Last checked at 24 Nov 2010 07:00
Northern Bear PLC
("Northern Bear" or "the Group")
Unaudited Interim Results and Trading Update
Highlights
§ Revenue £15.9 million (2009: £15.6 million)
§ Adjusted profit before tax* from continuing operations £705,000 (2009: £665,000)
§ Adjusted earnings per share* from continuing operations 2.5p (2009: 2.4p)
§ Net bank debt reduction to £9.1 million (2009: £10.1 million)
*Calculated before share based payments and exceptional items
Graham Forrest, CEO commented:
"For the first time in two years we are able to report improved pre exceptional results from continuing operations, compared to the corresponding period in the previous year.
"This solid performance, together with our robust cash management, have contributed towards a reduction in our net debt in the past 12 months of £1.0 million.
"We continue to take the necessary steps to best position our business in a rapidly changing market place, and in this regard, we are continually evaluating numerous new opportunities."
***Ends***
For further information please contact:
Northern Bear PLC
Graham Forrest - Chief Executive Officer +44 (0) 77 6496 3751
Strand Hanson Limited
James Harris / James Spinney +44 (0) 20 7409 3494
Seymour Pierce Limited
David Banks / Katie Ratner / Paul Jewell (Corporate Broking) +44 (0) 20 7107 8000
Hansard Group
Adam Reynolds +44 (0) 20 7245 1100
Chairman's Statement
Introduction
I am pleased to announce the unaudited interim results for the six months to 30 September 2010, in which the Group delivered a solid set of results, particularly in the context of the current macro-economic climate.
Adjusted profit before tax (before exceptional items and share based payments) grew 6.0% to £705,000 (2009: £665,000), on turnover of £15.9 million, (2009: £15.6 million) a 1.9% increase.
On the same basis, adjusted earnings per share from continuing operations increased by 4.2% to 2.5p per share (2009: 2.4p).
Cash management, one of our key performance indicators, remains particularly strong, with a reduction in net bank debt to £9.1 million (2009: £10.1 million), in spite of suffering a write-off of £165,000 following the administration of Connaught plc.
Throughout the period, our Board has reviewed any under-performing businesses; this has resulted in the disposal of DJ McGough, a loss‑making business, in September of this year.
These results give us a firm foundation for future growth. Furthermore, a number of specific opportunities are beginning to present themselves as the terrain shifts following the Comprehensive Spending Review last month and the demise of a number of our competitors.
Trading
The trading environment during the six months to 30 September 2010, while continuing to be challenging, has certainly improved upon the previous year.
Turnover has increased by 1.9% to £15.9 million (2009: £15.6 million) and gross margins have been maintained at 27%.
We continue to manage our cost base, while at the same time remaining focussed on responding to opportunities as they arise.
The disposal of DJ McGough demonstrates that your Board is able to respond and adapt to changing market conditions in a very clear and focussed manner. It also indicates that the Board is prepared to take tough and decisive action in dealing with under-performing businesses.
The portfolio of businesses within the Group continues to be monitored closely by the Board.
Cash Flow
The cash performance of the Group remains very strong, with a reduction in net bank debt to £9.1 million (2009: £10.1 million).
Our main lender continues to be extremely supportive in terms of agreeing covenants and capital repayment scheduling, despite the difficult trading conditions of the past two years.
Our working capital management continues to improve, resulting in our period end trade receivables balance falling to £6.8 million (2009: £8.0 million). This is particularly important in the current environment, as highlighted by one of our largest customers, Connaught plc, falling into administration, as referred to above.
Dividend
At the time of our preliminary results for the year ended 31 March 2010, I indicated a wish to return to the paying of a dividend at the earliest possible opportunity.
While the reinstatement of a dividend remains firmly on the agenda, the timing is still uncertain and is dependent on the macro-economic recovery.
In this regard, we must remain prudent and have therefore decided that there will be no interim dividend paid.
Strategy / Outlook
Throughout the last six months, the Board has implemented a strategy to review any under-performing businesses. As previously stated, this has resulted in the disposal of DJ McGough and may lead to similar action being taken in the future should the situation arise.
Cash management is at the forefront of all Board decisions and the cost base of the business continues to be closely monitored.
Having taken these difficult decisions, there are now a number of very positive opportunities which the Board has begun to investigate.
We are working more closely with regional local authorities and will, over the course of the next few months, be applying for main contractor status, which the Board believes will enable the Group to maximise revenue generating opportunities.
Furthermore, we have been approached on a number of specific projects; currently we are completing an exercise on energy management within social housing.
We look forward to updating shareholders as the Group takes advantage of further opportunities in the coming months.
