PHSC Regulatory News (PHSC)

3 December 2015 PHSC PLC ("PHSC", the "Company", or the "Group") Unaudited Interim Results for the six months ended 30 September 2015 GROUP CHIEF EXECUTIVE OFFICER'S STATEMENT Financial Highlights * Group turnover for first half down 18% at £3.354m compared with £4.129m last year. * EBITDA reduces to £229k, versus £444k after cost of acquisitions last year. * Basic earnings per share down 45% at 1.23p compared with 2.26p last year. * Cash position increased from £138k at 30 Sept 2014 to £611k * Net asset value (unaudited) up to £6.635m from £6.622m last year. * Pro-forma net asset value (unaudited) per share of 53.3p compared to a current share price (mid) of 24.5p. * Near-threefold increase in EBITDA in Q2 versus Q1, as new contracts and cost savings take effect. Trading overview As indicated in our previous trading update, the conclusion of two largecontracts resulted in a hiatus in our order book which we have been seeking toaddress. In our pre-AGM trading update covering the first four months, wereported EBITDA of circa £66k. It can be seen from today's announcement thatthe final two months of H1 generated an additional £139k of profit, enabling usto climb up to £229k EBITDA for the first half of the year. Although somewhatless than at this stage in 2014-15, the recent upturn in performance has giventhe board a degree of confidence that subsidiaries are successfully adjustingto their new circumstances. The breakdown of performance by individualsubsidiary later in this statement will show that the single most significantfactor was a gap in the order book of B to B Links Limited. The subsidiary didnot have the benefit of last year's large one-off contract and this coincidedwith work deferrals from a major customer. Those orders were subsequentlyreleased to us for fulfilment and the positive effect can be seen in Q2'simproved performance. Our QCS International Limited subsidiary is now rolling out a programme oftraining and consultancy support in connection with recent revisions tointernational quality standards ISO 9001and ISO 14001. This programme wasforecast to have commenced in Q2 but there was a delay in official publicationby the standards body. This resulted in the subsidiary having to postpone anumber of transitional courses but these will now commence in Q3. Health and safety consultancy and training activity continued to take place inline with expected customer demand. The conclusion of a large valueasbestos-related project with a leading university detrimentally affectedincome and caused an overmanning situation which has now been rectified. Outlook The Group traditionally performs better in the second half of the financialyear, although this trend was interrupted in 2014-15 by the exceptionalperformance of B to B Links in the first half. Based on the current order bookwe expect to see further progress from existing subsidiaries in Q3 and Q4,giving us a stronger second half to the current year. Dividend prospects The Board is not declaring an interim dividend but intends to recommend anappropriate final dividend in line with its stated policy of at leastmaintaining the level of dividend. Cash Flow The bank balance stood at £611k as at the date of the interim accounts,compared with £138k this time last year. The relatively low balance last yearwas caused by meeting our obligations in respect of acquisition payments thatfell due in that period. An agreement has been put in place with our bankers, HSBC, that allows theGroup to call upon an overdraft facility of £200k. This facility is due forreview in November 2016. We are confident that our cash balance and theavailability of bank funding will enable us to meet all our financialobligations over the foreseeable future. Performance by Trading Subsidiaries Profit/loss figures for individual subsidiaries are stated before tax andinter-company charges (including the costs of operating the plc which arerecovered through management charges to trading subsidiaries), interest