Preliminary Results
PHSC PLC Final Results 2008/09
______________________________________________
Group Chief Executive's Statement
for the year ended 31 March 2009
Highlights:
! Group revenues virtually unchanged at £5.022m from £5.078m
! Profits reduced from £521,000 to £326,000 due to impact of economic downturn
! Net cash reserves of £843,000.
! 445,000 Ordinary Shares bought in for cancellation
! Net Group assets rise to £5.00m from £4.89m
! Basic earnings per share reduced from 4.48p to 2.89p
! Proposed final dividend maintained at 0.85p per Ordinary Share (2008: 0.85p)
! One subsidiary acquired, bringing the number of active subsidiaries to six
At the end of what proved a difficult year, I present my review of how the
Group performed in the new commercial environment in which our subsidiaries
found themselves. In addition to expanding some of the key points listed above,
I comment on several of the activities that have taken place, and how the
continuing downturn in the marketplace may affect the Group in the year ahead.
General Overview
Although the reduction in earnings during the year is disappointing, the Group
has stood up well in comparison to some of its peers. We benefit from a very
healthy cash position, albeit that interest earned dropped by around £24,000
from the previous year.
One acquisition was concluded during the year, when we welcomed Inspection
Services (UK) Limited into the Group. The new company undertakes statutory and
non-statutory examination of various plant and equipment across the UK,
obtaining a large proportion of revenues via insurance brokers. Reference to
the transaction is made in the section headed "Recent and Proposed
Acquisitions" below.
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 445,000 Ordinary Shares were
purchased during the year and subsequently cancelled.
In last year's statement it was reported that we agreed to acquire the virtual
freehold of the RSA premises at Raunds, Northants, for a fee of £74,500. This
was duly completed and funded from existing cash resources.
Recent and Proposed Acquisitions
Inspection Services (UK) Limited was purchased on 1 October 2008 for an initial
goodwill consideration of £180,000 with a potential further payment of £25,000
after the first anniversary depending on profit targets being achieved.
Our proposed acquisition of a water services company, reported last year, did
not proceed due to a combination of circumstances. These were a below expected
performance by that company in the period of due diligence, and a view by our
own Board that shareholders' interests would be better served by conserving our
cash reserve.
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. The
contracts of both non-executives were extended for a further twelve months from
March 31 2009.
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. A
number of health and safety training, and general consultancy assignments,
carried out by particular trading subsidiaries will have been invoiced by other
Group companies. For that reason, as in previous years, 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 £1.08 million, yielding a profit of £518,000.
In the previous year there were sales of £1.05 million and a profit of £
561,000.
RSA Environmental Health Limited
Sales of £802,000, yielding a loss of £29,000.
In the previous year there were sales of £971,000 and a profit of £70,000.
Adamson's Laboratory Services Limited
Sales of £2.60 million yielding a profit of £410,000.
In the previous year there were sales of £2.73m, yielding a profit of £490,000.
Envex Company Limited
Sales of £225,000, yielding a profit of £9,000.
In the previous year there were sales of £224,000 and a profit of £15,000.
In House The Hygiene Management Company Limited
Sales of £233,000, yielding a profit of £10,000.
In the previous year there were sales of £118,000 and a profit of £17,000 in
the four month period post acquisition on 30 November 2007.
Inspection Services (UK) Limited
Sales of £128,000, yielding a profit of £33,000 for the six-month period from
the date of acquisition. An adjustment to the way in which income was
recognised in the completion accounts was required to ensure compliance with UK
GAAP. The adjustment of net asset value was provisionally set at £15,000 at
the date of acquisition, but is subject to ongoing discussion as to quantum. We
believe that a substantially higher figure is ultimately repayable in due
course.
Dividend
The Board is proposing a final dividend of 0.85p per ordinary share to be paid
on 18 September 2009 to shareholders on the register as at 21 August 2009.
Prospects
In the current climate, and based upon the predictions of most economic
forecasters looking at the UK economy, we do not expect that the period ending
March 2010 will be any easier than the previous year. This is evidenced by the
fact that trading in the first three months of 2009/10 generated Group revenues
of £1,092,000, against £1,248,000 for the same period the previous year.
With many clients seeking to reduce spending on non-essential services, our
target must be to try to maintain core revenues at a similar level to the year
just ended. Despite the challenges we are faced with, our diverse client base
gives us some degree of protection because we are not reliant upon any
particular business sector.
Our strong cash position means that we have no direct exposure to the
difficulties caused by restrictions on corporate lending. In fact we have
halved the outstanding mortgage on our Raunds premises since the year end,
repaying a lump sum of £40,000 to reduce future interest payments.
