Deep Value Investing Appendix PDF

Deep
Value
Investing
Appendix: Company Releases
Jeroen Bos
Finding bargain shares
with big potential
Welcome
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ELCOME TO THE free Appendix to Jeroen Bos’s Deep Value Investing.
Here you’ll find every results statement used by Jeroen to devise his
investments as discussed at length in Deep Value Investing – including the
270% profit gained with Barratt Developments, the 182% gained with Spring
Group and the 196% with ArmorGroup.
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get the most out of it – but for anyone who wants to go deeper with a master
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Harriman House, 2013
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5/24/13
Spring Group PLC
Final Results
Spring Group PLC
28 February 2008
28 February 2008
Preliminary Announcement 2007
Spring continues strong growth in profit and net fee income
Glotel successfully integrated
Spring Group plc ('Spring'), the technology staffing and workforce management
company, announces its audited results for the year ended 31 December 2007.
FINANCIAL HIGHLIGHTS
• Revenues of £432.8 million (2006: £407.3 million)

• Net fee income (Gross profit) up 22.7% to £56.1 million (2006: £45.8
million)
• Gross margin percentage up 180 basis points to 13.0% from 11.2%
• Profit before taxation up 31.2% to £7.1 million (2006: £5.4 million)
• Basic earnings per share up 22.1% to 3.76 pence (2006: 3.08 pence)
• Final dividend of 0.2 pence (2006: 0.2 pence)
• Cash inflow from operating activities of £19.9 million (2006: cash
inflow of £14.0 million)
• Group net cash, total cash less bank loans, of £35.0 million after
acquisition cash outflow of £30.8 million (2006: £46.9 million)
• Total assets £158.3 million (2006: £139.5 million)
STRATEGIC AND OPERATIONAL HIGHLIGHTS
• 2007 goals realised - strategic plan ahead of schedule

• New management team appointed to run core businesses
• All divisions record increase in both revenues and profits
• Business successfully restructured into 3 divisions
• Significant growth in sales capability with over 250 net new sales
staff
• Geographic expansion with offices established in USA, Mainland Europe
and Asia Pacific
• Additional openings planned for Europe and Asia Pacific in 2008
• Glotel plc successfully integrated and trading ahead of expectations
Peter Searle, Chief Executive Officer, commented:
'During 2007 we achieved a robust financial performance whilst putting

in place both the strategy and management team required to deliver a sustainable
improvement in performance.
'With the Group increasingly diversified by both geography and market

segment and a strong business in temporary/contract staffing, we believe that
Spring is well placed with its healthy balance sheet and solid trading to enjoy
further growth both organically and by acquisition.
'2008 has started as 2007 finished, with continuing improvement in key

performance indicators for all of our businesses. With many of our new staff
still to reach full productivity and with our ambitious growth plans, we are
confident that we can continue to deliver sustainable, profitable growth.'
For further information:
Peter Searle, Chief Executive Officer, Spring Group plc 0207 356 0701
Peter Darraugh, Chief Financial Officer, Spring Group plc
Ben Atwell/Susan Quigley, Financial Dynamics 0207 831 3113
Adrian Hadden, Managing Director, Collins Stewart 0207 523 8353
Information on Spring can be found on www.spring.com
Chairman's Statement
I am pleased to report that 2007 saw a further improvement in the performance of

the Group. During the course of the year, the Group has restructured its core
operations; strengthened its management team with experienced senior staff to
run each of the key operating divisions; delivered further improvements to
efficiency of its support operations; and accelerated the growth strategy both
organically by increasing the number of sales consultants; and by acquisition
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through the purchase of the Glotel business.
The culture of the Company has changed. We have focussed our people on
delivering excellent service to our candidates and clients. We have endeavoured
to recruit the best people by providing an environment of high reward,
recognition and motivation. We believe we will retain and develop these staff to
put us in a position where we can outshine the competition. This policy has
created a workplace that whilst challenging and competitive is also a fun and
rewarding place to work. We believe our company provides opportunities for our
staff to fulfil their ambitions by providing a structured career in which they
can grow and develop their talents.
Our management team are highly motivated and ambitious to further grow our
organisation both organically and through selective acquisitions. The last
twelve months have laid down an extremely strong platform to enable these goals
to be realised.
Our results for 2007 reflect the successful execution of our plans and the
consequent continued improvement in the financial health of the Group. Revenues
increased 6.3% to £432.8 million, but the more relevant measure of volume in our
business, net fee income, improved by 22.7% to £56.1 million. Pre-tax profits
were £7.1 million, an improvement of 31.2% compared to the prior year, with
basic earnings per share of 3.76p, up 22.1% on 2006.
The Group's balance sheet remains healthy with total assets of £158.3
million, compared with £139.5 million at 31 December 2006. Closing net cash at
the year end was £35.0 million compared with £46.9 million last year, reflecting
the £30.8 million cash outflow for the Glotel business and continued strong cash
generation from the underlying business.
We announced the successful completion of the acquisition of Glotel plc in July

and the integration of the Glotel business was completed during the second half
of the year. Since acquisition, the Glotel business has been trading ahead of
our expectations and the Board expects this acquisition to be earnings enhancing
in 2008.
Whilst market commentators have mixed views on the prospects for the recruitment
sector in 2008, our business is, so far this year, trading in line with our
expectations. We will continue to review opportunities to grow our company by
looking at new markets and possible acquisitions, but we remain determined to
invest wisely in and continue to build the business for the benefit of our
shareholders. The Group is well placed to make further progress in 2008.
Spring Staff
The continued progress shown by the Group in 2007 is a function of the efforts
from all of the staff throughout the Group. I would like to extend the
appreciation of the Board and shareholders to the staff at Spring and to thank
them for their dedication to the Group and to all of our clients and candidates.
Annual General Meeting
Our AGM will be held on 8 May 2008 and I look forward to welcoming shareholders
there.
Amir Eilon
Chairman
27 February 2008
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
2007 saw the continuing successful implementation of the strategy that has
returned the Group to sustainable growth and profitability. We have seen
increases in revenue, net fee income and profitability driven by greater
productivity, higher margin business and significantly greater efficiencies and
automation in running our back office.
In July we successfully completed the acquisition of Glotel plc. This

accelerated our strategy and has significantly enhanced our geographic spread,
with businesses in Europe, eleven locations in North America and two in
Australia. During the second half of 2007 we completed the integration of the
businesses with the integration of the UK back office functions completed ahead
of schedule in early October.
Since the acquisition of Glotel all parts of the acquired business have made a
positive contribution to our results in the year and we anticipate further
progress in 2008 together with a full year's benefit from the
integration synergies arising from the combination of the two businesses.
Strategic Update
In line with our strategy the Group is now split into 3 clear business
divisions; Managed Solutions, Professional Staffing and General Staffing, which
also incorporates our engineering staffing business. These business units now
all have strong leadership teams in place on a global basis.
Our plans to increase our permanent business have proved relatively successful
with net fee income growing by £2 million to £12.3 million (2006: £10.3 million)
representing approximately 22% of the Group's total net fee income. However, we
are still predominantly a contract/temporary based organisation and this less
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volatile revenue stream puts us in good stead to withstand market turbulence
throughout the economic cycle.
Geographically our business has also expanded rapidly and this overseas
expansion into new markets, though requiring initial investment in 2007, is now
generating a positive return for the Group. Our new US and Asia Pacific
businesses which, with mainland Europe, now account for over 20% of our net fee
income on a run rate basis. We have 4 offices in mainland Europe, Germany,
Belgium and two in Italy with further overseas office openings planned in
Singapore, Hong Kong and Delhi during 2008. We will of course continue to
consider new office openings in existing territories where appropriate to
continue to drive growth and gain market share.
During the course of 2007 we also grew our sales capacity, increasing the
revenue generating headcount by more than 250 net staff. This was accomplished
through the acquisition of Glotel and organically through our central recruiting
and training functions. This central team will enable us to continue to invest
in and expand our sales capacity further through 2008.
Operating Review
The results for 2007 show a strong improvement in each of the primary financial
performance measures compared with 2006. The Group reversed the volume decline
experienced in earlier years and recorded sequential quarter on quarter growth
in revenue, net fee income and profit, throughout 2007. In the fourth quarter
of 2007 revenues increased by 34% to £126.9 million, net fee income increased by
45% to £17.1 million and profit before tax improved by 49% to £2.7 million over
the comparative fourth quarter of 2006.
Group Results
Revenue Operating profit

£million 2007 2006 2007 2006
Professional Staffing 227.4 226.5 6.0 5.6
Managed Solutions 153.1 140.2 3.3 2.7
General Staffing 54.6 49.6 0.6 (0.1)
Intercompany revenue (2.3) (9.0) - -
Central costs - - (4.0) (3.6)
Total 432.8 407.3 5.9 4.6
Professional Staffing
This division comprises the IT Contracting and Permanent Recruitment Services

businesses within the Group as well as the Glotel business acquired in the
second half of 2007.
The division reported a small increase in revenue from £226.5 million in 2006 to
£227.4 million in 2007 with the corresponding operating profit improving from
£5.6 million in 2006 to £6.0 million in 2007. The revenue movement is the net
effect of the Glotel acquisition, the switch to lower revenue, higher margin
accounts and investment in new brands, offset by the reduction in volumes as a
consequence of the Group's decision to exit a small number of high
volume but unprofitable accounts.
As with our other divisions, we have built a strong management team. A key focus
has been the drive to increase sales headcount, with this division absorbing the
majority of new sales hires as well as the business acquired from the Glotel
acquisition. In 2007 we established new sales teams in both the contract and
permanent recruitment divisions with each team specialising in a range of
technical disciplines, which should facilitate a greater focus on improving
further our gross margins.
During the year we have seen a significant increase in percentage margin and net
fee income due to improvements in the quality of business being secured. As new
sales staff recruited through 2007 become fully productive, coupled with
increases in productivity in our existing businesses we expect to see this trend
continue in 2008.
Managed Solutions
Our Managed Solutions division which consists of our Hyphen, RPO and IT
Solutions businesses has proven to be robust through 2007. As a result of
focusing on maximising revenues from those clients with whom we have some of our
strongest relationships we grew revenues by 9.2% from £140.2 million in 2006 to
£153.1 million in 2007. As the quality and terms of this business has improved
so has operating profit improving by 22.2% from £2.7 million in 2006 to £3.3
million in 2007.
Investment has been made throughout 2007 in new corporate sales staff and
account directors with the aim of improving service levels and winning new
clients. Our resourcing capabilities have also become more effective and
efficient with the creation of the central resourcing pool.
The long term customer contracts, and the predominance of contract staff should
result in robust performance from this division throughout the economic cycle
and we anticipate that growth levels should continue.
General Staffing
During 2007 we grew revenues in this business by 10.0% from £49.6 million in
2006 to £54.6 million in 2007 and turned a £0.1 million loss in 2006 into a £0.6
million profit in 2007, whilst making investments in new offices, people and
brands.
This division has seen the opening of several new offices in 2007 to give
greater market coverage in both the Spring Personnel and Elizabeth Hunt brands.
Aligned to this has been a corresponding increase in headcount. Spring Direct
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has moved into the Engineering market with marked success and we will be
investing further in this business throughout 2008.
I am confident that as offices and staff become fully productive that we will
see further increases in revenue, net fee income and profit from this business
in 2008.
Improved Business Efficiency
During the year we established centralised corporate sales and bid teams
together with central resourcing units. These support the growth of our
businesses and will allow us to maximise on sales opportunities and give
customers both a high level of support as well as provide a central basis for
efficient candidate supply.
In order to implement best practice and to get maximum economies of scale we

have now completed the creation of our centralised Finance, Administration and
IT functions. As well as the obvious symbiotic benefits this offers we have the
capacity to absorb further volume in these functions with minimal increase in
our operating costs. We have also centralised our HR and Marketing functions,
which allows us to quickly support new brands in a co-ordinated corporate manner
and also to integrate any acquired companies efficiently.
Through the course of 2007 we have used these efficiency savings in the support
functions to help fund the investment in our front office sales capacity. By a
combination of both organic growth and acquisition we will exit 2007 with a net
increase of in excess of 250 additional sales staff worldwide compared to
December 2006.
Outlook 2008
During 2007 we achieved a robust financial performance whilst putting in place

both the strategy and management team required to deliver a sustainable
improvement in performance.
With the Group increasingly diversified by both geography and market segment and
a strong business in temporary/contract staffing, we believe that Spring is well
placed with its healthy balance sheet and solid trading to enjoy further growth
both organically and by acquisition.
2008 has started as 2007 finished with continuing improvement in key performance
indicators for all of our businesses. With many of our new staff still to reach
full productivity and with our ambitious growth plans, we are confident that we
can continue to deliver sustainable, profitable growth.
Peter Searle
Chief Executive Officer
27 February 2008
Income Statement
Revenue
In 2007 the Group generated revenues from continuing operations of £432.8

million (2006: £407.3 million), of which £48.1 million were generated from the
acquisition of Glotel.
Gross Profit (Net Fee Income)
The gross margin of the business continued to improve to 13.0% (2006: 11.2%),
with net fee income from operations up by £10.3 million to £56.1 million (2006:
£45.8 million). The net fee income of Glotel for the 5 months since acquisition
amounted to £8.3 million with a gross margin of 17.3% for the period. The
underlying gross margin for the business has improved from 11.2% in 2006 to
12.4% in 2007.
Operating Profit
Overall, the Group generated an operating profit of £5.9 million from continuing
operations, a £1.3 million improvement against the prior year (2006: £4.6
million). The 2007 result includes £0.5 million of non-recurring costs
associated with the integration of Glotel, and hence excluding these costs the
operating profit would have increased by £1.8 million to £6.4 million.
The acquisition of Glotel has contributed £1.2 million to operating profit for
the 5 months since acquisition. However, the overall contribution to the Group
profit before tax is less marked when interest that would have been earned on
the cash deposits utilised to acquire Glotel is considered. The lost interest
would amount to approximately £0.6 million.
Net Interest
The Group continues to focus on the management and improvement of working

capital. Over the course of the last three years the Group has made efforts to
improve its intra-month net cash position with the consequence of moving from
incurring interest expense of £0.6 million in 2004 to generating net interest
income of £1.2 million in 2007 (2006: £0.8 million). Such has been the Group's
success in improving working capital management that sufficient free cash was
generated to enable the Group to fund the acquisition of Glotel without recourse
to debt finance. On 24 July 2007 there was a £30.8 million cash outflow
associated with the acquisition of Glotel, and as a consequence, interest income
in the second half of 2007 was reduced. Interest income will also be down
during 2008 whilst this cash outflow associated with the acquisition is
replenished.
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Non-recurring Items
As mentioned above, in the Group's operating profit includes £0.5 million of

non-recurring costs associated with the integration of the support functions of
Glotel into Spring. There are no exceptional charges or discontinued businesses
in the income statement in 2007.
Taxation
The taxation charge for the year is £1.1 million and the effective rate is
15.8%, (2006: £0.6 million, effective rate 10.4%) reflecting the continuing
availability of UK trading losses. Going forward the effective rate will
continue to rise as UK trading losses are utilised and an increasing proportion
of the Group's profits will arise in overseas territories with higher
marginal rates of tax.
Earnings per Share and Dividend
Basic and diluted earnings per share were 3.76p and 3.74p per share
respectively, (2006: basic and diluted 3.08p). The weighted average number of
shares in issue in the year was 162,250,076 (2006: 160,890,853).
A final dividend of 0.2p (2006: 0.2p) has been proposed, which together with the
interim dividend of 0.1p (2006: 0.1p) makes the total dividend for the year 0.3p
(2006: 0.3p). The final dividend, which is subject to shareholder approval,
will be paid on 30 May 2008 to those shareholders on the register at 9 May 2008.
Balance Sheet
The Group had net assets of £83.1 million at 31 December 2007 (2006: £74.7
million) of which £39.7 million (2006: £51.2 million) is represented by cash.
The acquisition of Glotel has had a significant impact on our net assets and
cash balances during the year. Despite the net cash outflow of £30.8 million
associated with the acquisition of Glotel our year on year cash balance only
decreased by £11.5m, highlighting the continuing positive cash generation in the
business. The increase in net assets relates principally to the Glotel
acquisition and the profit generated in the year. Capital expenditure, totalled
£1.8 million (2006: £2.2 million). The main driver for our capital expenditure
relates to investments in IT systems and in particular the renewal of front and
back-office systems with other capital expenditure relating to the continued
refurbishment of the office portfolio.
During the course of 2007, further revisions to the Group's front office
and financial systems were completed. These changes, coupled with the
re-organisation of the Group's support functions into one single location in
Birmingham, provide the UK business with a scaleable business support model
Cashflow
During the year the Group generated a cashflow from operating activities of
£19.9 million (2006: £14.0 million). After the £30.8 million cash outflow
associated with the acquisition of Glotel net cash balances were £35.0 million
at 31 December 2007 (2006: £46.9 million).
Peter Darraugh
Group Finance Director
27 February 2008
Income Statement
Year ended Year ended

31 December 31 December
2007 2006
Note £000 £000
Revenue 3 432,826 407,301

Cost of sales (376,687) (361,545)
_________ _________
Gross profit 56,139 45,756
Selling and distribution expenses (24,971) (19,633)
Administrative costs (25,258) (21,502)
_________ _________
Operating profit 5,910 4,621
Finance income 1,396 943

Finance charges (248) (186)
_________ _________
Profit before taxation 7,058 5,378
Taxation (1,113) (559)
_________ _________
Profit for the year 5,945 4,819

_________ _________
Earnings per share 5

Basic earnings per share from continuing operations 3.76p 3.08p
Diluted earnings per share from continuing operations 3.74p 3.08p
Balance Sheet
Note 2007 2006
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£000 £000
Non current assets
Property, plant and equipment 2,579 2,077
Goodwill and intangible assets 26,306 13,565
Deferred tax asset 6,009 5,205
_________ _________
34,894 20,847
Current assets
Trade and other receivables 83,685 67,491
Financial assets 4 4
Cash and short term deposits 39,726 51,195
_________ _________
123,415 118,690
_________ _________
Total assets 158,309 139,537
_________ _________
Current liabilities
Trade and other payables 66,612 57,434
Financial liabilities 5,350 5,062
Income tax payable 946 28
Provisions 318 700
_________ _________
73,226 63,224
Non current liabilities

Financial liabilities 4 657
Provisions 492 655
Deferred tax liability 1,523 296
_________ _________
2,019 1,608
Total liabilities 75,245 64,832

_________ _________
Equity
Called up share capital 16,418 16,122
Share premium 16,335 14,574
Other reserves 4,804 4,325
Retained earnings 45,507 39,684
_________ _________
Total equity attributable to equity holders of Spring Group plc 83,064 74,705
_________ _________
Total equity and liabilities 158,309 139,537

_________ _________
Cash Flow Statement

2007 2006
Note £000 £000
Operating activities
Finance income (1,396) (943)
Finance expense 248 186
Loss/(profit) on sale of fixed assets 4 (4)
IFRS 2 share option charge 360 245
Depreciation, amortisation and impairment 2,098 1,427
Decrease in trade and other receivables 13,872 13,035
Decrease in trade and other liabilities (2,453) (4,375)
Decrease in provisions (580) (1,065)
_________ _________
Net cashflow from trading activities 19,211 13,884
Outflow relating to reorganisation and redundancy costs - (200)
Interest received 1,433 1,003
Interest paid (194) (89)
Tax paid (573) (570)
_________ _________
Net cash inflow from operating activities 19,877 14,028
Investing activities
Acquisition of a subsidiary including net overdraft acquired 4 (30,784) -
Purchases of property, plant and equipment (664) (785)
Purchases of intangible assets (1,117) (1,600)
Proceeds from sale of property, plant and equipment 2 28
_________ _________
Cash outflow from investing activities (32,563) (2,357)
Financing activities
Proceeds from issue of shares 2,057 181
New borrowings 4,695 4,315
Repayment of borrowings (4,940) (7,281)
Repayment of capital element of finance leases and hire purchase (31) (18)
contracts
Financing interest received 7 29
Financing interest paid (68) (93)
Equity dividends paid to shareholders (482) (469)
_________ _________
Cash inflow/(outflow) from financing activities 1,238 (3,336)
Exchange losses/(gains) on cash and cash equivalents (21) 7

_________ _________
Net (decrease)/increase in cash and cash equivalents (11,469) 8,342
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_________ _________
Cash and cash equivalents at beginning of year 51,195 42,853
Cash and cash equivalents at end of year 39,726 51,195
_________ _________
Notes to the accounts
Issued
capital Share premium
£000 £000
1 January 2006 16,068 14,447
Currency translation difference - -
Net loss on cash flow hedge - -
Net (expense) / income recognised directly in equity - -
Profit for the year - -
Total recognised (expense) / income for the year - -
Equity shares issued 54 127
Share based payments - -
Dividends paid - -
______ ______
31 December 2006 16,122 14,574
______ ______
1 January 2007 16,122 14,574

Currency translation difference - -
Net profit on cash flow hedge - -
Net income recognised directly in equity - -
Profit for the year - -
Total recognised income for the year - -
Equity shares issued 296 1,761
Share based payments - -
Dividends paid - -
______ ______
31 December 2007 16,418 16,335
(continued from table above)

Other reserves
Own shares held Net unrealised Foreign Merger reserve
in ESOP trust gains reserve currency
reserve
£000 £000 £000 £000
1 January 2006 (5,370) (8) (1) 9,765
Currency translation difference - - 19 -
Net loss on cash flow hedge - (80) - -
Net (expense) / income recognised directly in - (80) 19 -
equity
Profit for the year - - - -
Total recognised (expense) / income for the - (80) 19 -
year
Equity shares issued - - - -
Share based payments - - - -
Dividends paid - - - -
______ ______ ______ ______
31 December 2006 (5,370) (88) 18 9,765
______ ______ ______ ______
1 January 2007 (5,370) (88) 18 9,765

Currency translation difference - - 7 -
Net profit on cash flow hedge - 88 - -
Net income recognised directly in equity - 88 7 -
Profit for the year - - - -
Total recognised income for the year - 88 7 -
Equity shares issued - - - -
Share based payments - - - -
Dividends paid - - - -
______ ______ ______ ______
31 December 2007 (5,370) - 25 9,765
______ ______ ______ ______
Total other Retained Total

reserve earnings
£000 £000 £000
1 January 2006 4,386 35,089 69,990
Currency translation difference 19 19
Net loss on cash flow hedge (80) - (80)
Net (expense) / income recognised directly in equity (61) - (80)
Profit for the year - 4,819 4,819
Total recognised (expense) / income for the year (61) 4,819 4,758
Equity shares issued - - 181
Share based payments - 245 245
Dividends paid - (469) (469)
______ ______ ______

31 December 2006 4,325 39,684 74,705
______ ______ ______
1 January 2007 4,325 39,684 74,705

Currency translation difference 7 - 7
Net profit on cash flow hedge - - 88
Net income recognised directly in equity 95 - 95
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Profit for the year - 5,945 5,945
Total recognised income for the year 95 5,945 6,040
Equity shares issued - - 2,057
Share based payments - 360 360
Dividends paid - (482) (482)
______ ______ ______
31 December 2007 4,420 45,507 82,680
______ ______ ______
1) Corporate information
The principal activities of the Group are described in the Chairman's

Statement, Chief Executive Officer's review and the Group Finance Director's
report, contained within this announcement. The Group's financial statements of
Spring Group plc for the year ended 31 December 2007 were authorised for issue
by the board of directors on 27 February 2008 and the balance sheet was signed
on the board's behalf by Amir Eilon and Peter Darraugh. Spring Group plc is a
public limited company incorporated and domiciled in England & Wales. The
Company's ordinary shares are traded on the London Stock Exchange.
2) Basis of preparation
Spring Group plc prepares its financial statements on the basis of International
Financial Reporting Standards (IFRS) as adopted for use by the European Union
(EU). The financial information presented herein has been prepared in accordance
with the accounting policies used in preparing the financial statements for the
year ended 31 December 2007, which do not differ from those used for the
financial statements for the year ended 31 December 2006. The financial
information contained in this document does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information for
the year ended 31 December 2007 has been extracted from the financial statements
of Spring Group plc which will be delivered to the Registrar of Companies in due
course. The auditors have issued an unqualified opinion on the Group's financial
statements for the year ended 31 December 2006, which have been filed with the
Registrar of Companies.
3) Segmental information
a) Business segments
The Group considers there to be two business segments - Professional

Staffing and General Staffing. Professional Staffing is split into two
divisions, Professional Staffing and Managed Solutions. On the basis that
management also monitor additional sub-operations additional information has
been provided for the Professional Staffing sector in respect of revenue and
profit. The principal segment reporting is based on industry sectors and
secondarily on geography by destination of supply. An analysis by industry
sector and by geography is the best reflection of the Group's management
structure and reporting lines. The accounting policies of the operating segments
are the same as those described in the summary of significant accounting
policies. The Group evaluates performance based on sector contributions, which
is defined as the amount of profit or loss after allocation of certain corporate
expenses, before finance income and charges, any amortisation and impairment of
intangible assets and income tax expense.
Professional Staffing includes the provision of IT and Telecoms specialists to

large national and international organisations as well as to smaller regional
organisations, it also includes permanent placements and provision of teams to
undertake IT and Telecoms testing services. General Staffing largely consists
of clerical, industrial and light manual activities.
Revenue Operating profit

2007 2006 2007 2006
£000 £000 £000 £000
Professional staffing 227,372 226,528 6,005 5,568
Managed solutions 153,059 140,209 3,279 2,717
________ ________ ________ ________
Total professional staffing 380,431 366,737 9,284 8,285
General Staffing 54,554 49,576 606 (110)
Intercompany revenue(1) (2,159) (9,012) - -
Central costs - - (3,980) (3,554)
________ ________ ________ ________
432,826 407,301 5,910 4,621
________ ________ ________ ________
Net finance income 1,148 757

________ ________

Taxation (1,113) (559)
________ ________
Profit for the year from continuing operations 5,945 4,819
________ ________
Depreciation and Capital expenditure

impairment of tangible
and intangible fixed
assets Tangible Intangible
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
Total professional staffing 900 581 120 18 22 41
General staffing 414 382 285 105 8 21
Unallocated corporate expenses 784 464 297 446 1,086 1,538
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______ ______ ______ ______ ______ ______

2,098 1,427 702 569 1,116 1,600
______ ______ ______ ______ ______ ______
Investments in tangible
and intangible
Total assets Total liabilities fixed assets
2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000
Total professional staffing 124,852 89,640 67,239 54,138 23,183 10,559
General staffing 25,155 28,271 4,392 4,667 851 879
Unallocated corporate assets/ 8,302 21,626 3,614 6,027 4,851 4,204
liabilities
________ ________ ________ ________ ________ ________
158,309 139,537 75,245 64,832 28,885 15,642
________ ________ ________ ________ ________ ________
1) Intercompany revenue is predominantly priced at cost plus a small

administrative fee. During the year ended 31 December 2007 the Professional
staffing segment received income of £25,000 from the General Staffing segment
(2006: £17,000) and £281,000 (2006: £nil) from Spring Group plc. The General
Staffing segment received income of £1,740,000 (2006: £2,541,000) from the
Professional staffing segment and £35,000 (2006: £nil) from Spring Group plc. In
addition there was £78,000 (2006: £6,454,000) of intercompany revenue between
Professional staffing and managed solutions. Consequently, external revenue is
£380,047,000 (2006: £360,266,000) for the Professional staffing segment and
£52,779,000 (2006: £47,035,000) for the General Staffing segment.
b) Geographical segments
Revenue Total assets
2007 2006 2007 2006
£000 £000 £000 £000
United Kingdom 393,018 396,192 128,348 137,062
Rest of Europe 13,349 7,990 2,782 2,475
North America 19,290 - 26,341 -
Rest of World 7,169 3,119 838 -
________ ________ ________ ________
432,826 407,301 158,309 139,537
________ ________ ________ ________

Capital expenditure Investments in tangible and
intangible fixed assets
2007 2006 2007 2006
£000 £000 £000 £000
United Kingdom 1,736 2,169 16,051 15,642
Rest of Europe 3 - 5 -
North America 64 - 12,749 -
Rest of World 16 - 80 -
________ ________ ________ ________
1,819 2,169 28, 885 15,642
________ ________ ________ ________
4. Business combinations
Acquisition of Glotel plc
On 24 July 2007, the Group acquired 100% of the voting shares of Glotel plc, a
UK listed company specialising in recruitment in the telecoms sector.
The fair value of the identifiable assets and liabilities of Glotel plc as at
the date of acquisition and the corresponding carrying amounts immediately
before the acquisition were:
The total cost of the combination was £28,720,000 which was satisfied as
follows:
£000 £000
Fair value Previous carrying
recognised on value
acquisition
Property, plant and equipment 868 868

Intangible fixed assets 2,905 222
Deferred tax asset 1,394 1,394
Prepayments 10,706 10,706
Cash and cash equivalents 2,183 2,183
______ ______
36,969 34,286
______ ______
Bank overdraft 4,261 4,261

Trade payables 451 451
Accruals and other payables 11,757 11,757
Deferred tax liability 1,128 -
______ ______
17,597 16,469
Net assets 19,372 17,817
Goodwill arising on acquisition 9,348
______
Total consideration 28,720
______
The total cost of the combination was £28,720,000 which was satisfied as
follows:
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Cost: £000
Cash 27,415
Costs associated with the acquisition 1,305
______
Total 28,720
______
Cash outflow on acquisition:
Net overdraft acquired with the subsidiary 2,064

Cash paid 28,720
______
Net cash outflow 30,784
______
From the date of acquisition, Glotel plc has contributed £1,072,000 to the net
profit of the Group. If the combination had taken place at the beginning of the
year, the profit after tax for the Group would have been reduced to £5,109,000
and revenue from continuing operations would have increased to £495,322,000.
The goodwill of £9,348,000 comprises the fair value of the assembled workforce
and expected synergies arising from the acquisition.
5. Earnings per share
2007 2007 2006 2006

Profit p per Profit p per
£000 share £000 share
Basic earnings per share from continuing operations 5,945 3.76 4,819 3.08
Diluted earnings per share from continuing operations 5,945 3.74 4,819 3.08
______ ______ ______ ______
No. of shares No. of shares
Weighted average ordinary shares in issue 162,250,076 160,890,853

Weighted average ordinary shares held as own shares in (4,329,205) (4,329,205)
ESOP trust
____________ ____________
Adjusted weighted average ordinary shares in issue 157,920,871 156,561,648
Dilutive share options 1,159,064 210,177

____________ ____________
Adjusted weighted average ordinary shares in issue and 159,079,935 156,771,825
dilutive options over shares
____________ ____________
The Company holds an investment in its own shares through an ESOP trust. These
shares are excluded from the calculation of the adjusted weighted average number
of shares in issue as rights to dividends have been waived.
6. Dividends
2007 2006
£000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2006: 0.2p (2005: 0.2p) 322 313
Interim dividend for 2007: 0.1p (2006: 0.1p) 160 156
______ ______
Dividends paid 482 469
______ ______
Proposed for approval by shareholders at the AGM:
Final dividend for 2007: 0.2p (2006: 0.2p) 328 322
______ ______
This information is provided by RNS

The company news service from the London Stock Exchange
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Spring Group PLC
Half Yearly Report

RNS Number : 2036X
Spring Group PLC
11 August 2009
Spring Group plc
Interim results for the six months to 30 June 2009
Spring Group plc ('Spring'), the technology staffing and workforce management company, announces its unaudited
results for the six months ended 30 June 2009.
Revenues down 10.5% to £224.3 million (2008: £250.5 million)

Net fee income (Gross profit) down 23% to £26.2 million (2008: £34.0 million)
Gross margin percentage down to 11.7% from 13.6%
Loss before taxation, interest, depreciation and amortisation of £0.2 million (2008: Profit £4.6 million)
Operating loss of £1.4 million (2008: Profit £3.3 million)
Loss per share of 0.89 pence (2008: profit 1.54 pence)
Interim dividend of 0.1 pence (2008: 0.1 pence)
Cash inflow from operating activities of £10.0 million (2008: cash outflow of £7.7 million)
Group net cash of £48.6 million (December 2008: £40.3 million, June 2008: £26.2 million)
Total assets £155.8 million (2008: £168.5 million)
STRATEGIC AND OPERATIONAL HIGHLIGHTS
Continued investment in overseas expansion

Further long term contract wins in Recruitment Process Outsourcing (RPO)
Additional cost re-alignment commensurate with current economic conditions
Peter Searle, Chief Executive Officer, commented:
'We continue to focus on maintaining a strong balance sheet and the period end net cash balance of over £48 million
will allow us to continue to maintain investment where appropriate to support our global strategy.
Despite the prevailing mark et conditions we are confident that we have a robust and efficient business with the
resources and strength in depth in the management team to tak e full advantage of medium to longer term growth
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opportunities'.
Chief Executive's review
Introduction
As previously announced, Spring has experienced a challenging first half to the year characterised by a much weaker
market for permanent staffing whilst contract staffing has proven to be more resilient.
Our revenues were down by 10.5% to £224.3 million (2008: £250.5 million) with net fee income dropping by 23% to
£26.2 million (2008: £34.0 million) as a result of the greater impact on permanent revenues and the resultant change
in mix in our business.
Our Temp and Contract business, which now accounts for approximately 85% of our Net Fee Income, experienced a
16% reduction compared with the first half of last year whilst our Permanent business experienced a more marked
decline of 49%. At the same time, we continue to manage our cost base prudently so that it is in line with current
market conditions. This has resulted in a broadly breakeven performance at the EBITDA level.
We continued to focus on maintaining a strong balance sheet and finished the period with £48.6 million net cash
(December 2008: £40.3 million), allowing us to maintain investment where appropriate and take advantage of longer
term growth.
The new offices we opened in 2008 in Italy, France and Asia Pacific, whilst still in investment phase, performed in
line with our expectations. We believe that these investments will put us in a strong position to support future growth
and international expansion is a key part of our strategy. We will continue to look to invest in other growth markets,
both geographic and new sectors, in the medium term.
We have continued to make good progress in our RPO business, with last year's successes being supplemented by
a number of new client wins. We have improved and expanded our sales capability to support this market opportunity
and believe the investment will deliver excellent returns.
The General staffing sector however, remains challenging, though a strong management team and a focus on cost
control should ensure that this business is well positioned to take advantage in an upturn.
Strategic Update
The Group strategy of targeting three market sectors, Managed Solutions, Professional Staffing and General Staffing
continues to be our core driver and expanding these services into new sectors and new geographies will enable the
group to emerge from the global downturn in a strong position.
The general staffing and permanent business have faced challenging market conditions however the global contract
business in particular IT contracting has remained robust and the RPO business has benefited from a number of
recent wins supported by longer term contracts.
The success of these business units will continue to allow us to maintain geographic growth and support the
international office network to enable us to continue developing as a global supplier of choice. Whilst we have
reduced headcount in sales and support in the UK and US we have maintained our investments in people in those
overseas markets where we see most opportunity such as Europe and Asia Pacific.
Operating Review
The table below sets out the results for the Group for the first half of 2009 with comparisons against the same period
in the prior year.
Group Results
Revenue Gross profit 'NFI' Operating (loss)/profit

