NBI.L Regulatory News (NBI)

RNS Number : 1540J

Northbridge Industrial Services PLC

25 March 2010

 

 

25 March 2010

 

Northbridge Industrial Services Plc.

("Northbridge" or the "Group")

 

Preliminary Results for the Year Ended 31 December 2009

 

 

Northbridge Industrial Services plc, the industrial services and rental company, today announces its preliminary results for the year ended 31 December 2009.

 

Highlights:

 

·; Consolidated Group revenue of £12.7 million (2008: £15.7 million)

·; Pre-tax profits £2.2 million (2008: £3.0 million); Profit before tax and exchange losses/gains of £2.3 million (2008 £2.4 million)

·; Rental revenue maintains strong performance at £7.7 million (2008: £7.7 million)

·; Gross margins continue to grow, increasing to 59.0% (2008: 51.0%)

·; Earnings per share, excluding currency movements, continue to show growth at 20.0 pence (2008: 19.4 pence). Basic earnings per share of 19.1 pence (2008: 25.3 pence).

·; Strong operating cash generation pre hire fleet expenditure of £3.7 million (2008: £3.0 million)

·; Successful open offer to shareholders raising £1.5 million net of expenses

·; Further substantial investment of £5.5 million into the hire fleet (2008: £1.9 million)

·; Proposed increase in the final dividend to 2.7 pence, raising the total dividend for the year to 4.1 pence (2008: 3.9 pence), an increase of 5.1%.

 

Outlook:

 

We believe the global economic environment and therefore the markets in which we operate are showing signs of improvement. The substantial investment into our hire fleet will enable the Group to benefit from any upturn in terms of revenue potential and cash flow.

 

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

"We are pleased that the Group's performance has shown such resilience in the current economic environment and, allowing for currency movements, we have been able to show continued growth in earnings per share. It is also encouraging that the cash generation driven by the ever increasing hire fleet continues to be maintained. This has enabled further substantial investment which will ensure continuing profitable growth in the future. As a sign of the Board's confidence in the Group's prospects, an increase in the dividend of 5.1% for the year has been proposed."

 

For further information

 

Northbridge Industrial Services plc 01283 531645

Eric Hook, Chief Executive Officer

Ash Mehta, Finance Director

 

Smith & Williamson Corporate Finance Limited (Nominated Adviser) 020 7131 4000

Azhic Basirov / David Jones

 

Arbuthnot Securities Limited (Broker) 020 7012 2139

Alasdair Younie / Ed Burbidge

 

Buchanan Communications 020 7466 5000

Charles Ryland / James Strong

 

About Northbridge:

 

Northbridge Industrial Services was incorporated for the purpose of acquiring companies that hire and sell specialist industrial equipment supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas industries. In particular it will seek to acquire specialist businesses that have the potential for expansion into complete outsourcing providers.

CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW

 

We are pleased to present our review of the Group's trading performance for 2009.

 

Following our record year in 2008, we are encouraged with the way our businesses performed in 2009 against a backdrop of world economic turmoil, with most major economies suffering from recessionary conditions. In particular, allowing for the one-off currency gain in 2008, our underlying earnings per share continued to show growth.

 

Our two largest subsidiaries, Crestchic and Northbridge Middle East ("NME") continued to trade as expected, and NME, established in 2007, had another very strong year. Crestchic, despite a slowdown in sales of manufactured units, saw a good improvement in rental activity in the UK.

 

Crestchic designs, manufactures, sells and hires load bank 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, and the increasing reliance on power critical technology used within the banking, medical, marine and defence industries, has resulted in a continued strong rental demand for Crestchic's products and associated services. Additionally, Crestchic is benefiting in certain geographies from a background of an increasingly unreliable global power infrastructure.

 

NME which is based in Jebel Ali, Dubai, acts as a distributor for Crestchic's products and services in the region as well as trading on its own account in the rental of transformers, generators and associated electrical equipment.

