TIDMNBI
RNS Number : 9132B
Northbridge Industrial Services PLC
15 June 2021
15 June 2021
Northbridge Industrial Services Plc.
("Northbridge", the "Company" or the "Group")
AGM & Strategic Update
New Banking Facility & Loan Note Repayment
Northbridge Industrial Services Plc, the industrial services and
rental company, today issues the following trading and strategic
update, ahead of its Annual General Meeting which will be held
today at 1.00 p.m. at the Group's head office in Burton on
Trent.
Trading update
As previously noted in the full year results announcement on 13
April 2021, Crestchic, the Group's Power Reliability business,
began the year with a record order book for manufactured equipment.
Ongoing order levels have remained in line with expectations and
encouragingly it is expected that the factory will remain at full
capacity through the year.
Crestchic hire revenue for the first half of 2021 will be
significantly ahead of the COVID-affected first half of 2020 with
revenue in the Far East particularly strong in the first quarter
before revenue in the US, Europe and the Middle East also picked up
strongly in the second quarter.
Activity has been encouraging across all sectors, with data
centres remaining a key and growing area and marine rebounding well
after a subdued 2020. Opportunities are continuing to emerge in the
related areas of renewables and grid resilience.
Although the Group plans to pass on most of the cost increases
seen from the rise in commodity and shipping prices, the supply
chain disruption experienced in 2020 is continuing to slightly
affect margins as a consequence of extended assembly times.
Visibility for the second half is growing with trading set to
continue in this positive vein well into the third quarter.
Trading at Tasman, the Group's Drilling Tools business, has
remained resilient during the first half. COVID-related
difficulties in moving people and equipment around the world and
out to rigs remain a barrier to a recovery in activity but the
trading environment is expected to improve in the second half of
the year, particularly in gas-related activity in Australia.
Overall, the Group's half year revenue and pre-exceptional
pre-tax profit will be significantly ahead of 2020 and the Group
remains firmly on course to meet full year management
expectations.
New banking facilities and settlement of the convertible loan
notes
It is a pleasure to today announce a GBP10 million full
refinancing with HSBC. The Board is delighted to begin what is
expected to be a long and successful relationship and would like to
thank the HSBC team for a professional and swift re-financing
process.
The new facilities are more cost-effective, larger and simpler
than our current facilities. This, together with the global reach
and capabilities of HSBC, will enable us to deliver on our
strategic objectives, which include the construction of the
additional factory building in Burton.
These new facilities have also already enabled us to offer to
redeem the Group's GBP4 million convertible loan notes, the
interest rate on which was set to rise to 10% on 1 July 2021. The
Company is pleased to confirm that all bondholders have responded
to our offer and that they requested that GBP3,056,938 of the loan
notes to be repaid in cash and GBP943,062 to be converted into
Ordinary Shares in the Company.
As per the original terms of the loan notes, the redemption is
subject to a 25% early redemption premium and a total redemption
payment of GBP3,821,172.50 will be made today. The early redemption
penalty included of GBP764,234.50 will be disclosed as an
exceptional interest cost in the half year report.
The conversion of GBP943,062 of the loan notes at the exercise
price of 90 pence per share will see 1,047,848 new ordinary shares
issued. An application to AIM to issue these new shares has been
made and admission is expected to occur on 18 June 2021
("Admission").
The Board is pleased with the outcome of the process of settling
the loan notes. The level of conversion shows confidence in the
Company's strategic direction whilst the redemption allows us to
minimise dilution and maintain a prudent level of gearing. The
refinancing, together with the conversion and the redemption of the
loan notes, will result in a substantial reduction in our ongoing
interest costs. The Board would also like to place on record its
thanks to NatWest for all of their help over the past six
years.
Strategic update
Today, the retirement of Ash Mehta marks the conclusion of the
reshaping of the Board as the Group sets out on its journey of
transformation and the new team is already working smoothly
together. Combining the roles of Chairman and Chief Executive,
together with the promotion of Chris Caldwell to the Board, has not
only reduced costs but also clarified and speeded up decision
making. To support the executive team, Stephen Yapp has taken on
the responsibilities of Senior Independent Director. Judith
Aldersey-Williams retains her responsibilities for Governance and
Risk and has taken over from Ash as Chair of the Audit Committee.
The Board is comforted that Ash has agreed to be retained for the
rest of the year in an advisory capacity to assist in a smooth
transfer of responsibilities and thanks him for the exceptional
contribution that he has made to the Board during his fourteen
years of service.
We are also pleased to announce, following consultation with
major shareholders and the receipt of a fairness opinion from our
broker and NOMAD, Shore Capital, the successful implementation of a
long term incentive plan which we believe will support the
retention of key executives and officers and their alignment to the
creation of significant shareholder value over the three year life
of the plan.
Planning permission has now been received for the construction
of a third building at the site of our head office, factory and
hire facility in Burton upon Trent. Construction contracts are out
at tender and we intend to break ground in the third quarter of
2021 with an anticipated completion date in the first half of 2022.
The new facility will add a much needed 50% to our production
capacity and can be further expanded as and when required for
future growth.
The process to explore the possibility of the divestment of our
Tasman drilling tools division is proceeding on timetable and we
are currently assessing the non-binding indicative offers received
to date. We remain hopeful that a divestment at a fair value will
be achieved this year but, should this not be possible, are
developing contingency plans to improve the profitability of the
business should we consider it to be in the interests of
shareholders to continue to own the business for the time
being.
Northbridge is firmly on track to meet management expectations
for the half and full year in 2021 and to build on the strong
position of the Crestchic Power Reliability business. Growth will
continue to come both from established and emerging business
sectors, notably data centres and renewables/resilience and through
opportunities for further market penetration, particularly in
continental Europe and the USA.
Total voting rights
Following Admission, the Company's issued share capital will
comprise 29,281,259 Ordinary Shares, including 215,150 Ordinary
Shares held in treasury.
Therefore, the figure of 29,066,109 Ordinary Shares should be
used by shareholders in the Company as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change in their interest in, the
share capital of the Company under the FCA's Disclosure Guidance
and Transparency Rules.
-Ends-
For further information
Northbridge Industrial Services Plc
01283 531645
Peter Harris, Executive Chairman
Iwan Phillips, Finance Director
Shore Capital (Nominated Adviser and Broker) 020 7408 4050
Robert Finlay / David Coaten / 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 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.
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