PHSC Plc - Final Results for the year ended 31 March 2022
PR Newswire
London, August 1
PHSC PLC
(“PHSC”, the “Company” or the “Group”)
Final Results for the year ended 31 March 2022
Availability of Annual Report and Notice of Annual General Meeting
PHSC (AIM: PHSC), a leading provider of health, safety, hygiene and environmental consultancy services and security solutions to the public and private sectors, announces its audited results for its financial year ended 31 March 2022.
Financial Highlights
• Underlying EBITDA of £0.274m compared to £0.505m in the prior year
• Statutory loss after tax of £0.631m compared to a profit after tax of £0.087m in the prior year, mainly due to writing off goodwill in respect of the Security Division
• Security Division impairment plus other goodwill impairments totalling £0.793m
• Group sales revenue of £3.571m, up from £3.289m in the prior year
• Income augmented by £30k of pandemic-related grant funding, £411k less than the prior year
• Group net assets declined to £3.513m following goodwill impairments
• Statutory loss per share of 4.76p compared to earnings per share of 0.60p in the prior year
• 2,830,238 ordinary shares bought back and subsequently cancelled (post period end), representing 19% of those formerly in issue
• Cash reserves of £0.649m at year end post completion of share buybacks, down from £1.237m for the prior year
• Final dividend of 0.5p proposed, making a total of 1.0p for the year matching the prior year’s total
| 31.3.22 | 31.3.21 | |||
| £ | £ | |||
| (Loss)/profit before tax | (577,798) | 189,988 | ||
| Less: interest received | (388) | (999) | ||
| Add: depreciation | 58,812 | 65,619 | ||
| Add: impairment of B2BSG Solutions Limited goodwill | 676,178 | 200,000 | ||
| Add: impairment of Inspection Services (UK) Limited goodwill | 117,240 | - | ||
| Add: impairment of RSA Environmental Health Limited goodwill | - | 50,000 | ||
| Underlying EBITDA* | 274,044 | 504,608 |
* - 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 and Availability of full 2022 Annual Report
This year’s annual general meeting (AGM) will be held at 10.00 a.m. on Thursday, 29 September 2022 at The Old Church, 31 Rochester Road, Aylesford, Kent ME20 7PR.
The full annual report and accounts for the financial year to 31 March 2022 and notice of AGM are expected to be posted to shareholders on or around 2 August 2022 and will shortly be made available to download from 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 14 October 2022 to shareholders on the register on 30 September 2022.
For further information please contact:
PHSC plc
Stephen King Tel: 01622 717 7000
Strand Hanson Limited (Nominated Adviser)
James Bellman / Matthew Chandler Tel: 020 7409 3494
Novum Securities Limited (Broker)
Colin Rowbury Tel: 020 7399 9427
About PHSC
PHSC, 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, provides a range of health, safety, hygiene, environmental and quality systems consultancy and training services to organisations across the UK. In addition, B2BSG Solutions Limited 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 (Withdrawl) Act 2018 (as amended).
CHIEF EXECUTIVE OFFICER’S REPORT
On behalf of the board, I am pleased to present my review of the Group’s progress during the financial year 2021-22 as it left the pandemic behind and transitioned towards a more normal trading pattern. During this reporting period we successfully completed our second share buyback programme, the initial programme having been documented in last year’s report as a post balance sheet event. Further details are set out later in this report along with specific details on each subsidiary’s performance.
General business review and outlook
The overall uplift in sales revenue is welcome, and to a large extent offset the significant reduction in government grants associated with the pandemic. However, the costs associated with delivering our services greatly increased. This was due in part to the resumption of routine expenditure on office materials, travel and the like which had been largely suppressed during lockdown. In addition, the return to 100% of salary for those on the Coronavirus Job Retention Scheme (CJRS) had a sizeable impact. Considering performance in the round, the board is pleased that the Group has returned to a position where trading is profitable and cash generative.
