Northern Bear (LSE:NTBR) — Investor Presentation

0:01 Good afternoon, and welcome to the NORTHERN BEAR PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now

0:32 like to hand you over to CEO, John Davies. Good afternoon to you. Good afternoon. Thank you, Alex. Welcome, everybody, and thanks for joining us on today's presentation. And we hope you find it very useful and informative.

0:50 I'm John Davies. I'm the CEO in the business, and with me is my colleague, Julian Davis, his CFO. So what I'd like to do today would be to just run through, first of all, what we're gonna cover in this presentation just to give you a flavor of what we're be doing. So brief we're gonna give a brief overview of the group and just give an introduction of the businesses so everybody's got a good idea of what the group consists of. We're then gonna cover highlights of last year. I'll cover strategic highlights and milestones, and Julian Julian will cover financial highlights. Then Julian will move on to financial performance for the year, and then I'll carry out strategic and operational update, and then we'll finish off with questions.

1:37 So the group is 10 autonomous businesses. It's pretty unique in the North Of England, to be fair. We have, within the group, three of the largest roofing contractors in North Of England, Jennings, Wenleys, and Sprint. We've got two main contractor businesses, very much SME, but main contractor delivery in MGM, Arcas. Three specialist contract contractors, sorry, appeals, which I'll cover later, but obviously, isolates and list us. Material handling business, which is based in the Northeast mainly hires, sells, leases, forklift trucks to various clients throughout the North Of England. And finally, we've got a training and health and safety business, which covers our external works and also supports the group.

2:25 The clients for the group, they're a good mix of public sector and blue chip blue chip private clients, mainly in the affordable housing, private housing, local authority, health, education, and, again, the private sector. And the group supports the 10 autonomous businesses strategically providing guidance and also financial consolidation. So I'll just cover the highlights operationally, of where where we are and what's been happening in the year. So it's been a bit of a transitional year as you can imagine. It's a new executive team in place with myself and Julian. Julian has only been in the business two months, but I've been in over a year. Obviously, it's provided lots of challenges and learning, but the main thing that's come out throughout everything is a positivity of the teams and the businesses which are within the group.

3:18 So that's been a a fantastic thing to have, particularly for myself coming in the group to start. One of the things has been to raise aspirations in the business. We've done that by investing in staff resources and training. Clear messaging, although there was clear messaging in, but I've increased that through management information, reporting, and structured meetings throughout the business to really get that two way communication going between group and the individual businesses. We've also been supportive and brought in more governance and processes through ISOs, and we've also worked with the teams to select new markets where we could grow into. The market's pretty stable. It's not flying away, but what we have done is grow up targeted areas within the market, which has got growth in it. I think, Kate, this year last year's performance has been the fact we didn't drop any margin when we were when the wind works or turnover's gone up, but we haven't had to cut any margin to do that because we're pretty selective.

4:18 Obviously, one of the key business is fire stopping. We've had a focus on that, and we've moved the fire stopping business, ISA, into a brand new facility in Durham with a training facility. And then now start in last year, the cautiously moving international delivery. Another area in the year, which has been a real highlight, has been the MCS, decarbonization. So our roofing contract has one of them achieved MCS accreditation, which enabled us to carry out photovoltaic cell installations on roofs on new builds. That's been really good. And also list us as really driven in the markets with the health sector with regards to decarbonization. This has been our electrical contract. I think one of the other things is that's really tied up with raising aspirations of the people has been in premises, and we have invested, as I said before, in the ice house premises, but also a brand new deck roof for Wednesday roofing and further upgrades to other businesses.

5:13 So all of that's lifted the business throughout the course of the year. One of the the final thing is we're not afraid to make changes. So, obviously, Peels Peels really had an issue and were successful before COVID, but didn't make well, after COVID, the market hasn't come back. It's been very limited. So we invested for nine months in the year to try and bring the business back, but it became apparent that that market was very, very tight they were in in refurbishment sector, particularly in hotels. And, also, the team couldn't really cope with that level of margin. So we made a difficult decision to close peels down, but we made the decision nonetheless. Now I'm gonna hand it over to Julian to cover financial highlights.