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£million 2009 2008 2009 2008 2009 2008

Professional Staffing EMEA 84.9 111.5 11.3 11.7 0.3 2.5
Professional Staffing US 23.5 24.0 4.9 6.5 0.3 1.3
Professional Staffing APAC 5.9 6.5 0.8 2.5 (0.4) (0.1)
Managed Solutions 91.2 80.3 5.3 6.1 1.5 1.6
General Staffing 21.2 29.8 3.9 7.2 (1.7) (0.5)
Intercompany revenue (2.4) (1.6) - - - -
Central costs - - - - (1.4) (1.5)
Total 224.3 250.5 26.2 34.0 (1.4) 3.3
Managed Solutions
Our Managed Solutions division which consist of our Hyphen, RPO and Spring IT Solutions businesses has
experienced a mixed first half. Revenue has increased by 13.6% as a result of recent wins, though NFI has fallen by
13%, a margin of 5.8% (2008: 7.6%) due to the downsizing of our contract book in some of our more mature clients
and reduction in permanent volumes. The expansion of our client base on long term contracts bodes well for future
growth when markets recover.
We have through 2009 continued to invest in our Solutions products and staff and see this business as offering
significant potential for stable long term growth. This business has proven to be resilient throughout the economic
cycle and returns the group some of its highest conversion of NFI to operating profit.
Professional Staffing
This division comprises the IT contracting and permanent services businesses worldwide within the group including
the Glotel International telecoms business.
Revenues of £114 million were down 20% (H1 2008: £142 million) and NFI fell 18% to £17.0 million (H1 2008: £20.7
million).
Within the division the permanent business suffered a 40% decline in NFI, whilst the contract business was more
resilient with a reduction of 14%.
In our more mature operations in the UK and US, productivity per head has continued to improve despite the difficult
market conditions as a result of better sales training, strong sales management and commission schemes that
reward high margin business. Europe and Asia Pacific represent our primary investment areas, although loss making
at present we envisage these being key locations to our future growth strategy.
General Staffing
Throughout 2008 the group expanded its network and put in place a robust chain of offices that allowed us to gain
economies of scale and service a national client base.
However trading in this sector has been most affected by the downturn and our general staffing business which
traditionally operates on a 40/60% perm/temp mix has seen business fall by 48% and 17% respectively. We have
put in a new management team and structure and refocused the business on more robust markets which we believe
will position us better for the second half.
Group Overheads & Tax
The Group's central overhead reduced marginally year on year. The taxation charge for the period is £0.1 million
(2008: £1.0 million) reflecting the reduction in business activity, the movement in deferred tax and the effect of
withholding tax charges.
Earnings per share and Interim Dividend
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Basic loss per share was 0.89p, compared to earnings of 1.54p per share in the first half of 2008. An interim dividend
of 0.1p (2008: 0.1p) will be payable to shareholders on the register on 28th August 2009 and will be paid on
28th September 2009.
Balance sheet
Total assets decreased from £168.5 million at 31 December 2008 to £155.8 million at 30 June 2009, largely as a
result of retranslation of overseas assets following the strengthening of sterling during in the period. Net cash
balances (cash less short-term borrowings and overdrafts) increased from £40.3 million at 31 December 2008 to
£48.6 million at 30 June 2009. During the year a number of projects have been undertaken to improve working capital
and the progress in H1 on these initiatives resulted in cash inflow from operating activities of £10.0 million.
Principal risks and uncertainties

In keeping with the revised reporting standards for interim statements (IAS 34), we have detailed below the principal
risks and uncertainties related to the business.
Macro economic environment - The performance of the Group has a close relationship with the underlying growth of
the economies of the countries in which we operate. Our strategy continues to be one of international growth in order
to reduce the Group's exposure or dependence on any one specific economy.
Competitive environment - We operate in competitive markets, particularly in the United Kingdom where we are
exposed to high competitive risk. Competitors in our markets range from large multi-national organisations to small,
boutique, privately owned businesses. In all of our markets we are continually subject to both existing and new
competitors entering into the markets in which we operate, both by geographic region and specialist activity due to
the relatively low start up costs.
Commercial arrangements - The Group benefits from close commercial relationships with key clients, particularly in
the SMEs market, although the Group is not dependent on any single key client.
Technology systems - The Group is reliant on a number of technology systems in providing its services to clients.
These systems are housed in various locations and the business continues to review and enhance its ability to cope
with a significant data or other loss. The business is also reliant upon a number of important suppliers that provide
critical information technology infrastructure.
Regulatory environment - In common with many other sectors, the specialist recruitment industry is now governed by
an increased level of compliance; this varies from country to country and market to market. In addition, our clients
now require more complex levels of compliance in their contractual arrangements. The Group takes its
responsibilities seriously, is committed to meeting all of its regulatory responsibilities and continues to maintain its
internal controls and processes to ensure compliance with respect to legal and contractual obligations.
Treasury management and currency risk - The main functional currencies of the Group are Sterling and the US dollar.
The Group does not have material transactional currency exposures although it is exposed to translation differences
on the profits, assets and cash flows generated by its overseas operations.
Summary and Outlook
With our strong balance sheet and the healthy cash balance of over £48 million we will continue to maintain
investment where appropriate to support our global strategy.
Despite the prevailing market conditions we are confident that we have a robust and efficient business. With current
resources and a strong management team we are in a good position to take full advantage of medium to longer term
growth opportunities.
On 11 August 2009 the Company announced that it had received from Adecco UK Holdco Limited, a wholly owned
subsidiary of Adecco S.A,. a firm intention to make an offer for the entire issued and to be issued share capital of the
Company. Under the terms of the offer, the Company's shareholders will receive 62 pence in cash for each share in
the Company held by that shareholder. The offer is expected to be effected by way of a court-sanctioned scheme of
arrangement between the Company and its shareholders. Further details of the terms of the offer are set out in the
RNS announcement dated 11 August 2009.
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Peter Searle
11 August 2009
Directors' responsibilities
The condensed set of financial statements has been prepared in accordance with IAS 34;
The interim management report includes a fair review of the information required by DTR4.2.7R of the
'Disclosure and Transparency Rules', being an indication of important events that have occurred during
the six months of the financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining six months;
The interim management report includes a fair review of the information required by DTR4.2.8R of the
'Disclosure and Transparency Rules', being related party transactions that have taken place in the first
six months of the current financial year and have materially affected the financial position or
performance of the entity during the period; and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board

Peter Searle
11 August 2009
Report of the independent auditor - to the members of Spring Group plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly interim
report for the six months ended 30 June 2009 which comprise the Consolidated Income Statement, Consolidated
Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related
notes 1 to 12. We have read the other information contained in the half yearly interim report and considered whether
it contains any apparent misstatements or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE 2410 (UK and Ireland)
'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly interim report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly interim report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial statements included in this half-yearly interim report
has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our Responsibility
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Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly interim report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International
Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly interim report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
Registered auditor
London
11 August 2009
Consolidated income statement and statement of comprehensive income - for the six months ended 30
June 2009
Consolidated income statement

Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
30 June 30 June 31 December
Note 2009 2008 2008
£000 £000 £000
Revenue 2 224,247 250,464 516,541

Cost of sales (198,025) (216,442) (449,336)
Gross profit 26,222 34,022 67,205
Selling and distribution expenses (15,122) (18,162) (35,636)
Administrative costs (12,520) (12,555) (25,140)
Operating (loss)/profit 2 (1,420) 3,305 6,429
Finance income 152 674 386

Finance charges (166) (570) (307)
(Loss)/profit before taxation (1,434) 3,409 6,508

Taxation 5 (93) (953) (2,088)
(Loss)/profit for the period (1,527) 2,456 4,420
Earnings per share

(0.89)p 1.54p 2.77p
Basic (loss)/earnings per share from continuing 3
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operations
Diluted (loss)/earnings per share from 3 (0.88)p 1.52p 2.76p
continuing operations
Consolidated statement of comprehensive income

ended ended
2009 2008 2008
£000 £000 £000
(Loss)/profit for the period (1,527) 2,456 4,420
Exchange difference on translation of foreign operations (3,878) (33) 7,732

Other comprehensive (loss)/income for the period, (3,878) (33) 7,732
net of tax
Total comprehensive (loss)/income for the period, net (5,405) 2,423 12,152
of tax
Consolidated balance sheet - for the six months ended 30 June 2009

2009 2008 2008
Note £000 £000 £000
Non current assets
Property, plant and equipment 7 1,989 2,596 2,500
Goodwill and intangible assets 27,176 25,888 29,647
Deferred tax asset 3,872 5,689 4,158
33,037 34,173 36,305
Current assets
Inventories 391 - 735
Trade and other receivables 67,735 93,940 87,340
Financial assets 4 4 4
Cash and short term deposits 9 54,664 31,277 44,078
122,794 125,221 132,157
Total assets 155,831 159,394 168,462
Current liabilities
Trade and other payables 57,831 64,167 66,024
Financial liabilities 8 6,111 5,693 3,821
Income tax payable 555 1,835 868
Provisions 448 364 827
64,945 72,059 71,540
Non current liabilities

Provisions 124 222 568
Deferred tax liability 1,049 1,489 1,204
1,173 1,711 1,772
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Total liabilities 66,118 73,770 73,312
Equity
Called up share capital 16,421 16,421 16,421
Share premium 16,347 16,347 16,347
Other reserves 8,658 4,771 12,536
Retained earnings 48,287 48,085 49,846
Total equity attributable to equity holders 89,713 85,624 95,150

of Spring Group plc
Total equity and liabilities 155,831 159,394 168,462
Consolidated cash flow sheet - for the six months ended 30 June 2009

ended ended
Note 2009 2008 2008
£000 £000 £000
(Loss)/profit before taxation (1,434) 3,409 6,508
Finance income (152) (674) (386)
Finance expense 166 570 307
Profit on sale of fixed assets - (3) (3)
Share based payments 288 442 399
Depreciation, amortisation and impairment 1,263 1,312 2,721
Other non-cash items 53 - (1,588)
Decrease/(increase) in trade and other 18,368 (10,299) 1,463
receivables
Decrease in trade and other liabilities (7,455) (2,036) (2,691)
Decrease/(increase) in stock 296 - (603)
(Decrease)/increase in provisions (823) (224) 585
Net cash flow from trading activities 10,570 (7,503) 6,712
Interest received 169 669 352
Interest paid (167) (547) (256)
Tax paid (548) (313) (757)
Net cash inflow/(outflow) from operating 10,024 (7,694) 6,051
activities
Acquisition of a subsidiary including net - - 317
overdraft acquired
Purchases of property, plant and equipment (199) (597) (969)
Purchases of intangible assets (213) (195) (382)
Proceeds from sale of property, plant and - 3 -
equipment
Cash outflow from investing activities (412) (789) (1,034)
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Proceeds from issue of shares - 15 6
New borrowings - 23,470 23,470
Repayment of borrowings - (28,163) (28,795)
Repayment of capital element of finance leases (9) (14) (19)
Equity dividends paid to shareholders (320) (320) (480)
Cash outflow from financing activities (329) (5,012) (5,818)
Exchange (losses)/gains on cash and cash (996) (8) 1,341

equivalents
Net increase/(decrease) in cash and cash 8,287 (13,503) 540
equivalents
Cash and cash equivalents at beginning of 9 40,266 39,726 39,726

period
Cash and cash equivalents at end of period 9 48,553 26,223 40,266
Consolidated changes in equity - for the six months ended 30 June 2009
Other reserves
Issued Share Own Foreign Merger Total other Retained Total
capital premium shares currency reserve reserves earnings
held in reserve
ESOP trust
£000 £000 £000 £000 £000 £000 £000 £000
1 January 2008 16,418 16,335 (5,370) 409 9,765 4,804 45,507 83,064
Currency translation - - - (33) - (33) - (33)
difference
Profit for the period - - - - - - 2,456 2,456
Comprehensive - - - (33) - (33) 2,456 2,423
income/(loss)
Equity shares 3 12 15
issued
Share based - - - - - - 442 442
payments
Dividends paid - - - - - - (320) (320)
30 June 2008 16,421 16,347 (5,370) 376 9,765 4,771 48,085 85,624
(unaudited)
Currency translation - - - 7,765 - 7,765 - 7,765

difference
Profit for the period - - - - - - 1,964 1,964
Comprehensive - - - 7,765 - 7,765 1,964 9,729
income/(loss)
Equity shares - - - - - - -
issued
Share based - - - - - - (43) (43)
payments
Dividends paid - - - - - - (160) (160)
31 December 2008 16,421 16,347 (5,370) 8,141 9,765 12,536 49,846 95,150
(audited)
Currency translation difference - - - (3,878) - (3,878) - (3,878)
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Loss for the period - - - - - - (1,527) (1,527)
Comprehensive - - - (3,878) - (3,878) (1,527) (5,405)
income/(loss)
Share based - - - - - - 288 288
payments
Dividends paid - - - - - - (320) (320)
30 June 2009 16,421 16,347 (5,370) 4,263 9,765 8,658 48,287 89,713
(unaudited)
The shares issued in the year to 31 December 2008 where issued in lieu of salary.
Spring Group
Notes to the interim financial statements - 30 June 2009
1. Basis of preparation and accounting policies
Basis of preparation
These interim financial statements have been prepared in accordance with the accounting policies set out in the
Company's 2008 Annual Report and were approved by the board on 13 August 2009. The interim financial statements
for the six months ended 30 June 2009 have been prepared in accordance with IAS 34 'Interim Financial Reporting'.
The interim financial statements do not include all the information and disclosures in the annual financial statements
as at 31 December 2008.
The financial information in these interim financial statements does not constitute statutory financial statements as
defined in Section 240 of the Companies Act 2006. The Group's 2008 Annual Report has been filed with the Registrar
of Companies and the auditor's report on those financial statements was not qualified and did not contain statements
under section 237(2) or (3) of the Companies Act 2006.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are
consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31
December 2008, except for the adoption of new Standards and Interpretations as of 1 January 2009, as noted below:
IFRS 8 Operating Segments

The standard requires disclosure of information about the Group's operating segments and replaces the requirements
to determine primary (business) and secondary (geographical) reporting segments of the Group. Adoption of this
standard did not have any effect on the financial position or performance of the Group.
IAS 1 Revised Presentation of Financial Statements

The revised Standard separates owner and non-owner owned changes in equity. The statement of changes in equity
includes only details of transactions with owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income: it presents all items of recognised income
and expense, either in one single statement, or in two linked statements. The Group has elected to present in two
statements.
Comparative information has been restated so that it is also in conformity with the revised standard. Since the
change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
The amendments to the following standards below did not have an impact on the accounting policies, financial
position or performance of the Group:
IAS 23 Borrowing Costs

IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments
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IFRIC 16 Hedges of Net Investments in a Foreign Operation

IAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in
accordance with IAS 39 Financial Instruments: Recognition and Measurement
IAS 16 Property, Plant and Equipment
IAS 38 Intangible Assets: Expenditure on advertising and Promotion activities
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 7 Financial Instruments: Disclosures
IAS 8 Accounting Policies, changes in Accounting Estimates and Error
IAS 10 Events after the Reporting Period
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investment in Associates
IAS 31 Interest in Joint Ventures
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 39 Financial Instruments: Recognition and Measurement
2. Segmental information
Business segments
Information disclosed regarding the Group's operating segments is in accordance with IFRS 8, which replaces IAS 14
from 1st January 2009. The information reported is that which the chief operating decision maker uses internally in
evaluating the performance of operating segments and allocating resources to those segments. Professional Staffing
and Managed Solutions includes the provision of IT and Telecoms specialists to large national and international
organisations as well as to smaller regional organisations; it also includes permanent placements and provision of
teams to undertake IT and Telecoms testing services. General Staffing largely consists of clerical, industrial and light
manual activities.
Revenue
Six months Six months Year
Ended Ended Ended
2009 2008 2008
£000 £000 £000
Professional Staffing EMEA(1) 84,888 111,428 219,985
Professional Staffing US 23,451 24,041 53,957

Professional Staffing APAC 5,934 6,482 13,396
Managed Solutions 91,213 80,280 178,533
General Staffing 21,155 29,848 54,575
Intercompany revenue(2) (2,394) (1,615) (3,905)
224,247 250,464 516,541
Operating profit
Professional Staffing EMEA(1) 364 2,546 5,291
Professional Staffing US 328 1,296 2,985
Professional Staffing APAC (405) (99) (289)
Managed Solutions 1,452 1,647 3,331
General Staffing (1,729) (528) (2,557)
Central costs (1,430) (1,557) (2,332)
(1,420) 3,305 6,429
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Net finance income (14) 104 79

(Loss)/Profit before taxation (1,434) 3,409 6,508
Taxation (93) (953) (2,088)
(Loss)/Profit for the period from continuing operations (1,527) 2,456 4,420
(1) EMEA is largely UK based but includes Europe which is currently in the investment and build stage,
(2) Intercompany revenue is predominantly priced at cost plus a small administrative fee. During the six months ended 30
June 2009, the Professional Staffing UK segment received £346,000 from Managed Solutions. General Staffing received
£672,000, from Professional Staffing, £1,368,000 from Managed Solutions and £8,000 from Spring Group plc. Managed
solutions did not receive any intercompany income in the period. Consequently, external revenue is £83,485,000 for the
Professional Staffing UK segment and £19,107,000 for the General Staffing segment.

ended ended 31 December
30 June 2009 30 June 2008 2008
Loss Pence per Profit Pence per Profit Pence per
share share share
£000 £000 £000
Basic (loss)/earnings per (1,527) (0.89) 2,456 1.54 4,420 2.77
share from continuing
operations
Diluted (loss)/earnings per (1,527) (0.88) 2,456 1.52 4,420 2.76
share from continuing
operations
No. of shares No. of shares No. of shares
Weighted average number 164,210,089 164,198,261 164,204,284

of ordinary shares in issue
Weighted average number (4,241,884) (4,329,205) (4,329,205)
of ordinary shares held as
own shares in ESOP trust
159,968,205 159,869,056 159,875,079
Dilutive share options 1,616,187 1,469,274 453,585
Adjusted weighted average 161,584,392 161,338,330 160,328,664
number of ordinary shares
in issue and dilutive options
over shares
4. Dividends

Ended Ended ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2008 0.2p (2007: 0.2p) 320 320 320
Interim dividend for 2008: 0.1p (2007: 0.1p) - - 160
Dividends paid 320 320 480
Recommended interim dividend:
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Interim dividend for 2009: 0.1p (2008: 0.1p) 160 161 160
5. Taxation
The tax charge for the year has been calculated on the basis of the Directors' best estimate of the underlying annual
effective tax rate for the year of (6)% (2008: 28%). The lower tax rate in the prior year relates to the recognition of
deferred tax balances on losses that the Directors considered will be utilised in future periods.
6. Goodwill
Goodwill is tested for impairment annually (as at 31 December) and when circumstances indicate the carrying value
may be impaired. The Group's impairment test for goodwill and intangible assets with indefinite lives is based on
value in use calculations that use a discounted cash flow model. The key assumptions used to determine the
recoverable amount for the different cash generating units were discussed in the annual statements for the year
ended 31 December 2008.
The Group considers the relationship between its market capitalisation and its book value, among other factors, when
reviewing the indicators of impairment. The market capitalisation of the Group has increased since 31 December
2008 and although there has been an overall reduction in activity across the recruitment sector the Group considers
this to be temporary in nature and representative of the cyclical nature inherent within the sector.
7. Property, plant and equipment

Ended Ended Ended
£000 £000 £000
Opening net book value 2,500 2,579 2, 579
Additions 103 636 1,123
Disposals (50) - (5)
Depreciation (518) (620) (1,283)
Reclassification - - (41)
Exchange adjustment (46) 1 127
Closing net book value 1,989 2,596 2,500
8. Financial liabilities

Ended Ended Ended
£000 £000 £000
Current
Obligations under finance leases and hire - 14 9
purchase contracts
Bank overdrafts 6,111 5,054 3,812
Loan notes - 625 -
6,111 5,693 3,821
9. Cash and cash equivalents

Ended Ended Ended
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£000 £000 £000

Cash and cash equivalents include the following
for the purposes of the cash flow statement:
Cash in hand and in bank 54,664 31,277 44,078
Bank overdraft (6,111) (5,054) (3,812)
48,553 26,223 40,266
10. Capital commitments
At 30 June 2009, the Group had capital commitments of £nil (31 December 2008 £nil, 30 June 2008 £nil).
11. Share based payments
In April 2009, 6,330,700 share options were granted to senior executives under the Senior Executive Plan. The
exercise price of the options is £nil. The performance conditions attached to 50% of the award was based on Total
Shareholder Return ('TSR') performance measured against a bespoke group of comparator companies. The
performance conditions attached to the other 50% of the award was based on a range of cumulative pre-tax EPS
targets to be achieved over three financial years. In addition, for the EPS target, the share price on the date of vest
must be above the share price on the date of issue, this being 38.3 pence. If these performance conditions are not
met the options lapse. The fair value of the options granted is estimated at the date of grant using the binomial
pricing model, taking into account the terms and conditions upon which the options were granted. The contractual life
of the option is 3 years. The fair value of options granted during the six months ended 30 June 2009 was estimated
on the date of grant using the following assumptions:
Volatility 44.7% - 46.0%

Dividend yield (% p.a.) 0.78%
Expected term 3 years
12. Related party disclosures
The Group's significant related parties are disclosed in the Spring Group plc annual report for the year ended 31
December 2008. There were no material differences in related parties and no related party transactions in the period.

END
IR ILFETTSIILIA
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Moss Bros Group

Proposed Disposal and Trading
RNS Number : 7535A
Moss Bros Group PLC
07 February 2011
FOR IMMEDIATE RELEASE

7 February 2011
Moss Bros Group PLC

("Moss Bros" or the "Company")
Proposed Disposal of the Hugo Boss Franchised Businesses

and
Trading Update
Moss Bros, the UK's number 1 branded suit specialist, today announces its
intention to dispose of its 15 Hugo Boss franchised stores to Hugo Boss UK
Limited (the "Purchaser"), for a cash consideration of £16.5 million. The
Purchaser will acquire the business and assets of these stores as a going
concern and completion of the Disposal ("Completion") will take place on 1 April
2011, subject to the approval of the Company's Shareholders.
Highlights
· Cash consideration of £16.5 million, £4.2 million of which will be payable

to Moss Bros in cash on Completion, with the remaining £12.3 million
being deferred and payable to Moss Bros in instalments upon the
transfer of the Leases of each of the Hugo Boss Franchised Stores,
expected to take place by the end of December 2011
· The transaction is integral to Moss Bros' recently developed strategy to

focus growth and resources on the Company's own brands
· The Disposal will enable Moss Bros to significantly accelerate this

strategy as the cash proceeds of the Disposal will provide funding for
the redevelopment of Moss branded stores, investment in the service
experience, piloting and an appropriate roll out of new initiatives such
as Moss Bespoke and the development of a customer relationship
management system to leverage the value of the hire business
· The Disposal will give the Company increased financial flexibility and
allow a much simpler business model to be developed
· The cash generated pursuant to the Disposal will provide the Company
with sufficient working capital such that it will not need to renew its
current banking facilities and will operate debt-free
· The strong relationship with the Purchaser will continue, as Moss Bros
will continue to sell Hugo Boss branded clothing through its Moss and
Cecil Gee fascias
· Completion of the Disposal is conditional upon Shareholder approval at

a General Meeting expected to be held by the end of February 2011
· Moss Bros confirms that it continued to trade well during the important
Christmas trading period, and total sales and margins continue with a
positive like-for-like trend. Like-for-like sales were up 7.0% for the 26
weeks to 29 January 2011, and up 9.1% for the 52 weeks to 29
January 2011. Gross margin also continues to perform well. The Board
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remains confident of the outturn for the full year
Commenting on the Disposal, Brian Brick, Chief Executive Officer of Moss Bros,
said:
"This is a transformational deal for Moss Bros and absolutely in line with
our recently developed strategy of focusing on growing our own
brands. Having restored the quality of the product offering of the core
Moss Bros business and established a strong momentum in positive
like-for-like sales, this transaction will give us the opportunity to focus
exclusively on investing and developing the brands which we own, from
a position of operational and financial strength. There is significant
untapped potential in our position as the UK's number 1 branded suit
specialist, with our unique offering of hire, strength in retail and
innovation in new areas such as Moss Bespoke.
"Although we are ever mindful of the fragile trading conditions in the

UK, we have a great product offering, a focused business model and,
following the Disposal, will have the financial flexibility to leverage the
attractive niche which we have as the UK's number 1 branded suit
specialist."
Commenting on the transaction, Claus-Dietrich Lahrs, CEO and Chairman of the

Managing Board at Hugo Boss AG, the parent company of the Purchaser, said:
"This transaction works well for both of our companies. The acquisition
is a central component of our global growth strategy and at the same
time allows Moss Bros to focus its investment on its own brands."
Enquiries:
Moss Bros Group PLC 020 7447 7200

Debbie Hewitt, Chairman
Brian Brick, Chief Executive Officer
Robin Piggott, Finance Director
Altium Capital Limited 020 7484 4040

Ben Thorne
Sam Fuller
Paul Chamberlain
Hawkpoint Partners Limited 020 7665 4500

Christopher Darlington
William Bain
Bryony Marshall
Buchanan Communications Limited 020 7466 5000

Charles Ryland
Christian Goodbody
Gabriella Clinkard
This summary should be read in conjunction with the full text of the following
announcement.
Altium Capital Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Moss Bros Group
PLC and for no one else in relation to the Disposal and is not advising any
other person and accordingly will not be responsible to anyone other than
Moss Bros Group PLC for providing the protections afforded to the customers of
Altium Capital Limited or for providing advice in relation to the Disposal or any
other matter referred to herein.
Hawkpoint Partners Limited, which is authorised and regulated in the United

Kingdom by the Financial Services Authority, is acting exclusively for Moss Bros
Group PLC and for no one else in relation to the Disposal and is not advising
any other person and accordingly will not be responsible to anyone other than
Moss Bros Group PLC for providing the protections afforded to the customers of
Hawkpoint Partners Limited or for providing advice in relation to the Disposal or
any other matter referred to herein.
Moss Bros Group PLC
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Proposed Disposal of the Hugo Boss Franchised Businesses
Introduction
Moss Bros, the UK's number 1 branded suit specialist, which retails and hires
men's clothing through 155 UK and Ireland based retail stores and online, has
entered into a conditional sale and purchase agreement with Hugo Boss UK
Limited relating to the proposed disposal of the Hugo Boss Franchised
Businesses, for a cash consideration of £16.5 million.
The Disposal is conditional upon approval by Moss Bros' Shareholders and a

circular containing a notice convening a General Meeting at which a resolution
to approve the Disposal will be proposed will be issued to Shareholders as
soon as practicable.
Background to and reasons for the Disposal
In recent months the Company has undertaken a strategic review, aimed at

developing a strategic plan to restore the Company's growth and profitability.
It has determined and is successfully pursuing a strategy which focuses on
building the Company's core Moss brand and which specifically leverages the
value inherent in the Company's Moss Bros hire activity. The development of
our product offering, the creation of a new store environment, the extension of
our online activity and innovation in areas such as Moss Bespoke all form a
core part of that strategy, as does a streamlining of the Company's activities to
simplify the business and reduce operating costs.
As part of the strategic review, the Company has been exploring its options
concerning its franchising activities, with a view to simplifying the business and
focusing in the future on the store fascias and product brands that the
Company owns.
The Company has operated a number of Hugo Boss franchised stores in the UK
under franchise agreements with Hugo Boss AG since 1995. During this period
the Company has operated the Hugo Boss Franchised Stores successfully and
continues to enjoy a strong relationship with the Purchaser. The Company
recently entered into discussions with the Purchaser to explore the possibility
of selling the Hugo Boss Franchised Businesses, such that they would come
under the Purchaser's direct ownership, and for the Company to receive a cash
consideration for these businesses, which the Company could use to invest in
its own brands.
The Directors unanimously believe that this transaction will allow the Company
to significantly accelerate its chosen strategy by focusing exclusively on the
rebuilding of the Moss brand, and that the cash proceeds of the Disposal will
provide funding for the redevelopment of Moss branded stores, the roll out of
new initiatives such as Moss Bespoke following rigorous piloting and the
development of a customer relationship management system, all from a debt-
free position. Furthermore, the Disposal will give the Company increased
financial flexibility and allow a much simpler business model to be developed.
For the reasons above, the Board considers the Disposal to be fundamental to
the strategic development of the Group.
The wholesale relationship with the Purchaser will continue, as Moss Bros will
continue to stock Hugo Boss branded clothing in selected Moss and Cecil Gee
stores.
Information on the Hugo Boss Franchised Businesses
The Hugo Boss Franchised Businesses comprise 15 Hugo Boss branded retail
stores in the UK, currently operated by the Company under Franchise
Agreements with Hugo Boss AG.
The Hugo Boss Franchised Businesses had operating profits of £0.7 million
(after exceptional impairment of £1.1 million) for the year ended 30 January
2010 and operating profits of £0.4 million for the six months ended 31 July
2010. As at 31 July 2010, the Hugo Boss Franchised Businesses had total
assets of £9.8 million. This information has been extracted from the
consolidation schedules which underlie the audited consolidated financial
statements of Moss Bros Group PLC for the year ended 30 January 2010 and
the unaudited half yearly financial report of Moss Bros Group PLC for the six
months ended 31 July 2010.
Principal Terms of the Disposal
The Purchaser will acquire the business and assets of the Hugo Boss
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Franchised Businesses as a going concern, including the leases, stock and
fixtures and fittings associated with the Hugo Boss Franchised Stores. In
addition, all the employees who currently work in the Hugo Boss Franchised
Stores and nine employees who currently work at the Company's head office
will be transferred to the Purchaser.
Completion of the Disposal will, subject to the passing of the Resolutions, take
place on 1 April 2011. From that date, the Purchaser will occupy the Hugo Boss
Franchised Stores and operate the Hugo Boss Franchised Businesses.
The consideration payable by the Purchaser to the Company is £16.5 million
(subject to subsequent adjustment to reflect the amount by which the
transferred stock is mo re or less than £4.2 million), payable in cash on
Completion (subject as set out below).
The 15 stores which comprise the Hugo Boss Franchised Businesses are held
by the Company under Leases, the transfer of which require (as is standard)
the consent of the superior landlords. Whilst the Company is confident that all
of these consents will be obtained they may not all have been obtained by 1
April 2011. Accordingly, the Sale and Purchase Agreement contains provisions
which provide for an amount of the consideration in respect of the stores the
subject of any such Leases (being a maximum aggregate amount of £12.3
million) to be put in escrow and deferred and paid in instalments, along with
interest, in the period from 1 April 2011 to the date of transfer of the Lease in
question. In addition, if landlord's consent to the transfer of any Lease has not
been obtained by 31 December 2011, the Sale and Purchase Agreement
provides that the Purchaser may vacate the store in question in which case its
operation (and the associated Franchise Agreement) will revert to the
Company and no further consideration will be payable to the Company in
respect of that store. In these circumstances the Company will be obliged to
pay £25,000 per store in respect of the Purchaser's costs of vacation. As these
payments could, in aggregate, exceed one per cent. of the Company's market
capitalisation, the Listing Rules require these payments to be approved by
Shareholders at the General Meeting.
Effect of the Disposal and use of Disposal proceeds
The Company currently has obligations under its Franchise Agreements with
Hugo Boss AG to meet certain minimum capital investment standards for the
Hugo Boss Franchised Stores in its estate and is also required to commit to
sales-related marketing spend in relation to these businesses. If the Disposal
does not complete or is significantly delayed, the Company will be required to
continue to fulfil its obligations to the Purchaser in relation to the Hugo Boss
Franchised Stores. Following the Disposal, the Board expects that the removal
of these commitments will provide greater flexibility and focus for the
Company's future investment programme on its wholly owned Moss branded
activities.
The Company's current £5 million revolving business loan agreement with

Lloyds TSB Bank plc expires on 31 May 2011. The cash generated pursuant to
the Disposal will provide the Company with sufficient working capital such that
it will not need to renew the current facilities and will operate debt-free.
However, if the Disposal does not complete or is significantly delayed, the
Directors expect that the Company will continue to require access to similar
banking facilities in the future. The Company does not currently anticipate
difficulties in renewing the existing facility or replacing it with similar facilities,
and has had preliminary discussions with regard to a possible extension or
renewal of its facilities on a similar basis to its current banking arrangements.
The Board intends that the net proceeds received from the Disposal will be
reinvested in the Company's core business and its estate of Moss Bros
branded retail stores. This proposed investment programme will allow the
Company to further invest in the look and product mix of its stores, an
appropriate roll out of Moss Bespoke after rigorous piloting and to invest in the
Company's online service offering and customer relationship management
capability. A portion of the net proceeds will also be made available to provide
improved flexibility for the Company's working capital and stock purchasing
requirements, including hire stock.
In addition to the investment of the net proceeds from the Disposal, the Board
expects that the Company will benefit from a renewed focus on its core Moss
Bros branded stores without the need to continue to dedicate management
time and other resources to the Hugo Boss Franchised Stores.
Under the existing Franchise Agreement in relation to certain Hugo Boss

