Information  X 
Enter a valid email address

Northern Bear Plc (NTBR)

  Print      Mail a friend       Annual reports

Monday 25 November, 2019

Northern Bear Plc

Interim Results

RNS Number : 4383U
Northern Bear Plc
25 November 2019
 

25 November 2019

Northern Bear plc

("Northern Bear" or the "Company")

 

Interim results for the six month period ended 30 September 2019

 

The board of directors of Northern Bear (the "Board") is pleased to announce the unaudited interim results for the Company and its subsidiaries (together the "Group") for the six months to 30 September 2019. 

 

Financial Summary

·      Revenue of £27.8m (2018: £28.6m)

·      Operating profit of £1.3m (2018: £1.7m)

·      Adjusted operating profit* of £1.4m (2018: £1.7m)

·      Basic earnings per share of 5.4p (2018: 6.9p)

·      Adjusted basic earnings per share* of 5.6p (2018: 7.4p)

·      Net bank debt of £0.7m at 30 September 2019 (31 March 2019: net cash £2.0m; 30 September 2018: net bank debt £0.3m)

* stated prior to the impact of amortisation and other acquisition related adjustments

Steve Roberts, Executive Chairman of Northern Bear, commented:

 

"Following a frustratingly slow first financial quarter to 30 June, resulting from contract delays, we have experienced a much stronger second quarter to 30 September, with excellent results across the Group having been achieved since July.

 

"The Group continues to hold a significant order book, and we consider the outlook for the second half of the current financial year to be positive.  Accordingly, I am hopeful of reporting another strong set of full year results."

 

 

For further information please contact:

 

Northern Bear plc

Steve Roberts - Executive Chairman

Tom Hayes - Finance Director

 

+44 (0) 166 182 0369

+44 (0) 166 182 0369

 

Strand Hanson Limited (Nominated Adviser and Broker)

James Harris

James Spinney

James Bellman

+44 (0) 20 7409 3494

 

 

 

 

 

 

Chairman's statement

 

Introduction

 

I am pleased to report the unaudited interim results for the six months ended 30 September 2019 (the "Period") for Northern Bear plc (the "Company" and, together with its subsidiaries, the "Group"). 

 

In our preliminary results for the year to 31 March 2019 ("FY19"), announced in July 2019, we stated that the Group had experienced a slow first financial quarter ended 30 June 2019 ("Q1"), due to a number of contract delays arising from matters which were beyond our control.  We also stated that, with such contracts having commenced, trading was expected to be stronger in the second quarter. 

 

We subsequently issued a trading update in October 2019 to confirm that trading in the second quarter ended 30 September 2019 ("Q2") was much stronger than Q1, and ahead of the corresponding period last year, with excellent results across the Group since July. 

 

Further to the October trading update, I am pleased to confirm the Group's results for the Period with adjusted operating profit (stated prior to the impact of amortisation and other acquisition related adjustments) of £1.4m (2018: £1.7m) and adjusted basic earnings per share of 5.6p (2019: 7.4p). 

 

Whilst we are greatly encouraged by performance in Q2, the slower trading in Q1 means that reported results for the Period are not as strong as those for the six months to 30 September 2018 (the "Prior Period").  However, when we reported the interim results for the Prior Period, we stated that these results were considered exceptional and this should be taken into account when comparing the results for the Period. 

 

Trading

 

There were some excellent results for our Group companies over the Period.  Our Roofing division produced some outstanding results, despite the impact of the contract delays in Q1 referred to above, after very strong trading in Q2. 

 

Revenue for the Period was £27.8m (2018: £28.6m) and, through continued careful contract selection and execution, gross margins were in line with Prior Period at 19.5% (2018: 19.7%). 

 

Administrative expenses increased to £4.1m (2018: £3.9m) due primarily to non-payroll costs including fleet expenses (which vary depending on contract locations) and investment in training and compliance costs. 

 

Overall profit before income tax for the Period was £1.2m (2018: £1.6m) and basic earnings per share was 5.4p (2018: 6.9p). 

 

Cash flow

 

Net bank debt at 30 September 2019 was £0.7m (30 September 2018: £0.3m, 31 March 2019: £2.0m net cash). 

