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REG - Nexus Infrastructure - Interim Results

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RNS Number : 0618O  Nexus Infrastructure PLC  08 June 2022

8 June 2022

Nexus Infrastructure plc ("Nexus" or the "Group")

Interim results for the six months ended 31 March 2022

 

Nexus, a leading enabler of energy transition by delivering sustainable
infrastructure, today announces its unaudited interim results for the six
months ended 31 March 2022.

Mike Morris, Chief Executive of Nexus, commented:

"I am pleased with the excellent progress made in the first half of the year
pursuing our strategy in multi-utilities, energy transition and civil
engineering. TriConnex continues to thrive, eSmart Networks is delivering
growth and building its order book and Tamdown is on track with its medium
term plan. Nexus has a strong balance sheet with £23m of cash, plus a growing
order book. Combined with our sought-after services we head into the second
half of the year with positive momentum."

 Group financial highlights:

·    Group revenue of £80.3m (H1 2021: £63.7m)

·    Group operating profit of £1.1m (H1 2021: £1.5m)

·    Group order book remains strong with a 6.6% increase since the year
end to £306.7m (H1 2021: £301.6m)

Strong balance sheet & cash generation: delivering returns to
shareholders:

·    Net assets growth of 8.5% to £32.7m at 31 March 2022 (31 March 2021:
£30.1m)

·    Cash and cash equivalents of £23.1m (31 March 2021: £25.6m), with
net cash of £12.5m (31 March 2021: £13.7m)

·    The post period end sale and leaseback of the head office building,
Nexus Park, increased cash and cash equivalents balance by £2.9m and
eliminated Group borrowings, increasing net cash by £13.5m

·    Interim dividend increased by 66% to 1.0 pence per share (H1 2021:
0.6 pence per share) reflecting confidence in the second half of the year

Strategic progress:

·    Multi-Utilities business TriConnex continues to grow by attracting
new customers and leveraging its differentiation in designing multi-utility
networks

·    Energy Transition business eSmart Networks continues to scale up,
with significant growth in the order book and continuing to develop its market
position in the electric vehicle charging, industrial electrification and
renewable infrastructure sectors

·    Civil Engineering business Tamdown has grown its order book since the
year end, despite an acceleration of on-site delivery. The management team is
focused on optimising efficiency and protecting margins

Divisional performances:

·    TriConnex: solid performance

o  Revenues up 2.5% to £25.0m (H1 2021: £24.4m)

o  Operating profit up 2.5% to £2.4m (H1 2021: £2.4m)

o  Order book up 3.4% by £6.5m to £197.4m (H1 2021: £190.9m)

 

·    eSmart Networks: reflects investment to grow

o  Revenues up 208% to £8.6m (H1 2021: £2.8m)

o  Operating loss of £1.1m (H1 2021: loss £0.4m)

o  Order book up 72.1% to £21.0m (H1 2021: £12.2m)

 

·    Tamdown: turnaround being delivered

o  Revenues up 26.8% to £46.7m (H1 2021: £36.8m)

o  Operating profit of £1.1m (H1 2021: £0.3m)

o  Order book of £88.4m (H1 2021: £98.5m)

 

Enquiries:

 

 Nexus Infrastructure plc                                  Tel: 01376 559 550

 Michael Morris, Chief Executive Officer

 Alan Martin, Chief Financial Officer

 Numis Securities Limited                                  Tel: 0207 260 1200

 (Nominated Adviser & Broker)

 Oliver Hardy (Nomad)

 Heraclis Economides

 Ben Stoop

 Camarco                                                   Tel: 0203 757 4992

 (Financial Public Relations)

 Ginny Pulbrook

 Rosie Driscoll

Notes to Editors:

Nexus is enabling the energy transition by delivering sustainable
infrastructure. The Group's capabilities are:

Multi-Utilities   - TriConnex, our multi-utilities business, designs,
installs and connects energy, water, fibre networks and electric vehicle
charging infrastructure on new residential developments. The business offers
end‑to‑end solutions with the goal of being recognised as the UK's leading
independent provider of utility connections to new developments.

Energy Transition   - eSmart Networks, the energy transition specialist,
provides public electric vehicle charging, industrial electrification and
renewable energy connections. The business was created to respond to the UK's
need for charging infrastructure as the transition to electric vehicles
gathers pace and has since broadened its services to provide grid connection
solutions and renewable energy infrastructure.

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.

Business and Financial Review

All of the Group's businesses have successfully grown their revenues in the
period. Profits have improved within TriConnex and Tamdown due to increased
revenues and successful delivery on site, whilst the loss in eSmart Networks
reflects the investment in overheads to sustain the high level of revenue
growth as this business further establishes its position as a market leader in
the UK's energy transition markets. All businesses have successfully secured
work during the period, with the order book standing at £306.7m, an increase
of 6.6% from the year end position.