paidand received, depreciation and amortisation. Adamson's Laboratory Services Limited Revenue of £1,105,100 yielding a profit of £102,900 (the equivalent figures forthe same period last year were £1,288,600 and £67,400). Inspection Services (UK) Limited Invoiced sales of £106,500 yielding a profit of £18,800 (the figures for thesame period last year were £96,300 and £8,900). Personnel Health and Safety Consultants Limited Invoiced sales of £328,300 yielding a profit of £132,000 (the figures for thesame period last year were £390,800 and £191,200). RSA Environmental Health Limited Invoiced sales of £209,700 resulting in a profit of £21,000 (the figures forthe same period last year were £198,200 and £8,000). Quality Leisure Management Limited Invoiced sales of £239,600 resulting in a profit of £34,900 (the figures forthe same period last year were £246,800 and £57,000). QCS International Limited Invoiced sales of £245,000 yielding a profit of £58,000 (the figures for thesame period last year were £254,000 and £58,900). B to B Links Limited Invoiced sales of £1,120,100 yielding a profit of £58,900 (the figures for thesame period last year were £1,654,300 and £402,000) Stephen King - Group Chief Executive Officer For further information please contact: PHSC plc Stephen King 01622 717700 www.phsc.plc.uk Sanlam Securities UK Limited (Nominated adviser and broker) 020 7628 2200 Lindsay Mair/James Thomas Group Statement of Comprehensive Six Six YearIncome months months ended ended ended 30 Sept 30 Sept 31 Mar 15 14 15 Note Unaudited Unaudited £'000 £'000 £'000 Continuing operations Revenue 3 3,354 4,129 7,731 Cost of sales (1,804) (2,249) (4,226) Gross profit 1,550 1,880 3,505 Administrative expenses (1,345) (1,383) (2,739) Exceptional administrative expenses 2 - (75) (263) Profit from operations 205 422 503 Finance income - - 1 Finance costs - - (1) Profit before taxation 205 422 503 Corporation tax expense (49) (136) (154) Profit for the period after tax attributable to owners of parent 3 156 286 349 Total comprehensive income attributable to 156 286 349owners of the parent Attributable to: Equity holders of the Group 156 286 349 Basic and diluted Earnings per Share 5 1.23p 2.26p 2.75pfor profit after tax from continuingoperations attributable to the equityholders of the Group during theperiod Group Statement of Financial Position 30 Sept 30 Sept 31 Mar 15 14 15 Unaudited Unaudited Note £'000 £'000 £'000 Non-current assets Property, plant and equipment 4 684 686 689 Goodwill 4,580 4,560 4,580 5,264 5,246 5,269 Current assets Inventories 224 228 216 Trade and other receivables 1,864 2,922 1,980 Cash and cash equivalents 611 138 462 2,699 3,288 2,658 Total assets 3 7,963 8,534 7,927 Current liabilities Trade and other payables 1,126 1,475 1,156 Financial liabilities - 2 - Current corporation tax payable 134 237 105 Short term provisions - 130 - 1,260 1,844 1,261 Non-current liabilities Deferred taxation liabilities 68 68 68 68 68 68 Total liabilities 1,328 1,912 1,329 Net assets 6,635 6,622 6,598 Capital and reserves attributable toequity holders of the Group Called up share capital 1,268 1,268 1,268 Share premium account 1,831 1,831 1,831 Capital redemption reserve 144 144 144 Retained earnings 3,392 3,379 3,355 6,635 6,622 6,598 Group Statement of Changesin Equity Share Share Capital Retained Total Capital Premium Redemption Earnings Reserve £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2015 1,268 1,831 144 3,355 6,598 Profit for the period - - - 156 156attributable to equityholders Dividends - - - (119) (119) Balance at 30 September 201 1,268 1,831 144 3,392 6,6355 Balance at 1 April 2014 1,268 1,831 144 3,197 6,440 Profit for the period - - - 286 286attributable to equityholders Dividends - - - (104) (104) Balance at 30 September 201 1,268 1,831 144 3,379 6,6224 Group Statement of Cash Flows Six Six Year months months ended ended ended 30 Sept 30 Sept 31 Mar 15 14 15 Unaudited Unaudited £'000 £'000 £'000 Cash flows generated