Global was originally known as MOS International and floated on AIM in 2001. After a period of poor performance and increasing losses, Wood took control in the autumn of 2003. He restructured the company and then set about acquiring businesses in order to build the group into a more significant operation. The upturn in oil exploration activity has helped to accelerate the improvement in Global’s fortunes.

As a result of the acquisition activity Global now has two divisions. Patriot supplies handling equipment to the offshore oil and gas industry, while NIM supplies handling and marine access equipment to the oil and marine sectors.

Patriot absorbed the MOS business and it is 83 per cent owned by Global – the minority shares are traded in the US. Over two decades it has developed a wide product range for the oilfield services market. Oilfield operators are using equipment that can perform a range of tasks in order to reduce costs and increase efficiency. Although typical orders are up to $2 million, Patriot can provide much higher value packages of equipment.

Newcastle-based NIM manufactures winches, hoists, pipe handling equipment and marine access hatches. It has sales offices in China, India and the Middle East. As well as increased activity in the offshore oil sector there is also improving demand from the refining, construction, telecoms and defence sectors.

A strong order book

The order book was worth just over £19 million at the end of March. Patriot accounted for £16 million and NIM for just over £3 million. Four-fifths of this order book is due for delivery in this financial year where forecast turnover is £20 million. There are another £26 million of potential orders across the group although it is difficult to assess what percentage of these could be won.

Global is gaining market share but it is so small that it hardly registers on the competition’s radar. Patriot is number three in its markets but it is a long way behind National Oilwell Varco and Maritime Hydraulics. NIM has half-a-dozen rivals.

Global has estimated net cash of £250,000 thanks to share issues last year. This year it should be able to finance its rapid growth and generate a small amount of cash. The appointment of a full-time finance director will help improve cash collection.

Delays meant that Global didn’t complete all the work it expected to in the year to March 2006. This work has slipped into this financial year. Analysts forecast profits of around £2 million for this year. At 24.75p, the shares are trading on less than six times earnings for the year to March 2007. That is a fraction of the rating of other quoted oil services companies.

Proof of progress

Global shares are lowly rated because the company needs to show that it is making progress in order to rebuild investor confidence. It hasn’t made a profit since it floated on AIM so if it delivers the earnings expected by analysts this year, a change in perception of its prospects should materialise.

The shares have started to edge up in the past month. The figures for the year to March 2006 are due to be published at the end of June. They will show a loss of just over £1 million but will also provide an opportunity to update the order books.

At this stage there is still a risk that Global won’t meet expectations but, having disappointed before, management understands that it has got to at least achieve the targets that have been set. If the order book continues to grow then it is conceivable that Global could do even better than expected. Speculative buy.