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PHSC plc  -  PHSC   

Half-year Report

Released 07:00 05-Dec-2018

Half-year Report

5 December 2018

PHSC PLC
(“PHSC”, the “Company”, or the “Group”)

Unaudited Interim Results for the six months ended 30 September 2018

GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT

Financial Highlights

Operational Highlights

Business overview

The Group achieved revenues of £2.897m in the first half, compared to £3.720m last year.  The decrease in revenues relates mainly to a reduction in revenues from the Group’s security division, as detailed below, and no revenues being generated during the period from ALS, the Group’s asbestos management business which ceased in March 2018 and which had revenues of £0.382m last year.

Having ceased its asbestos management activities, the Group disposed of its associated property in Essex for £305,000, as announced on 28 September 2018.  The book value at that date was approximately £133,000 representing a gain of approximately £166,000 after sale fees and legal costs. Charges have been incurred for ending services and leasing equipment agreements associated with the property, and disposal of contents, resulting in an overall positive contribution of approximately £150,000.

EBITDA, without the benefit of this gain, would have been £119,000 over the period, a reduction of £78,000 on last year.  The main variance relates to reduced revenues and profits at our security division, which has been impacted by reduced orders from its largest client whilst that client re-evaluates its own strategy.  A breakdown of revenues and EBITDA by subsidiary is given below.

At the start of the current financial year, we merged the Group’s security businesses, B to B Links Limited (B to B) and SG Systems (UK) Limited (SG), into a single corporate entity, B2BSG Systems Limited.  As the year has progressed, we have been taking steps to fully integrate both parts of the business.  This involves streamlining the office and accounting functions, creating a single sales team and having a combined engineering department responsible for installations and servicing.  These operations will be managed from the Finchampstead, Berkshire premises, and we have given notice to terminate our lease at the Amesbury, Wiltshire office and warehouse formerly used by SG.  In the short term, this amalgamation and streamlining process will involve some costs but longer term will give the business a lower overhead.

The lease on the office used by Quality Leisure Management Limited (QLM) in Northleach expires on 31 December 2018.  QLM will relocate to Raunds, Northamptonshire, where it will share Group-owned premises currently occupied by another subsidiary, RSA Environmental Health Limited (RSA).  This will lead to lower fixed costs going forward though there will be certain relocation and redundancy expenses borne in Q3.

Our Scottish subsidiary, QCS, has taken on additional premises adjacent to its existing unit, which has also had its lease renewed.  We have invested approximately £50,000 in refurnishing and modernising both units to improve and expand the training facility, so that larger numbers of delegates can attend courses where appropriate.  A secondary training area has also been created, providing the ability to run more than one course at the same time.

The Group continues to suffer from a general inertia and level of uncertainty in its client base ahead of clarification on the implications and impacts of Brexit.  As we have repeatedly reported, the weakness of Sterling impacts particularly on our security business, which relies upon imported equipment purchased in US Dollars and Euros.

Outlook

The majority of the Group’s revenues arise from its security division and this is heavily weighted towards the retail sector.  Our security business is highly regarded within the retail sector and recently won the Highly Commended Award in the “Vendor of the Year” category at the Retail Risk Fraud Awards.  We are well-placed to deliver security solutions to the sector and have a number of key partnerships with national accounts.

Trials and tribulations on the high street are well publicised and we are not insulated from this.  Until retailers have emerged from the Christmas period they are unlikely to consider meaningful investment in their stores, partly because of financial uncertainties but also because they do not want work going on in store during the peak period.  This means we always see a tail-off in activity as we approach the festive period and as a result of the general weakness in the sector, we have reduced visibility for the start of calendar year 2019.

Our health and safety businesses are all trading profitably and we expect this to continue for the second half of the financial year.  Levels of contract renewal at QLM, Inspection Services (UK) Limited and Personnel Health and Safety Consultants Limited remain high.  The main activity of RSA continues to be the delivery of safety-rated training and advice to the education sector and the subsidiary intends to refresh its offering over the coming months.

With the new investment in QCS’s premises and management’s steps to improve and expand the range of courses that they offer, we are confident of seeing improved results going forward.  QCS, which delivers training and consultancy in management and quality systems, is recognised as a leader in its field.

Dividend

In view of the gain arising from the sale of the property relating to the discounted asbestos operations and the resulting strengthening of our balance sheet, the board has decided to declare an interim dividend of 0.5p per ordinary share, to be paid on 28 February 2019 to those on the register of members on 4 January 2019.

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 2018 stood at £583k compared with £129k at the same time last year.

