Last checked at 27 Aug 2013 07:00
27 August 2013
Northern Bear PLC
("Northern Bear" or the "Company")
Results for the year ended 31 March 2013
Highlights
· Profit from continuing operations (before exceptional items) £1.0m (2012: 0.9m)
· Adjusted (before exceptional items) earnings per share 5.5p (2012: 4.8p)
· Net bank debt decreased to £6.4m (2012: £7.0m).
Howard Gold, Chairman of Northern Bear Plc commented:
"The Group has continued to perform well, despite difficult trading conditions. We have seen continued strong performance from our Roofing division and an uplift in the level of new house build projects during the year.
We have made changes to the Group's management structure during the year, including the appointment of Graham Jennings as Managing Director of the Group in July 2012. I am confident that this provides us with a more effective management structure to meet the challenges we face going forward.
Our focus remains on improving earnings and reducing the Group's level of bank debt through operating cash flow generated.
I would like to thank all our directors and employees for their contribution during the year."
For further information contact:
Northern Bear PLC
Steve Roberts
Chief Financial Officer +44 (0) 845 680 2369
Strand Hanson Limited (Nominated Adviser)
James Harris
James Spinney +44 (0) 20 7409 3494
Chairman's Statement
Introduction
I am pleased to report the Group's results for the year to 31 March 2013.
The Group continued to perform well, despite difficult trading conditions, which were exacerbated in 2012 by the wettest summer in England and Wales for 100 years. Profit from continuing operations, before exceptional items, was £1.0m (2012: £0.9m). Adjusted earnings per share was 5.5p (2012: 4.8p).
The Group made changes to its management structure during the period, including the appointment of Graham Jennings as Managing Director of the Group in July 2012. I would like to thank Graham for his contribution to date and am confident his vast experience in the sector will allow him to guide the Group through the continued difficult trading conditions.
One of the Group's subsidiaries, MGM Ltd, incurred a significant loss in the year ended 31 March 2013 on a contract entered into in February 2011. This loss has been treated as exceptional in the accounts and details of the loss are provided in Note 7. In early 2012, Steven Gray (the previous Managing Director of MGM, from whom the Group acquired the company) was asked by the Board to oversee day to day control at MGM. Lance Rainey, formerly joint Managing Director of MGM, left the business in February 2013 and Steven continues to oversee day to day control.
Historically, all divisions were run relatively autonomously, with support from Operations Directors as required. Following the appointment of Graham Jennings as Managing Director, the Group reporting structure has changed so that all divisional Managing Directors now report directly to Graham. In addition, all contracts carrying a significant value or risk for the Group require approval by the Board.
I am pleased with the performance of the rest of the Group, particularly the roofing division where we have seen continued strong performance and also an uplift in the level of new house build projects. We have continued to deliver savings in central costs although this area remains under constant review.
The Group's results were not affected in the current period by losses from discontinued operations. The disposals of The Roof Truss Company (Northern) Limited and Hastie D Burton Limited resulted in £0.2m of exceptional costs being incurred in the prior period.
Trading
The Group continued to experience difficult trading conditions, including the adverse weather in 2012. Revenue decreased by 3.6% to £35.1m (2012: £36.4m) but the Group managed to increase its gross margins before exceptional items to 23.2% (2012: 22.8%).
The Group undertook a further review of overheads during the year and this has resulted in a reduction in administrative expenses before exceptional items to £6.5m (2012: £6.7m).
The market conditions in which the Group operates continue to be challenging and remain impacted by the current uncertain macroeconomic conditions. Despite the continued uncertainty, the Group's order books remain healthy, although the roll out of some of these orders remains difficult to predict.
Cash flow
Net bank debt at 31 March 2013 was £6.4m (2012: £7.0m).
The Board's strategy continues to include a reduction in the level of bank debt and the Group's bank continues to be supportive.
Dividend
Given the aim of reducing bank debt levels, the Board believes that it would not be appropriate to declare a final dividend for the year.
Strategy / Outlook
The Board's priority over recent years has been to use operating cash flow to reduce bank debt levels. Whilst this strategy will remain, we will continue to monitor opportunities for the use of funds generated, including capital investment, bolt-on acquisitions and capital repurchases.
Order books continue to be healthy and we remain cautiously optimistic with regard to maintaining current levels of trading, although market conditions remain volatile.
Our overall priority remains to improve earnings and cash flow, as well as to continue reducing the Group's level of bank debt. In this respect the Group's cost base remains under constant review.
