Final Results 2019

7 April 2020

Northbridge Industrial Services Plc

("Northbridge" or the "Group" or the "Company")

Audited results for the Year Ended 31 December 2019

Northbridge Industrial Services plc, the industrial services and rental company, today announces its audited results for the year ended 31 December 2019, which are in line with market expectations.

Highlights:

· 2019 was a strong year for the Group delivering earnings growth and cash generation

· Group revenue up 24.7% to £33.6 million (2018: £26.9 million)

· Gross profit up 40.3% to £15.8 million (2018: £11.3 million)

· EBITDA1 up 52.9% to £7.0 million (2018: £4.6 million)

· Strong cash generation from operations1 up 87.6% to £8.0 million (2018: £4.3 million)

· Strong balance sheet with net debt1 down 25.9% to £6.4 million (2018: £8.7 million)

· Gearing1 down to 18.4% (2018: 23.8%)

· Tasman returned to EBITDA positive

· Excellent all-round growth in Crestchic power reliability

· No immediate liquidity issues in light of COVID-19

1 excluding the impact of IFRS 16; reconciliation included in the Financial Review.

Eric Hook, Chief Executive Officer, commenting on the results said:

"2019 was a strong year with much positive momentum achieved throughout the Group. However, the impact of COVID-19 and its consequences, coming in the midst of our accelerating recovery, comes at an unfortunate time. However, Northbridge is as well set as it can be; it is much leaner now, with a low cost base and a strong balance sheet, manageable bank debt, a full equipment sales order book and a very experienced management team. I have no doubt that we can weather the storm and return to growth once the crisis is over".

For further information

Northbridge Industrial Services plc 01283 531645

Eric Hook, Chief Executive Officer

Iwan Phillips, Finance Director

Shore Capital (Nominated Adviser and Broker) 020 7408 4050

Robert Finlay / Antonio Bossi / Henry Willcocks

Buchanan Communications 020 7466 5000

Charles Ryland / Stephanie Watson

About Northbridge:

Northbridge Industrial Services plc hires and sells specialist industrial equipment. With offices or agents in the UK, USA, The Middle East, Belgium, Germany, France, Australia, New Zealand, Singapore, China, Brazil and South Korea, Northbridge has a global customer base. This includes utility companies, renewables, the oil and gas sector, data centres, shipping, banking, mining, construction and the public sector. The product range includes loadbanks, transformers, and drilling tools. Northbridge was admitted to AIM in 2006 since when it has grown by providing a high level of service, responsiveness and flexibility to customers. It has also grown by the acquisition of companies in the UK, Dubai, Australia, Belgium, New Zealand and Singapore and through investing further in those acquired companies to make them more successful. Northbridge continues to seek suitable businesses for acquisition across the world.

CHIEF EXECUTIVE'S REVIEW

2019 was an excellent year for the Group, with a first time return to annual profit before tax since 2014. This cemented our recovery from the downturn, which had affected our industries during the last four years. Both parts of the business, Tasman and Crestchic, played a full part in the recovery with excellent results also from North America (Crestchic) and Australia (Tasman).

Much of the cost of sales which includes depreciation is fixed and is less sensitive to volume. This operational gearing means that, as revenues improve, gross profit will grow proportionately faster. The beneficial impact of this during 2019 became more pronounced as the increase in revenue year on year of 24.7% led in turn to much larger increases in gross profit and EBITDA of 40.3% and 52.9% respectively. This was achieved despite a slight swing back to sales in the overall revenue mix, following the record opening order book for Crestchic Loadbanks at the beginning of the year.

As we have already noted in our trading update on 31 January 2020, orders for the sale of manufactured units of Crestchic products were again at a record level at the beginning of 2020.

Costs continue to be well controlled and the increase of 12.7% was predominantly due to our continued organic expansion of the power reliability business into North America and our new location for Tasman in Southeast Asia.

