(NBI.L) Northbridge Industrial Services PLC Buy/Sell

Operational Highlights

Eric Hook, Chief Executive Officer, commented:

"We expect the Group to turn in a solid performance for the whole of 2009 despite the economic conditions, and based on enquiries and forward orders we already expect a strong 2010".

For more information please contact:

Northbridge Industrial Services plc 01283 531 645

Eric Hook, CEO / Ash Mehta, Finance Director

Smith & Williamson Corporate Finance Limited 020 7131 4000

(Nominated Adviser) Azhic Basirov / David Jones

Arbuthnot Securities Limited (Broker) 020 7012 2000

Alasdair Younie / Ed Burbidge

Buchanan Communications 020 7466 5000

Charles Ryland / James Strong

Chairman's statement

I am pleased to report a period of further good progress in the Group's trading for the six months ended 30 June 2009 and strategic objectives being achieved.

Against a background of continued economic uncertainty the Group's businesses have held up well.

The Group's higher margin rental business is still experiencing good growth and the proportion of rental in the overall revenue mix is now well over 50%, leading to a substantial increase in the Group's gross margin. We are reaping the benefits of our ongoing investment in the Group's hire fleet over previous years. This level of expansion has continued into 2009 with a further investment of £1.7 million together with the £1.2 million acquisition of compressors which added to our portfolio of products.

Although sales of manufactured units by Crestchic, our largest subsidiary, are as expected lower than last year's record levels, we are still receiving an encouraging level of sales enquiries.

Northbridge Middle East ("NME"), which started trading in 2007, continues to grow rapidly and in April 2009 won a substantial rental contract to provide generators, transformers and associated equipment to the Jabali Salab zinc mine in Yemen. This contract will commence fully in January 2010 and is due to increase to the maximum level during 2010. It includes a minimum service period which has recently been increased from 12 months to 36 months. In April 2009, NME also acquired Tyne Technical Equipment Rental Services ("TTERS"), a Dubai registered company whose principal business is the rental of generators and the sale of associated services to the infrastructure and oil and gas industries in the United Arab Emirates.

RDS (Technical) Ltd, ("RDS") which supplies generators and associated equipment to the oil and gas industry in the Caspian Region, continued to perform well. A new phase of investment planned to start in 2010 will benefit the Company next year and beyond.

The Group's cashflow has been very strong in the first half, helped by the growth in rental activities. Opportunities for further rental growth are encouraging, particularly overseas, and to help fund this potential the Group raised additional capital via an open offer of new ordinary shares to existing shareholders in June 2009 raising £1.52 million before costs. During the period the Group purchased an existing specialist compressor hire fleet from Sullair at a cost of £1.2 million, 90 per cent of which was financed by a five year hire purchase agreement with Lloyds Banking Group.

Financial results

Northbridge's revenue for the half year was £6.1 million (2008: £6.9 million) with gross profits of £3.9 million (2008: £3.7 million). Profit before taxation was £1.1 million (2008: £1.0 million). Net assets at 30 June 2009 were £11.9 million (2008: £8.7 million)

Basic earnings per share increased 8.1% at 10.7 pence (2008: 9.9 pence) and diluted earnings per share increased to 10.6 pence (2008: 9.7 pence)

Financing and cash flow

During the period cash generated from operations amounted to £2.7 million (2008 £0.9 million) and a further £1.5 million was raised through the open offer. £2.9 million was invested in the hire fleet and a final payment of £0.9 million was made for the Group's business premises in Dubai. Net gearing at the end of the period was 24.0% (2008: 29.3%).

Dividends

The Board has declared an increased interim dividend of 1.4 pence (2008: 1.3 pence); an increase of 7.7%, to be paid on 13 November 2009 to shareholders on the register as at 16 October 2009.

