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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Crestchic Plc | LSE:LOAD | London | Ordinary Share | GB00B0SPFW38 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 399.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMNBI
RNS Number : 4431B
Northbridge Industrial Services PLC
17 April 2012
17 April 2012
Northbridge Industrial Services Plc.
("Northbridge" or the "Group")
Preliminary Results for the Year Ended 31 December 2011
Northbridge Industrial Services plc, the industrial services and rental company, today announces its preliminary results for the year ended 31 December 2011.
Highlights:
-- Consolidated Group revenue up 29% to GBP24.9 million (2010: GBP19.3 million) -- Pre-tax profits pre exceptionals up 18% at GBP4.6 million (2010: GBP3.9 million) -- 54% improvement in the like for like sale of manufactured units
-- Continuing strong cashflow generated from operations before movements in working capital of GBP6.9 million (2010: GBP5.9 million)
-- Proposed increase in the final dividend to 3.25 pence, raising the total dividend for the year to 5.0 pence (2010: 4.6 pence), an increase of 8.7%
-- Adjusted earnings per share up 5% to 24.6p (2010: 23.4p)* -- Tasman Oil Tools in Australia has performed ahead of expectations
o Deferred consideration of GBP2.4million fully discharged
o 3 significant contract wins announced since the year end
-- Sale of underutilised assets for cash and impairment loss recognised as previously advised -- International coverage growth
o Acquisitions in Belgium and Singapore
o Investment in start up operations in USA, France and Singapore
Eric Hook, Chief Executive Officer, commenting on the results and outlook said:
"We are pleased with the Group's performance and development during 2011 at a time when the world economy has continued to prove challenging. Having started 2012 with good levels of demand for our manufactured products we expect continued growth this year and an increase in the dividend of 8.7% for the year has been proposed. We continue to be confident in the Group's prospects for the coming year and remain committed to the Group's global strategy and objectives."
Trading since year end
Tasman Oil Tools, which was acquired in July 2010, has been able to capitalise on the continued growth of the onshore and offshore oil and gas industry in Australia and has so far this year won three separate contracts to supply drill pipeline during 2012 to Santos, Woodside and Origin and has already secured 56% of its expected turnover for 2012.
As advised on 27 January 2012 as part of the ongoing review of the Group's assets, the Board recognised that certain rental assets (that were originally purchased to supply generators, transformers and ancillary equipment for the rental contract to the Jabali Zinc Project in Yemen which was terminated in 2010) were not achieving the levels of utilisation that were considered acceptable in comparison to Group activities. The Board is pleased to announce that these assets have now been sold and cash proceeds have been received. Although the Board has had to recognise an impairment within the 2011 figures the cash proceeds received have been released for investment into core hire assets.
Following a period of sustained demand for products manufactured at its Burton assembly plant, resulting in extended lead times, Northbridge has been able to secure, for GBP1.25 million, additional factory premises totaling 26,200 sq ft on land directly adjacent to its current Burton manufacturing facility. The Group's rental operation which occupies part of the existing production facility will be relocated to the new premises enabling increased production and a reduction in rental costs as other Group operations are consolidated onto the new site.
In addition, Northbridge Middle East utilising part of its own fleet and part of the DSG Rental fleet has secured two significant contracts to supply transformers to an existing Northbridge and DSG customer. The contracts are for a minimum 12 month period.
Outlook:
Demand for the sale of our load bank product remains buoyant and we are hopeful that the utilisation rates for the rental of our specialist industrial products will be sustained. The continued investment into our hire and manufacturing operations will help to ensure that we are well placed to exploit future opportunities. Whilst the European economy continues to prove challenging, as a sign of the Board's confidence in the Group's prospects, an increase in the dividend of 8.7% for the year has been proposed. We are pleased with the Group's performance and development in 2011 and, having started 2012 with good levels of contracted rental demand and product sales orders, we expect continued growth this year.
For further information
Northbridge Industrial Services plc 01283 531645
Eric Hook, Chief Executive Officer
Craig Robinson, Finance Director
Westhouse Securities Limited (Nominated Adviser and Broker)
020 7601 6100
Antonio Bossi /Adam Lloyd
Buchanan Communications 020 7466 5000
Charles Ryland / James Strong
About Northbridge:
Northbridge Industrial Services plc hires and sells specialist industrial equipment to a non-cyclical customer base. With offices or agents in the UK, US, Dubai, Belgium, Germany, France, Australia, Singapore, India, Brazil, Korea and Azerbaijan, Northbridge has a global customer base. This includes utility companies, the oil and gas sector, shipping, construction and the public sector. The product range includes loadbanks, transformers, generators, compressors and oil tools. Northbridge was admitted to AIM in 2006 since when it has recorded increased earnings and dividends based on providing a high level of service, responsiveness and flexibility to customers. It has grown by acquisition of companies in the UK, Dubai, Azerbaijan and Australia and through investing further in those acquired companies to make them more successful. Northbridge continues to seek suitable businesses for acquisition across the world.
*Basic earnings per shareadjusted for the loss made on certain assets originally purchased for the Jabal Salab Zinc Mine project of GBP1,455,000 (2010: profit of GBP292,000).
CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW
We are pleased to present our review of the Group's trading performance for 2011.
Our manufacturing and sales activities enjoyed a much better year with demand strengthening in the second half; this helped to grow our overall trading profits before tax and exceptional items to GBP4.6 million (2010: GBP3.9 million). Adjusted basic earnings per share (as described in the Financial Performance section) improved to 24.6p (2010: 23.4p).
The worldwide economy continued its slow progress to recovery and whilst we have seen parts of our business perform strongly during the year, other parts have experienced more difficult trading conditions. In particular the larger international projects for power testing and commissioning have been slower to return to normal following the financial crisis in 2008. The normal gestation time for these types of projects is around 3 years and generally our services are engaged towards the end of this time. We are expecting an upturn in this part of our business later this year and into 2013 following substantial investment by the major oil companies into new rigs and FPSOs (floating production, storage and offloading vessels).
