Northbridge Industrial Services Plc Acquisition of Loadcell Services
Northbridge, the industrial services and rental company, is pleased to announce that it has completed the acquisition of the assets of Loadcell Services Pte Ltd and Loadcell Services BVI ("Loadcell"), an oilfield instrumentation supplier based in Singapore (the "Acquisition").
Loadcell was formed in 1982 in Singapore by the current owner and the operation in Vietnam was established in 1992. It now operates throughout South East Asia. Loadcell supplies its customers in the oil and gas sector with a broad range of equipment and services, including drilling instrumentation, loadcells and strain gauges. Its rental activity includes loadcells from 10 to 1,000 tonnes and hydrostatic pressure test equipment to 20,000 psi. Further details of its activities, services and customers can be found on Loadcell's website, www.loadcellservices.com.
Loadcell has been acquired by Northbridge Loadcell Services Pte Ltd ("NLS"), a wholly-owned subsidiary of Northbridge, incorporated for the purposes of the Acquisition, and will assume the name following the Acquisition. The vendor, who is retiring, has entered into a full time service agreement with NLS for an initial three-month period and thereafter will provide consultancy services for a further 24 months. Key staff have agreed new employment contracts and arrangements have been made to ensure an orderly transfer of the business and assets.
Consideration for the tangible assets of the business will be in cash and comprises payments totaling S$2,093,000 (c.£1 million) which will be payable in three tranches: 25% on completion, 25% after six months and the final 50% after 12 months, each of which will be met out of the Group's current cash resources. In addition, the vendor is entitled to an earn-out payment based on the gross profits generated by the Loadcell assets over the 24 months following completion of the Acquisition. The maximum total consideration payable, including the tangible assets, is S$4,093,000 (c.£2 million) over the 24 month period. The additional payment will only be made if gross profits from the Loadcell assets exceed S$2 million per annum in each of the two years following completion. The average monthly revenue during the seven months ended 31 July2011 from Loadcell's unaudited accounts was S$370,000 (c.£180,000).
NLS will share the Group's existing premises in Singapore and a new senior manager has been appointed who will also assist with the existing Northbridge Asia Pacific business.
Commenting on the Acquisition, Eric Hook, Chief Executive of Northbridge, said:
"We are very pleased to have completed this acquisition, which demonstrates the ongoing commitment to our business strategy. Loadcell is an excellent fit with Northbridge's existing business, particularly in the Asia-Pacific region, building on the previous acquisition of Tasman in Australia. The consideration will be satisfied from the Group's existing cash resources and it is expected that it will be earnings enhancing in the longer run. I look forward to working with the existing management team to fully integrate and grow the Loadcell business.
"We are continuing to look at a number of potential acquisitions and are committed to finding those which are best suited to our strategy for long term growth and will also ensure the best possible returns for our shareholders."