Moving into operating profit for the first time in four years enabled our cash generated from operations to improve very substantially, increasing by 87.6% to £8.0 million (2018: £4.3 million). The additional free cash flow enabled us to continue to invest in the hire fleet, which was split fairly evenly between Crestchic and Tasman. Despite this investment in working capital and hire fleet additions, net debt at the year-end fell to £6.4 million (2018: £8.7 million) and year end gearing fell to only 18.4% (2018: 23.8%) including the convertible loan notes of £3.9 million.

Our joint venture in Malaysia ("OTOT") with the local partner, Olio Resources SDN BHD, continued to make good progress as rental revenue increased by 32% to £2.7 million (2018: £2.1 million). Our share of the losses also increased to £0.7 million as the legacy loss-making contracts from 2016 unwound but these were all renewed on improved terms at the end of November 2019, as part of the joint tender process with Petronas. The joint venture itself has a limited amount of rentable assets which are provided on assignment by the partners, and therefore relies on the Tasman depot in Malaysia ("TOTSEA") to provide additional equipment when needed. TOTSEA is a wholly owned subsidiary of the Group and its revenue grew by 62.3% to £0.8 million (2018: £0.4 million).

Crestchic - Power Reliability

Crestchic manufactures, sells and rents loadbanks and transformers, and supplies two main markets. Firstly, the developed world, where it is focused on supporting the power reliability, renewables and power security markets and secondly, emerging markets, where it is mostly focused on resources, typically shipyards, oil and gas facilities and mines.

Crestchic total turnover during the period was £25.4 million (2018: £20.4 million). Both outright sales of manufactured goods and rental revenue achieved good increases, and gross margins improved further to 51.0% (2018: 46.8%). The continued growth in renewables being added to grids in the developed world magnifies the need for properly tested backup systems to ensure resilience. The major power outage suffered by the East of England in August 2019, caused by two unrelated utility failures, has encouraged more sophisticated reliance testing as, in many cases, the existing backup systems failed to work properly. Crestchic loadbanks are the most advanced systems available in the western economies for this purpose and the roll-out of our new fibre optic control systems is also a world first. As in 2018, the year ended with the largest ever order book for the sale of manufactured equipment. This represents a sure sign of momentum in the demand for Crestchic's products in all markets.

Our business in the USA continued its good progress and is expected to provide a long-term growth opportunity for Crestchic. Judicious investment in specialised rental fleet and the relocation of underutilised equipment from other regions increased our footprint in North America. In December we relocated the business to our first specialised rental and service location in Pennsylvania. Overall revenue from sales and rental rose to £4.4 million (2018: £2.0 million) with all of this increase coming from the sale of manufactured units. We continue to look for suitable trading partners for our rental operation in order to expand our footprint whilst minimising the overhead cost of operating in North America.

The continuing growth in data centres throughout Western Europe has given Northbridge two additional opportunities, firstly in heat load management, by using loadbanks to simulate the heat from computer servers, and secondly in managing and proving backup power sources. Global investment in this type of "big data" is likely to grow for many years to come.

Tasman Oil Tools

Our oil tool rental operations in Australia, New Zealand, Malaysia, Singapore and the Middle East continued to recover. This is evidenced most strongly in Australia with revenue up a further 22.9% on top of the 61.4% increase in 2018. Total revenue for the division in 2019 was £8.2 million (2018: £6.6 million). Rental during the period increased by 30% to £7.1 million (2018: £5.4 million), and we continued to support this growth with further capital expenditure for specific contracts.

The increase in rental volumes in 2019, whilst still low historically, began to make a significant difference to the Group's overall profitability, and particularly to cash flows, with the Tasman businesses returning to positive territory at the EBITDA level. Rental rates are beginning to show signs of upward movement although this depends on the type of equipment and the location of the contract. The rental contracts showing the most promise are mostly related to natural gas, both for local grids in Australia and for LNG for wider export markets. The nearest customer base for liquified natural gas ("LNG") is the large carbon-heavy economies of China, India, South Korea and Japan, all of which are using LNG as a method of reducing the carbon content of their electricity-generating output. These contracts are generally linked to long-term supply, usually index linked and not so volatile as the oil market. By maintaining our infrastructure and hire fleet whilst cutting costs, we have positioned the Company in a strong position for when market demand begins to recover more significantly.