Tasman Oil Tools, the Western Australian business we acquired in the second half of 2010, had a successful first full year as part of the Group, with profits in excess of GBP2 million. We have continued to invest in the business, both organisationally and in its systems and hire fleet, and it gained its Quality Assurance Standards Accreditation in the second half of 2011. It has made the transition from a family run business to corporate parentage extremely well. Tasman is strongly focused towards renting its equipment into the oil and gas industry with over 85% of the total revenue coming from this activity.
Crestchic, our main UK subsidiary, performed well and its profits were up 14.3% during the year. This was led by a strong demand for manufactured units continuing the trend of the last quarter of 2010. The demand for these products is worldwide and it was encouraging to see demand from both the USA and South East Asian shipyards increasing once again. The additional sales compensated for a slower period for the larger rental projects where a number had been delayed or postponed until 2012 and beyond.
Crestchic designs, manufactures, sells and hires loadbank equipment, which is primarily used for the commissioning and maintenance of independent power sources such as diesel generators and gas turbines. The need to test and maintain standby and independent power systems, together with the associated switchgear and controls, has become an increasingly important element within the power critical technology used by the banking, medical, marine and defence industries. This has resulted in continued strong demand for Crestchic's range of equipment and services throughout the world. Additionally Crestchic is benefiting from a background of an increasingly unreliable global power infrastructure and an increase in the size and remoteness of projects.
Northbridge Middle East (NME) had a satisfactory year but profits fell from the record levels of 2011. This was partly due to the slowdown in major projects mentioned above and partly due to Dubai's own financial problems. In addition one of our major customers in the region relocated some of its operations to Singapore. However this year has seen a steady start and we expect growth to return to this region for the future. NME is located in the Jebel Ali Free Zone of Dubai and acts as a distributor for the full range of Crestchic's products and services throughout the Middle East and Africa, as well as trading on its own account in the rental of transformers, generators and associated electrical equipment.
Our new operation in Singapore, Northbridge Industrial Services Pte (NAP), whose commencement was prompted by our Dubai customer's relocation, showed an inaugural profit and has been further strengthened by the acquisition of the assets of Loadcell Services (NLS). Both businesses are able to share premises and administrative support. NLS is a complementary business to others in the region and we look forward to it making a contribution to earnings this year.
RDS, our specialist generator and transformer rental subsidiary, which trades principally in the Caspian region, had a better year with a good increase in profits compared to 2010. In addition Allied industrial Resources ("AIR") in the UK, which offers high volume/high pressure compressed air equipment rental, made a profit during the year compared with a loss in 2010.
Our other acquisition in December 2011, DSG Rental NV, which is based in Antwerp, Belgium and rents transformers contributed to Group profits immediately and will continue to do so in 2012. We are now able to offer this service to a much wider customer base using Northbridge's worldwide depot base. Initial indications are that this strategy will be successful.
Impairment review
Towards the end of the year it became apparent that the remaining equipment acquired for the Jabal Salab Zinc Mine project in Yemen in 2009, which was cancelled in 2010, was unlikely to achieve the levels of utilisation or level of profits we would normally expect for this size of investment. At 20MW it was insufficient in size for an IPP (independent power producer) project and anticipated future maintenance costs would make the equipment uneconomic in the long run as part of our hire fleet and would act as a "drag" on the future profitability of the Group.
Following an in-depth review of the likely options available, including external professional advice, we decided to allow for an impairment to the carrying value and seek to dispose of most of the equipment that we could not use elsewhere. These accounts include a full provision for the loss of value, which amounts to GBP1.46 million, and since the year end the equipment has been sold. The proceeds of GBP860,000 have been invested in profit generating assets.
Acquisitions
On the 13 December 2011 we announced the acquisition of the assets of Loadcell Services Pte Ltd and Loadcell Services BVI ("Loadcell"), an oilfield instrumentation supplier based in Singapore. Loadcell was formed in 1982 and it now operates throughout South East Asia. It supplies its customers in the oil and gas sector with a broad range of services relating to drilling instrumentation, strain gauges and loadcells. Its rental activity includes loadcells from 10 to 1,000 tonnes and hydrostatic pressure test equipment to 20,000 psi.
Consideration for the assets will be in cash and comprises payments totalling Sing$2,093,000 (cGBP1.0 million) payable in three tranches. The first payment of GBP257,000 has already been paid. Further payments will be made at 6 months (25%) and 12 months (50%) from the acquisition date from the Group's cash resources. In addition, the vendor is entitled to an earn-out payment based on the gross profits generated by the Loadcell assets over the 24 month period following the acquisition. The maximum total consideration, including the assets, is Sing$4,093,000 (cGBP2.0 million). The additional payment will only be made if gross profits from the Loadcell business exceed Sing$2.0 million per year in each of the two years following the acquisition.
A new company was incorporated to complete the acquisition, Northbridge Loadcell Services Pte Ltd, and the business will share premises with NAP in Singapore.
On 16 December 2011, we announced the acquisition of 100% of the shares in DSG Rental NV ("DSGR"), a transformer rental business based in Antwerp, Belgium. The total consideration was EUR2.9 million with EUR2.6 million paid in cash and a further EUR0.3 million deferred for four months. In addition Northbridge assumed the leasing and other debts of EUR3.2 million. DSGR was incorporated in 2006 and specialises in the hire of containerised transformers, switchgear and substations on a global basis. The containers are rapidly deployable and range from 230 volts to 36,000 volts. Each can be adapted according to the specific requirements of the client.
DSGR's main customer base is industrial companies, other rental companies, and international power projects in Europe, Africa and the Middle East. The product portfolio is complementary to Northbridge's existing transformer and loadbank rental equipment. The business has grown substantially since incorporation. Revenue in the 12 months ended 30 June 2011 was EUR1.8 million and EBITDA was EUR1.1 million.
