Final Results
PHSC PLC Final Results 2007/08
______________________________________________
Group Chief Executive's Statement
for the year ended 31 March 2008
Highlights:
! Group revenues increased to GBP5.08m from GBP4.59m
! Profit from continuing operations maintained and disposal of loss-making
subsidiary helped profit for financial year increase from GBP462,000 to GBP521,000
! Borrowings reduced by GBP280,000
! Net Group assets rise to GBP4.89m from GBP4.52m
! Basic earnings per share (net of discontinued operations) reduced from 4.70p
to 4.48p due
to full effect of dilution
! Proposed dividend raised to 0.85p per Ordinary Share (2007: 0.80p)
! One subsidiary acquired and two further acquisitions in pipe-line
I am pleased to present my review of how the Group has performed financially
over the year, and to outline some of the activities that have taken place. In
addition, I look forward to our prospects and opportunities for the year ahead.
Although it was disappointing that we were ultimately unable to conclude our
planned acquisition of a water treatment business due to the seller withdrawing
from the transaction, we did successfully complete the purchase of In House the
Hygiene Management Company Limited (In House) on 30 November 2007. Thus the
Group presently consists of the parent company along with five active
subsidiaries. It is expected that this number will increase in the current
year. Reference to the In House transaction and other planned additions is made
in the section headed "Recent and Proposed Acquisitions" below.
As a result of being unable to proceed with the acquisition opportunity
mentioned above, a higher than anticipated level of cash was held throughout
the period. This cash arose from the GBP1m placing that occurred in March 2007.
In addition, given that the company is cash-generative, a decision was made to
reduce borrowings. In consequence, bank loans secured against Group-owned
properties had reduced from around GBP370,000 at the start of the year to around
GBP90,000 at the year end.
In line with the Board's stated policy of buying back shares where the price is
attractive and where cash flow allows, a total of 136,277 ordinary shares were
purchased during the year and subsequently cancelled. This included the
remaining holding of 86,277 shares originally issued to the seller as part of
the consideration for RSA Environmental Health Limited (RSA) in 2004.
In last year's statement I reported that we had purchased additional premises
for Adamson's Laboratory Service Limited (ALS) at Raunds in Northamptonshire,
adjacent to the existing offices leased by RSA. We have now agreed to acquire
the virtual freehold of the RSA premises themselves for a fee of GBP73,500 and
that purchase is currently in progress. This will be funded from existing cash
resources.
Recent and Proposed Acquisitions
The Group acquired In House the Hygiene Management Company Limited (In House)
on 30 November 2007 for an initial consideration of GBP200,000 paid for out of
existing cash resources. Further payments of GBP50,000 become due on each of the
first and second anniversaries. Both anniversary payments are subject to an
uplift equal to 50% of any pre-tax profit that exceeds GBP100,000 in the
preceding year. In House is a well-respected and established food safety and
hygiene consultancy, with hospitals, schools and hotels among its client base.
The company also offers general health and safety consultancy and training.
Please refer to the section of my report headed Performance by Trading
Subsidiaries for information on post-acquisition performance.
Since the year end, Heads of Terms have been signed for the acquisition of two
companies that will each bring significant new benefits and opportunities to
the Group. Both proposed transactions are subject to a due diligence process
currently in progress. Details of the intended acquisitions are outlined below.
The first company is an independent specialist in the examination and
certification of plant and equipment, offering an inspection service for all
statutory and non-statutory requirements throughout the UK. Originally formed
in 1992, the company derives much of its work from a network of insurance
brokers and enjoys a high level of repeat business. The agreed price is GBP
180,000 payable in cash on completion, plus assets at book value. An additional
GBP25,000 becomes due on the first anniversary subject to pre-tax profits of not
less than GBP60,000 accruing in the period. In the last financial year, the
company recorded pre-tax profits of GBP40,000 on revenues of GBP221,000.
