NBI.L Regulatory News (NBI)

14 April 2015

Northbridge Industrial Services Plc

("Northbridge" or the "Group")

Preliminary Results for the Year Ended 31 December 2014

Northbridge Industrial Services plc, the industrial services and rental company, today announces its preliminary results for the year ended 31 December 2014.

Highlights:

· Consolidated Group revenue up 19.4% to £44.9 million (2013: £37.6 million)

· Pre-exceptional Profit before tax up 16.5% to £7.0 million (2013: £6.0 million)

· Pre-exceptional EBITDA up 25.7% to £13.8 million (2013: £11.0 million)

· Basic earnings per share before exceptional items of 32.5 pence (2013: 28.7 pence)

· Strategic acquisition of Tasman Oil Tools Ltd, New Zealand, re-uniting the brand name

· Successful placing of 642,202 new shares, raising £3.4 million in September 2014

· A further £7.0 million invested in the hire fleet, gross cost now £43.5 million (2013: £36.4 million)

· Modest year end gearing 31.6% (2013: 31.5%)

· Proposed final dividend increased to 4.0 pence raising the total dividend for the year to 6.2 pence (2013: 5.9 pence), an overall increase of 5.1%

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

"We are pleased with the Groups' performance and the continued good progress achieved during 2014. In particular the successful acquisition of Tasman Oil Tools Ltd in New Zealand. This has enabled us to re- unify the name "Tasman Oil Tools" in Australia and New Zealand, and re-brand our Middle Eastern Oil Tool rental business under the same identity. The combined entities, now all trading as "Tasman" have a substantial presence in their markets.

We have also continued to invest in Crestchic Ltd, our electrical equipment and testing business, and add further experienced personnel to our management team. Whilst revenue visibility is noticeably reduced in our rental activities at present we continue to be confident in the Group's longer term prospects and remain committed to the Group's stated successful strategy and objectives."

Outlook:

Although the collapse in the price of oil did not have a material impact on the Group's results during the latter part of 2014, the picture so far in 2015 is much harder to analyse. Current volumes and margins in our oil tool rental business are down overall when compared to this time last year, although some of this was expected. Larger projects carried out by our Crestchic loadbank business in the Middle East and Far East, which are connected to the oil and gas sector have historically been subject to delays and postponements and this has not changed, although it is still too early to forecast the impact.

Capital investment in the oil and gas industry as a whole has seen a noticeable reduction in almost all areas of operation and recent M & A activity amongst the majors will lead to further consolidation in a sector which includes many of our key customers. Underlying demand for our goods and service will take some time to stabilise and, as current contracts unwind, replacement contracts are likely to be harder to secure.

Encouragingly, the level of quotes and enquiries in both our oil tool rental business and Crestchic businesses remain at a good level although revenue visibility at this stage is poor.

Although the timing is not yet clear other parts of our business, most notably those involved in power reliability and power projects, should fare better, particularly in those countries whose economies are now beginning to grow again. This growth will be supported by the lower price of energy in the more advanced economies.

Although it is too early yet to give an update on full year expectations, management expects that results for the six months to 30 June 2015 will be less than those achieved in the comparative period to 30 June 2014.

The Group has good operating cashflow and we have modest and manageable gearing. Our strategy over the next few months will be to concentrate on capital management, further streamlining the Group's core activities, and continuing the process of de-gearing in the normal course of business.

We are satisfied that we have the correct long term strategy to face this headwind going forward and that there will still be opportunities to build the Group further by organic growth, particularly in areas where the economy is growing and it is essential that we have the cash resources to take advantage of this.

We have substantial modern hire fleet, a broad footprint in areas which continue to develop their oil and gas industries and the ability to move and share equipment across continents. We are very focussed on supporting our businesses in order to be well placed when the current uncertainty unwinds.

We have proposed a final dividend of 4.0 pence, an increase of 2.5%, giving a total dividend for the year of 6.2p, up 5.1% on 2013.

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 / Henry Willcocks

Buchanan 020 7466 5000

Charles Ryland / Stephanie Watson

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, 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, Singapore and New Zealand 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 2014.

The Group enjoyed a strong start to 2014 compared with the previous year, assisted by new contract wins and the extensions of a number of hire contracts which overran from the second half of 2013. This helped maintain the revenue mix for the full year which was 61% rental and 39% sales. Overall Group revenue for 2014 was £44.9 million (2013: £37.6 million), an increase of 19.4%. Allowing for the acquisitions of Tasman Oil Tools Limited and Tasman Oil Tools Leasing Limited ("TNZ") at the end of September 2014, the underlying increase in sales was 15.6%.

