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 |
| Adj EBITDA | 14.3 | 12.7 | 16.1 | 8.2 | 13.9 |
| Fully Adj PBT | 10.6 | 7.9 | 10.4 | 1.9 | 7.6 |
| Fully Adj EPS (p) | 82.7 | 57.9 | 78.9 | 14.6 | 58.5 |
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 | 8.2 | 13.9 |
| Adj EBIT | 10.7 | 8.0 | 10.6 | 2.4 | 8.1 |
| Reported PBT | 9.1 | 6.0 | 7.4 | 1.9 | 7.6 |
| Fully Adj PBT | 10.6 | 7.9 | 10.4 | 1.9 | 7.6 |
| NOPAT | 8.5 | 6.5 | 8.5 | 1.9 | 6.6 |
| Reported EPS (p) | 71.2 | 47.5 | 57.4 | 14.9 | 60.0 |
| Fully Adj EPS (p) | 82.7 | 57.9 | 78.9 | 14.6 | 58.5 |
| Dividend per share (p) | 6.0 | 18.0 | 9.0 | 15.0 | 20.0 |
Cash Flow & Balance Sheet
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Operating cash flow | 11.6 | 20.7 | (0.8) | (10.8) | 20.9 |
| Free Cash flow | 9.1 | 17.9 | (4.5) | (15.2) | 15.0 |
| FCF per share (p) | 89.2 | 176.7 | (43.6) | (147.1) | 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) | (16.2) | 13.8 |
| Overdrafts / borrowings | 6.4 | 2.7 | 4.8 | 4.8 | 4.8 |
| Cash & equivalents | 17.0 | 33.4 | 25.8 | 9.6 | 23.4 |
| Net (Debt)/Cash | 10.6 | 30.6 | 21.0 | 4.8 | 18.6 |
Nav & Returns
Year end: December (£m unless shown)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Net asset value | 12.8 | 18.2 | 20.9 | 21.5 | 26.4 |
| NAV/share (p) | 126.2 | 179.0 | 203.2 | 208.2 | 256.5 |
| Net Tangible Asset Value | 12.8 | 18.2 | 18.7 | 19.2 | 24.2 |
| NTAV/share (p) | 126.2 | 179.0 | 181.2 | 186.1 | 234.4 |
| Average equity | 10.2 | 11.5 | 12.8 | 15.5 | 19.6 |
| Post-tax ROE (%) | 70.7% | 42.1% | 46.3% | 9.9% | 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% | (49.2%) | 70.1% | |
| Adj EBIT growth | (25.3%) | 32.3% | (77.4%) | 239.5% | |
| Adj PBT growth | (25.4%) | 32.5% | (81.8%) | 301.7% | |
| Adj EPS growth | (30.0%) | 36.3% | (81.6%) | 301.7% | |
| Dividend growth | 200.0% | (50.0%) | 66.7% | 33.3% | |
| Adj EBIT margins | 2.4% | 2.6% | 0.6% | 2.0% |