Northern Bear adds to portfolio
Apr 3 2008 by Karen Dent, The Journal
FAST-GROWING building services and supplies company Northern Bear has paid £6.7m to add two more businesses to its portfolio as it continues to expand.
The Chester-le-Street company has bought North East forklift trucks business A1 Industrial Trucks and plumbing and heating firm DJ McGough, which are both well-established and profitable businesses.
The acquisitions, which were timed to be completed before the change in Capital Gains Tax, bring the total number of businesses in AIM-listed Northern Bear’s hands to 12. The new additions mean the number of firms owned by the group has doubled in the last year.
It earmarked the businesses, which are both Newcastle-based, as part of its efforts to diversify from the new-build housing market and to insulate itself against the downturn in that sector. Its new-build housing businesses are now expected to contribute less than 15% of Northern Bear’s turnover in the current financial year.
Finance director David Jay said: “The housing market will come back in the future. There will be a lot of new housing needed in the next 12 years, according to the Prime Minister. We certainly want to be in a good position when it does come back.”
It has paid £4.67m for A1 Trucks, which was established in 1983 and sells, leases, rents and maintains a fleet of around 400 forklift trucks for a number of commercial customers. Company founders Derek Wymes and Graeme Tennick will remain with the firm, which has a turnover of around £3.3m.
DJ McGough, a commercial and industrial plumbing, heating and mechanical services firm set up in 1988, has revenues of around £2.7m. Northern Bear, which is working on a number of publicly-funded projects, paid £2.04m for the business.
Mr Jay said: “We will continue to look at businesses with strong cashflow and strong management.”
Northern Bear issued a trading update last week which brokers Dawney Day said could see the firm’s turnover increase to around £31m for the year, from around £4.7m in 2007.
Northern Bear chairman Jon Pither said: “The company said in a trading statement that we expect turnover and profit before tax for the 12 months to March 31, 2008, to be at the upper end of market expectations.
“The board remains confident of the company’s trading outlook for the coming financial year.”
Northern Bear shares rose by 1% to finish at 98.87p.
