TIDMNTBR
RNS Number : 6665U
Northern Bear Plc
16 July 2018
16 July 2018
Northern Bear PLC
("Northern Bear" or the "Company")
Preliminary results for the year ended 31 March 2018
The board of directors of Northern Bear (the "Board") is pleased
to announce its unaudited preliminary results for the year ended 31
March 2018.
Highlights
-- Turnover from continuing operations of GBP53.6m (2017: GBP45.6m)
-- Adjusted operating profit* from continuing operations of GBP3.1m (2017: GBP2.5m)
-- Operating profit from continuing operations of GBP2.8m (2017: GBP2.5m)
-- Adjusted basic earnings per share* from continuing operations of 12.5p (2017: 11.3p)
-- Basic earnings per share from continuing operations of 10.9p (2017: 11.3p)
-- Acquisition of H Peel & Sons (Holdings) Limited in July 2017
-- Net bank debt position at year end of GBP0.8m (2017: net cash of GBP0.6m)
-- Increase in proposed final dividend to 3.0p per share (2017: 2.5p)
-- Proposed special dividend of 1.0p per share (2017: 1.5p per share)
* stated prior to the impact of amortisation and transaction
costs in relation to the acquisition of H Peel & Sons
(Holdings) Limited
Steve Roberts, Executive Chairman of Northern Bear,
commented:
"I am delighted to be reporting on another great set of results.
With a strong current order book, I am hopeful of another good year
to come and would like to thank my fellow Directors and the
management teams and staff at all of our companies for the efforts
they put into making the Group such a success story.
We are pleased to be back on the acquisition trail and will
continue to look at opportunities as and when they arise."
For further information 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 results for the year to 31 March 2018
for Northern Bear and its subsidiaries (together, the "Group").
The Group's continuing operations delivered another excellent
year's trading, with turnover and operating profit from continuing
operations ahead of the already strong results for the prior
year.
We also completed our first acquisition in almost ten years in
July 2017 when we acquired H Peel & Sons (Holdings) Limited and
its subsidiary (together, "H Peel"). H Peel has traded in line with
our expectations since acquisition and has made a positive
contribution to our results over the period.
The acquisition of H Peel, along with the disposal of Chirmarn
Holdings Limited and its subsidiaries in the prior year, has
allowed us to consolidate the Group's core operations, while adding
a well-established and high quality business to our portfolio of
companies.
Trading
The Group's continuing operations traded strongly and ahead of
management expectations over the course of the financial year,
despite the severe winter weather (particularly during the first
three months of 2018). This is testament to the continued hard work
of our Group managing director, Graham Jennings, our operations
director, Keith Soulsby, and all of the operational management
team.
This is the first winter for several years where we have
experienced severe weather over a sustained period of time. I am
therefore pleased to report that the Group was able to continue its
strong performance despite such weather conditions, in part due to
the diversity of its businesses.
From time to time we receive shareholder enquiries with regard
to the impact of industry events and severe weather on the Group's
results. I would like to assure our shareholders that, if the
Group's results are likely to be materially affected by any such
events, we will make an appropriate announcement immediately as is
required by the AIM Rules for Companies. Our policy continues to be
to avoid issuing unnecessary market updates, or creating an
expectation of providing ongoing commentary, on wider market events
when the Board does not expect the Group's performance to be
materially affected.
Turnover from continuing operations increased to GBP53.6 million
(2017: GBP45.6 million), which was due to a combination of
increased turnover from existing operations and the impact of the H
Peel acquisition.
Gross profit from continuing operations increased to GBP10.5
million (2017: GBP9.3 million) while gross margin reduced to 19.6%
(2017: 20.4%). The reduction in gross margin is the result of a
change in sales mix. The Group's Specialist Building Services
division typically operates at lower margins than the Roofing and
Materials Handling divisions, and accounted for a higher proportion
of the Group's turnover during the year.
Administrative expenses, before amortisation and transaction
costs, increased to GBP7.5 million (2017: GBP6.8 million), largely
to support increased activity levels in the period.
We have made the decision to present operating profit both
before and after the impact of the amortisation of intangible
assets and transaction costs totalling GBP0.3 million (2017: nil),
in order to provide a better understanding of the Group's
underlying trading performance. Operating profit from continuing
operations, prior to these costs, was GBP3.1 million (2017: GBP2.5
million). After the impact of these costs, operating profit from
continuing operations was GBP2.8 million (2017: GBP2.5
million).
