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7 March 2024
Nexus Infrastructure plc
("Nexus" or the "Group")
Preliminary results for the year ended 30 September 2023
Strong balance sheet, well positioned for market upturn
Nexus Infrastructure plc (AIM:NEXS), a leading provider of essential infrastructure solutions, announces its preliminary results for the year ended 30 September 2023 (FY23).
Commenting on the year in review, Charles Sweeney, Chief Executive Officer of Nexus, said:
"FY23 was a year of change for Nexus, following the successful sale of two subsidiaries and the return of £60.5m to shareholders. During the second half of the year, we restructured the Group and its support framework, introduced improvements to processes and reduced costs in line with our strategy. With a strong balance sheet, a loyal customer base and a committed team, we are well placed for the future.
"The Group's main trading subsidiary, Tamdown, provides a range of civil engineering solutions to the UK housebuilding sector. Market conditions significantly deteriorated in H2 as the major developers made cuts to their budgets and postponed new project activities. ilke Homes entering into administration was a high-profile example of the turbulence in the sector and Tamdown was significantly impacted by this failure. Decisive actions were taken to right-size the business, in order to protect and improve margins and to ensure we are well-positioned to return to a growth trajectory when the housebuilding market rebounds.
"Our strong balance sheet continues to underpin our stability. FY24 has started in line with the Board's expectations and the order book has grown by 24%, from the year end position, by the end of January 2024. The horizon presents several new opportunities, a testament to the strength of our offering, providing confidence in the long-term success of the Nexus Group."
Financial summary
· Continuing revenue1 of £88.7m (2022: £98.4m) of which Tamdown delivered £87.9m (2022: £98.4m), reflecting the continued challenging wider economic environment and the slowdown in housebuilding activity.
· Operating loss of £8.4m (2022: £0.3m) including exceptional items of £0.6m (2022: £0.0m) with the decrease in profitability impacted by ilke Homes entering administration.
· Earnings per share2 (basic) of 239.0p (2022: 6.0p). 3
· Order book4 at the year end 30 September was £46.0m (2022: £95.5m) reflecting a resilient performance during a year of exceptionally challenging market conditions. As at 31 January 2024, a number of key new contract awards had been secured, increasing the order book to £57.2m.
· A robust balance sheet as the Group's cash5 remained high at £14.6m (2022: £4.6m).
· Final dividend of 2.0p, bringing full year dividend to 3.0p.
· Net assets remain strong following sale of TriConnex and eSmart Networks subsidiaries at £33.0m (2022: £34.1m).
1. Excluding discontinued operations being TriConnex and eSmart Networks which were disposed in February 2023.
2. Continuing operations (being Tamdown as the main trading subsidiary of the Group) including the profit on disposal on the sale of TriConnex and eSmart Networks.
3. Variation is as a result of the capital return by way of Tender Offer (following the sale of TriConnex and eSmart), which on completion in February 2023 resulted in the cancellation of the associated Ordinary Shares.
4. Secured work yet to be carried out for continuing operations.
5. Cash and cash equivalents less borrowings for continuing operations.
Strategic highlights
· Disposal of TriConnex and eSmart Networks in February 2023 returning £60.5m to shareholders, realising the inherent value of these businesses and ensuring Tamdown is well capitalised for the future.
· Completed a restructuring to reflect the new requirements of the Group and to benefit from a reduction in costs where possible.
· Cost controls implemented, while maintaining customer engagement in the current economic environment to support future growth.
· Group is well positioned to innovate and leverage know-how across Nexus.
Outlook for FY24 and beyond
The fundamental market growth drivers for the Group remain positive as the UK's housing market has been in a long-term position of structural undersupply for many years. Tamdown continues to focus on customer service, winning high-quality contracts with longstanding customers, and improving operating margins.
Tamdown's refreshed position and the Group's strong financial footing mean Nexus is well-placed to return to a growth trajectory when the housebuilding market improves.
Market sentiment anticipates a recovery in the housebuilding market over the next 18 months. Tamdown's services, capabilities and expertise form the principal element of activities at the start of new developments and will therefore feature early when conditions in the housebuilding sector improve. The Board will continue to review a range of future growth options to deliver expansion and diversification opportunities, to take full advantage of the Group's capabilities and experience.
Nexus Infrastructure will be hosting its Annual General Meeting at 9:00am on 27 March 2024 at Nexus Park, Avenue East, Skyline 120, Great Notley, Braintree, Essex, CM77 7AL.
The Directors have made arrangements to enable shareholders to either attend the meeting in person or virtually. To attend virtually, shareholders must pre-register by contacting the Company Secretary by email: investors@nexus-infrastructure.com.
For more information, please contact:
Nexus Infrastructure plc | via Alma |
Charles Sweeney, Chief Executive Officer | |
Dawn Hillman, Chief Financial Officer | |
| |
Deutsche Numis (London) (Nominated Adviser & Broker) | Tel: 0207 260 1200 |
Oliver Hardy (Nomad) | |
Heraclis Economides | |
Hannah Boros | |
| |
Alma Strategic Communications Justine James | Tel: 0203 405 0205 nexus@almastrategic.com |
Hannah Campbell | |
Will Merison | |
Notes to Editors
Nexus is a market-leading provider of essential infrastructure solutions.
