Interim Results

PHSC PLC                                             Interim Report 2006

CHAIRMAN'S STATEMENT
for the six months ended 30 September 2006

Financial Highlights

-        Group   turnover  (consolidated)  for  the  period  is  £2.102m  compared  with  £1.465m  for  the   same
         period last year, representing an increase of over 40%.

-        Group  profit  before  tax  provision  is  £168,000 compared  with  £137,000  for  the  same  period  last
         year, which is an improvement of more than 20%.

-        Earnings  per  share  at  the  interim  stage are 1.02p compared with  0.79p  for  the  same  period  last
         year, a rise of almost 30%.

-        There  was  a  net  outflow  of  cash  as  a  consequence  of  dividends  paid  and  stage  payments  for
         acquisitions. Discounting those two elements, cash-flow was positive.

There continues to be an interchange of work between subsidiaries, with a number of personnel from each
Group company having the skills to undertake assignments on behalf of any other trading subsidiary.
Similarly, work awarded to one subsidiary may be carried out and invoiced by another member of the
Group.  This affords a high degree of flexibility and efficiency as it allows us to minimise the effects of
peaks and troughs in the workload.  However, it may also have a distorting effect on individual company
performance.

Corporate Review

Acquisitions and disposals
There have been no acquisitions in the period, although a number of prospects have been evaluated.

Heads of terms have recently been agreed with The Envex Company Limited, a health and safety consultancy
practice based in Berkshire.  In  the year ended 31 May 2006, Envex had revenues of £238,000 and a modest
pre-tax profit  of  £7,150. Acquisition  of  Envex  would  give  a Group presence to the west of London
and  would  complement  existing  Group locations to the south, north and east.

The initial consideration for Envex is agreed at £35,000 with further self-funded payments (ie out of profits that the
company generates) on the first and second anniversaries of completion of the purchase.

Following a strategic review, the Board has determined that the best interests of the Group would be served by
the company divesting  itself  of  its Health and Safety Click (HSC) subsidiary.  HSC was acquired in the full
knowledge  that further investment would be required to enable the company to reach its potential, and various
measures were taken to  try  and facilitate this. Whilst the HSC concept does remain an attractive one, the
Board are of the view  that PHSC  plc  should  concentrate its efforts on maximising shareholder value from
companies in the  sector  that are already sufficiently well established to be cash-generative. HSC is not
forecast to become profitable over the next two years and thus does not fit this model.

Working with HSC for approximately a year has given valuable insights into the ways that an internet-based provider can
deliver  a service, and the Board believes that a faster and more cost-effective route into this particular  market
can be achieved by developing web-based offerings through other Group subsidiaries.

Discussions have commenced with HSC's management with a view to them taking control of the company, and are planned
with a third  party  who have expressed an interest in acquiring the company.  Should matters be brought to a 
conclusion, there will be a positive effect on Group profitability and cash-flow.

Performance by Trading Subsidiaries
Profit figures for subsidiaries are stated before tax, management charges and amortisation of goodwill on consolidation.

Personnel Health and Safety Consultants Limited
Invoiced sales of £514,295 yielding a profit of £210,602 (the figures for the same period last year were £625,000 and
£179,000).

RSA Environmental Health Limited
Invoiced sales of £445,866 yielding a profit of £29,526 (the figures for the same period last year were £337,000 and
£45,500).

Adamson's Laboratory Services Limited
Invoiced sales of £1,099,216 yielding a profit of £190,069. There is no direct comparison with the same period
last year, as the company was acquired in June 2005.

Health & Safety Click Limited
Invoiced sales of £43,356 resulting in a loss of £26,031. There is no direct comparison with the same period
last year, as the company was acquired in August 2005.

Dividend
The Board is not recommending payment of an interim dividend, but expects to propose an appropriate final dividend
at the end of the year.

Prospects
It is traditionally the case that demand for the Group's services is higher in the second half of the year. 
This trend is set to continue with order books already full until the end of December. There is no reason
to doubt that this will flow through into significant improvements in profitability levels in the second
half of the year.

Profitability would also be enhanced as a consequence of replacing HSC with Envex, as outlined above, in the  Group
portfolio.