 

We had stated in the March 2019 results that the cash position at 31 March 2019 reflected some favourable working capital swings which to an extent would be expected to reverse post year end.  This was the case, and the current customer and contract mix has an increased working capital requirement which reduced operating cash flow in the Period.  The cash position was also impacted by the payment of the FY19 final ordinary and special dividends totalling £0.7m (2018: £0.7m), and annual bonus payments related to FY19 but settled in the Period which contributed to the movement in trade and other payables. 

 

As we have emphasised previously, the net bank debt position represents a snapshot at a particular point in time and our net cash/bank debt position can move by up to £1.5m in a matter of days given the nature, size and variety of contracts that we work on and the related working capital balances.  The highest bank position in the Period was £2.0m net cash, the lowest net bank debt position during the period was £2.6m, and the average was £1.1m net bank debt.

 

Our revolving credit facility and overdraft with Yorkshire Bank are committed to 31 May 2020.  We have already commenced renewal discussions and are confident that facilities will be renewed in the New Year.  Pending this renewal, we have presented the amount drawn on the revolving facility at 30 September 2019 of £2.0m (30 September 2018: £2.0m, 31 March 2019: £1.0m) in loans and borrowings in current liabilities, as it falls due within one year. 

 

Balance sheet

 

Details of new accounting standards which are being applied for the Group's current financial year are set out in Note 2 to this document.  The principal change in the Period is the adoption of IFRS 16 "Leases", which requires all leases to be included on the balance sheet with recognition of right of use assets and corresponding liabilities for future lease payment obligations. 

 

The Group's leases previously reported as operating leases relate to land and buildings and motor vehicles.  The related balances have been presented separately on the face of the consolidated balance sheet in order to show the impact of IFRS 16 adoption.  We have not restated comparative information for prior periods.  

 

Dividend

 

Our stated policy is to pay only a final dividend, at the Board's discretion, and to assess future dividend levels in line with the Group's relative performance, after taking into account the Group's available cash, working capital requirements, corporate opportunities, debt obligations, and the macro economic environment at the relevant time.

 

Provided that the strong trading performance and operating environment continues for the remainder of the financial year, it is the current intention of the Board to continue with our dividend policy.  However, we do not intend to pay further special dividends unless profitability increases from FY19 levels. 

 

Strategy

 

We continue to seek acquisitions of established specialist building services businesses, either in the same or complementary sectors to our current operations.  Our main criteria are that a business is well-established in its sector, has a consistent track record of profitability and cash generation and has a strong management team who are committed to remaining with the business.  Any potential acquisition would, in addition, need to be earnings accretive and provide an acceptable return on investment.

 

Outlook

 

The Group continues to hold a high level of committed orders although, as experienced in Q1, we have limited short term visibility as to when these orders will be realised.  The strong momentum in Q2 has, to date, continued into the second half of the financial year and we consider the outlook for the current financial year to remain positive, despite continued uncertainty in the macro-economic environment, and are hopeful of reporting another strong set of full year results. 

 

Conclusion

 

I am pleased to be reporting what we consider to be a strong set of results for the Period.  As always, our loyal, dedicated and skilled workforce is a key part of our success and we make every effort to support them through continued training and health and safety compliance. I would once more like to thank all of our employees for their hard work and contribution. 

 

 

Steve Roberts

Executive Chairman

25 November 2019


Consolidated statement of comprehensive income

for the six month period ended 30 September 2019

 

 


6 months ended


6 months ended


Year ended


30 September 2019


30 September 2018


31 March 2019


Unaudited


Unaudited


Audited


£'000


£'000


£'000







Revenue

27,849


28,576


56,575

Cost of sales

(22,431)


(22,942)


(44,659)

Gross profit

5,418


5,634


11,916

Other operating income

12


12


24

Administrative expenses

(4,059)


(3,903)


(8,725)

Operating profit (before amortisation and other adjustments)

1,371


1,743


3,215

Deferred consideration adjustments

36


23


265

Amortisation of intangible assets arising on acquisitions

(77)


(76)


(152)

Operating profit

1,330


1,690


3,328

Finance costs

(97)


(103)


(197)

Profit before income tax

1,233


1,587


3,131

Income tax expense

(235)