Tamdown provides a range of civil engineering and infrastructure services to the UK housebuilding sectors, with operations focused on the South-East of England and London. It has an established market-leading position, having been in operation for over 45 years.
www.nexus-infrastructure.com
Chairman's statement
Overview of the year
It has been a year of significant change for Nexus with the successful sale of TriConnex and eSmart Networks in February 2023, which saw the return of £60.5m via a tender-offer process to shareholders and crystallised the inherent value of these businesses as well as helping to ensure that the Group was well capitalised for the future. The strategic disposal marked an important step change for the Group. As a Board, we are extremely proud of the team's hard work and commitment to achieving a successful outcome. Following the disposal, Mike Morris and Alan Martin stepped down from their respective roles as CEO and CFO. We would like to thank them for their significant contributions in completing the disposal and for their leadership in driving the development of Nexus during their time with the Group. Mike will continue to provide input and guidance to the Board in his role as a Non-Executive Director.
Following the completion of the sale, Tamdown became the main trading business of Nexus. The business navigated a challenging market and performed well in the first half, successfully growing revenues and profit, securing new work, and maintaining a good order book despite the difficult environment. The widely expected market upturn in the second half did not materialise and housebuilding activity in fact, slowed significantly. The decline in house sales negatively impacted several of Tamdown's customers, resulting in a significant reduction in new housing developments. ilke Homes, filed for administration in June 2023, causing a material one-off impact on the business. In response to the declining market conditions, the team carried out an operational review and implemented a range of cost management measures and decisions to right size the business. This has now been completed and it ensures we are well placed to benefit when housebuilding output improves again.
As a Board, we remain confident in the strength of Tamdown and its ability to deliver once market conditions normalise. We believe that there is a positive outlook for the housebuilding sector in the future due to the chronic undersupply of good-quality housing across the UK.
Board and governance
Upon completion of the sale of TriConnex and eSmart Networks, we welcomed Charles Sweeney to the Nexus Board as CEO and Dawn Hillman as CFO, to lead the Group. Both have deep knowledge and experience in the leadership of construction businesses, including a collective total of 43 years with the Group. Since their appointment, they have played a crucial role in transitioning the Group and ensuring that Tamdown is effectively organised for current market circumstances and has the foundations in place for growth as conditions improve. The Board and the management team are also developing a refreshed strategy, to ensure the Group remains a high-quality business, continues to grow over the long-term, and delivers diversification opportunities, taking full advantage of the Group's capabilities and experience.
Post-period end, after seven and a half years as a Non-Executive Director, we announced that Alex Wiseman will not stand for re-election at the forthcoming AGM in March 2024 and will step down from the Board. Alex has had a huge impact on the Group since he was appointed in June 2016 and played a pivotal role in the growth of the business and the successful disposal of TriConnex and eSmart Networks. We wish him all the very best for the future.
A primary driver of Nexus' success is the team of highly skilled, driven, and loyal employees across the Group. Nexus places great importance on engaging with and developing its employees and providing a platform for personal growth and successful career development. On behalf of the Board, I would like to congratulate and thank our employees for their continued hard work and dedication throughout the year.
Dividend
Nexus continues to operate with a robust balance sheet, with net cash of £14.6m at year-end. The Board intends to recommend the payment of a final dividend of 2.0p per share.
Stakeholder engagement
The Board recognises the importance of stakeholder engagement to the long-term success and sustainability of our business. The Group is committed to developing effective dialogue and relationships with all stakeholder groups and the Board continually develops our business using learnings from these interactions.
We remain focused on our mission to be recognised as the leading provider of essential infrastructure solutions in the UK, by delivering outstanding performance through a focus on delivery, customer service and diversification; stakeholder engagement helps us to achieve this.
Sustainability
At the heart of our purpose, Building Bright Futures, is a commitment to sustainability - for our people, communities, and the planet. Nexus and our people continue to challenge assumptions across our operations and find better ways to ensure quality delivery while also improving our sustainability as a business.
Our dedication to Health & Safety was recognised by the Royal Society for the Prevention of Accidents (RoSPA) with Tamdown receiving its 14th consecutive Gold Award and the RoSPA President's award. We also launched a bespoke Behavioural Safety Programme to influence actions towards safer outcomes.
We continued our wellbeing initiatives to support our people, as well as our volunteering scheme and fundraising efforts to support the communities we operate within.
Our teams are working to continuously improve our and our customers' journeys to; lower emissions, decrease carbon footprint and reduce the environmental impact of project operations. During the year Tamdown undertook a Plant Renewal Programme investing in new machinery to improve fuel and other efficiencies. We also adopted a greener fleet to reduce our emissions, and worked with suppliers at our Nexus Park head office to improve our waste management and energy consumption.
We see sustainability as a journey for our business alongside our customers and suppliers, and it is a journey we are fully committed to.
Summary and outlook
The Group has taken effective mitigating actions during the year and continues to be committed to protecting and improving margins to ensure we are well-positioned to support established and new customers when market confidence returns. The balance sheet has remained resilient, which was particularly demonstrated in the second half of the year, and continues to support us in FY24. Despite the challenging environment, the long-term fundamental market growth drivers for Tamdown are positive. The housing market has been in a long-term position of structural undersupply and the recent downturn in new housebuilding is only exacerbating the situation.
Trading in the first quarter of FY24 is in line with the Board's expectations. There are several new opportunities on the horizon, reflecting the strength of our offering and the value Tamdown brings to its customer base, providing confidence in the long-term success of Nexus.
Richard Kilner
Non-Executive Chairman
Executive review
This year has been one of change. Following the sale of TriConnex and eSmart Networks in February 2023, a new management team is now in place, and we have made a number of adjustments in Tamdown, including reducing overhead, plant and labour costs, to reflect the subdued market conditions in the housebuilding sector. Tamdown is now well placed to benefit fully from the upturn in the sector which the market expects in the years ahead. In parallel , we are developing our strategy that will deliver a path of long-term sustainable growth for the Group, to deliver expansion and diversification opportunities, to take full advantage of the Group's capabilities and experience.