People
The key relationships in each of our businesses remain fundamental to our continued success.
I am delighted to report that these remain very strong and this, together with the commitment of our senior management, is testament to the robust nature of our business model.
I am very proud of all of our employees, and their continued efforts provide me with optimism for the future.
Howard Gold
Chairman
24 November 2010
Condensed consolidated statement of comprehensive income
for the six month period ended 30 September 2010
6 months ended | 6 months ended | Year ended | ||||
Note | 30 September 2010 | 30 September 2009 | 31 March 2010 | |||
£'000 | £'000 | £'000 | ||||
Revenue | 15,911 | 15,613 | 31,712 | |||
Cost of sales | (11,545) | (11,384) | (23,076) | |||
Gross profit | 4,366 | 4,229 | 8,636 | |||
Other operating income | 11 | 13 | 23 | |||
Administrative expenses | ||||||
Exceptional expenses | (217) | (58) | (2,320) | |||
Share based payments | (30) | (31) | (60) | |||
Other administrative expenses | (3,408) | (3,315) | (6,939) | |||
(3,655) | (3,404) | (9,319) | ||||
Operating profit/(loss) | 722 | 838 | (660) | |||
Finance expenses | (264) | (262) | (531) | |||
Profit/(loss) before income tax | 458 | 576 | (1,191) | |||
Income tax expense | (136) | (170) | (139) | |||
Profit/(loss) from continuing operations | 322 | 406 | (1,330) | |||
(Loss)/profit from discontinued operations, net of tax | (64) | 25 | (31) | |||
Profit/(loss) for the period | 258 | 431 | (1,361) | |||
Total comprehensive income attributable to equity holders of the parent | 258 | 431 | (1,361) | |||
Basic earnings/(loss) per share | ||||||
From continuing operations | 1.7p | 2.2p | (7.0)p | |||
From discontinued operations | (0.3)p | 0.1p | (0.2)p | |||
From total operations | 1.4p | 2.3p | (7.2)p | |||
Adjusted (pre exceptional) earnings/(loss) per share | ||||||
From continuing operations | 2.5p | 2.4p | 4.6p | |||
From discontinued operations | (0.3)p | 0.1p | (0.1)p | |||
From total operations | 2.2p | 2.5p | 4.5p |
Condensed consolidated statement of changes in equity
for the six month period ended 30 September 2010
Share capital | Capital redemption reserve | Share premium | Merger reserve | Retained earnings | Total equity | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
At 1 April 2009 | 190 | - | 5,169 | 12,586 | 3,330 | 21,275 | |
Total comprehensive income for the period | |||||||
Profit for the period | - | - | - | - | 431 | 431 | |
Transactions with owners, recorded directly in equity | |||||||
Equity settled share based payment transactions | - | - | - | - | 31 | 31 | |
At 30 September 2009 | 190 | - | 5,169 | 12,586 | 3,792 | 21,737 | |
At 1 April 2009 | 190 | - | 5,169 | 12,586 | 3,330 | 21,275 | |
Total comprehensive income for the year | |||||||
Loss for the year | - | - | - | - | (1,361) | (1,361) | |
Transactions with owners, recorded directly in equity | |||||||
Equity settled share based payment transactions | - | - | - | - | 60 | 60 | |
At 31 March 2010 | 190 | - | 5,169 | 12,586 | 2,029 | 19,974 | |
At 1 April 2010 | 190 | - | 5,169 | 12,586 | 2,029 | 19,974 | |
Total comprehensive income for the period | |||||||
Profit for the period | - | - | - | - | 258 | 258 | |
Transactions with owners, recorded directly in equity | |||||||
Buy back of shares | (6) | 6 | - | (514) | (1,766) | (2,280) | |
Equity settled share based payment transactions | - | - | - | - | 30 | 30 | |
At 30 September 2010 | 184 | 6 | 5,169 | 12,072 | 551 | 17,982 | |
Condensed consolidated balance sheet
at 30 September 2010
30 September 2010 | 30 September 2009 | 31 March 2010 | |||
£'000 | £'000 | £'000 | |||
Assets | |||||
Property, plant and equipment | 3,053 | 3,422 | 3,126 | ||
Intangible assets | 21,753 | 25,264 | 23,623 | ||
Other investments | 11 | 11 | 11 | ||
Total non-current assets | 24,817 | 28,697 | 26,760 | ||
Inventories | 893 | 1,000 | 916 | ||
Trade and other receivables | 6,768 | 7,981 | 7,838 | ||
Prepayments for current assets | 647 | 808 | 233 | ||
Cash and cash equivalents | 253 | 358 | 355 | ||
Total current assets | 8,561 | 10,147 | 9,342 | ||
Total assets | 33,378 | 38,844 | 36,102 | ||