(302)


(540)

Profit for the period

998


1,285


2,591







Total comprehensive income attributable to equity holders of the parent

998


1,285

2,591







Earnings per share from continuing operations






Basic earnings per share

5.4p


6.9p


14.0p

Diluted earnings per share

5.4p


6.9p


13.9p

 

 

 

 

 

 

 

Consolidated statement of changes in equity

for the six month period ended 30 September 2019

 

 

 



Share capital

Capital redemption reserve

Share premium

Merger reserve

Retained earnings

Total equity



£'000

£'000

£'000

£'000

£'000

£'000









At 1 April 2018

189

6

5,169

9,605

6,409

21,378

Total comprehensive income for the period







Profit for the period

-

-

-

-

1,285

1,285








Transactions with owners, recorded directly in equity







Exercise of share options

-

-

-

-

14

14

Equity dividends paid

-

-

-

-

(740)

(740)

At 30 September 2018

189

6

5,169

9,605

6,968

21,937









At 1 April 2018

189

6

5,159

9,605

6,409

21,378

Total comprehensive income for the year







Profit for the year

-

-

-

-

2,591

2,591








Transactions with owners, recorded directly in equity







Exercise of share options

-

-

-

-

17

17

Equity dividends paid

-

-

-

-

(740)

(740)

At 31 March 2019

189

6

5,169

9,605

8,277

23,246









At 1 April 2019

189

6

5,169

9,605

8,277

23,246

Total comprehensive income for the period







Profit for the period

-

-

-

-

998

998








Transactions with owners, recorded directly in equity







Equity dividends paid

-

-

-

-

(741)

(741)








Other items







Cumulative effect of IFRS16 initial application

-

-

-

-

(18)

(18)

At 30 September 2019

189

6

5,169

9,605

8,516

23,485









 

 

 

 

 

 

Consolidated balance sheet

at 30 September 2019

 


30 September 2019


30 September 2018


31 March

2019


Unaudited


Unaudited


Audited


£'000


£'000


£'000

Assets






Property, plant and equipment

3,145


3,122


3,033

Right of use asset

1,084


-


-

Intangible assets

20,399


20,552


20,476

Trade and other receivables

1,025


1,420


1,057

Total non-current assets

25,653


25,094


24,566







Inventories

805


724


652

Trade and other receivables

9,906


9,224


8,450

Prepayments

606


536


259

Cash and cash equivalents

1,300


1,746


3,038

Total current assets

12,617


12,230


12,399

Total assets

38,270


37,324


36,965







Equity






Share capital

189


189


189

Capital redemption reserve

6


6


6

Share premium

5,169


5,169


5,169

Merger reserve

9,605


9,605


9,605

Retained earnings

8,516


6,968


8,277

Total equity attributable to equity holders of the Company

23,485


21,937


23,246







Liabilities






Loans and borrowings

230


2,173


1,236

Deferred consideration

-


206


217

Lease liabilities

814


-


-

Deferred tax liabilities

295


316


295

Total non-current liabilities

1,339


2,695


1,748







Loans and borrowings

2,236


194


232

Deferred consideration

229


417


97

Trade and other payables

10,075


11,181


11,152

Lease liabilities

292


-


-

Current tax payable

614


900


490

Total current liabilities

13,446


12,692


11,971







Total liabilities

14,785


15,387


13,719

Total equity and liabilities

38,270


37,324


36,965

 

 

 

 

 

 

 

Consolidated statement of cash flows

for the six month period ended 30 September 2019


6 months ended


6 months ended


Year ended


30 September 2019


30 September 2018


31 March 2019


Unaudited


Unaudited


Audited


£'000


£'000


£'000

Cash flows from operating activities






Operating profit for the period

1,330


1,690


3,328







Adjustments for:






Depreciation of property, plant and equipment

265


264


538

Depreciation of lease asset

152


-


-

Amortisation

77


76


152

Loss/(profit) on sale of property, plant and equipment

5


14


17

Deferred consideration adjustments

(36)


(23)


(265)


1,793


2,021


3,770

Change in inventories

(153)


228


163

Change in trade and other receivables

(1,424)


(811)


