2 Aug 2017 07:00
2 August 2017
Northbridge Industrial Services Plc
("Northbridge" or the "Group")
Pre- Close Trading Update
Northbridge, the industrial services and rental company, is pleased to issue the following pre-close trading statement in advance of its interim results announcement for the half year ended 30 June 2017, which is scheduled to be released during the week commencing 25 September 2017. Recent trading has been consistent with our internal forecasts and, consequently, the Group expects the results for the first six months of 2017 to be in line with management's expectations.
Northbridge has two core activities, Crestchic Loadbanks and Tasman Oil Tools. Crestchic is a specialist electrical equipment business which manufactures and rents loadbanks and transformers from its base in Burton on Trent and has depots in France, Germany, Belgium, UAE and Singapore. It also has satellite locations in China and the USA. Tasman Oil Tools rents drilling equipment to the oil, gas and geothermal industries from its sites in Australia, New Zealand and the UAE.
The power reliability side of our European, UK and USA activities has continued to be resilient. New markets in the USA are expected to provide a long-term growth opportunity for Crestchic and the growth of renewable power generation in advanced economies have already provided profitable opportunities and will continue to do so in the years to come. This contrasts our other overseas markets which have continued to experience low levels of activity in power projects, particularly in the oilfields and shipyards who use our loadbanks and transformers. However, we do believe these markets will recover in the longer term.
Whilst sentiment in the oil and gas market has maintained its gradual improvement since 2016, the pace of recovery remains slow, investment in exploration and production still lags and, despite reductions in supply, surplus oil stocks are still at a high level. "Lower for longer" still remains the mantra. As a result, we have only seen a modest improvement in the trend of oil tool rental revenues from the record lows of 2016. Having taken the necessary steps to right-size the business, we continue to generate cash despite the ongoing sluggishness in energy related industries.
We are also very pleased to announce the formation of a Joint Venture company in Malaysia with our local partner, Olio Resources SDN BHD ("Olio"). The new company, called Olio Tasman Oil Tools SDN BHD ("OTOT") will be 51% owned by Olio and 49% by Northbridge, and will service the oil tool rental market in the region. It will begin trading on the 1 October 2017 from a newly established location in Malaysia. Both JV partners will provide equipment for the rental fleet and OTOT will also have access to the substantial existing hire fleet of the Tasman Group. Olio already hold key contracts for the provision of oil tools to the oil majors in Malaysia and, while initial trading levels are not expected to be material to the second half results, 2018 will benefit from a full year of the Joint Venture. Revenues are then expected to build into the future, particularly as the oil and gas industry recovers.
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 Communications 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, UAE, 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, UAE, 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.