PTSG.L Regulatory News (PTSG)

29 September 2015

Premier Technical Services Group PLC

("PTSG" or the "Group")

AIM: PTSG

Interim results

Premier Technical Services Group PLC ("PTSG", the "Group"), the niche specialist services provider, announces its interim results for the six months ended 30 June 2015.

Key highlights

· Group revenue up 40% to £11.7m (2014: £8.4m)

· Gross profit up 27% to £6.4m (2014: £5.0m)

· Operating profit* up 30% to £2.4m (2014: 1.8m)

· Adjusted EPS 2.21p

· Interim dividend of 0.46p per share

· Expansion into steeplejacking via acquisition of Pendrich and NATHS

· Renewal rates of 85%

· Admission to AIM in February 2015 raising £5.0m in new funds

* before adjusting items and on a consistent basis

John Foley, Chairman of Premier Technical Services Group PLC commented

"The Group has made a very encouraging start to life as a public company with strong levels of profitable organic growth seen across our service offerings."

Enquiries:

About PTSG - www.ptsg.co.uk 

Chairman's statement

Overview of results

PTSG's results for the six months ended 30 June 2015 show very strong levels of profitable organic growth.

We were formally admitted to AIM on 11 February 2015 as a result of a successful IPO process which raised £5m of new funds for the Group and it is pleasing to produce a set of results to new shareholders which demonstrate that the IPO process has not distracted management from its central task of executing the Group's clear growth strategy. The progress made in the first six months of 2015 enables the Board to declare an interim dividend of 0.46p a share, amounting to £0.4m. The interim dividend will be paid on 30 October to shareholders on the register on 9 October.

Turnover increased by 40% to £11.74m (30 June 2014: £8.4m). Gross profit increased by 27% to £6.39m (30 June 2014: £5.03m); EBIT increased by 30% to £2.4m (30 June 2014: £1.84m); underlying profit before tax before adjusting items increased by 20% to £2.35m (30 June 2014: £1.95m). Net debt at 30 June 2015 was £1.62m (31 December 2014: £5.0m). Adjusted EPS was 2.21p.

Profit before taxation after adjusting items was £0.7m. Adjusting items of £1.65m principally included share-based payments, deferred consideration payable to previous businesses owners who remain as PTSG employees and IPO costs. Fully diluted EPS (after adjusting items) was 0.28p.

Acquisition

We completed the acquisition of Pendrich Height Services and NATHS on 12 June 2015 for an initial cash consideration of £0.2m. Further consideration of a maximum of £1.74m payable over a three year period in cash or shares (at PTSG's option) will be self funded from the after tax profits of the acquired businesses. These acquisitions expand the Group's Electrical Services offering and enable us to offer a national steeplejacking offering to customers.

Operational highlights

Substantial progress has been made in 2015 at an operational level with the strengthening of the management team with appropriate external appointments and internal promotions. Further investment has been made in the Group's proprietary internal systems so that we can handle the increasing volume of low value transactions that is a feature of our business.

The organic growth achieved so far in 2015 has been particularly impressive in our Electrical Services division but all areas of the Group performed well. The opportunity to develop multi skill offerings to customers has been grasped during 2015 with the signing of a number of framework contracts with major FM customers. The integration of Pendrich and NATHS is ongoing and performance is in line with plan.

Strategy

PTSG is a niche specialist services provider and offers customers a broad range of specialist services on a national basis. We have a tried and tested business model which is introduced into carefully selected acquisition targets.

We chose to become a publicly quoted company in order to accelerate our growth plans. We have identified a number of acquisition targets which can broaden the Group's service offerings at sensible entrance prices. 

Outlook

The Group has made a very encouraging start to life as a public company with strong levels of profitable organic growth seen across our service offerings. This positive momentum means that we expect to exceed our pre IPO expectations in 2016 and beyond. We face the future with confidence and are excited about the growth opportunities which are available to us.

JR Foley

Chairman

Chief Executive's report

Overview

The start to 2015 has been a positive one. Top line performance has seen turnover increase by 40% to £11.7m (2014: £8.4m) and operating profits before adjusting items and on a consistent basis increasing by 30% to £2.4m (2014: £1.8m) driven by robust EBIT margins which remain consistently high at 21.2%. This is a reflection of the specialist and skilled nature of our activities and of the diversification of the Group as a whole.

