Northern Bear : interim report 30 Sep 2023

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	[phone]
Tom Hayes - Finance Director	[phone]
Strand Hanson Limited (Nominated Adviser)	[phone]
James Harris
James Bellman
Hybridan LLP (Nominated Broker)	[phone]
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.

1. 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