The second company was originally formed in 1989 and provides specialist
scientific, process and engineering services to the water industry. Projects
are undertaken in the potable water, waste water, fresh water and marine water
environments. The business is ideally placed to benefit from increasing
regulatory attention being paid to the sector. In particular, the company
assists clients to meet EU-driven environmental legislation, and the Asset
Maintenance Planning (AMP) programmes that water companies must agree with
Ofwat, the regulatory body. The purchase price has been agreed at GBP500,000
inclusive of net assets of approximately GBP335,000. An initial sum of GBP350,000
becomes payable on completion, GBP100,000 six-months thereafter, and the balance
on the first anniversary of completion. All these payments will be made from
currently existing cash resources. Management accounts for the nine-months to
end of March 2008 indicate that the company had revenues of GBP316,000 for that
period and pre-tax profits of GBP124,000 before director's earnings.
Corporate Structure
In addition to myself, Nicola Coote is an executive director. There are two
non-executive directors on the Board: Mike Miller, who chairs the Audit
Committee, and Graham Webb MBE who chairs the Remuneration Committee.
A Chartered Secretary, Lorraine Young, supports the Board and its committees.
The corporate resource is strengthened by the presence of our Group Accountant,
Candy Wilton.
Performance by Trading Subsidiaries
Profit figures below are stated before tax and Group management charges. Note
that several general health and safety training and consultancy assignments
carried out by particular trading subsidiaries will have been invoiced by other
Group companies as in previous years, thus it is inappropriate to make direct
performance comparisons at subsidiary company level. Reference should be made
to the Group's overall performance.
Personnel Health and Safety Consultants Limited
Sales of GBP1.05 million, yielding a profit of GBP561,000.
In the previous year there were sales of GBP1.12 million and a profit of GBP
528,000.
RSA Environmental Health Limited
Sales of GBP971,000, yielding a profit of GBP70,000.
In the previous year there were sales of GBP966,000 and a profit of GBP68,000.
Adamson's Laboratory Services Limited
Sales of GBP2.73m yielding a profit of GBP490,000.
In the previous year there were sales of GBP2.44m, yielding a profit of GBP542,000
after adjusting to include unbilled revenues at the year end of GBP119,000.
Envex Company Limited
Sales of GBP224,000, yielding a profit of GBP15,000.
By comparison, invoiced sales for the four months after acquisition were GBP
55,000, resulting in a profit of GBP3,000.
Dividend
The Board is proposing a final dividend of 0.85p per ordinary share to be paid
on 19 September 2008 to shareholders on the register as at 22 August 2008.
Prospects
We are finding that the pricing of health and safety consultancy services is
becoming more competitive, and margins are under pressure. Despite this tougher
economic environment, the Board takes the view that PHSC plc can look forward
to revenue growth and a good performance in the forthcoming year. Whilst much
of the growth is dependent on the successful conclusion of the proposed
acquisitions outlined above, the marketplace for the current subsidiaries'
services is still strong. We feel that we are better placed than the majority
of our competitors to withstand the effects of any downturn. Our confidence
arises from the fact that we have a very diverse client portfolio and there are
many ongoing contracts that will underpin revenues.
Trading in the first two months of 2008/09 generated Group revenues of GBP810,000
(2007/08: GBP725,000).
AGM
The Annual General Meeting will be held on Friday 12 September 2008 at The Old
Church, 31 Rochester Road, Aylesford, Kent ME20 7PR at 10:00am.