We have also presented adjusted earnings per share for the year,
the calculation for which is included later in this document.
Adjusted basic earnings per share from continuing operations was
12.5p (2017: 11.3p). Reported basic earnings per share from
continuing operations was 10.9p (2017: 11.3p).
Cash flow and bank facilities
We stated in prior year results that the Group's operating cash
generation was significantly in excess of trading profits, due to
some favourable payment terms on contract work. We stated at the
time that this may reverse in due course. The Group's working
capital has since reverted to a more normal position, due to a
change in contract mix, and, hence, cash generated from operations
in the year was GBP1.4 million (2017: GBP4.5 million).
The Group's working capital requirements will continue to vary
depending on the ongoing customer and contract mix. I believe that
the Group's results, when considered over a period of more than one
year, have demonstrated a strong ratio of profit to operating cash
generation.
During the prior year we signed a new GBP3.5m revolving credit
facility agreement with Yorkshire Bank to replace the previous term
loan facility. This new facility was intended to provide the Group
with a much more flexible funding structure and to support a wider
range of options for capital allocation. It has since supported our
acquisition of H Peel as well as the ordinary and special dividends
paid during 2017. The facility is committed to 31 May 2020 and the
Group also retains a GBP1.0m overdraft facility.
Dividend policy
In view of the continued strong trading performance of the
Group, I am pleased to announce that the Board proposes the payment
of an increased final dividend of 3.0p per share (2017: 2.5p per
share) for the year ended 31 March 2018. This is subject to
shareholder approval at the Annual General Meeting to be held on 20
August 2018. If approved, it will be payable on 31 August 2018 to
shareholders on the register at 10 August 2018.
Due to the exceptional financial performance in the year, we
have also decided to distribute funds which are surplus to our
strategic requirements. Accordingly, we are announcing a proposed
special dividend of 1.0p per share (2017: 1.5p per share), which is
also subject to shareholder approval and payable as above.
The Board will continue to assess the dividend levels, and our
intention remains to adjust future dividends 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.
Outlook
The Group continues to hold a high level of committed orders and
trading in the new financial year has started well, which provides
optimism for another good set of results in the year ending 31
March 2019.
Strategy
I am delighted that the Group was able to complete the
acquisition of H Peel in July 2017. H Peel is an interiors and fit
out business based in Dewsbury, West Yorkshire. It has a blue chip
client base, spread across the UK, and operates primarily in the
hotel and leisure sectors.
H Peel met all of our acquisition criteria, which include that a
business is well established in its sector, is consistently
profitable and cash generative, and has a strong management team
who are committed to remaining with the business.
The acquisition also provided us with further sectoral and
geographical diversification. The management team at H Peel have
settled in well and we look forward to sharing in their continued
success.
We continue to be presented with acquisition opportunities on a
regular basis. However, we will only proceed with an acquisition
where we are confident that it will meet the above criteria,
predictably enhance earnings and provide an attractive return on
investment for our shareholders.
People
During the year Graham Jennings, our Group managing director,
stepped down from his role as managing director of Jennings Roofing
in order to focus on his Group role and to support the further
expansion and development of the Group.
Martin Briggs, who has worked closely with Graham for the past
26 years, was appointed as managing director at Jennings Roofing
with effect from 1 April 2018. I would like to congratulate Martin
on his promotion and I wish him well in his new role.
The Group's loyal, dedicated and skilled workforce, along with
continued investment in training new operatives and apprenticeship
schemes, is a key part of our success. With HR overseen by Keith
Soulsby, the Group continues to invest in its workforce, regardless
of short term economic conditions. This is particularly important,
given the continued shortage of skilled operatives and cost
pressures in our sector.
Conclusion
I am delighted to be able to report such a positive set of
results, and I would, once again, like to thank all our employees
for their hard work and contribution to another period of strong
performance for the Group.
