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Share based payment expense
- current tax - - - 282 - - 282
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Share based payment expense
- deferred tax - - - (268) - - (268)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Dividends paid - - - - - (2,151) (2,151)
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December 2019 1,044 455 (220) 1,634 20 13,282 16,215
--------------------------------- -------- -------- -------- -------- ----------- --------- --------
Balance sheets as at 31 December 2019
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ -------- -------- -------- --------
Assets Restated Restated
Non-current assets
Intangible assets 2,272 - - -
Property, plant and equipment 28,775 22,591 27,375 22,591
Investments in subsidiaries - - 4,614 2,437
Investments in joint ventures - - 225 200
Deferred tax asset 625 902 226 795
------------------------------------------------------------------ -------- -------- -------- --------
31,672 23,493 32,440 26,023
------------------------------------------------------------------ -------- -------- -------- --------
Current assets
Inventories 1,805 1,791 1,248 1,287
Trade and other receivables 81,201 60,814 74,500 51,488
Cash and cash equivalents 25,814 33,353 19,785 31,358
------------------------------------------------------------------ -------- -------- -------- --------
108,820 95,958 95,533 84,133
------------------------------------------------------------------ -------- -------- -------- --------
Total assets 140,492 119,451 127,973 110,156
------------------------------------------------------------------ -------- -------- -------- --------
Equity and liabilities
Capital and reserves attributable to equity holders of the Parent
Share capital 1,044 1,015 1,044 1,015
Share based payment reserve 1,634 1,450 1,634 1,450
Merger reserve 455 455 455 455
Treasury share reserve (220) - (220) -
Capital redemption reserve 20 20 20 20
Retained earnings 18,013 15,229 13,282 10,977
------------------------------------------------------------------ -------- -------- -------- --------
Total equity 20,946 18,169 16,215 13,917
------------------------------------------------------------------ -------- -------- -------- --------
Liabilities
Non-current liabilities
Trade and other payables 6,709 2,329 6,709 2,329
Obligations under leases 3,677 2,032 2,529 2,032
Provisions 313 350 313 350
------------------------------------------------------------------ -------- -------- -------- --------
10,699 4,711 9,551 4,711
------------------------------------------------------------------ -------- -------- -------- --------
Current liabilities
Trade and other payables 107,653 95,727 101,202 90,806
Current income tax payable 22 157 (30) 35
Obligations under leases 1,172 687 1,035 687
------------------------------------------------------------------ -------- -------- -------- --------
108,847 96,571 102,207 91,528
------------------------------------------------------------------ -------- -------- -------- --------
Total liabilities 119,546 101,282 111,758 96,239
------------------------------------------------------------------ -------- -------- -------- --------
Total equity and liabilities 140,492 119,451 127,973 110,156
------------------------------------------------------------------ -------- -------- -------- --------
Statement of cash flows for the year ended 31 December 2019
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------------------- -------- -------- -------- --------
Cash flows from operating activities Restated Restated
Operating profit 7,670 6,162 6,178 4,900
Adjustment for:
Amortisation of intangible assets 43 - - -
Depreciation of property, plant and equipment 5,475 4,677 5,410 4,676
Gain on disposal of property, plant and equipment (410) (574) (410) (574)
Share based payment expense 866 1,069 866 1,069
-------------------------------------------------------- -------- -------- -------- --------
Operating cash flows before movement in working capital 13,644 11,334 12,044 10,071
Decrease in inventories 59 29 39 100
(Increase) / decrease in receivables (11,392) 1,292 (16,801) 3,228
Increase in amounts owed by joint ventures (5,830) (8,479) (6,210) (8,814)
Decrease in reinstatement provision (37) (54) (37) (54)
Increase in payables 4,285 19,669 7,274 17,281
-------------------------------------------------------- -------- -------- -------- --------
Cash generated from / (used in) operations 729 23,791 (3,691) 21,812
Income tax paid (1,133) (500) (753) (87)
-------------------------------------------------------- -------- -------- -------- --------
Net cash generated from / (used in) operations (404) 23,291 (4,444) 21,725
-------------------------------------------------------- -------- -------- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (3,072) (3,263) (2,968) (3,263)
Proceeds on disposal of property, plant and equipment 1,062 930 1,062 930
Cash acquired through purchase of subsidiary 842 - - -
Investment in joint ventures - - (25) (200)
Interest received 49 31 49 31
Dividends received from subsidiaries - - 723 422
