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 | 340.5 | 347.5 | 362.5 | 378.1 |
| Adj EBITDA | 14.3 | 12.1 | 12.0 | 12.5 | 13.0 |
| Fully Adj PBT | 10.6 | 7.9 | 7.4 | 7.8 | 8.3 |
| Fully Adj EPS (p) | 82.7 | 59.3 | 55.7 | 58.6 | 62.2 |
Profit & Loss
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue | 302.3 | 340.5 | 347.5 | 362.5 | 378.1 |
| Adj EBITDA | 14.3 | 12.1 | 12.0 | 12.5 | 13.0 |
| Adj EBIT | 10.7 | 8.0 | 7.6 | 8.0 | 8.4 |
| Reported PBT | 9.1 | 6.0 | 7.4 | 7.8 | 8.3 |
| Fully Adj PBT | 10.6 | 7.9 | 7.4 | 7.8 | 8.3 |
| NOPAT | 8.5 | 6.4 | 6.1 | 6.4 | 6.8 |
| Reported EPS (p) | 71.2 | 47.7 | 59.1 | 62.2 | 66.0 |
| Fully Adj EPS (p) | 82.7 | 59.3 | 55.7 | 58.6 | 62.2 |
| Dividend per share (p) | 6.0 | 18.0 | 20.0 | 21.0 | 22.0 |
Cash Flow & Balance Sheet
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Operating cash flow | 11.6 | 23.2 | 2.0 | 13.9 | 14.6 |
| Free Cash flow | 9.1 | 20.3 | (4.6) | 6.8 | 6.9 |
| FCF per share (p) | 89.2 | 199.9 | (45.4) | 67.1 | 67.6 |
| Acquisitions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Disposals | |||||
| Shares issued | |||||
| Net cash flow | 5.7 | 16.3 | (6.5) | 4.7 | 4.6 |
| Overdrafts / borrowings | 5.0 | 4.9 | 4.9 | 4.9 | 4.9 |
| Cash & equivalents | 17.0 | 33.4 | 26.8 | 31.5 | 36.1 |
| Net (Debt)/Cash | 12.0 | 28.4 | 21.9 | 26.6 | 31.2 |
Nav & Returns
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Net asset value | 12.8 | 18.2 | 22.3 | 26.5 | 30.9 |
| NAV/share (p) | 126.4 | 179.4 | 212.7 | 252.6 | 295.2 |
| Net Tangible Asset Value | 12.8 | 18.2 | 22.3 | 26.5 | 30.9 |
| NTAV/share (p) | 126.4 | 179.4 | 212.7 | 252.6 | 295.2 |
| Average equity | 11.9 | 14.6 | 17.8 | 22.3 | 26.6 |
| Post-tax ROE (%) | 60.7% | 33.2% | 33.7% | 28.3% | 25.2% |
Metrics
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue growth | 12.6% | 2.1% | 4.3% | 4.3% | |
| Adj EBITDA growth | (15.3%) | (1.6%) | 4.2% | 4.6% | |
| Adj EBIT growth | (25.8%) | (5.3%) | 5.3% | 6.0% | |
| Adj PBT growth | (25.2%) | (6.2%) | 5.3% | 6.1% | |
| Adj EPS growth | (28.3%) | (6.1%) | 5.3% | 6.1% | |
| Dividend growth | 200.0% | 11.1% | 5.0% | 4.8% | |
| Adj EBIT margins | 2.3% | 2.2% | 2.2% | 2.2% |