5 December
2017
PHSC PLC
(“PHSC”, the “Company”, or the
“Group”)
Unaudited Interim
Results for the six months ended 30
September 2017
GROUP CHIEF
EXECUTIVE OFFICER’S STATEMENT
Financial Highlights
- Group turnover for first half up 3.7% at £3.720m compared with
£3.587m last year.
- EBITDA of £197k, versus a loss of £93k at the half way stage
last year.
- Earnings per share of 1.08p compared with a loss of 0.85p last
year.
- Cash of £129k compared with £301k last year.
- Net asset value (unaudited) of £5.680m.
- Pro-forma net asset value (unaudited) per share of 38.7p
compared to a current share price (mid) of 11p.
- Interim dividend declared of 0.5p per Ordinary Share.
Operational Highlights
- 61% of revenues in security related technology services
compared with 55% last year.
- On-going rationalisation and cost reduction programme.
Trading overview
The board is pleased to be able to report a return to
profitability. Our EBITDA of £197,000 compares with a loss of
£93,000 for the corresponding period last year, meaning an
improvement in performance of £290,000. This turnaround has been
achieved through a combination of factors: improved performance in
our security technology businesses, strong revenues from quality
systems management and training, steady income from general health
and safety services, and reduced losses from asbestos
consultancy.
QCS International Limited (QCS) has enjoyed an excellent first
half to the financial year. Revenues have been extremely strong as
the company benefited from an increased demand for management
systems training.
Total income from the security related businesses, B to B Links
Limited (B to B) and SG Systems Limited (SG), was £2.26m and
generated EBITDA of £149,700 before management charges. The
corresponding figures last year were £1.98m and £19,200. B to B
finished the first half strongly, despite continuing to suffer the
effects of the weak exchange rate. The company imports the vast
majority of its electronic components from Europe or Asia with payment having to be made in USD or
Euros. The second half of the year is traditionally unpredictable,
with retail clients tending to defer projects that may prove
disruptive to their sales over the Christmas period. Q3 is
therefore seen as being quieter, with a focus on completion of
those installations currently underway before the go-ahead is given
for new installations and further upgrade work.
The first half cumulative loss for SG resulted from additional
costs associated with external accounting support and other costs
associated with changing the company’s accounts manager. The hybrid
accounting system inherited at the time of acquisition is in the
process of being replaced by one that is compatible with that used
by B to B, as those companies move closer towards integration.
Without these costs the company would have turned a small profit
for the first half despite the negative effect of the weakness of
Sterling. The new business pipeline continues to be encouraging,
with very good feedback and interest at the recent Retail Fraud
Show where one of the company’s products was shortlisted in the
Most Innovative In-Store Solution category. The volume
potential from new products is significant, but it will take time
for product trials with national retailers to convert to regular
sales.
Outlook
Whilst we will look to consolidate the progress made in the year
to date, there are a number of uncertainties that may impact on the
second half of the year. With an increasing reliance upon security
systems and related technology, our success is fairly closely
aligned to the fortunes of the retail environment and this is an
unpredictable marketplace. We continue to strengthen relationships
with existing clients and seek to form new partnerships with
others, as well as extending our offering to non-retail
sectors.
The board has come to the view that falling revenues and lower
margins at our loss-making Adamson’s Laboratory Services Limited
(ALS) subsidiary cannot be eliminated if we follow the current
operating model. Despite cost-cutting that enabled the company to
reduce its losses by 30% in the period, local management has been
unable to identify a plan of action that would see a stabilisation
of the company. It is planned that asbestos management services are
procured externally, with ALS acting as an intermediary. This will
result in the majority of remaining posts becoming redundant at the
end of Q3. The company trades from Group-owned premises in Essex
and Northamptonshire. It is likely that the Essex premises will be
disposed of in due course. Costs will be associated with the
restructuring and will mostly be borne in the second half of the
year.
