REG - Northern Bear Plc - Interim Results
26/11/2021 07:00
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RNS Number : 6636T Northern Bear Plc 26 November 2021
26 November 2021
Northern Bear plc
("Northern Bear" or the "Company")
Interim results for the six month period ended 30 September 2021
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 2021.
Financial Summary
· Revenue of £30.0m (H1 2020: £20.1m)
· Adjusted operating profit* of £1.5m (H1 2020: £0.5m)
· Net cash of £0.6m at 30 September 2021
· Robust trading performance despite industry-wide supply chain
disruptions and staffing challenges
· Positive outlook for the second half of the financial year
· Appointment of two new independent non-executive Directors with
significant corporate, financial, and real estate experience
* stated prior to the impact of amortisation and impairment charges
Jeff Baryshnik, Non-Executive Chairman of Northern Bear, commented:
"We are pleased to announce strong operating results for the period, despite
ongoing industry-wide challenges."
"It is a testament to the executive team and subsidiary operating teams that
these results exceed those from the comparable pre-pandemic period for the six
months ended 30 September 2019. With a strong order book, we are well
positioned to continue to generate a more normalised level of profitability."
For further information please contact:
Northern Bear plc
Jeff Baryshnik - Non-Executive Chairman +44 (0) 166 182 0369
Tom Hayes - Finance Director +44 (0) 166 182 0369
Strand Hanson Limited (Nominated Adviser and Broker) +44 (0) 20 7409 3494
James Harris
James Bellman
Chairman's Statement
Introduction
I am pleased to report the unaudited interim results for the six months ended
30 September 2021 (the "Period") for Northern Bear plc (the "Company" and,
together with its subsidiaries, the "Group").
Further to the recent 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 impairment charges) of £1.5m (H1 2020: £0.5m) and
diluted earnings per share of 6.1p (H1 2020: 13.2p diluted loss per share).
In our last Annual Report and Accounts published in July 2021, we noted the
industry-wide challenges with respect to both availability and price inflation
of construction materials. There also have been well-publicised challenges
in relation to attracting and retaining employees in the construction
industry. Despite the impact of these headwinds on our businesses, our Group
generated strong operating results that exceeded those of the comparable
pre-pandemic period for the six months ended 30 September 2019.
Trading
Despite industry-wide challenges, our Group companies generated strong results
in aggregate during the Period. Our roofing division was somewhat more
adversely impacted by materials shortages than the other divisions, but our
companies have strong and well-established supplier relationships and have
been able, on the whole, to work with our robust supply chain to ensure
continuity of supply for contracts
Revenue for the Period was £30.0m (H1 2020: £20.1m) and, through the greater
economy of scale from higher revenues along with continued careful contract
selection and execution, gross margins materially exceeded those of the period
ending 30 September 2020 ("Prior Period") at 19.5% (H1 2020: 14.5%).
Administrative expenses increased to £4.5m (H1 2020: £3.8m) due to both an
element of semi-variable costs in the overhead base and the voluntary and
temporary wage reductions incurred by Group directors during the Prior Period.
Overall profit before income tax for the Period was £1.4m (H1 2020: £2.4m
loss) and diluted earnings per share was 6.1p (H1 2020: 13.2p diluted loss per
share).
Cash flow
Net cash at 30 September 2021 was £0.6m (30 September 2020: £0.6m, 31 March
2021: £2.1m).
We had stated in the March 2021 results that the cash position at 31 March
2021 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 the cash balance during the Period.
As we have emphasised previously, the net cash/bank debt position represents a
snapshot at a particular point in time and our net cash/bank debt position can
move by up to £1.5m in a matter of days given the nature, size and variety of
contracts and their associated working capital requirements. The highest bank
position during the Period was £2.5m net cash, the lowest net bank debt
position during the period was £1.2m net bank debt, and the average was
£0.1m net cash.
Our existing £3.5m revolving credit facility with Virgin Money plc
(previously known as Yorkshire Bank) was renewed in March 2020 and provides us
with committed working capital facilities to May 2023, along with a £1m
overdraft facility which is renewable annually.
Strategy and Dividend
Following recent Board appointments, as detailed below, I have commenced a
process of engaging with the Board and management to discuss and review the
Group's strategy and approach to capital allocation, including the dividend
policy. Once this process is completed, we will provide further information
to shareholders. Our existing 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.
Outlook
Our forward order book remains strong and should support our trading
performance in the coming months, subject to the ongoing supply chain and
staffing challenges noted above and the uncertainty over the long-term outlook
for the COVID-19 pandemic.
People and Board changes
As announced on 11 November 2021, I am pleased that Harry Samuel and Anil
Khera were appointed to the Board as non-executive directors effective as of
that date.
