REG - Nexus Infrastructure - Final Results
31/01/2023 07:00
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RNS Number : 3320O Nexus Infrastructure PLC 31 January 2023
31 January 2023
Nexus Infrastructure plc ("Nexus" or the "Group")
Full year results for the year ended 30 September 2022
Strategic disposal to complete in February
Core business Tamdown well positioned with strong order book
Mike Morris, Chief Executive Officer of Nexus, a leading provider of
sustainable infrastructure, commented:
"Following last year's strategic review, I am delighted that we have
successfully crystalised value for all shareholders and stakeholders through
the sale of TriConnex and eSmart Networks. This transaction has been
structured to leave our Tamdown business well capitalised, with a strong
executive leadership team who will continue to successfully drive its
transition plans.
"Tamdown is in a resilient position for the year ahead, with high customer
retention and repeat business. It has a strong order book of £95.5m which
provides good visibility of revenue to help navigate any macroeconomic
headwinds. I remain deeply committed to Nexus and look forward to supporting
the new team as they take the business forward."
Total Group performance, including TriConnex and eSmart Networks, for the year
ended 31 September 2022:
· Total revenue growth of 26.6% to £173.4m (2021: £137.0m)
· Total adjusted operating profit up 39.7% to £4.0m (2021:
£2.9m), a significant improved on the prior year
· Operating loss of continuing operations of £0.3m (2021: £1.3m)
· Balance sheet strength maintained with an increase in net cash to
£24.2m (2021: £18.1m)
· Order book remains strong at £316.1m (2021: £287.8m) providing
good revenue visibility
· Net assets continue to grow to £34.1m (2021: £32.1m)
Inherent value of the Group crystallised:
· Since the year end shareholders have agreed to the sale of TriConnex
and eSmart Networks for a consideration of £77.7m, realising the inherent
value of these businesses and ensuring Tamdown is well capitalised for the
future.
· Sale price represents a multiple of c18x operating profit for
TriConnex and eSmart Networks.
· A substantial proportion of the net proceeds of the sale will be
returned to shareholders by way of a tender offer in early 2023. Given that
the tender offer process will commence by the end of February, no final
dividend is being recommended by the Board for the year ended 30 September
2022.
· Future dividend policy will reflect the current market alongside the
cash generative nature of the Tamdown business.
Transitional year for Tamdown
· Significant revenue growth of 26.1% to £98.4m (2021: £78.0m) due
to high levels of activity on site
· Two-year turnaround programme on track with improvement in operating
profits (excluding exceptional items) of £2.9m to £2.3m (2021: loss £0.6m)
· Order book increased by 12.0% to £95.5m (2021: £85.3m) following a
successful year winning contracts, providing good visibility for the year
ahead
Outlook
· Well capitalised for the future with approximately £10m of the net
proceeds of the disposal to be retained by Nexus enabling the business to
focus on high-quality contracts and improve operating margins towards those
achieved historically achieved.
· Tamdown has an established market position, with a reputation for
providing quality services.
· A solid platform to deliver on its growth prospects for 2023 and
beyond.
Enquiries
Nexus Infrastructure plc Tel: 01376 559 550
Michael Morris, Chief Executive Officer
Alan Martin, Chief Financial Officer
Numis Securities Limited Tel: 020 7260 1000
(Financial Adviser, Nominated Adviser & Broker)
Oliver Hardy (Nomad)
Heraclis Economides
Hannah Boros
Camarco Tel: 020 3757 4992 / 4981
(Financial Public Relations)
Ginny Pulbrook
Rosie Driscoll
Notes to Editors
Civil Engineering - Tamdown, our civil engineering business, provides a range
of civil engineering and infrastructure services to the UK housebuilding and
commercial sectors. Services include earthworks, highways, substructures and
basements and installing sustainable drainage systems. It has an established
market-leading position having been in operation for over 40 years.
Chairman's statement
I was appointed Non-Executive Chairman at the beginning of 2022, and I am
pleased to report that the Group has delivered a record year of revenue
(inclusive of discontinued operations) in the financial year to 30 September
2022. Since the year end, shareholders have agreed to the sale of TriConnex
and eSmart Networks. The transaction, which is expected to complete in early
February 2023, crystallises the inherent value of these businesses and ensures
Tamdown is well capitalised for the future. It is anticipated that the
majority of the proceeds will be returned to Shareholders in early 2023, with
the remainder of the proceeds to be kept within Nexus for working capital
purposes. The financial statements have been formatted to comply with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, which will
result in the consolidated accounts appearing very different to prior years.
Overview of the year
Throughout the year, the Group consisted of the following businesses:
TriConnex, which designs, installs and connects multi-utility networks
to properties on new residential developments; eSmart Networks, which
focuses on electric vehicle charging infrastructure, energy transition
solutions and renewable infrastructure; and Tamdown, a leading provider of
civil engineering and infrastructure construction services.
Revenues in all businesses have grown throughout the year, with Total revenue
(inclusive of discontinued operations) achieving a record of £173.4m, a
year-on-year increase of 26.6% (2021: £137.0m). Tamdown, which is the
continuing operations of the Group, recorded a revenue growth of 26.1% to
£98.4m (2021: £78.0m) due to high levels of activity on site. TriConnex
continued to grow and recorded a record revenue of £55.7m (2021: £50.7m)
with an increase in the number of active contracts and activity levels on site
remaining high. eSmart Networks continued with its high level of revenue
growth, with revenue totalling £19.3m (2021: £9.0m) an increase of 115%,
though growth was limited in H2 due to customer delays and longer supplier
lead times relating to the manufacture and delivery of specialised
equipment.
The Group recorded a significantly improved operating result before
exceptional items (inclusive of discontinued operations) with an operating
profit of £4.0m (2021: £2.9m). TriConnex and Tamdown both improved their
operating profits following increased revenue. eSmart Networks incurred a loss
for the year with gross margin impacted by one low margin contract and a
significant increase in overheads as the business continues to scale up to
support future growth. The total operating result after exceptional items
(inclusive of discontinued operations) totalled £4.0m (2021: £4.2m), with
the prior year including exceptional profit of £1.3m relating to the disposal
of Tamdown's former office.