The sale of TriConnex and eSmart Networks returned £60.5m via a tender-offer process to shareholders and ensured that the Group was well capitalised for the future. However, Tamdown subsequently faced a significant decline in market conditions and the expected upturn in the housebuilding sector in the second half of 2023 did not materialise. Housebuilding activity slowed dramatically in an environment of high inflation and elevated interest rates. There were several high-profile 'casualties' during the year, including the modular housebuilder, ilke Homes which entered into administration and was formally liquidated with unpaid debts in excess of £300m. Tamdown had been working on two projects for ilke Homes.
Tamdown's order book was £46.0m at year-end. Since then, Tamdown has continued to focus on customer service, winning high-quality contracts, and improving gross margins. By the end of January 2024 , a number of key new contract awards had been secured, increasing the order book to £57.2m.
Overall, the Group revenues for the continuing operations for FY23 were £88.7m (2022: £98.4m) with an operating loss of £8.4m (2022: £0.3m) including exceptional items of £0.6m.
Nexus has a robust balance sheet with cash and cash equivalents of £14.6m at the FY23 year-end (2022: £4.6m). Having taken the prudent actions mentioned above, the Board is confident that the Group is well-positioned to fully benefit from the widely anticipated improvement in the residential housebuilding market.
Operational update: Nexus Infrastructure
Following the sale of TriConnex and eSmart Networks, a 'Transition Project' was implemented to ensure these subsidiaries were separated from the Group in an efficient and orderly way.
The Nexus organisation was restructured to reflect the new requirements of the Group and to benefit from a reduction in costs where possible. A review of our external service providers was undertaken with new arrangements introduced as necessary. This included the appointment of new auditors (MHA) and financial PR company (Alma Strategic Communications).
The Group also considered if it would be appropriate to change its banking arrangements. After a detailed evaluation process, we were pleased to secure Barclays as an additional banking services provider.
Operational update: Tamdown
Tamdown provides a range of essential civil engineering and infrastructure solutions to the UK housebuilding sector. These services include earthworks, building highways, substructures and basements, and installing sustainable drainage systems. It has an established market-leading position having been in operation for over 45 years. It is particularly recognised for its experience and capabilities in the safe delivery of large, complex, multi-phase developments. It has a strong brand and a loyal customer base.
Tamdown's performance in Health & Safety was again recognised by the Royal Society for the Prevention of Accidents (RoSPA), receiving a Gold Award for the 14th consecutive year. Tamdown was also awarded the RoSPA President's Award. A Behavioural Safety programme was rolled out across the business and this, along with a number of other initiatives, was used to proactively protect the health and safety of our site and office personnel and all those working at or visiting our facilities. Tamdown's Accident Incidence Rate (AIR) for the year was 122 (2022: 369). By comparison, the Health and Safety Executive's figures, published in November 2023, state that the equivalent average for the UK construction industry overall in 2022/23 was 296.
During the first half of the year, Tamdown won work from several customers, leveraging its strong relationships and reputation for quality delivery. However, in the second half, the major housebuilders experienced a material decline in new house sales and, as a result, significantly reduced the award of new projects. As noted above, there were several high-profile 'casualties' during the year, including the modular housebuilder, ilke Homes which entered into administration and thereafter was formally liquidated with unpaid debts in excess of £300m. Tamdown had been working on two projects for ilke Homes and, as an unsecured creditor, debts of £2.9m went unpaid, impacting Tamdown's profits and cash collection. There were further impacts due to the removal of work in progress and the future expected revenues listed in the order book.
Tamdown's order book was £46.0m (2022: £95.5m) at the year-end but, following the award of a number of new projects post period-end, the order book by the end of January 2024 had improved to £57.2m.
At the end of FY23, we implemented a restructuring of our organisation to reduce costs and to position the business for recovery when the inevitable market upturn takes place. We have maintained our reputation and relationships with our supply chain, this loyalty is in line with our values and we expect will be returned in-kind as we return to growth.
Financial Review
Revenue and profits
Revenue for the Group (for continuing operations) decreased to £88.7m (2022: £98.4m). Tamdown's revenue decreased to £87.8m (2022: £98.4m), reflecting the challenging market for housebuilders in the second half.
Gross profit for the Group (for continuing operations) decreased to £6.0m (2022: £9.9m). The gross profit margin for Tamdown decreased to 5.8% (2022: 17.4%) reflecting the significant impact of Ilke Homes on profitability.
Administrative expenses for the Group (for continuing operations) increased in the year to £10.8m before exceptional items (2022: £10.2m). The exceptional items for the year relate to restructuring costs.
The Group's operating loss, for the year was £8.4m (2022: £0.3m). The sale of TriConnex and eSmart Networks generated profits of £67.3m taking the profit attributable to equity holders of the parent company to £58.8m (2022: £2.7m).
The net finance charge for the year totalled £0.16m (2022: £0.6m). Interest received on bank deposits increased to £0.4m (2022: £0.0m) due to the increase in interest rates. Interest payable on bank borrowings was £0.0m (2022: £0.2m) due to borrowings being settled in 2022. Interest on lease liabilities of £0.6m (2022: £0.4m) increased due to lease liabilities increasing following the sale and leaseback of Nexus Park.
Tax
The Group recorded a tax charge for the year of £(0.05)m (2022 £0.1m) representing an effective tax rate of 22% (2022 21.5%). The income tax expense relates to continuing operations
Strong balance sheet and cash
The Group continues to maintain a strong balance sheet with shareholders' funds increasing during the year to 30 September 2023 to £33.0m (2022: £34.1m) the movement representing the trading performance of the Group less the payment of dividends totalling £0.09m and the return to shareholders of £60.5m following the sale of TriConnex and eSmart Networks.