 

RDS (Technical) Ltd, ("RDS") our specialist generator and transformer rental subsidiary, which trades principally in the Caspian Region, had another profitable and cash generative year but earnings were lower compared with the record level of 2008 as some projects reached completion. A new phase of investment by the oil majors has commenced in the region and we expect an upturn in activity during 2010 and beyond.

 

In April 2009, RDS was awarded a rental contract to supply generators, transformers and associated equipment together with a maintenance agreement to the Jabali Zinc Project in Yemen. Due to start in September 2009 with the full package expected on site in 2010, the contract had a minimum service period for the hire of the equipment of 12 months. The value of this minimum service period is US$2.9 million. Following a delay to the project, which will now start later this year, the minimum service period has been extended to 36 months.

 

In April 2009, we also announced the acquisition of a 66.67% interest in Tyne Technical Equipment Rental Services LLC ("TTERS"). This Dubai registered company was formed in 2004 and its principal business is the rental of generators and the sale of associated services to the infrastructure and the oil and gas industries in the United Arab Emirates.

 

The total consideration paid was £170,000 comprising £62,000 in cash and 80,000 Northbridge shares. Additionally, Northbridge will acquire the remaining 33.33% of the company on 13 April 2011 for a price based on a multiple of net profits in the preceding twelve months, subject to a maximum cap of £680,000 (total £850,000). At this level of consideration the profit before taxation of TTERS would be £250,000. As part of the transaction the Group will provide an inter company loan of up to £250,000 for further investment into the TTERS hire fleet.

 

In July 2009, Northbridge acquired a specialist air compressor fleet based in the UK from the manufacturer Sullair Corporation. The specialist applications for these compressors include pipeline dewatering and pressure testing in the oil & gas industry, and the addition of this equipment is complementary to Northbridge's existing businesses and is in line with our strategy of offering a portfolio of specialist rental assets. The cost of the hire fleet was £1.2 million of which 90% was funded by a hire purchase agreement with Lloyds Banking Group.

 

The Group raised a further £1.5 million in July 2009 from an open offer to shareholders which was well supported with the funds being used for further investment into the hire fleet.

 

Financial performance

 

Group consolidated revenue for the year ended 31 December 2009 was £12.7 million (2008: £15.7 million), gross profit and net profit were £7.5 million (2008:£8.0 million) and £2.2 million (2008: £3.0 million) respectively. The 2009 profit included a currency loss of £112,000 (2008: gain of £620,000) and excluding these gains and losses the profit before tax and exchange gain was £2.3 million (2008: £2.3 million).

 

The decline in sales revenue was principally due to the reduction in the sale of manufactured units which amounted to £5.0 million (2008: £8.0 million), total hire revenue at £7.7 million was unchanged (2008 £7.7 million).

 

The Group benefitted from a reduced tax charge due to a revised tax strategy in response to recent changes to the Controlled Foreign Companies rules. This resulted in earnings per share for the year of 19.1 pence (2008: 25.3 pence). Excluding exchange gains the earnings per share would have been 20.0 pence (2008: 19.4 pence) including the effect of taxation.

 

Net cash generated from operating activities pre hire fleet was £3.7 million, an improvement on the previous year (2008: £3.0 million). Net assets at 31 December 2009 were up by 24% to £12.4 million (2008: £10.0 million). This equates to a basic asset value of £1.37 per share (2008: £1.31 per share).

 

At 31 December 2009 the Group had increased net gearing, defined as the ratio of all short and long term borrowings and other financial liabilities less cash, to net assets, of 28.9% (2008: 13.9%). Cash balances at the year end were £0.8 million (2008: £2.1 million).

 

Net fixed asset investment by the Group was £6.0 million (2008: £3.7 million) which includes a further £5.5 million into our hire fleet. This expenditure is our largest investment to date into our hire fleet and the majority of this will support existing contracts.

