Small Cap Value Report (Fri 10 May 2019) - CTO, PTSG

12th May '19 by Paul Scott

40 comments 10897 reads

Good morning, it's Paul here.

The good news is that I'm finally starting to get over quite literally the worst flu/chest infection of my life. It's been absolutely horrendous - I've been bed-ridden for 22+ hours per day, for the last fortnight. It felt like I was almost suffocating some of the time.

Anyway, that's why my reports last week were so terrible. I got up at 7am each day, did a quick review of the RNS & wrote up some snippets. Then I felt so ill that I had to go back to bed, and nothing else happened for the rest of the day.

I'm only explaining this, because I don't want subscribers to think that poor quality reports are becoming the norm. Quite the opposite - I really want to boost the quality, now that the SCVRs are part of the Stockopedia subscription. You should see a marked improvement in the coming days/weeks, as I gradually get back on my feet again, health-wise. Thanks for bearing with me.

Also apologies to people who manage far worse health problems of their own. I'm lucky enough to have enjoyed good health for the last 50 years, but this last thing really did knock me for six. I did wonder if it was pneumonia actually. But anyway, it seems to be clearing up now.

T Clarke (LON:CTO)

Share price: 128p
No. shares: 43.0m
Market cap: £55.0m

AGM Trading update

... the Building Services Group, issues a Trading Update covering the period from 1st January 2019 to date.

This is a contractor for mainly complex electrical & IT fit-outs for office buildings. I visited one of their sites some time ago, and it was very interesting to see just how complex the work is for a major office block. The trouble is, that reinforced to me that the consequences of something going wrong, or being mis-priced and/or having cost over-runs, makes this quite a risky area to operate in. Especially as its profit margins are wafer thin.

This update is excellent, in its clarity, and providing hard figures, instead of waffle that we all too often get from other trading updates. So top marks to the company & its advisers;

The 17.5p EPS figure coincides with the Stockopedia forecasts. That…

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bobsandy12

10th May '19

Welcome back to the world of the living Paul......life is good

cholertonandrew

Don’t worry Paul, everyone gets ill. I hope you’re on the mend. I wonder if Ed can arrange cover for if you or Graham are ill? I don’t think you should be left feeling you have to write when not well or feeling bad about it. Just an idea.

Regards
Andrew

davidjhill

Andrews Sykes (LON:ASY) are they IHT qualifying as on AIM timarr? If so this might be a strong reason as to why they are listed as he would be able to pass his 90% share on to his sons at zero IHT. Not that I am any tax expert but just a thought.

timarr

Hi David

Exactly the suggestion I made on the other thread - but I was wrong. I'd forgotten that BPR for IHT purposes applies to all unlisted companies - for historical reasons AIM listed companies are counted as unlisted. So if they take Andrews Sykes (LON:ASY) private they can still benefit from the IHT relief.

Exactly the same situation applies at London Security (LON:LSC) where Tony Murray owns 99%. I can't think of a single reason why he'd do this, but he's a decorated WW2 pilot and he's nigh on 100, so I suppose he can do whatever he feels like.

timarr

garbetklb

EU Supply (LON:EUSP) - agreed bid announced this afternoon at 40%ish premium. I have a v small holding.

lol, yes I suppose you're right. Not obvious !!

Jonathan C

It does sound like proper flu, in which case Paul take it easy as it will probably take at least a further two weeks for you to feel half-normal. If you push yourself too hard, you will set yourself back. It's a nasty nasty disease.

Jonathan

jonno

Hi Rhomboid
Great up date on Airea (LON:AIEA), just shows the benefit of going to AGMs. It sounds as if the company is really starting to benefit from the closure of the Rylux factory and despite the rise in the share price since last year still looks like a promising investment.

Your post prompted me to read the recent prelims according to which basic EPS were 8.21p however I struggle to reconcile this with Group basic EPS of 4.86p. I suspect I am missing the obvious, perhaps you can help. I initially thought that it may be due to exceptionals but there are none for the year to Dec 2018.

All the best

rhomboid1

11th May '19

Hi Jonno

http://www.aireaplc.com/~/medi...

P16 has the details...basically there’s a loss from discontinued activities at Ryalux

I’d post a picture but the the tech doesn’t seem to work for me..

Many thanks Rhomboid, penny dropped so to speak.

All being well will look to make an initial purchase next week.

bestace

Tim,

You're not the only person to have raised the issue of Mr Murray's age and majority ownership of Andrews Sykes (LON:ASY). The point seems to come up as a negative whenever the company is discussed and as a shareholder of around 3 years' standing that's a risk I've been prepared to accept for now.

However your post has prompted me to look back at the ownership history and I don't think the situation is as everyone (including myself) seems to think.