Group revenue totalled £80.3m (H1 2021: £63.7m), with Group operating profit
of £1.1m (H1 2021: £1.5m). The operating profit for the period was lower
than anticipated due to the loss recorded by eSmart Networks following the
continued and planned investment in overheads to support its high levels of
growth and being impacted by one low margin contract, which is now complete.
The Group's balance sheet remains strong with net assets increasing
year-on-year by 8.5% to £32.7m as at 31 March 2022 (2021: £30.1m). Included
within the net assets balance is cash and cash equivalents of £23.1m (31
March 2021: £25.6m) and net cash, adjusted for borrowings, at 31 March 2022
was £12.5m (31 March 2021: £13.7m). Since the period end 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, increasing net cash by £13.5m.

TriConnex

TriConnex designs, installs and connects energy, water, fibre networks and
electric vehicle charging infrastructure on new residential properties, with
operations in the South East, Midlands and South West of England.
TriConnex's core customer base consists of a mix of large, small and mid-sized
residential developers, who are offered a full multi-utility network service
from concept to connection.

Activity on sites has been high during the period with customers requiring
final connections of utilities to fulfil consumer demand. Housebuilder
customers continue to view their long-term plans positively and award
contracts to TriConnex, resulting in a further increase in the order book.

Revenue for TriConnex increased by 2.5% to £25.0m against a strong prior year
period (H1 2021: £24.4m). Operating profit improved by 2.5% to £2.4m (H1
2021: £2.4m).

TriConnex continues to differentiate itself in the market through its
provision of a full multi-utility connection offering to the residential
sector, coupled with a deep focus on outstanding customer service. The
business continues to be successful in securing orders, with the order book
increasing by 3.4% year-on-year to £197.4m (H1 2021: £190.9m) and up 4.4% in
the first half of the 2022 financial year.

TriConnex continues to assist customers with their energy transitions and
implementation of the Future Homes Standard to ensure that new homes built
from 2025 will produce 75-80% less carbon emissions than homes delivered under
current regulations. A key feature of the Future Homes Standard is expected to
be that no new homes will be able to connect to the gas network from 2025.
TriConnex is already well placed to provide solutions for this and is
assisting customers in designing alternative low-carbon heating sources for
both current and planned developments.

The fundamental growth drivers for the business are positive and the increase
in order book provides visibility of earnings for the future.

eSmart Networks

eSmart Networks, our energy transition business, provides public electric
vehicle charging, industrial electrification and renewable energy connections.
The business was created to respond to the UK's need for charging
infrastructure as the transition to electric vehicles gathers pace and has
since broadened its services to provide grid connection solutions and
renewable energy infrastructure.

eSmart Networks provides a high quality, end-to-end solution of design,
installation and connection of rapid electric vehicle charging infrastructure
for a variety of customers such as charge point network operators, electric
forecourt providers, local authorities, vehicles OEMs, direct B2B and B2C. The
skills and capabilities within the business allow us to provide turnkey
electric vehicle charging solutions for customers, with our ability to control
the timescale and grid connection process making for an accelerated
installation for customers.

eSmart Networks also provides electrical design, installation and grid
connection solutions to the industrial and commercial, renewable energy and
storage sectors. Projects include the provision of electrical infrastructure
for fulfilment centres, food production units and cold storage warehouses.

Revenue for the period grew significantly, with a year-on-year growth of 208%
to £8.6m (H1 2021: £2.8m). The gross margin in the period of 15.9% was
impacted by one low margin contract, which is now complete, and the gross
margin for H2 is expected to revert to the previous rate of approximately 25%.
The gross profit for the period was £1.4m (H1 2021: £0.7m). The business
continued to scale up during the period with additional investment in
resources and a £1.4m increase in overheads in order to support future
revenue growth. The operating loss for the period was £1.1m (H1 2021: loss
£0.4m).

eSmart Networks has been successful during the period in securing contracts in
all three of the sectors that it addresses. The order book of £21.0m as at 31
March 2022 is a 72.1% increase year-on-year (H1 2021: £12.2m) and an increase
of £7.5m during the first half of the financial year. eSmart Networks is well
placed to support the energy transition agenda in the UK and expects continued
momentum and order book growth.

The UK's need for electric vehicle charging infrastructure is significant,
with consumer demand for charging points to fulfil the needs of the increasing
number of electric vehicles, along with support from the UK Government. This,
along with high demand within the industrial and commercial sector for
independent connections providers and renewable connections, is expected to
result in the creation of valuable growth markets. The eSmart Networks team's
proven expertise and skills means that they are well placed to participate and
grow their existing solid position in these high growth markets.