The business has now been re-named as "Northbridge Transformers" and will be marketed on a worldwide basis through the Northbridge depot network alongside our other products.
The initial consideration payable for both Loadcell and DSGR was satisfied from the Group's existing cash resources and bank facilities.
Financial performance
The group's consolidated revenue for the year ended 31 December 2011 was GBP24.9 million (2010: GBP19.3 million). This included a first full year from Tasman of GBP7.1 million (2010: GBP3.7 million). The activity split within the revenue was 56.9% rental and 43.1% sales. This is compared to the bias of 2010 which was 66.5% rental, despite a full 2011 inclusion of Tasman's revenue which is predominantly rental income. This was caused by a very strong performance of the sales of manufactured units, up 65.7% from 2011. Excluding Tasman, the overall increase in revenue was 14.1%.
Gross profits and pre-exceptional pre-tax profits were GBP14.7 million (2010: GBP12.1 million) and GBP4.6 million (2010: GBP3.9 million) respectively.
Basic earnings per share based on the average shares in issue during the period was 15.1 pence (2010: 25.8 pence). Adjusted earnings per share (before the loss made on certain assets originally purchased for the Jabal Salab Zinc Mine project of GBP1,455,000 (2010: profit of GBP292,000) improved to 24.6p (2010: 23.4p).
Net cash generated from operating activities amounted to GBP4.8 million (2010: GBP6.0 million), with a further GBP2.4 million (2010: GBP4.4 million) invested into the hire fleet. At the year end, stock and work-in-progress amounted to GBP2.5 million (2010: GBP1.0 million), the increase being largely due to increased demand for manufactured units and long lead times for some components. Total net assets at 31 December were GBP26.2 million (2010: GBP24.5 million) of which GBP18.2 million (2010: GBP15.5 million) was represented by the hire fleet. The final deferred payments relating to the acquisition of Tasman in 2010 were made during the year and these amounted to Aus$3.7 million (GBP2.4 million).
At 31 December the group had net gearing, defined as the ratio of all short and long-term financial liabilities less cash held to net assets of 39.5% (2010: 14.3%).
Dividend
Based on this performance the Board is pleased to propose an increase in the final dividend for 2011 of 6.6% to 3.25 pence (2010: 3.05 pence) resulting in a total dividend for the year of 5.0 pence (2010: 4.6 pence) per share, an overall increase of 8.7% for the year. The final dividend will be paid on the 8 June 2012 to shareholders on the register on 18 May 2012, subject to shareholder approval at the Annual General Meeting, to be held at 12.00 noon on 30 May 2012 at the offices of Buchanan Communications, 107 Cheapside, London EC2V 6DN.
Business review
This year has seen a continued development of Group activities. Although our Middle Eastern business has seen a material decline in demand, it does remain profitable however, and we believe the downturn will be short lived. The introduction of further income streams, particularly relating to transformers has been encouraging. In the short term a large proportion of our loadbank hire fleet has been relocated to Singapore to service the needs of one of our larger customers who has also relocated their operations from Abu Dhabi to Singapore. In the UK the demand for our manufactured units continues to grow and has doubled since 2009.
Tasman, the oil tool rental business in Western Australia, had a solid performance during its first full year as part of the Group. Management has been strengthened with the addition of new senior operational and accounting staff and in the last quarter we gained the Quality Assurance Standards Accreditation needed for the longer-term growth of the business.
We are determined to increase the awareness of the Crestchic brand of loadbanks particularly in Europe and the USA and during the year we have opened a small depot in the Paris region of France. We have also terminated the exclusive agency of our US agent and taken on the mantle of distribution ourselves and have established Crestchic Inc and recruited our first direct sales person. The previous agent remains active and continues selling a range of products on a non-exclusive basis.
Strategy
The Northbridge strategy is to acquire and consolidate specialist industrial equipment businesses. The criteria against which potential targets are assessed are:
-- Potential for expansion into complete outsourcing providers; -- Supplying, or capable of supplying, a worldwide customer base; -- Incorporating a strong element of rental and service work; and -- Capable of organic growth in their own right.
By consolidating a number of such companies Northbridge can add significant value through organic expansion into new geographical or industry markets and, by making complementary acquisitions, we can increase the Group's product offering to its international customer base.
In achieving this strategy we will be able to capitalise on the market opportunity to become a significant industrial services business serving an international market. The Board reviews this strategy periodically and believes it is still the correct one for the Group. We are actively continuing to search for suitable acquisitions.
Staff
We would like to take this opportunity to thank all the employees of the Group for their contribution to our success in 2011. In particular, we would like to welcome the employees of Loadcell and DSGR to the Group and thank them for the smooth transition to new ownership.
Outlook
Certain of our markets are showing signs of recovery and in particular the loadbank sales activity is very strong and we have now outgrown our current premises in Burton on Trent. Whilst we have been granted planning consent on our adjacent freehold land, we have decided instead that it would be both quicker and cheaper to acquire the freehold of the next door industrial unit which has become available. It comprises 26,000 sq ft of warehouse and office space and at a cost of GBP1.25 million represents around half of the cost of developing premises on our own land. This will be used to house all the non-manufacturing activity and boost our potential manufacturing capacity.
Tasman has also won three significant contracts for 2012 with major oil and gas companies and we look forward to further progress in the region.
Both our acquisitions of Loadcell and DSGR will help our business grow into the future and are very complementary to our current activities both in terms of product range and geography.
The growth of these parts of our business will help mitigate the slower activities in UK rental and international projects for commissioning and testing new standby and independent power plants.
