2 December
2019
PHSC PLC
(“PHSC”, the “Company”, or the “Group”)
Unaudited Interim
Results for the six months ended 30
September 2019
GROUP CHIEF EXECUTIVE OFFICER’S
STATEMENT
Financial Highlights
- Group revenue for first half of £2.234m, down from £2.897m last
year.
- EBITDA of £175k, compared with an underlying equivalent of
£135k at the halfway stage last year i.e. before factoring in an
exceptional gain from property disposal.
- Earnings per share of 1.01p compared with 1.47p last
year. Last year’s figure includes exceptional gain from
property disposal.
- Cash of £688k compared with £583k last year.
- Net asset value (unaudited) of £5.3m compared to £5.5m last
year.
- Pro-forma net asset value (unaudited) per share of 36p compared
to a current share price (mid) of 11p.
- Interim dividend declared of 0.5p per ordinary share.
Operational Highlights and Business
Outlook
Compared with the halfway stage last year, EBITDA from trading
activities improved across the Group as a whole by £40k, aided by
the Group’s lower overheads and premises related savings. This was
achieved despite a decline in product sales through our security
division, caused by the trading difficulties of the retail
sector.
All businesses within the safety division contributed higher
profits, with three out of the four safety-related subsidiaries
achieving higher revenues. The forward order book is very
encouraging.
Our quality systems division also reported growth in sales and
increased profits. The larger space available for public training
courses, following expansion into an adjacent unit, is starting to
pay dividends with higher delegate numbers being achieved.
Our security division saw a reduction in sales of around 45% as
the customer base, predominantly high street retailers, continued
to struggle, resulting in a loss for the first half. The effect has
been mitigated to an extent by careful cost control and a reduction
in staffing levels through normal staff turnover. After a prolonged
period of low activity, the subsidiary’s largest client has
recently begun to place new business, and this gives more scope for
optimism in the future. As has been previously reported, the weak
Sterling exchange rate impacts greatly on gross profit margins, as
all product supplied and installed are imported and paid for in US
Dollars or Euros.
The fortunes of the Group as a whole are affected by the
performance of the security division, which presently accounts for
approximately 40% of the Group’s revenues. The business is an
important player in the retail sector and has again been recognised
at the annual Retail Risk Fraud Awards when it was Highly Commended
for RFID solutions (products using radio frequency identification
systems).
Dividend
Profitable trading and a healthy cash position have enabled the
Board to declare an interim dividend of 0.5p per ordinary share, to
be paid on 28 February 2020 to those
on the register of members on 3 January
2020.
The recommendation by the Board of any final dividend for the
current financial year will be subject to the Group’s full year
performance.
Cash Flow
Cash at bank on 30 September 2019
stood at £688k compared with £583k at the same time last year.
Other than in the normal course of business and the proposed and
any future dividends that might be declared, the Board does not
currently anticipate there being any additional calls on the
Company’s cash.
Performance by Trading
Subsidiaries
Profit/loss figures for individual subsidiaries are stated
before tax and inter-company charges (including the costs of
operating the plc which are recovered through management charges
to, and dividends from, trading subsidiaries), interest paid and
received, depreciation and amortisation.
Inspection Services (UK) Limited
Invoiced sales of £132,613 yielding a profit of £35,860 (the
figures for the same period last year were £108,563 and
£19,130).
Personnel Health and Safety Consultants Limited
Invoiced sales of £366,657 yielding a profit of £139,470 (the
figures for the same period last year were £311,111 and
£123,846).
RSA Environmental Health Limited
Invoiced sales of £207,524 resulting in a profit of £50,488 (the
figures for the same period last year were £190,563 and
£27,501).
Quality Leisure Management Limited
Invoiced sales of £194,295 resulting in a profit of £58,544 (the
figures for the same period last year were £218,327 and
£46,983).
QCS International Limited
Invoiced sales of £397,832 yielding a profit of £142,102 (the
figures for the same period last year were £363,514 and
£111,259).
B2BSG Systems Limited
Invoiced sales of £935,356 resulting in a loss of £56,558 (the
figures for the same period last year were £1,705,080 and £65,319
profit).
