26 September 2017

Premier Technical Services Group PLC

("PTSG" or the "Group")

Interim Results 2017 and Divisional Reorganisation for H2

Strong growth with record turnover and profits

Premier Technical Services Group PLC ("PTSG" or the "Group"), the niche specialist services provider, announces its interim results for the six months ended 30 June 2017.

Key highlights

·     An excellent first half of 2017 with revenue increasing 19% to £21.9m (H1 2016: £18.5m)

·     Strong underlying organic revenue growth of 14%

·     Gross profit up 18% to £11.2m (H1 2016: £9.5m)

·     Adjusted operating profit* growth of 20% to £4.4m (H1 2016: £3.7m)

·     Adjusted eps* of 3.86p up 21% (H1 2016: 3.19p)

·     Improvement in trading cash conversion to 64%

·     Strong contract wins and renewal rate of 85%

·     Interim dividend increased by 14% to 0.8p per share (H1 2016: 0.7p per share)

·     Nimbus Lightning Protection Ltd acquired in January 2017, fully integrated into the Electrical Services Division with good contribution in H1.

·     BEST acquired after period end in June 2017 - Integration progressing to plan with business performing well.

·     UK Sprinklers acquired in September 2017 expanding our fire solutions business.

·     Divisional reorganisation unveiled for H2 aligning our business with customers' needs and industry demands.

John Foley, Chairman of PTSG, commenting on the interim results said:

"The business has continued to perform very well and is executing its stated strategy of attaining market dominance in the sectors in which it operates.  Once again we have grown both organically and through selective acquisition whilst retaining our core focus of delivering exceptional customer services." 

"PTSG has considerable opportunity ahead. Our unique operating model delivers high contract retention rates, very steady gross margin performance and healthy underlying organic growth rates and we continue to identify carefully selected acquisition opportunities where our operating model can be put to good effect. Collectively this gives the Board confidence that the Group is well positioned to maintain its current positive momentum. Since 30 June, trading has continued to be strong and we remain hungry to succeed, confident of our prospects and enthusiastic about the future both in the remainder of this year and beyond."

* before adjusting items of £2.4m (2016: £1.4m) resulting in a statutory operating profit of £2.0m (2016: £2.3m) and eps of 1.15p (2016: 1.71p)

Divisional Reorganisation

PTSG also announces plans to rename two of its four divisions following significant growth in the rope access/steeplejack and fire services sectors, with certain service lines moving divisions to better reflect how the group operates and is managed.

The Group, which operates extensively in the facilities management (FM) and construction sectors, has updated its corporate branding to fully reflect the Group's current and diverse range of products and services and its team's broad level of capabilities. PTSG's business will now be segmented into four clear and distinct areas:

1.     PTSG Access and Safety - providing installation, maintenance, inspection, safety testing and repair services for all types of equipment including building maintenance units, gantry systems, cradle systems, monorail systems and lifting equipment. 

There has been no change in the composition of this division.

2.     PTSG Electrical Services - providing installation, maintenance, inspection, safety testing and repair services for all lightning and surge protection systems along with fixed wire and portable appliance testing.

The steeplejack services that previously were a constituent of this division has been transferred to the Building Access Specialist Division.  The dry riser and fire service businesses have been combined to form the new Fire Solutions division.

3.     PTSG Building Access Specialists (formerly PTSG High Level Cleaning ("HLC")) - providing highly trained rope access and steeplejack personnel who can access any part of any building or structure to install, maintain, inspect, test, clean and repair any aspect that will help to improve and sustain aesthetic and structural integrity.

This division comprises the services of the HLC division together with the rope access/steeplejack services transferred from Electrical Services division.

4.     PTSG Fire Solutions (formerly PTSG Training Solutions) - providing installation, maintenance, inspection, safety testing and repair services for all types of dry riser systems, fire alarms, sprinkler, emergency lighting and fire extinguisher systems.  

The training services will continue to be reported within the division in which the training was delivered.  The renaming of the division allows the Group to launch PTSG Fire Solutions which comprises the dry riser and fire services transferred from Electrical services together with UK Sprinklers Ltd which has just been acquired.

