13 Sep 2013 07:00
13 September 2013
Northbridge Industrial Services Plc
("Northbridge" or the "Group")
Unaudited Interim Results for the six months ended 30 June 2013
Northbridge, the industrial services and rental company today announces its unaudited interim results for the six month period ended 30 June 2013.
Highlights
• Group revenue up 31% to £18.6 million (2012: £14.2 million)
• Gross profit up 25% to £9.9 million (2012: £8.0 million)
• Operating profit up 70% to £2.8 million (2012: £1.7 million)
• Strong cash generation from operations of £5.2 million (2012: £4.7 million)
• Significant reduction in net gearing to 37% (2012: 47%)
• Significant increase in revenue from Middle East and Asia-Pacific businesses
• Expansion of transformer rental activity into the Middle East and Asia Pacific regions
• EPS up 88% to 12.6 pence per share (2012: 6.7 pence)
• Interim dividend increased by 8% to 2.0 pence (2012: 1.85 pence)
Acquisition & Placing
· Acquisition of Crestchic Asia-Pacific PTE Limited ("CAP") by Northbridge's wholly owned subsidiary Northbridge Industrial Services Pte Ltd and Placing of 1,561,700 new Ordinary Shares in Northbridge to raise approximately £6.17 million before expenses, announced today
· CAP, an independent distributor of Crestchic loadbank products, builds on Northbridge's presence in Asia-Pacific and complements the existing portfolio
Commenting on the results and the outlook, Eric Hook, Chief Executive of Northbridge said:
"Northbridge continues to make good progress in the sales of its manufactured units and the rental of its specialist equipment and we expect to see further growth as market conditions improve. Having invested in our rental fleet in the Middle East and Asia Pacific we have seen good growth, especially in the Middle Eastern business following the expansion of transformer rental into the region. Further fleet investment is planned to ensure that progress is maintained. We expect to see continued strong cash flow during the second half of 2013 ensuring further reductions in net gearing. We remain optimistic about future trading, but are mindful that market conditions remain challenging. However, we are currently on track to achieve management's expectations for the year as a whole."
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 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 acquisition of companies in the UK, Dubai, Azerbaijan, Australia and Belgium 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 be able to report further progress in Group trading for the six months ended 30 June 2013. Group revenue was up by 31% to £18.6 million (2012: £14.2 million), which, as previously indicated, was assisted by the extension of a number of hire contracts which overran from the second half of 2012. The resultant change of revenue mix to 64% rental was very favourable compared to 2012 (54%) and this enabled us to report an increase in Group profits before tax of 82% to £2.6 million (2012: £1.4 million). We expect the mix of revenue in the second half of 2013 to remain biased towards rental, but at a slightly lower level.
Trading conditions have improved since 2012, but remain challenging, particularly in Europe, with contract start dates continuing to be delayed. The underlying performance of all our major activities has improved since the first half of last year and it is encouraging to report a significant increase in revenues from our Middle East and Asia Pacific businesses. Our start-up businesses in Singapore and France continue to make progress and will contribute to profits in the longer term.
Northbridge Transformers, established following an acquisition in December 2011, also had a good start to the year despite a weak European economy. Following substantial investment in additional transformers for its hire fleet, we have now rolled out the business into our Middle East and Far East depots.
The sale of manufactured units based at our Burton on Trent premises has continued to increase following the relocation of the rental business to nearby premises. A second containerised production facility will be completed during the second half of 2013; this will have an upgraded crane and will enable us to manufacture heavier equipment required for both our rental fleet and outside customers.
Financial results
Northbridge's revenue for the half year ended 30 June 2013 totalled £18.6 million (2012: £14.2 million) with gross profits of £9.9 million (2012: £8.0 million). Profits before tax totalled £2.6 million (2012: £1.4 million). Net assets at the 30 June 2013 were £30.3 million (2012: £26.8 million).
Basic earnings per share totalled 12.6 pence (2012: 6.7 pence) and diluted earnings per share was 12.2 pence (2012: 6.6 pence).
Financing and cash flow
During the period the group continued to see cash flow improving, with £5.2 million (2012: £4.7 million) being generated from operations. A further £2.4 million was invested into the hire fleet, and the excess cash flow enabled net gearing at the end of the period to reduce to 36.8% (2012:46.9%). The comparable figure for hire fleet investment in 2012 was £4.9 million plus a further £1.8 million relating to investments in new property. A higher level of capital investment is expected in the second half of 2013.
Dividends
The Board has declared a dividend of 2.00 pence (2012: 1.85 pence), an increase of 8.1%, to be paid on 28 October 2013 to shareholders on the register on 27 September 2013.