The profit for the year attributable to equity holders of the parent company
equated to £2.7m (2021: £3.0m). The basic earnings per share from total
operations was 6.0p per share (2021: 6.6p per share). The basic loss per
share from continuing operations was 2.2p per share (2021: 4.0p per share).
The order book for each of the Group's businesses remains strong. The total
order book (inclusive of the discontinued operations) was £316.1m
(2021: £287.8m), up 9.8%. Tamdown had a successful year winning contracts
and grew its order book by 12.0% to £95.5m (2021: £85.3m) even with the
acceleration of delivery on site. The TriConnex order book grew by 4.4% to
£197.4m (2021: £189.0m), and eSmart Networks grew by 72% to £23.2m (2021:
£13.5m) with increased demand for its services for electric vehicle charging
infrastructure, industrial electrification and renewable energy
infrastructure.
The Group's balance sheet remains strong, with a continued high net cash,
inclusive of discontinued operations, of £24.2m (2021: £18.1m) and with net
assets improving by 6% to £34.1m (2021: £32.1m).
Returns to shareholders
As a listed company, one of our primary objectives is to deliver value to
shareholders. Such value would normally be delivered by way of dividends from
earned trading profits. As such, the Board declared an interim dividend of
1.0p per share, a 66% increase on the prior year (2021: 0.6p per share) based
upon the expected trading results for the year.
The Board is not recommending the payment of a final dividend for the year
ended 30 September 2022 as, since the year end, shareholders have approved the
sale of TriConnex and eSmart Networks for a consideration of £77.7m, with the
expectation that a substantial proportion of the net proceeds will be returned
to shareholders in early 2023. The transaction will result in a profit on sale
of approximately £72m and the Board is proposing to distribute approximately
£65m by way of a tender offer and will write to shareholders in due course
setting out the terms and the timetable of the capital return. Approximately
£10m of the net proceeds of the disposal are to be retained by Nexus to
strengthen its balance sheet and ensure Tamdown has adequate working capital.
To the extent that surplus capital arises in the future, it is the Board's
intention that such capital will be distributed to shareholders.
The Board believes that Tamdown can continue to improve operating profit
margins and generate positive free cash in 2023 and thereafter support a
progressive dividend policy.
Board and governance
As announced in August 2021, Geoff French retired as Non-Executive Chairman on
31 December 2021 following two terms as a Director and Non-Executive Chairman.
In line with the announcement, I was appointed as Non-Executive Chairman from
1 January 2022, and Chair of the Nomination Committee, whilst also continuing
to serve on the Company's Audit and Remuneration Committees. The roles of
Senior Non-Executive Director and Chair of the Remuneration Committee were
taken up by Ffion Griffith with effect from 1 January 2022.
Clare Lacey was appointed as a Non-Executive Director on 14 January 2022.
Clare is a Chartered Accountant with nearly 20 years' experience, focused on
the infrastructure and renewable energy sectors. Clare was a founding partner
of QMPF LLP, an Edinburgh based infrastructure and energy advisory business,
established in 2012 following a management buy-out of Quayle Munro in 2012 and
grew the business over its first ten years. Clare is a Non-Executive Director
of infrastructure and education related companies.
The Board consists of six members, including four Non- Executive Directors and
two Executive Directors. In line with the QCA Corporate Governance Code (the
"QCA Code"), the Board has reviewed the independence of the Non-Executive
Directors and considers all the Non- Executive Directors to be independent.
Upon completion of the sale of TriConnex and eSmart Networks, Mike Morris,
CEO, and Alan Martin, CFO, will step-down from their current roles at Nexus to
lead TriConnex and eSmart Networks under their new ownership. Charles Sweeney
will be appointed to the Nexus Board as CEO and Dawn Hillman will be appointed
to the Nexus Board as CFO to lead the remaining Nexus Group. Charles Sweeney
is currently the COO of Nexus and Dawn Hillman is currently Financial Director
of TriConnex and Nexus Company Secretary. Both individuals have deep knowledge
and experience of Tamdown and Nexus, having worked within the Group for a
collective total of 43 years. Mike Morris will remain on the Nexus Board as a
Non-Executive Director following completion of the sale and will remain the
largest shareholder.
Mike has successfully led the Group since 1999 and through his vision and
entrepreneurship has grown the Group to the infrastructure business that it is
today. Alan joined the Group in 2015 and can include leading the IPO in 2017
as one of his many successes. I and the Board would like to record our sincere
gratitude to both Mike and Alan for their contributions to the business over
many years. I look forward to working with Mike in his new capacity as a
non-executive director.
People
A primary driver of the Group's success is the team of highly skilled, driven
and loyal employees across the businesses. 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 them for their continued hard work and
dedication throughout the year.
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.
Sustainability
At the heart of our purpose, Building Bright Futures, is a commitment to
sustainability. I'm proud of what Nexus and its people achieved this year. We
maintained our focus on health and safety and continued our work on developing
and engaging our workforce, especially through the 'My Bright Future'
performance development approach, which was expanded this year.
To aid our approach to reducing energy consumption across our sites and
offices, improvement initiatives included working with key suppliers to reduce
fuel wastage, reduce transport distances and monitor driver performance, and
energy-saving initiatives in our head office which achieved a BREEAM 'Very
Good' rating.
We are developing a Group wide approach to sustainability. This is important
to the Board because it supports our overall growth strategy and enables the
energy transition by delivering sustainable infrastructure.
Outlook
Trading in the first quarter of FY23 is in line with the Board's expectations.
The two-year turnaround plan for Tamdown is well progressed with operational
benefits coming through. Tamdown is continuing to see positive demand for its
services despite macroeconomic headwinds increasing and new build housing
market softness. Despite the headwinds, the fundamental market growth
drivers for Tamdown are positive since the housing market has been in a
long-term position of structural undersupply as the number of new houses built
has failed to keep pace with the rate of household formation.
The sale of TriConnex and eSmart Networks crystallises the inherent value of
these businesses and ensures Tamdown is well capitalised and able to progress
with its two-year turnaround plan focusing on high quality contracts and
improving operating margins.