Peter Harris Eric Hook Chairman Chief Executive
FINANCE DIRECTOR'S REPORT
Revenue and Profit before tax
During the year ended 31 December 2011 the Group achieved turnover of GBP24.9 million (2010: GBP19.3 million) with Northbridge Loadcell Services and DSG Rental contributing a combined revenue figure of GBP0.2 million following their acquisition in November and December 2011. Increased demand for the sale of our products resulted in the proportion of Group revenues from sales as opposed to rentals moving up to 43.1% (2010: 33.5%).
With operating expenditure as a percentage of turnover reducing to 39.6% from 42.9% in 2010 the profit before tax pre-exceptional items is up for the year by 18.1% to GBP4.6 million (2010: GBP3.9 million).
Exceptional costs of GBP1.7 million (2010: GBP0.2 million) included acquisition costs of GBP0.2m (2010: GBP0.2 million) and GBP1.5m of impairments costs relating to certain under-utilised assets that were sold after the period end. Whilst this reduces the profit before tax this is not a cash charge.
Earnings per share
The basic EPS figure of 15.1 pence after exceptional items (2010: 25.8 pence) and diluted EPS of 14.9 pence (2010: 25.5 pence) have been arrived at in accordance with the calculations contained in note 10.
Balance sheet and debt
The balance sheet shows an increase in property, plant and equipment due to our investment into the hire fleet of GBP2.4 million (2010: GBP4.4 million). A further GBP4 million was added by the acquisitions of DSG Rental and Northbridge Loadcell bringing the carrying value of our hire fleet at cost to GBP23.8 million (2010: GBP18.9 million). Trade receivables have increased to GBP6.4 million (2010: GBP5.4 million) due to higher trading. Cash and cash equivalents reduced to GBP0.9million (2010: GBP2.6 million).
Bank borrowings increased to GBP7.8 million (2010: GBP5.1 million) with overall gearing (ratio of financial liabilities less cash held to net assets) increasing to 39.5% (2010: 14.3%). The Group remained within its banking covenants during the year which were revised at the time of taking on additional borrowings in 2010. The Group cashflow from operating activities before movements in working capital was GBP6.9 million (2010: GBP5.9 million). The largest component of the difference between the profit before tax of GBP2.9 million and the cashflow from operating activities before movements in working capital of GBP6.9 million is depreciation, which at GBP2.2 million is significantly higher than in 2010 (GBP1.6 million) due to the larger hire fleet in the Group. Based on the Group's cashflow from operating activities there is further capacity for increased borrowings.
Cash flow
During the year, the Group generated GBP4.8 million of cash from operations (2010: GBP6.0 million), of which GBP2.4 million (2010: GBP4.4 million) was reinvested into the hire fleet. The Group also secured additional bank borrowings during the year giving rise to a net inflow of funds from bank borrowings of GBP2.8 million (2010: GBP2.1 million) which in part was used to finance business activities and the cost of acquisitions of GBP4.5m. The Group also paid out GBP0.7 million (2010: GBP0.5 million) in dividends to shareholders.
Income tax expense
The Group has an income tax expense for the year of GBP0.6 million (2010: GBP0.6 million) equating to a charge of 19.6% (2010: 17.5%) of profit before tax. The Group has benefited from reduced taxation on the current year and previous year's profits in two of its businesses following utilisation of HMRC rules on overseas subsidiaries.
Principal risks and uncertainties
In common with all trading businesses the Group is subjected to a variety of risks in the conduct of its normal business operations and seeks to mitigate exposure to all forms of risk where practical and to transfer risk to insurers where cost effective. In this respect the Group maintains a range of insurance policies against major identified insurable risks, including (but not limited to) business interruption, damage to or loss of property and equipment, and employment risks. The major risks are outlined below.
Operational and commercial risks
The Group's revenues are derived from the sale and rental of complementary industrial equipment and services across a range of sectors including oil and gas, banking, shipping, health care, utilities, and power generation. The Group's customer base is global and diverse and, whilst this minimises over reliance on any country or sector, the Group's revenues are dependent on global economic conditions and competitor activity, The competition for the products and services that the Group provides varies subsidiary by subsidiary and some of our products and services are subject to less market competition than others. Where there is increased competition this may result in lower pricing and margins or loss of business to competitors.
Information technology
The Group is dependent on its information technology ("IT") systems to operate its business efficiently, without failure or interruption. Whilst data within key systems is regularly backed up and systems are subject to virus protection, any failure of back-up systems or other major IT interruption could have a disruptive effect on the Group's business.
Interest rate risk
Although the Group delegates day-to-day control of its bank accounts to local management within agreed parameters it has a centrally managed policy and most Group borrowings and overdrafts attract variable interest rates although on occasion the Group may enter into capping arrangements for certain variable interest rate borrowings. The Board accepts that this policy of not fixing interest rates neither protects the Group entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk associated with interest payments. The Board considers that it achieves an appropriate balance of exposure to these risks. The Group's bank borrowings are made up primarily of revolving facilities, finance leases, mortgage and term loans. The rate on part of the term loan total has been capped at the margin plus a maximum LIBOR rate of 2% for the remaining term of the loan. The Group also utilises a short-term trade finance facility, a temporary overdraft facility and leasing arrangements.
Foreign currency exchange risk
The Group is exposed to movements in exchange rates for both foreign currency transactions and the translation of net assets and income statements of foreign subsidiaries. Also part of the cash at bank is held in Euro, US Dollar, Australian Dollar and UAE Dirham accounts and there are also trade balances and investments in these currencies. The Board manages this risk by converting non-functional currency into Sterling as appropriate, after allowing for future similar functional currency outlays. It does not currently consider that the use of hedging facilities would provide a cost-effective benefit to the Group on an ongoing basis although a forward currency contract was used to fix part of the cash consideration paid to the vendors of DSGR on completion of the acquisition.