Anil Khera began his career at Credit Suisse, within DLJ Real Estate Capital
Partners, before joining Blackstone's real estate investment team in 2006
where he spent 10 years, becoming a managing director of the Real Estate
Capital Markets team in 2011. In 2016, Mr Khera founded Node Living, a fully
integrated residential investment, development and management company based in
London which operates across Europe and North America.
Harry Samuel spent over 20 years across various leadership roles within Royal
Bank of Canada (RBC). This included roles as Global Head of Funding and
Liquidity Asset Management, Foreign Exchange and Commodities, and Fixed Income
and Currencies, before becoming CEO of RBC Capital Markets Europe in 2011 and
subsequently CEO of RBC Investor & Treasury Services and Chair of RBC's
European Executive Committee from 2013 to 2019. Mr Samuel currently serves as
CEO of Affordable Housing Communities Limited and Managing Director of
Affordable Housing and Healthcare Group Limited, a leading UK developer,
constructor and operator of shared ownership communities working in
partnership with local authorities, NHS Trusts and institutional investors to
create socially impactful developments.
The Company also announces that, further to the Company's announcement of 24
August 2021, John Holroyd has retired from the Board. Steve Roberts,
formerly Executive Chairman, resigned as a Director of the Company on 24
August and continues to be part of the Group's operational management team and
a Director of all our subsidiary companies. The Board and I would like to
thank John and Steve for their contributions as Directors of the Company.
Conclusion
I am pleased to report a strong set of results for the Period that exceeded
those of the comparable pre-pandemic period for the six months ended 30
September 2019 despite widespread industry challenges. 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.
Jeff Baryshnik
Non-Executive Chairman
26 November 2021
Consolidated statement of comprehensive income
for the six month period ended 30 September 2021
6 months ended 6 months ended Year ended
30 September 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 29,973 20,105 49,182
Cost of sales (24,114) (17,190) (40,726)
Gross profit 5,859 2,915 8,456
Other operating income 86 1,366 1,549
Administrative expenses (4,459) (3,806) (8,640)
Operating profit (before amortisation and other adjustments) 1,486 475 1,365
Impairment charge - (2,807) (2,807)
Amortisation of intangible assets arising on acquisitions (7) (16) (13)
Operating profit/(loss) 1,479 (2,348) (1,455)
Finance costs (65) (68) (176)
Profit/(loss) before income tax 1,414 (2,416) (1,631)
Income tax expense (270) (60) (162)
Profit/(loss) for the period 1,144 (2,476) (1,793)
Total comprehensive income/(loss) attributable to equity holders of the parent 1,144 (2,476) (1,793)
Earnings per share from continuing operations
Basic earnings/(loss) per share 6.1p (13.3p) (9.6p)
Diluted earnings/(loss) per share 6.1p (13.2p) (9.6p)
Consolidated balance sheet
at 30 September 2021
30 September 2021 30 September 2020 31 March
2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Property, plant and equipment 3,893 3,375 3,596
Right of use asset 1,183 1,198 1,094
Intangible assets 18,037 18,040 18,044
Trade and other receivables 1,006 1,080 872
Total non-current assets 24,119 23,693 23,606
Inventories 1,080 881 974
Trade and other receivables 12,010 10,673 9,843
Cash and cash equivalents 563 569 2,114
Total current assets 13,653 12,123 12,931
Total assets 37,772 35,816 36,537
Equity
Share capital 190 190 190
Capital redemption reserve 6 6 6
Share premium 5,169 5,169 5,169
Merger reserve 9,703 9,703 9,703
Retained earnings 8,362 6,535 7,218
Total equity attributable to equity holders of the Company 23,430 21,603 22,286
Liabilities
Deferred consideration 50 50 -
Trade and other payables - - 122
Lease liabilities 1,078 1,114 1,039
Deferred tax liabilities 487 294 487
Total non-current liabilities 1,615 1,458 1,648
Loans and borrowings 22 31 28
Deferred consideration - 50 50
Trade and other payables 11,703 11,705 11,936
Lease liabilities 565 571 533
Current tax payable 437 398 56
Total current liabilities 12,727 12,755 12,603
Total liabilities 14,342 14,213 14,251
Total equity and liabilities 37,772 35,816 36,537
Consolidated statement of changes in equity
for the six month period ended 30 September 2021
Share capital Capital redemption reserve Share premium Merger reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2020 190 6 5,169 9,703 9,011 24,079
Total comprehensive income for the period
Loss for the period - - - - (2,476) (2,476)
At 30 September 2020 190 6 5,169 9,703 6,535 21,603
At 1 April 2020 190 6 5,169 9,703 9,011 24,079
Total comprehensive income for the year
Loss for the year - - - - (1,793) (1,793)
At 31 March 2021 190 6 5,169 9,703 7,218 22,286
At 1 April 2021 190 6 5,169 9,703 7,218 22,286
Total comprehensive income for the period
Profit for the period - - - - 1,144 1,144
At 30 September 2021 190 6 5,169 9,703 8,362 23,430
Consolidated statement of cash flows
for the six month period ended 30 September 2021
6 months ended 6 months ended Year ended
30 September 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Operating profit/(loss) for the period 1,479 (2,348) (1,455)
Adjustments for:
Depreciation of property, plant and equipment 312 283 600
Depreciation of lease asset 174 185 373