Richard Kilner
Non-Executive Chairman
Executive Review
We are pleased to confirm that the Group's total revenue (inclusive of
discontinued operations) has increased by 26.6% to £173.4m compared to the
prior year (2021: £137.0m). All the Group's businesses grew in the year, with
growth for Tamdown and TriConnex driven by high levels of activity on sites,
and growth for eSmart Networks driven by the fulfilment of an increasing
number of customer awards in both electric vehicle infrastructure and
industrial and commercial connections.
The Group performed well in the first half of the year with revenues
increasing against the revenue recorded in the second half of the previous
financial year, and with revenue growth continuing into the second half of the
year. Tamdown, the continuing operation of the Group, had a very positive year
with revenue up 26.1% to £98.4m (2021: £78.0m) due to an increased number of
projects and high levels of activity on sites. TriConnex, a discontinued
operation, recorded strong revenue throughout the year due to high levels of
activity on site, achieving a record revenue of £55.7m and growth of 9.7%
(2021: £50.7m). eSmart Networks, a discontinued operation, also had a very
strong year with revenue increasing by 114.7% to £19.3m (2021: £9.0m), with
revenue growth being recorded in all of the sectors the business is
addressing. The revenue growth for eSmart Networks, even though significant,
was restricted due to customer delays and longer supplier lead times in the
manufacture and delivery of specialised electrical equipment utilised on
projects.
The profitability of the Group, before exceptional items, has improved
significantly due to the revenue growth and despite additional investment in
the resources of eSmart Networks to support its ongoing growth. Tamdown made
progress with the gross margin improving in the year as old contracts, which
had previously been impacted by delay and unproductive working periods
principally due to Covid-19, were completed and cease to be a drag on
profitability. The trading and profitability of TriConnex has been strong
throughout the year, with demand for multi utility connection services
remaining high, the business continuing to deliver good margins and the
continual diversification and enhancement to its service offering to fulfil
the needs of its customer base. eSmart Networks made excellent progress in the
year, with significant growth in revenue from a widening customer base. eSmart
Networks' gross margins have been in line with expectations except for one low
margin contract, completed in H1, which depressed the gross margin for the
year. Delays by customers and in the supply of some equipment resulted in
lower than anticipated revenue and lower gross profit to cover the increase in
resources required to meet the growth in revenue. The operating environment
for all the businesses is characterised by increased input cost inflation, but
the businesses are committed to taking the necessary mitigating actions to
protect and maintain margins.
The Group's order book, inclusive of the discontinued operations, remains high
and has increased by 9.8% year-on-year to £316.1m (2021: £287.8m), providing
good visibility of future earnings. Tamdown has been active and competitive in
the market, both winning and negotiating work from its extensive client base,
leveraging our continued strong relationships and reputation for quality work.
Tamdown has been successful in securing new business throughout the period,
and even with the acceleration of delivery on site, the order book increased
by 12.0% to £95.5m (2021: 85.3m). TriConnex has continued to increase its
order book, even with a record level of revenue achieved in the year. The
order book for TriConnex at the yearend totalled £197.4m (2021: £189.0m),
with the strong performance continuing to be driven by the up front,
mission-critical nature of securing utility network connections on development
sites. The order book for eSmart Networks has increased substantially during
the year, driven by the growing demand for electric vehicle charging,
industrial energy transition solutions and renewable energy infrastructure.
The order book for eSmart Networks increased by 71.8% during the year to end
the year at £23.2m (2021: £13.5m), with a growing customer base in all the
sectors the business is addressing.
During the year the Group has completed the sale and leaseback of its head
office building, Nexus Park. This transaction has increased the Group's cash
and cash equivalents balance by £2.9m and eliminated the Group's borrowings
of £10.6m. The disposed-of assets were sold at net book value and the
subsequent lease arrangement will result in increased depreciation and
interest expenses.
Financial performance
Total revenue for the Group (including discontinued operations) increased by
26.6% to £173.4m (2021: £137.0m). The revenue for all businesses increased
during the year, with Tamdown's revenue increasing to £98.4m (2021: £78.0m),
TriConnex's revenue increasing to £55.7m (2021: £50.7m) and eSmart
Networks' revenue increasing to £19.3m (2021: £9.0m).
Total gross profit (including discontinued operations) for the year increased
to £30.3m (2021: £24.2m) with the overall gross margin decreasing to 17.4%
(2021: 17.7%). The gross margin for Tamdown improved significantly against the
prior year to 10.1% (2021: 7.7%) as operational enhancements continue to
improve margins and new, more profitable contracts start to dominate the
contract mix.
TriConnex maintained a high gross margin at 29.3% (2021: 30.9%), with a
decline against the prior year due to the high levels of input cost inflation
being faced. eSmart Networks' gross margin was down against the prior year at
20.8% (2021: 28.0%) due to the impact of one low-margin contract, completed in
the first half of the financial year, which depressed the H1 gross margin to
15.9%, whilst the gross margin in H2 reverted to expected levels of around
25%.
Administrative expenses for the Group, including discontinued operations,
increased in the year to a total of £26.2m (2021: £20.2m), with the main
increase incurred by eSmart Networks, where the average headcount has
increased by 81% to support the continued growth of the business. The
exceptional item for the current year relates to the profit on sale and
leaseback of Nexus Park. The exceptional item in the prior year related to the
profit on sale of Tamdown's former office, which generated a profit of
£1.3m.
The Group's total operating profit, including discontinued operations, for the
year before exceptional items was £4.0m (2021: £2.9m) and with the impact of
exceptional items, totalled £4.0m (2021: £4.2m). The operating loss, before
the impact of exceptional items, for the continuing operations reduced to
£0.3m (2021: loss £2.6m) and inclusive of the impact of exceptional items
was a loss of £0.3m (2021: loss £1.3m). The profit for the year attributable
to equity holders of the parent company was £2.7m (2021: £3.0m).
