PHSC plc
(the “Company” or the “Group”)
Final Results for
the year ended 31 March 2020 and
Notice of Annual General Meeting
Financial Highlights
•
EBITDA of £0.255m, an increase of approximately 120% from £0.116m
last year (after adjustment for exceptional gain on property sale
of £0.166m last year)
•
Statutory loss after tax of £0.015m compared with a profit of
£0.001m last year (which included gain on property sale of £0.166m
last year)
•
Group revenue of £4.438m compared with £5.215m last year
•
Cash reserves of £0.756m at year end compared to £0.642m last
year
•
Write-down of £0.200m due to impaired goodwill, the same as last
year
•
Group net assets at £4.978m after goodwill impairment compared to
£5.140m last year
•
Loss per share of 0.11p compared to a profit per share of 0.005p
last year
•
Final dividend of 0.5p proposed, making a total of 1.0p for the
year, matching the 1.0p paid last year
|
|
31.3.20 |
|
31.3.19 |
|
|
£ |
|
£ |
Profit before tax |
|
4,999 |
|
42,494 |
Less: interest received |
|
(1,990) |
|
(303) |
Add: interest paid |
|
- |
|
1,514 |
Add: depreciation |
|
52,194 |
|
38,179 |
Add: impairment B2BSG Solutions
Limited goodwill |
|
200,000 |
|
200,000 |
Less: net gain on sale of
property |
|
- |
|
(166,270) |
Underlying EBITDA* |
|
255,203 |
|
115,614 |
* Underlying EBITDA is calculated as
earnings before interest, tax, depreciation, impairment charges and
non-recurring costs. This is used by the board as a measure
of underlying trading and has been provided to assist shareholders
in understanding the Group’s trading activities.
Annual General Meeting
This year’s annual general meeting (AGM) will be held at
10am on Wednesday 30 September 2020 at the Old Church, 31 Rochester
Road, Aylesford, Kent ME20 7PR.
The report and accounts and notice of AGM are expected to be
posted to shareholders on or around 24
August 2020 and will shortly be available to view on the
Company’s website at www.phsc.plc.uk.
Dividend
The Company confirms that, subject to shareholder approval at
the AGM, the final dividend of 0.5p will be payable on 16 October 2020 to shareholders on the register
on 2 October 2020.
For further information please contact:
PHSC plc (www.phsc.plc.uk)
Stephen King
(stephen.king@phsc.co.uk) – 01622 717700
Strand Hanson Limited (Nominated Adviser)
Richard Tulloch/James Bellman – 020 7409 3494
Novum Securities Limited (Broker)
Colin Rowbury – 020 7399 9427
About PHSC
PHSC plc, through its trading subsidiaries Personnel Health
& Safety Consultants Limited, RSA Environmental Health Limited,
QCS International Limited, Inspection Services (UK) Limited, and
Quality Leisure Management Limited, provide 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.
The information contained in this
announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No 596/2014.
STRATEGIC REPORT
On behalf of the board, I present my review of the Group’s
activities and performance during financial year 2019-20, along
with a commentary about the Group’s plans and expectations for
2020-21.
General business review and
outlook
Trading for the year ended 31 March
2020 showed consolidated Group revenue of £4.438m
(31 March 2019: £5.215m) and EBITDA
of approximately £255,000 for the period. In the previous year, the
Group recorded EBITDA of £116,000 (excluding an exceptional gain
from the sale of an unused property).
Sales within B2BSG Solutions Limited, the Group’s security
division which predominantly serves the high street retail sector,
continued to decline during the year, as a result of the ongoing
struggles within the high street retail sector impacting on the
demand for our services. Revenues in the security division
fell to £1.9m (31 March 2019: £2.7m),
accounting for 43% of Group revenues compared with 52% in the
previous year. As a result, the board considered the carrying
value of its security division and decided that a further
impairment of £0.2m (31 March 2019:
£0.2m) was appropriate.
Revenues in the Group’s health, safety and management systems
businesses remained stable at £2.5m (31
March 2019: £2.5m), though accounted for 57% of the Group’s
overall revenue (31 March 2019:
48%).
Various actions were taken to mitigate the effect of lower sales
across the Group as a whole, which led to cost savings in a number
of areas. In particular, there were lower overheads and
premises-related savings across the Group. The security division,
whilst still loss-making, saw an improvement overall and further
commentary regarding this subsidiary and the other companies within
the Group appear later in this report.
Impact of COVID-19
The specific impacts of COVID-19 on each subsidiary is provided
later in this report, though from a Group-wide perspective the
pandemic had a marginally adverse impact on the year ended
31 March 2020. The financial
consequences of COVID-19 will largely be seen in 2020-21, though
are at this stage very difficult to quantify due to the uncertainty
of how the UK economy will respond to the on-going COVID-19
pandemic. The trading update below provides figures for Q1 of
2020-21.