Paul Teasdale, CEO of PTSG, commenting on the reorganisation said:

"After 10 years of strong growth, which has seen our services increase year-on-year, we recognised that we needed to refresh how our business divisions are organised to make sure that they are easily recognisable and understood by our customers - reflecting our current goals, values and service offering. After careful consideration we developed the concept of four business divisions all focused on very specific but market facing product, people and service areas.

"As has always been the case, we want our message to be clear and positive and an excellent reflection of what we can do for our customers' businesses. We are excited to continue our growth and development at PTSG."

Enquiries:

About PTSG - www.ptsg.co.uk

Premier Technical Services Group PLC is the UK's leading provider of façade access and fall arrest equipment services, lightning protection and electrical testing, steeplejack and rope access services and fire solutions.

Operating through four divisions, Access & Safety, Electrical Services, Building Access Specialists and Fire Solutions, the Group provides highly-engineered industrial products and quality services and has a substantial presence in a number of niche markets.

PTSG provides a central information service for its businesses and champions the dissemination of key information and best practice. PTSG unites its constituent businesses under one clear identity, which supports smarter working and delivers top class service to its customers.

Headquartered in Castleford, West Yorkshire, the Group employs more than 600 people across 17 UK sites, who service more than 150,000 buildings across the whole of the UK for over 17,000 customers in a wide range of industries. 

Chairman's statement

Overview of results

I am pleased to report that PTSG continues to successfully develop the range, scale and quality of its service offering and that positive evidence of the Group's progress can be clearly seen in the results for the six month period to 30 June 2017. Record levels of turnover, gross profit, adjusted EBITDA, underlying profit before taxation and adjusted earnings per share were achieved in the reporting period.

Acquisitions

One acquisition was made during the reporting period as we purchased the entire issued share capital of Nimbus Lightning Protection Limited in January 2017 for a total consideration of £1.0 million which was paid in cash on completion.

Since the reporting period end we have also made two further important acquisitions and successfully placed 12.5 million new ordinary shares and increased our bank facilities with HSBC PLC in order to finance these acquisitions and provide the Group with increased banking facilities.

The acquisition of Brooke Edgeley (Industrial Chimneys) Ltd ("BEST") was concluded in July for an initial cash consideration of £14 million which was entirely funded from the proceeds of the placing; £6 million of deferred consideration is also payable over 3 years with two thirds of the payments payable in cash or shares at the Group's discretion. This major acquisition further advanced our position as market leader in the UK Lightning Protection sector. In addition, BEST's steeplejack business activities further expand our existing capability in this specialist area.

We announced the acquisition of UK Sprinklers Limited on 12 September 2017 for a total consideration of £2.5 million comprising an initial cash payment of £1.3 million, two fixed deferred cash payments of £0.1 million on the first and second anniversary of completion, and a contingent payment of £1.0 million payable over 3 years, dependent on performance and payable in cash or shares at the Group's discretion.

This business activity further expands our service offering in the area of Fire Solutions which was previously identified as a significant growth area for us.

Financial Overview Of Results

Turnover increased by 19% to £21.9 million (H1 2016: £18.5 million). Gross profit increased by 18% to £11.2 million (H1 2016: £9.5 million). Adjusted EBITDA increased by 22% to £5.1 million (H1 2016: £4.2 million) and underlying profit before taxation (before adjusting items of £2.4 million) increased by 19% to £4.1 million (H1 2016: £3.5 million). Adjusted earnings per share increased by 21% to 3.86 pence (H1 2016: 3.19 pence). The Board has recommended an interim dividend of 0.8 pence which will be paid on 27 October 2017 to shareholders on the register at 6 October 2017.

Net debt at 30 June 2017 was £12.2 million which was an increase of £0.1 million from 31 December 2016 after cash payments of £1.0 million in relation to the acquired business and necessary increases in working capital resulting from the increased size of the Group. We trade comfortably within our recently expanded banking facilities.

