TIDMNTBR
RNS Number : 9724G
Northern Bear Plc
12 November 2018
12 November 2018
Northern Bear plc
("Northern Bear" or the "Company")
Interim results for the six month period ended 30 September
2018
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 2018.
Highlights
-- Revenue of GBP28.6m (2017: GBP27.2m)
-- Operating profit of GBP1.7m (2017: GBP1.4m)
-- Profit before income tax of GBP1.6m (2017: GBP1.3m)
-- Basic earnings per share of 6.9p (2017: 5.9p)
-- Cash generated from operations of GBP2.0m (2017: GBP0.9m)
-- Net bank debt of GBP0.3 million at 30 September 2018 (31
March 2018: GBP0.8 million; 30 September 2017: GBP0.6m)
Steve Roberts, Executive Chairman of Northern Bear,
commented:
"We have had a very successful first half to the financial year,
with increased revenue, profit before tax and basic earnings per
share.
"Overall the outlook for the second half of the financial year
is currently very good and we hope to report 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 2018 (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 2018, we
stated that the Group continued to hold a high level of committed
orders and that trading in the new financial year had started well.
By September 2018, it was apparent that trading for the six month
period to 30 September 2018 had been particularly strong and that
results would be ahead of the prior period, and we issued a trading
update to this effect on 20 September 2018.
Further to that update, I am pleased to confirm the Group has
made further positive progress and produced excellent results for
the Period, generating retained profits of GBP1.3 million (2017:
GBP1.1 million) and basic earnings per share of 6.9p (2017:
5.9p).
Trading
Our Group companies produced outstanding results over the
Period, with continuing high levels of committed orders secured.
Performance was particularly strong in our Roofing and Specialist
Building Services divisions.
Isoler Limited, our fire protection business, secured some major
contracts and traded exceptionally well over the Period. Our
materials handling business, A1 Industrial Trucks Limited, has
found trading conditions more challenging, but we are hopeful that
recent additions to the management team will improve performance
over the second half of the year.
Revenue for the Period was GBP28.6 million (2017: GBP27.2
million) and gross margins improved to 19.7% (2017: 18.4%),
principally through careful contract selection and execution.
Administrative expenses increased to GBP3.9 million (2017:
GBP3.5 million) in order to support the higher activity levels in
the Period. As with results for the prior period, we have presented
transaction costs and amortisation separately within the income
statement, as well as an adjusted earnings per share calculation
(in the notes to this report), in order to provide an indication of
underlying trading performance.
Overall profit before income tax for the Period increased to
GBP1.6 million (2017: GBP1.3 million). We benefited from a full six
months' trading from H. Peel & Sons Limited ("H Peel") in the
Period, which accounted for GBP0.1 million of the increase, as H
Peel was acquired on 25 July 2017 during the comparative
period.
Cash flow
Net bank debt at 30 September 2018 was GBP0.3 million (30
September 2017: GBP0.6 million, 31 March 2018: GBP0.8 million).
Cash generated from operations was GBP2.0 million in the period
(2017: GBP0.9 million) although the overall cash movement was
impacted by the payment of last year's final ordinary and special
dividends, totalling GBP0.7 million (2017: GBP0.7 million), and the
payment of deferred and earn out consideration on H Peel of GBP0.3
million.
The operating cash generation in the period was outstanding,
although I would emphasise that this 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. For information, the lowest net bank debt
position during the period was GBPnil, the highest was GBP1.8
million, and the average was GBP0.9 million.
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. As a result of new standards, we have changed the
presentation of trade and other receivables on the balance sheet at
30 September 2018 to split out contract retentions between current
assets and non-current assets based on whether balances are due in
less than or more than one year from the balance sheet date.
Contract retentions are an ongoing feature of the Group's
businesses and the industry in which they operate and are something
that we monitor closely. Retention periods are typically one year
from completion where a Group company is the main contractor on a
project and two years where it is a subcontractor.
Dividend
Our stated policy is to pay only a final dividend. 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 progressive dividend
policy.
