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NMCN PLC   -  NMCN   

UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIALS

Released 07:00 08-Aug-2019

RNS Number : 3193I
NMCN PLC
08 August 2019
 

8 August 2019

 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

 

NMCN PLC

UNAUDITED CONDENSED GROUP HALF YEARLY FINANCIAL STATEMENTS

 

nmcn PLC ("the Company" or "the Group" or "nmcn"), a leading engineering and construction company, delivering major water, built environment and critical national infrastructure projects, announces its unaudited interim results for the six months ended 30 June 2019.

 

Highlights:-




Six Months Ended


Six Months Ended


Period Movement




30 June 2019


30 June 2018






£'000


£'000


%






Restated1



Revenue



183,978


 

161,175


14.1%









Profit Before Tax



3,463


2,503


38.4%









Cash and Cash Equivalents



25,785


18,891


36.5%









Earnings per Share



27.0p


20.0p


35.1%









Proposed Dividends



9.0p


6.0p


50.0%

 

1 After IFRS 16 Leases and other prior period restatements - see note 3.

 

o   Revenue increased by 14.1% compared with H1 2018.

o   Profit before tax increased by 38.4% to £3.5 million (H1 FY18 restated: £2.5 million).

o   Cash of £25.8 million, an increase of 36.5% (H1 FY18: £18.9 million).

o   Current order book for completion in 2019 of circa £356 million (H1 FY18: circa £320 million).

o   Increased interim dividend to 9.0p (H1 FY18: 6.0p).

 

John Homer - Chief Executive - Commented:

 

"These results demonstrate the continued progress made in the business against our strategic objectives. Our focus on profit improvement (profit before tax circa 38% ahead of last year) and cash generation (period end balance circa 36% ahead of last year) continues to show returns.

 

We continue to invest significantly in the development of our people and the evolution of our employer brand. It is our firm belief that our people are the overarching differentiator in the service that we provide and the primary driver for our continued success.

 

The outlook for future trading remains positive and provides the opportunity to maximise earnings from our operations. We are confident that the Board's expectations will be achieved, with net margins slightly exceeding 2%."

 

For further information:-



 

John Homer, Chief Executive

Daniel Taylor, Chief Financial Officer

01623 515008

nmcn PLC

 

 

 

 

 


OUR OPERATING AND FINANCIAL REVIEW

 

Group Financial Performance

 

In the first half of 2019, the Group has achieved satisfactory growth in both revenue and profitability. Revenue for the period increased by 14.1% from £161.2 million to £184.0 million. Profit before tax for the period totalled £3.5 million compared to £2.5 million for the same period in 2018, an increase of over 38%. Continued progress has been achieved across the business units and sectors. The Telecoms business returned to a commendable level of profitability, following the completion of the strategic business review and the extension of a term contract with its principal customer. Results overall for the period were better than the Board's expectations and there is cautious optimism for the second half and beyond.

 

On 1 January 2019 the Group adopted IFRS 16 Leases under the retrospective method, leading to a restatement of the Group's previously reported results. As a result of the transition additional assets and liabilities of £2.0 million have been recognised as at 30 June 2018, with a minimal impact on profit before tax. Full details of the transition can be found in note 3.

 

Built Environment Segment

 



As restated



6 months ended 30 June 2019

6 months ended 30 June 2018

Period movement


£'000

£'000

%

 

Revenue 

 

51,874

 

48,786

 

6.3%





Operating profit

588

4

13,365.2%





Operating profit margin

1.1%

0.0%

1.1%





Secured workload

118,000

89,000

32.6%

 

The Built Environment segment has seen a sustainable growth in revenue in the period from £48.8 million to £51.9 million, an increase of 6.3%. This growth in the segment is despite uncertainty in the marketplace causing delays on the commencement of major schemes. This has impacted both the Construction and Highways business units.

 

These delays have meant only a small contribution to operating profit in the first half of the year by these business units; however, both have healthy order books to construct in the second half of 2019. Both business units have invested in people for the future, to ensure we have the capability to deliver the additional revenue forecast in the second half of 2019 and future years. The Highways business unit in particular has been awarded a place on the Regional Development Partnership by Highways England where its first scheme is junction improvements on the M621 for circa £28 million. This scheme will commence in 2020 once the design stage is completed. The Construction business unit has a number of large schemes, which we are working on early design stages with developers, where orders are anticipated in the second half of the year for 2020 and beyond.

