REG-PHSC Plc: Final Results
20/08/2020 07:05
PHSC plc
(the “Company” or the “Group”)
Final Results for the year ended 31 March 2020 and Notice of Annual General
Meeting
Financial Highlights
• EBITDA of £0.255m, an increase of approximately
120% from £0.116m last year (after adjustment for exceptional gain on
property sale of £0.166m last year)
• Statutory loss after tax of £0.015m compared with a
profit of £0.001m last year (which included gain on property sale of £0.166m
last year)
• Group revenue of £4.438m compared with £5.215m
last year
• Cash reserves of £0.756m at year end compared to
£0.642m last year
• Write-down of £0.200m due to impaired goodwill, the
same as last year
• Group net assets at £4.978m after goodwill
impairment compared to £5.140m last year
• Loss per share of 0.11p compared to a profit per
share of 0.005p last year
• Final dividend of 0.5p proposed, making a total of
1.0p for the year, matching the 1.0p paid last year
31.3.20 31.3.19
£ £
Profit before tax 4,999 42,494
Less: interest received (1,990) (303)
Add: interest paid - 1,514
Add: depreciation 52,194 38,179
Add: impairment B2BSG Solutions Limited goodwill 200,000 200,000
Less: net gain on sale of property - (166,270)
Underlying EBITDA* 255,203 115,614
* Underlying EBITDA is calculated as earnings before interest, tax,
depreciation, impairment charges and non-recurring costs. This is used by
the board as a measure of underlying trading and has been provided to assist
shareholders in understanding the Group’s trading activities.
Annual General Meeting
This year’s annual general meeting (AGM) will be held at 10am on Wednesday
30 September 2020 at the Old Church, 31 Rochester Road, Aylesford, Kent ME20
7PR.
The report and accounts and notice of AGM are expected to be posted to
shareholders on or around 24 August 2020 and will shortly be available to view
on the Company’s website at www.phsc.plc.uk.
Dividend
The Company confirms that, subject to shareholder approval at the AGM, the
final dividend of 0.5p will be payable on 16 October 2020 to shareholders on
the register on 2 October 2020.
For further information please contact:
PHSC plc (www.phsc.plc.uk)
Stephen King (stephen.king@phsc.co.uk) – 01622 717700
Strand Hanson Limited (Nominated Adviser)
Richard Tulloch/James Bellman – 020 7409 3494
Novum Securities Limited (Broker)
Colin Rowbury – 020 7399 9427
About PHSC
PHSC plc, through its trading subsidiaries Personnel Health & Safety
Consultants Limited, RSA Environmental Health Limited, QCS International
Limited, Inspection Services (UK) Limited, and Quality Leisure Management
Limited, provide a range of health, safety, hygiene, environmental and quality
systems consultancy and training services to organisations across the UK.
B2BSG Solutions Limited offers innovative security solutions including
electronic tagging, labelling and CCTV.
The information contained in this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No 596/2014.
STRATEGIC REPORT
On behalf of the board, I present my review of the Group’s activities and
performance during financial year 2019-20, along with a commentary about the
Group’s plans and expectations for 2020-21.
General business review and outlook
Trading for the year ended 31 March 2020 showed consolidated Group revenue of
£4.438m (31 March 2019: £5.215m) and EBITDA of approximately £255,000 for
the period. In the previous year, the Group recorded EBITDA of £116,000
(excluding an exceptional gain from the sale of an unused property).
Sales within B2BSG Solutions Limited, the Group’s security division which
predominantly serves the high street retail sector, continued to decline
during the year, as a result of the ongoing struggles within the high street
retail sector impacting on the demand for our services. Revenues in the
security division fell to £1.9m (31 March 2019: £2.7m), accounting for 43%
of Group revenues compared with 52% in the previous year. As a result, the
board considered the carrying value of its security division and decided that
a further impairment of £0.2m (31 March 2019: £0.2m) was appropriate.
Revenues in the Group’s health, safety and management systems businesses
remained stable at £2.5m (31 March 2019: £2.5m), though accounted for 57% of
the Group’s overall revenue (31 March 2019: 48%).
Various actions were taken to mitigate the effect of lower sales across the
Group as a whole, which led to cost savings in a number of areas. In
particular, there were lower overheads and premises-related savings across the
Group. The security division, whilst still loss-making, saw an improvement
overall and further commentary regarding this subsidiary and the other
companies within the Group appear later in this report.