6:02 Hi. Good afternoon, everyone. As an introduction, I'm just gonna run through this summary slide, and then I'll go through what sits behind some of the key figures in following slides in the presentation.

6:15 The year, as can be shown on this summary on the various figures, is a story of revenue margin and profit growth in the twelve months. We're very pleased that the adjusted operating profit figure is GBP 3,800,000, which is a significant increase on previous years. Now that GBP 3,800,000 is made up of 3,400,000, but an add back of provisions in relation to the closure of the appeals business of GBP 400,000 to give us $3,800,000 adjusted profit for the year. Those profits have then turned into cash through strong operating cash flows. So the cash flow before financing this year was £6,000,000 which was significantly up on last year, and we've ended up in a much stronger cash position with a net cash position being for just over 4,500,000 higher this year than the same time last year.

7:08 So the overall financial performance, I've just broken down into a few areas. I'm gonna just cover off very briefly long term long term financial performance, summary with a bit more detail on the trading performance, profit and loss performance for the year, pick up a bit on the balance sheet, some something on cash performance, and then at the end, just pick up on on dividends, the historic and the proposal for the current year.

7:33 So on the on the five year performance, it's all the overall trends are very positive. So on all the measures, revenue profitability and gross margin and adjusted profit are all showing a strong growth trend over the five year period. On revenue in particular, there's a compound annual growth rate of 12.2%, which is which is very strong, and gross profit gross profit margins have actually increased from 7.4% or 17.2%, sorry, in 2021 to 24.6% in 2025. So that's a 7.4% increase and reflects the underlying strength that's been developed in the trading businesses. There are fluctuations within the five years, but as I say, the overall trend in all the metrics are positive.

8:20 So on the group income statement, again, is just a very summarized version of it. Headline I pick up from here is the profit before interest and tax of operating profits as it's shown on here of 3,400,000. Now that's in line with the top end of the expected outcome that was communicated in March March this year. And revenue and and underlying that is revenue and growth and margin growth across all the divisions within the group, and we'll touch on some of those separately later on. One point to note on here is focus area for the group is the operating costs have increased during the year from '24 to '25, and that's due to investment in people and teams required to deliver the growth in the current year. Plus, as the business has grown, there's been general increases in overheads at the same time.

9:09 The 3,400,000 operating profit when adjusted is 3,800,000. And I think I mentioned before, there's some small amortization add backs in there for the current year, but the main add back is a a 444,000 provision that was made in relation to the cost of the closure of the appeals business. And expectations for the current financial year to March 2026 is of a similar level of profit before interest and tax to this year. So looking for a year of consolidation from there following the excellent results of the current year.

9:46 Now to give a little bit more background and flavor to the operating profit for the current year, you'll see this is a a simple bridge that we've pulled together that takes us from the £2,400,000 profit in 2024 to 3,400,000 in 2025. I just want to touch on each of the box very quickly. The 97 positive on corporate is as a result of managing head office and and PLC costs that we've been successful in doing that. So that's ended up with a very small positive variance. Roofing and material handling businesses, they're both well established business and performed well. Material handling has been steady again, cash generative, and we're generating cash to allow us to invest further in the fleet. And the roofing businesses activity levels are actually up this year. So there's increased volumes. We've been able to generate additional value as as John mentioned through the the PV, so to a full take offering and integration into our roofing systems.

10:45 The red box towards the dotted red box towards the right hand side of this chart, all three of the the blocks within there, the businesses, is our building services division. Isola has had strong performance during the year and what has been a good market helped by regulatory change. And again, that's something that John will cover in a little bit more detail in the strategy and operational update section later. The contracting businesses that sit within the group have performed well. Revenues we'll come on to the revenues later on. Revenues are down slightly for those businesses combined, but profitability, it has increased. Some problematic contracts in previous years have been finished, and we now have a good mix of contracts and customers in both those businesses across public and private sector. And then this is the red the only red block, frankly, on on this chart is in relation to peels, and that's the cost the further trading losses and the closure cost of that business in the twelve months.