Cash at bank stood at £756,000 at year end. Due to concerns
about cash flow during the COVID-19 pandemic, the Group exercised
an option to defer payment of VAT due for Q4 of 2019-20 but has
recently made these payments in full (£162,410) to HMRC.
The Group continues to enjoy a strong cash position and has an
undrawn facility with HSBC plc, renewed in October each year and
currently agreed at £50,000, having been reduced from £150,000.
Since the start of the pandemic, the Group has reviewed staffing
levels and has made five posts redundant, including three at the
security division. In addition, the Group furloughed a number
of staff under the Government's Job Retention Scheme. All
except one subsidiary has taken advantage of the furlough
arrangements, with up to half of the Group’s staff furloughed at
the peak of the crisis.
Our priority has been the health, safety and wellbeing of
customers and staff, and our expertise in the field of health and
safety has enabled us to continue to provide various services to
existing clients. We have also been able to acquire new
clients who commissioned us to assist with enabling them to provide
COVID-Secure environments so that they could return to work.
All Group directors elected to take a 20% reduction in pay from
1 May 2020 for the duration of the
furlough scheme.
Net asset value
As at 31 March 2020, the Group’s
consolidated net assets stood at £4.98m (2019: £5.14m). There were
14,677,257 ordinary shares in issue at that date which equates to a
net asset value per share of 34p.
As we have previously stated, the Company’s ordinary shares
continue to trade at a substantial discount to the net asset value.
We recognise that there is a value of goodwill on the balance
sheet and we review this each year to ensure that the value is
fairly stated. In each of the past two years, the board has
taken the decision to reduce the carrying value of our security
division by £200,000, and we have done the same thing in 2019-20 in
line with good accounting practice. The write-down represents
a reduction of approximately 4% in the consolidated net assets of
the Group. The board remains satisfied that all other
goodwill valuations can presently be justified.
Outlook
Whilst the effect of COVID-19 on the economy is the greatest
concern for the Group, this does not reduce the potentially
negative effects of the lack of specific terms on which the UK will
trade with the EU at the end of the transition period this year.
That matter was causing some clients to delay certain
investment decisions, and this is exacerbated by the uncertainly
brought about by the pandemic. We may also be affected
positively or negatively by future Government fiscal measures to
assist the recovery of the UK economy and we will pay close
attention to such decisions as they are announced. In the
context of our security division, an important general economic
factor is the purchasing power of sterling as a weaker pound erodes
our gross margins. The closure of many retail premises is also a
critical factor as the move to online shopping accelerates.
Trading update
Unaudited management accounts for the first quarter of 2020-21
indicate that Group revenues were £0.82m and generated an EBITDA of
£108,300. This compares with total revenues of £1.08m for the
first quarter of 2019-20 and an EBITDA of £84,600.
Dividends
A total dividend of 1.0p per ordinary share, (£146,772) was paid
in respect of the year ended 31 March
2019. An interim dividend of 0.5p in respect of the
year ended 31 March 2020 was paid in
February 2020 and, subject to
shareholder approval, a final dividend of 0.5p, to be paid from
earnings from the year ended 31 March
2020, is proposed for payment in October 2020, matching the total of 1.0p paid
last year.
Pre-tax profit/(loss) per subsidiary
before Group management charges
Profits before tax and management charges are reviewed by each
subsidiary and by the board every month to establish whether each
subsidiary is trading profitably and to determine whether
intervention is necessary. To provide a more accurate picture
of the performance of each subsidiary, the cross-charging of
consultants between subsidiaries has been introduced so that the
cost of labour is met by the invoicing company rather than the
subsidiary providing that labour.
A review of the activities of each trading subsidiary is
provided below. The profit figures stated are before tax,
central management charges and impairment charges. The
management charges are the individual subsidiary’s contribution to
Group overheads and are not directly attributable costs.
B2BSG Solutions Limited (B2BSG)
- 2020: revenues of £1,915,200 yielding a loss of £90,800
- 2019: revenues of £2,724,000 yielding a loss of £137,400
The fall in revenue reflects the reduced demand from B2BSG’s
primary sphere of operation which remains the retail sector which
has continued to suffer as a result of weaker consumer demand on
the high street and the move towards on-line purchasing which has
accelerated during the COVID-19 pandemic. Over £165,000 was
saved in lower staff salaries and associated expenditure through
restructuring and non-replacement of leavers. There were no
redundancy payments necessary in this process.
There are bad debts of £18,730 provided for in the accounts.
These stem mainly from a second period of administration by a large
client, Debenhams, who have proposed a Company Voluntary
Arrangement for their UK businesses and have closed their estate in
Ireland entirely.
Selling into the retail sector remains challenging and the
COVID-19 pandemic will have a large effect on our client base.