Credit risk
Exposure to credit risk arises principally from the Group's trade receivables which is managed through stringent credit control practices including assessing all new customers, setting credit ratings which are factored into credit decisions, regularly reviewing established customers and credit insurance where felt appropriate. At 31 December 2011 the Group had GBP2,614,000 (2010: GBP3,237,000) of trade receivables which were past due but not impaired of which GBP2,219,000 (2010: GBP2,672,000) has been collected since the year end. At 31 December 2011 trade receivables of GBP15,000 (2010: GBP109,000) were past due and are considered to be impaired due to the fact that the debts are old and due from customers in financial difficulty. During the year the Group wrote off GBP97,000 (2010: GBP68,000) of debts considered unrecoverable.
Craig Robinson
Finance Director
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2011
Hot Features
Premium
2011 2010
Note GBP'000 GBP'000
-------------------------------------------------------- ----- --------- ---------
Revenue 2 24,904 19,327
Cost of sales (10,220) (7,264)
-------------------------------------------------------- ----- --------- ---------
Gross profit 14,684 12,063
Selling and distribution costs (5,529) (3,848)
Administrative expenses
-------------------------------------------------------- ----- --------- ---------
Excluding exceptional items (4,320) (4,123)
Exceptional items 3 (1,688) (195)
-------------------------------------------------------- ----- --------- ---------
Total administrative expenses (6,008) (4,318)
-------------------------------------------------------- ----- --------- ---------
Profits from operations 3,147 3,897
Finance income 18 8
Finance costs (277) (226)
-------------------------------------------------------- ----- --------- ---------
Profit before income tax excluding exceptional
items 4,576 3,874
Exceptional items 3 (1,688) (195)
-------------------------------------------------------- ----- --------- ---------
Profit before income tax 2,888 3,679
Income tax expense 4 (567) (643)
-------------------------------------------------------- ----- --------- ---------
Profit for the year attributable to the equity
holders of the parent 2,321 3,036
Other comprehensive income
Exchange differences on translating foreign
operations (56) 1,802
-------------------------------------------------------- ----- --------- ---------
Other comprehensive income for the year, net
of tax (56) 1,802
-------------------------------------------------------- ----- --------- ---------
Total comprehensive income for the period attributable
to equity holders of the parent 2,265 4,838
-------------------------------------------------------- ----- --------- ---------
Earnings per share
- basic (pence) 5 15.1 25.8
- diluted (pence) 5 14.9 25.5
-------------------------------------------------------- ----- --------- ---------
All amounts relate to continuing operations.
CONSOLIDATED BALANCE SHEET
As at 31 December 2011
2011 2010
------------------ ------------------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
ASSETS
Non-current assets
Intangible assets 11,134 9,755
Property, plant and equipment 23,323 20,504
----------------------------------- -------- -------- -------- --------
34,457 30,259
----------------------------------- -------- -------- -------- --------
Current assets
Inventories 2,468 1,010
Trade and other receivables 8,451 6,215
Cash and cash equivalents 878 2,588
----------------------------------- -------- -------- -------- --------
11,797 9,813
----------------------------------- -------- -------- -------- --------
Total assets 46,254 40,072
----------------------------------- -------- -------- -------- --------
LIABILITIES
Current liabilities
Trade and other payables 3,691 3,424
Financial liabilities 3,195 1,703
Other financial liabilities 993 2,310
Provisions - 71
Current tax liabilities 426 1,098
----------------------------------- -------- -------- -------- --------
8,305 8,606
----------------------------------- -------- -------- -------- --------
Non-current liabilities
Financial liabilities 8,031 4,382
Other financial liabilities 725 -
Deferred tax liabilities 2,975 2,584
----------------------------------- -------- -------- -------- --------
11,731 6,966
----------------------------------- -------- -------- -------- --------
Total liabilities 20,036 15,572
----------------------------------- -------- -------- -------- --------
Total net assets 26,218 24,500
----------------------------------- -------- -------- -------- --------
Capital and reserves attributable
to equity holders of the Company
Share capital 1,551 1,547
Share premium 13,203 13,153
Merger reserve 849 849
Foreign exchange reserve 1,588 1,644
Treasury share reserve (201) (201)
Retained earnings 9,228 7,508
----------------------------------- -------- -------- -------- --------
Total equity 26,218 24,500
----------------------------------- -------- -------- -------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2011
Foreign Treasury
Share Share Merger exchange share Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- --------- --------- --------- ---------
Changes in equity
Balance at 31 December
2010 1,547 13,153 849 1,644 (201) 7,508 24,500
Profit for the year - - - - - 2,321 2,321
Other comprehensive
income - - - (56) - - (56)
------------------------ -------- -------- -------- --------- --------- --------- ---------
Total comprehensive
income for the year - - - (56) - 2,321 2,265
Issue of share capital 4 50 - - - - 54
Deferred tax on share
options - - - - - 81 81
Share option expense - - - - - 54 54
Dividends paid - - - - - (736) (736)
------------------------ -------- -------- -------- --------- --------- --------- ---------
Balance at 31 December
2011 1,551 13,203 849 1,588 (201) 9,228 26,218
------------------------ -------- -------- -------- --------- --------- --------- ---------
For the year ended 31 December 2010
Foreign Treasury
Share Share Merger exchange share Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- --------- --------- --------- ---------
Changes in equity
