Preliminary Results

RNS Number : 1437L

Northern Bear Plc

02 July 2014

 



2 July 2014

Northern Bear PLC

("Northern Bear" or the "Company")

Preliminary results for the year ended 31 March 2014

Highlights

·      Profit before tax of £1.8m (2013: £0.7m)

·      Basic earnings per share 7.6p (2013: 2.7p)

·      Net bank debt decreased to £5.4m (2013: £6.4m).

·      Final dividend of 0.75p per share proposed (2013: nil)

·      Company well placed to capitalise on commercial opportunities

Steve Roberts, Executive Chairman of Northern Bear commented:

"The last year has seen a marked improvement in the performance of our business, which I believe is a response to the hard work of our staff and the careful prioritisation of resources during a period of bleak economic conditions.  The Group is now well placed to take advantage of opportunities as and when they arise, both through organic growth and bolt-on acquisitions.  With brighter macro-economic and local economic conditions, we hope to be able to announce further progress in due course." 

For further information contact:

Northern Bear PLC

Steve Roberts

Executive Chairman                                                                                                                     [phone]

Strand Hanson Limited (Nominated Adviser and Broker)

James Harris

James Spinney                                                                                                                              [phone]

Chairman's Statement

Introduction

I am pleased to report the Group's results for the year to 31 March 2014.   

The Group has performed well over the year, delivering a net profit of £1.3 million (2013: £0.5 million) and earnings per share of 7.6p (2013: 2.7p). 

The new Group reporting structure introduced following Graham Jennings' appointment as Managing Director, under which all divisional Managing Directors now report directly to Graham, continues to deliver benefits for the Group and I am confident that it will continue to do so in the future. 

The Group's results were not affected in the financial year by exceptional items or by discontinued operations.  In the previous reporting period, exceptional items of £0.6 million were incurred, of which £0.5 million was a loss on a significant contract entered into by one of the Group's subsidiaries, MGM Limited. 

Trading

Trading during the year significantly exceeded internal management forecasts, with performance during the second half of the year, which is often adversely affected by bad weather, showing particularly strong results. 

The Group's revenue increased to £36.8m (2013: £35.1m) in the year and gross profit to £9.2m (2013: £7.6m) as margins improved across the majority of the Group's companies, which is testament to the hard work of our management teams.  Gross profit in the prior year was adversely impacted by the contract entered into by MGM Limited mentioned above. 

Operating profit increased to £2.2m (2013: £1.1m) despite an increase in administrative costs to £7.0m (2013: £6.5m).  The increase in administrative costs was due to higher operating costs in certain areas, including semi-variable costs such as insurance expenditure increasing with revenue in the year, and the recruitment of additional senior management. 

Cash flow

Net bank debt at 31 March 2014 was £5.4m (2013: £6.4m).  Bank facilities were renewed on 7 April 2014 and the maturity profile of bank debt has been improved through the renewal process. 

Historically, despite very challenging trading conditions, which have impacted upon the performance of businesses in all sectors across the UK, Northern Bear has consistently managed to reduce its debt by maintaining a tight control of costs and maximising the performance of its larger divisions.  If the apparent upturn in the sector and the strong trading performance continue, this increases the possibility of a larger debt reduction, on an annual basis, in the future. 

Share option scheme

To incentivise our key officers and employees, the Company granted options in March 2014 over, in aggregate, 530,000 ordinary shares of 1p each.  These options are exercisable at 28.5p per share from 7 March 2017 until 7 March 2024, provided that the option holder is still an officer or employee of the Company at the time. 

The Board intends to continue to use share options to incentivise key people in the future. 

Dividend

The Board has kept dividend policy under review in recent years and has considered it prudent not to declare interim or final dividends, whilst pursuing a strategy of reducing the Group's level of gearing.

I am delighted to announce that, in view of the solid performance of the business and lower level of bank debt, the Board proposes the payment of a final dividend of 0.75p per share for the year ended 31 March 2014.  This is subject to shareholder approval at the Annual General Meeting on 18 August 2014 and, if approved, will be payable on 29 August 2014 to shareholders on the register on 8 August 2014. 

Strategy / Outlook

The Board's priority in recent years, whilst trading conditions have been challenging, has been to use operating cash flow to reduce bank debt levels.  Whilst this remains our overall priority, we will continue to monitor opportunities for other uses of funds generated, including capital investment, bolt-on acquisitions and capital repurchases. 

We have seen positive movement in several sectors during the year, particularly the new house building market, and continued strength in the Social Housing sector for most Group companies. 

