TIDMPHSC
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 GBP3.720m compared with GBP3.587m last
year.
* EBITDA of GBP197k, versus a loss of GBP93k at the half way stage last year.
* Earnings per share of 1.08p compared with a loss of 0.85p last year.
* Cash of GBP129k compared with GBP301k last year.
* Net asset value (unaudited) of GBP5.680m.
* 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 GBP197,000 compares with a loss of GBP93,000 for the corresponding period last
year, meaning an improvement in performance of GBP290,000. 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 GBP2.26m and generated EBITDA of GBP149,700
before management charges. The corresponding figures last year were GBP1.98m and
GBP19,200. 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 GBP129k compared with GBP301k at the
same time last year.
A final payment of GBP25,000 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 GBP300,000 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 GBP283,400 resulting in a loss of GBP62,700 before redundancy costs of GBP
8,800 (the equivalent figures for the same period last year were GBP509,800 and a
loss of GBP101,400).
Inspection Services (UK) Limited
Invoiced sales of GBP108,700 yielding a profit of GBP25,200 (the figures for the
same period last year were GBP111,200 and GBP23,000).
Personnel Health and Safety Consultants Limited
Invoiced sales of GBP317,600 yielding a profit of GBP123,900 (the figures for the
same period last year were GBP340,300 and GBP108,100).
RSA Environmental Health Limited
Invoiced sales of GBP174,600 resulting in a profit of GBP20,900 (the figures for
the same period last year were GBP189,200 and GBP34,600).
Quality Leisure Management Limited
Invoiced sales of GBP203,000 resulting in a profit of GBP52,300 (the figures for
the same period last year were GBP196,400 and GBP6,400).
QCS International Limited
Invoiced sales of GBP372,100 yielding a profit of GBP145,900 (the figures for the
same period last year were GBP258,600 and GBP67,300).
B to B Links Limited
Invoiced sales of GBP1,521,800 yielding a profit of GBP169,400 (the figures for the
same period last year were GBP1,237,900 and GBP38,000).
SG Systems (UK) Limited
Invoiced sales of GBP738,700 resulting in a loss of GBP19,700 (the figures for the
same period last year were GBP743,700 and a loss of GBP18,800).
This announcement contains inside information for the purposes of Article 7 of
EU Regulation
596/2014.
For further information please contact:
01622 717700
PHSC plc
Stephen King
Stephen.king@phsc.co.uk
www.phsc.plc.uk
Northland Capital Partners Limited (Nominated Adviser) 0203 861 6625
Edward Hutton/David Hignell
Beaufort Securities Limited (Broker) 020 7382 8300
Elliot Hance
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 Six Year
months months ended
ended ended
30 Sept 17 30 Sept 16 31 Mar 17
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 - - 50
consideration
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 159 (114) (691)
owners of the parent
Basic and diluted Earnings per Share for 5 1.08p (0.85)p (4.92p)
profit/(loss) 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 17
17 16
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'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
Capital Merger
Share Share Redemption Relief Retained
Capital Premium Reserve Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2017 1,468 1,916 144 134 1,859 5,521
Profit for the period - - - - 159 159
attributable to equity holders
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 - - - - (114) (114)
attributable to equity holders
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 Six Year
months months
ended ended ended
30 Sept 17 30 Sept 16 31 Mar 17
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 (68) (83) 23
activities
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 (78) 45 (49)
equivalents
Cash and cash equivalents at beginning of 207 256 256
period
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 (433) 198 447
receivables
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
GBP130,000. 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 GBP'000 GBP'000 GBP'000
Impairment of PHSC plc's investment - - 625
in
Adamson's Laboratory Services
Limited
30 Sept 30 Sept 16 31 Mar 17
17
3 Segmental Reporting Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue
PHSC plc - - -
Personnel Health & Safety Consultants 318 340 667
Ltd
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 114 90 255
Ltd
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 22 35 -
deferred tax)
Fair value movement on contingent - - 50
consideration
Goodwill impairment - - (625)
159 (114) (691)
Total assets
PHSC plc 4,005 4,037 3,955
Personnel Health & Safety Consultants 776 951 863
Ltd
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 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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 14,677,257 13,451,480 14,062,687
share
END
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