Post-pandemic it became clear to the board that the market for products and services provided by the Security Division had been badly affected by changes in shopping habits and an acceleration of the shift toward on-line purchasing. With its predominantly retail sector client base, this left B2BSG Solutions Limited (B2BSG) exposed to greatly reduced sales from a diminishing number of clients. Accordingly, the board believed it prudent and appropriate to write off the carrying value of this division whilst continuing to assist management in their attempts to turn its fortunes around. Similarly, a view was taken that stock values should be impaired in recognition of the lower demand for electronic article surveillance (EAS) equipment. The majority of this product, nevertheless, remains current and serviceable. It is worth noting that B2BSG has reported a pre-management charges profit of approximately £10k for Q1 of the current financial year which is an improvement on the loss-making situation at the same stage in 2021-22.
As has been explained previously, the Security Division is affected by exchange rate fluctuations, with all EAS equipment being sourced from abroad and paid for in Euros or US dollars. Exchange rate movements have seen a general weakening of Sterling versus the USD with rates recently touching a two-year low.
Our Systems Division saw both revenue and profits rise by around 50% in response to the lifting of restrictions in Scotland where it is based, and the ability to return to face-to-face training delivery for those clients that preferred this.
The Safety Division performed very well and benefited from a large contract for COVID-19 testing which was on a commission basis. This is explained further below with respect to the results for Personnel Health and Safety Consultants Limited (PHSCL).
It is noted that the Group’s cash reserves at the financial year end (£0.649m) were around half that of 2020-21 (£1.237m) despite the Group being cash-generative in terms of normal trading. Such reduction is due to the successful implementation of our share buyback programmes resulting in over 2.8m ordinary shares being acquired into treasury and subsequently cancelled post period end. The total spent on buybacks during the year was circa £0.65m inclusive of legal fees and brokerage.
Now that we have a well-established and proven mechanism, the board is again seeking shareholder approval for a replenished share buyback authority at the Company’s forthcoming AGM. No decision has been made as to whether or when, if duly approved at the AGM, any further buyback programme will take place. This will be determined by periodically assessing the Group’s cash position and any anticipated call on resources for other purposes. Accordingly, the proposed renewed authority simply provides the board with maximum flexibility that it may or may not choose to exercise.
The Group’s current cash position is approximately £0.718m which is more than sufficient to meet its needs for the foreseeable future and to cover the proposed dividend. An advantage of having fewer shares in issue is that the cash required to maintain the dividend at its current level per share is around 20% lower than it would otherwise have been. In addition to maintaining a strong bank balance, HSBC Bank plc provides us with a facility of £50,000 to draw upon should the need arise which is due for renewal in October 2022. The board expects to renew the facility at its present level but does not currently anticipate having to draw upon it.
The Group confirms that it did not apply for any Government loan monies available to support UK businesses through the pandemic.
Net asset value
As stated in the general business review section above, the board has written off the entire carrying value of the Security Division (B2BSG) as a consequence of the decline in demand for the goods and services that it provides and a highly competitive marketplace. This impairment has resulted in a reduction in assets of £0.676m. From a routine review of the carrying value of the other subsidiaries, the board has determined that Inspection Services (UK) Ltd is overvalued and should also be written down by approximately £0.117m. No other subsidiaries are believed to be held at inflated values based on their prospects for the current year and the foreseeable future.
The year-end consolidated net assets, further to the goodwill impairments and expenditure on share buybacks, total approximately £3.513m. Based on the number of shares currently in issue this equates to approximately 30p per ordinary share versus a prevailing mid-market price of approximately 26.5p. The board welcomes the narrowing of the gap between the Company’s asset value and market share price.
Outlook
The Group is not immune from the uncertainty in both the domestic and macroeconomic environments. Costs have been increasing across all areas, with notable uplifts to the cost of accommodation, energy supply, and travel including fuel. Management have sought to help defray some of the impact on employees by awarding generous pay rises albeit below the headline figure for inflation. We have generally found that the market for both administrative staff and fee-earning professionals has become far more competitive, which has raised the expectations of current and prospective new employees. There is limited scope to pass on the effects of these additional costs to our clients, resulting in margins being squeezed.
Despite the difficult trading environment, we are confident that the Group can remain profitable and cash-generative throughout the year. The management team are always seeking ways to work more productively and to reduce costs to the lowest level reasonably practicable.
