TIDMNTBR
RNS Number : 5504H
Northern Bear Plc
25 November 2022
25 November 2022
Northern Bear plc
("Northern Bear" or the "Company")
Interim results for the six month period ended 30 September
2022
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 2022.
Financial Summary
-- Revenue of GBP34.0m (H1 FY 22: GBP30.0m)
-- Adjusted operating profit* of GBP1.5 m (H1 FY 22: GBP1.5m)
-- Net bank debt of GBP1.9m at 30 September 2022
-- Settlement of legal claim against Springs Roofing Limited, as
previously announced on 8 July 2022
-- Strong order book supportive of trading for the remainder of the financial year
* stated prior to the impact of amortisation
Jeff Baryshnik, Non-Executive Chairman of Northern Bear,
commented:
"We are pleased to announce solid operating results for the
period despite significant inflationary headwinds. The Group enjoys
a strong order book, so we are well positioned for the remainder of
the financial year."
For further information please contact:
+44 (0) 166
Northern Bear plc 182 0369
Jeff Baryshnik - Non-Executive Chairman +44 (0) 166
Tom Hayes - Finance Director 182 0369
Strand Hanson Limited (Nominated Adviser
and Broker)
James Harris +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 2022 (the "Period", "H1 FY23") for
Northern Bear plc (the "Company" and, together with its
subsidiaries, the "Group").
I am pleased to confirm the Group's results for the Period, with
adjusted operating profit (stated prior to the impact of
amortisation) of GBP1.5m (H1 FY22: GBP1.5m) and diluted earnings
per share of 6.0p (H1 FY22: 6.1p).
In our last Annual Report and Accounts published in July 2022,
we noted the continued 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 solid operating results whilst further investing in the
Group's businesses.
Trading
Despite industry-wide challenges, our Group companies generated
strong results in aggregate during the Period. 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. Additionally, we have not
experienced any slowdown in business to date despite widely
publicised concerns about rising interest rates and their potential
effects on construction generally and the housing market more
specifically.
Revenue for the Period was GBP34.0m (H1 FY22: GBP30.0m) and,
through the greater economy of scale from higher revenues along
with continued careful contract selection and execution, gross
margins were increased to 20.7% (H1 FY22: 19.5%).
However, administrative expenses increased to GBP5.6m (H1 FY22:
GBP4.5m) in large part due to increases in payroll, motor and fuel
expenses, insurance costs, and general cost inflation. The payroll
increase relates primarily to the recruitment of additional
commercial and operational staff, in particular at MGM and Isoler,
both of which have performed strongly in recent years and are
businesses where we see further opportunities for profitable
growth.
Overall profit before income tax for the Period was GBP1.4m (H1
FY22: GBP1.4m) and diluted earnings per share was 6.0p (H1 FY2022:
6.1p).
Cash flow
Net bank debt at 30 September 2022 was GBP1.9m (30 September
2021: GBP0.6m net cash, 31 March 2022: GBP2.2m net cash).
We had stated in the 2022 annual results that the cash position
at 31 March 2022 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, along
with increased turnover levels, has created an increased working
capital requirement which reduced the cash balance during the
Period.
As we announced in July 2022, one of the Company's subsidiaries,
Springs Roofing Limited ("Springs"), settled a claim by Engie
Regeneration (FHM) Limited for GBP0.6 million, which also impacted
the Group's consolidated cash balances. The claim related to
roofing work undertaken between April 2009 and March 2011 on seven
care home properties. The Springs directors believed that the claim
was without merit and this position was supported by third-party
technical expert and legal advice. In reaching the agreed
settlement set out above, Springs considered the management time
commitment, the legal costs and the commercial risk of continued
litigation. Springs, and the wider Group, retain excellent
commercial relationships with Engie (now known as Equans), which
continues to be an important and valued customer. The settlement
was satisfied from the Group's existing cash resources in August
2022 and was previously recorded as an exceptional item in the
Group's annual results to March 2022.
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 GBP1.5m in a
matter of days given the nature, size and variety of contracts and
their associated working capital requirements. The highest net cash
position during the Period was GBP2.1m, the lowest net bank debt
position during the Period was GBP2.7m, and the average net bank
debt position during the Period was GBP0.7m.
Our existing GBP3.5m revolving credit facility with Virgin Money
plc (previously known as Yorkshire Bank) was last renewed in March
2020 and provides us with committed working capital facilities to
May 2023, along with a GBP1.0m overdraft facility which is
renewable annually. We have already commenced initial renewal
discussions with Virgin Money and these have been positive to
date.
Strategy and Dividend
As previously announced, I commenced a process of engaging with
the Board and management to discuss and review the Group's strategy
and approach to capital allocation with a focus on further
increasing shareholder value. As part of this review, we have
increased our emphasis on seeking higher margin business
opportunities with the goal of continually improving our operating
margins. We anticipate completing this review over the coming
months.
