PHSC PLC - Final Results

9 July 2013

                                   PHSC PLC

                        (the "Company" or the "Group")

     Preliminary Announcement of Results for the year ended 31 March 2013

Highlights:

  * EBITDA improved by 35% at £0.603m, up from £0.445m
  * Group revenues increased by 30% to £5.791m compared with £4.434m
  * Cash reserves of £0.216m
  * Group net assets rise to £5.63m from £5.37m
  * Basic earnings per share up 25% to 3.64p from 2.91p
  * Proposed final dividend increased by 50% to 1.5p per share

I am pleased to present my review of the Group's performance over the year, and
to update shareholders on the progress made at PHSC plc.

In last year's report I said that our future prospects would depend in part
upon our ability to develop new products and a wider range of services. The
improvement in revenues and profits that we are able to report has been made
possible by our decision to add to our core activities. We made two
acquisitions during the year; QCS International Limited (QCS) and B to B Links
Limited (B to B), and both have made positive contributions.

Revenue and profit

Consolidated Group sales for the period rose to £5,791,300 from £4,434,300.
This improvement of more than 30% can be attributed largely to the additional
revenues generated by our two new companies, with QCS having been acquired at
the end of July 2012 and B to B joining the Group at the start of October 2012.
As a consequence of the improved revenues, the Group was able to generate a 35%
increase to earnings before interest, taxation, depreciation and amortisation
(EBITDA). The figure of £603,100 EBITDA compares with £445,500 generated in the
previous year.

Costs

Following a pay freeze in the previous year, the remuneration committee
approved a 2% general increase that took effect in July 2012. This award did
not apply to directors on the main board.

At the start of the year, the business and assets of Envex Company Limited
(Envex) were transferred to Adamson's Laboratory Services Limited (ALS) and
Envex became a trading division of ALS. This led to some economies of scale.

In Q4, net proceeds of £71,000 were realised from the sale of the vacant
property, previously occupied by RSA Environmental Health Limited (RSA), at
Raunds. RSA now shares the adjacent ALS satellite offices and this has led to
lower overall premises-related costs.

With Group revenues rising by over a third, it is unsurprising that overall
costs of sales and overheads increased proportionately. In the case of B to B
we now have a subsidiary that predominantly derives income from the
installation and sale of equipment and consumables. The profiles of all our
other businesses are largely of a service nature, whereby they sell only their
time and expertise. This different emphasis has an impact on the cost of sales
and necessitates the holding of product and equipment in stock. B to B is
involved in a large CCTV installation contract and has had to purchase
materials and services to enable it to gear up for the ongoing installation
works.

Recent Acquisitions

QCS International Limited (QCS)

The entire issued share capital of QCS was purchased at the end of July 2012.
QCS is a company incorporated in Scotland, and was established in 1987. The
company specialises in quality, environmental, and health and safety management
systems and assists organisations by providing practical support and training
in systems such as ISO 9001, ISO 14001, OHSAS 18001 and ISO 13485.

The terms were for an initial consideration of £160,000 in cash and the issue
of 79,186 Ordinary Shares in PHSC plc, and net current assets £ for £. On the
first anniversary a further £160,000 becomes due under the contract but after
adjustments this payment will be £121,000. This arises because the cash and
cash-equivalent net assets purchased at completion were overvalued. An
overpayment of approximately £39,000 arose as it was found that QCS had
received several advance payments for services. At the time of completion, we
and the sellers were fully aware that an adjustment would be required but could
not quantify this until completion accounts had been prepared. The reduced sum
payable on the first anniversary does not affect the overall consideration, as
in effect the payment at completion was £199,000. A final payment of £80,000 is
due two years after completion, subject to adjustment up or down according to
performance against targets.

The acquisition of QCS enables the Group to offer a number of new services. It
will also help to expand the Scottish marketplace for the Group, in that QCS
will be able to introduce all of the Group's services to their existing
clients.

B to B Links Limited (B to B)

The Company acquired the entire issued share capital of B to B at the end of
September 2012. B to B is a retail security and labeling company that provides
a range of security solutions to independent and large, national retailers. Its
core business is the prevention of stock loss through the use of electronic
article surveillance (EAS) designed specifically for the protection of small
and vulnerable products. B2B is the recognised preferred security partner of a
number of trade associations. They are one of the market leaders and
specialists in the supply of EAS security tagging systems to protect perfumes,
gift items and alcohol in a variety of retail outlets, including shops on board
ferries operating in both UK and international waters, duty free shops in
international airports and in the high street.