Other financial information
Net finance costs
The net finance charge for the year totalled £0.6m (2021: £0.4m). Interest
received on bank deposits continued to be low, £0.0m (2021: £0.0m) due to
low interest rates. Interest payable totalled £0.6m (2021: £0.4m),
constituted as interest payable on bank borrowings of £0.2m (2021: £0.3m),
with the reduction due to the reduction in bank borrowings and interest on
lease liabilities of £0.4m (2021: £0.1m), with the increase related to the
interest on the increase in lease liabilities following the sale and leaseback
of Nexus Park.
Tax
The Group recorded a total tax charge, including discontinued operations, for
the year of £0.7m (2021: £0.8m), representing an effective tax rate of
21.5% (2021: 20.8%). The income tax expense related to the continuing
operations totals £0.1m (2021: £0.1m) and £0.6m (2021: £0.7m) relates to
discontinued operations.
Earnings per share
Basic earnings per share for total operations equated to 6.0p per share,
compared to 6.6p per share in 2021. The diluted earnings per share for total
operations was 5.9p (2021: 6.4p). The basic and diluted loss per share from
continuing operations was 2.2p per share (2021: loss 4.0p).
Dividends
As noted in the Chairman's statement, the Board declared and paid an interim
dividend of 1.0p per share (2021: 0.6p per share). A final dividend is not
being recommended as the majority of the proceeds from the disposal of
TriConnex and eSmart Networks are proposed to be distributed by way of a
tender offer in early 2023.
Total dividend for the year equated to 1.0p per share (2021: 2.0p per share).
The total cost of the dividend payment was £0.5m.
Statement of financial position
The Group continues to maintain a strong balance sheet, with shareholders'
funds increasing during the year to 30 September 2022 by £2.0m to £34.1m
(2021: £32.1m), the movement representing the trading performance of the
Group companies less the payment of dividends totalling £1.1m.
The assets and liabilities of TriConnex and eSmart Networks are considered to
be a disposal group in accordance with IFRS 5: Non-current Assets Held for
Sale and Discontinued Operations, and so are disclosed separately on the
statement of financial position. Assets classified as held for sale total
£57.4m, including cash and cash equivalents of £19.6m, contract assets of
£17.9m and trade and other receivables of £15.1m. Liabilities associated
with assets classified as held for sale total £49.1m, including trade and
other payables of £16.4m and contract liabilities of £31.5m.
In April 2022, the Group completed a sale and leaseback transaction of Nexus
Park, the Group's head office building, which generated proceeds of £13.5m,
clearing the Group's borrowings of £10.6m. The Group simultaneously entered
into a 20 year lease, which created an IFRS 16 right of use asset of £10.8m
and an associated lease liability of £10.9m.
Cash flow
The Group utilised £5.3m (2021: utilised £2.6m) of cash in the year,
resulting in a cash and cash equivalents balance at 30 September 2022,
inclusive of the discontinued operations, of £24.2m (2021: £29.5m). The cash
and cash equivalents balance that relates to the continuing operations
totalled £4.6m, with £19.6m related to the discontinued operations.
Operating cash flows before working capital movements generated £6.5m (2021:
generated £5.1m). Working capital increased during the year by £8.9m (2021:
increase of £1.7m), with increases in debtors, contract assets and
inventories partly mitigated by increases in payables and contract
liabilities, resulting in cash used in operating activities of £2.4m (2021:
generated £3.4m). Tax and interest payments amounted to £0.8m (2021:
£0.7m). Cash generated from investing activities totalled £12.8m (2021:
utilised £5.8m), with £13.6m generated from the proceeds of disposal of
property, plant and equipment, including £13.5m on the disposal of Nexus Park
and £0.8m used to acquire fixed assets. Net cash outflows from financing
activities totalled £14.9m (2021: inflow £0.4m) with £0.6m inflow from the
drawdown of hire purchase facilities and outflows of £11.7m on the repayment
of bank loans, £2.8m on lease repayments and £1.1m (2021: £0.3m) on
dividend payments.
The Group continues to have a good relationship with its sole banker, Allied
Irish Bank ("AIB"). The current facilities provided by AIB include an undrawn
revolving credit facility of £5.0m, and an associated accordion of £5.0m.
The Group is fully compliant with its banking covenants.
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.
Summary and outlook
Nexus has had a successful year, with each business growing and effectively
dealing with the challenges of input cost inflation, in addition to the
successful sale and leaseback of Nexus Park, which cleared all of the Group's
borrowings.
TriConnex continued to grow both revenue and profit to record levels. eSmart
Networks continued to play a leading part in the ongoing electrification of
the UK, with growth in both revenue and its order book. Tamdown has
continuously improved performance in the year and the growth of the order book
along with accelerated activity on site provide confidence that existing and
new customers will continue to demand our services, with improvements to
profitability over the medium term expected as this continues.
Looking forward, the disposal of TriConnex and eSmart Networks ensures that
Tamdown is well capitalised and able to progress with its two-year turnaround
plan focusing on high-quality contracts and improving operating margins
towards those achieved historically. Whilst economic and political uncertainty
remains, the Group's market position, strong order book and healthy balance
sheet give the Group a solid platform to deliver Tamdown's growth prospects
for 2023 and beyond.
Operational Review
Civil Engineering
Tamdown, our Civil Engineering business, provides a range of civil engineering
and infrastructure services 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 40 years.
Financial and operating performance
Tamdown performed well throughout the year, with revenues increasing
significantly in the first half of the year, compared to revenue recorded in
the second half of the previous year. Revenue continued to grow in the
second half of the current financial year, during Tamdown's traditionally busy
trading period. The strong revenue growth is attributed to an acceleration of
activity from the opening order book and from newly won contracts during the
year. Overall revenue increased in the year by 26.1% to £98.4m
(2021: £78.0m).
The gross margin for the year has improved by 240 basis points to 10.1% (2021:
7.7%), with newly won contracts driving the gross margin improvements. The
overall margin reflects old contracts impacted by additional costs incurred in
previous years due to delays and less productive working periods, principally
due to Covid-19. Whilst the operating environment continues to be
characterised by input cost inflation, primarily in materials, energy and
labour, the business is committed to taking the necessary actions to protect
and maintain its margins. The gross margin will continue to show improvement
as these older contracts complete. Gross profit for the period totalled
£9.9m, an increase of 65% on the prior year (2021: £6.0m).