Current order book levels are very encouraging and, although the roll out of these orders remains difficult to predict, point to the likelihood that the upward trend in performance should continue through the new financial year.  The strong pipeline of orders, coupled with a brighter outlook for both the national and local construction sectors, bodes well for our specialist building and support services businesses. 

New Trading Division

In May 2014 we announced the launch of a new trading division, Vantage Point Media, which provides an innovative new way of conducting detailed aerial surveys of buildings and roofs using state-of-the-art remote controlled hexacopters.  This is an excellent example of how we are prepared to adapt new technologies and work together to provide innovative solutions for our clients. 

Board Changes

Howard Gold stepped down in his capacity as Non-Executive Chairman of the Company on 13 February 2014, after five years in the role, in order to focus more on other business commitments, however, we are delighted that he agreed to remain on the Board as a Non-Executive Director.  Howard guided the Group through difficult circumstances in his time as Chairman, including a severe recession and a major restructuring process and I feel sure that his continued involvement will deliver benefits for the Group. 

I agreed to step up to the role of Executive Chairman, following Howard stepping down.  I have been a Director of the Company since its inception and have played a key part in assisting Graham Jennings (Group Managing Director) and the Board with the restructuring of the Group since my appointment as Finance Director in October 2009.  I look forward to my new role, guiding the Board as it continues to implement its strategy in the future. 

Tom Hayes was appointed as Finance Director and joined the Company Board as an Executive Director on 13 February 2014.  Tom is a Chartered Accountant and has substantial experience within 'Big 4' firms, in both Assurance and Corporate Finance services.  He has been involved with the Group since January 2008 and has previously worked in both divisional and Group finance roles.  I would like to welcome Tom to the Board and wish him every success in his new role. 

People

In an industry which has seen a decreasing number of skilled tradesmen over the past few years, our strategy of employing the majority of our workforce, along with investment in training new operatives, continues to reap rewards.  We are able to sustain a loyal and dedicated workforce with the skills required to meet the demands of the modern day construction industry.

The quality and experience of our people and the key customer relationships that they maintain remain fundamental to the Group's success and I would like to thank all of our employees for their contribution to the Group's results. 

Steve Roberts

Executive Chairman

2 July 2014

Consolidated statement of comprehensive income

for the year ended 31 March 2014

		2014		2013
		£000		£000
Revenue		36,781		35,147
Cost of sales
Exceptional expenses		-		(532)
Other cost of sales		(27,542)		(26,985)
		(27,542)		(27,517)
Gross profit		9,239		7,630
Other operating income		20		23
Administrative expenses
Exceptional expenses		-		(114)
Share based payments		(1)		-
Other administrative expenses		(7,025)		(6,458)
		(7,026)		(6,572)
Operating profit		2,233		1,081
Finance income		21		-
Finance expense		(502)		(399)
Profit before income tax		1,752		682
Income tax expense		(417)		(195)
Profit for the year		1,335		487
Total comprehensive income attributable to equity holders of the parent		1,335		487
Earnings per share from continuing operations
Basic earnings per share		7.6p		2.7p
Diluted earnings per share		7.5p		2.7p
Basic adjusted (pre exceptional) earnings per share		7.6p		5.5p
Diluted adjusted (pre exceptional) earnings per share		7.5p		5.5p

Consolidated statement of changes in equity

for the year ended 31 March 2014

		Share capital	Capital redemption	Share premium	Merger reserve	Retained earnings	Total equity
		£000	£000	£000	£000	£000	£000
At 1 April 2012		184	6	5,169	10,371	2,132	17,862
Total comprehensive income for the year
Profit for the year		-	-	-	-	487	487
Transactions with owners, recorded directly in equity
Buy back of shares		-	-	-	-	(15)	(15)
At 31 March 2013		184	6	5,169	10,371	2,604	18,334
At 1 April 2013		184	6	5,169	10,371	2,604	18,334
Total comprehensive income for the year
Profit for the year		-	-	-	-	1,335	1,335
Transactions with owners, recorded directly in equity
Equity settled share-based payment transactions		-	-	-	-	1	1
At 31 March 2014		184	6	5,169	10,371	3,940	19,670

