Northbridge Industrial Services Plc (LON:NBI), the industrial services and rental company, today issued the following trading update for the period 1 January 2019 to 31 May 2019, ahead of its Annual General Meeting to be held later today at 12.00 noon.
As the Group noted in its results announcement on 11 April 2019, sentiment in the oil and gas industry has continued to improve, following the stabilisation in the crude oil price over the last 12 months. This has been most apparent in the Group’s Tasman Oil Tools operations in Australia and surrounding areas where revenues have continued to recover. As a result of this, we have continued to invest in the sector and our acquisition of a competitor’s hire fleet, which was completed earlier in the year, accelerated the process. Whilst activities have begun to increase, rental rates still remain at low levels and will take more time to recover.
Other areas of Northbridge’s activities have also shown signs of recovery, most notably Crestchic Loadbanks, which is seeing some improvement in sales and rental in the oil, gas and marine markets, which had suffered in the downturn. Its traditional power reliability market continues to perform well and it is active in the data centre and renewables sectors, both of which continue to grow.
Northbridge’s business model is focused strongly towards rental of equipment and therefore the Group has high operational gearing, which is coupled with a strong cash flow and a conservative depreciation policy. As the momentum of the recovery increases, this operational gearing will begin to benefit an increasing cash flow. At the end of April 2019 we have already seen a 78% increase to £5.7 million (April 2018: £3.2 million) in the 12 month trailing EBITDA. The equivalent figure at 31 December 2018 was £4.6 million.
Northbridge’s balance sheet remains strong and the Group has a substantial portfolio of rental assets which are readily available for deployment. We have cash available to invest in growing the hire fleet to take advantage of further opportunities and are confident that current trading will justify that investment.
