TIDMNBI
RNS Number : 4312O
Northbridge Industrial Services PLC
28 May 2015
For immediate release 28 May 2015
Northbridge Industrial Services Plc.
("Northbridge" or the "Group")
AGM Statement
Northbridge Industrial Services plc, the industrial services and
rental company will today hold its AGM at 12 noon at the offices of
Buchanan, 107 Cheapside, London EC2V 6DN. Peter Harris, the
Chairman of Northbridge will make the following statement on the
Group's current trading and outlook.
At the time of our preliminary announcement in April we
highlighted a cyclical reduction in our oil & gas related
rental revenue. This has continued and, despite a high current
level of quotations and enquiries, we now see no reliable signs of
any upturn for the rest of 2015.
Our Crestchic loadbank operations in Singapore and Dubai, and
Tasman Oil Tools in Australia are the businesses most affected by
this downturn. These are predominantly rental activities with
correspondingly high operational gearing. Our loadbank business in
Singapore and Dubai focuses on larger projects being carried out in
shipyards and in other oil & gas facilities, where there has
been a marked slowdown since the beginning of the year, with
projects subject to delays, postponements and cancellations. Tasman
in Australia has also suffered from significant cuts in investment
by the oil & gas industry, exacerbated by merger and
acquisition activity within our customer base.
The Group's other businesses, Crestchic Loadbanks in the UK and
Europe, and Northbridge's transformer rental operation, have so far
been unaffected by the turmoil in the energy sector, and are
performing to plan with robust cash flow.
Whilst we do not believe the current downturn in the oil &
gas industry will be prolonged, we nevertheless think it prudent
not to assume a return to stability and growth before 2016/17. We
have therefore taken steps to ensure we will be in a position to
take advantage when the upturn arrives. These steps will accelerate
the de-gearing of our balance sheet by a combination of reductions
in capital expenditure, cost savings and the disposal of non-core
and surplus assets.
In summary the actions taken so far are,
-- Closure and sale of the generator rental activities in the Middle East
-- Closure and sale of the air compressor rental business in the UK
-- Closure of our business in Vietnam
-- Sale of non-core hire fleet
-- A substantial cut in hire fleet capital expenditure
-- Overall head count reduction of 10%
The closure and sale of the non-core activities are expected to
raise around GBP1.5 million in cash by the end of June and further
surplus equipment has been earmarked for sale. We also expect to
reduce capital expenditure over the next 18 months by a further
GBP10.0 million. Current hire fleet capital expenditure is largely
focused towards US specification loadbanks, where the market
remains strong, and specialist oil tools in the Middle East to
support current contracts. We have also invested in our systems and
processes to share equipment internally in order to increase
utilization and decrease duplication.
Following these actions, Northbridge will be focused on its two
core businesses, Crestchic, in the manufacture, sale and rental of
loadbanks and transformers, and Tasman Oil Tools, in the rental and
management of oil & gas drilling equipment. Both these
activities have extensive, modern and well maintained hire fleets,
which are virtually unencumbered and, even at reduced levels of
rental activity, will generate good cashflow.
Following the shakeout in the oil & gas and energy sector we
will enter the new era streamlined, structurally sound and with
lower costs.
In the current volatile period maintaining flexibility as well
as being open to opportunities as they arise will be very
important. Accordingly, we are pleased to have entered into a new
GBP17.1 million senior multicurrency term and revolving facility
agreement with Royal Bank of Scotland Plc and KBC Bank NV. This
four year agreement incorporates a GBP7.1 million Multicurrency
Term Loan and a GBP10 million Revolving Facility. In addition we
have entered into a GBP5.75 million ancillary facility agreement.
Whilst these facilities are subject to normal banking covenants and
are available for general corporate purposes, they also provide
further scope for growing the businesses should these opportunities
arise.
In the event of the downturn being further prolonged, our
actions are aimed to enable us to become materially financially
ungeared by the end of 2016, with substantial freehold properties
and good cash flow.
The Directors expect the Group to be lossmaking during the first
half of 2015. We have very significantly reduced our expectations
for the year as a whole, but expect the Group to remain profitable
and cash generative in 2015.
For further information
Northbridge Industrial Services plc 01283 531645
Eric Hook, Chief Executive Officer
Craig Robinson, Finance Director
Westhouse Securities 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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