TIDMNBI
RNS Number : 1807P
Northbridge Industrial Services PLC
29 September 2011
The following replaces the announcement released at 7.00 a.m.
today under RNS 1495P. The announcement has been amended to show
the correct record date of 14 October 2011.
NORTHBRIDGE INDUSTRIAL SERVICES PLC
("Northbridge" or "the Group")
Unaudited Interim Results for the six months ended 30 June
2011
Northbridge, the industrial services and rental company today
announces its unaudited interim results for the six month period
ended 30 June 2011.
Highlights
-- Group revenue up 45% to GBP11.4 million (2010: GBP7.8
million)
-- Profit before tax up 41% to GBP2.0 million (2010: GBP1.4
million)
-- Gross margin unchanged at 63% (2010: 63%)
-- Strong cash generation from operations of GBP2.4 million
(2010: GBP1.9 million)
-- Net gearing reduced substantially to 17% (2010: 31%)
-- Interim dividend increased by 13% to 1.75 pence (2010: 1.55
pence)
-- Investment in start-up operations in USA, France and
Singapore
-- Integration of Tasman Oil Tools is now fully complete
-- 28% improvement in the underlying sales of manufactured
units
Commenting on the results and the outlook Eric Hook, Chief
Executive of Northbridge, said:
"We are encouraged by the Group's development and the
improvement in trading in the majority of our operations. Although
the economic environment has slowed during the second half of the
year we remain confident that the demand for our specialist
equipment and continuing investment in our rental fleet will ensure
that progress is maintained."
For further information:
Northbridge Industrial Services plc
Eric Hook, Chief Executive Officer
Craig Robinson, Finance Director 01283 531645
Arbuthnot Securities Limited (Nominated Adviser
& Broker)
Antonio Bossi
Ed Groome 020 7012 2000
Buchanan Communications
Charles Ryland
James Strong 020 7466 5000
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, 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.
Chairman's Statement
I am pleased to report further good progress in the Group's
trading for the six months ended 30 June 2011 which shows an
increase in revenue and profit before tax of 45% and 41%
respectively and on an underlying basis (excluding Tasman results
and the acquisition related amortisation and interest costs and the
one off benefit of the terminated Zincox contract in 2010) of 5%
and 1% respectively compared to the first six months of 2010.
There is still some ongoing uncertainty in the economic climate,
but we have seen a definite increase in the demand for sales of
equipment where there has been a 28% improvement in the underlying
sales compared to the same period last year. This growth in demand
has come from all of our overseas markets.
The Group's higher margin rental businesses are still
experiencing good demand and revenue generated from hire activities
now represents 60% of overall revenue. This has led to an unchanged
gross margin of 63% in the period (2010: 63%) despite the reduced
margins on the increased revenues generated from equipment
sales.
Our main subsidiary in the Middle East, Northbridge Middle East
("NME"), continues to develop although there has been a slowdown in
major projects this year as some of our marine conversion customers
have moved to the Far East. Towards the end of the reporting period
we were awarded a substantial contract in the Asia Pacific region
with one of these customers and we have taken this opportunity to
establish a similar business - Northbridge Asia Pacific ("NAP") -
in Singapore. NAP currently shares the equipment with NME but it is
our intention to invest substantially in these two regions in the
future.
Some of our smaller activities in the Middle East were affected
by the ongoing economic situation and the termination of the Jabal
Salab Zinc project last year. However there have been signs of
improvement in the local economy recently and we expect this to
continue in the second half.
RDS (Technical) Ltd ("RDS") in the Caspian is now seeing the
benefit from a new round of oil and gas investment in the region
and rental revenue is beginning to improve with some new longer
term contracts won during the period.
Continuing strong operating cash flow during the six months has
enabled the Group to further invest in the hire fleet and to make
the first deferred consideration payment following the purchase of
Tasman Oil Tools Pty Ltd ("Tasman") out of cash flow without
recourse to additional borrowings. It is expected that the second
and final deferred payment due in September of this year will also
be made from cash generated from our operations in the region.
Financial results
Northbridge's revenue for the half year ended 30 June 2011
totalled GBP11.4 million (2010: GBP7.8 million) with gross profits
of GBP7.1 million (2010: GBP5.0 million). Profit before taxation
totalled GBP2.0 million (2010: GBP1.4 million). Net assets at 30
June 2011 were GBP25.8 million (2010: GBP13.4 million).
