7 Jun 2017 07:00
7 June 2017
Northbridge Industrial Services Plc
("Northbridge" or the "Group")
AGM Statement
Northbridge Industrial Services Plc, the industrial services and rental company, today issues the following trading update for the period 1 January 2017 to 31 May 2017, ahead of its Annual General Meeting to be held later today at 12.00 noon.
As noted in the Preliminary results on 25 April 2017, sentiment in the Oil & Gas industry has begun to improve following the agreement between OPEC and other producer countries to reduce surpluses. This was enacted on 1 January 2017 and has now been extended for a further nine months beyond the 30 June 2017. Compliance with this agreement, further supported by the scheduled IPO of Saudi Aramco, has enabled the crude oil price to stabilize at around $50 per barrel. This has encouraged the wider industry to re-consider the development of reserves, which have slipped to a 70 year low during the downturn. As a consequence, the Group is seeing a modest upturn in the investment plans amongst our customer base leading into 2018. However, we still believe that the pace of the recovery will be slow.
Other areas of Northbridge's activities have proved resilient, most notably Crestchic Loadbanks, which are involved in power reliability. This has become a particular issue in western economies, with the continuing development of the Renewable Sector and the decline in fossil fuel generation having led to fragmentation of power sources. This has meant a continuing demand for our services and the Group is increasing its presence in the Renewable Sector.
Northbridge's business model is focused mainly towards rental of equipment and the Group has high operational gearing, which is coupled with a strong cash flow and a conservative depreciation policy. Despite the continued trading losses in the period, EBITDA remains positive and the net debt position will continue to decrease during 2017. The separation of the Group's two trading subsidiaries, Tasman Oil Tools and Crestchic Loadbanks, into activity based management will enable better focus going forward which will ensure all opportunities can be fully exploited.
Northbridge's balance sheet remains strong and the Group has a substantial portfolio of rental assets which are readily available for deployment. This gives us confidence to take advantage when the recovery momentum increases. We have substantially reduced our overhead costs and streamlined the core business and, while short term trading visibility remains challenging, our performance will be highly sensitive to modest improvements in revenue. Whilst we believe this will be unlikely before the last quarter of 2017, we remain optimistic that Northbridge will benefit from this strengthened position when market conditions begin to improve.
-Ends-
For further information
Northbridge Industrial Services Plc 01283 531645
Eric Hook, Chief Executive Officer
Iwan Phillips, Finance Director
Stockdale Securities Limited (Nominated Adviser and Broker) 020 7601 6100
Robert Finlay / Antonio Bossi / Henry Willcocks
Buchanan 020 7466 5000
Charles Ryland / Stephanie Watson/ Catriona Flint
About Northbridge:
Northbridge Industrial Services plc hires and sells specialist industrial equipment. With offices or agents in the UK, USA, Dubai, Belgium, Germany, France, Australia, New Zealand, Singapore, China, Brazil and South Korea, Northbridge has a global customer base. This includes utility companies, the oil and gas sector, shipping, banking, mining, construction and the public sector. The product range includes loadbanks, transformers and oil 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, 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.