 

The Telecoms business unit has seen a significant turnaround in the first half of 2019 when compared to the same period last year. The business unit has achieved an operating profit of £0.5 million for the period. Further growth is expected in super-fast broadband over the next few years, and the business unit is well placed to take advantage of the right opportunities.

 

Secured order book for the Built Environment segment to construct in 2019 is £118 million (H1 2018: £89 million), an increase from the comparable period of 32.6%.

 

 

 

 

Water Segment

 



As restated



6 months ended 30 June 2019

6 months ended 30 June 2018

Period movement


£'000

£'000

%

 

Revenue 

 

132,104

 

112,389

 

17.5%





Operating profit

2,953

2,585

14.2%





Operating profit margin

2.2%

2.3%

(0.1%)





Secured workload

238,000

231,000

3.0%

 

The Water segment has achieved another significant growth in revenue for the period up from £112.4 million to £132.1 million, an increase of 17.5%. The Water segment also achieved an increase in operating profit to £3.0 million from £2.6 million, an increase of 14.2%.

 

During the period, and as previously reported, the Water segment has been successful in securing the following strategic frameworks for the Asset Management Period 7 ("AMP 7"):

 

o   Severn Trent Water, Lots 1, 2 and 3

o   South West Water, Civil Engineering K7 Capital Works Framework

o   South Staffs Water, Water Treatment Works

 

The secured order book of circa £238 million for the Water segment is an increase of 3.0% on the previous period (H1 2018: £231 million). The Board is cautious around a potential downturn in workload through the AMP transition which may impact Q4 2019 and into 2020.

 

Legacy

 

In relation to the one remaining outstanding legacy contract with Cyden Homes Limited, the Group is pursuing claims with the client for sums greater than the carrying value and will continue to do so until it is resolved.

 

Cash

 

The improvement in profitability has resulted in a significant enhancement of the half-year bank position with cash at 30 June 2019 being £25.8 million (H1 2018: £18.9 million). This is after further investment in the self-funded nmcn residential developments of £4.4 million (H1 2018: £2.0 million), where all schemes are progressing well with the first sales due to be completed imminently. The forecast cash flows remain positive and hence the Group continues to assess strategic investment opportunities.

 

Dividend

 

The increase in profitability and the improved cash position, along with the Board's strategy to maintain a progressive dividend policy, has meant that the Board is proposing a 50% increase on the interim dividend to 9.0p per share (H1 2018: 6.0p per share). The dividend will be paid on 13 September 2019 to shareholders on the register at 16 August 2019.

 

 

 

 

 

 

 

Outlook

 

The current order book for completion this year is circa £356 million (2018: circa £320 million). This leads the Board to be confident that its expectations will be achieved, with net margins slightly exceeding 2%.

 

The Board is cautious around the AMP transition for Q4 2019 and into 2020, in relation to the revenue deliverable. Uncertainty around the political landscape and Local Government expenditure will remain until a conclusion is reached, but the Group's strong reputation for operational delivery, our balance sheet, cash position and positive rebrand mean it is well placed to manage these headwind challenges. The outlook therefore for the Group remains positive, with the Group well positioned to obtain additional opportunities that prevail due to the well-publicised issues of some of the major construction companies in the UK.

 

 

 



UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

 

The unaudited condensed Group results for the half year ended 30 June 2019 are shown below together with the unaudited (restated) Group results for the half year ended 30 June 2018 and the audited (restated) Group results for the year ended 31 December 2018.

 


Six Months Ended 30 June

Year Ended


2019


2018


31 December 2018


£'000


£'000


£'000




Restated1


Restated1

Revenue

183,978


161,175


340,450

Other operating income

610


291


1,277


184,588


161,466


341,727

Raw materials and consumables

(28,848)


(24,556)


(48,930)

Other external charges

(104,176)


(91,636)


(197,605)

Employee costs

(41,946)


(38,116)


(78,633)

Depreciation of property, plant and equipment

(2,611)


(2,258)


(4,677)

Other operating charges

(3,466)


(2,311)


(5,720)

Operating profit

3,541


2,589


6,162

Finance income

37


-


31

Finance costs

(115)


(86)


(185)

Profit before tax

3,463


2,503


6,008

Tax (Note 7)

(705)


(475)


(1,187)

Profit for the period

2,758


2,028


4,821

Other comprehensive income

-


-


-

Total comprehensive income for the period

2,758


2,028


4,821

 

