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PHSC – full-year results state recent “improving picture”, so why are the shares sliding?

By Steve Moore | Friday 11 August 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

PHSC Plc (PHSC), “a leading provider of health, safety, hygiene and environmental consultancy services and security solutions”, has announced results for its year ended 31st March 2017 which feature as the first two “Financial Highlights”; “Underlying EBITDA loss of £0.1m, down from a profit of £0.368m last year… Group revenue rose to £7.16m compared with £7.04m last year”. Hmmm, “a leading provider” ya say?

Of course, EBITDA is also bullshit earnings – with the adjusted pre-tax loss £0.15 million and, even after £0.12 million of new equity more than acquisition spending, there a net £0.05 million burn of cash (net) to £0.21 million.

Current assets over liabilities were slightly increased to £0.99 million, with there also £0.63 million of non-current asset “property, plant and equipment”. The company argues “consolidated net assets of £5.52m… which equates to a net asset value per share of 38p”. However, £3.88 million of that comprises goodwill.

The performance came with the company noting “ongoing political uncertainty and the weaker sterling exchange rate continue to adversely affect the group, and in particular the security-related subsidiaries that import materials priced in euros or US dollars”.

It did though add latest management accounts show, on 5% increased revenue, a first quarter EBITDA “around £120k”, versus a “loss of £40k that was reflected over the corresponding period last year”. That offers some encouragement, but I’d want to see some sustained evidence of real profit and cash generation before considering this other than an avoid.

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