+44 (0) 1977 668 771
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News

Final Results

26 March 2019
 

Premier Technical Services Group PLC

(“PTSG” or the “Group”)

Another year of exceptional growth delivering record turnover and profits

Final Results

Premier Technical Services Group PLC (“PTSG” or the “Group”), the niche specialist services provider, announces its final results for the year ended 31 December 2018.

Key highlights

*before adjusting items of £10.5m (2017: £8.3m) resulting in a statutory operating profit of £4.4m (2017: £2.4m) and eps of 2.77p (2017: 1.37p)

**before adjusting items of £10.5m (2017: £8.3m) resulting in a statutory profit before tax of £3.7m (2017: £1.8m)

 
John Foley, Chairman of Premier Technical Services Group PLC commented

“The second half of 2018 saw the Group make two further acquisitions, raise fresh equity proceeds of £20m and continue to deliver further healthy levels of organic turnover and profit growth. As a result of all these factors, I am pleased to report that record levels of turnover, gross profit, adjusted EBITDA and adjusted earnings per share were achieved in the year. Subsequent to the year end we announced the acquisition of Trinity Fire and Security Systems Limited, which greatly increases the size and offering of our Fire Solutions Division and percentage of turnover from recurring and maintenance activities. 2019 has started well as we continue to deliver against our strategy to seek sector dominance in the markets we serve, and the Board is both confident and enthusiastic about the Group’s prospects and performance.”

 

Enquiries:

PTSG +44 (0)1977 668 771
Paul Teasdale, Chief Executive Officer
Numis Securities +44 (0)207 260 1000
Stuart Skinner / Kevin Cruickshank / Michael Burke
Hudson Sandler +44 (0)207 796 4133
Charlie Jack / Hattie O’Reilly

 

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 1,200 people across 31 UK sites, who service more than 180,000 buildings across the whole of the UK for over 20,000 customers in a wide range of industries.

The Company is listed on the LSE AIM (PTSG.L)

 

Chairman’s statement 

 

2018 – a summary

The first half of 2018 saw the Group successfully integrate the three acquisitions made in 2017 and deliver healthy levels of profitable growth within its new divisionalised structure.

The second half of 2018 saw the Group make two further acquisitions, raise fresh equity proceeds of £20m (before expenses) from a successful placing of 12,698,414 new ordinary shares at a price of 157.5 pence per ordinary share with institutional investors and continue to deliver further healthy levels of organic turnover and profit growth. As a result of all these factors, I am pleased to report that record levels of turnover, gross profit, adjusted EBITDA and adjusted earnings per share were achieved in the year ended 31 December 2018.

Subsequent to the year end we purchased the entire issued share capital of Trinity Fire and Security Systems Limited and have recently announced the negotiation of £40m of committed banking facilities with HSBC UK Bank plc. The Group is very well placed to continue its 12 year history of delivering year on year profitable growth.

Acquisitions

Two acquisitions were completed in 2018.

The acquisition of the entire issued share capital of M&P Fire Protection Limited (“M&P”) was completed in July 2018 for a total consideration of up to a maximum of £3.5m, comprising an initial cash payment of £1.0m and deferred payments of up to £2.5m payable over five years subject to the business achieving stretching and escalating profit targets in each of those periods. M&P significantly enhances the scale and geographic coverage of the Group’s sprinkler and dry risers operations and has performed well since it joined the Group.

The acquisition of the entire issued share capital of Guardian Electrical Compliance Limited (“Guardian”) was completed in October 2018 for a total consideration of up to a maximum of £16.0m comprising an initial cash payment of £12.0m and deferred payments of up to £4.0m payable over three years, subject to the business achieving stretching profit targets. Guardian significantly increased our already strong presence in the electrical safety services market and possesses in “TraQ-It” a proprietary software platform which provides customer and staff with a unique , interactive on line portal. “TraQ-it” will be combined with PTSG Clarity, the Group’s existing proprietary operating system, to strengthen the service offering to PTSG Group’s customers. Guardian has also performed strongly since joining PTSG.

The acquisition of the entire issued share capital of Trinity Fire and Security Systems Limited was completed in January 2019 for a total consideration up to a maximum of £15.8m, comprising an initial cash payment of £10.8m and deferred payments of up to £5.0m payable over two years. Trinity is seen by us as a transformational transaction since it greatly increases the size and offering of our Fire Solutions Division, making it the largest division in the Group and enabling us to provide a full suite of fire protection services. Again, Trinity has performed encouragingly well since joining PTSG.

As is our policy with all deferred payments to which Premier Technical Services Group Plc is a party, such payments can be satisfied in cash or shares at our option.