Equity | |||||
Share capital | 184 | 190 | 190 | ||
Capital redemption reserve | 6 | - | - | ||
Share premium | 5,169 | 5,169 | 5,169 | ||
Merger reserve | 12,072 | 12,586 | 12,586 | ||
Retained earnings | 551 | 3,792 | 2,029 | ||
Total equity attributable to equity holders of the company | 17,982 | 21,737 | 19,974 | ||
Liabilities | |||||
Loans and borrowings | 3,352 | 4,593 | 3,810 | ||
Deferred tax liabilities | 57 | 56 | 62 | ||
Total non-current liabilities | 3,409 | 4,649 | 3,872 | ||
Bank overdraft | 4,929 | 4,904 | 4,327 | ||
Loans and borrowings | 1,379 | 1,419 | 1,425 | ||
Trade and other payables | 5,313 | 5,606 | 6,176 | ||
Current tax payable | 366 | 379 | 278 | ||
Deferred consideration | - | 150 | 50 | ||
Total current liabilities | 11,987 | 12,458 | 12,256 | ||
Total liabilities | 15,396 | 17,107 | 16,128 | ||
Total equity and liabilities | 33,378 | 38,844 | 36,102 |
Condensed consolidated statement of cash flows
for the six month period ended 30 September 2010
6 months ended | 6 months ended | Year ended | |||
30 September 2010 | 30 September 2009 | 31 March 2010 | |||
£'000 | £'000 | £'000 | |||
Cash flows from operating activities | |||||
Profit/(loss) for the period | 258 | 431 | (1,361) | ||
Adjustments for: | |||||
Depreciation | 274 | 297 | 566 | ||
Impairment | - | - | 1,806 | ||
Finance expense | 264 | 262 | 531 | ||
Loss on sale of property, plant and equipment | 2 | 16 | 60 | ||
Equity settled share based payment transactions | 30 | 31 | 60 | ||
Income tax expense | 111 | 180 | 251 | ||
939 | 1,217 | 1,913 | |||
Change in inventories | (166) | 24 | (67) | ||
Change in trade and other receivables | 672 | (499) | (356) | ||
Change in prepayments | (445) | (438) | 9 | ||
Change in trade and other payables | (641) | (635) | (65) | ||
359 | (331) | 1,434 | |||
Interest paid | (264) | (262) | (531) | ||
Tax paid | (44) | (249) | (415) | ||
Net cash from operating activities | 51 | (842) | 488 | ||
Cash flows from investing activities | |||||
Proceeds from the sale of property, plant and equipment | 27 | - | 147 | ||
Acquisition of subsidiary, net of cash acquired | (50) | (300) | (400) | ||
Disposal of subsidiary, net of cash disposed of | (9) | - | - | ||
Acquisition of property, plant and equipment | (79) | (17) | (139) | ||
Net cash from investing activities | (111) | (317) | (392) | ||
Cash flows from financing activities | |||||
Repayment of borrowings | (532) | (532) | (1,064) | ||
Payment of finance lease liabilities | (112) | (116) | (265) | ||
Net cash from financing activities | (644) | (648) | (1,329) | ||
Net decrease in cash and cash equivalents | (704) | (1,807) | (1,233) | ||
Cash and cash equivalents at start of period | (3,972) | (2,739) | (2,739) | ||
Cash and cash equivalents at end of period | (4,676) | (4,546) | (3,972) | ||
Notes
1. Basis of preparation
These condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting as adopted by the EU'. They do not include all the information required for full annual financial statements, and should be read in conjunction with the financial statements of the Group as at and for the year ended 31 March 2010.
These condensed financial statements are unaudited and were approved by the Board of Directors on 23 November 2010.
The information for the year ended 31 March 2010 does not constitute statutory financial statements as defined by section 435 of the Companies Act 2006. Those financial statements have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
The accounting policies applied by the Group in these condensed financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 March 2010, other than as disclosed in note 2.
2. Changes in accounting policies
From 1 April 2010 the following standards, amendments and interpretations became effective and were adopted by the Group:
§ Revised IFRS 3: Business combinations;
§ Amendments to IAS 27: Consolidated and separate financial statements.
The adoption of the above has not had a significant impact on the Group's profit for the period or equity.
3. Discontinued operation
On 15 September 2010, the Group disposed of DJ McGough Limited through a buy back of shares.