Tamdown continues to maintain a tight control of costs, with administrative
expenses, excluding the impact of exceptional items, being held broadly in
line with revenue increases at £7.6m (2021: £6.7m).
The operating profit for the year totalled £2.3m, being a £2.9m improvement
on the prior year's operating loss, prior to the exceptional item,
of £0.6m. The prior year operating profit of £0.6m included an exceptional
profit of £1.3m relating to the sale of Tamdown's former office, which became
surplus to requirements following the move to Nexus Park. There are no
exceptional items in the current year's results.
Tamdown has been active and competitive in the market, negotiating and winning
work from our extensive customer base, leveraging our continued strong
relationships and reputation for quality work. Tamdown has been successful in
securing new business throughout the year, and even with the acceleration of
delivery on site, the order book increased by 12% over the year to £95.5m
(2021: £85.3m).
Our civil engineering markets
Tamdown customers are UK housebuilders and affordable housing developers,
including housing associations. As such, the UK housebuilding market is key to
Tamdown. The fundamental market growth drivers for our business are positive
since the housing market has been in a long-term position of structural
undersupply as the number of new houses built has failed to keep pace with the
rate of household formation. The recent Government briefing paper in February
2022 'Tackling the under-supply of housing in England', references the
National Housing Federation estimate of up to 340,000 new homes per year
needed in England up to 2031, which is ahead of the Government's estimate of
300,000 new homes target to tackle the housing shortage. Recent statements
from the Secretary of State confirm the current Governments commitment to
building 300,000 houses every year by the mid-2020s. There is the expectation
that the housing deficit will remain over the long- term. The prevalence of
this deficit has attracted a significant amount of Government stimulus to the
sector.
Tamdown operates in the South East of England and London, where the
undersupply of housing is more acute compared to the rest of the UK. Tamdown
works with the majority of the quoted housebuilders, who account for
approximately 50% of total private new build volumes. This dominance is
expected to continue as these customers work through their land bank and
develop larger schemes.
Tamdown also works alongside a number of housing associations that deliver
mixed tenure developments and are focused on the affordable homes segment of
the housing market, offering variety and strength to its customer base.
Tamdown is working in partnership with our customers, delivering fundamental
and essential elements of the modular building revolution. This, and other
Modern Methods of Construction, are enabling the construction industry to
build better, greener and faster while meeting new targets and legislation.
There is general acceptance that there is a deficit in housing supply and so,
with Tamdown's established market position as one of the leading providers
of infrastructure and civil engineering services to major UK housebuilders, we
are well placed to benefit from the Government's current
and future stimulus.
Growth strategy
Tamdown's ambition is to return to yielding profits in a sustainable manner
through the successful delivery of our strategic goals, including:
Margin enhancement:
Tamdown's ongoing focus is on how the team plans and procures the resources
required on projects, the mobilisation process and the interaction with
customers before and during delivery, to ensure that projects are delivered
safely, on time, to a high quality and profitably. Tamdown leverages our
strong customer relationships along with our reputation for delivering quality
work to secure projects with appropriate margins, especially with increased
inflationary price pressures within the cost base. The selection of customers
and projects will continue to be important in ensuring that margin improvement
is achieved and maintained.
Multi-phase projects:
A significant element of Tamdown's work is from larger, multi-phase projects,
which provide a good level of visibility of future revenues.
These projects are typically large housing developments which are completed in
phases. Once Tamdown has won an initial phase it is typically retained for the
remainder of the scheme, the phases of which can extend over many years. With
Tamdown's extensive customer base and long standing reputation for great
customer service, the Company is well placed to be awarded multi phase
projects.
Market penetration:
Tamdown has strong relationships with many of the regional businesses of
blue-chip customers. Within the geographies where Tamdown operates, a number
of existing customers have additional regional businesses to which Tamdown
does not currently provide services. Accordingly, there is an opportunity to
increase market share by winning projects with these additional regional
businesses. This is likely to be achieved through the provision of excellent
customer service to current customers, which will lead to recommendations to
other regions. Tamdown has been successful during the year in deepening its
market penetration with new and existing customers, including new regions of
existing customers. These businesses present an ongoing growth opportunity.
Customer diversification:
The majority of Tamdown's customers are large residential housebuilders.
Tamdown is developing relationships with customers that address the affordable
housing market, such as housing associations that undertake developments
themselves and the housebuilders that build on behalf of housing
associations via a partnership model.
Outlook
Tamdown has an established market position, with a reputation for providing
quality services to UK housebuilders. The operating environment continues to
be characterised by significant levels of input cost inflation, primarily in
materials, energy and labour, but the business is committed to taking the
necessary actions to protect and maintain our margins. There is currently a
level of uncertainty regarding consumer demand for new properties following
recent interest rate increases, however the backdrop of Government support to
counter the housing supply deficit, alongside order book wins, provides us
with confidence that existing and new customers will continue to demand our
services, with improvements to profitability over the medium term as the
turnaround continues.
Multi-Utilities
TriConnex, our Multi-Utilities business, designs, installs and connects
electricity, water, gas, fibre networks and electric vehicle charging
infrastructure on new residential developments. Working with major housing
developers, the business offers end-‑to-‑end solutions of utility
connections to new residential developments.
Financial and operating performance
Revenue for TriConnex increased by 9.7% to £55.7m (2021: £50.7m).
Activity on sites has been high throughout the year, with customers requiring
final connections to fulfil consumer demands. The revenue growth occurred in
all regions, with the core South East region being the most pronounced with
growth of over 10% in the year.
