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)
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Revenue | 217.6 | 250.5 | 302.3 | 340.2 | 405.4 |
| Adj EBITDA | 2.8 | 8.5 | 14.3 | 12.7 | 16.1 |
| Fully Adj PBT | 0.6 | 5.9 | 10.6 | 7.9 | 10.4 |
| Fully Adj EPS (p) | 12.3 | 63.9 | 82.7 | 57.9 | 78.9 |
Profit & Loss
Year end: December (£m unless shown)
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Revenue | 217.6 | 250.5 | 302.3 | 340.2 | 405.4 |
| Adj EBITDA | 2.8 | 8.5 | 14.3 | 12.7 | 16.1 |
| Adj EBIT | 0.8 | 6.1 | 10.7 | 8.0 | 10.6 |
| Reported PBT | 0.6 | 2.1 | 9.1 | 6.0 | 7.4 |
| Fully Adj PBT | 0.6 | 5.9 | 10.6 | 7.9 | 10.4 |
| NOPAT | 1.7 | 6.7 | 8.5 | 6.5 | 8.5 |
| Reported EPS (p) | 12.3 | 26.0 | 71.2 | 47.5 | 57.4 |
| Fully Adj EPS (p) | 12.3 | 63.9 | 82.7 | 57.9 | 78.9 |
| Dividend per share (p) | 0.0 | 4.5 | 6.0 | 18.0 | 9.0 |
Cash Flow & Balance Sheet
Year end: December (£m unless shown)
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Operating cash flow | 4.4 | 8.2 | 11.6 | 20.7 | (0.8) |
| Free Cash flow | 3.2 | 7.3 | 9.1 | 17.9 | (4.5) |
| FCF per share (p) | 31.6 | 72.1 | 89.2 | 176.7 | (43.6) |
| Acquisitions | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 |
| Disposals | |||||
| Shares issued | |||||
| Net cash flow | 1.2 | 4.8 | 5.7 | 16.3 | (7.5) |
| Overdrafts / borrowings | 4.2 | 4.0 | 6.4 | 2.7 | 4.8 |
| Cash & equivalents | 6.6 | 11.4 | 17.0 | 33.4 | 25.8 |
| Net (Debt)/Cash | 2.4 | 7.4 | 10.6 | 30.6 | 21.0 |
Nav & Returns
Year end: December (£m unless shown)
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Net asset value | 10.2 | 12.7 | 12.8 | 18.2 | 20.9 |
| NAV/share (p) | 100.7 | 125.1 | 126.2 | 179.0 | 203.2 |
| Net Tangible Asset Value | 10.2 | 12.7 | 12.8 | 18.2 | 18.7 |
| NTAV/share (p) | 100.7 | 125.1 | 126.2 | 179.0 | 181.2 |
| Average equity | 10.2 | 11.5 | 12.8 | 15.5 | 19.6 |
| Post-tax ROE (%) | 12.2% | 23.0% | 56.7% | 31.1% | 30.2% |
Metrics
Year end: December (£m unless shown)
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Revenue growth | 15.1% | 20.7% | 12.5% | 19.2% | |
| Adj EBITDA growth | 202.1% | 68.9% | (11.4%) | 27.0% | |
| Adj EBIT growth | 619.2% | 76.3% | (25.3%) | 32.3% | |
| Adj PBT growth | 875.7% | 78.5% | (25.4%) | 32.5% | |
| Adj EPS growth | 418.4% | 29.5% | (30.0%) | 36.3% | |
| Dividend growth | N/A | 33.3% | 200.0% | (50.0%) | |
| Adj EBIT margins | 2.4% | 3.6% | 2.4% | 2.6% |