18 Feb 2022 10:09
18 February 2022
Northbridge Industrial Services Plc
("Northbridge", the "Company" or the "Group")
Pre-close trading update and notice of results,
Disposal of Tasman operations in Australia and New Zealand,
Capital Markets Event
and
Appointment of Director
Pre-close trading update and notice of results
Northbridge, the industrial services and rental company, is pleased to announce the following pre-close trading update in advance of its results announcement for the year ended 31 December 2021, which is scheduled to be released on or around 12 April 2022.
The Board is confident that the pre-exceptional profit before tax for the year will be in line with management's expectations.
Group revenue for the year is expected to have increased to £38.8 million (2020: £34.0 million) with the Crestchic division growing significantly by 20% to £29.4 million (2020: £24.6 million).
Within Crestchic, hire revenue increased by 34% to £15.4 million (2020: £11.5 million) and sales and service revenue increased by 7% to £14.0 million (2020: £13.1 million). With demand continuing to be strong, equipment sales would have grown further but for capacity and supply chain constraints, which we expect to be resolved when the factory expansion comes on stream in Q2 2022.
The change in overall revenue mix towards the higher margin rentals has increased overall gross margin for the year within Crestchic.
The Group remains highly cash generative and, with some of the spend on the new factory originally expected to occur in 2021 slipping into 2022, year-end pre-IFRS 16 net debt has fallen to £1.0 million (31 December 2020: £5.4 million).
Outlook for 2022 - Record Order Book
In 2022, for the fourth year in a row, the factory order book for the outright sale of loadbanks started the year at a record level and the secured Crestchic hire revenue is well ahead of this point last year with good visibility already into the second quarter.
The pipeline of rental projects is encouraging across all the regions in which Crestchic operates with data centre work in Europe and energy and marine projects in the Middle East and Asia being particularly strong. We have also recently won our first significant rental order for testing a data centre outside of Europe.
The US business continues to grow its revenue and a lease has been signed on a new depot in Texas which will become operational towards the end of Q2 2022. An order for US manufactured loadbanks for heatload testing in datacentres has been placed which will provide the equipment for the entry into this sector of the US market.
The new factory build in Burton on Trent is progressing well and will enable Crestchic to increase sales revenue and expand its loadbank hire fleet from H2 2022.
Divisional sale update
Further to the announcement of 13 January 2022, the Board is pleased to announce that it has exchanged contracts for the sale of its Tasman operations in Australia and New Zealand (Tasman ANZ) to Well Integrity Group Ltd and an associated company (together "Well Integrity Group"), with completion, on satisfaction of various procedural conditions, expected on or before 28 February 2022 ("Completion").
The aggregate purchase consideration to be paid by Well Integrity Group for Tasman ANZ is A$7.85m (£4.13m) and the book value of the transferring assets (NAV) of Tasman ANZ at Completion is expected to be A$9.10m (£4.79m). The consideration will be paid in four tranches, with A$6.0m (£3.16m) paid on Completion and the balance in three instalments, with the final instalment due twelve months after Completion. The purchase agreement contains a mechanism to adjust the total consideration according to the actual net debt and working capital at Completion, but this is not expected to be material and will not affect the loss on disposal.
The Board believes that the consideration represents fair value for Tasman ANZ and that Well Integrity Group, with its experience of operating across the region, will be an excellent new owner for the business. The Board would like to thank the staff of Tasman ANZ for their loyal and committed service while a part of the Group and to wish them well under their new ownership.
Following completion of this transaction, the only remaining asset of the Tasman division will be the operation in the Middle East and the disposal of this business will now be progressed.
The Tasman division as a whole is expected to break even on a trading basis for 2021 and the estimated final exceptional charge related to the restructure and disposal of the division, as noted in the previous announcement on 13 January 2022, remains unchanged at between £6.0 and £7.0 million. The Board is currently reviewing how the exceptional charge will be reported between 2021 and 2022, but it is expected that the majority of the charge with be reported in the accounts for the year ended 31 December 2021.
Appointment of Director
Nicholas Mills has been appointed today as Non-Executive Director of the Company with immediate effect.
Nicholas is employed by Harwood Capital LLP, which holds 22.6 per cent. of the Company's issued share capital. Nicholas joined Harwood Capital LLP in January 2019 after spending five years at Gabelli Asset Management in New York. He acted primarily as a Research Analyst covering the multi-industrial space and also gained experience in Merger Arbitrage strategies and marketing Closed End Funds. He currently sits on the board of Circassia Group Plc and Hargreaves Services Plc as a non-executive director. He has a Bachelor of Science Degree from Boston College's Carroll School of Management.
Further information in accordance with Schedule Two (g) of the AIM Rules for Companies is set out at the end of this announcement.
Capital Markets Event
Northbridge will host a virtual capital markets event on 10 March 2022 where it will make a presentation in which management will outline the strategic direction and exciting future prospects of the Group, followed by an interactive Q&A session.
Please contact Buchanan if you wish to attend the event at georgec@buchanan.uk.com.
For further information
Northbridge Industrial Services Plc 01283 531645
Peter Harris, Executive Chairman
Iwan Phillips, Finance Director
Shore Capital (Nominated Adviser and Broker) 020 7408 4050
Robert Finlay / David Coaten / Henry Willcocks
Buchanan Communications 020 7466 5000
Charles Ryland / Stephanie Whitmore
Appendix - AIM Rule 17
Save for the information set out above and below, there are no further disclosures to be made in accordance with Rule 17, Schedule Two (g) of the AIM Rules for Companies in respect of the appointment of Nicholas Harwood Bertram Mills, aged 31, who does not personally hold an interest in the Company's share capital.
Current Directorships
62 Pont Street (Freehold) Limited
Circassia Group Plc
Growth Financial Services Limited
Hargreaves Services Plc
Harwood Capital Management (Gibraltar) Limited
Harwood Capital Management Limited
North Atlantic Investment Services Limited
Past Directorships (within the last five years)
Harwood America, Inc.
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 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.