NBI.L Regulatory News (NBI)

8 April 2014

Northbridge Industrial Services Plc.

("Northbridge" or the "Group")

Results for the Year Ended 31 December 2013

Northbridge Industrial Services plc, the industrial services and rental company, today announces its results for the year ended 31 December 2013.

Highlights:

· Consolidated Group revenue up 22.0% to £37.6 million (2012: £30.8 million)

· Pre-exceptional Profit before tax up 22.3% to £6.0 million (2012: £4.9 million)

· Pre-exceptional EBITDA up 18.7% to £11.0 million (2012: £9.3m)

· Pre-exceptional earnings per share 28.7 pence (2012: 24.0 pence)

· A successful placing of a further 1,561,700 new shares, raising £6.1 million

· Two strategic acquisitions completed during 2013

· Net book value of hire fleet increased by 30.3% to £27.8 million (2012: £21.3 million)

· Year end gearing reduced to 31.5% (2012: 44.3%)

· Proposed final dividend increased to 3.9 pence raising the total dividend for the year to 5.90 pence (2012: 5.425 pence), an overall increase of 8.8%.

Eric Hook, Chief Executive Officer, commenting on the results and outlook said:

"We are pleased with the Group's performance and the continued progress achieved during 2013. We are seeing signs of pick up in the world economy but certain geographies in which we operate are recovering more slowly.

The two acquisitions that we made during the year, based alongside our established network of global hubs are integrating well and will contribute to the Group's continued growth in the longer term.

We have continued to invest in our existing hire fleet and an additional production facility at our UK premises which will enable further growth with enhanced cash generation for the foreseeable future.

Sales of load banks were strong with rental activity levels for our European hire fleet remaining at similar levels to 2012 despite difficult trading environments. Tasman Oil Tools had a good year and we saw further expansion of the Northbridge Transformers brand on a global basis.

Having started 2014 with good levels of continuing rental projects and demand we expect continued growth this year. We continue to be confident in the Group's prospects and remain committed to the Group's stated successful strategy and objectives."

Outlook:

The first quarter of 2014 has started well and the Group has been able to capitalise on the more buoyant market conditions in most parts of our business. Our expansion in the Middle East and the Far East, the increased production capacity and our continuing capital expenditure program has resulted in a significantly larger and more balanced hire fleet and gives us confidence of continued growth.

Our operating cash flow remains strong and we continue to contemplate further acquisitions.  

As a sign of the Board's confidence in the Group's prospects, an increase in the final dividend for 2013 of 9.1% has been proposed to 3.9 pence (2012: 3.575 pence).

We are pleased with the Group's progress in 2013 and, having started 2014 with good levels of demand for our products we expect continued growth this year in line with management's expectations.

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

Robert Finlay/Antonio Bossi /Paul Gillam/Henry Willcocks

Buchanan Communications 020 7466 5000

Charles Ryland / Clare Akhurst

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 the acquisition of companies in the UK, Dubai, Azerbaijan, Australia, Belgium and Singapore 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 AND CHIEF EXECUTIVE'S REVIEW

We are pleased to present our review of the Group's trading performance for 2013.

The Group enjoyed a much stronger start to 2013 compared with the previous year, assisted by the extensions of a number of hire contracts which over ran from the second half of 2012. This helped change the revenue mix towards rental which, for the full year, was 61% rental and 39% equipment sales as against 59% rental and 41% sales in 2012. Overall Group revenue for 2013 was £37.6 million (2012:£30.8 million) an increase of 22.0%. Allowing for the two acquisitions in the last four months of 2013, the underlying increase in sales was 18.2%.

Profit before tax (pre-exceptionals) was £6.0 million (2012: £4.9 million) an increase of 22.3%. Post exceptional profits of £6.6 million (2012: £4.9 million) included £1.1m negative goodwill on the acquisition of Oilfield Material Management Limited. The overall movement of revenue mix towards rental increased the Group's cash generation, and EBITDA (pre-exceptionals) for 2013 at £11.0 million (post exceptional: £11.6 million) showed an 18.7% increase on 2012 (£9.3 million). Pre-exceptional Earnings per Share were 28.7 pence an increase of 19.6% (post exceptional: 32.7 pence, 2012: 24.0 pence).

