LONDON (Alliance News) - Northbridge Industrial Services PLC Tuesday said it had raised about GBP3.5 million before expenses in a share placing to help pay for its acquisition of New Zealand-based drilling tools company Tasman Oil Tools, as it also reported higher profit for the first half of the year.
In a statement, the company said it will buy Tasman for GBP13.0 million, funding the deal with the proceeds of the placing, bank facilities and by issuing shares to the sellers. It expects the deal to boost its earnings modestly in the first full year after the deal completes, but the deal will also boost its presence in the region and means it has now bought all of Tasman Oil Tools after it bought the Australian Tasman business in 2010.
Northbridge said it had placed 642,202 shares at 545 pence each with existing institutional investors. The placing was handled by Westhouse Securities Ltd, and the price was a 7.5% discount to the closing mid-market price on September 22.
Tasman rents drilling tools for the onshore and offshore oil and gas industry and the geothermal power industry. It made revenue of GBP7.4 million in the year to end-March, down from GBP8.8 million a year earlier, while pretax, pre-items profit fell to GBP2.9 million, from GBP4.4 million. Northbridge said Tasman's results in fiscal 2013 and 2014 had been buoyed by geothermal drilling activity, which is expected to run at much reduced levels in the immediate future.
"Tasman further strengthens our global reach and, in particular, our expertise and capabilities in the important oil and gas industries," Northbridge Chief Executive Eric Hook said in a statement.
Northbridge will pay an initial GBP6.5 million in cash and issue the sellers with 365,132 Northbridge shares. It will then pay a deferred cash payment of GBP2.25 million in January 2015, and the same amount again a year later.
Separately, Northbridge said its earnings per share rose to 14.8 pence in the six months to June 30, up from 12.6p a year earlier, as revenue rose 14% to GBP21.2 million, from GBP18.6 million, driven by growth in the Middle East and Asia Pacific. Its margins also rose as more of its sales came from its higher-margin tool rental business. Pretax profit was GBP3.3 million, up from GBP2.6 million.
It said trading conditions still remain challenging, particularly in Europe, but are continuing to improve. It was also hit by the strength of the pound, which weighed on the translation of its overseas earnings into sterling.
"Whilst we are mindful that further revenue needs to be secured prior to the year end, we remain optimistic about future trading and are currently on track to achieve management's expectations for the year as a whole," Hook said.
It declared an interim dividend of 2.2p, up from 2.0p at the half way stage in 2013. Its operating cash flow had risen to GBP6.5 million in the first half of this year, from GBP4.8 million a year earlier.
Northbridge shares were down 3.8% at 567.20 pence Tuesday morning as its placing price set a new reference price.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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