Impact of COVID-19
The specific impacts of COVID-19 on each subsidiary is provided later in this
report, though from a Group-wide perspective the pandemic had a marginally
adverse impact on the year ended 31 March 2020. The financial consequences of
COVID-19 will largely be seen in 2020-21, though are at this stage very
difficult to quantify due to the uncertainty of how the UK economy will
respond to the on-going COVID-19 pandemic. The trading update below provides
figures for Q1 of 2020-21.
Cash at bank stood at £756,000 at year end. Due to concerns about cash flow
during the COVID-19 pandemic, the Group exercised an option to defer payment
of VAT due for Q4 of 2019-20 but has recently made these payments in full
(£162,410) to HMRC.
The Group continues to enjoy a strong cash position and has an undrawn
facility with HSBC plc, renewed in October each year and currently agreed at
£50,000, having been reduced from £150,000.
Since the start of the pandemic, the Group has reviewed staffing levels and
has made five posts redundant, including three at the security division. In
addition, the Group furloughed a number of staff under the Government's Job
Retention Scheme. All except one subsidiary has taken advantage of the
furlough arrangements, with up to half of the Group’s staff furloughed at
the peak of the crisis.
Our priority has been the health, safety and wellbeing of customers and staff,
and our expertise in the field of health and safety has enabled us to continue
to provide various services to existing clients. We have also been able to
acquire new clients who commissioned us to assist with enabling them to
provide COVID-Secure environments so that they could return to work.
All Group directors elected to take a 20% reduction in pay from 1 May 2020 for
the duration of the furlough scheme.
Net asset value
As at 31 March 2020, the Group’s consolidated net assets stood at £4.98m
(2019: £5.14m). There were 14,677,257 ordinary shares in issue at that date
which equates to a net asset value per share of 34p.
As we have previously stated, the Company’s ordinary shares continue to
trade at a substantial discount to the net asset value. We recognise that
there is a value of goodwill on the balance sheet and we review this each year
to ensure that the value is fairly stated. In each of the past two years,
the board has taken the decision to reduce the carrying value of our security
division by £200,000, and we have done the same thing in 2019-20 in line with
good accounting practice. The write-down represents a reduction of
approximately 4% in the consolidated net assets of the Group. The board
remains satisfied that all other goodwill valuations can presently be
justified.
Outlook
Whilst the effect of COVID-19 on the economy is the greatest concern for the
Group, this does not reduce the potentially negative effects of the lack of
specific terms on which the UK will trade with the EU at the end of the
transition period this year. That matter was causing some clients to delay
certain investment decisions, and this is exacerbated by the uncertainly
brought about by the pandemic. We may also be affected positively or
negatively by future Government fiscal measures to assist the recovery of the
UK economy and we will pay close attention to such decisions as they are
announced. In the context of our security division, an important general
economic factor is the purchasing power of sterling as a weaker pound erodes
our gross margins. The closure of many retail premises is also a critical
factor as the move to online shopping accelerates.
Trading update
Unaudited management accounts for the first quarter of 2020-21 indicate that
Group revenues were £0.82m and generated an EBITDA of £108,300. This
compares with total revenues of £1.08m for the first quarter of 2019-20 and
an EBITDA of £84,600.
Dividends
A total dividend of 1.0p per ordinary share, (£146,772) was paid in respect
of the year ended 31 March 2019. An interim dividend of 0.5p in respect of
the year ended 31 March 2020 was paid in February 2020 and, subject to
shareholder approval, a final dividend of 0.5p, to be paid from earnings from
the year ended 31 March 2020, is proposed for payment in October 2020,
matching the total of 1.0p paid last year.
Pre-tax profit/(loss) per subsidiary before Group management charges
Profits before tax and management charges are reviewed by each subsidiary and
by the board every month to establish whether each subsidiary is trading
profitably and to determine whether intervention is necessary. To provide a
more accurate picture of the performance of each subsidiary, the
cross-charging of consultants between subsidiaries has been introduced so that
the cost of labour is met by the invoicing company rather than the subsidiary
providing that labour.
A review of the activities of each trading subsidiary is provided below. The
profit figures stated are before tax, central management charges and
impairment charges. The management charges are the individual subsidiary’s
contribution to Group overheads and are not directly attributable costs.