Balance at 31 December
2009 909 6,967 - (158) (201) 4,908 12,425
Profit for the year - - - - - 3,036 3,036
Other comprehensive
income - - - 1,802 - - 1,802
------------------------ -------- -------- -------- --------- --------- --------- ---------
Total comprehensive
income for the year - - - 1,802 - 3,036 4,838
Issue of share capital 638 6,186 849 - - - 7,673
Share option expense - - - - - 42 42
Dividends paid - - - - - (478) (478)
------------------------ -------- -------- -------- --------- --------- --------- ---------
Balance at 31 December
2010 1,547 13,153 849 1,644 (201) 7,508 24,500
------------------------ -------- -------- -------- --------- --------- --------- ---------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Cash flows from operating activities
Net profit from ordinary activities before taxation 2,888 3,679
Adjustments for:
- amortisation and impairment of intangible assets 617 376
- amortisation of capitalised debt fee 28 18
- depreciation of property, plant and equipment 2,164 1,605
- (profit)/loss on disposal of property, plant
and equipment (447) 1
- impairment of property, plant and equipment 1,455 -
- decrease in provision for future employment
costs (71) (70)
- investment income (18) (7)
- finance costs 277 226
- share option expense 54 42
------------------------------------------------------ --------- ---------
6,947 5,870
------------------------------------------------------ --------- ---------
(Increase)/decrease in inventories (1,085) 490
(Increase)/decrease in receivables (765) 506
Decrease in payables (329) (901)
------------------------------------------------------ --------- ---------
Cash generated from operations 4,768 5,965
Finance costs (277) (226)
Taxation (1,493) (1,188)
Hire fleet expenditure (2,437) (4,361)
Sale of assets within hire fleet 919 387
------------------------------------------------------ --------- ---------
Net cash from operating activities 1,480 577
------------------------------------------------------ --------- ---------
Cash flows from investing activities
Finance income 18 8
Acquisition of subsidiary undertaking (net of
cash acquired) (2,096) (6,509)
Payment of deferred consideration (2,390) -
Purchase of property, plant and equipment (364) (252)
Sale of property, plant and equipment 66 28
------------------------------------------------------ --------- ---------
Net cash used in investing activities (4,766) (6,725)
------------------------------------------------------ --------- ---------
Cash flows from financing activities
Proceeds from share capital issued 54 6,748
Proceeds from bank and other borrowings 3,801 4,241
Repayment of bank borrowings (953) (2,111)
Repayment of finance lease creditors (588) (529)
Dividends paid in the year (736) (478)
------------------------------------------------------ --------- ---------
Net cash from financing activities 1,578 7,871
------------------------------------------------------ --------- ---------
Net (decrease)/increase in cash and cash equivalents (1,708) 1,723
Cash and cash equivalents at beginning of period 2,588 776
Exchange (losses)/gains on cash and cash equivalents (2) 89
------------------------------------------------------ --------- ---------
Cash and cash equivalents at end of period 878 2,588
------------------------------------------------------ --------- ---------
During the period the Group acquired property, plant and hire equipment with an aggregate cost of GBP2,961,000 (2010: GBP4,665,000) of which GBP160,000 (2010: GBP52,000) was acquired by means of finance leases.
1. ACCOUNTING POLICIES
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
While the financial information included in the annual financial results announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply with IFRSs.
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Statutory accounts for the year ended 31 December 2010 have been delivered to the Registrar of Companies and those for the year ended 31 December 2011 will be delivered following the company's annual general meeting.
The auditors have reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports.
Their report for the year end 31 December 2011 and 31 December 2010 did not contain statements under s498 (2) or (3) of the Companies Act 2006.
1.2 BASIS OF CONSOLIDATION
The financial statements consolidate the accounts of Northbridge Industrial Services plc and its subsidiary undertakings.
The results of the business acquired during the year are included from the effective date of acquisition. Intercompany transactions and balances between companies are eliminated in full.
2. SEGMENT INFORMATION
The Group currently has three main reportable segments:
-- Europe - this segment is involved in the manufacture, hire and sale of specialist industrial equipment. It is the largest proportion of the Group's business and generated 51% (2010: 50%) of the Group's revenue. This includes the Crestchic, DSGR and AIR businesses;
-- Middle East - this segment is involved in the hire of specialist industrial equipment and contributes 18% (2010: 31%) of the Group's revenue. This includes the NME, RDS and TTERS businesses; and
-- Asia-Pacific - this segment is involved in the hire and sale of specialist industrial equipment and generated 31% (2010: 19%) of the Group's revenue. This includes the Tasman, NIS Pty and Loadcell businesses.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer different products and services which operate in different locations around the world. They are managed separately because they require different marketing and distribution strategies.
Measurement of operating segment profit or loss, assets and liabilities
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.
The Group evaluates performance on the basis of profit or loss before tax.
Segment assets and liabilities include an aggregation of all assets and liabilities relating to businesses included within each segment. Other adjustments relate to the non-reportable head office along with consolidation adjustments which include goodwill and intangible assets. All inter-segment transactions are at arm's length.