Trading update
According to the most recent set of management accounts (unaudited), in Q1 the Group generated revenue of approximately £0.854m and EBITDA of approximately £96k. This compares well with the Q1 position last year which showed income of approximately £0.926m and EBITDA of approximately £72k.
Dividends
A total dividend of 1.0p per ordinary share (£146,772) was paid in respect of the financial year ended 31 March 2021. An interim dividend of 0.5p in respect of the financial year ended 31 March 2022 was paid in February 2022 and, subject to shareholder approval, a final dividend of 0.5p to be paid from earnings from the financial year ended 31 March 2022 is proposed for payment in October 2022, thereby matching last year’s total. Following the share buyback programmes completed in 2021-22, the cost of the final dividend will fall approximately 19% from £73,386 to £59,235.
PERFORMANCE BY TRADING SUBSIDIARY
The Group currently measures the following key performance indicators (KPIs).
Total revenues
Total revenues are reviewed each month across the Group to provide the board with a ready measure of how well the Group and underlying businesses are performing relative to historical data. It enables any trend to be detected, understood and acted upon as appropriate. Consolidated Group revenues (excluding government grant funding) for the year increased by 8.5%.
Earnings before interest, taxation, depreciation, amortisation and non-recurring costs (underlying EBITDA)
The Group’s underlying EBITDA decreased from £504,608 in 2020-21 to £274,044 in 2021-22 with the improvement in business activity failing to outweigh the reduction in COVID-19 support funding which dropped from £441,125 to £29,527.
Staff turnover
Staff turnover is monitored as the key asset of each subsidiary is its workforce. Recruiting replacement staff is an expensive task and it is not always possible to compensate for the specialised knowledge that may be lost when an employee departs. During the year, five people left the employment of the Group and five people joined, resulting in the total number of employees at the year-end remaining unchanged at 44.
Pre-tax profit/(loss) per subsidiary before Group management charges
Profit before tax and management charges is reviewed by each subsidiary and by the board every month. Each subsidiary director provides a commentary to enable the board to establish whether intervention of any kind is appropriate.
A summary of the results and activities of our trading subsidiaries is set out below. Where relevant, government grant funding is excluded from revenues, but included in profits. Performance is based on those factors within a subsidiary director’s control, so results are shown exclusive of management charges and taxation and any impairment judged necessary. The Group covers its own management costs by levying a charge on each subsidiary and derives other income through the receipt of dividends from its subsidiaries.
B2BSG Solutions Limited (B2BSG)
- 2022: revenues of £749,200 yielding a loss of £79,200 after a slow-moving stock write down of £55,000
- 2021: revenues of £1,136,600 yielding a profit of £13,800
The COVID-19 pandemic that drastically affected the previous year continued to have an adverse impact, with many of B2BSG’s clients having downsized their operations or ceased trading entirely.
High street shops were able to reopen in mid-April 2021 in England, with some variation elsewhere in the UK. This enabled the Company to bring staff back to work and to cease reliance on the CJRS. Only £3k of CJRS funding was received in 2021-22 representing a significant reduction from around £133k in the prior year.
Sales revenues came in at £749k compared with £1.137m in the previous year. There was an EBITDA loss of £65k for the year, after discounting exceptional items (£7.6k of redundancy pay and £3.4k of bad debts) and before management charges. The £3.4k of bad debts compares favourably with debts of £22k written off in the previous year.
Employment costs were lower, as staff numbers were reduced. Some office space was returned to the relevant landlord and a lower rental charge was incurred. One notable area where costs rose was in carriage, where shipping fees went up in some cases by a factor of ten, due to a worldwide shortage of capacity. All of the Company’s products are imported.
Management expectations are for B2BSG to hold its own in 2022-23 and to see an improvement in the following year. As stated earlier, Q1 performance has seen a profit of around £10k per the unaudited management accounts. Ultimately, the performance of the business will be largely dependent on the fortunes of the retail sector and management’s ability to negotiate shocks to the global economy. Any further deterioration in foreign exchange rates will harm the Company’s prospects.