Crestchic, our main UK subsidiary, again performed well and in particular the sales of manufactured units continued its strong growth, with volumes up a further 25.7% compared with 2012. This was helped by the recent investment in our factory premises at Burton on Trent and a strengthening in demand within our customer base. It has been further advanced more recently by having an additional higher capacity overhead gantry crane installed in the last quarter. Rental revenue at Crestchic from the UK, Europe and West Africa was at a similar level to 2012, reflecting the more difficult trading environment in Europe. However the opportunity was taken to redeploy surplus equipment into the Middle and Far East where utilisation remained high. Overall operating profits for Crestchic were up 23.7%.

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 continues to benefit from a background of an increasingly unreliable global power infrastructure and an increase in the size and remoteness of certain projects.

On 13 September 2013 the Group acquired Crestchic (Asia-Pacific) PTE Limited (CAP) for a total price of Sing$13.0 million (£6.5 million) with the fair value of assets acquired totalling £5.4 million. This acquisition enhances Northbridge's presence in the Asia Pacific Region and also re-unifies the well-known Crestchic brand. CAP is in the process of merging with our other loadbank rental operation in the region (Northbridge Asia Pacific (NAP)) and the combined entity will trade under the Crestchic brand name. The acquisition was funded by the placing of 1,561,700 new ordinary shares at 395 pence each, raising £6.17 million before expenses. The placing was well supported by both existing and new shareholders.

CAP was founded in 1994 in Singapore and has been trading as an independent distributor of Crestchic products focussed on rental, and specialising in loadbanks and transformers with customers in Singapore, Malaysia, China and Indonesia for the last 20 years. CAP had a substantial hire fleet of both loadbanks and containerised distribution transformers with an historical cost in excess of Sing$15.0 million. The hire fleet comprises Crestchic loadbanks identical to those in the Group's hire fleet, together with a large fleet of complementary transformers, again of similar design to that of Northbridge's.

Tasman Oil Tools ("Tasman") which specialises in renting drilling tools to the Australian oil & gas industry from its base in Perth W.A. and depots in New South Wales, Northern Territories and Queensland also had a good year albeit slightly behind the record profits of 2012. The first half benefitted from the continuing large contracts running on from 2012 with a number of new contracts being won which started towards the end of 2013. Following the completion of the larger hires, the equipment has been serviced, recertified and deployed into the hire fleet. We start 2014 with a much enhanced hire fleet and a new tender season underway.

On 15 November 2013 the Group acquired the trade and assets of Oilfield Material Management Limited (OMM BVI), a company based in Abu Dhabi. OMM BVI is a rental provider of drilling tools for the oil and gas industry to customers in the Middle East and North Africa. Following the acquisition, OMM BVI will trade utilising the Group's existing oil tool rental identity as Tasman OMM FZE (TOMM) and is in the process of relocating to our premises in the Jebel Ali Free Zone of Dubai. There is a high degree of commonality between the equipment and customer base of both Tasman and TOMM. Sharing resources will provide the combined entity with a solid base on which to grow.

Northbridge Middle East ("NME"), which experienced difficult trading during Dubai's financial crisis, has seen further improvement in its fortunes following the steady improvement in 2012. Profits, which are not subject to tax, rose by 100% on turnover up by 94%. It not only enjoyed a strong performance from its additional activity of transformer rental, but also has seen a return of testing and commissioning work together with some signs that the local economy is over the worst.

NME operates from the Jebel Ali Freezone of Dubai and acts as a distributor for the full range of Crestchic's products and services throughout the Middle East and East Africa as well as trading on its own account in the rental of transformers, generators and associated electrical equipment.

