REG-PHSC Plc: Half-Year Report
23/11/2021 07:05
23 November 2021
PHSC PLC
(“PHSC”, the “Company” or the “Group”)
Unaudited Interim Results for the six months ended 30 September 2021
PHSC (AIM: PHSC), a leading provider of health, safety, hygiene and
environmental consultancy services and security solutions to the public and
private sectors, is pleased to announce its unaudited interim results for the
six month period ended 30 September 2021.
GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT
Financial Highlights
* Group revenue excluding grant funding of £1.719m (H1 FY21: £1.377m).
* EBITDA of £163k (includes £29k of grant funding) (H1 FY21: £182k
including £316k of grant funding). * Lower EBITDA reflects a reduction of
£287k in grant funding over the period.
* Adjusted EBITDA, excluding all grant funding, of £134k (H1 FY21: £134k
loss).
* Earnings per share of 0.78p (H1 FY21: 0.83p).
* Successful share buyback programme completed during the period, as
previously announced.
* Cash of £902k after £325k cost of the share buyback programme (H1 FY21:
£1.0m).
* Net asset value (unaudited) of £4.7m (H1 FY21: £5.1m).
* Pro-forma net asset value (unaudited) per share of 35.9p, compared to a
mid-market share price as at market close on 30 September 2021 of 22p.
* Interim dividend declared of 0.5p per ordinary share.
Operational Highlights and Business Outlook
In Q2 2021, the majority of the restrictions imposed by the UK Government in
response to the COVID-19 pandemic were lifted or relaxed, which led to an
overall improvement in total revenue for H1 FY21 as clients began their own
recovery programmes. The gradual return to more normal working conditions
meant that the Group had progressively less reliance on the Government’s
Coronavirus Job Retention Scheme (“CJRS”). This led to reduced grant
receipts, down from approximately £316k in H1 FY21 to just below £30k for H1
FY22.
We continue to maintain a £50,000 banking facility with HSBC Bank plc which
has been renewed for a further year to October 2022. We have not made any use
of such facility and do not expect to have to do so.
Despite the reopening of retail premises, the Security Division has not
returned to the level of pre-pandemic trading. This is due predominantly to
the permanent closure of former key clients such as Debenhams, Peacocks and
Edinburgh Woollen Mill. Another factor that impacts margins is the cost of
transportation, with all security related products being shipped in from
abroad. Carriage charges have risen, in some cases five-fold, and it is simply
not possible to pass on and recover such increase from the end user where
prices are built into existing contracts. The business has reduced its cost
base by downsizing the warehousing and office space it occupies, and staffing
levels are now as low as is practicable without adversely affecting the
customer experience. Management continues to seek to secure additional
business from existing clients, as well as new client wins.
The reopening of education and leisure facilities has resulted in a welcome
return to profitable trading for the relevant subsidiaries in the Safety
Division that specialise in such sectors.
Our subsidiary focused on the statutory examination of plant and equipment was
largely unaffected by COVID-19, save where clients had closed their
workplaces, as there was no derogation offered by the relevant authorities
from the legal obligation to ensure safety of the plant concerned. However,
since lockdown has been lifted, we have found that costs have risen
considerably, particularly in the prices of accommodation and travel, which
has adversely affected margins.
Our Systems Division has bounced back exceptionally well from the enforced
suspension of many of its activities, including the delivery of public
training courses. Notably, the new revenue stream from our ‘UK Responsible
Person’ (“UKRP”) service continues to increase. This service provides a
portal to enable clients in the European Union (“EU”) medical device
sector to supply the UK marketplace. Further growth is anticipated in the
number of clients using this service.
General safety consultancy and training sales have shown a marked improvement,
although EBITDA has reduced across the Safety Division as a whole due to the
significantly lower income from CJRS funding. Further details are provided
by way of the segmental analysis below showing the performance of individual
subsidiaries.
The Board is generally satisfied with the Group’s performance at this stage
of its COVID-19 recovery programme and is confident that further progress can
be achieved over the remainder of the financial year.
Dividend
The Board is confident that the Group will remain profitable and has
sufficient cash reserves to enable the payment of an interim dividend.
Accordingly, the Board has decided to declare an interim dividend of 0.5p per
ordinary share, to be paid on 21 January 2022, to those shareholders on the
register of members on 24 December 2021.
As in previous years, the recommendation by the Board of any final dividend
will be subject to the Group’s full year performance and the outlook at that
time.
Cash Flow
Cash at bank on 30 September 2021 stood at £902k compared to approximately
£1m at the same time last year. As indicated, the lower balance at the
interim stage reflects the utilisation of £325k on the Company’s successful
share buyback programme implemented during the period.