326

Change in prepayments

(347)


(271)


6

Change in trade and other payables

(1,077)


846


819

Cash generated from operations

(1,208)


2,013


5,084

Interest paid

(82)


(65)


(127)

Tax paid

(111)


-


(669)

Net cash flow from operating activities

(1,401)


1,948


4,288







Cash flows from investing activities






Proceeds from sale of property, plant and equipment

141


119


518

Acquisition of property, plant and equipment

(405)


(333)


(581)

Acquisition of subsidiary (net of cash acquired)

(64)


(327)


(426)

Net cash from investing activities

(328)


(541)


(489)







Cash flows from financing activities






Issue / (repayment) of borrowings

1,007


(498)


(1,498)

Repayment of finance lease liabilities

(127)


(168)


(271)

Repayment of lease liabilities

(148)


-


-

Proceeds from the exercise of share options

-


14


17

Equity dividends paid

(741)


(740)


(740)

Net cash from financing activities

(9)


(1,392)


(2,492)







Net (decrease)/increase in cash and cash equivalents

(1,738)


15


1,307

Cash and cash equivalents at start of period

3,038


1,731


1,731

Cash and cash equivalents at end of period

1,300


1,746


3,038

 

 

Notes

1.   Basis of preparation

These interim consolidated financial statements have been prepared using accounting policies based on International Financial Reporting Standards (IFRS and IFRIC Interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 March 2019 Annual Report and Financial Statements. The financial information for the half years ended 30 September 2019 and 30 September 2018 does not constitute statutory accounts within the meaning of Section 434 (3) of the Companies Act 2006 and both periods are unaudited.  The financial information has not been prepared (and is not required to be prepared) in accordance with IAS 34 Interim Financial Reporting.

The annual consolidated financial statements of Northern Bear plc (the "Company", or, together with its subsidiaries, the "Group") are prepared in accordance with IFRS as adopted by the European Union. The comparative financial information for the year ended 31 March 2019 included within this report does not constitute the full statutory Annual Report for that period. The statutory Annual Report and Financial Statements for the year ended 31 March 2019 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 March 2019 was i) unqualified, ii) did not draw attention to any matters by way of emphasis, and iii) did not contain a statement under 498(2) - (3) of the Companies Act 2006.

2.    Accounting policies

The Group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2019 annual financial statements, as set out in Notes 2 and 3 of that document, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 April 2019, and will be adopted in the 2020 financial statements. The accounting policies applied are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 31 March 2020 or are expected to be adopted and effective at 31 March 2020.

 

The Group has adopted IFRS 16 'Leases' from 1 April 2019.  IFRS 16 requires lessees to record all leases on the balance sheet by recognising right of use assets relating to leased assets, and lease liabilities representing future lease payment obligations.  The Group's leases previously recognised as operating leases under IAS 17 'Leases' include land and buildings and motor vehicles.  Right of use assets and lease liabilities in relation to these leases have both been presented separately on the face of the consolidated balance sheet in these interim financial statements. 

 

The Group has adopted IFRS 16 using the modified retrospective approach under which the cumulative effect of initial application is recognised as an opening reserves adjustment of £18,000 at 1 April 2019.  The Group's comparative information for prior periods has not been restated under this approach. 

 

Under IFRS 16 the Group now recognises a right of use asset and a lease liability at the lease commencement date. 

 

The lease liability is measured initially at the present value of future lease payments from the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate under its current bank facilities, with appropriate adjustments if required for residual value guarantees, the exercise price of purchase options, and termination penalties.  The Group has predominantly used the incremental borrowing rate as the discount rate for this purpose. 

 

The right of use asset is measured based on the initial lease liability with adjustments as required for initial direct costs, the costs of removal and restoring, payments made at or prior to commencement, and lease incentives received. 

 

Following initial adoption of IFRS 16 the Group recognised £902,000 of right of use assets and £920,000 of lease liabilities, both in relation to leases formerly classed as operating leases under IAS 17, on the consolidated balance sheet at 1 April 2019.  The Group recognised £152,000 depreciation of right of use assets and £20,000 of interest payments in finance costs in the consolidated statement of comprehensive income during the period. 