Attributed to:-






Equity holders of the parent

2,758


2,028


4,821


2,758


2,028


4,821

Basic earnings per share (Note 6)

27.0p


20.0p


47.5p

Diluted earnings per share (Note 6)

26.3p


20.0p


45.0p

Dividend per share (Note 8)

9.0p


6.0p


18.0p







1 After IFRS 16 Leases and other prior period restatements - see note 3.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

 

 


Share

Share-Based Payment

Merger

Capital Redemption

Retained



Capital

Reserve

Reserve

Reserve

Earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2018 as previously reported

1,015

-

455

20

11,343

12,833

Adjustment on adoption of IFRS 16 (Note 3.5)

-

-

-

-

(21)

(21)

Balance at 1 January 2018 as restated

1,015

-

20

11,322

12,812

Profit and total comprehensive income for the period as restated (Note 3.5)

-

-

-

-

2,028

2,028

Dividends paid

-

-

-

-

(305)

(305)

Balance at 30 June 2018 as restated

1,015

-

20

13,045

14,535

Profit and total comprehensive income for the period as restated (Note 3.5)

-

-

-

-

2,793

2,793

Share-based payment expense

-

1,069

-

-

-

1,069

Share-based payment expense - deferred tax

-

381

-

-

-

381

Dividends paid

-

-

-

-

(609)

(609)

Balance at 31 December 2018 as restated (Note 3.5)

1,015

1,450

20

15,229

18,169

Profit and total comprehensive income for the period

-

-

-

-

2,758

2,758

Purchase of own shares (Note 11)

-

-

-

-

(164)

(164)

Exercise of share options

29

(697)

-

-

(977)

(1,645)

Share-based payment expense

-

521

-

-

-

521

Share-based payment expense - deferred tax

-

(236)

-

-

-

(236)

Dividends paid

-

-

-

-

(1,214)

(1,214)

Balance at 30 June 2019

1,044

1,038

455

20

15,632

18,189

 

 



UNAUDITED CONDENSED GROUP BALANCE SHEETS

 

The unaudited condensed Group balance sheets as at 30 June 2019 and 30 June 2018 (restated) are shown below together with the audited (restated) Group balance sheet as at 31 December 2018.

 




30 June

31 December




2019


2018


2018




£'000


£'000


£'000

Assets




Restated1


Restated1

Non-current assets








Property, plant and equipment


25,710


20,886


22,591


Investments in joint ventures


-


75


-


Deferred tax asset


739


890


902




26,449


21,851


23,493

Current assets








Inventories


1,855


1,539


1,791


Trade and other receivables


66,929


67,265


60,814


Cash and cash equivalents


25,785


18,891


33,353




94,569


87,695


95,958








Total assets


121,018


109,546


119,451









Equity and liabilities







Capital and reserves attributable to equity holders of the Parent








Share capital


1,044


1,015


1,015


Share-based payment reserve


1,038


-


1,450


Merger reserve


455


455


455


Capital redemption reserve


20


20


20


Retained earnings


15,632


13,045


15,229

Total equity


18,189


14,535


18,169








Liabilities














Non-current liabilities








Obligations under leases


6,119


2,579


3,016


Provisions


339


401


350



6,458


2,980


3,366

Current liabilities








Trade and other payables


91,444


87,811


93,140


Current income tax payable


810


312


157


Obligations under leases


4,117


3,908


4,619




96,371


92,031


97,916








Total liabilities


102,829


95,011


101,282








Total equity and liabilities


121,018


109,546


119,451

 

1 After IFRS 16 Leases and other prior period restatements - see note 3.

 



UNAUDITED CONDENSED GROUP STATEMENTS OF CASH FLOWS

 

The unaudited condensed Group statements of cash flows for the periods ended 30 June 2019 and 30 June 2018 (restated) are shown below together with the audited (restated) Group statement of cash flows for the year ended 31 December 2018.



