Premier Technical Services buys two businesses for a combined £5.6m

5th Jul 2016 08:41

(ShareCast News) - Premier Technical Services (PTS), a niche service provider, bought UK Dry Risers (UKDR) for £2.1m and UK Dry Risers Maintenance (UKDRM) for £3.5m to expand the company's service to new niche markets.UKDR, an installation of dry and wet riser systems, was bought for a maximum cash consideration of £2.1m, with an initial payment of £1.2m, a fixed deferred payment of £50,000 to be paid on the first anniversary of the acquisition and a contingent payment of £860,000 deferred for 12 months and subject to the business achieving profit targets.The Bury based company's revenue was £3m for the year ended 31 March 2016 with a profit before tax of £700,000. Net assets were £1.4m.PSTSG said they inherited a positive working capital balance from UKDR of £1.6m, including a cash balance of £800,000. The company also said, in addition to usual warranty protections, the acquisition allows for the offset of uncollected debtor balances against deferred consideration payment which would fall due and are payable.PTSG also bought UKDRM, a tester, repairer and maintainer of dry and wet riser systems for a maximum consideration of £3.5m, with an initial payment of £1.8m and five fixed deferred payments of £60,000 to be paid on the first anniversary of the acquisition and contingent deferred payments over five years of £1.4m, subject to the company achieving profitability targets.The Oldham based company's revenue was £1.1m for the year ended 30 November 2015, with a profit before tax of £400,000. Net assets were £500,000.PSTSG said they inherited a positive working capital balance of £800,000, including a cash balance of £500,000.PTSG also said that the acquisition was funded by a £14m draw-down against the newly increased debt facilities in aggregate arranged with HSBC. Following the acquisitions and after netting off cash balances inherited, PTSG's core borrowings are £9.4m.The Yorkshire based company said both acquisitions will be integrated in its electrical services division and Mike Charlton of UKDR and Daniel Hardman and Claire Spencer-Hardman of UKDRM will remain.PTSG said a large percentage of both businesses' activity is installation and recurring compliance testing and maintenance work, which complements the PTSG model.PTSG chief executive Paul Teasdale said: "Both businesses are well established and respected in the UK and their addition to the group expands our service offering into new niche markets."The acquisitions are expected to be immediately earnings enhancing for the group. We were pleased to confirm at last month's AGM that current trading within the existing group is in line with the board's expectations and the directors are confident that PTSG's combination of a broad and loyal customer base with a high level of regulatory and compliance-driven recurring revenues provides a solid basis for continuing strong organic growth."Shares in Premier Technical Services were up 1.32% to 77p at 0935 BST.