People
Following Graham Forrest's resignation as Chief Executive Officer of the Company in October 2011, I oversaw an operational review resulting in changes to the Group's management structure. This resulted in the appointment of Graham Jennings as Managing Director of the Group effective from 30 July 2012. Keith Soulsby was also re-appointed to the Board as a Director on 11 May 2012.
I am confident that the Group now has a more effective management structure which will allow it to continue to meet the challenges it faces and which is already delivering benefits to the Group.
Steven Gray resigned from the Board on 7 February 2013. However, Steven remains with the Group in day to day control of MGM Limited.
The quality and experience of our people and the key customer relationships they maintain remain fundamental to the Group's success.
Howard Gold
Non-Executive Chairman
23 August 2013
Consolidated statement of comprehensive income
for the year ended 31 March 2013
| Beforeexceptionalitems |
Exceptionalitems |
2013 Total | Beforeexceptionalitems |
Exceptionalitems |
2012 Total | |
£000 | £000 | £000 | £000 | £000 | £000 | ||
Continuing operations | |||||||
Revenue | 35,147 | - | 35,147 | 36,412 | - | 36,412 | |
Cost of sales | (26,985) | (532) | (27,517) | (28,099) | - | (28,099) | |
Gross profit |
8,162 |
(532) |
7,630 |
8,313 |
- |
8,313 | |
Other operating income | 23 | - | 23 | 16 | - | 16 | |
Administrative expenses | (6,458) | (114) | (6,572) | (6,666) | (191) | (6,857) | |
Operating profit/(loss) |
1,727 |
(646) |
1,081 |
1,663 |
(191) |
1,472 | |
Finance income | - | - | - | 1 | - | 1 | |
Finance expense | (399) | - | (399) | (452) | - | (452) | |
Profit/(loss) before income tax |
1,328 |
(646) |
682 |
1,212 |
(191) |
1,021 | |
Income tax expense | (350) | 155 | (195) | (349) | 50 | (299) | |
Profit/(loss) from continuing operations |
978 |
(491) |
487 |
863 |
(141) |
722 | |
Discontinued operations | |||||||
Loss from discontinued operations (net of income tax) |
- |
- |
- |
- |
(159) |
(159) | |
Profit/(loss) for the year |
978 |
(491) |
487 |
863 |
(300) |
563 | |
Total comprehensive income attributable to equity holders of the parent |
487 |
563 | |||||
Basic and diluted earnings/(loss) per share | |||||||
- continuing operations | 2.7p | 4.0p | |||||
- discontinued operations | - | (0.9)p | |||||
- total operations | 2.7p | 3.1p |
Adjusted (pre exceptional) earnings per share |
| ||||||
- continuing operations | 5.5p | 4.8p | |||||
- discontinued operations | - | - | |||||
- total operations | 5.5p | 4.8p |
Consolidated statement of changes in equity
for the year ended 31 March 2013
Sharecapital | Capital redemption | Sharepremium | Mergerreserve | Retainedearnings | Totalequity | ||
£000 | £000 | £000 | £000 | £000 | £000 | ||
At 1 April 2011 |
184 |
6 |
5,169 |
10,371 |
1,569 |
17,299 | |
Total comprehensive income for the year | |||||||
Profit for the year | - | - | - | - | 563 | 563 | |
At 31 March 2012 |
184 |
6 |
5,169 |
10,371 |
2,132 |
17,862 | |
At 1 April 2012 | 184 | 6 | 5,169 | 10,371 | 2,132 | 17,862 | |
Total comprehensive income for 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 | |
Consolidated balance sheet
at 31 March 2013
2013 | 2012 |
| |||||
£000 | £000 |
| |||||
Assets |
| ||||||
Property, plant and equipment | 2,418 | 2,220 |
| ||||
Intangible assets | 21,357 | 21,348 |
| ||||
Deferred tax assets | - | 33 |
| ||||
Total non-current assets | 23,775 | 23,601 |
| ||||
|
| ||||||
Inventories | 715 | 807 |
| ||||
Trade and other receivables | 7,456 | 7,607 |
| ||||
Prepayments | 142 | 194 |
| ||||
Deferred consideration receivable | 197 | 222 |
| ||||
Cash and cash equivalents | 202 | 243 |
| ||||
Total current assets | 8,712 | 9,073 |
| ||||
Total assets |
32,487 |
32,674 |
| ||||
Equity |
| ||||||
Share capital | 184 | 184 |
| ||||
Capital redemption reserve | 6 | 6 |
| ||||