As a result of this ongoing review, which includes dividend
policy, we did not declare a final dividend for the year ended
March 2022. I would note that we have the cash resources available
to pay a final dividend commensurable with prior year dividends,
should we have decided to declare one. Any future dividends would
be in line with the Group's relative performance, after taking into
account the Group's available resources, working capital
requirements, corporate opportunities, debt obligations, and the
macro-economic environment.
Outlook
Our forward order book remains strong and should continue to
support our trading performance for the remainder of the financial
year, subject to the ongoing supply chain and staffing challenges
noted above, the winter weather conditions, and the wider
macro-economic environment.
We note the Bank of England's recent commentary on the UK
economic outlook and the likelihood of recession, along with the
potential impact of higher interest rates on the construction
industry and housing market, and ever-increasing energy costs.
Our Group traded profitably through the last major recession in
2008-2009 and we have relatively limited exposure to new build
housing work at approximately 10 to 15% of current Group turnover.
While we are mindful that trading conditions may well become more
challenging, our results in October were in line with management
expectations and we have not seen any drop-off in trading to date.
Further, although we have been impacted by higher fuel and vehicle
costs in the Period, our Group exposure to heat, light and power
costs is relatively low at less than GBP0.1m per annum.
Conclusion
I am pleased to report solid results for the Period 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, including through continued training and
health and safety compliance. I would like to thank all of our
employees for their hard work and contribution.
Jeff Baryshnik
Non-Executive Chairman
25 November 2022
6 months ended 6 months ended Year ended
30 September 30 September
2022 2021 31 March 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 33,951 29,973 61,098
Cost of sales (26,935) (24,114) (48,642)
--------------- --------------- --------------
Gross profit 7,016 5,859 12,456
Other operating income 13 86 99
Administrative expenses (5,573) (4,459) (10,005)
--------------- --------------- --------------
Operating profit (before
amortisation and other
adjustments) 1,456 1,486 2,550
--------------- --------------- --------------
One-off costs - - (648)
Impairment charge - - (2,612)
Amortisation of intangible
assets arising on acquisitions (6) (7) (13)
--------------- --------------- --------------
Operating profit/(loss) 1,450 1,479 (723)
Finance costs (89) (65) (156)
--------------- --------------
Profit/(loss) before income
tax 1,361 1,414 (879)
Income tax expense (234) (270) (449)
--------------- --------------- --------------
Profit/(loss) for the
period 1,127 1,144 (1,328)
--------------- --------------- --------------
Total comprehensive income/(loss)
attributable to equity
holders of the parent 1,127 1,144 (1,328)
=============== =============== ==============
Earnings per share from
continuing operations
Basic earnings/(loss) per
share 6.0p 6.1p (7.1)p
Diluted earnings/(loss)
per share 6.0p 6.1p (7.1)p
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Property, plant and equipment 4,550 3,893 4,413
Right of use asset 1,596 1,183 1,702
Intangible assets 15,413 18,037 15,419
Trade and other receivables 783 1,006 708
Total non-current assets 22,342 24,119 22,242
Inventories 1,383 1,080 1,404
Trade and other receivables 14,535 12,010 12,152
Cash and cash equivalents 150 563 3,233
Total current assets 16,068 13,653 16,789
------------- ------------- ---------
Total assets 38,410 37,772 39,031
============= ============= =========
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 7,034 8,362 5,907
Total equity attributable
to equity holders of the Company 22,102 23,430 20,975
============= ============= =========
Liabilities
Loans and borrowings - - 1,000
Trade and other payables 168 - 58
Lease liabilities 1,433 1,078 1,606
Deferred tax liabilities 879 487 879
Total non-current liabilities 2,480 1,565 3,543
------------- ------------- ---------
Loans and borrowings 2,028 22 38
Deferred consideration - 50 -
Trade and other payables 10,796 11,703 13,210
Provisions - - 600
Lease liabilities 615 565 609
Current tax payable 389 437 56
Total current liabilities 13,828 12,777 14,513
------------- ------------- ---------
Total liabilities 16,308 14,342 18,056
============= ============= =========
Total equity and liabilities 38,410 37,772 39,031
============= ============= =========
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 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
========= ============ ========= ========= ========== ========
At 1 April 2021 190 6 5,169 9,703 7,218 22,286
Total comprehensive income
for the year
Loss for the year - - - - (1,328) (1,328)
Transactions with owners,
recorded directly in equity
Exercise of share options - - - - 17 17
At 31 March 2022 190 6 5,169 9,703 5,907 20,975
========= ============ ========= ========= ========== ========
At 1 April 2022 190 6 5,169 9,703 5,907 20,975
Total comprehensive income
for the period
Profit for the period - - - - 1,127 1,127
At 30 September 2022 190 6 5,169 9,703 7,034 22,102
========= ============ ========= ========= ========== ========
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating profit/(loss) for
the period 1,450 1,479 (723)
Adjustments for:
Depreciation of property,
plant and equipment 361 312 671
Depreciation of lease asset 204 174 374
Amortisation 6 7 13
Impairment charge - - 2,612
Profit/(loss) on sale of property,
plant and equipment (16) (5) (29)
2,005 1,967 2,918