The cash reserves are sufficient to service all requirements arising in the
normal course of the Group’s business and in relation to the proposed
dividend. Whilst the Board has not currently committed to any additional calls
on the Company’s cash, it is anticipated that a potential further share
buyback programme, utilising the authority granted by the relevant special
resolution passed at the 2021 Annual General Meeting, will be duly considered
by the Board prior to the end of the financial year and announced as
appropriate.
Discrete Performance by Trading Subsidiaries
Profit/loss figures for individual subsidiaries below are stated before tax
and inter-company charges (including the costs of operating the parent plc
which are recovered through management charges levied on, and dividends
received from, trading subsidiaries), interest paid and received, depreciation
and amortisation. Invoiced sales do not include CJRS grant funding, but such
income is taken into account when calculating profit/loss figures. The net
reduction of £287k in grant funding is the reason that most of the
Company’s subsidiaries show lower EBITDA despite higher sales revenue.
Inspection Services (UK) Limited
Invoiced sales of £94,392 yielding a profit of £10,923 (H1 FY21: £113,807
and £25,471).
Personnel Health and Safety Consultants Limited
Invoiced sales of £607,906 yielding a profit of £198,579 (H1 FY21: £381,531
and £223,591).
RSA Environmental Health Limited
Invoiced sales of £130,953 resulting in a profit of £15,646 (H1 FY21:
£100,123 and £30,686).
Quality Leisure Management Limited
Invoiced sales of £137,281 resulting in a profit of £37,500 (H1 FY21:
£90,369 and £40,342).
QCS International Limited
Invoiced sales of £356,968 yielding a profit of £113,668 (H1 FY21: £196,533
and £46,705).
B2BSG Solutions Limited
Invoiced sales of £391,729 resulting in a loss of £16,738 (H1 FY21:
£495,228 and £4,394 loss).
For further information please contact:
PHSC plc
Stephen
King
Tel: 01622 717 700
Stephen.king@phsc.co.uk
www.phsc.plc.uk
Strand Hanson Limited (Nominated Adviser) Tel: 020
7409 3494
James Bellman/Matthew Chandler
Novum Securities Limited
(Broker) Tel: 020 7399
9427
Colin Rowbury
About PHSC
PHSC, 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. In addition, B2BSG Solutions Ltd
offers 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 Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018.
Group Statement of Comprehensive Income Six months ended Six months ended Year ended
30 Sept 21 30 Sept 20 31 Mar 21
Note Unaudited Unaudited Audited
£’000 £’000 £’000
Continuing operations
Revenue 3 1,719 1,377 3,290
Cost of sales (888) (767) (1,765)
Gross profit 831 610 1,525
Administrative expenses (727) (775) (1,528)
Goodwill impairment 2 - - (250)
Government grants 29 316 441
Other income - - 1
Profit from operations 133 151 189
Finance income - 1 1
Profit before taxation 133 152 190
Corporation tax expense (27) (31) (102)
Profit for the period after tax attributable to owners of parent 3 106 121 88
Total comprehensive income attributable to owners of the parent 106 121 88
Basic and diluted earnings per share for profit after tax from continuing operations attributable to the equity holders of the Group during the period 5 0.78p 0.83p 0.60p
Group Statement of Financial Position 30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
Note £’000 £’000 £’000
Non-current assets
Property, plant and equipment 4 500 565 530
Goodwill 3,028 3,278 3,028
Deferred tax asset 2 20 2
3,530 3,863 3,560
Current assets
Inventories 252 263 260
Trade and other receivables 686 753 590
Cash and cash equivalents 902 1,003 1,237
1,840 2,019 2,087
Total assets 3 5,370 5,882 5,647
Current liabilities
Trade and other payables 460 571 518
Right of use lease liability 28 34 32
Current corporation tax payable 115 71 88
603 676 638
Non-current liabilities
Right of use lease liability 26 54 39
Deferred taxation liabilities 51 52 51
77 106 90
Total liabilities 680 782 728
Net assets 4,690 5,100 4,919
Capital and reserves attributable to equity holders of the Group
Called up share capital 1,308 1,468 1,468
Share premium account 1,916 1,916 1,916
Merger relief reserve 134 134 134
Other reserves 304 144 144
Retained earnings 1,028 1,438 1,257
4,690 5,100 4,919
Group Statement of Changes in Equity
Share Capital Share Premium Merger Relief Reserve Other Reserves * Retained Earnings Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 April 2021 1,468 1,916 134 144 1,257 4,919
Profit for the period attributable to equity holders - - - - 106 106
Purchase of Treasury shares (160) - - 160 (325) (325)
Cost of share buyback - - - - (10) (10)
Balance at 30 September 2021 1,308 1,916 134 304 1,028 4,690
Balance at 1 April 2020 1,468 1,916 134 144 1,317 4,979
Profit for the period attributable to equity holders - - - - 121 121
Balance at 30 September 2020 1,468 1,916 134 144 1,438 5,100
* Other reserves represent the merger relief reserve and Treasury shares held
by the Group.