Franchised Stores operated by the Company, the Franchise Agreement would
(in the absence of the Disposal) terminate prior to the expiry of the Leases for
those stores. Under the terms of the Disposal, these Leases will be transferred
or assigned to the Purchaser, therefore removing any potential onerous lease
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obligations on the Company. However, as is standard practice on the
assignment of commercial leases, the landlords may require the Company to
guarantee the performance by the Purchaser of the Lease covenants. The
Company will receive the benefit of an indemnity from the Purchaser against
liabilities arising under the assigned Leases and, in addition, Hugo Boss AG,
the ultimate parent company of the Purchaser, will if required give a guarantee
to the landlords against liabilities arising under the assigned Leases.
Following the transfer of the Hugo Boss Franchised Stores to the Purchaser,
the Continuing Group will no longer benefit from the revenues or profits of the
Hugo Boss Franchised Businesses, to the extent any are made.
Current Trading
In spite of the poor weather conditions which impacted high street retailers
leading up to and during the important Christmas trading period, Moss Bros
continued to trade well and total sales continue with a positive like-for-like
trend. Like-for-like sales were up 7.0% for the 26 weeks to 29 January 2011,
and up 9.1% for the 52 weeks to 29 January 2011. Gross margin also
continues to perform well and the business is starting to see the benefits of
the cost review actions taken in the third quarter coming through. The Board
remains confident of the outturn for the full year.
The Company expects to announce its preliminary results for the year ending
31 January 2011 on 30 March 2011.
General Meeting
Completion of the Disposal is conditional upon Shareholder approval at a

General Meeting expected to be held by the end of February 2011. A circular
containing a notice convening the General Meeting will be issued to
Shareholders as soon as practicable.
DEFINITIONS
The following definitions apply throughout this announcement unless the

context otherwise requires:
"Company" or "Moss Bros" Moss Bros Group PLC
"Completion" the completion of the Disposal in accordance

with the terms of the Sale and Purchase
Agreement
"Continuing Group" the Group following the disposal of the Hugo

Boss Franchised Businesses
"Directors" or "Board" the directors of the Company as at the date

of this announcement
"Disposal" the sale of the Hugo Boss Franchised

Businesses to the Purchaser on the terms of
the Sale and Purchase Agreement
"Financial Services the Financial Services Authority of the UK in

Authority" or "FSA" its capacity as the competent authority for
the purposes of Part VI of FSMA and in the
exercise of its functions in respect of
admission to the Official List otherwise than
in accordance with Part VI of FSMA
"Franchise Agreements" the franchise agreements entered into

between the Company and Hugo Boss AG
relating to the Hugo Boss Franchised
Businesses
"FSMA" the Financial Services and Markets Act 2000

of England and Wales, as amended
"General Meeting" the General Meeting of the Company to be

convened for the purpose of approving the
Disposal
"Group" the Company and its existing subsidiary

undertakings
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"Hugo Boss Franchised the business, assets, leases and employees

Businesses" of the Hugo Boss Franchised Stores, which
retail Hugo Boss branded menswear
"Hugo Boss Franchised the 15 branded retail stores in the UK,

Stores" currently operated by the Company under
the Franchise Agreements, forming part of
the Hugo Boss Franchised Businesses
"Lease" or "Leases" the leases entered into between the

Company and the landlords relating to the
leasehold properties relating to each Hugo
Boss Franchised Store and forming part of
the Hugo Boss Franchised Businesses
"Listing Rules" the listing rules made by the FSA under Part
VI of FSMA (as amended from time to time)
"Moss Bespoke" the brand under which the Company

provides customised menswear tailoring
services
"Official List" the Official List of the Financial Services

Authority
"Shares" ordinary shares of 5 pence each in the

capital of the Company
"Purchaser" Hugo Boss UK Limited
"Resolutions" the resolutions set out in the notice of the

General Meeting
"Sale and Purchase the conditional agreement between the

Agreement" Company and the Purchaser dated 4
February 2011 relating to the sale and
purchase of the Hugo Boss Franchised
Businesses
"Shareholder(s)" holder(s) of Shares
"UK" or "United Kingdom" the United Kingdom of Great Britain and

Northern Ireland

END
DISUSSKRAKAURAR
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Moss Bros Group
Final Results
RNS Number : 8747D
Moss Bros Group PLC
30 March 2011
MOSS BROS GROUP PLC

Preliminary results for the 52 weeks ended 29 January 2011
Moss Bros Group PLC ("the Group"), the UK's No 1 Branded Suit Specialist, is today announcing its
Preliminary Results, covering the period from 31 January 2010 to 29 January 2011.
The Group's trading performance remains in line with the Board's expectations and is on course to
deliver the anticipated levels of continued growth.
HEADLINES
Financial
· Group like for like** VAT inclusive sales up 9.1% (2009/10: -0.4%)
- Retail sales - like for like ** sales up 8.9%
- Hire sales - like for like ** sales up 10.9%
· EBITDA * before exceptional items of £3.8m (2009/10: £3.2m)
· Pre-tax loss before exceptional items reduced to £(2.7)m (2009/10: £(3.9)m)
· Total loss before taxation and after exceptional items £(7.5)m (2009/10: £(6.6)m)
· Total gross margin up 0.3 percentage points to 55.4% (2009/10: 55.1%) against a fall of 0.5
percentage points in first half
· Total net inventory at £18.9m (2009/10: £16.9m), reflecting higher current season inventories and
improved sales
· Cash balance of £6.9m (2009/10: £6.3m). Net cash inflow £0.6m (2009/10: £1.8m outflow)
· Consistent with last year and in line with the Board's policy, no final dividend is being proposed
Operational
· All areas of the business have seen growth with the Hire business achieving its highest ever sales
· The appointment of the Group Finance Director successfully concludes the restructuring of the
Executive management team
· The fundamental review of how best to leverage the potential of all brands across the Group's
fascias has now been completed with the post year end disposal of Hugo Boss Franchise
Business for a consideration of £16.5m, approved by shareholders on 3 March 2011
· The cost review implemented in the second half has resulted in an annualised saving of £3.0m on
overheads
· The new Moss Bespoke concept has been piloted and the opportunity identified to take the core
Moss brand into new segments and a more premium position through a 'shop within a shop'
model in the larger Moss stores
· The planning phase to modernise the look and feel of the core Moss stores is nearing completion
and the first new concept store is planned to open in May 2011 at Canary Wharf
Current trading
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· In spite of tougher like for like ** comparators, trading continues to be encouraging. Like for like **
sales in the first eight weeks of the new financial year have continued to improve on 2010/11,
ahead 7.8%; with like for like ** gross profit ahead 8.4%
Commenting on the results and outlook, Brian Brick, Chief Executive Officer, said:
"We have made good progress on all of the operational priorities we set out at the beginning of the year
and this has had a very positive impact on trading, despite the difficult trading environment last year.
We continue to build clear strategic goals, an effective management team and a track record of
delivering. Current trading reflects strong like for like ** growth and our continued focus on the
operational priorities, with the support of our strong balance sheet, gives me great confidence that we
will fully achieve the potential for this business."
*EBITDA is earnings before interest, taxation, depreciation, amortisation and before exceptional items
52 weeks ended 52 weeks ended

29 January 30 January
2011 2010
£m £m
Loss before taxation (7.5) (6.6)
Net interest - -
Depreciation and amortisation of non-current assets 6.5 7.1
Exceptional items 4.8 2.7
EBITDA before exceptional items 3.8 3.2
**Like for like represents financial information for stores open throughout the current and prior financial
periods and compares 52 weeks against 52 weeks.
For further information please contact:

Moss Bros Group Plc: 0207 447 7200
Robin Piggott, Finance Director and Company Secretary
Buchanan Communications: 0207 466 5000
Charles Ryland/Nicola Cronk/Gabriella Clinkard
CHAIRMAN'S STATEMENT
I am pleased to report that the Group achieved total revenue of £136.4m, a 6.0% increase on the prior
year. The financial result, as expected was a significantly reduced loss before taxation and exceptional
items of £(2.7)m compared with a loss of £(3.9)m in the previous year. The loss before taxation, after
exceptional items, was £(7.5)m against £(6.6)m in the prior year. Adjusted EBITDA (earnings before
interest, taxation, depreciation, amortisation and exceptional items) continued on a positive trend to
£3.8m, compared with £3.2m in the previous year. This strong performance was achieved in the
context of a tough trading environment, where many competitors struggled to grow.
There is no question that it has been a transformational year for the Group. In spite of the tough trading
environment, the Executive team has continued to make progress on the journey back to profitability,
through execution of a clear set of operational priorities. Their actions have led to a considerable
improvement in sales, growth in margins and a substantial reduction in the cost base of the business.
We have also laid the foundations for the next phase of the strategic plan, with the objective of
leveraging the value of the Moss brand and our position as 'the No.1 Branded Suit Specialist'. The
decision to dispose of our 15 Hugo Boss franchises to Hugo Boss for £16.5m approved by
shareholders on 3 March 2011, will release both people and financial resources to focus on the
development of the core Moss business. Furthermore, investment and innovation in new products like
Moss Bespoke have brought momentum to the rehabilitation of the Moss brand, with the associated
PR creating interest and footfall from a new segment of customers.
In parallel with these actions, the team has continued to show diligent cash and working capital
control and the business will enter this new financial year debt free, with a strong cash balance.
During the last 12 months, we progressed the restructuring of the Board with the welcomed
appointments of Robin Piggott in June as Group Finance Director, and Maurice Helfgott in October as
Senior Independent Non-Executive Director. They have collectively added a wealth of experience in
retail, property, e-commerce and brand management.
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Throughout the year, our people have continued to show a combination of hard work, passion and
commitment and on behalf of the Board I would like to thank them for their contribution.
In line with our stated policy the Board is not proposing a dividend this year, as in 2009/10. The Board
believes it is prudent to continue to conserve cash in the current economic environment, though we will
continue to review our position on this.
There is no doubt that the transformational changes in 2010/11 and subsequently have created the
resources to develop and deliver a clear and compelling strategy which leverages the full potential of
the Moss brand and our clear position as 'the No.1 Branded Suit Specialist'. Early signs of progress
are reflected in the strong start to this financial year and whilst economic conditions in the UK are
expected to remain challenging, we are well placed to continue the drive to profitability and to fully
leverage the potential of the Moss brand.
Debbie Hewitt
Chairman
30 March 2011
BUSINESS REVIEW
OVERVIEW
Moss Bros Group PLC ("the Group") retails and hires formal wear and fashion products for men,
predominantly in the UK. The Group retails menswear through the Moss fascia and hire of formal wear
under the Moss Bros Hire brand through its mainstream stores. The Group also trades through the
Savoy Taylors Guild, Hugo Boss and Cecil Gee fascias.
The Group has made significant progress this year, despite continued turbulent trading conditions. A
strong focus on product and range management, operational delivery and cost control have combined to
grow like for like ** sales and decrease significantly the level of trading losses.
RESULTS AND KEY ACTIVITIES
In the 52 weeks ended 29 January 2011, total like for like ** sales increased by 9.1% (2009/10: down by
0.4%), and gross margin improved to 55.4%, an increase of 0.3 percentage points. The increases in
sales and margin were driven by improvements in the average transaction value, units per transaction
and average selling price, together with more effective management of discounting. The loss before
taxation and before exceptional items of £(2.7)m, compared with a loss of £(3.9)m in the previous year.
Adjusted EBITDA before exceptional items improved to £3.8m (2009/10: £3.2m).
The second half of the year saw the completion of a radical cost review, and operating costs will reduce
by £3.0m on an annualised basis as a result. Inventory was also tightly controlled.
As at 29 January 2011, the Group had cash balances of £6.9 million (2009/10: £6.3 million).
In addition to a number of operational improvements, further progress was made on the strategic
agenda of leveraging the Moss brand. The sale of the Hugo Boss franchise is a critical development
which will release resources to invest in the core estate, as well as removing the potential liability of a
number of potentially onerous leases which did not run coterminously with the individual franchise
agreements.
We enter the new financial year debt-free and well positioned to invest in areas of the business that will
best sustain the momentum of our recovery to profit. The strong balance sheet gives us the flexibility to
develop key areas of the business such as e-commerce, which to date have not yet benefited from any
significant investment.
REVIEW OF OPERATIONS
MAINSTREAM RETAIL
There are 98 Moss and Savoy Taylors Guild branded stores (2009/10: 97) and 33 outlet stores (2009/10:
32), all of which trade Moss own brands of Ventuno, De Havilland, Blazer and Savoy Taylors Guild. The
Moss and Savoy Taylors Guild stores also stock selected third party guest brands including Hugo Boss,
Ted Baker and French Connection. The vast majority of the stores also have a Moss Bros Hire outlet
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within them.
We have continued to implement detailed operational and performance reviews of all stores. This has
resulted in a streamlining of the product range, a comprehensive programme of store profiling and
associated inventory control measures. These actions impacted positively on the like for like ** sales for
Mainstream Retail, which were up by 10.7% on 2009/10, on improved gross margins. The margin
performance was enhanced by consolidation into fewer suppliers and focus on key guest brands which
included Ted Baker and French Connection.
The number of loss making stores significantly reduced during the year and we have taken a provision
against 13 stores which are expected to remain loss making for the remainder of the lease term, the
average term of which is 2.6 years. We also took advantage of the opportunity created by a key competitor
going into administration and moved quickly to acquire eight stores on a temporary basis just prior to the
Christmas trading period, all of which made a positive contribution. Subject to successfully concluding
negotiations with landlords it is hoped a number of these will continue to trade on an ongoing basis.
In parallel with operational improvements, we have researched the perception and value of the Moss
brand, its positioning with current and potential customers and the overall perceived value of the offering.
It is clear that the brand has tremendous heritage, but that there is significant opportunity to promote it to
both younger and to more affluent customers, who are looking for choice, value for money and confidence
in their choice of style. We are uniquely placed to provide this and have a clear aspiration to further build
on our position as 'the UK's No. 1 branded suit specialist' on the high street. Our sales promotion
activities increasingly reflect this aspiration, with a premium product positioning and the use of visual
merchandising to simplify the process of buying a suit and also encourage the purchase of accessories
such as shirts, ties and shoes.
Innovation in our product offering has also taken the brand into new segments and a more premium
position. The new Moss Bespoke concept is a good example of leveraging our core capability in suits into
a new and growing segment of high quality, affordable, bespoke suits for a more mass market. The pilot
has successfully demonstrated that this and similar offerings are important to the rehabilitation and
development of the Moss brand. Not only does it add 'theatre' to the Moss offering, it also enhances our
reputation for quality and value for money and provides an opportunity to improve the footfall and sales
densities in our larger stores. The flagship Moss Bespoke store in Blomfield Street, London, is in an ideal
position in the City to showcase and pilot the development of this and other suit offerings and as a result
of lessons learnt, we intend to open a further six 'store within store' Moss Bespoke outlets in other core
Moss Retail Stores during 2011/12, standing alongside our retail and hire offering.
As well as improving the brand positioning and the product offering, the team is well underway with the
planning phase of a project to modernise the look and feel of the core Moss stores and our first 'new look'
store will open in Canary Wharf in late May 2011. There will be extensive piloting of this store layout, to
ensure the look and fit can be adapted to meet the various store profiles which exist across the Group.
Any wider implementation programme will be prioritised and phased to reflect an acceptable level of
payback. Because of the extent of the under investment of some of the core estate, some of which has
not had basic maintenance and improvements for a number of years, we will carefully balance the new
refit with a care and maintenance programme to bring all of the estate up to at least a basic minimum
level of presentation.
We have already seen recognition for some of this care and maintenance spend with the award of a West
End Association 'Glammy' for best Menswear store in Oxford Street in 2010.
HIRE
Moss Bros Hire is the market leader in the UK hire market and the number one recognised name for hire.
We have 125 Moss Bros Hire outlets (2009/10: 124), all contained within core Moss Retail, Savoy Taylors
Guild and Cecil Gee Stores.
Market share increased in 2010/11, in spite of the fact that the hire market in general continued to contract
due to the material drop in the corporate hire market for both black tie and morning suit events. Like for
like ** sales recorded an increase of 10.9%. The demise of a major competitor reinforced the
considerable strength of our nationwide offering and the quality of our service.
Our new Hire supply chain infrastructure is now very successfully embedded into the business and we
are seeing improvements in the accuracy and speed of allocation and the distribution of orders.
Looking forward, there are further opportunities to leverage pricing and to grow our market share through
the consideration of new opportunities such as the School Prom hire market, new distribution channels
and the introduction of a new interactive internet site, with the ultimate aim of order and re-order on-line.
Moss Bros Hire also offers one of the most significant opportunities to develop our retail offering by
leveraging the rich source of customer data that comes from its customers, many of whom are unaware
of, or do not consider the Moss Retail offer.
FASHION
Cecil Gee
We operate 9 Cecil Gee branded stores, (2009/10: 10), which concentrate on a number of key brands
including Hugo Boss, Ralph Lauren and Diesel, with other high fashion brands relevant to each store's
size and location. As the independent sector finds it increasingly hard to survive in a highly competitive
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market place, the Cecil Gee performance in 2010/11 proved resilient with a like for like ** sales increase
of 6.4%.
Going forward we will focus our activity in Cecil Gee on the key brands where we can leverage the value
of our scale.
Hugo Boss
The Group operated 15 Hugo Boss stores in the UK (2009/10: 16). In line with our franchise agreements,
we opened a new store in Bond Street and relocated our Manchester store during the year. Like for like **
sales increased by 6.1%.
In February 2011, we announced our intention to dispose of our Hugo Boss stores to Hugo Boss for a
potential consideration of £16.5m. The transaction was approved by the Group's shareholders on 3 March
2011 and will complete on 1 April 2011. The transaction will release both people and financial resources
to focus on the development of the core Moss business, though we will continue to sell the Hugo Boss
product through our Moss Retail, Cecil Gee and Savoy Taylors Guild stores.
INTERNET SHOPPING
Moss.co.uk progressed well in the year, with sales sharply up on the previous year, albeit from a low
base. There is significant opportunity to grow this channel and we will focus our effort in the future on
the improving the functionality of the site and in developing a truly multi-channel business.
In the longer term, the bigger opportunity is the introduction of a more comprehensive and fully integrated
CRM programme, specifically in linking the Moss Bros Hire customer to the Moss Retail offering.
COSTS
With the recovery in sales established, a comprehensive review of the cost base was undertaken in the
second half of the year, with the project delivering an annualised reduction in costs of £3.0m. Not only has
this reduced costs, it has also allowed us to simplify the business.
SUPPLY CHAIN
The buying team is continually assessing supplier performance, to ensure the most commercially
beneficial results for the Group. Over the last few years, we have shifted the emphasis of our product
supply from mainland Europe into China and achieved a better buying margin as a result, whilst also
improving the quality of our products. The timely ordering of inventory has allowed for much greater scope
for tactical promotions.
We continue to monitor the impact of the increase in VAT to 20% on retail prices, as well as inflation in the
price of cotton. We anticipate that retail prices will increase in 2011/12.
DISTRIBUTION CENTRE
The efficiency of the Group's distribution centre has freed up further capacity to allow for greater volumes.
This has enabled the business to consider taking on third party product on an outsourcing basis to
leverage off the existing cost base. With the loss of the Hugo Boss volumes in the coming year, the
business will continue to explore the best options to meet this change in volume, whilst ensuring we
continue to service the growth in our core Moss business and our customers.
PEOPLE
With the need for talented and committed people across all areas of the Group, this means a continuing
focus on effective recruitment, induction, performance management and training.
The addition of a new Store Operations Director, a Head of HR and a Property expert during the year has
added to the talent pool of the Company. In addition, the Board has been further strengthened by the
appointment of Robin Piggott as Group Finance Director and Maurice Helfgott as Senior Independent
Director, the latter of which means we now satisfy the Corporate Governance requirement for
independent Non-Executive Directors.
PRINCIPAL RISKS AND UNCERTAINTIES
Cash and Funding

Cash balances are managed and monitored on a daily basis; the peaks and troughs in the cash cycle are
well known through experience and appropriate cash management takes place to limit the use of existing
banking facilities. The additional cash created by the sale of the Hugo Boss franchises to Hugo Boss has
created the potential for the business to dispense with the need for a debt facility and we enter 2011/12
debt free.
Inventory and Continuity of Supply

Demand forecasting, inventory ordering and inventory intake are aligned to maximising sales and the
cash management focus discussed above. The placing of all orders is subject to product demand
forecasting models and ongoing rates of sale of all product lines.
The consolidation of product buying into fewer suppliers creates sufficient scale to mitigate the risk of
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the suppliers going out of business in the short to medium term. Negotiations take place regularly with
key suppliers regarding rate and payment terms. Proactive dialogue is maintained with supplier credit
insurers to good effect to ensure they have the relevant and most current information on which to base
their insurance levels.
The recent increase in cotton prices could be considered a risk factor for the Group. Management have
mitigated this risk as a significant proportion of inventory prices have been agreed with the suppliers
for the 2011/12 financial year.
Property
The business operates from a portfolio of high street, shopping centre and factory outlet stores all held
under operating leases. Each store is evaluated annually to assess its ongoing commercial viability.
There are a number of locations in the UK and Southern Ireland which would suit one of the businesses'
fascias and the Group has recently increased its in-house resource in this area in order that
opportunities for the development of its store portfolio are maximised. All potential sites are rigorously
evaluated both operationally and financially before new lease acquisitions are made.
Staff Hiring and Retention

Attracting and retaining high calibre staff is a priority and a central focus in striving for excellent customer
service across the Group's business channels. Staff development is to be improved so that the Group
can take full advantage of the recovery in its performance.
FINANCIAL REVIEW
2010/11 2009/10
TRADING RESULTS
Revenue v last year (like for like **) +9.1% -0.4%
% Gross margin 55.4% 55.1%
% Gross margin v last year +0.3% +1.8%
EBITDA before exceptional items £3.8m £3.2m
Underlying loss before taxation and exceptional items £(2.7)m £(3.9)m
Loss before taxation £(7.5)m £(6.6)m
**Like f or like represents f inancial inf ormation f or stores open throughout the current and prior f inancial periods and compares 52 weeks
against 52 weeks.
The improvement across the business that started in the second half of 2009/10 gained momentum in
2010/11 with strong like for like ** sales growth and continued margin improvement. Gross margins
improved despite the increase in VAT rates in January 2010 and 2011.
REVENUE
As stated in note 1 to the accounts, the Consolidated Group Statement of Comprehensive Income for the
52 weeks ended 30 January 2010 and the Consolidated Statements of Financial Position as at 30 January
2010 and 31 January 2009 have been restated to recognise deferred revenue in respect of Hire sales.
The deferred revenue relates to deposits received from customers prior to the year end but where the
related hire suits were not collected for use until after the year end. Previously, the deposits were
recorded as revenue when received from the customers and not when the hire was made, which was
inconsistent with the Company's stated policy. The adjustments represent a net increase in revenue and
profit before taxation in the year ended 30 January 2010 of £0.01m. Deferred revenue in respect of hire
deposits, held on the balance sheet at 29 January 2011 was £1.6m (30 January 2010: £1.5m).
The operational improvements increased the overall results for the period; however these were expected
to be better but were impacted by the snow in early December. The core Moss Retail and Hire businesses
including Outlets were the strongest performers with like for like ** sales up 10.7% and 10.9%
respectively, with fashion fascias up a creditable 6.2%.
GROSS MARGIN
Gross margin has increased 0.3 percentage points, building on increases achieved in 2009/10,
despite the increases in VAT from 15%, to 17.5% and to 20%. This was despite considerable
promotional pressure from our competitors who sacrificed gross margin to attract sales. The ongoing
exercise to consolidate volume into a smaller number of suppliers and attain a better unit purchase
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price has enabled tactical promotions to attract new and retain existing customers.
The seasonal mix of inventory held across the year has also resulted in the need for less discounting
which in turn has lifted the overall gross margin achieved and the business has used its strong
average daily cash balance to pay suppliers earlier than normal to attract lower unit costs.
PRE EXCEPTIONAL OPERATING COSTS
A renewed focus on cost control in the business mitigated cost increases in the second half of the
year. Administrative expenses, shops' selling and marketing costs ("operating costs") increased by
7.4% in the first half but by only 1.7% in the second half, giving an increase for the period of 4.5%.
The comprehensive review of the business announced in September 2010 has been completed and
like for like ** operating costs are planned to reduce by £3.0m per year in the 2011/12 financial year.
The cost reductions have been derived from efficiencies at head office, the distribution centre and in
stores and will assist in the process of simplifying the business.
EXCEPTIONAL ITEMS
A provision for onerous property lease contracts has been made under IAS 37 'Provisions, Contingent
Liabilities and Contingent Assets' of £3.0m in respect of certain loss making stores. Having traded
these for a further year, even with the benefit of the significant positive operational changes which have
improved the underlying performance of the business, these particular stores are ones that we
recognise are now unlikely to achieve a positive return during the remaining life of their leases. The
provision represents the net present value of projected losses for each store, until the end of lease, as
the directors believe there is no realistic prospect of achieving lease surrender for an amount less than
that provided.
An impairment review of assets under IAS 36 'Impairment of Assets' has resulted in a write down in the
fixed asset values of certain stores amounting to £0.9m.
Other exceptional adjustments were made up of £0.5m relating to reorganisation costs in connection
with the review of the cost base of the business, and £0.4m in respect of non contingent fees incurred
in relation to the disposal of the Hugo Boss Franchise Business.
A tax credit of £1.0m is applied to the exceptional items resulting in a total exceptional charge after
taxation of £3.8m.
LOSS PER SHARE

Loss per share was (5.94) pence compared to (6.10) pence per share last year.
DIVIDEND
In line with our stated policy the Board is not proposing a dividend this year, as in 2009/10. The Board
believes it is prudent to continue to conserve cash in the current economic environment, though we will
continue to proactively review our position on this, as the year progresses.
INVESTMENT
Total capital expenditure in the year was £4.9m (2009/10: £3.5m) and depreciation was £6.5m
(2009/10: £7.1m). This included the opening of two new stores and the refitting or re-branding of four
stores across all fascias. The total capital expenditure included further investment in new Moss Bros
Hire inventory of £0.7m (2009/10: £0.7m), whilst depreciation on hire inventory was £1.3m (2009/10:
£1.5m).
CASH
The year end cash balance was £6.9m compared to £6.3m last year.
INVENTORY
The mix of inventory in the business has been re-geared to ensure sufficient inventory is available to
support sales across the business. This has led to an increase in current season inventory compared to
the prior year.
TRADE AND OTHER PAYABLES

The terms and conditions with our suppliers are reviewed and adjusted so as to maximise the
average cash balance whilst improving the product gross margin.
OUTLOOK
In spite of tough trading conditions, the business has made progress on all of the operational
priorities set out at the beginning of the year and this has had a very positive impact on trading.
Furthermore, we have made good progress on developing and executing our strategic goals and the
sale of our Hugo Boss Franchise Business has given us the financial and people resources to bring
momentum to this. I am confident that we will maximise the potential of the Moss brand and create
substantial shareholder value in the process.
Brian Brick
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30 March 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 52 WEEKS ENDED 29 JANUARY 2011
52 weeks to 29 January 2011 52 weeks to 30 January 2010 *

Exceptional Exceptional
items items
Underlying (note 3) Total Underlying (note 3) Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Revenue 136,438 - 136,438 128,747 - 128,747

Cost of sales (60,813) - (60,813) (57,747) - (57,747)
Gross profit 75,625 - 75,625 71,000 - 71,000

Administrative expenses (6,095) (800) (6,895) (5,136) (178) (5,314)
Shops' selling and
marketing
costs (72,200) (3,988) (76,188) (69,778) (2,553) (72,331)
Operating loss (2,670) (4,788) (7,458) (3,914) (2,731) (6,645)

Investment revenues 1 - 1 24 - 24
Financial costs (47) - (47) (24) - (24)
Loss before taxation (2,716) (4,788) (7,504) (3,914) (2,731) (6,645)

Taxation 913 973 1,886 749 134 883
Loss after taxation and

total comprehensive
loss for the period
(1,803) (3,815) (5,618) (3,165) (2,597) (5,762)
Basic loss per share 4 (5.94)p (6.10)p
Diluted loss per share 4 (5.94)p (6.10)p
*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period ended 30
January 2010.
All revenue and profits relate to the continuing operations of the Group and includes the Hugo Boss
Franchise business the disposal of which is to be completed on 1 April 2011.
There are no other items of comprehensive income in the period other than the loss for the period.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share
Share premium Retained Total equity
capital account earnings * *
£'000 £'000 £'000 £'000
52 weeks ended 30 January 2010
Balance at 1 February 2009 as originally stated 4,727 8,673 25,985 39,385

Effect of restatement * - - (1,521) (1,521)
Balance at 1 February 2009 as restated 4,727 8,673 24,464 37,864

Loss for the period - - (5,762) (5,762)
Credit to equity for equity settled share-based payments - - 110 110
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Balance at 30 January 2010 4,727 8,673 18,812 32,212
Share
Share premium Retained Total
capital account earnings equity
£'000 £'000 £'000 £'000
52 weeks ended 29 January 2011

Loss for the period - - (5,618) (5,618)
Credit to equity for equity settled share-based
payments - - 277 277
January 2010 and the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January 2009.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 29 JANUARY 2011
29 January 30 January 31 January

2011 2010 * 2009 *
£'000 £'000 £'000
ASSETS
Intangible assets 1,276 1,609 1,849
Property, plant and equipment 17,809 21,810 27,069
Lease improvements 2,231 1,700 2,542
TOTAL NON-CURRENT ASSETS 21,316 25,119 31,460
Inventories 18,928 16,925 15,394

Cash and cash equivalents 6,936 6,279 8,107
Current tax asset - - 44
TOTAL CURRENT ASSETS 31,771 28,986 29,956
TOTAL ASSETS 53,087 54,105 61,416
LIABILITIES
Provisions 1,205 - 200
Current tax liability 10 22 -
TOTAL CURRENT LIABILITIES 20,882 16,657 17,393
Other payables 2,732 2,579 2,504

Provisions 1,802 - -
Deferred tax liabilities 800 2,657 3,655
TOTAL NON-CURRENT LIABILITIES 5,334 5,236 6,159
TOTAL LIABILITIES 26,216 21,893 23,552
NET ASSETS 26,871 32,212 37,864
EQUITY
Issued capital 4,727 4,727 4,727
Share premium account 8,673 8,673 8,673
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF PARENT 26,871 32,212 37,864
*See note 1 f or details of restatement applied to the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January
2009.
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CONSOLIDATED CASH FLOW STATEMENT

52 weeks to 52 weeks to
2011 2010 *
£'000 £'000
Cash flows from operating activities

Operating loss before taxation (7,458) (6,645)
Adjustments for:
Amortisation of intangible assets 506 647
Impairment of property, plant and equipment 901 2,251
Depreciation of property, plant and equipment 6,666 6,464
Loss on sale of property, plant and equipment 633 35
Increase in inventories (2,003) (1,531)
(Increase) / decrease in receivables (125) 629
Increase / (decrease) in payables 3,185 (732)
Increase in provisions 3,007 -
Share based payments charge 277 110
Taxation received 17 -
Net cash from operating activities 5,606 1,228
Cash flows used in investing activities

Finance income (net) (46) -
Purchase of intangible assets (173) (407)
Purchase of property, plant and equipment (4,776) (3,082)
Proceeds on disposal of property, plant and equipment 46 433
Net cash used in investing activities (4,949) (3,056)
Cash flows from financing activities

Dividends paid - -
Proceeds from the issue of shares - -
Net cash used in financing activities - -
Cash and cash equivalents at beginning of period 6,279 8,107

Increase/(decrease) in cash and cash equivalents 657 (1,828)
Cash and cash equivalents at end of period 6,936 6,279
January 2010 and the Consolidated Statement of Financial Position as at 30 January 2010 and 31 January 2009.
1. Basis of preparation
The financial information set out above is based on the Company's financial statements which are
prepared in accordance with International Financial Reporting Standards as adopted for use in the
EU.
From the Group's perspective, there are no applicable differences between IFRS adopted for use in
the European Union and IFRS as issued by the International Accounting Standards Board.
The accounting policies adopted by the Group for the 52 weeks ended 29 January 2011 in these
consolidated preliminary results are consistent with those adopted by the Group in its consolidated
financial statements for the 52 weeks ended 30 January 2010.
These consolidated preliminary results have been prepared in accordance with the recognition
and measurement criteria of IFRS. They do not include all the information required for full annual
financial statements, and should be read in conjunction with the consolidated financial statements
of the Group as at and for the period ended 29 January 2011.
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The financial information set out above does not constitute the Company's statutory accounts for
the years ended 29 January 2011 or 30 January 2010, but is derived from those accounts. Statutory
accounts for 2009/10 have been delivered to the Registrar of Companies and those for 2010/11
will be delivered following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498(2) or (3) Companies Act 2006 or equivalent
preceding legislation.
Prior year restatement
The Consolidated Group Statement of Comprehensive Income for the 52 weeks ended 30 January
2010 and the Consolidated Statements of Financial Position as at 30 January 2010 and 31
January 2009 have been restated to recognise deferred revenue in respect of hire sales at the
point of the service is provided to the customer. The deferred revenue relates to deposits received
from customers prior to the year end but where the related hire suits were not collected for use until
after the year end. Previously, the deposits were recorded as revenue when received from the
customers and not when the hire was made, which was inconsistent with the Company's stated
policy.
In accordance with the policy for hire sales, the prior period Group Statement of Comprehensive
Income and Consolidated Statement of Financial Position have been restated in accordance with
IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'. Also, in accordance with
IAS 1 (revised) 'Presentation of Financial Statements', a Consolidated Statement of Financial
Position as at 31 January 2009 is presented together with related notes.
Impact on comparative consolidated statement of comprehensive income

52 weeks to
30 January 2010
£'000
Increase in revenue 10
Decrease in loss before taxation 10
Decrease in basic loss per share 0.01 pence

Decrease in diluted loss per share 0.01 pence
Impact on comparative consolidated statement of financial position
2010 2009
£'000 £'000
Increase in deferred revenue 1,511 1,521
2. Going concern
The Group's business activities, together with the factors likely to affect its future development,
performance and position are set out in the Chairman's Statement and the Chief Executive's
Business Review. The latter describes the financial position of the Group, its cash flows and
funding, together with the Group's objectives, key risks and uncertainties.
The Group meets its day to day working capital requirements through surplus cash balances and
when needed through a £5.0m Revolving Business Loan Agreement with Lloyds TSB Bank plc
which expires on 31 May 2011. The cash generated pursuant to the disposal of the Hugo Boss
Franchised Business to Hugo Boss UK Limited, details of which are set in the Chief Executive
Business Review, will provide sufficient working capital such that the Company will not need to
renew the current facilities and will operate debt free. At the EGM of Moss Bros Group PLC
shareholders held on 3 March 2011, all resolutions as set out in the Notice of Meeting contained in
the Circular to shareholders dated 11 February 2011 were passed. All resolutions were put to the
meeting and approved on a poll. However, if the disposal does not complete or is significantly
delayed it is likely the Group will continue to require access to similar banking facilities in the
future. The Company does not anticipate difficulties in renewing the existing facility or replacing it
with similar facilities in the unlikely event that this should prove necessary.
The Board of Directors has undertaken a recent thorough review of the Group's budgets and
forecasts and has produced detailed cash flow projections which take account of reasonably
possible changes in trading performance. These cash flow projections show that the Group
should be able to operate within the level of its current and expected future facilities.
After making enquiries, the Directors have a reasonable expectation that the Group and Company
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have adequate resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and
Accounts for the 52 weeks ended 29 January 2011.
3. Exceptional items
2010/11 2009/10
£'000 £'000
Administrative expenses:
Costs arising from management restructuring - redundancy 388 178
Non contingent fees arising from the disposal of the Hugo Boss
Franchise Business 412 -
Total exceptional administrative expenses 800 178
Shop selling and marketing costs:

Costs arising from management restructuring - redundancy 80 -
Other property related losses
- impairment of property, plant and equipment 901 2,251
- provision for onerous property lease contracts 3,007 -
Other - 302
Total exceptional shop selling and marketing costs 3,988 2,553
Tax credit related to exceptional items (973) (134)
Basic loss per ordinary share is based on the weighted average of 94,530,752 (2009/10:
94,530,752) ordinary shares in issue during the period and are calculated by reference to the loss
attributable to shareholders of £5,618,000 (2009/10 *: loss of £5,762,000).
Diluted loss per ordinary share is based upon the weighted average of 94,530,752 (2009/10:
94,530,752) ordinary shares which excludes the effects of share options and shares under the
LTIP, 7,282,728 (2009/10: 6,393,020) that were anti-dilutive for the periods presented but could
dilute earnings per share in the future and are calculated by reference to the loss attributable to
shareholders as stated above. In the current and prior period the weighted average number of
ordinary shares was not diluted, as per IAS 33 'Earnings per Share', as this would decrease the
basic loss per share.
*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period
ended 30 January 2010.
5. Revenue and operating segments
Revenue
Revenue comprises sales to third parties (excluding VAT) and is derived from the retail sale and
hire of clothing and ancillary goods. Revenue is recognised on exchange of goods; for the hire of
clothing, the exchange of goods occurs when the hire clothing and ancillary goods are collected for
use by the customer. At this point it is deemed that all risks and rewards have been transferred.
Hire deposits paid in advance are held on the balance sheet until the date of hire.
Operating Segments
The majority of the Company's turnover arose in the United Kingdom, with the exception of one
store in Ireland.
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief Executive to allocate
resources to the segments and to assess their performance.
Information reported to the Group's Chief Executive for the purposes of resource allocation and
assessment of segment performance is focused on the split between retail and hire.
Information regarding the Group's operating segments is reported below.
The following is an analysis of the Group's revenue and gross profit in the current and prior years:
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52 weeks to 52 weeks to
29 January 30 January *
2011 2010
Key financials £'000 £'000
Revenue
Retail 120,958 114,550
Hire 15,480 14,197
Total revenue 136,438 128,747
Gross profit
Retail 64,936 61,098
Hire 10,689 9,902
Total gross profit 75,625 71,000
Administrative expenses (6,895) (5,314)

Shops' selling and marketing costs (76,188) (72,331)
Operating loss (7,458) (6,645)
Investment revenues 1 24
Financial costs (47) (24)
Loss before taxation (7,504) (6,645)
*See note 1 f or details of restatement applied to the Consolidated Statement of Comprehensiv e Income f or the 52 week period
ended 30 January 2010.
The accounting policies for the reportable segments are the same as the Group's accounting
policies.
Only revenue and gross profit have been reported for the Group's business segments, Retail and
Hire, as the main operating costs, being property, related overheads and staff, cannot be separately
identifiable as they both use the same stores and hence operating profit is not reported to the Chief
Executive by Retail and Hire. Revenue and gross profit are the measures reported to the Chief
Executive for the purpose of resource allocation and assessment of segmental performance.
On the same basis, assets cannot be allocated between Retail and Hire, and are not reported to
the Chief Executive.
6. Events after the balance sheet date

Disposal of the Hugo Boss Franchise Business
Moss Bros Group PLC announced on 7 February 2011 that it had entered into a conditional sale
and purchase agreement with Hugo Boss UK Limited, relating to the disposal of the Hugo Boss
Franchised Business, for a cash consideration of £16.5m. The disposal constitutes a Class 1
transaction pursuant to Chapter 10 of the Listing Rules and was subsequently approved on 3
March 2011 by the shareholders of the Company at an Extraordinary General Meeting. The transfer
of the business to Hugo Boss UK Limited will take place on 1 April 2011 with £4.2m to be received
on that date, and the balance in instalments as each lease is assigned to the purchaser.
The proceeds from the disposal will provide the Company funding to eliminate debt and invest in
the core business.
The agreed sale and purchase agreement will dispose of the 15 Hugo Boss branded retail stores
in the UK, currently operated by the Company under the Franchise Agreement with Hugo Boss AG.
Hugo Boss UK Limited will acquire the business and assets of the Hugo Boss Franchised
Business as a going concern, including all the leases, inventory and property, plant & equipment
associated with the 15 Hugo Boss franchised stores. In addition all the employees who currently
work in the Hugo Boss franchised stores and those in the Head Office working directly on Hugo
Boss Franchised Business, will be transferred across. The cash consideration of £16.5m is
subject to subsequent adjustment to reflect the amount of transferred inventory and consent of the
superior landlords. The Company is confident that all these consents will be obtained.
The 15 Hugo Boss franchised stores had sales of £33.0m (2009/10: £33.0m) and operating profit
of £3.4m (after exceptional items of £nil) for the 52 weeks ended 29 January 2011 (2009/10: £0.7m
after exceptional impairment of £1.1m). As at the same date, the 15 Hugo Boss franchised stores
had net assets of £10.8m and total assets of £11.2m. The estimated pre tax profit on disposal as
at 1 April 2011 is £6.8m.
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END
FR PGURWWUPGPGB
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Moss Bros Group
Half Yearly Report

RNS Number : 9656O
Moss Bros Group PLC
27 September 2011
MOSS BROS GROUP PLC

HALF YEARLY FINANCIAL REPORT
For the six months to 30 July 2011
Moss Bros Group PLC ("the Group"), the UK's No 1 Branded Suit Specialist, is today publishing its Half
Yearly Financial Report, covering the period from 30 January 2011 to 30 July 2011.
The Group's trading performance is currently ahead of the Board's expectations and although mindful
of the fragile economy, the business is on course to deliver better than anticipated levels of growth by
the year end.
HIGHLIGHTS
Financial
· Like for like* sales, including vat, up 15.4%.
· Continuing operations pre-tax profit ahead of expectations, at £2.2m, (2010: loss of £2.8m). This is
after crediting £0.7m (2010: £0.7m) in respect of deferred income held on hire deposits in the
period.
· Continuing operations EBITDA** of £4.2m, (2010: negative £0.2m), due to improving sales and
reduced Head Office costs.
· Gross margin from continuing operations up 2.7 percentage points to 62.6%, compared with the
same period last year.
· Total net stock at £11.6m (2010: £9.4m (excluding Hugo Boss and Cecil Gee)) increased in line with
sales and reflected the correction of stock shortages experienced last year. Residual Spring stocks
have been successfully cleared.
· Strong cash balance of £15.4m (2010: £4.5m), reflecting receipt of proceeds relating to the
successful disposal of the non-core 15 Hugo Boss franchised stores and 8 Cecil Gee stores.
Operational
· Record sales for Moss Bros Hire in the period, which reaped the benefits of the new Hire
distribution system that was fully implemented last year, and continued investment in stock.
· Successful disposal of the Hugo Boss and Cecil Gee businesses, creating a simpler operating
model, with management focus on the core Moss brand. This means the profitability of the
business will, in future, be weighted towards the first half of the financial year, being the period
during which the Hire business generates two thirds of its annual sales.
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· Successful pilot of the new look Moss store at Canary Wharf, where for the first time, the core
Hire, Retail and Bespoke fascias are presented together in one store. The pilot was delivered on
time, on budget and has so far traded well and achieved anticipated sales targets.
· Planning phase to develop and refine the key design principles of the Canary Wharf pilot store, to
modernise the wider Moss store portfolio continues.
· Project commenced to develop our multi-channel strategy, including a fully integrated e-

commerce offering for Moss Hire, Retail and Bespoke.
Current Trading
· Trading in the 8 weeks to 24 September has continued to be encouraging. Like for like* sales
continue to be strong, although the gross margin has been affected by rising raw material
prices. Like for like cash gross profit in the 8 weeks to 24 September is 10% ahead of last year.
· With the continued strong trading performance to date, the Board, although mindful of the
fragile external trading environment, nonetheless anticipates that the outturn for the full year
will be ahead of previous management expectations.
Commenting on the results and outlook, Brian Brick, Chief Executive Officer, said:
"Whilst the economy has not materially picked up, the Group has traded well ahead of last year across
both hire and retail in the first six months of the year. This trend has continued into the second half,
albeit at a lower level than the first half due to strengthening comparatives.
We continue to make good progress on our strategic priorities of focusing investment on the look and
product mix of the core Moss stores, planning our integrated e-commerce offering and exploring ways
of leveraging our customer data, whilst at the same time applying careful management of our costs, to
ensure we have resilience in the event that there is a further downturn in consumer spending.
The early response to the Autumn/Winter range is positive, with like for like* sales continuing to
improve year on year although gross margins are being impacted by increasing raw material prices.
Despite challenging economic conditions and increasingly tough comparatives in the balance of the
year, we remain confident in our strategy and ability to drive profitable growth. We will continue to
invest to consolidate our position as the UK's number 1 branded suit specialist."
*Like for like represents financial information for stores open during the current and prior financial
** EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional items on
continuing activities, and excludes the profit on disposal of discontinued operations.
Moss Bros Group PLC: 0207 447 7200

Robin Piggott, Finance Director
Buchanan Communications: 0207 466 5000
Charles Ryland/Nicola Cronk
INTERIM MANAGEMENT REPORT 2011
FOR THE SIX MONTHS TO 30 JULY 2011

To the shareholders of Moss Bros Group PLC
CAUTIONARY STATEMENT
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This Interim Management Report ("IMR") has been prepared solely to provide additional information
to shareholders to assess the Group's strategies and the potential for those strategies to succeed. This
IMR should not be relied on by any other party or for any other purpose.
This IMR contains certain forward-looking statements. These statements are made by the Directors in
good faith based on the information available to them up to the time of their approval of this IMR but
such statements should be treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward looking information.
This IMR has been prepared for the Group as a whole and therefore gives greater emphasis to those
matters which are significant to Moss Bros Group PLC and its subsidiary undertakings when viewed as a
whole.
OVERVIEW
Moss Bros Group PLC ("the Group") retails and hires formal wear and fashion products for men,
predominantly in the UK. The Group retails menswear through the Moss fascia and hires formal wear
under the Moss Bros Hire brand through its mainstream stores.
The Group's vision is to be the UK's No.1 suit specialist for hire, buy and bespoke.
REVIEW OF THE FIRST HALF

The profit before tax and exceptional items for the first half of £2.2m (2010: loss of £2.8m) includes a
credit of £0.7m (2010: £0.7m) arising from the seasonal fluctuation in the value of hire deposits held
during the period, and a credit of £0.3m in respect of the release of onerous lease provisions in the
period. It is expected that the timing difference relating to hire deposits will unwind by the January
2012 year end, leaving a minimal impact on the full year results.
The operating profit in the six months to 30 July 2011 was £2.2m, £5.0m higher than the comparative
period in 2010.
As previously announced, we disposed of the non-core Hugo Boss (15 stores) and Cecil Gee (8 stores)
businesses in the first half for a combined cash consideration of £19.8m, generating a profit on sale of
£8.0m. The Hugo Boss disposal completed on 31 March 2011 and the Cecil Gee disposal on 18 June
2011. Of the £18.2m Boss consideration, £12.3m was deferred, dependent on successful assignment of
leases. As at 24 September, £8.0m of the £12.3m had been received with the balance expected to be
received by 31 October 2011. The Cecil Gee consideration was received in full on the completion date.
All Hugo Boss and Cecil Gee leases disposed are guaranteed by the purchasers' parent company.
A consequence of the disposals of Hugo Boss and Cecil Gee, for which Christmas is an important peak
trading period, is that the profitability of the core Moss business will, in future, be weighted towards
the first half of the financial year, being the period during which the high margin Hire business
generates two thirds of its annual sales.
Trading performance
The Group traded strongly in the first half with sales and gross margins comfortably ahead of last year.
Total continuing revenue excluding VAT has increased by 17.3% in the six months to 29 July 2011
compared with the comparative period in 2010. Like for like* retail sales performed well, increasing by
16.3%. Moss Bros Hire maintains its position as the leading brand name in formal hire and recorded a
like for like* sales increase of 12.4%. Overall like for like* sales were up 15.4% in the first half.
Gross margin increased by 2.7% in the first six months. An improved product mix meant faster sell
through rates and lower end of season mark downs, whilst greater breadth of brands led to higher
average transaction values.
Cost control remained an important factor with all expenditure carefully planned and monitored. An
additional charge of £0.8m was made in the half to reflect the anticipated earlier vesting of the 2009
LTIP award, and the triggering of performance related staff bonuses. The total charge over the life of
the LTIP is unchanged. New store operating costs amounted to £1.1m in the half. The rate of cost
savings in the second half are expected to diminish as savings made last year annualise and raw
material price increases impact.
The new store in Canary Wharf has traded well since opening in May 2011 and has provided useful
3/16
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feedback for the future development of the store fit. New openings in the second half in Bluewater,
Liffey Valley and Meadowhall will incorporate further improvements. A number of existing stores
have been identified for refit in the next six months so that the new concept can be adapted for ease
of rollout, and the commercial benefits of the refit fully assessed.
An 18 month project has commenced to implement our multi-channel strategy, including a fully
integrated e-commerce offering for Moss Hire, Retail and Bespoke, incorporating "click and collect"
capability. This will allow pro-active marketing across existing hire, buy and bespoke customer groups,
and will be centred on a fully integrated stock and customer data base. It is anticipated that the project
will take 18 months to complete and will involve a capital investment in systems of £1.2m during that
period. Internet sales currently account for only 1% of total sales and we believe there is significant
scope to grow sales and profits in this area.
*Like for like represents sales including VAT for stores open throughout the current and prior financial
FINANCIAL SUMMARY
A summary of the key financial results is set out in the table below.
Key financials 26 weeks to 26 weeks to 52 weeks to

CONTINUING OPERATIONS 30 July 2011 31 July 2010** 29 January 2011
Re-presented* Re-presented*
£'000 £'000 £'000
Revenue
Retail 40,855 34,162 72,304
Hire 10,978 10,022 15,479
Total revenue 51,833 44,184 87,783
Gross profit
Retail 23,493 18,937 40,865
Hire 8,932 7,497 10,688
Total gross profit 32,425 26,434 51,553
Administrative expenses (1) (3,429) (2,885) (6,483)

(1) (26,840) (26,363) (53,957)
Shops' selling and marketing costs
Operating profit / (loss) 2,156 (2,814) (8,887)
Investment revenues 17 1 1
Financial costs (17) (3) (47)
Profit / (loss) before taxation 2,156 (2,816) (8,933)
EBITDA (2) 4,183 (182) 36
(1) Admi ni s tra ti ve expens es a nd s hops ' s el l i ng a nd ma rketi ng cos ts a re not a na l ys ed between Reta i l a nd Hi re.
(2) EBITDA i s ea rni ngs before i nteres t, ta x, depreci a ti on, a morti s a ti on a nd excepti ona l i tems on conti nui ng
a cti vi ti es , a nd excl udes the profi t on di s pos a l of di s conti nued opera ti ons .
* See note 2 for deta i l s of re-pres enta ti on.
** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve
Income for the 26 week peri od ended 31 Jul y 2010.
DIVIDEND AND DIVIDEND POLICY
The Board, in line with its policy, is recommending that no interim dividend is paid (2010: £nil) in order
to conserve cash and maintain a strong balance sheet. It is the Board's intention to review the
dividend position in March 2012 in light of the trading and financial performance of the business over
the remainder of the financial year.
FINANCIAL POSITION
Net assets have increased by 30.6% to £35.1m (29 January 2011: £26.9m).
The daily management of cash remains a focus. The underlying cash position at 30 July 2011 was
£15.4m, £10.8m higher than at the same time in 2010 (29 January 2011: £6.9m) reflecting receipt of
proceeds relating to the successful disposal of the 15 Hugo Boss franchised stores and 8 Cecil Gee
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stores.
The Group continues to meet its day to day working capital requirements through surplus cash
balances. Current economic conditions will create uncertainty, particularly over the level of demand
for the Group's products. However, despite this uncertainty, the Board has concluded, in light of
detailed cash flow projections, taking account of reasonably possible changes in trading performance,
in addition to the level of cash in the business that the Group has adequate resources to continue in
operational existence for the foreseeable future.
Total net stock (excluding Hugo Boss and Cecil Gee) at £11.6m (2010: £9.4m) increased in line with sales
and reflecting the stock shortages experienced last year. Residual Spring stocks have been successfully
cleared.
CASH FLOW
Net cash inflow for the six months ended 30 July 2011 was £8.4m, £10.2m better than the comparative
period in 2010. The disposal of the Hugo Boss and Cecil Gee businesses and improved trading was
partially offset by increased investment in stock. No dividends being paid during the period (2010:
£nil).
BOARD CHANGES
Mark Bernstein and Tony Bogod stood down from the Board at the company's Annual general Meeting
in May 2011. Bryan Portman joined the Board on 1 July 2011 and chairs the Audit Committee and serves
on the Remuneration and Nomination Committees.
RELATED PARTY TRANSACTIONS
Berwin & Berwin Limited, a key supplier, is considered a related party of the Group because a Non
Executive Director of Moss Bros Group PLC, Simon Berwin, is the Chief Executive and a significant
shareholder of Berwin & Berwin Limited. All transactions have been carried out at arm's length as
disclosed in note 9 to the condensed set of interim financial statements.
On 22 December 2010, Moss Bros Group PLC entered into a short term lease with Berkeley Burke
Trustee Company Limited, a pension fund and the superior landlord, for a store in Hounslow. Berkeley
Burke Trustee Company Limited is considered a related party of the Group because Brian Brick is a
beneficiary of the pension fund. The company intends to take a long term lease in financial year 28
January 2012 on arm's length terms.
RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which could have a material impact on the
Group's performance over the remaining six months of the financial year and could cause actual results
to differ materially from expected and historical results. With the exception of cash and funding, the
Directors do not consider that the principal risks and uncertainties have changed since the publication
of the annual report for the year ended 29 January 2011, which are summarised below:
CASH AND FUNDING
With the improvement in trading and the receipt of the proceeds of the Hugo Boss and Cecil Gee
disposals the Group has developed a strong balance sheet and is well placed to invest in the business
without the need for bank funding.
INVENTORY AND PROPERTY

Demand forecasting, inventory ordering and inventory intake are aligned with the cash management
focus discussed above. The placing of all orders is subject to diligent product demand forecasting
models and ongoing rates of sale of all product lines. Autumn/Winter product has been phased to
arrive earlier compared with the prior year and this is underpinning continued positive like for like*
sales growth.
The business operates from a portfolio of high street, shopping centre and factory outlet stores all held
under operating leases. Each store is evaluated annually to assess its ongoing commercial viability. In
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the current macro environment, even more stringent and enhanced financial hurdles are required to
be met before any consideration is given to new stores.
STAFF HIRING AND RETENTION
The Group has a reputation of attracting some of the best talent in menswear and tries to ensure that it
not only maintains this attraction but also retains this talent. There is a strong capability, passion and
drive at all levels in the business to ensure that the Group will come out of the current tough economic
conditions ideally placed to take full advantage of a recovery in the economy.
OUTLOOK
Trading in the first eight weeks of the second half has been encouraging, with like for like* sales
growth and achieved gross profit ahead of the prior year.
Moss Bros Group PLC

8 St. John's Hill
London
SW11 1SA
By Order of the Board,
Brian Brick Robin Piggott
Chief Executive Officer Finance Director and Company Secretary
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

26 weeks to 30 July 2011 26 weeks 52 weeks to 29 Ja nua ry 2011
to
31 Jul y
2010
Underlying Exceptional Total Tota l ** Underl yi ng Excepti ona l Tota l
items i tems
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Re-presented* Re-presented* Re-presented* Re-presented*
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
CONTINUING OPERATIONS Note 10
Revenue 51,833 - 51,833 44,184 87,783 - 87,783
Cos t of s a l es (19,408) - (19,408) (17,750) (36,230) - (36,230)

Gross profit 32,425 - 32,425 26,434 51,553 - 51,553
Admi ni s tra ti ve expens es (3,429) - (3,429) (2,885) (6,095) (388) (6,483)

Shops ' s el l i ng a nd ma rketi ng (26,840) - (26,840) (26,363) (51,229) (2,728) (53,957)
cos ts
Operating profit / (loss) 2,156 - 2,156 (2,814) (5,771) (3,116) (8,887)
Inves tment revenues 17 - 17 1 1 - 1

Fi na nci a l cos ts (17) - (17) (3) (47) - (47)
Profit / (loss) on ordinary 2,156 - 2,156 (2,816) (5,817) (3,116) (8,933)
activities before taxation
Ta xa ti on - - - - 1,781 682 2,463

Profit / (loss) from continuing
operations after taxation 2,156 - 2,156 (2,816) (4,036) (2,434) (6,470)
DISONTINUED
OPERATIONS
Profi t / (l os s ) a fter ta x from
di s conti nued opera ti ons 5 5,930 5,935 172 2,233 (1,381) 852
Profit / (loss) after taxation 6/16

5/24/13
attributable to equity holders of 2,161 5,930 8,091 (2,644) (1,803) (3,815) (5,618)
the parent
Earnings / (loss) per share

(pence)
Ba s i c - tota l 8.56p (2.80)p (5.94)p
Di l uted - tota l 7.96p (2.80)p (5.94)p
Ba s i c - conti nui ng 2.28p (2.98)p (6.84)p
Di l uted - conti nui ng 2.12p (2.98)p (6.84)p
Underlying earnings / (loss) per

share (pence)
Ba s i c - conti nui ng 2.28p (2.98)p (4.27)p
opera ti ons
Di l uted - conti nui ng 2.12p (2.98)p (4.27)p
opera ti ons
There are no other items of comprehensive income in either period other than the profit / (loss) for
the period.
*See note 2 for deta i l s of re-pres enta ti on.
**In the pri or yea r 26 week peri od ended 31 Jul y 2010, there were no excepti ona l i tems . See note 8 for deta i l s of
res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Comprehens i ve Income for 26 week peri od ended
31 Jul y 2010.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

26 Weeks ended 30 July 2011 Share Share Share Own Retained Total
(Unaudited) capital premium based shares earnings equity
account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 January 2011 4,727 8,673 387 (218) 13,302 26,871
Profit for the period - - - - 8,091 8,091
Credit to equity for share
based payments - - 547 - - 547
Own shares purchased - - (415) - (415)
Balance at 30 July 2011 4,727 8,673 934 (633) 21,393 35,094
26 Weeks ended 31 July 2010 Share Share Share Own Retained Total
(Unaudited) capital premium based shares earnings** equity**
account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 February 2010 as
originally stated 4,727 8,673 110 (218) 20,431 33,723
Effect of restatement - - - - (1,511) (1,511)
Balance at 1 February 2010 4,727 8,673 110 (218) 18,920 32,212
Loss for the period - - - - (2,644) (2,644)
Balance at 31 July 2010 4,727 8,673 301 (218) 16,276 29,759
52 Weeks ended 29 January Share Share Share Own Retained Total

2011 capital premium based shares earnings equity
(Audited) account payments held
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 February 2010 4,727 8,673 110 (218) 18,920 32,212
Loss for the year - - - - (5,618) (5,618)
Balance at 29 January 2011 4,727 8,673 387 (218) 13,302 26,871
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Income for 26 week peri od ended 31 Jul y 2010 a nd the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JULY 2011
As at As at As at
30 July 2011 31 July 2010 ** 29 January 2011
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Assets
Intangible assets 1,078 1,459 1,276
Lease improvements 923 2,776 2,231
Total non-current assets 15,029 24,372 21,316
Inventories 11,640 17,098 18,928

Deferred consideration on disposals 9,789 - -
Total current assets 41,325 26,884 31,771
Total assets 56,354 51,256 53,087
Liabilities
Current tax liability 10 21 10
Provisions 631 - 1,205
Total current liabilities 15,574 15,945 20,882
Other payables 1,427 2,895 2,732

Deferred tax liabilities 2,865 2,657 800
Provisions 1,394 - 1,802
Total non-current liabilities 5,686 5,552 5,334
Net assets 35,094 29,759 26,871
Equity
Issued capital 4,727 4,727 4,727
Share based payments 934 301 387
Own shares held (633) (218) (218)
Equity attributable to equity holders
of parent 35,094 29,759 26,871
** See note 8 for deta i l s of res ta tement a ppl i ed to the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

26 weeks to 26 weeks to 52 weeks to

30 July 2011 31 July 2010 ** 29 January 2011
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
8,091 (2,644) (5,618)
Profit / (loss) after taxation 8/16
5/24/13
Adjustments for:
Taxation charge / (credit) 2,065 - (1,886)
Net finance costs - 2 46
Amortisation of intangible assets 296 334 506
Depreciation of property, plant and equipment 1,731 3,136 6,666
Impairment of property, plant and equipment - - 901
Loss on disposal of property, plant and equipment 14 4 633
Gain on disposal of discontinued operations (7,995) - -
Increase in inventories (550) (173) (2,003)
Decrease / (increase) in receivables 1,385 (170) (125)
(Decrease) / increase in payables (4,558) 306 3,185
(Decrease) / increase in provisions (346) - 3,007
Share-based payments expense 547 191 277
Taxation received - - 17
Net cash from operating activities 680 986 5,606
Cash flows from investing activities

Net finance costs - (2) (46)
Purchase of intangible assets (114) (184) (173)
Purchase of property, plant and equipment (1,195) (2,545) (4,776)
Proceeds on disposal of property, plant and
equipment 25 2 46
Net proceeds on disposal of discontinued 9,456 -
operations -
Net cash used in investing activities 8,172 (2,729) (4,949)

Dividends paid - - -
Proceeds from the issue of share capital - - -
Purchase of own shares (414) - -
Net cash from financing activities (414) - -
Cash and cash equivalents at beginning of period 6,936 6,279 6,279

Net increase / (decrease) in cash and cash
equivalents 8,438 (1,743) 657
Cash and cash equivalents at end of period 15,374 4,536 6,936
Income for 26 week peri od ended 31 Jul y 2010 a nd the Condens ed Cons ol i da ted Sta tement of Fi na nci a l Pos i ti on a s
a t 31 Jul y 2010.
NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The information for the year ended 29 January 2011 does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditor reported on those accounts: their report was
unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The results for the 26 weeks ended 30 July 2011 and 31 July 2010 are neither audited nor reviewed by
the Group's auditor.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION
The annual financial statements of Moss Bros Group PLC are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial statements included in this half-yearly 9/16
5/24/13
financial report has been prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted by the European Union.
The comparative information has been re-presented to reflect the discontinued Hugo Boss and Cecil
Gee operations as described in note 11.
GOING CONCERN
The Directors are satisfied that the Group and Company have sufficient resources to continue in
operation for the foreseeable future, a period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed
The Directors believe the Group is well placed to manage its business risks successfully despite the
current uncertain economic outlook. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the Group should be able to operate
within the level of its current and anticipated cash resources.
CHANGES IN ACCOUNTING POLICY

The same accounting policies, presentation and methods of computation are followed in the
condensed set of financial statements as applied in the Group's latest annual audited financial
statements for the year ended 29 January 2011.
NOTES TO THE CONDENSED CONSOLIDATED SET OF FINANCIAL STATEMENTS (CONTINUED)
3. BUSINESS SEGMENTS
The majority of the Company's turnover arose in the United Kingdom, with the exception of one store
in Ireland.
IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the Chief Executive to allocate
resources to the segments and to assess their performance.
Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and
assessment of segment performance is focused on the split of Retail and Hire.
Information regarding the Group's continuing operating segments is reported below.

The following is an analysis of the Group's revenue and gross profit for the Retail and Hire business in
the 26 weeks ended 30 July 2011:
Key financials 26 weeks to 26 weeks to 52 weeks to

CONTINUING OPERATIONS 30 July 2011 31 July 2010 29 January 2011
Re- Re-presented*
£'000 presented* £'000
£'000
Revenue
Retail 40,855 34,162 72,304
Hire 10,978 10,022 15,479
Total revenue 51,833 44,184 87,783
Gross profit
Retail 23,493 18,937 40,865
Hire 8,932 7,497 10,688
Total gross profit 32,425 26,434 51,553
Administrative expenses (3,429) (2,885) (6,483)

Shops' selling and marketing costs (26,840) (26,363) (53,957)
Operating profit / (loss) 2,156 (2,814) (8,887)
Investment revenues 17 1 1
Financial costs (17) (3) (47)
Profit / (loss) before taxation 2,156 (2,816) (8,933)
10/16
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Only revenue and gross profit have been reported for the Group's business segments; Retail and Hire,
as the main operating costs, being property, related overheads and staff, cannot be separately
identifiable as they both use the same stores and hence operating profit is not reported to the Chief
Executive Officer by Retail and Hire. Revenue and gross profit are the measures reported to the Chief
Executive for the purpose of resource allocation and assessment of segmental performance.
On the same basis, assets cannot be allocated between Retail and Hire, and are not reported to the
Chief Executive.
4. TAX
Tax on continuing operations for the 26 week period is charged at 0.0% (six months ended 31 July 2010:
0.0%; year ended 29 January 2011: 27.6%), representing the expected of the average annual effective
tax rate for the full year, applied to the pre-tax income of the six month period.
Tax on discontinued operations for the six month period is charged at 25.8% (six months ended 31 July
2010: 0.0%; year ended 29 January 2011: 40.4%), representing the estimated tax liability arising on pre-
tax income in respect of discontinued operations.
5. EARNINGS PER SHARE
Basic earnings / (loss) per ordinary share is based on the weighted average of 94,530,752 (31 July 2010:
94,530,752; 29 January 2011: 94,530,752) ordinary shares in issue during the period and is calculated by
reference to the profit / (loss) attributable to shareholders of £8,091,000 (31 July 2010: (£2,644,000); 29
January 2011: (£5,618,000)).
Diluted earnings per ordinary share is based upon the weighted average of 101,665,061 ordinary shares
(94,530,752), share options and shares under the LTIP (6,493,100), and own shares held (641,209).
In the 26 weeks to 31 July 2010, the diluted loss per ordinary share is based upon the weighted average
of 94,530,752 ordinary shares (29 January 2011: 94,530,752), which excludes the effects of share options
and shares under the LTIP 9,623,497 (29 January 2011: 7,282,728) and own shares held 300,000 (29
January 2011: 300,000) that were anti-dilutive for the period presented but could dilute earnings per
share in the future and are calculated by reference to the loss attributable to shareholders as stated
above. In the prior periods the weighted average number of ordinary shares was not diluted, as per
IAS 33 'Earnings per Share', as this would decrease the basic loss per share.
Basic earnings / (loss) per share 26 weeks to 26 weeks to 52 weeks to
30 July 2011 31 Jul y 2010 29 Ja nua ry 2011
Re-pres ented* Re-pres ented*
pence pence pence
Tota l (conti nui ng a nd di s conti nued opera ti ons ) 8.56 (2.80) (5.94)
Di s conti nued opera ti ons (6.28) (0.18) (0.90)
Conti nui ng opera ti ons 2.28 (2.98) (6.84)
Excepti ona l s (net of ta x) - - 2.57
Underlying basic earnings / (loss) per share 2.28 (2.98) (4.27)
Diluted earnings / (loss) per share 26 weeks to 26 weeks to 52 weeks to

30 July 2011 31 Jul y 2010 29 Ja nua ry 2011
Re-pres ented* Re-pres ented*
Pence pence pence
Tota l (conti nui ng a nd di s conti nued opera ti ons ) 7.96 (2.80) (5.94)
Di s conti nued opera ti ons (5.84) (0.18) (0.90)
Conti nui ng opera ti ons 2.12 (2.98) (6.84)
Excepti ona l s (net of ta x) - - 2.57
Underlying diluted earnings / (loss) per share 2.12 (2.98) (4.27)
6. BANK OVERDRAFTS AND LOANS
11/16
5/24/13
On 1 June 2010, the Group secured a £5.0m committed loan facility for the following 12 month period
to 31 May 2011. In the current period, this loan facility was not renewed; as the consideration from
Hugo Boss and Cecil Gee disposals gives the company a strong cash balance to self fund its working
capital and investment requirements, without any external debt.
7. DIVIDENDS
The Directors have not declared an interim or final dividend in the current half year or the prior year.
8. PRIOR YEAR RESTATEMENT
The Consolidated Group Statement of Comprehensive Income for the 52 weeks ended 30 January 2010
and the Consolidated Statements of Financial Position as at 30 January 2010 and 31 January 2009 were
previously restated in the Annual Report and Accounts 2010/11, to recognise deferred revenue in
respect of hire sales at the point of the service is provided to the customer. The deferred revenue
relates to deposits received from customers prior to the year end but where the related hire suits
were not collected for use until after the year end. Previous to the Annual Report and Accounts
2010/11, the deposits were recorded as revenue when received from the customers and not when the
hire was made, which was inconsistent with the Company's stated policy.
The adjustment for hire sales deposits is a timing difference which will unwind before the year end.
In accordance with the policy for hire sales, the results for the 26 week period ended 31 July 2010 have
been restated in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors'.
Impact on comparative condensed consolidated statement of comprehensive income

26 weeks to
31 July 2010
£'000
Increase in revenue 703
Decrease in loss before taxation 703
26 weeks to
31 July 2010
Decrease in basic loss per share 0.74 pence

Decrease in diluted loss per share 0.74 pence
Impact on comparative consolidated statement of financial position

26 weeks to
31 July 2010
£'000
Increase in deferred revenue 808
9. RELATED PARTY TRANSACTIONS

The Group had no material related party transactions other than on an arm's length basis, which might
reasonably be expected to influence decisions made by other users of these financial statements.
TRADING TRANSACTIONS
During the period, the Group entered into the following transactions with related parties who are not
members of the Group:
Berwin & Berwin Limited 26 weeks to 26 weeks to 52 weeks to

30 July 2011 31 July 2010 29 January 2011
£'000 £'000 £'000
Total inventory purchases (excluding VAT) 4,428 3,188 6,679
Berwin & Berwin Limited, a key supplier, is considered a related party of the Group because a Non 12/16
5/24/13
Executive Director (appointed 29 May 2009) of Moss Bros Group PLC, Simon Berwin, is the Chief
Executive and a significant shareholder of Berwin & Berwin Limited. At 30 July 2011 the balance owed
to Berwin & Berwin Limited was £594,000 (31 July 2010: £339,000, 29 January 2011: £606,000).
Purchases of goods from related parties were made on an arm's length basis, consistent with the
previous terms.
On 13 September 2009 an agreement was made with Berwin Retail Limited, to supply hire to Berwin
Retail Limited to be sold through their House of Fraser concessions. This agreement was terminated in
the prior year by mutual accord with all stores closed by 29 January 2011. Berwin Retail Limited is
considered a related party of the Group because Simon Berwin is a Non Executive Director of Moss Bros
Group PLC, and is also the Managing Director and a significant shareholder of Berwin Retail Limited.
There were no sales in the current period (31 July 2010: £154,000, 29 January 2011: £248,000). There was
no outstanding liability with Berwin Retail Limited at 30 July 2011 (31 July 2010: asset £9,000, 29 January
2011: £nil).
During the current period, the Group purchased £6,000 (31 July 2010: £nil, 29 January 2011: £237,000) of
inventory from Baumler AG. Baumler AG is considered a related party of the Group because on 2
December 2009, Berwin & Berwin Limited acquired Baumler AG under a joint venture. There was no
outstanding liability with Baumler at 30 July 2011 (31 July 2010: £nil, 29 January 2011 £nil).
On 22 December 2010, Moss Bros Group PLC entered into a short term lease with Berkeley Burke
Trustee Company Limited, a pension fund and the superior landlord, for a store in Hounslow. Berkeley
Burke Trustee Company Limited is considered a related party of the Group because Brian Brick is a
beneficiary of the pension fund. The company intends to take a long term lease in financial year
ending 28 January 2012 on arm's length terms.

