Problem contracts push losses up again at nmcn to £24m
Listed civils contractor nmcn has announced a fourth increase in predicted losses to the stock market this time to £24m.
The latest trading update this morning also warned that “the company will need to consider all appropriate options” if ongoing refinancing talks fail.
Losses for 2020 were predicted at £15m last October then £16.5m in December and £22m in February.
The update said: “Activity levels across the business are reasonable however we are dealing with some performance issues in our Building business unit and are still experiencing a number of challenges on two loss making contracts in Water which will impact current year performance.”
New CEO Lee Marks is conducting a comprehensive review of the business and Preliminary Results for last year will be published by the end of June.
Nmcn secured an initial round of refinancing last month worth £21.2m.
It is still in talks with under lenders about a larger deal – which the Enquirer understands is worth around £50m.
Nmcn said: “The Company has been working since Q4 2020 to secure a financing package more appropriate to the size and nature of the Group’s businesses and risk profile.
“This has been a core focus of the Board in light of a number of contractual issues exacerbated by the Covid-19 pandemic which have resulted in the Group now expecting to report overall underlying losses before tax of £24m, approximately £6m of which are attributed to 2019.
“These issues have presented significant challenges requiring the Board to actively manage the Group’s working capital whilst work on the refinancing has been undertaken.
“The Company is pleased to report that discussions are progressing well with a number of interested parties.
“The Board has now received heads of terms and is working towards concluding an agreement during June.
“If the Group is unable to secure commitment for the requisite level of funding to satisfy its ongoing working capital requirements, then the Company will need to consider all appropriate options.
“The Company’s overdraft facility with Lloyds Bank plc has been extended into June to accommodate the continuation of these discussions.”
Marks said: “I was delighted to join the Company as Chief Executive earlier this month, as I see a business with a significant depth of expertise focusing on attractive and appropriate addressable markets.
“The combination of internal issues and the Covid-19 pandemic has undoubtedly created very challenging circumstances for nmcn over the course of the last 18 months and I would like to thank my colleagues for their efforts.
“There is certainly much to do but with progress toward an appropriate financing structure being made I look forward to the challenge.”
Nmcn’s share price fell more than 20% in early trading on Friday morning.
Source: Construction Enquirer