The remaining health and safety businesses are expected to
remain profitable in the second half. There are high expectations
that QCS will continue to exceed targets for sales and profits in
the delivery of quality management consultancy and training
services. Sales are already looking promising with high levels of
training already secured, and additional income expected from new
consultancy projects recently won.
Dividend
The board has declared an interim dividend of 0.5p per ordinary
share, to be paid on 28 February 2018
to those on the register of members on 5
January 2018.
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 30th September
2017 stood at £129k compared with £301k at the same time
last year.
A final payment of £25,000 will be paid on 11 December 2017 to the sellers of SG in
settlement of the acquisition terms.
Other than in the normal course of business and as outlined
above, there are no future calls on the Company’s cash.
The Company retains its £300,000 overdraft facility with
HSBC.
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 £283,400 resulting in a loss of £62,700 before
redundancy costs of £8,800 (the equivalent figures for the same
period last year were £509,800 and a loss of £101,400).
Inspection Services (UK) Limited
Invoiced sales of £108,700 yielding a profit of £25,200 (the
figures for the same period last year were £111,200 and
£23,000).
Personnel Health and Safety
Consultants Limited
Invoiced sales of £317,600 yielding a profit of £123,900 (the
figures for the same period last year were £340,300 and
£108,100).
RSA Environmental Health Limited
Invoiced sales of £174,600 resulting in a profit of £20,900 (the
figures for the same period last year were £189,200 and
£34,600).
Quality Leisure Management Limited
Invoiced sales of £203,000 resulting in a profit of £52,300 (the
figures for the same period last year were £196,400 and
£6,400).
QCS International Limited
Invoiced sales of £372,100 yielding a profit of £145,900 (the
figures for the same period last year were £258,600 and
£67,300).
B to B Links Limited
Invoiced sales of £1,521,800 yielding a profit of £169,400 (the
figures for the same period last year were £1,237,900 and
£38,000).
SG Systems (UK) Limited
Invoiced sales of £738,700 resulting in a loss of £19,700 (the
figures for the same period last year were £743,700 and a loss of
£18,800).
This announcement contains inside information for the purposes
of Article 7 of EU Regulation
596/2014.
For further information please contact:
PHSC plc
Stephen King
Stephen.king@phsc.co.uk
www.phsc.plc.uk
|
01622 717700 |
Northland Capital Partners
Limited (Nominated Adviser)
Edward Hutton/David Hignell |
0203 861 6625 |
Beaufort Securities Limited
(Broker)
Elliot Hance |
020 7382 8300 |
About PHSC
PHSC plc, through its trading subsidiaries Personnel Health
& Safety Consultants Ltd, RSA Environmental Health Ltd,
Adamson's Laboratory Services 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. B to B Links Ltd provides innovative security
tagging, product protection, CCTV and labelling solutions to
national and independent retailers. SG Systems UK is a market
leading provider of anti-theft solutions for retail loss
prevention, and customer activity marketing data.
