Strong cash flows, dividends and an exciting consolidation opportunity underpin the investment case at Northbridge, recently recommended by Growth Company Investor at 128.5p.

Maiden figures for the year to December, based on only nine months’ trading from the core Crestchic business (acquired for £6.7m at float in March), revealed an encouraging £1.1m pre-tax profit from £6.9m sales. A full year of Crestchic would have contributed sales of £8.7m, representing impressive 40% sales growth, with its pre-tax profits surging 49% north to £1.88m.

Crestchic makes and rents loadbank equipment used to test diesel generators and gas turbines when they are installed or maintained. Global demand for loadbanks is buoyant, particularly in the US and South East Asia. Factors fuelling demand include the need to continually test and maintain independent and standby power systems, rising reliance on power-critical technology used in the banking, medical, marine and defence industries, as well as the ongoing oil and gas boom.

Fattened by £892,000 of cash from operations, Northbridge’s coffers were replete with £1.1m net cash at year-end, and a maiden dividend of 2p was proposed. Alongside the figures, the £900,000 acquisition of Loadbank Hire Services was announced, cementing the group’s leading position in the loadbank market.

This year, Charles Stanley envisages a rise in pre-tax profits to £1.6m from revenues of £9.6m, ahead of £1.9m off a top line £10.7m for 2008. Based on those numbers, the shares trade on forward multiples of 10.9 and 9.4, undemanding for a high-margin buy-and-build business enjoying bumper demand for its services. Net assets of £7.2m support the valuation and acquisitions in the industrial equipment space should provide added earnings spice.