Currently have no position but a very bullish trading update on Tuesday has so far gone virtually unrewarded and I am considering a small purchase. It is a very fragemented sector and PHSC has a good chance to lead the consolidation and thereby expand rapidly.

A read of the update - extracts below - should give those unfamiliar a flavour of what the company is all about, they provide safety advice to a wide range of blue chip customers, particularly regarding asbestos, but many other areas too. trading is traditionally strong at this time of year, says the company, as local authorities spend a lot of money in this quarter. Among their clients are Mercedes, Lee Cooper, Pilkington, Reuters and Virgin.

Worth a read if you are interested in this sort of area. As far as I know PHSC is the first specialist quoted company in this field and this is a strong trading statement indeed. it's quite illiquid and it should be noted the first half eps was heavily impacted by the cost of AIM admission, so this half should be much better.

"PHSC plc, the provider of health, safety and environmental services to
corporate and public sector clients, is pleased to announce that trading in the
third quarter of the current financial year fully met internal expectations and
that management anticipate a similar performance in the fourth quarter. The
Group currently have a record order book and continue to win new contracts. In
particular, the recently acquired Adamson's Laboratory Services Limited now has
a forward order book that approaches 3million.

Management accounts have now been completed for the third quarter of the
Group's trading year, covering the months of October, November and December
2005.

The monthly average of sales in the third quarter was 20% higher than the
monthly average sales achieved during the first half of the year which led to
trading profits in the third quarter being 60% above the average for the
previous two quarters.

Sales for the first three quarters of the current financial year were 2.9m and
the Group expects to be close to the top end of its internal target range of
3.8m to 4m of sales for the full year. Profits before plc charges and tax
currently stand at 456,000. Plc charges are 95,000 in the year to date.

It should be noted that the acquisition of Adamson's Laboratory Services
Limited ("ALS") was completed in mid-June, thus approximately 400,000 of ALS
sales will not be included in the Group's year-end profit and loss account.
This will, however, have a relatively small effect overall as only 25,000 of
profit arose from those sales.

Prospects for wholly-owned subsidiaries:

Personnel Health & Safety Consultants Limited ("PHSCL")

The company recently announced that it had been awarded an improved contract
with the Go-Ahead Group plc, valued at a minimum of 345,000 over three years.

Subscriptions to the company's safety advisor service continue to provide a
regular income, with 150,000 of subscriptions due in the last quarter of the
financial year. The company is leading a group-wide initiative to promote this
service through the use of a professional marketing organisation.

RSA Environmental Health Limited ("RSA")

The last part of the financial year is traditionally the busiest and most
lucrative for RSA. Most of the company's work is for local authorities for whom
31 March is a significant date by which certain performance and budgetary
targets must be achieved.

ALS

The company now has a forward order book which is approaching 3m, which is the
highest in the company's history. This includes substantial ongoing contracts
with local authorities, property management companies, the leisure sector,
housing associations, universities and other institutions. The demand for
asbestos management services continues to increase and the company is working
to full capacity over the last quarter of the financial year. New accounting
disciplines have been introduced and this will lead to the cessation of a
factoring arrangement in February, with a saving of 3,000 per month.

Health and Safety Click Limited ("HSCL")
This company was acquired for its future potential and a loss in the financial
year was anticipated. Management are predicting improvement in sales over the
coming months, and a narrowing of losses.........."

Happy to hold this one for the long term.

I think we might see a lower eps this year, but then a very large rise next year.

Have been going through these over the weekend in more detail and still like what I see. There are caveats in that acquisitions have been paid for in a mix of new shares and cash, and this from the interims is significant:

'The total cost of the transition to AIM, including costs in respect of the
share issue was 185,000, which has been set against the share premium account.
This has of course resulted in a corresponding reduction in net assets.

Financial Review

There was considerable expenditure associated with the acquisitions and
corporate activity that took place in the period. Whilst the costs have now
been accounted for, it is too early to have enjoyed the benefits.
Group turnover (consolidated) for the period is 1.465m (compared with 0.976m
for the same period last year). Group profit before tax provision is 137,000.
Earnings per share (diluted) at the interim stage are 0.79p.'

