Half-yearly Report
PHSC PLC Interim Report 2008
__________________________________________________________________________
GROUP CHIEF EXECUTIVE OFFICER'S STATEMENT
for the six months ended 30 September 2008
Financial Highlights
- Group turnover (consolidated) for the period is £2.401m compared with £
2.518m for the same period last year, representing a decline of 4.5%
- Group profit before tax provision and goodwill impairment has reduced to £
231,000 from £364,000 for the same period last year.
- Diluted earnings per share at the interim stage are 1.04p compared with
2.14p achieved in the corresponding period last year.
- A total of 170,000 Ordinary Shares in PHSC plc were purchased and cancelled
in the period at cost of £64,000.
- Net cash outflow from operating activities was £188,000 (£479,000 inflow in
the same period last year). This includes payment of corporation tax of £
231,000 resulting from the requirement for quarterly instalments for the first
time. After payment of dividends (£97,000), purchase of own shares (£64,000),
purchase of our Raunds premises (£74,500), there was a £412,000 net decrease in
cash. This resulted in cash reserves standing at £892,000 at the end of the
period.
Corporate review
Post balance sheet events
Share purchase
In October 2008, 275,000 Ordinary Shares in PHSC plc were purchased at 23p each
and were cancelled.
Acquisitions
We previously announced the proposed acquisition of two companies: Inspection
Services (U.K.) Limited and Aquatic Water Services Limited.
Completion of the purchase of Inspection Services (U.K.) Limited took place on
1 October 2008. The 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 purchase price of £
180,000 was paid in cash on completion. Cash assets of £136,000 were purchased
£ for £. Net non-cash assets, mainly short-term debtors £ for £, were purchased
at fair value of £25,200. An additional £25,000 becomes due to the sellers on
the first anniversary subject to pre-tax profits of not less than £60,000
accruing in the period. In the last financial year, the company recorded
pre-tax profits of £40,000 on revenues of £221,000.
Discussions relating to the acquisition of Aquatic Water Services Limited (AWS)
are continuing. Our board is adopting a cautious approach in the current
economic climate and in the short term we believe that shareholders' interests
may be better served by us conserving our cash resources. AWS 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.
Performance by Trading Subsidiaries
Profit figures for individual subsidiaries are stated before tax and management
charges.
Adamson's Laboratory Services Limited
Invoiced sales of £1,273,687 yielding a profit of £236,680 (the figures for the
same period last year were £1,407,317 and £277,838).
Envex Company Limited
Invoiced sales of £121,029 yielding a profit of £28,471 for the period (the
figures for the same period last year were £123,818 and £6,874).
Personnel Health and Safety Consultants Limited
Invoiced sales of £509,016 yielding a profit of £236,881 (the figures for the
same period last year were £508,377 and £255,637).
RSA Environmental Health Limited
Invoiced sales of £377,673 yielding a loss of £31,203 (the figures for the same
period last year were £479,266 and a profit of £29,091).
In-House The Hygiene Management Company Limited
Invoiced sales of £131,331 yielding a profit of £7,855. There are no comparable
figures for last year as the company was not part of the Group at that time.
Dividend
The Board is not recommending payment of an interim dividend, but expects to
propose an appropriate final dividend at the end of the year.
Prospects
The Group's diverse client base leaves it well-placed to cope with the economic
downturn and predicted recession in the UK economy. Aside from a small
mortgage on one of its properties, the Group has no borrowings and does not
utilise its overdraft facility. Cash balances at the bank are more than
sufficient to ensure that restrictions on the availability and cost of finance
will have no direct effect.
Stephen King - Group Chief Executive Officer
PHSC plc
Six
Consolidated income statement Six months months Year
ended ended ended
30 Sept
30 Sept 08 07 31 Mar 08
Note Unaudited
£'000 £'000 £'000
Continuing operations
Revenue 2,401 2,518 5,078
Cost of sales 1,258 1,374 2,721
Gross profit 1,143 1,144 2,357
Other income 1 1 1
Administrative expenses - regular (935) (792) (1,637)
Administrative expenses - goodwill
impairment (27) - -
Operating profit 182 353 721
Finance income 25 22 56
Finance costs (3) (11) (20)
Profit before taxation 204 364 757
Corporation tax expense (83) (111) (236)
Profit for the period on continuing
operations 121 253 521
Attributable to:
Equity holders of the Group 121 253 521
Earnings per share for profit from
continuing 3
operations attributable to the equity holders of
the
Group during the period
Basic 1.05p 2.17p 4.48p
Diluted 1.04p 2.14p 4.42p
Consolidated balance sheet 30 Sept 08 30 Sept 07 31 Mar 08
Unaudited
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 2 861 823 807
Goodwill 2,566 2,253 2,585
3,427 3,076 3,392
Current assets
Inventories 344 316 263
Trade and other receivables 1,087 821 1,026
Cash and cash equivalents 892 1,547 1,303
2,323 2,684 2,592
Total assets 5,750 5,760 5,984
Current liabilities
Trade and other payables 510 410 551
Financial liabilities 5 83 4
Current corporation tax payable 87 347 238