-------------------------------------------------------- -------- -------- -------- --------
Net cash used in investing activities (1,119) (2,302) (1,159) (2,080)
-------------------------------------------------------- -------- -------- -------- --------
Cash flows from financing activities
Equity dividends paid (2,151) (914) (2,151) (914)
Treasury shares repurchased (220) - (220) -
Proceeds from exercise of share options 29 - 29 -
Repayment of obligations under leases (1,272) (491) (1,243) (491)
Repayment of obligations under financing arrangements (3,583) (3,052) (3,583) (3,052)
Proceeds from financing arrangements 1,459 - 1,459 -
Interest payable under leases (132) (71) (115) (71)
Interest payable under financing arrangements (139) (110) (139) (110)
Interest paid (7) (4) (7) (4)
-------------------------------------------------------- -------- -------- -------- --------
Net cash used in financing activities (6,016) (4,642) (5,970) (4,642)
-------------------------------------------------------- -------- -------- -------- --------
Net (decrease) / increase in cash and cash equivalents (7,539) 16,347 (11,573) 15,003
-------------------------------------------------------- -------- -------- -------- --------
Cash and cash equivalents at 1 January 33,353 17,006 31,358 16,355
-------------------------------------------------------- -------- -------- -------- --------
Cash and cash equivalents at 31 December 25,814 33,353 19,785 31,358
-------------------------------------------------------- -------- -------- -------- --------
Cash and cash equivalents comprise funds held at the bank which
are immediately accessible.
1. Basis of preparation
The condensed Group financial statements for the year ended 31
December 2019 included in this report do not constitute the Group's
statutory accounts for the year ended 31 December 2019 but are
derived from those accounts. The auditor has reported on those
accounts; their report was unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report
and did not contain statements under s498(2) or (3) Companies
Act 2006 or equivalent preceding legislation.
While the financial information included in this announcement
has been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRSs),
this announcement does not itself contain sufficient information
to comply with IFRSs.
The condensed Group financial statements have been prepared on
a basis consistent with that adopted in the previous year's published
financial statements and in accordance with IFRSs, with the exception
of the change of accounting policy and other restatements described
in note 2 below.
The Group expects to publish statutory financial statements for
the year ended 31 December 2019 that comply with both IFRSs as
adopted for use in the European Union and IFRSs as compliant
with the Companies Act 2006 and Article 4 of the EU IAS Regulations
based on the information presented in this announcement.
The condensed financial statements were approved by the Board
on 22 April 2020.
Audited statutory accounts for the year ended 31 December 2018
have been delivered to the registrar of companies. The Independent
Auditors' Report on the Annual Report and Financial Statements
for 2018 was unqualified, did not draw attention to any matters
by way of emphasis without qualifying their report and did not
contain a statement under s498(2) or (3) of the Companies Act
2006 or equivalent preceding legislation.
2. Change of Accounting Policy and Other Restatements
Except as described below, the accounting policies adopted in
the preparation of the condensed Group financial statements for
the year ended 31 December 2019 are consistent with the policies
applied by the Group in its consolidated financial statements
as at, and for the year ended 31 December 2018.
2.1 IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 January 2019.
IFRS 16 replaces IAS 17 and provides a single lease accounting
model, requiring lessees to recognise right of use assets and
lease liabilities in the balance sheet for all applicable leases.
Operating lease costs previously recognised within operating
profit in the statement of comprehensive income have been replaced
by depreciation and finance costs.
As a result of IFRS 16, leases previously accounted for as finance
leases have been reclassified as financing arrangements accounted
for in line with IFRS 9 as they do not fall within the scope
of IFRS 16. This has been determined on the basis that the Group
owns all assets that it finances and the agreement with the lender
does not constitute a sale.
The adoption of IFRS 16 under the fully retrospective approach
has affected the comparative information presented in the Group's
financial statements, representing an increase in gross assets
and liabilities in the balance sheet and an increase in operating
profit and finance costs in the statement of comprehensive income.
The impact of the restatement on the prior year's results is
shown in note 2.2.
2.2 Impact of restatements on the financial statements
The following tables summarise the impact of adopting IFRS 16
on the Group's and Company's financial statements as described
in note 2.1.
