PCH makes Victorian move with acquisitions

Malaga-based scaffolding and form-work supplier PCH Group Ltd has announced plans to acquire Melbourne-based Linc Scaffolding and the remaining 50 per cent stake in Geelong West Scaffolding.

The full text of a company announcement is pasted below.

PCH Group Ltd today announced the strategic expansion of its activities in the Victorian market with the signing of Heads of Agreements to acquire two established scaffolding businesses. This will provide PCH with positions in both the residential and industrial markets in Victoria with effect from 1 July 2007.

PCH will acquire the business of Linc Scaffolding ("Linc"), a highly regarded supplier to the Melbourne residential market. Linc and PCH have maintained a solid business relationship over the past two years whereby Linc has sourced its hire equipment (including scaffolding, temporary fencing and hoists) through PCH on a "cross-hire" arrangement. The acquisition of Linc will provide PCH with a strategic foothold in the Melbourne residential market and provide Linc with the capacity to pursue targeted growth opportunities.

PCH will also acquire the remaining 50% shareholding in Geelong West Scaffolding ("GWS"), which was established in 2005 to service the industrial market in the South East of Victoria. PCH was a founding 50% shareholder in GWS and in gaining full control, PCH is now able to further invest and support the business' expansion plans.

PCH Managing Director, Mr James Cullen, said that he was pleased with the agreements that have been reached. "We have been watching these businesses for some time now and by acquiring them simultaneously we achieve an immediate presence in key Victorian markets, with a combined turnover of approximately $10 million. Both businesses operate on the same foundations as PCH, having built similar reputations for safety, quality and professionalism."

Mr Cullen said that Linc's founder and 25% GWS co-founding shareholder, Mr Craig Roylance, will be responsible for managing and developing PCH's Victorian operations. GWS's other 25% cofounding shareholder, Mr David Dundon, will also continue in a senior management role with GWS.

The purchases will be funded by a mix of cash, shares and profit related contingent components.

Mr Cullen also confirmed that PCH's 2007 year was ahead of budget. Following the well flagged low first half pre-tax result of $3.6 million, the expected rebound in earnings had commenced as investments in new international markets began to contribute. As a result, the Company expects to report a full year pre-tax result in excess of $10 million and EBITDA in excess of $18 million.

"We are seeing the benefits of our expansion strategy now starting to come through in line with previous advice to the market. Whilst not all new regions have reached profitability yet, we continue to pick up new work and build towards the required critical revenue mass. In just the last week we have secured a new scaffolding contract in Qatar and another formwork contract in Singapore", Mr Cullen said.