10. EXCEPTIONAL ITEMS
26 weeks to 26 weeks to 52 weeks to

30 July 2011 31 July 2010 29 January
2011
£'000 £'000 £'000
Administrative expenses
CONTINUING OPERATIONS
Costs arising from management restructuring - - - (388)
redundancy
- - (388)
DISCONTINUED OPERATIONS
Non contingent fees arising from the disposal of the
Hugo Boss Franchise Business - - (412)
- - (412)
Shop selling and marketing costs

Costs arising from management restructuring -
redundancy - - (80)
-impairment of property, plant and equipment - - (679)
-provision for onerous property lease contracts - - (1,969)
- - (2,728)
-impairment of property, plant and equipment - - (222)
-provision for onerous property lease contracts - - (1,038)
- - (1,260)
Other gains and losses 13/16

5/24/13
Profit on disposal of discontinued operations 7,995 - -
7,995 - -
TOTAL EXCEPTIONAL ITEMS 7,995 - (4,788)
Taxation (charge) / credit on exceptional items (2,065) - 973

11. DISCONTINUED OPERATIONS
Hugo Boss
Moss Bros Group PLC announced on 7 February 2011 that it had entered into a conditional sale and
purchase agreement with Hugo Boss UK Limited, relating to the disposal of the Hugo Boss Franchised
Business, for a cash consideration of £18.2m. The disposal constitutes a Class 1 transaction pursuant to
Chapter 10 of the Listing Rules and was subsequently approved on 3 March 2011 by the shareholders of
the Company at an Extraordinary General Meeting. The transfer of the business to Hugo Boss UK
Limited took place on 31 March 2011. Up to 30 July 2011, £8.4m had been received from Hugo Boss UK
Limited. A further £5.5m was received to the period 24 September 2011, leaving a balance outstanding
o f £4.3m which is expected to be received in the second half of the year.
The proceeds from the disposal will provide the Company with funding to eliminate debt and invest in
the core business.
The agreed sale and purchase agreement disposed of the 15 Hugo Boss branded retail stores in the UK,
previously operated by the Company under the Franchise Agreement with Hugo Boss AG. Hugo Boss
UK Limited acquired the business and assets of the Hugo Boss Franchised Business as a going concern,
including all the leases, inventory and property, plant & equipment associated with the 15 Hugo Boss
franchised stores. In addition all the employees who previously worked in the Hugo Boss franchised
stores and those in the Head Office working directly on Hugo Boss Franchised Business, transferred
across. The cash consideration of £16.5m was subject to subsequent adjustment upwards to £18.2m to
reflect the amount of transferred inventory.
A profit of £8.4m arose on the disposal of the Hugo Boss Franchise Business, being the proceeds £18.2m
less the carrying amount of the net assets attributable £9.4m and £0.4m associated legal and
professional fees.
Cecil Gee
Moss Bros Group PLC announced on 20 June 2011, that, in line with its stated strategy of focusing on the
core Moss business, it has disposed of 8 Cecil Gee stores to JD Sports Fashion plc, for a cash
consideration of £1.7m which has now been fully paid. JD Sports Fashion plc acquired the business and
assets of the 8 stores as a going concern and completion of the disposal took place on 18 June 2011.
The Cecil Gee business comprised 9 menswear retail stores and the remaining store, Glasgow, will
convert to a new format Moss store.
A loss of £0.38m arose on the disposal of the Cecil Gee business, being the proceeds £1.65m less the
carrying amount of the net assets attributable £1.94m and £0.09m associated legal and professional
fees.
11. DISCONTINUED OPERATIONS (CONTINUED)
The results of the discontinued operations of the Hugo Boss Franchise Business and Cecil Gee Business,
which have been included in the consolidated income statement, were as follows:
26 weeks to 30 July 2011 26 weeks to 31 Jul y 2010 52 weeks To 29 Ja nua ry
2011
14/16
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£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

UNDERLYING Hugo Cecil Total Hugo Ceci l Tota l Hugo Ceci l Tota l
Boss Gee Bos s Gee Bos s Gee
Revenue 4,283 3,240 7,523 16,464 5,647 22,111 36,831 11,822 48,653
Cos t of s a l es (2,011) (1,752) (3,763) (8,226) (3,227) (11,453) (18,069) (6,513) (24,582)
Gross profit 2,272 1,488 3,760 8,238 2,420 10,658 18,762 5,309 24,071
Shops ' s el l i ng a nd
ma rketi ng cos ts (2,083) (1,672) (3,755) (7,498) (2,988) (10,486) (15,001) (5,969) (20,970)
Operating profit / (loss) 189 (184) 5 740 (568) 172 3,761 (660) 3,101
Inves tment revenues - - - - - - - - -

Fi na nci a l cos ts - - - - - - - - -
Profit / (loss) before 189 (184) 5 740 (568) 172 3,761 (660) 3,101
taxation
Ta xa ti on on underl yi ng - - - - - - (1,051) 183 (868)
Underlying profit / (loss) 189 (184) 5 740 (568) 172 2,710 (477) 2,233
after taxation
EXCEPTIONALS
Profi t on di s pos a l of
di s conti nued 8,373 (378) 7,995 - - - - - -
opera ti ons
Ta xa ti on on profi t on
di s pos a l of (2,065) - (2,065) - - - - - -
di s conti nued
opera ti ons
Other excepti ona l s - - - - - - (412) (1,260) (1,672)
Ta xa ti on on - - - - - - - 291 291
excepti ona l s
Exceptionals profit / (loss) 6,308 (378) 5,930 - - - (412) (969) (1,381)
after taxation
TOTAL PROFIT / (LOSS) 6,497 (562) 5,935 740 (568) 172 2,298 (1,446) 852
AFTER TAXATION
12. SHARE BASED PAYMENTS

On 7 November 2009 a new Long Term Incentive Plan (LTIP) was approved and 6,681,160 shares were
awarded to Directors and senior employees. Under the same 2009 LTIP, 497,660 shares were awarded
to senior employees on 23 April 2010 and 453,207 shares were awarded to a Director on 8 October 2010.
During the prior year ended 29 January 2011, 831,560 options lapsed as a Director and senior employees
left the Group. There were no additional grants awarded or lapsed options in the 26 week period
ended 30 July 2011.
12. SHARE BASED PAYMENTS (CONTINUED)
In accordance with this plan, the shares are exercisable at nil cost, subject to the satisfaction of
performance conditions and the requirement for the continued employment during the vesting
period. The fair value at grant is measured at grant date and recognised over the vesting period. The
grants are accounted for in accordance with IFRS 2 'Share Based Payments'. The charge in the period to
29 July 2011 was £547,000 (31 July 2010: £191,000; 29 January 2011: £277,000). In the 26 weeks to 30 July
2011, the charge significantly increased to reflect the anticipated earlier vesting of the LTIP awards as
management revised the estimated EBITDA forecast for 52 weeks to 28 January 2012.
The Group used inputs as previously published to measure the fair value of the share options.
13. HALF-YEARLY FINANCIAL REPORT
This half-yearly financial report is available on application from the Company Secretary, Moss Bros
Group PLC, 8 St. John's Hill, London SW11 1SA (and on the Company's website www.mossbros.co.uk).
15/16
5/24/13
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a: the condensed set of financial statements has been prepared in accordance the applicable set
of accounting standards, gives a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group, or the undertakings included in the consolidation as required
by DTR 4.2.4R;
b: the interim management report includes a fair review of the information required by DTR
4.2.7R (indication of important events during the first six months and description of principal
risks and uncertainties for the remaining six months of the year); and
c: the interim management report includes a fair review of the information required by the DTR
4.2.8R (disclosure of related parties' transactions and changes therein).
By Order of the Board,
Chief Executive Officer Finance Director and Company Secretary

Brian Brick Robin Piggott
26 September 2011 26 September 2011

END
IR SEDFAMFFSEEU
16/16
5/24/13
ArmorGroup Intl plc
Interim Results
ArmorGroup International plc
19 September 2007
Good revenue growth outside of Iraq; strong pipeline of opportunities
ArmorGroup International plc, the leading provider of defensive protective

security services, today announces its unaudited interim results for the six
months ended 30 June 2007.
Key points
• Revenues up to $137.0 million (2006: $134.4 million), with non-Iraq

revenue rising 26% to $80.5 million
• Operating profit of $3.5 million (2006: $4.3 million)
• Profit before tax of $2.5 million (2006: $3.7 million)
• Basic earnings per share of 3.5 cents (2006: 4.9 cents)
• Strong cash flow from operations of $8.6 million (2006: $12.4 million)
• Net debt of $7.6 million at the period end, compared to $3.6 million at
31 December 2006
• Unchanged interim dividend declared of 1.25 pence
All figures quoted in this statement are in US$, with the exception of the
dividend.
David Seaton, Chief Executive Officer, commenting on the results announcement

said:
'We have achieved modest revenue growth in the first half with the Group's
operations in Afghanistan and Nigeria contributing to an overall revenue growth
of 26% outside Iraq. We have also seen revenue growth from both our training
and mine action divisions, in line with our strategy of diversifying revenues
away from protective security services. Market consolidation is gathering pace,
giving rise to an increasing number of acquisition opportunities on which the
Group is well positioned to capitalise and leverage its operational gearing.
Consistent with prior years, the full year outcome will be heavily weighted
towards the second half of the year as significant new contracts won in the
first half, and those we continue to win in the second, mobilise as expected.
The Group continues to have a strong pipeline of identified opportunities going
forward with tenders awaiting award of $227 million (2006: $142 million) and the
Board remains confident in the Group's prospects for the full year.'
For further enquiries please contact:
David Seaton, Chief Executive Officer Tel: + 44 (0) 20 7808 5800
Matthew Brabin, Chief Financial Officer
Patrick Toyne Sewell, Director of Communications Tel: +44 (0) 7767 498 195
Citigate Dewe Rogerson
Ged Brumby Tel: + 44 (0) 20 7638 9571
1/9
5/24/13
This press release and analyst presentation will be available to download from
the Investor Relations section of the ArmorGroup website at www.armorgroup.com
today at 7.00 am and 9.30 am respectively. A presentation to analysts will take
place at 9:30am this morning at the offices of Citigate Dewe Rogerson, 3 London
Wall Buildings, London Wall EC2M 5SY.
Notes to Editors
For over 25 years ArmorGroup has been recognised as a leading provider of

defensive, protective security services to national governments, multinational
corporations and international peace and security agencies operating in hostile
environments. ArmorGroup provides protective security services, security
consultancy, security training and mine action services. It has 9,500 highly
trained and experienced employees and operations in 38 countries. Over the past
two years it has supported its clients in over 100 countries across the Middle
East, Africa, North and South America, the CIS and central Asia.
ArmorGroup International plc is headquartered in London and listed on the London

Stock Exchange. It complies with the US Foreign and Corrupt Practices Act, 1997
and the UK's Anti-Terrorism, Crime and Security Act, 2001 and has also been
certified to ISO 9001:2000 and to ISO/IEC 27001:2005. For more information
please visit www.armorgroup.com.
Business and Operating review
Overview
Overall revenue for the six months to 30 June grew to $137.0 million (2006:
$134.4 million) with the Group's operations in Afghanistan and Nigeria
contributing to revenue growth of 26% outside Iraq. The Group's operations in
Iraq now represent 41% (2006: 52%) of total Group revenues. Gross profits
increased 7% to $30.5 million.
Administrative expenses for the Group increased 11% to $27.1 million (2006:
$24.3 million), driven by expansion in Afghanistan and Nigeria. Central costs
remained stable at $5.4 million (2006: $5.3 million).
Operating profit reduced to $3.5 million (2006: $4.3 million), primarily due to
the effect of the higher costs outlined above combined with a reduction in
Afghanistan profits following the re-award of the UK Government contract at
significantly lower margins. Operating profit was also impacted by: a $0.4
million loss caused by the weakness of the US$, the Group's primary operating
currency, over the period (2006: loss of $0.2 million); and $0.4 million in
redundancy costs following the refocusing of the Group's Ugandan business.
Profit before tax was $2.5 million (2006: $3.7 million) as net interest charges
increased to $0.9 million (2006: $0.6 million) due to the significant increase
in working capital required to mobilise the US Embassy contract in Afghanistan,
which started operations on July 1, and the effect of higher interest rates.
Basic earnings per share for the period was 3.5 cents (2006: 4.9 cents).
The Group's effective taxation rate reduced slightly to 27% (2006: 30%) due to
further utilisation of overseas tax losses.
The Group's net debt at 30 June had increased to $7.6 million, compared to $3.6
million at 31 December 2006, with $8.7 million of cash balances offset by bank
borrowings of $16.4 million. The Group continues to achieve strong cash
conversion with cash flows from operations of $8.6 million (2006: $12.4
million).
Net assets at 30 June were $84.3 million (2006: $78.0 million).
The Group will pay an unchanged interim dividend for the period of 1.25 pence to
be paid on 9 November 2007 to shareholders on the register on 28 September 2007.
Divisional overview
Protective Security Division
The Protective Security Division generated revenue of $118.6 million (2006:

$124.4 million), marginally lower than the same period last year which included
a number of major guarding contracts in Iraq that wound down as expected during
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5/24/13
the second half of 2006. The division now accounts for 87% of Group revenues,
down from 93% for the same period last year.
Operating profits before head office costs fell to $8.5 million (2006: $9.8
million). However, the Group expects a significantly stronger performance from
this division in the second half as contracts signed later in the first half and
early in the second continue to mobilise.
In Iraq the Group carried out over 2,250 convoy escort missions over the period,
representing around 35% of all registered convoy missions in Iraq, with its
vehicles driving almost 900,000 kilometres. The security situation in the
country continues to be unstable with the rate of hostile incidents similar to
the second half of 2006. In order to protect its employees as highly as
possible, the Group invested a further $1.8 million on higher specification
armoured vehicles over the period.
To improve its access to the growing convoy escort market, created by the
increasing trend for the US Government to outsource its logistics in Iraq, the
Group signed a teaming agreement with American United Logistics ('AUL') in July
and became its exclusive protective security provider in Iraq. At that time,
ArmorGroup stated that it believed AUL was in an excellent position to be a
major supplier of logistic services to the US Government, which would lead to an
increase in convoy activity. This confidence has proven to be well founded with
the Group now providing AUL with a growing number of convoy escort teams.
ArmorGroup is working closely with AUL and other logistics companies to ensure
it is strongly positioned to capitalise on a number of major identified
opportunities in this market.
Elsewhere in the Middle East, Bahrain performed well while the US Embassy
contract in Jordan, which was awarded in January, mobilised as expected.
Revenues in Afghanistan rose strongly to $19.5 million (2006: $15.7 million)

although at lower margins due to competitive pressures during the rebidding
process for the Group's strategically important and prestigious contract in the
country, with the UK's Foreign and Commonwealth Office. The US Embassy contract
mobilised more slowly than expected as the administrative and human resources
support requirement has proved particularly onerous. The contract is now
running as expected but is unlikely to achieved planned profitability in the
current financial year. The Group has continued to win other contracts in
Afghanistan and expects the benefits of these to strengthen its second half
performance.
African revenues improved over 30% to $17.7 million (2006: $13.4 million)
reflecting the increasing threat levels in the Niger Delta region of Nigeria and
the Democratic Republic of Congo. The US embassy contract in Nigeria, announced
in May, has not yet mobilised due to a number of administrative and contractual
issues on which we are working closely with US Government representatives to
resolve. The Board is reviewing the Group's operations in certain African
countries, particularly where its services have become commoditised as result of
saturation by local competitors. As part of this review the Group has refocused
its manned guarding business in Uganda on significantly fewer, albeit higher
margin contracts, resulting in $0.4 million of redundancy costs during the half.
South American revenues improved to $10.3 million (2006: $10.1 million) although
profitability in the first half was affected by the nationalisation of a major
client's operations in Venezuela and the loss of a long term contract in
Colombia due to the Group's decision not to re-bid it at unacceptably low
margins. However, the Group continues to win business across the region and was
recently awarded a major technical security contract in Colombia, in partnership
with Siemens, which will mobilise towards the end of the year.
Eurasian revenues fell 17% to $5.6 million (2006: $6.8 million) as a number of
larger contracts completed at the end of 2006. The market has become more
difficult as international clients are now taking a more conservative approach
to making new investments in the region. Despite this ArmorGroup was recently
awarded a significant new contract on Sakhalin Island which will contribute in
the second half.
The Group's North American revenues fell to $3.8 million (2006: $4.5 million)
and the Washington office continues to provide key administrative support for
major US Government contracts overseas and coordinate initiatives on the US
mainland.
The Group's abduction, kidnap for ransom and extortion (K&R/E) consultancy, Neil
Young International, which was acquired in January, has been integrated
successfully and has made an excellent contribution. Neil Young, its Managing
Director, has now been tasked to drive forward the Group's new specialist Risk
Management Division. The Division will incorporate K&R/E capabilities as well
as a new consulting business, which will focus on helping organisations' senior
decision makers plan for and deliver effective risk management solutions
throughout the life cycles of major projects.
Security Training Division
Overall training revenues rose to $9.4 million (2006: $7.2 million) while
operating losses before head office costs increased to $0.8 million (2006: $0.6
million). Despite more efficient management of the Group's Ghassan training
facility in Iraq there was a weaker performance at the US facilities as a result
of course postponements due to clients' operational commitments. The division
now accounts for around 7% of Group revenues, up from 5% for the same period
last year. A reorganisation of the Pershore facility in the UK at the beginning
of the second half will improve its profitability going forward.
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Weapons Reduction and Mine Clearance Division
The Weapons Reduction and Mine Clearance division had an excellent first half,
generating $9.0 million in revenues (2006: $2.7 million) and achieving $1.2
million in operating profit before head office costs (2006: $0.3 million). The
division now accounts for around 7% of Group revenues, up from 2% in the same
period last year. This strong performance was driven by the major contracts in
Lebanon and Sudan which the division won in the second half of 2006. The Mine
Action (MA) team have continued this momentum into the current year with new
contracts or contract extensions won with humanitarian agencies in Cyprus, Nepal
and Sudan. It is also one of only five registered MA teams in Afghanistan and,
as such, is starting to secure an increasing number of contracts. The MA market
continues to grow with the increasing realisation by the major humanitarian
organisations and international donors of the operational and financial benefits
derived from using commercial MA organisations, combined with the continued
growth in government outsourcing of this type of technical service.
Competitive landscape
The competitive landscape continues to polarise as the larger and more complex
government contracts, particularly in Afghanistan and Iraq, are won by the major
international security companies which have proven resources and reputations.
Although some of ArmorGroup's larger competitors have been prepared to work on
major contracts at extremely low margins, the Group is committed to improving
its operating margins and so will continue to decline to bid on those contracts
where the margins required to win the work are not acceptable.
The consolidation of the market is gathering pace giving rise to a number of

interesting acquisition opportunities. Combined with the inability of the
larger Iraq-born companies to diversify successfully, this means that ArmorGroup
is increasingly well positioned for future growth. The Board believes the
Group's prospects are strong due to its competitive advantages of: an
unrivalled, long term reputation; a comprehensive global infrastructure; an
increasingly diversified service line; high quality employees; and a broadening
blue-chip client base.
Current trading and prospects
Consistent with prior years, the full year outcome will be heavily weighted
towards the second half of the year as significant new contracts won in the
first half, and those it continues to win in the second, mobilise as expected.
As at 19 September 2007, the Group had $280 million of full year 2007 revenues
already under contract (102% of total 2006 revenues), some $38 million ahead of
the same point the previous year. The Group continues to have a strong pipeline
of identified opportunities going forward with tenders awaiting award of $227
million (2006: $142 million) and the Board remains confident in the Group's
prospects for the full year.'
Consolidated income statement (unaudited)
For the six months ended 30 June 2007
Six months Six months

ended ended Year ended
Note 2007 2006 2006
US$'000 US$'000 US$'000
Revenue 2 137,021 134,374 273,453

Cost of sales (106,491) (105,799) (213,784)
Gross profit 30,530 28,575 59,669
Operating profit 3,458 4,265 10,607
Interest receivable and similar 100 101 157
income
Interest payable and similar (1,045) (666) (1,209)
charges
Profit before income tax 2,513 3,700 9,555
Income tax expense (666) (1,101) (2,460)
Profit for the period 1,847 2,599 7,095
Profit attributable to:

Equity holders of the Company 1,847 2,599 7,095
1,847 2,599 7,095
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Earnings per share expressed per 1

pence share (US cents)
- basic 6 3.47 4.90 13.35

- diluted 6 3.36 4.79 13.05
All amounts included above are derived from continuing operations.
Dividends
A dividend of 1.25 pence per share (2006: 1.25 pence per share) amounting to
$1,337,000 (2006: $1,263,000) has been proposed for the interim period ending 30
June 2007.

Consolidated balance sheet (unaudited)
As at 30 June 2007
Note 2007 2006 2006

US$'000 US$'000 US$'000
Non-current assets
Goodwill 22,844 20,775 21,317
Other intangible assets 2,761 812 810
Deferred tax assets 3,682 3,498 3,845
59,538 52,238 56,842
Current assets
Inventories 2,351 1,508 1,530
Cash and cash equivalents 5 8,718 8,708 14,646
73,730 66,613 70,209
Total assets 133,268 118,851 127,051
Current liabilities
Borrowings (14,848) (9,366) (14,614)
Trade and other payables (28,391) (20,316) (21,157)
Current income tax liabilities (2,213) (2,482) (2,102)
Provisions and other liabilities (201) (120) (134)
(45,653) (32,284) (38,007)
Net current assets 28,077 34,329 32,202

Total assets less current 87,615 86,567 89,044
liabilities
Non-current liabilities
Borrowings (1,517) (6,810) (3,592)
Provisions and other liabilities (132) (117) (131)
Deferred tax liabilities (1,638) (1,594) (2,434)
(3,287) (8,521) (6,157)
Net assets 84,328 78,046 82,887
Capital and reserves

Capital redemption reserve 96 96 96
Merger reserve 1,273 1,273 1,273
Cumulative translation reserve 1,626 (55) 961
Total equity shareholders' funds 84,328 78,046 82,887
Consolidated cash flow statement (unaudited)

30 June 30 June 2006
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Note 2007 2006
US$'000 US$'000 US$'000

Cash inflow from operations 4 8,603 12,393 30,650
Interest paid (992) (719) (1,271)
Income tax paid (1,188) (1,068) (2,418)
Net cash inflow from operating activities 6,523 10,707 27,118

Purchase of businesses (net of cash (1,353)
acquired)
(52) (52)
Purchase of property, plant and equipment (7,331) (6,914) (18,105)
Purchase of other intangible assets (1,914) (294) (524)
Proceeds from sale of property, plant and 255
equipment
7 122
Net cash outflow from investing activities (10,343) (7,253) (18,559)

Net proceeds from issue of Ordinary Share 38
capital
9 43
Equity dividends paid to shareholders (360) (1,491) (2,754)
New bank borrowings 329 3,460 3,460
Finance lease principle payments (42) (13) (43)
Repayment of borrowings (2,156) (9,175) (6,986)
Net cash outflow from financing activities (2,191) (7,210) (6,280)
Net (decrease)/ increase in cash and cash (6,011)
equivalents
(3,756) 2,279
Cash and cash equivalents at beginning of 14,594
period
12,279 12,279
Exchange gains/ (losses) on cash and bank 63
overdrafts
(10) 36
Cash and cash equivalents at end of period 8,646
5 8,513 14,594
Consolidated statement of changes in shareholders' equity (unaudited)

Capital Cumulative Retained
redemption translation earnings
Share Share reserve Merger reserve
capital premium reserve
Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2007 1,049 56,952 96 1,273 961 22,556 82,887
Shares issued - 38 - - - - 38
Cost of share - - - - - 490 490
options
Currency - - - - 665 - 665
translation
adjustments
Profit for the - - - - - 1,847 1,847
period
Dividends paid to - - - - - (1,599) (1,599)
equity shareholders
At 30 June 2007 1,049 56,990 96 1,273 1,626 23,294 84,328
Capital Cumulative
redemption translation
Share Share reserve Merger reserve Retained
capital premium earnings
reserve Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2006 1,046 56,912 96 1,273 (178) 17,334 76,483
Shares issued 1 8 - - - - 9
Cost of share - - - - -
options
323 323
Currency - - - -
translation
adjustments 123 - 123
Profit for the - - - - - 2,599 2,599
period
Dividends paid to
equity shareholders
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- - - - - (1,491) (1,491)
At 30 June 2006 1,047 56,920 96 1,273 (55) 18,765 78,046
Shares issued 2 32 - - - - 34
Cost of share
options
- - - - - 558 558
Currency
translation
adjustments - - - - 1,016 - 1,016
Profit for the - - - - - 4,496 4,496
period
Dividends paid to
equity shareholders
- - - - - (1,263) (1,263)
At 31 December 2006
1,049 56,952 96 1,273 961 22,556 82,887
Notes to the interim statement
1 Basis of preparation
The unaudited interim financial information of ArmorGroup International plc is

for the six months ended 30 June 2007 and has been prepared on the basis of the
accounting policies set out in the Annual report and accounts for the year ended
31 December 2006. The Group's accounts for the year ended 31 December 2006 were
prepared in accordance with International Financial Reporting Standards (IFRS),
International Accounting Standards (IAS) and related interpretations, as adopted
for use in the European Union and were prepared under the historical cost
convention.
The unaudited interim financial information contained within this report

complies with the disclosures required by the Listing Rules of the Financial
Services Authority but does not comply with all the disclosures required by IAS
34 'Interim Financial Reporting' which is non-mandatory and is therefore not in
full compliance with IFRS as adopted by the European Union.
The information contained within this interim report does not constitute
statutory accounts for the purposes of section 240 of the Companies Act 1985.
The comparative financial information for the year ended 31 December 2006 has
been extracted from the Group's statutory accounts for the year ended 31
December 2006 which contained an unqualified auditors' report and have been
delivered to the Registrar of Companies.
2 Segmental reporting

2007 2006 2006
Revenue US$'000 US$'000 US$'000
Protective security services 118,620 124,415 244,510

Security training 9,436 7,228 18,329
Weapons reduction and mine clearance 8,965 2,731 10,614
Revenue 137,021 134,374 273,453
Revenue in respect of protective security services includes recharges to third

party customers at cost or cost plus a handling fee of certain contract
expenses, including insurance, equipment, travel and out of pocket expenses of
$148,000 for the six months ended 30 June 2007 (six months ended 30 June 2006:
$2,404,000; year ended 31 December 2006: $3,476,000).

2007 2006 2006
Profit before tax US$'000 US$'000 US$'000
Protective security services before head 8,467 20,345

office costs
9,830
Security training before head office costs (773) (569) (803)
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Weapons reduction and mine clearance 1,205 835
before head office costs
276
Head office costs (5,441) (5,272) (9,770)
Protective security services including 3,761 11,610

head office costs
4,949
Security training including head office (1,152) (1,458)
costs
(852)
Weapons reduction and mine clearance 849 455
including head office costs
168
Interest receivable and similar income 100 101 157

Interest payable and similar charges (1,045) (666) (1,209)
Profit before tax 2,513 3,700 9,555
Income tax expense (666) (1,101) (2,460)
Profit after tax 1,847 2,599 7,095
3 Items relating to the IPO
Prior to the IPO share options were issued to certain Directors and members of
management. There are no performance conditions and the options vest annually
in equal tranches over a 3 year period beginning on 31 December 2004 or 31 March
2005.
The charge for these pre-IPO options, which is recognised over the vesting
period and included in administrative expenses, was $10,000 for the six months
ended 30 June 2007 (six months ended 30 June 2006: $192,000; year ended 31
December 2006: $976,000, including related national insurance costs.
4 Cash inflow from operations

2007 2006 2006
US$'000 US$'000 US$'000

Adjustments for:
Interest receivable (100) (101) (157)
Interest payable 1,045 666 1,209
Taxation 666 1,101 2,460
Depreciation 8,030 7,815 14,871
(Profit)/ loss on disposal of property, (160)
plant and equipment
620 1,141
Amortisation of other intangible assets 254 212 440
Compensation charge in respect of share 490
based payments
323 881
12,072 13,235 27,940
Changes in working capital (excluding
effects of acquisition and disposal of
subsidiaries)
Increase in inventories (821) (338) (360)
Increase in trade and other receivables (8,277) (3,480) (768)
Increase in payables 5,563 2,952 3,786
Increase in provisions 66 24 52
Cash inflow from operations 8,603 12,393 30,650
5 Analysis of cash and cash equivalents
Cash and cash equivalents for the purposes of the cash flow statement are
analysed as follows:

2007 2006 2006
US$'000 US$'000 US$'000
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Cash at bank and in hand 8,718 8,708 14,646

Bank overdrafts (72) (195) (52)
6 Earnings per share
Basic
Basic earnings per share is calculated by dividing the earnings attributable to

equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.

2007 2006 2006
Profit attributable to equity holders of 1,847 2,599 7,095

the Company (US$'000)
Weighted average number of ordinary shares 53,280,961 53,087,392 53,145,172
Basic earnings per share (US cents) 3.47 4.90 13.35
Diluted
Diluted earnings per share is calculated adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares.

2007 2006 2006
Profit attributable to equity holders of 1,847 2,599 7,095

the Company (US$'000)
Adjustment for dilutive potential of 1,609,430 1,156,485 1,202,826
ordinary shares
for diluted earnings per share
Diluted earnings per share (US cents) 3.36 4.79 13.05
7 Post balance sheet events
An interim dividend of 1.25 pence per share was declared after the balance sheet
date and will be paid on 9 November 2007 to shareholders on the register on 28
September 2007.