B2BSG Solutions Limited (B2BSG)
* 2020: revenues of £1,915,200 yielding a loss of £90,800
* 2019: revenues of £2,724,000 yielding a loss of £137,400
The fall in revenue reflects the reduced demand from B2BSG’s primary sphere
of operation which remains the retail sector which has continued to suffer as
a result of weaker consumer demand on the high street and the move towards
on-line purchasing which has accelerated during the COVID-19 pandemic. Over
£165,000 was saved in lower staff salaries and associated expenditure through
restructuring and non-replacement of leavers. There were no redundancy
payments necessary in this process.
There are bad debts of £18,730 provided for in the accounts. These stem
mainly from a second period of administration by a large client, Debenhams,
who have proposed a Company Voluntary Arrangement for their UK businesses and
have closed their estate in Ireland entirely.
Selling into the retail sector remains challenging and the COVID-19 pandemic
will have a large effect on our client base. Any further material
deterioration in the retail sector and specifically in B2BSG’s client base
may have a significant negative effect on B2BSG’s and hence the Group’s
prospects. In the meantime, B2BSG is making use of available business grants
and the Government’s Job Retention Scheme and looks forward to an increase
in demand once high streets are able to recover.
Inspection Services (UK) Limited (ISL)
* 2020: revenues of £230,800 yielding a profit of £37,400
* 2019: revenues of £232,600 yielding a profit of £43,500
ISL ended the year with marginally lower sales and a slight increase in total
costs compared with the prior year. ISL offers a fairly narrow range of
specialised services directly to clients and, for the most part, through
insurance brokers. The work involves the statutory examination and
inspection of workplace plant and equipment where plant failure may lead to a
serious risk of injury. This includes lifting plant and equipment, pressure
vessels, power presses and bailing machines.
Early in the COVID-19 pandemic, the Health and Safety Executive (HSE) notified
duty holders across the UK that the obligation to have plant and equipment
examined in line with statutory frequencies was not being relaxed. Our
professional association, the Safety Assessment Federation, in consultation
with the HSE, deemed us to be “key workers”. This enabled ISL to carry
on trading as normal, subject to complying with appropriate safety protocols
to safeguard staff and those they may encounter in their work and as a result,
demand has remained stable during since the financial year end.
Personnel Health & Safety Consultants Limited (PHSCL)
* 2020: revenues of £763,600 yielding a profit of £302,500
* 2019: revenues of £657,100 yielding a profit of £278,000
Income from PHSCL’s flagship product, the Appointed Safety Advisor Service
was around 10% down year on year. However, consultancy income from
non-retained clients more than doubled to around £225,000. In addition,
revenue from training courses was up by £20,000.
Despite the reduction in revenue from the Appointed Safety Advisor Service,
PHSCL derives most of its income from this product. There was some client
churn, though generally client retention is good and has not been unduly
affected by the COVID-19 pandemic.
PHSCL continues to meet the accreditation requirements for the ISO 9001
quality management standard, having held this “kitemark” for 23 years
since becoming the first organisation of its kind to achieve the standard.
Since the financial year-end, COVID-19 has had an effect both on PHSCL and the
clients we serve. There has been demand for consultancy advice in relation
to preparing COVID-Secure workplaces and this has introduced us to a number of
clients for whom we have not worked before. Once a degree of normality
returns, we would hope to build on those relationships by offering other
services.
QCS International Limited (QCS)
* 2020: revenues of £756,700 yielding a profit of £220,900
* 2019: revenues of £759,500 yielding a profit of £242,300
QCS maintained a good level of both sales and profits and performed as
expected over the year. The introduction of management standard ISO 45001
(for health and safety) and work assisting clients on ISO 27001 (information
security) more than offset the loss of work in the previous year relating to
the transition to new quality and environmental standards.
Sales in public training and consultancy services remained strong. Full
advantage was made of the investment in new training facilities that are now
able to accommodate additional delegates. However, in-house training sales
weakened, and this caused total sales for the year to end marginally below
those for 2018-19. An internal target to increase public training sales by
12% over the period was achieved. Efforts will continue to promote in-house
services and reduce the decline in that area. Consultancy sales remained
consistently strong throughout the year, posting growth of 7%. QCS continues
to enjoy exceptionally high levels of repeat business and has developed a
loyal customer base across many economic sectors.
