NBI.L Regulatory News (NBI)

26 Mar 2009 07:00



For immediate release   26 March 2009

Northbridge Industrial Services Plc.

("Northbridge" or "The Company")

Preliminary Results for the Year Ended 31 December 2008

Northbridge Industrial Services Plc. the industrial services and rental company, today announces its preliminary results for the year ended 31 December 2008.

Highlights:

Consolidated revenue up 40% to £15.7 million (2007: £11.2 million)

Pre-tax profit up 82% to £2.97 million (2007: £1.63 million)

Crestchic trading at record levels benefiting from established presence in Middle East

Northbridge Middle East FZE acquired new premises in June 2008 accelerating growth

Acquisition of remaining 49% of RDS in June 2008 following robust profitability

Further investment of £1.9m  in hire fleet during the year 

Strong operating cash generation and a year end cash and cash equivalents balance of £2.1 million (2007: £1.1 million) with net debt of £1.4 million (2007: £0.4 million)

Basic earnings per share up 65% to 25.3 pence (2007: 15.3 pence)

30% increase in proposed final dividend payment to 2.6 pence per share raising the total dividend for the year to 3.9 pence per share (2007: 3.0 pence per share)

Outlook:

Trading in all our subsidiaries remains encouraging and our customer base of power generation and the oil & gas sector have a degree of resilience which will help us through any down turn

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

"These results highlight the further development and growth we have achieved in 2008. During the year all of our main subsidiaries have performed ahead of our expectations and are profitable and cash generative. The investment in our hire fleet will benefit us in terms of cash flow in the medium term enabling us to drive the Group forward and take advantage of any opportunities which may arise.

Trading for 2009 has started well and whilst the order book is not as full as last year's record level, we are still encouraged by the level of enquiries for the sales of manufactured units with rental demand also remaining buoyant. We look forward to updating shareholders on our progress as the year unfolds."

For further information

Northbridge Industrial Services plc

Eric Hook, Chief Executive Officer 077 0283 1110

Ash Mehta, Finance Director 079 3054 7441

Charles Stanley Securities (Nominated Adviser) 020 7149 6000

Mark Taylor / Freddy Crossley

Buchanan Communications 020 7466 5000

Charles Ryland / Isabel Podda

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 a review of the Group's performance during our second full year of trading. The results highlight the Group's continued development and growth achieved since its admission to AIM in March 2006. During this period all of our main subsidiaries performed ahead of our expectations and were profitable and cash generative.

Crestchic, our main subsidiary continued to trade at record levels with sales of manufactured units rising by 25% compared with 2007. Crestchic's rental operation continues to grow and is now supported by our established presence in the Middle East, in the Jebel Ali Free Zone of Dubai.

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 continually 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 demand for Crestchic's range of services. Additionally Crestchic is benefiting from a background of an increasingly unreliable global power infrastructure.

Northbridge Middle East FZE ("NME"), which was formed in 2007, acquired new premises in June 2008 which markedly accelerated the growth of the business. NME promotes the sales and rental of Crestchic's products in that region as well as acting as an outlet for RDS's generators. NME revenue for 2008, in its first year of trading in the rental of loadbanks and transformers as well as other products was £2.4 million with profit before tax of £468,000, and net assets at year end were £846,000.

We acquired the remaining 49% of RDS (Technical) Ltd also in June 2008 for a total final price of £1.8 million. The net assets of RDS at the 30 June 2008 were £2.1 million of which £1.0 million was cash. RDS is a Jersey registered company with a branch office in Azerbaijan, whose principal business is to provide generators and associated equipment to the oil and gas industries in the Caspian Region.

Both of these transactions in 2008 strengthened the international presence of the Group and further developed the core business in areas that we expect to grow in the future. They also increased the Group's hire fleet and enabled us to increase the hire revenue proportion of our revenue to 49%, increasing our gross margin in the medium term. Almost all of the hire fleet is unencumbered and therefore cash generative and generally more resilient in any down turn.