Operations
Crestchic Loadbanks
Crestchic, our main UK subsidiary again showed growth both in outright sales and rental, and although our rental activity remained slow in certain areas, rentals outside Western Europe were stronger. Sales of manufactured units were up by 8.5% and we are now able to dedicate the entire facility to manufacturing following the relocation of the rental activity to new premises last year. A further new production facility for containerised equipment is being established in the area formerly occupied by the rental business. This will incorporate a higher capacity overhead crane and enable us to assemble much heavier loadbanks and transformers than previously manufactured.
Tasman Oil Tools
Tasman, our oil tools business based in Perth, Western Australia enjoyed the greatest benefit from overrunning 2012 contracts, with revenue up by 33.7% compared to the same period last year. All the major contracts won last year, which required additional capital expenditure, have now ended successfully and the additional equipment acquired is now available for hire elsewhere.
Our hire fleet now has a substantial presence in the Australian market and we can increase the benefit of "spot hire" with our local availability. Larger offshore contracts are usually linked to the availability of rigs in Australasia and further tenders are expected to become available as the rig count increases.
Following the recruitment of a local sales resource we have been able to increase revenue from the coal bed methane (CBM) area of Queensland and we are hopeful this will become a strong market for Tasman.
Northbridge Middle East (NME)
Northbridge Middle East distributes Crestchic products in the Middle East region as well as operating its own hire fleet. Since the acquisition of DSG Rental in December 2011, NME has also been able to offer transformer hire as part of its portfolio of equipment. This has been a successful venture and during the period revenue and profits from the region have rebounded to pre-financial crisis levels, aided by both power testing and transformer rental. The contract that suffered from a delayed start in 2012 is now underway and will continue into 2014.
Outlook
We remain optimistic about the future of the business, and with the economy improving in many parts of the world, we believe we can grow our core business further. In addition we are still looking for potential acquisition targets and the strength of our cash flow and our balance sheet will help us capitalise on a recovery.
The last 12 months has seen us enjoy good growth in key markets of the Middle East and Asia Pacific in particular. This has been aided by judicious investment and the transfer of assets from less buoyant areas. We expect that this process will continue and plan further investment in our worldwide hire fleet.
The acquisition of CAP in Singapore, signed on 12 September 2013, will give us additional size and the momentum to benefit from the significant opportunities for our services in the Asia Pacific region. It is also the final step in bringing the distribution rights of our "Crestchic" loadbanks back in-house.
Peter Harris
Chairman
13 September 2013
Consolidated statement of comprehensive income
For the six months ended 30 June 2013
Notes | Six months ended 30 June 2013 Unaudited £'000 | Six months ended 30 June 2012 Unaudited £'000 | Year ended 31 December 2012 Audited £'000 | |
Revenue | 18,611 | 14,188 | 30,813 | |
Cost of sales | (8,699) | (6,231) | (13,247) | |
Gross profit | 9,912 | 7,957 | 17,566 | |
Selling and distribution costs | (3,812) | (3,168) | (6,653) | |
Administrative expenses | (3,291) | (3,138) | (5,454) | |
Profit from operations | 2,809 | 1,651 | 5,459 | |
Finance income | 26 | 32 | 30 | |
Finance costs | (269) | (273) | (609) | |
Profit before income tax | 2,566 | 1,410 | 4,880 | |
Income tax expense | (617) | (383) | (1,173) | |
Profit for the period attributable to the equity holders of the parent | 1,949 | 1,027 | 3,707 | |
Other comprehensive income | ||||
Exchange differences on translating foreign operations | (331) | (274) | (583) | |
Other comprehensive income for the period, net of tax | (331) | (274) | (583) | |
Total comprehensive income for the period attributable to equity holders of the parent | 1,618 | 753 | 3,124 | |
Earnings per share attributable to the equity holders of the parent | 2 | |||
- basic (pence) | 12.6 | 6.7 | 24.0 | |
- diluted (pence) | 12.2 | 6.6 | 23.8 | |
Dividend per share (pence) | 3 | 2.00 | 1.85 | 5.425 |
All amounts relate to continuing operations.
