Interim Results

27 September 2018

Northbridge Industrial Services Plc

("Northbridge" or the "Group")

Improved Performance Continues

Unaudited Interim Results for the six months ended 30 June 2018

Northbridge, the industrial services and rental company, today announces its unaudited interim results for the six-month period ended 30 June 2018.

Highlights

· Group revenue up 4.5% to £12.6 million (2017: £12.0 million)

· Gross profit increased by 11.5% to £5.0 million (2017: £4.5 million)

· EBITDA up materially by 24.3% to £1.8 million (2017: £1.4 million)

· Significantly increased cash generation from operations of £1.9 million (2017: £0.6 million)

· Reduced operating loss of £1.2 million (2017: £2.0 million)

· Issue of £4 million convertible loan notes on 12 April 2018

· Net debt reduced substantially to £6.2 million (£9.5 million at 30 June 2017; £8.7 million at 31 December 2017)

· Placing of 2 million shares at 125 pence which raised £2.4 million after expenses

· Final £1.1 million paid for deferred consideration on the acquisition of Tasman New Zealand in September 2014

· Improving conditions in the drilling tool market, with rental revenue up 19% year on year

Commenting on the results and the outlook, Eric Hook, Chief Executive of Northbridge, said:

 "We are very pleased to see that improved sentiment in the oil and gas markets has begun to translate into increased activity in our oil tool rental division, Tasman, providing sufficient confidence to invest selectively in our hire fleet for the first time in four years in order to supply contracts won in Malaysia and Australia. Crestchic, our power reliability side of the business, continued to show a resilient performance, with growth being achieved in particular within the rental division.

"Having raised further capital and refinanced our debt during the first six months, we have a strong balance sheet which leaves Northbridge securely positioned. We look forward to a successful second half of the year and remain confident for the long-term prospects for the business."

For further information

About Northbridge:

Northbridge Industrial Services plc hires and sells specialist industrial equipment. With offices or agents in the UK, USA, Dubai, Belgium, Germany, France, Australia, New Zealand, Singapore, China, Brazil and South Korea, Northbridge has a global customer base. This includes utility companies, the oil and gas sector, shipping, banking, mining, construction and the public sector. The product range includes loadbanks, transformers and oil 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, by the acquisition of companies in the UK, Dubai, Australia, Belgium, New Zealand and Singapore and through investing further in those acquired companies to make them more successful. Northbridge continues to seek suitable businesses for acquisition across the world.

Chairman's statement

We are pleased to present our unaudited interim results for the six-month period to 30 June 2018.

As stated in the trading update issued on 2 August 2018, improvement in sentiment in the oil and gas market has continued and begun to be evidenced in increased activity in our rental businesses of Tasman Oil Tools ("Tasman"). As we also commented at the AGM in May, we felt confident enough in the future of Tasman to selectively invest further capital in our hire fleet for the first time in four years. This was specifically to meet new contracts won in Malaysia and Australia, which in turn will benefit the second half of 2018.

The power reliability business of Crestchic Loadbanks ("Crestchic") continued to be resilient, with its European division showing encouraging growth in rental, supported by a successful project in Russia for the World Cup.

Having taken the opportunity to refinance our debt and to raise further equity during the six-month period under review, our gearing has been reduced substantially and our balance sheet considerably strengthened.

The two core activities, Crestchic Loadbanks and Tasman Oil Tools, both have good opportunities to grow their businesses into an ever-growing power reliability market and a recovering oil and gas industry.

Crestchic is a specialist provider of electrical equipment which is used primarily to commission, test and service independent power plants. It has a strong position in the power reliability market, particularly in Western economies. In addition, it also provides loadbanks and transformers for testing large power projects across the globe, typically in shipyards, oil refineries and mines. Crestchic has a manufacturing base in Burton on Trent in the UK, and sells, services and rents its equipment from its depots in the UK, Europe, the Middle East, Singapore, China and the USA.

Tasman Oil Tools is a "down hole" tool rental specialist, which rents equipment to the Oil & Gas and Geothermal industries from its depots in Australia, New Zealand and the Middle East, and through a recently established Joint Venture with Olio Resources in Malaysia.

