Company Announcements

Preliminary Full Year Results

Source: RNS
RNS Number : 9016F
Nexus Infrastructure PLC
07 March 2024
 

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


·     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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