22 November 2007
CHAIRMAN'S STATEMENT for the six months ended 30 September 2007
Financial Highlights
- Group turnover (consolidated) for the period is £2.518m compared with £2.060m for the same period
last year, representing an increase of 22%.
- Group profit before tax provision is £364,000, a 49% increase in the figure of £244,000 for the
same period last year.
- Diluted earnings per share at the interim stage in respect of continuing activities are 2.14p representing a 22% rise above the 1.76p achieved in the corresponding period last year.
- Net cash inflow from operating activities was £479,000 (£87,000 in the same period last year). After
payment of dividends (£93,000), repayment of borrowings (£140,000) and final payments relating to previous
acquisitions (£159,000), there was a £78,000 net increase in cash. This resulted in cash reserves rising to £1.547m at the end of the period.
The pattern of work continues to result in an interchange of work between subsidiaries. There is a core of personnel
in the Group with the skills to undertake assignments on behalf of any trading subsidiary. Subsequently, the
contracts earned by one subsidiary may be carried out and invoiced by another member of the Group and we have
a policy of not cross-charging between subsidiaries. In consequence the individual performance of each
subsidiary may be distorted and thus the consolidated Group position is the only true measure of performance.
Corporate Review
Acquisitions
There have been no acquisitions in the period although, as previously announced, Heads of Terms have been signed
with two companies as detailed below.
Heads of Terms have been agreed with In House The Hygiene Management Company (IH), a food hygiene practice. Due
diligence is underway and completion is expected before the end of the calendar year. Turnover for IH in
the six months to 30 June 2007 was £197,000, generating pre-tax profits of £56,000 (unaudited).
IH will enter into a strategic partnership with our RSA Environmental Health subsidiary, and will be managed from
RSA's Midlands offices.
The initial consideration for IH is agreed at £200,000 with further payments each of £50,000 on the first and
second anniversaries. Each anniversary payment is subject to a self-funded bonus according to profits.
Heads of Terms have been agreed with Guardian Water Treatment Limited (Guardian), a company specialising in air and
water quality management. Due diligence is underway and completion is expected before the end of the calendar
year, but after the IH acquisition. Guardian's turnover in the year to 31 March 2007 was £2.1m, generating
pre-tax profits of £263,000 (unaudited). Management accounts indicate that Guardian is currently trading
ahead of last year's performance.
The maximum purchase price is £2.15m (including the freehold property based on current property values) and
comprises payment on completion of £900,000, a further unconditional payment of £400,000 on the first
anniversary of completion and a bonus payment on the second anniversary of completion of £200,000 on the
basis that the adjusted earnings before interest and tax (EBIT) for the trading year to 31 March 2009 reaches
a minimum of £400,000. This payment will be adjusted pound for pound by the amount that EBIT is above or
below that figure, subject to a minimum payment of £50,000 and a maximum of £400,000. The Group will purchase
the business property at fair market value within an agreed period after completion. This property is
currently valued at £450,000.
Performance by Trading Subsidiaries
Profit figures for individual subsidiaries are stated before tax and management charges.
Adamson's Laboratory Services Limited
Invoiced sales of £1,407,319, yielding a profit of £277,838 (the figures for the same period last year were £1,099,216 and £190,069).
Envex Company Limited
Invoiced sales of £123,818, resulting in a loss of £6,874 for the period. There are no comparable figures for last year as the company was not part of the Group at that time.
Personnel Health and Safety Consultants Limited
Invoiced sales of £508,377, yielding a profit of £255,637 (the figures for the same period last year were £514,295 and £210,602).
RSA Environmental Health Limited
Invoiced sales of £479,266, yielding a profit of £29,091 (the figures for the same period last year were £445,866
and £29,526).
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
It has traditionally been the case that demand for the Group's services is higher in the second half of the year.
Despite the excellent first half performance, we believe that this trend will continue in the current
financial year. Subject to completing both acquisitions as anticipated, there will also be significant new
revenues and profits to supplement those generated by continuing operations.
Stephen King - Chairman and Managing Director
> Download the detailed interim financial statements (pdf)
For further information please contact:
PHSC plc
Stephen King 01622 717700
Stephen.king@phsc.co.uk
www.phsc.plc.co.uk
Ruegg & Co Limited
Gavin Burnell 020 7584 3663
gburnell@ruegg.co.uk
