In its audited results for the year ended 31 December 2020, Northbridge Industrial Services (NBI ) said it has delivered “robust results in what has been a year of unprecedented challenge.”
The industrial services and rental company, which stated that its results are in line with market expectations, reported a revenue increase of 1.1% to £34m from £33.6m in 2019.
While hire sales were down 7.9%, primarily due to impact of the COVID-19 pandemic, equipment sales increased by 16.9% with data centres coming out particularly strong with 22% of total equipment sales now coming from its power reliability division, Crestchic.
Northbridge said it had entered 2021 with new year record orders for the sale of Crestchic products and signs of strengthening rental pipelines across both of its operating divisions.
The Group has benefited from growth in two sectors that have either been relatively unaffected by the pandemic or even benefited from it: renewable energy and data centres.
To meet the expected increase in demand for its products for both outright sales and rentals, the Group said it is now at an advanced stage of planning to enlarge its factory.
It said it expects to break ground on a new building in the second half of 2021 with the new facility scheduled to be up and running in early 2022. Both the extension as well as the reconfigured existing facilities are expected to increase production capacity by some 50%.
The Group reported exceptional profit before tax to be up at £0.4m (2019 £0.3m) despite the challenges of the pandemic. Over the period, the group incurred £7.8m in exceptional impairment of Tasman division intangibles and other assets due to impact of COVID-19.
The Group finished the period with ‘a strong balance sheet’ with net debt down 11.9% to £6.8 m (2019: £7.8m) while net debt to EBITDA ratio decreased to 0.9X (2019: 1.0X).
Following a strategic review, Northbridge appointed advisors to pursue the potential disposal of its Tasman drilling tools division and decided to place its focus on Crestchic.
Looking ahead, the Group said that as the impact of the pandemic diminishes, the Board expects that Tasman will continue to generate cash and return to profitability but added that the disposal of the division will be considered should the Board receive a good offer.
Executive Chairman, Peter Harris said, “It is testament to the swift, decisive decision making of the management team and the commitment of our employees that Northbridge has delivered such robust results in what has been a year of unprecedented challenge.
For the Group to continue to trade profitably and generate cash during the year highlights the strength of our business and ongoing demand for our services, particularly the relevance of our power reliability assets as the global new economy increasingly offers opportunities in areas including data centres, power resilience and clean and renewable energy.”
Outlook
Northbridge told investors that it is renegotiating its banking facilities in order to provide ‘flexible, committed support to fund the ongoing growth and development of the business.’
The Company noted that this process should be completed in the second quarter of 2021.
The Group said it expects growth in revenues and profit growth this year ‘with profit for the first half to be ahead of 2020 and for this to continue during the second half of the year.’
Reasons to NBI
Northbridge Industrial Services is a global provider of specialist industrial equipment. Operating through five major international hubs with a worldwide support network of depots and agents, Northbridge is able to service the global demand for its products.
In December 2020, the Group presented investors with a positive trading update and said the range of near- and medium-term strategic opportunities ‘continues to increase.’
It said Crestchic, its power reliability business, routine testing has remained ‘buoyant’ while two large rental projects, in leisure and utility power support in Europe and the USA, were undertaken. It said Tasman's performance in a market impacted by international travel restrictions and lower energy prices was ‘resilient, and trading will be ahead of FY19.’
There is a renewed sense of urgency from national governments to move quickly to a sustainable Net Zero Carbon by 2050, and this has been enhanced by plans to "build back greener" following Covid-19 and the increasing global focus and regulation on ESG, it said.
The Group highlighted that Crestchic's reliance on customers from the oil and gas industry has decreased naturally over the past five years, as growth in its power reliability markets in advanced economies continues and new services are continually added to its portfolio.
While Crestchic benefits from new opportunities where energy storage battery farms are being integrated into the UK grid and require high voltage load tests, the Group said ‘longer term opportunities are likely to arise when there is a stronger penetration of hydrogen fuel cells into back-up power systems in place of the current reliance on diesel generators.’
Tasman's hire fleet is now predominantly used to drill for gas and geothermal fluids rather than oil and, more recently, for carbon capture projects in its main markets in Australasia.
Its investment in LNG and natural gas, particularly in Australia, is set to rise ‘for the immediately foreseeable future, as it is both a key transitional fuel to replace high carbon content alternatives, and a prime component for "blue"-hydrogen (H2) manufacture.’
The Group acknowledged that substantial investment is now being allocated by national governments globally in order to ‘kick start a move towards a hydrogen-based economy.’
‘A substantial proportion of the future capital investment of the Group is now targeted towards increasing revenue in these high growth markets related to power reliability where there are longer-term opportunities with higher returns on capital,’ the Company outlined to investors.
For more news and updates on Northbridge Industrial Services: