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RNS
Nexus Infrastructure PLC  -  NEXS   

Preliminary Results

Released 07:00 09-Jan-2018

RNS Number : 2867B
Nexus Infrastructure PLC
09 January 2018
 

9 January 2018

 

Nexus Infrastructure plc ("Nexus" or the "Group")

Preliminary results for the year ended 30 September 2017

Landmark year, robust results, positioned for growth

 

Mike Morris, Chief Executive of Nexus, the leading provider of essential infrastructure services to the UK housebuilding and commercial sectors, comments:

"It has been a landmark year for Nexus with the successful listing of the business on AIM in July, a robust performance and continued growth in our order book which gives us good visibility of future earnings. All of which pays tribute to the hard work and commitment of our employees."

We have strong market positions along with well-defined strategic objectives in place to continue to deliver growth and future value for all stakeholders."

 

Highlights:

Resilient performance in FY2017 despite impact of EU Referendum

§ Revenue of £135.0m, in line with expectations (2016: £135.7m)

§ Operating profit of £9.3m, ahead of expectations (2016: £10.4m)

§ Order Book, up 25% at year end to £202.7m

§ Sustained momentum with current order book of £213m as at the end of December 2017

Strong cash generative business model

§ Cash and cash equivalents of £27.1m at year end

§ Proposed final dividend of 4.2 pence per share, taking the full year dividend to 6.3 pence per share, ahead of expectations and in line with progressive dividend policy

Established growth strategy within attractive and expanding addressable markets

·     Organic growth driven by large multi-phase contracts, geographic expansion, cross selling and combined delivery of Tamdown and TriConnex services

·     Inorganic growth plans focused on disciplined approach to bolt-on acquisitions

Proven track record of delivering consistent growth, profits and cash generation

Confident outlook for the year ahead

 

 

Enquiries:

 

Nexus Infrastructure plc

Michael Morris, Chief Executive Officer

Alan Martin, Chief Financial Officer

 

Tel: 01376 320856

Numis Securities Limited

(Nominated Adviser & Broker)

Oliver Hardy (Nomad)                  

Heraclis Economides     

Ben Stoop

 

Tel: 0207 260 1200

Financial Public Relations

Camarco

Ginny Pulbrook

Tom Huddart

 

                                                                               

Tel: 0203 757 4992

Notes to Editors:

 

Nexus is a leading provider of essential infrastructure services to the UK housebuilding and commercial sectors. The Group comprises two separately managed and operated businesses: Tamdown, a provider of specialised infrastructure services; and TriConnex which designs, installs and connects utility networks to properties on new residential and commercial developments.

 

Tamdown has a well-established market position having been in operation for over 40 years and currently counts amongst its customers nine of the top ten largest UK housebuilders. TriConnex was established in 2011 to take advantage of deregulation in the utilities market with the goal of being recognised as the UK's leading independent provider of utility connections to new developments.

 

 

CHAIRMAN'S STATEMENT

I am pleased to report a robust set of results for the year ended 30 September 2017.  This is our maiden set of results as a public company, following the Company's successful Initial Public Offering ("IPO") on the London Stock Exchange's Alternative Investment Market ("AIM") in July 2017. I would like to take this opportunity of welcoming all our new shareholders.

Overview of the year

The Nexus business model, with Tamdown's well established market position as a leading provider of essential infrastructure services to the UK's largest housebuilders, coupled with TriConnex's growing utilities connection services, was resilient during a challenging year. As previously reported, the EU Referendum caused a slowdown in tendering activity and delays to customers awarding new contracts during the second half of 2016 with a corresponding delay to work commencing on site.  In spite of this market backdrop, the Group is reporting revenue for the year of £135.0m (2016: £135.7m), and an operating profit of £9.3m (2016: £10.4m).  As at 30 September 2017, the order book was at a record level of £202.7m up 25% from £161.7m in 2016, providing good earnings visibility for the year ahead.

Strategy

The Group's mission is to be recognised as the leading provider of essential infrastructure services in the UK.  The Group's strategy is to deliver outstanding performance through a focus on innovation and customer service which will lead to growth, building on existing market positions by developing new markets and services whilst extending geography, both organically and through complementary earnings enhancing acquisitions. 

The Group's organic growth strategy is focused on four key drivers: increasing market share within current geographies, expanding into new geographies, diversification into new growth sectors and leveraging customer relationships to enhance cross selling within the Group.  In addition to organic growth, further growth will come from the successful sourcing, execution and integration of chosen acquisitions. 

