REG - Northern Bear Plc - Interim Results <Origin Href="QuoteRef">NTBR.L</Origin>
RNS Number : 9091XNorthern Bear Plc30 November 201730 November 2017
Northern Bear plc
("Northern Bear" or the "Company")
Interim results for the six month period ended 30 September 2017
The board of directors of Northern Bear (the "Board") is pleased to announce its unaudited interim results for the Company and its subsidiaries (together the "Group") for the six months to 30 September 2017.
Highlights
Revenue from continuing operations of 27.2 million (2016: 20.1 million)
Adjusted profit before income tax* from continuing operations of 1.5 million (2016: 1.3 million)
Reported profit before income tax from continuing operations of 1.3 million (2016: 1.3 million)
Basic earnings per share from total operations of 5.9p (2016: 5.2p)
Net bank debt of 0.6 million at 30 September 2017 (30 September 2016: 2.0 million)
* Adjusted for the impact of non-recurring transaction costs and amortisation of acquired intangibles
Steve Roberts, Executive Chairman of Northern Bear, commented:
"I am pleased to report that the Group has had another six months of strong operational performance. We also completed the acquisition of H Peel, our first acquisition for over nine years. With a strong order book, we are looking forward to the rest of our financial year with optimism and are confident that we will be able to maintain our progressive dividend policy."
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 2017 for Northern Bear plc (the "Company") and its subsidiaries (together the "Group").
In our trading update, released on 7 November 2017, we announced that profit before tax from continuing operations would exceed last year's excellent results, before the impact of non-recurring transaction costs and amortisation of acquired intangibles relating to the acquisition of H Peel & Sons (Holdings) Limited ("H Peel") in July 2017.
Further to that update, I am pleased to confirm the Group's outstanding results for the period. After non-recurring transaction costs and amortisation, the Group generated retained profits from total operations of 1.1 million (2016: 0.9 million) and basic earnings per share of 5.9p (2016: 5.2p). This included a positive post-acquisition contribution from H Peel.
Trading
During the prior year to 31 March 2017, the Company disposed of Chirmarn Holdings Limited and its subsidiaries (together "Chirmarn"). Results from these companies have, accordingly, been presented as discontinued operations in the results for the prior period to 30 September 2016 and for the year to 31 March 2017.
Turnover from continuing operations for the period increased to 27.2 million (2016: 20.1 million). Much of the increase was attributable to a strong performance in our Specialist Building Services division, and to the inclusion of revenues generated by H Peel.
Gross profit from continuing operations increased to 5.0 million (2016: 4.5 million) while gross margin reduced to 18.4% (2016: 22.2%). The Group's Specialist Building Services division typically operates at lower margins than the Roofing and Materials Handling divisions and, hence, the reduction in gross margin is down to a change in sales mix in the period.
The Group continues to be careful in terms of contract selection. I am pleased to report that trading profits were in line or ahead of management expectations at every trading division during the period. This is testament to the hard work of our Group Managing Director, Graham Jennings, our Operations Director, Keith Soulsby, and all of the operational management team.
Administrative expenses, before transaction costs and amortisation, increased to 3.5 million (2016: 3.1 million). This was largely to support increased activity levels in the period. Operating profit, again, before transaction costs and amortisation, increased to 1.6 million (2016: 1.4 million).
Cash flow
Net bank debt at 30 September 2017 was 0.6 million (30 September 2016: 2.0 million net bank debt, 31 March 2017: 0.6 million net cash), which was in line with management expectations. The increase in debt from 31 March 2017 relates to both the H Peel acquisition and the payment in the period of last year's final ordinary and special dividends, which totalled 0.7 million (2016: 0.4 million).
Cash generated from operations was 0.9 million in the period (2016: 1.4 million), which was impacted by the reversal of some favourable working capital movements in the prior year.
As reported in April 2017, the Group recently negotiated a new revolving credit facility with Yorkshire Bank, which provided us with the flexibility to pursue acquisition opportunities. Following the H Peel acquisition, we extended this facility by a further 1 million (to 4.5 million). This will provide continued flexibility in this area.
Dividend
The Board has followed a progressive dividend policy in recent years, with continued increases in the final dividend and a special dividend for the year ended 31 March 2017.
Our stated policy is to pay only a final dividend. This is primarily due to the potential impact of exceptional, adverse weather on the Group's trading over the winter months. Provided that the strong trading performance continues for the remainder of the financial year, it is the intention of the Board to continue with our progressive dividend policy.