Profit before tax (pre-exceptionals) was £7.0 million (2013: £6.0 million), an increase of 16.5%. Post-exceptional profits were £6.3 million after accounting for the acquisition costs of TNZ of £0.5 million and a write down of goodwill associated with Northbridge Loadcell Services (2013: £6.6 million, which included £1.1m negative goodwill on the acquisition of Oilfield Material Management Limited).

EBITDA (pre-exceptionals) for 2014 was £13.8 million and showed a 25.7% increase on 2013 (£11.0 million). Pre-exceptional earnings per share was 32.5 pence (2013: 28.7 pence), an increase of 13.2%, based on the weighted average shares in issue during the year and following the increase in the number of shares issued as part of the acquisition of Tasman Oil Tools Ltd in New Zealand (TNZ).

Crestchic, our main UK subsidiary, again performed well and continued its growth in both the sale of manufactured units, up 5.3% compared to 2013, and rental, up 23% compared to 2013 benefiting from a recovery in some of our European markets.

Overall gross margins were down compared to 2013 at 48.4% compared to 54.0%; this was entirely due to an increase in the sales mix towards packaged transformers following a single large order gained during the year.

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 23 September 2014 the Group acquired TNZ in New Zealand for a total price of NZ$25.5 million (£12.2 million) with the fair value of the fixed assets acquired totalling £3.5 million. This acquisition has enabled us to re-unify the name of "Tasman Oil Tools" in Australia and New Zealand for the first time since 1996 when they became separated after a change in ownership. We acquired the Tasman operation in Australia during 2010. In addition, we have rebranded our Middle Eastern Oil Tool Rental business under the same name. The combined entities, now all trading as "Tasman", have a substantial presence in their markets.

The acquisition was part funded by the placing of 642,202 new ordinary shares at 545 pence each, raising £3.4 million before expenses. The placing was well supported by existing shareholders.

Founded in 1980, TNZ specialises in renting drilling tools to the New Zealand oil and gas industry from its base in New Plymouth. It also provides equipment to the geothermal power utilities throughout New Zealand. TNZ's performance during 2013 and 2014 was enhanced by additional geothermal drilling demand caused by the New Zealand Government privatisation of the geothermal power utilities prior to June 2014.

Tasman as a whole, now operating from Australia, the Middle East and New Zealand, had a good start to the year, benefiting from continuing contracts running on from 2013. The rapid fall in the price of oil had little impact on revenues until the last quarter of 2014 with trading in 2015 likely to prove to be much more difficult. During the final quarter we took the opportunity to make a substantial early discounted settlement of the "earn out" associated with the acquisition of the trade and assets of OMM BVI in 2013. No further payments are now due.

We have started the new year with a much larger integrated business, a much enhanced hire fleet and modest gearing, and we are confident that we can take advantage of any new opportunities that arise and we will be well placed when a recovery in the oil and gas markets takes place.

Our other larger core activities based in Dubai and Singapore are focused on the rental of loadbanks and transformers. Crestchic Middle East ("CME") has now been rebadged using the Crestchic name following the acquisition of the last substantial independent user of the Crestchic name Crestchic Asia Pacific ("CAP") in 2013. We continue to use the CAP identity in Singapore.

All our loadbank activities are now branded as "Crestchic" and we are able to promote that service in an integrated way throughout the world.

Northbridge Transformers ("NT"), which was acquired from DSG NV and renamed in December 2011, continued to perform well during 2014. Despite European demand being relatively soft, it is able to use CME in the Middle East and CAP in Singapore as a conduit for its activities.

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 CME 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 investment in this activity over the last few years means 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.

Financial performance

The Group's consolidated revenue for the year ended 31 December 2014 was £44.9 million (2013: £37.6 million). This included a contribution of £1.4 million from the acquisition of TNZ in the last quarter of 2014.

Gross profits and pre-exceptional pre-tax profits were £21.7 million (2013: £20.3 million) an increase of 7.0% and £7.0 million (2013: £6.0 million) an increase of 16.5%, respectively. Pre-exceptional earnings per share based on the average shares in issue during the period was 32.5 pence (2013: 28.7 pence). Earnings before interest, taxation, depreciation and amortisation ("EBITDA") were 74.8 pence per share (2013: 72.5 pence).

Net cash generated from operating activities amounted to £8.6 million (2013: £9.1 million), of which £6.0 million (2013: £4.8 million) was invested into the hire fleet. At the year end, stock and work-in-progress amounted to £4.2 million (2013: £3.8 million). Total net assets at 31 December 2014 were £46.4 million (2013: £37.4 million), of which £31.0 million (2013: £27.8 million) was represented by the hire fleet. The fair value of the acquired hire fleets of TNZ was £2.8 million.