The Group is taking a disciplined approach to acquisitions, seeking to enhance shareholder value with acquisitions that are linked or closely associated with TriConnex, such as businesses within existing residential utility or non-residential utilities markets or new markets, such as continuing to develop our fibre and Electric Vehicle charging services.

Returns to shareholders

As a listed company, one of our primary objectives is to deliver increased shareholder value over time.  The Board has adopted a progressive dividend policy and has already paid an interim dividend of 2.1 pence per share.  For the year ended 30 September 2017, the Board is proposing a final dividend of 4.2 pence per share, which, if approved at the AGM, will take the dividend for the year to 6.3 pence per share.  The total dividend for the year of £2.4m is based on a dividend cover of 3.0 times the Group's profit after tax, adjusted for exceptional items, which is in line with our guidance on dividend cover stated at the time of the IPO.  The dividend will be paid on 9 March 2018 to shareholders on the register at close of business on 9 February 2018.  The shares will go ex-dividend on 8 February 2018.

Looking forward, whilst continuing to invest in the growth plans of the business, our adopted progressive dividend policy will enable shareholders to benefit as the Group delivers on its performance targets.

Board and Governance

The Board has been established now for over a year, with Richard Kilner appointed as Non-Executive Director and myself, appointed as Non-Executive Chairman, in January 2016.  Alex Wiseman was appointed as Non-Executive Director in June 2016.  The Board consists of five members in total including executive board directors Mike Morris (CEO) and Alan Martin (CFO).

Since the Board was expanded in early 2016, roles and responsibilities have been defined and the Board has spent time setting out the vital discipline, processes and authorities of governance.  Changes have included the creation of Board sub-committees in 2016 for Audit, Remuneration and Nominations, all of which were in place throughout the year under review.

People

A primary driver to the Group's success is the team of highly skilled, driven and loyal employees across the businesses.  Nexus places great importance on engaging with and developing its employees and providing a platform for personnel growth and successful career development.  On behalf of the Board, I would like to congratulate and thank them for their continued hard work and dedication.

Outlook

We are in a strong position to deliver growth.  The fundamental market drivers for our business look positive in the short and medium terms. The order book has grown significantly over the past year and is now at a record level.  Against this background, the Board is optimistic on the outlook for the business and is confident the Group will deliver on its growth strategy.

 

Geoff French

Chairman

8 January 2018

 

 

EXECUTIVE REVIEW

Group operating results

As anticipated and as highlighted earlier in the year, the outcome for the Group's full year revenues of £135.0m (2016: £135.7m) were relatively flat reflecting the impact of the EU Referendum. Revenues for Tamdown were £105.6m (2016: £112.4m) and were broadly offset by the 26.3% increase in TriConnex's revenues to £29.5m (2016:  £23.3m).

Gross profit for the year increased to £27.2m (2016: £26.3m), with the overall gross margin improving by 78 basis points to 20.2% (2016: 19.4%).

Administrative expenses for the Group increased by £2.0m to £17.9m (2016: £15.9m).  The 12.4% increase was primarily due to investment for growth within TriConnex, where the planned office headcount has increased by 27, along with salary increases.

Group operating profit, which has been recorded before the deduction of exceptional costs, for the year was £9.3m (2016: £10.4m).  Group operating margin decreased to 6.9% (2016: 7.6%), with the gross margin improvement offset by the significant investment in administrative expenses to support future growth.

Exceptional items totalling £1.7m (2016: nil) were recorded in the year to reflect the costs related to the IPO. 

Profit for the year attributable to equity holders of the parent company was £5.8m (2016: £8.4m). 

Basic earnings per share were 15.4 pence, after the impact of the exceptional item (2016: 22.3 pence).  The underlying basic earnings per share, adjusting for the exceptional item, were 19.1 pence (2016: 22.3 pence). 

The Group's balance sheet remains strong, with net assets growing by 27.2% to £17.0m (2016: £13.4m).  The Group's net cash remains high at £18.7m (2016: £23.6m) with cash and cash equivalents at £27.1m (2016: £34.0m) and bank borrowings of £8.4m (2016: £10.4m).  The Group holds a high net cash position in order to support growth and the Group's acquisition strategy. 

