Half-year Report

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16 November 2023

 

PHSC PLC

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

 

Unaudited Interim Results for the six months ended 30 September 2023

 

PHSC (AIM: PHSC), a leading provider of health, safety, hygiene and environmental consultancy services and security solutions to the public and private sectors, is pleased to announce its unaudited interim results for the six-month period ended 30 September 2023.

 

GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT

 

Financial Highlights

  • Group revenue of £1.651m (H1 FY23: £1.679m).
  • EBITDA of £174k (H1 FY23: £162k).
  • Earnings per share of 1.04p (H1 FY23: 0.90p).
  • Cash of £638k following payment of increased dividend and completion of share buyback programme (H1 FY22: £691k).
  • Net asset value (unaudited) of £3.5m (H1 FY23: £3.6m).
  • Pro-forma net asset value (unaudited) per share of 32.2p, compared to a mid-market share price as at market close on 29 September 2023 of 18.5p.
  • Interim dividend declared of 0.75p per ordinary share.

 

Operational Highlights and Business Outlook

 

Whilst income for the first half of the financial year was approximately £28k lower than at this stage in 2022, EBITDA for the same period rose by approximately £12k. Overall, profitability was further boosted by £7.6k of bank interest, compared with none for H1 last year.  All subsidiaries made a contribution to this improved performance and there is a breakdown of how each part of the Group has performed provided later in this report.

 

The Group continued to respond to challenges caused by a shortage of skilled professional staff, which is not unique to our subsidiaries, and seeks to mitigate the cost pressures that this shortage is causing. The expectations of fee-earning personnel in particular have risen markedly, and recruitment of appropriately qualified staff at sustainable salary levels is proving difficult. To mitigate this, we have had to increase the fees we charge for many of our services and ensure that the quality of our service  enables us to retain our existing clients and to attract new contracts.

 

Although the UK retail sector is still under considerable pressure, our bias towards more clients in the food sector has helped our Security Division. As noted later in this report, the profitability of B2BSG Solutions at the halfway stage represents a great improvement versus H1 2022, and management are confident that the subsidiary can make a positive contribution over the remainder of the year.

 

Across the Safety Division, combined sales were £28k below where they were at this point in 2022 but EBITDA was circa £12k higher as a result of improved margins. In last year’s interim report, we noted that there had been a marked improvement in the fortunes of RSA Environmental Health, which predominantly sells into the education sector. This year we have to report that net profit growth at this subsidiary was not replicated and fell below where it had been in the corresponding period.  Despite this, it will be seen that the Safety Division as a whole performed better than before.  This demonstrates the strength of the Safety Division overall and the cyclic nature of its business.  In addition, a decline in the fortunes of one subsidiary can be offset by improvement in another.

 

The Management Systems Division of the Group, QCS International, saw some slippage in both revenue and EBITDA. The subsidiary is seeking to take on more staff to assist with demand, as current personnel are already working to capacity.

 

Looking to the remainder of the current year, the Board believes there are plenty of opportunities for each of our three Divisions (safety, security and management systems). With the recruitment of extra personnel of the right calibre, we firmly believe we will be able to continue to deliver positive outcomes for shareholders.

 

Dividend

Based on our projections that the Group will continue to have adequate and growing cash reserves from trading activities, the Board has declared an interim dividend of 0.75p per ordinary share to be paid on 12 January 2024 to those shareholders on the register of members on 22 December 2023. This represents a 50% increase on the 0.5p interim dividend in the previous year.

 

Any recommendation by the Board for the payment of a final dividend will be subject to the Group’s full year performance, cash reserves, and the outlook at that time and will be notified in due course.

 

Cash Flow

Cash at bank on 30 September 2023 stood at £0.638m compared to approximately £0.7m at the same time last year.  The figure shown is net of around £208k, inclusive of costs, for the successful share buyback programme completed in August 2023.

 

Despite no current expectation of having to call upon it, the Group has agreed to renew its £50,000 banking facility with HSBC.

