Northbridge Industrial Services Plc (LON:NBI), the industrial services and rental company, has today issued the following pre-close trading statement in advance of its preliminary results announcement for the year ended 31 December 2017, which is scheduled to be released during the week commencing 9 April 2018. Recent trading has been consistent with the Group’s forecasts and, consequently, the Group expects the results for the full year ended 31 December 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. It 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. It has also recently entered a joint venture in Malaysia with Olio Resources SND BHD (“Olio”), which commenced trading on 1 October 2017, to offer similar services throughout the South East Asia region. Olio already holds a number of contracts for the provision of drilling tools to the oil majors in the region and the JV will have access to Tasman’s existing hire fleet. Initial trading levels are not material on a Group basis but are expected to begin to benefit Northbridge during 2018 as the industry begins to recover in the local market.
Within Crestchic, the power reliability side of our European, UK and USA activities has continued to grow and is being supported by growth of new markets. We are beginning to access new rental and sales markets in the USA which are expected to provide a long-term growth opportunity for Crestchic. In addition, the growth of renewable power generation in advanced economies is opening a new market opportunity. It has already provided profitable opportunities and is expected to continue to do so in the years to come. Some of our other overseas markets, particularly in the oilfields and shipyards which use our loadbanks and transformers, continued to experience lower levels of activity in power projects during 2017, as we have previously stated, but we do believe these markets will begin to recover in the medium term.
Sentiment in the oil and gas markets has maintained its gradual improvement since the end of 2016 and the price of crude oil has now risen nearer to 2014 levels. Though the pace of recovery in the drilling industry still remains cautious, confidence in stable commodity prices and improving cash flow within the industry is likely to enable the oil majors and the Exploration and Production companies to increase capital spending during 2018.
The modest improvement in the trend of our oil tool rental revenues mentioned in our interim results has continued from the record lows of 2016 and, having taken the necessary steps to right-size the business, we continue to generate cash.
Gresham House Strategic PLC has a total interest of 7.9% in Northbridge Industrial Services Plc correct as of 31 August 2017 month end NAV announcement, released 04 September 2017.