At 31 December 2014 the Group had net gearing, defined as all short and long-term financial liabilities less cash held divided by total equity to net assets of 31.6% (2013: 31.5%). This level of gearing, despite the continued investment programme in our hire fleet and the assumption of an additional debt package relating the acquisition of TNZ at the end of September 2014, 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 2014 of 2.6% to 4.0 pence (2013: 3.9 pence) resulting in a total dividend for the year of 6.2 pence per share (2013: 5.9 pence) an overall increase of 5.1% for the year. The final dividend will be paid on the 3 June 2015 to shareholders on the register on 15 May 2015, subject to shareholder approval at the Annual General Meeting, to be held at 12.00 noon on 28 May 2015 at the offices of Buchanan Communications, 107 Cheapside, London EC2V 6DN.

Business review

2014 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 in TNZ in September, as it fitted our strategy well. This unified the Tasman name for the first time in nearly 20 years and we now operate in oil tool rental under a single brand identity in all our current markets. Our entire combined hire fleet is now available to all our worldwide customers, with a single and enhanced standard of QHSE which is so important in our markets.

Likewise, Crestchic has also been able to unify its brand identity. We are now trading as a unified business from all our locations and increasingly distributing our products and services on a worldwide basis.

Following the acquisition of TNZ, the rebranding exercise and the steady growth of our existing activities with these products, we have continued to focus explicitly on loadbanks, transformers and oil tools.

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 2014. In particular, we would like to welcome the employees of Tasman Oil Tools Ltd in New Zealand, many of whom have long service with Tasman, and thank them for the smooth transition to the new ownership.

In addition we would like to welcome Ian Gardner to the Board. Ian joined the Group in 2007 and was instrumental in the start-up and subsequent growth of Northbridge Middle East and he is also responsible for the Group's activities in the Asia Pacific region and Australia. Following the Acquisition of Tasman Oil Tools and the start-up of Northbridge Asia Pacific in 2011, Ian relocated from Dubai to Singapore, where the Group's regional headquarters are now based. Ian has 25 years' experience in the industrial services and rental sector and also has extensive overseas experience; Ian is a member of the Institute of Sales and Marketing.

We have also taken the opportunity to strengthen the management team with the appointment of two further senior executives. Kelby Henn joined Crestchic as Factory Manager in Burton on Trent and Euan Ramsey joined Tasman as Business Development Manager based in the Middle East. Both bring executive experience to their new roles and we wish them well for the future.

Outlook

Although the collapse in the price of oil did not have a material impact on the Group's results during the latter part of 2014, the picture so far in 2015 is much harder to analyse. Current volumes and margins in our oil tool rental business are down overall when compared to this time last year, although some of this was expected. Larger projects carried out by our Crestchic loadbank business in the Middle East and Far East, which are connected to the oil and gas sector have historically been subject to delays and postponements and this has not changed, although it is still too early to forecast the impact.

Capital investment in the oil and gas industry as a whole has seen a noticeable reduction in almost all areas of operation and recent M & A activity amongst the majors will lead to further consolidation in a sector which includes many of our key customers. Underlying demand for our goods and service will take some time to stabilise and, as current contracts unwind, replacement contracts are likely to be harder to secure.

Encouragingly, the level of quotes and enquiries in both our oil tool rental business and Crestchic businesses remain at a good level although revenue visibility at this stage is poor.

Although the timing is not yet clear other parts of our business, most notably those involved in power reliability and power projects, should fare better, particularly in those countries whose economies are now beginning to grow again. This growth will be supported by the lower price of energy in the more advanced economies.

Although it is too early yet to give an update on full year expectations, management expects that results for the six months to 30 June 2015 will be less than those achieved in the comparative period to 30 June 2014.

The Group has good operating cashflow and we have modest and manageable gearing. Our strategy over the next few months will be to concentrate on capital management, further streamlining the Group's core activities, and continuing the process of de-gearing in the normal course of business.

We are satisfied that we have the correct long term strategy to face this headwind going forward and that there will still be opportunities to build the Group further by organic growth, particularly in areas where the economy is growing and it is essential that we have the cash resources to take advantage of this.

We have substantial modern hire fleet, a broad footprint in areas which continue to develop their oil and gas industries and the ability to move and share equipment across continents. We are very focussed on supporting our businesses in order to be well placed when the current uncertainty unwinds.

We have proposed a final dividend of 4.0 pence, an increase of 2.5%, giving a total dividend for the year of 6.2p, up 5.1% on 2013.