Financial results

Northbridge's revenue for the half year ended 30 June 2018 totalled £12.6 million (2017: £12.0 million) with gross profits of £5.0 million (2017: £4.6 million). Oil tool revenues and gross profit were £2.8 million and £0.4 million respectively (2017: £2.6 million and £0.1 million). Group losses before tax were significantly reduced to £1.5 million (2017: £2.4 million). There were no exceptional charges in the first six-month period of 2018 (2017: Nil).

Net assets at 30 June 2018 were £36.2 million (31 December 2017: £35.7 million). The basic and diluted loss per share (LPS) was 5.7 pence (2017: 8.9 pence). Net assets per share were £1.29 (31 December 2017: £1.38) and EBITDA per share increased to 6.3 pence for the period (2017: 5.5 pence).

Financing and cash flow

Cash flow during the period continued to be positive and showed a marked improvement on last year, despite the continued slow market conditions in the period. Cash flow from operating activities was £1.9 million (2017: £0.6 million).

Capital expenditure on the hire fleet remained unchanged at £0.2 million (2017: £0.2 million).

Earnings before interest, taxation, depreciation and amortisation (EBITDA) and before exceptional costs in the first six months of 2018 were £1.8 million (2017: £1.4 million). Depreciation and amortisation in the period totalled £3.0 million (2017: £3.5 million), of which depreciation alone was £2.6 million (2017: £3.1 million).

Debt repayments and issue of new equity

During the period, the Group issued a convertible loan note for £4.0 million carrying a fixed interest rate of 8%. This, in conjunction with the early renewal of our banking facilities with our senior lender, Royal Bank of Scotland ("RBS"), enabled the group to consolidate future bank funding solely with the RBS Group, fully repaying KBC Bank in the process, and to reduce capital repayments, which in turn, allows for further investment into the recovering market. The loan notes are convertible into ordinary 10p shares in Northbridge at the discretion of the bond holders at a conversion price of 125p.

Additionally, on 20 June 2018 the company announced a placing of a further 2 million shares to raise £2.5 million in new equity. Approximately £1.05 million of the proceeds from the placing was used to pay the outstanding deferred consideration due to the vendor of the Tasman Oil Tools companies in New Zealand.

The placing of new equity and improved operating cashflow has enabled gearing to be reduced to 17.1% (30 June 2017: 24.5%) and the half year closing cash balances were £3.9 million and net debt was £6.2m.

Dividends

No interim dividend is being declared for 2018 (2017: Nil).

Operations

Crestchic loadbanks and transformers

The electrical equipment business of Northbridge, manufactures, sells and rents loadbanks and transformers, and supplies two main markets. Firstly, the developed world, where it is focussed on supporting the power reliability and power security markets and increasingly renewables; and secondly, emerging markets (EM), where it is mostly focussed on resources related businesses, typically oil and gas facilities and mines, as well as shipyards,

Total turnover during the period was £9.8 million (2017: £9.5 million) and gross profit was £4.6 million (2017: £4.5 million). Underlying this performance was a change in revenue mix, with a recovery in the higher margin rental activity to £5.9 million (2017: £5.2 million). Sales of manufactured units were down on the previous year at £3.9 million (2017: £4.3 million) and represents a continuation of the slow demand from EM for Crestchic's products. There is evidence that these markets for our products, which have traditionally been strong, will return to growth over the medium term.

Rental in the UK and Western Europe continued to perform well, and the contract to supply the FIFA World Cup stadiums helped rental revenue during the period. The new venture in the USA continued its progress and is expected to provide a long-term growth opportunity for Crestchic. Relocation of underutilised equipment from the Asia-Pacific region has doubled our fleet size in North America at minimal cost.

The continuing growth in data centres throughout Western Europe has given Northbridge two additional opportunities, firstly, in heat load management, by using loadbanks to simulate the heat from computer servers, and then, secondly, managing and proving the backup power sources. Investments in this type of "big data" facilities is likely to grow for many years to come providing ongoing demand for our equipment.

