REG-PHSC plc: Interim Results <Origin Href="QuoteRef">PHSC.L</Origin>
03/12/2015 07:10
3 December 2015
PHSC PLC
("PHSC", the "Company", or the "Group")
Unaudited Interim Results for the six months ended 30 September 2015
GROUP CHIEF EXECUTIVE OFFICER'S STATEMENT
Financial Highlights
* Group turnover for first half down 18% at £3.354m compared with £4.129m
last year.
* EBITDA reduces to £229k, versus £444k after cost of acquisitions last year.
* Basic earnings per share down 45% at 1.23p compared with 2.26p last year.
* Cash position increased from £138k at 30 Sept 2014 to £611k
* Net asset value (unaudited) up to £6.635m from £6.622m last year.
* Pro-forma net asset value (unaudited) per share of 53.3p compared to a
current share price (mid) of 24.5p.
* Near-threefold increase in EBITDA in Q2 versus Q1, as new contracts and
cost savings take effect.
Trading overview
As indicated in our previous trading update, the conclusion of two large
contracts resulted in a hiatus in our order book which we have been seeking to
address. In our pre-AGM trading update covering the first four months, we
reported EBITDA of circa £66k. It can be seen from today's announcement that
the final two months of H1 generated an additional £139k of profit, enabling us
to climb up to £229k EBITDA for the first half of the year. Although somewhat
less than at this stage in 2014-15, the recent upturn in performance has given
the board a degree of confidence that subsidiaries are successfully adjusting
to their new circumstances. The breakdown of performance by individual
subsidiary later in this statement will show that the single most significant
factor was a gap in the order book of B to B Links Limited. The subsidiary did
not have the benefit of last year's large one-off contract and this coincided
with work deferrals from a major customer. Those orders were subsequently
released to us for fulfilment and the positive effect can be seen in Q2's
improved performance.
Our QCS International Limited subsidiary is now rolling out a programme of
training and consultancy support in connection with recent revisions to
international quality standards ISO 9001and ISO 14001. This programme was
forecast to have commenced in Q2 but there was a delay in official publication
by the standards body. This resulted in the subsidiary having to postpone a
number of transitional courses but these will now commence in Q3.
Health and safety consultancy and training activity continued to take place in
line with expected customer demand. The conclusion of a large value
asbestos-related project with a leading university detrimentally affected
income and caused an overmanning situation which has now been rectified.
Outlook
The Group traditionally performs better in the second half of the financial
year, although this trend was interrupted in 2014-15 by the exceptional
performance of B to B Links in the first half. Based on the current order book
we expect to see further progress from existing subsidiaries in Q3 and Q4,
giving us a stronger second half to the current year.
Dividend prospects
The Board is not declaring an interim dividend but intends to recommend an
appropriate final dividend in line with its stated policy of at least
maintaining the level of dividend.
Cash Flow
The bank balance stood at £611k as at the date of the interim accounts,
compared with £138k this time last year. The relatively low balance last year
was caused by meeting our obligations in respect of acquisition payments that
fell due in that period.
An agreement has been put in place with our bankers, HSBC, that allows the
Group to call upon an overdraft facility of £200k. This facility is due for
review in November 2016. We are confident that our cash balance and the
availability of bank funding will enable us to meet all our financial
obligations over the foreseeable future.
Performance by Trading Subsidiaries
Profit/loss figures for individual subsidiaries are stated before tax and
inter-company charges (including the costs of operating the plc which are
recovered through management charges to trading subsidiaries), interest paid
and received, depreciation and amortisation.
Adamson's Laboratory Services Limited
Revenue of £1,105,100 yielding a profit of £102,900 (the equivalent figures for
the same period last year were £1,288,600 and £67,400).
Inspection Services (UK) Limited
Invoiced sales of £106,500 yielding a profit of £18,800 (the figures for the
same period last year were £96,300 and £8,900).
Personnel Health and Safety Consultants Limited
Invoiced sales of £328,300 yielding a profit of £132,000 (the figures for the
same period last year were £390,800 and £191,200).
RSA Environmental Health Limited
Invoiced sales of £209,700 resulting in a profit of £21,000 (the figures for
the same period last year were £198,200 and £8,000).
Quality Leisure Management Limited
Invoiced sales of £239,600 resulting in a profit of £34,900 (the figures for
the same period last year were £246,800 and £57,000).
QCS International Limited
Invoiced sales of £245,000 yielding a profit of £58,000 (the figures for the
same period last year were £254,000 and £58,900).