11:42 So above that, the bridge, let's say, takes it from the 2,400,000 of last year to the 3,400,000 that's been reported this year. And rather than go through all the divisions of the business, I just thought it would be helpful just to pull out one of the one of the main ones, which is the building services division. This includes Isola, the contracting businesses, MGM and Arcas, Listers, our electrical contractor and NORTHERN BEAR SAFETY, which is our in health health and safety team. As I mentioned on the on on running through the previous slide, the revenue in the contract in the building services division overall is down slightly, and that's a a reduction in the revenue in the contracting businesses, but offset by a strong performance by isola. But if you look on the the couple of charts on there on the operating profit and operating margin, they're showing an overall significant increase. And that's as a result of Isola's strong performance, but also the reduction in volumes and revenues in the contracting businesses being offset by an improvement in gross margin as a result of the fall away of those more problematic contracts in previous years and the better mix of contracts that we've got going forward.

12:57 So onto the onto the balance sheet. There's only three or four points really I'd I'd out on this one. One is for business of this nature. I think it's a a strong balance sheet with net assets of 22,300,000 and and a strong cash position with 4,000,000 of cash, and bank loans are only just under 1,500,000. Return on capital employed has also increased during the year from 9.6 to 13.3, which is as a result of the improved profitability of the trading entities and demonstrates an efficient use of the assets to generate revenue and profit within the group. The higher fleet at just under 4,000,000 has increased 3.7 to 4,000,000, and that is as a result of the further investment in that fleet where we find that long term hires in that business are very strong from a cash generative perspective.

13:49 And then the last point, I've touched on it briefly before, was the positive cash position with £4,000,000 in cash at the year end, which is an increase of 3,000,000 from the previous year. And I'll just touch on that in the following slide where I've pulled together Pulled together a simple cash bridge, which is taking us from the March 24 cash balance of just under 1,000,000 to the March 25 of just under 4,000,000. The big green bar on the left hand side with 7,700,000 in is cash from operations. Now that's a reflection of the ability of the group to manage its working capital, and it's been very successful in turning profits in the year into cash. There is some visits behind that from the end of the previous financial year and the timing of Easter resulted in some cash that would normally have been collected in the twenty four financial period being collected very early in the '25 period. So that helped just boost that cash position at the start of the year.

14:47 Then as we go through the chart and work from from left to right, the next key point I pick on there is the net capital expenditure. So there's just under £1,500,000 of capital expenditure, and the vast majority of that relates to the material handling business. So it's that's further investment in in fleet.

15:11 So moving on, loan repayments. This is, I think, a a good news story for the business. So included within the 1,700,000 are 750,000 of quarterly loan repayments, which are the standard scheduled repayments agreed with Virgin Money. But what we've also been able to do is pay an additional £1,000,000 of that loan down during the year with those repayments being made out of surplus operating cash flows. And then I'll just touch on the the last little red blob in there, which is the dividends. So the dividend in the previous year was 2p per share, and the total cost of the business, that was 275,000. So I did hope the the effect of across that chart, say, it takes us from just under 1,000,000 to just under 4,000,000 in cash, which puts us in a very strong position cash position at the start of the financial year ended March 26.

16:07 So the last slide, I was just going to pick up on the financial performance. We just levered up returns to shareholders. And September 24, that dividend that was paid with a 2% ordinary dividend. But then in December 24, we made a significant return to shareholders with a share buyback of 3,100,000 funded by a £3,500,000 loan from nudging money. What we're proposing for this year based on the the performance and the results for the September 25 dividend is a 2.5p dividend per share, an ordinary an ordinary dividend of 2.5p per share. Sorry. And a 1p per share special dividend. Now that 1p special dividend reflects the exceptional trading results for the year, and that will take the total cost of the dividends to around just under £500,000 for the year.

17:00 So what I'll do now is I'll just hand back to John, who's gonna pick up on strategic and operational letters. Thanks, Julia. So I thought what we would first of all do is we just cover some of the key strategic drivers. Can you just move it? One sec. So these are absolutely core to our business in the group. Some of these were in place over twelve months ago and before, and some weren't. But this has been the driver through last year and will continue to be the drivers through this year. So the first one, obviously, recognizing the award of success of our people. We've got over 400 employees, and with a retainment of them and ensuring they're motivated, absolutely paramount to the group and their success. Investing for growth, I think that came through and will come through in what we've done, and that's been mentioned in some of our other reports, which have been out.

