13 September 2013 -Interim results and acquisition
The group has reported excellent results for the six months to 30 June with revenues rising 31% to £18.6m (2012: £14.2m) and pre-tax profits increasing by 82% to £2.57m (2012: £1.41m). Earnings per share were 88% higher at 12.6p (2012: 6.7p) and the interim dividend was raised by 8% to 2.0p (2012: 1.85p). These are clearly very good results with revenues increasing significantly in the Middle-East and Asia and overall group revenues were helped by an overspill of contracts from 2012. In addition, a change in revenue mix to 64% rental (2012: 54%) also helped margins and profits and this bias towards rental (as opposed to sale of equipment) is expected to continue in the second half albeit at a lower level. Strong cash flow has allowed gearing to fall to 37% (2012: 47%).
The group is confident about future prospects and is extending its operations in Asia with the acquisition of Crestchic (Asia-Pacific) PTE Ltd (CAP). CAP is an independent distributor of the group’s products based in Singapore with customers also in Malaysia, China, Japan, Vietnam and Australia. This acquisition will enhance Northbridge’s presence in the Asia Pacific region and is a further step in the strategic growth and development of the group. Maximum consideration for the purchase is £6.63m and to help fund this the group has also announced a placing of 1.56m shares at 395p to raise £6.17m before expenses.
We believe that prospects for the group remain promising and maintain our recommendation of BUY.