from/(used by)operating activities Cash generated from/(used by) operations 306 (231) 739 Interest paid - - (1) Tax paid (20) (27) (177) Net cash (used by)/generated from 286 (258) 561operating activities Cash flows used in investing activities Purchase of property, plant and equipment (18) (12) (59) Purchase of subsidiary companies net of - (200) (564)cash acquired Disposal of fixed assets - 1 Interest received - - 1 Net cash used in investing activities (18) (212) (621) Cash flows used in financing activities Dividends paid to group shareholders (119) (104) (190) Net cash used in financing activities (119) (104) (190) Net increase/(decrease) in cash and cash 149 (574) (250)equivalents Cash and cash equivalents at beginning of 462 712 712period Cash and cash equivalents at end of period 611 138 462 Notes to the cash flow statement Cash generated from/(used by) operations Operating profit - continuing operations 205 422 503 Depreciation charge 24 22 52 Goodwill impairment - 49 29 Fair value movement in contingent - - 233consideration Loss on sale of fixed assets - - 12 Increase in inventories (8) (73) (61) Decrease/(increase) in trade and other 115 (987) (44)receivables (Decrease)/increase in trade and other (30) 341 21payables Decrease in financial liabilities - (5) (6) Cash generated from/(used by) operations 306 (231) 739 Notes to the Financial Statements 1. Basis of preparation These condensed consolidated financial statements are presented on the basis ofInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion and interpretations issued by the International Financial ReportingInterpretations Committee (IFRIC) and have been prepared in accordance with AIMrules and the Companies Act 2006, as applicable to companies reporting underIFRS. The financial information contained in this report, which has not been audited,does not constitute statutory accounts as defined by Section 434 of theCompanies Act 2006. The Group's statutory financial statements for the yearended 31 March 2015, prepared under IFRS have been filed with the Registrar ofCompanies. The auditors' report for the 2014 financial statements wasunqualified and did not contain a statement under Section 498 (2) or (3) of theCompanies Act 2006. The same accounting policies and methods of computation are followed withinthese interim financial statements as adopted in the most recent annualfinancial statements. New IFRS standards and interpretations not adopted Certain new standards, amendments and interpretations of existing standardsthat have been published and which have not been applied in these financialstatements were in issue but not yet effective (and in some cases had not yetbeen adopted by the EU) IFRS standards and interpretations issued (and EU adopted) but Effective date -not yet effective accounting period beginningTitle on/after IFRS 13 Fair Value Measurement 01/01/2013 IFRIC 20 Stripping Costs in the Production of a Surface Mine 01/01/2013 IFRS 1 Amendments - Government Loans 01/01/2013 Transition Guidance (Amendments to IFRS 10, 11 and 12) 01/01/2013 Novation of Derivatives and Continuation of Hedge Accounting 01/01/2014(Amendments to IAS 39) Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 01/01/201427) IAS 36 Amendments Recoverable Amount Disclosures for 01/01/2014non-Financial Assets IFRIC 21 Levies 01/01/2014 IFRS Standards and Interpretations issued by IASB but not yet Effective date -EU approved accounting period beginningTitle on/after IAS 19 Amendment - Defined Benefit Plans: Employee 01/07/2014Contributions IFRS 10 and IAS 28 Amendments: Sale or Contribution of 01/01/2016Assets between an Investor and its Associate or JointVenture IAS 27 Amendment: Equity Method in Separate Financial 01/01/2016Statements IAS 16 and IAS 41 Amendments: Agriculture Bearer Plants 01/01/2016 IFRS 14 Regulatory Deferral Accounts 01/01/2016 IAS 16 and IAS 38 Amendments: Clarification of Acceptable 01/01/2016Methods of Depreciation and Amortisation IFRS 11 Amendments: Accounting for