ISG.L Regulatory News (ISG)

13 Nov 2007 07:01

Interior Services Group PLC13 November 2007 Interior Services Group plc ACQUISITION OF PEARCE GROUP LTD EXPANDS ISG'S REGIONAL CONTRACTING FOOTPRINT AND BRINGS SPECIALISM IN RETAIL ISG is pleased to announce the acquisition of Pearce Group Ltd (Pearce) for aninitial consideration of £12.75m. A further £9m of deferred consideration ispayable dependent on certain performance targets being met over the followingtwo financial years. Pearce is a well established business that complements existing businessesalready operated by ISG. Pearce comprises two divisions: a national foodretailing division, acting on a framework basis for leading retailers such asTesco, M&S, Sainsbury and Asda (£88m revenue) and a leading regionalconstruction business in the West Country and South Wales (£70m revenue). The acquisition of Pearce will: • add a national food retail contracting capability to the banking and non-food focus of ISG's existing retail operations; • expand ISG's existing regional construction coverage from the South, East and North into the West of England and South Wales; and • add to ISG's affordable, social and student housing capability ISG expects important benefits to arise from being able to offer Pearce clientsa national delivery capability through ISG's existing regional constructionoperations particularly for clients in the food retailing sector. In addition,operational improvements are expected from the implementation of ISG BestPractice and Procurement. Colin Forrest, Chief Executive of Pearce, will jointhe ISG Group Managing Directors Operational Board. In the year to 30 April 2007 Pearce reported turnover of £158m and profitsbefore tax of £2m. Net assets at that date stood at £1.7m. At completionPearce has estimated cash balances of £10m. The company's secured work atSeptember 2007 for the year to 30 April 2008 stood at £147m. Pearce head officeis in Bristol and employs 350 staff. In 2007 Pearce was announced as theRegional Construction Firm of the Year at the Construction Industry Awards.Pearce is also a Top 100 Company in the 2007 Sunday Times list of Best Companiesto Work For. The initial consideration will comprise £9.50m in cash and £3.25m in shares(subject to three year lock-in provisions) at a price of 282p. The further £9mof deferred consideration will be satisfied by a mix of 50% cash and 50% shares.ISG will be funding the acquisition from available banking facilities. The transaction is expected to enhance earnings in the current and future years. ISG continues to trade in line with expectations. A further trading update willbe given at the company's AGM, on 17 December 2007. David Lawther, Chief Executive of ISG said: "The acquisition of Pearce is another important step in our strategy tostrengthen each of our businesses and to improve the group's balance andearnings quality. Regional construction will now be a substantial nationalbusiness with strong relationships in the large retail market. The shape of the business is now markedly different from that of two years ago.Since then, to complement the strong organic growth achieved from our marketleading core London based business, we have: • developed a £180m national retail business through Pearce, Cathedral and Dean and Bowes • built a £300m regional construction business with a delivery capability across the country; and • overseas established an international fit out and project management capability with 10 offices in Europe and Asia by acquiring full control from our local JV partners • taken the fee contribution from projects outside the London office fit out and refurbishment market from 36% to 65% of proforma 2007/8 target As well as organic growth, ISG will continue to look for further opportunitiesto strengthen and diversify the business by acquiring strong management teamsand business brands such as Pearce". Date: 13 November 2007For further information please contact: Interior Services Group PLCDavid Lawther, Chief Executive 020 7392 5307Jonathan Houlton, Group Finance Director 020 7392 4905Web: www.isgplc.com College HillMatthew Smallwood 020 7457 2020 About Pearce Group Limited Established in 1922 Pearce Group Ltd was a listed company until 1985 when it wasacquired by Crest Nicholson. In 2003 it was bought out from Crest Nicholsonthrough an MBO. Pearce Group Ltd's retail division acts for the UK's leading food retailers suchas Tesco, M&S, Sainsbury and Asda typically under long term frameworkagreements. Independent research conducted for ISG has identified a number ofUK food retailers planning to invest significant amounts on their retail estatesover the next 5 years - either by building new units or on upgrading theirexisting portfolio. Pearce Group Ltd is well placed to benefit from these capexprograms. Pearce Group Ltd has a significant track record of operating in the West Countryand South Wales over many years. In particular the regional division has atrack record of procuring industrial and education facilities as well as inleisure. The division has also made important inroads into providing new buildaffordable housing and refurbishing student accommodation in the region. Majorcommercial clients in the region include Rolls-Royce, Gerber Juice, Esporta andClarks Shoes; and the MoD, Aspire Defence, Sovereign, Source and localauthorities and colleges in the defence, housing and education sectors. This information is provided by RNS The company news service from the London Stock Exchange