Financial performance

Group consolidated revenue for the year to 31 December 2008 was up over 40% to £15.7 million (2007: £11.2 million), gross profit and net profit before tax were both up strongly at £8.0 million (2007: £5.6 million) and £2.97 million (2007: £1.63 million) respectively. This increase in profit includes a currency gain of £620,000 primarily relating to the fall in Sterling against the US Dollar, UAE Dirham and Euro in the last quarter of the year. Even allowing for this effect, net profit was up by more than 50%. Operating cash flow for the year was £3.0 million (2007: £1.3 million). Net assets at 31 December 2008 were £9.97 million (2007: £8.13 million) and the Group had gearing, defined as the ratio of all short and long term borrowings and other financial liabilities to net assets, of 34.8% (2007: 23.0%) at the year end. Cash balances at the year end were £2.1 million (2007: £1.5 million).

Fixed asset investment in the Group was £4.4 million and includes £1.9 million for the trading premises in Dubai and a further £1.9 million in hire fleet expansion (2007: £600,000). The underlying performance at Crestchic for the whole year showed an improvement in the sales of manufactured units of 25% to £8.0 million. 

RDS contributed total revenue of £1.2 million for the year, together with profits before tax of £425,000 (2007: £121,000). The Net Assets of RDS at 31 December 2008 were £2.3 million (2007: £1.8 million). 

Dividend

Based on this performance, the Board is pleased to propose an increase to the final dividend for 2008 of 30% to 2.6 pence per share (2007: 2.0 pence) resulting in a total dividend for the year of 3.9 pence (2007: 3.0 pence) per share, a 30% increase. The final dividend will be paid on 27 May 2009 to shareholders on the register on 24 April 2009, subject to shareholder approval at the Annual General Meeting to be held at 12 noon on 19 May 2009 at the offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.

  Business Review

During the year the Group continued to experience strong demand from its two main overseas markets, the United States and South East Asia, for sale of products. Rental demand also continued to strengthen and projects were successfully completed in Africa, the Caspian region, Europe and the Middle East.

Fixed asset investment accelerated during 2008 and we added a further £1.9 million at cost to our hire fleet; the bulk of this investment was in load banks and transformers. The total cost of our hire fleet is now £5.0 million (2007: 3.6 million) which represents a 39% increase in 2008.

Our new premises in Dubai have eased the logistics of operating in the Middle East and we are now able to base a proportion of our hire fleet there. This enables us to offer a much better and faster service to our customers as well as keeping shipping costs to a minimum.

On 30 June 2008 we completed the final stage of our acquisition of RDS (Technical) Ltd by acquiring the remaining 49% of the shares. The original 51% controlling stake was acquired in September 2007 for £0.7 million and Northbridge had the option to purchase the remaining shares for a price based on the audited pre- tax profits. The price was subject to a maximum consideration of £1.8 million for 100% of RDS which would be paid if the profits in the year to 31 March 2008 reached £328,000 or above. The profit of RDS in the year to 31 March 2007 reached £425,000 and therefore the maximum consideration of £1.8 million was paid. Net assets of RDS at 31 December 2008 were £2.2 million. Since completion, the profitability of RDS has continued to be robust and the transition from the vendor to our own management team has been successful.

Our acquisitions and other investments in 2008 have been made out of a combination of the Group's trading cash flow and existing banking facilities. These facilities were increased during the year by £900,000 and comprise a mortgage against the freehold premises of £1.4 million, with a remaining term of 14 years and an interest rate of 2.5% above base rate, and a revolving credit facility of £1.9 million at an interest rate of 2.5% above LIBOR. Cash balances at the year end amounted to £2.1 million.

Strategy

Northbridge's strategy was set out in the placing document in 2006. This is to acquire and consolidate specialist industrial equipment businesses. The criteria that these potential targets will possess are;

Supplying, or capable of supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas sector 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 through complementary acquisitions, increase the Company'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 delivering this excellent set of results. We would also like to welcome the new employees who have joined the Group through our recent acquisitions and thank them for enabling the smooth transition to new ownership.