Tamdown

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. Tamdown has an established market-leading position, with a
reputation for providing quality services to a broad range of the top UK
housebuilders.

The fundamental market growth drivers for Tamdown are positive since the UK's
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. This structural undersupply provides us with confidence
that our housebuilding customers will continue to demand our quality services.

Revenue for Tamdown in the period grew year-on-year by 26.8% to a total of
£46.7m (H1 2021: £36.8m). The strong growth is attributed to an acceleration
of activity on the existing order book and low revenues in H1 2021 following
low levels of new contract awards in 2020.

Tamdown's gross margin for the period was 11.0% (H1 2021: 10.1%), with newly
won contracts driving gross margin improvements. The overall margin reflects
old contracts impacted by delays and unproductive working periods, principally
due to Covid-19. The gross margin will continue to show improvement as these
older contracts complete. Gross profit for the period totalled £5.2m (H1
2021: £3.7m) and operating profit for the period totalled £1.1m (H1 2021:
£0.3m).

Tamdown has been active and competitive in the market, winning 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 3.6% since the year end to £88.4m (H1 2021:
£98.5m).

The operating environment continues to be characterised by significant levels
of input cost inflation, primarily in materials, energy and labour. The
business is committed to taking the necessary actions to protect and maintains
its margins. The backdrop of Government stimulus 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 advances.

Dividend and Dividend timetable

Considering these results and our confidence in the expected results for the
financial year, the Board is declaring an interim dividend of 1.0 pence per
share, an increase of 66% over the prior year (H1 2021: 0.6 pence per share).
The Group's dividend policy remains unchanged and the Board expects the
results for the year to be weighted to the second half of the year, with
TriConnex and Tamdown continuing to deliver profits and eSmart Networks to
significantly increase revenue and deliver profits.

The interim dividend will be paid on 15 July 2022 to shareholders on the
register at close of business on 17 June 2022. The shares will go ex-dividend
on 16 June 2022.

Financial Overview

The interim report has been prepared on the basis of the accounting policies
as set out in the Report and Accounts for the year ended 30 September 2021.

Income statement

Group revenue increased 25.9% to £80.3m (H1 2021: £63.7m), with revenue
growth from all of the Group's businesses, particularly eSmart Networks as it
works through the order book, and Tamdown as its turnaround continues with
high levels of activity on site.

Group gross profit was £14.0m (H1 2021: £11.7m), with an overall gross
margin of 17.5% (H1 2021: 18.3%).

The Group's operating profit totalled £1.1m (H1 2021: £1.5m) with positive
contributions by TriConnex and Tamdown, mitigated by a loss recorded by eSmart
Networks due to a low margin contract and the investment in overheads to
sustain future growth. Net finance costs totalled £0.2m (H1 2021: £0.2m)
resulting in profit before tax of £1.0m (H1 2021: £1.3m).

The tax charge for the period was £0.2m (H1 2021: £0.2m) reflecting an
effective tax rate of 23.9% (H1 2021: 17.9%).

The profit after tax for the period totalled £0.7m (H1 2021: £1.1m),
resulting in basic earnings per share for the period of 1.59p (H1 2021:
2.35p).

Balance Sheet and Cash Flow

The Group's balance sheet remains strong with net assets standing at £32.7m
at 31 March 2022 compared to £30.1m at 31 March 2021. Included within the net
assets balance is cash and cash equivalents of £23.1m (31 March 2021:
£25.6m), with net cash, adjusting for borrowings, totalling £12.5m (31 March
2021: £13.7m).

Since the period end, 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, increasing net cash by £13.5m. The disposed of assets were sold
at net book value and the subsequent lease arrangement will result in
increased depreciation and interest expenses.

In line with prior years, cash was utilised in the first half of the year,
with operating activities utilising £4.0m (H1 2021: £4.3m). The Board
expects that working capital will reduce in H2 2022, resulting in operating
cash flows in H2 2022 being positive. Investing activities consumed £0.4m
including investment in operational plant with the prior year expenditure
relating to the construction of the head office building (H1 2021: £4.1m),
financing activities consuming £2.0m (H1 2021: generation £1.9m) including
the dividend payments of £0.6m and loan and lease liability repayments of
£1.4m.

Risks and Uncertainties

The Group is subject to a number of risks and uncertainties as part of its
activities. The Board regularly reviews and considers these and seeks to
ensure that appropriate processes are in place to identify, monitor and
control these risks. The Directors consider that the principal risks and
uncertainties facing the Group include a potential market downturn, inflation
and regulatory changes imposed by the Building Safety Bill and Future Homes
Standard as outlined on pages 50 to 54 of the Report and Accounts for the year
ended 30 September 2021.