Departure from the EU has not yet directly affected sales, though a
significant proportion of medical device work is linked to an ability to offer
services linked to EU regulation. QCS now offers a ‘UK Responsible
Person’ service in the event of a no-deal conclusion to the transition
period which may present some opportunities, acting as a UK address for
manufacturers of medical devices within the remaining EU. To date there have
been an encouraging number of enquiries regarding the service. The weakness
of sterling has the potential to work in QCS’s favour.
Quality Leisure Management Limited (QLM)
* 2020: revenues of £353,400 yielding a profit of £75,700
* 2019: revenues of £437,600 yielding a profit of £106,500
QLM made a profit before tax and central management charges of £75,711,
compared to £106,576 in the previous year.
Retained client renewals remained largely the same in comparison to the
previous period. Small deviations are seen as contracts between local
authorities and QLM clients change, or smaller clients are absorbed by larger
operators though there remains a strong need for QLM’s expertise with
clients placing significant reliance on its services.
Although the support service remains a stable source of income, audit income
fell significantly compared to the same period last year. Savings and cost
cutting exercises across many local authorities has seen a knock-on effect to
the resources of leisure trusts and other QLM clients. In addition, auditing
functions are more frequently tackled internally by clients leading to less
need for external verification and auditing. The impact of COVID-19 remains
to be seen and will depend on what support is given to the sector by local
authorities and central government.
Training is a core income stream and remained generally consistent with
previous years. The most popular courses were IOSH Managing Safely and
QLM’s own (CIMSPA Endorsed) Health and Safety Management in Leisure and
Culture Facilities.
One full-time consultant left the business in October 2019 and was not
replaced which led to greater use of sub-contractors.
RSA Environmental Health Limited (RSA)
* 2020: revenues of £418,100 yielding a profit of £83,500
* 2019: revenues of £404,300 yielding a profit of £66,700
Revenue for the year was up by 3.4% to £418,100. Costs were effectively
controlled, and this led to gross profit margin of 53% (2019: 52%).
Integration of the Envex brand into RSA has brought in some much-needed skills
which have aided service delivery to our existing clients, reducing the need
to rely on contractors and associates.
Whereas in previous years the focus of RSA has been on the SafetyMARK brand,
providing safety services to the school’s sector, this year has seen the
revenues fall into four main categories; training, health and safety
consultancy, food safety consultancy and SafetyMARK. This has widened the
focus and spread some of the risk, leaving RSA potentially less exposed in the
future.
SafetyMARK, whilst remaining the main focus, saw revenues fall within the
financial year to around £90,000. This can be partially accounted for by a
number of postponed audits at short notice within the last quarter. This
happened due to a combination of staffing changes at key schools and the start
of the COVID-19 pandemic. There was also an impact on this sector by RSA
diverting its attention to fulfilling a large contract in the hospitality
sector. However, demand for safety services in schools remains strong and is
expected to pick up when schools are fully open in September 2020.
Training has seen an increase due to the numbers of courses being provided to
clients compared to the previous year. There continues to be demand for some
of our public courses within the schools’ sector and for our IOSH accredited
school courses. Training was not unduly affected by COVID-19 in March, with
only a couple of courses having to be postponed to the next financial year
Health and safety consultancy saw the biggest change in demand for the year
2019-20 as a result of the large contract in the hospitality sector previously
mentioned. This generated significant revenues for RSA but was very heavy in
administrative terms.
Food safety consultancy saw strong demand, but the impact of COVID-19 saw an
end to the ability to continue with auditing of our regular clients. All
clients have stated that they will restore the audit programmes as soon as the
various sectors are allowed to open.
PHSC plc
* 2020: net loss of £424,100 before management charges, exceptional costs and
dividends received
* 2019: net loss of £523,700 before management charges, exceptional costs and
dividends received
The Company incurs costs on behalf of the Group and does not generate any
income. The costs incurred by the Company represent the costs of running an
AIM quoted Group. The reduction in costs is due to changes in staffing
arrangements between the Company and the subsidiaries. Costs in all other
respects are consistent with the previous year.
PRINCIPAL RISKS AND UNCERTAINITIES
Pandemic
The coronavirus pandemic involving the spread of COVID-19 has presented
several different risks to the business. The spread was rapid and the global
repercussions unprecedented.
As Government guidance evolved, a comprehensive plan was developed and updated
by the directors to minimise the risk to staff, customers and business
continuity. This was circulated to all staff and contained measures to
maintain business productivity whilst protecting the health of employees,
customers, and other stakeholders. The plan was monitored and revised in
response to new information published by Public Health England. Guidance was
also published on the website for staff, customers, and prospects to access.
