The combined trading and strategic update from Northbridge reports progress across several areas. Trading for FY21 was in-line with upwardly revised profit expectations, cash flow remained healthy, and the new year has started positively. In addition, the Group has exchanged contracts to dispose of most of its Tasman division, with just its Middle Eastern operations remaining and related write-downs unchanged versus prior expectations.
Trading in the year to December was strong, with revenues improving 14% overall and by 20% y-o-y within Crestchic. The combination of continued recovery from the pandemic, a return of large project work (highlighting confidence in markets), and continued growth within datacentre and energy markets drove the top-line.
FY22 to date has witnessed the agreements to dispose of the bulk of the non-core oil drilling tools division, Tasman, with the operations in the Middle East remaining for now. The operations in Australia and New Zealand, the ‘crown jewels’ of the division, should generate consideration of £4.1m. The proceeds will be invested in the expansion of Crestchic, where the return on investment has been consistently higher.
We are encouraged by this update. Our fair value calculation is for now conservatively held at 189p / share as we await confirmation of the strong start to trading this year continuing.