Any further material deterioration in the retail sector and
specifically in B2BSG’s client base may have a significant negative
effect on B2BSG’s and hence the Group’s prospects. In the
meantime, B2BSG is making use of available business grants and the
Government’s Job Retention Scheme and looks forward to an increase
in demand once high streets are able to recover.
Inspection Services (UK) Limited
(ISL)
- 2020: revenues of £230,800 yielding a profit of £37,400
- 2019: revenues of £232,600 yielding a profit of £43,500
ISL ended the year with marginally lower sales and a slight
increase in total costs compared with the prior year. ISL
offers a fairly narrow range of specialised services directly to
clients and, for the most part, through insurance brokers.
The work involves the statutory examination and inspection of
workplace plant and equipment where plant failure may lead to a
serious risk of injury. This includes lifting plant and
equipment, pressure vessels, power presses and bailing
machines.
Early in the COVID-19 pandemic, the Health and Safety Executive
(HSE) notified duty holders across the UK that the obligation to
have plant and equipment examined in line with statutory
frequencies was not being relaxed. Our professional
association, the Safety Assessment Federation, in consultation with
the HSE, deemed us to be “key workers”. This enabled ISL to
carry on trading as normal, subject to complying with appropriate
safety protocols to safeguard staff and those they may encounter in
their work and as a result, demand has remained stable during since
the financial year end.
Personnel Health & Safety
Consultants Limited (PHSCL)
- 2020: revenues of £763,600 yielding a profit of £302,500
- 2019: revenues of £657,100 yielding a profit of £278,000
Income from PHSCL’s flagship product, the Appointed Safety
Advisor Service was around 10% down year on year. However,
consultancy income from non-retained clients more than doubled to
around £225,000. In addition, revenue from training courses
was up by £20,000.
Despite the reduction in revenue from the Appointed Safety
Advisor Service, PHSCL derives most of its income from this
product. There was some client churn, though generally client
retention is good and has not been unduly affected by the COVID-19
pandemic.
PHSCL continues to meet the accreditation requirements for the
ISO 9001 quality management standard, having held this “kitemark”
for 23 years since becoming the first organisation of its kind to
achieve the standard.
Since the financial year-end, COVID-19 has had an effect both on
PHSCL and the clients we serve. There has been demand for
consultancy advice in relation to preparing COVID-Secure workplaces
and this has introduced us to a number of clients for whom we have
not worked before. Once a degree of normality returns, we
would hope to build on those relationships by offering other
services.
QCS International Limited (QCS)
- 2020: revenues of £756,700 yielding a profit of £220,900
- 2019: revenues of £759,500 yielding a profit of £242,300
QCS maintained a good level of both sales and profits and
performed as expected over the year. The introduction of
management standard ISO 45001 (for health and safety) and work
assisting clients on ISO 27001 (information security) more than
offset the loss of work in the previous year relating to the
transition to new quality and environmental standards.
Sales in public training and consultancy services remained
strong. Full advantage was made of the investment in new
training facilities that are now able to accommodate additional
delegates. However, in-house training sales weakened, and
this caused total sales for the year to end marginally below those
for 2018-19. An internal target to increase public training
sales by 12% over the period was achieved. Efforts will
continue to promote in-house services and reduce the decline in
that area. Consultancy sales remained consistently strong
throughout the year, posting growth of 7%. QCS continues to
enjoy exceptionally high levels of repeat business and has
developed a loyal customer base across many economic sectors.
Departure from the EU has not yet directly affected sales,
though a significant proportion of medical device work is linked to
an ability to offer services linked to EU regulation. QCS now
offers a ‘UK Responsible Person’ service in the event of a no-deal
conclusion to the transition period which may present some
opportunities, acting as a UK address for manufacturers of medical
devices within the remaining EU. To date there have been an
encouraging number of enquiries regarding the service. The
weakness of sterling has the potential to work in QCS’s favour.
Quality Leisure Management Limited
(QLM)
- 2020: revenues of £353,400 yielding a profit of £75,700
- 2019: revenues of £437,600 yielding a profit of £106,500
QLM made a profit before tax and central management charges of
£75,711, compared to £106,576 in the previous year.
Retained client renewals remained largely the same in comparison
to the previous period. Small deviations are seen as
contracts between local authorities and QLM clients change, or
smaller clients are absorbed by larger operators though there
remains a strong need for QLM’s expertise with clients placing
significant reliance on its services.
Although the support service remains a stable source of income,
audit income fell significantly compared to the same period last
year. Savings and cost cutting exercises across many local
authorities has seen a knock-on effect to the resources of leisure
trusts and other QLM clients. In addition, auditing functions
are more frequently tackled internally by clients leading to less
need for external verification and auditing. The impact of
COVID-19 remains to be seen and will depend on what support is
given to the sector by local authorities and central
government.
