REG-PHSC Plc: Half-year Report
05/12/2018 07:05
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
* Group turnover for first half of £2.897m, down from £3.720m last year
* EBITDA of £285k (inclusive of gain on disposal of property of £150k)
compared with £197k profit at the half way stage last year
* Earnings per share of 1.47p compared with 1.08p last year
* Cash of £583k compared with £129k last year
* Net asset value (unaudited) of £5.503m
* Pro-forma net asset value (unaudited) per share of 37.5p compared to a
current share price (mid) of 12.25p
* Interim dividend declared of 0.5p per ordinary share
Operational Highlights
* Acceleration of plans to bring the Group’s security businesses under one
roof
* Disposal of the property formerly used by Adamson’s Laboratory Services
Limited (ALS), the Group’s asbestos subsidiary which was discontinued in
March 2018 generating a gain of £150k
* Investment in extended training area and office facilities for QCS
International Limited (QCS)
* Two leased premises to be vacated in Q3/Q4 resulting in ongoing cost savings
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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