Interim Results
PHSC PLC Interim Report 2005
________________________________________________
CHAIRMAN'S STATEMENT
for the six months ended 30 September 2005
I report on the half way stage in the current year, covering a period that has
been the most active for PHSC plc (the Group) since the Group was formed. Since
we announced the audited results for the year ended 31 March 2005, a number of
significant events and developments have taken place. These involved
acquisitions, institutional investment, a strengthening of the corporate
infrastructure, and a move from OFEX to AIM. Each development is outlined
below. The net effect is that the Group now has in place a robust corporate
framework that will enable the trading subsidiaries to exploit opportunities
for the provision of health, safety and environmental solutions across the UK.
Acquisitions
The Group acquired Adamson's Laboratory Services Limited (ALS) on 17 June 2005.
ALS is our largest acquisition to date. The purchase price was £1.31m in cash
at completion plus £100,000 in ordinary shares of PHSC plc at 62.5p.
Instalments of £125,000 and £100,000 cash are payable on the first and second
anniversaries respectively. The purchase price included net assets of around £
440,000 of which £175,000 is the freehold premises.
ALS provides mainly asbestos management services to a number of institutions,
local authorities and private sector clients.
On 19 August 2005 we announced the acquisition of Health & Safety Click Ltd
(HSCL). We undertook to make an injection of up to £75,000 into HSCL for
working capital purposes, and to make a further payment of £50,000 to eliminate
the directors' loan account. Former shareholders of HSCL will receive pro-rata
to their shareholdings 50% of any net profits of HSCL for the three years
ending 31 March 2008.
HSCL delivers a low cost health and safety protection and advisory service via
a web based system in order for smaller organisations to become compliant with
health and safety standards.
Institutional Investment
In June 2005 we raised £650,000 before expenses by placing 1,250,000 new
ordinary shares at 52p per share with clients of M.D. Barnard & Co Ltd.
AIM
Following a successful application for the Group's ordinary shares to be traded
on AIM the Group resigned its membership of the OFEX exchange on 30 June 2005.
On 4 July 2005 trading commenced on AIM.
The total cost of the transition to AIM, including costs in respect of the
share issue was £185,000, which has been set against the share premium account.
This has of course resulted in a corresponding reduction in net assets.
Financial Review
There was considerable expenditure associated with the acquisitions and
corporate activity that took place in the period. Whilst the costs have now
been accounted for, it is too early to have enjoyed the benefits.
Group turnover (consolidated) for the period is £1.465m (compared with £0.976m
for the same period last year). Group profit before tax provision is £137,000.
Earnings per share at the interim stage are 0.79p.
Corporate Structure
The Board is committed to the principles of good corporate governance and to
that end has put in place a structure to take the company forward.
The Group welcomed Mike Miller to the Board as a non-executive director. Mike
will chair the newly formed Audit Committee. His fellow non-executive director,
Graham Webb MBE chairs the Remuneration Committee.
The corporate resource has been further strengthened by the appointment of a
Chartered Accountant, Candy Wilton as Group Accountant.
Performance by Trading Subsidiary
Profit figures are stated before tax, PLC charges and amortisation of goodwill
on consolidation.
Personnel Health and Safety Consultants Limited
Invoiced sales of £625,000, yielding a profit of £179,000.
RSA Environmental Health Limited
Invoiced sales of £337,000, yielding a profit of £45,500.
Adamson's Laboratory Services Limited
Invoiced sales post acquisition (between 17 June and 30 September) were £
496,000, yielding a profit of £31,000.
The Group inherited a factoring agreement that currently costs approximately £
3,000 per calendar month. Notice has been given to terminate the arrangement
with effect from February 2006.
Health & Safety Click Limited
Invoiced sales post acquisition (between 17 August and 30 September) were £
6,000, resulting in a pre-tax loss of £9,000.
Dividend
The Board is not recommending an interim dividend, but expects to propose an
appropriate final dividend at the end of the year.
Prospects
We continue to remain optimistic about the level of demand for the Group's
services, and the opportunity for cross selling to our subsidiaries' client
base. The Board is confident that there will be significant improvements in
profitability levels in the second half of the year, which is also
traditionally more profitable than the first half.