The cash and cash equivalents balance at 30 September 2023 was £14.6m (2022: £4.6m). Operating cash outflows before working capital movements were £5.9m (2022: inflows £1.5m). Working capital decreased during the year by £7.2m (2022: £2.9m outflow).
Tax and interest payments amounted to £0.1m (2022: £0.8m). Cash generated from investing activities totalled £60.2m (2022: £11.9m).
Net cash outflows from financing activities totalled £62.1m (2022: £14.0m) with £1.5m of lease repayments, £0.09m (2022: £1.1m) on dividend payments, and £60.5m on returns to shareholders following the sale of TriConnex and eSmart Networks.
The Group introduced a new banking relationship with Barclays in the year alongside its ongoing relationship with Allied Irish Bank ("AIB"), a good indicator of the strength of the business. The facilities provided by AIB including the undrawn revolving credit facility of £5.0m, and an associated accordion of £5.0m were cancelled in the year as these are no longer considered to be required by the business.
Order book
The order book stood at £46.0m (2022: £95.5m), which the board considers to reflect a resilient performance during a year of exceptionally challenging market conditions. By the end of January 2024, a number of key new contract awards had been secured, increasing the order book to £57.2m.
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 short-term credit rating of A. As the Group operates wholly within the UK, there is no requirement for currency risk management.
Market Update
The fundamental market growth drivers for the Group remain positive. The UK's housing market has been in a long-term position of structural undersupply for many years and the number of new houses being built has failed to keep pace with the rate of household formation. This structural undersupply provides us with confidence that our housebuilding customers will continue to demand our quality services when conditions normalise.
Market sentiment is that there will be a recovery in the housebuilding market over the next 18 months. Tamdown's services, capabilities and expertise form the principal element of activities at the start of any new development and will therefore feature early in the cycle when the market upturn takes place.
Summary and outlook
FY23 was a year of significant change for the Group, with Tamdown now the primary operating business of Nexus. Whilst Tamdown operated in difficult market conditions, we took decisive action to respond and right-size the business. As a result of this, along with our strong financial footing, we are well-placed to return to a growth trajectory when the housebuilding market improves.
It has been widely reported that market conditions in the UK are expected to improve over the next 18 months, which alongside our long-standing relationships, a loyal and dedicated team, strong management of cash, and a range of potential strategic opportunities, means we can look to the future with confidence.
Charles Sweeney
Chief Executive Officer
Dawn Hillman
Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
|
| 2023 | 2022 |
| Note | £'000 | £'000 |
|
|
|
|
Continuing operations |
|
|
|
Revenue | 2 | 88,691 | 98,392 |
|
|
|
|
Cost of sales |
| (82,719) | (88,482) |
|
|
|
|
Gross profit |
| 5,972 | 9,910 |
|
|
|
|
Administrative expenses |
| (10,779) | (10,225) |
|
|
|
|
Impairment Loss |
| (2,935) | - |
|
|
|
|
Operating loss before exceptional items |
| (7,742) | (315) |
Exceptional items | 4 | (645) |
|
|
|
|
|
Operating loss |
| (8,387) | (315) |
|
|
|
|
Finance income | 5 | 447 | 13 |
Finance expense | 5 | (599) | (607) |
|
|
|
|
Loss before tax |
| (8,540) | (909) |
|
|
|
|
Taxation | 6 | 46 | (109) |
|
|
|
|
Loss from continuing operations |
| (8,494) | (1,018) |
|
|
|
|
Discontinued operations |
|
|
|
Profit from discontinued operations (after tax) | 11 | 67,292 | 3,729 |
|
|
|
|
|
|
|
|
Profit and total comprehensive income for the year attributable to equity holders of the parent |
| 58,799 | 2,711 |
|
|
|
|
Earnings/(losses) per share (p per share) |
|
|
|
|
|
|
|
Basic (p per share) - total operations | 8 | 238.96 | 5.96 |
Diluted (p per share) - total operations | 8 | 238.96 | 5.89 |
|
|
|
|
Basic (p per share) - continuing operations | 8 | (34.52) | (2.24) |
Diluted (p per share) - continuing operations | 8 | (34.52) | (2.24) |
|
|
|
|
Basic (p per share) - discontinued operations | 8 | 273.48 | 8.20 |
Diluted (p per share) - discontinued operations | 8 | 273.48 | 8.10 |
|
|
|
|
|
|
|
|
There are no recognised gains and losses other than those shown in the income statement above and therefore no separate statement of other comprehensive income has been presented. |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
|
| Group | Group |
|
| 2023 | 2022 |
| Note | £'000 | £'000 |
|
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 9 | 5,377 | 5,459 |
Right of use assets | 10 | 11,435 | 12,620 |
Goodwill |
| 2,361 | 2,361 |
Investments in subsidiaries |
| |
|
Deferred tax asset |
| |
|
Total non-current assets |
| 19,173 | 20,440 |
|
|
|
|
Current assets |
|
|
|
Inventories |
| 44 | 43 |
Trade and other receivables |
| 24,135 | 30,388 |
Contract assets |
| 2,784 | 8,120 |
Corporation tax asset |
| | 27 |
Cash and cash equivalents |
| 14,626 | 4,597 |
|
| 41,589 | 43,175 |
Assets classified as held for sale | 11 | | 57,411 |
Total current assets |
| 60,763 | 100,586 |
Total assets |
| 60,763 | 121,026 |
|
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