The more recent growth in renewable power generation in advanced economies is continuing to gather pace and has created new markets for our equipment and services. This also represents another long-term growth opportunity for the company, and we are currently supporting this growth through the further technical development of our products.

Tasman Oil Tools

Our oil tool rental operations in Australia, New Zealand and the Middle East, which suffered heavily during the downturn in the oil market over the last 3 years, have shown signs of recovery. Total revenue in the six months was £2.8 million (2017: £2.6 million). Rental, on its own during the period was up 19% to £2.5 million (2017: £2.1 million). Within this, Australia, achieved an increase in revenue of 96.5% to £1.2 million (2017: £0.6 million) and we have been able to support this growth with further capital expenditure for specific contracts.

During the period, volumes still remained too low in aggregate to make a material difference to our overall profitability, but we are encouraged that these are moving in the right direction. Rental rates remain depressed and are expected to take some time to recover to previous levels. The relative stability in crude oil prices currently being experienced by the industry we believe will, in the longer term, encourage further exploration and production. By maintaining our infrastructure and hire fleet whilst cutting costs, we have put the company in a strong position for when market demand recovers more significantly.

The Joint Venture in Malaysia with our local partner, Olio Resources SDN BHD, started trading well during the six months. Early results are encouraging, and the proportion of revenue generated by our own oil tools is beginning to increase. Further modest capital expenditure will ensure this momentum continues. The JV's revenue for the first 6 months was RM3.9 million (£0.7 million) and the after-tax loss consolidated in these accounts was £0.1 million.

Outlook

The sentiment in the Oil & Gas industry has continued to improve and this is beginning to translate into increased activity in exploration and production. With a strengthened balance sheet and additional resources, we believe that we have weathered the worst of the down turn and look forward to the future with more optimism. We are now in a position to invest judiciously into growth areas of our business, and the outlook remains in line with expectations.

Peter Harris

Chairman

27 September 2018

Consolidated statement of comprehensive income

For the six months ended 30 June 2018

All amounts relate to continuing operations.

Consolidated balance sheet

As at 30 June 2018

Consolidated cash flow statement

For the six months ended 30 June 2018

Notes to the unaudited interim statements

For the six months ended 30 June 2018

1. Basis of preparation

This interim report has been prepared in accordance with the accounting policies disclosed in the full statutory accounts for the year ended 31 December 2017.

These policies are in accordance with International Financial Reporting Standards and International Accounting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board, as endorsed for use in the European Union, that are expected to be applicable for the year ending 31 December 2018.

The Group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim consolidated financial information.

The financial information in this statement relating to the six months ended 30 June 2018 and the six months ended 30 June 2017 has not been audited.

The financial information for the year ended 31 December 2017 does not constitute the full statutory accounts for that period. The annual report and financial statements for 2017 has been filed with the Registrar of Companies.

The Independent Auditor's Report on the annual report and financial statement for 2017 was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

The interim report for the period ended 30 June 2018 was approved by the Board of Directors on 27 September 2018.

2. Earnings per share

The earnings per share figure has been calculated by dividing the loss after taxation, £1,472,000 (2017: £2,308,000), by the weighted average number of shares in issue, 25,999,050 (2017: 25,899,602).

The diluted earnings per share assumes all share options are exercised at the start of the period or, if later, the date of issue of the share options. This had no effect on the weighted average number of shares in issue (2017: nil). At the end of the period, the Company had in issue 1,819,451 (2017: 1,594,451) share options which have not been included in the calculation of the diluted earnings per share because their effects are anti-dilutive, although these share options could be dilutive in the future.

3. Dividends

No interim dividend (2017: nil) will be paid to shareholders.

4. Interim report

Copies of the interim report are being sent to all shareholders and are available to the public from the offices of Northbridge Industrial Services plc at Second Avenue, Centrum 100, Burton-on-Trent, Staffordshire DE14 2WF. The interim report and the interim announcement will also be available from the Group's website at www.northbridgegroup.co.uk.