Short term provisions 80 - 80
682 840 873
Non-current liabilities
Financial liabilities 82 148 85
Long-term provisions 50 - 50
Deferred taxation liabilities 82 91 83
214 239 218
Total liabilities 896 1,079 1,091
Net assets 4,854 4,681 4,893
Capital and reserves attributable to equity
holders of the Group
Called up share capital 1,135 1,166 1,152
Share premium account 1,488 1,463 1,488
Revaluation reserve 199 203 200
Capital redemption reserve 36 5 19
Retained earnings 1,996 1,844 2,034
4,854 4,681 4,893
Consolidated cash flow statement Six months Six months Year
ended ended ended
30 Sept 08 30 Sept 07 31 Mar 08
Unaudited
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 46 490 897
Interest paid (3) (11) (20)
Tax paid (231) - (245)
Net cash (used in)/generated from operating activities (188) 479 632
Cash flows used in investing activities
Purchase of property, plant and equipment (77) (31) (42)
Purchase of subsidiary companies (8) (159) (382)
Interest received 25 22 57
Net cash used in investing activities (60) (168) (367)
Cash flows used in financing activities
Repayments of borrowings (3) (140) (281)
Dividends paid to group shareholders (97) (93) (93)
Purchase of own shares (64) - (56)
Net cash used in financing activities (164) (233) (430)
Net (decrease)/increase in cash and cash equivalents (412) 78 (165)
Cash and cash equivalents at beginning of year 1,304 1,469 1,469
Cash and cash equivalents at end of year 892 1,547 1,304
Notes to the cash flow statement
Cash generated from operations
Operating profit - continuing operations 182 353 720
Goodwill impairment 27 - -
Depreciation 24 29 54
(Increase)/decrease in inventories (82) 73 126
(Increase)/decrease in trade and other receivables (61) 129 10
(Decrease)/increase in trade and other payables (44) (94) (13)
Cash generated from operations 46 490 897
Consolidated Statement of Changes in Equity
Capital
Share Share Redemption Revaluation Retained Total
Capital Premium Reserve Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2007 1,166 1,488 5 203 1,659 4,521
Profit attributable to
equity holders - - - - 521 521
Dividends - - - - (93) (93)
Purchase of own shares (14) - 14 - (56) (56)
Depreciation on revalued
assets (3) 3 -
Balance at 30 September 2007 1,152 1,488 19 200 2,034 4,893
Balance at 1 April 2008 1,152 1,488 19 200 2,034 4,893
Profit attributable to
equity holders - - - - 121 121
Dividends - - - - (97) (97)
Purchase of own shares (17) - 17 - (63) (63)
Depreciation on revalued
assets - - - (1) 1 -
Balance at 30 September 2008 1,135 1,488 36 199 1,996 4,854
Notes on the financial statements
The unaudited financial information comprises the consolidated interim balance
1 sheets as at 30 September 2008
and 30 September 2007 and the related consolidated interim statements of
income, changes in equity and cash
flows and related notes for the six months then ended (hereinafter referred to
as the "financial information").
The financial information, including the comparative figures for the year ended
31 March 2008, do not
constitute statutory financial statements for the purposes of Section 240 of
the Companies Act 1985. A copy
of the statutory financial statements for the year ended 31 March 2008,
prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union, International
Financial Reporting Intermediate Committee (IFRIC) interpretatations and The
Companies Act 1985 applicable
to companies reporting under IFRS, has been delivered to the Registrar of
Companies and
contained an unqualified auditors' report in accordance with Section 235 of the
Companies Act 1985.
PHSC plc has adopted IFRS with effect from 1 April 2007, in accordance with
European Union Regulations
and the London Stock Exchange AIM Rules. The first Annual Report prepared under
IFRS was for the year ended 31 March 2008. In compliance with IFRS 1 'First
Time Adoption of
International Financial Reporting Standards', the date of transition to IFRS is
1 April 2006.
The interim financial information has been prepared in accordance with the
recognition and measurement
requirements of IFRS as endorsed by the European Union. The Directors do not
consider that there are any
significant changes to the Group's accounting policies (as set out in the 2007
Annual Report) other than those
resulting from the adoption of IFRS. An explanation of how transition to IFRS
has affected the reported
financial position and performance of the Group is provided in note 3. The note
includes reconciliations of equity
and profit for comparative periods reported under UK GAAP to those reported for
those periods under IFRS.
30 Sept 08 30 Sept 07 31 Mar 08
Unaudited
2 Property, plant and equipment £'000 £'000 £'000
Cost or valuation
Brought forward 1,052 1,008 1,008
Additions 78 31 42
Acquisition of subsidiary - - 2
1,130 1,039 1,052
Depreciation
Brought forward 245 191 191
Charge 24 25 54
269 216 245
Net book value 861 823 807
3 Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings 30 Sept 08 30 Sept 07 31 Mar 08
£'000 £'000 £'000
(unaudited) (unaudited)
Continuing activities 121 253 521
Number of shares 30 Sept 08 30 Sept 07 31 Mar 08
Weighted average number of shares for the purpose
of basic earnings per share 11,487,085 11,657,296 11,626,677
Effect of dilutive warrants 163,373 163,373 163,373
Weighted average number of shares for the purpose
of diluted earnings per share 11,650,458 11,820,669 11,790,050
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