Other including
Inter- consolidation 2011
Europe Middle Asia-Pacific Total company adjustments Total
East
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------- ------------- --------- --------- ---------------- ---------
Revenue from external
customers 12,747 4,449 7,708 24,904 - - 24,904
Inter-segment
revenue 1,157 - - 1,157 (1,157) - -
Finance income 5 12 17 - 1 18
Finance expense (62) (6) (5) (73) - (204) (277)
Depreciation (791) (512) (761) (2,064) - (100) (2,164)
Amortisation (51) - - (51) - (566) (617)
Profit before
tax before exceptional
costs 2,471 893 2,390 5,754 (14) (1,164) 4,576
Exceptional costs (9) (1,455) (38) (1,502) - (186) (1,688)
Profit before
tax 2,462 (562) 2,352 4,252 (14) (1,350) 2,888
------------------------- --------- -------- ------------- --------- --------- ---------------- ---------
Balance sheet
Assets 18,735 12,796 13,295 44,826 (18,890) 20,318 46,254
Liabilities (10,909) (5,950) (5,125) (21,984) 18,890 (16,942) (20,036)
------------------------- --------- -------- ------------- --------- --------- ---------------- ---------
7,826 6,846 8,170 22,842 - 3,376 26,218
------------------------- --------- -------- ------------- --------- --------- ---------------- ---------
Other
Non-current tangible
assets additions 1,093 1,061 2,219 4,372 (1,417) 6 2,961
------------------------- --------- -------- ------------- --------- --------- ---------------- ---------
Other including
Inter- consolidation 2010
Europe Middle Asia-Pacific Total company adjustments Total
East
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- ------------- --------- --------- ---------------- ---------
Revenue from external
customers 9,679 5,948 3,700 19,327 - - 19,327
Inter-segment
revenue 603 - - 603 (603) - -
Finance income - - 4 4 - 4 8
Finance expense (73) (17) - (90) - (136) (226)
Depreciation (770) (526) (308) (1,604) - (1) (1,605)
Amortisation (22) - - (22) - (326) (348)
Profit before
tax before exceptional
costs 2,071 1,821 1,507 5,399 (41) (1,484) 3,874
Exceptional costs - - - - - (195) (195)
Profit before
tax 2,071 1,821 1,507 5,399 (41) (1,679) 3,679
------------------------- -------- -------- ------------- --------- --------- ---------------- ---------
Balance sheet
Assets 13,939 15,255 8,536 37,730 (15,994) 18,336 40,072
Liabilities (5,735) (7,895) (1,586) (15,216) 15,994 (16,350) (15,572)
------------------------- -------- -------- ------------- --------- --------- ---------------- ---------
8,204 7,360 6,950 22,514 - 1,986 24,500
------------------------- -------- -------- ------------- --------- --------- ---------------- ---------
Other
Non-current tangible
assets additions 1,423 2,090 2,067 5,580 (894) (21) 4,665
------------------------- -------- -------- ------------- --------- --------- ---------------- ---------
External revenue Non-current assets
by location by location
------------------- ---------------------
2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- -------- ---------- ---------
UK 12,576 9,679 11,152 9,930
Australia 7,077 3,700 11,064 12,411
United Arab Emirates 3,492 4,941 4,925 7,088
Azerbaijan 957 1,007 994 830
Singapore 631 - 2,978 -
Belgium 171 - 3,344 -
24,904 19,327 34,457 30,259
---------------------- --------- -------- ---------- ---------
External revenue Non-current assets
by type by type
------------------- ---------------------
2011 2010 2011 2010
GBP'000 GBP'000 % %
------------------- --------- -------- ---------- ---------
Hire of equipment 14,164 12,646 56.9 65.4
Sale of product 10,740 6,681 43.1 34.6
------------------- --------- -------- ---------- ---------
24,904 19,327 100.0 100.0
------------------- --------- -------- ---------- ---------
3. EXCEPTIONAL COSTS
Exceptional costs incurred during the year were as follows:
2011 2010
GBP'000 GBP'000
Acquisition costs (1) 233 195
Impairment of property plant and equipment (2) 1,455 -
Exceptional costs 1,688 195
------------------------------------------------ -------- --------
(1) The exceptional costs relate to fees incurred on the acquisition of DSG Rental NV and the assets of Loadcell Services Pte Ltd and Loadcell Services BVI (2010: Tasman Oil Tools Pty). In line with IFRS 3 (revised) these costs have been disclosed in the statement of comprehensive income.
(2) As part of the ongoing review of the Group's assets, the Board has recognised that certain rental assets have not achieved the levels of utilisation that are considered acceptable in comparison to Group activities and have been written down to their recoverable amount being their fair value less costs to sell. The recoverable value of the assets was calculated as the higher of their value in use and fair value less costs to sell. These assets were originally purchased to supply generators, transformers and ancillary equipment for the terminated rental contract to the Jabali Zinc Project in Yemen and have been sold since the year end.
4. INCOME TAX EXPENSE
2011 2010
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Current tax expense 889 547
Prior year over provision of tax (235) (39)
--------------------------------------------------------- -------- --------
654 508
Prior year over provision of deferred tax (174) -
Deferred tax expense resulting from the origination and
reversal of temporary differences 87 135
--------------------------------------------------------- -------- --------
Tax on profit on ordinary activities 567 643
--------------------------------------------------------- -------- --------
Factors affecting tax charge for the year
The tax assessed for the year is different to the standard rate of corporation tax in the UK (26.5%). The differences are explained below:
2011 2010
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Profit on ordinary activities before tax 2,888 3,679
----------------------------------------------------------- -------- --------
Profit on ordinary activities multiplied by standard rate
of corporation tax in the UK of 26.5% (2010: 28%) 765 1,030
Effects of:
- group adjustments not allowable for tax (180) 41
- income not subject to tax (236) (480)
- expenses not allowable for tax purposes 582 52
- difference in tax rates 45 39
- prior year (over)/under provision of tax and deferred
tax (409) (39)
----------------------------------------------------------- -------- --------
Total tax charge for the year 567 643
----------------------------------------------------------- -------- --------
The standard rate of corporation tax in the UK is now 24% since 5 April 2012.
5. EARNINGS PER SHARE
2011 2010
GBP'000 GBP'000
---------------------------------------- -------- --------
Numerator
Earnings used in basic and diluted EPS 2,321 3,036
---------------------------------------- -------- --------
Number Number
----------------------------------------------------- ----------- -----------
Denominator
Weighted average number of shares used in basic EPS 15,338,369 11,749,249
Effects of share options 264,530 158,951
----------------------------------------------------- ----------- -----------
Weighted average number of shares used in diluted
EPS 15,602,899 11,908,200
----------------------------------------------------- ----------- -----------
At the end of the year, the Company had in issue 178,397 (2010: 99,701) share options which have not been included in the calculation of diluted EPS because their effects are anti-dilutive. These share options could be dilutive in the future.
6. DIVIDENDS
2011 2010
GBP'000 GBP'000
----------------------------------------------------------------------- -------- ---------
Final dividend of 3.05 pence (2010: 2.7 pence) per ordinary
share proposed and paid during the year relating to
the previous year's results 468 241
Interim dividend of 1.75 pence (2010: 1.55 pence) per
ordinary share paid during the year 268 237
----------------------------------------------------------------------- -------- ---------
736 478
----------------------------------------------------------------------- -------- ---------
The Directors are proposing a final dividend of 3.25 pence (2010: 3.05 pence) per share totalling GBP504,000 (2010: GBP468,000), resulting in dividends for the whole year of 5.0 pence (2010: 4.6 pence) per share. The dividend has not been accrued at the balance sheet date.