Basic earnings per share totalled 10.8 pence (2010: 11.5 pence)
and diluted earnings per share totalled to 10.5 pence (2010: 11.3
pence). The average number of shares in issue was 15,322,957 (2010:
8,940,107).
Financing and cash flow
During the period the Group continued to generate cash strongly
from operations with GBP2.4 million (2010: GBP1.9 million) being
generated. Investment into the hire fleet was GBP0.7 million (2010:
GBP1.5 million) net of financing. Net gearing at the end of the
period was 17% (2010: 31%). Deferred consideration payment due on
the Tasman acquisition totalled GBP1.1million
Dividends
The Board has declared an interim dividend of 1.75 pence (2010:
1.55 pence), an increase of 13%, to be paid on 4 November 2011 to
shareholders on the register as at 14 October 2011.
Operations
Crestchic
Crestchic, our main subsidiary, showed good growth in activity
compared to 2010 and the sales revenue generated from manufactured
units rose by 52%. Increased levels of production resulted in
additional direct labour being recruited during the period and the
manufacturing unit at Burton on Trent is now operating at near
maximum capacity. UK rental revenues maintained expected levels of
activity following two good years of growth despite adverse
economic conditions.
NME
NME, which distributes Crestchic products in the Middle East
region as well as operating its own hire fleet of industrial
equipment, continues to make progress. We have taken steps during
the year to support growth by recruiting additional sales and
technical management. Two of our customers have begun to relocate
some of their larger conversion work to the Far East and China and
whilst this will have a short term impact on the rental revenue in
the region for 2011, we have relocated some equipment to our new
operation in Singapore to continue to support them. The regional
shipyards continue to win work and we have gained new rental
customers during the period. Additionally, sales of equipment for
both oil and gas and power have been very strong.
The purchase of the remaining shares in Tyne Technical Equipment
Rental Services LLC ("TTERS") went ahead as planned and it is now
fully incorporated into our operations and cost savings have been
achieved. TTERS will continue to improve as the local economy
strengthens.
RDS, which offers rental services to the oil and gas industry in
the Caspian region, has seen activity levels increase recently and
new long term rental contracts have been won as a new phase of
investment gets underway in the region.
Tasman
Tasman was acquired in July 2010 following the placing of
5,606,000 new shares at GBP1.25 each. The aggregate consideration
for the entire share capital was AUD$16.9 million. This was made up
of an initial cash consideration of GBP7.1 million, a deferred cash
consideration of GBP2.4 million payable in two tranches and 738,045
Northbridge shares issued at the placing price.
Tasman, based in Perth, Western Australia, specialises in the
rental of equipment for the onshore and offshore oil industry
across Australia and we are pleased to confirm that the integration
of Tasman is now fully complete. Tasman is trading in line with
expectations and generating good profits and cash flow, which have
in turn facilitated the payment of the deferred consideration.
Outlook
The revenue and profitability of the group continued to improve
during the first half of the year despite ongoing global economic
uncertainty and we expect this to be maintained during the second
half despite the dearth of larger rental projects. The demand for
the Group's manufactured loadbanks has been at record levels and we
expect the resulting sales, albeit at lower gross margin, will
continue to partly offset any shortfall in expected rental
revenues. The longer lead time associated with equipment ordering
and manufacture will afford the group more regular cash flows and
facilitate more accurate forecasting.
In order to facilitate the routes to market of our products and
maximise earnings potential we have terminated the previous
distribution agreement with our agent in the USA and replaced it
with a non exclusive arrangement. Now employing our own sales
force, we can achieve direct access to the lucrative North American
market for all of our products. There are also additional costs in
establishing our own depots in France and Singapore and following
further rental fleet investment we expect these nascent operations
to contribute to our profit in the future.
In line with our stated strategy we are still actively looking
for further acquisitions to support our worldwide growth and we
have both cash and additional borrowing capacity to take advantage
of suitable opportunities as they arise.
