Business
Northern Bear : interim report 30 Sep 2023
Northern Bear : interim report 30 Sep
About this update from Northern Bear Plc
29 November 2023 Northern Bear plc (" Northern Bear " or the " Company ") Interim results for the six month period ended 30 September 2023 Northern Bear (LSE:NTBR), the AIM quoted holding company of the group of companies providing specialist building and support services headquartered in Northern England and serving customers across the UK, is pleased to announce the unaudited interim results for the Company and its subsidiaries (together the "Group") for the six months to 30 September 2023 (the "Period" or "H1 FY24"). Financial Summary Revenue of £36.9m, representing an increase of 8.7% ( H1 FY23: £34.0m ) Operating profit of £1.8m*, representing an increase of 20.9% ( H1 FY23: £1.5m ) Profit for the period up 11.6% to £1.3m (H1 FY23: £1.1m) Basic earnings per share up 11.7% to 6.7p (H1 FY23: 6.0p) Net cash of £0.4m as at 30 September 2023 (30 September 2022: £1.9m net bank debt; 31 March 2023: £3.2m net cash) Equity dividends paid of £0.6m in the Period (H1 FY23: £nil) Post period end: return of capital of approximately £3.1m by way of tender offer for 5 million Ordinary Shares at a fixed price of 62p per Ordinary Share, expected to complete in December 2023, and updated upon separately today via RNS. Operational and commercial summary The Board of Directors of Northern Bear (the "Board") is pleased with the Group's performance during the Period, with revenue and profits in line with management's expectations and ahead of strong prior year results. Site activity levels remained high despite the ongoing macro-economic challenges and their related impact on the construction industry. The results in the Period are testament to the hard work and commitment of the Group's employee base. Outlook The Group has traded well during the first half of FY24 and has the potential to trade ahead of strong prior year results should this level of performance continue. At this stage, the Board confirms that the Group is trading in line with market expectations. Our forward order book remains strong and should support our trading performance in the coming months. No material adjustments to reported operating profit in the Period or H1 FY23 Harry Samuel, Non-Executive Chairman of Northern Bear, commented: "Notwithstanding the challenging macro-economic environment, the Group's performance has been strong during the Period and beyond, with a robust pipeline of new business opportunities supported by the continued efforts of our dedicated workforce." For further information please contact: Northern Bear plc Harry Samuel - Non-Executive Chairman +44 (0) 166 182 0369 Tom Hayes - Finance Director +44 (0) 166 182 0369 Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409 3494 James Harris James Bellman Hybridan LLP (Nominated Broker) +44 (0) 20 3764 2341 Claire Louise Noyce Northern Bear plc Interim Report 30 September 2023 Contents Advisers 2 Chairman's statement 3 Consolidated statement of comprehensive income 5 Consolidated balance sheet 6 Consolidated statement of changes in equity 7 Consolidated statement of cash flows 8 Notes 9 1 Advisers Auditor Nominated Adviser Saffery LLP Strand Hanson Limited Mitre House 26 Mount Row North Park Road London Harrogate W1K 3SQ HG1 5RX Nominated Broker Registrar Hybridan LLP Link Group 3rd Floor 10th Floor Moor Place Central Square 1 Fore St Ave 29 Wellington Street London Leeds EC2Y 9DT LS1 4DL Legal advisers Bankers Mincoffs Solicitors LLP Virgin Money plc 5 Osborne Terrace 94-96 Briggate Jesmond Leeds Newcastle upon Tyne LS1 6NP NE2 1SQ Registered office A1 Grainger Prestwick Park Prestwick Newcastle upon Tyne NE20 9SJ 2 Chairman's statement Introduction I am delighted to report the unaudited interim results for the Company and its subsidiaries (together the "Group") for the six months ended 30 September 2023 (the "Period" or "H1 FY24"). These results represent a significant improvement on what were considered very strong results in the prior period ended 30 September 2022 (the "Prior Period" or "H1 FY23), and are testament to the hard work and commitment of the Group's employee base. Trading Despite ongoing macro-economic challenges and their related impact on the construction industry, our site activity levels remained high during the Period across our Group of companies. This led to revenue in the Period increasing by 8.7% to £36.9m (H1 FY23: £34.0m). Gross margin increased to 22.2% (H1 FY23: 20.7%) through both greater economies of scale from higher revenues and continued careful contract selection and execution. This was offset to an extent by administrative expenses increasing to £6.4m from £5.6m to support the higher revenue levels. All of our Roofing, Specialist Building Services, and Materials Handling divisions made positive trading contributions during the Period. As reported in our results for the financial year ended 31 March 2023 ("FY23"), Arcas Building Solutions undertook a small number of contracts under prior management where significant trading losses were incurred totalling £733,000 (including a provision for losses through to completion). John Davies was appointed as Managing Director at Arcas in April 2023 and has since made significant commercial, management, and systems' improvements to the business. I am pleased to report that Arcas traded profitably in the Period. As in prior years, we have included a calculation of adjusted Operating Profit, adjusted EBITDA, and adjusted earnings per share in note 4 to these interim results as supplemental measures of the Group's profitability, in addition to the statutory measures defined under IFRS. The only adjusting item to Operating Profit in the Period and Prior Period is for amortisation of £6,000. Cash flows The Group had a net cash position, defined as cash balances less the amount drawn down on our revolving credit facility, of £0.4m at 30 September 2023 (30 September 2022: net bank debt of £1.9m; 31 March 2023: net cash of £3.2m). As in prior years, the financial year-end balance is usually a high point reflecting favourable working capital movements, and excess cash balances would be expected to normalise post year-end. During the Period. the Company paid an ordinary