Northbridge, the industrial services and rental company, is pleased to issue the following pre-close trading statement in advance of its results announcement for the year ended 31 December 2018, which is scheduled to be released during the week commencing 8 April 2019.
Recent trading has continued to achieve an improved performance since last year and has been consistent with the Group’s forecasts. Consequently, the Group expects the results for the full year ended 31 December 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, sells 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.
Crestchic- Electrical power reliability
The UK and European activities of Crestchic continue to perform well and be resilient to market conditions, and rental revenue has shown some improvement during 2018. Looking forward, new markets in the USA and the growth of renewable power generation in developed economies, is providing further long-term growth opportunities for Crestchic. The US operation, which we started in 2016, has continued to grow and both its rental and sales revenues have increased. Our other overseas markets for power projects, principally relating to natural resources and shipyards, have begun to show some signs of renewed activity and Northbridge is hopeful that this will continue into 2019, as the recovery in the energy market continues. Crestchic has started 2019 with its largest ever new year order book for the sale of manufactured equipment.
Tasman – Drilling tool rental
The improvement in sentiment in the oil and gas market experienced during the first half of 2018 continued into the second half. Activity levels in our rental business of Tasman Oil Tools (“Tasman”) continued to improve. Year-on-year revenues are now showing significant gains in large parts of our market, albeit from a low base. Following the modest amount of capital investment in the hire fleet during the second half, the Group was pleased to complete a significant purchase of hire fleet assets following the liquidation of a competitor in the Asia Pacific region. US$3.8m (£3.0m) has been paid to date out of a maximum consideration of $4.0m (£3.1m). A proportion of these oil tools were on cross- hire to Tasman’s JV in Malaysia and a significant cost saving was made when these tools were brought into our ownership. Further of these assets have now been deployed into Tasman rental contracts in Australia and New Zealand. Additional customers have also been introduced in Singapore, Thailand and Vietnam. Funding for the acquisition was provided from existing cash resources (raised from the Group’s equity placing in June 2018) and a £1.5 million increase in the Group’s current loan facility with RBS. This should reduce the need for substantial further capital investment as the recovery gathers pace.
The equity placing earlier in 2018 reduced gearing and strengthened the Group’s balance sheet noticeably, even allowing for the acquisition of the hire fleet above. Trading cash flow has also begun to improve and, alongside the fundraising, has put the Group in a strong position for the future. We are more confident in the resilience of the recovery in our markets, despite the recent dips in the oil price, and we expect further good progress to be made during 2019.