TriConnex is a high gross margin business, principally due to the technical,
office-‑based, added-‑value nature of the services it provides, resulting
in a higher proportion of overhead costs. The current operating environment is
characterised by input cost inflation, primarily in materials, energy and
labour; however, the business is committed to taking the necessary actions to
protect and maintain its margins. The high gross margin has broadly been
maintained during the year, with the margin recorded for the year of 29.3%
(2021: 30.9%). The increase in activity, resulting in the increased revenue
for the year, led to the increase in gross profit to £16.3m (2021:
£15.7m)
As TriConnex provides a full concept to connection service with a significant
amount of desktop planning, research and technical design, the majority of
TriConnex's staff are office based. TriConnex has maintained a tight control
of costs, with the overhead increase for the year limited to less than 4%, at
£10.8m (2021: £10.4m), as operational efficiencies are realised.
Operating profit increased by 5.0% to a record profit level of £5.6m (2021:
£5.3m) with an operating margin of 10.0% (2021: 10.5%).
TriConnex's order book has continued to grow throughout the year with growth
of 4.4% over the year to £197.4m (2021: £189.0m).
Energy Transition
eSmart Networks, our Energy Transition business, provides public electric
vehicle charging, industrial electrification and renewable energy
connections.
Financial and operating performance
eSmart Networks has continued to develop its offering to the electric
vehicle ('EV') charging infrastructure sector, whilst also developing its
services to the industrial electrification and the renewable energy
infrastructure sectors.
Revenue for the year grew significantly by 114.7% to £19.3m (2021: £9.0m),
as the business continues to scale up in parallel to the growing pace of the
EV charging infrastructure sector, along with industrial electrification and
entering the renewable energy infrastructure sectors. Revenue was lower than
anticipated as the business experienced some delays in the second half of the
year to the conversion of its order book to revenue, due to longer lead times
dictated by our customers and longer lead times relating to the manufacture
and delivery of specialised equipment utilised on projects. The revenue
relating to the delayed activity will be delivered in the current financial
year.
The gross margin recorded for the year was 20.8% (2021: 28.0%). The gross
margin in H1 was 15.9%, with one low-margin contract impacting the period. The
gross margin in H2 reverted to expected levels of 24.8%. The gross profit for
the year totalled £4.0m (2021: £2.5m). Administrative expenses have grown
with the scaling up of headcount to service the increased levels of activity,
to £5.2m (2021: £2.4m), with the headcount increasing to 96 by the year end
(2021: headcount 60). The delayed revenue in H2 and the continued scaling up
of the business prevented eSmart Networks from achieving an operating profit
in H2, resulting in an operating loss for the year of £1.2m (2021: profit
£0.2m).
The growing demand for electric vehicle charging, industrial electrification
and renewable energy infrastructure has driven a substantial increase in the
order book, with an increase of £9.7m to £23.2m (2021: £13.5m), an increase
of 72% over the year.
Consolidated statement of comprehensive income
For the year ended 30 September 2022
2022 2021
Note £'000 £'000
Continuing operations
Revenue 2 98,392 77,324
Cost of sales (88,482) (71,330)
Gross profit 9,910 5,994
Administrative expenses (10,225) (7,427)
Other income 4 - 120
Operating loss before exceptional items (315) (2,579)
Exceptional items 5 - 1,266
Operating loss (315) (1,313)
Finance income 6 13 -
Finance expense 6 (607) (384)
Loss before tax (909) (1,697)
Taxation 7 (109) (92)
Loss from continuing operations (1,018) (1,789)
Discontinued operations
Profit from discontinued operations (after tax) 3,729 4,764
Profit and total comprehensive income for the year attributable to equity 2,711 2,975
holders of the parent
Earnings/(losses) per share (p per share)
Basic (p per share) - total operations 9 5.96 6.56
Diluted (p per share) - total operations 9 5.89 6.43
Basic (p per share) - continuing operations 9 -2.24 -3.95
Diluted (p per share) - continuing operations 9 -2.24 -3.95
Basic (p per share) - discontinued operations 9 8.20 10.51
Diluted (p per share) - discontinued operations 9 8.10 10.30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Restated
Group Group
2022 2021
Note £'000 £'000
Non-current assets
Property, plant and equipment 10 5,459 19,584
Right of use assets 11 12,620 2,415
Goodwill 2,361 2,361
Total non-current assets 20,440 24,360
Current assets
Inventories 43 2,495
Trade and other receivables 30,388 38,150
Contract assets 8,120 19,107
Corporation tax asset 27 84
Cash and cash equivalents 4,597 29,517
Assets classified as held for sale 57,411 -
Total current assets 100,586 89,353
Total assets 121,026 113,713
Current liabilities
Borrowings - 2,076
Trade and other payables 21,698 33,894
Contract liabilities 3,543 33,495
Lease liabilities 11 1,663 1,090
Corporation tax liability - -
Liabilities associated with assets classified as held for sale 49,094 -
Total current liabilities 75,998 70,555
Non-current liabilities
Borrowings - 9,365
Lease liabilities 11 10,793 1,499
Deferred tax liabilities 95 162
Total non-current liabilities 10,888 11,026
Total liabilities 86,886 81,581
Net assets 34,140 32,132
Equity attributable to equity holders of the Company
Share capital 911 908
Share premium account 9,419 9,419
Retained earnings 23,810 21,805
Total equity 34,140 32,132
Consolidated statement of changes in equity
For the year ended 30 September 2022
Share capital Share premium account Retained earnings
Total
£'000 £'000 £'000 £'000
Equity as at 1 October 2020 905 9,419 18,476 28,800
Transactions with owners
Dividend paid - - (272) (272)
Share-based payments - - 626 626
Issue of share capital 3 - - 3
3 - 354 357
Total comprehensive income
Profit and total comprehensive income for the year - - 2,975 2,975
- - 2,975 2,975
Equity as at 30 September 2021 908 9,419 21,805 32,132
Transactions with owners
Dividend paid - - (1,091) (1,091)
Share-based payments - - 385 385
Issue of share capital 3 - - 3
3 - (706) (703)
Total comprehensive income
Profit and total comprehensive income for the year - - 2,711 2,711
- - 2,711 2,711
Equity as at 30 September 2022 911 9,419 23,810 34,140
Consolidated statement of cash flows
For the year ended 30 September 2022
Restated
Group Group
2022 2021
Note £'000 £'000
Cash flow from operating activities
Profit before tax (including discontinued operations) 3,454 3,757
Adjusted by:
Profit on disposal of property, plant and equipment - owned - (1,288)
Share-based payments 385 626
Finance expense (net) 588 402
Depreciation of property, plant and equipment - owned 833 492
Depreciation of property, plant and equipment - right of use 1,215 1,110
Operating profit before working capital changes 6,475 5,099
Working capital adjustments:
(Increase)/decrease in trade and other receivables (7,384) (485)