Tamdown

Financial & Operating performance

The revenue for Tamdown decreased by 6.1% to £105.6m, (2016: £112.4m).  This was anticipated earlier in the year and highlighted at the time of the IPO, as the business saw the impact of the June 2016 EU Referendum on the housebuilding market and customers in general. 

From the end of 2016 onwards, orders for new phases and new sites returned to normal levels. This is reflected in the 24.9% improvement in the order book from £86.7m at 30 September 2016 to £108.3m at 30 September 2017.

The gross margin for the year at 16.4% (2016: 16.5%) maintained the significant improvement in margin of recent years. 

Our investment for growth with increased headcount, staff and salary costs resulted in a 10.9% increase in administrative expenses to £10.1m (2016: £9.1m). The operating profit for the year at £7.2m (2016: £9.5m), achieved an operating margin of 6.8% (2016: 8.4%). The Board believes that this investment can support Tamdown's growth over a number of years.

Our markets

The customers of Tamdown are UK housebuilders or affordable housing developers, including housing associations and, as such, the UK housebuilding market is key to the Company. The housing market has been in a long-term position of structural undersupply as the number of new houses built has failed to keep pace with the rate of household formation. Current estimates from the DCLG are for annual household formation in excess of 250,000 over the short to medium term, which compares to the CPA estimates of UK housing starts in 2016 of approximately 148,000 (178,000 including public and private homes) and is projected to increase to 158,000 in 2019 (192,000 including public and private homes). As a result, there is the expectation that the housing deficit will remain over the long term. The prevalence of this deficit has attracted a significant amount of government stimulus to the sector.

Tamdown operates within the more economically resilient areas of the South East of England and London where the undersupply of housing appears to be more acute compared to the rest of the UK.  Tamdown works with the majority of the quoted housebuilders, who account for approximately 50% of total private new build volumes (compared to approximately 32% in 2005) with this dominance expected to continue as they work through their land bank and develop larger schemes.

The housing White Paper released in February 2017 announced new plans by the UK Government to tackle the undersupply of houses by reducing the obstacles to housebuilding and help local authorities, developers and small to medium sized housebuilders meet housing needs. This included greater support for small housebuilders, through the Home Building Fund, to build up to 225,000 homes in the long term. This is alongside a commitment to build more affordable homes, including Rent to Buy and shared ownership, with an extra £1.4 billion for the Affordable Homes Programme, to build around 225,000 affordable homes.

The Government announced in the November 2017 Budget a further package of investments, loans and guarantees, which when added to previous initiatives totalled £44bn, to increase the annual number of new homes from 217,000 in 2016/17 to 300,000 by 2025.

Outlook

Tamdown has an established market position, providing quality services to 9 of the top 10 UK housebuilders. The backdrop of Government stimulus to counter the housing supply deficit provides us with confidence that our customers will continue to demand our services.

Our strategic objectives are to grow the business organically, expand into new geographic markets and develop diversification opportunities into sectors such as affordable residential and build to rent. These plans, alongside working with TriConnex to ensure that the early customer intelligence that TriConnex becomes aware of is utilised in the most effective manner, give us confidence that we have an established route to continue to grow the Tamdown business.

TriConnex

Financial & Operating performance

Revenue for TriConnex increased by 26.3% to £29.5m (2016: £23.3m).  This strong growth is due to a combination of an expansion of our customer base, increased market share from current customers and the take up by customers of TriConnex's self-lay water and fibre services.  The EU referendum had a limited negative impact on the order book of TriConnex mainly due to the longer lead times in designing and implementing utility networks.  The order book grew by 25.9% over the year to £94.4m (2016: £75.0m).

TriConnex is a high gross margin business, principally due to the more technical, office based, added value nature of the services it provides, resulting in a higher proportion of overhead cost.  The high gross margin was maintained during the year, with the margin improving by 40 basis points to 33.8% (2016: 33.4%).

As TriConnex provides a turnkey service from concept to connection with a significant amount of desktop planning and research, the majority of TriConnex's staff are office based and in order for TriConnex to continue to grow it has needed to invest in an increased number of staff within business development, technical and operations departments, with the total headcount increasing by 57 (44%) over the year.  Accordingly, overheads have increased in the year to £6.5m (2016: £5.0m), broadly in proportion to turnover growth.

Operating profit increased by 23.8% to £3.5m (2016: £2.8m) with an operating margin of 11.8% (2016: 12.1%).

