nmcn PLC
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Description
The group was founded in 1946 as North Midland Construction and, with its water-focused subsidiary Nomenca, was rebranded as nmcn last year. It now consists of two segments: Water (72% of 2018 revenue and a similar proportion of profit) and Built Environment. (Longer-term the aim is for a more even balance in revenue and earnings between the two segments.) Water undertakes major civil engineering, construction and maintenance programmes for large water groups. Built Environment is engaged in a range of new build and refurbishment activities, a number of which address Government priorities, including student and private rental housing, health, roads and telecommunications.
Our view
The company should benefit from a strategy targeting sustainable earnings growth, supported by environmental investment and a more selective trend among customers seeking more stable, long-term partners after Carillion’s failure. The cash-positive group’s 2016 strategy prioritises margins, cash generation and risk management after incurring past loss-making legacy contracts.
Financial Summary
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue | 302.3 | 340.2 | 405.4 | 370.0 | 403.5 |
| Fully Adj PBT | 10.6 | 7.9 | 10.4 | -14.0 | 7.6 |
| Fully Adj EPS (p) | 82.7 | 57.9 | 78.9 | -107.0 | 58.5 |
| Dividend per share (p) | 6.0 | 18.0 | 9.0 | 10.0 | 5.0 |
Profit & Loss
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue | 302.3 | 340.2 | 405.4 | 370.0 | 403.5 |
| Adj EBITDA | 14.3 | 12.7 | 16.1 | (7.7) | 13.9 |
| Adj EBIT | 10.7 | 8.0 | 10.6 | (13.5) | 8.1 |
| Reported PBT | 9.1 | 6.0 | 7.4 | (14.0) | 7.6 |
| Fully Adj PBT | 10.6 | 7.9 | 10.4 | (14.0) | 7.6 |
| NOPAT | 8.5 | 6.5 | 8.5 | (10.9) | 6.6 |
| Reported EPS (p) | 71.2 | 47.5 | 57.4 | (109.8) | 60.0 |
| Fully Adj EPS (p) | 82.7 | 57.9 | 78.9 | (107.0) | 58.5 |
| Dividend per share (p) | 6.0 | 18.0 | 9.0 | 10.0 | 5.0 |
Cash Flow & Balance Sheet
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Operating cash flow | 11.6 | 20.7 | (0.8) | (15.7) | 20.9 |
| Free Cash flow | 9.1 | 17.9 | (4.5) | (17.0) | 15.0 |
| FCF per share (p) | 89.2 | 176.7 | (43.6) | (165.1) | 145.4 |
| Acquisitions | 0.0 | 0.0 | 0.8 | 0.0 | 0.0 |
| Disposals | |||||
| Shares issued | |||||
| Net cash flow | 5.7 | 16.3 | (7.5) | (18.0) | 15.0 |
| Overdrafts / borrowings | 6.4 | 2.7 | 4.8 | 4.8 | 4.8 |
| Cash & equivalents | 17.0 | 33.4 | 25.8 | 7.8 | 22.7 |
| Net (Debt)/Cash | 10.6 | 30.6 | 21.0 | 2.9 | 17.9 |
Nav & Returns
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Net asset value | 12.8 | 18.2 | 20.9 | 8.6 | 14.8 |
| NAV/share (p) | 126.2 | 179.0 | 203.2 | 83.4 | 143.4 |
| Net Tangible Asset Value | 12.8 | 18.2 | 18.7 | 6.3 | 12.5 |
| NTAV/share (p) | 126.2 | 179.0 | 181.2 | 61.4 | 121.4 |
| Average equity | 10.2 | 11.5 | 12.8 | 15.5 | 19.6 |
| Post-tax ROE (%) | 70.7% | 42.1% | 46.3% | (73.0%) | 31.6% |
Metrics
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue growth | 12.5% | 19.2% | (8.7%) | 9.1% | |
| Adj EBITDA growth | (11.4%) | 27.0% | (147.5%) | (281.8%) | |
| Adj EBIT growth | (25.3%) | 32.3% | (226.9%) | (160.5%) | |
| Adj PBT growth | (25.4%) | 32.5% | (233.9%) | (154.6%) | |
| Adj EPS growth | (30.0%) | 36.3% | (235.6%) | (154.6%) | |
| Dividend growth | 200.0% | (50.0%) | 11.1% | (50.0%) | |
| Adj EBIT margins | 2.4% | 2.6% | (3.6%) | 2.0% |