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09/1/2020
08:41 | cjohn: Galaxy Enforcer 23 Dec '19 - 12:46 - 17 of 20
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CJohn I am only stating what the company has stated in the interim's regarding the goodwill.
The company most certainly hasn't said that writing off the goodwill on the balance sheet will increase the share price!!
They say what any company says about goodwill, that it's value is regularly re-considered.
Goodwill per se isn't a NEGATIVE. It's an accounting item, that finds its way onto balance sheets following acquistions. Its existence may or may not be justified economically. If PHSC decided that the goodwill on their balance sheet was UNJUSTIFIED and eliminated it from the balance sheet, this would not IMPROVE sentiment towards PHSC.
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23/12/2019
09:00 | cjohn: They made over 1p eps in the first half, even with a poor performance from the most important security division.
If they repeat that in the second half, trading alone would support the current share price, putting aside the strong net cash position and the overall strong asset backing.
If their cutting back on capacity and costs at the security division improves margins, then we'd expect the trading result in the second half to support a higher price.
Of course, the uncertainty and potential disruption around Brexit could have a continuing negative impact on trading.
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03/5/2018
09:56 | microscope: I agree meijiman the spread is 'killing the goose', not to mention taking the pee.... (In reality nearer 2p but still your point is more than correct!)
However I think you have to decide what you think is fair value, and where we might be in, say, 1-2 years time in terms of the company.
Adamson's will be behind them and hopefully the rest, particularly the QCS division, purring along rather nicely.
My idea of fair value, on these two measures, is well above 20p, (a market cap of under 4 million even at 25p remember, with a chance of a dividend at next interims) and therefore I still think that at this price the shares are well worth buying, despite as you rightly point out, the crass spread.
Although I am loaded up fairly fully, I'm like battlebus, silently watching/waiting.... Suspect there could be a 'fastest finger first' were the share price to drop much from here!
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10/1/2018
10:47 | microscope: Thread re-written due to issue with previous header.
It's been over 12 years on the current active thread.. So i think PHSC is a deserving candidate for a new makeover!
The company is involved in Health and Safety, and the parent company has grown by acquisitions over a period of about 30 years. One of them (all will be revealed later in this post...) is a hidden gem imho, and the key reason for my investment here.
There are eight sub-divisions, and a summary of each can be found in last month's interim results here: hTTps://uk.advfn.com/stock-market/london/phsc-plc-PHSC/share-news/PHSC-Plc-Half-year-Report/76226577 which showed an ebitda profit of just under 200k overall, and a dividend of 0.5p a share, with cash at period end of £129,000.
With just under 14.7 million shares in issue, and a share price of a mere 12.25p at the time of scribbling this, the market cap is a miniscule £1.9 million, so the dividend is unusual for a company of this size.
Pro forma nav was no less than 38.7p per share at these interims.
So you're looking at these numbers and wondering why the market cap is quite so low..
Something doesn't add up....
.....You're right of course. The catch is Adamson's laboratory, one of their divisions, specializing in asbestos management. It imports materials and the falling pound has hammered them. Despite hefty cuts and lay offs, parent management concluded that 'they are unable to come up with a successful turnaround plan, and as a result, one of the two plants will be closed, with disposal of the factory. Costs will be in the second half of the year, including redundancy payments.'
The first half loss in that division was £71,500 including redundancy cost, and it's clear there's more to come. The other plant will move to an intermediary business with a skeleton staff.
The 2016 finals included around a 500,000 writedown of the Adamson's business.
However a note to the 2016 accounts said that it from then would have "zero carrying value" ie no further goodwill writedowns. So it will just be costs.
Of course it will hurt the second half and therefore year end results.
The spread can be brutal, anything recently from 0.5p to 3p, depending on which market maker is on the bid/offer etc at any given time.
That's the bad news.
The Better news is that six of the other seven other divisions are trading profitably (a couple of them marginally, the other four healthily), with strong growth in the B2B field. The only other losing division was a tiny 19k loss because of the costs of adopting updated accounting standards.
It will be borderline I think whether they make an overall profit for this year given the Adamson's situation, but in six months time that will be behind them, and they will be able to sell the closed plant at some stage. Even so yield is 4% (xd currently) if they don't pay a year end divvy.
One division really stands out for me. And this is where I would argue, very strongly, that PHSC's 'hidden value' is actually pretty special at the current share price, even accepting the short term difficulty of the Adamson's situation.
Here it is: (Remember this is just for SIX months!)
QCS International Limited
Invoiced sales of £372,100 yielding a profit of £145,900 (the figures for the same period last year were £258,600 and £67,300).