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ArmorGroup Intl plc
Preliminary Results
20 March 2008

Preliminary results
ArmorGroup International plc, the leading provider of defensive protective

security services, today announces its unaudited preliminary results for the
twelve months ended 31 December 2007. The Group can also announce that the
Board has reached agreement on the terms of a recommended cash offer for
ArmorGroup by G4S (March 2008) Limited (a wholly-owned subsidiary of G4S plc).
Summary of the results
• Revenues up 8.0% to $295.3 million, with non-Iraq revenue rising 33%
• Operating profit of $9.2 million, before $2.9 million of exceptional

aborted acquisition and severance costs, and $6.3m after exceptional items
(2006: $10.6 million).
• Profit before tax, before the exceptional costs, of $7.1 million and
$4.2million after exceptional items (2006: $9.6 million)
• Basic earnings per share of 5.5 cents (2006: 13.4 cents)
• Strong operating cash flow of $25.3 million (2005: $30.7 million)
• Recommended final dividend of 1.5 pence, giving a total of 2.75

pence for the year (2006: 2.75p)
• Recommended cash offer by G4S (March 2008) Limited, a wholly-owned

subsidiary of G4S plc, at a price of 80 pence per share in cash announced this
morning (see separate announcement for full details). The final dividend is
included in offer price and so will not be paid if offer becomes or is declared
wholly unconditional.
All figures quoted in this statement are in US$, with the exception of the
dividend and the Offer price.
Sir Malcolm Rifkind, Chairman, commenting on the results and the Offer said:
'2007 was a challenging year for the Group with continued growth in the market
and in the Group's revenues undermined by lower margins and delays on some of
its largest contracts. The management and organisational changes the Board made
towards the end of the year and at the start of 2008 have given the Group the
operational strength and commercial focus essential for improving its
profitability.
'The offer by G4S announced today gives ArmorGroup shareholders the prospect of
a cash exit at an attractive price when considered against the potential of the
ArmorGroup as a standalone business. The Board believes that G4S's offer is
full and fair and, accordingly, the Board is pleased to recommend it to
shareholders.'
Enquiries:
David Barrass, Chief Executive Officer Tel: +44 (0) 20 7808 5800
Matthew Brabin, Chief Financial Officer
Patrick Toyne Sewell, Director of Communications Mob: +44 (0) 7767 498 195
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This press release will be available to download from the ArmorGroup website at
www.armorgroup.com today after 7.00 am.
Notes to Editors
For over 25 years ArmorGroup has been recognised as a leading provider of

defensive and protective security services to national governments,
multinational corporations and international peace and security agencies
operating in hazardous environments. It has approximately 8,500 employees and
38 offices in 27 countries. Over the past two years ArmorGroup has supported
its clients in over 50 countries across the Middle East, Africa, North and South
America, the CIS and central Asia.
ArmorGroup International plc is headquartered in London and listed on the London

Stock Exchange. It complies with the US Foreign and Corrupt Practices Act, 1997
and the UK's Anti-Terrorism, Crime and Security Act, 2001 and has also been
certified to ISO 9001:2000 and to ISO/IEC 27001:2005. For more information
please visit www.armorgroup.com.
Preliminary results
Summary
Overall revenue for the twelve months to 31 December grew to $295.3 million
(2006: $273.5 million) with the Group's operations in Afghanistan and Nigeria
contributing to growth of 33% outside Iraq. The Group's operations in Iraq now
represent 37% (2006: 49%) of total Group revenues.
Gross profits increased 9.9% to $65.6 million although operating profits

declined to $9.2 million, before $2.9 million of one off costs relating to the
aborted acquisition and settlement costs with the previous CEO, and to $6.3m
after the one-off costs (2006: US$10.6 million). The Group achieved good profit
growth in Iraq and from the Weapons Reduction & Mine Clearance (WR&MC) division
which was offset by widespread margin reduction, particularly in Afghanistan,
combined with contract delays.
The Group continued to achieve strong cash conversion through good working
capital management. Net debt was US$9.5 million at the year end (2006: US$3.6
million). Basic earnings per share fell to 5.5 cents (2006: 13.4 cents). The
Board is recommending a final dividend for the year of 1.5 pence to be paid on 4
July 2008 to shareholders on the register on 2 June 2008.
Moving forward
As a result of the Group's underperformance, as reported in the Group's trading

update in November, the Board carried out an immediate and full review of the
Group's organisational structure. David Barrass was appointed interim Chief
Executive Officer in December following the resignation of David Seaton in
November.
The Board's review of the Group was completed in early January and its
recommendations on the Group's structure were implemented immediately. The
changes already made to the cost base since the beginning of 2008 are expected
to result in annual savings of $3.5 million. The focus on cost reduction is
expected to lead to further savings in 2008.
The Group's new structure will make it a more commercially-focused organisation,

with a level of overhead appropriate for the current level of business. The
drive for expansion will continue although it will be tempered by greater
prudence in expenditure.
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Outlook
The Board believes the Group's competitive advantages, the continued growth in
its markets and the changes it is making will allow the business to continue to
develop in 2008 and beyond.
The market
The major market driver continues to be the increase in government outsourcing

of security services to the private sector. The US Government has used private
contractors to support its military and diplomatic activities for many years but
there is a growing understanding and acceptance of the benefits that reputable
companies, such as ArmorGroup, can bring to the over-stretched public sector.
This change in attitude has accelerated over the last year, albeit with
set-backs resulting from the ill-judged actions of other less reputable
companies. As a result the Group has been closely involved in briefing a number
of sovereign governments and major international organisations on the
development and management of procedures and controls for wider use of private
security companies to bolster capacity.
Market growth, driven by greater use of the private security market by

governments and international peace and security organisations (NGOs), is
matched by the ongoing dependence of the oil, gas and extractive industries on
security services as they develop operations in the world's more hostile
environments. The Group continues to support its existing clients as their
operations extend into new hazardous areas while providing services to new
clients, as more international organisations accept that their duty of care
towards their employees needs the proactive security services provided by highly
regarded, international providers rather than the commoditised services offered
by local suppliers.
The Group's competitive advantages: its proven global capability; the highest
quality employees; prestigious client base; unrivalled ethical and regulatory
standards; and access to the resources required to invest in its clients'
protection, will continue to position ArmorGroup strongly.
Operational review
The Group provided its services to over 95 separate government, commercial and
NGO clients in over 45 countries during 2007. The Group's Protective Services
division had a mixed year winning and retaining a number of major strategic
contracts, yet being impacted by delays in the mobilisation and execution of
those contracts and increased margin pressure. The WR&MC division had an
excellent year, carrying out a number of major programmes won in the second half
of 2006, which resulted in a strong growth in revenues and operating profits.
The Training division undertook a cost reduction exercise at Pershore in the
second half of the year and achieved a strong performance at Longworth Hall.
However, the division continues to be undermined by the short notice
cancellation of courses in the US. The recently formed risk management business
performed creditably and continues to provide the Group with specialist skills
it could not previously offer its clients.
Protective Security Division
The Division's revenues increased by 5.6% to $258.3 million, driven by the award
of major new contracts in Afghanistan and Nigeria. Operating profits before
head office costs fell to $16.8 million (2006: $20.3 million) primarily due to
significantly lower margins on the new UK Government contract in Afghanistan,
the losses on the US Embassy contract in Kabul and weak performances from
several of the Group's African and Latin American operations.
Middle East
The Group's Middle East revenues fell to $119.7 million (2006: $138.9 million)
as the Iraq business completed its transition to the lower volume but higher
margin convoy escort contracts and away from the high volume, but lower margin,
guarding contracts of the previous year.
ArmorGroup is the largest commercial provider of convoy escort services in Iraq

and conducted a total of 2,387 convoy escort missions in support of
reconstruction efforts throughout Iraq in 2007. The security situation in Iraq
has improved since the US military's 'surge' was launched in the spring of 2007
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with around 150 hostile actions directed at ArmorGroup personnel in the second
half of the year, compared to 365 in the first half. The Group has invested a
further $6.5 million in 2007 to provide enhanced protective equipment and
vehicles for its employees.
The involvement of a number of private security companies (PSCs) in the shooting

of Iraqi civilians during September 2007 led to widespread political debate over
the use, coordination and regulation of PSCs in Iraq. This debate led to a
significant slowing in the award and mobilisation of a number of major contracts
in the country over the last quarter of the year as clients attempted to
mitigate the perceived risk to their operations and reputations. ArmorGroup,
although temporarily impacted by this slow down, continues to be a recognised
global leader in the regulatory, ethical and reputational advancement of the
industry. Performance was also impacted in the final quarter by a major
contract which did not achieve the rapid increase in convoy escort teams
originally projected by the client. This increase eventually happened in
January 2008 and the contract is now running in line with expectations.
Elsewhere the Group continued to benefit from its regional network with non-Iraq
revenues rising significantly on the back of successfully winning a number of
contracts to support US Government programmes in Bahrain, the United Arab
Emirates and Jordan. The Group's restructuring of its central overhead in the
region is expected to lead to improvements in the region's profitability in
2008.
Asia
The division's revenues in Asia grew strongly during the period to $59.5 million
(2006: $35.9 million), primarily through the securing of two strategically
important and long-term projects in Afghanistan: the US Embassy contract in
Kabul; and the extension of the Group's contract to protect UK Government
personnel and property across the country. However, operating profits for the
region fell, impacted by lower margins on the extended FCO contract due to
increased competition at the time of the rebid in late 2006 and the extensive
mobilisation costs and ongoing operational commitments associated with the US
Embassy project. The Group restructured the project management team in October
2007 and has worked closely with the client to overcome many of the outstanding
issues to ensure this project achieves profitability in 2008.
The Group has continued to win an increasing number of commercial contracts in

Afghanistan and believes that the international commitment to the reconstruction
of the country will present further opportunities in 2008.
The Tokyo sales and marketing office continues to source a good stream of
opportunities from Japanese companies operating across the world and the Group
remains committed to those efforts.
Africa
African revenues improved 26% to $37.2 million (2006: $29.6 million) with strong
performances from the Group's operations in Algeria, Nigeria and the Democratic
Republic of Congo. However, the Group's African businesses continue to be
impacted by the increasing commoditisation of its services, driven by local
competition and the tendency of some clients to award contracts based on price
rather than quality.
The Group is in the process of realigning its businesses across the continent
through the consolidation of living and office accommodation, reductions in
local head office staff and a focus on operational and accounting procedures.
At the same time the Group is implementing a training and quality assurance
programme across the region to ensure performance standards and Duty of Care
responsibilities are maintained. The Group expects the benefits of these
programmes to become evident over the first half of 2008.
The Group continues to pursue additional opportunities across the region,

building on its growing consultancy and training track record, and has more
recently supported clients' bids for opportunities in Libya and Sudan as well as
providing a wide range of emergency services for organisations affected by the
recent troubles in Kenya.
North America
ArmorGroup North America's revenues increased to $7.4 million (2006: $6.6
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million), primarily due to a continuation of its reconstruction support
activities in Louisiana. The Washington office continues to provide the hub for
the Group's bidding for and management of major US Government contracts overseas
while coordinating the Group's relationships with the larger US defence
integrators on potential opportunities. There was some reorganisation of the US
cost-base at the beginning of 2008 to reduce its costs in line with its current
revenue base.
South America
South American revenues decreased marginally to $20.5 million (2006: $21.0

million) with a good performance in Venezuela offset by a very poor one in
Colombia and a slow decline in Ecuador. A reorganisation of the South American
business has been undertaken with the region now being managed out of Venezuela,
a new commercial manager appointed to run the Colombian business and the closure
of the loss-making Brazil office.
The Group's businesses in the region will continue to be impacted by growing

government intervention and increasing commoditisation of services by local
competition. However, the new management team, a rebalanced cost base and an
increasing number of multinational clients is expected to deliver better returns
in 2008.
Eurasia
Revenues in Eurasia fell 7% to $12.3 million (2006: $13.3 million) primarily due
to the loss of the US Embassy Moscow contract in mid-year and a number of major
commercial contracts coming to an end in the third quarter of the year.
However, the business was awarded contracts in the final quarter of the year
which will replace a substantial portion of the lost revenue in 2008. The
business has also established partnership arrangements with reputable local
security providers in a number of key Siberian cities and former Soviet
republics, including Kyrgyzia and Azerbaijan.
Risk management
The risk management business was formed in the autumn and was built around Neil
Young International, the Group's specialist abduction, kidnap for ransom and
extortion consultancy which was acquired in January 2007. The business has
made a satisfactory start with a modest but expanding number of consulting
projects for major international companies in the Middle East and Africa.
However, the business is also generating an increasing number of opportunities
for other Group services and we expect to benefit further from this
cross-selling programme in 2008.
Security Training Division
Training revenues grew by 1% to $18.5 million (2006: $18.3 million) and reported
a comparable operating loss, before charging its share of head office costs, of
$0.8 million for the year (2006: loss of $0.8 million).
The Group's training business in the US continued to be impacted by the

cancellation of client courses at short notice with the delays in the Congress
approval for the US Defense budget leading to further cut backs in the fourth
quarter as clients were left without sufficient training budgets. The ongoing
commitment to the training of the US Embassy Kabul guard force continues to tax
resources and the ability to offer commercial courses at the Group's Texas
facility. Some of this commitment shifted to the Group's Virginia facility, in
order to share the burden of this important effort and resulted in the Texas
facility performing well towards the end of the year. The Defense budget was
passed in January 2008, which has enabled US Government clients to book new
courses and reschedule cancelled ones. In February 2008, the business was
awarded its first long-term contract, worth a maximum of $7.5 million over five
years, to provide training for the US Department of Homeland Security.
The cost reduction exercise at the Pershore training facility in July

significantly reduced its previous losses. Due to the continued lack of
sustained interest by UK companies in providing programmed pre-deployment
training to employees, its costs were further reduced in January 2008 and its
instructors refocused on providing internal training as a Group-wide resource.
Our specialist courses continue to develop and the Group anticipates those
courses will run for an extended period. The Group has now suspended its low
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margin, close protection training courses to ensure management focus on these
courses.
Weapons Reduction & Mine Clearance Division
The division had an excellent year, achieving $18.5 million in revenues (2006:
$10.6 million) and achieving $3.3 million in operating profit before head office
costs (2006: $0.8 million). The division now accounts for around 6% of Group
revenues, up from 4% in the same period last year. The majority of this revenue
was generated by two major contracts which mobilised in the second half of 2006:
a mine survey and clearance programme in Southern Sudan; and a battle area
clearance programme in South Lebanon. The former contract was substantially
re-awarded to the Group in September although the latter programme was completed
in December, which will impact the division's revenues in the first half of
2008.
The division continued to win new contracts and contract extensions throughout
the year, supporting humanitarian programmes in Cyprus, Nepal and Sudan as well
as pursuing further commercial projects in Afghanistan and Mozambique. The team
also won a number of smaller projects in Albania, Azerbaijan and Montenegro as
part of the US Government's Weapons Reduction and Abatement Services programme.
The division has continued to extend its commercial footprint in Afghanistan,

which is becoming one of the more important growth markets for mine action, and
ArmorGroup is one of only five registered mine action companies in the country.
The division has now supported both commercial and humanitarian clients across
Afghanistan and as reconstruction activity continues is well-placed to benefit
from further growth.
Financial Review
Overall revenue for the twelve months to 31 December grew to $295.3 million
(2006: $273.5 million). Gross margins were maintained at 22% for the year as
whole, despite a number of major contracts which were re-awarded at
significantly lower margins.
Gross profits increased 9.9% to $65.6 million. Administrative expenses,

excluding exceptional items, increased 14.9% year on year to $56.4 million
(2006: $49.1 million), evenly split over the two halves of the year, with the
increase primarily due to: $2.4 million in legal, consultancy and insurance
costs; $0.9 million of Mine Action establishment costs in relation to new
contracts in Afghanistan, Sudan and Nepal; and $1.9 million increased cost base
in Nigeria, partially related to the introduction of a consultancy and training
capability in that country.
Profits were expected to be adversely affected by the weakness over the year of
the US$, the Group's primary operating currency, which had an impact of $0.4
million in the first half. However, due to the strengthening of the US$ in the
last two months of the year the impact was reduced to $0.1 million over the year
as a whole (2006: loss of $0.6 million). The Group continues to review how best
to reduce this exposure going forward, although the strengthening of the US$
since the beginning of 2008 has reduced the effects of this issue.
The Group incurred two one-off costs during the year:
• the Board reported in December that the Group had been unable to
progress a strategic acquisition that had been the subject of extensive
discussions for some months, primarily due to the reduced availability of
acquisition finance following the collapse of global credit markets in the
second half of the year. Consequently the Group wrote off $2.1 million of
professional fees incurred on the due diligence and contract negotiations in
2007.
• the Group also charged $0.7 million of severance costs related to

former CEO David Seaton, following his departure from the Group in November
2007.
A review of the Group's overhead structure was undertaken over the year end with
a significant reorganisation of the Group's operations in January 2008. The
reorganisation is expected to cost $0.9 million in 2008 and will produce annual
savings of $3.5 million. The focus on cost reduction is expected to lead to
further savings in the near future.
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Operating profit, before the $2.9 million of exceptional costs, was down to $9.2
million (2006: $10.6 million) with good growth in Iraq and from the WR&MC
division offset by widespread margin reduction, particularly in Afghanistan in
the first half of the year, combined with contract delays.
Net interest charges increased to $2.1 million, compared to $1.1million in 2006.

The charge reflects the interest costs associated with the $23.7 million (2006:
$18.7 million) capital investment in the business over the year including: $10.8
million on the acquisition of over 175 vehicles; $3.6 million on a Group-wide IT
system, which is now substantially complete and already bringing significant
benefits; and $3.4 million on equipment for a major contract in Colombia.
Capital expenditure will continue to be aligned to the operational equipment
required for new contract awards. Profit before tax, taking into account the
$2.9 million of exceptional charges, was reduced to $4.2 million (2006: $9.6
million).
The Group's effective tax rate during the period increased to 30% (2006: 26%)
which reflects the mix of jurisdictions where profits have been generated, the
release of provisions and the Group's ability to utilise tax losses in the US,
Nigeria and Kenya. Profit after tax fell by 58.4 % to $3.0 million (2006: $7.1
million) and basic earnings per share to 5.5 cents (2006: 13.4 cents).
The Group achieved a good cash conversion rate of 275% (2006: 289%), before
exceptional items, with cash inflow from operations of $25.3million (2006: $30.7
million) as a result of a strong management focus on improving working capital.
Net debt at 31 December 2007 had increased to $9.5 million at the year end
(2006: $3.6 million). The Group still has a strong balance sheet comprising
US$18.2 million (2006: $14.6 million) of positive cash balances offset by bank
borrowings of US$27.7 million (2006: $18.2 million). Net assets at 31 December
2007 were $84.1 million (2006: $82.9 million).
The Board will be recommending the payment of a final dividend of 1.5 pence on 4
July 2008 to shareholders on the register on 2 June 2008. Combined with the
interim dividend of 1.25 pence, which was paid in November 2007, this will
result in a dividend for the year of 2.75 pence (2006: 2.75 pence).

Consolidated income statement for the year ended 31 December 2007
Unaudited

Note 2007 2006
US$'000 US$'000
Revenue 3 295,275 273,453

Cost of sales (229,695) (213,784)
Administrative expenses before exceptional items (56,387) (49,062)

Exceptional administrative expenses 4 (2,856) -
Operating profit before exceptional items 9,193 10,607

Exceptional administrative expenses 4 (2,856) -

Finance costs 5 (2,246) (1,209)
Profit before tax 4,227 9,555
Income tax expense 7 (1,275) (2,460)

Equity shareholders 2,952 7,095
Earnings per share expressed in US cents per 1 pence share

- basic 9 5.53 13.35
- diluted 9 5.35 13.05

Consolidated balance sheet as at 31 December 2007
Unaudited
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2007 2006
US$'000 US$'000
Non-current assets
Goodwill 22,850 21,317
Other intangible assets 4,268 810
Deferred tax assets 5,858 3,845
66,673 56,842
Current assets
Inventories 1,874 1,530
78,092 70,209
Total assets 144,765 127,051
Current liabilities
Borrowings (21,474) (14,614)
Trade and other payables (28,919) (21,157)
Current income tax liabilities (1,723) (2,102)
Provisions and other liabilities (33) (134)
(52,149) (38,007)
Borrowings (6,185) (3,592)
Provisions and other liabilities (37) (131)
Deferred tax liabilities (2,327) (2,434)
(8,549) (6,157)
Total liabilities (60,698) (44,164)
Net assets 84,067 82,887
Capital and reserves attributable to equity holders of the

Company
Share premium account 56,993 56,952
Capital redemption reserve 96 96
Merger reserve 1,273 1,273
Cumulative translation reserve 1,403 961
Total equity 84,067 82,887

Consolidated cash flow statement for the year ended 31 December 2007
Unaudited

Note 2007 2006
US$'000 US$'000
Cash generated from operations 10 25,274 30,650
Interest received 136 157
Interest paid (1,546) (1,271)
Income tax paid (3,774) (2,418)
Net cash generated from operating activities 20,090 27,118

Purchase of businesses (net of cash acquired) (884) (52)
Purchase of property, plant and equipment (19,231) (18,105)
Purchase of intangible assets (3,567) (524)
Proceeds from sale of property, plant and equipment 1,035 122

Net proceeds from issue of ordinary share capital 44 43
Equity dividends paid to shareholders (2,976) (2,754)
New bank borrowings 14,189 3,460
Finance lease principal payments (53) (43)
Net cash generated from / (used in) financing activities 5,978 (6,280)
Net increase in cash and cash equivalents 3,421 2,279

Exchange gains on cash and bank overdrafts 143 36
10

Consolidated statement of changes in shareholders' equity for the year ended
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31 December 2007
Unaudited
Share Share Capital Merger Cumulative Retained

capital premium redemption translation earnings
Share reserve reserve reserve
Note account Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2006 1,046 56,912 96 1,273 (178) 17,334 76,483
Share options
- Proceeds from shares issued 3 40 - - - - 43
- Cost - - - - - 881 881
Currency translation - - - - 1,139 - 1,139
adjustments
Profit for the year - - - - - 7,095 7,095
Dividends paid to equity 8 - - - - - (2,754) (2,754)
shareholders
At 31 December 2006 1,049 56,952 96 1,273 961 22,556 82,887
Share options
- Proceeds from shares issued 3 41 - - - - 44
- Cost - - - - - 718 718
Currency translation - - - - 442 - 442
adjustments
Dividends paid to equity 8 - - - - - (2,976) (2,976)
shareholders
At 31 December 2007 1,052 56,993 96 1,273 1,403 23,250 84,067

Notes to financial information
1. Preliminary announcement
The preliminary financial information in this statement, which was approved by

the Board on 19 March 2008, is not audited and does not constitute statutory
accounts for the years ended 31 December 2007 or 31 December 2006 within the
meaning of Section 240 of the Companies Act 1985 (as amended). Financial
statements for ArmorGroup International plc for the year ended 31 December 2006
presented under IFRS have been delivered to the Registrar of Companies. The
auditors reported on those accounts: their report was unqualified and did not
contain a statement under either Section 237 (2) or Section 237 (3) of the
Companies Act 1985.
As at the date of this announcement the auditors have not reported on the
Group's financial statements for the year ended 31 December 2007, nor have such
financial statements been delivered to the Registrar of Companies. The
financial statements for the year ended 31 December 2007 will be distributed to
shareholders prior to, and filed with the Registrar of Companies following, the
Annual General Meeting.
The preliminary financial information has been prepared in accordance with the
Listing Rules of the Financial Services Authority and uses EU adopted
International Financial Reporting Standards (IFRS) accounting policies
consistent with those described in the Annual Report and Financial Statements
2006. During the year ended 31 December 2007, the Company has defined its
accounting policy for exceptional items. Exceptional items are material
non-recurring items of income and expense separately disclosed by virtue of
their size or significance to enable a full understanding of the group's
financial performance.
The directors consider United States Dollars (US$) to be the Group's functional
currency. Accordingly, this financial information is presented in US$. At 31
December 2007 the closing exchange rate to sterling was £1/US$1.997 (31 December
2006: £1/US$1.958) and the average exchange rate to sterling for the year ended
31 December 2007 was £1/US$2.001 (31 December 2006: £1/US$1.8398).
The preparation of financial information in conformity with generally accepted

accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
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statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.
3. Segmental reporting
a. Primary reporting format - business segment analysis
2007 2006
Revenue US$'000 US$'000
Protective security services 258,282 244,510

Security training 18,490 18,329
Weapons reduction and mine clearance 18,503 10,614
Revenue 295,275 273,453
Revenue in respect of protective security services includes recharges to third

party customers at cost or cost plus a handling fee of certain contract
expenses, including insurance, equipment, travel and out of pocket expenses of
US$1,848,000 for the year ended 31 December 2007 (2006: US$3,476,000).
2007 2006
Profit for the year from continuing operations US$'000 US$'000
Protective security services before head office costs 16,847 20,345

Security training before head office costs (826) (803)
Weapons reduction and mine clearance before head office costs 3,348 835
Head office costs (10,176) (9,770)
Segment result
Protective security services including head office costs 7,946 11,610
Security training including head office costs (1,463) (1,458)
Weapons reduction and mine clearance including head office costs 2,710 455
Operating profit before exceptional items 9,193 10,607
Exceptional items (2,856) -
b. Secondary format - geographical segment analysis
The group manages its business segments on a global basis.
Revenue
2007 2006
US$'000 US$'000
Western Europe 10,496 10,174

Eastern Europe 13,876 13,939
South America 20,522 20,959
North America 16,844 14,914
Asia 62,888 36,636
Africa 45,617 35,413
Middle East 125,032 141,418
295,275 273,453
Geographical analysis is based on the region in which the services are

performed.
Exceptional items include $2,124,000 of costs incurred as a result of the

decision taken not to progress with a strategic acquisition. The costs relate
to professional fees incurred on the due diligence and contract negotiations.
In addition, $732,000 included in exceptional items relates to the redundancy

package for the former CEO Dave Seaton.
4. Net finance costs
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2007 2006
US$'000 US$'000
Finance costs on bank overdrafts and loans 2,244 1,201

Finance costs on finance leases 2 8
Total finance costs 2,246 1,209

Finance income (136) (157)
Net finance costs 2,110 1,052
5. Acquisitions and Disposals
Acquisitions
On 10 January 2007 the Group purchased 100% of the ordinary share capital of
Neil Young Associates for a consideration of £250,000 in cash and a further
£375,000 of deferred consideration to be paid in three annual tranches,
dependent on the annual profits of Neil Young Associates. Neil Young Associates
provides kidnap and extortion prevention, training and response services. The
acquisition was satisfied by £321,500 in cash (inclusive of £71,500 acquisition
costs) and £375,000 cash in deferred consideration, resulting in provisional
goodwill of £696,500. Goodwill arising on the acquisition was US$1,385,000 and
was attributed to the anticipated profitability of the acquired business and the
synergies expected to arise. The fair value of the net assets acquired on the
acquisition of Neil Young Associates was £100, being the nominal value of the
share capital.
From the date of acquisition to 31 December 2007 Neil Young Associates

contributed US$1,798,000 to revenue, increased profit before interest by
US$593,000 and increased profit before taxation by US$592,000. Neil Young
Associates contributed US$4,000 to the Group's net operating cash inflows, paid
US$ nil in respect of interest, US$ nil in respect of taxation and utilised
US$2,000 for capital expenditure.
There were no acquisitions or disposals during the year ended 31 December 2006.
6. Income tax expense
Analysis of expense for the year 2007 2006

US$'000 US$'000
UK current tax
Corporation tax charge at 30% (2006: 30%) 2,105 1,792
Adjustment in respect of prior periods 1,032 (16)
3,137 1,776
Foreign current tax
Corporation tax charge 1,325 670
Adjustment in respect of prior periods (1,094) (455)
231 215
Total current tax expense 3,368 1,991
UK deferred tax
Deferred tax charge 695 597
Adjustment in respect of prior periods (662) 62
Impact of change in UK tax rate 55 -
88 659
Foreign deferred tax
Deferred tax credit (2,084) (115)
Adjustments in respect of prior periods (97) (75)
(2,181) (190)
Total deferred tax (credit) / expense (2,093) 469
Income tax expense 1,275 2,460
The total income tax expense for the year is higher (2006: lower) than the
standard rate of corporation tax in the UK (30%). The differences are explained
below:
2007 2006
US$'000 US$'000
Profit before income tax 4,227 9,555
Profit multiplied by standard rate of corporation tax in the 1,268 2,867

UK of 30% (2006:30%)
Effects of:
Adjustments to tax in respect of prior periods (821) (484)
Adjustments in respect of foreign tax rates (1,530) (1,946)
11/13
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Expenses not deductible for tax purposes 537 266
Depreciation in excess of capital allowances 49 13
Other timing differences 72 (27)
Utilisation of losses (74) (257)
Unrelieved foreign tax credits 441 343
Unrelieved losses carried forward 356 262
Deferred tax on undistributed earnings 922 1,423
Remeasurement of deferred tax - change in UK tax rate 55 -
Income tax expense 1,275 2,460
7. Dividends
A dividend of 1.5 pence per share will be recommended by the Board after the balance sheet date and will be paid on 4
July 2008 to shareholders on the register on 2 June 2008.
An interim dividend for 2007 of 1.25p per share, amounting to US$1,377,000, was
paid on 9 November 2007 to shareholders on the register on 28 September 2007.
A second interim dividend for 2006 of 1.50 pence per share, amounting to US$1,599,000, was paid on 2 July 2007 to
shareholders on the register on 1 July 2007.
An interim dividend for 2006 of 1.25 pence a share, amounting to US$1,263,000,

was paid on 10 November 2006 to shareholders on the register at 29 September
2006.
Basic
Basic earnings per share is calculated by dividing the earnings attributable to

equity holders of the Company by the weighted average number of ordinary shares
in issue during the year.
2007 2006
Profit attributable to equity holders of the Company (US$'000) 2,952 7,095

Weighted average number of ordinary shares 53,355,360 53,145,172
Basic earnings per share (US cents) 5.53 13.35
Diluted
Diluted earnings per share is calculated by adjusting the weighted average

number of ordinary shares outstanding to assume allotment of all dilutive
potential ordinary shares. The Group has one class of dilutive potential
ordinary shares: those share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the year.
2007 2006
Profit attributable to equity holders of the Company (US$'000) 2,952 7,095

Weighted average number of ordinary shares 53,355,360 53,145,172
Adjustment for dilutive potential of ordinary shares 1,832,582 1,202,826
Weighted average number of ordinary shares for diluted 55,187,942 54,347,998
earnings per share
Diluted earnings per share (US cents) 5.35 13.05
9. Reconciliation of profit after tax to net cash generated from operating

activities
2007 2006
US$'000 US$'000
Profit after tax 2,952 7,095

Adjustments for:
Finance income (136) (157)
Finance costs 2,246 1,209
Taxation 1,275 2,460
Depreciation 14,610 14,871
Loss on disposal of property, plant and equipment 953 1,141
Compensation charge in respect of share based payments 718 881
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23,436 27,940
Changes in working capital (excluding effects of acquisition
of subsidiaries)
Increase in inventories (344) (360)
Increase in trade and other receivables (4,035) (768)
Increase in payables 6,412 3,786
(Decrease)/increase in provisions (195) 52
Cash generated from operations 25,274 30,650
Cash and cash equivalents include the following for the purposes of the cash
flow statement:
2007 2006
US$'000 US$'000

Bank overdrafts - (52)
18,158 14,594
10. Reconciliation of net cash flow to movement in net debt
2007 2006
US$'000 US$'000
Increase in cash in the year 3,421 2,279

(Increase)/decrease in other borrowings (8,910) 3,569
Changes in net debt resulting from cash flows (5,489) 5,848

Other non-cash movements (595) -
Foreign exchange translation adjustments 143 24
Movement in net debt in the year (5,941) 5,872

Net debt at the beginning of the year (3,560) (9,432)
Net debt at the end of the year (9,501) (3,560)
11. Reconciliation of movements in net debt
Group At 1 Cash flow At 31

January Non-cash Exchange December
2007 movements movement 2007
US$'000 US$'000 US$'000 US$'000 US$'000
Cash at bank and in hand 14,646 3,369 - 143 18,158

Overdrafts (52) 52 - - -
14,594 3,421 - 143 18,158
Bank and other borrowings due (14,509) (3,056) (3,887) - (21,452)

within one year
Bank and other borrowings due in (3,588) (5,907) 3,358 - (6,137)
more than one year
Finance leases (57) 53 (66) - (70)
(3,560) (5,489) (595) 143 (9,501)

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Morson Group PLC
Preliminary Results
RNS Number : 4331A
Morson Group PLC
30 March 2012
Morson Group PLC

("Morson" or "the Group")
Audited preliminary results for the year ended 31 December 2011
Morson (AIM: MRN.L) the UK's leading provider of technical contracting personnel to the aerospace
and defence, nuclear and power, rail and other technical industries, is pleased to announce its
preliminary results for the year ended 31 December 2011.
Financial Highlights
Solid trading performance in a competitive market place aided by the breadth of our offering:
· Group revenues exceed £0.5 billion, up 11.0% to £507.9 million (2010: £457.6 million)
· Group net fee income (gross profit) up 10.9% to £38.9 million (2010: £35.1 million)
· Adjusted profit before tax* down 12.4% to £7.1 million (2010: £8.1 million)
· Profit before tax down 38.9% to £5.7 million (2010: £9.4 million)
· Adjusted basic earnings per share* down 12.7% to 12.27 pence (2010: 14.06 pence)
· Basic earnings per share down 36.2% to 10.01 pence (2010: 15.69 pence)
· Net debt at year end up 43.7% to £33.3 million (2010: £23.2 million)
Business Highlights
· Average contractor numbers engaged up 700 to 10,900

· Strength in core markets
· Excellent client retention rate
· Continued expansion and investment for the future:
o Aberdeen recruitment office and Bristol design centre opened
o Growing niche areas of IT, Oil & Gas and Telecommunications
* Before amortisation of £866,000 (2010: £620,000), exceptional gain on acquisition of businesses £nil (2010: £1,249,000), exceptional
restructuring costs £110,000 (2010: £404,000) and fair value loss regarding the derivative financial instruments £391,000 (2010: gain
£1,063,000).
Commenting on the outlook Gerry Mason, Non Executive Chairman, said:
"The Board's view is that the current year will again be challenging. We expect our core markets to
remain solid but margin pressures to continue. We have several key contract renewals and
extensions that fall due in 2012 and will be focussed on achieving these, developing service
capabilities and expertise and planning for the longer term growth of the business.
Aerospace, particularly on the civil side, is performing well and remains the largest business sector
for us. Rail has recently seen government support for further future rail improvement programmes. We
expect nuclear power to become a key contributor to the UK's energy needs and that there will be an
increasing resource requirement in the near future entailing not just new nuclear stations but also the
site support facility, control environment and the upgrading work needed on the UK power
transmission grid and infrastructure."
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Morson Group plc 0161 707 1516

Ged Mason, Chief Executive Officer
Paul Gilmour, Group Financial Director
WH Ireland Ltd.
Adrian Hadden, Nick Field 0207 220 1666
Buchanan 020 7466 5000

Diane Stewart, James Strong, Carrie Clement
INTRODUCTION
In a challenging year, it is pleasing to be able to report further growth in revenues and Net Fee
Income, albeit there has been considerable pressure on operating margins and hence profits are at a
lower level. Compared with 2010, Revenue exceeded £0.5 billion, increasing by 11.0% to £507.9
million and Net Fee Income increased 10.9% to £38.9 million. Adjusted profit before tax (see
derivation in table in Business Review below) decreased by 12.4% to £7.1 million, reflecting
continued pricing pressure, ongoing investments in new areas and a reduced contribution from
Morson Projects, our engineering consultancy division. Profit before tax decreased by 38.9% to £5.7
million.
At an operational level, our core markets have held up well, particularly in aerospace, marine and
defence. All material contracts which were up for renewal during the year were won and the Group
continued to grow the numbers of contractors placed and to expand our offering both in the UK and
overseas.
The year 2011 has been one in which much of the business community has experienced continuing
challenges with financial constraint and economic uncertainty and we have seen this impact
business confidence, strategy, investment and performance in some areas of our client base. As a
leading provider of talent and services, across sectors, to many of the UK's largest engineering
businesses the Group is in a strong position but this inevitably impacted our performance with some
areas of our business being affected more than others.
Morson has had to be cognizant of the impact of the trading environment in each of our areas of
activity and has planned and managed the business in 2011 to deal with market conditions. During
the year, we concentrated on delivering increased market share whilst investing in niche areas that
should deliver returns in the future.
The Group has also faced notable challenges during the year and addressed a need for change and
investment within our engineering consultancy division Morson Projects including welcoming a new
Managing Director and Finance Director. This is a key aspect of developing the Group's future
relationships and capabilities.
The Group balance sheet remains strong. The increased levels of revenues and expansion into new
markets have increased the working capital requirements of the business during the year. This and
the £4.0 million acquisition of the non-controlling minority stake in Morson Wynnwith have contributed
to increased net debt levels to £33.3 million (2010: £23.2 million) at 31 December 2011. This remains
well within facility limits.
RESULTS
Key financial and business highlights include:
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Financial Highlights
Solid trading performance in a competitive market place aided by the breadth of our offering:
· Group revenues exceed £0.5 billion, up 11.0% to £507.9 million (2010: £457.6 million)
· Group net fee income (gross profit) up 10.9% to £38.9 million (2010: £35.1 million)
· Adjusted profit before tax* down 12.4% to £7.1 million (2010: £8.1 million)
· Profit before tax down 38.9% to £5.7 million (2010: £9.4 million)
· Adjusted basic earnings per share* down 12.7% to 12.27 pence (2010: 14.06 pence)
· Basic earnings per share down 36.2% to 10.01 pence (2010: 15.69 pence)
· Net debt at year end up 43.7% to £33.3 million (2010: £23.2 million)
Business Highlights
· Average contractor numbers engaged up 700 to 10,900