Strategic review

In December 2021, we announced that we would explore strategic options to
crystalise shareholder value in eSmart Networks. This process continues, with
the focus on a minority investment in eSmart Networks by a third party. We
will update the market as to the outcome of this review when finalised but are
delighted that, in the meantime, eSmart Networks continues to play a leading
part in the ongoing electrification of the UK.

Summary and Outlook

During the first half of the financial year the Group's performance reflected
strong underlying trading across all businesses. Looking ahead, although there
are currently signs of significant levels of input cost inflation across the
industry, the Group is committed to taking the necessary mitigating actions to
protect and maintain margins.

Nexus continues to be well positioned to support established and new customers
with their Net Zero plans, which is in line with our strategy of enabling the
UK's energy transition by delivering sustainable infrastructure including
electric vehicle charging, industrial electrification and low carbon heating
sources. TriConnex continues its strong performance, eSmart Networks continues
to scale up and is expected to deliver significant revenue growth and deliver
profits during the second half of the year in line with management
expectations. Tamdown is on track to enhance profitability over the medium
term.

The Group's order book is ahead year-on-year and has grown over the past six
months. This, combined with a strong balance sheet and the strength of our
chosen market sectors, gives us confidence for the second half of the year
with trading performance for the full-year in-line with the Board's
expectations.

Mike Morris

Chief Executive Officer

 Condensed consolidated statement of comprehensive income
 For the six months to 31 March 2022

                                                                                    Unaudited                                     Unaudited                                     Audited
                                                                                    six months to                                 six months to                                 Year ended
                                                                                    31 March                                      31 March                                      30 September
                                                                                    2022                                          2021                                          2021
                                                                              Note  £'000                                         £'000                                         £'000

 Revenue                                                                      2     80,266                                        63,737                                        136,955

 Cost of sales                                                                      (66,226)                                      (52,047)                                      (112,774)

 Gross profit                                                                       14,040                                        11,690                                        24,181

 Administrative expenses                                                            (12,891)                                      (10,199)                                      (20,155)

 Other income                                                                 4                           -                                             -                       133

 Operating profit before exceptional items                                          1,149                                         1,491                                         2,893
 Exceptional items                                                            5                            -                                            -                       1,266

 Operating profit                                                                   1,149                                         1,491                                         4,159

 Finance income                                                                     3                                             1                                                                    -
 Finance expense                                                                    (200)                                         (196)                                         (402)

 Profit before taxation                                                             952                                           1,296                                         3,757

 Taxation                                                                     6     (228)                                         (232)                                         (782)

 Profit and total comprehensive income for the period attributable to equity        724                                           1,064                                         2,975
 holders of the parent

 Earnings per share (p per share)
 Basic                                                                        8     1.59                                          2.35                                          6.56
 Diluted                                                                      8     1.56                                          2.22                                          6.43

 

 Condensed consolidated statement of financial position
 at 31 March 2022

                                                               Unaudited                               Unaudited      Audited
                                                               six months to                           six months to  Year ended
                                                               31 March                                31 March       30 September
                                                               2022                                    2021           2021
                                                         Note  £'000                                   £'000          £'000

 Non-current assets
 Property, plant and equipment                                 19,509                                  16,946         19,584
 Right of use assets                                           2,048                                   2,723          2,415
 Goodwill                                                      2,361                                   2,361          2,361
 Total non-current assets                                      23,918                                  22,030         24,360

 Current assets
 Inventories                                                   3,080                                   2,022          2,495
 Trade and other receivables                                   42,942                                  34,646         38,150
 Contract assets                                               26,820                                  18,776         21,138
 Corporation tax asset                                         263                                     468            84
 Cash and cash equivalents                                     23,098                                  25,624         29,517
 Total current assets                                          96,203                                  81,536         91,384
 Total assets                                                  120,121                                 103,566        115,744

 Current liabilities
 Borrowings                                              9     1,715                                   2,150          2,076
 Trade and other payables                                      34,112                                  29,114         33,894
 Contract liabilities                                          40,423                                  29,107         35,526
 Lease liabilities                                             1,004                                   1,198          1,090
 Total current liabilities                                     86,129                                  61,569         72,586

 Non-current liabilities
 Borrowings                                              9                      8,875                  9,767          9,365
 Lease liabilities                                             1,146                                   1,825          1,499
 Deferred tax liabilities                                      163                                     278            162
 Total non-current liabilities                                 10,184                                  11,870         11,026
 Total liabilities                                             87,438                                  73,439         83,612