Strong focus remains on cost control and operating profit, whilst remaining competitive on prices in all areas. We completed the acquisitions of Pendrich Height Services Ltd and NATHS Ltd in June.

We have also delivered strong organic growth across the Group - most notably in Electrical Services where revenue grew by 42% and adjusted operating profit by 34%.

It was also pleasing to see Access and Safety return to positive growth of 5% (H2 2014: -1%).

Our Niche specialist services are sold on a recurring basis under contract to a retained customer base. We have continued our high client retention figure of over 85% on annual orders driven by the quality of services and our competitive pricing.

Market Environment

Demand for our services is underpinned by regulatory requirements around the installation, maintenance and testing of access and safety systems, lightning protection and electrical equipment, as well as insurance compliance requirements, and general repair and maintenance.

Many of our customers are streamlining their businesses through supplier rationalisation, moving to single source supply, which is benefiting the Group and is expected to continue in the future.

Strategy

We aim to build our market share in each of our niche services, to markets characterised by high regulation, long-term growth drivers, and non-discretionary spend for customers.

As the UK's market leader in access and safety services and one of the industry's leading lightning protection businesses, we are well-positioned to capitalise on our recent entry into the high level cleaning market, with organic growth and cross selling opportunities.

Our major customers include the US Air Force, Marks & Spencer plc, Royal Bank of Scotland plc, Unite, Sheffield Hallam University, Network Rail, Harrods, Morgan Sindall, Willmott Dixon, Carillion, Barclays, Land Securities, Land Rover and Manchester United plc.

Our strategy is to generate significant shareholder value through organic growth, including cross-selling and complementary acquisitions. Just 5% of customers currently receive multiple lines of service, with considerable scope to improve this and increase profitability.

While we are already a market leader in a number of our operations, we still have a less than 10% share in our principal markets and there is significant scope for growth.

Acquisitions

PTSG has a track record of successfully integrating acquisitions in complementary areas of activity and driving improved operational and financial performance. We are committed to pursuing acquisition opportunities in existing and adjacent markets, with a view to cross-selling services and leveraging our client base. We are attracted to opportunities in our core markets, where owner-managers are interested in playing a role in the enlarged business.

PTSG's first acquisition, National Cradle Maintenance Limited, was in 2007, and was funded by £0.9m of equity from the founders. Since then we have made 12 subsequent acquisitions, at a total consideration of £8.9m, and our most recent acquisition Pendrich was completed in June 2015.

Our in-house acquisitions team considers a strong pipeline of opportunities, including bolt-ons to existing divisions and businesses with activities in new and adjacent sectors. The Board will consider acquisitions that allow the Group to enter attractive new markets where we can leverage our operational and managerial framework; expand existing operations geographically to increase our penetration of the UK market; and grow operations in an existing market and geography, leveraging economies of scale to improve margins.

We have a pipeline of acquisition opportunities which will carry us through 2015, 2016 and 2017. 2015/16 will see further acquisitions in the Access and Safety and Electrical Services divisions.

Divisional results

We have achieved strong levels of organic growth by improving operational processes and efficiencies, reducing costs; being more competitive and establishing new partnerships and relationships.

During 2015 we expect to spend £0.2m on software development to increase productivity, efficiency and reduce costs. We have also signed new supply chain and framework agreements, including Vinci, Norlands, CloudFM and Shepherd FM and renewed our contract with Tubelines.

Access and Safety is the Group's largest and longest established division, and provides maintenance, inspection and testing solutions for the highly-regulated area of "working at height", as well as the design and installation of permanently installed façade access and fall arrest equipment. Contracts often include both the initial installation of access solutions and ongoing maintenance. The majority of clients enter into a contract for a period of three to five years.

The division generated sales of £5.5m and adjusted EBIT of £0.9m for the six months ended 30 June 2015, returning to growth of 5% in the period.

Electrical Services is currently the Group's second largest and fastest growing division, with sales of £4.4m and adjusted EBIT of £1.2m for the six months ended 30 June 2015. The division is an established provider of lightning and surge protection systems, PAT testing and fixed wire testing services. It is involved in both installation services and the maintenance, testing and repair of systems. Following on from the acquisition of Pendrich Height Services Ltd in June 2015, we have added a new offering of Steeplejack services to this division.

Further exciting developments were evident in our High Level Cleaning division. Our 2014 acquisition of Acescott, an established business with expertise in the design and application of cleaning systems for large and complex buildings in July 2014, contributed £0.4m to adjusted operating profits and £1.8m of revenue to the Group for the six months ended 30 June 2015.