And then you read the statement
"There are high expectations that QCS will continue to exceed targets for sales and profits in the delivery of quality management consultancy and training services. Sales are already looking promising with high levels of training already secured, and additional income expected from new consultancy projects recently won"
I can assure you, Stephen King (CEO of overall company PHSC, and very experienced, also owns about 22% of the equity) is a born pessimist, I followed this company back in Ofex days some 15 or so years ago. it's the most bullish statement I've ever heard from him.
Were QCS ever to be floated off, it would imho on these numbers float comfortably for a whole lot more than the entire £2 million market cap of the whole company (and that is why goodwill and nav is actually valuable in PHSC's case).
For anyone able to take a longer view, the market cap looks to have discounted far too much. net assets are in the region of 25p a share and although cash is £129,000 at the report date, the fact they felt able to pay a healthy divvy suggests it is not a concern.
They have a guaranteed but uncalled up loan of £300,000 from HSBC too.
If they ever took the business private (a stick posters have used against them for ten years) shareholders would imho certainly get more than 12.25p. Won't happen in my view anyway, they could have done it years ago and have never shown any interest in doing so. You almost invariably get a warning sign of these situations, a company will start moaning about listing costs. Has never happened here.
I could see them making £250,000 when they announce the interims in a year's time, with a decent second half ahead.
As always, dyor, caveat emptor and all imvho. All info in this post is in good faith, but I am an amateur investor, so please verify for yourselves and am happy to correct or update any errors/omissions that you spot.
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09/1/2018
20:11 | microscope: Thread replaced due to issue with header, please see here
https://uk.advfn.com/cmn/fbb/thread.php3?id=42159291
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08/12/2017
13:52 | microscope: Good stuff Ochs, and indeed bb, agreed :)
Sometimes nuggets are well hidden. That's the case here imho in one of the divisions. Those of us who knew this company in Ofex days know Stephen King has pretty much always been cautious or pessimistic.
If a company was coming to market with these comments below, it would be interesting to see what it would be valued at. I reckon, even after the recent share price progress, it would be more than this market cap....
One of the divisions here. And remember this is just for six months! :))
'QCS International Limited
Invoiced sales of £372,100 yielding a profit of £145,900 (the figures for the same period last year were £258,600 and £67,300).
And then you read the statement
"There are high expectations that QCS will continue to exceed targets for sales and profits in the delivery of quality management consultancy and training services. Sales are already looking promising with high levels of training already secured, and additional income expected from new consultancy projects recently won"'
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07/12/2017
15:07 | microscope: Just to recap from the results:
"Financial Highlights
* Group turnover for first half up 3.7% at GBP3.720m compared with GBP3.587m last
year.
* EBITDA of GBP197k, versus a loss of GBP93k at the half way stage last year.
* Earnings per share of 1.08p compared with a loss of 0.85p last year.
* Cash of GBP129k compared with GBP301k last year.
* Net asset value (unaudited) of GBP5.680m.
* Pro-forma net asset value (unaudited) per share of 38.7p compared to a
current share price (mid) of 11p.
* Interim dividend declared of 0.5p per Ordinary Share."
Impressive imho, well done PHSC :)
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06/12/2017
15:27 | microscope: Bit wide of the mark there, eezy. From yesterday' interims.
'...* Pro-forma net asset value (unaudited) per share of 38.7p compared to a
current share price (mid) of 11p.'
£350k would do nicely thank you for the property. (market cap at 11p £1.65 million)
Plenty loss making companies with market caps of 50-100 million+. Versarien maybe on your logic should be sold off?
lol
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05/12/2017
15:02 | microscope: Cheers, i should have added that I agree with you, even with another £1 million in writedowns, nav would still be well above share price valuation.
Can't see a year end divvy, but not impossible.
Incidentally just wondering if they own the plant being closed, or rent it, makes a difference.
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05/12/2017
13:39 | microscope: It is meijiman and they are good results, especially given the situation at Adamson's. Dividend is significant too in context of share price. Anyone buying on a 12-18 month+ basis will be making a good investment imho
Unfortunately that is of course not the whole story.
After some careful reading, As well as closing 50% of that business, there will be redundancy costs and last year's writedown was around half a million (to zero). Money will eventually be raised through the sell of the premises but be surprising if that happens this half.
Deeply frustrating, as everything else is delivering the goods. not sure why the cashflow is disappointing but they wouldn't pay a dividend if it was an issue.
i continue to watch closely. I am prepared to consider investing on a long term view, but the price will have to be right!
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PLUS1