Group Statement of
Comprehensive Income |
|
|
Six
months
ended |
|
Six
months
ended |
|
Year
ended |
|
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar
17 |
|
Note |
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Continuing
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
3 |
|
3,720 |
|
3,587 |
|
7,162 |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(1,994) |
|
(1,990) |
|
(3,988) |
|
|
|
|
|
|
|
|
Gross
profit |
|
|
1,726 |
|
1,597 |
|
3,174 |
|
|
|
|
|
|
|
|
Administrative
expenses |
|
|
(1,546) |
|
(1,713) |
|
(3,319) |
Goodwill
impairment |
2 |
|
- |
|
- |
|
(625) |
|
|
|
|
|
|
|
|
Other income |
|
|
- |
|
1 |
|
1 |
|
|
|
|
|
|
|
|
Profit/(loss) from
operations |
|
|
180 |
|
(115) |
|
(769) |
|
|
|
|
|
|
|
|
Fair value movement on
contingent consideration |
|
|
- |
|
- |
|
50 |
Finance income |
|
|
- |
|
1 |
|
1 |
Finance costs |
|
|
(2) |
|
- |
|
(2) |
|
|
|
|
|
|
|
|
Profit/(loss)
before taxation |
|
|
178 |
|
(114) |
|
(720) |
|
|
|
|
|
|
|
|
Corporation tax
expense |
|
|
(19) |
|
- |
|
29 |
|
|
|
|
|
|
|
|
Profit/(loss) for the period after tax attributable |
|
|
|
|
|
to owners of
parent |
3 |
|
159 |
|
(114) |
|
(691) |
|
|
|
|
|
|
|
|
Total
comprehensive income attributable to owners of the parent |
|
159 |
|
(114) |
|
(691) |
|
|
|
|
|
|
|
|
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 |
|
1.08p |
|
(0.85)p |
|
(4.92p) |
|
|
|
|
|
|
|
|
Group
Statement of Financial Position |
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar
17 |
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
Note |
|
£'000 |
|
£'000 |
|
£'000 |
Non-current
assets |
|
|
|
|
|
|
|
Property, plant and
equipment |
4 |
|
620 |
|
653 |
|
626 |
Goodwill |
|
|
3,878 |
|
4,504 |
|
3,878 |
Deferred tax
asset |
|
|
22 |
|
1 |
|
22 |
|
|
|
4,520 |
|
5,158 |
|
4,526 |
Current
assets |
|
|
|
|
|
|
|
Inventories |
|
|
492 |
|
493 |
|
487 |
Trade and other
receivables |
|
|
1,880 |
|
1,697 |
|
1,448 |
Cash and cash
equivalents |
|
|
129 |
|
301 |
|
207 |
|
|
|
2,501 |
|
2,491 |
|
2,142 |
|
|
|
|
|
|
|
|
Total
assets |
3 |
|
7,021 |
|
7,649 |
|
6,668 |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Trade and other
payables |
|
|
1,239 |
|
1,129 |
|
1,064 |
Current corporation
tax payable |
|
|
19 |
|
84 |
|
- |
Deferred
consideration |
|
|
- |
|
200 |
|
- |
Contingent
consideration |
|
|
25 |
|
- |
|
25 |
|
|
|
1,283 |
|
1,413 |
|
1,089 |
Non-current
liabilities |
|
|
|
|
|
|
|
Deferred taxation
liabilities |
|
|
58 |
|
63 |
|
58 |
Contingent
consideration |
|
|
- |
|
75 |
|
- |
|
|
|
58 |
|
138 |
|
58 |
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
1,341 |
|
1,551 |
|
1,147 |
|
|
|
|
|
|
|
|
Net assets |
|
|
5,680 |
|
6,098 |
|
5,521 |
|
|
|
|
|
|
|
|
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 |
|
1,915 |
|
1,916 |
Capital redemption
reserve |
|
|
144 |
|
144 |
|
144 |
Merger relief
reserve |
|
|
134 |
|
134 |
|
134 |
Retained earnings |
|
|
2,018 |
|
2,437 |
|
1,859 |
|
|
|
|
|
|
|
|
|
|
|
5,680 |
|
6,098 |
|
5,521 |
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
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 |
|
|
|
|
|
|
|
Balance at 1 April
2016 |
1,309 |
1,751 |
144 |
134 |
2,747 |
6,085 |
Profit for the period
attributable to equity holders |
