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13 Jul 2020 | 09:10

Northern Bear scraps final dividend as profit drops

(Sharecast News) - Northern Bear said it would not pay a final dividend after taking government support and asking workers to take pay cuts during the Covid-19 crisis. Reporting annual results the building services company said it had enough money to pay an unchanged dividend but that it was not appropriate to do so. It intends to restart dividends in the current financial year subject to trading.

Adjusted operating profit for the year to the end of March fell 31% to £2.2m as revenue fell to £54.4m from £56.6m. The company provides services to housebuilders, local authorities, NHS trusts and others, mainly in northern England.

Northern Bear said the last two weeks of the year were affected by the Covid-19 crisis and that activity was low in April as most building sites shut down. From late May business picked up and activity is now about 75% of normal levels. Its order book has strengthened in the meantime, Northern Bear said.

Executive Chairman Steve Roberts said the company performed well during a year when the business faced unprecedented disruption from Brexit uncertainty, the December election, severe storms in spring and the Covid-19 pandemic.

"In light of the unprecedented set of circumstances which faced the group throughout the financial year, we are very pleased with the group's financial performance," Roberts said.

"Whilst those circumstances meant that the group could not generate the level of profitability which would ordinarily have been possible from its very strong opening order book, that order book has grown further which should lead to a sustained period of strong profitability now that a more normal level of operating activity appears to be in the process of returning."

Investors have told companies to think before paying dividends if they are taking government support or cutting workers' wages to strengthen their finances. TI Fluid Systems faced an outcry in May after proposing a dividend when it had furloughed workers and reduced pay for other employees.

Northern Bear shares fell sharply in early trading but were down 0.9% to 55p at 09:30 BST.

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