Last checked at 17 Nov 2008 07:00
Northern Bear Plc
("Northern Bear" or the "Company")
Interim Results for the six month period ended 30 September 2008
Northern Bear, the Northern based support services group, is pleased to announce its unaudited results for the six month period ended 30 September 2008.
HIGHLIGHTS
71% increase in turnover to £23.4 million (2007 £13.7 million)
111% increase in profit before tax to £2.1 million (2007 £1.0 million)
59% increase in earnings per share to 8.1p (2007 5.1p)
Interim dividend of 1p per share (2007 1p per share)
Interest cover of 6.5 times (2007 4.9 times)
Howard Gold, Chairman of Northern Bear commented: "We are delighted to report yet another record set of results. With profits, sales and EPS increasing significantly across the board and the continuation of our dividend policy, this is a very pleasing set of numbers - especially given the current market conditions.
"In addition, our pipeline of acquisitions remains strong, and our funders continue to support our ongoing acquisition strategy. Whilst we are currently considering a number of acquisition opportunities, we have taken the decision not to complete any further additions until 2009.
"Whilst we remain well placed and funded to complete acquisition opportunities, any slowdown in acquisition activity would provide a useful opportunity to further reduce our debt position and take advantage of further reduced interest margins as a result of a low debt / EBITDA ratio.
"With our strong balance sheet, we look forward to progressing further during the second half of the current period and feel that our broad sector exposure will help us continue to prosper in these testing times."
Enquiries please contact:
Northern Bear Plc
Graham Forrest, Chief Executive
0776 4963751
Strand Partners Limited
James Harris
020 7409 3494
St Helen's Capital
Ruari McGirr
020 7628 5582
Bishopsgate Communications
Maxine Barnes / Nick Rome
020 7562 3350
For further information on the Company please visit www.northern-bear.com
Note to Editors
Northern Bear is the holding company for a growing portfolio of northern based support services businesses currently comprising 13 businesses in total. The Company is focused on acquiring well established, cash generative businesses based in the North of England in order to expand the portfolio of services that the Group currently offers. Northern Bear is committed to diversifying its customer portfolio, and is successfully implementing its policy to further develop its business away from the cyclical "New Build" housing sector, which accounted for 10% of Northern Bear's turnover in the last six months. Northern Bear is listed on the AIM market of the London Stock Exchange under the ticker symbol "NTBR".
Northern Bear currently has 13 businesses in its portfolio, including:
Jennings Roofing Manchester (set up November 2008)
D J McGough (acquired April 2008)
A1 Trucks (acquired April 2008)
Jennings Roofing Leeds (acquired November 2007)
Hastie D Burton (acquired June 2007)
Chirmarn Surveying (acquired May 2007)
Chirmarn (acquired May 2007)
MGM (acquired February 2007)
Floor Joist (acquired December 2006)
Wensley Roofing (acquired December 2006)
Springs Roofing (acquired December 2006)
Roof Truss (acquired December 2006)
Isoler (acquired December 2006)
Chairman's Statement
I am delighted to announce the unaudited results for the Group for the six months ended 30 September 2008.
These represent the fourth set of figures published by the Group since listing on AIM in December 2006, and once again, record results are reported.
This report is presented against a background of severe and uncertain economic pressures and problems in the world financial, commercial and trading markets and we have to recognise that all businesses are, or may be, affected by these circumstances. Nevertheless, we remain committed and focussed on continued growth in earnings, whilst ensuring that our robust defensive qualities help to insulate us from the extremes suffered by certain sectors in the economy.
Turnover for the period was £23.4 million (2007 £13.7 million), with profit before tax of £2.1 million (2007 £1.0 million). The results include contributions from A1 Industrial Trucks Ltd and D J McGough Ltd, which were the two companies acquired at the beginning of the period under review.
Basic earnings per share were 8.1p (2007 5.1p) and diluted earnings per share were 7.8p (2007 4.9p). The Board has decided to declare an interim dividend of 1p per share (2007 1p per share) payable on 19 December 2008 to shareholders on the register on 28 November 2008.
The interim dividend was covered 8 times and interest cover was 6 times at the half year.
Business Review
On 2 April 2008, we announced the acquisitions of D J McGough Ltd and A1 Industrial Trucks Ltd. These two acquisitions are in line with our existing strategy of acquiring mature, cash generative, consistently profitable businesses, where the experienced incumbent management team remain in place to run these businesses. Following acquisition, we make no attempt to over-centralise or rebrand businesses; they are already well respected in the local community and benefit from substantial customer goodwill. However, we are always able to achieve economies of scale with all acquisitions.
Our existing businesses have collectively delivered record results once again and each and every one of our management teams are to be applauded for this outstanding result.
