Acquisition of LET and LCS

nmcn PLC

7th October 2019

nmcn PLC

("nmcn" or the "Company" or the "Group")

Acquisition of Lintott Environmental Technologies and Lintott Control Systems Limited

nmcn PLC is delighted to announce that it has entered into a sale and purchase agreement ("SPA") to purchase the entire issued share capital of Lintott Environmental Technologies Limited ("LET") which has a wholly owned subsidiary called Lintott Control Systems Limited ("LCS") (the "Acquisition") for a total consideration of up to £3,760,978.50 subject to a three year earn out.

LCS is a Process Solutions Provider. The company specialises in the design, manufacture & after-care of digitally integrated factory-built, Water & Wastewater Treatment Systems, Process Software / Systems Integration.

Key terms of the SPA

− Initial consideration of £1 in cash on completion;

− Earn out payment structured in the following way:

o Achievement of profit targets (based on aggregate consolidated profit before tax ("PBT") for LET and LCS for their financial years ending 31 December 2019, 2020 and 2021):

▪ For an aggregate PBT amount of less than £1m achieved, the earn out consideration will be zero

▪ For an aggregate PBT amount between £1m and less than £3m, the earn out consideration will be actual PBT amount achieved

▪ For an aggregate PBT amount of £3m or more, the earn out consideration will be capped at £3m

▪ Preference share payment to the former holders of redeemable preference shares

o LCS totalling £85,340, for the payment of the preference shares

▪ Payable on the latter of 1 January 2022 or five business days after the Buyer Loan has been repaid in full.

▪ A Buyer Loan of circa £984k is being advanced on completion of the Acquisition - the use of these loans will be used by LET and LCS to repay certain debts due to CEMA Limited (a former shareholder in LCS) and to contribute towards the cost of redeeming £322,160 preference shares in LCS held by The Park Portfolio Ltd and Monkwell Ltd Pension Scheme.

o All consideration is to be satisfied in cash. The maximum consideration payable is up to £3,760,978.50.

▪ A payment of up to £675,637.50 shall be subject to and contingent on payment of unpaid invoices issued by LCS to certain third parties.

▪ The buyer loan is to be repaid in full before payment of any earn-out is made.

For the year ended 31 December 2018, LCS achieved a turnover of £8,536,965 and a loss before tax of £998,140. Its financial position in FY2018 includes £98,168 of non-current assets and £4,030,194 of current assets. LCS is a subsidiary of LET, LET had non-current assets of £1,488,243 in FY 2018. David Owen and Jamie Thums will remain Directors of both acquired businesses, with Mark Davy assuming the role of Operational Lead for LCS.

nmcn Chief Executive Officer, John Homer, commented: 

The strong cash position we've been able to build in recent years has enabled us to take the next step in broadening our offering to the water sector.

The acquisition of Lintott Environmental Technologies & Lintott Control Systems is an extremely exciting opportunity and a commercially viable deal. This acquisition offers an excellent opportunity for nmcn to strengthen and expand our already established offering to the UK Water Industry and potentially other markets in the future in providing Off-Site Build, Chemical Dosing Systems, Motor Control Centres, and Control Systems.

The acquisition complements our full asset lifecycle management offering to the water sector in offsite manufacture, production and maintenance of assets. We look forward to progressing our product offering combining our own experience with the newly acquired colleagues, skills and expertise to reinforce our market leading position in this sector.

David Owen, Managing Director at Lintott Control Systems said: "We were attracted by the market opportunity and business development opportunities presented by joining nmcn. We look forward to supporting the wider business in achieving its growth objectives and in delivering exceptional customer service."

"The Lintott facility will now become part of the nmcn PLC's national network of offices with the full team joining nmcn."

For further information please contact:

nmcn PLC - 01623 515 008

John Homer, Chief Executive

Dan Taylor, Chief Financial Officer

About nmcn

nmcn Plc (formerly known as North Midland Construction Plc) is a leading engineering and construction company in the UK. Its talented 1800-strong team offers multi-sector engineering and construction skills, technical innovation, design and specialist fabrication.

The company delivers major built environment and water industry projects across the UK - from buildings and highways to large-scale water networks and treatment plants. With its history dating back to 1946, nmcn now has 12 UK offices and four off-site manufacturing facilities.

www.nmcn.com

This disclosure is made in accordance with Article 19 of the EU Market Abuse Regulation 596/2014.