| 15,540 | 21,698 |
Contract liabilities |
| 552 | 3,543 |
Lease liabilities |
| 1,826 | 1,663 |
Corporation tax liability |
| 18 | |
|
| 17,936 | 26,904 |
Liabilities associated with assets classified as held for sale | 11 | | 49,094 |
Total current liabilities |
| 17,936 | 75,998 |
|
|
|
|
Non-current liabilities |
|
|
|
Lease liabilities |
| 9,818 | 10,793 |
Deferred tax liabilities |
| | 95 |
Total non-current liabilities |
| 9,818 | 10,888 |
Total liabilities |
| 27,754 | 86,886 |
|
|
|
|
Net assets |
| 33,010 | 34,140 |
|
|
|
|
Equity attributable to equity holders of the Company |
|
|
|
Share capital |
| 181 | 911 |
Share premium account |
| 9,419 | 9,419 |
Retained earnings |
| 23,410 | 23,810 |
|
|
|
|
Total equity |
| 33,010 | 34,140 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
|
| Share | Share | Retained | Total |
|
| capital | premium account | earnings |
|
|
| | | | |
| Note | £'000 | £'000 | £'000 | £'000 |
Equity as at 1 October 2021 |
| 908 | 9,419 | 21,805 | 32,132 |
|
| |
|
|
|
Profit for the period |
| |
| 2,711 | 2,711 |
Total comprehensive income for the period |
| |
| 2,711 | 2,711 |
|
| |
|
|
|
Transactions with owners |
| |
|
|
|
Dividend paid | 7 | |
| (1,091) | (1,091) |
Share-based payments |
| |
| 385 | 385 |
Issue of share capital |
| 3 | |
| 3 |
|
| 3 | | (706) | (703) |
|
| |
|
|
|
|
| |
|
|
|
Equity as at 30 September 2022 |
| 911 | 9,419 | 23,810 | 34,140 |
|
| |
|
|
|
Profit for the period |
| |
| 58,799 | 58,799 |
Total comprehensive income for the period |
| |
| 58,799 | 58,799 |
|
| |
|
|
|
Transactions with owners |
| |
|
|
|
Dividend paid | 7 | |
| (90) | (90) |
Share buyback |
| (743) | | (59,808) | (60,551) |
Share-based payments |
| |
| 700 | 700 |
Issue of share capital |
| 13 | |
| 13 |
|
| (730) | | (59,198) | (59,929) |
|
| |
|
|
|
Equity as at 30 September 2023 |
| 181 | 9,419 | 23,410 | 33,010 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
|
| Group | Group |
|
| 2023 | 2022 |
| Note | £'000 | £'000 |
|
| |
|
Cash flow from operating activities |
| |
|
(Loss)/Profit before tax continuing operations |
| 58,753 | 3,454 |
Adjusted by: |
| |
|
Gain on sale of subsidiaries |
| (67,292) | |
Profit on disposal of property, plant and equipment - owned |
| (573) | |
Share-based payments |
| 700 | 385 |
Finance expense (net) | 5 | 152 | 588 |
Depreciation of property, plant and equipment - owned | 9 | 726 | 833 |
Depreciation of property, plant and equipment - right of use | 10 | 1,618 | 1,215 |
Operating profit before working capital changes |
| (5,917) | 6,475 |
|
| |
|
Working capital adjustments: |
| |
|
Decrease/(Increase) in trade and other receivables |
| 6,949 | (7,384) |
Decrease/(Increase) in contract assets |
| (91) | (6,818) |
(Increase) in inventory |
| (744) | (430) |
(Decrease)/Increase in trade and other payables |
| (7,398) | 4,155 |
(Decrease)/Increase in contract liabilities |
| (59) | 1,565 |
Cash (used in)/generated from operating activities |
| (7,260) | (2,437) |
|
| |
|
Interest paid | 5 | (599) | (244) |
Taxation paid |
| 242 | (550) |
|
| |
|
Net cash (used in)/generated from operating activities |
| (7,617) | (3,231) |
|
| |
|
Cash flow from investing activities |
| |
|
Purchase of property, plant and equipment - owned | 9 | (759) | (795) |
Purchase of property, plant and equipment - right of use | 10 | (1,088) | |
Proceeds from disposal of property, plant and equipment - owned | 9 | 1,408 | 13,555 |
Sale of available for sale investments |
| |
|
Sale of discontinued operations | 11 | 60,168 | |
Interest received | 5 | 447 | 39 |
Net cash generated from/(used) in investing activities |
| 60,176 | 12,799 |
|
| |
|
Cash flow from financing activities |
| |
|
Dividend payment | 7 | (90) | (1,091) |
Draw down of HP facility |
| | 587 |
Sharebuy back |
| (60,551) | |
Repayment of term loan |
| | (11,663) |
Principal elements of lease repayments |
| (1,472) | (2,753) |
Net proceeds from the issue of share capital |
| 13 | 3 |
Net cash (used in)/generated from financing activities |
| (62,100) | (14,917) |
|
| |
|
Net change in cash and cash equivalents |
| (9,542) | (5,349) |
|
| |
|
Cash and cash equivalents at the beginning of the year |
| 24,168 | 29,517 |
|
| |
|
Cash and cash equivalents at the end of the year |
| 14,626 | 24,168 |
|
| |
|
Reconciliation of cash and cash equivalents at the end of the year |
| |
|
Held by continuing operations |
| 14,626 | 4,597 |
Held by discontinued operations |
| | 19,571 |
Cash and cash equivalents at the end of the year |
| 14,626 | 24,168 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
1. Accounting policies
The financial information does not constitute the Company's financial statements for the years ended 30 September 2023 or 2022 but is derived from those statements. Financial statements for 2022 have been delivered to the Registrar of Companies and those for 2023 will be delivered following the Company's General Meeting in April 2024.
While the financial information included in this preliminary announcement have been prepared in accordance with UK adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, this announcement itself does not contain sufficient information to fully comply with those Standards.
The accounting policies used to prepare these preliminary results are the same as those used in the preparation of the Group's audited accounts for the year ended 30 September 2022 which have been delivered to the registrar of Companies.