 

Dividend

 

Based on this performance, the Board is pleased to propose an increase to the final dividend for 2010 of 3.8% to 2.7 pence (2008: 2.6 pence) resulting in a total dividend for the year of 4.1 pence (2008: 3.9 pence) a share, a 5.1% increase. The final dividend will be paid on 28 May 2010 to shareholders on the register on 7 May 2010, subject to shareholder approval at the annual General Meeting to be held at 12:00 noon on 18 May 2010 at the offices of Buchanan Communications, 45 Moorfields London EC2Y 9AE

 

Business Review

 

It has been a challenging year for the global economy and the world's economic problems were reflected in the demand for some of our manufactured products. In particular our markets in South East Asia, notably shipyards, suffered a decline. Our other markets, whilst less severely affected, still showed a slow down.

 

In contrast however, demand for our rental services held up well and in total matched 2008's record level. Individual performances in the UK and the Middle East were also able to show some rental growth.

 

The mix of revenue in the business is now moving strongly towards rental which in turn will lead to higher gross margins for the Group.

 

Substantial investment continues to be made into our hire fleet and in addition to the first time investment in the compressor fleet, we have continued to expand the load bank, transformer and generator hire fleets.

 

Much of this expenditure in transformers and generators is to support our new contract at the Jabali Zinc project in Yemen. Our original contract was signed in April 2009 and included a minimum service period of 12 months with a value of US$2.9 million. The contract was due to start in October 2009 but following a number of delays is now due to commence later in 2010. In September 2009 the minimum service period was extended to 36 months and interim payments are being made.

 

The decline in orders for our product sales has allowed us to use the spare factory capacity to continue to build equipment for our own use. During the year a total of £1.6 million of transformers and load banks were manufactured for the hire fleet. This will help us to continue to grow our rental business and will also reduce our reliance on cross hire to fulfil contracts in busy periods.

 

In July 2009, we were able to acquire a complete compressor hire fleet directly from the manufacturer, Sullair Corporation. The fleet comprises 28 specialised high flow/high pressure compressors together with four specialist dryer units which operate at between 24 bar and 35 bar with airflows up to 45.3 cubic metres per minute. These units can provide instrument quality air with built-in after-coolers and compressed air filtration and can also be used for pipeline dewatering and pressure testing in the oil & gas industry.

 

Funding for the purchase was provided by Lloyds Banking Group via a five year hire purchase agreement. A number of the units were already on hire at completion and we are pleased to add this service to our portfolio of products. Our intention is to expand this business to all our locations in the future.

 

Strategy

 

Northbridge's strategy is to acquire and consolidate specialist industrial equipment businesses. The criteria that these potential targets will possess are;

 

• Potential for expansion into complete outsourcing providers;

• Supplying, or capable of supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas sector

• Incorporating a strong element of service work; and

• Revenue between approximately £1 million to £10 million

 

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 customer base. In delivering such a 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 that it is still the correct one for the Group and we actively continue to search for suitable acquisitions.

 

Staff

 

We would like to take the opportunity to thank the employees of the Group for their contribution in maintaining our performance in difficult circumstances. We would also like to welcome the new employees who have joined the Group through our recent acquisitions and thank them for ensuring the smooth transition to new ownership.

 

Outlook

 

We believe the global economic environment for 2010 is showing some signs of improvement, but it will be some time before we can be sure that demand has recovered in all our markets. Enquiries for the sales of manufactured units are improving compared with the levels of last year and rental demand continues to increase in most markets.

 

Substantial investment has been made into our hire fleet over the last few years, which gives us a long term benefit in terms of revenue potential and cash flow. This will enable the Group to continue the development of its strategy and we will be well placed to take advantage of any opportunities that arise.

 

Trading across our subsidiaries is encouraging and our customer base of power generation and the oil & gas sectors have a degree of resilience which will help us through any future downturn.

 

 

 

P R Harris E W Hook

Chairman Chief Executive

FINANCE DIRECTOR'S REPORT

 

International Financial Reporting Standards (IFRS)

 

Whilst the Group accounts have been prepared under IFRS, the Board has elected to continue to prepare the accounts of the subsidiary companies and the parent company under UK GAAP, to enable eventual use of the distributable reserves of those companies prior to conversion to IFRS.