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 key acquisition criteria, which include a business that is well established in its sector, a consistent track record of profitability and cash generation and a strong management team who are committed to remaining with the business. The acquisition also provides the Group with further sectoral and geographical diversification. The team at H Peel have settled in well and we look forward to sharing in their continued success.
We continue to believe that acquisitions of established specialist building services businesses, either in the same or complementary sectors to our current operations, could further enhance the Group's offering to customers. Although we are presented with potential acquisitions on a regular basis, we will only proceed with such an acquisition opportunity where we are confident that it will meet our criteria, predictably enhance earnings and provide an acceptable return on investment for our shareholders.
Outlook
The Group currently has a high level of committed orders and the Directors are positive about the outlook for trading in the second half of the year, subject to there being no exceptional, adverse weather conditions over the period.
People
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. Our operational strategy is to directly employ a large majority of the workforce and, with HR responsibilities overseen by Keith Soulsby, the Group continues to invest in training, regardless of short term economic conditions. This is particularly important, given the continued shortage of skilled operatives and cost pressures in our sector.
During the period we were notified by Graeme Tennick, the current Managing Director of A1 Industrial Trucks, our Materials Handling business, that he intends to retire from his role in March 2018. Graeme is co-founder of A1 and has remained with the business for almost ten years since it was acquired by the by the Group in April 2008. We have worked with Graeme to recruit a replacement who has held senior roles in national Materials Handling businesses and, subject to satisfactory performance, he will be appointed Managing Director of A1 on Graeme's retirement. I would like to thank Graeme and his co-founder Derek Wymes (who retired in summer 2016) for their hard work and contribution since joining the Group.
Conclusion
I am, yet again, delighted to be reporting on an excellent trading period and set of results. I would once more like to thank all of our employees for their hard work and contribution to another strong set of results for the Group.
Steve Roberts
Executive Chairman
Consolidated statement of comprehensive income
for the six month period ended 30 September 2017
6 months ended
6 months ended
Year ended
30 September 2017
30 September 2016
31 March 2017
Unaudited
Unaudited
Audited
'000
'000
'000
Revenue
27,196
20,147
45,563
Cost of sales
(22,202)
(15,656)
(36,256)
Gross profit
4,994
4,491
9,307
Other operating income
13
13
25
Administrative expenses
(3,453)
(3,139)
(6,786)
Operating profit (before amortisation and transaction costs)
1,554
1,365
2,546
Transaction costs
(158)
-
-
Amortisation of acquired intangibles
(26)
-
-
Operating profit
1,370
1,365
2,546
Finance income
-
-
-
Finance costs
(59)
(94)
(166)
Profit before income tax
1,311
1,271
2,380
Income tax expense
(249)
(253)
(386)
Profit from continuing operations
1,062
1,018
1,994
Discontinued operations
Loss from discontinued operations
(net of income tax)
-
(103)
(4,266)
Profit/(loss) for the period
1,062
915
(2,272)
Total comprehensive income / (loss) attributable to equity holders of the parent
1,062
915
(2,272)
Basic earnings / (loss) per share
Continuing operations
5.9p
5.8p
11.3p
Discontinued operations
-
(0.6)p
(24.1)p
Total operations
5.9p
5.2p
(12.8)p
Diluted earnings / (loss) per share
Continuing operations
5.9p
5.7p
11.1p
Discontinued operations
-
(0.6)p
(24.1)p
Total operations
5.9p
5.1p
(13.0)p
Consolidated statement of changes in equity
for the six month period ended 30 September 2017
Share capital
Capital redemption reserve
Share premium
Merger reserve
Retained earnings
Total equity
'000
'000
'000
'000
'000
'000
At 1 April 2016
184
6
5,169
10,371
6,532
22,262
Total comprehensive income for the period
Profit for the period
-
-
-
-
915
915
Transactions with owners, recorded directly in equity
Equity settled share-based payment transactions
-
-
-
-
8
8
Equity dividends paid
-
-
-
-
(353)
(353)
At 30 September 2016
184
6
5,169
10,371
7,102
22,832
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)