Inspection Services (UK) Limited (ISL)
- 2022: revenues of £186,600 yielding a profit of £8,700
- 2021: revenues of £213,900 yielding a profit of £31,500
ISL achieved revenues of £186,600 which is a reduction of £27,300 versus the prior year figure of £213,900. This led to a reduced EBITDA before management charges of £18,600 compared to £41,300 in 2020-21. Despite the lower sales, costs remained at the same level as the previous year with notable rises in vehicle and travel expenses. Hotel accommodation in particular was more expensive than expected. This was caused by higher prices following the lifting of COVID-19 lockdown restrictions along with the failure of providers to pass on the effects of a reduction in VAT to clients.
Approximately two-thirds of the Company’s business is placed by insurance brokers on behalf of their clients, with the remaining third being sales made directly to clients. When work is introduced through an insurance broker, a commission becomes payable.
There have been a small number of former clients who ceased trading during the pandemic or disposed of some work equipment which led to a reduction in the requirement to conduct examinations. It has not been possible to make up the shortfall with new clients at this stage.
Personnel Health & Safety Consultants Limited (PHSCL)
- 2022: revenues of £1,283,100 yielding a profit of £351,000
- 2021: revenues of £968,900 yielding a profit of £498,000
Turnover exceeded £1m for the first time in several years. This was as a result of a one-off contract with an invoice value of over £400k for supporting clients in the provision of COVID-19 testing services. The work was carried out by external medical specialists and generated a 5% premium for PHSCL. The profit of £351,000 was lower than the previous year and reflected an increased use of subcontractors. The team worked incredibly hard for the first three quarters of the year, but staff utilisation was lower in Q4 for a number of reasons that have subsequently been addressed and rectified by management. The Safety Division is focussing on acquiring an online management system to support its clients in monitoring their compliance status, particularly those with multiple sites. This should support the sales and marketing functions who will be able to pitch for larger contracts where an online offering is increasingly becoming a prerequisite of the tender process.
QCS International Limited (QCS)
- 2022: revenues of £724,100 yielding a profit of £189,600
- 2021: revenues of £500,700 yielding a profit of £121,100
Despite the pandemic placing varied and changing constraints on the business, the year saw sales and profits approaching levels last achieved prior to the health emergency. Whilst training was impacted considerably, consultancy work has been buoyant and has made a significant contribution towards compensating for lost training revenue. By the end of the financial year, training was beginning to approach previous levels, suggesting that the trend is towards more normal operating conditions.
Consultancy activity for the year was above normal (pre-pandemic) levels. This was due to a combination of new client activity, continued interest in the UK Responsible Person services for medical devices, and excellent levels of repeat business. Sales for consultancy approached £400,000 for the year ended 31 March 2022, which is a record performance for QCS.
The pandemic caused revenue from public (face-to-face) training to drop to £112,000 from the previous year as there were times during 2021-22 when training was constrained. Nevertheless, income generated from those periods when training was possible resulted in income more than doubling year on year to £237,000. By Q4 it was pleasing to note that training income had fully recovered.
In January 2022, the Company lost the services of one of its key consultants who specialised in medical device work and recruitment of a possible replacement remains ongoing in what is a difficult and competitive market. A new consultant was engaged at the very end of the financial year to support broader quality/environmental and health and safety services.
Quality Leisure Management Limited (QLM)
- 2022: revenues of £323,600 yielding a profit of £100,900
- 2021: revenues of £234,300 yielding a profit of £99,700
QLM started the financial year with most, if not all, support service and retained clients either closed or heavily restricted under COVID-19 legislation. This severely restricted the generation of additional income from activities such as auditing. These restrictions continued throughout the period and, whilst easing gradually, restrictions of some kind remained in place for most of the year.
The health and safety support service was the least affected income stream. Guidance in respect of changes in COVID-19 legislation and best practice were topical questions together with the recommissioning of equipment and facilities.
Profitability improved at the start of Q3 as facilities progressively reopened and restrictions were relaxed to varying degrees. Auditing and training became the priority as previously closed or restricted facilities began to focus on ensuring normal health and safety standards were in place and that staff were competent to achieve or maintain them. Audits were and continue to be, a strong part of the business.
Following the development of videoconferencing courses last year, this delivery method remains popular. In addition to reducing staff travel time and costs recharged to clients, it enables greater accessibility to those companies only requiring a small number of participants.