2. Revenue
Revenues from external customers for continuing operations are generated from the supply of services relating to civil engineering and construction contracts. Revenues from external customers for discontinued operations are generated from the supply of design, installation and connection of multi-utility networks, and energy transition projects. Revenue is recognised in the following operating divisions:
|
| 2023 | 2023 | 2023 |
|
| Continuing Operations | Discontinued Operations | Total |
|
| £'000 | £'000 | £'000 |
|
|
| | |
Segment revenue |
| 88,691 | 23,484 | 112,175 |
Inter-segment revenue |
|
|
|
|
Revenue from external customers |
| 88,691 | 23,484 | 112,175 |
|
|
|
|
|
Timing of revenue recognition |
|
|
|
|
Over time |
| 88,691 | 23,484 | 112,175 |
|
|
|
|
|
Customer type |
|
|
|
|
Residential |
| 87,839 | 17,992 | 105,831 |
Non-residential |
| 852 | 5,492 | 6,344 |
|
| 88,691 | 23,484 | 112,175 |
|
|
|
|
|
|
|
|
|
|
|
| 2022 | 2022 | 2022 |
|
| Continuing Operations | Discontinued Operations | Total |
|
| £'000 | £'000 | £'000 |
|
|
| | |
Segment revenue |
| 98,392 | 75,011 | 173,403 |
Inter-segment revenue |
|
|
|
|
Revenue from external customers |
| 98,392 | 75,011 | 173,403 |
|
|
|
|
|
Timing of revenue recognition |
|
|
|
|
Over time |
| 98,392 | 75,011 | 173,403 |
|
|
|
|
|
Customer type |
|
|
|
|
Residential |
| 98,392 | 55,670 | 154,062 |
Non-residential |
|
| 19,341 | 19,341 |
|
| 98,392 | 75,011 | 173,403 |
3. Segmental analysis - Income Statement
The Group has one operating division under the control of the Executive Board, which is identified as the Chief Operating Decision Maker as defined under IFRS 8: Operating Segment:
· Tamdown
All of the Group's operations are carried out entirely within the United Kingdom.
The results for TriConnex and eSmart Networks have been presented as discontinued under IFRS 5, with the Tamdown and Group administration expenses comprising the continuing operations below. The related assets and liabilities of these operations have been similarly presented.
Segment information about the Group's operations is presented below:
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Revenue from continuing operations |
|
|
Tamdown | 87,839 | 98,392 |
Nexus Infrastructure plc | 841 | - |
Nexus Park Ltd | 11 | - |
Inter-company trading |
|
|
Total revenue from continuing operations | 88,691 | 98,392 |
Revenue from discontinued operations |
|
|
TriConnex | 17,992 | 55,670 |
eSmart Networks | 5,492 | 19,341 |
Inter-company trading |
|
|
Total revenue from discontinued operations | 23,484 | 75,011 |
Total revenue | 112,175 | 173,403 |
|
|
|
Gross profit from continuing operations |
|
|
Tamdown | 5,120 | 9,910 |
Nexus Infrastructure plc | 841 | - |
Nexus Park Ltd | 11 | - |
Total gross profit from continuing operations | 5,972 | 9,910 |
Gross profit from discontinued operations |
|
|
TriConnex | 4,649 | 16,319 |
eSmart Networks | 1,256 | 4,024 |
Total gross profit from discontinued operations | 5,905 | 20,343 |
Total gross profit | 11,036 | 30,253 |
|
|
|
Operating (loss)/profit from continuing operations after exceptional items |
|
|
Tamdown | (6,031) | 2,272 |
Group administrative expenses | (2,356) | (2,587) |
Total operating loss from continuing operations after exceptional items | (8,387) | (315) |
Operating profit/(loss) from discontinued operations after exceptional items |
|
|
TriConnex | 850 | 5,568 |
eSmart Networks | (1,102) | (1,212) |
Total operating (loss)/profit from discontinued operations after exceptional items | (252) | 4,356 |
Total operating (loss)/profit after exceptional items | (8,639) | 4,041 |
|
|
|
The value of depreciation included in the measure of segment profit is: | ||
|
|
|
| 2023 | 2022 |
| £'000 | £'000 |
Tamdown | 1,284 | 814 |
Group | 1,060 | 733 |
Total depreciation - continuing operations | 2,344 | 1,547 |
TriConnex |
| 351 |
eSmart Networks |
| 150 |
Total depreciation - discontinued operations |
| 501 |
Total depreciation | 2,344 | 2,048 |
4. Exceptional items
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Continuing operations |
|
|
Redundancy Costs | 645 | 0 |
Total | 645 | 0 |
5. Finance income and expense
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Finance income |
|
|
Continuing operations |
|
|
Interest on bank deposits | 447 | 13 |
|
|
|
Discontinued operations |
|
|
Interest on bank deposits | 26 | 26 |
|
|
|
Finance expense |
|
|
Continuing operations |
|
|
Interest on bank loan |
| (186) |
Interest on hire purchase agreements | (56) | |
Interest on lease liabilities | (543) | (421) |
| (599) | (607) |
|
|
|
Discontinued operations |
|
|
Interest on bank loan |
|
|
Interest on lease liabilities | (21) | (20) |
| (21) | (20) |
|
|
|
Finance expense (net) | (152) | (588) |
6. Taxation
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Current tax - continuing operations: |
|
|
UK corporation tax on profits for the year |
| 79 |
Adjustment in respect of prior periods | 50 | |
Total current tax | 50 | 79 |
|
|
|
Deferred tax - continuing operations: |
|
|
Origination and reversal of timing differences | (34) | (94) |
Adjustment in respect of prior periods | (55) | 124 |
Effect of tax rate change on opening balance | (8) | |
Total deferred tax - continuing operations | (96) | 30 |
Total deferred tax | (96) | 30 |
Total tax charge | (46) | 109 |
|
|
|
The tax assessed for the year is higher than (2022: higher than) the standard rate of corporation tax as applied in the UK. The differences are explained below: | ||
|
|
|
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Profit/(loss) before tax | 58,813 | 3,454 |
|
|
|