The joint venture in Malaysia with our local partner, Olio Resources SDN BHD, started trading in full in 2018. Early results are encouraging, and the proportion of revenue generated from hiring Tasman tools into the joint venture started to increase.

Because of our improved trading position and cash flows, Tasman was able to purchase an entire and complementary hire fleet in late 2018, at a significant discount to its new replacement value, from a distressed competitor and this transaction. Together with further modest capital expenditure, this enabled the positive momentum to continue. This also reduced the average age of the Tasman fleet and enabled us to expand our footprint and services in Southeast Asia. We have also come out of the recent downturn with a much larger market share than we had at the beginning and at a minimal cost.

Outlook

During the first quarter of 2020 trading continued with its improving trajectory from the last six months of 2019. This was particularly true for Tasman where year on year increases were most evident and, as indicated before, we had record factory orders for the sale of manufactured Crestchic units. The Crestchic rental operation was also performing to plan.

However, by the end of March the impact of the Covid-19 pandemic was becoming apparent and was felt in almost every location in which we operate. Whilst demand for our rental services remains stable, the closure of national borders, travel restrictions, lockdowns of increasing severity, and site access has made operation in our normal patterns extremely difficult. Some rig operators have been unable to change crews and commissioning of some larger power projects have lacked appropriate staff. It has also been difficult to move equipment across national boundaries and it has been impossible to give normal customer support, which is essential in our type of work. This has affected the rental operations of both Crestchic and Tasman.

Crestchic's sales orders have remained at a record level and continued to grow in the first quarter. To date, no order has yet been cancelled or otherwise delayed. However, factory output has inevitably been compromised as staffing has been reduced through self-isolation and social distancing has reduced productivity. Staff welfare has been our top priority and our staff are key to our future success.

Due to these restraints it is likely that our performance in quarter 2 and quarter 3 of 2020 will be adversely affected, although this is impossible to quantify currently, but we might see some recovery in quarter 4 and beyond.

Based on our assumptions we don't have an immediate liquidity problem, and actions to mitigate the financial impact on the Group's cash flow during this sharp down turn in business will include reducing variable costs where possible, negotiating reductions in contracted fixed costs, restricting capital expenditure and taking advantage of the various support mechanisms including loans, grants, payment holidays etc offered by the Governments of the countries in which we operate. These are predominately offered to protect liquidity and employment and we have already received funds from the New Zealand Government for that purpose.

It is unclear at the time of writing, what the consequences of the very sharp reduction in crude oil prices witnessed in the last six weeks will be. This has been caused by the collapse of demand, firstly from China, but then across the world, exacerbated by increasing production from Saudi Arabia and the Gulf States. Although it seems likely that crude oil prices will remain low for some time particularly when stocks remain at record levels, there are now some early signs of key producing nations seeking to stabilise market prices. Actions to reduce supply may not be agreed by the producer nations until after the pandemic crisis is over, however the peak in virus deaths between China and Europe and then on to North America are only weeks apart, and therefore a more managed oil and gas market may emerge by 2021.

Tasman's operations, particularly in Australia and New Zealand, are focused towards gas production and geothermal fluids to a much greater extent now than they were in 2014, and demand for natural gas to supply local markets in Australia remains high, particularly as winter in the southern hemisphere approaches. Likewise, geothermal drilling in New Zealand, which ceased during their lockdown, will restart as the travel and work restrictions are relaxed.

The Group as a whole is well positioned to benefit from a recovery as we believe there will be an added focus on resilience and sustainability in all energy focused industries, and an upturn in demand for gas, geothermal and carbon capture in order to retain the remission in pollution caused by the reduction of industrial emissions since the beginning of the pandemic.