Northbridge Transformers ("NT"), which was acquired from DSG NV, and renamed in December 2011, continued its good performance during 2013. Despite European demand being relatively soft, it is able to use NME in the Middle East and the newly acquired CAP in Singapore as a conduit for its activities. We have seen the brand "Northbridge Transformers" expand on the global stage during 2013 with equipment on hire in Pakistan, Peru, Indonesia and East Africa.

NT offers specialist transformers for rental throughout the world for high and low voltages at various capacities, generally packaged in ISO containers, which can be used for both "step up" and "step down" projects. Working alongside NME and CAP, it also provides packaged transformers for large independent power projects ("IPP"), where diesel generators are used to supplement national grids at high voltages in times of power shortage. Substantial further investment in this activity during the year meant we have been able to grow this business from its original base in Belgium to a worldwide audience, leveraging off our other depots throughout the world.

Northbridge Industrial Services (Asia Pacific) Pte ("NAP"), the business we started in Singapore during 2011, had a successful year and achieved good profitability benefitting from high levels of utilisation and the Group's acquisition of its immediate competitor in September 2013. The businesses will be merged and continue trading under the Crestchic name. Currently the businesses operate from two separate leasehold premises and our plans are to relocate both activities to a larger unified site.

Financial performance

The Group's consolidated revenue for the year ended 31 December 2013 was £37.6 million (2012: £30.8 million). This included a contribution of £1.2 million from the two acquisitions in the last quarter of 2013. The activity split within the revenue was 61% rental and 39% sales compared with the split of 2012 which was 59% rental. This improvement in the mix towards rental was despite a continued strong performance of the sale of the Group's own manufactured units, up 26% from 2012.

Gross profits and pre-exceptional pre-tax profits were £20.3 million (2012: £17.6 million) an increase of 15.6% and £6.0 million (2012: £4.8 million) respectively. Pre-exceptional earnings per share based on the average shares in issue during the period was 28.7 pence (2012: 24.0 pence), an increase of 19.6%.

Net cash generated from operating activities amounted to £9.1 million (2012: £8.4 million), of which £4.8 million (2012: £5.7 million) was invested into the hire fleet. At the year end, stock and work-in-progress amounted to £3.8 million (2012: £2.7 million). The increase was largely due to increased work-in-progress at the year-end relating to one large contract, increasing demand for manufactured units and long lead times for key components. Total net assets at 31 December were £37.4 million (2012: £28.8 million) of which £34.5 million (2012: £28.0 million) was represented by the hire fleet. The written down value of the acquired hire fleets of CAP and TOMM was £6.9 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 31.5% (2012: 44.3%). At the end of June 2013, prior to the issue of new equity and the assumption of new debt relating to the two second half acquisitions, the net gearing was 36.8%. This reduction, despite the continued investment programme in our hire fleet, underlines the cash generative nature of the business.

Dividend

Based on this performance the Board is pleased to propose an increase in the final dividend for 2013 of 9.1% to 3.9 pence (2012: 3.575 pence) resulting in a total dividend for the year of 5.9 pence (2012: 5.425 pence) per share, an overall increase of 8.8% for the year. The final dividend will be paid on the 4 June 2014 to shareholders on the register on 14 May 2014, subject to shareholder approval at the Annual General Meeting, to be held at 12.00 noon on 29 May 2014 at the offices of Buchanan Communications, 107 Cheapside, London EC2V 6DN.

Business review

2013 has seen the continued development of the Group, both organically and by acquisition. We were very pleased to be able to announce the acquisition of 100% of the shares of CAP in September, as it fitted our strategy so well.

As an independent Crestchic distributor, CAP's rental fleet of loadbanks was identical to our existing fleet and exactly matched both the age profile and range of specifications. Likewise the transformers were very similar to Northbridge's own hire fleet and had been cross-hired by us extensively in the past. The opportunity to unify the Crestchic brand in South East Asia was welcome and an outcome we had been working on for some time.