The risk of employees contracting the virus, resulting in loss of key staff to
illness was mitigated by working from home being encouraged wherever
appropriate. Vulnerable workers were identified and asked to shield, and
employees contacted regularly to monitor welfare. A skeleton staff remained in
the head office to minimise numbers present whilst at the same time
maintaining business continuity. Social distancing was exercised, and hand
sanitiser provided.
Where consultants were required to visit clients’ premises, mainly to advise
on COVID-19 related topics, face masks and disposable gloves were issued.
Consultants were asked to use their own vehicles to commute rather than take
public transport. A focus was to protect PHSC’s reputational risk by
ensuring staff adhered to government guidelines. In the short term, all
classroom training was ceased.
The risk of poor communication during the pandemic was mitigated using
Microsoft Teams and Zoom to keep in touch with staff and clients. The
operational directors met via Zoom each week for a business update and to
share knowledge and best practice. Board meetings were also undertaken as
scheduled via Zoom.
In terms of lost revenue and profit, the impact in the year ended 31 March
2020 was immaterial though the full effect will be felt in the new financial
year. The UK lockdown has inevitably led to a loss of business and revenue, as
schools, leisure facilities, shops and pubs/restaurants make up a significant
portion of the Group’s customer base. An exception to this is ISL, where the
Health and Safety Executive did not relax the obligation to have plant and
equipment examined in line with statutory frequencies. The engineers were
deemed key workers and ISL was able to carry on trading as normal, subject to
complying with appropriate safety protocols to safeguard staff. Another
mitigating factor is the uninterrupted subscription income received by some of
the subsidiaries which provides a base of ongoing revenue. It is also
fortunate that the expertise within the Group in the field of health and
safety has enabled various services to continue to be provided to existing
clients and new clients have been secured who commissioned assistance with the
provision of COVID-Secure environments. Income from the Government Job
Retention Scheme and Business Grants have also played a key role in
maintaining cash flow.
In terms of liquidity risk, the Group had a strong cash position at the year
end and the start of lockdown. Good credit control has been maintained by the
head office staff and with the income from the Government’s schemes, the
Group has remained cash generative. Payment of VAT for Q4 was initially
delayed in line with an HMRC concession but was subsequently settled in full.
Although the economic outlook remains uncertain, the discipline of forecasting
has been maintained, though initially with a reduced horizon. Expectations
for first half of 2020-21 are that with the continued use of Government
funding assistance, the Group should do no worse than break even and will
maintain a strong cash position.
Regulatory/Marketplace
Approximately 50% of the Group’s work involves assisting organisations with
the implementation of measures to meet regulatory requirements relating to
health and safety at work. If the regulatory burden was to be substantially
lightened, for example if the government embarked upon a programme of radical
deregulation, there could be less demand for the Group’s services. Changes
to the operation of the employer’s liability insurance system, as proposed
in some quarters, could reduce the incentive for organisations to buy in
claims-preventive services such as health and safety advice. In mitigation
of these risks, the board has diversified the Group’s range of offerings for
example, through investing in its security businesses and is exploring
non-regulatory areas of environmental work to add to the current portfolio of
services.
In the event of a “no deal” end to the post-Brexit transition period, the
Group’s security division will take appropriate steps to ensure that
sufficient supplies are held of relevant products to meet the predicted needs
of customers. In doing so, customers can expect more frequent requests to
forecast their likely requirements over longer time horizons than usual. The
security division is already dealing extensively with a wide range of imported
goods, some from within the EU and others from countries beyond the EU. It
is therefore well-versed in customs processes and expects to be able to apply
the same or similar processes to imports from within the EU (albeit at
potentially different tariff rates) should that prove necessary under a “no
deal” Brexit. Matters outside the Group’s control would include delays
caused at customs if administrative demands on border officials are suddenly
increased, resulting in slower clearance times for imported goods.
There are predictions by economists that the value of sterling may deteriorate
if the UK and EU cannot reach a trade deal by the end of the transition
period. Whilst the Group will take reasonable steps to hedge against the
effects of a weaker pound, customers are being advised to consider
pre-ordering and/or increasing their stock levels of those products supplied
by the Group’s security division which they see as critical to their
business. Higher stock levels would have the double benefit of reducing the
risk of an interruption to supply, and mitigating the impact of price rises
that would ultimately work their way through to all imported goods if there is
a materially weaker exchange rate. The warehouse at B2BSG has the capacity for
storage of additional products and close partnership with logistics providers
will allow access to further warehousing space should that prove necessary.