Nevertheless, we are essentially a support service and the financial health of
our clients is key to our own success. The Group does not intend to follow the
lead of some others in the health, safety and environmental consultancy
community who are known to be chasing revenue without regard to profits. We
will seek to win new business where we can, emphasising the quality of our
service, and given that it is commercially viable to do so.
Finally, we will continually review expenditure across the Group with a view to
reducing our own costs.
AGM
The Annual General Meeting will be held on Wednesday 9 September 2009 at The
Old Church, 31 Rochester Road, Aylesford, Kent ME20 7PR at 10:00am.
Stephen King
Group Chief Executive
GROUP BALANCE SHEET 31.3.09 31.3.08
AS AT 31 MARCH 2009 £'000 Restated
£'000
Non-Current Assets
Property, plant and equipment 847 807
Goodwill 2,734 2,585
3,581 3,392
Current Assets
Inventories - 3
Trade and other receivables 1,508 1,286
Cash and cash equivalents 843 1,303
2,351 2,592
Total Assets 5,932 5,984
Current Liabilities
Trade and other payables 671 551
Financial liabilities 9 4
Current corporation tax payable 31 238
Short term provisions 75 80
786 873
Non-Current Liabilities
Trade and other payables 2 -
Financial liabilities 75 85
Long term provisions - 50
Deferred tax liabilities 74 83
151 218
Total Liabilities 937 1,091
Net Assets 4,995 4,893
Capital and Reserves attributable
to Equity holders of the Group
Called up share capital 1,107 1,152
Share premium account 1,488 1,488
Revaluation reserve 197 200
Capital redemption reserve 64 19
Retained earnings 2,139 2,034
4,995 4,893
GROUP INCOME STATEMENT 31.3.09 31.3.08
FOR THE YEAR ENDED 31 MARCH 2009 £'000 £'000
Continuing operations:
Revenue 5,022 5,078
Cost of sales 2,732 2,721
Gross Profit 2,290 2,357
Administrative expenses 1,844 1,637
Other income 2 1
Operating Profit 448 721
Finance income 32 56
Finance costs 8 20
Profit before taxation 472 757
Corporation tax expense 146 236
Profit for the Financial Year on 326 521
Continuing Operations
Profit for the Financial Year 326 521
Attributable to:
Equity holders of the Group 326 521
Earnings per Share for Profit from
Continuing Operations attributable to
the Equity Holders of the Group
during the year
Basic 2.89p 4.48p
Diluted 2.85p 4.42p
GROUP STATEMENT OF Share Share Capital Revaluation Retained Total
CHANGES IN EQUITY Capital Premium Redemption Reserve Earnings
FOR THE YEAR ENDED Reserve
31 MARCH 2009 £ £ £ £ £ £
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
Balance at 1 April 2008 1,152 1,488 19 200 2,034 4,893
Profit for year 326 326
attributable to equity
holder
Dividends (97) (97)
Purchase of own shares (45) 45 (127) (127)
Depreciation on revalued (3) 3 -
assets
Balance at 31 March 2009 1,107 1,488 64 197 2,139 4,995
GROUP CASH FLOW STATEMENT 31.3.09 31.3.08
FOR THE YEAR ENDED 31 MARCH 2009 £'000 Restated
Note
£'000 £'000
Cash flows from operating activities:
Cash generated from operations 1 422 897
Interest paid (8) (20)
Tax paid (358) (245)
Net cash generated from operating 56 632
activities
Cash flows from investing activities
Purchase of property, plant and (89) (42)
equipment
Purchase of subsidiary companies (net of (229) (382)
cash acquired)
Interest received 32 56
Net cash used in investing activities (286) (368)
Cash flows from financing activities
Repayment of borrowings (6) (281)
Dividends paid to group shareholders (97) (92)
Purchase of own shares (127) (57)
Net cash used by financing activities (230) (430)
Net decrease in cash and cash (460) (166)
equivalents
Cash and cash equivalents at beginning 1,303 1,469
of year
Cash and cash equivalents at end of year 843 1,303
NOTE TO THE GROUP CASH FLOW STATEMENT 31.3.09 31.3.08
FOR THE YEAR ENDED 31 MARCH 2009 £'000 Restated
£'000
I. CASH GENERATED FROM OPERATIONS
Operating profit - continuing operations 448 721
Depreciation and amortisation charges 84 54
Loss on sale of fixed assets 1 -
Decrease in stock and work in progress 3 -
(Increase)/decrease in debtors (93) 136
Decrease in creditors (21) (14)
Cash generated from operations 422 897
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
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