Given our improved cash position, we have reduced our (currently unused) banking facility from £300,000 to £150,000, as we see this as being adequate for our foreseeable needs and results in a lower facilitation fee.

Other than in the normal course of business, the board does not currently anticipate there being any additional calls on the Company’s cash.

Performance by Trading Subsidiaries

Profit/loss figures for each of the Group’s subsidiaries are stated before tax and inter-company charges (including the costs of operating the plc which are recovered through management charges to trading subsidiaries), interest paid and received, depreciation and amortisation.

Inspection Services (UK) Limited

Invoiced sales of £108,600 yielding a profit of £19,100 (the figures for the same period last year were £108,700 and £25,200).

Personnel Health and Safety Consultants Limited

Invoiced sales of £311,100 yielding a profit of £123,800 (the figures for the same period last year were £317,600 and £123,900).

RSA Environmental Health Limited

Invoiced sales of £190,600 resulting in a profit of £27,500 (the figures for the same period last year were £174,600 and £20,900).

Quality Leisure Management Limited

Invoiced sales of £218,300 resulting in a profit of £47,000 (the figures for the same period last year were £203,000 and £52,300).

QCS International Limited

Invoiced sales of £363,500 yielding a profit of £111,300 (the figures for the same period last year were £372,100 and £145,900).

B2BSG Solutions Limited

Invoiced sales of £1,705,100 yielding a profit of £65,300 (the combined figures across B to B and SG over the same period last year were £2,260,500 and £189,100).

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/Frederick Twist

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.




 

Group Statement of Comprehensive Income  Six months
ended
 Six months
ended
Year
ended
30 Sept 18 30 Sept 17 31 Mar 18
Note Unaudited Unaudited Audited
£'000 £'000 £'000
Continuing operations
Revenue 3 2,897 3,720 7,013
Cost of sales (1,494) (1,994) (3,938)
Gross profit 1,403 1,726 3,075
Administrative expenses (1,298) (1,546) (3,042)
Goodwill impairment 2 - - (200)
Other income - - 25
Profit on disposal of fixed assets 166 - -
Profit/(loss) from operations 271 180 (142)
Finance costs (1) (2) (4)
Profit/(loss) before taxation 270 178 (146)
Corporation tax expense (54) (19) (15)
Profit/(loss) for the period after tax attributable
to owners of parent 3 216 159 (161)
Total comprehensive income attributable to owners of the parent 216 159 (161)
Basic and diluted Earnings per Share for profit/(loss) after tax from continuing operations attributable to the equity holders of the Group during the period 5 1.47p 1.08p (1.09p)

   

Group Statement of Financial Position 30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 4 453 620 594
Goodwill 3,678 3,878 3,678
Deferred tax asset 22 22 22
4,153 4,520 4,294
Current assets
Inventories 379 492 389
Trade and other receivables 1,404 1,880 1,569
Cash and cash equivalents 583 129 244
2,366 2,501 2,202
Total assets 3 6,519 7,021 6,496
Current liabilities
Trade and other payables 889 1,239 1,137
Current corporation tax payable 71 19 16
Contingent consideration - 25 -
960 1,283 1,153
Non-current liabilities
Deferred taxation liabilities 56 58 56
56 58 56
Total liabilities 1,016 1,341 1,209
Net assets 5,503 5,680 5,287
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 1,841 2,018 1,625
5,503 5,680 5,287

   

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 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
Balance at 1 April 2017 1,468 1,916 144 134 1,859 5,521
Profit for the period attributable to equity holders - - - - 159 159
Balance at 30 September 2017 1,468 1,916 144 134 2,018 5,680

   

Group Statement of Cash Flows  Six months  Six months Year
ended ended ended
30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows generated from/(used by) operating activities
Cash generated from/(used by) operations 48 (66) 143
Interest paid (1) (2) (4)
Tax paid - - -
Net cash generated from/(used by) operating activities 47 (68) 139
Cash flows from/(used in) investing activities
Purchase of property, plant and equipment (8) (10) (19)
Disposal of fixed assets (net of disposal costs) 300 - 15
Net cash from/(used in) investing activities 292 (10) (4)
Cash flows used in financing activities
Payment of contingent consideration - - (25)
Dividends paid to group shareholders - - (73)
Net cash used in financing activities - - (98)
Net increase/(decrease) in cash and cash equivalents 339 (78) 37
Cash and cash equivalents at beginning of period 244 207 207
Cash and cash equivalents at end of period 583 129 244
Notes to the cash flow statement
Cash generated from/(used by) operations
Operating profit/(loss) - continuing operations 271 180 (142)
Depreciation charge 13 16 34
Goodwill impairment - - 200
Profit on sale of property (166) - -
Loss on sale of other fixed assets 3 - 1
Decrease/(increase) in inventories 10 (4) 98
Decrease/(increase) in trade and other  receivables 165 (433) (121)
(Decrease)/increase in trade and other payables (248) 175 73
Cash (used by)/generated from  operations 48 (66) 143



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 2018, prepared under IFRS have been filed with the Registrar of Companies.  The auditors’ report for the 2017 financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The same accounting policies and methods of computation are followed within these interim financial statements as adopted in the most recent annual financial statements. 

