Falling oil prices blamed for significant losses at Northbridge

STOKE-on-Trent industrial services and rental company, Northbridge, has revealed the full extent the decline in the oil and gas sector has had on its finances.

The market had been braced for a tough statement and it was not disappointed.

For the full year to December 31, 2015 the company made a pre-tax loss of £8.6m (2014: profit of £6.3m) – the figure includes exceptional costs of £7.2m (2014: £0.7m).

Group revenue was down 24% to £34.1m (2014: £44.9m), and the basic loss per share was 44.3p (2014: earnings per share of 28.8p).

Eric Hook, Northbridge CEO, said: “The dramatic fall in the price of oil during 2015 was the single biggest event to impact Northbridge’s trading performance. Our rental operations in Australia, New Zealand, the Middle East and the Asia Pacific region bore the brunt of the decline in demand for drilling tools and load testing equipment focused towards the oil and gas sector.

“Rental is the most profitable and cash generative part of Northbridge and with high operational gearing; a decline in this income stream disproportionately affects profit and cash flow.”

The company has launched a share placing as it looks to raise between £4.0m and £4.5m. In addition, a further £1.1m is expected to be raised by way of an underwritten open offer to existing shareholders on the basis of two new ordinary shares for every 25 existing ordinary shares.

The placing is intended to strengthen the balance sheet to support growth going forward.