For further information please
contact:
PHSC plc
Stephen
King
01622 717 700
Stephen.king@phsc.co.uk
www.phsc.plc.uk
Strand Hanson Limited (Nominated
Adviser)
020 7409 3494
Richard Tulloch/Eric Allan
Novum Securities Limited
(Broker)
020 7399 9427
Colin Rowbury
About PHSC
PHSC plc, through its trading subsidiaries Personnel Health
& Safety Consultants Ltd, RSA Environmental Health Ltd, QCS
International Ltd, Inspection Services (UK) Ltd and Quality Leisure
Management Ltd, provides a range of health, safety, hygiene,
environmental and quality systems consultancy and training services
to organisations across the UK. B2BSG Systems Ltd offer innovative
security solutions including tagging, labelling and CCTV.
The information contained within this announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 (“MAR”).
Group Statement of
Comprehensive Income |
|
|
Six months
ended |
|
Six months
ended |
|
Year
ended |
|
|
|
30 Sept 19 |
|
30 Sept 18 |
|
31 Mar 19 |
|
Note |
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
£’000 |
|
£’000 |
|
£’000 |
Continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
3 |
|
2,234 |
|
2,897 |
|
5,215 |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(1,101) |
|
(1,494) |
|
(2,719) |
|
|
|
|
|
|
|
|
Gross
profit |
|
|
1,133 |
|
1,403 |
|
2,496 |
|
|
|
|
|
|
|
|
Administrative
expenses |
|
|
(979) |
|
(1,298) |
|
(2,418) |
Goodwill
impairment |
2 |
|
- |
|
- |
|
(200) |
|
|
|
|
|
|
|
|
Profit on disposal of
fixed assets |
|
|
- |
|
166 |
|
166 |
|
|
|
|
|
|
|
|
Profit from
operations |
|
|
154 |
|
271 |
|
44 |
|
|
|
|
|
|
|
|
Finance
income/(costs) |
|
|
1 |
|
(1) |
|
(1) |
|
|
|
|
|
|
|
|
Profit before
taxation |
|
|
155 |
|
270 |
|
43 |
|
|
|
|
|
|
|
|
Corporation tax
expense |
|
|
(7) |
|
(54) |
|
(42) |
|
|
|
|
|
|
|
|
Profit
for the period after tax attributable |
|
|
|
|
|
|
to owners of
parent |
3 |
|
148 |
|
216 |
|
1 |
|
|
|
|
|
|
|
|
Total
comprehensive income attributable to owners of the parent |
|
148 |
|
216 |
|
1 |
|
|
|
|
|
|
|
|
|
Basic and diluted
Earnings per Share for profit after tax from continuing operations
attributable to the equity holders of the Group during the
period |
5 |
|
1.01p |
|
1.47p |
|
0.005p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
Statement of Financial Position |
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
Note |
|
£’000 |
|
£’000 |
|
£’000 |
Non-current
assets |
|
|
|
|
|
|
|
Property, plant and
equipment |
4 |
|
561 |
|
453 |
|
489 |
Goodwill |
|
|
3,478 |
|
3,678 |
|
3,478 |
Deferred tax
asset |
|
|
18 |
|
22 |
|
18 |
|
|
|
4,057 |
|
4,153 |
|
3,985 |
Current
assets |
|
|
|
|
|
|
|
Inventories |
|
|
307 |
|
379 |
|
317 |
Trade and other
receivables |
|
|
1,069 |
|
1,404 |
|
973 |
Cash and cash
equivalents |
|
|
688 |
|
583 |
|
642 |
|
|
|
2,064 |
|
2,366 |
|
1,932 |
|
|
|
|
|
|
|
|
Total
assets |
3 |
|
6,121 |
|
6,519 |
|
5,917 |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Trade and other
payables |
|
|
647 |
|
889 |
|
675 |
Right of use lease
liability |
|
|
23 |
|
- |
|
- |
Current corporation
tax payable |
|
|
62 |
|
71 |
|
55 |
|
|
|
732 |
|
960 |
|
730 |
Non-current
liabilities |
|
|
|
|
|
|
|
Right of use lease
liability |
|
|
54 |
|
- |
|
- |
Deferred taxation
liabilities |
|
|
46 |
|
56 |
|
46 |
|
|
|
100 |
|
56 |
|
46 |
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
832 |
|
1,016 |
|
776 |
|
|
|
|
|
|
|
|
Net assets |
|
|
5,289 |
|
5,503 |
|
5,141 |
|
|
|
|
|
|
|
|
Capital and
reserves attributable to equity |
|
|
|
|
|
|
|
holders of the
Group |
|
|
|
|
|
|
|
Called up share
capital |
|
|
1,468 |
|
1,468 |
|
1,468 |
Share premium
account |
|
|
1,916 |
|
1,916 |
|
1,916 |