Peter Harris Eric Hook

Chairman Chief Executive

14 April 2015 14 April 2015

FINANCE DIRECTOR'S REPORT

Revenue and profit before tax

The review of the financial performance for the year ended 31 December 2014 refers principally to the performance of the consolidated Group for the full year 2014 but also refers to the underlying performance of the Group. This measure excludes the post-acquisition performance of the two trading entities (Tasman Oil Tools Ltd and Tasman Oil Tools Leasing Ltd ("TNZ")) which were acquired during the second half of 2014 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 manufactured and new equipment. Increased year-on-year revenue totalled £44.9 million (2013: £37.6 million). Underlying revenue for the year totalled £43.5 million, an increase of 15.6%. The full year benefited from several longer-term rental contracts secured in prior years plus an enlarged hire fleet inventory. The split of these revenues between the various regions compared to 2013 is shown in note 2.

As many of the Group's costs are largely of a fixed nature in the short to medium term (with significant movements in the cost base being attributable to acquisitions) any revenue movement, however small, will be highlighted at the gross profit level. This impact is often referred to as operational gearing. Gross profit for the year increased to £21.7 million from £20.3 million, aided by the increased level of overall revenue. There was a marginal shift in sales mix away from the higher margin rental revenue due to the significant level of equipment sales secured during the second half of the year. Underlying gross profit totalled £20.8 million (2013: £19.7 million), an increase of 5.6%.

Despite the enlarged level of Group overhead, operating expenditure as a percentage of turnover continued its downward trend seen over recent years decreasing to 31.7% from 36.9% in 2013.

Net finance costs for the year remained static at £0.5 million despite an increase in the level of net debt following the acquisitions in the second halves of 2014 and 2013.

The Group incurred exceptional items during the year relating principally to the acquisitions that took place during the year totalling £0.7 million (net gain 2013: £0.6 million).

After amortisation charges profit before tax (pre-exceptionals) totalled £7.0 million (2013: £6.0 million), an increase of 16.5%. Profit before tax totalled £6.3m (2013: £6.6 million).

Earnings per share

The basic EPS figure of 28.8 pence (2013: 32.7 pence) and diluted EPS of 28.0 pence (2013: 31.8 pence) have been arrived at in accordance with the calculations contained in note 10.

Balance sheet and debt

A strengthened balance sheet indicates total net assets of £46.4 million (2013: £37.4 million) representing net assets per share of 263 pence (2013: 233 pence) and incorporates an increase in property, plant and equipment from £34.5 million to £39.1 million. This includes planned direct hire fleet investment of £7.0 million (2013: £5.0 million) and also £2.8 million representing the fair value of hire fleet assets of the acquisition that took place during 2014.

An important measure of the Group's performance is the return on capital employed (ROCE) calculated as being EBITA (pre-exceptional items) divided by average total assets less current liabilities. In 2014 ROCE decreased to 14.7% from 16.0% reflecting the impact of TNZ during the year.

Trade receivables have increased to £11.2 million (2013: £9.4 million) impacted by the acquisitions in the second half of the year. Debtor days remained static at 91 days.

Cash and cash equivalents reduced marginally to £3.4 million (2013: £3.5 million) with the opportunity for good cash generation remaining in the current financial year.

Although net debt increased to £14.7 million (2013: £11.8 million) following the two acquisitions in the second half of the year, net gearing, calculated as net debt divided by total equity, only increased marginally to 31.6% from 31.5%. The Directors feel that the current level of gearing is appropriate and, in the ordinary course of business, a reduction in gearing is targeted for 2015. Based on the Group's cash flow from operating activities there is capacity for increased borrowings should suitable opportunities arise to further grow the business.

Cash flow

The Group continues to generate sustained and progressive levels of cash from operating activities before movements in working capital, which totalled £12.7 million (2013: £10.0 million) during the year. The largest component of the difference between the profit before tax of £6.3 million and the cash flow from operating activities before movements in working capital is depreciation which, at £5.5 million, is higher than in 2013 (£3.9 million) due to the Group's continued investment in the hire fleet and the acquisitions during the second halves of 2014 and 2013.

Cash from operations totalled £8.6 million during the year (2013: £9.1 million) of which £6.0 million (2013: £4.8 million) was reinvested into the hire fleet.

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 £3.7 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 £2.8 million (2013: £2.5 million). Both of these sources of funds were used to finance the cost of acquisitions of £6.2 million (2013: £7.9 million) and business activities.

The Group paid out £1.1 million (2013: £0.9 million) in dividends to shareholders.

