TIDMNMCN
RNS Number : 5993J
NMCN PLC
23 December 2020
23 December 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
NMCN PLC
("nmcn" or "the Company" or "the Group")
Trading & Board Change Update
Overview
Further to our announcement of 15 October 2020, which indicated
that the Group was likely to report losses of between GBP13.5
million and GBP15.0 million this year, the nmcn Board is able to
confirm that it expects that the Group will report losses before
tax of circa GBP16.5 million.
An investigation has verified, subject to audit, that these
include GBP5.3 million of prior year contract adjustments pre-tax,
to five contracts within the Water business, relating to errors
which should have been identified and corrected at the reporting
date and information affecting estimates which should have been
available. Profit before tax for the year ended 31 December 2019
will therefore be restated to GBP2.1 million from GBP7.4 million.
Consequently, loss before tax for the current year is expected to
be about GBP11.2 million, including GBP1.2 million for the final
settlement of the last remaining legacy contract. The majority of
the net cash flows associated with the forecast loss have already
been incurred and the loss to be reported will have limited further
impact on the Group's current cash position.
In addition to the prior year adjustments a number of difficult
contracts are being brought to a conclusion. This, together with
Covid-19 and the AMP project cycle have made for an extremely
challenging year. Some GBP20.0 million of secured orders originally
scheduled to be completed this financial year have slipped into
2021, due to the effects of coronavirus. This revenue is now
reflected within the 2021 budgets.
Divisional Performance
As stated in the announcement of 15 October 2020, the
loss-making contracts primarily related to the Water sector where
each project has been analysed and f ull anticipated losses have
been accrued. The major loss-making contract in the Water Division
will be completed early next year and we believe there will be no
further adverse impact on cash flow.
Within Built Environment, Highways has been loss-making due to
two poorly performing contracts which are now complete and the
final settlements are being pursued. The Telecoms division has
performed well on the back of increased expenditure on fibre by the
Telecoms industry. Building has been significantly impacted by
Covid-19, with consequent delays, and this has resulted in the
division being loss-making this year.
Management has taken action to improve on-site contractual
performance and programme delivery to preserve margins going
forward. Furthermore, the evaluation of risk across the entire life
cycle of contracts and subsequent reviews have been strengthened
and are now more robust.
Group Financial Position
As previously announced, the Board appointed Arrowpoint
Advisory, part of Rothschild & Co on 25 September 2020 to help
secure a medium-term debt package more appropriate to the size and
nature of the Group's businesses and risk profile, which also takes
into account the change in payment terms on the new Framework
Agreements. It is expected that this medium-term debt package will
be in place by the end of February 2021. In the meantime, the Group
has taken significant steps to improve debt collection and to
operate within its current overdraft facilities of GBP15 million,
albeit there has been regrettably some creditor stretch in recent
weeks.
Initiatives to release cash from property development projects
are well underway with encouraging indications on achievable
values. One development is now sold, and the sale process is
on-going on the second completed development. The final two
projects are scheduled to complete in February and April next year
and the initial level of buyer interest is encouraging on the back
of a strong demand for housing. No further development projects are
currently being undertaken.
Board Changes Update
Actions to strengthen our senior management team are well
underway. Further to our announcement on 28 October 2020, Alan
Foster, our recently appointed Chief Financial Officer, will join
the Group on 4 January 2021 and will be appointed a Director with
effect from that date. The process for securing a new Chief
Executive Officer is well advanced and is likely to conclude in the
first quarter of next year.
Outlook
The Covid-19 pandemic will continue to constrain our operations
running into 2021. However, we will enter the new fiscal year with
a secured order book of circa GBP200 million and with visibility on
a further GBP100 million of framework orders at this stage. With
expenditure in the AMP 7 cycle starting to ramp-up and the benefits
of our efficiency initiatives set to accrue, we look forward to a
return to previous levels of profitability. As the level of Group
profitability recovers, the Board will look to reinstate the
payment of dividends beyond 2021.
Ian Elliott, Acting Chairman, commented:
"2020 has unquestionably been a difficult year for the Group,
with the combination of the Covid-19 constraints, the AMP
transition and the consequences of prior year contract adjustments.
However, I would like to acknowledge the fortitude of everyone
within the Group in rising to the challenges we have faced.
We will enter 2021 with many issues already addressed, with an
encouraging order book, a strengthened management team and with the
optimism of a return to profitability."
Enquiries:
nmcn Plc - 01623 515008
Ian Elliott, Acting Chairman
Robert Moyle, Acting Chief Executive
Mike Holt, Audit Committee Chair
About nmcn
nmcn Plc (TIDM: NMCN) is a leading engineering and construction
company in the UK. Its talented 2,000-strong team offers
multi-sector engineering and construction skills, technical
innovation, design, and specialist fabrication.
The Company delivers major built environment and water industry
projects across the UK - from buildings and highways to large-scale
water networks and treatment plants. With its history dating back
to 1946, nmcn now has 12 UK offices and four off-site manufacturing
facilities.
LEI Number: 213800ANYQVA5OS51A68
www.nmcn.com
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