Our markets

The utility connections market consists of three regulated utilities; electricity, gas and water, and one unregulated utility, fibre. TriConnex initially offered electricity and gas connections, expanding to offer water connections in 2014 and fibre connections in 2016.  The market has arisen from the deregulation of the utility sector and TriConnex entered the market in 2011 as a result of this deregulation.

Since 2000 the regulator of electricity and gas utilities, Ofgem, has been focused on improving competition within the distribution side of the industry.  In 2010, licence obligations were imposed on electricity and gas distribution companies to promote competition and tighten up performance standards when working with independents. Today approximately 60% of gas and approximately 30% of electricity connections in the UK are undertaken by independent connection providers and these percentages are expected to continue to grow.

The priority for the regulator for Water, Ofwat, has, until recently, been to encourage the investment in an inadequate infrastructure rather than the promotion of competition meaning that the selling, distribution and the connection of water to new developments had remained with the regional monopoly water companies.  However, the concept of Self-Lay was introduced in 2013 which permitted developers to arrange for the installation of the water mains and services by an independent third party, so called Self-Lay Organisations (SLOs) such as TriConnex. 

The fibre connections market is not a regulated activity and independents have always been able to provide them. Thus, there has been less opportunity for TriConnex to benefit from deregulation but in 2016, Ofcom mandated more open access to Openreach's fibre network throughout the UK and the dynamics remain similar to the electricity, gas and water connections market as the availability of high speed fibre is an increasingly important factor for home buyers, and therefore for housebuilders and developers. There has been significant government support to roll out super-fast fibre across the country, including new residential and commercial developments.

TriConnex has approximately 20% share of the independent utilities connection market in the South East of England.  This has been built through having a deep understanding of its customers' needs, drawing on the Group's expertise in residential developments, being more service focused and user-friendly than competitors, as well as by providing fast and reliable delivery. The market share for the South West of England is approximately 3% but TriConnex has only been operating in the region since 2015 and has identified significant growth opportunities.

Outlook

The proportion of regulated utility connections to be made by independents is expected to continue to increase. TriConnex has already built a reputation of a high level of customer services alongside cost effective, efficient connections.

Our strategic objectives are to exploit the opportunities to increase the customer base in a sector which is predicted to grow due to undersupply.  In addition, as the utilities services sector is highly fragmented, the TriConnex team will explore acquisition opportunities, with the aim of increasing geographic penetration and service offering, as well as being earnings enhancing for the Group.

Other financial information

Exceptional item

In 2017, the Group incurred a number of exceptional costs in relation to the IPO totalling £1.7m and comprised £0.6m in relation to transaction costs and £1.1m in relation to settling share based management incentive arrangements (non-cash) that were triggered on completion of the IPO.

Net finance costs

The net finance charge for the year totalled £0.2m (2016: £0.2m).  Interest received on bank deposits totalled £0.1m (2016: £0.1m), with interest payable on bank borrowing of £0.26m (2016: £0.30m) and interest on finance lease and hire purchase facilities totalling £0.04m (2016: £0.06m).

Tax

The tax charge for the year was £1.6m, representing an effective tax rate of 21.0%.  This is higher than the statutory rate of corporation tax due to some exceptional costs related to the IPO not being deductible for tax. 

Earnings per share

Basic earnings per share were 15.4 pence, after the impact of the exceptional item (2016: 22.3 pence).  The underlying basic earnings per share, which has been adjusted for the impact of the exceptional item were 19.1 pence (2016: 22.3 pence).  The diluted earnings per share were 15.0 pence (2016: 22.2 pence) and the adjusted diluted earnings per share, excluding the impact of the exceptional item were 18.6 pence (2016: 22.2 pence).

Dividends

As discussed in the Chairman's Statement, the Board has recommended a final dividend of 4.2 pence per share, giving a total dividend for the year of 6.3 pence per share.  This is in line with our guidance at the time of the IPO.  The total cost of the dividend, including the interim dividend, will be £2.4m.

Statement of financial position

During the year to 30 September 2017, shareholders' funds increased by £3.6m to £17.0m (2016: £13.4m), the movement included the payment of a dividends totalling £3.5m, which was mitigated by the strong trading performance of the Group companies.

Non-current assets increased over the year by £3.0m to £10.2m (2016: £7.2m), with the increase including the acquisition of land in Braintree where the Group's new head office buildings will be built once the design and planning processes have completed, which is anticipated to be midway through 2018.  Current assets decreased by £2.0m to £65.8m (2016: £67.8m) with inventories increasing by £0.5m, trade and other receivables increasing by £4.4m and cash balances decreasing by £6.9m to £27.1m.