Also the number of shares now in issue is just under 10 million, up from the average figure quoted in the interims. 125,000 in cash is due on 17th June 2006, with a further 100,000 in a year's time and the 5% extra on the excess turnover is payable.

All that taken into account I think the company is now in an incredibly strong posiiton following two strong trading updates recently and the fact not only ar the acquisitions paid for, they are now at the point of 'contribution' to profits.

In turn that will lead to a stronger eps particularly next year and leave the company in a good position to make further acquisitions in a very disparate sector where consolidation should be easy - and they remain the only quoted specialist company in the health and safety sector.

In short, the shares will never set the world on fire, but if we are to have market volatility or a downturn, this share looks pretty bomb-proof in that (sometimes silly) legislation will contine to mean this is one area companies cutting back will not be able to avoid paying for. PHSC has a very strong blue-chip client list.

No position (had one on Ofex at one time) but tempted to take one in this really nice business, despite the illiquidity.

http://www.phsc.co.uk/

Bought 10k shares this morning, this company has delivered two cracking trading statements to the market this year and received no credit whatever.
Defensive qualities and niche play.
Nice company!

Why I'm buying into PHSC. A bit more detail.

I have been building what I hope is a long term growth stake now in this tiny company. It does not need explanation that Public Health and Safety is a massive growth area. Also the AIM listed company is the only entirely specialist quoted one on the market.

There are 11.6 million shares in issue, and the market cap is just over 5 million. Dilution is under 2%. Shares are fairly illiquid online. Consultancy busineses are often highly dependent on 'luxury' services, but Health and Safety provides, of course, no such concern.

In themselves, the last results were positive enough:
pre-tax profits (net of goodwill) up from 411,000 to 634,000
- Earnings per share rise from 2.6p to 3.67p
- Group revenues increased to 4.65m from 3.70m
- Proposed dividend raised to 0.80p per Ordinary Share (2006: 0.75p)
- One subsidiary acquired and another disposed of in the period.

The company has divisions giving consultancy advice in areas ranging from factory personnel, asbestos guidance and environmental health and since results has made an acquisition in the Food Safety and Hygiene Areas.

they are currently advertising jobs well outside their heartland in Scotland,Yorkshire,Northampton,Cheshire,Cumbria for a range of posts that include:

Anti-Social behaviour complaints
Inpecting rental Properties
Food heath and safety inspections
Environmental Protection
Heath and Safety audits at council waste sites.

There are lots of profitable little companies (unquoted) doing single areas of Health and Safety Care, and the company has literally dozens of potential acquisitions identified and to choose from. For such a small company It is indeed an enviable position to be in.

There's around 1.4 million of cash on the balance sheet.

Things have got even better since results.

A trading statement last month revealed:
The directors of PHSC are pleased to announce that group revenues for the four months to 31 July
2007 are up 16% compared to the same period of last year at 1,668,413 (1,441,231). This has flowed
through to enable the group to produce a pre-tax profit for the four months to 31 July 2007 of
254,906 (prior to amortisation of goodwill). This compares to 145,027 for the same period of last
year and is an improvement of 76%.

In announcing the latest figures, Stephen King, managing director of PHSC, said: "The board is
delighted with trading performance in the year to date. Our decision to dispose of a loss-making
subsidiary toward the end of the last financial year has had a positive impact on profits, but the
majority of the increase arises from improvement in revenues and margins elsewhere in the Group.
The proposed addition of In House The Hygiene Management Company Limited, announced last week,
will serve to further enhance profitability in the second half of this year."

On her first day in office the Health and Safety Commissions (HSC) new Chair, Judith Hackitt CBE, has called for more board level engagement and ownership on health and safety issues.

With the latest figures showing 241 workplace fatalities, 146,000 serious injuries and two million reported cases of work-related ill-health, there is no room for complacency. More needs to be done in addressing the enormous challenges of improving health and safety in our workplaces. To improve our safety record we need strong and committed boardroom leadership that focuses on real causes of harm in the workplace and not trivia.