Stephen King - Chairman and Managing Director

PHSC plc                                                                                               Interim Report
                                                                                                                 2006

Group profit and loss account                                        Six months      Six months                  Year
                                                                          ended           ended                 ended
                                                                     30 Sept 06      30 Sept 05             31 Mar 06
                                                                      Unaudited       Unaudited               Audited
                                                                          £'000           £'000                 £'000
Turnover                                                                                              

Continuing operations                                                     2,103             963                 2,013
Acquisitions                                                                  0             502                 1,692
                                                                          2,103           1,465                 3,705

Cost of sales                                                                                         

Continuing operations                                                     1,085             475                 1,010
Acquisitions                                                                  0             278                   784
                                                                          1,085             753                 1,794

Gross profit                                                              1,018             712                 1,911

Administrative expenses                                                   (841)           (608)               (1,516)
Other operating income                                                        1              30                    30
                                                                          (840)           (578)               (1,486)

Operating profit                                                                                      

Continuing operations                                                       178             164                   258
Acquisitions                                                                  0            (30)                   166
                                                                            178             134                   424

Interest receivable                                                           5              12                    21
Interest payable                                                           (15)             (9)                  (34)

Profit on ordinary activities before taxation                               168             137                   411

Tax charge on profit on ordinary activities                                (68)            (63)                 (163)

Profit for the period                                                       100              74                   248

Dividends                                                                  (74)               0                     0

Retained profit for the period                                               26              74                   248

Earnings per ordinary share                                               1.02p           0.79p                 2.60p
Diluted earnings per ordinary share                                       1.00p           0.78p                 2.56p

Group balance sheet                                                  30 Sept 06      30 Sept 05        31 Mar 06
                                                                      Unaudited       Unaudited          Audited
                                                                          £'000           £'000            £'000
Fixed assets                                                                                         
Intangible assets                                                         2,223           2,383            2,280
Tangible assets                                                             700             736              720

Total fixed assets                                                        2,923           3,119            3,000

Current assets                                                                                       
Stocks                                                                      376             105              297
Debtors                                                                     786             809              689
Cash at bank and in hand                                                    319             648              487
                                                                          1,481           1,562            1,473

Creditors:                                                                                           
Amounts falling due within one year                                       (810)         (1,097)            (751)

Net current assets                                                          671             465              722

Total assets less current liabilities                                     3,594           3,584            3,722

Creditors:                                                                                           
Amounts falling due after more than one year                              (270)           (468)            (417)

Provisions for liabilities and charges:                                                              
Deferred taxation                                                          (13)            (13)             (13)

Net assets                                                                3,311           3,103            3,292

Capital and reserves                                                                                 
Called up share capital                                                     981             983              983
Share premium accounts                                                      722             728              728
Revaluation reserve                                                         205             194              205
Profit and loss account                                                   1,403           1,198            1,376

Total equity shareholders' funds                                          3,311           3,103            3,292

Group cash flow statement                                       Six months       Six months             Year
                                                                     ended            ended            ended
                                                                30 Sept 06       30 Sept 05        31 Mar 06
                                                                 Unaudited        Unaudited          Audited
                                                                     £'000            £'000            £'000

Net cash (outflow)/inflow from operating activities                    102             (74)              631
Returns on investments and servicing of finance                       (10)                3             (13)
Taxation                                                                 0               87            (222)
Capital expenditure                                                   (16)              (4)              (2)
Acquisitions                                                         (125)          (1,291)          (1,345)
Equity dividends paid                                                 (63)                -                -
Net cash (outflow)/inflow before financing                           (112)          (1,279)            (951)
Financing                                                             (56)            1,119              630
(Decrease)/increase in cash in period                                (168)            (160)            (321)

Reconciliation of net cash flow to movement in net funds                                         
(Decrease)/increase in cash in the period                            (168)            (160)            (321)
Cash (inflow)/outflow from (increase)/decrease in  debt                 48            (442)            (286)
Loans acquired with subsidiaries                                         -            (189)            (124)
Change in net debt resulting from cash flows                         (120)            (791)            (731)
Net funds at beginning of period                                        75              806              806
Net funds at end of period                                            (45)               15               75

Reconciliation of operating profit to operating cash flow                                        
Operating profit/(loss)                                                178              134              425
Depreciation/amortisation                                               90               79              216
Loss on disposal fixed assets                                            3                1                1
(Increase)/decrease in stock and WIP                                  (80)            (106)             (95)
(Increase)/decrease in debtors                                        (97)              177               92
Increase/(decrease) in creditors                                         8            (359)              (8)
Net cash (outflow)/inflow from operating activities                    102             (74)              631

PHSC plc