 

The cancellation of those shares previously bought back and initially held in treasury has reduced the total cost of dividend payments. The Group has sufficient cash reserves to service the proposed interim dividend and all requirements arising in the normal course of business. There are no additional calls on the Company’s cash. It is noted that authority was obtained at the last AGM for the Company to potentially undertake a further share buyback programme(s), however, no decision has been taken on this matter at the present time.

 

Discrete Performance by Trading Subsidiaries

Profit/loss figures for the individual subsidiaries below are stated before tax and inter-company charges (including the costs of operating the parent plc which are recovered through management charges levied on, and dividends received from, trading subsidiaries), interest paid and received, depreciation and amortisation.

 

Inspection Services (UK) Limited

Invoiced sales of £100,960 yielding a profit of £5,654 (H1 FY23: £95,620 and £4,962).

 

Personnel Health and Safety Consultants Limited

Invoiced sales of £393,594 yielding a profit of £158,501 (H1 FY23: £423,253 and £119,478).

 

RSA Environmental Health Limited

Invoiced sales of £161,109 resulting in a profit of £17,055 (H1 FY23: £174,625 and £32,767).

 

Quality Leisure Management Limited

Invoiced sales of £201,985 resulting in a profit of £70,279 (H1 FY23: £192,014 and £67,769).

 

QCS International Limited

Invoiced sales of £353,647 yielding a profit of £114,889 (H1 FY23: £408,894 and £138,463).

 

B2BSG Solutions Limited

Invoiced sales of £439,920 resulting in a profit of £38,901 (H1 FY23: £384,340 and £2,825).

For further information please contact:

 

PHSC plc

Stephen King      Tel: 01622 717 7000

Stephen.king@phsc.co.uk

www.phsc.plc.uk

 

Strand Hanson Limited (Nominated Adviser)  Tel: 020 7409 3494

James Bellman/Matthew Chandler

 

Novum Securities Limited (Broker)   Tel: 020 7399 9427

Colin Rowbury

 

About PHSC

 

PHSC, 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. In addition, B2BSG Solutions Ltd offers innovative security solutions including tagging, labelling and CCTV.

 

 

 

Group Statement of Comprehensive Income

 

 

 Six months

ended

 

 Six months

ended

 

Year

ended

 

 

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

Note

 

Unaudited

 

Unaudited

 

Audited

 

 

 

£’000

 

£’000

 

£’000

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

2

 

1,651

 

1,679

 

3,438

 

 

 

 

 

 

 

 

Cost of sales

 

 

(758)

 

(804)

 

(1,613)

 

 

 

 

 

 

 

 

Gross profit

 

 

893

 

875

 

1,825

 

 

 

 

 

 

 

 

Administrative expenses

 

 

(743)

 

(744)

 

(1,525)

Other income

 

 

-

 

1

 

3

 

 

 

 

 

 

 

 

Profit from operations

 

 

150

 

132

 

303

 

 

 

 

 

 

 

 

Finance income

 

 

8

 

-

 

1

 

 

 

 

 

 

 

 

Profit before taxation

 

 

158

 

132

 

304

 

 

 

 

 

 

 

 

Corporation tax expense

 

 

(36)

 

(26)

 

(61)

 

 

 

 

 

 

 

 

Profit for the period after tax attributable to owners of parent

2

 

122

 

106

 

243

 

 

 

 

 

 

 

 

Total comprehensive income attributable to owners of the parent

 

122

 

106

 

243

 

 

 

 

 

 

 

 

Basic and diluted earnings per share for profit after tax from continuing operations attributable to the equity holders of the Group during the period

4

 

1.04p

 

0.90p

 

2.05p

 

 

Group Statement of Financial Position

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

 

 

Unaudited

 

Unaudited

 

Audited

 

Note

 

£’000

 

£’000

 

£’000

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

3

 

492

 

462

 

468

Goodwill

 

 

2,235

 

2,235

 

2,235

Deferred tax asset

 

 

12

 

16

 

12

 

 

 

2,739

 

2,713

 

2,715

Current assets

 

 

 

 

 

 

 

Inventories

 

 

186

 

206

 

200

Trade and other receivables

 

 

686

 

660

 

674

Cash and cash equivalents

 

 

638

 

691

 

