Interim Results

Northern Bear PLC (“Northern Bear” or the “Group”) Results for the six months ended 30 September 2013

Highlights

Gross Profit of £4.2m (2012: £4.0m)
Earnings per share 3.2p (2012: 2.6p)
Operating Profit increased to £0.9 million (2012: £0.8 million)

Howard Gold, Non-Executive Chairman of Northern Bear Plc commented:

“The Group has continued to perform well, despite difficult trading conditions. I am confident that the Group’s new management structure is already delivering benefits and will continue to do so 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 period.”

For further information contact:

Northern Bear PLC

Steve Roberts – Chief Financial Officer +44 (0) 845 680 2369

Strand Hanson Limited

James Harris / James Spinney +44 (0) 20 7409 3494

Chairman’s statement

Introduction

I am pleased to report unaudited interim results for the six months to 30 September 2013.

The Group has performed well over the period, delivering profit of £0.6 million (2012: £0.5 million) and earnings per share of 3.2p (2012: 2.6p).

Following Graham Jennings’ appointment as Managing Director, the Group reporting structure has been changed so that all divisional Managing Directors now report directly to Graham. I am delighted with the response from our divisional Managing Directors and am confident that this structure is delivering benefits and will continue to do so going forward.

The Group’s results were not affected in the current period by exceptional items or by discontinued operations. In the prior period exceptional items of £0.1 million were incurred.

Trading

Whilst the Group’s revenue decreased to £17.4 million (2012: £17.7 million) its gross profit increased to £4.2 million (2012: £4.0 million) due to margin improvements across the majority of the Group’s companies, which is testament to the hard work of our management teams.

Operating profit increased to £0.9 million (2012: £0.8 million) despite an increase in administrative costs to £3.3 million (£3.1 million). The increase in administrative costs was due to higher operating costs in certain areas, including the recruitment of additional senior management resource and increased insurance costs.

Cash flow

Net bank debt at 30 September 2013 was £6.6m (2012: £6.7m).

The strong trading performance in the period has had a limited effect on bank debt due to the impact of the exceptional loss incurred on one contract in the prior year. This loss was highlighted in the financial statements for the year ended 31 March 2013. Whilst there has been no impact on trading results from this contract in the period, the subsequent working capital flows had a significant impact on cash flow in the early part of the period.

The Board’s strategy remains to focus on reducing the Group’s level of bank debt. The Group’s bank continues to be supportive.

Dividend

Despite improved trading performance, the Board believes that it would be prudent not to declare an interim dividend for the period. The Board’s dividend policy will remain under review.

Strategy / Outlook

The Board’s priority in recent years has been to use operating cash flow to reduce bank debt levels whilst trading conditions have been challenging. Whilst this remains our overall priority, we will continue to monitor opportunities for the use of funds generated, including capital investment, bolt-on acquisitions and capital repurchases.

Order books across the Group are strong although the roll out of these orders is always difficult to predict. Despite market conditions remaining challenging we have seen a positive movement in several sectors, particularly the new house building market, and continued strength in the Social Housing sector for most Group companies. This should continue to create opportunities going forward. We are hopeful of a successful second half of the financial year.

People

In an industry which has seen a decreasing number of skilled tradesmen over the past few years our strategy of employing the majority of our workforce, along with investment in training new operatives, continues to reap dividends. We are able to sustain a loyal and dedicated workforce with the skills required to meet the demands of the modern day construction industry.

The quality and experience of our people and the key customer relationships that they maintain remain fundamental to the Group’s success and I would like to thank all of our employees for their contribution to the Group’s results.

Howard Gold

Non-Executive Chairman

16 December 2013

Consolidated statement of comprehensive income

for the six month period ended 30 September 2013

	6 months ended	6 months ended	Year ended
	30 September 2013	30 September 2012	31 March 2013
	Unaudited	Unaudited	Audited
	£’000	£’000	£’000

Revenue	17,383	17,670	35,147
Cost of sales
Exceptional expenses	–	–	(532)
Other cost of sales	(13,174)	(13,713)	(26,985)
	(13,174)	(13,713)	(27,517)
Gross profit	4,209	3,957	7,630
Other operating income	9	16	23
Administrative expenses
Exceptional expenses	–	(58)	(114)
Other administrative expenses	(3,299)	(3,073)	(6,458)
	(3,299)	(3,131)	(6,572)
Operating profit	919	842	1,081
Finance income	–	–	–
Finance expenses	(191)	(202)	(399)
Profit before income tax	728	640	682
Income tax expense	(168)	(172)	(195)
Profit for the period	560	468	487


Total comprehensive income attributable to equity holders of the parent	560	468	487

Combined earnings per share
Basic earnings per share	3.2p	2.6p	2.7p

Adjusted (pre exceptional) earnings per share	3.2p	2.9p	5.5p

Consolidated statement of changes in equity

for the six month period ended 30 September 2013

	Share capital	Capital redemption reserve	Share premium	Merger reserve	Retained earnings	Total equity
	£’000	£’000	£’000	£’000	£’000	£’000

At 1 April 2012	184	6	5,169	10,371	2,132	17,862
Total comprehensive income for the period
Profit for the period	–	–	–	–	468	468

At 30 September 2012	184	6	5,169	10,371	2,600	18,330

At 1 April 2012	184	6	5,169	10,371	2,132	17,862
Total comprehensive income for the 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

At 1 April 2013	184	6	5,169	10,371	2,604	18,334
Total comprehensive income for the period
Profit for the period	–	–	–	–	560	560