Steve Roberts
Executive Chairman
16 July 2018
Consolidated statement of comprehensive income
for the year ended 31 March 2018
2018 2017
GBP000 GBP000
Revenue 53,573 45,563
Cost of sales (43,067) (36,256)
--------- ---------
Gross profit 10,506 9,307
Other operating income 23 25
Administrative expenses (7,459) (6,786)
------------------------------------------------- --------- ---------
Operating profit (before amortisation
and transaction costs) 3,070 2,546
Transaction costs (158) -
Amortisation of acquired intangible assets
arising on acquisitions (102) -
------------------------------------------------ --------- ---------
Operating profit 2,810 2,546
Finance costs (213) (166)
--------- ---------
Profit before income tax 2,597 2,380
Income tax expense (613) (386)
--------- ---------
Profit from continuing operations 1,984 1,994
--------- ---------
Discontinued operations
(Loss) / profit from discontinued operations
(net of income tax) - (4,266)
--------- ---------
Profit / (loss) for the year 1,984 (2,272)
========= =========
Total comprehensive income/(loss) attributable
to equity holders of the parent 1,984 (2,272)
========= =========
Basic (loss) / earnings per share
Continuing operations 10.9p 11.3p
Discontinued operations - (24.1p)
--------- ---------
Total operations 10.9p (12.8p)
--------- ---------
Diluted (loss) / earnings per share
Continuing operations 10.8p 11.1p
Discontinued operations - (24.1p)
------ --------
Total 10.8p (13.0p)
------ --------
Consolidated statement of changes in equity
for the year ended 31 March 2018
Share Capital Share Merger Retained Total
capital redemption premium reserve earnings equity
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2016 184 6 5,169 10,371 6,532 22,262
Total comprehensive income
for the year
Loss for the year - - - - (2,272) (2,272)
Transactions with owners,
recorded directly in equity
Equity settled share-based
payment transactions - - - - 14 14
Exercise of share options - - - - 41 41
Equity dividends paid - - - - (353) (353)
Transfer in respect of discontinued
operations - - - (1,140) 1,140 -
At 31 March 2017 184 6 5,169 9,231 5,102 19,692
======== =========== ======== ======== ========= ========
At 1 April 2017 184 6 5,169 9,231 5,102 19,692
Total comprehensive income
for the year
Profit for the year - - - - 1,984 1,984
Transactions with owners,
recorded directly in equity
Issue of shares 5 - - - - 5
Exercise of share options - - - - 65 65
Equity dividends paid - - - - (742) (742)
Merger reserve arising on
acquisition - - - 374 - 374
At 31 March 2018 189 6 5,169 9,605 6,409 21,378
======== =========== ======== ======== ========= ========
Consolidated balance sheet
at 31 March 2018
2018 2017
GBP000 GBP000
Assets
Property, plant and equipment 3,050 2,852
Intangible assets 20,628 17,458
Total non-current assets 23,678 20,310
-------- --------
Inventories 952 944
Trade and other receivables 9,833 8,755
Prepayments 265 246
Cash and cash equivalents 1,731 2,583
-------- --------
Total current assets 12,781 12,528
-------- --------
Total assets 36,459 32,838
======== ========
Equity
Share capital 189 184
Capital redemption reserve 6 6
Share premium 5,169 5,169
Merger reserve 9,605 9,231
Retained earnings 6,409 5,102
-------- --------
Total equity attributable to equity holders
of the Company 21,378 19,692
-------- --------
Liabilities
Loans and borrowings 2,672 2,122
Deferred consideration 510 -
Deferred tax liabilities 316 182
-------- --------
Total non-current liabilities 3,498 2,304
-------- --------
Loans and borrowings 227 168
Deferred consideration 425 -
Trade and other payables 10,333 10,255
Current tax payable 598 419
-------- --------
Total current liabilities 11,583 10,842
-------- --------
Total liabilities 15,081 13,146
-------- --------
Total equity and liabilities 36,459 32,838
======== ========
Consolidated statement of cash flows
for the year ended 31 March 2018
2018 2017
GBP000 GBP000
Cash flows from operating activities
Operating profit for the year - continuing
operations 2,810 2,546
Operating profit for the year - discontinued
operations - (206)
------- -------
Operating profit for the year 2,810 2,340
Adjustments for:
Depreciation 559 549
Amortisation 103 2
(Profit)/loss on sale of property, plant
and equipment (7) 9
Equity settled share-based payment transactions - 14
------- -------
3,465 2,914
Change in inventories 11 24
Change in trade and other receivables (1,004) (1,802)
Change in prepayments 33 29
Change in trade and other payables (1,103) 3,358
------- -------
Cash generated from operations 1,402 4,523
Interest received - -
Interest paid (139) (166)
Tax paid (483) (341)
------- -------
Net cash flow from operating activities 780 4,016
------- -------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 186 294
Proceeds from subsidiary disposal - 25
Acquisition of property, plant and equipment (569) (689)
Acquisition of subsidiary (net of cash
acquired) (866) -
-------
Net cash from investing activities (1,249) (370)
------- -------
Cash flows from financing activities
Issue/(repayment) of borrowings 511 (2,441)
Repayment of finance lease liabilities (216) (208)
Proceeds from the exercise of share options 64 41
Equity dividends paid (742) (353)
------- -------
Net cash from financing activities (383) (2,961)
------- -------
Net increase in cash and cash equivalents (852) 685
Cash and cash equivalents at start of
year 2,583 1,898
------- -------
Cash and cash equivalents at end of year 1,731 2,583
======= =======
Notes
1 Basis of preparation
This announcement has been prepared in accordance with the
Company's accounting policies, which in turn are in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("EU") applied in accordance with the provisions
of the Companies Act 2006. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board
("IASB") and the IFRS Interpretations Committee and there is an
on-going process of review and endorsement by the European
Commission. The accounting policies comply with each IFRS that is
mandatory for accounting periods ended 31 March 2018.