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 need to meet these criteria and, in
addition, be earnings accretive and provide an acceptable return on
investment.
Our continued preference is to source acquisitions through
direct conversations with business owners or via our industry
contacts rather than through intermediaries. We have generally
found negotiations more productive with entrepreneurs whose
priority is to secure the long-term future of their business and
employees, in addition to realising significant equity value,
rather than seeking to maximise sale value through an auction
process. We are always happy to have such conversations with
business owners and can assure complete confidentiality.
Outlook
The results for the Period were exceptionally strong and we
continue to hold a high level of committed orders. The Board
considers the outlook for trading in the second half of the year to
be very good and we hope to report another strong set of results
for the full financial year.
People
Succession planning remains an ongoing focus for us and a
programme of succession planning is in place for all of our
subsidiary businesses. We have recently included a news feed on our
website, in order to provide updates on operational progress that
would not need to be released via RNS, and any changes to
subsidiary management teams would be included there.
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.
Conclusion
I am delighted to be reporting on another excellent trading
period and such an outstanding set of results. I would once more
like to thank all of our employees for their hard work and
contribution.
Steve Roberts
Executive Chairman
12 November 2018
Consolidated statement of comprehensive income
for the six month period ended 30 September 2018
6 months ended 6 months ended Year ended
30 September 30 September
2018 2017 31 March 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 28,576 27,196 53,573
Cost of sales (22,942) (22,202) (43,067)
--------------- --------------- --------------
Gross profit 5,634 4,994 10,506
Other operating income 12 13 23
Administrative expenses (3,903) (3,453) (7,459)
--------------- --------------- --------------
Operating profit (before
amortisation and transaction
costs) 1,743 1,554 3,070
Transaction costs and adjustments 23 (158) (158)
Amortisation of intangible
assets arising on acquisitions (76) (26) (102)
Operating profit 1,690 1,370 2,810
Finance costs (103) (59) (213)
--------------- --------------
Profit before income tax 1,587 1,311 2,597
Income tax expense (302) (249) (613)
--------------- --------------- --------------
Profit for the period 1,285 1,062 1,984
--------------- --------------- --------------
Total comprehensive income
attributable to equity
holders of the parent 1,285 1,062 1,984
=============== =============== ==============
Earnings per share from
continuing operations
Basic earnings per share 6.9p 5.9p 10.9p
Diluted earnings per share 6.9p 5.9p 10.8p
Consolidated statement of changes in equity
for the six month period ended 30 September 2018
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 2017 184 6 5,169 9,231 5,102 19,692
Total comprehensive income
for the period
Profit for the period - - - - 1,062 1,062
Transactions with owners, recorded
directly in equity
Issue of shares 5 - - - - 5
Exercise of share options - - - - 38 38
Equity dividends paid - - - - (742) (742)
Merger reserve arising on acquisition - - - 374 - 374
--------- ------------ --------- --------- ---------- --------
At 30 September 2017 189 6 5,169 9,605 5,460 20,429
========= ============ ========= ========= ========== ========
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
========= ============ ========= ========= ========== ========
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
========= ============ ========= ========= ========== ========
Consolidated balance sheet
at 30 September 2018
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Property, plant and equipment 3,122 3,007 3,050
Intangible assets 20,552 20,661 20,628
Trade and other receivables 1,420 - -
Total non-current assets 25,094 23,668 23,678
Inventories 724 1,033 952
Trade and other receivables 9,224 8,881 9,833
Prepayments 536 503 265
Cash and cash equivalents 1,746 2,923 1,731
Total current assets 12,230 13,340 12,781
------------- ------------- ---------
Total assets 37,324 37,008 36,459
============= ============= =========
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 6,968 5,460 6,409
Total equity attributable to
equity holders of the Company 21,937 20,429 21,378
============= ============= =========
Liabilities
Loans and borrowings 2,173 3,630 2,672
Deferred consideration 206 474 510
Deferred tax liabilities 316 307 316
Total non-current liabilities 2,695 4,411 3,498
------------- ------------- ---------
Loans and borrowings 194 180 227
Deferred consideration 417 365 425
Trade and other payables 11,181 10,898 10,333
Current tax payable 900 725 598
Total current liabilities 12,692 12,168 11,583
------------- ------------- ---------
Total liabilities 15,387 16,579 15,081
============= ============= =========