Financial overview of results

Turnover increased by 31% to £69.1m (2017: £52.9m). Gross profit increased by 29% to £35.0m (2017: £27.1m). Adjusted EBITDA increased by 39% to £17.1m (2017: £12.3m). Underlying profit before taxation (before adjusting items of £10.5m) increased by 40% to £14.3m (2017: £10.2m, before adjusting items of £8.3m). Adjusting items were principally one-off and non-trading items including £1.5m of restructuring costs, £2.4m of share option costs and £5.8m of contingent consideration payment in relation to acquisitions. Adjusted earnings per share increased by 22% to 11.9p (2017: 9.7p). The Board has recommended a final dividend of 0.9p per share, which together with the interim dividend of 0.9p is a 13% increase on the dividends paid in respect of 2017. Net bank debt at 31 December 2018 was £11.9m (2017: £18.3m). Underlying trading cash conversion improved to 72% (2017: 65%),

despite the working capital impact of underlying organic turnover growth during 2018 of 19%. 2018 saw applications and accrued income levels principally associated with the Group’s installation activities reduced by 14% to £8.4m at 31 December 2018 (2017: £9.8m) despite the substantial increase in the Group’s turnover.

Debtor days on invoiced sales equated to 88 days at 31 December 2018 (2017: 97 days) and further improvements in the Group’s working capital position have been targeted for 2019.

 

Operational highlights

Underlying organic turnover growth of 19% is regarded by the Board as healthy and the performances of our Fire Solutions and Electrical Services divisions were especially pleasing. Turnover from recurring compliance and maintenance activities increased to 51% of total Group turnover during 2018 (2017: 48%), with the associated gross profit of £22.8m amounting to 62% of total Group gross profit (2017: 58%), and we expect that the full year effect of the Trinity acquisition will naturally increase this percentage in 2019. Gross profit margins remained strong at 51%, showing continuing sustainability in all areas, which reflects the strength of the Group’s established operating model. We pride ourselves on the fact that our operating model is best in class in the markets in which we operate; the contract renewal rates in our core maintenance divisions were at 88% in 2018 and once again we believe that this is an industry-leading contract renewal rate. The Group’s major accounts  sales team was grown in size in 2018 and had a successful year; the cross-selling of the Group’s service offering to our large customer base continues to gather positive momentum and continues to provide further organic growth opportunities. The Chief Executive’s Review provides further detail on the initiatives currently underway in the key areas of efficiency, innovation and scalability, which will continue to improve the range and quality of our multi-disciplinary service offerings.

 

Strategy and intent

We operate only in those areas where we believe that our established operating model can work effectively. We have grown both organically and as a result of completing 26 acquisitions since the Group’s creation in 2007. Our turnover and underlying levels of EBITDA have more than trebled since our IPO in February 2015. The successful placing which raised £20 million of fresh equity proceeds in October 2018 together with the Group’s strong underlying operational cash flow and newly announced expanded committed banking facilities provide us with plenty of headroom to continue to develop our established growth plans.

 

People

I would like to thank the 850 employees, based in 21 locations across the UK, for their continuing commitment. The Group continues to win awards for its performance at Institute of Workplace Facilities Management “IWFM” and Premises and Facilities Management “PFM” annual ceremonies because of their hard work.

 

Outlook

2019 has started well as we continue to deliver against our strategy to seek sector dominance in the markets we serve, which are underpinned by compliance demand. The Board is both confident and enthusiastic about the Group’s prospects and performance.

 
John Foley
Chairman

 

Chief Executive’s review

 

After 12 years as Chief Executive of PTSG, I have never felt greater pride in the work we do, the positive effect we have on building users and the workplace environment, and the benefits this brings to everyone involved with the company – directly and indirectly.

PTSG is unique in the way it provides building owners and managers with the niche specialist services they need to operate at optimum efficiency. We have never strayed from our original vision of meeting a market requirement for a single provider of multiple expert services to the services and construction sectors. As we continue to pursue our business model, which combines acquisitive growth and organic growth, while delivering our unique bundled service provision, we enjoy year-on-year growth.

Absolutely fundamental to this growth and success is our approach to customer service. Its importance for any business can’t be overstated, but for PTSG it’s the destination to which all other roads lead. In every job we do, we want to delight our customers through our high standards of workmanship. We look for ways to innovate, to offer cost-effectiveness, to offer services beyond the original contract and to ensure our operatives undertake every action safely. This approach guarantees the best possible result and has led to a contract renewal rate of 88%. This is an endorsement that we do “get it right” and is something we aim to maintain and build on even further.

 

Acquisitions unlock further market potential

Having mentioned acquisitions as one of the bedrocks of our success, in 2018 we made two carefully targeted and highly strategic business acquisitions that have bolstered our Fire Solutions and Electrical Services divisions – which I expect to be the two most prolific areas of the Group in 2019. M&P Fire Protection Ltd. (M&P) was acquired in July 2018. The team provides a range of services in the installation, maintenance and testing of dry and wet riser systems and commercial and domestic sprinkler systems. Based in Maidstone, Kent, this gives us a substantial presence in the south of England.