A growing part of the company's business is the installation of closed circuit
television systems (CCTV), and at the time of acquisition they had secured an
agreement with a major department store chain. This CCTV agreement has
generated average revenues of £75,000 per month.

Consideration for the acquisition was satisfied via an initial cash payment of
£303,444 at completion, and the issue of 150,000 new ordinary shares of PHSC
plc. A further cash payment of £320,000 falls due on the first anniversary, and
a final cash payment on the second anniversary of between £120,000 and £800,000
subject to performance over the period since completion. Cash and other assets
were purchased at fair value based on the completion accounts.

The acquisition of B to B has enabled the company to diversify from its core
business of health and safety consultancy and training.

Other Opportunities

The Group is not currently considering any further acquisitions. We believe
that calls on our cash to satisfy the two most recent purchases will limit our
ability to fund enlargement of the company during the present earn-out periods.
We also take the view that after increasing the size of the Group by a third in
the course of the year, a period of consolidation is necessary.

Corporate Structure

There has been no change to the make-up of the board. It consists of myself,
Nicola Coote (executive director), and two non-executive directors (Mike
Miller, who chairs the audit committee, and Graham Webb MBE who chairs the
remuneration committee). The contracts of both non-executives have been
extended until 31 March 2014. Our chartered secretary, Lorraine Young, supports
the board and its committees. All corporate matters relating to accounting are
ably dealt with by our Group Accountant, Candy Wilton.

Despite recent upward movements, our shares continue to trade well below asset
value. The board regularly reviews each area of corporate expenditure,
including that relating to our trading platform, to satisfy itself that
maintaining an AIM listing remains appropriate. We do however remain committed
to AIM, and the associated costs become easier to justify when we are in a
period of corporate growth.

Employees

I recognise that our success as a group is entirely dependent upon the
commitment, skills and input of every employee at every subsidiary company. On
behalf of the board, I wish to thank all of the Group's employees for their
support and enthusiasm over the past year. We are committed to taking all
reasonable steps to safeguard the welfare of, and recognise the contribution
made by, each member of staff.

Performance by Trading Subsidiaries

Profit figures below are stated before tax and Group management charges. Note
that revenues for services are credited to the company generating the sale even
if the work is delivered by a sister company. For that reason, reference should
be made to the Group's overall performance instead of looking at how individual
subsidiaries have fared.

Personnel Health and Safety Consultants Limited

Sales of £765,500, yielding a profit of £300,000.
In the previous year there were sales of £770,600 and a profit of £313,000.

RSA Environmental Health Limited

Sales of £420,700, yielding a profit of £10,900.
In the previous year there were sales of £474,300 and a loss of £3,300.

Adamson's Laboratory Services Limited

Sales of £2,366,900 yielding a profit of £366,700.
In the previous year there were combined (with Envex Company) sales of
£2,223,800, yielding a combined profit of £300,600.

Inspection Services (UK) Limited

Sales of £202,100, yielding a profit of £6,600.
In the previous year there were sales of £242,100, yielding a profit of
£13,000.

Quality Leisure Management Limited

Sales of £607,600, yielding a profit of £119,300.
In the previous year there were sales of £723,500, yielding a profit of £160,800.

B to B Links Limited

In the six-month period since acquisition there were sales of £1,093,800
yielding a profit of £83,500.

QCS International Limited

In the eight-month period since acquisition there were sales of £334,600
yielding a profit of £98,000.

Net Asset Value

As at 31 March 2013, the Company had net assets of £5.63 million. There were
10,606,348 Ordinary Shares in issue at that date which equates to a net asset
value (NAV) per share of 53p. At today's price of 27.5p per share, the Ordinary
Shares of the Company are currently trading at a discount of almost 50% to the
net asset value.

Each year we evaluate the level of goodwill associated with each historical
acquisition, to ensure that the value on the balance sheet can still be
justified. We have written down the carrying value of Inspection Services (UK)
Limited by £39,400 this year, in recognition of the reducing contribution that
the subsidiary is likely to make to Group profits going forward. We remain
comfortable with all other valuations.

Dividend

The board is proposing a final dividend of 1.5p per ordinary share. This is an
increase from the ordinary dividend of 1.0p last year. However, due to cash
calls in connection with acquisitions previously outlined, we are unable to pay
an additional dividend (last year: 1.0p per ordinary share). Subject to
approval at the annual general meeting, the dividend of 1.5p per ordinary share
will be paid on 30 September 2013 to shareholders on the register as at 23
August 2013.