Consolidated balance sheet

at 31 March 2014

		2014		2013
		£000		£000
Assets
Property, plant and equipment		2,530		2,418
Intangible assets		21,355		21,357
Total non-current assets		23,885		23,775
Inventories		831		715
Trade and other receivables		9,151		7,456
Prepayments for current assets		169		142
Deferred consideration receivable		166		197
Cash and cash equivalents		111		202
Total current assets		10,428		8,712
Total assets		34,313		32,487
Equity
Share capital		184		184
Capital redemption reserve		6		6
Share premium		5,169		5,169
Merger reserve		10,371		10,371
Retained earnings		3,940		2,604
Total equity attributable to equity holders of the Company		19,670		18,334
Liabilities
Loans and borrowings		1,039		1,692
Deferred tax liabilities		66		24
Total non-current liabilities		1,105		1,716
Bank overdraft		3,664		4,242
Loans and borrowings		1,169		920
Trade and other payables		8,261		7,109
Current tax payable		444		166
Total current liabilities		13,538		12,437
Total liabilities		14,643		14,153
Total equity and liabilities		34,313		32,487

Consolidated statement of cash flows

for the year ended 31 March 2014

		2014		2013
		£000		£000
Cash flows from operating activities
Profit for the year		1,335		487
Adjustments for:
Depreciation		496		494
Amortisation		2		2
Finance income		(21)		-
Finance expense		502		399
Loss on sale of property, plant and equipment		16		7
Equity settled share-based payment expenses		1		-
Income tax expense		417		195
		2,748		1,584
Change in inventories and materials handling property, plant and equipment		(116)		(284)
Change in trade and other receivables		(1,695)		151
Change in prepayments		(26)		52
Change in trade and other payables		1,151		396
		2,062		1,899
Interest received		21		-
Interest paid		(433)		(399)
Tax paid		(97)		(410)
Net cash from operating activities		1,553		1,090
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		147		80
Proceeds from subsidiary disposal		31		25
Purchase of own shares		-		(15)
Acquisition of property, plant and equipment		(436)		(228)
Acquisition of intangibles		-		(11)
Net cash from investing activities		(258)		(149)
Cash flows from financing activities
Repayment of borrowings		(564)		(684)
Repayment of finance lease liabilities		(244)		(207)
Net cash from financing activities		(808)		(891)
Net increase in cash and cash equivalents		487		50
Cash and cash equivalents at start of period		(4,040)		(4,090)
Cash and cash equivalents at end of period		(3,553)		(4,040)

Notes

1    Basis of preparation

The preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the EU ("Adopted IFRSs"), IFRIC interpretations and the Companies Act 2006 as applicable to companies reporting under IFRS. 

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 2014.

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 2014 or 2013. 

The financial information for the year ended 31 March 2013 is derived from the financial statements for that year, which have been delivered to the Registrar of Companies.  The auditor has reported on the 2013 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 2014 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 for the year divided by the weighted average number of ordinary shares outstanding, excluding those in treasury, calculated as follows:

	2014		2013
Profit for the year (£000)	1,335		487
Weighted average number of ordinary shares (000)	17,670		17,765
Basic earnings per share	7.6p		2.7p

The calculation of diluted earnings per share is the profit 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:

	2014		2013
Profit for the year (£000)	1,335		487
Weighted average number of ordinary shares (000)	17,670		17,765
Effect of potential dilutive ordinary shares	90		-
Diluted weighted average number of ordinary shares (000)	17,760		17,765
Diluted earnings per share	7.5p		2.7p

The calculation of basic adjusted earnings per share is the profit for the year, adjusted for exceptional charges, divided by the weighted average number or ordinary shares outstanding above. Adjusted earnings is calculated as follows:

	2014		2013
Profit for the year (£000)	1,335		487
Exceptional expenses (£000)	-		491
Profit for the year before exceptionals (£000)	1,335		978
Basic adjusted (pre exceptional) earnings per share	7.6p		5.5p

The calculation of diluted adjusted earnings per share is calculated as the profit for the year, adjusted for exceptional charges, divided by the diluted weighted average number or ordinary shares outstanding, both of which are as calculated above, giving rise to a diluted adjusted (pre exceptional) earnings per share of 7.5p (2013: 5.5p).

4    Finance income and expense

	2014 £'000		2013 £'000
Finance income
Bank interest	21		-
Finance expense
On bank loans and overdrafts	341		367
Finance charges payable in respect of finance leases and hire purchase contracts	28		32
Amortisation of transaction costs included in borrowings	133		-
	502		399

In the year ended 31 March 2013 amortisation of transaction costs of £106,000 was included in other administrative expenses. 

5    Availability of financial statements

The Group's Annual Report and Financial Statements for the year ended 31 March 2014 are expected to be approved by 21 July 2014 and will be posted to shareholders during the week commencing 21 July 2014.  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 11.00am on 18 August 2014. 

 

END

 

 

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