At 30 September 2013	184	6	5,169	10,371	3,164	18,894

Consolidated balance sheet

at 30 September 2013

	30 September 2013	30 September 2012	31 March 2013
	Unaudited	Unaudited	Audited
	£’000	£’000	£’000
Assets
Property, plant and equipment	2,464	2,373	2,418
Intangible assets	21,356	21,348	21,357
Deferred tax assets	–	33	–
Total non-current assets	23,820	23,754	23,775

Inventories	867	814	715
Trade and other receivables	8,356	7,729	7,456
Prepayments for current assets	425	337	142
Deferred consideration receivable	180	200	197
Cash and cash equivalents	260	327	202
Total current assets	10,088	9,407	8,712
Total assets	33,908	33,161	32,487

Equity
Share capital	184	184	184
Capital redemption reserve	6	6	6
Share premium	5,169	5,169	5,169
Merger reserve	10,371	10,371	10,371
Retained earnings	3,164	2,600	2,604

Total equity attributable to equity holders of the Company	18,894	18,330	18,334

Liabilities
Loans and borrowings	1,402	2,036	1,692
Deferred tax liabilities	23	–	24
Total non-current liabilities	1,425	2,036	1,716

Bank overdraft	4,931	4,389	4,242
Loans and borrowings	967	938	920
Trade and other payables	7,384	6,858	7,109
Current tax payable	307	610	166
Total current liabilities	13,589	12,795	12,437

Total liabilities	15,014	14,831	14,153
Total equity and liabilities	33,908	33,161	32,487

Consolidated statement of cash flows

for the six month period ended 30 September 2013

	6 months ended	6 months ended	Year ended
	30 September 2013	30 September 2012	31 March 2013
	Unaudited	Unaudited	Audited
	£’000	£’000	£’000

Cash flows from operating activities
Profit for the period	560	468	487
Adjustments for:
Depreciation	235	231	494
Amortisation	1	–	2
Finance expense	191	202	399
Loss on sale of property, plant and equipment	15	3	7
Income tax	168	172	195
	1,170	1,076	1,584
Change in inventories and materials handling property, plant and equipment	(234)	(192)	(284)
Change in trade and other receivables	(900)	(122)	151
Change in prepayments	(283)	(143)	52
Change in trade and other payables	274	145	396
	27	764	1,899
Interest paid	(191)	(202)	(399)
Tax paid	(28)	–	(410)
Net cash (outflow)/inflow from operating activities	(192)	562	1,090

Cash flows from investing activities
Proceeds from the sale of property, plant and equipment	72	44	80
Proceeds from subsidiary disposal, net of cash disposed of	17	22	25
Purchase of own shares	–	–	(15)
Acquisition of property, plant and equipment	(82)	(150)	(228)
Acquisition of intangible assets	–	–	(11)
Net cash inflow/(outflow) from investing activities	7	(84)	(149)

Cash flows from financing activities
Repayment of borrowings	(360)	(344)	(684)
Payment of finance lease liabilities	(86)	(106)	(207)
Net cash inflow/(outflow) from financing activities	(446)	(450)	(891)

Net (decrease)/increase in cash and cash equivalents	(631)	28	50
Cash and cash equivalents at start of period	(4,040)	(4,090)	(4,090)
Cash and cash equivalents at end of period	(4,671)	(4,062)	(4,040)

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 2013.

These condensed financial statements are unaudited and were approved by the Board of Directors on 16December 2013.

The information for the year ended 31 March 2013 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 auditor and delivered to the Registrar of Companies. The report of the auditor 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 2013, other than as disclosed in note 2.

2. Changes in accounting policies

From 1 April 2013 the following standards, amendments and interpretations became effective and were adopted by the Group:

§ IAS 19 revised, Employee benefits;

§ IFRS 13, Fair Value Measurement;

§ Amendments to IAS 12, Income taxes – Deferred taxes: recovery of underlying assets;

§ Amendments to IFRS 7, Financial instruments: Disclosures – Offsetting financial assets and financial liabilities;

and

§ Improvements to IFRS 2009-2011.

The adoption of the above has not had a significant impact on the Group’s profit for the period or equity.

3. Taxation

The taxation charge for the six months ended 30 September 2013 is calculated by applying the Directors’ best estimate of the annual effective tax rate to the profit for the period.

4. 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, excluding those held in treasury for the proportion of the year held in treasury, calculated as follows:

	6 months ended	6 months ended	Year ended
	30 September 2013	30 September 2012	31 March 2013
	Unaudited	Unaudited	Audited

Profit for the period (£’000)	560	468	487
Weighted average number of ordinary shares (000)	17,670	17,804	17,765
Earnings per share	3.2p	2.6p	2.7p

The calculation of adjusted earnings per share was based on the profit for the period, adjusted for exceptional charges, and on the weighted average number of ordinary shares outstanding excluding those held in treasury for the proportion of the year held in treasury, calculated as follows:

	6 months ended	6 months ended	Year ended
	30 September 2013	30 September 2012	31 March 2013
	Unaudited	Unaudited	Audited
Profit for the period (£’000)	560	468	487
Exceptional expenses (£’000)	–	42	491
Profit for the period before exceptionals (£’000)	560	510	978

Weighted average number of ordinary shares (000)	17,670	17,804	17,765

Adjusted earnings per share	3.2p	2.9p	5.5p

Share options in issue do not have a dilutive impact on the earnings per share calculation.

5. 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 and 5, and 42 to 46 of our Annual Report and Financial Statements for the year ended 31 March 2013, which are available on our website, www.northernbearplc.com.

6. 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.

7. Half year report

The condensed financial statements were approved by the Board of Directors on 16 December 2013 and are available on the Company’s website, www.northernbearplc.com. Copies will be sent to shareholders and are available on application to the Company’s registered office.

8. Statement of directors’ responsibilities

The director named below confirms 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 2013.

For and on behalf of the Board of Directors

Steven Roberts

Finance Director

16 December 2013