High Level Cleaning includes a wide range of specialist cleaning services, from commercial window cleaning to pressure washing of cladding, façades, guttering and rooftops and graffiti and chewing gum removal. Customers' buildings include office blocks, shopping centres, factories and hotels. PTSG has a clear advantage in tailoring projects that require complex access systems to clean and maintain buildings externally with minimal disturbance to the occupiers.

Outlook for 2015/2016

We have made a good start to 2015 and we continue to trade in line with the Board's expectations for the full year. The positive momentum achieved in the first half of 2015 has continued into the remainder of the year and we look forward to continuing the further development of Premier Technical Services Group Plc.

PW Teasdale

Chief Executive Officer

Unaudited Consolidated Income Statement and Statement of Consolidated Income

Unaudited Consolidated Statement of Changes in Equity

Unaudited Consolidated Balance Sheet

As at 30 June 2014 and 2015 and 31 December 2014

Unaudited Consolidated Cash Flow Statement

For the six months ended 30 June 2014 and 2015 and the year ended 31 December 2014

Notes to the Unaudited Financial Information

For the six months ended 30 June 2015

1. General information

Premier Technical Services Group plc (the "Company") is a company incorporated in England and Wales and domiciled in the UK. The address of the registered office is: 13 Flemming Court, Whistler Drive, Castleford, WF10 5HW (registered company number is 06005074). The Company and its subsidiaries (together referred to as the "Group") is a niche specialist service provider whose principal activities are the maintenance, inspection, testing, repair and installation of permanent façade access equipment, fall arrest systems and lightning protection systems together with fixed wire and portable appliance testing.

2. Basis of preparation

The interim financial information for the six month period ended 30 June 2015 has not been audited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim financial information for the period ended 30 June 2014 is also unaudited. The comparative figures for the year ended 31 December 2014 do not constitute full financial statements and have been abridged from the full accounts for the year ended on that date, on which the auditors gave an unqualified report.

This unaudited consolidated interim financial information ("interim financial information") has been prepared on a going concern basis under the historical cost convention and is in accordance with AIM Rule 18 in relation to half year reports.

3. Going concern basis

After making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons they continue to adopt the going concern basis in preparing the interim financial information.

4. Significant accounting policies

In preparing the unaudited Interim Financial Information, the significant accounting policies, critical accounting estimates and judgements, and financial risk management disclosures, are the same as those set out in the 2014 Annual Report and Accounts

5. Segmental analysis

Management has determined the operating segments based on the operating reports reviewed by the Board of Directors that are used to assess both performance and strategic decisions. Management has identified that the Board of Directors is the chief operating decision maker in accordance with the requirements of IFRS 8 "Operating segments".

The Board of Directors considers the business to be split into three main types of business generating revenue; Access and Safety, Electrical Services and High Level Cleaning.

 6. Earnings per share

The calculation of basic earnings per share for the half year to 30 June 2015 was based on the profit attributable to ordinary shareholders of £236,094 (six months ended June 2014: £1,212,053; year ended 31 December 2014: £532,040) and a weighted average number of Ordinary Shares in issue of 84,519,233 (six months ended 30 June 2014: 77,142,800; year ended 31 December 2014: 77,142,800).

The calculation of adjusted earnings per share for the half year to 30 June 2015 was based on the profit before adjusting items of £1,864,388 (six months ended 30 June 2014: £1,565,118; year ended 31 December 2014: £2,907,618) and a weighted average number of Ordinary Shares in issue of 84,519,233 (six months ended 30 June 2014: 77,142,800; year ended 31 December 2014: 77,142,800).

7. Business Acquisitions

On 12 June 2015 Pendrich Height Services Limited and NATHS Limited were acquired for a total cash consideration of £240,000. This acquisition has been accounted for in the consolidated financial statements by the acquisition method of accounting.

Pendrich Height Services and NATHS are steeplejack, rope access and working at height companies based in Edinburgh, Scotland. This acquisition enables us to extend our customer services offering within our Electrical Services division and provides our clients with the opportunity to further utilise PTSG as its Niche Specialist Service Provider.

The table below explains the adjustments made to the book value of the major categories of assets and liabilities in arriving at fair values:

The fair values of the assets and liabilities acquired, and the resulting goodwill remain provisional, but will be finalised within 12 months of the acquisition.

ENDS