750

 

 

 

1,510

 

1,557

 

1,624

 

 

 

 

 

 

 

 

Total assets

2

 

4,249

 

4,270

 

4,339

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

 

486

 

471

 

531

Right of use lease liability

 

 

30

 

23

 

25

Current corporation tax payable

 

 

92

 

81

 

57

 

 

 

608

 

575

 

613

Non-current liabilities

 

 

 

 

 

 

 

Right of use lease liability

 

 

27

 

14

 

26

Deferred taxation liabilities

 

 

62

 

62

 

62

 

 

 

89

 

76

 

88

 

 

 

 

 

 

 

 

Total liabilities

 

 

697

 

651

 

701

 

 

 

 

 

 

 

 

Net assets

 

 

3,552

 

3,619

 

3,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and reserves attributable to equity holders of the Group

 

 

 

 

 

 

 

Called up share capital

 

 

1,104

 

1,185

 

1,185

Share premium account

 

 

1,916

 

1,916

 

1,916

Capital redemption reserve

 

 

507

 

426

 

426

Merger relief reserve

 

 

134

 

134

 

134

Retained earnings

 

 

(109)

 

(42)

 

(23)

 

 

 

 

 

 

 

 

 

 

 

3,552

 

3,619

 

3,638

 

Group Statement of Changes in Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Capital

Share

Premium

 

Merger

Relief

Reserve

 

Capital

Redemption

Reserve

 

 

Treasury

Shares

Retained

Earnings

 

 

Total

 

£’000

£’000

£’000

£’000

 

£’000

£’000

£’000

 

 

 

 

 

 

 

 

Balance at 1 April 2023

1,185

1,916

134

426

-

(23)

3,638

Profit for the period attributable to equity holders

-

-

-

-

 

-

122

122

Purchase of own shares

(81)

-

-

81

-

-

-

Cancellation of treasury shares

-

-

-

-

-

(208)

(208)

 

 

 

 

 

 

 

 

Balance at 30 September 2023

1,104

1,916

134

507

-

(109)

3,552

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2022

1,468

1,916

134

143

(645)

497

3,513

Profit for the period attributable to equity holders

-

-

-

-

 

-

106

106

Cancellation of treasury shares

(283)

-

-

283

645

(645)

-

 

 

 

 

 

 

 

 

Balance at 30 September 2022

1,185

1,916

134

426

-

(42)

3,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Statement of Cash Flows

 Six months

 Six months

 

Year

 

 

ended

 

ended

 

ended

 

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

 

Unaudited

 

Unaudited

 

Audited

 

 

£’000

 

£’000

 

£’000

Cash flows generated from operating activities

 

 

 

 

 

 

Cash generated from operations

 

131

 

62

 

318

Tax paid

 

-

 

-

 

(55)

Net cash generated from operating activities

 

131

 

62

 

263

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(33)

 

(2)

 

(41)

Disposal of fixed assets

 

-

 

-

 

-

Interest received

 

8

 

-

 

1

Net cash used in investing activities

 

(25)

 

(2)

 

(40)

 

 

 

 

 

 

 

Cash flows used in financing activities

 

 

 

 

 

 

Payments on right of use assets

 

(10)

 

(18)

 

(4)

Share buyback

 

(208)

 

-

 

-

Dividends paid to Group shareholders

 

-

 

-

 

(118)

Net cash used in financing activities

 

(218)

 

(18)

 

(122)

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(112)

 

42

 

101

Cash and cash equivalents at beginning of period

 

750

 

649

 

649

Cash and cash equivalents at end of period

 

638

 

691

 

750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the cash flow statement

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

 

 

 

 

 

 

Operating profit - continuing operations

 

150

 

132

 

303

Depreciation charge

 

24

 

30

 

63

Goodwill impairment

 

-

 

-

 

-

Loss on sale of fixed assets

 

-

 

-

 

-

Decrease/(increase) in inventories

 

14

 

(20)

 

(14)

Decrease in trade and other receivables

 

32

 

66

 

52

Decrease in trade and other payables

 

(89)

 

(146)

 

(86)

Cash generated from operations

 

131

 

62

 

318

 

 

Notes to the Interim 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 announcement, 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 2023, prepared under IFRS, have been filed with the Registrar of Companies. The auditor’s report for the 2023 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.

