A North East construction has revealed it has been considering significant growth deals after a Canadian investment group took a major stake in the company.
Prestwick-based Northern Bear has issued a trading update in which it said that it had mulled “two potentially accretive acquisitions of a more substantial size than those we have made previously” as part of a strategy led by new chairman Jeff Baryshnik. Neither deal came to fruition, however.
Mr Baryshnik’s Cedarvale Holdings group took a near 30% stake in Northern Bear in 2019 for almost £4m and he became chairman in 2021, starting a review the group’s strategy on capital allocation.
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Northern Bear - whose recent work included contracts on the Hard Rock Cafe in Newcastle, plus schools in Northumberland and County Durham - said that review was ongoing and it was exploring avenues for “increasing shareholder value”.
Elsewhere in its trading update, the company said was expecting profits for its 2022 financial year to be between £2.5m and £2.6m. It has also improved its cash position from the previous year.
But it noted the “industry-wide challenges” faced by construction firms, including the availability and price inflation of construction materials, and problems with attracting and retaining employees.
Northern Bear said it had “strong and well-established supplier relationships” and had been able to work with firms in its supply chain to maintain operations.
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Mr Baryshnik said: “We are pleased to announce strong expected operating results for FY22, despite ongoing headwinds.
“It is a testament to the executive team and the subsidiary operating teams that FY22 results are expected to exceed those from the comparable pre-pandemic period of FY20.”
Northern Bear was formed and floated on the AIM exchange in 2006, though some of its component companies have a longer history. The group is currently made up of 12 businesses, mostly based in the North, which in total employ more than 300 people.
In its previous financial year, which ran to March 31 2021, Northern Bear reported revenues of £49.2m - down around £5m from a year earlier - and an operating profit of £1.4m.
The expected profit signalled in today’s trading update would put it on course for a return to pre-pandemic levels of profitability.