The Group’s security division works almost exclusively in the retail sector
and this has continued to suffer as a result of weaker consumer demand on the
high street and the move towards on-line purchasing which has accelerated
during the COVID-19 pandemic. Any further material deterioration in the
retail sector and specifically in B2BSG’s client base may have a significant
negative effect on the company’s and hence the Group’s prospects.
Technological
The Group’s website is a primary source of new business. If the website
became inaccessible for protracted periods, or was subject to “hacking”,
this may prejudice the opportunity to obtain new business. Additionally, the
increase in the use of the internet for satisfying business requirements may
lead to a reduction in demand for face-to-face consultancy services and the
number of training courses commissioned may be affected by moves towards
screen-based interactive learning. The subject of IT security is regularly
reviewed by the board to ensure that appropriate strategies are in place.
Personnel
Generally, there is an excess of demand over supply for health and safety
professionals. Those with sufficient qualifications and experience to be
suitable for consultancy roles are in the minority. This has the combined
effect of making it difficult for the Group to source suitable personnel and
having to offer higher remuneration packages to attract them. The Group is
dependent upon its current executive management team. Whilst it has entered
into contractual arrangements with the aim of securing the services of these
personnel, the retention of their services cannot be guaranteed.
Accordingly, the loss of any key member of management of the Group may have an
adverse effect on the future of the Group’s business. The Group and each
subsidiary have contingency plans in place in the event of incapacity of key
personnel.
Geographical
The Group offers a nationwide service, but a number of organisations see
benefit in using consultancies that are local to them and internet search
engines favour local providers. With offices in Kent, Berkshire,
Northamptonshire and Scotland, the Group has a good geographical spread.
Licences
The Group is reliant on licences and accreditations to be able to carry on its
business. The temporary loss of, or failure to maintain, any single licence
or accreditation would be unlikely to be materially detrimental to the Group,
as the directors believe that this could be remedied. However, if the Group
fails to remedy any loss of, or does not maintain, any licence or
accreditation, this will have a material adverse effect on the business of the
Group. The Group has internal processes in place to ensure that the licences
and accreditations are maintained.
SECTION 172 STATEMENT
The Companies (Miscellaneous Reporting) Regulations require large companies to
publish a statement describing how the directors have had regard to the
matters set out in section 172 (1) (a) to (f) of the Companies Act 2006. These
sections require directors to act in a way most likely to promote the success
of the Group for the benefit of its stakeholders and with regard to the
following matters.
The likely consequences of any decision in the long-term.
The board receives an annual business plan from the director of each
subsidiary company, which forms the basis of the Group’s strategic plan. The
board requires that the plans include financial forecasts, KPI’s, marketing
strategy and an analysis of strengths, weaknesses, opportunities, and threats.
Subsidiary directors, via the Groups operational board of which they are
members, consider the implications of their own plans in the context of what
others within the Group are intending to do and the opportunities for
synergies are explored. Any proposed actions that may adversely affect another
subsidiary are flagged at operational board level and are resolved. Subsidiary
directors are challenged on the content of their plans and the assumptions
they have made, to ensure that the plans are realistic and achievable. Once
agreed by the board, this plan, at Group and subsidiary level, is used as the
benchmark against which to assess performance.
The interests of the Group’s employees
As the Group is mainly involved in the supply of services, the board considers
the staff to be the greatest asset and the interests of employees are taken
into consideration in all decisions made. Each subsidiary company within the
Group has in place the necessary structures to ensure effective communication
with its employees. The subsidiary directors meet once a quarter and relevant
information is shared with employees via team meetings held at subsidiary
level. The views of employees are heard in a similar fashion, initially at
team meetings, and ascending to the operational board and the main board if
appropriate. Each subsidiary has its own bonus scheme, based on results for
the financial year and/or tailor-made targets. There is an annual budget for
staff training in recognition that the performance of the Group can be
improved by the development of its employees.
The Group is committed to equality of employment and its policies reflect a
disregard of factors such as disability in the selection and development of
employees. During the year, a review was conducted to identify any
gender-related pay anomalies across the Group and as at the date of this
report, there are no known anomalies in any subsidiary that would fall into
this category.