In addition, the acquisition of OMM BVI in Abu Dhabi, which has now been renamed as TOMM has given us the opportunity to expand our successful Oil Tool Rental activity from Australia to the Middle East. We have also relocated TOMM to Northbridge's facility in Jebel Ali, Dubai, enabling both companies to share the same location and resources. The acquisition substantially increases the group's rental revenue from oil tools into the growing Middle East region.

Following these acquisitions, and the steady growth of our existing activities with these products, we have further been able to refine our strategy to focus explicitly on loadbanks, transformers and oil tools.

We were very sorry to report the death of Jim Gould last year, he was a Director of the Company, but more importantly the founder and managing director of Crestchic Ltd. Crestchic was the first acquisition completed by Northbridge following its formation in 2005 and Jim played an active role until his death in October. He will be greatly missed, but leaves behind a vibrant and successful business.

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;

· Capable of organic growth in their own right;

· Active in the oil and gas and power related industries; and

· Involved in the loadbank, transformer, oil tool and associated markets.

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 2013. In particular, we would like to welcome the employees of Crestchic Asia Pacific and OMM BVI to the Group and thank them for the smooth transition to new ownership.

Outlook

The first quarter of 2014 has started well and the Group has been able to capitalise on the more buoyant market conditions in most parts of our business. Our expansion in the Middle East and the Far East, the increased production capacity and our continuing capital expenditure program has resulted in a significantly larger and more balanced hire fleet and gives us confidence of continued growth.

Our operating cash flow remains strong and we continue to contemplate further acquisitions. As a sign of the Board's confidence in the Group's prospects, an increase in the final dividend for 2013 of 9.1% has been proposed to 3.9 pence (2012: 3.575 pence).

We are pleased with the Group's progress in 2013 and, having started 2014 with good levels of demand for our products we expect continued growth this year in line with management's expectations.

Peter Harris Eric Hook

Chairman Chief Executive

8 April 2014 8 April 2014

FINANCE DIRECTOR'S REPORT

Revenue and Profit before tax

The review of the financial performance for the year ended 31 December 2013 refers principally to the performance of the consolidated Group for the full year 2013 but also refers to the underlying performance of the Group. This measure excludes the post-acquisition performance of the two trading entities (Crestchic (Asia-Pacific) PTE Limited and OMM BVI) acquired during the second half of 2013 and, we believe helps to aid comparison with prior periods and an understanding of the Group's financial performance as a whole.

The Group's revenues are derived principally from the rental of its hire fleet and also from the sale of new equipment. Increased year on year revenue totalled £37.6 million (2012: £30.8 million). Underlying revenue for the year totalled £36.4 million. The full year benefitted from several longer-term rental contracts secured in 2012 plus an enlarged hire fleet inventory.

As many of the Group's costs are of a fixed nature in the medium and short term any revenue movement, however small, will be highlighted at the Gross Profit level. Gross Profit for the year increased from £17.6 million to £20.3 million, aided by the increased level of overall revenue and also the continuing shift in sales mix towards the higher margin rental revenue. Underlying Gross Profit totalled £19.7 million (2012: £17.6 million).

Despite the increased level of Group overhead, operating expenditure as a percentage of turnover continued its downward trend seen over recent years decreasing to 36.9% from 39.3% in 2012.

Net Finance costs for the year decreased to £0.5 million from £0.6 million following a reduction in the level of net debt achieved during the year.

Exceptional items relating principally to the acquisitions that took place during the year, totalled a net gain of £0.6 million (2012 £nil million).

Profit before tax (pre-exceptionals) totalled £6.0 million (2012: £4.9 million), an increase of 22.3%. Profit before tax totalled £6.6m (2012: £4.9m).

Earnings per share

The basic EPS figure of 32.7 pence after exceptional items (2012: 24.0 pence) and diluted EPS of 31.8 pence (2012: 23.8 pence) have been arrived at in accordance with the calculations contained in note 5.