QLM has been involved as an expert witness in several legal cases in recent years. With the legal system returning to relative normality post-pandemic, this aspect of the business remains active.
RSA Environmental Health Limited (RSA)
- 2022: revenues of £304,000 yielding a profit of £53,600
- 2021: revenues of £235,100 yielding a profit of £57,400
Revenue was up by 29% to £304,000 despite the first half of the financial year continuing to be affected by the COVID-19 pandemic and associated lockdowns. The pandemic severely affected revenue in Q1 and Q2 because RSA’s largest marketplace is the education sector. Most of the school-based income reflects a two-year audit and consultancy cycle. With lockdowns and effective school closures in the corresponding period in 2020-21, no new contracts were set up at that time, so no second-year payments fell due. It was not until Q3 that the cycle of second payments started to come through. In other areas there has been a slow return to normal operations. As restrictions eased, audits were booked for our NHS and hospitality clients and in the latter part of the year revenue from these sectors has returned to pre-pandemic levels with the employed staff working at full capacity.
In previous years, the focus of the Company had been on the SafetyMARK brand, providing safety services to the school sector. Efforts have been made to diversify revenue streams and this is resulting in a more even spread of income across the five main services namely, training, SafetyMARK, health and safety consultancy, health and safety advisory services and food safety consultancy. Almost £100,000 of the total revenues was generated by the combined health and safety streams, showing the success of the diversification strategy.
SafetyMARK services saw revenues recover to finish above expectations at £82,000. For the latter part of the year, revenues were above previous years, and this strong demand continues.
Food safety consultancy has seen a return to pre-pandemic levels of demand. Recently, some clients have increased the level of service required because of the upturn in fortunes for the wider hospitality sector.
PHSC plc
- 2022: net loss of £409,200 before management charges, exceptional costs, interest and dividends received
- 2021: net loss of £382,400 before management charges, exceptional costs, interest and dividends received
The Company incurs costs on behalf of the Group and does not generate any income; the costs relate to running an AIM quoted Group. The 7% increase in the net loss is due to the reduction in CJRS funding from £45,300 in 2020-21 to £3,700 in 2021-22.
PRINCIPAL RISKS AND UNCERTAINTIES
Pandemic
The financial impact of the coronavirus pandemic eased in the second half of the financial year with business activity starting to return to pre-pandemic levels. Inevitably, there are legacy impacts in particular on the high street where consumers’ shopping habits have shifted towards on-line ordering, and this is a concern to the security division where retail outlets form a significant part of its customer base. Conversely, the systems and safety divisions are experiencing a rebound in activity as clients catch up on projects that were deferred or cancelled in the previous year. The Group’s ability to deliver services remotely as an alternative to a face-to-face offering is more appealing to some customers and this alternative continues to be offered where appropriate.
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 Systems Division and is exploring non-regulatory areas of environmental work to add to the current portfolio of services.
The Group’s Security Division works almost exclusively in the retail sector, and this has continued to suffer as a result of weak consumer demand on the high street and the move towards on-line purchasing which accelerated during the COVID-19 pandemic. Any further material deterioration in the retail sector and specifically in B2BSG’s client base would have a significant negative effect on the Company’s and hence the Group’s prospects. To mitigate any future negative effects, the Group has written off the investment value of its Security Division and has made a significant financial provision against the value of stock held in its warehouse.
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. The Aylesford based businesses (PHSC plc, PHSCL, ISL) have obtained certification to Cyber Essentials standard and all staff across the Group have participated in on-line training to reduce the risk of falling victim to phishing and other such scams. All head office data is backed up to the Cloud and removeable hard drives attached to the physical server are rotated on a daily basis.
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 managing director of each subsidiary company, which forms the basis of the Group’s strategic plan. The board requires that the plans include financial forecasts, KPIs, marketing strategy and an analysis of strengths, weaknesses, opportunities, and threats. Subsidiary directors, via the Group’s 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 its 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 escalated 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. A review has been conducted to identify any gender-related pay anomalies across the Group and found there to be no such anomalies.
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 Group’s supply chains and can be viewed on our website (www.phsc.plc.uk).