Total equity and liabilities 37,324 37,008 36,459
============= ============= =========
Consolidated statement of cash flows
for the six month period ended 30 September 2018
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Operating profit for the period 1,690 1,370 2,810
Adjustments for:
Depreciation 264 265 559
Amortisation 76 26 103
(Profit)/loss on sale of property,
plant and equipment 14 (3) (7)
Non-cash transaction adjustments (23) - -
2,021 1,658 3,465
Change in inventories 228 (70) 11
Change in trade and other
receivables (811) (52) (1,004)
Change in prepayments (271) (205) 33
Change in trade and other
payables 846 (461) (1,103)
--------------- --------------- -----------
Cash generated from operations 2,013 870 1,402
Interest received - - -
Interest paid (65) (59) (139)
Tax paid - (106) (483)
--------------- --------------- -----------
Net cash flow from operating
activities 1,948 705 780
--------------- --------------- -----------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 119 94 186
Acquisition of property, plant
and equipment (333) (313) (569)
Acquisition of subsidiary
(net of cash acquired) (327) (817) (866)
--------------- --------------- -----------
Net cash from investing activities (541) (1,036) (1,249)
--------------- --------------- -----------
Cash flows from financing
activities
Issue / (repayment) of borrowings (498) 1,504 511
Repayment of finance lease
liabilities (168) (129) (216)
Proceeds from the exercise
of share options 14 38 64
Equity dividends paid (740) (742) (742)
Net cash from financing activities (1,392) 671 (383)
--------------- --------------- -----------
Net increase in cash and cash
equivalents 15 340 (852)
Cash and cash equivalents
at start of period 1,731 2,583 2,583
Cash and cash equivalents
at end of period 1,746 2,923 1,731
=============== =============== ===========
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 2018 Annual Report
and Financial Statements. The financial information for the half
years ended 30 September 2018 and 30 September 2017 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 2018 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
2018 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 2018 was i) unqualified, ii)
did not draw attention to any matters by way of emphasis, and iii)
and 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 2018 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 2018, and will be adopted in the
2019 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 2019 or are expected to be adopted and effective at 31 March
2019.
New standards impacting the Group that will be adopted in the
annual financial statements for the year ending 31 March 2019, and
which have given rise to changes in the Group's accounting policies
are:
-- IFRS 9 Financial Instruments; and
-- IFRS 15 Revenue from Contracts with Customers
Details of the impact of these two standards are given below.
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.
IFRS 9 Financial Instruments
IFRS 9 has replaced IAS 39 Financial Instruments: Recognition
and Measurement, and has had an effect on the Group in the
following areas:
-- The impairment provision on financial assets measured at
amortised cost (such as trade and other receivables) have been
calculated in accordance with IFRS 9's expected credit loss model,
which differs from the incurred loss model previously required by
IAS 39. This has not resulted in a change to the impairment
provision at 1 April 2018.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 has replaced IAS 18 Revenue and IAS 11 Construction
Contracts as well as various Interpretations previously issued by
the IFRS Interpretations Committee, noting the Company has adopted
the modified retrospective approach. There is no material impact on
any revenue stream for the Group, noting the following as it
relates to the Group's revenue streams from its operating segments
as set out in Note 4 of the Annual Report and Financial Statements
for the year ended 31 March 2018:
2. Accounting policies (continued)
-- Roofing activities - revenue is recognised over time based on
allocation of the customer contract price to distinct performance
obligations and recognising revenue when those performance
obligations are satisfied;
-- Building services activities - revenue is recognised over
time based on allocation of the customer contract price to distinct
performance obligations and recognising revenue when those
performance obligations are satisfied;
-- Materials handling activities
o Product sales - revenue is recognised on delivery to the
customer
o Assets leased to customers - revenue is recognised on a
straight line basis over the lease term
On application of IFRS 15 the Group has changed the basis of
presentation of its consolidated balance sheet such that contract
retentions due in more than one year are shown in non-current
assets. The amount due in more than one year is presented on an
undiscounted basis as the impact of discounting is not considered
to be material. The Group has not restated the consolidated balance
sheet at 31 March 2018 or 30 September 2017 in this report on an
equivalent basis.