Balance sheet and debt

A further strengthened balance sheet incorporates an increase in property, plant and equipment from £28.0 million to £34.5 million. This includes direct hire fleet investment of £4.8 million (2012: £7.8 million) and also £6.9 million representing the net book value of hire fleet assets of the two acquisitions that took place during 2013.

Trade receivables have increased to £9.4 million (2012: £7.6 million) impacted by strong trading performance in the final quarter of the financial year, the timing of certain larger rental contracts and the acquisitions in the second half of the year.

Cash and cash equivalents increased to £3.5million (2012: £0.5 million) with the opportunity for good cash generation remaining in the current financial year.

Although borrowings increased as expected to £15.3 million (2012: £13.2 million), overall gearing reduced from 44.3% to 31.5%. Group cashflow from operating activities before movements in working capital totalled £9.9 million (2012: £8.9 million). The largest component of the difference between the profit before tax of £6.6 million and the cashflow from operating activities before movements in working capital of £9.9 million is depreciation which, at £3.9 million, is higher than in 2012 (£3.1 million) due to the Group's expanded hire fleet. The directors feel that the current level of gearing is appropriate and, in the ordinary course of business, a further reduction in gearing is targeted for 2014. However, based on the Group's cashflow from operating activities there is capacity for increased borrowings should suitable opportunities arise to further grow the business.

Cash flow

The sustained and progressive level of cash generated from operations totalled £9.1 million during the year (2012: £8.4 million) of which £4.8 million (2012: £5.7 million) was reinvested into the hire fleet. Cash conversion, measured by cash generated from operating activities before tax as a percentage of pre-exceptional profit from operations was 152% (2012 : 165%) reflecting the continuing robust quality of earnings and the focus on working capital management. The Group closely monitors cash management and prioritises the repatriation of cash to the UK from its overseas subsidiaries.

During the year proceeds raised from the issue of share capital totalled £6.1 million. In addition to this, further Group bank borrowings were secured giving rise to a net inflow of funds from bank and other borrowings of £2.5 million (2012: £0.8 million). Both of these sources of funds were used to finance the cost of acquisitions of £7.9 million (2012: £0.6million), business activities and also the fitting out and conversion of the additional production facility at Burton on Trent.

The Group paid out £0.9 million (2012: £0.8 million) in dividends to shareholders.

Income tax expense

The Group had an income tax expense for the year of £1.4 million (2012: £1.2 million) equating to a charge of 23% (2012: 24%) of pre-exceptional profit before tax. The Group benefited from a reduced income tax rate for the current year following the continued utilisation of HMRC rules on overseas subsidiaries. We manage taxes such that we pay the correct amount of tax in each country that we operate, utilising available reliefs and engaging with local tax authorities and advisors as appropriate.

Principal Risks and Uncertainties

The Group has once again had a successful year but in common with any organisation the Group can be subjected to a variety of risks in the conduct of its normal business operations that could have a material impact on the Group's long-term performance. The Group 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 here.

Operational and commercial risks

Description: The Group's revenues are derived from the sale and rental of specialist complementary industrial equipment and services and are dependent upon global economic conditions and competitor activity. The Group operates in highly competitive markets across a range of sectors including oil and gas, banking, shipping, health care, utilities and power generation. There are a relatively small number of significant competitors serving the markets in which we operate although we often compete against larger capitalised companies who could pose a significant threat because of financial capability which may result in lower pricing and margins or loss of business.

Mitigation: The Group's market and customer base is global and diverse, minimising over reliance on individual countries, sectors or customers.

Competition for products and services provided by the Group varies by subsidiary with some of our products and services being subject to less market competition than others. As the Group's global business continues to develop this increases and broadens both the customer and revenue base placing reduced reliance on individual customers, markets and regions. Our use of international hubs holding significant levels of equipment available for rent has enabled us to service our customer needs better, and the ability to readily transport our containerised loadbank and transformer fleet enables us to respond to changes in localised utilisation.