Impact on the Group statement of comprehensive income
Year ended 31 December 2018
-------------------------------- ----------------------------------- ---
GBP'000 GBP'000 GBP'000
-------------------------------- --------------- ---------- -----------
As reported Adjustment Restated
Note 2.1
Revenue 340,450 - 340,450
Other operating income 1,277 - 1,277
-------------------------------- --------------- ---------- -----------
341,727 - 341,727
Raw materials and consumables (48,930) - (48,930)
Other direct charges (197,605) - (197,605)
Employee costs (78,633) - (78,633)
Depreciation of property, plant
and equipment (4,166) (511) (4,677)
Other operating charges (6,282) 562 (5,720)
-------------------------------- --------------- ---------- -----------
Operating profit 6,111 51 6,162
Finance income 31 - 31
Finance costs (114) (71) (185)
-------------------------------- --------------- ---------- -----------
Profit before tax 6,028 (20) 6,008
Tax (1,191) 4 (1,187)
-------------------------------- --------------- ---------- -----------
Profit and total comprehensive
income for the year 4,837 (16) 4,821
-------------------------------- --------------- ---------- -----------
Impact on the Group balance sheet As at 1 January
2018
---------------------------------- ------- ----------------------- --------
GBP'000 GBP'000 GBP'000
---------------------------------- ------- ----------- ---------- --------
As reported Adjustment Restated
Note 2.1
Assets
Non-current assets
Property, plant and equipment 18,174 1,409 19,583
Investments in subsidiaries - - -
Investments in joint ventures - - -
Deferred tax asset 1,223 5 1,228
------------------------------------------- ----------- ---------- --------
19,397 1,414 20,811
------------------------------------------ ----------- ---------- --------
Current assets
Inventories 1,820 - 1,820
Trade and other receivables 53,627 - 53,627
Cash and cash equivalents 17,006 - 17,006
------------------------------------------- ----------- ---------- --------
72,453 - 72,453
------------------------------------------ ----------- ---------- --------
Total assets 91,850 1,414 93,264
------------------------------------------- ----------- ---------- --------
Equity and liabilities
Capital and reserves attributable
to equity holders of the Parent
Share capital 1,015 - 1,015
Share based payment reserve - - -
Merger reserve 455 - 455
Capital redemption reserve 20 - 20
Retained earnings 11,343 (21) 11,322
------------------------------------------- ----------- ---------- --------
Total equity 12,833 (21) 12,812
------------------------------------------- ----------- ---------- --------
Liabilities
Non-current liabilities
Trade and other payables - 2,514 2,514
Obligations under leases 2,514 (1,453) 1,061
Provisions 404 - 404
------------------------------------------- ----------- ---------- --------
2,918 1,061 3,979
------------------------------------------ ----------- ---------- --------
Current liabilities
Trade and other payables 73,471 2,451 75,922
Current income tax payable 177 - 177
Obligations under leases 2,451 (2,077) 374
------------------------------------------- ----------- ---------- --------
76,099 374 76,473
------------------------------------------ ----------- ---------- --------
Total liabilities 79,017 1,435 80,452
------------------------------------------- ----------- ---------- --------
Total equity and liabilities 91,850 1,414 93,264
------------------------------------------- ----------- ---------- --------
Impact on the Group balance sheet (continued) As at 31 December
2018
---------------------------------- ------- ----------------------- --------
GBP'000 GBP'000 GBP'000
---------------------------------- ------- ----------- ---------- --------
As reported Adjustment Restated
Note 2.1
Assets
Non-current assets
Property, plant and equipment 19,918 2,673 22,591
Investments in subsidiaries - - -
Investments in joint ventures - - -
Deferred tax asset 893 9 902
------------------------------------------- ----------- ---------- --------
20,811 2,682 23,493
------------------------------------------ ----------- ---------- --------
Current assets
Inventories 1,791 - 1,791
Trade and other receivables 60,814 - 60,814
Cash and cash equivalents 33,353 - 33,353
------------------------------------------- ----------- ---------- --------
95,958 - 95,958
------------------------------------------ ----------- ---------- --------
Total assets 116,769 2,682 119,451
------------------------------------------- ----------- ---------- --------
Equity and liabilities
Capital and reserves attributable
to equity holders of the Parent
Share capital 1,015 - 1,015
Share based payment reserve 1,450 - 1,450
Merger reserve 455 - 455
Capital redemption reserve 20 - 20
Retained earnings 15,266 (37) 15,229
------------------------------------------- ----------- ---------- --------
Total equity 18,206 (37) 18,169
------------------------------------------- ----------- ---------- --------
Liabilities
Non-current liabilities
Trade and other payables - 2,329 2,329
Obligations under leases 2,329 (297) 2,032
Provisions 350 - 350