Outlook

The global economic environment for 2009 looks very different from 2008 and it will be some time before we have any visibility of market demand for the latter part of the year. However trading has started well and whilst the order book is not as full as last year's record level, we are still encouraged by the level of enquiries for the sales of manufactured units with rental demand also remaining buoyant.

Substantial investment has been made into our hire fleet over the last few years, which gives us a long term benefit in terms of 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 in all 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 down turn.

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 25.3 pence (2007: 15.3 pence) and diluted earnings per share of 25.0 pence (2007: 14.5 pence) have been arrived at in accordance with the calculations contained in note 4.. 

Balance Sheet

The balance sheet shows a significant increase in property, plant and equipment arising from our acquisitions during the year but also our net investment into the hire fleet of £1.4 million. Despite the growth in revenues our inventories were stable at £1.1 million. Trade receivables increased from £3.1million to £3.8 million, but this growth in percentage terms is lower than year on year revenue growth.

Cash and cash equivalents increased to £2.08 million (2007: £1.1 million) and bank borrowings also increased by £1.58 million to £3.03 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 Ltd and Northbridge Middle East. Part of this cashflow was reinvested in increasing the size of the hire fleet which thereby increases the revenue capacity of the fleet for future years. 

Interest rate risk

The Group is cash positive and places its balances on short term deposit with Bank of Scotland and other local banks. The Board manages its interest rate policy centrally, bearing rates of interest in relation to Bank of Scotland 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, setting credit ratings which are factored into credit decisions. The Company's subsidiaries record of debt collection is very positive and the Group has only £555,000 (2007: £637,000) outstanding over three months old at 31 December 2008 of which £444,000 has been collected since the year end.

Economic environment

The global economy is facing the most challenging economic environment for many years. 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. However trading has started well and whilst the order book is not as full as last year's record level, we are still encouraged by the level of enquiries for the sales of manufactured units with rental demand also remaining buoyant.

Going concern

During this uncertain economic period 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 2009 as well as extending those budgets out to March 2010 and also considering the current pipeline of orders and the outlook for future orders. The board has also reviewed the current banking facilities which are in place until 22 April 2010 and the covenant calculations relating to those bank borrowings which are well within their limits. The Group is highly cash generative and ordinarily uses surplus cash to invest 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 2.6 pence (2007: 2.0 pence) per Ordinary share in addition to the interim dividend of 1.3 pence (2007: 1.0 pence) during the year. The dividend for the full year of 3.9 pence (2007: 3.0 pence) is covered 6.5 times by the earnings per share of 25.3 pence, and will be paid on 27 May 2009 to shareholders on the register on the 24 April 2009.

A K Mehta

Finance Director

  CONSOLIDATED INCOME STATEMENT 

For the year ended 31 December 2008

		2008	2007
	Note	£'000	£'000
REVENUE	2	15,734	11,203
Cost of sales		(7,711)	(5,626)
GROSS PROFIT		8,023	5,577
Selling and distribution costs		(2,747)	(2,385)
Administrative expenses		(2,129)	(1,484)
PROFIT FROM OPERATIONS		3,147	1,708
Finance income		23	23
Finance costs		(203)	(100)
PROFIT BEFORE INCOME TAX		2,967	1,631
INCOME TAX EXPENSE	3	(1,049)	(477)
PROFIT FOR THE YEAR ATTRIBUTABLE TO  THE EQUITY HOLDERS OF THE PARENT		1,918	1,154
Earnings per share
- basic (pence)	4	25.3	15.3
- diluted (pence)	4	25.0	14.5

All amounts relate to continuing operations.