Income tax expense

The overall income tax expense for the year totalled £1.2 million (2013: £1.4 million) equating to a charge of 19.5% (2013: 20.5%) of 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. The Group manages taxes such that it pays the correct amount of tax in each country that it operates, utilising available reliefs and engaging with local tax authorities and advisors as appropriate.

Craig Robinson

Finance Director

14 April 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2014

All amounts relate to continuing operations.

CONSOLIDATED BALANCE SHEET

As at 31 December 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2014

For the year ended 31 December 2013

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2014

During the period the Group acquired property, plant and hire equipment with an aggregate cost of £8,324,000 (2013: £5,496,000) of which £1,306,000 (2013: £244,000) was acquired by means of finance leases. This includes £7,029,000 (2013: £5,008,000) of hire fleet additions of which £1,063,000 (2013: £178,000) was acquired by means of finance lease.

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 2014 or 2013, but is derived from those accounts. Statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies and those for the year ended 31 December 2014 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 2014 and 31 December 2013 did not contain statements under s498 (2) or (3) of the Companies Act 2006.

1.2 BASIS OF CONSOLIDATION

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

- The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights substantive potential voting rights held by the company and by other parties.

- Other contractual arrangements

- Historic patterns in voting attendance

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

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% (2013: 43%) 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 20% (2013: 19%) of the Group's revenue. This includes the NME, RDS, TME and TTERS businesses; and

· Asia-Pacific - this segment is involved in the hire and sale of specialist industrial equipment and generated 37% (2013: 38%) of the Group's revenue. This includes the Tasman, NIS Pty, CAP, TNZ 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 (£660,000) and head office expenditure (£1,156,000). The reconciling adjustments between the total segmental net assets and 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 (£561,000) and head office expenditure (£1,474,000). The reconciling adjustments between the total segmental net assets and 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 the acquisition of Tasman Oil Tools Limited and Tasman Oil Tools Leasing Limited (2013: 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) As part of the ongoing review of the Group's assets, the Board has recognised that certain rental assets have not achieved the levels of utilisation that are considered acceptable in comparison to Group activities. The items highlighted were sold during the year and the loss on disposal is considered an exceptional cost.

(3) During the year the operations of the two acquisitions made in 2013 (Crestchic (Asia-Pacific) Pte Limited and the trade and assets of Oilfield Material Management Limited) were moved to existing Northbridge sites in Singapore and Dubai. The costs associated with the moves are recognised as exceptional.

(4) As part of the ongoing review of potential goodwill impairment, the Board has recognised that the recoverable amount of the goodwill related to the acquisition of Loadcell in 2011 is lower than its carrying value. An impairment charge of £99,000 has been recognised in the period and shown as an exceptional cost.

(5) The fair value of the trade and assets Oilfield Material Management Limited purchased in 2013 was deemed to be in excess of the fair value of the consideration paid. In line with IFRS 3 the negative goodwill was 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 (21.5%). The differences are explained below:

The standard rate of corporation tax in the UK is now 20% since 1 April 2015.

5. EARNINGS PER SHARE

At the end of the year, the Company had in issue 180,500 (2013: nil) 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

Tasman Oil Tools Ltd and Tasman Oil Tools Leasing Limited ("TNZ")

On 23 September 2014, the Group purchased 100% of TNZ. TNZ is registered in New Zealand and its principal business is the hire of oil tools. The fair value of the total consideration is £12,227,000, which was satisfied by £6,235,000 in cash on acquisition, £1,918,000 in shares, £1,188,000 in deferred consideration paid in December 2014 and £2,886,000 of deferred consideration. Acquisition expenses of £454,000 have been taken to profit or loss (see note 4).

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 £1,889,000 representing contractual receivables of £1,904,000. Whilst the Group will make every effort to collect all contractual receivables, at the time of acquisition it was deemed unlikely that this £15,000 would be collectable.

The net cash sum expended on the acquisition in 2014 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. TNZ is an excellent fit with the Group's existing business and the acquisition will serve to consolidate the oil tools operations in the Asia-Pacific region.

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 2014, TNZ contributed £1,409,000 to Group revenues and £438,000 to Group profit after tax. If the acquisition had occurred on the first day of the accounting period Group revenue would have been £49,098,000 and Group profit for the period after tax would have been £7,281,000.

The Directors are proposing a final dividend of 4.00 pence (2013: 3.90 pence) per share totalling £737,000 (2013: £676,000), resulting in dividends for the whole year of 6.20 pence (2013: 5.90 pence) per share. The dividend has not been accrued at the balance sheet date.