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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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
-
Lloyds Bank closures to hit nearly 300 in 2025Lloyds Bank is to close its doors to another 55 branches next year. Which ones are closing?
-
Which British stocks offer the best quality and growth?A professional investor highlights British stocks that hit the sweet spot. This week, Alexandra Jackson, manager of Rathbone UK Opportunities Fund, picks three favourites
