(Alliance News) - Shares fell in NMCN PLC on Wednesday as it confirmed that for 2020 it would report losses exceeding its original expectations.
Shares in the Nottinghamshire-based engineering and construction firm were 12% lower at 250.00 pence on Wednesday in London.
In mid-October, NMCN said that it expected to report a pretax loss between GBP13.5 million and GBP15.0 million for 2020, however it now anticipates a loss of GBP16.5 million.
The figure includes GBP5.3 million of prior year contract adjustments to five contracts within the Water business, related to errors and to information affecting estimates. As a result, pretax profit for 2019 will be restated to GBP2.1 million from the original GBP7.4 million.
In addition to prior year adjustments, Covid-19 and the AMP project cycle have made 2020 an "extremely challenging year" for NMCN, with GBP20 million of orders scheduled to be completed in the year slipping into 2021 due to the pandemic. This revenue will be reflected in the 2021 budget. The AMP project cycle refers to the five-year price and investment regimes that are applied to UK water companies by the UK regulator.
Segmentally, NMCN said that within Built Environment, Highways has been loss-making due to two poorly performing contracts, while Telecoms has performed well on increased spending on fibre by the industry.
Looking ahead, NMCN said the pandemic will continue to restrain its operations running into 2021; however it has a secured order book of GBP200 million, with visibility of a further GBP100 million or framework orders.
As the group looks to return to profitability, NMCN will seek to reinstate the payment of dividends in 2021.
"2020 has unquestionably been a difficult year for the group, with the combination of the Covid-19 constraints, the AMP transition, and the consequences of prior year contract adjustments. However, I would like to acknowledge the fortitude of everyone within the group in rising to the challenges we have faced. We will enter 2021 with many issues already addressed, with an encouraging order book, a strengthened management team and with the optimism of a return to profitability," said Acting Chair Ian Elliott.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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