 Net assets                                                    32,683                                  30,127         32,132

 Equity attributable to equity holders of the Company
 Share capital                                                 910                                     908            908
 Share premium account                                         9,419                                   9,419          9,419
 Retained earnings                                             22,354                                  19,800         21,805
 Total equity                                                  32,683                                  30,127         32,132

 

 

 Condensed consolidated statement of changes in equity
 For the six months to 31 March 2022

                                                        Share                       Share                           Retained                                    Total
                                                        capital                     premium                         earnings
                                                                                    account
                                                        £'000                       £'000                           £'000                                       £'000

 Equity at 1 October 2020 (Audited)                     905                         9,419                           18,476                                      28,800
 Transactions with owners
 Issue of share capital                                 3                                         -                                     -                       3
 Share-based payments                                                -                            -                 260                                         260
                                                        3                                         -                 260                                         263
 Total comprehensive income
 Profit and total comprehensive income for the period                -                            -                 1,064                                       1,064
                                                                     -                            -                 1,064                                       1,064

 Equity at 31 March 2021 (Unaudited)                    908                         9,419                           19,800                                      30,127
 Transactions with owners
 Share-based payments                                                -                            -                 366                                         366
 Dividends paid                                                      -                            -                 (272)                                       (272)
                                                                     -                            -                 94                                          94
 Total comprehensive income
 Profit and total comprehensive income for the period               -                             -                 1,911                                       1,911
                                                                    -                             -                 1,911                                       1,911

 Equity at 30 September 2021 (Audited)                  908                         9,419                           21,805                                      32,132
 Transactions with owners
 Issue of share capital                                 2                                         -                                    -                        2
 Dividends paid                                                      -                            -                 (637)                                       (637)
 Share-based payments                                                -                            -                 462                                         462
                                                        2                                                           (175)                                       (173)
 Total comprehensive income
 Profit and total comprehensive income for the period                -                            -                 724                                         724
                                                                     -                            -                 724                                         724

 Equity at 31 March 2022 (Unaudited)                    910                         9,419                           22,354                                      32,683

 

 

 Condensed consolidated statement of cash flows
 For the six months to 31 March 2022

                                                                  Unaudited                                     Unaudited                                       Audited
                                                                  six months                                    six months                                      Year ended

                                                                   to                                            to                                             30
                                                                  31 March                                      31 March                                        September
                                                                  2022                                          2021                                            2021
                                                                  £'000                                         £'000                                           £'000

 Cash flow from operating activities
 Profit before tax                                                952                                           1,296                                           3,757

 Adjusted by:
 Profit on disposal of property, plant and equipment - owned      (3)                                           (83)                                            (1,288)
 Share-based payments                                             462                                           260                                             626
 Finance expense (net)                                            196                                           195                                             402
 Loss on disposal of assets measured at FVOCI                                           -                       3                                                                      -
 Depreciation of property, plant and equipment - owned            396                                           295                                             492
 Depreciation of property, plant and equipment - right of use     466                                           473                                             1,110
 Operating profit before working capital charges                  2,469                                         2,439                                           5,099

 Working capital adjustments:
 (Increase)/decrease in trade and other receivables               (4,792)                                       3,019                                           (485)
 Increase in contract assets                                      (5,682)                                       (6,049)                                         (8,411)
 Increase in inventories                                          (585)                                         (838)                                           (1,311)
 Increase/(decrease) in trade and other payables                  175                                           (3,164)                                         1,602
 Increase in contract liabilities                                 4,898                                         526                                             6,945

 Cash (used in)/generated from operating activities               (3,517)                                       (4,067)                                         3,439

 Interest paid                                                    (158)                                         (164)                                           (355)
 Taxation paid                                                    (407)                                         (58)                                            (343)

 Net cash flows used in/generated from operating activities       (4,082)                                       (4,289)                                         2,741

 Cash flow from investing activities
 Purchase of property, plant and equipment - owned                (411)                                         (4,303)                                         (7,681)
 Proceeds from disposal of property, plant and equipment - owned  40                                            217                                             1,902
 Proceeds from the disposal of assets measured at FVOCI                                 -                                             -                         3
 Interest received                                                4                                             1                                                                      -
 Net cash used in investing activities                            (367)                                         (4,085)                                         (5,776)

 Cash flow from financing activities
 Dividend payment                                                 (637)                                                               -                         (272)
 Draw down of term loan                                                                 -                       2,905                                           3,538
 Repayment of term loan                                           (851)                                         (350)                                           (1,459)
 Principal elements of lease repayments                           (484)                                         (675)                                           (1,373)
 Net proceeds from the issue of share capital                     2                                             3                                               3
 Net cash generated from financing activities                     (1,970)                                       1,883                                           437