17:51 Improved communication in the business, we've had that, as I said, through various management meetings and structures we put in place. Focus on cash generation. I think from Julian's last second last slide, you'd see how important that is to the group. And, really, that's a thing called cash back profits, which I firmly believe in, and that's what we need to always strive for. Public private client balance, that was in the group already, but we must maintain that as we grow. And the bottom two are really, really key in my mind, and this is improving the quality of the opportunity and upvying our offering, which are very much tied together. But that basically means that we provide a better service and get better rewarded for the service we provide and always take in that angle and look at that whatever we deliver.

18:39 So we'll just move on to the business. Well, about the services business. So what we've done is we've got emerging trends. You can see the businesses in there, Arcas, Northern Bay City, the MGM, J List, those electrical. The emerging trends coming out of this sector, really, are client funded. There's a lot of public sector funding coming through. There's more growth coming through on housing, particularly affordable housing. We'll see that start to be released and progressed. Increased prevalence of the public sector with decarbonization, That's really starting to come through as well. Although it has been slow, that's starting to push through particularly in health and education. And on the other side of that, we've got a lot of more increased regulation coming through in this sector. So those are the trends we're seeing. But in order to counter that, I'll just run through some of the strategic focuses we're putting in this in this sector of our business. So raising the profile, a good example of that will be our cast rebranded in 2024, and we'll really put a focus out in the blue chip clients, refurbishment projects, high level delivery, and fast track delivery, and that's been paying dividends in the Northeast with some good clients and good contracts coming through from where they were before.

19:48 The carbon reduction offering for education and health, list has been marked on that for the last eighteen months. And over the last six months, we've seen progress on that, and major contracts have been won for solar, with the New York University and also LED lighting with Leeds Health Trust. So I can see that continue going forward. Oh, our value offer. The best way to describe this would be, I'll give an example. We have, signed up, exclusive contract with a business called Husq who actually deliver a process, a patented process, which we can convert, disused garage sites in old affordable housing locations or council house garage sites in the bungalows without needing full planning permission.

20:36 And that means that can be done within eighteen months and without all of the planning restrictions in place. So that's a real positive for the business. It's something we're pushing. And, again, that puts us into a gives us a USP, basically, in the marketplace, and that means we're adding value to the clients, and there should be more reward for that. So we're going back to those strategies, which I went through before. Framework, public sector contracts, start to come before. We must ensure we're we're we're professional, and we're tied up for that. So there's been heavy investment in the last twelve months in ISOs, quality controls, and submissions of improvements for tenders. So big investment in people on that side over the last twelve months, and that should put us in a better position.

21:22 Investment led growth. Obviously, we've been tied a little bit with the loan that we've been carrying, where we put 3,100,000 back in the shareholders. So what we've done, and this is a good example of this, BEAR, is we've had a start up called Callisto Glass Facades, which is a brand within MGM with its own director in charge of it. And we run that with separate accounts, and we're running that within MGM though. But eventually, within twelve, eighteen months, that should come out as a stand alone business. And that's a way of getting some organic growth, if you like, new growth without having to spend any money. So that's the type of thing we've been looking at just to look at things, if you like, in the left field. Help and see if you're training. Obviously, big push from the government on CITB grants and further training and encouragement in the construction sector. Our health and safety and training business looks at that, and they provide support all the businesses that we're looking at to to achieve what we can to actually get recruit people and train people up.

22:26 Isola. So emerging trends, obviously, increased regulatory drivers. So the building safety act is impacting everybody in the construction sector, private and public sector. Building owners, because of this, are responsible for their buildings and if they're safe or not, which again is a major stream of work that we're looking at. This is all down we went for. And, also, the massive tier one contractors who are international and national have major issues around this building safety act and how to carry out major refurbishment works. We're well placed to carry out that type of work for them. So those are the emerging trends. And, basically, where one is, this is all about sustainable growth for isolates. So we've installed a compliance team into the business at a real heavy cost in excess of £200,000, but that enables us to provide a one stop shop to some of these clients and building owners where we can provide a solution to any issues they've got with regards to fire stopping, which again is about up value in our offer and should bring further value in.