 

Earnings per share

 

The basic earnings per share figure of 19.1 pence (2008: 25.3 pence) and diluted earnings per share of 18.9 pence (2008: 25.0 pence) have been arrived at in accordance with the calculations contained in note 4.

 

Balance Sheet

 

The balance sheet shows another significant increase in property, plant and equipment this year primarily due to our net investment into the hire fleet of £5.6 million (2008: £1.4 million). Inventories were higher at the year end at £1.3 million (2008: £1.1 million) due to increased levels of production for the hire fleet. Trade and other receivables reduced markedly to £3.2million (£4.1million) due to a strong focus in the Group on managing customer receivables.

 

Cash and cash equivalents reduced to £0.8 million (2008: £2.1 million) and bank borrowings decreased to £2.9 million from £3.0 million. The Group remains comfortably within its banking covenants and based on its cash generation from operations has further capacity for increased borrowings.

 

Cash Flow

 

During the year, the operational cash flow of Northbridge was derived largely from Crestchic and Northbridge Middle East. Part of this cashflow was reinvested to increase the size of the hire fleet which increases the revenue earning capacity of the fleet for future years.

 

Income Tax Expense

The Group has a reduced income tax expense for the year of £640,000 (2008: £1,049,000) equating to a charge of 28.9% (2008: 35.4%) of Profit before income tax. The Group has benefited from reduced taxation on the current year and previous year's profits in one of its businesses following utilisation of HMRC rules on overseas subsidiaries.

 

Interest rate risk

 

The Group is cash positive and places its balances on short term deposit with Lloyds Banking Group and other local banks. The Board manages its interest rate policy centrally, bearing rates of interest in relation to Lloyds Banking Group base rates on all Group borrowings and overdrafts.

 

Foreign currency exchange risk

 

Part of the cash at bank is held in Euro, US Dollar and Arab Emirates Dirham accounts. 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.

 

Credit risk

 

The Group manages its credit risk by assessing all new customers entering into contracts with them, and setting credit ratings which are factored into credit decisions. Northbridge's subsidiaries record of debt collection is very positive and the Group has only £1,953,000 (2008: £555,000) outstanding over three months old at 31 December 2009 of which £1,198,000 has been collected since the year end.

 

Economic environment

 

The global economy continues to face a challenging economic environment. Whilst we benefit to some extent from our geographic spread and the range of sectors our end users operate in, we have been impacted by reduced visibility of market demand although this visibility is now improving. Trading has started well and we are encouraged by the level of enquiries for both sales of manufactured units and rental demand.

 

Going concern

 

During these continuing uncertain economic times the Board has undertaken a thorough review of the Group's ability to operate as a going concern. This has included reviewing and approving budgets for 2010 as well as extending those budgets out to March 2011 and also considering the current pipeline of orders and the outlook for future orders. The Board has also reviewed the current banking facilities to 30 April 2011 and the covenant calculations relating to those bank borrowings which are well within their limits and the bank have given an indication that the facilities have been agreed and will be renewed. The Group is highly cash generative and ordinarily uses surplus cash to investment into the hire fleet and other property, plant and equipment to increase the future revenue potential of the Group. However such investment could easily be curtailed if cash balances were to reduce.

 

Therefore the Directors are of the opinion that the Group has adequate resources to continue to operate for the foreseeable future and have prepared the accounts on a going concern basis.

 

 

Proposed dividend

 

The Board has proposed, subject to shareholder approval a final dividend of 2.7 pence (2008: 2.6 pence) per Ordinary share in addition to the interim dividend of 1.4 pence (2008: 1.3 pence) during the year. The dividend for the full year of 4.1 pence (2008: 3.9 pence) is covered 4.7 times by the earnings per share of 19.1 pence, and will be paid on 28 May 2010 to shareholders on the register on 7 May 2010.

