TIDMNTBR
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 GBP27.8m (2018: GBP28.6m)
-- Operating profit of GBP1.3m (2018: GBP1.7m)
-- Adjusted operating profit* of GBP1.4m (2018: GBP1.7m)
-- 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 GBP0.7m at 30 September 2019 (31 March 2019:
net cash GBP2.0m; 30 September 2018: net bank debt GBP0.3m)
* 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:
+44 (0) 166
Northern Bear plc 182 0369
Steve Roberts - Executive Chairman +44 (0) 166
Tom Hayes - Finance Director 182 0369
Strand Hanson Limited (Nominated Adviser
and Broker)
James Harris
James Spinney +44 (0) 20 7409
James Bellman 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 GBP1.4m (2018: GBP1.7m) 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 GBP27.8m (2018: GBP28.6m) 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 GBP4.1m (2018: GBP3.9m) 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 GBP1.2m
(2018: GBP1.6m) and basic earnings per share was 5.4p (2018:
6.9p).
Cash flow
Net bank debt at 30 September 2019 was GBP0.7m (30 September
2018: GBP0.3m, 31 March 2019: GBP2.0m 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
GBP0.7m (2018: GBP0.7m), 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 GBP1.5m 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 GBP2.0m net cash, the lowest net bank
debt position during the period was GBP2.6m, and the average was
GBP1.1m 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 GBP2.0m (30
September 2018: GBP2.0m, 31 March 2019: GBP1.0m) 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 30 September
2019 2018 31 March 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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
Capital
Share redemption Share Merger Retained Total
capital reserve premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 30 September 31 March
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 30 September 31 March
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 GBP18,000 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
GBP902,000 of right of use assets and GBP920,000 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 GBP152,000 depreciation of right
of use assets and GBP20,000 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 6 months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
Unaudited Unaudited Audited
Profit for the period (GBP'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 6 months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
Unaudited Unaudited Audited
Profit for the period (GBP'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 6 months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
Unaudited Unaudited Audited
Profit for the period (GBP'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
(GBP'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 6 months
ended ended Year ended
30 September 30 September 31 March
2019 2018 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 rns@lseg.com or visit www.rns.com.
END
IR CKBDQOBDDNDB
(END) Dow Jones Newswires
November 25, 2019 02:00 ET (07:00 GMT)
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