------------------------------------------- ----------- ---------- --------
2,679 2,032 4,711
------------------------------------------ ----------- ---------- --------
Current liabilities
Trade and other payables 93,140 2,587 95,727
Current income tax payable 157 - 157
Obligations under leases 2,587 (1,900) 687
------------------------------------------- ----------- ---------- --------
95,884 687 96,571
------------------------------------------ ----------- ---------- --------
Total liabilities 98,563 2,719 101,282
------------------------------------------- ----------- ---------- --------
Total equity and liabilities 116,769 2,682 119,451
------------------------------------------- ----------- ---------- --------
Impact on the Group statement of cash flows As at 31 December
2018
------------------------------------- ------- ----------------------- --------
GBP'000 GBP'000 GBP'000
------------------------------------- ------- ----------- ---------- --------
As reported Adjustment Restated
Note 2.1
Cash flows from operating
activities
Operating profit 6,111 51 6,162
Adjustment for: -
Depreciation of property,
plant and equipment 4,166 511 4,677
Gain on disposal of property,
plant and equipment (574) - (574)
Share based payment expense 1,069 - 1,069
---------------------------------------------- ----------- ---------- --------
Operating cash flows before
movement in working capital 10,772 562 11,334
Decrease in inventories 29 - 29
Decrease in receivables 1,292 - 1,292
Increase in amounts owed by
joint ventures (8,479) - (8,479)
Decrease in reinstatement
provision (54) - (54)
Increase in payables 19,669 - 19,669
---------------------------------------------- ----------- ---------- --------
Cash generated from operations 23,229 562 23,791
Income tax paid (500) - (500)
---------------------------------------------- ----------- ---------- --------
Net cash generated from operations 22,729 562 23,291
---------------------------------------------- ----------- ---------- --------
Cash flows from investing
activities
Purchase of property, plant
and equipment (3,263) - (3,263)
Proceeds on disposal of property,
plant and equipment 930 - 930
Investment in joint ventures - - -
Interest received 31 - 31
Dividends received from subsidiaries - - -
------------------------------------- ------- ----------- ---------- --------
Net cash used in investing
activities (2,302) - (2,302)
---------------------------------------------- ----------- ---------- --------
Cash flows from financing
activities
Equity dividends paid (914) - (914)
Repayment of obligations under
leases (3,052) 2,561 (491)
Repayment of obligations under
financing arrangements - (3,052) (3,052)
Interest payable under leases (110) 39 (71)
Interest payable under financing
arrangements - (110) (110)
Interest paid (4) - (4)
---------------------------------------------- ----------- ---------- --------
Net cash used in financing
activities (4,080) (562) (4,642)
---------------------------------------------- ----------- ---------- --------
Net increase in cash and cash
equivalents 16,347 - 16,347
---------------------------------------------- ----------- ---------- --------
Cash and cash equivalents
at 1 January 2018 17,006 - 17,006
---------------------------------------------- ----------- ---------- --------
Cash and cash equivalents
at 31 December 2018 33,353 - 33,353
---------------------------------------------- ----------- ---------- --------
2.3 Non-recurring items
Items identified as non-recurring are not attributed to the ongoing
trading of the Group and are explained in the following paragraphs
accordingly. The profit before non-recurring items is deemed
by the Board to be an alternative performance measure (APM).
The Group has used this APM to aid comparability of its performance
and position between periods.
The non-recurring items in 2019 are in relation to the following
items and amounted to GBP2.95m (2018: GBP1.87m) in total before
tax.
Legacy Contract contracts accounted for GBP1.48m of non-recurring
adjustments in the period (2018: GBP0.51m). There was an adjustment
of GBP0.75m relating to revenue (2018: GBPNil) and a cost adjustment
of GBP0.74m (2018: GBP0.51m) in the year.
Specific costs of GBP1.86m were incurred in respect of additional
costs incurred following the insolvency of a subcontractor. This
situation is unique and therefore has been classified as non-recurring
given the material nature of the amounts involved.
The Group has recognised the recovery of GBP0.39m in 2019 from
an aggregate supplier in respect of the rectification of significant
defective work in the prior year which resulted from a substandard
product provided by the supplier. In 2018, costs of GBP0.47m
were classified as non-recurring in respect of this work.
During the prior year a non-recurring expense in relation to
the 'true-up' of the Directors' Performance Share Plan (PSP)
was recognised at GBP0.52m. A specific provision of GBP0.37m
was also recognised in the prior year in respect of an insolvent
development customer.
3. Segment reporting
The operating segment reporting format reflects the Group's management
and internal reporting structure.