Profit/(loss) before tax multiplied by the respective standard rate of corporation tax applicable in the UK (22.01%) (2022: 19.0%) | 12,998 | 657 |
|
|
|
Effects of: |
|
|
Fixed asset differences | (11) | (168) |
Non-deductible expenses | 1,760 | 229 |
Income not taxable for tax purposes | (16,713) | |
Other tax adjustments, reliefs and transfers |
| (59) |
Chargeable gains/losses | (58) | |
Group income | 247 | |
Adjustment in respect of prior periods - current tax | 38 | (19) |
Adjustment in respect of prior periods - deferred tax | (55) | 124 |
Remeasurement of deferred tax for changes in tax rates | (251) | |
Movement in deferred tax not recognised | 1,999 | (22) |
Total tax charge | (46) | 742 |
|
|
|
Income tax expense from continuing operations | (46) | 109 |
Income tax expense from discontinued operations |
| 633 |
Total tax charge | (46) | 742 |
|
|
|
There was no income tax (charged)/credited directly to equity in the year (2022: £nil). | ||
|
|
|
At the balance sheet date, the Group has unused tax losses of £7.85m (2022: £0) and other fixed asset and short term temporary differences of £142k (2022 : £0) available for offset against future profits with an indefinite expiry period. Based on the projections, there are insufficient future taxable profits to justify the recognition of a deferred tax asset. On this basis no deferred tax asset has been recognised in the current year, the unrecognised deferred tax asset calculated at the substantively enacted rate in the UK of 25% amounts to £1.99m as at 30 September 2023 (2022: £0). |
7. Dividends
Group and Company |
|
|
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Amounts recognised as distributions to equity holders in the year: |
|
|
Interim dividend for the year ended 30 September 2023 of 1.0p per share (2022: 1.0p per share) | 90 | 456 |
Final dividend for the year ended 30 September 2022 of £nil per share (2021: 1.4 per share) |
| 635 |
| 90 | 1,091 |
|
|
|
The proposed final dividend for the year ended 30 September 2023 of 2.0p per share (2022 £nil per share) makes a total dividend for the year of 3.0p (per share (2022 1.0p per share). The proposed final dividend is subject to approval by shareholders at a GM and has not been included as a liability in these financial statements. The total estimated final dividend to be paid is £180,666 |
8. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of shares in issue for the year.
Diluted earnings per share is calculated by adjusting the weighted average number of shares in issue for the year to assume conversion of all dilutive potential shares.
The calculation of the basic and diluted earnings per share is based on the following data:
| 2023 | 2022 |
| £'000 | £'000 |
|
|
|
Weighted average number of shares in issue for the year | 24,605,883 | 45,482,193 |
|
|
|
Effect of dilutive potential ordinary shares: | 0 | |
Share options (number) | 0 | 578,508 |
|
|
|
Weighted average number of shares for the purpose of diluted earnings per share | 24,605,883 | 46,060,701 |
|
| |
Profit for the year attributable to equity shareholders | 58,799 | 2,711 |
|
|
|
Basic earnings (p per share) | 238.96 | 5.96 |
Diluted earnings (p per share) | 238.96 | 5.89 |
|
|
|
Continuing operations |
|
|
|
|
|
Loss for the year from continuing operations | (8,494) | (1,018) |
|
|
|
Basic losses (p per share) | (34.52) | (2.24) |
Diluted losses (p per share) | (34.52) | (2.24) |
|
|
|
There are no share options in place so no dilutive effective on the earnings per share |
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
Profit for the year from discontinued operations | 67,292 | 3,729 |
|
|
|
Basic earnings (p per share) | 273.48 | 8.20 |
Diluted earnings (p per share) | 273.48 | 8.10 |
9. Property, plant and equipment
Group | Freehold land and buildings | Leasehold improvements | Plant and machinery | Motor vehicles | Fixtures and fittings | Total |
|
|
|
|
|
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 October 2021 | 16,921 | 657 | 1,943 | 1,040 | 2,008 | 22,569 |
Additions | 41 | | 185 | 196 | 373 | 795 |
Disposals | (13,569) | | (130) | (93) | (6) | (13,798) |
Transfer to leasehold improvements | (3,393) | 3,393 | |
|
|
|
Transfer from right of use assets |
|
| 232 | |
| 232 |
Transfer to assets held for sale |
|
| (99) | (1,008) | (491) | (1,598) |
At 30 September 2022 |
| 4,050 | 2,131 | 135 | 1,884 | 8,200 |
Additions |
|
| 183 | 299 | 347 | 829 |
Disposals |
|
| (2,826) | (54) | (68) | (2,948) |
Transfer from right of use assets |
|
| 2,384 | |
| 2,384 |
At 30 September 2023 |
| 4,050 | 1,872 | 380 | 2,163 | 8,465 |
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
At 1 October 2021 | 38 | 657 | 1,417 | 585 | 288 | 2,985 |
Charge for the year | 137 | 85 | 99 | 119 | 394 | 834 |
Disposals | (175) | | (91) | (76) | | (342) |
Transfer from right of use assets |
|
| 154 | |
| 154 |
Transfer to assets held for sale |
|
| (56) | (542) | (292) | (890) |
At 30 September 2022 |
| 742 | 1,523 | 86 | 390 | 2,741 |
Charge for the year |
| 170 | 156 | 33 | 367 | 726 |
Disposals |
|
| (1,983) | (49) | (28) | (2,060) |
Transfer from right of use assets |
|
| 1,681 | |
| 1,681 |
At 30 September 2023 |
| 912 | 1,377 | 70 | 729 | 3,088 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 30 September 2021 | 16,883 | | 526 | 455 | 1,720 | 19,584 |
At 30 September 2022 |
| 3,308 | 608 | 49 | 1,494 | 5,459 |
At 30 September 2023 | - | 3,138 | 495 | 310 | 1,434 | 5,377 |
10. Right of use assets and lease liabilities
The Group has leases for freehold property, plant and machinery, motor vehicles and fixtures and fittings. Leases for freehold property relate mainly to office properties, whilst the plant and machinery leases are predominantly large machinery used in site operations.
