Final Results

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

 

 

 

 

Before
exceptional
items

 

Exceptional
items

 

2013

Total

Before
exceptional
items

 

Exceptional
items

 

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

 

 

 

 

Share
capital

Capital

redemption

Share
premium

Merger
reserve

Retained
earnings

Total
equity

£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 https://northernbearplc.com/