TIDMPHSC
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 GBP2.234m, down from GBP2.897m last year.
* EBITDA of GBP175k, compared with an underlying equivalent of GBP135k 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 GBP688k compared with GBP583k last year.
* Net asset value (unaudited) of GBP5.3m compared to GBP5.5m 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 GBP40k, 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 GBP688k compared with GBP583k 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 GBP132,613 yielding a profit of GBP35,860 (the figures for the
same period last year were GBP108,563 and GBP19,130).
Personnel Health and Safety Consultants Limited
Invoiced sales of GBP366,657 yielding a profit of GBP139,470 (the figures for the
same period last year were GBP311,111 and GBP123,846).
RSA Environmental Health Limited
Invoiced sales of GBP207,524 resulting in a profit of GBP50,488 (the figures for
the same period last year were GBP190,563 and GBP27,501).
Quality Leisure Management Limited
Invoiced sales of GBP194,295 resulting in a profit of GBP58,544 (the figures for
the same period last year were GBP218,327 and GBP46,983).
QCS International Limited
Invoiced sales of GBP397,832 yielding a profit of GBP142,102 (the figures for the
same period last year were GBP363,514 and GBP111,259).
B2BSG Systems Limited
Invoiced sales of GBP935,356 resulting in a loss of GBP56,558 (the figures for the
same period last year were GBP1,705,080 and GBP65,319 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 Six Year
ended months ended
ended
30 Sept 19 30 Sept 18 31 Mar 19
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 148 216 1
owners of the parent
Basic and diluted Earnings per Share for 5 1.01p 1.47p 0.005p
profit after tax from continuing
operations attributable to the equity
holders of the Group during the period
Group Statement of Financial Position 30 Sept 30 Sept 31 Mar 19
19 18
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'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 Share Capital Merger Retained
Capital Premium Redemption Relief Earnings
Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2019 1,468 1,916 144 134 1,479 5,141
Profit for the period - - - - 148 148
attributable to equity
holders
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 - - - - 216 216
attributable to equity
holders
Balance at 30 September 2018 1,468 1,916 144 134 1,841 5,503
Group Statement of Cash Flows Six Six Year
months months
ended ended ended
30 Sept 19 30 Sept 18 31 Mar 19
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 57 47 315
activities
Cash flows (used in)/from investing
activities
Purchase of property, plant and equipment (14) (8) (69)
Disposal of fixed assets (net of disposal 2 300 299
costs)
Interest received 1 - -
Net cash (used in)/from investing (11) 292 230
activities
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 642 244 244
period
Cash and cash equivalents at end of 688 583 642
period
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 (96) 165 595
receivables
(Decrease)/increase in trade and other (35) (248) (462)
payables
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 GBP83,575 of
right-of-use assets and the impact of discounting was considered immaterial so
lease liabilities of GBP83,575 were also recognised. Therefore, no adjustment to
equity at 1 April 2019 was made. In the period to 30 September 2019,
depreciation of GBP6,905 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
GBP'000 GBP'000 GBP'000
Impairment of PHSC plc's investment in - - 200
B2B Links Limited
3. Segmental Reporting
30 Sept 19 30 Sept 18 31 Mar 19
Unaudited Unaudited Audited
Revenue GBP'000 GBP'000 GBP'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 398 363 759
Ltd
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 GBP'000 GBP'000 GBP'000
charge
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 - 12 -
deferred tax)
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 GBP'000 GBP'000 GBP'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 1,057 689 950
Ltd
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 - 18 -
Services Ltd
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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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 14,667,257 14,667,257 14,667,257
for the purpose of basic earnings
per share
END
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December 02, 2019 08:00 ET (13:00 GMT)
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