  

CONSOLIDATED BALANCE SHEET As at 31 December 2008				2008					2007
			Note	£'000		£'000		£'000		£'000
ASSETS NON-CURRENT ASSETS
Intangible assets						3,159				3,254
Property, plant and equipment						8,675				5,398
						11,834				8,652
CURRENT ASSETS
Inventories				1,096				1,136
Trade and other receivables				4,085				3,272
Cash and cash equivalents				2,078				1,461
						7,259				5,869
TOTAL ASSETS						19,093				14,521
LIABILITIES
CURRENT LIABILITIES
Bank overdraft				-				359
Trade and other payables				2,384				1,953
Financial liabilities				1,966				173
Other financial liabilities				988				1,150
Current tax liabilities				1,386				589
						6,724				4,224
NON-CURRENT LIABILITIES
Financial liabilities				1,502				1,342
Long term provisions				212				212
Deferred tax liabilities				683				604
						2,397				2,158
TOTAL LIABILITIES						9,121				6,382
TOTAL NET ASSETS						9,972				8,139
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital						763				763
Share premium						5,546				5,546
Foreign exchange reserve						178				-
Treasury share reserve						(117)				(59)
Retained earnings						3,602				1,889
TOTAL EQUITY						9,972				8,139

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2008

	Share Capital	Share Premium	Foreign Exchange Reserve	Treasury Share Reserve	Share Option Reserve	Retained Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Changes in equity
Balance at 31 December 2007	763	5,546	-	(59)	-	1,889	8,139
Foreign Exchange on translation	-	-	178	-	-	-	178
Net income recognised in equity	-	-	178	-	-	-	178
Retained profit for the financial year	-	-	-	-	-	1,918	1,918
Total recognised income and expense for the year	-	-	-	-	-	1,918	1,918
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

For the year ended 31 December 2007

	Share Capital	Share Premium	Foreign Exchange	Treasury Share	Share Option	Retained Earnings	Total
			Reserve	Reserve	Reserve
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Changes in equity
Balance at 31 December 2006	739	5,527	-	-	209	721	7,196
Retained profit for the financial year	-	-	-	-	-	1,154	1,154
Total recognised income and expense for the year	-	-	-	-	-	1,154	1,154
Issue of share capital	24	19	-	-	-	-	43
Share options exercised during year	-	-	-	-	(200)	200	-
Share option expense	-	-	-	-	29	-	29
Dividends paid	-	-	-	-	-	(224)	(224)
Transfer to retained profit	-	-	-	-	(38)	38	-
Purchase of Ordinary shares for holding in treasury	-	-	-	(59)	-	-	(59)
Balance at 31 December 2007	763	5,546	-	(59)	-	1,889	8,139

  CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2008

	Note	2008	2007
		£'000	£'000
OPERATING ACTIVITIES
Net profit from Ordinary activities before taxation		2,967	1,631
Adjustments for:
Foreign exchange gains		(620)	-
Amortisation of intangible fixed assets		95	126
Amortisation of capitalised debt fee		92	18
Depreciation of property, plant and equipment		715	444
Loss on disposal of property, plant and equipment		(54)	22
Decrease in provision for future employment costs		-	(53)
Investment income		(23)	(23)
Finance costs		203	100
Share option expense		45	29
		3,420	2,294
Decrease in inventories		40	(414)
Increase in receivables		(424)	(917)
Increase in payables		385	745
CASH GENERATED FROM OPERATIONS		3,421	1,708
Finance costs		(203)	(100)
Taxation		(173)	(254)
NET CASH FROM OPERATING ACTIVITES		3,045	1,354
CASH FLOWS FROM INVESTING ACTIVITIES
Finance income		23	23
Acquisition of subsidiary undertaking (net of cash acquired)		(1,150)	(983)
Purchase of property, plant and equipment		(2,925)	(904)
Sale of property, plant and equipment		480	17
Net cash used in investing activities		(3,572)	(1,847)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share capital issued		-	43
Proceeds from bank borrowings		1,626	1,500
Repayment of bank borrowings		(64)	(715)
Repayment of finance lease creditors		(196)	(49)
Repurchase of own shares		(58)	(59)
Dividends paid in the year		(250)	(224)
Net cash flow from financing activities		1,058	496
NET INCREASE IN CASH AND CASH EQUIVALENTS		531	3
Cash and cash equivalents at beginning of period		1,102	1,099
Exchange gains on cash and cash equivalents		445	-
Cash and cash equivalents at end of period	5	2,078	1,102

During the period the Group acquired property, plant and equipment with an aggregate cost of £4,407,000 (2007: £984,000) of which £494,000 (2007: £80,000) was acquired by means of finance leases and £988,000 by deferred commitment. Cash payments of £2,925,000 (2007: £904,000) were made to purchase property plant and equipment.