In October 2018, we acquired Guardian Electrical Compliance Limited, based in Sheffield, to enhance our strong presence in the electrical safety services market. The company complements our existing compliance and testing operating model and product coverage extremely well. Furthermore, its proprietary “TraQ-It” software platform enhances our existing disciplines. Guardian, therefore, is far from just a commodity; it is a managed testing service – and 72% of PTSG’s proforma 2019 gross profit is generated by compliance businesses.

It is worth noting that we have made 26 business acquisitions to date. A substantial number of these were in the areas of lightning protection and electrical testing and maintenance, which has seen PTSG Electrical Services Ltd. become the largest of our four business divisions, making a significant Group turnover contribution. I am confident that Fire Solutions will follow a similar path, aided by the ongoing high demand for services in this area.

 

Grenfell – the beginning of a more robust approach to fire safety

Although nearly two years have passed since the Grenfell tragedy, its effects are still resonating throughout the industry, with a call for a rigorous approach to compliance and testing within buildings. The fire was allegedly caused by an electrical fault within one of the apartments, which soon got out of control largely because of the building’s flammable cladding. However, as M&P Fire Protection’s Paul Atkins told BBC London: “If they’d had a sprinkler system the fire would have been deluged before it got to the cladding. People would’ve had plenty of time to leave the building. To date no-one has ever died in a fire with a sprinkler system in the household.”

The disaster triggered a huge demand for fire safety and suppression systems to be installed within buildings, with several councils in London alone committing to sprinkler systems in all of their housing blocks of a certain height. The world’s first modern recognisable sprinkler system was installed in the Theatre Royal, Drury Lane in the United Kingdom in 1812 by its architect, William Congreve, and was patented the same year. It’s an innovation which has been saving lives for over two centuries and has the potential to save countless more.

Of course, innovation is about much more than technology. As a multi-disciplinary service provider, it is about being open to change with the ability to adapt quickly and effectively to meet the evolving needs of the business leaders in our industry.

In 2017, this saw us reorganise our business as a result of the call for stringent adherence to the highest standards of safety regarding fire solutions in buildings.

Our approach in creating a discrete Fire Solutions business division in answer to an industry and governmental need has had the dual effect of safeguarding a substantial and growing number of buildings from the risk and effects of fire, while growing our business. As demand continues to grow, we will remain extremely vigilant in upholding these standards of fire safety and will look for areas to further strengthen our services in this area – and our coverage of the UK.

It could be said that as far as PTSG is concerned, the revolution took place in 2007, the year the company was formed, and the evolution is ongoing. We achieve continuous growth by delivering niche specialist services to the highest possible standard – work which improves the day-to-day lives of building users in many different sectors. Safe working is an original and integral part of our ethos; rather than doing what is necessary to be safe, we have always tried to set the standard for safe working within the industry. It’s a way of working that has seen our HSEQ team actively featured heavily in trade publications such as PFM magazine, and in 2018 we received our eighth RoSPA Gold award and our second Gold medal.

November saw a significant change in the FM industry as the British Institute of Facilities Management (BIFM)

changed its name to the Institute of Workplace and Facilities Management (IWFM). It’s a change that PTSG fully endorses; giving special significance to the term ‘workplace’ resonates with the approach we take to working in multiple areas of the services and construction sectors. We have always held the view that the niche specialist services undertaken as part of facilities management contribute to the performance of organisations of all kinds.

In fact, the design of this annual report was based upon the theme: ‘Connected workplace that drives innovation’.

 

Divisional results

I am delighted to report another year of exceptional growth – Group turnover is up substantially on last year’s figure. All four divisions have performed well but special mention must be made of Fire Solutions which, at the time that the Interim Report 2018 was published, was already making a contribution of 21% while only in its second year of operation. As ever, our growth is down to the talent and hard work of all 850+ team members.

 

Access & Safety

Safety Testing and Installation, Cradle Maintenance and Installation. As the UK’s leading supplier of fall arrest systems and safety testing services. In 2018 we achieved a turnover of £17.3m (2017: £20.2m) with growth across all segments apart from Cradles where installation work is lumpy in nature. Adjusted operating profits were

£3.0m (2017: £3.2m) however, the margin increased to 17.0% (2017: 15.8%).

 

Electrical Services

Lightning Protection, Fixed Wire and PAT Testing, (design, install and maintenance). Turnover grew strongly to

£30.9m (2017: £20.2m) as it became the largest division with the Group. Adjusted operating profits increased by 49% to £7.0m (2017: £4.7m). We saw growth in all services with the acquisitions made in 2017 and 2018 making good progress.