Operations

Crestchic

Crestchic, Northbridge's main subsidiary, saw rental demand continue to grow and rental revenue increased by 31% compared with last year. This benefited the rental/sales mix in total Group turnover and resulted in the Group's gross margins increasing by 9.9% to 64.0%. Crestchic experienced a reduction in the sale of manufactured units compared with the record level of last year. This was largely down to the current economic environment which has reduced demand in some overseas markets, principally South East Asia. The additional production capacity released by the fall in sales has been utilised by building more units for the hire fleet from which we expect a long term benefit.

RDS (Technical) Ltd ("RDS")

RDS which provides generators and associated equipment to the oil and gas industry in the Caspian region continues to trade well. A new phase of investment is about to start in the region from which RDS is well placed to benefit. During the period the holding company, which was previously a Jersey registered company, has been transferred to Dubai under the control of Northbridge Middle East. At the same time a trading branch of RDS was established in the Jebel Ali Free Zone.

Northbridge (Middle East) ("NME")

NME now acts as an agent for Crestchic products and since its formation at the end of 2007 has experienced good growth, with turnover in the first six months of 2009 increasing significantly. The final payment of £0.9 million has been made on the premises in the Jebel Ali Free zone which is now shared with RDS. The portfolio of products offered by Northbridge has been enhanced by the acquisition of a 66.7% shareholding in TTERS for a consideration of £170,000 which was satisfied by £62,000 in cash and the issue of 80,000 Northbridge shares at 135 pence per share. TTERS, which is also based in Dubai, rents generators and associated equipment to the infrastructure and oil and gas industries in the United Arab Emirates. Northbridge will acquire the remaining 33.3% of the shares for a multiple of net profit in the year to March 2011 subject to a maximum cost of £680,000 giving a total maximum consideration of £850,000. Based on an assessment at 30 June 2009, £135,000 has been included as the expected fair value of the contingent consideration. In the year to December 2008 the unaudited turnover and net profits of TTERS were £600,000 and £57,000 respectively. As part of the transaction RDS has provided an intercompany loan of £250,000 for further investment in the hire fleet. In order for the maximum consideration to be payable TTERS will need to generate pre tax profits of £250,000 in the year to March 2011.

In April 2009 the new branch of RDS won a significant contract for the supply of generators, transformers and associated equipment together with a maintenance agreement to the Jabali Zinc Project in Yemen, which is controlled by Zincox Resources plc, an AIM-quoted company. The contract is due to start later this year and will increase to the maximum capacity in 2010. There is a minimum service period, at the maximum capacity, of 12 months with a value of US $2.9 million p.a. In September 2009, the contract was extended for a further 24 months.

Rest of the World

As well as having sales agents and salespeople in North America, South America, Continental Europe and the Far East, the Group has recently employed a sales representative in India. This follows a number of successful conferences and exhibitions held in India over the last few months. Based on those events we believe that India offers interesting opportunities for the Group.

Outlook

Trading has remained stable in all our activities during the first half of 2009 and our enquiry level remains high despite the global economic uncertainty. Higher margin rental continues to grow and the extra investment made this year will show early returns in 2010 and beyond. We look forward to reporting further progress in the Group's activities for the year ending 31 December 2009, and based on sales enquiries and our order book we already expect a strong 2010.

Peter Harris

Chairman
Northbridge Industrial Services plc

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2009

6 Months ended 6 Months ended Year to
30th June 30th June 31st December

Unaudited Unaudited Audited
£000's £000's £000's
Revenue 6,101 6,870 15,734
Cost of sales (2,195) (3,152) (7,711)

Gross profit 3,906 3,718 8,023
Selling and distribution costs (1,596) (1,765) (2,747)
Administrative expenses (1,113) (886) (2,129)

Profit from operations 1,197 1,067 3,147
Finance income - 17 23
Finance costs (78) (50) (203)

Profit before income tax 1,119 1,034 2,967
Income tax expense (Note 3) (313) (286) (1,049)

Profit for the period 806 748 1,918

attributable to the equity holders of the parent

Other comprehensive income:
Exchange differences on (200) - 178

translating foreign operations

Other comprehensive income for (200) - 178

the period, net of tax

Total comprehensive income for 606 748 2,096

the period attributable to equity holders of the parent

Earnings per share (Note 5)

Dividend per share 1.4p 1.3p 2.6p

All revenue and operating profit is derived from continuing operations.