Stephen King
Group Chief Executive
GROUP BALANCE SHEET 31.3.08 31.3.07
Restated
AS AT 31 MARCH 2008 GBP'000 GBP'000
Non-Current Assets
Property, plant and equipment 807 818
Goodwill 2,585 2,240
3,392 3,058
Current Assets
Inventories 263 389
Trade and other receivables 1,026 951
Cash and cash equivalents 1,303 1,469
2,592 2,809
Total Assets 5,984 5,867
Current Liabilities
Trade and other payables 551 504
Financial liabilities 4 84
Current corporation tax payable 238 236
Short term provisions 80 144
873 968
Non-Current Liabilities
Financial liabilities 85 287
Long term provisions 50 -
Deferred tax liabilities 83 91
218 378
Total Liabilities 1,091 1,346
Net Assets 4,893 4,521
Capital and Reserves attributable
to Equity holders of the Group
Called up share capital 1,152 1,166
Share premium account 1,488 1,488
Revaluation reserve 200 202
Capital redemption reserve 19 5
Retained earnings 2,034 1,660
4,893 4,521
GROUP INCOME STATEMENT 31.3.08 31.3.07
Restated
FOR THE YEAR ENDED 31 MARCH 2008 GBP'000 GBP'000
Continuing operations:
Revenue 5,078 4,589
Cost of sales 2,721 2,306
Gross Profit 2,357 2,283
Administrative expenses 1,637 1,504
Other income 1 1
Operating Profit 721 780
Finance income 56 9
Finance costs 20 28
Profit before taxation 757 761
Corporation tax expense 236 239
Profit for the Financial Year on 521 522
Continuing Operations
Loss for the Financial Year on - 60
Discontinued Operations
Profit for the Financial Year 521 462
Attributable to:
Equity holders of the Group 521,162 462,401
Earnings per Share for Profit from
Continuing Operations attributable to
the Equity Holders of the Group
during the year
Basic 4.48p 5.31p
Diluted 4.42p 5.22p
Earnings per Share for Profit from
Discontinued Operations attributable
to the Equity Holders of the Group
during the year
Basic - (0.61)p
Diluted - (0.60)p
GROUP STATEMENT OF Share Share Capital Revaluation Retained Total
CHANGES IN EQUITY Capital Premium Redemption Reserve Earnings
Reserve
FOR THE YEAR ENDED GBP GBP GBP GBP GBP GBP
31 MARCH 2008
Balance at 1 April 2006 983 728 - 205 1,298 3,214
Profit for year - - - - 462 462
attributable to equity
holder
Dividends - - - - (74) (74)
Issue of ordinary shares 188 812 - - - 1,000
Costs of placing new - (52) - - - (52)
shares issued
Purchase of own shares (5) - 5 - (29) (29)
Depreciation on revalued - - - (3) 3 -
assets
Balance at 31 March 2007 1,166 1,488 5 202 1,660 4,521
Balance at 1 April 2007 1,166 1,488 5 202 1,660 4,521
Profit for year - - - - 521 521
attributable to equity
holder
Dividends - - - - (92) (92)
Purchase of own shares (14) - 14 - (57) (57)
Depreciation on revalued - - - (2) 2 -
assets
Balance at 31 March 2008 1,152 1,488 19 200 2,034 4,893
GROUP CASH FLOW STATEMENT 31.3.08 31.3.07
Restated
FOR THE YEAR ENDED 31 MARCH 2008 GBP'000 GBP'000
Cash flows from operating activities:
Cash generated from operations 897 658
Interest paid (20) (28)
Tax paid (245) (186)
Net cash generated from operating 632 444
activities
Cash flows from investing activities
Purchase of property, plant and (42) (166)
equipment
Proceeds from sale of property, plant - 7
and equipment
Purchase of subsidiary companies (net of (382) (160)
cash acquired)
Interest received 56 9
Net cash used in investing activities (368) (310)
Cash flows from financing activities
Proceeds from borrowings - 93
Repayment of borrowings (281) (90)
Dividends paid to group shareholders (92) (74)
Proceeds of share issues - 948
Purchase of own shares (57) (29)
Net cash (used by)/generated from (430) 848
financing activities
Net (decrease)/increase in cash and cash (166) 982
equivalents
Cash and cash equivalents at beginning 1,469 487
of year
Cash and cash equivalents at end of year 1,303 1,469
NOTE TO THE GROUP CASH FLOW STATEMENT 31.3.08 31.3.07
Restated
FOR THE YEAR ENDED 31 MARCH 2008 GBP'000 GBP'000
I. CASH GENERATED FROM OPERATIONS
Operating profit - continuing operations 721 780
Profit for financial year - discontinued - (60)
operations
Depreciation and amortisation charges 54 81
Loss on sale of discontinued operations - 34
Loss on sale of fixed assets - 3
Decrease/(increase) in stock and work in 126 (83)
progress
Decrease/(increase) in debtors 10 (251)
(Decrease)/increase in creditors (14) 154
Cash generated from operations 897 658
For further information please contact:
PHSC plc
Stephen King 01622 717700
www.phsc.plc.co.uk
Ruegg & Co Limited
Gavin Burnell 020 7584 3663
Hichens, Harrison & Co. plc
Daniel Briggs 020 7382 7776
Latest directors dealings
- 1 day ago Banco Santander S.A.
- 1 day ago Banco Santander S.A.
- 1 day ago Banco Santander S.A.
- 1 day ago Banco Santander S.A.
- 1 day ago Georgia Capital