 

Building Access Specialists

Steeplejack Services, High Level Installations, High Level Remedials, High Level Cleaning. Our products and services enable safe, efficient access to any part of any building. Our team members are experts at working at height and performing a high-quality service even in the most inaccessible locations. We employ some of the UK’s most talented and safety conscious working at height specialists in the UK. In 2018 we achieved an increase in turnover to £5.6m (2017: £5.4m). Adjusted operating profits rose to £1.4m (2017: £1.2m).

 

Fire solutions

Wet and Dry Risers, Sprinkler Systems, Fire Alarms, Emergency Lighting, Fire Extinguishers (design, install and maintenance). We now offer one of the UK’s most comprehensive fire solutions services delivering high quality, safety systems in both residential and commercial settings. Turnover increased rapidly to £15.3m (2017: £7.1m) benefiting from strong organic growth coupled with a good contribution from M&P Fire Protection Ltd which was acquired in July 2018. Adjusted operating profits increased to £3.5m (2017: £1.6m).

 

Predicting volume and demand whilst increasing efficiency

PTSG has in place a strong pipeline of acquisitions, and our ongoing work to make sure our infrastructure is scalable will support further significant additions to the Group. This bodes extremely well for our investors; PTSG is the leader in the market sectors in which it elects to operate. We have achieved this position through acquisitive growth, balanced by organic growth.

While it is predicted that Fire Solutions will make the largest contribution to Group turnover in 2019, followed by Electrical Services, I am also extremely optimistic of further growth in Access & Safety and Building Access, with plans for further expansion and geographical coverage in these areas. We must, as a business, be equally vigilant regarding efficiency as we are with company growth and any areas for improvement must be addressed.

For example, we will continue to identify opportunities for upskilling our staff and retaining the talent within our workforce; we will continue to look for ways to innovate, either through technology and software or the way we operate as an organisation; and we will play to our strengths and maximise opportunities for cross-selling. All of this will help to drive up our already high contract renewal rate, as the improvements within our specialist teams are felt by our clients.

I look forward to 2019 with great confidence and the expectation of consolidating our position as leader in our chosen market sectors. We are now focused on facilitating a connected workforce that drives innovation. Every action within all of our projects must be undertaken safely, for the overall safe and efficient operation of buildings in all of the sectors in which we work. In doing so, we will delight a growing diversity of customers.

 
Paul Teasdale
Chief Executive

 

Financial review

 

Summary

2018 was another significant year for PTSG with continued substantial earnings and revenue growth.

The acquisition of Guardian Electrical Compliance Limited extended our market dominance in our Electrical Services division and the acquisition of M&P Fire Protection Limited enhances our offering in the Fire Solutions division. To provide additional financial flexibility and help fund the acquisitions £20m (pre expenses) was raised via the successful placement of new, ordinary shares.

 

Another year of strong earnings and revenue growth

Revenue grew by 31% in 2018 to £69.1m (2017 £52.9m) with 21% from acquisitions and a reported 10% from pure organic growth. We have previously explained that the revenue in the Cradle Installation division is lumpy in nature, with most of the turnover on these long-term contracts being recognised when the cradle is delivered and installed on site. This lumpy nature resulted in an abnormally high turnover for this division in 2017 and a more normalised turnover in 2018. Excluding the impact of these installations shows that the underlying organic growth rate of the Group was 19%.

Access and Safety’s turnover was affected by this and as such reported a 14% year on year reduction; with the remainder of the Access and Safety division (excluding Cradle Installations) growing by 14%. Despite the lower turnover, the operating margin grew to 17% (2017: 15.8%).

Electrical Services’ revenue grew by 53% to £30.8m and is now the largest division accounting for 45% of the Group’s revenue. The revenue growth was aided by the Guardian acquisition and 17% pure organic growth –

driven by strong growth in the Lightning Protection Testing and Electrical Testing divisions. The operating margin for this division was accretive to the Group at 23%.

Following the refocusing of the Building Access Specialist division in 2017, it returned to growth in 2018 with revenue up 4%. Operating margins increased from 22% to 24%.

Revenue in the Fire Solutions division grew by 114% to £15.3m, with organic growth at 65% predominantly due to the explosive growth in UK Sprinklers. Operating margin increased by 1 percentage point to 23%.

Turnover from recurring compliance and maintenance activities accounted for 51% of the total Group turnover (2017: 48%).

Gross profit increased by 29% to £35.0m (2017: £27.1m) with the gross margin, continuing to exceed 50%, at 50.6% (2017: 51.2%). The slight reduction against the prior year margin was due to mix and in particular the strong growth in the Fire Solutions division, which has a GP lower than some of the other divisions but whose operating margin is accretive for the Group. Gross profit from recurring compliance and maintenance activities accounted for 62% of the total Group gross profit (2017: 58%).

