Northern Bear Interims better than expected, shares hit 131p before profit-taking

This morning's share price reaction to its results saw the group's shares hit 131p, before falling back to 125p on the back of some profit-taking.

Building services group Northern Bear (LON:NTBR) reported strong interim results for the six months to end-September, with revenue increasing to £49.4m (£37.6m), accompanied by a gross profit of £12.2m and an operating profit of £4.1m.

The company also saw a significant improvement in basic earnings per share to 21.9p from 8.4p, driven by robust trading and a £1.3m non-recurring operating profit.

Cash generated from operations rose to £3.1m, enabling the full repayment of a £1.45m term loan, and the company ended the period with a net cash position of £3.8m.

Despite anticipating flat market conditions and some business pressures, the group maintains a stable forward order book and its Management stated that it expects its full-year outcome to be broadly consistent with the previous year's strong underlying profit performance.

The Business

The group which listed in 2006, consists of nine wholly owned specialist building service providers in the North of the UK, primarily in the North East and Yorkshire and mainly serving public-sector customers.

Projects are mostly for existing buildings and typically completed within weeks or months.

The group reports in three segments: Roofing (42% of sales in FY25), Specialist Building Services (53%) and Materials Handling (5%) which is a forklift/truck reseller and leasing company.

The corporate strategy is to seek to achieve organic growth and bolt-on accretive acquisitions.

Management Comment

Chairman Simon Carr stated that:

"I am pleased to report that the Group's financial position remains robust, with continued progress being achieved toward our medium-term goals.

The current performance reflects the benefits of ongoing investment, an element of organic growth, and disciplined cash management, all of which have contributed to a solid set of results for the period."

Broker's View

Analyst Jon Levinson, at Hybridan, has this morning stated that:

"The investment thesis is one of an improving quality of earnings and no debt; this dividend paying company deserves a higher P/E rating.

The weighted average construction services sector P/E is 10.8x, while the ongoing P/E we forecast for 2026 is 6x, which drops to 4.6x including the N-RP."

For the current year to end-March 2026 Levinson estimates £89.0m (£78.1m) in sales, with pre-tax profits of £3.96m (£3.31m).

My View

Obviously, trading conditions within its main operating sectors remain tricky, but this little cash-rich group does appear to have strengthened itself against such pressures.

Its shares, now at 125p, still offer risk-tolerant investors some very appealling upside.

(Profile 11.07.25 @ 89.50p set a Target Price of 110p*)

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(Profile 13.11.25 @ 117p set a Target Price of 140p)