Amortisation 7 16 13
Impairment charge - 2,807 2,807
Profit/(loss) on sale of property, plant and equipment (5) 2 -
1,967 945 2,338
Change in inventories (106) 126 33
Change in trade and other receivables (2,301) (2,472) (1,434)
Change in trade and other payables (355) 2,514 2,867
Cash (used in)/generated from operations (795) 1,113 3,804
Interest paid (42) (33) (176)
Tax paid 111 - (252)
Net cash flow from operating activities (726) 1,080 3,376
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 240 218 420
Acquisition of property, plant and equipment (727) (591) (1,200)
Acquisition of subsidiary (net of cash acquired) - - (50)
Net cash from investing activities (487) (373) (830)
Cash flows from financing activities
Repayment of borrowings (6) (3,500) (3,503)
Repayment of lease liabilities (332) (296) (587)
Net cash from financing activities (338) (3,796) (4,090)
Net decrease in cash and cash equivalents (1,551) (3,089) (1,544)
Cash and cash equivalents at start of period 2,114 3,658 3,658
Cash and cash equivalents at end of period 563 569 2,114
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 UK. 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 2021 Annual Report and Financial Statements. The financial information for the half years ended 30 September 2021 and 30 September 2020 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 International Financial Reporting Standards in conformity with the Companies Act 2006. The comparative financial information for the year ended 31 March 2021 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 2021 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 2021 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 2021 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 2021, and will be adopted in
the 2022 financial statements. The accounting policies applied are based on
the recognition and measurement principles of IFRS in issue as adopted by the
UK and are effective at 31 March 2022 or are expected to be adopted and
effective at 31 March 2022.
New and amended standards and interpretations issued by the IASB that will
apply for the first time in the next annual financial statements include:
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16) - effective date on or after 1 January
2021.
· Covid 19-Related Rent Concessions Beyond 30 June 2021 (Amendment
to IFRS 16 Leases) - effective date on or after 1 April 2021.
Adoption of the above standards and interpretations is 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 2021 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 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
Profit/(loss) for the period (£'000) 1,144 (2,476) (1,793)
18,665 18,665 18,665
Weighted average number of ordinary shares excluding shares held in treasury
for the proportion of the year held in treasury ('000)
Basic earnings/(loss) per share 6.1p (13.3p) (9.6p)
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 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
Profit/(loss) for the period (£'000) 1,144 (2,476) (1,793)
18,665 18,665 18,665
Weighted average number of ordinary shares excluding shares held in treasury
for the proportion of the year held in treasury ('000)
Effect of potential dilutive ordinary shares ('000) 43 46 43
Diluted weighted average number of ordinary shares excluding shares held in 18,708 18,711 18,708
treasury for the proportion of the year held in treasury ('000)
Diluted earnings/(loss) per share 6.1p (13.2p) (9.6p)
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 or loss for the
period, adjusted for impairment charges, acquisition related items, and
transaction and other one-off costs, divided by the weighted average number of
ordinary shares outstanding as presented above.
Adjusted earnings per share is calculated as follows:
6 months ended 6 months ended Year ended
30 September 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
Profit/(loss) for the period (£'000) 1,144 (2,476) (1,793)
Impairment charge - 2,807 2,807
Amortisation of intangible assets arising on acquisitions 7 16 13
Corporation tax effect of above items - - -
Adjusted profit for the period (£'000) 1,151 347 1,027
18,665 18,665 18,665
Weighted average number of ordinary shares excluding shares held in treasury
for the proportion of the year held in treasury ('000)
Adjusted basic earnings per share 6.2p 1.9p 5.5p
Adjusted diluted earnings per share 6.2p 1.9p 5.5p
5. Finance costs
6 months ended 6 months ended Year ended
30 September 2021 30 September 2020 31 March 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
On bank loans and overdrafts 42 33 97
Finance charges on lease liabilities 23 35 79
Unwinding of discount on deferred consideration liabilities - - -
Total finance costs 65 68 176
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 11 to 14, and 68
to 71 of our Annual Report and Financial Statements for the year ended 31
March 2021, which are available on the Company's website,
www.northernbearplc.com (http://www.northernbearplc.com) .
7. Half year report
The condensed financial statements were approved by the Board of Directors on
26 November 2021 and are available on the Company's website,
www.northernbearplc.com (http://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 as it forms part of United Kingdom domestic law pursuant to
the European Union (Withdrawal) Act 2018, as amended.
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