In summary, the company is on course to grow profits to close to 5p this year, and beyond the progress should continue. A dividend of close to 1p might not excite, but for a company of this market cap of 5million, any dividend tends to be a bonus, and debt is low. There will be goodwill write-downs but with the the underlying business growing sao quickly now, organically and by acquisition, that is not a concern imho.

The 45p share price is almost an all time low, yet the company is achieving as never before.

Maybe it started AIM life slightly overvalued at 80p on what it had then achieved, but the balance has swung to leave a risk/reward loaded in investors favour to an almost ridiculous degree. I can see 5p this year and 7p+ next, my personal price target is back to 80p in this financial year, giving a p/e of 16, rising to 130p through 2008 on a similar p/e. From a company turning over 37k in the early 1990s management has built the company to this level.

Management: PHSC is led by co-founder, Stephen King. With 20 years experience in health and safety management, having qualified in 1985, King is at the top of his field and knows the industry inside out. As head of occupational health at News International, King led a team of practitioners responsible for the well-being of over 4,000 staff. In 1990, he joined Reuters plc as UK Health and Safety Manager. He left employment with Reuters plc in 1992 and continued to service their health and safety requirements through PHSC. Having engineered seven acquisitions to date following the introduction of PHSC shares to OFEX and now AIM, King has proved himself to be a shrewd entrepreneur.

Nicola Coote was King's co-founding partner. After an administrative role in health and safety with News International, she moved to Reuters plc in 1990, and qualified as a health and safety practitioner in 1991. She left their employment in 1992 and together with Stephen King, continued to service their health and safety requirements through PHSC.

A great tuckaway in my view. So reminiscent of Asfare from last year.

Useful link here, Adamson's in a huge growth aarea - sad though the awful consequences are of Asbestos. Adamson's is providing an absolutely vital service. There's a useful link here but can anyone tell me why my links on this site never come up as 'live' links? -:(
http://www.hse.gov.uk/asbestos/index.htm

Nice move today; starting to play catch up? Still a long way to run though.

http://www.gwtltd.com/index.html

"a significant moment in the
development of the Group.
With both companies
currently trading ahead of last year's performance, the board is confident that this acquisition
represents extremely good value for our investors. With no dilution to existing shareholdings, there will
inevitably be an enhancement to earnings per share.

PHSC PLC ("the Company")

Heads of Agreement signed for acquisition

PHSC is pleased to announce that it has signed Heads of Agreement in respect of the acquisition by
PHSC plc of Guardian Water Treatment Limited ("Guardian").

Guardian is an air and water hygiene specialist, was established in 2000 and operates from its base in
Essex.

Air hygiene services include surveys, mechanical cleaning, biocidal disinfection, ductwork and kitchen
extract cleaning, and air quality monitoring. Water hygiene activities include a full range of
Legionella risk assessment and controls such as tank disinfection and cleaning, a full range of water
treatment services, and the supply of associated chemicals.

Turnover of Guardian for the year to 31 March 2007 was 2.1m, which generated pre-tax profits of
263,000.

Subject to agreement of all parties and satisfactory conclusion of due diligence by PHSC, completion
is scheduled for the third quarter of PHSC's accounting period ie the period ending 31 December 2007.

After a suitable handover period on terms to be agreed, the present Managing Director, Mark Hobson,
will leave the company and it is envisaged that Guardian will continue to be run by the existing
senior management team.

The maximum purchase price is 2.15m .

Stephen King, Managing Director of PHSC plc, said of the acquisition:

Guardian represents our largest acquisition to date, and the board sees it a significant moment in the
development of the Group. Results in the year to 31 March 2007 give combined turnover and profit
figures, before tax and exceptional items, of around 6.7m and 900k respectively. With both companies
currently trading ahead of last year's performance, the board is confident that this acquisition
represents extremely good value for our investors. Note that the consideration is planned to be funded
entirely from existing cash and future revenue. With no dilution to existing shareholdings, there will
inevitably be an enhancement to earnings per share.

From all time low last month to 12 month high on Friday, albeit in a narrowish range; with more news on the two acquisitions to come and interims next month on the back of that fine Trading Statement, I think the trend reversal is now established and the shares should be primed for a fine run through 2008.