RE: Tipped in the IC this morning12 May 2017 11:56
The text of the IC tip has been posted elsewhere, so here it is - part one:
"PTSG founded just over a decade ago with the aim of building market-leading positions in highly specialised, high-margin niches in the facilities management market. More recently, following PTSG's 2015 float, its strategic aim has become to dominate, and not just lead, in these niches. The group works across a range of areas such as the installation and maintenance of cradles for window cleaning on high buildings, and dry risers - fire suppression systems that allow fire services to pump water into burning buildings. Its strategy has been producing strong results, with the group recently announcing its tenth consecutive year of double-digit organic growth.
The group is divided into three divisions: access and safety (48 per cent of last year's sales and 39 per cent of underlying operating profit) provides window cradle installation and maintenance, along with safety testing and installation; electrical services (45 per cent of sales and 52 per cent of profit) covers lightning protection and a range of fire prevention and protection businesses such as dry risers, fire alarms and extinguishers; high-level cleaning covers window cleaning at height, along with gutters, pressure washing, specialist abseiling and others. There are plans to create a fourth division based on training and consultancy, which is currently carried out within the separate business units. The group is looking to take advantage of its experience of training its own staff as well as those of clients by expanding these activities through acquisitions. However, chief executive Paul Teasdale says launching the division is just one of many opportunities the group was pursuing.
A lot of the work the group does is in industries that are otherwise fragmented, giving plenty of opportunity for acquisitive growth, and 21 businesses have been bought over the past 10 years, including eight in 2015 and 2016. PTSG is market leader in its access and safety division and in lightning protection, and is top three in electrical testing. Despite this, its access and safety and electrical services divisions have an estimated market share of just 7 per cent and 6 per cent, respectively.
The acquisitions have helped turbo-charge profit growth, but cash generation has recently been less impressive, with 2016 cash from operations coming in at just £570,000. There's also a big gap between last year's reported statutory pre-tax profit number of £2.6m and the company's adjusted figure of £7.5m. This is something investors will want to keep an eye on."