The maintenance of our margins in such testing times results from the emphasis we place on winning good quality contracts; we do not chase turnover for turnover's sake. Furthermore, the nature of our client base limits our exposure to potential bad debts.
Over the past two years, we have seen our policy of reducing our reliance on the new house build sector yield benefits. Whilst we are very keen to retain our presence in this sector, only 10% of our turnover in the last six months was generated from new house build. This move away from new house build has not been an accident; we first reported our intention as early as December 2006, at the time of our flotation. Conditions in our two new house build businesses continue to be challenging. It is however, greatly to their credit that they continue to operate on a profitable basis. We have responded to market conditions by reducing overheads and, in the case of Wensley Roofing, by aligning it more closely with our social housing businesses, to focus on regeneration and affordable housing opportunities.
The experience of our managers in changing market conditions has been pivotal in the continued growth of our public funded work. Their guidance continues to be crucial as we focus on shareholder value and sustainable growth in these more difficult times.
Outlook
Our pipeline of acquisitions remains strong, and we have the continued support of our funders to grow through acquisition. However, in the current climate, the case for making an acquisition would have to be very strong and the sustainability of underlying profits of any target solid.
Any slowdown in acquisition activity would provide a useful opportunity to further reduce our debt position and take advantage of further reduced interest margins as a result of a low debt / EBITDA ratio.
We recently renewed our overdraft facility with Yorkshire Bank on identical terms, albeit that this is currently unused due to strong cash flow across the Group.
We continue to grow our family of businesses not only by acquisition, but also by organic growth. In this regard we announced, on 13 November 2008, the opening of Jennings Roofing Manchester, a sister roofing business to the original business based in Leeds. This has been set up at a nominal net cost and is already contributing to Group profitability.
We continue to search diligently for similar opportunities. They are likely to be built around existing, long standing, customer relationships in the geographical region in which we seek to set up operations
Board Changes
On 30 June 2008, Marcus Yeoman resigned as a non-executive director. Marcus had been on the Board since flotation, his guidance and wise advice were very valuable during the Company's formative period.
On October 21 2008, Jon Pither, the co-founder and Chairman, resigned to avoid any potential conflict of interest with his other business concerns. Jon served the Board with great distinction; his influence, experience and knowledge will be greatly missed by us all. Jon continues to be a great friend and shareholder of the Company and we wish him every success in the future.
I considered it a great honour to be asked to chair this Company and accordingly I agreed to replace Jon as Chairman.
Following the departures of Jon and Marcus, we still have a very experienced Board, on which Steve Roberts and I serve as non-executive directors. We are delighted to announce that the Board will be further strengthened by today's appointment of Ian McLean as a third non-executive director.
Ian, who was part of the broking team which originally helped the Company to obtain its listing on AIM, has substantial experience in the City. He has worked in the broking and research community his entire career and, since 2002, has also sat on the board of Quayle Munro Holdings PLC, the AIM listed Edinburgh and London based merchant bank.
I feel the next six months will be very important in the shaping of Northern Bear's future, and whilst the current economic climate continues, we will focus our attentions on organic growth and I am sure that, with the talents we have across our operating businesses, we will emerge very strong from these difficult times. I am confident that our broad sector exposure will help us to continue to prosper.
Howard Gold
Chairman
14 November 2008
Consolidated income statement
for the six month period ended 30 September 2008
|
Note | Unaudited 6 months ended 30 September 2008 | Unaudited6 months ended 30 September 2007 | Audited Year ended 31 March 2008 | |
| £000 | £000 | £000 | ||
| Continuing operations | ||||
| Revenue | 23,444 | 13,705 | 32,241 | |
| Cost of sales | (16,445) | (9,804) | (22,777) | |
| Gross profit | 6,999 | 3,901 | 9,464 | |
| Other operating income | 12 | 19 | 46 | |
| Administrative expenses | (4,502) | (2,656) | (6,302) | |