Six Months Ended 30 June


Year Ended



2019


2018


31 December

2018



£'000


£'000


£'000





Restated1


Restated1

Cash flows from operating activities







Operating profit


3,541


2,589


6,162

Adjustments for:







Depreciation of property, plant and equipment


2,611


2,258


4,677

Gain on disposal of property, plant and equipment


(203)


(293)


(574)

Equity-settled share-based payment transactions


521


-


1,069

Operating cash flows before movements in working capital


6,470


4,554


11,334








(Increase)/decrease in inventories


(64)


284


29

(Increase)/decrease in receivables


(1,747)


(11,607)


1,177

Increase in amounts owed by joint ventures


(4,368)


(2,036)


(8,364)

Decrease in reinstatement provision


(11)


(3)


(54)

(Decrease)/increase in payables


(3,370)


14,340


19,669

Cash (used in)/generated from operations


(3,090)


5,532


23,791








Income tax paid


(129)


-


(500)

Net cash (used in)/generated from operations


(3,219)


5,532


23,291








Cash flows from investing activities







Purchase of property, plant and equipment

(1,438)


(1,953)


(3,263)

Proceeds on disposal of property, plant and equipment

532


550


930

Investment in joint ventures

-


(75)


-

Interest received

37


-


31

Interest paid

-


(4)


(4)

Net cash used in investing activities


(869)


(1,482)


(2,306)








Cash flows from financing activities







Equity dividends paid


(1,214)


(305)


(914)

Purchase of own shares


(164)


-


-

Proceeds from exercise of share options


29


-


-

Repayments of obligations under leases


(2,016)


(1,778)


(3,543)

Interest payable under leases


(115)


(82)


(181)

Net cash used in financing activities


(3,480)


(2,165)


(4,638)








Net (decrease)/increase in cash and cash equivalents

(7,568)


1,885


16,347

Cash and cash equivalents at start of period


33,353


17,006


17,006

Cash and cash equivalents at end of period


25,785


18,891


33,353

 

1 After IFRS 16 Leases and other prior period restatements - see note 3.

 

 

 

 

 

 

 

1.

Basis of preparation


The unaudited condensed Group half-yearly financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, and have been prepared on the basis of International Financial Reporting Standards (IFRSs) as adopted by the European Union. They do not include all of the information required for full annual financial statements. These condensed consolidated half-yearly financial statements have not been subject to audit or review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 by the Company's auditor, do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006, and should be read in conjunction with the Annual Report 2018. The comparative figures for the year ended 31 December 2018 are not the Group's statutory accounts for that financial year. Those accounts have been reported upon by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain statements under Section 435 and 498 (2) or (3) respectively of the Companies Act 2006.

The Board regularly reviews financial statements, cash balances and forecasts and the Directors confirm that they consider the Group has adequate resources to continue to operate for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the unaudited condensed Group half yearly financial statements.

This is the first set of the Group's financial statements where IFRS 16 Leases has been applied. Changes to significant accounting policies are described in Note 3.



2.

Use of judgements and estimates


The preparation of unaudited condensed Group half-yearly financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these unaudited condensed Group half-yearly financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2018.

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2018.



3.1.

Changes in significant accounting policies and other restatements


Except as described below, the accounting policies adopted in the preparation of the unaudited condensed Group half-yearly financial statements to 30 June 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.

This is the first set of the Group's financial statements where IFRS 16 Leases has been applied. The impact on these condensed half-yearly financial statements and the changes to the Group's significant accounting policies, together with details of other restatements, are described in further detail below.

The Group has considered amendments to existing standards and interpretations that are effective for the year ending 31 December 2019 and is of the view that they have no impact on the unaudited condensed Group half-yearly accounts, except as noted below for IFRS 16.



3.2.

IFRS 16 Leases - overview

The Group has initially adopted IFRS 16 Leases from 1 January 2019 under the retrospective approach.

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. The adoption of IFRS 16 under the retrospective approach has affected the comparative information presented in the Group's condensed half-yearly 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 period's results is shown in note 3.5.

 

 

3.3.

IFRS 16 Leases - changes in accounting policy

The details of the new significant accounting policy and the nature of the change to previous accounting policy in relation to the Group's adoption of IFRS 16 Leases is set out below.

 

Amended accounting policy

Nature of change in accounting policy

 

 

The Group assesses whether a contract is or contains a lease at inception of the contract.

A contract is or contains a lease if the contract includes the right to control the use of an identified asset for a period of time in exchange for consideration. Factors that are considered when making this assessment include: the Group's right to obtain substantially all the economic benefits from use of the asset; the Group's right to direct the use of the asset; and the supplier's right to substitute the asset.

The Group previously determined whether a contract was or contained a lease under IFRIC 4. In practice, all contracts that are classified as a lease under IFRS 16 were also previously classified as a lease under IFRIC 4 and vice versa.

