Since taking back control from John Homer, chairman and acting chief executive Robert Moyle has ordered a review of major contracts. This review has resulted in the board now expecting the company to report a pre-tax loss of between £13.5m and £15.0m for the year. Mr Moyle has also instigated an external investigation “to verify the extent of the prior year adjustments included within this loss”.
The contracts involved are mostly in the water sector. The additional costs for 2020 have largely already been incurred and the situation is expected to have limited impact on the group's cash position, the board said.
The board has also undertaken a review of its financial structure following a change in payment terms on the new framework agreements. It has appointed debt specialist Arrowpoint to advise on a medium-term debt package to sit alongside its existing overdraft facility.
NMCN is also refinancing a property developments to release £4m of cash for the business.
Acting chairman Ian Elliott said: “Following the announcement of the board changes and the subsequent internal review undertaken, a number of issues have come to light which are concerning and are being addressed. Decisive action is being taken by the board to limit the impact on the business and to ensure that the good relationships which the group has enjoyed with its customers for many years are maintained.
“The combination of the coronavirus impact and the company's internal issues is challenging, but the board remains confident of the market opportunity and the Group's ability to successfully address it."