FINANCIAL REVIEW

IFRS 16

IFRS 16 addresses the accounting for leases and requires lessees to recognise all leases on their balance sheet with limited exemptions. This results in the recognition of a right-of-use asset and corresponding liability on the balance sheet, with the associated depreciation and interest expense being recorded in the income statement over the lease period. Limited exemptions apply for short-term leases (leases with a term of twelve months or less) and low value leases. The payments for the exempt leases are recognised as an expense in the income statement on a straight line basis over the lease term.

The Group has adopted IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application (£nil) is recognised in retained earnings at 1 January 2019. Accordingly, the comparative information has not been restated and continues to be reported under IAS 17 "Leases" and IFRIC 4 "Determining Whether an Arrangement Contains a Lease".

All ratios used in this announcement use the 2019 figures after adjusting for the impact of IFRS 16 so that they are directly comparable with the 2018 reported figures. The effect of IFRS 16 on these ratios is explained in the following table.

* - To be consistent with 2018, any leases which would have been classified as finance leases in the prior year have been added to loans and borrowings.

Revenue and profit before tax

The Group's revenue is derived principally from the rental of its hire fleet and also from the sale of manufactured equipment. Notes 2 and 3 show the Group's revenue split by segment, geography and revenue type.

As many of the Group's costs are largely of a fixed nature in the short to medium term (with significant movements in the cost base being attributable to acquisitions, large capital expenditure and divestments) any revenue movement, however small, will be highlighted at the operating profit level. This operating gearing, and despite a slight movement in revenue mix towards sales in the year and tight cost control, enabled an increase in gross profit of 40.3%.

Rental revenue made up 64% of total revenue in 2019 compared to 65% in 2018. Rental revenue within Tasman increased by 30% with the Australian entity driving the improvement with a 34% increase in hire revenue.

Pre-exceptional operating costs were £1.5 million higher in 2019 at £13.6 million (2018: £12.1 million). This was mainly due the costs of the new Tasman entity in Singapore, investment in staff and premises in the US and a modest increase in staff numbers across the Group.

Net finance costs increased in 2019 with a full year's interest charge on the £4.0 million of convertible loan notes and the addition of interest relating to IFRS 16 (£77,000). The profit before tax for the year was £0.3 million (2018: pre-exceptional loss before tax of £2.0 million).

Earnings per share

The basic and diluted loss per share ("LPS"), both of 0.8 pence (2018: 8.9 pence) have been arrived at in accordance with the calculations contained in note 6.

Balance sheet and debt

Total net assets at 31 December 2019 were £35.0 million compared with £36.5 million in 2018. The decrease in net assets during the year is mainly due to the decrease in the foreign exchange reserve.

Net assets per share at the year-end are 125 pence (2018: 132 pence).

Hire fleet additions in the year totalled £3.7 million (2018: £4.5 million) with investment made in both the Crestchic and Tasman businesses. Property, plant and equipment decreased from £28.9 million to £25.6 million during the year due to net additions of £2.7 million being more than offset by a negative movement of £0.5 million from the translation of assets held in foreign currency and a depreciation charge of £5.4 million.

Inventory levels have decreased during the year to £3.5 million (2018: £4.3 million) mainly due to the finished goods of £0.7 million held at the prior year end mostly being sold or capitalised into the hire fleet during 2019.

Trade receivables have increased slightly from £5.9 million to £6.0 million in the year. Collections during the year have been reasonable and a modest increase in provisions has been made.

Year-end net debt stood at £6.4 million (2018: £8.7 million) which includes £3.9 million debt convertible to equity at 125 pence per share. During the year the Group has been able to make investments in both fixed assets and working capital while decreasing debt.

Notwithstanding the investment seen during the year, the Group's leverage, as calculated by dividing net debt by EBITDA, has decreased from 1.9 as at 31 December 2018 to 0.9 as at 31 December 2019. Excluding the convertible debt, the leverage is 0.4 (2018: 1.1).

Cash flow

The Group continued to increase the cash generated from operating activities which totalled £8.0 million during the year (2018: £4.3 million). The Group closely monitors cash management and prioritises the repatriation of cash to the UK from its overseas subsidiaries.