| Results from operating activities | 2,509 | 1,264 | 3,208 | |
| Finance income | 20 | 24 | 64 | |
| Finance expenses | (406) | (280) | (1,020) | |
| Profit before income tax | 2,123 | 1,008 | 2,252 | |
| Income tax expense | (609) | (313) | (694) | |
| Profit for the period | 1,514 | 695 | 1,558 | |
| Basic earnings per share | 5 | 8.1p | 5.1p | 10.3p |
| Diluted earnings per share | 5 | 7.8p | 4.9p | 9.4p |
Consolidated statement of changes in equity
for the six month period ended 30 September 2008
| Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 | |
| £000 | £000 | £000 | |
| Profit for the period | 1,514 | 695 | 1,558 |
| Shares issued | 1,672 | 5,261 | 6,556 |
| Share based payments | 52 | 112 | 196 |
| Dividends | (376) | - | (169) |
| Net increase in total equity | 2,862 | 6,068 | 8,141 |
| Total equity at start of period | 17,757 | 9,616 | 9,616 |
| Total equity at end of period | 20,619 | 15,684 | 17,757 |
Consolidated balance sheet
at 30 September 2008
| Unaudited 30 September 2008 | Unaudited 30 September 2007 | Audited 31 March 2008 | ||
| £000 | £000 | £000 | ||
| Assets | ||||
| Property, plant and equipment | 3,955 | 1,965 | 2,177 | |
| Intangible assets | 24,828 | 16,749 | 20,788 | |
| Other investments | 11 | 11 | 11 | |
| Deferred tax assets | 11 | - | 11 | |
| Total non-current assets | 28,805 | 18,725 | 22,987 | |
| Inventories | 810 | 2,018 | 311 | |
| Trade and other receivables | 10,218 | 4,483 | 8,165 | |
| Prepayments for current assets | 747 | 443 | 277 | |
| Cash and cash equivalents | 292 | 3,049 | 714 | |
| Total current assets | 12,067 | 9,993 | 9,467 | |
| Total assets | 40,872 | 28,718 | 32,454 | |
| Equity | ||||
| Share capital | 188 | 159 | 170 | |
| Share premium | 5,021 | 5,075 | 5,021 | |
| Reserves | 12,589 | 9,597 | 10,935 | |
| Retained earnings | 2,821 | 853 | 1,631 | |
| Total equity attributable to equity holders of the company | 20,619 | 15,684 | 17,757 | |
| Liabilities | ||||
| Loans and borrowings | 5,485 | 4,097 | 3,400 | |
| Deferred tax liabilities | - | 67 | - | |
| Total non-current liabilities | 5,485 | 4,164 | 3,400 | |
| Bank overdraft | 3,390 | 2,383 | 2,283 | |
| Loans and borrowings | 1,994 | 929 | 1,501 | |
| Trade and other payables | 7,318 | 4,373 | 6,044 | |
| Current tax payable | 1,566 | 1,185 | 869 | |
| Deferred consideration | 500 | - | 600 | |
| Total current liabilities | 14,768 | 8,870 | 11,297 | |
| Total liabilities | 20,253 | 13,034 | 14,697 | |
| Total equity and liabilities | 40,872 | 28,718 | 32,454 | |
Consolidated statement of cash flows
for the six month period ended 30 September 2008
| Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 | |
| £000 | £000 | £000 | |
| Cash flows from operating activities | |||
| Profit for the period | 1,514 | 695 | 1,558 |
| Adjustments for: | |||
| Depreciation | 332 | 146 | 329 |
| Finance income | (20) | (24) | (64) |
| Finance expense | 406 | 280 | 1,020 |
| Loss on sale of property, plant and equipment | 4 | 1 | 3 |
| Equity settled share-based payment transactions | 52 | 112 | 196 |
| Income tax expense | 609 | 313 | 694 |
| 2,897 | 1,523 | 3,736 | |
| Change in inventories | (198) | (1,607) | 135 |
| Change in trade and other receivables | (1,585) | 958 | (1,273) |
| Change in prepayments | (355) | (213) | 26 |
| Change in trade and other payables | 651 | (495) | 98 |
| Change in deferred consideration | (100) | - | 199 |
| 1,310 | 166 | 2,921 | |
| Interest received | 20 | 24 | 64 |
| Interest paid | (406) | (280) | (1,020) |
| Tax paid | (225) | (65) | (1,555) |
| Net cash from operating activities | 699 | (155) | 410 |
| Cash flows from investing activities | |||
| Proceeds from sale of property, plant and equipment | 145 | - | 22 |
| Acquisition of subsidiary, net of cash acquired | (4,057) | (2,502) | (5,535) |
| Acquisition of property, plant and equipment | (335) | (119) | (295) |
| Net cash from investing activities | (4,247) | (2,621) | (5,808) |
| Cash flows from financing activities | |||
| Proceeds from issue of share capital | - | 3,924 | 3,906 |
| Payment of transaction costs | - | (289) | (337) |
| Proceeds from new borrowings | 3,500 | 1,850 | 4,500 |
| Repayment of borrowings | (988) | (1,354) | (3,395) |
| Payment of finance lease liabilities | (117) | (87) | (74) |
| Dividends paid | (376) | - | (169) |
| Net cash from financing activities | 2,019 | 4,044 | 4,431 |
| Net increase / (decrease) in cash and cash equivalents | (1,529) | 1,268 | (967) |
| Cash and cash equivalents at start of period | (1,569) | (602) | (602) |
| Cash and cash equivalents at end of period | (3,098) | 666 | (1,569) |
Notes
(forming part of the financial statements)
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 Group financial statements for the year ended 31 March 2008.