23:37 We are developing strategies and doing some small amount delivery nationally for clients. But, actually, what we want to do is we want to develop our public sector base, if you like, nationally and in the South Of the country. So we'll balance off so that we get some more sustainable work with long term frameworks as well as work for those private clients. So that's a strategy that we'll be looking to going forward. And trading and accreditation, as I said, you know, twelve months ago, there was a big investment in their debt or at office, and that continues. And there's a training debt win there, probably one of a kind in the North Of England, to be fair. That continues to be a major selling point for the business.

24:21 Thanks, Judy. Roofing. So these these are mature businesses, and in many ways, the foundation stones of NORTHERN BEAR because they're the first businesses in the in the group. So emerging trends, there's a strong pipeline of new build housing and retrofitting programs with affordable housing. There's a rising demand of solar PV installations that have been integrated into the roofing. And, also, there's an increase in capital expenditure to local government and national government because there's been a lack of investment as we all know for the last ten or fourteen years, and now the buildings need to be put right. And that's not complete, particularly in the school sector and education sector where there's a lot of work coming through. So those are the sort of trends we're seeing. So how we've how we've dealt with that is we managed to get for Wednesday's MCS accreditation, which has taken twelve months, and they now are able to deliver full PV on a roof in one visit while the roof tiles are being installed and sign that off, provide that to the new house builder. So what that does for the business, it nearly doubles the price of a roof, but also means that works carried out in one visit, which is a benefit to Wensley, but also benefit, as you can imagine, to the house builder. So that's been a real positive, and that's start really push on now in the business.

25:44 Because of that, we've had investment growth, and we'll have to put a new depot. So they'll be moving into a new depot in the next couple of months to facilitate the PV installations, but also raises the company profile, and it also raises the aspirations of the staff and management team there, which is great. Developing house builder partnerships. I think this is gonna be key on the private sector. Private sector housing in a minute has a massive shortage of trades and subcontractors to deliver. We're a massive, massive market for housing, And I do believe that we'll be able to develop where we get two, three year frameworks with the house builders, and that's where it's looking because, actually, we've got the trades that are required to complete the houses, and that's something we're working on as we speak with our clients. We have a balanced portfolio of clients. Private, public, really strong. That's always been the case along may it continue.

26:35 And we also the one thing we do, we do a lot all three businesses are autonomous. We bring the supply chain together so we get maximize our buying power, if you like, through volume with the roof suppliers and the tile suppliers. So if there's any issues, we can count on them to look our roofs. Thanks, Julia. So our core is our material handler business. I'll just go through the emerging trends. So what we've got is there's obviously a big push towards electrical vehicles in there. Clients are wanting more increased outsourcing, so they want the full package. Don't really wanna be involved in anything to do with the forklift apart from employing the drive, and sometimes it's not even that.

27:20 Great. Our telematics in there for the efficiencies and logistics. And on the negative in there, we do have the Chinese product coming into the coming into The UK, and it's pretty aggressive with the marketing and the pricing that the Chinese products are are giving. So the strategies we've got around that is really we're trying to offer higher value offer to our clients because we're the franchisee for Mitsubishi, which are classed, if you like, as the I'd say the Audi fork of trucks or whatever or the BMW or whatever it is, but the high level. So we'll try and offer that high level value. So we will

27:56 do full leasing, and we'll basically run the forklift, maintain the forklift, train their drivers, and then we'll buy them back from them at the end of the term, which do has a big attraction to some of the clients. Obviously, we've got the the electrification of the forklifts, all of our engineers are trained up on that now. Short term hire, we maximize what we have because when we get a buyback, we'll either resell or we will actually rehire short term hires with them to absolutely max maximize what we can do with our balance sheet. Operator training, we provide that to all of our clients, full operator training, fully up to date with all of the telematics. And, also, what we're looking at going forward is a wider offering just because there's a little bit of tension with the product offer coming out. So looking at racking systems and cleaning systems to our existing warehouse clients to see if we can widen our offering to.

28:52 So just to move on really to to potential acquisitions and and where we are with that. Where we are is we're really we're we're paying the debt off. That will be paid off shortly. But then we'll be looking at businesses, and we really look to establish businesses. I don't mind businesses where we can add something and improve that the business if they come into the group. It be it's absolutely paramount. They must have a balanced mix of blue chip and private and public sector clients. We need them to be resilient and have their own layer on management teams. We have many, many businesses coming to our group to try and see if we're interested where the management team want to disappear, which is no good for us or anybody. We must have a management team in place and the most type of resources. So the type of businesses we're we're looking for is really in the fire solutions area, additional roofing, affordable housing, and, obviously, businesses linked with decarbonization.

