Northern Bear Regulatory News (NTBR)

27 November 2015

Northern Bear PLC

("Northern Bear" or the "Company")

Interim Results

Chairman's statement

Introduction

I am pleased to report the unaudited interim results for the six months to 30 September 2015.

The Group has continued to perform very well, delivering retained profit of £0.7 million (2014: £0.7 million) and earnings per share of 4.2p (2014: 4.1p) in the period.

Delivering profits in line with the prior period is an excellent result, given the September 2014 interim results represented an outstanding trading performance for the Group and a significant step up from previous years.

Trading

The Group's revenue decreased to £19.6 million (2014: £20.1 million) in the period and its gross profit also decreased to £4.4 million (2014: £4.6 million).

Revenue in the current period was impacted by delays in commencing work on a major roofing contract due to factors outside of our control. Had this contract commenced as expected, we would have reported revenue and gross profit in excess of prior period results. This contract is now underway and, in addition, we have a very strong committed order book across the Group.

Operating profit remained at £1.1 million (2014: £1.1 million) and profit before tax at £0.9m (2014: £0.9m). We have continued to keep a careful control of costs across the Group and have made a number of savings in the period through operational efficiencies.

The Group's roofing companies continue to perform well within their sector, despite constant pressure on margins. This continued success is testament to the quality of our management team who have proactively implemented savings on all direct cost lines. They are assisted in their endeavours by the exceptional supply chain in place, which ensures that we receive both competitive prices and an outstanding service.

Our mainstream specialist building services companies continue to secure high quality work and to grow their reputations within the industry. A number of high profile contracts have been secured in recent months from Local Authorities, Housing Associations and the private sector. Our asbestos removal and surveying business has endured a challenging few months but has implemented a number of management role changes, along with an overhead review conducted by the Group Managing Director. Moving forward, we would envisage this having a positive impact on the business.

Our materials handling business, A1 Industrial Trucks, continues to not only exceed our expectations with regard to sales and hire of Mitsubishi Fork Lift trucks, but also to provide an excellent service in maintaining both sold and leased trucks for its customers.

Cash flow

Net bank debt at 30 September 2015 was £4.0m (2014: £4.9m).

The Group's net bank debt position has benefited from both the strong trading profits and an improved working capital position, such that cash generated from operations was £1.4m (2014: £1.5m). We have continued to invest in our fixed asset base with gross capital expenditure of £0.3m (2014: £0.3m).

As disclosed in the Annual Report and Financial Statements for 31 March 2015, the Group's bank facilities have recently been restructured and this has reduced finance costs in the period to £0.1m (2014: £0.2m).

Dividend

As has been our policy for some time no interim dividend will be declared. The Group will continue to use trading cash flow to reduce bank debt. Provided that the Group's strong performance continues for the remainder of the financial year, the Board intends to continue with its current policy of paying a final dividend.

Operational matters

As previously mentioned in our 2015 Annual Report, our growing building services division has now been integrated into new offices at Team Valley in Gateshead. We have also combined the administrative functions of Jennings Roofing's Leeds and Manchester divisions into one central office in Leeds. These moves have provided overhead reductions, as well as enhancing our ability to pool resources.

Northern Bear Safety has continued to grow its business with continued support for both Group companies and external clients. It has been instrumental in helping the Group reduce the number of working days lost due to accidents and continues to provide a significant number of training courses in the new facility at Team Valley. The Construction Industry Training Board (CITB) approved training centre at Team Valley now includes a scaffolding set up (with a ladder station) and we are planning a low level rig for the New Year.

Vantage Point Media, the drone survey business, has also continued to grow and has provided aerial imagery for a number of high profile clients including Capita, Durham University and Gateshead Council. A decision has been taken by the Board to rebrand this business as "Survey Drones", which defines its services better in this growing marketplace.

Strategy

Having used operating cash flow to reduce bank debt levels in recent years, the Group is now well placed to take advantage of both strategic and commercial opportunities as and when they arise.

I am pleased to say that we are being presented with a number of acquisition opportunities at present and, whilst we will be cautious in our use of shareholders' funds in this area, I believe that making a small number of bolt-on acquisitions of specialist building services businesses could enhance the Group's service offering to customers and provide an attractive return on investment.

We would seek to use existing cash resources to fund small acquisitions but, should an outstanding opportunity to purchase a larger business arise, we would seek to raise a mix of external debt and equity.

Outlook

The Group has a stronger order book than has previously been the case at this time of year and there are encouraging signs of tender activity for all Group companies. We are cautiously optimistic for a successful second half to the financial year.

People

I am proud to say that the Group directly employs the large majority of its workforce and has continued to invest in training new operatives throughout difficult economic times. Having a loyal, dedicated and skilled workforce is increasingly paying dividends in a sector where labour shortages and cost pressures are impacting operators of all sizes.

The new National Living Wage legislation is not expected to impact the Group's results in the future as our full time operatives can already expect to earn in excess of the proposed amounts.

I would once again like to thank all of our employees for their hard work and contribution to the Group's continued success.

Steve Roberts

Executive Chairman

For further information please contact:

Consolidated statement of comprehensive income

for the six month period ended 30 September 2015

Consolidated statement of changes in equity

for the six month period ended 30 September 2015

Consolidated balance sheet

at 30 September 2015

Consolidated statement of cash flows

for the six month period ended 30 September 2015

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 2015.

These condensed financial statements are unaudited and were approved by the Board of Directors on 27 November 2015.

The information for the year ended 31 March 2015 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 2015, other than as disclosed in note 2.

2. Changes in accounting policies

From 1 April 2015 the following standards, amendments and interpretations became effective and were adopted by the Group:

§ IFRIC 21 Levies;

§ Annual Improvements to IFRS (2011 - 2013);

§ Annual Improvements to IFRS (2010 - 2012); and

§ IAS 19 (amendment) Employment Benefits

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 2015 is calculated by applying the Directors' best estimate of the annual effective tax rate to the profit for the period.

4. Earnings per share

Basic earnings per share is the profit for the period divided by the weighted average number of ordinary shares outstanding, excluding those held in treasury, calculated as follows::

The calculation of diluted earnings per share is the profit for the period divided by the weighted average number of ordinary shares outstanding, after adjustment for the effects of all potential dilutive ordinary shares, excluding those in treasury, calculated as follows:

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 8 and 9, and 52 to 55 of our Annual Report and Financial Statements for the year ended 31 March 2015, 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 27 November 2015 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 2015.

For and on behalf of the Board of Directors

Thomas Hayes

Finance Director

27 November 2015