 

 

 

A K Mehta

Finance Director

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2009

 

		2009	2008
	Note	£'000	£'000
REVENUE	2	12,719	15,734
Cost of sales		(5,207)	(7,711)
GROSS PROFIT		7,512	8,023
Selling and distribution costs		(2,789)	(2,747)
Administrative expenses		(2,340)	(2,129)
PROFITS FROM OPERATIONS		2,383	3,147
Finance income		1	23
Finance costs		(173)	(203)
PROFIT BEFORE INCOME TAX		2,211	2,967
INCOME TAX EXPENSE	3	(640)	(1,049)
PROFIT FOR THE YEAR ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT		1,571	1,918
Other comprehensive income:
Exchange differences on translating foreign operations		(336)	178
Other comprehensive income for the period, net of tax		(336)	178
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		1,235	2,096
Earnings per share
- basic (pence)	4	19.1	25.3
- diluted (pence)	4	18.9	25.0

 

 

All amounts relate to continuing operations.

 

CONSOLIDATED BALANCE SHEET

As at 31 December 2009				2009					2008
			Note	£'000		£'000		£'000		£'000
ASSETS   NON-CURRENT ASSETS
Intangible assets						3,315				3,159
Property, plant and equipment						13,505				8,675
						16,820				11,834
CURRENT ASSETS
Inventories				1,266				1,096
Trade and other receivables				3,156				4,085
Cash and cash equivalents				776				2,078
						5,198				7,259
TOTAL ASSETS						22,018				19,093
LIABILITIES
CURRENT LIABILITIES
Trade and other payables				2,775				2,384
Financial liabilities				2,240				1,966
Other financial liabilities				52				988
Current tax liabilities				1,038				1,386
						6,105				6,724
NON-CURRENT LIABILITIES
Financial liabilities				2,256				1,502
Long term provisions				141				212
Deferred tax liabilities				1,091				683
						3,488				2,397
TOTAL LIABILITIES						9,593				9,121
TOTAL NET ASSETS						12,425				9,972
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital						909				763
Share premium						6,967				5,546
Foreign exchange reserve						(158)				178
Treasury share reserve						(201)				(117)
Retained earnings						4,908				3,602
TOTAL EQUITY						12,425				9,972

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2009

 

	Share Capital	Share Premium	Foreign Exchange Reserve	Treasury Share Reserve	Retained Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Changes in equity
Balance at 31 December 2008	763	5,546	178	(117)	3,602	9,972
Total comprehensive income for the year	-	-	(336)	-	1,571	1,235
Issue of Share capital	146	1,421	-	-	-	1,567
Share option expense					54	54
Dividends paid	-	-	-	-	(319)	(319)
Purchase of Ordinary shares for holding in treasury	-	-	-	(84)	-	(84)
Balance at 31 December 2009	909	6,967	(158)	(201)	4,908	12,425

 

 

For the year ended 31 December 2008

	Share Capital	Share Premium	Foreign Exchange Reserve	Treasury Share Reserve	Retained Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Changes in equity
Balance at 31 December 2007	763	5,546	-	(59)	1,889	8,139
Total comprehensive income for the year	-	-	178	-	1,918	2,096
Share option expense	-	-	-	-	45	45
Dividends paid	-	-	-	-	(250)	(250)
Purchase of Ordinary shares for holding in treasury	-	-	-	(58)	-	(58)
Balance at 31 December 2008	763	5,546	178	(117)	3,602	9,972

 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2009

 