Northbridge Industrial Services plc

Consolidated Balance sheet as at 30th June 2009
30th June 2009 30th June 2008 31st December 2008
Unaudited Unaudited Audited
£000's £000's £000's

Assets Non-current assets
Intangible assets 3,526 3,210 3,159
Property plant & equipment 11,332 7,387 8,675

Total non-current assets 14,858 10,597 11,834

Current assets
Inventories 1,290 1,477 1,096
Trade & other receivables 3,547 4,270 4,085
Cash and cash equivalents 1,885 1,209 2,078

Total current assets 6,722 6,956 7,259

Total assets 21,580 17,553 19,093

Liabilities Current liabilities
Bank overdraft - (597) -
Trade & other payables (2,555) (2,710) (2,384)
Financial liabilities (603) (316) (1,966)
Other financial liabilities (1,941) (810) (988)
Tax liabilities (1,135) (703) (1,386)

(6,234) (5,136) (6,724)

Non-current liabilities
Financial liabilities (2,420) (2,859) (1,502)
Long-term provisions (347) (212) (212)
Deferred tax liability (683) (604) (683)

(3,450) (3,675) (2,397)

Total liabilities (9,684) (8,811) (9,121)

Total net assets 11,896 8,742 9,972

Equity attributable to equity holders of the parent
Share capital 909 763 763
Share premium account 6,966 5,546 5,546
Treasury share reserve (201) (59) (117)
Foreign exchange reserve (22) (17) 178
Retained earnings 4,244 2,509 3,602

Total equity 11,896 8,742 9,972

Northbridge Industrial Services plc

Consolidated Statement of Cash Flows

For the six months ended 30 June 2009

6 Months ended 6 Months ended Year to
30thJune 30thJune 31st December 2008
2009 2008 Audited
Unaudited Unaudited
£000's £000's £000's

Operating activities
Net profit from ordinary 1,119 1,034 2,967

activities before taxation Adjustments for:
Foreign exchange gains 28 - (620)
Amortisation of intangible 63 58 95

fixed assets
Amortisation of capitalised 1 10 92

debt fee
Depreciation of property 399 374 715

plant and equipment
(Loss)/profit on disposal of 10 - (54)

property plant and equipment
Finance income - (16) (23)
Finance costs 78 50 203
Share option expense 30 25 45

1,728 1,535 3,420
(Increase)/decrease in (187) (341) 40

inventories
Decrease/(increase) in 1,022 (998) (424)

receivables
Increase in payables 90 740 385

Cash generated from operations 2,653 936 3,421
Finance costs (78) (50) (203)
Taxation (565) (172) (173)

Net cash from operating 2,010 714 3,045

activities

Cash flows from investing activities
Finance income - 16 23

Acquisition of subsidiary
undertaking (net of cash (1,061) (1,164) (1,150)

acquired)
Sale of property, plant and 45 39 480

equipment
Purchase of property, plant (1,947) (1,592) (2,925)

and equipment (Note 4)

Net cash used in investing (2,963) (2,701) (3,572)

activities

Cash flows from financing activities
Proceeds from share capital 1,459 - -

issued
Proceeds from bank borrowings - 1,750 1,626
Repayment of bank borrowings (41) (50) (64)
Payment of finance lease (178) (50) (196)

obligations
Purchase of own shares (85) - (58)
Dividends paid to equity (194) (153) (250)

shareholders

Net cash flow (used in)/from 961 1,497 1,058

financing activities

Net (decrease)/ increase in 8 (490) 531

cash and cash equivalents
Cash and cash equivalents at 2,078 1,102 1,102

beginning of period
Exchange differences on cash (201) - 445

and cash equivalents
Cash and cash equivalents at 1,885 612 2,078

end of period
Notes to the unaudited interim statements

Northbridge Industrial Services plc

1. Basis of preparation

This half-yearly financial report has been prepared in accordance with the accounting policies disclosed in the full statutory accounts for the year ended 31 December 2008.