dividend of 2.0p per ordinary share (H1 FY23: nil) and a further special dividend of 1.0p per ordinary share (H1 FY23: nil), providing a return of capital to shareholders of £0.6m (H1 FY23: £nil). As we have emphasised in prior results, our net cash (or net bank debt) position represents a snapshot at a particular point in time and can move by up to £1.5m in a matter of days, given the nature, size and variety of contracts that we work on and the related working capital balances. The lowest position in the Period was £0.7m net bank debt, and the highest position in the Period was £3.3m net cash, and the average was £0.7m net cash. 3 Chairman's statement (continued) Tender offer and new bank facilities On 23 October 2023, we announced a return of capital of up to £3.1m by way of Tender Offer to shareholders for up to 5 million Ordinary Shares at a fixed price of 62 pence per Ordinary Share. This was approved by shareholders at a General Meeting on 15 November 2023; further to this we announced this morning that the Tender Offer was fully subscribed, and it is expected to complete on or around 8 December 2023. The return of capital of £3.1m, plus associated costs, will be funded using both existing cash resources and an increase of £1.0m to the Group's existing debt facilities of £4.5m from Clydesdale Bank plc (trading as Virgin Money). We had previously stated that costs and expenses related to the Tender Offer were not expected to exceed an aggregate of £0.4 million inclusive of VAT. While the final amount will only be confirmed following conclusion of the Tender Offer, our current expectation is that the final costs and expenses will be closer to £0.2m. Outlook As at the date of this report, the Board confirms that the Group is trading in line with management's expectations and that our forward order book remains strong. The timing of Group turnover and profitability is, however, difficult to predict, and our results are subject to monthly variability. In addition, whilst on site activity levels have been encouraging, overall Group performance is dependent on a number of factors outside of management's control, including macro-economic factors and their impact on the construction industry, any prolonged spells of severe weather, supply-chain and construction materials availability, and ongoing challenges with attracting and retaining employees within the construction industry. Notwithstanding the inherent uncertainties associated with our industry, the Group has made an excellent start to FY24 and has the potential to trade ahead of strong prior year results should the current level of performance continue. People and Board changes As announced following the conclusion of the General Meeting on 15 November 2023, Jeff Baryshnik resigned from his role as Non-Executive Chairman and as a director of the Company with immediate effect. The board would like to thank Jeff for his service as a director of the Company. have assumed the position of Interim Non-Executive Chairman, having previously been a Non-Executive Director, until such time as the Board has identified and appointed a permanent successor. Martin Boden joined the Board as a Non-Executive Director on 13 September 2023. I am pleased to welcome Martin, who brings strong public markets experience to the Board. 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. Conclusion Once again, I would like to thank all our employees for their hard work and commitment, and our shareholders for their continued support. Harry Samuel Non-Executive Chairman 29 November 2023 4 Consolidated statement of comprehensive income for the six month period ended 30 September 2023 6 months ended 6 months ended Year ended 30 September 30 September 2023 2022 31 March 2023 Unaudited Unaudited Audited £'000 £'000 £'000 Revenue 36,890 33,951 69,724 Cost of sales (28,704) (26,935) (55,785) Gross profit 8,186 7,016 13,939 Other operating income 16 13 35 Administrative expenses (6,449) (5,579) (11,828) Operating profit 1,753 1,450 2,146 Finance costs (74) (89) (210) Profit before income tax 1,679 1,361 1,936 Income tax expense (421) (234) (344) Profit for the period 1,258 1,127 1,592 Total comprehensive income attributable to equity holders of the parent 1,258 1,127 1,592 Earnings per share from continuing operations Basic earnings per share 6.7p 6.0p 8.5p Diluted earnings per share 6.7p 6.0p 8.5p 5 Consolidated balance sheet at 30 September 2023 30 September 30 September 31 March 2023 2022 2023 Unaudited Unaudited Audited £'000 £'000 £'000 Assets Property, plant and equipment 5,171 4,550 4,990 Right of use asset 1,565 1,596 1,553 Intangible assets 15,400 15,413 15,406 Trade and other receivables 983 783 799 Total non-current assets 23,119 22,342 22,748 Inventories 1,418 1,383 1,444 Trade and other receivables 13,964 14,535 12,771 Cash and cash equivalents 439 150 3,150 Total current assets 15,821 16,068 17,365 Total assets 38,940 38,410 40,113 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 8,195 7,034 7,499 Total equity attributable to equity holders of the Company 23,263 22,102 22,567 Liabilities Trade and other payables 55 168 114 Lease liabilities 1,484 1,433 1,504 Deferred tax liabilities 1,059 879 1,059 Total non-current liabilities 2,598 2,480 2,677 Loans and borrowings 50 2,028 35 Trade and other payables 11,690 10,796 13,947 Lease liabilities 709 615 700 Current tax payable 630 389 187 Total current liabilities 13,079 13,828 14,869 Total liabilities 15,677 16,308 17,546 Total equity and liabilities 38,940 38,410 40,113 6 Consolidated statement of changes in equity for the six month period ended 30 September 2023 Capital Share redemption Share Merger Retained Total capital reserve premium reserve earnings equity £'000 £'000 £'000 £'000 £'000 £'000 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 At 1 April 2022 190 6 5,169 9,703 5,907 20,975 Total comprehensive income for the year Profit for the year - - - - 1,592 1,592 At 31 March 2023 190 6 5,169 9,703 7,499 22,567 At 1 April 2023 190 6 5,169 9,703 7,499 22,567 Total comprehensive income for the period Profit for the period - - - - 1,258 1,258 Transactions with owners, recorded directly in equity Equity dividends paid - - - - (562) (562) At 30 September 2023 190 6 5,169 9,703 8,195 23,263 7