Premier Technical Services (PTSG) is a reasonably acquisitive company, so while it seems unusual the group made no new deals in the first six months of the year, the lull enabled some improved housekeeping on the cash front. An intensified focus on cash collection yielded a 17 percentage point improvement in the underlying cash conversion rate. The dry spell could only last so long, however, and post period-end the niche service provider announced the acquisition of M&P Fire Protection for an initial payment of £1m. Management expects to announce further deals before Christmas, and chief executive Paul Teasdale describes the current pipeline as “the most exciting” the group has ever seen.
The group’s acquisitions are structured to include performance-related contingent payments, which have continued to weigh on the statutory earnings in the period. Management expects this to persist into the second half of the year, before reported growth returns in 2019.
As expected, the focus on compliance in the wake of the Grenfell Tower tragedy has led to strong growth in the fire protection business. Revenues grew 148 per cent on the first half of last year, and while the division accounts for just 21 per cent of revenues, Mr Teasdale predicted it would become the largest division soon, followed closely by electrical services.
House broker Numis expects an adjusted pre-tax profit of £14m for the full year, giving EPS of 10.9p, up from £10.2m and 9.7p in 2017.
| PREMIER TECHNICAL SERVICES (PTSG) | ||||
| ORD PRICE: | 179p | MARKET VALUE: | £198m | |
| TOUCH: | 177-180p | 12-MONTH HIGH: | 215p | LOW: 158p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 137 | |
| NET ASSET VALUE: | 32p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 21.9 | 1.7 | 1.15 | 0.80 |
| 2018 | 30.2 | 1.3 | 1.06 | 0.90 |
| % change | +38 | -24 | -8 | +13 |
| Ex-div: | 4 Oct | |||
| Payment: | 26 Oct | |||
| *Includes intangible assets of £25.9m, or 23p a share | ||||