Group Statement of Cash Flows Six months Six months Year
ended ended ended
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
£’000 £’000 £’000
Cash flows generated from operating activities
Cash generated from operations 17 264 702
Tax paid - - (37)
Net cash generated from operating activities 17 264 665
Cash flows used in investing activities
Purchase of property, plant and equipment - (2) (9)
Disposal of fixed assets - - 4
Interest received - 1 1
Net cash used in investing activities - (1) (4)
Cash flows used in financing activities
Payments on right of use assets (17) (16) (33)
Share buyback (335) - -
Dividends paid to Group shareholders - - (147)
Net cash used in financing activities (352) (16) (180)
Net increase in cash and cash equivalents (335) 247 481
Cash and cash equivalents at beginning of period 1,237 756 756
Cash and cash equivalents at end of period 902 1,003 1,237
Notes to the cash flow statement
Cash generated from operations
Operating profit - continuing operations 133 151 189
Depreciation charge 30 30 66
Goodwill impairment - - 250
Loss on sale of fixed assets - - 2
Decrease in inventories 8 1 4
Decrease/(increase) in trade and other receivables (96) 133 296
Decrease in trade and other payables (58) (51) (105)
Cash generated from operations 17 264 702
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 announcement, 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 2021, prepared under IFRS, have been filed with the
Registrar of Companies. The auditor’s report for the 2021 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.
Impairment of goodwill
The Board has considered the carrying value of goodwill and is satisfied that
the assumptions made at the time of the last adjustment remain valid. Although
a half year loss has been incurred by the Security Division, the effect of the
cost reduction programme implemented in Q1 2021 should improve the financial
year end position. The longer-term outlook presently remains stable and an
impairment charge in these interim financial statements is not therefore
considered necessary but will be reassessed at the year end.
Government grants
Government grants represent amounts receivable in relation to the CJRS. The
grants have been recognised in the period to which the costs relate.
2. Exceptional Administrative Expenses
Six months ended Six months ended Year ended
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
Impairment of PHSC plc’s investment in £’000 £’000 £’000
B2BSG Solutions Limited - - 200
RSA Environmental Health Limited - - 50
3. Segmental Reporting
Six months ended Six months ended Year ended
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
Revenue £’000 £’000 £’000
Security division : B2BSG Solutions Ltd 392 495 1,136
392 495 1,136
Health & Safety division
Inspection Services (UK) Ltd 94 114 214
Personnel Health & Safety Consultants Ltd 608 382 969
Quality Leisure Management Ltd 137 90 235
RSA Environmental Health Ltd 131 100 235
970 686 1,653
Systems division: QCS International Ltd 357 196 501
Total revenue 1,719 1,377 3,290
Profit/(loss) after taxation, before management charge
Security division: B2BSG Solutions Ltd (13) (1) 3
Health & Safety division
Inspection Services (UK) Ltd 6 18 27
Personnel Health & Safety Consultants Ltd 166 183 409
Quality Leisure Management Ltd 30 33 85
RSA Environmental Health Ltd 13 25 51
215 259 572
Systems division: QCS International Ltd 87 33 104
Holding company: PHSC plc (183) (170) (341)
106 121 338
Goodwill impairment - - (250)
Total Group profit after taxation 106 121 88
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
Total assets £’000 £’000 £’000
Security division: B2BSG Solutions Ltd 292 411 320
Safety division
Inspection Services (UK) Ltd 108 176 121
Personnel Health & Safety Consultants Ltd 470 581 377
Quality Leisure Management Ltd 166 210 168
RSA Environmental Health Limited 584 637 595
1,328 1,604 1,261
Systems division: QCS International Ltd 337 320 253
Holding company: PHSC plc 4,184 4,322 4,584
6,141 6,657 6,418
Adjustment of goodwill (773) (775) (773)
Adjustment of deferred tax 2 - 2
Total assets 5,370 5,882 5,647
4. Property, plant and equipment
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
£’000 £’000 £’000
Cost or valuation
Brought forward 928 949 949
Additions - 2 8
Disposals - - (29)
Carried forward 928 951 928
Depreciation
Brought forward 398 356 356
Charge 30 30 65
Disposals - - (23)
Carried forward 428 386 398
Net book value 500 565 530
5. Earnings per share
The calculation of the basic earnings per share is based on the following
data.
Six months ended Six months ended Year ended
30 Sept 21 30 Sept 20 31 Mar 21
Unaudited Unaudited Audited
£’000 £’000 £’000
Earnings
Continuing activities 106 121 88
Number of shares 30 Sept 21 30 Sept 20 31 Mar 21
Weighted average number of shares for the purpose of basic earnings per share 13,646,497 14,667,257 14,667,257
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