The Group conducts business through two operating segments, Built
Environment and Water. The Built Environment segment includes
Building, Highways and Telecoms which were separately reported
last year.
Further details of the operating segments activities are provided
in our operational and financial review.
Segment revenue and profit
Year ended 31 December 2019
Total before
non-recurring Non-recurring
Built Environment Water items items
GBP'000 GBP'000 GBP'000 GBP'000 Total
--------------------------------- ----------------- -------- -------------- ------------- --------
Revenue
External sales 122,783 282,625 405,408 (750) 404,658
--------------------------------- ----------------- -------- -------------- ------------- --------
Result before corporate expenses 10,040 21,193 31,233 (2,948) 28,285
Corporate expenses (7,003) (13,612) (20,615) - (20,615)
--------------------------------- ----------------- -------- -------------- ------------- --------
Operating profit/(loss) 3,037 7,581 10,618 (2,948) 7,670
Finance income 49 - 49
Finance costs (278) - (278)
--------------------------------- ----------------- -------- -------------- ------------- --------
Profit before tax 10,389 (2,948) 7,441
Tax (2,089) 560 (1,529)
--------------------------------- ----------------- -------- -------------- ------------- --------
Profit for the year 8,300 (2,388) 5,912
--------------------------------- ----------------- -------- -------------- ------------- --------
Year ended 31 December 2018
Total before
non-recurring Non-recurring
Built Environment Water items items
GBP'000 GBP'000 GBP'000 GBP'000 Total
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Restated Restated Restated Restated
Revenue
External sales 95,870 244,580 340,450 - 340,450
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Result before corporate expenses as reported 7,649 20,857 28,506 (1,865) 26,641
IFRS 16 restated 26 26 52 - 52
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Result before corporate expenses as restated 7,675 20,883 28,558 (1,865) 26,693
Corporate expenses (7,744) (12,787) (20,531) - (20,531)
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Operating profit/(loss) (69) 8,096 8,027 (1,865) 6,162
Finance income 31 - 31
Finance costs (185) - (185)
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Profit before tax 7,873 (1,865) 6,008
Tax (1,538) 351 (1,187)
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Profit for the year 6,335 (1,514) 4,821
--------------------------------------------- ----------------- -------- -------------- ------------- --------
Segment assets
Restated
2019 2018
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Built Environment 70,497 52,954
Water 69,995 66,497
--------------------------------------------------- -------- --------
Total segment assets and consolidated total assets 140,492 119,451
--------------------------------------------------- -------- --------
Other segment information
Additions to non-current
Depreciation and amortisation assets
Restated Restated
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- -------------- ------------ ------------
Built Environment 1,643 1,317 3,321 2,264
Water 3,875 3,360 8,990 5,777
------------------ --------------- -------------- ------------ ------------
Total 5,518 4,677 12,311 8,041
------------------ --------------- -------------- ------------ ------------
There were no impairment losses recognised in respect of property,
plant and equipment. All of the above relates to continuing operations
and arose in the United Kingdom. The results of each segment are
not materially affected by seasonality. Segment liabilities are
not presented as they are not managed on a segment-by-segment
basis.
4. Information about major customer
Revenue of approximately GBP192,360,000 (2018: GBP172,523,000)
was derived from a single external customer within the Water segment.
No other customer accounted for more than 10% of revenues.
5. Earnings per share
Basic earnings per share and diluted earnings per share are calculated
on the profit attributable to equity holders of the parent of
GBP5,912,000 (2018 restated: GBP4,821,000). The weighted average
of 10,306,253 (2018: 10,150,000) shares in issue during the year
is used for the basic earnings per share calculation.
Outstanding share awards granted under the Performance Share Plan
("PSP") totalling 714,182 awards (2018: 1,059,741) are considered
to be contingently issuable shares that could potentially dilute
basic earnings per share in the future, of which the performance-related
vesting conditions had been satisfied in respect of 269,486 awards
as at 31 December 2019 (2018: 792,246). This additional number
of shares is therefore included in the diluted earnings per share
calculation as at that date.
6. Taxation
The provision for deferred tax is calculated based on the tax
rates enacted or substantially enacted at the balance sheet date.
The tax charge in the year arises from the taxable profits generated
and the reversal of the deferred tax asset from previous years'
trading losses. There are no unrecognised trading losses carried
forward (2018: GBPnil).
A reduction in the UK corporation tax rate from 19% to 17% (effective
1 April 2020) was substantively enacted on 6 September 2016. This
will reduce the Group's future current tax charge accordingly.