Operational Highlights

The Chief Executive's Review contains full details of operational performance and I wish to highlight the emphasis placed on compliance to a demanding set of safety standards, the continuing attention to our customer needs and best interests, the delivery of very high contract renewal rates, the ongoing development of our proprietary Clarity system, the importance of training and the further expansion of the Group's internal support structures. The PTSG operating model is both innovative and yet well established and volume is our friend, not our enemy, since the model is scalable so long as the areas of operation are carefully targeted. This is why our gross margin percentage has remained so steady at 51.1% (2016: 51.4%), only really affected by the mix of installation to testing and repair sales.

Strategy

These are exciting times for the Group. However, whilst we are pleased to make positive progress we remain fully committed to our principal objective which is to build a Group which can become the UK's leading provider of clearly identified niche specialist services to customers in the facilities management, property and construction sectors. As founders of the Group, the Group's CEO and I know that there is still much to do to achieve our goals and our vision is shared with a growing number of committed colleagues.

We undertake acquisitions to seek sector dominance in our chosen areas of operation which are those where we think that our operating model can be put to good effect. We often create new areas of operation by acquiring businesses which we think possess the necessary technical strengths to secure a good entry point and the creation of our Fire Services division is the latest case in point.

Our organic growth strategy now also needs to recognise the increased size and scale of the Group. Our existing methods of operation result in high contract retention rates, very steady gross margin performance and healthy organic growth. Our new divisional structure recognises the capability that now exists to cross sell our services to our customer base, and is an important step in our development.

Outlook

We remain hungry to succeed, confident of our prospects and enthusiastic about the future, both in the remainder of this year and beyond.

John Foley

Chairman

26 September 2017

Chief Executive's review

Overview

From a business perspective, the first half 2017 has gone beyond our own expectations at PTSG. Turnover and operating profit have gained considerable momentum over the first half of the year, instilling confidence that we will be in a position of real strength by the year-end.

So far 2017 has been quite unlike any other year in our ten-year history. It would be remiss of me not to reference the fact that the first half of the year was characterised by high-profile events which have had a significant effect on all who operate within facilities management. More than ever, the industry demands steadfast compliance to a set of safety standards which will ultimately keep everyone from harm.

Compliance has always been one of the founding principles of PTSG. Not only does it ensure that our work and the projects we are involved in satisfy the rigorous standards set within our industry, it also has the effect of aligning safety with quality - the hallmark of success in facilities management.

Our customers' needs and interests have always taken precedence over everything else in our work, and our renewed focus in this area will simply strengthen our commitment to them. Through the highest quality products and services, our aim is to give our customers the best possible experience of the buildings in which we work.

Their satisfaction with our work is what has produced our record-high contract renewal rate in excess of 85 per cent. For this achievement, thanks must go to each and every member of our team who have made PTSG the success it is today.

Restructuring for growth

Standing still or being satisfied with success has never been the PTSG way. The forthcoming re-organisation of our business is a reflection of our desire to meet and, wherever possible, exceed the demands from our increasing client base for a single provider of all the niche specialist services for the facilities management industry. These demands have evolved over recent months, and we will offer four discrete but complementary business divisions.

·   Access & Safety

·   Electrical Services

·   Building Access Specialists

·   Fire Solutions.

This new structure aligns our business with what our customers need and the industry demands. It enables us to provide an even more complete, multi-disciplinary service, driving the value we offer and giving our clients a measurable commercial advantage.

Further growth through acquisitions

Our business has grown rapidly over the ten years since we began trading, and has seen a significant increase since our last annual report was published. We now deliver our services from 17 locations across the UK via a talented team of over 600 highly trained, professional and dedicated people.

The growth in 2017 can in part be attributed to our recent strategic business acquisitions.

2017 began with our acquisition of Nimbus Lightning Protection Ltd ("Nimbus"), a leading Lightning protection, Design, Installation and Testing Company based in Nottingham. This enabled us to continue to build the UK's largest lightning protection business and expand into the Midlands market place.