29:52 Maybe alternative to electric, but we'll look at that.

29:58 So finally, key points. The overall trading performance has been good, and the key features of that have been growth in both the revenue and the margin. All the all the divisions are delivering operating growth for the prior year, and you can see where where we have to make a change with peels, for example, we've made the change.

30:18 We're looking at diversifying our customers and sectors. We've got strong cash generation from the trades, and we're managing to pay down the bank loans in an accelerated manner. We're gonna continue to develop a wider offering of balance mix of client base. We're gonna continue to invest and invest offers of higher value services,

30:40 and we're gonna look at the building services group to see where we get more growth in geography and also sustainable growth in the isola business, which is apparent, but it must be sustainable and it must be compliant. And in the year, obviously, we've increased the proposed dividend, which is $2.2.5 pence plus a special dividend of 1p, as Julian said before. And we are pretty confident that the market is holding up for 2026 expectations.

31:09 So on that, I think, thanks for your patience, and we'll go up to some questions now. That's fantastic, John. Julian, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. And John, Julian, as you can see, we have received a number of questions throughout today's presentation.

31:39 And if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you. Yeah. Thanks, Alex. So one of the questions we've got is, how do you see the new product development, a g, glass walls, solar panels, and how big an opportunity is this for you, and what sort of level of investment is requirement is required. So just in answering that question, I'll cover off the roof. Fortive will take

32:10 investment in areas between 100 to 200,000. The market's there and Orton, we've already got. Wensley's already have MCS accreditation. Springs Roofing will have it by the end of the year. And what I see there is I see an increase in turnover across the group, two or three million, and I see the effect on the businesses of 10% profit increase going forward. Callisto, slightly different. Very little investment in terms of real cash in there. It's a start up business, but I would like to think that two to three years time we'll have a business, it can purchase 3 to 400,000 PBT. So well worth doing, but not a massive profit center for the business. Another question is,

32:57 isolate is a strong performer. What do you see this group look like in three years, and will it continue to expand? So looking at 2025, it turned over 10,500,000. But what it was doing was maximizing its potential ability to make profit with the market. How we see that development is turnover, yes, may go up. Profits may not follow, but what we will have is long term frameworks and sustainable profits that could be repeated over many years, which would be key and also protect the group in which, it delivers its services because, obviously, it's highly regimented and highly process driven.

33:42 Another question. Would you consider acquisition as the share price rises? Are there any geographies, new industries you'd like going to? Well, as the share price rises, obviously, it's and our position is to increase that shareholder value again. So, yes, we will be looking at acquisitions. Having said that, the the level of the share price doesn't really affect our acquisitions. It's more on where we are with the bank and cash. But the focus for us on acquisition is is the business fit for our group, and will it bring a benefit, and will be able will we be able to grow the business? So that's absolutely paramount to us. So if you just bear with me, just Julian's got any questions. Yeah. There's a question on there that says, if not previously covered, can you share your plans for the dividend?

34:30 Then we've touched on that in the presentation with the with the 2.5 and the and the 1p special dividend for the year. So this comes around. So we've got a question. Congratulations on the results, which are not only a result of the weather, testament to hard work you've put in. Now that the business generates quite a bit of cash, please elaborate on how you'd like to allocate it. Yeah. I think the initial point, John's mentioned already, is part of that is it will be returned to shareholders in forms of the dividend.

35:03 And then what another key driver and the key use of that cash will be paying down the debt. After that, as I mentioned, if opportunities, strategic opportunities come up, potential acquisitions we made up for that, what's that what's that to you on the longer term? I think that with the market, the way the market's traveling, that investment's key, and I think that came through the presentation. So although we will be paying out to shareholders, and we will be looking to pay the loan off as quick as we can, we will also be looking to invest wherever we can to bring further growth to the business and further opportunities. Okay. There's a another question. In the past, you mentioned further financing options for the materials handling business.

