PTSG storms ahead and sees no fall out from Carillion collapse
The Castleford-based firm said it takes on around £800,000 of work annually for Carillion and it expects this work will be taken on by existing PTSG clients.
PTSG is the UK’s leading provider of facade access and fall arrest equipment services, lightning protection and electrical testing.
The firm said 2017 results will be in line with the board’s expectations. It said the sharp increase in 2018 reflects the strength of the group’s order book and the successful integration of its recently acquired businesses.
PTSG noted the recent statement from Carillion, which was placed into liquidation on Monday. PTSG said that as it only takes on £800,000 of work annually for Carillion and the work should be taken on by existing PTSG clients, the ongoing effect on the group is expected to be minimal.
"Given PTSG’s highly diversified customer base, the board expects that there will be no material impact on 2018 trading," the firm said in a trading update.
"The group has outstanding net debt of £300,000 due from Carillion and this has been fully accounted for in the group’s 2017 balance sheet."
PTSG's shares rose 13 per cent to 195p on the news.
PTSG said the integration of the ‘Best’ Lightning Protection business, which it bought last July, has progressed "very well" and is nearly complete.
The UK Sprinklers business acquired last September has been fully integrated into the group and is trading 50 per cent ahead of the acquired business with a very strong order book and pipeline.
PTSG also announced the appointment of Michael James Higgins, aged 61, as a non-executive director. He will join both the audit and remuneration committees.
Mr Higgins is currently the chairman or non-executive director of three listed companies: Ebiquity, Plant Heath Care and Progility.
John Foley, chairman of PTSG, said: “Our strong performance reflects the success of our strategy to seek market dominance through organic growth and carefully selected acquisitions. We have a healthy pipeline of potential acquisitions to complement our unique business model, and will continue to appraise opportunities as they arise.
“I am very pleased to welcome Michael onto the board. He brings a wealth of experience and his long-standing involvement with AIM and growth companies together with his experience at the QCA will prove invaluable.”
Analyst Julian Cater at Numis said: "PTSG's pre-close trading update indicates that 2017 results are expected to be in line with the board's expectations, but results for 2018 are expected to be materially above current market forecasts.
"We have increased our 2018 pre-tax profit forecast by 10 per cent to £14m and our 2019 pre-tax profit forecast by 12 per cent to £15.6m.
"Updated for our new estimates, we increase our price target to 220p (previously 205p) and raise our rating to 'buy' (previously 'hold')."
Mr Cater said PTSG's exposure to Carillion is modest.
"Management has indicated that its revenues with Carillion are around £800,000 - less than 2 per cent of revenues for 2017," he said.
"In December, PTSG had outstanding debtors of £300,000 due from Carillion, and these had been fully provided against. Management expects the Carillion work to be taken on by other PTSG clients and expects no material impact in 2018."
PTSG will announce final results for the year to December 31 on March 20.