 

1. ACCOUNTING POLICIES

	1.1	BASIS OF PREPARATION OF FINANCIAL STATEMENTS
		These preliminary results for the year ended 31 December 2008 have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("adopted IFRSs"). The principal accounting policies adopted in the preparation of these preliminary results are as used in previous years financial statements, except as stated below, and those policies have been consistently applied to all the years' presented, unless otherwise stated. The financial information set out herein (which was approved by the Board on 26 March 2009 does not constitute the Company's statutory accounts for the years ended 31 December 2008 and 2007 but is derived from the 2008 statutory accounts. The statutory accounts for the year ended 31 December 2007 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2008 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 and did not contain statements under section 237(2) or (3) of the Companies Act 1985.

	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.

	1.3	FOREIGN CURRENCIES
		Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated income statement. On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve").
	1.4	FINANCIAL INSTRUMENTS
		(a) Financial assets The Group's financial assets fall into the categories discussed below, with the allocation depending to an extent on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity. Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values. Loans and receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables) and deposits held at banks, but may also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue and subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. The effect of discounting on these financial instruments is not considered to be material.  Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. (b) Financial liabilities The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. . Unless otherwise indicated, the carrying amounts of the Group's financial liabilities are a reasonable approximation of their fair values. Other financial liabilities include the following items: Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. Bank borrowings and loan notes are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. Interest expense in this context includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Interest is recognised as a finance expense in the income statement. Fair value is calculated discounting estimated future cash flows using a market rate of interest. Financial instruments are recognised when the Group becomes party to the contractual terms of the instrument and derecognised on expiry of the contractual terms or conditions attaching to the instrument. (c) Share capital The Group's Ordinary shares are classified as equity instruments. The Group is not subject to any externally imposed capital requirements. Share capital includes the nominal value of the shares and any share premium attaching to the shares. (d) Option to purchase minority interest in subsidiary The Company values such options on a fair value basis. Where the consideration for the acquisition of the minority interest is dependent upon the profitability of the subsidiary company, fair value is calculated on the basis of the most likely outcome of the results of the subsidiary.

1.5	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
	The preparation of consolidated financial statements under IFRS requires the Group to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below: Estimated impairment of goodwill The Group is required to test whether goodwill has suffered any impairment. The recoverable amounts of cash generating units have been determined based on value-in-use estimations. The use of this method requires the estimation of future cash flows expected to arise from the continuing operation of the cash generating unit.  Actual outcomes could vary significantly from these estimates. Impairment of assets Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash generating unit is determined based on value-in-use calculations prepared on the basis of management's assumptions and estimates.  Provisions Provisions have been made for employment costs. These provisions are estimates and the actual costs and timings of future cash flows are dependent upon future events. Any difference between expectations and the actual future liability will be accounted for in the period when such determination is made. Income taxes The Group recognises expected liabilities for tax based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual liability arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax provisions in the period when such determination is made.
1.6	GOING CONCERN
	During this uncertain economic period 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 2009 as well as extending those budgets out to March 2010 and also considering the current pipeline of orders and the outlook for future orders. The board has also reviewed the current banking facilities which are in place until 22 April 2010 and the covenant calculations relating to those bank borrowings which are well within their limits. The Group is highly cash generative and ordinarily uses surplus cash to invest 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.

2. SEGMENT INFORMATION

The principal activity of the Group is the manufacture, hire and sale of specialist industrial equipment.The entire revenue arises from the Group's continuing principal activity, which the Directors believe to be the only class of business carried out by the Group. Whilst the Group is involved in both the hire and sale of industrial equipment, the business' organisational structure and its internal financial reporting system is such that there is one business segment. The Group's primary reporting format for reporting segment information is geographical segments by location of assets. 