 

 

 

 

The Group allocates the consideration in the contract to each lease component on the basis of relative stand-alone selling prices. For each lease component, the Group recognises a right of use asset and a lease liability at the lease commencement date.

Under IAS 17, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all the risks and rewards of ownership to the Group. Under IFRS 16, the majority of the Group's leases are recognised on the balance sheet as right of use assets and lease liabilities, including those arrangements previously classified as either finance leases or operating leases under IAS 17.

 

 

Lease liabilities are presented as "obligations under leases" in the balance sheet.

The lease liability is initially measured at the present value of future lease payments, discounted at the interest rate implicit in the lease. Where the implicit interest rate cannot be determined, the Group discounts the future lease payments using its incremental borrowing rate.

The lease liability is subsequently measured at amortised cost using the effective interest method.

Lease liabilities were only recognised under IAS 17 in respect of arrangements classified as finance leases. This distinction no longer exists under IFRS 16.

Where an arrangement was treated as a finance lease under IAS 17, a liability was initially recognised equal to the value of the asset capitalised within property, plant and equipment (see below). The liability was subsequently measured at amortised cost using the effective interest method. There is no material difference between the amounts recognised as liabilities or as interest expense for such arrangements following the adoption of IFRS 16.

Lease payments associated with operating leases were recognised as an expense on a straight-line basis over the lease term, with no amounts being recognised on the balance sheet.

 

 

Right of use assets are presented in "property, plant and equipment" on the balance sheet.

The right of use asset is initially measured at cost, representing the initial amount of the lease liability adjusted for any up-front lease payments, direct costs incurred or lease incentives received.

The right of use asset is subsequently depreciated on a straight-line basis to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of right of use assets are determined on the same basis as those of property, plant and equipment.

Assets were only recognised under IAS 17 in respect of arrangements classified as finance leases.

Where an arrangement was previously treated as a finance lease under IAS 17, an asset was recognised within property, plant and equipment at the fair value of the asset or, if lower, the present value of the minimum lease payments. The asset was subsequently depreciated on the same basis as other similar assets purchased by the Group without recourse to financing arrangements. Such assets are now presented as right of use assets within property, plant and equipment. There is no material difference between the amounts recognised as assets or as depreciation expense for such arrangements following the adoption of IFRS 16.

In addition, under IFRS 16 a right of use asset is now recognised within property, plant and equipment for assets under leases that were previously classified as operating leases under IAS 17, for which were lease payments were recognised as an expense on a straight-line basis over the lease term, with no amounts being recognised on the balance sheet.

 

 

No right of use asset or lease liability is recognised in respect of leases with terms of 12 months or less or in relation to low value assets. Lease payments associated with such leases are recognised as an expense on a straight-line basis over the lease term.

The treatment of short-term leases and leases for low-value assets is unchanged on adoption of IFRS 16 as all such leases were previously classified as operating leases under IAS 17.

 

 



 

3.4.

Other restatements

As disclosed in the consolidated financial statements for the year ended 31 December 2018, the Group made two restatements to its previously reported results, which were both in relation to reclassifications only. The restatements also applied to the six months ended 30 June 2018 as noted below. The restatements had no impact on total comprehensive income or the total equity of the Group.

The Company reclassified an asset that was jointly owned from within contract assets to property, plant and equipment due to the long-term nature of the asset concerned. The net book value, and hence total adjustment at 30 June 2018 was £0.8 million. The Company also reclassified items between contract assets and accruals, increasing both by £4.3 million to better reflect the nature and timing of the transactions involved. The restatements combined also increased revenue and the related costs by £0.3 million. The impact of the restatement on the prior period's results is shown in note 3.5.

 

3.5.

Impact of restatements on the condensed half-yearly financial statements

Impact on the condensed Group statements of comprehensive income

 


Six Months Ended 30 June 2018

Year Ended 31 December 2018


As Reported

Adjustments

Restated

As Reported

Adjustments

Restated


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Explanation of adjustment


Note 3.3

Note 3.4



Note 3.3

Note 3.4











Revenue

160,859

-

316

161,175

340,450

-

-

340,450

Other operating income

291

-

-

291

1,277

-

-

1,277


161,150

-

316

161,466

341,727

-

-

341,727

Raw materials and consumables

(24,509)

-

(47)

(24,556)

(48,930)

-

-

(48,930)

Other external charges

(91,636)