(Increase) in contract assets (6,818) (6,380)
(Increase) in inventory (430) (1,311)
Increase/(decrease) in trade and other payables 4,155 1,602
Increase in contract liabilities 1,565 4,914
Cash (used in)/generated from operating activities (2,437) 3,439
Interest paid (244) (355)
Taxation paid (550) (343)
Net cash (used in)/generated from operating activities (3,231) 2,741
Cash flow from investing activities
Purchase of property, plant and equipment - owned (795) (7,681)
Proceeds from disposal of property, plant and equipment - owned 13,555 1,902
Proceeds from disposal of assets measured at FVOCI - 3
Interest received 39 -
Net cash generated from/(used in) investing activities 12,799 (5,776)
Cash flow from financing activities
Dividend payment 8 (1,091) (272)
Drawdown of term loan - 3,538
Drawdown on HP agreement 587 -
Repayment of term loan (11,663) (1,459)
Principal elements of lease repayments (2,753) (1,373)
Net proceeds from the issue of share capital 3 3
Net cash (used in)/generated from financing activities (14,917) 437
Net change in cash and cash equivalents (5,349) (2,598)
Cash and cash equivalents at the beginning of the year 29,517 32,115
Cash and cash equivalents at the end of the year 24,168 29,517
Reconciliation of cash and cash equivalents at the end of the year
Held by continuing operations 4,597 29,517
Held by discontinued operations 19,571 -
Cash and cash equivalents at the end of the year 24,168 29,517
1. Accounting policies
The financial information does not constitute the Company's financial
statements for the years ended 30 September 2022 or 2021 but is derived from
those statements. Financial statements for 2021 have been delivered to the
Registrar of Companies and those for 2022 will be delivered following the
Company's annual general meeting. The auditor has reported on those
statements; their report was unqualified, did not draw attention to any
matters by way of emphasis and did not contain statements under s498 (2) or
(3) Companies Act 2006 or equivalent preceding legislation.
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 2021 which have been delivered to the Registrar of
Companies.
In determining the appropriate basis of preparation of these financial
statements, the Directors are required to consider whether the Group can
continue in operational existence. For the current year, as the transaction to
sell TriConnex and eSmart Networks has not completed at the date of approving
the Annual Report, management has forecasts based on two scenarios, firstly,
on the basis that the transaction does not go ahead and secondly on the basis
that the transaction does complete. The scenarios have then been sensitised to
reflect severe but plausible downside scenarios reducing forecast revenue and
forecast margin, reflecting a cautious view on the trading outlook based on
the current market.
For both scenarios the budgets for the two-year period to September 2024
approved by the Board have been used.
These budgets were then subject to a range of sensitivities including a severe
but plausible scenario together with mitigating actions. Changes to the
principal assumptions included:
· a reduction in work secured of approximately 10%;
· a reduction in revenue of approximately 10%; and
· a reduction in gross profit of approximately 2%.
The budgets, as approved by the Board, satisfied all of the financial
covenants of the banking facilities. The banking facilities would remain in
place in the event that the transaction does not go ahead. The downside
scenarios significantly reduced profitability, resulting in limited headroom
on some of the financial covenants.
Based on the results of the analysis undertaken for both scenarios, the Group
is forecast to generate profits and cash in the year ending 30 September 2023
and beyond. The Directors have a reasonable expectation that the Group has
adequate resources to meet its liabilities as they arise for at least 12
months from the approval of these financial statements and, consequently, the
Directors have adopted the going concern basis of accounting in the
preparation of these financial statements.
2. Revenue
Revenues from external customers are generated from the supply of services
relating to civil engineering and construction contracts, design, installation
and connection of multi-utility networks and electrification and electric
vehicle infrastructure. Revenue is recognised in the following operating
divisions:
2022 2022 2022
Continuing Discontinued Total
Operations Operations
£'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
2021 2021 2021
Continuing Discontinued Total
Operations Operations
£'000 £'000 £'000
Segment revenue 78,047 59,739 137,786
Inter-segment revenue (723) (108) (831)
Revenue from external customers 77,324 59,631 136,955
Timing of revenue recognition
Over time 77,324 59,631 136,955
Customer type
Residential 76,233 50,730 126,963
Non-residential 1,091 8,901 9,992
77,324 59,631 136,955
3. Segmental analysis
The Group is organised into the following three operating divisions under the
control of the Executive Board, which is identified as the Chief Operating
Decision Maker as defined under IFRS8 'Operating Segments':
· Tamdown;
· TriConnex; and
· eSmart Networks.
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:
2022 2021
£'000 £'000
Revenue from continuing operations
Tamdown 98,392 78,047
Inter-company trading - (723)
Total revenue from continuing operations 98,392 77,324
Revenue from discontinued operations
TriConnex 55,670 50,730
eSmart Networks 19,341 9,009
Inter-company trading - (108)
Total revenue from discontinued operations 75,011 59,631
Total revenue 173,403 136,955
Gross profit from continuing operations
Tamdown 9,910 5,994
Total gross profit from continuing operations 9,910 5,994
Gross profit from discontinued operations
TriConnex 16,319 15,665
eSmart Networks 4,024 2,522
Total gross profit from discontinued operations 20,343 18,187
Total gross profit 30,253 24,181
Operating profit from continuing operations after exceptional items
Tamdown 2,272 624
Group administrative expenses (2,587) (1,938)
Total operating profit from continuing operations after exceptional items (315) (1,314)
Operating profit from discontinued operations after exceptional items
TriConnex 5,568 5,302
eSmart Networks (1,212) 171
Total operating profit from discontinued operations after exceptional items 4,356 5,473
Total operating profit after exceptional items 4,041 4,159
The value of depreciation included in the measure of segment profit is:
2022 2021
£'000 £'000
Tamdown 814 1,042
Group 733 73
Total deprecation - continuing operations 1,547 1,115
TriConnex 351 382
eSmart Networks 150 105
Total deprecation - discontinued operations 501 487
Total deprecation 2,048 1,602
4. Other income
2022 2021
£'000 £'000
Continuing operations
Research and development expenditure credit - 120
Discontinued operations
Research and development expenditure credit - 13
5. Exceptional items
2022 2021
£'000 £'000
Continuing operations
Gain on the disposal of fixed asset - 1,266
Exceptional items in the prior year related to the disposal of Tamdown's
former office building.