Capital redemption
reserve |
|
|
144 |
|
144 |
|
144 |
Merger relief
reserve |
|
|
134 |
|
134 |
|
134 |
Retained earnings |
|
|
1,627 |
|
1,841 |
|
1,479 |
|
|
|
|
|
|
|
|
|
|
|
5,289 |
|
5,503 |
|
5,141 |
Group
Statement of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
Capital |
Share
Premium |
Capital
Redemption
Reserve |
Merger
Relief
Reserve |
Retained
Earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
|
|
|
|
|
|
Balance at 1 April
2019 |
1,468 |
1,916 |
144 |
134 |
1,479 |
5,141 |
Profit for the period
attributable to equity holders |
- |
- |
- |
- |
148 |
148 |
|
|
|
|
|
|
|
Balance at 30
September 2019 |
1,468 |
1,916 |
144 |
134 |
1,627 |
5,289 |
|
|
|
|
|
|
|
Balance at 1 April
2018 |
1,468 |
1,916 |
144 |
134 |
1,625 |
5,287 |
Profit for the period
attributable to equity holders |
- |
- |
- |
- |
216 |
216 |
|
|
|
|
|
|
|
Balance at 30
September 2018 |
1,468 |
1,916 |
144 |
134 |
1,841 |
5,503 |
Group Statement of
Cash Flows |
|
Six
months |
|
Six
months |
|
Year |
|
|
ended |
|
ended |
|
ended |
|
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
£’000 |
|
£’000 |
|
£’000 |
Cash flows
generated from operating activities |
|
|
|
|
|
|
Cash generated from
operations |
|
57 |
|
48 |
|
326 |
Interest paid |
|
- |
|
(1) |
|
(2) |
Tax paid |
|
- |
|
- |
|
(9) |
Net cash generated
from operating activities |
|
57 |
|
47 |
|
315 |
|
|
|
|
|
|
|
Cash flows (used
in)/from investing activities |
|
|
|
|
|
|
Purchase of property,
plant and equipment |
|
(14) |
|
(8) |
|
(69) |
Disposal of fixed
assets (net of disposal costs) |
|
2 |
|
300 |
|
299 |
Interest received |
|
1 |
|
- |
|
- |
Net cash (used
in)/from investing activities |
|
(11) |
|
292 |
|
230 |
|
|
|
|
|
|
|
Cash flows used in
financing activities |
|
|
|
|
|
|
Dividends paid to
group shareholders |
|
- |
|
- |
|
(147) |
Net cash used in
financing activities |
|
- |
|
- |
|
(147) |
|
|
|
|
|
|
|
Net increase in
cash and cash equivalents |
|
46 |
|
339 |
|
398 |
Cash and cash
equivalents at beginning of period |
|
642 |
|
244 |
|
244 |
Cash and cash
equivalents at end of period |
|
688 |
|
583 |
|
642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the cash
flow statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from
operations |
|
|
|
|
|
|
Operating profit -
continuing operations |
|
154 |
|
271 |
|
44 |
Depreciation
charge |
|
21 |
|
13 |
|
38 |
Goodwill
impairment |
|
- |
|
- |
|
200 |
Profit on sale of
property |
|
- |
|
(166) |
|
(162) |
Loss on sale of other
fixed assets |
|
3 |
|
3 |
|
- |
Decrease in
inventories |
|
10 |
|
10 |
|
73 |
(Increase)/decrease in
trade and other receivables |
|
(96) |
|
165 |
|
595 |
(Decrease)/increase in
trade and other payables |
|
(35) |
|
(248) |
|
(462) |
Cash generated from
operations |
|
57 |
|
48 |
|
326 |
Notes to the Financial Statements
1. Basis of
preparation
These condensed consolidated financial statements are presented
on the basis of International Financial Reporting Standards (IFRS)
as adopted by the European Union and interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC)
and have been prepared in accordance with the AIM Rules for
Companies and the Companies Act 2006, as applicable to companies
reporting under IFRS.
The financial information contained in this report, which has
not been audited, does not constitute statutory accounts as defined
by Section 434 of the Companies Act 2006. The Group’s
statutory financial statements for the year ended 31 March 2019, prepared under IFRS have been
filed with the Registrar of Companies. The auditors’ report
for the 2019 financial statements was unqualified and did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006.
