PHSC Phsc Plc

24 November 2020

PHSC PLC

(“PHSC”, the “Company”, or the “Group”)

Unaudited Interim Results for the six months ended 30 September 2020

GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT

Financial Highlights

·          Group revenue for first half of £1.377m, down from £2.234m last year.

·          EBITDA of £182k, compared with £175k at the halfway stage last year.

·          Earnings per share of 0.83p compared with 1.01p last year. 

·          Cash of £1.0m compared with £756k as at 31 March 2020.

·          Net asset value (unaudited) of £5.1m compared to £5.0m as 31 March 2020.

·          Net asset value (unaudited) per share of 34.8p compared to a current share price of 12.0p.

·          Interim dividend declared of 0.5p per ordinary share.

Operational Highlights and Business Outlook

The first half of the year has been dominated by the effects of COVID-19 and this has led to a marked downturn in demand for the majority of our services, with the exception of Personnel Health & Safety Consultants Limited, whose core business has continued to provide clients with COVID-19 risk assessments and support.

The improved EBITDA would not have been achieved without considerable support through the Coronavirus Job Retention Scheme (CJRS) and local authority grants of, in aggregate, £316k.  However, the Group has not needed to make use of repayable financial support such as Government-backed loans and has not called upon our £50,000 facility with HSBC, which was renewed in October 2020.

Our security company, B2BSG Solutions Limited, was badly hit by the enforced closure of non-essential retail premises for much of the period, and the far lower demand once shops were gradually allowed to reopen.  Several retail clients have reduced the size of their estates, leading to reduced order quantities for our security products.  Some national chains who we work with are in severe financial difficulty and we expect that this may impact our ability to recover debts.  We have therefore made an initial provision of £10,000 in anticipation of losses due to customer default.  The extent to which the business can recover will depend largely on when and whether the high street is able to improve its fortunes following the easing of restrictions following the second lockdown.  On a positive note, the losses for the period were reduced substantially when compared to last year, albeit this was heavily supported by the CJRS and grant funding.

Demand for consultancy and training through our QCS International Limited subsidiary, which is based in Scotland, was negatively impacted, with both revenues and profits reducing by more than a half.  Training income was worst hit, with income of approximately £40,000 compared with £180,000 at the half-way stage last year.  Demand for consultancy support held up better than expected.  We expect that many clients will look to reinstate deferred training courses as soon as it is deemed safe and legal to do so, as determined by Scottish legislation.

There have been mixed fortunes in the Safety Division, with Quality Leisure Management Limited the worst affected.  The overwhelming majority of clients are leisure centres, and this sector was ordered to completely close for most of the period.  Funding of these establishments has been severely curtailed.  Whilst we have been called up to support some clients who use retainer services, the need for additional paid for services has been negligible.

Inspection Services (UK) limited has been largely unaffected by the pandemic and the half-year is generally in line with expectations.

RSA Environmental Health Limited, via its SafetyMARK branding, predominantly works in the school sector.  With schools closed (other than for limited exceptions) in the first wave of the pandemic, training and consultancy requirements were minimal.  With schools reopening we anticipate a gradual improvement in activity.  A positive point has been our ability to adapt and deliver accredited training remotely and this is an income stream that we will work to enlarge in the months ahead.

Personnel Health & Safety Consultants Limited enjoyed additional demand for its services, notably those related to assisting clients achieve COVID secure workplaces.  Our fee-earning staff who were initially furloughed under the CJRS have been fully productive since early summer, when the restrictions from the first lockdown were eased, and are generally expected to be busy through to the end of the calendar year.  We have sought to position ourselves in the marketplace as the “go to” health and safety consultancy for COVID-19 support and this has resulted in enquiries being at record levels.  This has resulted in several organisations using us for the first time and we will look to capitalise on these new relationships going forward.

Dividend

The Board is mindful of the fact that the Group has enjoyed considerable support from the CJRS together with associated grant funding and that careful thought should be given as to whether a distribution is appropriate in these circumstances.  However, we are aware that many of our shareholders have invested for the historically high yield that our dividend policy has offered and during these times we have continued to manage our business carefully.  The Board is therefore satisfied that a distribution from retained earnings is reasonable and that this would not materially compromise our cash position.  Accordingly, the Board declares an interim dividend of 0.5p per ordinary share, to be paid on 26 February 2021 to those on the register of members on 4 January 2021.

The recommendation by the Board of any final dividend for the current financial year will be subject to the Group’s full year performance and the outlook at that time.

Cash Flow

Cash at bank on 30 September 2020 stood at £1.0m compared to £756k as at 31 March 2020.

Other than in the normal course of business and the proposed and any future dividends that might be declared, the Board does not currently anticipate there being any additional calls on the Company’s cash.

Performance by Trading Subsidiaries

Profit/loss figures for individual subsidiaries are stated after government grants, which includes the CJRS, but before tax and inter-company charges (including the costs of operating the plc which are recovered through management charges to, and dividends from, trading subsidiaries), interest paid and received, depreciation and amortisation.

Personnel Health and Safety Consultants Limited

Invoiced sales of £381,531 yielding a profit of £223,591 (the figures for the same period last year were £366,657 and £139,470).

RSA Environmental Health Limited

Invoiced sales of £100,123 resulting in a profit of £30,686 (the figures for the same period last year were £207,524 and £50,488).

Quality Leisure Management Limited

Invoiced sales of £90,369 resulting in a profit of £40,342 (the figures for the same period last year were £194,295 and £58,544).

QCS International Limited

Invoiced sales of £196,533 yielding a profit of £46,705 (the figures for the same period last year were £397,832 and £142,102).

Inspection Services (UK) Limited

Invoiced sales of £113,807 yielding a profit of £25,471 (the figures for the same period last year were £132,613 and £35,860).

B2BSG Solutions Limited

Invoiced sales of £495,228 resulting in a loss of £4,394 (the figures for the same period last year were £935,356 and £56,558 loss).

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

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 Ltd offer innovative security solutions including tagging, labelling and CCTV.

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 (“MAR”).

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 the AIM Rules for Companies 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 2020, prepared under IFRS have been filed with the Registrar of Companies.  The auditor’s report for the 2020 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. 

Impairment of goodwill

The Board has considered the carrying value of goodwill and is satisfied that the assumptions made at the time of the last adjustment remain valid. Although there have been losses in certain subsidiaries in the interim period, the Group’s performance against the background of COVID-19 has been better than was envisaged when the final results were published in August 2020.  The longer-term outlook presently remains stable and an impairment charge in these interim accounts is not therefore considered necessary but will be reassessed at the year end.

Government grants

Government grants represent amounts receivable in relation to the CJRS and other COVID-19 related business grants.  The grants have been recognised in the period to which the costs relate.

2.      Exceptional Administrative Expenses

3.      Segmental Reporting

4.      Property, plant and equipment

5.      Earnings per share

The calculation of the basic earnings per share is based on the following data.