- |
- |
- |
- |
(114) |
(114) |
Share issue |
159 |
164 |
- |
- |
- |
323 |
Dividends |
- |
- |
- |
- |
(196) |
(196) |
|
|
|
|
|
|
|
Balance at 30
September 2016 |
1,468 |
1,915 |
144 |
134 |
2,437 |
6,098 |
Group Statement of
Cash Flows |
|
Six
months |
|
Six
months |
|
Year |
|
|
ended |
|
ended |
|
ended |
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar
17 |
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
£'000 |
|
£'000 |
|
£'000 |
Cash flows (used
by)/generated from operating activities |
|
|
|
|
|
|
Cash (used
by)/generated from operations |
|
(66) |
|
(64) |
|
125 |
Interest paid |
|
(2) |
|
- |
|
(2) |
Tax paid |
|
- |
|
(19) |
|
(100) |
Net cash (used
by)/generated from operating activities |
|
(68) |
|
(83) |
|
23 |
|
|
|
|
|
|
|
Cash flows (used
in)/from investing activities |
|
|
|
|
|
|
Purchase of property,
plant and equipment |
|
(10) |
|
- |
|
(2) |
Disposal of fixed
assets |
|
- |
|
- |
|
2 |
Interest received |
|
- |
|
1 |
|
1 |
Net cash (used
in)/from investing activities |
|
(10) |
|
1 |
|
1 |
|
|
|
|
|
|
|
Cash flows
from/(used in) financing activities |
|
|
|
|
|
|
Payment of deferred
consideration |
|
- |
|
- |
|
(200) |
Dividends paid to
group shareholders |
|
- |
|
(196) |
|
(196) |
Proceeds from share
placement |
|
- |
|
323 |
|
323 |
Net cash from/(used
in) financing activities |
|
- |
|
127 |
|
(73) |
|
|
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents |
|
(78) |
|
45 |
|
(49) |
Cash and cash
equivalents at beginning of period |
|
207 |
|
256 |
|
256 |
Cash and cash
equivalents at end of period |
|
129 |
|
301 |
|
207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the cash
flow statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (used
by)/generated from operations |
|
|
|
|
|
|
Operating
profit/(loss) - continuing operations |
|
180 |
|
(114) |
|
(719) |
Depreciation
charge |
|
16 |
|
21 |
|
44 |
Goodwill
impairment |
|
- |
|
- |
|
625 |
Fair value movement
contingent consideration |
|
- |
|
|
|
(50) |
Loss on sale of fixed
assets |
|
- |
|
- |
|
6 |
Increase in
inventories |
|
(4) |
|
(77) |
|
(71) |
(Increase)/decrease in
trade and other receivables |
|
(433) |
|
198 |
|
447 |
Increase/(decrease) in
trade and other payables |
|
175 |
|
(92) |
|
(157) |
Cash (used
by)/generated from operations |
|
(66) |
|
(64) |
|
125 |
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 2017, 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. The
directors have assessed the potential impact of IFRS 15 and do not
expect that the adoption of this standard will have a material
impact on the financial statements of the Group in future periods.
IFRS 16 may have an impact on the measurement and treatment of
operating leases and related disclosures. As at 31 March 2017 the estimated impact of the
transition to IFRS 16 would be to increase tangible fixed assets
and liabilities by approximately £130,000. The impact on the
statement of comprehensive income is not expected to be material to
the 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:
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 positive and an
impairment charge in these interim accounts is not therefore
considered necessary and will be reassessed at the year end.
