TIDMNBI
RNS Number : 7249L
Northbridge Industrial Services PLC
04 May 2020
4 May 2020
Northbridge Industrial Services Plc.
("Northbridge" or the "Company")
COVID-19 Trading update
Production continuity promotes stability
Northbridge, the industrial services and rental company, today
issues a further trading statement in relation to COVID-19, this is
in follow up to the statement issued on 26(th) March 2020 and the
outlook comments in our results announcement on 7(th) April 2020,
and gives some further clarity on the immediate outlook for the
Group.
The Group's trading during the first quarter of 2020 was in line
with management's original expectations for the year, albeit with
some weakness towards the end of the period. Our recovery momentum
of 2019 was maintained, and Tasman, in particular, showed very good
year on year growth and traded profitably in the quarter.
Following the UK lockdown, we have largely been able to maintain
factory production under appropriate social distancing and staff
welfare working practices. We have a record level of sales orders
for this year and this has been our top priority, as the equipment,
(mostly used to test emergency backup power systems), is pre
ordered, and frequently paid in full before leaving the factory.
This will underpin the Group's cash planning and will help mitigate
any decline in rental revenue. Additional new orders have also been
received during the lockdown period, and the factory will be
running at near capacity for the remainder of the year. Maintaining
production enables the group to better manage any liquidity issues
during the expected COVID related downturn, as we are able to
receive cash deposits, together with trade and invoice financing,
prior to the goods being despatched to the customer.
Liquidity has improved since the year end, with additional funds
being drawn against facilities where available. In addition, all
senior salaried staff, including Board members, have accepted a
voluntary 20% pay reduction for a 3 month period from 1st April and
a small number of staff are furloughed in the UK, and funds have
been received from overseas job retention schemes. The amount of
cash released from this action, together with other savings in
variable costs in this quarter alone, is expected to be around
GBP0.5 million. All other discretionary spending including Capex
has also been significantly reduced.
Rental operations are either open for business or working on a
business continuity basis (despatching goods/accepting deliveries).
During the lockdown periods over the last six weeks, all locations
have negotiated and delivered new hire orders. This includes
equipment for a utility in California, data centres in Europe,
nuclear facilities in China and drilling tools and accessories for
onshore and offshore, gas, oil and geothermal projects in
Australia, New Zealand, South East Asia and the Middle East. Whilst
the volumes have been lower than prior to the lockdown, demand for
both Crestchic and Tasman services currently remain firm. It is
unclear whether a relaxation in lockdown measures will lead to a
"bounce back" in demand, however up to now most projects have been
delayed or postponed rather than cancelled.
The longer-term impact of lower oil and gas prices has yet to be
ascertained, and it is still too early to predict the level of
trading for the rest of 2020, but our assumptions remain that Q2
and Q3 will be the most directly affected by COVID-19 and that the
energy price downturn will continue to impact activity levels in Q4
and into 2021. The key drivers for the performance of the Group in
the second half of the year will therefore, be the level of
possible "bounce back" within Crestchic, and then later in the
year, for both Crestchic and Tasman, the effect of lower oil prices
and the resilience of demand for natural gas and LNG.
There is no doubt that trading will be adversely affected for
some time due to the economic fallout of the pandemic. However, the
benefit of the Group's strong positive cash flows, proactive cost
control and experienced management team have been well evidenced in
past downturns and we expect this to continue to be the case.
I would like to take the opportunity to thank all our staff for
the efforts they have made to maintain the business for the future
and wish them and their families well.
For further information
Northbridge Industrial Services plc 01283 531645
Eric Hook, Chief Executive Officer
Iwan Phillips, Finance Director
Shore Capital (Nominated Adviser and Broker) 020 7408 4050
Robert Finlay / Antonio Bossi / Henry Willcocks
Buchanan Communications 020 7466 5000
Charles Ryland / Stephanie Watson
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, Brazil 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. It
has also grown by the acquisition of companies in the UK, Dubai,
Australia, Belgium, New Zealand and Singapore and through investing
further in those acquired companies to make them more successful.
Northbridge continues to seek suitable businesses for acquisition
across the world.
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END
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