13 May
2020
PHSC PLC
Trading Update and
Commentary on COVID-19 Impact
PHSC plc (“the Group”), a leading provider of health, safety,
hygiene and environmental consultancy services and security
solutions to the public and private sectors, announces an update on
its performance for the financial year ended 31 March 2020.
The Group also provides an update on how it is being impacted by
the COVID-19 pandemic.
Trading for the year ended
31 March 2020
Unaudited management accounts for the year ended 31 March 2020 show consolidated Group revenue of
approximately £4.43 million (31 March
2019: £5.21 million) and EBITDA of approximately £280,000
for the period (31 March 2019:
£116,000 prior to exceptional gain from property sale).
Revenues for the year ended 31 March
2020 were, as with the interim results, impacted by a
reduction in revenues from the Group’s security division, as the
retail sector continued to struggle. In line with the
interims, this has resulted in the security division accounting for
approximately 40% (31 March 2019:
52%) of the Group’s revenues, with the Group’s health, safety and
management systems businesses accounting for approximately 60%
(31 March 2019: 48%) of Group
revenues.
EBITDA margin though increased as a result of lower overheads
and premises-related savings across the Group. In addition,
the Group’s health, safety and management systems companies
contributed higher profits and whilst the security division
continued to be loss-making in a challenging environment, it
reduced its year-on-year losses by a third. Full details
about the performances of individual subsidiaries will be given at
the time we announce our final results for the year ended
31 March 2020.
Cash at bank as at 11 May 2020 was
approximately £850,000, though it should be noted that the Group
has taken advantage of the opportunity to defer payment of £163,000
of VAT relating to Q4 of 2019/20 under the Government’s COVID-19
scheme. In addition, as set out below, the Group has
furloughed a number of its staff under the Government's Job
Retention scheme. The Group also has a £150,000 overdraft
facility with HSBC which is presently unused.
The above financial information is drawn from the Group’s
management accounts and is subject to audit and therefore may
change. The Group currently expects to announce its final
results for the year ended 31 March
2020 by mid-August 2020. In line with its obligations
and as part of the audit process, the Board will consider whether
any impairment provisions are necessary within the Group.
This will require a judgement as to what provision is appropriate
in the normal course of events and what the post-COVID-19 landscape
will look like.
Impact of COVID-19
The COVID-19 pandemic has had an adverse impact on the year
ended 31 March 2020, though not to a
material extent. The financial consequences of COVID-19 will
be seen in 2020/21, though are at this stage very difficult to
quantify due to the uncertainty of how the UK economy will emerge
from the current restrictions in place as a result of
COVID-19. As set out above, the Group enjoys a strong cash
position, even after allowing for the deferred VAT obligation and
the Board currently does not expect to have to use the Group’s
overdraft facility.
The Group has sought to reduce its costs and has taken advantage
of the Government's Job Retention scheme, with approximately half
of its staff furloughed at any one time. In addition, as set
out below, the Group continues to provide certain services to
clients where it is viable to do so and in compliance with current
Government guidelines. The Group’s priority at this time is
to ensure the health, safety and wellbeing of its customers and
staff.
PHSC plc has furloughed one part-time accounts
administrator. One Non-executive Director is currently
shielding on Government advice and has been furloughed, though is
available to carry out statutory functions as required. Other
Directors, although still working, have voluntarily reduced their
salaries by 20% for the duration of the Government's Job Retention
scheme.
Different Group subsidiaries have been affected in different
ways. Quality Leisure Management Limited and RSA
Environmental Health Limited ordinarily supply the leisure industry
and the education sector respectively. These types of
premises are all effectively closed and this has meant that the
majority of staff at these subsidiaries have been furloughed.
The remaining staff have been working hard to convert certain
training courses, normally delivered face-to-face, so that they can
be delivered remotely. There has been some early interest in
this new way of operating and we hope to see further progress
here.
QCS International Limited continues to service many of its
clients and is able to conduct a number of consultancy and training
activities remotely. Efforts are being made to deliver
courses remotely where appropriate, and to hold some courses at the
company’s training room, where social distancing can be
achieved. Ultimately the success of public training at our
venue will depend on clients’ appetites for moving towards a more
normalised situation. This subsidiary is in Scotland and will be required to comply with
the national strategy to tackle COVID-19, which may vary from the
rest of Group’s operations which are based in England.
Inspection Services (UK) Limited staff are deemed as key
workers, as they perform the essential function of carrying out
statutory examinations of plant and equipment. Unlike with
motor vehicles, where there has been a six-month extension to the
validity of MOT test certificates, the Government has not relaxed
the examination frequencies for lifting equipment and for pressure
systems. Those workplaces that have been mandated to close,
or have opted to close, have been advised to facilitate access to
enable examinations to take place as normal. Most work is
therefore continuing, though there has been some disruption to
normal sequencing and the efficiency with which visits can be
timetabled.
Personnel Health and Safety Consultants Limited has furloughed a
small number of staff, as it adjusts to a reduced workload.
In common with other subsidiaries offering consultancy support,
there is a certain amount of retainer income that continues to be
received. This subsidiary has also moved to convert some
training courses so they can be delivered via online platforms.
All except two employees at the Group’s security subsidiary,
B2BSG Solutions Limited, have been furloughed. The security
division focuses almost exclusively on the retail sector, which has
been impacted by the closure of all non-essential retail
premises. There is a small order volume relating to clients
who sell food and to non-retailers, though most revenue ceased once
the lockdown was introduced. Headcount within the division
has also been reduced, in anticipation of weaker customer demand
once stores are given permission to reopen, with three out of the
division’s 11 employees having been declared redundant. The
Board currently anticipates that by that time, consumer behaviour
will have changed and the trend to online shopping will have
accelerated, and that there will be a greater number of store
closures on the high street.
The Group will continue to keep all measures under review,
prioritising the safety of all of its stakeholders and will keep
shareholders updated as appropriate.
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 / James Bellman
Novum Securities Limited
(Broker)
020 7399 9427
Colin Rowbury
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.
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 Solutions Limited
offers innovative security solutions including electronic tagging,
labelling and CCTV.