Operating profit before adjusting items grew by 40% to £14.9m (2017: £10.6m). The adjusted operating profit margin grew by 147bps to 21.6% (2017: 20.1%) with overhead leverage and strong cost control mitigating the slight gross margin reduction. The statutory operating profit was £4.4m (2017: £2.4m) 83% ahead of last year.

Profit before tax was £3.7m (2017: £1.8m) and incorporated £10.5m (2017: £8.4m) of adjusting items. These adjusting items were either not expected to recur or non-trading in nature and were mainly associated with share option costs granted to Directors and employees of £2.4m (2017:£3.0m), £5.8m of contingent consideration payments in relation to acquisitions ( £2017: £3.5m), £0.8m amortisation of acquired intangible assets (2017:

£0.4m); and £1.5m of restructuring costs associated with the recent acquisitions (2017 : £1.4m). It should be noted that in 2018 the Group achieved the final share options milestone and as a result these costs will not be incurred in future years. The contingent payments on acquisition are in accordance with our acquisition strategy

in which we look to reduce risk by keeping initial consideration payments low and paying deferred consideration in future years against stretching profit targets, meaning these deferred payments are effectively self-financing. The current levels are expected to continue in the near future and will cover deferred consideration from the recent Trinity acquisition.

The interest charge and other financing costs were £0.7m (2017: £0.6m). This increase was driven by an increase in finance lease charges in line with the continued expansion in our employee and engineer base.

Adjusted earnings per share increased by 22% to 11.86p (2017: 9.73p). £1.9m of dividends were paid during the year and the Board is proposing a final dividend of 0.9p per share. This represents a 13% increase on the 2017 dividends and is in line with our progressive dividend policy. Statutory earnings per share was 2.77p (2017: 1.37p).

 

Net debt

Net debt, excluding finance leases, had reduced to £11.9m as of the 31 December 2018 (2017: £18.3m), which, together with the 39% increase in EBITDA, meant that net debt had reduced to only 69% of EBITDA. The reduction in net debt was predominantly driven by a surplus from the share placing £7.2m and an improved underlying operating cash conversion of 72%. This was offset by deferred consideration payments of £1.8m, and enabled the Group to spend £1.9m on dividends, £1.6m on capital expenditure and increase its working capital in line with the substantial increase in the size of the Group.

Trade and other receivables increased by £5.4m to £35.8m with the two acquisitions adding £2.4m. The acquisitions adversely affect a number of the debtors’ ratios because we acquired the full debtor book but only took a proportion of the year’s turnover. That said, trade receivables and accrued income, at the reported level, only increased by 13% despite turnover increasing by 31%. Accrued income reduced by 14% to £8.4m with virtually all the 2017 balance collected in the year. Trade receivables increased by £5.2m, due to a strong Q4 trading performance, with all the increase in the less than 120 days category. The level of debt in the 120+day category (from date of invoice and not due date) fell by 590bps to 20.6% due to improved cash collection.

We have a long-term relationship with our bankers, HSBC, having been a customer for over ten years. HSBC has been very supportive of the Group enabling us to develop our facilities in line with our increasing profitability. Post year end, we announced an extension to our banking facilities with the Revolving Credit Facility, taken out in 2015, increasing to £30m and a £10m term loan, repayable over four years, being taken out. Both these new facilities will give us additional flexibility for the future and are provided with the same covenant testing, but improved interest margins, as the previous facilities.

 

Acquisitions

We acquired M&P Fire Protection Limited and Guardian Electrical Compliance Limited during the year for a total consideration of £19.5m, £6.5m of which was deferred and is contingent on the continued employment of the vendors and the achievement of stretching milestone targets.

These acquisitions had a significant impact on the closing balance sheet adding £8.6m to goodwill, £6.2m to intangibles, and £0.2m to fixed assets.

 

Outlook

We believe that 2019 will be another year of substantial earnings and revenue growth driven by both organic and acquisitive growth. We are a well financed group and expect to make improvements to operating cash flow and net debt throughout the year. We believe that the Group remains well placed to deliver on our strategic priorities.