Transfers 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 period
Profit for the period
-
-
-
-
1,062
1,062
Transactions with owners, recorded directly in equity
Equity settled share-based payment transactions
-
-
-
-
1
1
Issue of shares
5
-
-
-
-
5
Exercise of share options
-
-
-
-
37
37
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
Consolidated balance sheet
at 30 September 2017
30 September 2017
30 September 2016
31 March
2017
Unaudited
Unaudited
Audited
'000
'000
'000
Assets
Property, plant and equipment
3,007
3,004
2,852
Intangible assets
20,661
21,350
17,458
Total non-current assets
23,668
24,354
20,310
Inventories
1,033
1,094
944
Trade and other receivables
8,881
9,384
8,755
Prepayments
503
421
246
Cash and cash equivalents
2,923
2,022
2,583
Total current assets
13,340
12,921
12,528
Total assets
37,008
37,275
32,838
Equity
Share capital
189
184
184
Capital redemption reserve
6
6
6
Share premium
5,169
5,169
5,169
Merger reserve
9,605
10,371
9,231
Retained earnings
5,460
7,102
5,102
Total equity attributable to equity holders of the Company
20,429
22,832
19,692
Liabilities
Loans and borrowings
3,630
142
2,122
Deferred consideration
474
-
-
Deferred tax liabilities
307
213
182
Total non-current liabilities
4,411
355
2,304
Loans and borrowings
180
4,168
168
Deferred consideration
365
-
-
Trade and other payables
10,898
9,353
10,255
Current tax payable
725
567
419
Total current liabilities
12,168
14,088
10,842
Total liabilities
16,579
14,443
13,146
Total equity and liabilities
37,008
37,275
32,838
Consolidated statement of cash flows
for the six month period ended 30 September 2017
6 months ended
6 months ended
Year ended
30 September 2017
30 September 2016
31 March 2017
Unaudited
Unaudited
Audited
'000
'000
'000
Cash flows from operating activities
Operating profit - continuing operations
1,370
1,365
2,546
Operating profit - discontinued operations
-
(126)
(206)
Operating profit for the period
1,370
1,239
2,340
Adjustments for:
Depreciation
265
259
549
Amortisation
26
1
2
(Profit)/Loss on sale of property, plant and equipment
(3)
9
9
Equity settled share-based payment transactions
1
8
14
1,659
1,516
2,914
Change in inventories
(70)
(118)
24
Change in trade and other receivables
(52)
(2,145)
(1,802)
Change in prepayments
(205)
(132)
29
Change in trade and other payables
(461)
2,263
3,358
Cash generated from operations
871
1,384
4,523
Interest received
-
-
-
Interest paid
(59)
(96)
(166)
Tax paid
(106)
(4)
(341)
Net cash flow from operating activities
706
1,284
4,016
Cash flows from investing activities
Proceeds from the sale of property, plant and equipment
94
167
294
Proceeds from subsidiary disposal
-
-
25
Acquisition of subsidiary, net of cash acquired
(817)
-
-
Acquisition of property, plant and equipment
(313)
(405)
(689)
Net cash from investing activities
(1,036)
(238)
(370)
Cash flows from financing activities
Repayment of borrowings
1,504
(451)
(2,441)
Payment of finance lease liabilities
(129)
(118)
(208)
Proceeds from the exercise of share options
37
-
41
Equity dividends paid
(742)
(353)
(353)
Net cash from financing activities
670
(922)
(2,961)
Net increase in cash and cash equivalents
340
124
685
Cash and cash equivalents at start of period
2,583
1,898
1,898
Cash and cash equivalents at end of period
2,923
2,022
2,583
1. Basis of preparation
The consolidated interim financial information has been prepared in accordance with the accounting policies that are expected to be adopted in the Group's full financial statements for the year ending 31 March 2018 which are not expected to be significantly different to those set out in Notes 2 and 3 of the Group's audited financial statements for the year ended 31 March 2017, other than as disclosed in Note 2. These 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 2018 or are expected to be adopted and effective at 31 March 2018. The financial information has not been prepared (and is not required to be prepared) in accordance with IAS 34. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this financial information.
The financial information in this statement relating to the six months ended 30 September 2017 and the six months ended 30 September 2016 has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.
The financial information for the year ended 31 March 2017 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 March 2017 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Annual Report and Financial Statements for the year ended 31 March 2017 was i) unqualified, ii) did not include any 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.