Our acquisition of UK Dry Risers Ltd. and UK Dry Risers Maintenance Ltd. in July 2016 and their subsequent integration into PTSG and our systems of operation were a text book example of our strategy in practice. This was illustrated when the turnover of UK Dry Risers Ltd increased by 10 per cent in the six-month period following its acquisition. UK Dry Risers Maintenance Ltd also saw a significant increase of 37 per cent in its turnover.

In July 2017, we announced the acquisition of BEST, a market leading lightning protection and steeplejack company based in Manchester. Established in 1957, BEST was a privately-owned business specialising in lightning protection and expert earthing, surge protection and steeplejack services. This acquisition enabled us to increase our scale in installation activities and additional capabilities with an attractive testing and inspection base. It also provided us with significantly increased geographic coverage.

We intend to stick very closely to this model for further acquisitions within our fire solution business, identifying opportunities in dry riser and sprinkler systems, as demonstrated by our post period end acquisition of UK Sprinklers Limited in September 2017.

Carefully targeted acquisitions, linked to strong organic growth, have been a principal drivers behind our ongoing success over the last ten years, enabling us to achieve a favourable share of the markets in which we operate as well as a wide geographical spread of the UK (and overseas). This latter point is crucial in our fast response time: we are able to deploy our experts to any job in any UK location within two hours, giving us a decisive competitive advantage.  In H1 2017 we reported organic revenue growth of 14% which excludes cradle installations which are large by definition and some high values are planned for H2.

Divisional Results

Each of our divisions contributed to the strong performance of PTSG during H1.

Access and Safety: Safety Testing and Installation, Cradle Maintenance and Installation - As the market leader in all four disciplines we continue to grow our offering. Due to a strong comparative in 2016 because of the timing of the completion of some high value cradle installation turnover declined 5% to £9.1m in H1 (2016: £9.5m H1), a 41% contribution to the turnover of the Group. Consequently, adjusted operating profits decreased to £1.5m from £1.6m in 2016. In 2017 there are some high value cradle installations planned for H2.

Electrical Services: Lightning Protection, Fixed Wire and PAT Testing, Fire alarms and Extinguishers and Steeplejack services - With two acquisitions in this area in 2016, which included a new service line in dry riser services, coupled with the acquisition of Nimbus in January 2017, we have seen the division grow by 56% to a turnover of £11.5m in H1 (2016: £7.4m H1), a 53% contribution to the turnover of the Group.

Adjusted operating profits increased to £2.6m from £1.7m in 2016.

High Level Cleaning: High Level Window Cleaning, Gutter Cleaning, Building Cleaning and Pressure Washing - Our teams are experts at working at height and the majority of our work is using abseiling techniques. In H1 we achieved a turnover of £1.3m, an 6% contribution to the turnover of the Group.

Training Solutions: Training, Consultancy and Insurance Inspections - As well as training our own people - the best in the business - we work closely with our clients to ensure the safety of their staff through our bespoke training programmes.

Divisional reorganisation

Due to changes in our operating environment, the decision has been made to reorganise the way in which PTSG is structured, therefore, in the second half of 2017, the business will be reporting under the new structure of:

·   Access & Safety

·   Electrical Services

·   Building Access Specialists

·   Fire Solutions.

People

Our aim of creating a place of excellence in which to work continues to bear fruit, with two of our Access Maintenance engineers achieving their NVQ Level 2 in Permanent Suspended Access Equipment.

Twin brothers Barry and Neil Hogg have worked incredibly hard over the last few months to demonstrate their skills and knowledge in the use of permanent suspended access equipment. Both engineers are the first to achieve this NVQ in the industry for a considerable amount of time. In fact, the qualification once risked being discontinued due to both a lack of engineers taking it and assessors accredited to award it.

PTSG supports its teams in gaining qualifications and accreditations across a wide range of disciplines, and invests in regular training to ensure that its operatives always demonstrate the high standards of safety and workmanship the company is known for.

Although it's a well-used saying, I don't mind repeating it: our people are the reason for our success. Without their skill, commitment and enthusiasm, we wouldn't be able to scale the heights of the industry.