 
Mark Watford
Finance Director

 

Consolidated statement of comprehensive income

for the year ended 31 December 2018

 

 

Year ended 31 December 2018 Year ended 31 December 2017
Before Adjusting Before Adjusting
adjusting items adjusting items
items Total items Total
£ £ £ £ £ £
Revenue 69,097,155 69,097,155 52,939,183 52,939,183
Cost of sales (34,134,303) (34,134,303) (25,860,206) (25,860,206)
Gross profit 34,962,852 34,962,852 27,078,977 27,078,977
Net operating costs

Other operating income

(22,280,539)

2,221,144

(10,457,975)

(32,738,514)

2,221,144

(16,755,254)

319,299

(8,286,404)

(25,041,658)

319,299

Total operating profit 14,903,457 (10,457,975) 4,445,482 10,643,022 (8,286,404) 2,356,618
Finance costs (648,743) (73,319) (722,062) (491,885) (71,357) (563,242)
Profit before taxation 14,254,714 (10,531,294) 3,723,420 10,151,137 (8,357,761) 1,793,376
Taxation (1,172,508) 499,341 (673,167) (733,233) 270,542 (462,691)
Profit attributable to owners

of the parent

 

13,082,206

 

(10,031,953)

 

3,050,253

 

9,417,904

 

(8,087,219)

 

1,330,685

 

Total comprehensive income/(expense) for the year attributable to owners of the

parent

 

 

 

 

13,082,206

 

 

 

 

(10,031,953)

 

 

 

 

3,050,253

 

 

 

 

9,417,904

 

 

 

 

(8,087,219)

 

 

 

 

1,330,685

 

Earnings per share (pence):

Basic and diluted earnings per

share

 

2.77

 

1.37

 

Consolidated statement of changes in equity

for the year ended 31 December 2018

 

Attributable to owners of the parent
Capital Share Non-
Share redemption Premium Retained controlling Total
capital reserve Account earnings Total interest equity
£ £ £ £ £ £ £
Balance at 31 December 2016 884,025 128,573 548,418 10,482,697 12,043,713 179 12,043,892
Profit for the year 1,330,685 1,330,685 1,330,685
Total comprehensive income 1,330,685 1,330,685 1,330,685
Transactions with owners
Issue of share capital 161,192 16,806,567 (1,160,631) 15,807,128 15,807,128
Share based payments charge 2,444,433 2,444,433 2,444,433
Share based deferred

consideration

 

 

 

 

923,000

 

923,000

 

 

923,000

Tax relating to share based

payments

 

 

 

 

1,363,109

 

1,363,109

 

 

1,363,109

Ordinary dividends paid (1,476,752) (1,476,752) (1,476,752)
Transactions with owners 161,192 16,806,567 2,093,159 19,060,918 19,060,918
Balance at 31 December 2017 1,045,217 128,573 17,354,985 13,906,541 32,435,316 179 32,435,495
 

Profit for the year

 

 

 

 

3,050,253

 

3,050,253

 

 

3,050,253

Total comprehensive income 3,050,253 3,050,253 3,050,253
Transactions with owners
Issue of share capital 186,652 23,123,374 (2,717,563) 20,592,463 20,592,463
Share based payments charge 1,302,498 1,302,498 1,302,498
Share based deferred

consideration

 

 

 

 

1,323,000

 

1,323,000

 

 

1,323,000

Tax relating to share based

payments

 

 

 

 

(1,032,697)

 

(1,032,697)

 

 

(1,032,697)

Ordinary dividends paid (1,872,379) (1,872,379) (1,872,379)
Transactions with owners 186,652 23,123,374 (2,997,141) 20,312,885 20,312,885
Balance at 31 December 2018 1,231,869 128,573 40,478,359 13,959,653 55,798,454 179 55,798,633

 

Consolidated balance sheet

as at 31 December 2018

 

2018 2017
£ £
Assets
Non-current assets
Intangible assets 40,130,047 26,212,021
Property, plant and equipment 5,645,423 4,310,058
Deferred tax asset 1,567,611
Total non-current assets 45,775,470 32,089,690
 

Current assets

Inventories 1,370,306 1,219,165
Trade and other receivables 39,501,417 32,531,384
Cash at bank and in hand 10,525,955 7,002,025
Total current assets 51,397,678 40,752,574
 

Liabilities

Current liabilities
Trade and other payables 9,830,569 9,030,829
Bank overdraft 10,402,258 12,662,910
Finance leases 1,123,782 736,069
Borrowings 52,167
Loan notes 1,680,000
Deferred consideration 1,935,679 1,335,432
Current tax liabilities 571,980 839,982
Total current liabilities 25,544,268 24,657,389
Net current assets 25,853,410 16,095,185
 

Non-current liabilities

Borrowings 12,000,000 12,661,742
Loan notes 1,060,881 2,667,563
Finance leases 1,275,250 420,075
Deferred consideration 677,000
Deferred tax liability 817,116
Total non-current liabilities 15,830,247 15,749,380
 

Net assets

 

55,798,633

 

32,435,495

 

Equity attributable to the owners of the parent

Share capital 1,231,869 1,045,217
Capital redemption reserve 128,573 128,573
Share premium account 40,478,359 17,354,985
Retained earnings 13,959,653 13,906,541
55,798,454 32,435,316
Non-controlling interests 179 179
Total equity 55,798,633 32,435,495