Stephen King - Managing Director
PHSC plc Interim Report 2005
Group profit and loss account Six months Six months Year
ended ended ended
30 Sept 05 30 Sept 04 31 Mar 05
Note Unaudited Unaudited Audited
£'000 £'000 £'000
Turnover
Continuing operations 963 627 1,362
Acquisitions 502 349 855
1,465 976 2,217
Cost of sales
Continuing operations 475 393 458
Acquisitions 278 140 579
753 533 1,037
Gross profit 712 443 1,180
Administrative expenses (608) (258) (718)
Other operating income 30 - -
(578) (258) (718)
Operating profit
Continuing operations 164 130 343
Acquisitions (30) 55 119
134 185 462
Interest receivable 12 5 14
Interest payable (9) - -
Profit on ordinary activities 137 190 476
before taxation
Tax charge on profit on (63) (48) (160)
ordinary activities
Retained profit on ordinary 74 142 316
activities
after taxation for the
financial period
Earnings per ordinary share 5 0.79p 1.86p 4.06p
Diluted earnings per ordinary 5 0.78p 1.86p 4.05p
share
Group balance sheet 30 Sept 30 Sept 31 Mar
05 04 05
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Fixed assets
Intangible assets 2 2,383 1,070 1,104
Tangible assets 3 736 400 389
Total fixed assets 3,119 1,470 1,493
Current assets
Stocks 105 - -
Debtors 809 328 407
Cash at bank and in hand 648 534 808
1,562 862 1,215
Creditors:
Amounts falling due within one 4 (1,097) (378) (359)
year
Net current assets 465 484 856
Total assets less current 3,584 1,954 2,349
liabilities
Creditors:
Amounts falling due after more (468) (100) -
than one year
Provisions for liabilities and
charges:
Deferred taxation (13) - -
Net assets 3,103 1,854 2,349
Capital and reserves
Called up share capital 983 800 837
Share premium accounts 728 - 284
Revaluation reserve 194 103 103
Profit and loss account 1,198 951 1,125
Total equity shareholders' 3,103 1,854 2,349
funds
Group cash flow statement Six months Six months Year
ended ended ended
30 Sept 05 30 Sept 04 31 Mar 05
Unaudited Unaudited Audited
£'000 £'000 £'000
Net cash (outflow)/inflow from (74) 325 574
operating activities
Returns on investments and 3 5 14
servicing of finance
Taxation 87 - (76)
Capital expenditure (4) (15) (68)
Acquisitions (1,291) (303) (303)
Equity dividends paid - - (76)
Net cash (outflow)/inflow before (1,279) 12 65
financing
Financing 1,119 69 289
(Decrease)/increase in cash in (160) 81 354
period
Reconciliation of net cash flow
to movement in net funds
(Decrease)/increase in cash in (160) 81 354
the period
Cash (inflow)/outflow from (442) 1 3
(increase)/decrease in debt
Loans acquired with subsidiaries (189) - -
Change in net debt resulting from (791) 82 357
cash flows
Net funds at beginning of period 806 449 449
Net funds at end of period 15 531 806
Reconciliation of operating
profit to operating cash flow
Operating profit/(loss) 134 185 462
Depreciation/amortisation 79 42 91
Loss on disposal fixed assets 1 1 2
(Increase)/decrease in stock and (106) - -
WIP
(Increase)/decrease in debtors 177 130 51
Increase/(decrease) in creditors (359) (33) (32)
Net cash (outflow)/inflow from (74) 325 574
operating activities
Notes on the financial statements
1 The financial information set out above does not constitute
statutory accounts within the meaning of
Section 240 of the Companies Act 1985. It has been prepared on the
basis of the accounting policies set out in the Group's 2005
statutory accounts. The state of affairs at 31 March 2005 has been
extracted from the Group's published accounts for the year ended 31
March 2005 that have been filed with the Registrar of Companies.
The auditors' report on the full statutory accounts of the Group
for the year ended 31 March 2005 was unqualified. The financial
information for the six months ended 30 September 2005 and 30
September 2004 has not been audited.
30 Sept 05 30 Sept 04 31 Mar 05
2 Intangible Fixed Assets Unaudited Unaudited Audited
£'000 £'000 £'000
Cost or valuation
Brought forward 1,197 769 699
Additions 1,282 432 486
In subsidiaries acquired 59 - 12
2,538 1,201 1,197
Depreciation
Brought forward 93 104 34
Charge 62 27 59
155 131 93
Net book value 2,383 1,070 1,104
3 Tangible Fixed Assets
Cost or valuation
Brought forward 510 475 474
Additions 2 21 22
Disposals (1) (7) (7)
Revaluation 91 - -
Acquisition of subsidiary 401 - 21
1,003 489 510
Depreciation
Brought forward 121 78 78
Charge 147 15 32
Eliminated on disposal (1) (4) (5)
Acquisition of subsidiary - - 16
267 89 121
Net book value 736 400 389
PHSC plc Interim Report 2005
Notes on the financial statements
4 Creditors: amounts falling 30 Sept 30 Sept 31 Mar
due within one year 05 04 05
Unaudited Unaudited Audited
£'000 £'000 £'000
Bank loans and overdrafts 128 - -
Hire purchase contracts 1 1 2
Trade creditors 50 - -
Tax 312 78 161
Social Security and other 35 31 -
taxes
VAT 145 80 97
Other creditors 408 188 85
Accrued expenses 18 - 14
1,097 378 359
5 Earnings per share
The earnings per share is 0.79p and the diluted earnings per share
is 0.78p.
The basic earnings per share is calculated by dividing the profit on
ordinary activities after tax of £74,000 (2004: £142,000) by
9,299,165 (2004: 7,612,383) being the weighted average number of
shares in issue and carrying the right to receive a dividend during
the six months ended
30th September 2005.
The calculation of diluted earnings per share is based on the
consolidated profit on ordinary activities after tax for the
financial year of £74,000 (2004: £142,000) and on 9,432,589 ordinary
shares (2004: 7,612,383) being the weighted average number of
ordinary shares in issue and carrying the right to receive a
dividend during the year, being 9,299,165 (2004: 7,612,383) ordinary
shares diluted for the effect of 133,424 (2004: nil) warrants
issued.
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