· Strength in core markets
· Excellent client retention rate:
· Continued expansion and investment for the future:
o Aberdeen recruitment office and Bristol design centre opened
o Growing niche areas of IT, Oil & Gas and Telecommunications
* Before amortisation of £866,000 (2010: £620,000), exceptional gain on acquisition of businesses £nil (2010: £1,249,000), exceptional
restructuring costs £110,000 (2010: £404,000) and fair value loss regarding the derivative financial instruments £391,000 (2010: gain
£1,063,000).
STRATEGY
The markets in which we operate are competitive. We differentiate our service on the basis of quality,
excelling at what we do and providing efficient, cost saving solutions for our clients. We are not
complacent and constantly innovate and develop our services to retain these long standing
relationships.
Within recruitment many of our sectors are mature and with high volumes generate low margin
returns, but run efficiently. The Group has sought to maintain these core strengths and position
Morson for organic growth as market conditions improve. This has included ongoing investment in our
business systems, operations and sales development teams.
Contemporaneously the Group has also invested in chosen developing markets that offer increased
opportunities for return and growth. This includes activity with clients in overseas locations both
through subsidiary operations and via our established UK offices. It has also included seeking to
increase our permanent recruitment activity and whilst this area has developed at a slower pace than
anticipated, in 2012 we will refocus resource to niche skillsets where we feel demand is higher.
Whilst these developing initiatives will require investment in terms of cost and working capital the
Board believe they will form an increasingly important part of Group activities in the years to come.
Whilst 2011 was a difficult year for Morson Projects, in recent years it has delivered good revenues
and grown our capability and skillsets across several exciting emerging engineering markets. It is
also, of course, an internal Group client for our recruitment activity. We have high quality clients, both
in the UK and overseas, involved in cutting-edge, innovative engineering projects and have a wealth of
design skills to call on. We wish to increase the returns we achieve on this business and have
initiated review, change and internal goals and aspirations to achieve this.
EMPLOYEES
Our staff continue to work hard and display great loyalty and commitment to what we do at Morson.
As we enter our 43rd year in business and see many staff with 10 and 20 years of service, and even
second generations joining us, it is a great testament to them and the business culture and
environment in which we all work. I am pleased on behalf of the Board to pass on our appreciation
and sincere gratitude to them all.
DIVIDEND
In December 2011 the Board took the decision that a final dividend for the year ended 31 December
2011 would not be proposed. As we set out at that time, investments in the business and
maintenance of core business and client relationships is key and we are mindful of the need to
manage cash resources appropriately. As we have previously announced, the Board will not be
reviewing its decision to suspend dividend payments until the time of the publication of the interim
2012 results, which is expected to be in September 2012. However, shareholders should be aware
that, for the reasons we have set out, there can be no guarantee that any dividend will be paid in
respect of the current financial year.
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OUTLOOK
The Board firmly believes that engineering talent will be in demand in the global economy in the years
to come and that the UK has a role to play in that market. Our highly qualified engineers, designers
and technical staff are respected throughout the world market and Morson intends to play a pivotal
role in supplying this talent, expanding our footprint overseas and constantly improving our delivery
and expertise. Clearly as we have several large key contract renewals and extensions that fall due in
2012 this will also be a major focus.
We expect our core markets to remain solid in the coming year. Aerospace, particularly on the civil
side, is performing well and remains the largest business sector for us. Rail has recently seen
government support for further future rail improvement programmes. We expect nuclear power to
become a key contributor to the UK's energy needs and that there will be an increasing resource
requirement in the near future entailing not just new nuclear stations but also the site support facility,
control environment and the upgrading work needed on the UK power transmission grid and
infrastructure.
Importantly, all of Morson's core areas have underlying maintenance requirements that have a very
long term future engineering need. Coupled with this, our investments into new areas and improving
our returns on design consultancy should enhance our performance.
Your Board's view is that the current year will again be challenging. We will plan for the longer term
growth and development of Morson to maintain our reputation, standards and market share and to
continue to deliver expert and flexible solutions and services to our clients.
GERRY MASON
NON EXECUTIVE CHAIRMAN
BUSINESS REVIEW
OVERVIEW: PERFORMANCE, MARKETS AND POSITION

The 2011 financial year has been a challenging one. The markets in which we operate have seen
intense competition and through the year the varying levels of confidence, due to wider economic
uncertainty, within our client base have affected demand. Our market position and framework
agreements are core strengths that have maintained solid and sustained business streams over
many years and these have enabled the Group to deliver growth in difficult markets.
During the year, we balanced the need to cut costs with a controlled and proportionate programme of
investment and change within the business. This aims to develop new lines of activity, raise
operational expertise and change and enhance systems and structure. We feel this will deliver
opportunities and returns in the future. A series of key performance indicators are presented later in
this review. For 2011 we returned adjusted pre-tax profits of £7.1 million (2010: £8.1 million)
maintaining significant profit levels in difficult trading conditions.
Our core focus is the provision of temporary staffing solutions to the UK recruitment market with
market leading positions in key sectors. This accounts for 91% of Group revenues. We are seeking
to expand our offering into overseas markets, permanent recruitment, other related engineering and
technical recruitment sectors and of course design consultancy.
Within Morson Projects, we have achieved revenue of £45.2 million, an increase of 20.7% over 2010.
However, here we have also experienced the most difficult trading with segment operating profit down
72.3% to £0.5 million (2010: £1.7 million). There have been several technically demanding projects
that have seen some cost overruns and scope change negotiation. However, these are not expected
to impact the coming year to the same extent and represent increases in technical knowledge and
capability gained by working through change and challenge with our clients on new concept design
work and structural materials. This has been complemented with other investment in this business.
We have improved our technical software offerings and reviewed and instigated a change in our office
network with an opening of a design centre in Bristol. Again we feel this will deliver opportunities and
returns in the future.
Activity with overseas clients is an area the Group is seeking to grow, both through an overseas
network of offices and contracting directly from our UK base. This applies both to recruitment and
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design consultancy. Across the Group revenues generated from non-UK activity amounted to £39.4
million (2010: £24.0 million). Whilst the development of overseas operations requires cost and
working capital input, the Board believes it to be a key part of achieving future earnings growth.
We feel it is important to remain known as a specialist engineering and technical service provider.
Our brand is well known, both to clients and the engineering and skilled technical professional
community. Sectors within which the Group operates include Rail, Power, Aerospace, Defence,
Nuclear, Telecommunication ("Telecoms"), Marine, Oil & Gas and Automotive. We work in 40
locations across the UK (being 27 stand alone branches and 13 offices co-located at client sites),
and internationally through a strategic network of 7 overseas offices in Italy, Germany, South Africa,
Serbia, Brazil, Colombia and Australia. Changes this year are new additions of Aberdeen,
Johannesburg and a new Bristol combined site.
SECTOR REVIEW
RECRUITMENT SERVICES
Temporary and permanent recruitment activity contributes 91.1% (2010: 91.8%) of Group sales and
84.7% (2010: 81.1%) of NFI. This represents a 10.1% growth in net revenue (revenue to third parties)
to £462.7 million (2010: £420.2 million) and a gross margin increase to 7.1% (2010: 6.8%) delivering
gross profits of £32.9 million (2010: £28.5 million) (segment gross margins are based on net revenue).
Adjusted operating profit for this segment was up 2.7% to £9.1 million (2010: £8.9 million).
Aerospace, Marine and Defence

This remains our largest sector, accounting for approximately 42% of Group revenue. It has again
delivered a good performance, benefiting from core substantial agreements with Xchanging (re BAE
Systems), Airbus/EADS, Thales, Babcock, GKN, Bombardier, QuEST Global and Finmeccanica
Group. Importantly Morson's strength in this sector is its capability which spans both military and
civil aircraft programme development.
As we had indicated prior to and through 2011, the Government's defence spending review in late
October 2010 had an immediate impact on activity at several BAE Systems' military aircraft sites.
Accordingly our activity through this contract was reduced. However, we have done well in other
defence areas including marine and maintenance and service of fixed wing and helicopter fleets to
offset such losses. Our presence in this area is still very substantial and our clients' core ongoing
requirements all require manpower support. Activity in Marine, a target area for the Group, has grown
and our market share increased through teams working at Rosyth, Barrow, Glasgow, Bristol,
Portsmouth and Plymouth. Contractors are engaged on ongoing fleet maintenance, new design and
build of Queen Elizabeth class of aircraft carriers and the Successor submarine programme.
The civil aerospace market continues to focus on new "green" technologies to deliver savings on fuel
via weight reduction. Improvements in design are key and working with new materials creates change
which drives design need. Often this activity is as investment in engineering research and
development, to deliver new variant planes and structures in a very competitive field. Morson
understands client requirements and has extensive experience of providing these often scarce skills
for the enhancement and modification of existing and conceptual aircraft and engine programmes.
Key areas of growth in this sector have been in both passenger and executive jet development
including Bombardier Learjet and C Series, Airbus A350, Airbus A320 NEO (New Engine Option).
Airbus Military products have also seen growth including A400M & Tanker projects.
Several new opportunities have also been identified including increasing our support to existing
customers in overseas locations, for example EADS in Europe, Finmeccanica in Italy and
Bombardier in Canada.
Nuclear Energy and Process

This sector has broadly had a steady year following the termination of the Magnox contract in June
2010. Since then all core clients have been maintained, with some new accounts won. During the
year we added URENCO as a key new client and anticipate growing this account in 2012. We and
our clients look forward to new-build and then decommissioning programmes. We remain involved in
the Magnox sites de-commissioning programmes via our preferred supplier list ("PSL") status with a
number of appointed contractor consortiums.
Whilst the UK nuclear new build programme has moved forward, progress has been slower than
might have been anticipated. Contracts have now been let for the first site infrastructure and
preparation works and this is yet another indicator that this activity could commence in earnest in the
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coming few years. Morson was heavily involved with the last station to be built within the UK and is
looking forward to these projects gathering momentum. We have good relationships with client
organisations who will be involved with these projects and are well placed to aim for preferred supplier
status with these as they develop, for example EDF.
Morson supports many businesses in this area and has the capacity and knowledge to contract
across the supply chain for a site, i.e. to the "tier one/two/three" suppliers, as demand shifts,
supplying the wide-ranging skills needed through different stages of a project from "cradle to grave".
Morson has been established within the power and nuclear community for over 30 years and remains
geographically very well placed, with our branch network in close proximity to all "new build" planned
sites, to take advantage of the emerging energy markets.
We believe UK energy demand will impel investments to be made in power infrastructure and believe
as a country we should be pushing forward with this to enhance energy security for our future. This
would create demand for our business and the expertise we have. We feel the ancillary site services
and connections to the electricity distribution grid of all the emerging new energy sources will place
significant skills resourcing pressure, rising demand for highly trained personnel and also a need for
the engineering consultancy services we can provide through Morson Projects. The timescales for
implementation of these projects remains in the hands of the government and regulatory bodies,
though we feel this must be accelerated soon.
On an ongoing basis Morson is involved with asset care and maintenance of existing power stations
and their current output. After new power sources come online there will be both decommissioning
work and of course the maintenance of those new power sources. Morson can play a significant role
in the resourcing and delivery of engineering talent through all these lifecycles which are very long
term engineering projects central to "UK PLC".
Rail and Transport

Morson has a long term involvement in this sector having first provided expertise some 20 years ago
to both the London Underground and the national overground networks. The Group now has a variety
of clients in this area and supplies a wide range of skillsets and resource solutions. These attributes
have helped our activity to remain broadly steady in 2011.
We did experience restraint in spending during the year with some existing framework contracts
delivering lower volume than in prior periods. We feel this is a reflection of reorganisation and
government spending policy within both Network Rail ("NWR") and Transport for London ("TfL").
TfL remains a core client for us and white collar engineering skills are predominant and are generally
longer term assignments. Within the underground network these are complemented by our ability to
supply flexible, specialist hands on skills of track workforces, safety critical resource and other track
maintenance and renewal skills. We anticipate trading in this area to remain steady and Cross Rail
programmes to support activity levels. We also add a note of caution that the Olympics and
Paralympic Games might well cause a hiatus of activity over several summer months which could
decrease revenues during that time.
With regard to the overground network, spending at NWR has been at relatively low levels. However,
the ongoing Cross Rail project is providing an opportunity for us to supply contractors to businesses
assisting TfL and NWR. The recent UK Government announcement in respect of the new high speed
rail links ("HS2") is a promising and welcome development. This £33 billion project has an initial
phase from London to Birmingham that is set to be operational by 2026. There is then a further "Y-
shaped" phase with extention arms to Manchester and Leeds that is subject to a consultation in
2014.
Other recruitment markets

As well as these core sectors and service offerings the Group has notable presence in several other
market sectors. These include:
· Oil and Gas, largely UK and servicing downstream (non-exploration/extraction) clients;
· IT systems and software, complementary services to existing clients;
· Increased presence within selected permanent disciplines; and
· Telecommunications activity, both in the UK and overseas.
Our overseas office in South Africa has commenced trading during the year and aims to move into
profit in the coming year. In Brazil we have moved to a minority ownership of that operation, with a
known and knowledgeable partner in order to seek expansion of the client base and wider
opportunities in the South and Central American region.
Technical engineering expertise touches on very many areas of business and we will continue to
monitor and evaluate existing and new target markets to provide diverse future income streams and
margin enhancing business.
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PROVISION OF ENGINEERING DESIGN CONSULTANCY AND

MANAGEMENT
Morson Projects shares many of the clients of the Recruitment business within the Aerospace and
Power sectors. In 2011 it contributed 8.9% (2010: 8.2%) of Group revenue and 15.3% (2010: 18.9%)
of Net Fee Income. The past year has been a challenging one for the company and whilst we have
seen a pleasing 20.7% growth in net revenue to £45.2 million (2010: £37.5 million) difficult trading and
some technically demanding projects have meant gross margin has reduced to 13.2% (2010: 17.7%)
delivering NFI of £6.0 million (2010: £6.6 million). This has flowed down to contributions at operating
profit levels of £0.5 million (2010: £1.7 million).
Within Morson Projects, Aerospace is the major sector which accounts for approximately 60% of
activity and it is within this division that the larger projects are undertaken. These have proved very
challenging on a commercial and technical level and margin and profitability has been affected.
The two main contracts in 2011 were work on the Bombardier Learjet 85 and also for GE Aviation in
connection with the Airbus A350 and work in these areas continues into 2012.
The work for Bombardier involved significant design using new composite materials and has moved
forward the knowledge base and capabilities of the company in this area. The main design contract
has now been delivered and additional contracts for work have been won. The work on the A350
involves trailing edge wing design, with a weight reduction focus, to improve fuel efficiency in new
variant planes. The contract here remains in progress and we anticipate this will be largely complete
by the time the Group reports interim results for 2012.
Also within Aerospace design, the company has looked at its delivery and geographic presence and
during the year invested in a new design centre at Filton near Bristol and the Birmingham presence
will be scaled down. Work in other areas continues with contracts being undertaken for several "first
tier" clients who support the major manufacturers.
Morson Projects Industrial and Nuclear Division has had a better year. Here we have seen steady
flow of work and increasing activity. We have engineering expertise that can be applied across
various power delivery markets and in linking the energy generated to the UK national delivery grid.
We feel we are well placed to benefit from what we believe will be a necessary government-led drive
and long term strategic investment programme to support the anticipated future UK energy demand.
Within industrial markets we can provide expert and flexible design resource as companies look to
drive efficiency in process and keep apace with the latest global advances in engineering. We believe
there will be a strong market for this consultative supporting engineering expertise as clients
outsource non-core tasks. Our customers here include, amongst others, framework agreements and
contracts with Sellafield, Alstom, Areva, Siemens and Pilkingtons.
OUTLOOK
The challenges faced throughout 2011 look set to continue into the coming year. Government
procurement and spending plans, together with wider economic uncertainty clearly flow through client
demand to Morson. We are conscious of these issues and have sought to position the Group,
maintaining market share and with increased capability, both to take advantage of an upturn and to
be resilient in times of recession.
Within recruitment, several key contracts, amounting to approximately one third of Group revenues
are due for renewal or extension in the coming months. These are normal course of business events
and we are currently confident of our position. Across our recruitment business we are taking steps
to protect our margins and maintain or expand our service offering and sector coverage. With regard
to design consultancy, project completion and delivery coupled with improvements in margin are key
targets to deliver improved profitability.
There are significant medium to longer term opportunities for the Group with HS2 and other major rail
infrastructure improvement works, Aircraft carriers, weight-driven civil Aerospace projects and of
course nuclear and energy delivery amongst many other projects. Engineers are a sought after global
resource and we look forward to, and are proud to be part of, the delivery of the future infrastructure
and technology programmes that will ensue. We have experienced management, have attracted
additional staff to support our goals and approach the future and meeting these challenges with
confidence.
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FINANCIAL REVIEW
Some Key Performance Indicators are displayed in the table set out below.
KEY PERFORMANCE INDICATORS 2011 2010 Variance Variance

£'000 £'000 £'000 %
Revenue 507,904 457,639 50,265 +11.0
Net Fee Income 38,910 35,095 3,815 +10.9
Adjusted operating profit (see below) 8,033 9,215 (1,182) -12.8
Adjusted profit before tax (see below) 7,107 8,113 (1,006) -12.4
Conversion ratio (adjusted operating
profit to NFI) 20.6% 26.3% (5.7%) -21.4
Adjusted operating profit margin 1.6% 2.0% (0.4%) -21.5
Interest cover being ratio of adjusted
operating profit (see below) to other
finance costs 8.7 8.4 0.3 +3.3
Dividend cover measured against
adjusted basic earnings per share (see
note 10) 6.1 2.3 3.8 +161.7
Net debt 33,344 23,196 10,148 +43.7
Average net debt during the year 30,921 22,796 8,125 +35.6
Number Number Number %
Average contractor numbers (not in '000) 10,900 10,200 700 +6.9
DERIVATION OF KEY PERFORMANCE

INDICATORS FROM CONSOLIDATED
INCOME STATEMENT 2011 2010
£'000 £'000
Add: amortisation of intangible assets 866 620
Less: exceptional net gain on
acquisition of business - (1,249)
Add: exceptional restructuring costs 110 404
ADJUSTED OPERATING PROFIT 8,033 9,215
Add/(less): fair value loss/(gain) on
financial instrument 391 (1,063)
Add: amortisation of intangible assets 866 620
acquisition of business - (1,249)
Add: exceptional restructuring costs 110 404
ADJUSTED PROFIT BEFORE TAX 7,107 8,113
DERIVATION OF KEY PERFORMANCE

INDICATORS FROM NOTES TO THE
CONSOLIDATED INCOME STATEMENT 2011 2010 Variance Variance
REGARDING SEGMENTAL REPORTING £'000 £'000 £'000 %
Morson International/ Morson Wynnwith:
temporary and permanent recruitment
services
Operating profit 8,141 9,101 (960) -10.5
Add: amortisation of intangible assets 866 620 246 +39.7
acquisition of businesses - (1,249) 1,249 -100.0
Add: exceptional restructuring costs 110 404 (294) -72.8
ADJUSTED SEGMENTAL OPERATING
PROFIT 9,117 8,876 241 +2.7
Morson Projects: engineering design
consultancy and management
SEGMENTAL OPERATING PROFIT 472 1,707 (1,235) -72.3
FINANCIAL OVERVIEW
The context of these results is within a difficult core UK market. Resilience in continuity and volumes
of activity is good. UK recruitment on the temporary side has been very solid but higher margin
permanent recruitment and design activity has been more challenging. Adjusted profit before tax of
£7.1 million has decreased compared to 2010 but remains substantial. Throughout this period we
have sought to improve market share which carries forward as opportunity for the future. Competition
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is fierce, as is client emphasis on cost control and unsurprisingly margins have been difficult to
maintain in all areas, so overall to maintain margins is an achievement. The overheads and cost
structure of the Group have increased notably with the acquisitions in 2010 and with additional
provisions for doubtful debt of £0.6 million, as well as investments in staff for permanent recruitment
and new and emerging offices. This remains in close focus and the organic investments in this area
continued into 2012, closely monitored for effectiveness.
REVENUE AND NET FEE INCOME ("NFI")

Group revenue increased by 11.0% to £507.9 million (2010: £457.6 million). This was achieved
across a sector and key client base broadly similar to the prior year. Recruitment activity saw
revenues rise by 10.1% from £420.2 million to £462.7 million and Engineering design consultancy
saw a substantial rise of 20.7% from £37.5 million to £45.2 million.
Group NFI (gross profit) generated from these revenues was up 10.9% to £38.9 million (2010: £35.1
million). The split of NFI across temporary and permanent recruitment and engineering design
consultancy was £31.6 million, £1.3 million and £6.0 million respectively (2010: £27.4 million, £1.1
million and £6.6 million).
Turning to percentage gross margin at Group level this was steady at 7.7% (2010: 7.7%) and across
operating segments there was an improved margin in temporary and permanent recruitment of 7.1%
(2010: 6.8%) and a reduced position for engineering design consultancy and management of 13.2%
(2010: 17.7%). Whilst the margin achieved by design consultancy was disappointing, the resilience
of the recruitment segment flows from the stability of the core framework agreements assisted by
increased newer business streams.
OPERATING PROFIT AND NFI CONVERSION

Group adjusted operating profit decreased by £1.2 million to £8.0 million (2010: £9.2 million).
Importantly, looking at business segments, within recruitment activity it rose from £8.9 million to £9.1
million, however within engineering design consultancy and management Morson Projects saw a fall
from £1.7 million to £0.5 million. Group shared costs in 2011 were £1.6 million (2010: £1.4 million).
Operating profit decreased by £2.4 million to £7.1 million.
Translation of the NFI earned to operating profit is a measure of the efficiency of operation and
overhead base of the Group. This can be expressed as a "Conversion Ratio", measured as the ratio
of adjusted operating profit before amortisation and exceptional items to NFI (as shown in the table
above). At Group level this year this is 20.6% (2010: 26.3%) reflecting the challenging year. Morson
aims to increase this as our markets improve. Looking at conversion ratios at segmental performance
level design consultancy saw a reduction from 25.8% to 7.9% and recruitment activity from 31.2% to
27.7%. Conversion ratio is also of course affected by the ongoing controlled investments into newer
niche areas that might bring higher returns in the future.
EXCEPTIONAL ITEMS
In 2011 there is an exceptional charge of £0.1 million recognised for the final restructuring steps
within the Morson Wynnwith business following its acquisition in 2010. There were two exceptional
items identified in 2010. Firstly there was an exceptional gain of £1.2 million realised on assessment
of the fair value of the acquisitions. Secondly £0.4 million was charged in respect of the acquisition
and integration of the Acetech and Wynnwith businesses.
FINANCE COSTS
Finance costs incurred in the consolidated income statement include two key elements.
Firstly a finance charge of £0.9 million (2010: £1.1 million), being the costs incurred on borrowings
through a function of both bank base rates and the financial instrument (as described below)
connected to these. With average net debt during 2011 of £30.9 million (2010: £22.8 million) this
gives a blended cost of finance of 3.0% (2010: 4.8%).
The Group's core confidential invoice discounting facility and revolving credit facility are calculated
respectively on bank base rates and LIBOR plus an agreed margin and there is also an overdraft
facility. These flexible facilities allow the Group to borrow only what it needs and thus the Group's
interest cost is commensurate with the working capital needs of the business.
Secondly, there is a charge of £0.4 million (2010: gain of £1.1 million) recognised in the consolidated
income statement relating to the fair value movement of the derivative financial instruments entered
into to protect the Group against high interest rates. The credit to the 2010 (and 2009) accounts
reflected the movement in the fair value of the derivative financial instrument in operation at that time
over those years following a large negative fair value of that instrument having been recognised in the
2008 Report caused due to the drop in base rates over that time. Interest payable under the
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instruments is paid quarterly in arrears dependent on the actual base rate during that period. Thus
the charge in 2011 reflected actual determined interest (included in the recognised finance cost
above) together with the non-cash fair value movement as the term of the instruments unwound.
At 31 December 2011 two interest base rate swap instruments existed, each for £5.0 million and for
a period of three years commencing on 1 April 2011. One is at a rate of 2.03% and one at 1.94%.
This is an area that is kept under review by the Board. At 31 December 2010 no financial instruments
to protect against base interest rate movements were in place.
Interest cover, being the ratio of adjusted operating profit to other finance costs, increased to 8.7
times (2010: 8.4 times).
PROFIT BEFORE TAX

Adjusted profit before tax has fallen by 12.4% to £7.1 million (2010: £8.1 million). The adjusting items
are set out in the table above. The Board consider that the measure of adjusted profit before tax gives
a meaningful and informative comparator against the prior year's performance. Actual profit before tax
after these matters was £5.7 million (2010: £9.4 million). The tables above provide a reconciliation of
the adjusted operating profit and adjusted profit before tax back to the statutory figures per the
consolidated income statement.
TAX
The Group's effective rate of tax for the year was 20.6% (2010: 19.9%), lower than the standard rate
of tax of 26.5% (2010: lower than standard rate of 28%). The key factors impacting this underlying
charge for the Group which tends to decrease the tax rate are certain costs that qualify as research
and development expenditure eligible for tax relief. However, offsetting this somewhat is the absence
of tax relief on certain amortisation costs, withholding tax adjustments on some overseas contracts
and certain disallowable business expenses that tend to increase the tax rate for the Group.
EARNINGS PER SHARE

Basic earnings per share decreased to 10.01 pence (2010: 15.69 pence), a fall of 36.2%. Adjusted
earnings per share (before amortisation of intangible assets, exceptional items and fair value
movement of the derivative financial instrument) as calculated in note 10 was down by 12.7% to 12.27
pence (2010: 14.06 pence).
Share options have been granted during the year.
DIVIDEND
The Board has not recommended that any final dividend be paid (2010: 4.0 pence). An interim
dividend of 2.0 pence per share (2010: 2.0 pence) was paid on 28 October 2011, making a total
dividend of 2.0 pence per share (2010: 6.0 pence) for the year. The total dividend is covered 5.1 times
(2010: 2.8 times) by current year earnings.
CASH FLOW AND FINANCING

Working capital needs of the Group are most affected by temporary recruitment segment activity due
to its nature, where payments to contractors are usually weekly and cash receipts from clients are
per commercial terms that can range from 14 to 90 days. As a result of these factors, all else being
equal, growth necessarily causes the absorption of cash. The converse may also be said to be true,
thus the slowing of growth experienced by this business would benefit the working capital position.
All these areas need careful management and may very well be impacted by changes in material key
client contract terms.
This impacts total borrowings net of cash and cash equivalents ("Net Debt") but other factors also
apply such as acquisitions, investments in organic growth areas, taxation, dividends and capital
expenditure.
During 2011 we have seen a rise in average Net Debt levels with average borrowings over 2011 of
£30.9 million (2010: £22.8 million) and the final month of the year i.e. December 2011 having average
borrowing levels of £37.1 million (December 2010: £32.1 million). We feel looking at average levels
gives a better measure of true borrowings as fluctuations day to day can be material. Some key
impacting factors include:
· the consideration paid of £4.0 million for the non-controlling minority interest in Morson
Wynnwith;
· increased activity on overseas business, particularly within telecommunications, that has
typically much longer credit terms;
· increased revenues generally across the Group;
· some changes in client credit terms on new or renewed agreements; and
· investments made to support organic growth within the business, for example new
offices in Aberdeen and Bristol and a larger permanent recruitment team.
10/21
5/24/13
Through 2011, working capital increased by £7.8 million (2010: increased by £4.6 million), reflecting
these factors. Cash collection patterns through the year were broadly consistent with prior periods for
UK recruitment, though extended for overseas activity and design consultancy. Overall an indicative
calculation counting revenue plus closing rate VAT back into trade and other receivables gives debt
turn at the year end of 56 days (2010: 57 days)
Tax paid during the year was £2.0 million (2010: £1.9 million) reflecting reduced adjusted profit before
tax, adjustment for prior periods, allowable research and development expenditure and increased
taxes on overseas income. Capital expenditure was down by £1.0 million to £1.3 million (2010: £2.3
million gross of grant income received of £0.5 million and £0.4 million of opening accruals for Head
Office property improvements and fixtures and fittings valued but not billed at 31 December 2009).
Our financing facilities have remained unchanged throughout the year.
The core facility is an invoice discounting facility that can grow with the business as it expands and
is secured on our largely blue chip debtor book. The Directors believe this type of facility is entirely
consistent with that used by companies providing similar services and is one that suits the Group's
business model very well. Costs are on a bank base rate plus margin basis and the facility has been
extended to 31 March 2014. The current capacity of the facility is £50 million and affords the Group
significant headroom. The Group also has a revolving credit facility of £5 million, extended and in
place until 31 October 2013 and at year end this was not utilised (2010: not utilised). Finally the
Group also has a £1 million overdraft facility. Consideration of the going concern basis is provided in
note 1 to the financial statements.
On 11 February 2011 the Group completed the acquisition of all of the 49% non-controlling interest in
Morson Wynnwith making it a 100% owned subsidiary. The consideration was £4.0 million and this
was financed via the revolving credit facility and repaid from operating cashflow.
BALANCE SHEET
Group net assets at 31 December 2011 were £60.1 million (2010: £62.0 million). This decrease
principally reflects the drop of £4.0 million due to the acquisition of the non-controlling minority
interest described above plus the collective £2.1 million addition through retained profits after
dividends and share based payment movements. Net Debt at the 2011 year end was £33.3 million
(2010: £23.2 million).
CONSOLIDATED INCOME STATEMENT

Year ended 31 Decem ber 2011
2011 2010
Note £'000 £'000
Revenue 2 507,904 457,639
Cost of sales (468,994) (422,544)
GROSS PROFIT 38,910 35,095
- amortisation of intangible fixed assets (866) (620)
-exceptional items:
- net gain on acquisition of businesses - 1,249
- restructuring costs 3 (110) (404)
- other administrative expenses (30,877) (25,880)
OPERATING PROFIT 2 7,057 9,440
Finance costs:
- fair value movements on derivative financial instruments (391) 1,063
- other finance costs 4 (926) (1,102)
PROFIT BEFORE TAXATION 5,740 9,401
Taxation 5 (1,185) (1,870)
NET PROFIT FOR THE YEAR 3 4,555 7,531
Attributable to:
Equity holders of the parent 4,450 6,985
Non-controlling interests 105 546
4,555 7,531
11/21
5/24/13
EARNINGS PER SHARE

From continuing operations
Basic (pence) 10 10.01 15.69
Diluted (pence) 10 9.80 15.42
All activity has arisen from continuing operations.