For the purposes of their assessment of the appropriateness of
the preparation of the Group's accounts on a going concern basis,
the directors have considered the current cash position and
forecasts of future trading including working capital and
investment requirements. The Group's forecasts and projections,
taking account of reasonable possible changes in trading
performance, show that the Group and the Company should have
sufficient cash resources to meet its requirements for at least the
next 12 months. Accordingly, the adoption of the going concern
basis in preparing the financial statements remains
appropriate.
2 Status of financial information
The financial information set out above does not constitute the
Company's financial statements for the years ended 31 March 2018 or
2017.
The financial information for the year ended 31 March 2017 is
derived from the financial statements for that year, which have
been delivered to the Registrar of Companies. The auditor has
reported on the 2017 financial statements; their report was i)
unqualified, ii) did not include references to any matters to which
the auditors drew attention by way of emphasis, without qualifying
their report, and iii) did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
The financial statements for 2018 will be finalised on the basis
of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The
results are unaudited; however, we do not expect there to be any
difference between the numbers presented and those within the
annual report.
3 Earnings per share
Basic earnings per share is the profit or loss for the year
divided by the weighted average number of ordinary shares
outstanding, excluding those in treasury, calculated as
follows:
2018 2017
Profit for the year (GBP000) - continuing operations 1,984 1,994
(Loss)/profit for the year (GBP000) - discontinued
operations - (4,266)
-------- --------
Profit/(loss) for the year (GBP000) - total
operations 1,984 (2,272)
-------- --------
Weighted average number of ordinary shares
excluding shares held in treasury for the proportion
of the year held in treasury ('000) 18,270 17,680
-------- --------
Basic earnings per share - continuing operations 10.9p 11.3p
Basic (loss)/earnings per share - discontinued
operations - (24.1p)
-------- --------
Basic earnings/(loss) per share - total operations 10.9p (12.8p)
-------- --------
The calculation of diluted earnings per share is the profit or
loss for the year 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:
2018 2017
Profit for the year (GBP000) - continuing operations 1,984 1,994
(Loss)/profit for the year (GBP000) - discontinued
operations - (4,266)
-------- --------
Profit/(loss) for the year (GBP000) - total
operations 1,984 (2,272)
-------- --------
Weighted average number of ordinary shares
excluding shares held in treasury for the proportion
of the year held in treasury ('000) 18,270 17,680
Effect of potential dilutive ordinary shares
('000) 113 214
-------- --------
Diluted weighted average number of ordinary
shares excluding shares held in treasury for
the proportion of the year held in treasury
('000) 18,383 17,894
-------- --------
Diluted earnings per share - continuing operations 10.8p 11.1p
Diluted (loss)/earnings per share - discontinued
operations - (24.1p)
-------- --------
Diluted earnings/(loss) per share - total operations 10.8p (13.0p)
-------- --------
All potential shares were anti-dilutive for 2017 discontinued
operations due to the loss reported.
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 from continuing
operations is the profit for the year from continuing operations,
adjusted for acquisition related costs, divided by the weighted
average number of ordinary shares outstanding as presented
above.