Information technology

Description: 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 systems failure or other major IT interruption could have a disruptive effect on the Group's business.

Mitigation: The geographically diverse nature of each Group location reduces the global risk associated with IT failure or disruption. The use of recognised service providers and operating and communication platforms has strengthened the Group's technological infrastructure and reduced the risk of loss due to failure, breakdown, loss or corruption of data.

Interest rate risk

Description: The Group delegates day-to-day control of its bank accounts to local management. Most Group borrowings and overdrafts attract variable interest rates although the Group has entered into capping arrangements for certain variable interest rate borrowings and has also more recently entered into certain fixed interest rate agreements. The Board accepts that this policy of not fixing interest rates for all borrowings 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.

Mitigation: All Group borrowings are arranged and administered centrally with day to day control of bank accounts by local management being restricted to operation within agreed parameters.

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 has been capped at the margin plus a maximum LIBOR rate of 2% for the remaining term of the loan. The Group also utilises short-term trade finance facilities, a temporary overdraft facility and leasing arrangements.

The Board considers that it currently achieves an appropriate balance of exposure to these risks although this situation is constantly monitored.

Foreign currency exchange risk

Description: 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. As local management have responsibility for their own bank accounts, cash at bank balances are held in Euro, US Dollar, Australian Dollar, Singaporean Dollar and UAE Dirham accounts. Outstanding balances for trade receivables, trade payables and financial liabilities are also held in these currencies.

Mitigation: The Board manages this risk by converting non-functional currency into Sterling as appropriate, after allowing for future similar functional currency outlays. The Board regularly seeks the opinion of foreign currency professionals to advise on potential foreign currency fluctuations especially when it is aware of future foreign currency requirements. It does not currently consider that the use of hedging facilities would provide a cost-effective benefit to the Group on an on-going basis.

Credit risk

Description: Exposure to credit risk arises principally from the Group's trade receivables. At 31 December 2013 the Group had £5,489,000 (2012: £3,648,000) of trade receivables which were past due but not impaired of which £4,831,000 (2012: £3,186,000) has been collected since the year end. At 31 December 2013 trade receivables of £582,000 (2012: £77,000) 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 £18,000 (2012: Nil) of debts considered unrecoverable.

Mitigation: The Group's trade receivables are managed through stringent credit control practices both at a local and Group level including assessing all new customers, requesting external credit ratings (which are factored into credit decisions), regularly reviewing established customers and obtaining credit insurance where felt appropriate.

Craig Robinson

Finance Director

8 April 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2013

All amounts relate to continuing operations.

CONSOLIDATED BALANCE SHEET

As at 31 December 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2013

For the year ended 31 December 2012

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2013

During the period the Group acquired property, plant and hire equipment with an aggregate cost of £5,496,000 (2012: £9,925,000) of which £244,000 (2012: £2,115,000) 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 2013 or 2012, but is derived from those accounts. Statutory accounts for the year ended 31 December 2012 have been delivered to the Registrar of Companies and those for the year ended 31 December 2013 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 2013 and 31 December 2012 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 43% (2012: 51%) of the Group's revenue. This includes the Crestchic, NT, AIR and Crestchic France businesses;

· Middle East - this segment is involved in the hire of specialist industrial equipment and contributes 19% (2012: 13%) of the Group's revenue. This includes the NME, RDS, TOMM and TTERS businesses; and

· Asia-Pacific - this segment is involved in the hire and sale of specialist industrial equipment and generated 38% (2012: 36%) of the Group's revenue. This includes the Tasman, NIS Pty, CAP 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.

The reconciling adjustments between the total segmental profit before tax and the profit before tax of the Group include amortisation (£561,000) and head office expenditure (£1,474,000). The reconciling adjustments between the total segmental net assets to the net assets of the Group include the addition of the head office net assets and consolidation adjustments.