This is what the latest annual report says about the controlling parties, which is consistent with the 'significant shareholders' section of the website:

That should be read in conjunction with two RNSs released over 10 years ago, firstly this one from 4/11/2008...

The Company has been notified today that on 26 October 2008, the Chairman, Mr Jacques-Gaston Murray, transferred his controlling interest in the Tristar Corporation in equal proportion to two trusts; the Jean-Jacques Murray Trust and the Jean-Pierre Murray Trust. Accordingly these two trusts are now the ultimate controlling parties of the Tristar Corporation and subsequently the ultimate controlling parties of the Company.

and secondly this one issued by London Security (LON:LSC) on 5/12/2008:

Further to the directors dealings announcement made on 5 November 2008 the Jean-Jacques Murray Trust has changed its name to the Ariane Trustee Company and the Jean-Pierre Murray Trust has changed its name to the Eden Trustee Company. These two trusts are now the ultimate controlling parties of the Tristar Corporation and subsequently the ultimate controlling parties of the Company.

So it looks to me like Mr Murray senior has already passed on his majority interest to his sons, although he retains a direct ownership of 1.25m shares, which is just under 3% of the company.

After a bit of googling, The Ariane and Eden trusts both appear to be Panama-registered but Murray senior is not listed as a trustee of either. The two sons JJ Murray and JP Murray are both trustees of their respective trusts, and in addition Xavier Mignolet and Marie-Claire Leon (both NEDs of Andrews Sykes (LON:ASY) and London Security (LON:LSC) ) are trustees of both trusts.

Bonitabeach

Re: AIERA (LON: AIEA)

Thank you rhomboid1 for an illuminating report on the AIERA (LON: AIEA) AGM. How refreshing to read from a clearly focused management lacking in waffle and excuses about it was too hot or too cold, there was not enough/too much football..... Plain speaking in Yorkshire is not always a myth.

Their website, AIREA PLC, confirms the favourable first impression. I find a lot to like in this business:

Focused management

Emphasis on selling the product

Geographic spread of customers
Underlying profitability - with free cash flow
Room to expand
Recognising value of good employees
Cheap valuation and decent dividend

Worthy of some investment I think.

mammyoko

12th May '19

Thanks very much for sharing this important information bestace

Gromley

13th May '19

No real knowledge or insight on Premier Technical Services (LON:PTSG) but I am struck by one thing in Paul's commentary.

There was an interesting bear dossier released a little while ago, raising some pertinent questions about PTSG's accounts. A contact sent me a copy of this, which I read with interest. It came with a "do not forward to anyone" caveat, so my apologies to the people who have asked me to forward it to them - I'm not allowed to.

Together with Paul's analysis that :

I don't think there was any particular smoking gun in the dossier,

Whilst I can absolutely understand that, if one has some specific insight or analysis that gives one an edge, then on would wish to limit the number of people that know it (at least while one builds one's position).

This sounds to me more like whisper campaign; publicise the fact there is a "bear dossier" and that there are question marks about the company which are not known to us the great unwashed.

For the avoidance of doubt, I am not suggesting that Paul is in anyway involved in this. Paul has laid out clearly and publicly the potential bear points as he sees them. If I were a shareholder then I would definitely be looking to kick the tyres on those points.

On the other hand if the 'dossier' comes from where I suspect, I would expect to see a drip feed of innuendo over the coming months that would be likely to at least hold back the share price. This in turn might present a good buying opportunity in the future.

Premier Technical Services (LON:PTSG) is therefore one that I am tempted to look at in more detail if and when I have the time.

Deegee Eff

Hi timarr,
Are you sure ? I understood that unlisted companies traded on Britdaq , for example, did not qualify for IHT relief.
Though, I am not certain, it is a while since I checked.
G.

tony akram

I am holder here ,thanks for the info Bestace ....appreciated

As a follow to my earlier post, I bought an opening position in Airea (LON:AIEA) today at 72p. All being well the interims, which look like being in late August will vindicate the purchase.

Richard Goodwin

Great research Bestace!

Hi Graham

No I'm not 100% sure - the rules in this area are incredibly complicated. However, this is taken from the LSE guide to tax benefits, in the section on IHT relief:

The full 100 per cent exemption for a shareholding is only applicable to certain unquoted companies (see page 07). For these purposes, shares admitted to AIM are regarded as unquoted. The investment must be held for at least two years before a chargeable transfer for IHT purposes

https://www.londonstockexchang...

But the rules may have changed, I'm not sure when that was written.

Small Cap Value Report (Fri 10 May 2019) - CTO, PTSG

T Clarke (LON:CTO)

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Paul Scott

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