	Note	2009	2008
		£'000	£'000 As restated
OPERATING ACTIVITIES
Net profit from Ordinary activities before taxation		2,211	2,967
Adjustments for: Foreign exchange gains		112	(620)
Amortisation of intangible assets		131	95
Amortisation of capitalised debt fee		1	92
Depreciation of property, plant and equipment		1,048	715
(Profit)/Loss on disposal of property, plant and equipment		8	(54)
Decrease in provision for future employment costs		(71)	-
Investment income		(1)	(23)
Finance costs		173	203
Share option expense		54	45
		3,666	3,420
(Increase)/Decrease in inventories		(170)	40
Decrease/(Increase) in receivables		1,037	(424)
(Decrease)/Increase in payables		(55)	385
CASH GENERATED FROM OPERATIONS		4,478	3,421
Finance costs		(173)	(203)
Taxation		(615)	(173)
Hire Fleet expenditure		(5,188)	(1,778)
NET CASH FROM OPERATING ACTIVITES		(1,498)	1,267
CASH FLOWS FROM INVESTING ACTIVITIES
Finance income		1	23
Acquisition of subsidiary undertaking (net of cash acquired) Additional payments for subsidiaries already owned		(73) -	- (1,150)
Purchase of property, plant and equipment		(167)	(1,147)
Sale of property, plant and equipment		63	480
Net cash used in investing activities		(176)	(1,794)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share capital issued		1,459	-
Proceeds from bank borrowings		-	1,626
Repayment of bank borrowings		(89)	(64)
Repayment of finance lease creditors		(460)	(196)
Repurchase of own shares		(84)	(58)
Dividends paid in the year		(319)	(250)
Net cash flow from financing activities		507	1,058
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,167)	531
Cash and cash equivalents at beginning of period		2,078	1,102
Exchange (losses)/gains on cash and cash equivalents		(135)	445
Cash and cash equivalents at end of period		776	2,078

 

During the period the Group acquired property, plant and hire equipment with an aggregate cost of £5,862,000 (2008: £4,407,000) of which £1,495,000 (2008: £494,000) was acquired by means of finance leases and £Nil (2008: £988,000) by deferred commitment. Cash payments of £5,355,000 including deferred consideration of £988,000 (2008: £2,925,000) were made to purchase property, plant and hire equipment.

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 2009 or 2008, but is derived from those accounts. Statutory accounts for the year ended 31 December 2008 have been delivered to the Registrar of Companies and those for the year ended 31 December 2009 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 2009 did not contain statements under s498 (2) or (3) of the Companies Act 2006 and their report for the year ended 31 December 2008 did not contain statements under s 237(2) or (3) of the Companies Act 1985.   On the adoption of the amendments to IAS 7 effective for these financial statements, cash payments to acquire or manufacture items included in the hire fleet have been reflected as cash flows from operating activities whereas prior to the amendment to IAS 7 such cash flows would have been presented as part of investing activities. The Group Cash Flow Statement for the year ended 31 December 2008 has been restated for this amendment.   The above reclassifications in the Group Cash Flow Statement have had no impact on the Group Balance Sheet at 1 January 2008 (being the Group Balance Sheet at 31 December 2007 which was prepared in accordance with IFRS and is publicly available).   The Group Balance Sheet at 1 January 2008 and the supporting notes to that balance sheet have not been presented in these financial statements.

 

	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 has 2 main reportable segments:

 

• UK - This segment is involved in the manufacture, hire and sale of specialist industrial equipment and is the largest proportion of the Group's business generating 71% (2008: 79%) of the Group's revenue. This includes the Crestchic Limited and AIR Limited businesses.

 

• Non-UK- This segment is involved in the hire of specialist industrial equipment and contributes 29% (2008 : 21%) of the Group's revenue. This includes the NME, RDS and TTERS 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. They are managed separately because they require different marketing 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.

