Making buildings safer is a sure bet for growth
ON THE anniversary of the Grenfell Tower tragedy, a fire broke out in a 20-storey tower block in Lewisham, South- East London. The blaze was brought under control within an hour and a half, 180 people were evacuated and there were no reported casualties. The block benefited from a highly efficient sprinkler system, i nstalled by
PTSG, a company that provides specialist services for buildings across the UK.
PTSG shares have had a disappointing few months, falling from 207p in January to 178p today. The decline does not reflect long-term prospects and the shares should recover and more over time.
Headquartered in Castleford, West Yorkshire, PTSG is run by Paul Teasdale, an entrepreneurial and dynamic Yorkshireman. He and chairman John Foley set up the firm in 2007, having made millions from founding and selling businesses in the specialist building services sector.
They are keen to generate similar value for PTSG shareholders, with a stated ambition of expanding PTSG into a £500 million business – almost tripling in size over the next few years.
The board was confident at its annual meeting last Monday and Teasdale is more optimistic than ever about the company’s prospects. PTSG is divided into four divisions, access and safety, electrical services, building access and fire solutions.
Each involves work that is highly s pecialised, r equiring s ki l l ed employees and professional engineers so competition is less intense and profit margins are high.
In many cases, PTSG is carrying out work that is mandatory under health and safety legislation, so customers are focused on efficacy as much as price.
The access and safety division, for example, ensures that the roofs on tall buildings are safe for workers and that cradles used at height are properly maintained as well. Customers include Marks & Spen- cer, where PTSG looks after 1,000 buildings. Building access involves working at high level, installing, repairing and cleaning tall buildings. The division is in the middle of a major project at the luxury Balmoral Hotel in Edinburgh, for instance, abseiling down the building to repair crumbling masonry. The business also saw a surge in demand after the Grenfell disaster, when tower block owners wanted cladding removed and tested.
Grenfell has bolstered demand at PTSG’s electrical services and fire solutions divisions too.
In each of these divisions, PTSG carries out initial installation but also takes on maintenance contracts often lasting several years.
PTSG’s order books are stronger than ever, as companies become increasingly aware of the need to ensure their buildings are safe and adequately protected against fire. PTSG is actively eyeing up prospective deals, as well, which will fuel growth.
Results for 2017 showed a 35 per cent revenue increase to £53 million and a 36 per cent rise in underlying pre-tax profit to £10.2 million.
Brokers have pencilled in revenues of around £68 million and profits of £14 million this year. A 12.5 per cent increase in the dividend to 1.8p is forecast, but this is primarily a growth stock, rather than an income-generating share. Midas verdict: PTSG provides essential building services across the UK. The company has more than 17,000 customers and looks after 150,000 properties so it does not rely on any individual business or sector for work. Teasdale is driven and ambitious and the shares, at 178p, should do well. A good addition to investors’ portfolio, particularly for those looking for a long-term growth story.