The adoption of the above standards has not had a significant
impact on the Group's profit for the period or equity.
Standards and interpretations effective in subsequent financial
periods
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective for periods beginning subsequent to 31 March 2019
(the date on which the company's next annual financial statements
will be prepared up to) that the Group has decided not to adopt
early. The most significant of these is IFRS 16 Leases (mandatorily
effective for periods beginning on or after 1 January 2019). It is
currently anticipated that substantially the whole of the Group's
leases that are currently accounted for as operating leases off the
Group's balance sheet would come on to the balance sheet with the
associated lease debt.
3. Taxation
The taxation charge for the six months ended 30 September 2018
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
2018 2017 2018
Unaudited Unaudited Audited
Profit for the period (GBP'000) 1,285 1,062 1,984
------------- ------------- -----------
Weighted average number of ordinary
shares excluding shares held
in treasury for the proportion
of the year held in treasury
('000) 18,510 17,920 18,270
Basic earnings per share 6.9p 5.9p 10.9p
------------- ------------- -----------
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
2018 2017 2018
Unaudited Unaudited Audited
Profit for the period (GBP'000) 1,285 1,062 1,984
------------- ------------- -----------
Weighted average number of
ordinary shares excluding shares
held in treasury for the proportion
of the year held in treasury
('000) 18,510 17,920 18,270
Effect of potential dilutive
ordinary shares ('000) 64 188 113
Diluted weighted average number
of ordinary shares excluding
shares held in treasury for
the proportion of the year
held in treasury ('000) 18,574 18,108 18,383
============= ============= ===========
Diluted earnings per share 6.9p 5.9p 10.8p
------------- ------------- -----------
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
2018 2017 2018
Unaudited Unaudited Audited
Profit for the period (GBP'000) 1,285 1,062 1,984
Transaction costs and adjustments (23) 158 158
Amortisation of intangible assets
arising on acquisitions 76 26 102
Unwinding of discount on deferred
consideration liabilities 38 - 74
Corporation tax effect of above
items - (30) (30)
------------- ------------- -----------
Adjusted profit for the period
(GBP'000) 1,376 1,216 2,288
------------- ------------- -----------
Weighted average number of ordinary
shares excluding shares held in
treasury for the proportion of
the year held in treasury ('000) 18,510 17,920 18,270
Adjusted basic earnings per
share 7.4p 6.8p 12.5p
------------- ------------- -----------
Adjusted diluted earnings per
share 7.4p 6.7p 12.4p
------------- ------------- -----------
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.
Transaction costs and adjustments for the period ended 30
September 2018 relate to the difference between the amount provided
for deferred and contingent consideration due in the period and the
actual amount paid. In the period ended 30 September 2017
transaction costs relate to acquisition related costs incurred.
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
2018 2017 2018
Unaudited Unaudited Audited
On bank loans and overdrafts 60 49 128
Finance charges payable in respect
of finance leases and hire purchase
contracts 5 10 11
Unwinding of discount on deferred
consideration liabilities 38 - 74
------------- ------------- -----------
Total finance costs 103 59 213
------------- ------------- -----------
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 7 to 10, and 60 to 64 of
our Annual Report and Financial Statements for the year ended 31
March 2018, 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 12 November 2018 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.
For and on behalf of the Board of Directors
Thomas Hayes
Finance Director
12 November 2018
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
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END
IR FKCDBFBDDNDK
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