Acquisitions of Interest 01/01/2016in Joint Operations IFRS 15 Revenue from Contracts with Customers 01/01/2017 IFRS 9 Financial Instruments 01/01/2018 The adoption of these standards, amendments and interpretations is not expectedto have a material impact on the group's profit for the period or equity.Application of these standards will result in some changes in presentation ofinformation within the condensed interim financial statements. The information presented within these interim financial statements is incompliance with IAS 34 "Interim Financial Reporting". This requires the use ofcertain accounting estimates and requires that management exercise judgement inthe process of applying the Group's accounting policies. The areas involving ahigh degree of judgement or complexity, or areas where the assumptions andestimates are significant to the interim financial statements are disclosedbelow: (a) Provisions The balance sheet of B to B Links Limited includes a £24k provision in respectof potential repairs and replacements under warranty. The assumed risk isexpressed in percentage terms over the two year warranty period. A further £3kprovision relates to work that may be required under retention clauses. (b) Impairment of goodwill Our interim review of the value of goodwill in the balance sheet did nothighlight any conditions which would give rise to a material impairment and forthis reason the Board is to defer any decision regarding any additionalimpairment of goodwill until the year end. 30 Sept 30 Sept 31 Mar 15 15 14 Unaudited Unaudited 2 Exceptional Administrative £'000 £'000 £'000 Expenses QCS International Limited: - 26 26 Acquisition payment in excess of provision B to B Links Limited: - - 208 Acquisition payment in excess of provision PHSC plc: - 49 29 Goodwill impairment as detailed in (b) above - 75 263 Notes to the Financial Statements(continued) 30 Sept 30 Sept 31 Mar 15 15 14 Unaudited Unaudited 3 Segmental Reporting £'000 £'000 £'000 Revenue PHSC plc - - - Personnel Health & Safety 328 391 754 Consultants Ltd RSA Environmental Health Ltd 210 198 422 Adamson's Laboratory Services Ltd 1,105 1,289 2,694 Inspection Services Ltd 106 96 196 Quality Leisure Management Ltd 240 246 534 Q C S International Ltd 245 254 527 B to B Links Ltd 1,120 1,655 2,604 3,354 4,129 7,731 Profit/(loss) after taxation PHSC plc 15 (41) (61) Personnel Health & Safety 71 78 171 Consultants Ltd RSA Environmental Health Ltd 7 - 11 Adamson's Laboratory Services Ltd 25 (45) 85 Inspection Services Ltd 13 2 6 Quality Leisure Management Ltd 14 24 66 Q C S International Ltd 34 42 117 B to B Links Ltd (23) 301 231 156 361 626 Taxation adjustment (group loss relief - - (14) and deferred tax) Additional acquisition payment (QCS/B - (26) (234) to B Links) Goodwill impairment - (49) (29) 156 286 349 Total assets PHSC plc 6,337 5,890 4,889 Personnel Health & Safety 422 464 811 Consultants Ltd RSA Environmental Health Limited 476 492 596 Adamson's Laboratory Services Ltd 815 1,219 1,377 Inspection Services Ltd 57 54 111 Quality Leisure Management Ltd 98 111 258 Q C S International Ltd 103 88 307 B to B Links Ltd 1,126 1,730 1,049 9,434 10,048 9,398 Adjustment of goodwill (1,471) (1,514) (1,471) 7,963 8,534 7,927 Notes to the Financial Statements 30 Sept 15 30 Sept 14 31 Mar 15(continued) Unaudited Unaudited 4 Property, plant and equipment £'000 £'000 £'000 Cost or valuation Brought forward 1,055 1,124 1,127 Additions 18 12 59 Disposals - - (132) Carried forward 1,073 1,136 1,054 Depreciation Brought forward 365 428 432 Charge 24 22 52 Disposals - - (119) Carried forward 389 450 365 Net book value 684 686 689 5 Earnings per share The calculation of the basic earnings per share is based on the following data. 30 Sept 15 30 Sept 14 31 Mar 15 £'000 £'000 £'000 Unaudited Unaudited Earnings Continuing activities 156 286 349 Number of shares 30 Sept 15 30 Sept 14 31 Mar 15 Weighted average number of shares for the purpose of basic earnings 12,686,353 12,686,353 12,686,353 per share END