Peter Harris
Chairman
29 September 2011
Consolidated statement of comprehensive income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------ ------ ----------- ----------- ------------
Revenue 11,380 7,828 19,327
Cost of sales (4,268) (2,872) (7,264)
------------------------------ ------ ----------- ----------- ------------
Gross profit 7,112 4,956 12,063
Selling and distribution
costs (2,392) (1,735) (3,848)
Administrative expenses
------------------------------ ------ ----------- ----------- ------------
Excluding exceptional items (2,585) (1,710) (4,123)
Exceptional items -
acquisition related
expenses - - (195)
------------------------------ ------ ----------- ----------- ------------
Total administrative expenses (2,585) (1,710) (4,318)
------------------------------ ------ ----------- ----------- ------------
Profit from operations 2,135 1,511 3,897
Finance income 12 - 8
Finance costs (139) (85) (226)
------------------------------ ------ ----------- ----------- ------------
Profit before income tax 2,008 1,426 3,679
Income tax expense (352) (402) (643)
------------------------------ ------ ----------- ----------- ------------
Profit for the period
attributable to the equity
holders of the parent 1,656 1,024 3,036
------------------------------ ------ ----------- ----------- ------------
Other comprehensive income
Exchange differences on
translating foreign
operations (183) 220 1,802
------------------------------ ------ ----------- ----------- ------------
Other comprehensive income
for the period, net of tax (183) 220 1,802
------------------------------ ------ ----------- ----------- ------------
Total comprehensive income
for the period attributable
to equity holders of the
parent 1,473 1,244 4,838
------------------------------ ------ ----------- ----------- ------------
Earnings per share
attributable to the equity
holders of the parent 2
- basic (pence) 10.8 11.5 25.8
- diluted (pence) 10.5 11.3 25.5
------------------------------ ------ ----------- ----------- ------------
Dividend per share (pence) 3 1.75 1.55 4.60
------------------------------ ------ ----------- ----------- ------------
All amounts relate to continuing operations.
Consolidated balance sheet
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- ------------
Assets
Non-current assets
Intangible assets 9,484 3,241 9,755
Property, plant and equipment 19,854 14,409 20,504
------------------------------- ---------- ---------- ------------
29,338 17,650 30,259
------------------------------- ---------- ---------- ------------
Current assets
Inventories 1,858 1,107 1,010
Trade and other receivables 6,669 4,303 6,215
Cash and cash equivalents 1,364 346 2,588
------------------------------- ---------- ---------- ------------
9,891 5,756 9,813
------------------------------- ---------- ---------- ------------
Total assets 39,229 23,406 40,072
------------------------------- ---------- ---------- ------------
Liabilities
Current liabilities
Trade and other payables 3,812 3,310 3,424
Financial liabilities 1,923 2,547 1,703
Other financial liabilities 1,192 153 2,310
Provisions - - 71
Current tax liabilities 580 832 1,098
------------------------------- ---------- ---------- ------------
7,507 6,842 8,606
------------------------------- ---------- ---------- ------------
Non-current liabilities
Financial liabilities 3,775 1,918 4,382
Long-term provisions - 106 -
Deferred tax liabilities 2,159 1,091 2,584
------------------------------- ---------- ---------- ------------
5,934 3,115 6,966
------------------------------- ---------- ---------- ------------
Total liabilities 13,441 9,957 15,572
------------------------------- ---------- ---------- ------------
Total net assets 25,788 13,449 24,500
------------------------------- ---------- ---------- ------------
Equity attributable to equity
holders of the parent
Share capital 1,550 909 1,547
Share premium 13,189 6,966 13,153
Merger reserve 849 - 849
Treasury share reserve (201) (201) (201)
Foreign exchange reserve 1,461 62 1,644
Retained earnings 8,940 5,712 7,508
------------------------------- ---------- ---------- ------------
Total equity 25,788 13,449 24,500
------------------------------- ---------- ---------- ------------
Consolidated cash flow statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ----------- ------------
Cash flows from operating activities
Net profit from ordinary activities
before taxation 2,008 1,426 3,679
Adjustments for:
Amortisation and impairment of
intangible fixed assets 320 74 376
Amortisation of capitalised debt
fee 10 - 18
Depreciation of property, plant
and equipment 1,079 742 1,605
(Profit)/loss on disposal of
property, plant and equipment (95) 2 1
Decrease in provision for future
employment costs (71) (35) (70)
Finance income (12) - (7)
Finance costs 139 85 226
Share option expense 22 21 42