 Net change in cash and cash equivalents                          (6,419)                                       (6,491)                                         (2,598)

 Cash and cash equivalents at the beginning of the period         29,517                                        32,115                                          32,115

 Cash and cash equivalents at the end of the period               23,098                                        25,624                                          29,517

 

 

 Notes to the condensed consolidated financial statements
 For the six months to 31 March 2022

 1. Basis of preparation and accounting policies

 The interim report of the Group for the six months ended 31 March 2022 has
 been prepared in accordance with UK-adopted IAS 34 "Interim Financial
 Reporting" and the AIM Rules for Companies.

 The interim report does not constitute financial statements as defined in
 Section 434 of the Companies Act 2006 and is neither audited nor reviewed. It
 should be read in conjunction with the Report and Accounts for the year ended
 30 September 2021, which is available on request from the Group's registered
 office, Nexus Park, Avenue East, Skyline 120, Great Notley, Braintree, Essex,
 CM77 7AL, or can be downloaded from the website www.nexus-infrastructure.com.

 The comparative information for the financial year ended 30 September 2021
 does not constitute statutory accounts as defined in section 434 of the
 Companies Act 2006. A copy of the statutory accounts for that year has been
 reported on by the Company's auditor and delivered to the Registrar of
 Companies. The report of the auditor was (i) unqualified, (ii) did not include
 a reference to any matters which the auditor drew attention by the way of
 emphasis without qualifying their report and (iii) did not contain statements
 under section 498 (2) or (3) of the Companies Act 2006.

 The interim report has been prepared on the basis of the accounting policies
 as set out in the Report and Accounts for the year ended 30 September 2021.

 In preparing this interim report, the significant estimates and judgements
 made by the Directors in applying the Group's accounting policies and
 financial risk management objectives were the same as those set out in the
 Report and Accounts for the year ended 30 September 2021.

 Going concern

 In determining the appropriate basis of preparation of the interim report, the
 Directors are required to consider whether the Group can continue in
 operational existence for the foreseeable future. After making enquiries, the
 Directors have a reasonable expectation that the Group has adequate resources
 to continue in operational existence for at least 12 months from the date of
 this report. Accordingly, they continue to adopt the going concern basis in
 preparing the interim report.

 

 

 Notes to the condensed consolidated financial statements (continued)
 For the six months to 31 March 2022

 2. Revenue

 Revenues from external customers are generated from the supply of services
 relating to construction contracts, design, installation and connection of
 utility networks and electric vehicle charging and smart energy
 infrastructure. Revenue is recognised over time in the following operating
 divisions:

                                      Unaudited 31 March 2022
                                      Tamdown                                               TriConnex                             eSmart Networks                                                                 Total
                                      £'000                                                 £'000                                 £'000                                                                           £'000

 Segment revenue                      46,662                                                24,988                                8,616                                                                           80,266
 Inter-segment revenue                                          -                                             -                                                         -                                                      -
 Revenue from external customers      46,662                                                24,988                                8,616                                                                           80,266

 Timing of revenue recognition
 Over time                            46,662                                                24,988                                8,616                                                                           80,266

 Customer type
 Residential                          46,662                                                24,988                                                                       -                                        71,650
 Non-residential                                               -                                            -                     8,616                                                                           8,616
                                      46,662                                                24,988                                8,616                                                                           80,266

                                      Unaudited 31 March 2021
                                      Tamdown                                               TriConnex                             eSmart Networks                                                                 Total
                                      £'000                                                 £'000                                 £'000                                                                           £'000

 Segment revenue                      36,806                                                24,385                                2,797                                                                           63,988
 Inter-segment revenue                (250)                                                                  -                    (1)                                                                             (251)
 Revenue from external customers      36,556                                                24,385                                2,796                                                                           63,737

 Timing of revenue recognition
 Over time                            36,556                                                24,385                                2,796                                                                           63,737

 Customer type
 Residential                          35,464                                                24,385                                                                      -                                         59,849
 Non-residential                      1,092                                                                  -                    2,796                                                                           3,888
                                      36,556                                                24,385                                2,796                                                                           63,737

                                      Audited 30 September 2021
                                      Tamdown                                               TriConnex                             eSmart Networks                                                                 Total
                                      £'000                                                 £'000                                 £'000                                                                           £'000

 Segment revenue                      78,047                                                50,730                                9,009                                                                           137,786
 Inter-segment revenue                (723)                                                                  -                    (108)                                                                           (831)
 Revenue from external customers      77,324                                                50,730                                8,901                                                                           136,955

 Timing of revenue recognition
 Over time                            77,324                                                50,730                                8,901                                                                           136,955

 Customer type
 Residential                          76,233                                                50,730                                                                      -                                         126,963
 Non-residential                      1,091                                                                  -                    8,901                                                                           9,992
                                      77,324                                                50,730                                8,901                                                                           136,955

 

 

 Notes to the condensed consolidated financial statements (continued)
 For the six months to 31 March 2022

 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 IFRS 8: Operating Segments:
 ·      Tamdown;
 ·      TriConnex; and
 ·      eSmart Networks.