Total liabilities decreased by £2.6m to £59.0m (2016: £61.6m), with borrowings decreasing by £2.0m with the repayment of the term loan.

Cash flow

The Group utilised £6.9m (2016: generated £6.3m) of cash in the year, resulting in a cash and cash equivalent balance at 30 September 2017 of £27.1m (2016: £34.0m).

Operating cash flows before working capital movements, generated £10.3m (2016: £11.7m). Investment in working capital totalled £5.0m (2016: £0.2m), with the main increase in debtors, resulting in cash generated from operating activities of £5.3m (2016: £11.5m).  Tax and interest payments amounted to £2.7m (2016: £2.4m).  Cash utilised in investing activities totalled £3.4m (2016: £0.2m), with £4.0m used to acquire fixed assets of which £3.0m was for land for the Group's new head office. Net cash out-flows from financing activities totalled £6.2m (2016: £2.5m), including £3.5m (2016: £11.0m) on dividend payments.

Treasury risk management

The Group's cash balances are centrally pooled and invested, ensuring the best available returns are achieved consistent with retaining liquidity for the Group's operations.  The Group deposits funds only with financial institutions which have a minimum credit rating of A.  As the Group operates wholly within the UK, there is no requirement for currency risk management

Current trading and outlook

Trading in the first few months of the new financial year has been in line with the Board's expectations.  Demand from customers is robust, and the Group's order book continuing to increase with the balance as at 31 December 2017 of £213m, which provides the Board with confidence for the year ahead.

 

Mike Morris                                                                       Alan Martin       

Chief Executive Officer                                                 Chief Financial Officer

8 January 2018
 

Consolidated statement of total comprehensive income

For the year ended 30 September 2017

 

 

Note

2017

2016

 

 

£'000

£'000

 

 

 

 

Revenue

 

135,034

135,720

 

 

 

 

Cost of sales

 

(107,793)

(109,399)

 

 

 

 

Gross profit

 

27,241

26,321

 

 

 

 

Administrative expenses

 

(17,910)

(15,941)

 

 

 

 

Operating profit

 

9,331

10,380

 

 

 

 

Exceptional items

3

(1,714)

-

Other income

4

-

380

Finance income

5

70

107

Finance expense

5

(304)

(352)

 

 

 

 

Profit before tax

 

7,383

10,515

 

 

 

 

Taxation

6

(1,554)

(2,104)

 

 

 

 

Profit

 

5,829

8,411

 

 

 

 

Other comprehensive income

 

 

 

Items that will or may be classified to profit or loss:

 

 

 

Available for sale investments

 

-

(379)

 

 

 

 

Total comprehensive income for the year attributable to equity holders of the parent

 

5,829

8,032

 

 

 

 

 

 

 

 

Earnings per share (pence per share)

 

 

 

Basic

8

15.40

22.28

Diluted

8

15.01

22.22

Consolidated statement of financial position

At 30 September 2017

 

 

2017

2016

 

£'000

£'000

 

 

 

Non-current assets

 

 

Property, plant and equipment

7,795

4,774

Goodwill

2,361

2,361

Other investments

55

60

Total non-current assets

10,211

7,195

 

 

 

Current assets

 

 

Inventories

924

427

Trade and other receivables

37,841

33,412

Cash and cash equivalents

27,066

33,992

Total current assets

65,831

67,831

Total assets

76,044

75,026

 

 

 

Current liabilities

 

 

Borrowings

2,000

2,000

Trade and other payables

49,909

49,908

Corporation tax

39

807

Total current liabilities

51,948

52,715

 

 

 

Non-current liabilities

 

 

Borrowings

6,400

8,400

Net obligations under finance leases/hire purchase agreements

619

433

Deferred tax liabilities

62

102

Total non-current liabilities

7,081

8,935

Total liabilities

59,029

61,650

 

 

 

Net assets

17,013

13,376

 

 

 

Equity attributable to equity holders of the company

 

 

Share capital

762

755

Retained earnings

16,251

12,621

 

 

 

Total equity

17,013

13,376

 

 

 

 

Consolidated statement of changes in equity

For the year ended 30 September 2017

 

 

Share capital

Capital redemption reserve

Retained earnings

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Equity as at 1 October 2015

755

4,734

10,821

16,310

Transactions with owners

 

 

 

 