-------------------------------------- ----------- ----------- ------------
3,400 2,315 5,870
-------------------------------------- ----------- ----------- ------------
(Increase)/ decrease in inventories (845) 159 490
(Increase)/decrease in receivables (478) (1,066) 506
Increase/(decrease) in payables 356 454 (901)
-------------------------------------- ----------- ----------- ------------
Cash generated from operations 2,433 1,862 5,965
Finance costs (139) (85) (226)
Taxation (1,073) (587) (1,188)
Hire fleet expenditure (664) (1,477) (4,361)
Sale of assets with hire fleet 360 - 387
-------------------------------------- ----------- ----------- ------------
Net cash from/(used in) operating
activities 917 (287) 577
-------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Finance income 12 - 8
Acquisition of subsidiary undertaking
(net of cash acquired) (1,076) - (6,509)
Sale of property, plant and equipment 21 92 28
Purchase of property, plant and
equipment (263) (62) (252)
-------------------------------------- ----------- ----------- ------------
Net cash (used in)/from investing
activities (1,306) 30 (6,725)
-------------------------------------- ----------- ----------- ------------
Cash flows from financing activities
Proceeds from share capital issued 39 - 6,748
Proceeds from bank borrowings 315 - 4,241
Repayment of bank and other
borrowings (441) (83) (2,111)
Payment of finance lease creditors (271) (261) (529)
Dividends paid in the year (468) (241) (478)
-------------------------------------- ----------- ----------- ------------
Net cash (used in)/from financing
activities (826) (585) 7,871
-------------------------------------- ----------- ----------- ------------
Net (decrease)/increase in cash
and cash equivalents (1,215) (842) 1,723
Cash and cash equivalents at
beginning of period 2,588 776 776
Exchange (losses)/gains on cash
and cash equivalents (9) 12 89
-------------------------------------- ----------- ----------- ------------
Cash and cash equivalents at end
of period 1,364 (54) 2,588
-------------------------------------- ----------- ----------- ------------
Notes to the unaudited interim statements
1. Basis of preparation
This interim report has been prepared in accordance with the
accounting policies disclosed in the full statutory accounts for
the year ended 31 December 2010.
These policies are in accordance with International Financial
Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International
Accounting Standards Board as endorsed for use in the European
Union, that are expected to be applicable for the year ending 31
December 2011.
The Group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing the interim consolidated financial
information.
The financial information in this statement relating to the six
months ended 30 June 2011 and the six months ended 30 June 2010 has
not been audited, but has been reviewed, pursuant to guidance
issued by the Auditing Practices Board.
The financial information for the year ended 31 December 2010
does not constitute the full statutory accounts for that period.
The Annual Report and Financial Statements for 2010 have been filed
with the Registrar of Companies.
The Independent Auditors' Report on the Annual Report and
Financial Statement for 2010 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
The interim report for the period ended 30 June 2011 was
approved by the Board of Directors on 29 September 2011.
2. Earnings per share
The earnings per share figure has been calculated by dividing
the profit after taxation, GBP1,656,000 (2010: GBP1,024,000), by
the weighted average number of shares in issue, 15,322,957 (2010:
8,940,107).
The diluted earnings per share assumes all share options are
exercised at the start of the period or, if later, the date of
issue of the share options. This increased the weighted average
number of shares in issue by 380,399 (2010: 87,454). At the end of
the period, the Company had in issue Nil (2010: 469,340) share
options which have not been included in the calculation of the
diluted earnings per share because their effects are anti-dilutive
although these share options could be dilutive in the future.
3. Dividends
An interim dividend of 1.75 pence per share (2010: 1.55 pence)
will be paid on 4 November 2011 to shareholders on the register as
at 14 October 2011. In accordance with IFRS, no provision for the
interim dividend has been made in these financial statements.
4. Interim report
Copies of the interim report are being sent to all shareholders
and are available to the public from the offices of Northbridge
Industrial Services plc at Second Avenue, Centrum 100, Burton on
Trent, Staffordshire DE14 2WF. The interim report and the interim
announcement will also be available from the Group's website at
www.northbridgegroup.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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