The statement of financial position shows the following information relating to right of use assets and leases:
|
|
| 2023 | 2022 |
|
|
| £'000 | £'000 |
|
|
|
|
|
Right of use assets |
|
|
|
|
Freehold property |
|
| 10,217 | 10,881 |
Plant and machinery |
|
| 610 | 873 |
Motor vehicles |
|
| 604 | 861 |
Fixtures and fittings |
|
| 4 | 5 |
|
|
| 11,435 | 12,620 |
|
|
|
|
|
Lease liabilities |
|
|
|
|
Current |
|
| 1,826 | 1,663 |
Non-current |
|
| 9,818 | 10,793 |
|
|
| 11,644 | 12,456 |
11. Assets held for sale and associated liabilities, and discontinued operations
On 30 December 2022, the group announced its intention to dispose of the subsidiaries TriConnex Ltd and eSmart Networks Ltd.
The associated assets and liabilities were consequently presented as held for sale in the 2022 financial statements.
The disposal completed on 3rd February 2023 and the former subsidiaries are reported in the current period as a discontinued operation.
Financial information relating to the discontinued operations for the period to the date of disposal are set out below.
The financial performance and cash flow information presented are for the four months ended 31 January 2023 (2023 columns) and the year ended 30 September 2022.
| Total | TriConnex | eSmart | Total | TriConnex | eSmart |
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| | | | | | |
Revenue | 23,484 | 17,992 | 5,492 | 75,011 | 55,670 | 19,341 |
| | | | | | |
Expenses | (23,795) | (16,942) | (6,853) | 70,655 | 50,102 | 20,553 |
| | | | | | |
Loss before income tax | (312) | 1,049 | (1,361) | 4,356 | 5,568 | (1,212) |
| | | | | | |
Income Tax expense | 60 | (199) | 259 | (633) | (624) | (9) |
| | | | | | |
Loss after income tax of discontinued operation | (252) | 850 | (1,102) | 3,723 | 4,944 | (1,221) |
| | | | | | |
Gain on sale of subsidiaries (see below) | 67,545 | | | | | |
| | | | | | |
Total gain on sale of subsidiary | 67,292 |
| | | | |
| | | | | | |
Consideration received: | Total | TriConnex | eSmart |
| | |
| 2023 | 2023 | 2023 |
| | |
| £'000 | £'000 | £'000 |
| | |
| | | | | | |
Cash | 77,700 | - | - | | | |
| | | | | | |
Carrying amount of net assets sold | 7,746 | 9,080 | (1,333) | | | |
| | | | | | |
Costs related to the sale of the discontinued operations | (2,409) | | | | | |
| | | | | | |
Gain on sale after income tax | 67,545 | - | - |
| | |
| | | | | | |
| | | | | | |
The carrying amounts of assets and liabilities as at the date of sale (3 February 2023) were : | | | | | ||
| | | | | | |
| Total | TriConnex | eSmart |
| Total |
|
| 2023 | 2023 | 2023 |
| 2022 |
|
| £'000 | £'000 | £'000 |
| £'000 |
|
Non-Current Assets |
| | | | | |
Property, plant and equipment | 798 | 643 | 155 | | 708 | |
Right of use assets | 1,585 | 1,153 | 432 | | 1,228 | |
Total non-current assets | 2,383 | 1,796 | 587 |
| 1,936 |
|
Current Assets |
| | | | | |
Inventories | 3,625 | 2,781 | 844 | | 2,882 | |
Trade and other receivables | 14,450 | 9,210 | 5,240 | | 15,146 | |
Contract assets | 23,232 | 19,335 | 3,897 | | 17,805 | |
Corporation tax asset | 330 | 71 | 259 | | 71 | |
Cash | 15,123 | 14,217 | 906 | | 19,571 | |
Total current assets | 56,760 | 45,615 | 11,146 |
| 55,475 |
|
Total assets | 59,143 | 47,411 | 11,733 |
| 57,411 |
|
Current liabilities |
| | | | | |
Trade and other creditors | 15,123 | 9,633 | 5,490 | | 16,357 | |
Contract liabilities | 34,449 | 27,322 | 7,127 | | 31,517 | |
Lease liabilities | 513 | 331 | 182 | | 382 | |
Corporation tax liability | 314 | 314 | | | | |
Total current liabilities | 50,399 | 37,600 | 12,799 |
| 48,256 |
|
Non-current liabilities |
| | | | | |
Lease liabilities | 883 | 648 | 235 | | 723 | |
Deferred tax liabilities | 115 | 83 | 32 | | 115 | |
Total non-current liabilities | 998 | 731 | 267 |
| 838 |
|
Total liabilities | 51,397 | 38,331 | 13,066 |
| 49,094 |
|
| | | | | | |
Net assets | 7,746 | 9,080 | (1,333) |
| 8,317 |
|
12. Events after the reporting year
Group and Company
There are no events after the reporting year to disclose.
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