Northern Bear into the red

07/07/2010 Robert Tyerman

Goodwill impairments and other provisions saw acquisitive building services and materials concern Northern Bear lose £1.1 million in the year to March.

Turnover fell 17 per cent to £35 million, as adverse economic conditions, especially in the north of England, and bad winter weather took their toll on the Chester-le-Street, County Durham-based company.

AIM-quoted Northern Bear, whose operating profit fell 54 per cent to £1.7 million, is passing the dividend, though chairman Howard Gold says the current financial year has started well, with a 'strong order book' and an order pipeline 'far exceeding' that of a year ago. The company, steered by chief executive officer Graham Forrest, has taken action to cut its overheads and ended March with net bank debt below £9 million and banking facilities of £10 million, though year-end cash was halved at £355,000.

According to Gold, Northern Bear saw a 'significant improvement in activity' during March and is now 'well placed' to win orders, provided the terms are acceptable. However, he concedes that public cuts are 'inevitable', which must have some impact on demand.

The company still sees complementary acquisitions as 'a key element' in its long-term growth strategy, though Gold states that it will not seek additional bank debt to fund any that it makes. Floated at 88p four years ago, Northern Bear shares now trade at 31p, down 4.5p this morning, and value the company at £5.9 million.