Nexus Infrastructure operating loss widens on housing downturn

Nexus Infrastructure reported continuing revenue of £88.7m in its preliminary results on Thursday, down from £98.4m in the prior year, attributed to broader economic challenges and a slowdown in housebuilding activity.

The AIM-traded firm recorded an operating loss of £8.4m for the 12 months ended 30 September, including exceptional items of £0.6m, widening from a loss of £0.3m in 2022.

That performance was put down to Ilke Homes entering administration.

Basic earnings per share amounted to 239p, a significant change from 6p a year earlier, largely due to the capital return following the sale of subsidiaries TriConnex and eSmart Networks.

Despite the decline in the order book, which closed at £46m, down from £95.5m, Nexus said it maintained a robust balance sheet with cash reserves of £14.6m.

A final dividend of 2p was declared, resulting in a full-year dividend of 3p, while net assets remained strong at £33m following the sale of subsidiaries.

Strategically, Nexus disposed of TriConnex and eSmart Networks in the period, realising £60.5m and ensuring sufficient capitalisation for its core subsidiary Tamdown.

The company completed a restructuring to align with new requirements and implemented cost controls while sustaining customer engagement.

Looking at the 2024 financial year and beyond, Nexus anticipated positive market growth driven by the UK's persistent housing undersupply.

It said market sentiment suggested a recovery within the next 18 months.

“2023 was a year of change for Nexus, following the successful sale of two subsidiaries and the return of £60.5m to shareholders,” said chief executive officer Charles Sweeney.

“During the second half of the year, we restructured the Group and its support framework, introduced improvements to processes and reduced costs in line with our strategy.

“With a strong balance sheet, a loyal customer base and a committed team, we are well placed for the future.”

Sweeney said the group's main trading subsidiary Tamdown provides a range of civil engineering solutions to the UK housebuilding sector.

“Market conditions significantly deteriorated in the second half, as the major developers made cuts to their budgets and postponed new project activities.

“Ilke Homes entering into administration was a high-profile example of the turbulence in the sector and Tamdown was significantly impacted by this failure.

“Decisive actions were taken to right-size the business, in order to protect and improve margins and to ensure we are well-positioned to return to a growth trajectory when the housebuilding market rebounds.”

The company’s strong balance sheet was underpinning its stability, Charles Sweeney added.

“The 2024 financial year has started in line with the board's expectations and the order book has grown by 24%, from the year end position, by the end of January 2024.

“The horizon presents several new opportunities, a testament to the strength of our offering, providing confidence in the long-term success of the Nexus Group.”

At 1034 GMT, Nexus Infrastructure shares were down 1.33% at 74p.

Reporting by Josh White for Sharecast.com.