Training is a core income stream and remained generally
consistent with previous years. The most popular courses were
IOSH Managing Safely and QLM’s own (CIMSPA Endorsed) Health and
Safety Management in Leisure and Culture Facilities.
One full-time consultant left the business in October 2019 and was not replaced which led to
greater use of sub-contractors.
RSA Environmental Health Limited
(RSA)
- 2020: revenues of £418,100 yielding a profit of £83,500
- 2019: revenues of £404,300 yielding a profit of £66,700
Revenue for the year was up by 3.4% to £418,100. Costs
were effectively controlled, and this led to gross profit margin of
53% (2019: 52%).
Integration of the Envex brand into RSA has brought in some
much-needed skills which have aided service delivery to our
existing clients, reducing the need to rely on contractors and
associates.
Whereas in previous years the focus of RSA has been on the
SafetyMARK brand, providing safety services to the school’s sector,
this year has seen the revenues fall into four main categories;
training, health and safety consultancy, food safety consultancy
and SafetyMARK. This has widened the focus and spread some of the
risk, leaving RSA potentially less exposed in the future.
SafetyMARK, whilst remaining the main focus, saw revenues fall
within the financial year to around £90,000. This can be
partially accounted for by a number of postponed audits at short
notice within the last quarter. This happened due to a combination
of staffing changes at key schools and the start of the COVID-19
pandemic. There was also an impact on this sector by RSA diverting
its attention to fulfilling a large contract in the hospitality
sector. However, demand for safety services in schools
remains strong and is expected to pick up when schools are fully
open in September 2020.
Training has seen an increase due to the numbers of courses
being provided to clients compared to the previous year.
There continues to be demand for some of our public courses within
the schools’ sector and for our IOSH accredited school courses.
Training was not unduly affected by COVID-19 in March, with only a
couple of courses having to be postponed to the next financial
year
Health and safety consultancy saw the biggest change in demand
for the year 2019-20 as a result of the large contract in the
hospitality sector previously mentioned. This generated
significant revenues for RSA but was very heavy in administrative
terms.
Food safety consultancy saw strong demand, but the impact of
COVID-19 saw an end to the ability to continue with auditing of our
regular clients. All clients have stated that they will restore the
audit programmes as soon as the various sectors are allowed to
open.
PHSC plc
- 2020: net loss of £424,100 before management charges,
exceptional costs and dividends received
- 2019: net loss of £523,700 before management charges,
exceptional costs and dividends received
The Company incurs costs on behalf of the Group and does not
generate any income. The costs incurred by the Company represent
the costs of running an AIM quoted Group. The reduction in costs is
due to changes in staffing arrangements between the Company and the
subsidiaries. Costs in all other respects are consistent with the
previous year.
PRINCIPAL RISKS AND UNCERTAINITIES
Pandemic
The coronavirus pandemic involving the spread of COVID-19 has
presented several different risks to the business. The spread was
rapid and the global repercussions unprecedented.
As Government guidance evolved, a comprehensive plan was
developed and updated by the directors to minimise the risk to
staff, customers and business continuity. This was circulated to
all staff and contained measures to maintain business productivity
whilst protecting the health of employees, customers, and other
stakeholders. The plan was monitored and revised in response to new
information published by Public Health England. Guidance was also
published on the website for staff, customers, and prospects to
access.
The risk of employees contracting the virus, resulting in loss
of key staff to illness was mitigated by working from home being
encouraged wherever appropriate. Vulnerable workers were identified
and asked to shield, and employees contacted regularly to monitor
welfare. A skeleton staff remained in the head office to minimise
numbers present whilst at the same time maintaining business
continuity. Social distancing was exercised, and hand
sanitiser provided.
Where consultants were required to visit clients’ premises,
mainly to advise on COVID-19 related topics, face masks and
disposable gloves were issued. Consultants were asked to use their
own vehicles to commute rather than take public transport. A focus
was to protect PHSC’s reputational risk by ensuring staff adhered
to government guidelines. In the short term, all classroom training
was ceased.
The risk of poor communication during the pandemic was mitigated
using Microsoft Teams and Zoom to keep in touch with staff and
clients. The operational directors met via Zoom each week for a
business update and to share knowledge and best practice. Board
meetings were also undertaken as scheduled via Zoom.