 

Other new and amended standards and interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to have a material impact on the Group's financial statements.

 

3.    Taxation

The taxation charge for the six months ended 30 September 2019 is calculated by applying the Directors' best estimate of the annual effective tax rate to the profit for the period.

 

4.    Earnings per share

 

Basic earnings per share is the profit or loss for the period divided by the weighted average number of ordinary shares outstanding, excluding those held in treasury, calculated as follows:

 






6 months ended


6 months ended


Year ended






30 September 2019


30 September 2018


31 March 2019






Unaudited


Unaudited


Audited











Profit for the period (£'000)

998


1,285


2,591

 

Weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)

18,519


18,510


18,515

Basic earnings per share


5.4p


6.9p


14.0p

 

 

The calculation of diluted earnings per share is the profit or loss for the period divided by the weighted average number of ordinary shares outstanding, after adjustment for the effects of all potential dilutive ordinary shares, excluding those in treasury, calculated as follows:

 



6 months ended


6 months ended


Year ended



30 September 2019


30 September 2018


31 March 2019



Unaudited


Unaudited


Audited








Profit for the period (£'000)

998


1,285


2,591

 

Weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)


18,519


18,510


18,515

Effect of potential dilutive ordinary shares ('000)


55


64


63

Diluted weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)


18,574


18,574


18,578








Diluted earnings per share


5.4p


6.9p


13.9p

 

 

The following additional earnings per share figures are presented as the directors believe they provide a better understanding of the trading performance of the Group.

 

Adjusted basic and diluted earnings per share is the profit for the period, adjusted for acquisition related costs, divided by the weighted average number of ordinary shares outstanding as presented above.

 

Adjusted earnings per share is calculated as follows:

 






6 months ended


6 months ended


Year ended






30 September 2019


30 September 2018


31 March 2019






Unaudited


Unaudited


Audited











Profit for the period (£'000)

998


1,285


2,591

Deferred consideration adjustments

(36)


(23)


(265)

Amortisation of intangible assets arising on acquisitions

77


76


152

Unwinding of discount on deferred consideration liabilities

21


38


70

Corporation tax effect of above items

(18)


-


(43)

Adjusted profit for the period (£'000)

1,042


1,376


2,505

 

Weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)

18,519


18,510


18,515

Adjusted basic earnings per share


5.6p


7.4p


13.5p

Adjusted diluted earnings per share


5.6p


7.4p


13.5p

 

 

4.    Earnings per share (continued)

 

On 25 July 2017 the Group acquired the entire issued share capital of H Peel & Sons (Holdings) Limited and its subsidiary H. Peel & Sons Limited. 

 

The consideration was satisfied through a combination of cash, equity instruments, and deferred and contingent consideration.  The amount recognised on the Group's balance sheet for deferred and contingent consideration at the date of acquisition was based on the discounted present value of estimated future payments to be made. 

 

Deferred consideration adjustments for the above periods relate to the difference between the amount provided for deferred and contingent consideration due in the period and the actual amount paid. 

 

As deferred and contingent consideration is presented at discounted present value the unwinding of this discount is recorded in finance costs in the income statement. 

 

 

5.    Finance costs

 

 






6 months ended


6 months ended


Year ended






30 September 2019


30 September 2018


31 March 2019






Unaudited


Unaudited


Audited











On bank loans and overdrafts

44


60


106

Finance charges payable in respect of hire purchase contracts

12


5


21

Finance charges on lease liabilities

20


-


-

Unwinding of discount on deferred consideration liabilities

21


38


70

Total finance costs

97


103


197

 

 

6.    Principal risks and uncertainties

 

The directors consider that the principal risks and uncertainties which could have a material impact on the Group's performance in the remaining six months of the financial year remain the same as those stated on page 9 to 12, and 64 to 67 of our Annual Report and Financial Statements for the year ended 31 March 2019, which are available on the Company's website, www.northernbearplc.com.

 

 

7.    Half year report

 

The condensed financial statements were approved by the Board of Directors on 25 November 2019 and are available on the Company's website, www.northernbearplc.com.  Copies will be sent to shareholders and are available on application to the Company's registered office.

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
IR CKBDQOBDDNDB

a d v e r t i s e m e n t