Serving our investors

I hope it is clear from my own observations over the past half-year that PTSG continues to go beyond expectations, both within the company and in the markets it serves. We are becoming the standard for safe, high-quality products and services in the facilities management industry. It's what I set out to achieve ten years ago and it makes me feel incredibly proud.

Innovation is something every business strives for but few truly achieve. Clarity, our unique proprietary software system, has been nothing short of a mini-revolution. With integration into the business taking place over the last year, Clarity has already processed over two million audited transactions, generating over 30,000 documents. In simple terms, it ensures that everyone at PTSG, including the administrative team, business development managers and on-site engineers are all able to do their jobs more efficiently.

Clarity features on the front cover of August's PFM magazine, with a double-page spread dedicated to the company's innovative Clarity system. This article covers the benefits the bespoke programme has brought to the Group and its clients, greatly speeding up its processes and creating unbeatable efficiency, more intelligent scheduling and greater levels of safety for engineers.

This isn't the first time PFM has covered PTSG's innovative and value-adding Clarity system. In October 2016, the magazine took an in-depth look at the system, detailing the individual aspects of Clarity that make it so effective, giving PTSG's engineers everything they need to do their job safely and efficiently.

Another endorsement of PTSG's work over recent months came in the form of five nominations in the PFM awards - for the third year running we are the most shortlisted business in the FM industry. This follows the announcement at this year's British Business Masters Awards which saw PTSG named high growth business of the year.

These are all contributing factors to our continued success and our reputation for quality and reliability in the market sectors in which we operate. The increase in our net profit, year on year, is a natural extension of this success, guaranteeing our investors a healthy return.

Looking forward

Success in any business demands a clear vision of what you want to achieve, applying your strengths in a focused and strategic way. It also requires a continuous review of your performance, highlighting any areas for improvement and further growth. We have pursued our original principle - to be the complete provider of engineered solutions - with single-minded determination, which has been instrumental in the success of PTSG. We have seen exponential growth year on year, with increasing interest from clients and investors who value the clarity and strength of our business model, and appreciate our willingness to map out the route for the future with the aim of increasing our market share.

For the remainder of 2017, our route must continue to be an unwavering commitment to compliance with industry standards and an uncompromising approach to safety. It's what we've always done at PTSG but at this point in time it must become our raison d'être. We intend to set the standard for quality and safety within facilities management to which others aspire. This will help to make PTSG the go-to organisation for making buildings safe and compliant: a future-proof formula for us as a business and the industry as a whole.

We look forward to greater success during the rest of 2017 and to bringing you a full report of our business activity and divisional results in 2018.

Paul Teasdale

Chief Executive

26 September 2017

Unaudited consolidated statement of comprehensive income

Unaudited consolidated statement of changes in equity

Unaudited consolidated balance sheet

as at 30 June 2016 and 2017 and 31 December 2016

Unaudited consolidated cash flow statement

for the six months ended 30 June 2016 and 2017 and the year ended 31 December 2016

Notes to the unaudited financial information

for the six months ended 30 June 2017

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 2017 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 2016 is also unaudited. The comparative figures for the year ended 31 December 2016 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 2016 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.

5. SEGMENTAL ANALYSIS continued               

6. EARNINGS PER SHARE

The calculation of basic earnings per share for the half year to 30 June 2017 was based on the profit attributable to ordinary shareholders of £1,026,764 (six months ended June 2016: £1,504,428; year ended 31 December 2016: £2,299,573) and a weighted average number of Ordinary Shares in issue of 89,505,162 (six months ended 30 June 2016: 88,026,169; year ended 31 December 2016: 88,101,562).

The calculation of adjusted earnings per share for the half year to 30 June 2017 was based on the profit before adjusting items of £3,453,350 (six months ended 30 June 2016: £2,805,673; year ended 31 December 2016: £6,721,419) and a weighted average number of Ordinary Shares in issue of 89,505,162 (six months ended 30 June 2016: 88,026,169; year ended 31 December 2016: 88,101,562).