In terms of lost revenue and profit, the impact in the year
ended 31 March 2020 was immaterial
though the full effect will be felt in the new financial year. The
UK lockdown has inevitably led to a loss of business and revenue,
as schools, leisure facilities, shops and pubs/restaurants make up
a significant portion of the Group’s customer base. An exception to
this is ISL, where the Health and Safety Executive did not relax
the obligation to have plant and equipment examined in line with
statutory frequencies. The engineers were deemed key workers and
ISL was able to carry on trading as normal, subject to complying
with appropriate safety protocols to safeguard staff. Another
mitigating factor is the uninterrupted subscription income received
by some of the subsidiaries which provides a base of ongoing
revenue. It is also fortunate that the expertise within the Group
in the field of health and safety has enabled various services to
continue to be provided to existing clients and new clients have
been secured who commissioned assistance with the provision of
COVID-Secure environments. Income from the Government Job Retention
Scheme and Business Grants have also played a key role in
maintaining cash flow.
In terms of liquidity risk, the Group had a strong cash position
at the year end and the start of lockdown. Good credit control has
been maintained by the head office staff and with the income from
the Government’s schemes, the Group has remained cash generative.
Payment of VAT for Q4 was initially delayed in line with an HMRC
concession but was subsequently settled in full.
Although the economic outlook remains uncertain, the discipline
of forecasting has been maintained, though initially with a reduced
horizon. Expectations for first half of 2020-21 are that with
the continued use of Government funding assistance, the Group
should do no worse than break even and will maintain a strong cash
position.
Regulatory/Marketplace
Approximately 50% of the Group’s work involves assisting
organisations with the implementation of measures to meet
regulatory requirements relating to health and safety at work. If
the regulatory burden was to be substantially lightened, for
example if the government embarked upon a programme of radical
deregulation, there could be less demand for the Group’s
services. Changes to the operation of the employer’s
liability insurance system, as proposed in some quarters, could
reduce the incentive for organisations to buy in claims-preventive
services such as health and safety advice. In mitigation of
these risks, the board has diversified the Group’s range of
offerings for example, through investing in its security businesses
and is exploring non-regulatory areas of environmental work to add
to the current portfolio of services.
In the event of a “no deal” end to the post-Brexit transition
period, the Group’s security division will take appropriate steps
to ensure that sufficient supplies are held of relevant products to
meet the predicted needs of customers. In doing so, customers
can expect more frequent requests to forecast their likely
requirements over longer time horizons than usual. The
security division is already dealing extensively with a wide range
of imported goods, some from within the EU and others from
countries beyond the EU. It is therefore well-versed in
customs processes and expects to be able to apply the same or
similar processes to imports from within the EU (albeit at
potentially different tariff rates) should that prove necessary
under a “no deal” Brexit. Matters outside the Group’s control
would include delays caused at customs if administrative demands on
border officials are suddenly increased, resulting in slower
clearance times for imported goods.
There are predictions by economists that the value of sterling
may deteriorate if the UK and EU cannot reach a trade deal by the
end of the transition period. Whilst the Group will take
reasonable steps to hedge against the effects of a weaker pound,
customers are being advised to consider pre-ordering and/or
increasing their stock levels of those products supplied by the
Group’s security division which they see as critical to their
business. Higher stock levels would have the double benefit of
reducing the risk of an interruption to supply, and mitigating the
impact of price rises that would ultimately work their way through
to all imported goods if there is a materially weaker exchange
rate. The warehouse at B2BSG has the capacity for storage of
additional products and close partnership with logistics providers
will allow access to further warehousing space should that prove
necessary.
The Group’s security division works almost exclusively in the
retail sector and this has continued to suffer as a result of
weaker consumer demand on the high street and the move towards
on-line purchasing which has accelerated during the COVID-19
pandemic. Any further material deterioration in the retail
sector and specifically in B2BSG’s client base may have a
significant negative effect on the company’s and hence the Group’s
prospects.
Technological
The Group’s website is a primary source of new business.
If the website became inaccessible for protracted periods, or was
subject to “hacking”, this may prejudice the opportunity to obtain
new business. Additionally, the increase in the use of the
internet for satisfying business requirements may lead to a
reduction in demand for face-to-face consultancy services and the
number of training courses commissioned may be affected by moves
towards screen-based interactive learning. The subject of IT
security is regularly reviewed by the board to ensure that
appropriate strategies are in place.
Personnel
Generally, there is an excess of demand over supply for health
and safety professionals. Those with sufficient
qualifications and experience to be suitable for consultancy roles
are in the minority. This has the combined effect of making
it difficult for the Group to source suitable personnel and having
to offer higher remuneration packages to attract them. The
Group is dependent upon its current executive management team.
Whilst it has entered into contractual arrangements with the aim of
securing the services of these personnel, the retention of their
services cannot be guaranteed. Accordingly, the loss of any
key member of management of the Group may have an adverse effect on
the future of the Group’s business. The Group and each subsidiary
have contingency plans in place in the event of incapacity of key
personnel.
Geographical
The Group offers a nationwide service, but a number of
organisations see benefit in using consultancies that are local to
them and internet search engines favour local providers. With
offices in Kent, Berkshire, Northamptonshire and Scotland, the Group has a good geographical
spread.