The deferred tax asset at 31 December 2019 has been calculated
based on these rates.
7. Dividends
Amounts recognised as distributions to equity holders in the year:
2019 2018
GBP'000 GBP'000
Final dividend for the year ended 31 December 2018
of 12p (2017: 3p) per share 1,214 305
Interim dividend for the year ended 31 December 2019
of 9p (2018: 6p) per share 937 609
--------- --------
2,151 914
========= ========
As part of a review of capital allocation across the business,
and recognising the uncertainties posed by the COVID-19 crisis,
in particular the possibility of further restrictions or extended
time frames, the Board will not be recommending a final dividend
for 2019 (2018: 12p). The Board is very mindful of the importance
of dividends to all shareholders and should circumstances permit
a special interim dividend may be made later this year.
8. Related parties and joint arrangements
The Group's related parties are key management personnel who are
the executive directors and non-executive directors. The only
transactions with these individuals comprise remuneration under
service contracts.
Additionally, the Group has the following interests in joint operations
and joint ventures;
Joint operations
BAMNomenca - (Water projects for South East Water)
50% interest in a joint operation with Bam Nuttall Limited.
BNM Alliance - (Construction of Elan Valley Aqueduct scheme and
Newark Sewer Strategy scheme)
50% interest in a joint operation with Barhale Limited.
The ASP Batch Joint Venture - (Waste Water Major Projects, Coventry
UK)
33% interest in a joint operation with Mott MacDonald Bentley
Limited and Costain Limited.
DNM Alliance - (Water Projects for Severn Trent Water)
50% interest in a joint operation with Doosan Enpure Limited.
Bellozane STW - (Sewage treatment works development in Jersey)
50% interest in a joint operation with Doosan Enpure Limited.
Stoke Bardolph THP (Water Project for Severn Trent Water)
50% interest in a joint operation with Mott MacDonald Bentley
Limited.
All joint operation activities are strategic to the Group and
its Water operating segment.
The condensed Group financial statements for the year ended 31
December 2019 incorporate the following relating to the joint
operations:
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
------------- ----------------- -----------------
Revenue 69,435 74,293
Expenses 73,942 74,010
Assets 5,720 3,603
Liabilities 9,887 16,599
Joint ventures
E&P Enderleigh Ltd - (Development of residential
property)
50% interest in a joint venture with Earl & Pelham Ltd
BENMC Alliance (Roundhills) Ltd - (Development of residential
property)
50% interest in a joint venture with Brooklyn Ellis Ltd
Springfield ECO Ltd - (Development of residential property)
50% interest in a joint venture with Stagfield Group Ltd
BENMCN Alliance (Park Farm) Limited - (Development of
residential property)
50% interest in a joint venture with Brooklyn Ellis Limited
During the year ended 31 December 2019 the Company provided
services to its joint ventures as follows:
Construction and Amounts due from
financing services joint ventures
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---------- --------- -------- --------
E&P Enderleigh Limited 502 2,537 3,517 3,056
BENMC Alliance (Roundhills) Limited 2,100 785 3,231 1,414
Springfield ECO Limited 2,214 665 6,532 4,344
BENMCN Alliance (Park Farm) Limited 613 - 1,744 -
Total 5,429 3,987 15,024 8,814
------------------------------------ ---------- --------- -------- --------
9. Share capital
2019 2018
GBP'000 GBP'000
Allotted, issued and fully paid:
10,438,608 (2018 - 10,150,000) ordinary shares of
10p 1,044 1,015
10. Contingent liabilities
Aviva Insurance Limited, Lloyds Bank PLC, and HCC International
Insurance Company Plc have given Performance Bonds to a value
of GBP15,411,000 (2018: GBP8,883,000) on the Group's behalf.
These bonds have been made with recourse to the Group.
11. The Annual Report and Accounts for the year ended 31 December
2019 will be despatched to shareholders on or around 27 May 2020
and will be available on the Company's website - www.nmcn.com.
12. The Annual General Meeting will be held on Thursday 25 June 2020
at 12.00 noon at the Group's Head Office at Nunn Close, The County
Estate, Huthwaite, Sutton-in-Ashfield, Nottinghamshire NG17 2HW.
Shareholders will be asked to vote by proxy and to attend the
meeting electronically, via either webinar or conference call.
Full details of hosting arrangements will be available on the
Company website following the circulation of the Annual Report
and notice of the General Meeting.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKBBKDBKBDQB
(END) Dow Jones Newswires
April 23, 2020 02:00 ET (06:00 GMT)
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