Dividend paid

-

-

(11,000)

(11,000)

Share-based payment charge

-

-

34

34

Transfer from capital redemption reserve to retained earnings

-

(4,734)

4,734

-

 

-

(4,734)

(6,232)

(10,966)

Total comprehensive income

 

 

 

 

Profit for the year

-

-

8,411

8,411

Other comprehensive income

-

-

(379)

(379)

 

-

-

8,032

8,032

 

 

 

 

 

Equity as at 30 September 2016

755

-

12,621

13,376

Transactions with owners

 

 

 

 

Dividend paid

-

-

(3,476)

(3,476)

Share-based payment charge

-

-

1,277

1,277

Issue of share capital

7

-

-

7

 

7

-

(2,199)

(2,192)

Total comprehensive income

 

 

 

 

Profit for the year

-

-

5,829

5,829

 

-

-

5,651

5,651

 

 

 

 

 

Equity as at 30 September 2017

762

-

16,251

17,013

 

 

 

Consolidated statement of cash flows

For the year ended 30 September 2017

 

 

Note

2017

2016

 

 

£'000

£'000

 

 

 

 

Cash flow from operating activities

 

 

 

Profit before tax

 

7,383

10,515

 

 

 

 

Adjusted by:

 

 

 

Loss on disposal of plant and equipment

 

20

3

Share-based payment charge

 

1,277

34

Loss/(Profit) on disposal of investments

 

5

(372)

Finance expense (net)

 

234

245

Depreciation of property, plant and equipment

 

1,400

1,261

Operating profit before working capital changes

 

10,319

11,686

 

 

 

 

Working capital adjustments:

 

 

 

(Increase)/Decrease in trade and other receivables

 

(4,428)

(11,273)

(Increase)/Decrease in inventories

 

(497)

312

Increase/(Decrease) in trade and other payables

 

(63)

10,753

 

 

 

 

Cash generated from operating activities

 

5,331

11,478

 

 

 

 

Interest paid

 

(304)

(355)

Taxation paid

 

(2,363)

(2,076)

 

 

 

 

Net cash flows from operating activities

 

2,664

9,047

 

 

 

 

Investing activities

 

 

 

Purchase of property, plant and equipment

 

(4,061)

(1,050)

Sale of property and equipment

 

629

244

Sale of available for sale investments

 

-

456

Interest received

 

70

107

Net cash used in investing activities

 

(3,362)

(243)

 

 

 

 

Financing activities

 

 

 

Dividend payment

7

(3,476)

(11,000)

Draw down of term loan

 

-

12,000)

Repayment of loans

 

(2,000)

(2,600)

Repayment of finance leases/hire purchase agreements

 

(759)

(936)

Issue of share capital

 

7

-

Net cash used in financing activities

 

(6,228)

(2,536)

 

 

 

 

Net change in cash and cash equivalents

 

(6,926)

6,268

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

33,992

27,724

 

 

 

 

Cash and cash equivalents at the end of the year

 

27,066

33,992

 

 

Notes to the preliminary results

For the year ended 30 September 2017

 

1.    Accounting policies

 

The Group financial statements have been prepared and approved by the Directors in compliance with international financial reporting standards (IFRSs) and IFRS interpretations committee (IFRIC) as adopted by the European Union.

 

The financial information included within this preliminary report does not constitute the Group's statutory accounts, but is derived from those accounts on which an unqualified audit opinion has been issued. Statutory accounts for 2016 have been delivered to the Registrar of Companies, and those for 2017 will be delivered in due course.

 

The accounting policies adopted in preparation of these accounts are consistent with those of the previous financial year. Of the new standards and interpretations that are in issue for the financial year ended 30 September 2017, there is no financial impact on these preliminary results.

 

 

 

 

 

Notes to the preliminary results (continued)

For the year ended 30 September 2017

 

2.    Segmental analysis

 

The Group is organised into the following two operating divisions under the control of the Executive Board, which is identified as the Chief Operating Decision Maker as defined under IFRS8 'Operating Segments':

 

·     Tamdown Group Limited

·     TriConnex Limited

 

All of the Group's operations are carried out entirely within the United Kingdom.