Prospects

Health and safety marketplace

We see this as a maturing market and one in which margins are progressively
diminishing. There remain many pro-active clients who understand the importance
to their business of maintaining good health and safety standards. This is
largely where our client base lies. Elsewhere there is often customer
reluctance to spend beyond what is seen as absolutely necessary to achieve
basic compliance, combined with a reduction in the perceived importance of
health and safety in the work environment. There is less focus by regulators on
all but the most hazardous of workplaces, leaving many employers to take the
view that compliance is not seen as important as it once was. This is
exemplified by a reduced number of routine inspections by enforcing
authorities, and a strategy that sees far fewer investigations of workplace
injuries.

Key areas for Group subsidiaries remain those of asbestos management, health
and safety in the leisure, care, transport and education sectors, statutory
examination of plant and machinery, and the provision of various forms of
worker and management training.

Quality systems

We expect to see organic incremental growth in our QCS subsidiary across the
key areas of public training, in house training, consultancy, and outsource
services for management systems. The company is based in Cumbernauld (near to
Glasgow) and has a strong presence in the central region of Scotland. It enjoys
significant revenue from customers both nationally and internationally, but we
see potential to expand the client base geographically particularly into
England.

SafetyMARK

As anticipated, 2012/13 was a formative year for our new SafetyMARK audit and
certification service that has been launched initially in the education sector.
This service is delivered by the In House division of RSA Environmental Health
Limited. In the year, revenues of around £31,000 were generated but there were
one-off set-up costs in the order of £20,000. We expect to more than double
this source of income in 2013/14 and to achieve higher margins now that the
launch costs are behind us. There are also opportunities for partnerships with
other providers of services to schools and colleges.

Retail security

Through our most recent acquisition, B to B, we expect to increase our presence
in this marketplace. As well as launching new products to the sector, we
propose to capitalise on B to B's good reputation and high profile to increase
revenues from our current range. We are presently working to build a more
robust infrastructure, necessary to adequately service the rapid expansion of
the CCTV side of the business. Once this new structure is in place, we will be
well-positioned to target a wider variety of sales opportunities. We also
recognise that potentially there is an overlap between security and safety,
meaning that there will be scope for cross-selling other Group services to the
client base.

Expectations

Thanks in no small measure to our decision to diversify into new areas of
business, the future of the Company looks more positive than it has done for
some time.

With a far smaller reliance on income derived from the public sector, we have
probably seen the end of the direct effects of Government spending cuts.
Confidence in the private sector, however, remains low in comparison to
pre-recession sentiment. It will take some time for organisations to reinstate
their budgets for many of the services we provide, and these are unlikely to
return to previous levels.

Our core of retained clients will continue to provide a revenue stream and this
will underpin the business as it adapts to different ways of working. The
demand for asbestos management services will remain a major contributor to
revenues as this area is highly regulated for good reason.

In 2013/14 we predict another positive year where revenue and profit from our
new subsidiaries will more than make up for any shortfall from the rest of the
Group..

Unusually for PHSC plc, and directly because of acquisition payments falling
due in the year, we will not have the security of a strong cash balance.
Nevertheless, we have an agreement with our bankers that any facilities we
require will be forthcoming, subject to the normal caveats.

In summary, I am confident that the Company has made satisfactory progress and
is going in the right direction. On behalf of the Board I would like to thank
all shareholders for their continued support.

Stephen King
Group Chief Executive



GROUP STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2013

                                                      31.3.13        31.3.12
                                                            £              £

Continuing operations:

Revenue                                             5,791,359      4,434,307

Cost of sales                                     (3,023,484)    (2,256,418)

Gross profit                                        2,767,875      2,177,889

Administrative expenses                           (2,255,042)    (1,786,139)

Other income                                            5,682          6,737

Profit from operations                                518,515        398,487

Finance income                                          2,163          8,906

Finance costs                                           (850)          (242)

Profit before taxation                                519,828        407,151

Corporation tax expense                             (137,477)      (108,072)

Profit for the year after tax attributable to         382,351        299,079
owners of the parent

Other comprehensive income                                  -              -

Total comprehensive income attributable to            382,351        299,079
owners of the parent

Attributable to:

Equity holders of the Group                           382,351        299,079

Basic Earnings per Share for profit after tax           3.64p          2.91p
and total comprehensive income from continuing
operations attributable to the equity holders
of the Group during the year


The company has elected to take the exemption under section 408 of the
Companies Act 2006 to not present the parent company profit and loss account.
The loss for the year before dividends received from subsidiaries (2013 - £
nil, 2012 - £586,555) was £96,917 (2012 - loss £42,093). The loss is after an
impairment charge in respect of the investment value of Inspection Services UK
Limited following an impairment review of the goodwill which has been
reflected in the consolidated accounts. There were no recognised gains and
losses for 2012 or 2011 other than those included in the company profit and
loss account.



GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2013

                                                   Capital
                               Share     Share  Redemption    Retained
                             Capital   Premium     Reserve    Earnings     Total
                                   £         £           £           £         £


Balance at 1 April 2011    1,038,196 1,497,409     143,628    2,594,120 5,273,353

Profit for year                    -         -           -      299,079   299,079
attributable to equity
holders

Deferred tax adjustment to         -         -           -        5,588     5,588
property valuation

Dividends                          -         -           -    (207,639) (207,639)

Balance at 31 March 2012   1,038,196 1,497,409     143,628    2,691,148 5,370,381

Balance at 1 April 2012    1,038,196 1,497,409     143,628    2,691,148 5,370,381

Profit for year                    -         -           -      382,351   382,351
attributable to equity
holders

Issue of shares               22,438    70,300           -            -    92,738

Stamp duty on issue of                (12,180)           -            -  (12,180)
shares

Deferred tax adjustment to         -         -           -        3,083     3,083
property valuation

Dividends                          -         -           -    (209,223) (209,223)

Balance at 31 March 2013   1,060,634 1,555,529     143,628    2,867,359 5,627,150



GROUP STATEMENT OF CASH FLOWS for the year ended 31 March 2013

                                                 31.3.13        31.3.12
                                                       £              £

Cash flows from operating activities:

Cash generated from operations                   427,108        514,030

Interest paid                                      (850)          (242)

Tax paid                                       (182,705)       (55,840)

Net cash generated from operating activities     243,553        457,948

Cash flows from investing activities

Purchase of property, plant and equipment       (25,371)        (6,009)

Purchase of subsidiary companies (net of cash  (785,866)      (107,097)
acquired)

Disposal of fixed assets                          88,250          7,414

Interest received                                  2,163          8,906

Net cash used in investing activities          (720,824)       (96,786)

Cash flows from financing activities

Dividends paid to Group shareholders           (209,223)      (207,639)

Net cash used by financing activities          (209,223)      (207,639)

Net increase in cash and cash equivalents      (686,494)        153,523

Cash and cash equivalents at beginning of year   902,582        749,059

Cash and cash equivalents at end of year         216,088        902,582



NOTES TO THE GROUP STATEMENT OF CASH FLOW for the year ended 31 March 2013

                                                 31.3.13        31.3.12
                                                       £              £

CASH GENERATED FROM OPERATIONS

Operating profit - continuing operations         518,515        398,487

Depreciation charge                               45,172         46,962

Goodwill impairment                               39,387              -

Acquisition cost                                       -          7,097

Profit on sale of fixed assets                   (5,184)        (1,328)

Increase in stock                               (14,884)        (3,775)

(Increase)/decrease in debtors                 (335,953)        155,573

Increase/(decrease) in creditors                 187,417       (88,986)

Decrease in financial liabilities                (7,362)              -

Cash generated from operations                   427,108        514,030


NOTE TO THE PRELIMINARY RESULTS ANNOUNCEMENT OF PHSC PLC FOR THE YEAR ENDED 31
MARCH 2013

The financial information set out above does not constitute the Group's
financial statements for the years ended 31 March 2013 or 2012, but is derived
from those financial statements. Statutory financial statements for 2012 have
been delivered to the Registrar of Companies and those for 2013 will be
delivered following their approval by the board and dispatch to shareholders.
The auditors have not yet reported on the 2013 financial statements.

Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not in itself contain sufficient information to
comply with IFRS. The accounting policies used in preparation of this
preliminary announcement are consistent with those in the full financial
statements that have yet to be published.

For further information please contact:

PHSC plc
Stephen King 01622 717700
www.phsc.plc.co.uk

Northland Capital Partners Limited
Gavin Burnell / Edward Hutton020 7796 8800
John Howes / Alice Lane(Broking)

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