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 interim results announcement for the half year ended 30 June 2018, which is scheduled to be released during the week commencing 24 September 2018. Recent trading is showing an improved performance since last year and has been consistent with our internal forecasts. Consequently, the Group expects the results for the first six months of 2018 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. Crestchic 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, Malaysia and the UAE.
The power reliability side of our Crestchic European, UK and USA activities continues to be resilient. Looking forward, new markets in the USA and the growth of renewable power generation in developed economies provides a long-term growth opportunity for Crestchic. Our other overseas markets for power projects continued to experience comparatively low levels of activity, however, there have been signs that oilfields and shipyards, which use our loadbanks and transformers, are beginning to see improving activity levels from the very low levels experienced in recent years.
The improvement in sentiment in the oil and gas market continued during the first half of 2018 and this has now begun to translate into increased activity in our rental business of Tasman Oil Tools (“Tasman”). As we commented at the AGM in May, we felt confident enough in the future of Tasman to selectively invest further capital in our hire fleet for the first time in four years. This was specifically to supply new contracts in Malaysia and Australia, which, in turn, are expected to benefit the second half of 2018. The overall revenue improvements in Tasman are becoming much more noticeable, albeit from a very low base, but it will still take some time before rental rates recover to normalised levels.
The recent issue of convertible loan notes, together with an equity placing, has reduced our gearing and strengthened the Group’s balance sheet noticeably. Trading cash flow has also begun to improve and, alongside the fundraising, has put the Group in a strong position to invest further into any new opportunities that emerge from the upturn. We now believe that the direction of travel for Northbridge is slowly, but consistently, moving in the right direction.
Our forecasts anticipated this gradual market recovery and we are confident that our results in 2018 will reflect that belief.
Gresham House Strategic PLC has a total interest of 7.9% in Northbridge Industrial Services Plc correct as of 31 January 2018 month end NAV announcement, released 1 February 2018.