 

Segment information about the Group's operations is presented below:

 

 

2017

2016

 

£'000

£'000

 

 

 

Revenue

 

 

Tamdown Group Limited

105,565

112,390

TriConnex Limited

29,469

23,330

Total revenue

135,034

135,720

 

 

 

Gross profit

 

 

Tamdown Group Limited

17,282

18,536

TriConnex Limited

9,959

7,785

Total gross profit

27,241

26,321

 

 

 

Operating profit

 

 

Tamdown Group Limited

7,210

9,451

TriConnex Limited

3,490

2,819

Group overhead

(1,369)

(1,889)

Total operating profit

9,331

10,381

 

 

 

Exceptional items

(1,714)

-

Other income

-

380

Net finance cost

(234)

(246)

Profit before tax

7,383

10,515

 

 

 

Taxation

(1,554)

(2,104)

 

 

 

Total comprehensive income for the period

5,829

8,411

 

 

 

Notes to the preliminary results (continued)

For the year ended 30 September 2017

 

3.    Exceptional items

 

 

2017

2016

 

£'000

£'000

 

 

 

IPO transaction costs

611

-

IFRS2 costs of shares transferred on IPO

1,103

-

 

1,714

-

 

The transaction costs relate to the admission of the company to the Alternative Investment Market of the London Stock Exchange on 11 July 2017. The admission to AIM triggered the settlement of management incentive arrangements, with shares being transferred to members of management. The amount relates to the fair value of shares transferred.

 

 

4.    Other income

 

 

2017

2016

 

£'000

£'000

 

 

 

Sale of available for sale investments

-

380

 

 

5.    Finance income and expense

 

 

2017

2016

 

£'000

£'000

 

 

 

Finance income

 

 

Interest on bank deposits

70

107

 

 

 

Finance expense

 

 

Interest on bank loan

(260)

(296)

Interest on hire purchase agreements

(44)

(56)

 

(304)

(352)

 

 

 

Finance expense (net)

(234)

(245)

 

 

 

Notes to the preliminary results (continued)

For the year ended 30 September 2017

 

6.    Taxation

 

 

2017

2016

 

£'000

£'000

 

 

 

Current Tax:

 

 

UK corporation tax on profits for the year

1,606

2,248

Adjustments in respect of prior periods

-

(81)

Total current tax

1,606

2,167

Deferred Tax:

 

 

Origination and reversal of timing differences

(52)

(37)

Prior period adjustment

-

(1)

Effect of tax rate change on opening balance

-

(25)

Taxation

1,554

2,104

 

The tax assessed for the year is different from the standard rate of corporation tax as applied in the UK. The differences are explained below:

 

Profit before tax

7,383

10,515

 

 

 

Profit before tax multiplied by the respective standard rate of corporation tax applicable in the UK (19.5%) (2016: 20.0%)

1,421

2,027

 

 

 

Effects of:

 

 

Non-deductible expenses

425

176

Prior period adjustment

-

(81)

Deduction in respect of share options exercised

(311)

-

Deferred tax

19

(18)

Taxation

1,554

2,104

 

 

 

Notes to the preliminary results (continued)

For the year ended 30 September 2017

 

7.    Dividends

 

 

2017

2016

 

£'000

£'000

 

 

 

Amounts recognised as distributions to equity holders in the year:

 

 

 

 

 

Interim dividend for the year ended 30 September 2017 of 2.1p (2016: £14.56)

799

11,000

 

 

 

Final dividend for the year ended 30 September 2016 of 3.5p per share

2,677

-

 

 

 

 

3,476

11,000

 

 

The proposed final dividend for the year ended 30 September 2017 of 4.2p per share (2016:3.5p) makes a total dividend for the year of 6.3p (2016: 18.06p). The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these financial statements. The total estimated dividend to be paid is £1,600,000.

 

 

8.    Earnings per share

 

 

2017

2016

 

£'000

£'000

 

 

 

Profit for the year attributable to equity shareholders

5,829

8,411

 

 

 

Weighted average number of shares in issue for the year

37,844,645

37,757,850

 

 

 

Effect of dilutive potential ordinary shares:

 

 

Share options

985,099

1,784

 

 

 

Weighted average number of shares for the purpose of diluted earnings per share

38,829,744

37,847,067

 

 

 

Basic earnings (pence per share)

15.40

22.28

 

 

 

Diluted earnings (pence per share)

15.01

22.22

 

On 5 July 2017, the Group passed resolutions, conditional upon Admission and to take effect immediately prior to Admission, to restructure the company's capital to reclassify all shares as ordinary voting shares and to subdivide and redesignate the shares as ordinary shares of £0.02 each.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Preliminary Results - RNS