|
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar
17 |
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
2 |
Exceptional
Administrative Expenses |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
Impairment of PHSC plc’s investment in
Adamson’s Laboratory Services Limited |
|
- |
|
- |
|
625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar
17 |
3 |
Segmental
Reporting |
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
Revenue |
|
|
|
|
|
|
|
PHSC plc |
|
- |
|
- |
|
- |
|
Personnel Health &
Safety Consultants Ltd |
|
318 |
|
340 |
|
667 |
|
RSA Environmental
Health Ltd |
|
175 |
|
189 |
|
374 |
|
Adamson's Laboratory
Services Ltd |
|
283 |
|
510 |
|
823 |
|
Inspection Services
Ltd |
|
109 |
|
111 |
|
228 |
|
Quality Leisure
Management Ltd |
|
203 |
|
196 |
|
437 |
|
Q C S International
Ltd |
|
372 |
|
259 |
|
624 |
|
B to B Links Ltd |
|
1,522 |
|
1,238 |
|
2,595 |
|
SG Systems (UK)
Ltd |
|
738 |
|
744 |
|
1,414 |
|
|
|
3,720 |
|
3,587 |
|
7,162 |
|
Profit/(loss) after taxation, before management charge |
|
|
|
|
|
|
PHSC plc |
|
(257) |
|
(259) |
|
(536) |
|
Personnel Health &
Safety Consultants Ltd |
|
114 |
|
90 |
|
255 |
|
RSA Environmental
Health Ltd |
|
21 |
|
30 |
|
65 |
|
Adamson's Laboratory
Services Ltd |
|
(75) |
|
(105) |
|
(195) |
|
Inspection Services
Ltd |
|
22 |
|
19 |
|
44 |
|
Quality Leisure
Management Ltd |
|
45 |
|
5 |
|
75 |
|
Q C S International
Ltd |
|
122 |
|
58 |
|
210 |
|
B to B Links Ltd |
|
166 |
|
33 |
|
75 |
|
SG Systems (UK)
Ltd |
|
(21) |
|
(20) |
|
(109) |
|
|
|
137 |
|
(149) |
|
(116) |
|
Taxation
adjustment (group loss relief and deferred tax) |
22 |
|
35 |
|
- |
|
Fair value
movement on contingent consideration |
- |
|
- |
|
50 |
|
Goodwill
impairment |
|
- |
|
- |
|
(625) |
|
|
|
159 |
|
(114) |
|
(691) |
|
Total
assets |
|
|
|
|
|
|
|
PHSC plc |
|
4,005 |
|
4,037 |
|
3,955 |
|
Personnel Health &
Safety Consultants Ltd |
|
776 |
|
951 |
|
863 |
|
RSA Environmental
Health Limited |
|
589 |
|
612 |
|
593 |
|
Adamson's Laboratory
Services Ltd |
|
271 |
|
954 |
|
364 |
|
Inspection Services
Ltd |
|
196 |
|
189 |
|
164 |
|
Quality Leisure
Management Ltd |
|
250 |
|
205 |
|
263 |
|
Q C S International
Ltd |
|
539 |
|
426 |
|
420 |
|
B to B Links Ltd |
|
1,385 |
|
1,170 |
|
1,175 |
|
SG Systems (UK)
Ltd |
|
346 |
|
404 |
|
207 |
|
|
|
8,357 |
|
8,948 |
|
8,004 |
|
Adjustment of
goodwill |
|
(1,336) |
|
(1,299) |
|
(1,336) |
|
|
|
7,021 |
|
7,649 |
|
6,668 |
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar 17 |
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
4 |
Property, plant and
equipment |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Cost or
valuation |
|
|
|
|
|
|
|
|
Brought forward |
|
1,066 |
|
1,079 |
|
1,083 |
|
|
Additions |
|
10 |
|
- |
|
2 |
|
|
Disposals |
|
(7) |
|
- |
|
(19) |
|
|
Carried forward |
|
1,069 |
|
1,079 |
|
1,066 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
Brought forward |
|
440 |
|
404 |
|
408 |
|
|
Charge |
|
16 |
|
22 |
|
44 |
|
|
Disposals |
|
(7) |
|
- |
|
(12) |
|
|
Carried forward |
|
449 |
|
426 |
|
440 |
|
|
|
|
|
|
|
|
|
|
|
Net book
value |
|
620 |
|
653 |
|
626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
Earnings per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
calculation of the basic earnings per share is based on the
following data. |
|
|
|
|
|
|
|
|
|
|
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar 17 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Unaudited |
|
Unaudited |
|
Final |
|
Earnings |
|
|
|
|
|
|
|
Continuing
activities |
|
159 |
|
(114) |
|
(691) |
|
|
|
|
|
|
|
|
|
Number of
shares |
|
30 Sept
17 |
|
30 Sept
16 |
|
31 Mar 17 |
|
|
|
|
|
|
|
|
|
Weighted average
number of shares for |
|
|
|
|
|
|
|
the purpose of basic
earnings per share |
|
14,677,257 |
|
13,451,480 |
|
14,062,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|