Other than as set out below, the same accounting policies and
methods of computation are followed within these interim financial
statements as adopted in the most recent annual financial
statements.
The Group has applied IFRS 16 with a date of initial application
of 1 April 2019 using the modified
retrospective approach and therefore the comparative information
has not been restated and continues to be reported under IAS 17 and
IFRIC 4. The cumulative effect of initial application is
recognised in retained earnings at 1 April 2019. The details
of the change in accounting policy are disclosed below.
Previously, the Group determined at contract inception whether
an arrangement is or contains a lease under IFRIC 4. Under
IFRS 16, the Group assesses whether a contract is or contains a
lease based on the definition of a lease.
On transition to IFRS 16, the Group elected to reassess whether
there is a lease for all contracts in place on or after 1 April
2019. Contracts that were not identified as leases under IAS
17 and IFRIC 4 were reassessed for whether there is a lease.
Therefore, the definition of a lease under IFRS 16 was applied to
contracts in place or entered into on or after 1 April 2019.
As lessee, the Group previously classified leases as operating
or finance leases based on its assessment pf whether the lease
transferred significantly all of the risks and remains incidental
to ownership of the underlying asset to the Group. Under IFRS
16, the Group recognises rights-of-use assets and liabilities for
most leases i.e. these leases are on-balance sheet.
The Group decided to apply recognition exemptions to short-term
leases of equipment and services.
At transition, lease liabilities were measured at the present
value of the remaining lease payments, discounted at a cost of
capital of 5.0%. Rights-of-use assets are measured at their
carrying amount as if IFRS 16 had been applied since the
commencement date, discounted at a cost of capital of 5.0%.
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Group assesses
whether:
- The contract involves the use of an identified assets; this may
be specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset;
- The Group has the right to obtain substantially all of the
economic benefits from use of the assets throughout the period of
use; and
- The Group has the right to direct the use of the asset.
The Group has this right when it has the decision-making rights
that are most relevant to changing how and for what purpose the
asset is used, In rare cases where the decision about how and
for what purpose the asset is used is predetermined, the Group has
the right to direct the use of the asset if the Group has the right
to operate the asset.
On transition to IFRS 16, the Group recognised an additional
£83,575 of right-of-use assets and the impact of discounting was
considered immaterial so lease liabilities of £83,575 were also
recognised. Therefore, no adjustment to equity at 1 April 2019 was made. In the period to
30 September 2019, depreciation of
£6,905 was recognised in the statement of comprehensive income in
relation to right of use assets.
The information presented within these interim financial
statements complies with IAS 34 “Interim Financial Reporting”.
This requires the use of certain accounting estimates and
requires that management exercise judgement in the process of
applying the Group’s accounting policies. The areas involving
a high degree of judgement or complexity, or areas where the
assumptions and estimates are significant to the interim financial
statements are disclosed below:
Impairment of goodwill
The Board has considered the carrying value of goodwill and
although there have been losses in certain subsidiaries in the
interim period, the longer term outlook remains stable and an
impairment charge in these interim accounts is not therefore
considered necessary and will be reassessed at the year end.