Change in inventories 21 (106) (430)
Change in trade and other
receivables (2,458) (2,301) (2,145)
Change in trade and other
payables (2,903) (355) 1,810
--------------- --------------- -----------
Cash (used in)/generated
from operations (3,335) (795) 2,153
Interest paid (56) (42) (101)
Tax paid 99 111 (57)
--------------- --------------- -----------
Net cash flow from operating
activities (3,292) (726) 1,995
--------------- --------------- -----------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment 193 240 588
Acquisition of property, plant
and equipment (614) (727) (1,747)
Acquisition of subsidiary
(net of cash acquired) - - (50)
--------------- --------------- -----------
Net cash from investing activities (421) (487) (1,209)
--------------- --------------- -----------
Cash flows from financing
activities
Issue of borrowings 990 - 1,010
Repayment of borrowings - (6) -
Repayment of lease liabilities (360) (332) (694)
Proceeds from the exercise
of share options - - 17
Net cash from financing activities 630 (338) 333
--------------- --------------- -----------
Net decrease in cash and
cash equivalents (3,083) (1,551) 1,119
Cash and cash equivalents
at start of period 3,233 2,114 2,114
Cash and cash equivalents
at end of period 150 563 3,233
=============== =============== ===========
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 2022 Annual Report
and Financial Statements. The financial information for the half
years ended 30 September 2022 and 30 September 2021 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 the requirements of the
Companies Act 2006 and UK adopted International Accounting
Standards. The comparative financial information for the year ended
31 March 2022 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 2022
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 2022 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 2022 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 2022, and will be adopted in the
2023 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 2023 or
are expected to be adopted and effective at 31 March 2023.
New and amended standards and interpretations issued by the IASB
that will apply for the first time in the next annual financial
statements include:
-- Reference to the Conceptual Framework (Amendments to IFRS 3
Business Combina ti ons) - e ff ec ti ve date on or a ft er 1
January 2022;
-- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16) - e ff ec ti ve date on or a ft er 1 January
2022;
-- Onerous Contracts - Cost of Ful fi lling a Contract
(Amendments to IAS 37 Provisions, Con ti ngent Liabili ti es and
Con ti ngent Assets) - e ff ec ti ve date on or a ft er 1 January
2022; and
-- Annual improvements 2018 - 2020 cycle - e ff ec ti ve date on or a ft er 1 January 2022.
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 2022
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
2022 2021 2022
Unaudited Unaudited Audited
Profit/(loss) for the period
(GBP'000) 1,127 1,144 (1,328)
------------- ------------- -----------
Weighted average number of ordinary
shares excluding shares held
in treasury for the proportion
of the year held in treasury
('000) 18,725 18,665 18,674
Basic earnings/(loss) per share 6.0p 6.1p (7.1)p
------------- ------------- -----------
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
2022 2021 2022
Unaudited Unaudited Audited
Profit/(loss) for the period
(GBP'000) 1,127 1,144 (1,328)
------------- ------------- -----------
Weighted average number of
ordinary shares excluding shares
held in treasury for the proportion
of the year held in treasury
('000) 18,725 18,665 18,674
Effect of potential dilutive
ordinary shares ('000) 15 43 42
------------- ------------- -----------
Diluted weighted average number
of ordinary shares excluding
shares held in treasury for
the proportion of the year
held in treasury ('000) 18,740 18,708 18,716
------------- ------------- -----------
Diluted earnings/(loss) per
share 6.0p 6.1p (7.1)p
------------- ------------- -----------
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 6 months
ended ended Year ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
Profit/(loss) for the period (GBP'000) 1,127 1,144 (1,328)
Impairment charge - - 2,612
One-off costs - - 648
Amortisation of intangible assets
arising on acquisitions 6 7 13
Corporation tax effect of above
items - - (123)
------------- ------------- -----------
Adjusted profit for the period
(GBP'000) 1,133 1,151 1,822
------------- ------------- -----------
Weighted average number of ordinary
shares excluding shares held in
treasury for the proportion of
the year held in treasury ('000) 18,725 18,665 18,674
Adjusted basic earnings per
share 6.1p 6.2p 9.8p
------------- ------------- -----------
Adjusted diluted earnings per
share 6.0p 6.2p 9.7p
------------- ------------- -----------
5. Finance costs
6 months 6 months
ended ended Year ended
30 September 30 September 31 March
2022 2021 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
On bank loans and overdrafts 56 42 101
Finance charges on lease liabilities 33 23 55
Total finance costs 89 65 156
------------- ------------- -----------
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 2022, which are available on the Company's website,
www.northernbearplc.com .
7. Half year report
The condensed financial statements were approved by the Board of
Directors on 25 November 2022 and are available on the Company's
website, www.northernbearplc.com . Copies will be sent to
shareholders and are available on application to the Company's
registered office.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law pursuant to the European Union
(Withdrawal) Act 2018, as amended.
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END
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