Licences
The Group is reliant on licences and accreditations to be able
to carry on its business. The temporary loss of, or failure
to maintain, any single licence or accreditation would be unlikely
to be materially detrimental to the Group, as the directors believe
that this could be remedied. However, if the Group fails to
remedy any loss of, or does not maintain, any licence or
accreditation, this will have a material adverse effect on the
business of the Group. The Group has internal processes in
place to ensure that the licences and accreditations are
maintained.
SECTION 172 STATEMENT
The Companies (Miscellaneous Reporting) Regulations require
large companies to publish a statement describing how the directors
have had regard to the matters set out in section 172 (1) (a) to
(f) of the Companies Act 2006. These sections require directors to
act in a way most likely to promote the success of the Group for
the benefit of its stakeholders and with regard to the following
matters.
The likely consequences of any
decision in the long-term.
The board receives an annual business plan from the director of
each subsidiary company, which forms the basis of the Group’s
strategic plan. The board requires that the plans include financial
forecasts, KPI’s, marketing strategy and an analysis of strengths,
weaknesses, opportunities, and threats. Subsidiary directors, via
the Groups operational board of which they are members, consider
the implications of their own plans in the context of what others
within the Group are intending to do and the opportunities for
synergies are explored. Any proposed actions that may adversely
affect another subsidiary are flagged at operational board level
and are resolved. Subsidiary directors are challenged on the
content of their plans and the assumptions they have made, to
ensure that the plans are realistic and achievable. Once agreed by
the board, this plan, at Group and subsidiary level, is used as the
benchmark against which to assess performance.
The interests of the Group’s
employees
As the Group is mainly involved in the supply of services, the
board considers the staff to be the greatest asset and the
interests of employees are taken into consideration in all
decisions made. Each subsidiary company within the Group has in
place the necessary structures to ensure effective communication
with its employees. The subsidiary directors meet once a quarter
and relevant information is shared with employees via team meetings
held at subsidiary level. The views of employees are heard in
a similar fashion, initially at team meetings, and ascending to the
operational board and the main board if appropriate. Each
subsidiary has its own bonus scheme, based on results for the
financial year and/or tailor-made targets. There is an annual
budget for staff training in recognition that the performance of
the Group can be improved by the development of its employees.
The Group is committed to equality of employment and its
policies reflect a disregard of factors such as disability in the
selection and development of employees. During the year, a review
was conducted to identify any gender-related pay anomalies across
the Group and as at the date of this report, there are no known
anomalies in any subsidiary that would fall into this
category.
The need to foster the Group’s
business relationships with suppliers, customers, and others.
The Group seeks to treat suppliers fairly and adhere to
contractual payment terms. The Group works with its suppliers to
help drive change through innovation, promoting new ideas and ways
of working. The Group has zero-tolerance to modern slavery
and is committed to acting ethically and with integrity in all
business dealings and relationships. The Group policy for Modern
Slavery and Human Trafficking contains systems and controls to
ensure that these activities are not taking place anywhere in the
subsidiaries or throughout the Groups supply chains.
The Group also has zero-tolerance with regards to bribery, made
explicit through its Anti-Bribery and Corruption Policy. This
covers the acceptance of gifts and hospitality and any form of
unethical inducement or payment including facilitation payments and
“kickbacks”. The policy sets out the responsibilities of directors,
employees and contractors and details the procedures in place to
prevent bribery and corruption.
Each subsidiary is focussed on its customers. Communication
takes many forms and is structured according to how each subsidiary
interacts with its client base. Channels of communication include
quarterly newsletters in hard copy and/or sent electronically,
customer roadshows, various social media platforms and regular
client meetings. An ongoing dialogue is held electronically, with
most clients subscribing to email updates that are sent out
periodically. There is also interaction through social media
platforms such as Twitter, LinkedIn and Facebook where
appropriate.
Stephen King is the principal
contact between the Company and its investors, with whom he
maintains a regular dialogue. The Company is committed to
listening to and communicating openly with its shareholders to
ensure that its business model and performance are understood.
Regular announcements are made to the market and the AGM provides a
forum for information dissemination, discussion, and feedback.
The impact of the Group’s operations
on the community and the environment
The board’s intention is to behave responsibly and ensure that
management operates the business in a responsible manner, complying
with high standards of business conduct and good governance. The
Group has a long tradition of supporting local causes through
sponsorship and community involvement, details of which can be
found on the PHSC plc website (www.phsc.plc.uk). The directors are
aware of the impact of the Group’s business on the environment but
believe this to be minimal due to the nature of its
operations.
