PHSC Regulatory News (PHSC)

PHSC Plc - Half-Year Report

PR Newswire

London, November 22

23 November 2021

PHSC PLC

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

Unaudited Interim Results for the six months ended 30 September 2021

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 2021.

GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT

Financial Highlights

Operational Highlights and Business Outlook

In Q2 2021, the majority of the restrictions imposed by the UK Government in response to the COVID-19 pandemic were lifted or relaxed, which led to an overall improvement in total revenue for H1 FY21 as clients began their own recovery programmes. The gradual return to more normal working conditions meant that the Group had progressively less reliance on the Government’s Coronavirus Job Retention Scheme (“CJRS”). This led to reduced grant receipts, down from approximately £316k in H1 FY21 to just below £30k for H1 FY22.

We continue to maintain a £50,000 banking facility with HSBC Bank plc which has been renewed for a further year to October 2022. We have not made any use of such facility and do not expect to have to do so.

Despite the reopening of retail premises, the Security Division has not returned to the level of pre-pandemic trading. This is due predominantly to the permanent closure of former key clients such as Debenhams, Peacocks and Edinburgh Woollen Mill. Another factor that impacts margins is the cost of transportation, with all security related products being shipped in from abroad. Carriage charges have risen, in some cases five-fold, and it is simply not possible to pass on and recover such increase from the end user where prices are built into existing contracts. The business has reduced its cost base by downsizing the warehousing and office space it occupies, and staffing levels are now as low as is practicable without adversely affecting the customer experience. Management continues to seek to secure additional business from existing clients, as well as new client wins.

The reopening of education and leisure facilities has resulted in a welcome return to profitable trading for the relevant subsidiaries in the Safety Division that specialise in such sectors.

Our subsidiary focused on the statutory examination of plant and equipment was largely unaffected by COVID-19, save where clients had closed their workplaces, as there was no derogation offered by the relevant authorities from the legal obligation to ensure safety of the plant concerned. However, since lockdown has been lifted, we have found that costs have risen considerably, particularly in the prices of accommodation and travel, which has adversely affected margins.

Our Systems Division has bounced back exceptionally well from the enforced suspension of many of its activities, including the delivery of public training courses. Notably, the new revenue stream from our ‘UK Responsible Person’ (“UKRP”) service continues to increase. This service provides a portal to enable clients in the European Union (“EU”) medical device sector to supply the UK marketplace. Further growth is anticipated in the number of clients using this service.

General safety consultancy and training sales have shown a marked improvement, although EBITDA has reduced across the Safety Division as a whole due to the significantly lower income from CJRS funding. Further details are provided by way of the segmental analysis below showing the performance of individual subsidiaries.

The Board is generally satisfied with the Group’s performance at this stage of its COVID-19 recovery programme and is confident that further progress can be achieved over the remainder of the financial year.

Dividend

The Board is confident that the Group will remain profitable and has sufficient cash reserves to enable the payment of an interim dividend. Accordingly, the Board has decided to declare an interim dividend of 0.5p per ordinary share, to be paid on 21 January 2022, to those shareholders on the register of members on 24 December 2021.

As in previous years, the recommendation by the Board of any final dividend will be subject to the Group’s full year performance and the outlook at that time.

Cash Flow

Cash at bank on 30 September 2021 stood at £902k compared to approximately £1m at the same time last year. As indicated, the lower balance at the interim stage reflects the utilisation of £325k on the Company’s successful share buyback programme implemented during the period.

The cash reserves are sufficient to service all requirements arising in the normal course of the Group’s business and in relation to the proposed dividend. Whilst the Board has not currently committed to any additional calls on the Company’s cash, it is anticipated that a potential further share buyback programme, utilising the authority granted by the relevant special resolution passed at the 2021 Annual General Meeting, will be duly considered by the Board prior to the end of the financial year and announced as appropriate.

Discrete Performance by Trading Subsidiaries

Profit/loss figures for 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. Invoiced sales do not include CJRS grant funding, but such income is taken into account when calculating profit/loss figures. The net reduction of £287k in grant funding is the reason that most of the Company’s subsidiaries show lower EBITDA despite higher sales revenue.

Inspection Services (UK) Limited

Invoiced sales of £94,392 yielding a profit of £10,923 (H1 FY21: £113,807 and £25,471).

Personnel Health and Safety Consultants Limited

Invoiced sales of £607,906 yielding a profit of £198,579 (H1 FY21: £381,531 and £223,591).

RSA Environmental Health Limited

Invoiced sales of £130,953 resulting in a profit of £15,646 (H1 FY21: £100,123 and £30,686).

Quality Leisure Management Limited

Invoiced sales of £137,281 resulting in a profit of £37,500 (H1 FY21: £90,369 and £40,342).

QCS International Limited

Invoiced sales of £356,968 yielding a profit of £113,668 (H1 FY21: £196,533 and £46,705).

B2BSG Solutions Limited

Invoiced sales of £391,729 resulting in a loss of £16,738 (H1 FY21: £495,228 and £4,394 loss).

For further information please contact:

PHSC plcStephen King Tel: 01622 717 700Stephen.king@phsc.co.ukwww.phsc.plc.uk

Strand Hanson Limited (Nominated Adviser) Tel: 020 7409 3494James Bellman/Matthew Chandler

Novum Securities Limited (Broker) Tel: 020 7399 9427Colin 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.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.

* Other reserves represent the merger relief reserve and Treasury shares held by the Group.

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 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 2021, prepared under IFRS, have been filed with the Registrar of Companies. The auditor’s report for the 2021 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 a half year loss has been incurred by the Security Division, the effect of the cost reduction programme implemented in Q1 2021 should improve the financial year end position. The longer-term outlook presently remains stable and an impairment charge in these interim financial statements 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. 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.