The need to foster the Group’s business relationships with suppliers,
customers, and others.
The Group seeks to treat suppliers fairly and adhere to contractual payment
terms. The Group works with its suppliers to help drive change through
innovation, promoting new ideas and ways of working. The Group has
zero-tolerance to modern slavery and is committed to acting ethically and with
integrity in all business dealings and relationships. The Group policy for
Modern Slavery and Human Trafficking contains systems and controls to ensure
that these activities are not taking place anywhere in the subsidiaries or
throughout the Groups supply chains.
The Group also has zero-tolerance with regards to bribery, made explicit
through its Anti-Bribery and Corruption Policy. This covers the acceptance of
gifts and hospitality and any form of unethical inducement or payment
including facilitation payments and “kickbacks”. The policy sets out the
responsibilities of directors, employees and contractors and details the
procedures in place to prevent bribery and corruption.
Each subsidiary is focussed on its customers. Communication takes many forms
and is structured according to how each subsidiary interacts with its client
base. Channels of communication include quarterly newsletters in hard copy
and/or sent electronically, customer roadshows, various social media platforms
and regular client meetings. An ongoing dialogue is held electronically, with
most clients subscribing to email updates that are sent out periodically.
There is also interaction through social media platforms such as Twitter,
LinkedIn and Facebook where appropriate.
Stephen King is the principal contact between the Company and its investors,
with whom he maintains a regular dialogue. The Company is committed to
listening to and communicating openly with its shareholders to ensure that its
business model and performance are understood. Regular announcements are made
to the market and the AGM provides a forum for information dissemination,
discussion, and feedback.
The impact of the Group’s operations on the community and the environment
The board’s intention is to behave responsibly and ensure that management
operates the business in a responsible manner, complying with high standards
of business conduct and good governance. The Group has a long tradition of
supporting local causes through sponsorship and community involvement, details
of which can be found on the PHSC plc website (www.phsc.plc.uk). The directors
are aware of the impact of the Group’s business on the environment but
believe this to be minimal due to the nature of its operations.
GOING CONCERN
Company law require the directors to consider the appropriateness of the going
concern basis when preparing the financial statements. COVID-19 and the
Government-imposed lockdowns and restrictions are inevitably having an impact
on the Group’s ability to trade normally. In terms of lost profit, a
relatively small impact was felt in the year ended 31 March 2020 though the
board’s expectations for the new financial year have had to be significantly
revised. Mitigating factors are the strong cash position at the start of
lockdown, income from statutory examination of equipment (a requirement not
relaxed during the pandemic), continuation of subscription income, demand for
COVID-19 Secure risk assessments, and income from the Government job retention
and business grant schemes. The Group’s expectations and current banking
facilities indicate that the Group has adequate resources to continue in
operational existence for the foreseeable future. Consequently, the directors
continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
In closing, I would like to extend thanks to all our shareholders for their
continued support and to everyone employed across the Group for their hard
work and effort during these unprecedented times. The board acknowledges the
valuable work carried out by every employee and recognises that it is reliant
upon each individual member of staff and management if it is to succeed and
prosper.
