Industrial services and equipment rental company Northbridge Industrial Services (NBI:AIM) gains 4.2% to 425p as it announces increased revenue, earnings per share and cash generation for the first six months of the year and confirms it is on track to meet full-year expectations.
The numbers were accompanied by an 8% hike in the dividend to 2p and a modest £6.2 million placing which will be used to fund the £6.6 million acquisition of Singapore-based Crestchic Asia Pacific. The latter is an independent distributor of its products and Northbridge is believed to have targeted this purchase as far back as 2006.
The Burton-on-Trent company derives around half of its revenues from the manufacture and hiring out of loadbanks – equipment used to test back-up power - and was one of the five stocks in our regional portfolio when we visited the Midlands for our Best of British series last month (8 Aug).
As we discuss in more detail here the £66 million cap is benefiting from last year's record capital expenditure of £6.2 million which enabled it to add to its rental fleet. The market has taken note of its improved prospects with the shares up 82.8% year-to-date.
First-half revenue is up 31% to £18.6 million, earnings per share advances 88% to 12.6p a share, pre-tax profit is up 85.7% to £2.6 million and cash generated from operations is ahead 10.6% to £5.2 million.
Encouragingly there is also an improvement in the balance sheet with the company's net gearing level reduced to 37% from the 47% which was posted for the same period in 2012.
N+1 Singer, which says it will revisit its 'buy' recommendation and 400p price target once it has finalised new forecasts to reflect today's update, comments: 'We see no surprises in the interims or in the announcement of an acquisition in Asia after two quiet years for this acquisitive group.'