Northern Bear : Unaudited Interim Report 2021

26 November 2021

Northern Bear plc

("Northern Bear" or the "Company")

Interim results for the six month period ended 30 September 2021

The board of directors of Northern Bear (the "Board") is pleased to announce the unaudited interim results for the Company and its subsidiaries (together the "Group") for the six months to 30 September 2021.

Financial Summary

• • Revenue of £30.0m (H1 2020: £20.1m)
  • Adjusted operating profit* of £1.5m (H1 2020: £0.5m)
  • Net cash of £0.6m at 30 September 2021
  • Robust trading performance despite industry-wide supply chain disruptions and staffing challenges
  • Positive outlook for the second half of the financial year
  • Appointment of two new independent non-executive Directors with significant corporate, financial, and real estate experience
• stated prior to the impact of amortisation and impairment charges

Jeff Baryshnik, Non-Executive Chairman of Northern Bear, commented:

"We are pleased to announce strong operating results for the period, despite ongoing industry-wide challenges."

"It is a testament to the executive team and subsidiary operating teams that these results exceed those from the comparable pre-pandemic period for the six months ended 30 September 2019. With a strong order book, we are well positioned to continue to generate a more normalised level of profitability."

For further information please contact:
Northern Bear plc
Jeff Baryshnik - Non-Executive Chairman	[phone]
Tom Hayes - Finance Director	[phone]
Strand Hanson Limited (Nominated Adviser and Broker)	[phone]
James Harris
James Bellman

Northern Bear plc

Interim Report

30 September 2021

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

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Advisers

Auditor	Nominated Adviser and Broker
Saffery Champness LLP	Strand Hanson Limited
Mitre House	26 Mount Row
North Park Road	London
Harrogate	W1K 3SQ
HG1 5RX

Bankers	Registered office
Virgin Money plc	A1 Grainger
94-96 Briggate	Prestwick Park
Leeds	Prestwick
LS1 6NP	Newcastle upon Tyne
	NE20 9SJ
Legal advisers
Mincoffs Solicitors LLP
5 Osborne Terrace
Jesmond
Newcastle upon Tyne
NE2 1SQ

2

Chairman's statement

Introduction

I am pleased to report the unaudited interim results for the six months ended 30 September 2021 (the "Period") for Northern Bear plc (the "Company" and, together with its subsidiaries, the "Group").

Further to the recent trading update, I am pleased to confirm the Group's results for the Period, with adjusted operating profit (stated prior to the impact of amortisation and impairment charges) of £1.5m (H1 2020: £0.5m) and diluted earnings per share of 6.1p (H1 2020: 13.2p diluted loss per share).

In our last Annual Report and Accounts published in July 2021, we noted the industry-wide challenges with respect to both availability and price inflation of construction materials. There also have been well-publicised challenges in relation to attracting and retaining employees in the construction industry. Despite the impact of these headwinds on our businesses, our Group generated strong operating results that exceeded those of the comparable pre-pandemic period for the six months ended 30 September 2019.

Trading

Despite industry-wide challenges, our Group companies generated strong results in aggregate during the Period. Our roofing division was somewhat more adversely impacted by materials shortages than the other divisions, but our companies have strong and well-established supplier relationships and have been able, on the whole, to work with our robust supply chain to ensure continuity of supply for contracts

Revenue for the Period was £30.0m (H1 2020: £20.1m) and, through the greater economy of scale from higher revenues along with continued careful contract selection and execution, gross margins materially exceeded those of the period ending 30 September 2020 ("Prior Period") at 19.5% (H1 2020: 14.5%).

Administrative expenses increased to £4.5m (H1 2020: £3.8m) due to both an element of semi-variable costs in the overhead base and the voluntary and temporary wage reductions incurred by Group directors during the Prior Period.

Overall profit before income tax for the Period was £1.4m (H1 2020: £2.4m loss) and diluted earnings per

share was 6.1p (H1 2020: 13.2p diluted loss per share).

Cash flow

Net cash at 30 September 2021 was £0.6m (30 September 2020: £0.6m, 31 March 2021: £2.1m).

We had stated in the March 2021 results that the cash position at 31 March 2021 reflected some favourable working capital swings which to an extent would be expected to reverse post year-end. This was the case, and the current customer and contract mix has an increased working capital requirement which reduced the cash balance during the Period.

As we have emphasised previously, the net cash/bank debt position represents a snapshot at a particular point in time and our net cash/bank debt position can move by up to £1.5m in a matter of days given the nature, size and variety of contracts and their associated working capital requirements. The highest bank position during the Period was £2.5m net cash, the lowest net bank debt position during the period was £1.2m net bank debt, and the average was £0.1m net cash.

Our existing £3.5m revolving credit facility with Virgin Money plc (previously known as Yorkshire Bank) was renewed in March 2020 and provides us with committed working capital facilities to May 2023, along with a £1m overdraft facility which is renewable annually.

Strategy and Dividend

Following recent Board appointments, as detailed below, I have commenced a process of engaging with the Board and management to discuss and review the Group's strategy and approach to capital allocation, including the dividend policy. Once this process is completed, we will provide further information to shareholders. Our existing policy is to pay only a final dividend, at the Board's discretion, and to assess future dividend levels in line with the Group's relative performance, after taking into account the Group's available cash, working capital requirements, corporate opportunities, debt obligations, and the macro economic environment at the relevant time.

3