2. Changes in accounting policies
From 1 April 2017 the following standards, amendments and interpretations became effective and were adopted by the Group:
Amendments to IAS 12 'Income Taxes' - Amendments to the recognition of deferred tax assets for unrealised losses;
Amendments to IAS 7 'Statement of Cash Flow' - Disclosure amendments;
Amendments to IAS 40 'Investment Property' for transfers of Investment Property; and
Annual Improvements to IFRS (2014 - 2016).
The adoption of the above has not had a significant impact on the Group's profit for the period or equity.
3. Taxation
The taxation charge for the six months ended 30 September 2017 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 2017
30 September 2016
31 March 2017
Unaudited
Unaudited
Audited
Profit for the period ('000) - continuing operations
1,062
1,018
1,994
Loss for the period ('000) - discontinued operations
-
(103)
(4,266)
Profit / (loss) for the period ('000) - total operations
1,062
915
(2,272)
Weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)
17,920
17,670
17,680
Basic earnings per share - continuing operations
5.9p
5.8p
11.3p
Basic loss per share - discontinued operations
-
(0.6p)
(24.1p)
Basic earnings/(loss) per share - total operations
5.9p
5.2p
(12.8p)
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 2017
30 September 2016
31 March 2017
Unaudited
Unaudited
Audited
Profit for the period ('000) - continuing operations
1,062
1,018
1,994
Loss for the period ('000) - discontinued operations
-
(103)
(4,266)
Profit / (loss) for the period ('000) - total operations
1,062
915
(2,272)
Weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)
17,920
17,670
17,680
Effect of potential dilutive ordinary shares ('000)
188
191
214
Diluted weighted average number of ordinary shares excluding shares held in treasury for the proportion of the year held in treasury ('000)
18,108
17,861
17,894
Diluted earnings per share - continuing operations
5.9p
5.7p
11.1p
Diluted loss per share - discontinued operations
-
(0.6p)
(24.1p)
Diluted earnings/(loss) per share - total operations
5.9p
5.1p
(13.0p)
All potential shares were anti-dilutive for discontinued operations in the year ended 31 March 2017 due to the loss reported.
5. Discontinued operations
During the year ended 31 March 2017, the Company disposed of its subsidiary Chirmarn Holdings Limited, along with its wholly owned subsidiaries Chirmarn Limited and Chirmarn (Surveying) Limited (together "Chirmarn"). Chirmarn's principal activities were asbestos removal and surveying services. The disposal was completed on 31 March 2017.
The results of the discontinued operations are included in the Group's consolidated financial information until the date the disposal was completed. These are as follows:
6 months ended
6 months ended
Year ended
30 September 2017
30 September 2016
31 March 2017
Unaudited
Unaudited
Audited
Revenue
-
731
1,370
Expenses
-
(859)
(1,582)
Pre tax trading loss
-
(128)
(212)
Loss on disposal of discontinued operations
-
-
(191)
Write off of related goodwill
-
-
(3,891)
Loss before income tax
-
(128)
(4,294)
Income tax credit
-
25
28
Loss for the period from discontinued operations
-
(103)
(4,266)
6. Acquisition of H Peel & Sons
On 25 July 2017 the Group acquired 100 per cent of the share capital of H Peel & Sons (Holdings) Limited, including its wholly owned subsidiary H Peel & Sons Limited (together "H Peel").
The initial value of purchase consideration recognised in the consolidated interim financial information is 2.3 million, which includes a combination of cash, shares and deferred consideration (an element of which is contingent) recorded at discounted present value. The total amount of intangible assets recognised in the balance sheet at 30 September 2017 is 3.2 million. These amounts represent the Directors' provisional estimates of fair values at the date of acquisition and will be finalised as part of the Group's year end reporting for the year to 31 March 2018.
7. 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, and 55 to 58 of our Annual Report and Financial Statements for the year ended 31 March 2017, which are available on our website, www.northernbearplc.com.
8. Half year report
The condensed financial statements were approved by the Board of Directors on 30 November 2017 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
30 November 2017
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 RNSThe company news service from the London Stock ExchangeENDIR OKCDPOBDDDDB
Recent news on Northern Bear
See all newsREG - Northern Bear Plc - Holding(s) in Company
AnnouncementREG - Northern Bear Plc - Director Dealing
AnnouncementREG - Northern Bear Plc - Holding(s) in Company
AnnouncementREG - Northern Bear Plc - Trading Update
AnnouncementREG - Northern Bear Plc - Holding(s) in Company
Announcement