PHSC PLC ("the Company")
Heads of Agreement signed for acquisition
PHSC is pleased to announce that it has signed Heads of Agreement in respect of the acquisition by
PHSC plc of Guardian Water Treatment Limited ("Guardian").
Guardian is an air and water hygiene specialist, was established in 2000 and operates from its base in
Essex.
Air hygiene services include surveys, mechanical cleaning, biocidal disinfection, ductwork and kitchen
extract cleaning, and air quality monitoring. Water hygiene activities include a full range of
Legionella risk assessment and controls such as tank disinfection and cleaning, a full range of water
treatment services, and the supply of associated chemicals.
Turnover of Guardian for the year to 31 March 2007 was £2.1m, which generated pre-tax profits of
£263,000.
Subject to agreement of all parties and satisfactory conclusion of due diligence by PHSC, completion
is scheduled for the third quarter of PHSC's accounting period ie the period ending 31 December 2007.
After a suitable handover period on terms to be agreed, the present Managing Director, Mark Hobson,
will leave the company and it is envisaged that Guardian will continue to be run by the existing
senior management team.
The maximum purchase price is £2.15m (including a side agreement for the purchase of freehold property
based on current property values) and comprises payment on completion of £900,000, a further
unconditional payment of £400,000 on the first anniversary of completion, a bonus payment on the
second anniversary of completion of £200,000 on the basis that the adjusted earnings before interest
and tax (EBIT) for the trading year to 31 March 2009 reaches a minimum of £400,000. This payment will
be adjusted £ for £ on the amount that EBIT is above or below that figure subject to a minimum payment
of £50,000 and a maximum payment of £400,000. The Company will make a formal commitment to purchase
the business property at fair market value (as advised by an independent valuer) within an agreed
period after completion. This property is currently valued at £450,000.
The effect of adding Guardian to the PHSC plc group of companies will be to further expand the range
of services offered. As there is very little overlap in terms of the client base, there are
opportunities to cross-sell.
Stephen King, Managing Director of PHSC plc, said of the acquisition:
Guardian represents our largest acquisition to date, and the board sees it a significant moment in the
development of the Group. Results in the year to 31 March 2007 give combined turnover and profit
figures, before tax and exceptional items, of around £6.7m and £900k respectively. With both companies
currently trading ahead of last year's performance, the board is confident that this acquisition
represents extremely good value for our investors. Note that the consideration is planned to be funded
entirely from existing cash and future revenue. With no dilution to existing shareholdings, there will
inevitably be an enhancement to earnings per share.
ENDS
For further information contact:
PHSC plc
Stephen King 01622 717700
Stephen.king@phsc.co.uk
www.phsc.plc.uk
Ruegg & Co Limited
Gavin Burnell / Brett Miller 020 7584 3663
gburnell@ruegg.co.uk
Hichens, Harrison & Co plc
Daniel Briggs 020 7382 7776
PHSC plc