Northbridge Industrial Services PLC Pre-Close Trading Update (7625F)
01 August 2016 - 4:00PM
UK Regulatory
TIDMNBI
RNS Number : 7625F
Northbridge Industrial Services PLC
01 August 2016
1 August 2016
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 update in advance
of its interim results for the six months ended 30 June 2016, which
are scheduled to be released on 29 September 2016.
The following statement updates the previous trading statement
given at our AGM on 26 May.
Despite a recovery in the crude oil price since its lowest point
in February, market conditions for the majority of global
participants in the oil and gas industry during Q2 2016 worsened
slightly and investment in current projects continued to fall. This
had a detrimental effect on our businesses which are involved
directly in this market. Our load testing business in the Middle
East and Asia Pac regions also experienced challenging conditions
which affected both rentals and sales in particular due to lower
activity in core markets such as shipyards. In this context, it now
seems prudent not to assume any upturn in the Group's performance
for the second half of 2016.
Looking forward into 2017 and 2018 there have been some more
reassuring announcements from the oil service majors who form part
of our customer base. They rely more on the activity levels in the
oil fields rather than the oil price and they believe the worst is
over and are predicting a return to more positive levels of
business in the future. If this is the case, we remain well
positioned to benefit from the market upturn as and when it
arrives. It the meantime we continue to reduce costs and maximise
cash generation while competing aggressively for every
opportunity.
On a more positive note our other activities, primarily focused
on power reliability, have performed much better and remain a
defensive hedge against the more volatile resource markets. Our
load bank rentals in the UK and Europe continue to perform well
and, as a result of ongoing R&D and product innovation, some
new markets are beginning to appear on the horizon. Our new Service
Division has outperformed our expectations and revenue in China has
continued to grow. Transformer rentals, frequently used on power
projects, have benefited from lower fuel costs and have remained on
hire for longer. All these activities continue to generate strong
positive cash flows.
Our new rental operation in the US has traded very well since it
started operations in the last quarter of 2015, with our new
multi-voltage units, unique in the market, having had a very
positive reception. We plan some further modest investment later
this year to sustain the momentum we have created in this
market.
The dramatic fall of the GBPGBP following the BREXIT vote at the
end June will have a positive and material impact on our balance
sheet at 30 June with more than 90% of our net assets held in
currencies other than the GBPGBP. However all our current trading
losses are also outside the UK and the translation of these will
impact results until the market recovers.
Our successful placing and open offer in April, which raised
GBP5.6 million, further strengthened the balance sheet and our
current trading generates sufficient cash flows to continue to pay
down existing debt quickly. The fund raising and the fall in the
GBPGBP will make a very material reduction to our balance sheet
gearing. This helps secure our medium term future and we can
continue to "ride out" the current turbulence in the market with
confidence and also allows us to invest judiciously for the
future.
For further information
Northbridge Industrial Services plc 01283 531645
Eric Hook
Iwan Phillips
StockdaleSecurities Limited (Nominated Adviser and Broker) 020
7601 6100
Robert Finlay / Antonio Bossi / Henry Willcocks
Buchanan 020 7466 5000
Charles Ryland / Stephanie Watson
About Northbridge:
Northbridge Industrial Services plc hires and sells specialist
industrial equipment to a non-cyclical customer base. With offices
or agents in the UK, US, Dubai, Belgium, Germany, France,
Australia, Singapore, India, Brazil, Korea and Azerbaijan,
Northbridge has a global customer base. This includes utility
companies, the oil and gas sector, shipping, 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 recorded increased earnings and dividends based on providing
a high level of service, responsiveness and flexibility to
customers. It has grown by the acquisition of companies in the UK,
Dubai, Azerbaijan, Australia, Belgium, Singapore and New Zealand
and through investing further in those acquired companies to make
them more successful. Northbridge continues to seek suitable
businesses for acquisition across the world.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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