2. Exceptional
Administrative Expenses
|
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
£’000 |
|
£’000 |
|
£’000 |
|
|
|
|
|
|
|
Impairment of PHSC plc’s investment in
B2B Links Limited |
|
- |
|
- |
|
200 |
3. Segmental
Reporting
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
Unaudited |
|
Unaudited |
|
Audited |
Revenue |
£’000 |
|
£’000 |
|
£’000 |
|
|
|
|
|
|
Security
division: B2BSG Solutions Ltd |
935 |
|
1,705 |
|
2,724 |
|
935 |
|
1,705 |
|
2,724 |
|
|
|
|
|
|
Health & safety
division |
|
|
|
|
|
Inspection Services
(UK) Ltd |
133 |
|
109 |
|
233 |
Personnel Health &
Safety Consultants Ltd |
367 |
|
311 |
|
657 |
Quality Leisure
Management Ltd |
194 |
|
218 |
|
438 |
RSA Environmental
Health Ltd |
207 |
|
191 |
|
404 |
|
901 |
|
829 |
|
1,732 |
|
|
|
|
|
|
Quality systems
division: QCS International Ltd |
398 |
|
363 |
|
759 |
|
|
|
|
|
|
Total
revenue |
2,234 |
|
2,897 |
|
5,215 |
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
Unaudited |
|
Unaudited |
|
Audited |
Profit/(loss) after
taxation, before management charge |
£’000 |
|
£’000 |
|
£’000 |
|
|
|
|
|
|
Security
division |
|
|
|
|
|
B2BSG Solutions
Ltd |
(42) |
|
62 |
|
(31) |
|
(42) |
|
62 |
|
(31) |
|
|
|
|
|
|
Health & safety
division |
|
|
|
|
|
Inspection Services
(UK) Ltd |
30 |
|
17 |
|
38 |
Personnel Health &
Safety Consultants Ltd |
137 |
|
114 |
|
249 |
Quality Leisure
Management Ltd |
49 |
|
41 |
|
93 |
RSA Environmental
Health Ltd |
43 |
|
26 |
|
61 |
|
259 |
|
198 |
|
441 |
|
|
|
|
|
|
Quality systems
division: QCS International Ltd |
115 |
|
100 |
|
159 |
|
|
|
|
|
|
Holding
company: PHSC plc |
(184) |
|
(156) |
|
(368) |
|
|
|
|
|
|
|
148 |
|
204 |
|
201 |
|
|
|
|
|
|
Taxation adjustment
(group loss relief and deferred tax) |
- |
|
12 |
|
- |
|
|
|
|
|
|
Goodwill
impairment |
- |
|
- |
|
(200) |
|
|
|
|
|
|
Total Group profit
after taxation |
148 |
|
216 |
|
1 |
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
Unaudited |
|
Unaudited |
|
Audited |
Total
assets |
£’000 |
|
£’000 |
|
£’000 |
|
|
|
|
|
|
Security
division |
|
|
|
|
|
B2BSG Systems Ltd |
602 |
|
1,112 |
|
553 |
|
602 |
|
1,112 |
|
553 |
|
|
|
|
|
|
Safety
division |
|
|
|
|
|
Inspection Services
(UK) Ltd |
218 |
|
233 |
|
193 |
Personnel Health &
Safety Consultants Ltd |
1,057 |
|
689 |
|
950 |
Quality Leisure
Management Ltd |
320 |
|
258 |
|
326 |
RSA Environmental
Health Limited |
684 |
|
619 |
|
636 |
|
2,279 |
|
1,799 |
|
2,105 |
|
|
|
|
|
|
Quality
division: QCS International Ltd |
765 |
|
568 |
|
667 |
|
|
|
|
|
|
Discontinued:
Adamson’s Laboratory Services Ltd |
- |
|
18 |
|
- |
|
|
|
|
|
|
Holding
company: PHSC plc |
3,249 |
|
4,146 |
|
3,366 |
|
|
|
|
|
|
|
6,895 |
|
7,643 |
|
6,691 |
|
|
|
|
|
|
Adjustment of
goodwill |
(774) |
|
(1,124) |
|
(774) |
|
|
|
|
|
|
Total
assets |
6,121 |
|
6,519 |
|
5,917 |
4. Property, plant
and equipment
|
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
£’000 |
|
£’000 |
|
£’000 |
|
|
|
|
|
|
|
Cost or
valuation |
|
|
|
|
|
|
Brought forward (as
restated) |
|
907 |
|
934 |
|
935 |
Additions |
|
14 |
|
8 |
|
69 |
Disposals |
|
(37) |
|
(163) |
|
(181) |
Carried forward |
|
884 |
|
779 |
|
823 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
Brought forward |
|
334 |
|
340 |
|
340 |
Charge |
|
21 |
|
13 |
|
38 |
Disposals |
|
(32) |
|
(27) |
|
(44) |
Carried forward |
|
323 |
|
326 |
|
334 |
|
|
|
|
|
|
|
Net book
value |
|
561 |
|
453 |
|
489 |
5. Earnings per
share
The calculation of the basic earnings per share is based on the
following data.
|
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
£’000 |
|
£’000 |
|
£’000 |
|
|
Unaudited |
|
Unaudited |
|
|
Earnings |
|
|
|
|
|
|
Continuing
activities |
|
148 |
|
216 |
|
1 |
|
|
|
|
|
|
|
Number of
shares |
|
30 Sept
19 |
|
30 Sept
18 |
|
31 Mar
19 |
|
|
|
|
|
|
|
Weighted average
number of shares for the purpose of basic earnings per share |
|
14,667,257 |
|
14,667,257 |
|
14,667,257 |