 All of the Group's operations are carried out entirely within the UK.

 Segment information about the Group's operations is presented below:

                                                                       Unaudited                                       Unaudited                                   Audited
                                                                       six months                                      six months                                  Year ended

                                                                       to                                              to                                          30
                                                                       31 March                                        31 March                                    September
                                                                       2022                                            2021                                        2021
                                                                       £'000                                           £'000                                       £'000
 Revenue
 Tamdown                                                               46,662                                          36,806                                      78,047
 TriConnex                                                             24,988                                          24,385                                      50,730
 eSmart Networks                                                       8,616                                           2,797                                       9,009
 Inter-company trading                                                                        -                        (251)                                       (831)
 Total revenue                                                         80,266                                          63,737                                      136,955

 Gross profit
 Tamdown                                                               5,158                                           3,732                                       5,994
 TriConnex                                                             7,511                                           7,235                                       15,665
 eSmart Networks                                                       1,371                                           723                                         2,522
 Total gross profit                                                    14,040                                          11,690                                      24,181

 Operating profit/(loss)
 Tamdown                                                               1,066                                           324                                         (642)
 TriConnex                                                             2,423                                           2,364                                       5,302
 eSmart Networks                                                       (1,083)                                         (368)                                       171
 Group administrative expenses                                         (1,257)                                         (829)                                       (1,938)
 Total operating profit before exceptional items                       1,149                                           1,491                                       2,893
 Exceptional items
 Tamdown                                                                                    -                                               -                      1,266
 Total operating profit                                                1,149                                           1,491                                       4,159

 Net finance cost                                                      (197)                                           (195)                                       (402)

 Profit before tax                                                     952                                             1,296                                       3,757

 Taxation                                                              (228)                                           (232)                                       (782)

 Profit and total comprehensive income for the period                  724                                             1,064                                       2,975

 

 Notes to the condensed consolidated financial statements (continued)

 For the six months to 31 March 2022

 3. Segmental analysis (continued)

 Statement of financial position analysis of operating segments:

                  Unaudited 31 March 2022
                  Assets     Liabilities                                   Net Assets
                  £'000      £'000                                         £'000
 Tamdown          42,536     26,606                                        15,930
 TriConnex        29,171     40,408                                        (11,237)
 eSmart Networks  4,166      7,914                                         (3,748)
 Group            21,150     12,510                                        8,640
 Net Cash         23,098                           -                       23,098
                  120,121    87,438                                        32,683

                  Unaudited 31 March 2021
                  Assets     Liabilities                                   Net Assets
                  £'000      £'000                                         £'000
 Tamdown          38,445     22,157                                        16,288
 TriConnex        20,075     34,483                                        (14,408)
 eSmart Networks  1,098      3,023                                         (1,925)
 Group            18,324     13,776                                        4,548
 Net Cash         25,624                           -                       25,624
                  103,566    73,439                                        30,127

                  Audited 30 September 2021
                  Assets     Liabilities                                   Net Assets
                  £'000      £'000                                         £'000
 Tamdown          36,288     26,184                                        10,104
 TriConnex        25,323     37,071                                        (11,748)
 eSmart Networks  3,590      7,310                                         (3,720)
 Group            21,026     13,047                                        7,979
 Net Cash         29,517                           -                       29,517
                  115,744    83,612                                        32,132

 

 4. Other Income

                                               Unaudited                                               Unaudited                                             Audited
                                               six months to                                           six months to                                         Year ended
                                               31 March                                                31 March                                              30 September
                                               2022                                                    2021                                                  2021
                                               £'000                                                   £'000                                                 £'000

                                                                          -                                                      -                           133

 Research and development expenditure credit
                                                                          -                                                      -                           133

 

 Notes to the condensed consolidated financial statements (continued)

 For the six months to 31 March 2022

 5. Exceptional items

 

                                     Unaudited                                             Unaudited                                             Audited
                                     six months to                                         six months to                                         Year ended
                                     31 March                                              31 March                                              30 September
                                     2022                                                  2021                                                  2021
                                     £'000                                                 £'000                                                 £'000

                                                               -                                                   -                             1,266

 Profit on the sale of fixed asset
                                                               -                                                     -                           1,266

 Exceptional items in the prior year related to the disposal of Tamdown's
 former office building.