 

 

 

					2008				2007
	UK	Germany	Middle East	Central Asia	Total	UK	Germany	Middle East	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Revenue	12,755	444	2,446	1,033	16,678	10,376	508	319	11,203
Less Inter Company Trading	(944)	-	-	-	(944)	-	-	-	-
Consolidated Revenue	11,811	444	2,446	1,033	15,734
Profit before taxation	1,866	173	467	461	2,967	1,142	362	127	1,631
Balance sheet
Assets	15,393	274	1,084	2,342	19,093	11,129	451	2,941	14,521
Liabilities	(7,708)	33	(1,385)	(61)	(9,121)	(5497)	(51)	(834)	(6,382)
	7,685	307	(301)	2,281	9,972	5,632	400	2,107	8,139
Other
Capital expenditure	1,770	16	2,018	614	4,418	1,859	16	209	2,084
Depreciation	528	10	34	143	715	401	17	26	444
Amortisation	95	-	-	-	95	124	2	-	126
Share option charge	45	-	-	-	45	29	-	-	29

		External revenue
		by customer location
		2008	2007
		£’000	£’000
	UK	4,400	3,435
	USA	2,713	1,094
	Middle East	2,815	1,205
	Central Asia	1,033	-
	Far East	2,106	2,803
	Other	2,667	2,666
		15,734	11,203

 

3. INCOME TAX EXPENSE

			2008	2007
			£'000	£'000
		Current tax expense	847	440
		Prior year under/(over) provision of tax	123	(48)
		Deferred tax expense resulting from the origination and reversal of temporary differences	79	85
		TAX ON PROFIT ON ORDINARY ACTIVITIES	1,049	477

FACTORS AFFECTING TAX CHARGE FOR THE YEAR

The tax assessed for the year is higher (2007: lower) than the standard rate of corporation tax in the UK (28.5%).The rate is calculated through the apportionment of two different rates following changes for the tax year 2009. The differences are explained below:

			2008	2007
			£'000	£'000
		Profit on Ordinary activities before tax	2,967	1,631
		Profit on Ordinary activities multiplied by standard rate of corporation tax in the UK of 28.5% (2007 : 30 %)	846	490
		EFFECTS OF:
		Expenses not allowable for tax purposes	80	60
		Income not taxable for tax purposes	-	(34)
		Other differences	-	9
		Under /(over) provision in prior period	123	(48)
		TOTAL TAX CHARGE FOR THE YEAR (see note above)	1,049	477

FACTORS THAT MAY AFFECT FUTURE TAX CHARGE

There are no factors that may affect future tax charges

4. EARNINGS PER SHARE

			2008	2007
			£'000	£'000
		Numerator
		Earnings used in basic and diluted EPS (£'000)	1,918	1,154
			Number	Number
		Denominator
		Weighted average number of shares used in basic EPS	7,586,054	7,532,163
		Effects of share options	88,085	433,630
		Weighted average number of shares used in diluted EPS	7,674,139	7,965,793

At the end of the year, the Company had in issue 288,861 (2007: 123,123) 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.		NOTE SUPPORTING CASH FLOW STATEMENT			2008	2007
					£'000	£'000
		Cash and cash equivalents comprises:
		Cash available on demand			2,078	1,461
		Overdrafts			-	(359)
					2,078	1,102

6.		DIVIDENDS			2008	2007
					£'000	£'000
		Final dividend of 2.0 pence (2007: 2.0) per Ordinary share proposed and paid during the year relating to the previous year's results			152	148
		Interim dividend of 1.3 pence (2007:1.0) per Ordinary share paid during the year			98	76
					250	224

The Directors are proposing a final dividend of 2.6 pence (2007: 2.0 pence) per share totalling £196,000 (2007: £152,000), resulting in dividends for the whole year of 3.9 pence (2007: 3.0 pence) per share. The dividend has not been accrued at the balance sheet date.

7.	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.
8.	ANNUAL GENERAL MEETING
	The Company's Annual General Meeting is to be held at 12 noon on 19 May 2009 at the offices of Buchanan Communications, 45 Moorfields, London EC2Y 9AE.

ENDFR EAXDSADLNEFE