3 April 2017
Disposal of Chirmarn Holdings Limited, Trading Update, New Bank Facilities
The Directors of Northern Bear (the “Board”) today announce the disposal of its subsidiary Chirmarn Holdings Limited (“Chirmarn”) to an independent third party for consideration of £50,000 (the “Disposal”).
The Disposal follows a detailed review by the Board of the entire Chirmarn operation. Chirmarn provides asbestos removal and surveying services to a range of local authority and commercial customers across North East England. Since its acquisition by the Company in 2007, Chirmarn has made a substantial contribution to the Group’s performance and traded exceptionally well during the severe recession which commenced in 2008.
However, in the financial year ended 31 March 2017, Chirmarn has been trading at a loss and has required continued funding from the Company. The Board has provided all possible resource and support to attempt to improve matters, but the situation has persisted and there can be no certainty that there will be any improvement in the business activities of Chirmarn in the short to medium term. Further, the sector in which Chirmarn operates differs from those in which other Group companies operate in that asbestos, for health & safety reasons, has not been widely used as a construction material for some time and hence we believe there is limited potential for long term market growth.
As a result, the Board believes that the Disposal is in the best interest of shareholders and will allow the Board to focus on the Group’s core businesses and markets. The purchaser has knowledge of the asbestos industry to support their own strategic plans, hence we consider that the disposal is also in the best long term interests of Chirmarn and its employees.
The Disposal will result in a loss on disposal in the Company’s financial year ended 31 March 2017, which will be treated as an exceptional item for reporting purposes.
The Board is pleased to announce that, following a relatively mild winter and continued strong performance in the Group’s Roofing division, trading results from continuing operations for the financial year ended 31 March 2017 are expected to be at least in line with the prior year.
Further guidance on trading and the Group’s net debt position will be provided closer to the publication of the Group’s full year results.
New bank facilities
The Group is also pleased to announce that it has signed a new £3.5m revolving credit facility agreement with Yorkshire Bank to replace the previous term loan facility which was due for renewal on 31 March 2017. This new facility will expire in May 2020. The Group also has a £1m committed overdraft facility. These new facilities were secured at reduced interest rate levels, which reflects the strength of recent and ongoing financial performance across the Group.
The new facilities will provide the Group with a much more flexible funding structure and, having reduced bank debt levels to a more appropriate level, a wider range of options for capital allocation in the future. Importantly, this should also assist in funding the Group’s progressive dividend policy
We would like to express our thanks to Yorkshire Bank for its continued support.
For further information, please contact:
|Northern Bear PLC
Steve Roberts – Executive Chairman
Tom Hayes – Finance Director
+44 (0) 166 182 0369
+44 (0) 166 182 0369
|Strand Hanson Limited (Nominated Adviser and Broker)
|+44 (0) 20 7409 3494
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”).