-

-

(91,636)

(197,605)

-

-

(197,605)

Employee costs

(38,116)

-

-

(38,116)

(78,633)

-

-

(78,633)

Depreciation of property, plant and equipment

(1,778)

(211)

(269)

(2,258)

(4,166)

(511)

-

(4,677)

Other operating charges

(2,543)

232

-

(2,311)

(6,282)

562

-

(5,720)

Operating profit

2,568

21

-

2,589

6,111

51

-

6,162

Finance income

-

-

-

-

31

-

-

31

Finance costs

(56)

(30)

-

(86)

(114)

(71)

-

(185)

Profit before tax

2,512

(9)

-

2,503

6,028

(20)

-

6,008

Tax

(477)

2

-

(475)

(1,191)

4

-

(1,187)

Profit for the period

2,035

(7)

-

2,028

4,837

(16)

-

4,821

Other comprehensive income

-

-

-

-

-

-

-

-

Total comprehensive income for the period

2,035

(7)

-

2,028

4,837

(16)

-

4,821

 

 

 

 

 

 

 



 

3.5.

Impact of restatements on the condensed half-yearly financial statements (continued)

Impact on the condensed Group balance sheets

 


As at 1 January 2018


As Reported

Adjustment

Restated


£'000

£'000

£'000

£'000






Explanation of adjustment


Note 3.3

Note 3.4







Assets





Non-current assets





Property, plant and equipment

18,174

1,409

-

19,583

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





Obligations under leases

2,514

374

-

2,888

Provisions

404

-

-

404


2,918

374

-

3,292

Current liabilities





Trade and other payables

73,471

-

-

73,471

Current income tax payable

177

-

-

177

Obligations under leases

2,451

1,061

-

3,512


76,099

1,061

-

77,160






Total liabilities

79,017

1,435

-

80,452






Total equity and liabilities

91,850

1,414

-

93,264

 

 

 



 

3.5.

Impact of restatements on the condensed half-yearly financial statements (continued)

Impact on the condensed Group balance sheets

 


As at 30 June 2018

As at 31 December 2018


As Reported

Adjustment

Restated

As Reported

Adjustment

Restated


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Explanation of adjustment


Note 3.3

Note 3.4



Note 3.3

Note 3.4











Assets









Non-current assets









Property, plant and equipment

18,147

1,951

788

20,886

19,918

2,673

-

22,591

Investments in joint ventures

75

-

-

75

-

-

-

-

Deferred tax asset

883

7

-

890

893

9

-

902


19,105

1,958

788

21,851

20,811

2,682

-

23,493

Current assets









Inventories

1,539

-

-

1,539

1,791

-

-

1,791

Trade and other receivables

63,014

-

4,251

67,265

60,814

-

-

60,814

Cash and cash equivalents

18,891

-

-

18,891

33,353

-

-

33,353


83,444

-

4,251

87,695

95,958

-

-

95,958

Total assets

102,549

1,958

5,039

109,546

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

1,015

-

-

1,015

Share-based payment reserve

-

-

-

-

1,450

-

-

1,450

Merger reserve

455

-

-

455

455

-

-

455

Capital redemption reserve

20

-

-

20

20

-

-

20

Retained earnings

13,073

(28)

-

13,045

15,266

(37)

-

15,229

Total equity

14,563

(28)

-

14,535

18,206

(37)

-

18,169










Liabilities


















Non-current liabilities









Obligations under leases

2,122

457

-

2,579

2,329

687

-

3,016

Provisions

401

-

-

401

350

-

-

350


2,523

457

-

2,980

2,679

687

-

3,366

Current liabilities









Trade and other payables

82,772

-

5,039

87,811

93,140

-

-

93,140

Current income tax payable

312

-

-

312

157

-

-

157

Obligations under leases

2,379

1,529

-

3,908

2,587

2,032

-

4,619


85,463

1,529

5,039

92,031

95,884

2,032

-

97,916










Total liabilities

87,986

1,986

5,039

95,011

98,563

2,719

-

101,282










Total equity and liabilities

102,549

1,958

5,039

109,546

116,769

2,682

-

119,451


 

 

 

 

3.5.