 

Consolidated cash flow statement

for the year ended 31 December 2018

 

2018 2017
£ £
Cash flows from operating activities
Profit after taxation 3,050,253 1,330,685
Adjustments for:
Income tax charge 673,167 462,691
Depreciation 2,237,531 1,683,633
Amortisation of intangible assets 829,857 370,623
Profit on disposal of property, plant and equipment (621,144) (319,299)
Finance costs 722,062 563,242
Share based payments 1,482,243 2,998,813
8,373,969 7,090,388
Changes in working capital:
Increase in inventories (59,973) (243,705)
Increase in trade and other receivables (4,586,208) (7,462,133)
(Decrease)/increase in trade and other payables 932,863 (195,864)
Cash generated from /(used in) operations 4,660,651 (811,314)
Interest paid (648,743) (491,885)
Tax paid (1,047,406) (790,890)
Net cash inflow/(outflow) from operating activities 2,964,502 (2,094,089)
 

Cash flows from investing activities

Acquisition of businesses (11,859,382) (14,993,975)
Purchase of property, plant and equipment (1,240,713) (1,368,289)
Payment of deferred consideration (1,772,054) (1,060,000)
Net proceeds from sale of property, plant and equipment 1,390,647 626,002
Net cash outflow from investing activities (13,481,502) (16,796,262)
 

Cash flows from financing activities

(Repayment)/Proceeds from borrowings (713,909) 1,944,124
Capital element of finance lease payments (1,704,593) (1,028,513)
Issue of shares 20,592,463 15,807,128
Dividends paid (1,872,379) (1,476,752)
Net cash inflow from financing activities 16,301,582 15,245,987
 

Net increase/(decrease) in cash and cash equivalents

 

5,784,582

 

(3,644,364)

Cash and cash equivalents at 1 January (5,660,885) (2,016,521)
Cash and cash equivalents at 31 December* 123,697 (5,660,885)

 

* cash and cash equivalents comprises cash at bank in hand of £10,525,955 (2017: £7,002,025) less bank overdraft of £10,402,258 (2017: £12,662,910).

 

Notes to the Final Results Basis of preparation

 

The preliminary financial information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006, for the financial years ended 31 December 2018 and 31 December 2017, but has been derived from those accounts.

These financial statements have been prepared in accordance with the requirements of the AIM Rules, in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”), the IFRS Interpretations Committee’s (“IFRSIC”) interpretations and with those parts of the Companies Act 2006 as applicable to companies reporting under IFRS, however, this announcement in itself does not contain sufficient information to comply with IFRS. The accounting policies used in preparation of this preliminary announcement have remained unchanged from those set out statutory accounts for the year ended 31 December 2017. They are also consistent with those in the full financial statements which have yet to be published.

Statutory accounts for 2017 have been delivered to the Registrar of Companies and those for the financial year ended 31 December 2018 will be delivered following the Company’s annual general meeting. The auditors have reported on those accounts and their opinion was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

Segmental information

 

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 four main types of business generating revenue; Access and Safety, Electrical Services, Building Access Specialists and Fire Solutions.

Principally, all revenue originates in the UK.

 

2018
Building
Access Electrical Access Fire
and Safety Services Specialists Solutions Group Total
£ £ £ £ £ £
Revenue
Total revenue 17,297,574 30,876,933 5,637,377 15,285,271 69,097,155
Total revenue from external customers 17,297,574 30,876,933 5,637,377 15,285,271 69,097,155
 

Operating profit before adjusting items

 

2,947,284

 

6,987,254

 

1,381,857

 

3,545,763

 

41,299

 

14,903,457

Restructuring costs (805,574) (633,006) (37,203) (1,475,783)
Share options granted to Directors and employees (2,357,034) (2,357,034)
Amortisation of intangible asset acquired (52,334) (752,523) (25,000) (829,857)
Contingent payments in relation to acquisitions (91,667) (5,703,634) (5,795,301)
Segment operating profit (359,325) (101,909) 1,356,857 3,508,560 41,299 4,445,482
Net finance cost (147,804) (88,883) (8,184) (20,382) (456,809) (722,062)
Profit before taxation (507,129) (190,792) 1,348,673 3,488,178 (415,510) 3,723,420
 

Other segmental items

Segment assets 21,332,705 22,713,251 3,696,054 9,195,480 40,235,659 97,173,149
 

Segment liabilities

 

(3,455,548)

(18,308,261

)

 

(1,911,014)

 

(2,847,733)

 

(14,851,960)

 

41,374,516

Capital expenditure 1,240,021 2,029,449 362,392 556,332 4,188,194
Depreciation 619,594 1,220,513 180,455 216,969 2,237,531

 

Segmental operating profit

The reconciliation of Adjusted EBITDA to statutory operating profit is shown below.