 

						2009
	UK	Non UK	Total	Inter Company	Other Including Consolidation Adjustments	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	9,165	3,819	12,984	(265)	-	12,719
Finance Income	1	-	1	-	-	1
Finance expense	(50)	(14)	(64)	-	(109)	(173)
Depreciation	(664)	(384)	(1,048)	-	-	(1,048)
Amortisation	(28)	-	(28)	-	(103)	(131)
Profit before tax	2,510	727	3,237	(162)	(864)	2,211
Balance sheet
Assets	12,546	12,070	24,616	(14,559)	11,961	22,018
Liabilities	(4,730)	(8,514)	(13,244)	7,223	(3,572)	(9,593)
	7,816	3,556	11.372	(7,336)	8,389	12,425
						2008
	UK	Non UK	Total	Inter Company	Other Including Consolidation Adjustments	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	13,199	3479	16,678	(944)	-	15,734
Finance Income	10	13	23	-	-	23
Finance expense	(26)	-	(26)		(177)	(203)
Depreciation	(535)	(180)	(715)	-	-	(715)
Amortisation	(28)	-	(28)	-	(67)	(95)
Profit before tax	3,304	893	4,197	(32)	(1,198)	2,967
Balance sheet
Assets	11,210	7,363	18,573	(9,714)	10,234	19,093
Liabilities	(3,680)	(4,227)	(7,907)	2,417	(3,631)	(9,121)
	7,530	3,136	10.666	(7,297)	6,603	9,972

 

 

		External revenue			Non-current assets
		by location			by location
		2009	2008		2009	2008
		£'000	£'000		£'000	£'000
	UK	8,900	12,255		9,380	8,616
	United Arab Emirates	2,865	2,446		6,490	2,132
	Azerbaijan	954	1,033		950	1,086
		12,719	15,734		16,820	11,834

 

		External revenue		External revenue
		by type		by type
		2009	2008	2009	2008
		£'000	£'000	%	%
	Hire of equipment	7,674	7,708	60.3	49.0
	Sale of product	5,045	8,026	39.7	51.0
		12,719	15,734	100%	100%

 

 

3. INCOME TAX EXPENSE

				2009	2008
				£'000	£'000
			Current tax expense	400	847
			Prior year over/underprovision of tax	(133)	123
			Deferred tax expense resulting from the origination and reversal of temporary differences	373	79
			TAX ON PROFIT ON ORDINARY ACTIVITIES	640	1,049
			FACTORS AFFECTING TAX CHARGE FOR THE YEAR The tax assessed for the year is lower than the standard rate of corporation tax in the UK (28%). The differences are explained below:
				2009	2008
				£'000	£'000
			Profit on Ordinary activities before tax	2,211	2,967
			Profit on Ordinary activities multiplied by standard rate of corporation tax in the UK of 28.% (2008 : 28.5 %)	619	846
			EFFECTS OF:
			Expenses not allowable for tax purposes	154	80
			Under /(Overprovision) in prior period	(133)	123
			TOTAL TAX CHARGE FOR THE YEAR (see note above)	640	1,049

 

 

4.		EARNINGS PER SHARE	2009	2008
			£'000	£'000
		Numerator
		Earnings used in basic and diluted EPS (£'000)	1,571	1,918
			Number	Number
		Denominator
		Weighted average number of shares used in basic EPS	8,239,811	7,586,054
		Effects of share options	84,900	88,085
		Weighted average number of shares used in diluted EPS	8,324,711	7,674,139

 

At the end of the year, the Company had in issue 430,357 (2008: 288,861) share options which have not been included in the calculation of diluted earnings per share because their effects are anti-dilutive. These share options could be dilutive in the future.

 

5.		DIVIDENDS			2009	2008
					£'000	£'000
		Final dividend of 2.6 pence (2008: 2.0 pence) per Ordinary share proposed and paid during the year relating to the previous year's results			194	152
		Interim dividend of 1.4 pence (2008: 1.3 pence) per Ordinary share paid during the year			125	98
					319	250

 

The Directors are proposing a final dividend of 2.7 pence (2008: 2.6 pence) per share totaling £241,000 (2008: £194,000), resulting in dividends for the whole year of 4.1 pence (2008: 3.9 pence) per share. The dividend has not been accrued at the balance sheet date.

 

6.	ANNUAL REPORT AND ACCOUNTS
	The annual report and accounts 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.
7.	ANNUAL GENERAL MEETING
	The Company's Annual General Meeting is to be held at 12 noon on 18 May 2010 at the offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.

 

 

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