B to B Links Limited
Invoiced sales of £1,120,100 yielding a profit of £58,900 (the figures for the
same period last year were £1,654,300 and £402,000)
Stephen King - Group Chief Executive Officer
For further information please contact:
PHSC plc
Stephen King 01622 717700
www.phsc.plc.uk
Sanlam Securities UK Limited (Nominated adviser and broker) 020 7628 2200
Lindsay Mair/James Thomas
Group Statement of Comprehensive Six Six Year
Income months months
ended
ended ended
30 Sept 30 Sept 31 Mar
15 14 15
Note Unaudited Unaudited
£'000 £'000 £'000
Continuing operations
Revenue 3 3,354 4,129 7,731
Cost of sales (1,804) (2,249) (4,226)
Gross profit 1,550 1,880 3,505
Administrative expenses (1,345) (1,383) (2,739)
Exceptional administrative expenses 2 - (75) (263)
Profit from operations 205 422 503
Finance income - - 1
Finance costs - - (1)
Profit before taxation 205 422 503
Corporation tax expense (49) (136) (154)
Profit for the period after tax attributable
to owners of parent 3 156 286 349
Total comprehensive income attributable to 156 286 349
owners of the parent
Attributable to:
Equity holders of the Group 156 286 349
Basic and diluted Earnings per Share 5 1.23p 2.26p 2.75p
for profit after tax from continuing
operations attributable to the equity
holders of the Group during the
period
Group Statement of Financial Position 30 Sept 30 Sept 31 Mar
15 14 15
Unaudited Unaudited
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 4 684 686 689
Goodwill 4,580 4,560 4,580
5,264 5,246 5,269
Current assets
Inventories 224 228 216
Trade and other receivables 1,864 2,922 1,980
Cash and cash equivalents 611 138 462
2,699 3,288 2,658
Total assets 3 7,963 8,534 7,927
Current liabilities
Trade and other payables 1,126 1,475 1,156
Financial liabilities - 2 -
Current corporation tax payable 134 237 105
Short term provisions - 130 -
1,260 1,844 1,261
Non-current liabilities
Deferred taxation liabilities 68 68 68
68 68 68
Total liabilities 1,328 1,912 1,329
Net assets 6,635 6,622 6,598
Capital and reserves attributable to
equity
holders of the Group
Called up share capital 1,268 1,268 1,268
Share premium account 1,831 1,831 1,831
Capital redemption reserve 144 144 144
Retained earnings 3,392 3,379 3,355
6,635 6,622 6,598
Group Statement of Changes
in Equity
Share Share Capital Retained Total
Capital
Premium Redemption Earnings
Reserve
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2015 1,268 1,831 144 3,355 6,598
Profit for the period - - - 156 156
attributable to equity
holders
Dividends - - - (119) (119)
Balance at 30 September 201 1,268 1,831 144 3,392 6,635
5
Balance at 1 April 2014 1,268 1,831 144 3,197 6,440
Profit for the period - - - 286 286
attributable to equity
holders
Dividends - - - (104) (104)
Balance at 30 September 201 1,268 1,831 144 3,379 6,622
4
Group Statement of Cash Flows Six Six Year
months months
ended ended ended
30 Sept 30 Sept 31 Mar
15 14 15
Unaudited Unaudited
£'000 £'000 £'000
Cash flows generated from/(used by)
operating activities
Cash generated from/(used by) operations 306 (231) 739
Interest paid - - (1)
Tax paid (20) (27) (177)
Net cash (used by)/generated from 286 (258) 561
operating activities
Cash flows used in investing activities
Purchase of property, plant and equipment (18) (12) (59)
Purchase of subsidiary companies net of - (200) (564)
cash acquired
Disposal of fixed assets - 1
Interest received - - 1
Net cash used in investing activities (18) (212) (621)
Cash flows used in financing activities
Dividends paid to group shareholders (119) (104) (190)
Net cash used in financing activities (119) (104) (190)
Net increase/(decrease) in cash and cash 149 (574) (250)
equivalents
Cash and cash equivalents at beginning of 462 712 712
period
Cash and cash equivalents at end of period 611 138 462
Notes to the cash flow statement
Cash generated from/(used by) operations
Operating profit - continuing operations 205 422 503
Depreciation charge 24 22 52
Goodwill impairment - 49 29
Fair value movement in contingent - - 233
consideration
Loss on sale of fixed assets - - 12
Increase in inventories (8) (73) (61)
Decrease/(increase) in trade and other 115 (987) (44)
receivables
(Decrease)/increase in trade and other (30) 341 21
payables
Decrease in financial liabilities - (5) (6)
Cash generated from/(used by) operations 306 (231) 739
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 AIM
rules 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 2015, prepared under IFRS have been filed with the Registrar of
Companies. The auditors' report for the 2014 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
Certain new standards, amendments and interpretations of existing standards
that have been published and which have not been applied in these financial
statements were in issue but not yet effective (and in some cases had not yet
been adopted by the EU)
IFRS standards and interpretations issued (and EU adopted) but Effective date -
not yet effective accounting
period beginning
Title on/after
IFRS 13 Fair Value Measurement 01/01/2013
IFRIC 20 Stripping Costs in the Production of a Surface Mine 01/01/2013
IFRS 1 Amendments - Government Loans 01/01/2013
Transition Guidance (Amendments to IFRS 10, 11 and 12) 01/01/2013
Novation of Derivatives and Continuation of Hedge Accounting 01/01/2014
(Amendments to IAS 39)
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 01/01/2014
27)
IAS 36 Amendments Recoverable Amount Disclosures for 01/01/2014
non-Financial Assets
IFRIC 21 Levies 01/01/2014
IFRS Standards and Interpretations issued by IASB but not yet Effective date -
EU approved accounting
period beginning
Title on/after
IAS 19 Amendment - Defined Benefit Plans: Employee 01/07/2014
Contributions
IFRS 10 and IAS 28 Amendments: Sale or Contribution of 01/01/2016
Assets between an Investor and its Associate or Joint
Venture
IAS 27 Amendment: Equity Method in Separate Financial 01/01/2016
Statements
IAS 16 and IAS 41 Amendments: Agriculture Bearer Plants 01/01/2016
IFRS 14 Regulatory Deferral Accounts 01/01/2016
IAS 16 and IAS 38 Amendments: Clarification of Acceptable 01/01/2016
Methods of Depreciation and Amortisation
IFRS 11 Amendments: Accounting for Acquisitions of Interest 01/01/2016
in Joint Operations
IFRS 15 Revenue from Contracts with Customers 01/01/2017
IFRS 9 Financial Instruments 01/01/2018
The adoption of these standards, amendments and interpretations is not expected
to have a material impact on the group's profit for the period or equity.
