Building services group Northern Bear said it performed well despite a subsidiary firm incurring a loss of £532,000 on a care home contract.
The Northumberland firm, which operates 10 firms in roofing, building services and materials handling activities, saw sales slide by 3.6% to £35.1m turnover for the year ended March 31, 2013, a figure it was pleased with, having experienced difficult trade conditions worsened by the wettest summer in England and Wales in a century.
The company reported a profit before tax of £682,000, down from a profit of £1m a year ago – yet pre-tax profits would have surpassed last year’s figure without the “significant loss” made on the care home project by its subsidiary MGM Limited, a loss it has treated as an exceptional expense.
In the company’s annual report, chairman Howard Gold said: “MGM Limited took on a significant contract for building works on a care home in February 2011.
“This was a new sphere of work for the group and, with hindsight, not one that MGM was in a position to carry out at the contracted price. Accordingly, exceptional expenses included within cost of sales of £532,000 have been presented separately and comprise the loss on this significant contract.”
During the course of the year it also disposed of two businesses – Hastie D Burton and Roff Truss – and as a result it recorded losses of £54,000 and £105,000 respectively through discontinued operations associated with those firms, amounts also noted as exceptional expenses.
Headcount was also reduced at the firm, from 349 in 2012 to 336, which appointed Graham Jennings as managing director of the group in July 2012.
Overall, Gold said the company continued to perform well despite difficult trading conditions, recording strong performance in its building and roofing activities, and net bank debt decreased to £6.4m, down from ï¿½7m last year. Turnover for its roofing activities topped £19.70m, just shy of last year’s £19.71m, while building services accrued gross revenues of £12.8m, compared to £13.9m for 2012, and the materials handling activities division reported revenues of £2.6m compared to last year’s £2.75m.
Gold said: “The group has continued to perform well, despite difficult trading conditions. We have seen continued strong performance from our roofing division and an uplift in the level of new house build projects during the year.
“We have made changes to the group’s management structure during the year, including the appointment of Graham Jennings as managing director. I am confident that this provides us with a more effective management structure to meet the challenges we face going forward.
“Our focus remains on improving earnings and reducing the group’s level of bank debt through operating cash flow generated.”