Last checked at 24 Jul 2009 07:00
PHSC PLC Final Results 2008/09
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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 Grouphas stood up well in comparison to some of its peers. We benefit from a veryhealthy cash position, albeit that interest earned dropped by around 24,000from the previous year.One acquisition was concluded during the year, when we welcomed InspectionServices (UK) Limited into the Group. The new company undertakes statutory andnon-statutory examination of various plant and equipment across the UK,obtaining a large proportion of revenues via insurance brokers. Reference tothe transaction is made in the section headed "Recent and ProposedAcquisitions" below.In line with the Board's stated policy of buying back shares where the price isattractive and where cash flow allows, a total of 445,000 Ordinary Shares werepurchased during the year and subsequently cancelled.In last year's statement it was reported that we agreed to acquire the virtualfreehold of the RSA premises at Raunds, Northants, for a fee of 74,500. Thiswas duly completed and funded from existing cash resources.
Recent and Proposed Acquisitions
Inspection Services (UK) Limited was purchased on 1 October 2008 for an initialgoodwill consideration of 180,000 with a potential further payment of 25,000after the first anniversary depending on profit targets being achieved.Our proposed acquisition of a water services company, reported last year, didnot proceed due to a combination of circumstances. These were a below expectedperformance by that company in the period of due diligence, and a view by ourown Board that shareholders' interests would be better served by conserving ourcash reserve.Corporate StructureIn addition to myself, Nicola Coote is an executive director. There are twonon-executive directors on the Board: Mike Miller, who chairs the AuditCommittee, and Graham Webb MBE who chairs the Remuneration Committee. Thecontracts of both non-executives were extended for a further twelve months fromMarch 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. Anumber of health and safety training, and general consultancy assignments,carried out by particular trading subsidiaries will have been invoiced by otherGroup companies. For that reason, as in previous years, it is inappropriate tomake direct performance comparisons at subsidiary company level. Referenceshould be made to the Group's overall performance.Personnel Health and Safety Consultants LimitedSales 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 LimitedSales 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 LimitedSales 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 LimitedSales 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 LimitedSales 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) LimitedSales of 128,000, yielding a profit of 33,000 for the six-month period fromthe date of acquisition. An adjustment to the way in which income wasrecognised in the completion accounts was required to ensure compliance with UKGAAP. The adjustment of net asset value was provisionally set at 15,000 atthe date of acquisition, but is subject to ongoing discussion as to quantum. Webelieve that a substantially higher figure is ultimately repayable in duecourse.
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 economicforecasters looking at the UK economy, we do not expect that the period endingMarch 2010 will be any easier than the previous year. This is evidenced by thefact that trading in the first three months of 2009/10 generated Group revenuesof 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, ourtarget must be to try to maintain core revenues at a similar level to the yearjust ended. Despite the challenges we are faced with, our diverse client basegives us some degree of protection because we are not reliant upon anyparticular business sector.Our strong cash position means that we have no direct exposure to thedifficulties caused by restrictions on corporate lending. In fact we havehalved 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 ofour clients is key to our own success. The Group does not intend to follow thelead of some others in the health, safety and environmental consultancycommunity who are known to be chasing revenue without regard to profits. Wewill seek to win new business where we can, emphasising the quality of ourservice, 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 KingGroup Chief ExecutiveGROUP BALANCE SHEET 31.3.09 31.3.08 AS AT 31 MARCH 2009 GBP'000 Restated GBP'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 31.3.08FOR THE YEAR ENDED 31 MARCH 2009 GBP'000 GBP'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 GBP GBP GBP GBP GBP GBP 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 GBP'000 Restated Note GBP'000 GBP'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 GBP'000 Restated GBP'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 plcStephen King 01622 717700www.phsc.plc.co.ukRuegg & Co LimitedGavin Burnell 020 7584 3663Hichens, Harrison & Co. plcDaniel Briggs 020 7382 7776
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