Acquisition of SG Systems (UK) Limited

14 December 2015

PHSC plc

("PHSC", the "Company" or the "Group")

Acquisition of SG Systems (UK) Limited

The Company is pleased to announce that on Friday 11 December 2015 it completed the acquisition of SG Systems (UK) Limited (“SG”).

SG is a growing anti-theft solutions and merchandising company that provides a range of security products and services to large national, key regional and independent retailers across the UK, Europe and the USA. Their core business is the prevention of stock loss through the use of electronic article surveillance (“EAS”) and product display merchandising protection, designed specifically for the protection of numerous product groups.

SG is a recognised high end service provider with a number of industry related accreditations and awards. They work with a variety of retail markets, including electrical, apparel, pharmacy, DIY, grocery supermarkets and department stores. SG also offers radio-frequency identification (RFID) systems, CCTV and customer-counting products. Unaudited financial results for the year to 30 September 2015 show revenues of GBP1,732,189 and loss before tax of GBP51,222 and, after adjustment for exceptional items, EBITDA of approximately GBP 150,000. SG had net assets of GBP236,388 as of 30 September 2015.

Consideration for the acquisition comprises a cash payment of GBP275,000 on completion along with the issue of 100,000 new Ordinary Shares of 10p each of PHSC plc (“Acquisition Shares”). A further cash payment of GBP200,000 falls due on the first anniversary and a final cash payment falls due on the second anniversary. The final payment is a nominal GBP75,000 and is capped in a range of GBP25,000-GBP375,000 with the actual sum determined by a formula that relates to SG’s performance over the period since completion.

This acquisition strengthens the Group’s presence in the retail security tagging sector, a market we first entered through the purchase of B to B Links Limited (B2B) in 2012.

Although SG and B2B will continue to carry out business as separate entities, they will work alongside each other to maximise the potential synergies. Colin Warnock, Managing Director of B2B, will take on responsibility for SG. Colin will be supported by SG’s outgoing directors who have all committed to remaining with the business in various capacities.

Application will be made for the Acquisition Shares to be admitted to trading on AIM. Admission is expected to become effective and dealings are expected to commence on AIM on 18 December 2015. Following admission of the Acquisition Shares, the Company will have 13,086,348 Ordinary Shares in issue. The Acquisition Shares will rank pari passu with the existing issued Ordinary Shares.

For further information please contact:

PHSC plc Stephen King   www.phsc.plc.uk	01622 717700
Sanlam Securities UK Limited (Nominated adviser and broker) Lindsay Mair/James Thomas	020 7628 2200