These policies are in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board as endorsed for use in the European Union, that are expected to be applicable for the year ended 31 December 2009.

The Group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing the interim consolidated financial information.

The comparatives for the full year ended 31 December 2008 are not the Group's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2)-(3) of the Companies Act 1985.

The interim report for the period ended 30 June 2009 was approved by the board of directors on 29 September 2009.

2. Acquisitions

Tyne Technical Equipment Rental Services

During the period, the Group purchased 66.67% of the interests of TTERS. TTERS is a Dubai registered company whose principal business is the rental of generators and the sale of associated services to the infrastructure and the oil and gas industries in the United Arab Emirates. The total consideration was £170,000, which was satisfied by £62,000 in cash and by the issue of 80,000 new ordinary shares at a price of 135 pence per ordinary share. Additionally, Northbridge will acquire the remaining 33.33% of the shares in the company on 13 April 2011 for a price based on a multiple of net profits in the preceding 12 months, subject to a maximum cost of £680,000 (and a total maximum cost of £850,000). At this level of consideration the profit before taxation of TTERS would be £250,000. Based on an assessment at 30 June 2009, £135,000 has been included as the expected fair value of the contingent consideration. The shares issued to the vendors as consideration are to be held for a minimum period of 24 months.

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

Fair value of assets acquired £'000 £'000
Property, plant and equipment 297
Current assets 108
Contract and customer related intangible assets (recognised on 124

acquisition)
Other payables (340)
Deferred tax liability (35)

Consideration paid
Cash 62
Shares 108
Fair value of contingent consideration 135
Costs of acquisition 12

Goodwill 163

The net cash sum expended on the acquisition was as follows:
£'000

Cash paid as consideration 62
Cash paid as acquisition expenses 12
Less cash acquired on acquisition (1)
Net cash movement 73

The main factors leading to the recognition of goodwill are the presence of certain intangible assets in the acquired entity, such as trading licenses required to operate in Dubai, and the assembled work force of the acquired entity which do not qualify for separate recognition.

It is impractical to determine the IFRS carrying amounts of the assets and liabilities (other than the contracts and customer lists) of TTERS immediately prior to acquisition as the business did not prepare accounts under IFRS.

3. Tax on profit on ordinary activities

The anticipated taxation rate on profits is estimated to be approximately 28%.

4. Property, plant and Equipment

During the period the Group acquired property, plant and equipment with an aggregate cost of £3,186,000 (2008: £2,402,000) of which £1,239,000 (2008: £810,000) was acquired by means of finance leases. Cash payments of £1,947,000 (2008: £1,592,000) were made to purchase property, plant and equipment.

5. Earnings per share

The earnings per share figure has been calculated by dividing the profit after taxation, £806,000, (2008: £748,000) by the weighted average number of shares in issue, 7,527,908 (2008: 7,550,149). 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. At the end of the period, the company had in issue 469,229 (2008: 40,000) share options which have not been included in the calculation of the diluted earnings per share because their effects are anti-dilutive. These share options could be dilutive in the future.

6. Dividends

An interim dividend of 1.4 pence per share (2008: 1.3 pence) will be paid on 13 November 2009 to shareholders on the register as at 16 October 2009. In accordance with IFRS, no provision for the interim dividend has been made in these financial statements

7. 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 this interim announcement will also be available from the Group's website at www.northbridgegroup.co.uk .

This information is provided by RNS The company news service from the London Stock Exchange

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