30 November 2011
GROUP CHIEF EXECUTIVE OFFICER'S STATEMENT for the six months ended 30 September 2011
Financial Highlights
- Group turnover (consolidated) for the period was £2.135m compared with £2.387m for the same period last year.
- EBITDA of £114k, compared with £106k for the same period last year.
- Basic earnings per share at the interim stage are 0.64p compared with 0.61p achieved in the corresponding period last year.
- Net cash generated by operating activities was £242k (£120k generated in the same period last year).
- Overall cash and cash equivalents stood at £805k at the end of the period compared with £749k at the year ended 31 March 2011. Cash has increased despite £207k paid out in dividends.
- Net asset value (unaudited) of £5.133m or 49p pence per Ordinary Share compared to a current share price (mid) of 16p pence
Trading overview
The Group continues to trade profitably but does so against a backdrop of a difficult marketplace where there appear to be fewer opportunities for additional work and reductions in margins for new work that is won.
Each subsidiary has seen a reduction in revenues but has been able to marginally improve the bottom line at the interim stage by prudent management of costs. Financial statistics are given for each trading subsidiary later in this statement.
The Board believes that the second half of the year will be significantly better than the first, something that has consistently happened in previous years. This is due to various factors, including the pattern of public sector spending.
We have taken the decision to relocate our subsidiary Envex Company Limited from rented offices in Berkshire to the Group-owned office of Adamson’s Laboratory Services Ltd in Essex. There will be net savings after the cost of office closure has been offset against lower future overheads.
Costs of running the parent company have decreased by about 12% from £228,500 to £200,300 for the first half year as a result of directors agreeing to lower salaries and other contributory factors. The Board continues to seek ways to achieve savings.
Outlook
Whilst the level of long-term contracts continues to be fairly stable, the volume of ad-hoc work is unpredictable and visibility is never more than a few months ahead. The Board, however, remains reasonably optimistic that the Company’s performance over the full year will be broadly in line with what was achieved in the previous year.
In our Annual Report we said that cost-cutting may lead to an overall improvement in margins but cautioned that in a volatile marketplace there can be no certainty. There are presently no signs of any increase in the level of confidence that our clients have in their own prospects, meaning they are cautious about allocation of budgets to services such as those we provide.
Dividend prospects
As in previous years, the Board is not recommending payment of an interim dividend, but expects to propose an appropriate final dividend at the end of the year.
Our special dividend of 1.0p, giving a total dividend of 2.0p per Ordinary Share, drew positive responses from the majority of investors. The Board is not averse to considering a similar distribution in relation to the current year, subject to this being judged appropriate in all the circumstances.
Despite a cash outflow of £207k pertaining to the dividend payment mentioned above, the Company’s cash reserves stood £56k higher at the end of the period compared with 31 March 2011.
Net Asset Value
As at 30 September 2011, the Company had net assets of £5.133m (unaudited) as per these interim accounts. There were 10,381,973 Ordinary Shares in issue at that date which equates to a net asset value (NAV) per share of 49 pence. At 16 pence per share the Ordinary Shares of the Company are currently trading at approximately a 67% discount to the net asset value.
Performance by Trading Subsidiaries
Profit/loss figures for individual subsidiaries are stated before tax and inter-company charges (including the costs of operating the plc which are recovered through management charges to trading subsidiaries), interest paid and received, depreciation and amortisation.
Adamson’s Laboratory Services Limited
Invoiced sales of £947,271 yielding a profit of £18,929 (the figures for the same period last year were £978,607 and £7,206).
Envex Company Limited
Invoiced sales of £65,136 yielding a profit of £8,761 for the period (the figures for the same period last year were £85,336 and £27,420).
Inspection Services (UK) Limited
Invoiced sales of £126,111 yielding a profit of £10,901 (the figures for the same period last year were £123,272 and £12,359).
Personnel Health and Safety Consultants Limited
Invoiced sales of £392,777 yielding a profit of £175,102 (the figures for the same period last year were £462,650 and £202,706).
RSA Environmental Health Limited
Invoiced sales of £246,057 yielding a profit of £11,658 (the figures for the same period last year were £367,847 and £15,942).
Quality Leisure Management Limited
Invoiced sales of £357,816 yielding a profit of £83,162 (the figures for the same period last year were £369,239 and £62,104).
Stephen King - Group Chief Executive Officer
> Download the detailed interim financial statements (pdf, 341kb)
For further information please contact:
PHSC plc
Stephen King 01622 717700
www.phsc.plc.co.uk
Northland Capital Partners Limited
(Nominated Adviser and Broker)
Gavin Burnell / Rod Venables 020 7796 8800