GOING CONCERN
Company law require the directors to consider the
appropriateness of the going concern basis when preparing the
financial statements. COVID-19 and the Government-imposed lockdowns
and restrictions are inevitably having an impact on the Group’s
ability to trade normally. In terms of lost profit, a relatively
small impact was felt in the year ended 31
March 2020 though the board’s expectations for the new
financial year have had to be significantly revised. Mitigating
factors are the strong cash position at the start of lockdown,
income from statutory examination of equipment (a requirement not
relaxed during the pandemic), continuation of subscription income,
demand for COVID-19 Secure risk assessments, and income from the
Government job retention and business grant schemes. The Group’s
expectations and current banking facilities indicate that the Group
has adequate resources to continue in operational existence for the
foreseeable future. Consequently, the directors continue to adopt
the going concern basis of accounting in preparing the annual
financial statements.
In closing, I would like to extend thanks to all our
shareholders for their continued support and to everyone employed
across the Group for their hard work and effort during these
unprecedented times. The board acknowledges the valuable work
carried out by every employee and recognises that it is reliant
upon each individual member of staff and management if it is to
succeed and prosper.
On behalf of the board
Stephen King,
Group Chief Executive
19 August 2020
GROUP STATEMENT OF FINANCIAL POSITION
as at 31 March 2020
|
|
|
31.3.20
£ |
|
31.3.19
£ |
Non-Current Assets |
|
|
|
|
|
Property, plant and equipment |
|
|
592,539 |
|
488,585 |
Goodwill |
|
|
3,278,463 |
|
3,478,463 |
Deferred tax asset |
|
|
19,582 |
|
17,627 |
|
|
|
|
|
|
|
|
|
3,890,584 |
|
3,984,675 |
Current Assets |
|
|
|
|
|
Stock |
|
|
264,301 |
|
316,556 |
Trade and other receivables |
|
|
885,947 |
|
973,130 |
Cash and cash equivalents |
|
|
755,919 |
|
642,466 |
|
|
|
|
|
|
|
|
|
1,906,167 |
|
1,932,152 |
|
|
|
|
|
|
Total Assets |
|
|
5,796,751 |
|
5,916,827 |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Trade and other payables |
|
|
622,938 |
|
675,162 |
Right of use liabilities |
|
|
34,071 |
|
- |
Current corporation tax payable |
|
|
40,250 |
|
54,707 |
|
|
|
|
|
|
|
|
|
697,259 |
|
729,869 |
Non-Current Liabilities |
|
|
|
|
|
Right of use liabilities |
|
|
69,912 |
|
- |
Deferred tax liabilities |
|
|
51,256 |
|
46,313 |
|
|
|
|
|
|
|
|
|
121,168 |
|
46,313 |
Total Liabilities |
|
|
818,427 |
|
776,182 |
|
|
|
|
|
|
Net Assets |
|
|
4,978,324 |
|
5,140,645 |
|
|
|
|
|
Capital and reserves
attributable to equity holders of the Group |
|
|
|
|
Called up share capital |
|
|
1,467,726 |
|
1,467,726 |
Share premium account |
|
|
1,916,017 |
|
1,916,017 |
Capital redemption reserve |
|
|
143,628 |
|
143,628 |
Merger relief reserve |
|
|
133,836 |
|
133,836 |
Retained earnings |
|
|
1,317,117 |
|
1,479,438 |
|
|
|
|
|
|
|
|
|
4,978,324 |
|
5,140,645 |
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2020
|
|
|
31.3.20
£ |
|
31.3.19
£ |
Continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
4,437,922 |
|
5,215,341 |
|
|
|
|
|
|
Cost of sales |
|
|
(2,251,867) |
|
(2,719,724) |
|
|
|
|
|
|
Gross profit |
|
|
2,186,055 |
|
2,495,617 |
|
|
|
|
|
|
Administrative expenses |
|
|
(1,983,046) |
|
(2,418,182) |
Goodwill impairment |
|
|
(200,000) |
|
(200,000) |
|
|
|
|
|
|
Other income |
|
|
- |
|
166,270 |
|
|
|
|
|
|
Profit/ from operations |
|
|
3,009 |
|
43,705 |
|
|
|
|
|
|
Finance income |
|
|
1,990 |
|
303 |
Finance costs |
|
|
- |
|
(1,514) |
|
|
|
|
|
|
Profit before taxation |
|
|
4,999 |
|
42,494 |
|
|
|
|
|
|
Corporation tax expense |
|
|
(20,548) |
|
(41,795) |
|
|
|
|
|
|
(Loss)/profit for the year after
tax attributable to owners |
|
|
|
|
|
of the parent |
|
|
(15,549) |
|
699 |
|
|
|
|
|
|
Other comprehensive income |
|
|
- |
|
- |
|
|
|
|
|
|
Total comprehensive (loss)/income
attributable to owners |
|
|
|
|
|
of the parent |
|
|
(15,549) |
|
699 |
|
|
|
|
|
|
Basic and diluted (loss)/earnings
per share from continuing operations |
|
|
(0.11)p |
|
0.005p |
|
|
|
|
|
