Sign In
14 Apr 2020 10:00
14 April 2020
nmcn PLC
("nmcn" or the "Company" or the "Group")
Further Covid-19 Update
As previously stated, nmcn will be reporting its 2019 Preliminary Results on Thursday 23 April. However, in light of the extraordinary circumstances emerging from the Covid-19 virus we want to update stakeholders further on how we are responding. nmcn is endeavouring to take all appropriate steps to protect the health and wellbeing of its staff, customers and suppliers and to fully comply with Government requirements and requests.
Furthermore, we continue to seek to be a responsible member of the communities in which we operate and serve, whilst positioning our business to emerge from this unprecedented period in the strongest possible condition.
Operational implications
The potential impact of Covid-19 on the Group's trading performance for the balance of 2020 remains unclear. We are experiencing disruption in certain areas, but where safe to do so, nmcn continues to be operational across many of its sectors. In Water, which accounts for circa two thirds of our overall revenues, we are working closely with our customers, across multiple business workstreams, that are designated by the Government to be critical to the Covid-19 response. There is a clear commitment and ongoing demand for our directly delivered services.
Built Environment, Telecommunications and Highways have also been designated 'critical sectors' and we remain operational to some degree here too, with the workforce engaged in all areas where we have framework and ongoing contractual requirements. Our services in Building have been disrupted with a temporary cessation of works at the majority of our sites.
Where it is safe to do so, we continue to work on those projects that are deemed to be in areas of critical national significance to the Covid-19 response. Presently such activities represent up to 70% of the workload we would anticipate in a more normal operating environment.
Financial implications
Since the escalation of the Covid-19 pandemic, the Board has been focussed on taking actions to preserve cash and protect liquidity in a way that does not compromise the long-term prospects of the business. To this end we have implemented a temporary and voluntary reduction in the remuneration of the Board of 20% and a 10% reduction for the senior management team (effective 1 April 2020). All non-essential capital and overhead expenditure has now been deferred, and a hiring freeze has been implemented along with various other cost reduction initiatives. Measures taken to reduce cash outflows include the deferral of VAT payment, financing costs, and utilisation of the Government's Job Retention Scheme.
As part of a review of capital allocation across the business, and recognising the uncertainties posed by the Covid-19 crisis, in particular the possibility of further restrictions or extended time frames, the Board will not be recommending a final dividend for 2019. The Board is very mindful of the importance of dividends to all shareholders and should circumstances permit a special interim dividend may be made later this year. The 2019 Directors' bonus payments are currently being deferred along with the vesting of the 2017 LTIPs. No new LTIPs will be awarded until the current uncertainties have diminished.
As a result of our prudent approach to the balance sheet we entered 2020 with a net cash position in excess of £25.8 million (unaudited), but in order to provide headroom and flexibility in the current circumstances, additional borrowing facilities are being considered by the Board. Working capital, in particular, will be important to address the opportunities that a recovering market may present. Discussions are also progressing with Lloyds Bank to utilise the recently announced Coronavirus Large Business Interruption Loan Scheme (CLBILS).
We believe these actions to be prudent in light of the uncertain macro outlook, and notwithstanding the essential nature of much of the work we undertake and the covenant strength of our customers. With the commitment of a highly skilled and dedicated workforce, we are adjusting to the evolving challenges of a global event. The Board is confident of the Company's ability to survive the storm and to emerge as a strong contender in its chosen markets, yet we are not able to quantify the likely impact on the 2020 full year results at this stage and consequently the Board does not believe it appropriate to provide forward looking financial guidance until greater visibility is available.
A further update on current trading will be provided with the Preliminary Results on Thursday 23rd April.
Chief Executive Officer, John Homer, commented:
"I would like to thank all my colleagues within nmcn and our external stakeholders for their flexibility and resolve in addressing such extraordinary circumstances. We seek to produce a holistic response to the challenges of Covid-19 which balances self-help with Government initiatives in a commercially robust but fair manner."
For further information please contact:
nmcn PLC - 01623 515 008
John Homer, Chief Executive
Dan Taylor, Chief Financial Officer
About nmcn
nmcn Plc is a leading engineering and construction company in the UK. Its talented 1800-strong team offers multi-sector engineering and construction skills, technical innovation, design and specialist fabrication.
The Company delivers major built environment and water industry projects across the UK - from buildings and highways to large-scale water networks and treatment plants. With its history dating back to 1946, nmcn now has 12 UK offices and four off-site manufacturing facilities.
www.nmcn.com
This disclosure is made in accordance with Article 19 of the EU Market Abuse Regulation 596/2014.
Follow the stocks