New IFRS standards and interpretations not adopted

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not been adopted by the European Union. IFRS 16 may have an impact on the measurement and treatment of operating leases and the related disclosures.  As at 31 March 2018 the estimated impact of the transition to IFRS 16 would be to increase tangible fixed assets and liabilities by approximately £52,000.  The impact on the statement of comprehensive income is not expected to be material to the financial statements. IFRS 9 is not expected to have a material impact on the financial statements of the group entities.

The information presented within these interim financial statements is in compliance 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 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
£'000 £'000 £'000
Impairment of PHSC  plc’s investment in
B2B Links Limited
- - 200

3.       Segmental Reporting

30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
Revenue £’000 £’000 £’000
Security division
B to B Links Ltd - 1,522 2,777
SG Systems (UK) Ltd - 738 1,449
B2BSG Solutions Ltd 1,705 - -
1,705 2,260 4,226
Health & safety division
Inspection Services Ltd 109 109 216
Personnel Health & Safety Consultants Ltd 311 318 616
Quality Leisure Management Ltd 218 203 439
RSA Environmental Health Ltd 191 175 370
829 805 1,641
Quality systems division:  QCS International Ltd 363 372 768
Discontinued:   Adamson’s Laboratory Services Ltd - 283 378
Total revenue 2,897 3,720 7,013

   

30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
Profit/(loss) after taxation, before management charge £’000 £’000 £’000
Security division
B to B Links Ltd - 166 78
SG Systems (UK) Ltd - (21) (96)
B2BSG Solutions Ltd 62 - -
62 145 (18)
Health & safety division
Inspection Services Ltd 17 22 46
Personnel Health & Safety Consultants Ltd 114 114 240
Quality Leisure Management Ltd 41 45 112
RSA Environmental Health Ltd 26 21 75
198 202 473
Quality systems division: QCS International Ltd 100 122 268
Discontinued: Adamson’s Laboratory Services Ltd - (75) (163)
Holding company: PHSC plc (156) (257) (522)
204 137 38
Taxation adjustment (group loss relief and deferred tax) 12 22 1
Goodwill impairment - - (200)
Total Profit/(loss) after taxation, before management charge 216 159 (161)

   

30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
Total assets £’000 £’000 £’000
Security division
B to B Links Ltd - 1,385 1,233
SG Systems (UK) Ltd - 346 155
B2BSG Systems Ltd 1,112 - -
1,112 1,731 1,388
Safety division
Inspection Services Ltd 233 196 177
Personnel Health & Safety Consultants Ltd 689 776 780
Quality Leisure Management Ltd 258 250 309
RSA Environmental Health Limited 619 589 663
1,799 1,811 1,929
Quality division: QCS International Ltd 568 539 677
Discontinued: Adamson’s Laboratory Services Ltd 18 271 85
Holding company: PHSC plc 4,146 4,005 3,586
7,643 8,357 7,665
Adjustment of goodwill (1,124) (1,336) (1,169)
Total assets 6,519 7,021 6,496

4.       Property, plant and equipment

30 Sept 18 30 Sept 17 31 Mar 18
Unaudited Unaudited Audited
£'000 £'000 £'000
Cost or valuation
Brought forward 934 1,066 1,066
Additions 8 10 19
Disposals (163) (7) (151)
Carried forward 779 1,069 934
Depreciation
Brought forward 340 440 440
Charge 13 16 34
Disposals (27) (7) (134)
Carried forward 326 449 340
Net book value 453 620 594

5.       Earnings per share

The calculation of the basic earnings per share is based on the following data.

30 Sept 18 30 Sept 17 31 Mar 18
£'000 £'000 £'000
Unaudited Unaudited
Earnings
Continuing activities 216 159 (161)
Number of shares 30 Sept 18 30 Sept 17 31 Mar 18
Weighted average number of shares for the purpose of basic earnings per share 14,677,257 14,677,257 14,677,257

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Half-year Report - RNS