On behalf of the board
Stephen King,
Group Chief Executive
19 August 2020
GROUP STATEMENT OF FINANCIAL POSITION
as at 31 March 2020
31.3.20 £ 31.3.19 £
Non-Current Assets
Property, plant and equipment 592,539 488,585
Goodwill 3,278,463 3,478,463
Deferred tax asset 19,582 17,627
3,890,584 3,984,675
Current Assets
Stock 264,301 316,556
Trade and other receivables 885,947 973,130
Cash and cash equivalents 755,919 642,466
1,906,167 1,932,152
Total Assets 5,796,751 5,916,827
Current Liabilities
Trade and other payables 622,938 675,162
Right of use liabilities 34,071 -
Current corporation tax payable 40,250 54,707
697,259 729,869
Non-Current Liabilities
Right of use liabilities 69,912 -
Deferred tax liabilities 51,256 46,313
121,168 46,313
Total Liabilities 818,427 776,182
Net Assets 4,978,324 5,140,645
Capital and reserves attributable to equity holders of the Group
Called up share capital 1,467,726 1,467,726
Share premium account 1,916,017 1,916,017
Capital redemption reserve 143,628 143,628
Merger relief reserve 133,836 133,836
Retained earnings 1,317,117 1,479,438
4,978,324 5,140,645
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2020
31.3.20 £ 31.3.19 £
Continuing operations:
Revenue 4,437,922 5,215,341
Cost of sales (2,251,867) (2,719,724)
Gross profit 2,186,055 2,495,617
Administrative expenses (1,983,046) (2,418,182)
Goodwill impairment (200,000) (200,000)
Other income - 166,270
Profit/ from operations 3,009 43,705
Finance income 1,990 303
Finance costs - (1,514)
Profit before taxation 4,999 42,494
Corporation tax expense (20,548) (41,795)
(Loss)/profit for the year after tax attributable to owners
of the parent (15,549) 699
Other comprehensive income - -
Total comprehensive (loss)/income attributable to owners
of the parent (15,549) 699
Basic and diluted (loss)/earnings per share from continuing operations (0.11)p 0.005p
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2020
Share Capital £ Share Premium £ Merger Relief Reserve £ Capital Redemption Reserve £ Retained Earnings £ Total £
Balance at 1 April 2018 1,467,726 1,916,017 133,836 143,628 1,625,511 5,286,718
Profit for year attributable to equity holders - - - - 699 699
Dividends - - - - (146,772) (146,772)
Balance at 31 March 2019 1,467,726 1,916,017 133,836 143,628 1,479,438 5,140,645
Balance at 1 April 2019 1,467,726 1,916,017 133,836 143,628 1,479,438 5,140,645
Loss for year attributable to equity holders - - - - (15,549) (15,549)
Dividends - - - - (146,772) (146,772)
Balance at 31 March 2020 1,467,726 1,916,017 133,836 143,628 1,317,117 4,978,324
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 March 2020
Note 31.3.20 £ 31.3.19 £
Cash flows from operating activities:
Cash generated from operations I 346,847 325,587
Interest paid - (1,514)
Tax paid (32,017) (9,345)
Net cash generated from operating activities 314,830 314,728
Cash flows (used in)/from investing activities
Purchase of property, plant and equipment (39,529) (69,578)
Disposal of fixed assets 2,250 299,495
Interest received 1,990 303
Net cash (used in)/from investing activities (35,289) 230,220
Cash flows used in financing activities
Payments on right of use assets (19,316) -
Dividends paid to shareholders (146,772) (146,772)
Net cash used in financing activities (166,088) (146,772)
Net increase in cash and cash equivalents 113,453 398,176
Cash and cash equivalents at beginning of year 642,466 244,290
Cash and cash equivalents at end of year 755,919 642,466
All changes in liabilities arising from financing relate entirely to cash
movements.
NOTES TO THE GROUP STATEMENT OF CASH FLOWS
for the year ended 31 March 2020
31.3.20 £ 31.3.19 £
I. CASH GENERATED FROM OPERATIONS
Operating profit – continuing operations 3,009 43,705
Depreciation charge 52,194 38,179
Goodwill impairment 200,000 200,000
Loss/(profit) on sale of fixed assets 4,430 (162,338)
Decrease in stock 52,255 72,478
Decrease/(increase) in trade and other receivables 87,183 595,495
(Decrease)/increase trade and other payables (52,224) (461,932)
Cash generated from operations 346,847 325,587
Notes to the results announcement of PHSC plc
The financial information set out above does not constitute the Group’s
financial statements for the years ended 31 March 2020 or 31 March 2019 but is
derived from those financial statements. Statutory financial statements for
2019 have been delivered to the Registrar of Companies and those for 2020 have
been approved by the board and will be delivered after dispatch to
shareholders. The auditors have reported on the 2019 and 2020 financial
statements which carried an unqualified audit report, did not include a
reference to any matters to which the auditor drew attention by way of
emphasis and did not contain a statement under section 498(2) or 498(3) of the
Companies Act 2006.
While the financial information included in this announcement has been
computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not in itself contain sufficient information to
comply with IFRS. The accounting policies used in preparation of this
announcement are consistent with those in the full financial statements that
have yet to be published.
Dividend
An interim dividend of £73,368 representing 0.5p per ordinary share was paid
in February 2020 in respect of the year ended 31 March 2020. The board is
proposing, subject to shareholder approval at the AGM, a final dividend of
£73,386, representing 0.5p per ordinary share, to be paid on 16 October 2020,
making a total dividend for the year of 1.0p.
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