These condensed financial statements are unaudited and were approved by the Board of Directors on 14 November 2008.
The information for the year ended 31 March 2008 does not constitute statutory financial statements as defined by section 240 of the Companies Act 1985. 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 237(2) or (3) of the Companies Act 1985.
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 2008.
2. Changes in accounting policies
There are no significant changes to accounting policies which are expected to be effective in the current financial year and therefore there is no impact on these condensed financial statements.
3. Segment analysis
Business sector is the basis of the Group's primary segmentation. The Group operates in one business segment being building services. As a result no additional business segment information is provided. The Group's secondary segment is geography. It operates in one geographic segment, the United Kingdom, as the Group has no material operations outside the UK, and therefore, no additional geographic segment information is required to be provided.
4. Acquisitions
a) On 2 April 2008 the company acquired 100% of the issued share capital of A1 Industrial Trucks Limited. The resulting goodwill was calculated and capitalised as follows:
| | | | | | | | £000 |
| | | | | | | | |
| Fixed assets | | | | | | | |
| Tangible | | | | | | | 1,641 |
| Current assets | | | | | | | |
| Stock | | | | | | | 37 |
| Debtors | | | | | | | 212 |
| Cash | | | | | | | 1,441 |
| Current liabilities | | | | | | | (537) |
| | | | | | | | |
| | | | | | | | |
| Net assets | | | | | | | 2,794 |
| Goodwill | | | | | | | 2,540 |
| | | | | | | | |
| | | | | | | | |
| Purchase consideration | | | | | | | 5,334 |
| | | | | | | | |
| | | | | | | | |
| Satisfied by: | | | | | | | |
| Cash | | | | | | | 4,197 |
| Shares | | | | | | | 1,137 |
| | | | | | | | |
| | | | | | | | 5,334 |
| | | | | | | | |
b) On 2 April 2008 the company acquired 100% of the issued share capital of DJ McGough Limited. The resulting goodwill was calculated and capitalised as follows:
| | | | | | | | £000 |
| | | | | | | | |
| Fixed assets | | | | | | | |
| Tangible | | | | | | | 98 |
| Current assets | | | | | | | |
| Stock | | | | | | | 264 |
| Debtors | | | | | | | 371 |
| Cash | | | | | | | 484 |
| Current liabilities | | | | | | | |
| Bank overdraft | | | | | | | (8) |
| Other liabilities | | | | | | | (397) |
| | | | | | | | |
| | | | | | | | |
| Net assets | | | | | | | 812 |
| Goodwill | | | | | | | 1,500 |
| | | | | | | | |
| | | | | | | | |
| Purchase consideration | | | | | | | 2,312 |
| | | | | | | | |
| | | | | | | | |
| Satisfied by: | | | | | | | |
| Cash | | | | | | | 1,777 |
| Shares | | | | | | | 535 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | 2,312 |
| | | | | | | | |
5. Earnings per share
The calculation of basic loss per share was based on the profit for the period and on the weighted average number of ordinary shares outstanding, calculated as follows:
| Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 | |
| Profit for the period (£000) | 1,514 | 695 | 1,558 |
| Weighted average number of ordinary shares ('000) | 18,709 | 13,548 | 15,103 |
| Earnings per share | 8.1p | 5.1p | 10.3p |
The calculation of diluted earnings per share was based on the profit for the period and on the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:
| Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 | |
| Profit for the period (£000) | 1,514 | 695 | 1,558 |
| Weighted average number of ordinary shares ('000) | 19,393 | 14,321 | 16,598 |
| Earnings per share | 7.8p | 4.9p | 9.4p |
6. Dividends
The following tables analyse dividends paid and the year to which they relate:
| Dividend declared | Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 |
| Pence per share | Pence per share | Pence per share | |
| 2008 interim dividend | - | - | 1.0p |
| 2008 final dividend | 2.0p | - | - |
| 2.0p | - | 1.0p | |
| Total dividend payable | Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 |
| £000 | £000 | £000 | |
| 2008 interim dividend | - | - | 169 |
| 2008 final dividend | 376 | - | - |
| 376 | - | 169 | |
| Dividend proposed at period end and not included as a liability in the accounts | Unaudited 6 months ended 30 September 2008 | Unaudited 6 months ended 30 September 2007 | Audited Year ended 31 March 2008 |
| £000 | £000 | £000 | |
| 2008 interim dividend (1.0p per share) | - | 169 | - |
| 2008 final dividend (2.0p per share) | - | - | 376 |
| 2009 interim dividend (1.0p per share) | 188 | - | - |
| 188 | 169 | 376 | |
7. Interim results
These results were approved by the Board of Directors on 14 November 2008.
Copies of the interim statement will be sent to shareholders. Further copies will be available from the Company's registered office and are also available on our website at www.northern-bear.co.uk.