Consolidated balance sheet
As at 30 June 2013
30 June 2013 Unaudited £'000 | 30 June 2012 Unaudited £'000 | 31 December 2012 Audited £'000 | |
ASSETS | |||
Non-current assets | |||
Intangible assets | 9,671 | 10,658 | 10,267 |
Property, plant and equipment | 28,400 | 26,920 | 28,006 |
38,071 | 37,578 | 38,273 | |
Current assets | |||
Inventories | 2,596 | 2,813 | 2,652 |
Trade and other receivables | 9,464 | 9,809 | 9,080 |
Cash and cash equivalents | 2,077 | 451 | 459 |
14,137 | 13,073 | 12,191 | |
Total assets | 52,208 | 50,651 | 50,464 |
LIABILITIES | |||
Current liabilities | |||
Trade and other payables | 5,319 | 6,308 | 3,689 |
Financial liabilities | 4,699 | 5,380 | 4,174 |
Other financial liabilities | - | 564 | 834 |
Current tax liabilities | 1,098 | 511 | 1,093 |
11,116 | 12,763 | 9,790 | |
Non-current liabilities | |||
Financial liabilities | 8,538 | 7,649 | 9,029 |
Other financial liabilities | - | 733 | 234 |
Deferred tax liabilities | 2,266 | 2,723 | 2,601 |
10,804 | 11,105 | 11,864 | |
Total liabilities | 21,920 | 23,868 | 21,654 |
Total net assets | 30,288 | 26,783 | 28,810 |
Equity attributable to equity holders of the parent | |||
Share capital | 1,579 | 1,562 | 1,562 |
Share premium | 13,561 | 13,367 | 13,367 |
Merger reserve | 849 | 849 | 849 |
Treasury share reserve | (201) | (201) | (201) |
Foreign exchange reserve | 674 | 1,314 | 1,005 |
Retained earnings | 13,826 | 9,892 | 12,228 |
Total equity | 30,288 | 26,783 | 28,810 |
Consolidated cash flow statement
For the six months ended 30 June 2013
Six months ended 30 June 2013 Unaudited £'000 | Six months ended 30 June 2012 Unaudited £'000 | Year ended 31 December 2012 Audited £'000 | |
Cash flows from operating activities | |||
Net profit from ordinary activities before taxation | 2,566 | 1,410 | 4,880 |
Adjustments for: | |||
- amortisation of intangible fixed assets | 328 | 360 | 698 |
- amortisation of capitalised debt fee | 28 | 27 | 60 |
- depreciation of property, plant and equipment | 1,785 | 1,439 | 3,117 |
- profit on disposal of property, plant and equipment | (229) | (85) | (221) |
- movement in contingent consideration | - | - | (260) |
- investment income | (26) | (32) | (30) |
- finance costs | 269 | 273 | 609 |
- share option expense | 48 | 24 | 48 |
4,769 | 3,416 | 8,901 | |
(Increase)/decrease in inventories | (488) | 57 | 330 |
Increase in receivables | (572) | (1,450) | (840) |
Increase in payables | 1,489 | 2,675 | 16 |
Cash generated from operations | 5,198 | 4,698 | 8,407 |
Finance costs | (269) | (273) | (577) |
Taxation | (700) | (350) | (723) |
Hire fleet expenditure | (2,403) | (4,922) | (5,731) |
Sale of assets within hire fleet | 395 | 1,166 | 1,552 |
Net cash from operating activities | 2,221 | 319 | 2,928 |
Cash flows from investing activities | |||
Finance income | 26 | 32 | 30 |
Payment of deferred consideration | - | (490) | (581) |
Sale of property, plant and equipment | 85 | 29 | 33 |
Purchase of property, plant and equipment | (97) | (1,762) | (2,079) |
Net cash used in investing activities | 14 | (2,191) | (2,597) |
Cash flows from financing activities | |||
Proceeds from share capital issued | 211 | 174 | 175 |
Proceeds from bank and other borrowings | 1,132 | 3,084 | 2,501 |
Repayment of bank and other borrowings | (1,312) | (761) | (1,690) |
Payment of finance lease creditors | (609) | (548) | (944) |
Dividends paid in the year | (559) | (500) | (786) |
Net cash (used in)/from financing activities | (1,137) | 1,449 | (744) |
Net decrease in cash and cash equivalents | 1,098 | (423) | (413) |
Cash and cash equivalents at beginning of period | 459 | 878 | 878 |
Exchange losses on cash and cash equivalents | 51 | (4) | (6) |
Cash and cash equivalents at end of period* | 1,608 | 451 | 459 |
*Cash and cash equivalents as at 30 June 2013 includes cash balances of £2,077,000 and an overdraft balance
held within Current Financial Liabilities of £469,000.
Notes to the unaudited interim statements
For the six months ended 30 June 2013
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 2012.
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 2012.
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 2013 and the six months ended 30 June 2012 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 2012 does not constitute the full statutory accounts for that period. The annual report and financial statements for 2012 has been filed with the Registrar of Companies.
The Independent Auditors' Report on the annual report and financial statement for 2012 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 2013 was approved by the Board of Directors on 13 September 2013.
2. Earnings per share
The earnings per share figure has been calculated by dividing the profit after taxation, £1,949,000 (2012: £1,027,000), by the weighted average number of shares in issue, 15,529,252 (2012: 15,379,744).
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 386,624 (2012: 230,737). At the end of the period, the Company had in issue 193,400 (2012: 227,000) 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 2.00 pence per share (2012: 1.85 pence) will be paid on 28 October 2013 to shareholders on the register as at 27 September 2013. 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.