7. ACQUSITIONS DURING THE YEAR
DSG Rental NV ("DSGR")
On 30 November 2011, the Group purchased 100% of DSGR. DSGR is registered in Belgium and its principal business is the hire of transformers. The fair value of the total consideration is GBP2,429,000, which was satisfied by GBP2,177,000 in cash on acquisition and GBP252,000 of deferred consideration.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Fair value of assets acquired GBP'000 GBP'000
--------------------------------------------------- -------- --------
Property, plant and equipment 3,392
Cash 338
Trade receivables 1,273
Other receivables 219
Contract and customer related intangible assets
(recognised on acquisition) 244
Finance lease and other debt (2,710)
Trade payables (519)
Other payables (108)
Taxation liabilities (166)
Deferred taxation on property plant and equipment (374)
Deferred taxation on intangible assets (83)
--------------------------------------------------- -------- --------
1,506
--------------------------------------------------- -------- --------
Consideration
Cash at bank and in hand 2,177
Deferred consideration 252
--------------------------------------------------- -------- --------
2,429
--------------------------------------------------- -------- --------
Goodwill 923
--------------------------------------------------- -------- --------
Current assets acquired include trade receivables with a book and fair value of GBP1,273,000 representing contractual receivables of the same value.
The net cash sum expended on the acquisition in 2011 was as follows:
GBP'000
----------------------------------- --------
Cash paid as consideration 2,177
Less cash acquired on acquisition (338)
----------------------------------- --------
Net cash movement 1,839
----------------------------------- --------
The acquisition was in line with the Group's stated strategy of acquiring earnings-enhancing specialist businesses in niche sectors which are capable of further organic growth. DSGR is an excellent fit with the Group's existing business and the acquisition will serve to consolidate the operations in Europe as well as act as a base from which the Group can meet the growing needs of its clients across Europe.
The main factors which led to the recognition of goodwill were the presence of certain intangible assets in the acquired entity. These included the assembled work force of the acquired entity which did not qualify for separate recognition. Moreover, elements of goodwill such as the strong position in a market were typically not contractual or separable from the entity. They remain within goodwill. None of the goodwill recognised is expected to be deductible for income tax purposes.
From the acquisition date to 31 December 2011, DSGR contributed GBP171,000 to Group revenues and GBP46,000 to Group profit after tax. It is not practicable to calculate the effect of acquiring DSGR on the first day of the accounting period on the Group revenue and Group profit after tax for the period due to differing accounting standards used.
Loadcell Services Pte Ltd and Loadcell Services BVI ("Loadcell")
On 4 November 2011, the Group purchased the assets of Loadcell and transferred them into Northbridge Loadcell Services Pte Ltd, a newly incorporated entity in Singapore. Loadcell's principal business is the supply of oilfield instrumentation. The fair value of the total consideration is GBP1,744,000, which was satisfied by GBP257,000 in cash on acquisition, GBP732,000 of deferred consideration, GBP40,000 of above market remuneration to the previous owner and GBP715,000 of contingent consideration.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Fair value of assets acquired GBP'000 GBP'000
------------------------------------------------- -------- --------
Property, plant and equipment 655
Inventory 373
Contract and customer related intangible assets
(recognised on acquisition) 629
Deferred taxation on intangible assets (106)
------------------------------------------------- -------- --------
1,551
------------------------------------------------- -------- --------
Consideration
Cash 257
Deferred consideration 732
Above market remuneration 40
Contingent consideration 715
------------------------------------------------- -------- --------
1,744
------------------------------------------------- -------- --------
Goodwill 193
------------------------------------------------- -------- --------
The deferred consideration is payable in May 2012 (GBP249,000) and November 2012 (GBP483,000).
The contingent consideration is payable based on the gross profits achieved in 2012 and 2013 subject to a maximum consideration of GBP860,000. At this level of consideration gross profits would be GBP983,000 in 2012 and 2013. Based on an assessment at the acquisition date, GBP715,000 has been included as the fair value of the contingent consideration.
The net cash sum expended on the acquisition in 2011 is the initial consideration of GBP257,000. The acquisition was in line with the Group's stated strategy of acquiring earnings-enhancing specialist businesses in niche sectors which are capable of further organic growth. Loadcell is an excellent fit with the Group's existing business, particularly in the Asia-Pacific region, building on the previous acquisition of Tasman in Australia.
The main factors which led to the recognition of goodwill were the presence of certain intangible assets in the acquired entity. These included the assembled work force of the acquired entity which did not qualify for separate recognition. Moreover, elements of goodwill such as the strong position in a market were typically not contractual or separable from the entity. They remain within goodwill. None of the goodwill recognised is expected to be deductible for income tax purposes.
From the acquisition date to 31 December 2011, Loadcell contributed GBP70,000 to Group revenues and a loss of GBP29,000 to Group profit after tax. It is not practicable to calculate the effect of acquiring Loadcell on the first day of the accounting period on the Group revenue and Group profit after tax for the period due to the quality of previous accounting records kept.
8. ANNUAL REPORT AND ACCOUNTS The annual report and accounts and notice of the Annual General Meeting will be posted to shareholders shortly and will be available for members of the public at the Company's registered office Second Avenue, Centrum 100, Burton on Trent, DE14 2WF, and on the company's website www.northbridgegroup.co.uk. 9. ANNUAL GENERAL MEETING The Company's Annual General Meeting is to be held at the offices of Buchanan Communications, 107 Cheapside, London, EC2V 6DN on 30 May 2012, commencing at 12.00 noon.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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