Tax expense

The overall tax charge for the year totalled £0.6 million (2018: credit of £0.3 million). This was made up of a tax charge of £0.6 million (2018: £0.4 million) and a deferred tax credit of £0.0 million (2018: £0.7 million). The deferred tax credit was lower than expected due to the Governments' decision to abolish the previously announced decrease in the UK corporation tax rate from 19% to 17%.

Losses relating to the Group's Australian entities have prudently not been recognised as a deferred tax asset at this balance sheet date, but the losses are available to be utilised against future profits. Any future recognition of a deferred tax asset will be dependent on these future profits by jurisdiction becoming more certain.

The Group manages taxes such that it pays the correct amount of tax in each country that it operates in, utilising available reliefs and engaging with local tax authorities and advisors as appropriate.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2019

All amounts relate to continuing operations.

CONSOLIDATED BALANCE SHEET

As at 31 December 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

For the year ended 31 December 2018

CONSOLIDATED CASH FLOW STATEMENT

1. ACCOUNTING POLICIES

1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

While the financial information included in the annual financial results announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply with IFRSs.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2019 or 2018, but is derived from those accounts. Statutory accounts for the year ended 31 December 2018 have been delivered to the Registrar of Companies and those for the year ended 31 December 2019 will be delivered following the company's annual general meeting.

The auditors have reported on those accounts; their reports were unqualified but included an emphasis of matter which refers to the potential impact of the issues connected to the COVID-19 pandemic and the resulting decline in market oil price on the going concern of the Group. As stated below, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. The auditor's opinion is not modified in respect of this matter.

Their reports for the year end 31 December 2019 and 31 December 2018 did not contain statements under s498 (2) or (3) of the Companies Act 2006.

The accounting policies used in the 2019 are identical to 2018 except for the adoption of IFRS 16.

Going concern

After making appropriate enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that the Group can have a reasonable expectation that adequate resources will be available for it to continue its operations for the foreseeable future, and consequently it is appropriate to adopt the going concern principle in the preparation of the financial statements.

In forming this judgement, the Directors have reviewed the Group's latest forecasts for 2020 and 2021 (including downside sensitivity scenarios and reverse stress testing), cash flow forecasts, contingency planning, the sufficiency of banking facilities and forecast compliance with banking covenants.

The downside sensitivity scenarios included the possibility of the oil price remaining at close to $30 per barrel for some time and the potential effect of COVID-19.

As noted in the Chief Executive's review, Tasman currently has a strong pipeline of work, which is ahead of 2019 levels, stretching throughout most of 2020. An oil price of close to $30 per barrel for a prolonged period may impact ad-hoc projects towards the end of 2020 and final investment decisions for larger projects in 2021.

Tasman is more prepared for a lower oil price than the last time the price was around $30 per barrel in 2015 as it is now more geographically diverse with operations in South East Asia and more of its revenue is derived from drilling for gas rather than oil.

The COVID-19 related downside sensitivities include a subdued period for Crestchic rental in the second and third quarter of 2020 with some modest improvement in the fourth quarter. Much of the testing that may be delayed because of COVID-19 is critical and will be carried out when possible to do so.

As noted in the Chief Executive's review, the Crestchic factory is currently scheduled to be at capacity for at least the next six months and any effect from a global slow-down will not affect the level of Crestchic sales in 2020. If the current restrictions are in place for a longer period, the factory's ability to keep output at its current high level may be in doubt.

Even with a reasonable downside scenario considering the effect of COVID-19 and the current oil price there is sufficient cashflow to pass all bank covenants and to sustain the requirements of the business.

This model includes some mitigation that is under the Directors' control including a reduction in capital expenditure and a modest reduction in costs. The model does not contain the sale of any assets, but that option would be open to the directors if required.

If trading conditions deteriorate further than expected the Board is encouraged by the approach of the various Governments and banks in the areas in which the Group operate and is confident that, if required, assistance will be available.

The main bank facilities are due for renewal on 30 June 2021 and the convertible loan notes are due for repayment in July 2021 if unconverted. The loan notes include an option to roll forward for one year with an increased coupon of 10% if agreed by both parties.