Impact of restatements on the condensed half-yearly financial statements (continued)

Impact on the condensed Group statements of cash flows

 


Six Months Ended 30 June 2018

Year Ended 31 December 2018


As Reported

Adjustment

Restated

As Reported

Adjustment

Restated


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Explanation of adjustment


Note 3.3

Note 3.4



Note 3.3

Note 3.4











Cash flows from operating activities





Operating profit

2,568

21

-

2,589

6,111

51

-

6,162

Adjustments for:









Depreciation of PPE1

1,778

211

269

2,258

4,166

511

-

4,677

Gain on disposal of PPE

(293)

-

-

(293)

(574)

-

-

(574)

Share-based payment expense

-

-

-

-

1,069

-

-

1,069

Operating cash flows before movements in working capital

4,053

232

269

4,554

10,772

562

-

11,334










Decrease in inventories

284

-

-

284

29

-

-

29

(Increase)/decrease in receivables

(11,044)

-

(563)

(11,607)

1,177

-

-

1,177

Increase in amounts owed by joint ventures

(2,036)

-

-

(2,036)

(8,364)

-

-

(8,364)

Decrease in reinstatement provision

(3)

-

-

(3)

(54)

-

-

(54)

Increase in payables

14,046

-

294

14,340

19,669

-

-

19,669

Cash generated from operations

5,300

232

-

5,532

23,229

562

-

23,791










Income tax paid

-

-

-

-

(500)

-

-

(500)

Net cash generated from operations

5,300

232

-

5,532

22,729

562

-

23,291










Cash flows from investing activities





Purchase of PPE

(1,953)

-

-

(1,953)

(3,263)

-

-

(3,263)

Proceeds on disposal of PPE

550

-

-

550

930

-

-

930

Investment in joint ventures

(75)

-

-

(75)

-

-

-

-

Interest received

-

-

-

-

31

-

-

31

Interest paid

(4)

-

-

(4)

(4)

-

-

(4)

Net cash used in investing activities

(1,482)

-

-

(1,482)

(2,306)

-

-

(2,306)










Cash flows from financing activities





Equity dividends paid

(305)

-

-

(305)

(914)

-

-

(914)

Repayments of obligations under leases

(1,576)

(202)

-

(1,778)

(3,052)

(491)

-

(3,543)

Interest payable under leases

(52)

(30)

-

(82)

(110)

(71)

-

(181)

Net cash used in financing activities

(1,933)

(232)

-

(2,165)

(4,076)

(562)

-

(4,638)










Net increase in cash and cash equivalents

1,885

-

-

1,885

16,347

-

-

16,347

Cash and cash equivalents at beginning of period

17,006

-

-

17,006

17,006

-

-

17,006

Cash and cash equivalents at end of period

18,891

-

-

18,891

33,353

-

-

33,353

 

1 Property, Plant & Equipment

 

 

 

 

 

 

4.

Segment reporting


The Board reviews the Group's operational performance via two segments: the Water segment and the Built Environment segment.

Segment revenue and profit

 

 



Six Months Ended 30 June 2019


Built Environment


Water


Total


£'000


£'000


£'000







Revenue

51,874


132,104


183,978







Result before corporate expenses

4,197


9,669


13,866







Corporate expenses

(3,609)


(6,716)


(10,325)







Operating profit

588


2,953


3,541







Finance income





37

Finance costs





(115)

Profit before tax





3,463

Tax





(705)

Total comprehensive income for the period

2,758

 



Six Months Ended 30 June 2018


Built Environment


Water


Total


£'000


£'000


£'000


Restated


Restated


Restated







Revenue

48,786


112,389


161,175







Result before corporate expenses

3,227


9,043


12,270







Corporate expenses

(3,223)


(6,458)


(9,681)







Operating profit

4


2,585


2,589







Finance income





-

Finance costs





(86)

Profit before tax





2,503

Tax





(475)

Total comprehensive income for the period

2,028

 

 

Segment assets





        30 June


2019


2018


£'000


£'000




Restated

Built Environment

59,725


55,746

Water

61,293


53,800

Total segment assets and consolidated total assets

121,018


109,546





For the purpose of monitoring segment performance and allocating resources between segments, the Group's Chief Executive monitors the tangible and financial assets attributable to each segment. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

 

Other segment information


Depreciation and


Additions to


amortisation


non-current assets


30 June


30 June


2019


2018


2019


2018


£'000


£'000


£'000


£'000




Restated




Restated

Built Environment

915


738


2,123


1,389

Water

1,696


1,520


3,932


2,427


2,611


2,258


6,055


3,816









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.

 

 

 

5.