 

  1. Segmental Reporting

 

Six months ended

 

Six months ended

 

Year ended

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

Unaudited

 

Unaudited

 

Audited

Revenue

£’000

 

£’000

 

£’000

 

 

 

 

 

 

Security division: B2BSG Solutions Ltd

440

 

384

 

830

 

 

 

 

 

 

Health & Safety division

 

 

 

 

 

Inspection Services (UK) Ltd

101

 

96

 

198

Personnel Health & Safety Consultants Ltd

393

 

423

 

807

Quality Leisure Management Ltd

202

 

192

 

402

RSA Environmental Health Ltd

161

 

175

 

366

 

857

 

886

 

1,773

 

 

 

 

 

 

Systems division: QCS International Ltd

354

 

409

 

835

 

 

 

 

 

 

Total revenue

1,651

 

1,679

 

3,438

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) after taxation, before management charge

 

 

 

 

 

 

 

 

 

 

 

Security division: B2BSG Solutions Ltd

32

 

4

 

(3)

 

 

 

 

 

 

Health & Safety division

 

 

 

 

 

Inspection Services (UK) Ltd

1

 

1

 

8

Personnel Health & Safety Consultants Ltd

124

 

102

 

229

Quality Leisure Management Ltd

59

 

56

 

116

RSA Environmental Health Ltd

12

 

25

 

61

 

196

 

184

 

414

 

 

 

 

 

 

Systems division: QCS International Ltd

87

 

107

 

225

 

 

 

 

 

 

Holding company: PHSC plc

(193)

 

(189)

 

(393)

 

 

 

 

 

 

Total Group profit after taxation

122

 

106

 

243

 

 

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

Unaudited

 

Unaudited

 

Audited

Total assets

£’000

 

£’000

 

£’000

 

 

 

 

 

 

Security division: B2BSG Solutions Ltd

525

 

178

 

466

 

 

 

 

 

 

Safety division

 

 

 

 

 

Inspection Services (UK) Ltd

89

 

97

 

68

Personnel Health & Safety Consultants Ltd

272

 

289

 

221

Quality Leisure Management Ltd

134

 

185

 

95

RSA Environmental Health Limited

575

 

619

 

565

 

1,070

 

1,190

 

949

 

 

 

 

 

 

Systems division: QCS International Ltd

205

 

395

 

242

 

 

 

 

 

 

Holding company: PHSC plc

3,038

 

3,270

 

3,216

 

 

 

 

 

 

 

4,838

 

5,033

 

4,873

 

 

 

 

 

 

Adjustment of goodwill

(591)

 

(765)

 

(536)

Adjustment of deferred tax

2

 

2

 

2

 

 

 

 

 

 

Total assets

4,249

 

4,270

 

4,339

 

 

  1. Property, plant and equipment

 

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

 

Unaudited

 

Unaudited

 

Audited

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

Cost or valuation

 

 

 

 

 

 

Brought forward

 

969

 

928

 

928

Additions

 

48

 

2

 

41

Disposals

 

-

 

-

 

-

Carried forward

 

1,017

 

930

 

969

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

Brought forward

 

501

 

438

 

438

Charge

 

24

 

30

 

63

Disposals

 

-

 

-

 

-

Carried forward

 

525

 

468

 

501

 

 

 

 

 

 

 

Net book value

 

492

 

462

 

468

 

  1. Earnings per share

 

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

 

 

 

Six months ended

 

Six months ended

 

 

Year ended

 

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

 

Unaudited

 

Unaudited

 

Audited

 

 

£’000

 

£’000

 

£’000

 

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

Continuing activities

 

122

 

106

 

243

 

 

 

 

 

 

 

Number of shares

 

30 Sept 23

 

30 Sept 22

 

31 Mar 23

 

 

 

 

 

 

 

Weighted average number of shares for the purpose of basic earnings per share

 

11,713,776

 

11,847,019

 

11,847,019

 

- ENDS -

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