At the date of approval of these financial statements the directors acknowledge that the issues connected to COVID-19 and the decline in market oil price create significant difficulties in being able to forecast future trading and cash flows and that actual results achieved might be significantly different to management current expectations in the forecasts prepared to assess funding requirements and going concern. This indicates the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would be necessary if the company is not able to achieve its forecasts or is unable to continue as a going concern.

1.2 BASIS OF CONSOLIDATION

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

- The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights substantive potential voting rights held by the company and by other parties.

- Other contractual arrangements

- Historic patterns in voting attendance

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of revenues

The Group has disaggregated revenue into various categories in the following table which is intended to:

· depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date; and

· enable users to understand the relationship with revenue segment information provided in note 3.

Revenue type and timing of transfer

of goods or service

Contract liabilities

Contract liabilities are included within "trade and other payables" on the face of the balance sheet. There were no contract assets in the current or prior year end.

Contracts liabilities arise when customers pay advanced deposits on units manufactured by Crestchic. These are generally recognised as revenue within four months and no deposits were recognised as revenue in a period longer than twelve months.

3. SEGMENT INFORMATION

The Group currently has two main reportable segments:

· Crestchic loadbanks and transformers - this segment is involved in the manufacture, hire and sale of loadbanks and transformers. It is the largest proportion of the Group's business and generated 76% (2018: 78%) of the Group's revenue. This includes the Crestchic, NTX, Crestchic France, NME, CME, CAP, USA and China businesses; and

· Tasman oil tools- this segment is involved in the hire and sale of oil tools and loadcells and contributes 24% (2018: 22%) of the Group's revenue. This includes the TOTAU, TOTNZ, TOTAE, TOTSEA and TOTAP and the Group's 49% share of OTOT and TSPG.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products and services.

Measurement of operating segment profit or loss, assets and liabilities

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

The Group evaluates performance on the basis of profit or loss before tax.

Segment assets and liabilities include an aggregation of all assets and liabilities relating to businesses included within each segment. Other adjustments relate to the non-reportable head office along with consolidation adjustments which include goodwill and intangible assets. All inter-segment transactions are at arm's length.

4. EXCEPTIONAL COSTS

An exceptional cost was recognised in the prior year for £712,000 (2017: nil) as a result of a post balance sheet event. The exceptional cost relates to a full provision against a debt in Dubai from revenue recognised in 2013 and 2014. The contract with the customer stated that payment should be made on a "back-to-back" basis and the customer claimed not to have been paid. The legal advice received stated that "back-to-back" was not time unlimited and legal action commenced in early 2016. As at 31 December 2018 the Group had been successful at two court hearings and the full amount had been secured by the court. In late February 2019 the Court of Cessation ruled that the legal action was premature and the security on the full amount was released.

Although the customer has always acknowledged the debt and there are no signs that cast any doubt on the customer's ability to pay, the latest court judgement casts some doubt as to the enforceability of the debt. Due to this post balance sheet event, in line with IFRS 9, a full provision has been made against the debt. The Directors remain confident that the debt will be paid in full but appreciate enforcement may be difficult and the timing of any receipts is uncertain. The Directors are still being advised as to the next steps to take to recover the debt.

The Directors believe that it is appropriate to disclose the provision resulting from the court's decision as an exceptional event.

5. INCOME TAX EXPENSE

6. EARNINGS PER SHARE

At the end of the year, the Company had in issue 2,086,951 (2018: 1,819,451) share options and £4,000,000 of convertible loan notes which can be converted to 3,200,000 (2018: 3,200,000) ordinary shares at a price of 125 pence per share which have not been included in the calculation of diluted EPS because their effects are anti-dilutive. These share options and convertible loan notes could be dilutive in the future.

Since the balance sheet date COVID-19 has spread across the globe. It's financial effect on the Group is currently uncertain but more details on the risks involved are included in the chief executive's review and the principal risks and uncertainties included within the annual report and accounts.