Adjusted earnings is calculated as follows:
2018 2017
Profit for the year (GBP000) - continuing operations 1,984 1,994
Transaction costs 158 -
Amortisation of intangible assets arising on
acquisitions 102 -
Unwinding of discount on deferred consideration
liabilities 74 -
Corporation tax effect of above items (30) -
-------- --------
Adjusted profit for the year (GBP000) - continuing
operations 2,288 1,994
Weighted average number of ordinary shares
excluding shares held in treasury for the proportion
of the year held in treasury ('000) 18,270 17,680
-------- --------
Adjusted basic earnings per share from continuing
operations 12.5p 11.3p
Adjusted diluted earnings per share from continuing
operations 12.4p 11.1p
-------- --------
4 Finance costs
2018 2017
GBP'000 GBP'000
On bank loans and overdrafts 128 149
Finance charges payable in respect of finance
leases and hire purchase contracts 11 17
Unwinding of discount on deferred consideration
liabilities 74 -
-------- --------
213 166
-------- --------
5 Loans and borrowings
2018 2017
GBP'000 GBP'000
Non-current liabilities
Secured bank loans 2,500 2,000
Finance lease liabilities 172 122
-------- --------
2,672 2,122
-------- --------
Current liabilities
Current portion of finance lease liabilities 211 163
Other loans 16 5
-------- --------
227 168
-------- --------
During the year to 31 March 2017 the Group renewed and replaced
term loan facilities with a GBP3.5 million revolving credit
facility in order to provide greater flexibility in the use of
funds. At 31 March 2018 a total of GBP2.5 million (2017: GBP2.0
million) was drawn down on this facility, which is committed until
31 May 2020, providing a net bank debt figure at 31 March 2018 of
GBP0.8 million (2017: net cash of GBP0.6 million) after offsetting
cash and cash equivalents of GBP1.7 million (2017: GBP2.6
million).
The Group also retains a GBP1 million overdraft facility for
working capital purposes. This facility was renewed on 31 May 2018
and is next due for routine review and renewal on 31 May 2019.
6 Acquisition
H Peel & Sons (Holdings) Limited
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, an interiors and fit out business based
in Dewsbury, West Yorkshire.
The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed are set out below:
Fair value
Book value adjustments Fair value
GBP000 GBP000 GBP000
Net assets acquired:
Intangible assets - 762 762
Property, plant and equipment 115 - 115
Inventory 19 - 19
Trade and other receivables 126 - 126
Cash and cash equivalents 329 - 329
Trade and other payables (1,297) - (1,297)
Deferred taxation - (130) (130)
------------- ------------- -----------
Total identifiable assets (708) 632 (76)
Goodwill 2,511
-----------
Total consideration 2,435
===========
Satisfied by:
Cash 746
Equity instruments (ordinary shares) 378
Deferred and contingent consideration 1,311
-----------
Total consideration 2,435
===========
Cash outflows arising on acquisition:
Cash consideration 746
Less: cash and cash equivalents acquired (329)
-----------
417
===========
Fair value adjustments of GBP632,000 relating to the separate
recognition of intangible assets and a related deferred tax
liability have been recorded.
Under the terms of the acquisition, deferred cash consideration
of GBP0.4 million is payable in four equal six monthly instalments
commencing six months from the acquisition date. Additional
contingent consideration of up to GBP1.4 million was payable,
subject to various earn out agreements, over a three year period
from the acquisition date. The deferred consideration balance of
GBP0.9 million at 31 March 2018 represents the discounted present
value of estimated future payments to be made.
The fair value of the 461,538 ordinary shares in Northern Bear
plc issued as part of the consideration paid (GBP378,000) was
determined on the basis of the closing mid-market price of the
Group's ordinary shares on 24 July 2017, being 82p.
Acquisition related costs included in administrative expenses
amount to GBP158,000.
H Peel contributed a total of GBP3.3 million revenue and GBP0.5
million to the Group's operating profit for the period between the
date of acquisition and the balance sheet date.
If the acquisition of H Peel had been completed on the first day
of the financial year, Group revenues for the year would have been
GBP54.3 million and Group operating profit would have been GBP2.9
million.
7 Availability of financial statements
The Group's Annual Report and Financial Statements for the year
ended 31 March 2018 are expected to be approved by 23 July 2018 and
will be posted to shareholders during the week commencing 23 July
2018. Further copies will be available to download on the Company's
website at: http://www.northernbearplc.com/. It is intended that
the Annual General Meeting will take place at the Company's
registered office, A1 Grainger, Prestwick Park, Prestwick,
Newcastle upon Tyne, NE20 9SJ, at 9:00am on 20 August 2018.
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
FR BCGDRRGBBGIU
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