Application of these standards will result in some changes in presentation of
information within the condensed interim financial statements.
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:
(a) Provisions
The balance sheet of B to B Links Limited includes a £24k provision in respect
of potential repairs and replacements under warranty. The assumed risk is
expressed in percentage terms over the two year warranty period. A further £3k
provision relates to work that may be required under retention clauses.
(b) Impairment of goodwill
Our interim review of the value of goodwill in the balance sheet did not
highlight any conditions which would give rise to a material impairment and for
this reason the Board is to defer any decision regarding any additional
impairment of goodwill until the year end.
30 Sept 30 Sept 31 Mar 15
15 14
Unaudited Unaudited
2 Exceptional Administrative £'000 £'000 £'000
Expenses
QCS International Limited: - 26 26
Acquisition payment in excess of
provision
B to B Links Limited: - - 208
Acquisition payment in excess of
provision
PHSC plc: - 49 29
Goodwill impairment as detailed
in (b) above
- 75 263
Notes to the Financial Statements
(continued)
30 Sept 30 Sept 31 Mar 15
15 14
Unaudited Unaudited
3 Segmental Reporting £'000 £'000 £'000
Revenue
PHSC plc - - -
Personnel Health & Safety 328 391 754
Consultants Ltd
RSA Environmental Health Ltd 210 198 422
Adamson's Laboratory Services Ltd 1,105 1,289 2,694
Inspection Services Ltd 106 96 196
Quality Leisure Management Ltd 240 246 534
Q C S International Ltd 245 254 527
B to B Links Ltd 1,120 1,655 2,604
3,354 4,129 7,731
Profit/(loss) after taxation
PHSC plc 15 (41) (61)
Personnel Health & Safety 71 78 171
Consultants Ltd
RSA Environmental Health Ltd 7 - 11
Adamson's Laboratory Services Ltd 25 (45) 85
Inspection Services Ltd 13 2 6
Quality Leisure Management Ltd 14 24 66
Q C S International Ltd 34 42 117
B to B Links Ltd (23) 301 231
156 361 626
Taxation adjustment (group loss relief - - (14)
and deferred tax)
Additional acquisition payment (QCS/B - (26) (234)
to B Links)
Goodwill impairment - (49) (29)
156 286 349
Total assets
PHSC plc 6,337 5,890 4,889
Personnel Health & Safety 422 464 811
Consultants Ltd
RSA Environmental Health Limited 476 492 596
Adamson's Laboratory Services Ltd 815 1,219 1,377
Inspection Services Ltd 57 54 111
Quality Leisure Management Ltd 98 111 258
Q C S International Ltd 103 88 307
B to B Links Ltd 1,126 1,730 1,049
9,434 10,048 9,398
Adjustment of goodwill (1,471) (1,514) (1,471)
7,963 8,534 7,927
Notes to the Financial Statements 30 Sept 15 30 Sept 14 31 Mar 15
(continued)
Unaudited Unaudited
4 Property, plant and equipment £'000 £'000 £'000
Cost or valuation
Brought forward 1,055 1,124 1,127
Additions 18 12 59
Disposals - - (132)
Carried forward 1,073 1,136 1,054
Depreciation
Brought forward 365 428 432
Charge 24 22 52
Disposals - - (119)
Carried forward 389 450 365
Net book value 684 686 689
5 Earnings per share
The calculation of the basic earnings per share is based on
the following data.
30 Sept 15 30 Sept 14 31 Mar 15
£'000 £'000 £'000
Unaudited Unaudited
Earnings
Continuing activities 156 286 349
Number of shares 30 Sept 15 30 Sept 14 31 Mar 15
Weighted average number of
shares for
the purpose of basic earnings 12,686,353 12,686,353 12,686,353
per share
END
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