ICR chief says firm’s international expansion a ‘success story’

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ICR Integrity’s boss said yesterday that the energy services firm’s international expansion was a “success story” and predicted higher earnings this year.

Chief executive Bill Bayliss said the decision to take the Aberdeen business to overseas markets was “paying dividends” at a time of persistent “pricing pressure” in the UK.

Mr Bayliss said the North Sea was “still recovering” from the downturn and that pressure on costs was unlikely to ease before the end of this year.

But he is hopeful that the crude prices will remain at current levels, and that the plump profits being recorded by operators will start flowing into the supply chain.

The businessman said oil companies had started tackling maintenance backlogs, but warned there would be a “lag” before the increased activity reached the supply chain.

He also thinks the recent entry of private-equity backed exploration and production firms to the North Sea is “very positive”.

Those newcomers are motivated by the desire to keep North Sea fields running for longer, pushing decommissioning further into the future.

Mr Bayliss said the US market was buoyant and that pricing pressure was less severe in Australian and the Middle East.

ICR − a provider of maintenance and integrity services to the oil and gas, power, chemical, nuclear and defence sectors – is “gaining traction” in those markets, Mr Bayliss said.

The company unveiled offices in Houston in April 2018, having celebrated the official opening of its new headquarters at Aberdeen Energy Park a month earlier.

Its other bases are in Kendal, Stavanger, Abu Dhabi and Perth, Australia.

Mr Bayliss said ICR had “done the right thing” by investing in “internationalisation” during a tough period of low oil prices and declining activity.

The firm has also spent cash on developing products, including fire retardant composite wraps, pipework leak seals, solar powered chemical injection pumps and inspection software.

ICR took on a number of engineering graduates from Robert Gordon University to help with research and development.

Mr Bayliss predicted that “shortages of people” in certain parts of the oil and gas industry would lead to inflation as demand for services increases.

He said: “We took risks during the downturn, but recognised that would pay dividends as market improved and we internationalised.”

ICR underwent a “corporate simplification process” in 2017-18, which involved the consolidation of various subsidiaries.

The company recorded earnings before interest, tax, depreciation and amortisation (Ebitda) of £8.7 million in the 12 months to May 31, 2018, up from £7.1m a year earlier.

Mr Bayliss said he was “confident” that figure would increase during the current financial year.

Turnover edged 3.6% higher to £28.2m in 2017-18, while pre-tax losses narrowed to £10.9m from £14.2m.

ICR was formed in July 2011, when venture capital firm Gresham Private Equity and HSBC backed a secondary buyout of Bridge of Don-based WTR from Maven Capital in a deal reported to be worth £15m.

Gresham later sold a majority stake to mid-market private equity firm Graphite Capital in a transaction thought to be worth up to £60m, including debt.

ICR’s latest accounts – published by Companies House − showed that the business had a “deficit within shareholders’ funds” of £65.3m.

In his strategic report, Mr Bayliss said the group was “resilient” and would generate enough cashflow to “service borrowings and meet financial covenants for at least the next 12 months”.

Furthermore, majority shareholder Graphite is prepared to support the group for the “foreseeable future”, he said.

Mr Bayliss, a former chief executive of Viking Seatech, said yesterday that ICR’s relationship with Graphite was “excellent”.

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