Results of the discontinued operation
6 months ended 30 September 2010 £000 | 6 months ended 30 September 2009 £000 | Year ended 31 March 2010 £000 | |
Revenue | 480 | 1,752 | 3,272 |
Expenses | (569) | (1,717) | (3,191) |
_______ | _______ | _______
| |
(Loss)/profit before tax | (89) | 35 | 81 |
Tax on (loss)/profit | 25 | (10) | (112) |
| _______ | _______ | _______ |
(Loss)/profit for the period | (64) | 25 | (31) |
_______ | ---_______ | _______ | |
Assets disposed of
| £000 | ||
Property, plant and equipment | 89 | ||
Inventories | 97 | ||
Trade and other receivables | 398 | ||
Prepayments for current assets | 31 | ||
Taxation receivable | 21 | ||
Cash and cash equivalents | 9 | ||
Loans and borrowings | (4) | ||
Trade and other payables | (226) | ||
Deferred tax | (5) | ||
_______
| |||
Net identifiable assets and liabilities | 410 | ||
_______ - | |||
Consideration received, satisfied in cash | - | ||
Cash disposed of | (9) | ||
_______
| |||
Net cash | (9) | ||
_______
|
4. Taxation
The taxation charge for the six months ended 30 September 2010 is calculated by applying the Directors' best estimate of the annual effective tax rate to the profit for the period.
5. Earnings per share
The calculation of basic earnings per share was based on the profit for the period and on the weighted average number of ordinary shares outstanding, calculated as follows:
6 months ended | 6 months ended | Year ended | |||||
30 September 2010 | 30 September 2009 | 31 March 2010 | |||||
Profit/(loss) for the period (£000) - continuing operations | 322 | 406 | (1,330) | ||||
(Loss)/profit for the period (£000) - discontinued operations | (64) | 25 | (31) | ||||
Profit/(loss) for the period (£000) - total | 258 | 431 | (1,361) | ||||
Weighted average number of ordinary shares (000) | 18,919 | 18,967 | 18,967 | ||||
Earnings/(loss) per share - continuing operations | 1.7p | 2.2p | (7.0)p | ||||
(Loss)/earnings per share - discontinued operations | (0.3)p | 0.1p | (0.2)p | ||||
Earnings/(loss) per share - total | 1.4p | 2.3p | (7.2)p | ||||
The calculation of adjusted earnings per share was based on the profit/(loss) for the period, adjusted for exceptional charges, and on the weighted average number of ordinary shares outstanding, calculated as follows:
6 months ended | 6 months ended | Year ended | |||||
30 September 2010 | 30 September 2009 | 31 March 2010 | |||||
Profit/(loss) for the period (£000) - continuing operations | 322 | 406 | (1,330) | ||||
Exceptional expenses (£000) | 217 | 58 | 2,320 | ||||
Less tax on exceptional expenses (£000) | (61) | (16) | (114) | ||||
Profit for the period before exceptionals (£000) - continuing operations | 478 | 448 | 876 | ||||
(Loss)/profit for the period before exceptionals (£000) - discontinued operations | (64) | 25 | (31) | ||||
Profit for the period before exceptionals (£000) - total | 414 | 473 | 845 | ||||
Weighted average number of ordinary shares (000) | 18,919 | 18,967 | 18,967 | ||||
Adjusted earnings per share - continuing operations | 2.5p | 2.4p | 4.6p | ||||
Adjusted earnings per share - discontinued operations | (0.3)p | 0.1p | (0.1)p | ||||
Adjusted earnings per share - total | 2.2p | 2.5p | 4.5p | ||||
Share options in issue do not have a dilutive impact on the earnings per share calculation.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 pages 4, 5, 6 and 45 to 49 of our Annual Report and Accounts for the year ended 31 March 2010, which are available on our website, www.northern-bear.com.
7. Related party transactions
There have been no related party transactions in the first six months of the current financial year which have materially affected the financial position or performance of the Group.
8. Half year report
The condensed financial statements were approved by the Board of Directors on 23 November 2010 and are available on the Company's website, www.northern-bear.com. Copies will be sent to shareholders and are available on application to the Company's registered office.
9. Statement of directors' responsibilities
The directors named below confirm on behalf of the Board of Directors that to the best of their knowledge:
§ The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU; and
§ The interim management report includes a fair review of the information required by:
§ DTR4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
§ DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Group during the period; and any changes in the related party transactions described in the last annual report that could do so.
The Directors of Northern Bear Plc are listed in the Annual Report and Financial Statements for the year ended 31 March 2010.
For and on behalf of the Board of Directors
GRAHAM S L FORREST
Chief Executive Officer
24 November 2010