|
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2020
|
Share
Capital
£ |
Share
Premium
£ |
Merger Relief
Reserve
£ |
Capital
Redemption
Reserve
£ |
Retained
Earnings
£ |
Total
£ |
|
|
|
|
|
|
|
Balance at 1 April 2018 |
1,467,726 |
1,916,017 |
133,836 |
143,628 |
1,625,511 |
5,286,718 |
Profit for year attributable to
equity holders |
- |
- |
- |
- |
699 |
699 |
Dividends |
- |
- |
- |
- |
(146,772) |
(146,772) |
Balance at 31 March 2019 |
1,467,726 |
1,916,017 |
133,836 |
143,628 |
1,479,438 |
5,140,645 |
|
|
|
|
|
|
|
Balance at 1 April 2019 |
1,467,726 |
1,916,017 |
133,836 |
143,628 |
1,479,438 |
5,140,645 |
Loss for year attributable to equity
holders |
- |
- |
- |
- |
(15,549) |
(15,549) |
Dividends |
- |
- |
- |
- |
(146,772) |
(146,772) |
Balance at 31 March 2020 |
1,467,726 |
1,916,017 |
133,836 |
143,628 |
1,317,117 |
4,978,324 |
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 March 2020
|
Note |
|
31.3.20
£ |
|
31.3.19
£ |
Cash flows from operating
activities: |
|
|
|
|
|
Cash generated from operations |
I |
|
346,847 |
|
325,587 |
Interest paid |
|
|
- |
|
(1,514) |
Tax paid |
|
|
(32,017) |
|
(9,345) |
Net cash generated from operating
activities |
|
|
314,830 |
|
314,728 |
|
|
|
|
|
|
Cash flows (used in)/from
investing activities |
|
|
|
|
|
Purchase of property, plant and
equipment |
|
|
(39,529) |
|
(69,578) |
Disposal of fixed assets |
|
|
2,250 |
|
299,495 |
Interest received |
|
|
1,990 |
|
303 |
Net cash (used in)/from investing
activities |
|
|
(35,289) |
|
230,220 |
|
|
|
|
|
|
Cash flows used in financing
activities |
|
|
|
|
|
Payments on right of use
assets |
|
|
(19,316) |
|
- |
Dividends paid to shareholders |
|
|
(146,772) |
|
(146,772) |
Net cash used in financing
activities |
|
|
(166,088) |
|
(146,772) |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents |
|
|
113,453 |
|
398,176 |
Cash and cash equivalents at
beginning of year |
|
|
642,466 |
|
244,290 |
Cash and cash equivalents at end
of year |
|
|
755,919 |
|
642,466 |
All changes in liabilities arising from financing relate
entirely to cash movements.
NOTES TO THE GROUP STATEMENT OF CASH FLOWS
for the year ended 31 March 2020
|
|
|
31.3.20
£ |
|
31.3.19
£ |
|
|
|
|
|
|
I. CASH GENERATED FROM
OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
Operating profit – continuing
operations |
|
|
3,009 |
|
43,705 |
Depreciation charge |
|
|
52,194 |
|
38,179 |
Goodwill impairment |
|
|
200,000 |
|
200,000 |
Loss/(profit) on sale of fixed
assets |
|
|
4,430 |
|
(162,338) |
Decrease in stock |
|
|
52,255 |
|
72,478 |
Decrease/(increase) in trade and
other receivables |
|
|
87,183 |
|
595,495 |
(Decrease)/increase trade and other
payables |
|
|
(52,224) |
|
(461,932) |
Cash generated from
operations |
|
|
346,847 |
|
325,587 |
Notes to the results announcement of
PHSC plc
The financial information set out above does not constitute the
Group’s financial statements for the years ended 31 March 2020 or 31 March
2019 but is derived from those financial statements.
Statutory financial statements for 2019 have been delivered to the
Registrar of Companies and those for 2020 have been approved by the
board and will be delivered after dispatch to shareholders. The
auditors have reported on the 2019 and 2020 financial statements
which carried an unqualified audit report, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis and did not contain a statement under section 498(2) or
498(3) of the Companies Act 2006.
While the financial information included in this announcement
has been computed in accordance with International Financial
Reporting Standards (IFRS), this announcement does not in itself
contain sufficient information to comply with IFRS. The accounting
policies used in preparation of this announcement are consistent
with those in the full financial statements that have yet to be
published.
Dividend
An interim dividend of £73,368 representing 0.5p per ordinary
share was paid in February 2020 in
respect of the year ended 31 March
2020. The board is proposing, subject to shareholder
approval at the AGM, a final dividend of £73,386, representing 0.5p
per ordinary share, to be paid on 16 October
2020, making a total dividend for the year of 1.0p.