The reconciling adjustments between the total segmental profit before tax and the profit before tax of the Group include amortisation (£566,000), head office expenditure (£1,007,000) and an intercompany receivable credit adjustment (£728,000). The reconciling adjustments between the total segmental net assets to the net assets of the Group include the addition of the head office net assets and consolidation adjustments.

3. EXCEPTIONAL ITEMS

Exceptional items incurred during the year were as follows:

(1) The exceptional costs relate to settlement costs on acquisition of Loadcell and fees incurred on the acquisition of Crestchic (Asia-Pacific) Pte Limited and the trade and assets of Oilfield Material Management Limited. In line with IFRS 3 (revised) acquisition costs have been charged to profit and loss.

(2) The fair value of the trade and assets Oilfield Material Management Limited purchased during the year is deemed to be in excess of the fair value of the consideration paid. In line with IFRS 3 the negative goodwill has been taken to profit and loss.

4. INCOME TAX EXPENSE

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 (23.25%). The differences are explained below:

The standard rate of corporation tax in the UK is now 21% since 1 April 2014.

5. EARNINGS PER SHARE

At the end of the year, the Company had in issue nil (2012: 284,833) 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. ACQUISITIONS DURING THE YEAR

Crestchic (Asia-Pacific) Pte Limited ("CAP")

On 13 September 2013, the Group purchased 100% of CAP. CAP is registered in Singapore and its principal business is the hire of loadbanks and transformers. The fair value of the total consideration is £6,480,000, which was satisfied by £5,357,000 in cash on acquisition and £1,123,000 of deferred consideration paid in November. Acquisition expenses of £236,000 have been taken to profit or loss (see note 3).

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

Current assets acquired include trade receivables with a book and fair value of £579,000 representing contractual receivables of the same value.

The net cash sum expended on the acquisition in 2013 was as follows:

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. CAP is an excellent fit with the Group's existing business and the acquisition will serve to consolidate the operations in Singapore and across the Far East.

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 2013, CAP contributed £757,000 to Group revenues and £165,000 to Group profit after tax. If the acquisition had occurred on the first day of the accounting period Group revenue would have been £39,264,000 and Group profit for the period after tax would have been £6,738,000.

Oilfield Material Management Limited ("OMM BVI")

On 15 November 2013, the Group purchased the trade and assets of OMM BVI and transferred them into Tasman OMM FZE ("TOMM"), a newly incorporated entity in Dubai. TOMM's principal business is the hire of tools and equipment for the oil and gas industry in the region. The fair value of the total consideration is £2,226,000, which was satisfied by £1,395,000 in cash on acquisition, £303,000 in shares on acquisition and £528,000 of deferred consideration. Acquisition expenses of £187,000 have been taken to profit or loss (see note 3).

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

£121,000 of the deferred consideration is due to be paid during 2016 with the remainder paid in equal monthly instalments over a period of 36 months post acquisition.

Current assets acquired include trade receivables with a book and fair value of £979,000 representing contractual receivables of

£1,335,000. Whilst the Group will make every effort to collect all contractual receivables, it considers that a provision of £356,000 is reasonable given that is some doubt surrounding the collection of certain receivables.

The net cash sum expended on the acquisition in 2013 was as follows:

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. TOMM is an excellent fit with the Group's existing business, particularly in the Middle East region, building on the previous acquisition of Tasman in Australia.

The negative goodwill has been recognised within exceptional operating costs. The negative goodwill represents the fair value attributed to the assets acquired less liabilities, in excess of the consideration paid for the trade and assets of OMM BVI.

From the acquisition date to 31 December 2013, TOMM contributed £408,000 to Group revenues and a loss of £125,000 to Group profit after tax. It is not practicable to calculate the effect of acquiring TOMM on the first day of the accounting period on the Group revenue and Group profit after tax for the period.

The Directors are proposing a final dividend of 3.9 pence (2012: 3.575 pence) per share totalling £675,000 (2012: £559,000), resulting in dividends for the whole year of 5.9 pence (2012: 5.425 pence) per share. The dividend has not been accrued at the balance sheet date.