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. This policy is also available on our website.
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, interaction via various social media platforms (Twitter, LinkedIn and Facebook) and regular client meetings. An ongoing dialogue is held electronically, with most clients subscribing to email updates that are sent out periodically.
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 our website. 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 requires the directors to consider the appropriateness of the going concern basis when preparing the financial statements. Cash reserves ended the year at a high level despite the completion of two successful share buybacks requiring total funding (including costs) of £644,700 in the year ended March 2022. The board is satisfied that such reserves, along with the Group’s cash-generative trading position and (unused) credit facility will ensure that there are sufficient resources to continue in operational existence for the foreseeable future. The directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
On behalf of the board, I must once again thank all our shareholders and employees for their ongoing loyalty and support. The board is grateful for the continuing spirit of teamwork and mutual support that is enabling the Group to move forward positively in the aftermath of the COVID-19 pandemic.
Stephen King
Group Chief Executive Officer
2 August 2022
GROUP STATEMENT OF FINANCIAL POSITION
as at 31 March 2022
Note | 31.3.22 £ | 31.3.21 £ | |||
| Non-Current Assets | |||||
| Property, plant and equipment | 5 | 490,138 | 529,413 | ||
| Goodwill | 6 | 2,235,045 | 3,028,463 | ||
| Deferred tax asset | 14 | 15,591 | 2,017 | ||
| 2,740,774 | 3,559,893 |
| Current Assets | |||||
| Stock | 8 | 185,685 | 259,760 | ||
| Trade and other receivables | 7 | 726,378 | 590,128 | ||
| Cash and cash equivalents | 9 | 649,363 | 1,237,483 | ||
| 1,561,426 | 2,087,371 |
| Total Assets | 4,302,200 | 5,647,264 |
| Current Liabilities | |||||
| Trade and other payables | 11 | 617,077 | 518,245 | ||
| Right of use lease liabilities | 13 | 30,632 | 31,856 | ||
| Current corporation tax payable | 55,112 | 88,011 | |||
| 702,821 | 638,112 |
| Non-Current Liabilities | |||||
| Right of use lease liabilities | 13 | 24,184 | 38,865 | ||
| Deferred tax liabilities | 14 | 61,842 | 50,988 | ||
| 86,026 | 89,853 |
| Total Liabilities | 788,847 | 727,965 |
| Net Assets | 3,513,353 | 4,919,299 |
| Capital and reserves attributable to equity holders of the Group | |||||
| Called up share capital | 10 | 1,467,726 | 1,467,726 | ||
| Share premium account | 10 | 1,916,017 | 1,916,017 | ||
| Capital redemption reserve | 143,628 | 143,628 | |||
| Merger relief reserve | 133,836 | 133,836 | |||
| Treasury shares | (644,738) | - | |||
| Retained earnings | 496,884 | 1,258,092 | |||
| 3,513,353 | 4,919,299 | ||||
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
Note | 31.3.22 £ | 31.3.21 £ | |||
| Continuing operations: | |||||
| Revenue | 3,570,626 | 3,289,462 | |||
| Cost of sales | 15 | (1,938,870) | (1,764,915) | ||
| Gross profit | 1,631,756 | 1,524,547 | |||
| Administrative expenses | 15 | (1,446,051) | (1,528,160) | ||
| Goodwill impairment | 6 | (793,418) | (250,000) | ||
| Government grants | 16 | 29,527 | 441,125 | ||
| Other income | - | 1,477 | |||
| (Loss)/profit from operations | (578,186) | 188,989 | |||
| Finance income | 19 | 388 | 999 | ||
| (Loss)/profit before taxation | (577,798) | 189,988 | |||
| Corporation tax expense | 20 | (53,205) | (102,241) | ||
| (Loss)/profit for the year after tax attributable to owners | |||||
| of the parent | (631,003) | 87,747 | |||
| Other comprehensive income | - | - | |||
| Total comprehensive (loss)/income attributable to owners | |||||
| of the parent | (631,003) | 87,747 | |||
| Basic and diluted (loss)/earnings per share from continuing operations | 21 | (4.76)p | 0.60p | ||
