News blog
Northern Bear
- BY: Andrew Hore |
- POSTED: 21/11/2008 |
- COMMENTS: Add yours
Northern Bear more than doubled its interim profits.
Profits jumped 111% to £2.1m on turnover up 71% to £23.4m in the six months to September 2008. The growth has come from acquisitions and organic growth. The interim dividend is unchanged at 1p a share.
The building support services provider took the decision to reduce its exposure to house building and it accounted for 10% of turnover. The public sector accounts for the majority of revenues.
The Newcastle base of the business means that it has not suffered the more extreme ups and downs that occurred in south east England. The government’s decent homes scheme for social housing is set to continue until at least 2010.
The diversification of interests helps the business. They include roofing, fire protection, asbestos removal and forklift trucks. Historically, the forklift rental business does well in recessions because customers do not want to invest in their own forklifts.
Net debt is £10.6m but there is still headroom available in the bank facility.
House broker St Helen’s Capital has cut its full year profit forecast from £4.4m to £3.5m.
Northern Bear is still looking for acquisitions. Management says an increasing number of people are approaching them with potential purchases. Northern Bear has not paid more than three times earnings in the past so it has not chased overpriced assets. It has also walked away from three potential deals in recent times.
The key attributes of an acquisition are that it should be involved in building services, be a long standing business, strong finances and good management. Management hopes to make another acquisition by March 2009.
Former Durlacher and Dawnay Day employee Ian McLean has joined the board as a non-executive director.
At 70p a share, Northern Bear is valued at £13.1m. The shares are trading on less than six times prospective earnings.
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