35:48 What will this look like for the coming year and beyond? That's something it's one of the the projects I'm picking up about a couple of months here now, settled in and got to the year end and the year end audit and the the results. But it's one of the the areas I'm gonna look at within the business. Seems to work very well at the moment, but I'm sure about efficiency within that in the in the coming months. I've got a question here, which is in October, you were awarded 1,000,000 shares on the option of 52p. Have you any plans to issue more? Well, the simple answer to that is yes.

36:21 We must retain our key people in the business, and we will be. And what it does, it aligns them, obviously, to shareholders in the business as well. It is absolutely key for retention. So we'll we'll be looking at that in the next six to eight months with further schemes. Okay. Question, the overdraft facility is committed to October 2026. What is the timeline on extending this? We've actually just renewed our overdraft facility in that one until till June 26. The relationship with Virgin Money is good. It wasn't a difficult conversation to renew that overdraft facility, so I think and they're very supportive of us in what we're doing and particularly with the results. So I don't think we'd have any problems in renewing that one. It's come from renewal next time.

37:09 Let me just go down. There's a one on how scalable is fire protection.

37:13 It's a fire protection opportunity beyond the Northeast, and when do you expect the division's compliance investment to deliver returns? Well, the compliance investments too forward, the investments there to make us more compliant. As probably everybody's aware, if we become even more compliant, and we can demonstrate that the clients who have major issues, therefore, that becomes a a tool that will sell the business and open up the market for us. The issue we have is operatives and resource, and that takes a lot longer. So, hence, the strategy of increasing the value of what we offer. So if we've got a 100 guys working on NICE, I'd rather work on high value solutions to clients than, for example, working as a subcontractor or main contractor.

38:00 So we do see profits continue to increase. Might not be at the level of have increased in the in the last twelve months, but that investment will pay off. The long game will be to increase the resource in there. So there are some questions that are quite wordy and long, but we'll probably have to come back on those or we'll be reading them out. Yeah. After how much of 26 revenue is already con contractor? It's there's we're we're measuring slightly different within the group compared with tier one contractor, for example, because of the nature of it with roofing contractors. But we're on we run a car and pretty level, to be fair, in terms of the market.

38:49 So there's no massive increase in there. There's no indication that is going to increase apart from things that we change by our own volition, I e, increase the value of what we do, put PV on the roof, do more decarbonization schemes. So it's really in our hands, but in the Northeast, certainly in the Northeast and in Yorkshire, we don't see any massive upturn in the market as yet. There's a couple of questions we've got about expected capital expenditure for next year. I don't think well, there's probably it won't won't be a bigger number than last year, and it's something that we continually review. And it will come into sort of that balance of looking at the financing options that we talked about earlier in the higher fleet and working the most efficient way and the most efficient balance of that.

39:37 I think I answered that one. I suppose there's a one on gross margin there, which I got to answer. The gross margin in the group is strange because we have because we have transactional businesses in the roofing, for example. This isn't a traditional overhead, and there's a lot of cost attached above the gross margin, and it's something we're looking at. But, unfortunately, we cannot allocate everything aside because the transactions are too small. So we do have, compared to our peers, a higher overhead and higher gross margin because we've got site costs within there because of the transactional nature of the business. So it is something we'll look at. But, obviously, if we increase the turnover, that cost will tend to go up.

40:35 K. Question, did I hear you correctly that you're going to pay all of the 1.45, million of bank loans? Does this mean that any acquisitions are likely to be done for shares rather than cash? I think that was very much dependent on on the timing, and the size of any potential acquisition. And we just have to review that as the opportunities come up. I don't think it's a there'll be a definite answer to that one, unfortunately. It's good out of Fred in there. Can you see the total staff headcount? Can you see what the total head staff headcount is at the year end? And how do you see it develop in the new financial year? We see it increasing. It's it's over 400. I think it's about 420,425.

41:21 We'll see it increasing over the course of the year, but that will be via recruitment, and that's limited and takes time. So I could see five to 10% being added maximum. Well, a 10% is probably too much, 5% added over the course of the year. There's a second part of that question. Are the contracts from Peel now absorbed into the wider group actually to be additive to the new year profitability? No. There no. There wasn't. There was a cut off on the contracts, and no contracts have carried across into the year end. The only thing the group is doing now is administering retention collections. We made provision within our figures for any any costs associated with appeals. Yeah. And there's only a amount cost coming through, but nothing less So appeals are really I suppose I think the answer, but material handling all of our so in the material handling business, there has been a large CapEx investment in new fleet over the last few years. Will this continue?