 

Building
Access Electrical Access Fire
and Safety Services Specialists Solutions Group Total
£ £ £ £ £ £
Adjusted EBITDA 3,566,878 8,207,767 1,562,312 3,762,732 41,299 17,140,988
Depreciation (619,594) (1,220,513) (180,455) (216,969) (2,237,531)
Operating profit before adjusting items 2,947,284 6,987,254 1,381,857 3,545,763 41,299 14,903,457
Restructuring costs (805,574) (633,006) (37,203) (1,475,783)
Share options granted to Directors and employees (2,357,034) (2,357,034)
Amortisation of intangible asset acquired (52,334) (752,523) (25,000) (829,857)
Contingent payments in relation to acquisitions (91,667) (5,703,634) (5,795,301)
Statutory operating profit (359,325) (101,909) 1,356,857 3,508,560 41,299 4,445,482

 

2017
Building
Access Electrical Access Fire
and Safety Services Specialists Solutions Group Total
£ £ £ £ £ £
Revenue
Total revenue 20,200,519 20,163,991 5,445,543 7,129,130 52,939,183
Total revenue from external customers 20,200,519 20,163,991 5,445,543 7,129,130 52,939,183
 

Operating profit before adjusting items

 

3,184,034

 

4,682,742

 

1,227,390

 

1,580,356

 

(31,500)

 

10,643,022

Restructuring costs (566,648) (741,074) (28,601) (48,790) (6,493) (1,391,606)
Share options granted to Directors and employees (2,998,813) (2,998,813)
Amortisation of intangible asset acquired (52,333) (293,290) (25,000) (370,623)
Contingent payments in relation to acquisitions (100,000) (3,425,362) (3,525,362)
Segment operating profit (533,760) 223,016 1,173,789 1,531,566 (37,993) 2,356,618
Net finance cost (89,433) (75,482) (15,951) (15,780) (366,596) (563,242)
Profit before taxation (623,193) 147,534 1,157,838 1,515,786 (404,589) 1,793,376
 

Other segmental items

Segment assets 22,713,713 15,590,383 7,419,880 6,450,468 20,667,820 72,842,264
Segment liabilities (4,801,727) (11,230,228 (2,058,857) (1,887,288) (20,428,669) (40,406,769)
Capital expenditure 906,201 791,942 163,308 172,406 2,033,857
Depreciation 575,648 820,212 175,399 112,374 1,683,633

 

Segmental operating profit

The reconciliation of Adjusted EBITDA to statutory operating profit is shown below.

 

Building
Access Electrical Access Fire
and Safety Services Specialists Solutions Group Total
£ £ £ £ £ £
Adjusted EBITDA 3,759,682 5,502,954 1,402,789 1,692,730 (31,500) 12,326,655
Depreciation (575,648) (820,212) (175,399) (112,374) (1,683,633)
Operating profit before adjusting items 3,184,034 4,682,742 1,227,390 1,580,356 (31,500) 10,643,022
Restructuring costs (566,648) (741,074) (28,601) (48,790) (6,493) (1,391,606)
Share options granted to Directors and employees (2,998,813) (2,998,813)
Amortisation of intangible asset acquired (52,333) (293,290) (25,000) (370,623)
Contingent payments in relation to acquisitions (100,000) (3,425,362) (3,525,362)
Statutory operating profit (533,760) 223,016 1,173,789 1,531,566 (37,993) 2,356,618

 

Earnings per share

The calculation of basic earnings per share for the year ended 31 December 2018 was based on the profit attributable to ordinary shareholders of

£3,050,253 (year ended 31 December 2017: £1,330,685).

 

2018

£

2017

£

Profit for the year attributable to owners of the parent 3,050,253 1,330,685
 

Weighted average number of ordinary shares in issue for the basic earnings per share

 

110,296,535

 

96,809,578

Basic and diluted earnings per share (in pence per share) 2.77 1.37

 

The calculation of adjusted earnings per share for the year ended 31 December 2018 was based on the profit before adjusting items of £13,082,206 (Year ended 31 December 2017: £9,417,904).

 

 

2017

£

2016

£

Adjusted earnings 13,082,206 9,417,904
Weighted average number of shares 110,296,535 96,809,578
Adjusted earnings per share (pence) 11.86 9.73

 

Annual Report

The annual report will be mailed to shareholders and will be available in due course on our website www.ptsg.co.uk.

Annual General Meeting

The annual general meeting will be held at 13 Flemming Court, Whistler Drive, Castleford, WF10 5HW on Monday 17 June 2019 at 2.00pm.

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