6. Finance income and expense
2022 2021
£'000 £'000
Finance income
Continuing operations
Interest on bank deposits 13 -
Discontinued operations
Interest on bank deposits 26 -
Finance expense
Continuing operations
Interest on bank loan (186) (287)
Interest on lease liabilities (421) (97)
(607) (384)
Discontinued operations
Interest on bank loan
Interest on lease liabilities (20) (18)
(20) (18)
Finance expense (net) (588) (402)
7. Taxation
2022 2021
£'000 £'000
Current tax - continuing operations:
UK corporation tax on profits for the year 79 -
Adjustment in respect of prior periods - 281
Total current tax - continuing operations 79 281
Current tax - discontinued operations:
UK corporation tax on profits for the year 635 525
Adjustment in respect of prior periods (19) 92
Total current tax - discontinued operations 616 617
Total current tax 695 898
Deferred tax - continuing operations:
Origination and reversal of timing differences (94) 144
Adjustment in respect of prior periods 124 (314)
Effect of tax rate change on opening balance - (19)
Total deferred tax - continuing operations 30 (189)
Deferred tax - discontinued operations:
Origination and reversal of timing differences 17 33
Adjustment in respect of prior periods - 26
Effect of tax rate change on opening balance - 14
Total deferred tax - discontinued operations 17 73
Total deferred tax 47 (116)
Total tax charge 742 782
The tax assessed for the year is higher than (2021: higher than) the standard
rate of corporation tax as applied in the UK. The differences are explained
below:
2022 2021
£'000 £'000
Profit/(loss) before tax 3,454 3,757
Profit/(loss) before tax multiplied by the respective standard rate of 657 714
corporation tax applicable in the UK (19.0%) (2021: 19.0%)
Effects of:
Fixed asset differences (168) (233)
Non-deductible expenses 229 149
Income not taxable for tax purposes - (24)
Other tax adjustments, reliefs and transfers (59) (45)
Chargeable gains/losses - 128
Losses carried back - -
Adjustment in respect of prior periods - current tax (19) 373
Adjustment in respect of prior periods - deferred tax 124 (288)
Deferred tax not recognised - 13
Deferred tax - other (22) (5)
Total tax charge 742 782
Income tax expense from continuing operations 109 92
Income tax expense from discontinued operations 633 690
Total tax charge 742 782
There was no income tax (charged)/credited directly to equity in the year
(2021: £nil).
8. Dividends
2022 2021
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Interim dividend for the year ended 30 September 2022 of 1p per share (2021: 456 272
0.6p per share)
Final dividend for the year ended 30 September 2021 of 1.4p per share (2020: 635 -
£nil per share)
1,091 272
9. Earnings/(losses) per share
Basic earnings/(losses) per share is calculated by dividing the profit/(loss)
attributable to equity shareholders of the Company by the weighted average
number of shares in issue for the year.
Diluted earnings/(losses) 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/(losses) per share is based
on the following data:
2022 2021
£'000 £'000
Weighted average number of shares in issue for the year 45,482,193 45,346,677
Effect of dilutive potential ordinary shares:
Share options (number) 578,508 926,345
Weighted average number of shares for the purpose of diluted earnings per 46,060,701 46,273,022
share
Profit for the year attributable to equity shareholders 2,711 2,975
Basic earnings (p per share) 5.96 6.56
Diluted earnings (p per share) 5.89 6.43
Continuing operations
Loss for the year from continuing operations (1,018) (1,789)
Basic losses (p per share) -2.24 -3.95
Diluted losses (p per share) -2.24 -3.95
There is no dilutive effect of the share options given the loss in the
continuing operations.
Discontinued operations
Profit for the year from discontinued operations 3,729 4,764
Basic earnings (p per share) 8.20 10.51
Diluted earnings (p per share) 8.10 10.30
10. Property, plant and equipment
Freehold land Leasehold Plant and Motor Fixtures and Total
and buildings improvements machinery vehicles fittings
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 October 2020 11,785 657 2,298 1,292 722 16,754
Additions 5,763 - 97 135 1,686 7,681
Disposals (627) - (526) (387) (400) (1,940)
Transfer from right of use assets - - 74 - - 74
At 30 September 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
Accumulated depreciation
At 1 October 2020 302 657 1,576 750 498 3,783
Charge for the year 54 - 113 155 170 492
Disposals (318) - (308) (320) (380) (1,326)
Transfer from right of use assets - - 36 - - 36
At 30 September 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
Net book value
At 30 September 2020 11,483 - 722 542 224 12,971
At 30 September 2021 16,883 - 526 455 1,720 19,584
At 30 September 2022 - 3,308 608 49 1,494 5,459
11. Right of use asset
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:
2022 2021
£'000 £'000
Right of use assets
Freehold property 10,881 542
Plant and machinery 873 1,305
Motor vehicles 861 561
Fixtures and fittings 5 7
12,620 2,415
Lease liabilities
Current 1,663 1,090
Non-current 10,793 1,499
12,456 2,589
12. Events after the reporting year
On 30 December 2022, the Board received an offer of £77,700,000 for the
disposal of all the shares in eSmart Networks Limited and TriConnex Limited.
The assets and liabilities related to these subsidiaries have been presented
as assets held for sale as at year end and their results presented separately
on the income statement as discontinued operations as per the Directors'
consideration of IFRS 5. The transaction is expected to be completed on 3
February 2023. An analysis of the results of the discontinued operations can
be found within Note 3.
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