Share premium | 5,169 | 5,169 |
| ||||
Merger reserve | 10,371 | 10,371 |
| ||||
Retained earnings | 2,604 | 2,132 |
| ||||
Total equity attributable to equity holders of the Company | 18,334 | 17,862 | |||||
Liabilities |
| ||||||
Loans and borrowings | 1,692 | 2,470 |
| ||||
Deferred tax liabilities | 24 | - |
| ||||
Total non-current liabilities | 1,716 | 2,470 |
| ||||
Bank overdraft |
4,242 |
4,333 |
| ||||
Loans and borrowings | 920 | 858 |
| ||||
Trade and other payables | 7,109 | 6,713 |
| ||||
Current tax payable | 166 | 438 |
| ||||
Total current liabilities | 12,437 | 12,342 |
| ||||
Total liabilities |
14,153 |
14,812 |
| ||||
Total equity and liabilities |
32,487 |
32,674 |
| ||||
Consolidated statement of cash flows
for the year ended 31 March 2013
2013 | 2012 |
| ||||
£000 | £000 |
| ||||
Cash flows from operating activities |
| |||||
Profit for the year | 487 | 563 |
| |||
Adjustments for: |
| |||||
Depreciation | 494 | 495 |
| |||
Amortisation | 2 | - |
| |||
Finance income | - | (1) |
| |||
Finance expense | 399 | 452 |
| |||
Loss on sale of property, plant and equipment | 7 | 24 |
| |||
Income tax | 195 | 299 |
| |||
1,584 | 1,832 |
| ||||
Change in inventories and materials handling property, plant and equipment |
(284) |
(145) |
| |||
Change in trade and other receivables | 151 | (1,579) |
| |||
Change in prepayments | 52 | (49) |
| |||
Change in trade and other payables | 396 | 1,708 |
| |||
1,899 |
1,767 |
| ||||
Interest received | - | 1 |
| |||
Interest paid | (399) | (452) |
| |||
Tax paid | (410) | (271) |
| |||
Net cash from operating activities | 1,090 | 1,045 |
| |||
Cash flows from investing activities |
| |||||
Proceeds from sale of property, plant and equipment | 80 | 70 |
| |||
Proceeds from subsidiary disposal, net of cash disposed of | 25 | 644 |
| |||
Purchase of own shares | (15) | - |
| |||
Acquisition of property, plant and equipment | (228) | (181) | ||||
Acquisition of intangible assets | (11) | - | ||||
Net cash from investing activities | (149) | 533 |
| |||
Cash flows from financing activities |
| |||||
Repayment of borrowings | (684) | (983) |
| |||
Repayment of finance lease liabilities | (207) | (184) |
| |||
Net cash from financing activities | (891) | (1,167) |
| |||
Net increase in cash and cash equivalents |
50 |
411 |
| |||
Cash and cash equivalents at start of year | (4,090) | (4,501) |
| |||
Cash and cash equivalents at end of year | (4,040) | (4,090) |
|
Notes
1) Exceptional expenses
One of the Group's subsidiaries, MGM Limited, took on a significant contract for building works on a care home in February 2011. The majority of the work in relation to this contract took place during the financial year ended 31 March 2013. This was a new sphere of work for the Group and, with hindsight, not one that MGM was in a position to carry out at the contracted price. Accordingly, exceptional expenses included within cost of sales of £532,000 (2012: £nil) have been presented separately and comprise the loss on this significant contract (including reversal of previously recognised margin).
Administrative expenses include the following exceptional expenses:
2013 | 2012 | ||
£000 | £000 | ||
Continuing operations: | |||
Redundancy costs | 61 | 86 | |
Legal and professional fees | 53 | 55 | |
Aborted transaction costs | - | 50 | |
114 | 191 | ||
Discontinued operations: | |||
Legal and professional fees | - | 159 |
Redundancy costs include redundancy expenses and the related costs, including professional fees, relating to former Directors of the group and subsidiary undertakings who have not been replaced.
Aborted transaction costs represent fees incurred on potential business acquisitions which aborted.
2) Availability of accounts
The audited Annual Report and Financial Statements for the 12 months ended 31 March 2013 have today been sent to shareholders and published at http://www.northernbearplc.com/.