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Northern Bear Share Discussion Threads
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In the last FY results, turnover and profits are not broken out by company. I did not look any further back than that. There is commentary suggesting that goodwill for Chirmain could only be maintained at its then levels if (IIRC) a fairly aggressive growth plan was effective, so I presume the results there have been less than fantastic for a little while.
We have no idea what Chirmain's losses were in H2 but at least the NTBR H1 results, which included whatever happened at Chirmain, was in no way onerous when viewed as a whole. Hopefully the situation at Chirmain was not too much worse in H2 than H1. Who knows?
|Im not a holder here, just a watcher. Sorry for being lazy but does anyone know exactly what Chirmarn contributed or otherwise to revenue/profits etc..?|
|Treatment of goodwill and intangibles in UK accounting is pretty poor. Tech companies get away with capitalising R&D virtually as they wish - this is easily used to disguise rotten trading. Companies like these under the NBR umbrella won't have a lot of tangible fixed assets unless they own real estate (possibly not) and transport (probably but quickly depreciated). One has to rely on business results and prospects to keep justifying the premiums paid over real book. And then bad news comes along and there is an impairment taken on the p&l. I wish they would do straight line depreciation but they don't. Pesonally I usually (mentally) strip out all goodwill and intangibles when I try to see the real net worth of a company but it is so depressing
I just have to accept UK accounting is soft.
But I also agree that as long as this group is cashflow positive and paying decent dividends the risk/reward is probably OK.|
|It does sound as though, at best, the goodwill on the NTBR B/S should be taken with a huge pinch of salt.
More important for me however is the way the company is steadily paying down debt and increasing the dividend. Given this continues to be the case, and provided operating profit remains at least at current levels, then the shares are probably significantly under-priced.
I just posted a follow up:
I am still positive on the continuing business. I think the statement on trading was as bullish as they can be given that year-end was last Friday. Chirmarn is disappointing but was not a massive contributor last year anyway.
@Tiswas... fair cop on the goodwill though! Shows how much thought goes into these valuations.|
|Of course this all makes a nonsense of some of the points raised in Lewis's article that we all praised above, (I mean the directors comments not Lewis).
So, essentially the board is telling us that with an 11% discount rate (10% + the AT LEAST 1% headroom they note) there is no impairment to the goodwill – these businesses are still worth more than they’re held on the balance sheet at. And they arrived at these valuations by looking at their ‘detailed approved budgets’ for next year, their profit projections for the four years after that, and applying a GDPish 2% growth rate in years 6-20.
Why is all of this relevant?
Again, I stress it is usually not. But in Northern Bear’s case, the value of their goodwill is £21.3m. Northern Bear’s own BoD have essentially said they are comfortable signing off on accounts which value their own subsidiaries at that figure.
So, what else have the directors valued wrongly?|
As per note 13 on p43, the goodwill on the accounts for Chirmarn Holdings Limited at 31-Mar-16 was £3,891k.
I have no idea on the tangible assets/liabilities associated with this business.|
|OP was up £200k at the interim to September but no mention of the asbestos business. If Shanklin is correct on the goodwill write-down then the March full year will look horrible with a pretty large net loss. That should be out in July though there were earlier trading statements in June for the past two years. Whatever they are clearly pleased to be getting rid of this business, the returns on assets and equity should look better going forward and it is one less headache for the company. It sounds like a sensible way of getting rid of a running sore.|
|"at least in line with the prior year" What is that supposed to mean?|
|There is the 50p, question is do I buy more at this level or wait for results and detail?|
|I am with ic2 in that the statement re the profitability of the continuing businesses is probably just a holding statement given they do not have finalised numbers. They may have beaten last year's numbers by a wide margin but it seems unlikely to me that the NOMAD would allow them to make a statement along those lines.|
|What cash loss on Chirmarn, how much did they lose in year? Continuing businesses at least in line with last year so less than last years eps with Chirmarn losses?
Too many questions left unanswered to my mind.|
|Seems like good news selling off a poor performing division and focussing on their core better performing ones.
Have to remember that the year end was only last Friday so they will need to be conservative about outlook until the accounts are looked at in detail, at least inline with last year does give the flexibility for the next trading update to report in more upbeat tones. The winter was mild so I would think that there is a good probability that they have traded strongly?|
|For me, the disappointing part is the circa £3.9m write-down on the Goodwill associated with Chirmarn. But the P/BV at NTBR will still be very low.
The NTBR H1 results were fine especially considering that Chirmarn was presumably loss-making in that period. The question is what did they lose in H2? Some indication would have been helpful.
The rest of the businesses seem to be doing fine.|
|Why disappointing? Sounds like the continuing businesses are more profitable than was indicated at the time of the interim results.|
|Disappointing update, think you will see 50p again.|
|Yes an absolute steal at 52p. I tried to top up this morning, but could not get a price on TDW or Selftrade, so I left it.
Bit miffed now!|
NMD results today were very strong, particularly their building division which doubled revenue. I except that each companies building division cover different sectors but with some crossovers. But with NTBRs building division and all other divisionS connected in someway to this sector, it bodes well that the general business environment is likely to have remained buoyant for NTBR also.
Today is the last day of their financial year, unfortunately we will have to be patient and await until June for the trading update followed by results in July.
I am confident that EPS will be reported at over 10p (could be higher with reduced finance charges) which gives a PER of 5, and this a company that has halved net debt in the last year and looks like it is heading for a net cash position during 2017.|
|Usual story I guess (emphasis on guess!). They drop the price to get a few holders to sell, then buy at a low price before they push the share price up again more to where it ought to be.
|Given the absence of bad weather I am slightly surprised by the share price fall here. Anybody any idea on what has caused this please... ... beyond there being more supply than demand for NTBR shares?
Thank you, Martin|
|Nowt hath changed lad! Time for you to buy some!|
|tiswas, beware the games of MM's though, I had a struggle to buy at 55 even though it was a small amount, now moved it up.|
|Just as there is some discussion on this BB the price falls away! I had hoped it would do the opposite.|
|Good article Lewis|