Revenue from contracts with customers


The following table shows the Group's revenue from contracts with customers, disaggregated into major classes of revenue and reconciled to the amount of revenue reported for the Group's reportable segments (Note 4).

 



Six Months Ended 30 June 2019

 


Built Environment


Water


Total

 


£'000


£'000


£'000

 

Construction

17,620


-


17,620

 







 

Highways

15,750


-


15,750

 







 

Telecommunications

18,504


-


18,504

 







 

nmcn Sustainable Solutions

-


36,008


36,008

 







 

NMCNomenca

-


96,096


96,096

 







 


51,874


132,104


183,978

 



 

 




 



Six Months Ended 30 June 2018

 


Built Environment


Water


Total

 


£'000


£'000


£'000

 


Restated


Restated


Restated

 

Construction

21,880


-


21,880

 







 

Highways

13,885


-


13,885

 







 

Telecommunications

13,021


-


13,021

 







 

nmcn Sustainable Solutions

-


32,150


32,150

 







 

NMCNomenca

-


80,239


80,239

 







 


48,786


112,389


161,175

 

Revenues of approximately £92,010,000 (2018: £79,044,000) within the Water segment were derived from a single external customer.

 

 

 

 

 

 

 

 

 

 

 

 

6.

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 £2,758,000 (2018 restated: £2,028,000). The weighted average of 10,211,825 (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 702,255 awards (2018: 1,016,898) 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 264,986 awards as at 30 June 2019 (2018: nil). This additional number of shares is therefore included in the diluted earnings per share calculation as at that date.

 

 



 

 

7.

Taxation

 

 


In respect of the six months ended 30 June 2019, the corporation tax effective rate was 20% (2018: 19%). A corporation tax provision has been included in relation to the taxable profits of the Company.

 

 



 

 

8.

Dividends

 

 


Amounts recognised as distributions to equity holders in the half year:-

 

 



Six Months to 30 June

 

 



2019


2018

 

 



£'000


£'000

 

 


Final dividend for the year ended 31 December 2018 of 12.0p (2017: 3.0p) per share.

1,214


305

 

 






 

 


The Directors propose an interim dividend of 9.0p (2018: 6.0p) per share, total £939,000 (2018: £609,000), which will be paid on 13 September 2019 to the shareholders on the register at 16 August 2019.

 

 

9.

Related parties


The Group's related parties are key management personnel who are the executive directors, non-executive directors and business unit leaders.

 

The Company has a controlling shareholder for the purposes of the Listing Rules, being the Moyle family and its associates. The relevant agreements as required by LR 9.2.2AR(2)(a) have been put in place between the Company, Mr R Moyle and the Moyle family trusts.






10.

Contingent liabilities


Lloyds Bank PLC, Aviva Insurance Limited and HCC International Insurance Co. Ltd have given Performance Bonds to a value of £8,264,000 (2018: £8,654,000) on the Group's behalf.  These bonds have been made with recourse to the Group.



11.

Share capital


During April 2019 the Group purchased 32,500 of its ordinary shares, which are held as treasury shares. Shares held in treasury may subsequently be cancelled, sold for cash or used to satisfy options exercised under any of the Company's share schemes. Whilst held in treasury, the shares are not entitled to receive any dividend or dividend equivalent (apart from any issue of bonus shares) and have no voting rights.

 

During June 2019 the Company issued 288,608 ordinary shares in order to satisfy the vesting of share awards to certain directors, granted in 2016, under the Company's Performance Share Plan ("PSP").

 

The total number of ordinary shares in issue and total number of voting rights in the Company, excluding shares held as treasury shares, was 10,406,108 as at 30 June 2019 (2018: 10,150,000).

 

12.

Seasonality


The Group's activities are not subject to significant seasonal variations.



13.

Principal risks and uncertainties


The Board consider the principal risks and uncertainties relating to the Group for the next six months to be the same as detailed in the last Annual Report and Accounts to 31 December 2018.



14.

Responsibility Statement of the Directors in respect of the half-yearly financial report


We confirm that to the best of our knowledge:




·           

the condensed set of financial statements, which has been prepared in accordance with IAS 34 and the ASB's 2007 statement of Half Year Reports, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;





·           

the interim management report includes a fair review of the information required by:






(a)

DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and







(b)

DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

 

J Homer

Chief Executive

 


D A Taylor


Chief Financial Officer


8 August 2019




 


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