Northbridge Industrial Services, the industrial services and rental company, is to make an impairment charge after realising that some of its rental assets are not being used as much as was expected.
The company says the generators, transformers and ancillary equipment it bought to supply the Jabali zinc project in Yemen "have not achieved the levels of utilisation that are considered acceptable."
The board is consequently contemplating selling the assets; the impairment provision, which will be treated as an exceptional item in the company's 2011 accounts, reflects the expectation that the assets wold be sold at less than their balance sheet valuation.
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Aside from this fly in the ointment, the company said 2011 profits before tax and exceptional items, but net of amortisation, will be in line with market expectations.
Trading has remained robust in the majority of the group's markets and, as expected, the second half of the year saw both increased rental and equipment sales.
"Contracted rental demand and product sales orders have increased strongly across the group compared with this time last year with all of the group's major businesses winning substantial contracts for 2012," revealed Eric Hook, Northbridge's Chief Executive Officer.
"Northbridge is therefore well placed to continue to exploit the opportunities that will arise throughout the year and the board is confident that the group will continue to grow and meet its objectives during 2012," Hook added.
The shares took a bit of a knock on the unexpected news about the impairment, and were down 10.5p at 245p in the afternoon session, having fallen as low as 240.7p at one point in the day.
BS/JH