 

 6. Taxation

 Taxation is recognised based on management's estimate of the weighted average
 effective annual tax rate expected for the full financial year. The estimated
 effective annual tax rate applied to the pre-tax income for the six months
 ended 31 March 2022 is 23.9%.

 7. Dividends

                                                                               Unaudited                               Unaudited                                                            Audited
                                                                               six months to                           six months to                                                        Year ended 30
                                                                               31 March 2022                           31 March 2021                                                        September 2021
                                                                               £'000                                   £'000                                                                £'000

 Amounts recognised as distributions to equity holders:

                                                                                                  -                                                                                         272

                                                                                                                     -
 Interim dividend for the year ended 30 September 2021 of 0.6p per share
                                                                               637                                                          -                                                                      -

 Final dividend for the year ended 30 September 2021 of 1.4p per share

                                                                               637                                                           -                                              272

 

 

 Notes to the condensed consolidated financial statements
 For the six months to 31 March 2022 (continued)

 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 period.

 Diluted earnings per share is calculated by adjusting the weighted number of
 shares in issue for the period to assume conversion of all dilutive potential
 shares.

 The calculation of the basic and diluted earnings per share is based on the
 following data:

                                                                             Unaudited      Unaudited      Audited
                                                                             six months to  six months to  Year ended
                                                                             31 March       31 March       30 September
                                                                             2022           2021           2021
                                                                             £'000          £'000          £'000

                                                                             724            1,064          2,975

 Profit for the period attributable to equity shareholders

                                                                             45,435,093     45,292,292     45,346,677

 Weighted average number of shares in issue for the year

 Effect of dilutive potential ordinary shares:
                                                                             1,024,980      2,692,034      926,345

 Share options

                                                                             46,460,073     47,984,326     46,273,022

 Weighted average number of shares for the purpose of diluted earnings per
 share

                                                                             1.59           2.35           6.56

 Basic earnings (p per share)

                                                                             1.56           2.22           6.43

 Diluted earnings (p per share)

 

 9. Borrowings

                Unaudited                                                   Unaudited      Audited
                six months to                                               six months to  Year ended
                31 March                                                    31 March       30 September
                2022                                                        2021           2021
                £'000                                                       £'000          £'000

                1,715                                                       2,150          2,076

 Current

                                           8,875                            9,767          9,365

 Non-current

 The Company entered into a £12.0m loan facility with Allied Irish Bank in
 December 2015. The loan is secured over the whole of the Company's
 undertakings and assets and by way of cross guarantee from other Group
 undertakings. The loan carries interest at LIBOR plus 2.25% and is repayable
 in instalments of £1.4m per annum with a termination payment in October 2022.

 The Company entered into a £10.0m ten-year facility and £5.0m five-year
 revolving credit facility with an accordion facility extension of £5.0m with
 Allied Irish Bank in August 2019. The loan is secured over the whole of the
 Company's undertakings and assets and by way of cross guarantee from other
 Group undertakings. The loan carries interest at LIBOR plus up to 2.20% and is
 repayable in instalments of £750,000 per annum.

 

 10. Related party transactions

 There have been no significant changes in the nature and amount of related
 party transactions since the last Report and Accounts as at, and for the year
 ended 30 September 2021.

 Transactions between the Company and its subsidiaries, which are related
 parties, have been eliminated in full on consolidation.

 

 

 Notes to the condensed consolidated financial statements

 For the six months to 31 March 2022 (continued)

 11. Events after the reporting period

 On 1 April 2022, the sale and leaseback transaction of Nexus Park, the Group
 head office building, was completed with Dorsel U.K. 4 Limited. The disposal
 included the 4.7 acre site and the three story, 35,000 sq ft head office
 building that all constitutes Nexus Park. For accounting purposes, the
 building has been derecognised, increasing the Group's cash and cash
 equivalents balance by £2.7m and eliminating the Group's borrowings,
 increasing net cash by £13.5m.

 

 Statement of Directors' responsibilities

 The Directors confirm that, to the best of our knowledge:

 ·      the condensed set of financial statements has been prepared in
 accordance with UK-adopted IAS 34 " Interim Financial Reporting"; and
 ·      the condensed set of financial statements has been prepared in
 accordance with the rules of the London Stock Exchange for companies trading
 securities on AIM.

 Signed on 7 June 2022 on behalf of the Board
                                                                       Alan Martin

 Mike Morris
 Chief Executive Officer                                               Chief Financial Officer

 

 

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