42:28 Well, our view is we'll restrict this really to what they produce on EBITDA or something like that. And we'll use more because there's more of a push as we mentioned in the strategy for clients who want a full leasing agreement, we'll mix that up with the lease agreements with Mitsubishi. And it could well be not, but I don't see the balance sheet reducing over the years. They are being maintained, but I don't think it'll continue to increase. Question there. Alright. So do you this is a good one for me coming from the Northeast. Do you think that the company's focus on the Northeast is a strategic strength or weakness? I think it's a strength because the businesses are mature and have a good market share in the Northeast.

43:18 There is more money made in other regions, but you have to have control when you move out of regions. Hence, I've said this isolate who do have the ability to move out of region are very, very cautious in their approach because there's absolutely no point expanding the business and not making any profit. So we are cautious. We will look and move out, but that's dependent on the opportunity. Yeah. The question, what what are the 2026 financial expectations? Think I touched on that, and we're expecting a profit before interest and tax level, a similar level to the current financial year. So I could for another good year of solid performance. I think one's a last one.

44:09 What was the rationale for a special dividend payment? So that that is as as a result of the results being so strong for the current year. So we kept the the the core ordinary dividend in place, but we gave a top off of just 1p due to the the performance and the availability of cash. Just use your Yes. That's an easy one, man. It's a matter of Well, for '26. Yeah. Yeah. Yeah. So congratulations on great results and cash conversion. We could be providing you forecast for '26 and '27, please. We're hoping to get something out either later today or I think tomorrow we're working with them on at the moment. So we'll get that out as soon as we can. Just the the one on there.

45:04 What's that? Would you invest further in your fleet of equipment or higher? Is it does this currently mostly focus on material handling forklifts? Yes. It's highly specialized in material handling forklifts, and probably the specialists of the team are there. And, yeah, I don't think we've got the ability in there, why they're too much apart from what I mentioned before as in linked with warehouse working. But what we are doing is we're looking to see if we can do some bigger deals with some bigger clients given the investment we put in. So that's one area we all look to try and push. Impact impact of the national living wage. What was that? What's the impact of the national living wage and national insurance increases? I suppose, in some respects, with most of our contract size has been quite small, it's positive for us because turnover goes up because we as a business, as soon as we know about it, we change our pricing policies to reflect that and pass the costs on, which is unfortunate for the clients.

46:05 So when that happened, if you like, last year, we went round and we ensured that all the businesses reflected the new hourly rates and tenders, prices, and also to legislative legislative change. So even if you're on a framework, you have the ability to get an increase for that. So very little impact. The return on camera. Yeah. It is having a return on capital or return on investment threshold that you target when appeasing acquisitions appraising acquisitions. I don't think there'd be anything as as formulaic because I think it's more of in terms of, as John talked in the presentation, around how good a fit it would be to the business, resilience, and the ability for us to to add value to that.

46:54 Again, will depend on the sector, and we'll have to look at it. Yeah. I think I came throughout our We like to add value to businesses, and that's the key criteria for us. I think we're about yeah. At the bottom. Yeah. I think we're at the bottom now, Alex, on questions. That's correct, John. Julian, thank you very much indeed for addressing those questions for investors today. And of course, the company can review all questions submitted today, and we'll polish those responses on the Investor Meet company platform. But before we direct investors to provide you with their feedback, which is particularly important to the company, John, could I please ask you for a few closing comments? Yeah. Certainly. It's been a it's been a pleasure presenting everybody. We're really excited about the business. Hope that comes through in the presentation.

47:41 I think we've got good things to come. Well, our Northeast business and Northeast business are used to working in tight markets. So in some regards, that's good. But we do seem to have some businesses here where we're pushing strategically where we'll get some decent growth and also add some value. So thank you very much for your for your time. Yeah. Thank you. Fantastic. John, Julian, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of NORTHERN BEAR PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.

48:30 Thank you.