PHSC PLC
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Share Capital £ | Share Premium £ | Merger Relief Reserve £ | Capital Redemption Reserve £ | Treasury Shares £ | Retained Earnings £ | Total £ |
| Balance at 1 April 2020 | 1,467,726 | 1,916,017 | 133,836 | 143,628 | - | 1,317,117 | 4,978,324 |
| Profit for year attributable to equity holders | - | - | - | - | - | 87,747 | 87,747 |
| Dividends | - | - | - | - | - | (146,772) | (146,772) |
| Balance at 31 March 2021 | 1,467,726 | 1,916,017 | 133,836 | 143,628 | - | 1,258,092 | 4,919,299 |
| Balance at 1 April 2021 | 1,467,726 | 1,916,017 | 133,836 | 143,628 | - | 1,258,092 | 4,919,299 |
| Loss for year attributable to equity holders | - | - | - | - | - | (631,003) | (631,003) |
| Dividends | - | - | - | - | - | (130,205) | (130,205) |
| Purchase of own shares | - | - | - | - | (644,738) | - | (644,738) |
| Balance at 31 March 2022 | 1,467,726 | 1,916,017 | 133,836 | 143,628 | (644,738) | 496,884 | 3,513,353 |
PHSC PLC
GROUP STATEMENT OF CASH FLOWS
for the year ended 31 March 2022
Note | 31.3.22 £ | 31.3.21 £ | |||
| Cash flows from operating activities: | |||||
| Cash generated from operations | I | 313,530 | 702,188 | ||
| Tax paid | (89,213) | (37,183) | |||
| Net cash generated from operating activities | 224,317 | 665,005 | |||
| Cash flows used in investing activities | |||||
| Purchase of property, plant and equipment | (22,117) | (8,739) | |||
| Proceeds from disposal of fixed assets | 140 | 4,333 | |||
| Interest received | 388 | 999 | |||
| Net cash used in investing activities | (21,589) | (3,407) | |||
| Cash flows used in financing activities | |||||
| Payment of lease liabilities | (15,905) | (33,262) | |||
| Purchase of own shares | (644,738) | - | |||
| Dividends paid to shareholders | (130,205) | (146,772) | |||
| Net cash used in financing activities | (790,848) | (180,034) | |||
| Net (decrease)/increase in cash and cash equivalents | (588,120) | 481,564 | |||
| Cash and cash equivalents at beginning of year | 1,237,483 | 755,919 | |||
| Cash and cash equivalents at end of year | 649,363 | 1,237,483 |
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 2022
| 31.3.22 £ | 31.3.21 £ | ||||
| I. CASH GENERATED FROM OPERATIONS | |||||
| (Loss)/profit from operations | (577,798) | 188,989 | |||
| Depreciation charge | 58,812 | 65,619 | |||
| Goodwill impairment | 793,418 | 250,000 | |||
| Loss on sale of fixed assets | 2,441 | 1,913 | |||
| Decrease in stock | 74,075 | 4,541 | |||
| (Increase)/decrease in trade and other receivables | (136,250) | 295,819 | |||
| Increase/(decrease) in trade and other payables | 98,832 | (104,693) | |||
| Cash generated from operations | 313,530 | 702,188 |
Notes
The financial information set out above does not constitute the Group’s financial statements for the years ended 31 March 2022 or 31 March 2021 but is derived from those financial statements. Statutory financial statements for 2021 have been delivered to the Registrar of Companies and those for 2022 have been approved by the board and will be delivered after dispatch to shareholders. The auditors have reported on the 2021 and 2022 financial statements which carried unqualified audit reports, did not include any 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 compiled 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 the preparation of this announcement are consistent with those in the full financial statements.
Dividends
A total dividend of 1.0p per ordinary share (£146,772) was paid in respect of the year ended 31 March 2021; half was paid in February 2021 and the balance in October 2021. An interim dividend of 0.5p in respect of the financial year ended 31 March 2022 was paid in February 2022 and, subject to shareholder approval at the AGM, a final dividend of 0.5p will be payable on 14 October 2022 to shareholders on the register on 30 September 2022, thereby matching the total of 1.0p paid last year.
