The board of directors of Northern Bear plc (the "Board") is pleased to provide an update on trading for the six month period ended 30 September 2020 ("H1 FY21") for the Company and its subsidiaries (together the "Group").
We provided updates on trading for H1 FY21 in the preliminary results announcement dated 13 July 2020 and on the date of the Annual General Meeting on 18 August 2020. In the latter announcement the Board noted an intention to provide a further trading update in October 2020. At that time the COVID-19 case load was relatively low and, should this have continued, we hoped to be able to provide a further positive update effectively post COVID-19 restrictions. The situation has since worsened, with a new four week lockdown for England commencing on 5 November, and it now appears clear that the Group will be working with widespread restrictions over the coming months.
As stated previously, the COVID-19 pandemic had a major impact on the construction industry with the majority of the Group's businesses seeing construction sites close in late March and, as a result, the Group had limited on-site work opportunities at that time.
We are pleased to say that, while activity levels were low during April, there was a gradual and sustained improvement during the latter part of May and June, with a number of private sector and local authority contracts resuming. This allowed us to restrict the extensive losses that would have occurred across the majority of our businesses in a worst-case scenario with no site activities over a period of months.
On release of our preliminary results in July we were operating at circa 75% of normal activity levels, and trading profitably again, and by our AGM date in August we had seen a further increase to circa 90% of normal levels. We have since had a solid trading month in September. We are pleased to report that, as a result of the strong trading as the second quarter progressed, we expect to report a small overall trading profit for H1 FY21. Given the circumstances faced in March, this performance is testament to the loyal workforce of the Group, many of whom took voluntary wage reductions to help restrict fixed overheads during the lockdown period and beyond.
The impact on our subsidiary businesses has varied over H1 FY21, with Isoler Limited (our fire protection business) busy throughout the period due to many of its ongoing projects being deemed essential works. Conversely, H Peel & Sons Limited, our fit out and interiors business has seen a major impact on its core hospitality and leisure markets from COVID-19 restrictions and has experienced a very challenging period which, given the new sector restrictions imposed in recent weeks by the Government, is likely to continue throughout the second half of the financial year.
Our forward order book remains strong and should support our operating performance in the remainder of this financial year, subject to a continued ability to fulfil contracts on site. The renewed restrictions put in place following the outbreak of the second wave of COVID-19 infections have increased inherent uncertainty in our industry, impacting both our customer base and supply chain, and are expected to remain headwinds to short term trading. We will do everything possible to maintain our site activities, by ensuring the first class safety procedures that our safety team have devised over this challenging period continue to remain fluid and in place in order to protect all of our workforce, customers, and members of the public.
In the meantime our financial position remains strong and, whilst it reflects only a snapshot in time and our working capital requirements swing on a daily basis, the Group was in a position of having a net cash rather than debt position as at 30 September 2020. We have made use of our £1m overdraft facility in H1 FY21 and subsequent to the period end, but have not drawn any of the £3.5m revolving credit facility since April 2020. Together with the strong order book, this strong cash and headroom position means that we are well placed to trade through a further difficult and uncertain period during this second wave of the pandemic and beyond.
The Group's unaudited interim results will be released in the week commencing 23 November 2020.