2011 2010
£'000 £'000
PROFIT FOR THE YEAR 4,555 7,531
Other comprehensive income:

- exchange differences on translation of foreign operations 5 28
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,560 7,559
Attributable to:
Equity holders of the parent 4,455 7,013
Non-controlling interests 105 546
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,560 7,559
CONSOLIDATED BALANCE SHEET

At 31 Decem ber 2011
2011 2010
Note £'000 £'000
NON-CURRENT ASSETS
Goodwill 33,513 33,513
Other intangible assets 1,784 2,650
Deferred tax asset 246 -
39,635 39,916
CURRENT ASSETS
Cash and cash equivalents 7 2,636 1,701
96,084 87,640
TOTAL ASSETS 135,719 127,556
CURRENT LIABILITIES
Current tax liabilities (258) (602)
Obligations under finance leases (57) (37)
Bank overdrafts 8 (35,923) (24,897)
Derivative financial instruments (391) -
(75,614) (65,184)
NET CURRENT ASSETS 20,470 22,456
NON-CURRENT LIABILITIES
Deferred tax liabilities - (333)
- (333)
TOTAL LIABILITIES (75,614) (65,517)
NET ASSETS 60,105 62,039
EQUITY
Issued capital 9 2,267 2,267
Share premium account 9 37,607 37,607
Retained earnings 9 20,912 22,443
12/21
5/24/13
Other reserves 9 (914) (928)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 59,872 61,389
Non-controlling interest 233 650
TOTAL EQUITY 60,105 62,039

2011 2010
Note £'000 £'000
NET CASH (OUTFLOW)/ INFLOW FROM OPERATING 13 (1,440) 2,541

ACTIVITIES
INVESTING ACTIVITIES
Grant income received - 479
Proceeds on disposal of property, plant and equipment 38 68
Purchases of property, plant and equipment (1,260) (2,307)
Acquisition of businesses - (10,104)
Acquisition of a non-controlling interest 11 (4,025) -
Disposal of a subsidiary undertaking including cash 12 (716) -
balances
NET CASH USED IN INVESTING ACTIVITIES (5,963) (11,864)
FINANCING ACTIVITIES
Dividends paid (2,668) (2,671)
Purchase of own shares - (262)
Repayments of obligations under finance leases (26) (24)
NET CASH USED IN FINANCING ACTIVITIES (2,694) (2,957)
NET DECREASE IN CASH AND CASH EQUIVALENTS (10,097) (12,280)
Effects of foreign exchange rate changes 6 18
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7 (23,196) (10,934)
CASH AND CASH EQUIVALENTS AT END OF YEAR 7 (33,287) (23,196)

Share Share Retained Translation Ow n Non- Total

premium controlling
capital account earnings reserve shares Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2,267 37,607 18,087 - (694) 57,267 104 57,371

2010
Profit for the - - 6,985 - - 6,985 546 7,531
year
Dividends - - (2,671) - - (2,671) - (2,671)
paid
Share-based - - 42 - - 42 - 42
payments
Purchase of - - - - (262) (262) - (262)
own shares
Exchange
differences on
13/21
5/24/13
translating the
net assets of - - - 28 - 28 - 28
foreign
operations
At 1 January 2,267 37,607 22,443 28 (956) 61,389 650 62,039
2011
Profit for the - - 4,450 - - 4,450 105 4,555
year
Dividends - - (2,668) - - (2,668) - (2,668)
paid
Share- - - 199 - - 199 - 199
based
payments
Exercise of - - (37) - 37 - - -
share options
Acquisition of a - - (3,503) - - (3,503) (522) (4,025)
non-controlling
interest
Disposal of a - - 28 (28) - - - -
subsidiary
undertaking
Exchange - - - 5 - 5 - 5
differences on
translating the
net assets of
foreign
operations
AT 31 2,267 37,607 20,912 5 (919) 59,872 233 60,105
DECEMBER
2011
1) GENERAL INFORMATION
Morson Group PLC is a company incorporated in the United Kingdom under the Companies Act. The
address of the registered office is Adamson House, Centenary Way, Salford, Manchester M50 1RD.
The nature of the Group's operations and its principal activities are set out in note 2 and in the
Business Review.
This preliminary announcement is presented in Pounds Sterling because that is the currency of the
primary economic environment in which the Group operates.
The financial information has been based on the Company's financial statements which are prepared
in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU.
Whilst the
financial information contained in this preliminary announcement has been prepared in accordance
with the recognition and measurement criteria of International Financial Reporting Standards (IFRS),
this announcement
does not itself contain sufficient information to comply with IFRS. The Company expects to publish
full financial statements that comply with IFRS in April 2012. The financial information has been
prepared under the same accounting policies as the 2010 financial statements..
The financial information for the year ended 31 December 2010 is derived from the statutory accounts
for that year which have been delivered to the Registrar of Companies. The auditors reported on those
accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and
did not contain a statement under s498(2) or (3) of the Companies Act 2006.
BASIS OF ACCOUNTING
The financial statements will be prepared in accordance with IFRS as adopted by the European
Union.
The financial statements will be prepared on the historical cost basis, except for the revaluation of
certain financial instruments. The financial statements will be prepared in accordance with accounting
policies previously published in the Company's 2010 annual report and accounts.
GOING CONCERN
The Directors are required to satisfy themselves as to whether the financial statements of the Group
should be prepared on a going concern basis. As part of the ongoing duties and activities of the
Board there is continual assessment of the Group's financial and commercial performance. This
review considers business risks and uncertainties that exist and takes account of how wider
14/21
5/24/13
economic circumstances can impact these, including due consideration and assessment of
potentially adverse and testing situations. The Board looks forward and appropriate forecasts of
financial performance and assessment of future business opportunities and challenges are regularly
made. The Directors have also considered the financial support required for these anticipated income
streams and note that the Group's current financing arrangements run until 31 March 2014 for its
invoice discounting facility and until 31 October 2013 for its revolving credit facility.
Having properly considered the matter the Directors conclude that they are satisfied that this
preliminary announcement should be prepared on a going concern basis.
2) BUSINESS AND GEOGRAPHICAL SEGMENTS
BUSINESS SEGMENTS
The two reported operating segments in this note are reported as the provision of temporary and
permanent recruitment services and the provision of engineering design consultancy and
management. These operating segments are consistent with the reporting regularly provided to the
Board of Directors. It is these reports which the Directors use to review the Group's operating results,
assess performance and make decisions about resource allocation.
The Group's business is described in sectors for the purposes of the Business Review. This is to
enable readers of the Annual Report and Accounts to gain a better understanding of the breadth of
our service offering as well as allowing an informed and helpful comparison to other organisations
also operating in our markets. The database of candidates held by the Group to supply to these
sectors is a combined one, encompassing a wide diversity of skills and talent, and whilst it has some
sector specific requirements, is in essence provided in the same manner across all sectors.
Performance and analysis of activity by these sectors is not a key management measure, nor is it
reported regularly to the Board of Directors and the business is not managed or divided internally by
these sectors. The key information used to manage the business is by activity type, i.e. the provision
of temporary and permanent recruitment services and the provision of engineering design consultancy
and management.
Provision of temporary Provision of

engineering
and permanent design consultancy
recruitment services and management Total
2011 2010 2011 2010 2011 2010

£'000 £'000 £'000 £'000 £'000 £'000
Gross revenue 480,739 434,142 46,392 37,599 527,131 471,741

Inter-segment sales (18,061) (13,969) (1,166) (133) (19,227) (14,102)
Revenue to third parties 462,678 420,173 45,226 37,466 507,904 457,639
Segmental gross profit 32,942 28,468 5,968 6,627 38,910 35,095

- amortisation of intangible
assets (866) (620) - - (866) (620)
- exceptional items:
- net gain on
acquisition of - 1,249 - - - 1,249
businesses
- restructuring costs (110) (404) - - (110) (404)
- other administrative (23,825) (19,592) (5,496) (4,920) (29,321) (24,512)
expenses
- shared costs (1,556) (1,368)
SEGMENT RESULT 8,141 9,101 472 1,707 7,057 9,440
Finance charge (net) (792) (1,086) (63) (21) (855) (1,107)
Shared finance (charge)/ - - - - (462) 1,068
income (net of shared finance
costs)
SEGMENT RESULT AFTER 7,349 8,015 409 1,686 5,740 9,401
FINANCE CHARGES
Taxation (1,185) (1,870)
PROFIT AFTER TAXATION 4,555 7,531
15/21
5/24/13
Capital additions 429 695 831 704 1,260 1,399
Depreciation and amortisation 1,337 1,072 418 377 1,755 1,449
NET ASSETS
Segment assets excluding amounts
due from other Group companies 109,770 106,260 24,865 20,372 134,635 126,632
Unallocated corporate assets 1,084 924
Consolidated total assets 135,719 127,556
Segment liabilities excluding
amounts
due to other Group companies (63,978) (58,227) (10,332) (6,548) (74,310) (64,775)
Unallocated corporate (1,304) (742)
liabilities
Consolidated total liabilities (75,614) (65,517)
Consolidated net assets 60,105 62,039
The centre of operations for all services delivered to clients is the UK. The Directors consider that the
Group does not generate material profits from overseas operations and therefore no geographical
segmental information is presented.
Inter-segment sales are charged at prevailing market prices. Within the engineering design
consultancy and management segment there exists some provision of temporary recruitment
services, however this is entirely related to the provision of engineering design consultancy and
management.
Segment profit is measured as those income streams and costs which are directly attributable to the
segment in question. Segment assets and liabilities are those held within the segment in question
with the exception of goodwill, which is allocated to business segments.
Unallocated corporate assets and liabilities consist of receivables and payables in Morson Holdings
Limited and Morson Group PLC.
Included in revenues arising from the provision of temporary and permanent recruitment services are
revenues of £65,389,000 (2010: £63,155,000) which arose from sales to the Group's largest
customer.
3) PROFIT FOR THE YEAR
2011 2010
£'000 £'000
Profit for the year has been arrived at after charging/(crediting):

Depreciation of property, plant and equipment 889 829
Foreign exchange losses/ (gains) 321 (264)
(Profit)/ loss on disposal of fixed assets (10) 31
Staff costs 48,211 34,556
Exceptional items:
- (1,249)
- net gain on acquisition of businesses
- restructuring costs 110 404
Movement in allowance for doubtful debts 562 1,135
During the year ended 31 December 2011 restructuring costs of £110,000 have been incurred
following the further integration of the Wynnwith business. These redundancy costs were over and
above those provided at 31 December 2010 and were not committed at that date.
During the year ended 31 December 2010 restructuring costs of £404,000 were incurred following the
acquisition and integration of the Wynnwith and Acetech businesses. This included a liability
recognised for redundancy costs committed to at the balance sheet date.
During the year ended 31 December 2010 a net gain of £1,249,000 was recognised following the
acquisition of the Wynnwith and Acetech businesses.
4) FINANCE COSTS
Fair value movements on the derivative financial instrument have been disclosed on the face of the 16/21
5/24/13 consolidated income statement.
2011 2010
£'000 £'000
Interest on bank overdrafts and loans 804 296

Interest paid in respect of the derivative financial instrument 114 780
Other financing charges payable 6 22
Interest on obligations under finance leases 2 4
Total other finance costs 926 1,102
No gains or losses have been recognised on financial liabilities measured at amortised cost.
5) TAXATION
2011 2010
£'000 £'000
Current tax - current year 1,509 1,501

- adjustments in respect of prior years 255 (45)
Deferred tax - current year (153) 343
- prior year (426) 71
1,185 1,870
Corporation tax is calculated at 26.5% (2010: 28.0%) of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the rate prevailing in the respective jurisdiction.
The charge for the year can be reconciled to the profit as per the income statement as follows:
2011 2010
£'000 £'000

Tax at the UK corporation tax rate of 26.5% (2010: 28.0%) 1,521 2,632
Income not taxable (90) (230)
Tax effect of higher rates of tax on overseas income 550 123
Effect of research and development tax credits (892) (615)
Utilisation of losses (25) (65)
Adjustments to tax charge in respect of prior periods (171) 26
Other 4 (10)
Tax expense for the year 1,185 1,870
6) DIVIDENDS
2011 2010
£'000 £'000
Amounts recognised as distributions to equity holders in the

year:
Final dividend for the year ended 31 December 2010 of 4.0 1,779 1,783
pence per ordinary share (year ended 31 December 2009: 4.0
pence)
Interim dividend for the year ended 31 December 2011 of 2.0 889 888
pence per ordinary share (year ended 31 December 2010: 2.0
pence)
2,668 2,671
No final dividend is proposed for the year ended 31 December - 1,779
2011 (2010: 4.0 pence per ordinary share)
17/21
5/24/13
7) CASH AND CASH EQUIVALENTS

2011 2010
£'000 £'000

Bank overdrafts (35,923) (24,897)
Cash and cash equivalents in the cash flow statement (33,287) (23,196)
8) BORROWINGS
2011 2010
£'000 £'000
SECURED BORROWING AT AMORTISED COST

Bank overdrafts 35,923 24,897
The borrowings are repayable as follows:
- on demand or within one year 35,923 24,897
2011 2010
% %
The weighted average interest rates paid were as follows:

- bank overdrafts 2.38 1.50
- bank loans 2.86 1.79
All borrowings are in Pounds Sterling and are arranged at floating rates, thus exposing the Group to
cash flow interest rate risk.
The Directors consider that the carrying value of borrowings approximates to their fair value.
The other principal features of the Group's borrowings are as follows:
(i) bank overdrafts are repayable on demand. Overdrafts of £35,923,000 (2010: £24,897,000) have
been secured on the trade debtors of the Group. The average effective interest rate
on bank overdrafts approximates 2.38% (2010: 1.50%) per annum; and
(ii) bank loans represent a revolving credit facility whereby the Group may borrow up to £5 million
subject to satisfaction of the requirements of the facility. The interest rate of the loan is set at
1.25% above LIBOR lending rate. Subject to the conditions of the facility the loan may be used
for both working capital and acquisitions. The period of the loan is set by interest periods at the
end of which the Group may repay all, part of or borrow more up to the ceiling. The loan has been
utilised in the current year but there were no borrowings at the balance sheet date.
At 31 December 2011, the Group had available £14,952,000 (2010: £22,694,000) of undrawn
committed borrowing facilities in respect of which all conditions precedent had been met.
9) ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

Share
Share premium Retained Translation Ow n
capital account earnings reserve shares Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2010 2,267 37,607 18,087 - (694) 57,267

Profit for the year - - 6,985 - - 6,985
Dividends paid - - (2,671) - - (2,671)
Share-based payments - - 42 - - 42
Purchase of own shares - - - - (262) (262)
Exchange differences on - - - 28 - 28
translating the net assets
of foreign operations
At 1 January 2011 2,267 37,607 22,443 28 (956) 61,389
Profit for the year - - 4,450 - - 4,450
18/21
5/24/13
Dividends paid - - (2,668) - - (2,668)
Share-based payments - - 199 - - 199
Exercise of share options - - (37) - 37 -
Acquisition of a non- - - (3,503) - - (3,503)
controlling interest
Disposal of a subsidiary - - 28 (28) - -
undertaking
Exchange differences on - - - 5 - 5
translating the net assets
of foreign operations
AT 31 DECEMBER 2011 2,267 37,607 20,912 5 (919) 59,872
10) EARNINGS PER SHARE

The calculation of EPS is based on the following data and numbers of shares:
2011 2010
£'000 £'000
Profit for the year used for the calculation of basic earnings 4,450 6,985
per share
Exceptional Items:
- net gain on acquisition of businesses* - (625)
- restructuring costs* 110 244
Fair value movements on derivative financial instruments 391 (1,063)

Tax effect of adjustments* (362) 149
Earnings for the purposes of adjusted earnings per share 5,455 6,259
2011 2010
Num ber Number
Weighted average number of ordinary shares for the 44,468,969 44,520,191

purposes of basic earnings per share
Effect of potentially dilutive ordinary shares:
- share options 918,696 794,207
Weighted average number of ordinary shares for the 45,387,665 45,314,398
purposes of diluted earnings per share
Earnings per share: Pence Pence
- basic 10.01 15.69
- diluted 9.80 15.42
Adjusted earnings per share:
- basic 12.27 14.06
- diluted 12.02 13.81
*These exceptional items have taken account of the share due to non-controlling interests.
The adjusted earnings per share has been calculated on the basis of continuing operations before
amortisation of intangible assets, the exceptional items and the fair value movement of the derivative
financial instrument, net of tax. The Directors consider that the adjusted earnings per share
calculation gives a better understanding of the Group's earnings per share.
11) ACQUISITION OF A NON-CONTROLLING INTEREST

On 11 February 2011 Morson Group PLC acquired the remaining issued shares in Morson Wynnwith
Limited for a cash consideration of £4,005,000 and stamp duty of £20,000, taking its shareholding to
100%. The difference between the fair value of the consideration and the carrying amount of the non-
controlling interests is shown as a negative movement in the equity of Morson Group PLC.
12) DISPOSAL OF A SUBSIDIARY

On 31 October 2011 Morson Group PLC disposed of its interest in Morson do Brasil Ltda to CPIM
Europe Limited, a newly incorporated entity in which Morson Group PLC holds a 19% stake and
19/21
5/24/13 which is accounted for as an associate.
The Directors have assessed the criteria for considering Morson do Brasil Ltda a discontinued
operation as defined in IFRS 5, and have concluded that this does not represent a separate major line
of business and is therefore not a discontinued operation.
The loss recognised within other administrative expenses as a result of this disposal is £160,000.
The net assets of Morson do Brasil Ltda at the 31 October 2011 were as follows:
2011
£'000
Property, plant and equipment 4

Financial assets 3,039
Cash and cash equivalents 716
Current tax liabilities (114)
Financial liabilities (3,469)
176
Loss on disposal (160)
Total consideration 16
Satisfied by:
Deferred consideration 16
16
13) NOTES TO THE CASH FLOW STATEMENT

RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATIONS
2011 2010
£'000 £'000

Adjustments for:
Exceptional net gain on acquisition of businesses - (1,249)
Exceptional restructuring costs 110 404
Loss on disposal of a subsidiary (see note 12) 160 -
Share-based payment expense 199 42
(Gain)/ loss on disposal of property, plant and equipment (10) 31
Operating cash flows before movements in working capital 9,271 10,117
Decrease/ (increase) in inventories 119 (1,830)
Increase in receivables (8,402) (4,930)
Increase in payables 492 2,187
Cash generated by operations 1,480 5,544
Income taxes paid (1,994) (1,901)
Interest paid (926) (1,102)
Net cash (used in)/ generated from operating activities (1,440) 2,541
14) COPIES OF THE ANNUAL REPORT AND ACCOUNTS

The Group's report and accounts for the year ended 31 December 2011 are expected to be posted to
shareholders on 17 April 2012 and will also be available from the Company's head office at Adamson
House, Centenary Way, Salford, M50 1RD and will be available for download from its website at:
www.morson.com

20/21
5/24/13
END
FR EBLBXLXFZBBZ
21/21
5/24/13
MMGG Acquisition Ltd
Offer for Morson Group plc

RNS Number : 0863E
MMGG Acquisition Limited
25 May 2012
EMBARGOED 09.00AM 25 MAY 2012
25 May 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF THAT JURISDICTION
RECOMMENDED CASH OFFER BY MMGG ACQUISITION PLC

("MMGG") FOR MORSON GROUP PLC ("MORSON")
Summary
· The board of MMGG and the Independent Director are pleased to

announce that they have reached agreement on the terms of a
recommended cash offer, with a loan note alternative to be made by
MMGG, for the whole of the issued and to be issued share capital of
Morson;
· The offer for the entire issued and to be issued share capital of Morson
will be 50 pence in cash for each Morson Share, valuing the existing
issued share capital of Morson at approximately £23 million;
• MMGG has decided to offer a loan note alternative to the Cash Offer in
the form of the Offer Loan Notes. Morson Shareholders must elect to
accept either the Cash Offer or the Loan Note Alternative for their
entire shareholding;
· In aggregate, MMGG has received irrevocable undertakings to accept

or procure acceptance of the Offer in respect of a total of 26,014,380
Morson Shares, representing 57.37 per cent. of the existing issued
share capital of Morson;
· The Independent Director, who has received advice from W H Ireland

Limited, considers the terms of the Offer to be fair and reasonable.
However, the Independent Director does not express any view on the
terms of the Loan Note Alternative. In providing such advice to the
Independent Director, W H Ireland Limited has relied upon the
Independent Director's commercial assessments.
· The Offer Price represents a premium of 20.5 per cent. to the Closing
Price of 41.5 pence per Morson Share on 24 May 2012, being the last
Business Day prior to the Offer being announced;
1/42
5/24/13
· MMGG was incorporated in England and Wales on 5 March 2012 for the
purpose of making the Offer. The shares in MMGG are owned by the
Management Team namely Gerrard Godfrey Mason (Chairman), Gerard
Anthony Mason (Group Chief Executive), Paul John Gilmour (Group
Finance Director) and Kevin Patrick Gorton (Group Managing Director).
The Management Team has irrevocably undertaken to accept the Loan
Note Alternative in respect of all the Morson Shares in which they are
interested, namely 21,209,630 Morson Shares representing 46.78 per
cent of the existing issued share capital of Morson.
PRESS ENQUIRIES
For further information contact:
MMGG
Ged Mason 0161 707 1516
Paul Gilmour 0161 707 1516
Morson
Ian Knight 07775 941804
SPARK Advisory Partners Limited (financial adviser to MMGG)

Matt Davis, Partner 020 3368 3552
Mark Brady, Partner 020 3368 3551
W H Ireland Limited (financial adviser to Morson)

Adrian Hadden, Managing Director 020 7220 1751
Nick Field, Corporate Finance Executive 020 7220 1658
This summary should be read in conjunction with the full text of the attached
announcement.
Apart from the responsibilities, if any, which may be imposed on SPARK Advisory
Partners Limited by the Financial Services and Markets Act 2000, the European
Communities (Markets in Financial Instruments) Regulations 2007 (as amended)
or the regulatory regimes established thereunder or the Code, SPARK Advisory
Partners Limited does not accept any responsibility whatsoever for the
contents of this announcement or for any statements made or purported to be
made by it or on its behalf in connection with the Offer. SPARK Advisory
Partners Limited accordingly disclaims all and any liability whether arising in tort,
contract or otherwise (save as referred to above) which it might otherwise
have in respect of this announcement or any such statement.
Apart from the responsibilities, if any, which may be imposed on W H Ireland

Limited by the Financial Services and Markets Act 2000, the European
or the regulatory regimes established thereunder or the Code, W H Ireland
Limited does not accept any responsibility whatsoever for the contents of this
announcement or for any statements made or purported to be made by it or on
its behalf in connection with the Offer. W H Ireland Limited accordingly
disclaims all and any liability whether arising in tort, contract or otherwise (save
as referred to above) which it might otherwise have in respect of this
announcement or any such statement. SPARK Advisory Partners Limited, which
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is authorised and regulated in the United Kingdom by the Financial Services
Authority, is acting exclusively for MMGG and no-one else in connection with
the Offer and will not be responsible to any person other than MMGG for
providing the protections afforded to customers of SPARK Advisory Partners
Limited or for providing advice in relation to the Offer or any other matter
referred to in this announcement.
SPARK Advisory Partners Limited has given and not withdrawn its written
consent to the release of this announcement with the inclusion of the
reference to its name in the form in which it is included.
W H Ireland Limited, which is authorised and regulated in the United Kingdom by

the Financial Services Authority, is acting exclusively for Morson in connection
with the Offer and will not be responsible to any person other than Morson for
providing the protections afforded to clients of W H Ireland Limited or for
providing advice in relation to the Offer or any other matter referred to in this
announcement.
W H Ireland Limited has given and not withdrawn its written consent to the
release of this announcement with the inclusion of the reference to its name in
the form in which it is included.
This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information contained or referred
to in the Offer Document which MMGG intends to despatch shortly to Morson
Shareholders and, for information only, to holders of options under the Morson
Share Schemes.
The availability of the Offer to persons who are not resident in the United
Kingdom may be affected by the laws of their relevant jurisdiction. Such
persons should inform themselves of, and observe, any applicable legal or
regulatory requirements of their jurisdiction. Further details in relation to
overseas shareholders will be contained in the Offer Document. Unless
otherwise determined by MMGG and permitted by applicable law and regulation,
subject to certain exceptions, the Offer is not being made and will not be
made, directly or indirectly, in or into, and the Offer will not be capable of
acceptance from a Restricted Jurisdiction. Accordingly, unless otherwise
determined by MMGG, copies of this announcement, the Offer Document, the
Form of Acceptance and any other related document are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent
in or into or from a Restricted Jurisdiction and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing so
may be a breach of applicable law and regulation in that jurisdiction and may
make invalid any purported acceptance of the Offer by persons in any such
jurisdiction. This announcement does not constitute an offer in a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or otherwise from or within a Restricted
Jurisdiction. Accordingly this announcement is not being, and should not be,
mailed, transmitted or otherwise distributed, in whole or in part, in or into or
from a Restricted Jurisdiction.
Morson Shareholders (including, without limitation, nominees, trustees

or custodians) must not forward this announcement to a Restricted
Jurisdiction
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This document contains certain forward-looking statements with respect to the

financial condition, results of operations and business of the Morson Group and
certain plans and objectives of the boards of directors of Morson and MMGG.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements often
use words such as "anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments made
by the Management Team and MMGG in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate.
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Forward-looking statements also include statements about MMGG's beliefs and
expectations related to the Offer being declared wholly unconditional, benefits
that would be afforded to customers, and benefits to MMGG that are expected
to be obtained as a result of the Offer being declared wholly unconditional.
There can be no assurance that the Offer will be declared wholly unconditional.
By their nature, forward-looking statements involve risk and uncertainty, and
the factors described in the context of such forward-looking statements in this
announcement could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking statements.
Should one or more of these risks or uncertainties materialise, or should

underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement.
The statements contained in this announcement are made as at the date of

this announcement, unless some other time is specified in relation to them, and
service of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such
date. Nothing contained in this document shall be deemed to be a forecast,
projection or estimate of the future financial performance of Morson or MMGG
except where expressly stated.
All subsequent oral or written forward looking statements attributable to MMGG

or Morson or any of their respective members, directors, officers or employees
or any persons acting on their behalf are expressly qualified in their entirety by
the cautionary statement above. All forward looking statements included in this
announcement are based on information available to MMGG and Morson on the
date hereof and are made only as of the date of this announcement. Undue
reliance should not be placed on such forward looking statements.
Subject to compliance with the Code, neither Morson nor MMGG intends, or
undertakes any obligation, to update any information contained in this
announcement.
DEALING DISCLOSURE REQUIREMENTS
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any paper offeror
(being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period
and, if later, following the announcement in which any paper offeror is first
identified.
An Opening Position Disclosure must contain details of the person's interests

and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by
no later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10th business day following the announcement in which
any paper offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in
1% or more of any class of relevant securities of the offeree company or of any
paper offeror must make a Dealing Disclosure if the person deals in any relevant
securities of the offeree company or of any paper offeror. A Dealing Disclosure
must contain details of the dealing concerned and of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any paper offeror, save to the extent that
these details have previously been disclosed under Rule 8. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later than 3.30
pm (London time) on the business day following the date of the relevant
dealing.
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If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an interest in
relevant securities of an offeree company or a paper offeror, they will be
deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in respect
of whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on the Takeover
Panel's website at www.thetakeoverpanel.org.uk, including details of the
number of relevant securities in issue, when the offer period commenced and
when any offeror was first identified. If you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
You should note that, for the purposes of the above summary of Rule 8 of the
Code, MMGG is not treated as a paper offeror and therefore there is no
requirement to disclose interests or dealings in the shares of MMGG under Rule
8 of the Code.
Publication on website
A copy of this announcement will be available free of charge, subject to

certain restrictions relating to persons in Restricted Jurisdictions, on MMGG's
website at www.MMGG.co.uk and on Morson's website at www.Morson.com by
no later than 12.00 p.m. (London time) on 28 May 2012.
Neither the content of the websites referred to in this announcement nor the
content of any website accessible from hyperlinks on MMGG's website and/or
Morson's website (or any other website) is incorporated into, or forms part of,
this announcement.
EMBARGOED 09.00AM 25 MAY 2012
25 May 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF THAT JURISDICTION
RECOMMENDED CASH OFFER BY MMGG ACQUISITION PLC

("MMGG") FOR MORSON GROUP PLC ("MORSON")
1. Introduction
The board of MMGG and the Independent Director are pleased to announce that
they have reached agreement on the terms of a recommended cash offer, with
a loan note alternative (further details of which are given in paragraph 4
below), to be made by MMGG for the whole of the issued and to be issued
share capital of Morson.
The Offer values each Morson Share at 50 pence and Morson's existing issued
share capital at approximately £23 million.
The Offer Price represents a premium of 20.5 per cent. to the Closing Price of
41.5 pence per Morson Share on 24 May 2012, being the last Business Day prior
to the Offer being announced. In aggregate, MMGG has received irrevocable
undertakings to accept or procure acceptance of the Offer in respect of a total
of 26,014,380 Morson Shares, representing 57.37 per cent. of the existing
issued share capital of Morson.
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5/24/13
2. Recommendation
The Independent Director, who has been so advised by W H Ireland Limited,

considers the terms of the Offer to be fair and reasonable. However, the
Independent Director does not express any view on the terms of the Loan Note
Alternative. In providing its advice to the Independent Director, W H Ireland
Limited has taken into account the commercial assessments of the Independent
Director. WH Ireland is acting as the independent financial adviser to Morson for
the purposes of providing independent financial advice to the Independent
Director on the Offer under Rule 3.1 of the Code.
Accordingly, the Independent Director recommends that Morson Shareholders

accept the Cash Offer as he has irrevocably undertaken to do in respect of his
own beneficial shareholding of 20,000 Morson Shares (representing
approximately 0.04 per cent. of the existing issued share capital of Morson).
The Independent Director, who has been so advised by WH Ireland Limited,

considers that whilst the nominal value at completion of the Loan Note
Alternative may be the same as that of the Cash Offer, additional risk attaches
to the Loan Note Alternative, arising from inter alia, the possibility that the
Company will in due course become a private limited company, the significant
increase in the indebtedness of the Company that will arise should the Offer
proceed and the claims of other creditors (including Barclays) ranking ahead of
the Loan Note Alternative and therefore gives no recommendation to Morson
Shareholders in relation to the Loan Note Alternative.
3. The Offer
The Offer, which will be on the terms and subject to the conditions set out
below and in Appendix I, and to be set out in full in the Offer Document and, in
relation to certificated shareholders, the Form of Acceptance, will be made on
the following basis:
For each Morson Share 50 pence in cash
Morson Shares will be acquired by MMGG pursuant to the Offer fully paid and
free from all liens, equities, charges, equitable interests, encumbrances, rights
of pre-emption and other third party rights and/or interests of any nature
whatsoever and together with all rights attaching to them, now or in the
future, including the right to receive and retain all dividends, interest and other
distributions declared, paid or made in the future.
As an alternative to the cash consideration which they would otherwise be

entitled to receive, Morson Shareholders will be able to elect to receive Offer
Loan Notes, which will be issued on the basis of 50 pence in nominal value of
Offer Loan Notes for each Morson Share.
Morson Shareholders must elect to receive either cash or Offer Loan Notes for
their entire holding of Morson Shares. There is no option for Morson
Shareholders to accept the Offer and elect to receive partly cash and partly
Offer Loan Notes.
4. The Loan Note Alternative
MMGG has decided to offer a loan note alternative to the Cash Offer in the form
of the Offer Loan Notes.
The Offer Loan Notes will be created by a resolution of the Board of MMGG (or
a duly authorised committee thereof) and will be constituted by the Offer Loan
Note Instrument executed as a deed by MMGG.
The issue of the Offer Loan Notes will be conditional on the Offer being
declared wholly unconditional.
The Offer Loan Notes will not be transferable.
No application will be made for the Offer Loan Notes to be listed or dealt in on
any stock exchange.
The Offer Loan Notes will not be qualifying corporate bonds for United Kingdom
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taxation purposes for Morson Shareholders who are individuals.
The Offer Loan Notes will bear interest at 4% per annum but this interest will
be accrued and only paid when the Offer Loan Notes are redeemed. The Offer
Loan Notes are, on the face of the Offer Loan Note Instrument, redeemable on
1 January 2018. However, payments under the Offer Loan Notes are subject to
the terms of the Intercreditor Agreement and it cannot be guaranteed that
redemption will occur on that date. Morson Shareholders who elect to receive
Offer Loan Notes must accede to the terms of the Intercreditor Agreement on
such terms as Barclays may require. A summary of the terms of the
Intercreditor Agreement is set out in Part B of Appendix II.
MMGG may (subject to the terms of the Intercreditor Agreement), at any time,
elect to redeem all or any part of the Offer Loan Notes (or any Offer Loan
Notes or part of any Offer Loan Notes held by certain of the Offer Loan
Noteholders as the board of MMGG may elect).
Morson Shareholders should consider carefully, in light of their own investment

objectives and tax position, whether they wish to elect for the Offer Loan
Notes under the Loan Note Alternative and are strongly advised to seek their
own independent financial advice before making any such election.
Further information on the Offer Loan Notes is given in Part A of Appendix II.
5. Background to and Reasons for the Offer
Background to the Offer
In Morson's admission document dated 27 March 2006, by which the Morson

Shares were admitted to trading on AIM at a price of 160 pence per Morson
Share, it was stated that:
"Admission will give the Group access to a new source of funds and tradeable
shares to facilitate the Group's future growth, both organically and by
acquisition. The Directors believe that a quotation on AIM will raise the status
and market profile of the Group, promoting further awareness of Morson and
that this increased awareness will strengthen the Group's ability to attract
new business and take advantage of growth opportunities.
In addition, the Directors believe that Admission will provide liquidity and a
value for the Company's equity which, in conjunction with the EMI scheme, will
help the Group to continue to attract, motivate and retain staff of an
appropriate calibre to achieve the growth opportunities."
Mindful of the factors below, set alongside the statement from the AIM
admission document, the Management Team have been evaluating the
continued appropriateness of the Company's admission to trading on AIM.
Share price volatility
Since its admission to trading on AIM in 2006, Morson's share price has been
extremely volatile, rising to a high of approximately 258 pence per Morson Share
in June 2007 and falling to a low of approximately 39 pence per Morson Share in
February of this year and as recently as 10 April this year.
During this time, the Group has continued to report profits above those
recorded at the time of its admission to trading on AIM and yet its share price
has, since 29 May 2008, remained below the price at which admission occurred,
namely 160p. This has defeated one of the core reasons for the original
admission, namely to attract, motivate and retain staff of an appropriate calibre
to achieve the growth opportunities which the Company intended to achieve
through share options and share ownership. The volatility in the share price
has resulted in options being granted with exercise prices, ranging from 89.5 -
245 pence per Morson Share, which are now substantially above the current
share price and those that subscribed for shares at admission are now sitting
on substantial losses, despite the Group delivering continued profitability in
difficult UK economic conditions.
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Management believes that it will have a greater chance of attracting, retaining
and incentivising key personnel with bonus and/or share option arrangements,
which may not comply with corporate governance guidelines for an AIM
company and therefore may not be acceptable to institutional investors and
the broader market if the Company were to remain admitted to trading on AIM.
Furthermore, the Management Team believes that concern about the

Company's share price performance may result in a loss of confidence when
approaching contract renewals. The Management Team also believes that the
relative decline in the Company's share price may be utilised by competitors in
an effort to imply financial distress despite the Company's performance in
difficult UK economic conditions. The Management Team had believed that the
Company's admission to AIM would strengthen its ability to gain and retain
business. It is their current opinion that, as a result of share price volatility and
the Company's depressed market capitalisation, being AIM listed now weakens
Morson's competitive positioning.
Business Transition
Despite the current UK economic climate, the Group has been able to maintain
a substantial level of profit. This has been achieved despite the loss in recent
years of a number of significant contracts and reduced volumes on others;
including the cessation of the Nimrod aircraft programme contributing to the
closure of the BAe site at Woodford, the supply of workers to Magnox, and the
loss of the "Trackforce" contract with Metronet. The Group has won new work
and renewed some existing contracts. However, new contracts are
predominantly obtained by a competitive tender process and renewals are
typically negotiated with pressure for margin reductions but with enhancement
of quality of service. The Morson Board believes that the economic outlook
remains challenging in the UK, with Government expenditure under pressure and
whilst there is commitment to long term projects such as HS2 and Crossrail, the
material benefits that could accrue to the Group are uncertain and a number of
years away.
The Morson Board has commenced the process of transitioning the business
from one that is predominantly UK-centric to one that is able to take
advantage of overseas opportunities. In addition, the Morson Board has
invested in new offices in the UK, in permanent staff and Morson Projects. This
strategy of investment for growth is one that, in the short to medium term,
may impact on future cashflow and profits. The Management Team believes
that this strategy will, over time, prove to enhance the security and
sustainability of revenues, but acknowledges that the risk profile of the
business may, for the foreseeable future, be higher than Morson Shareholders
currently envisage. The Management Team believes this may impact on the
Company's share price. Accordingly, Management believes that the transition
of the business would be best achieved in the more flexible private company
environment.
Current Trading and future prospects
As the Morson Board has stated in the preliminary results for the year ended 31
December 2011, released on 30 March 2012, the 2011 financial year was a
challenging one. The markets in which the Group operates are competitive and
varying levels of confidence amongst the Group's client base, due to wider
economic uncertainty, has affected demand.
Whilst the Group has been successful in maintaining key client relationships in
its core business, this has been achieved with downward pressure on margins
and/or payment terms. Furthermore, five of the contracts under which the
Group derives significant turnover are due for renewal or extension in 2012. If
the recent trend of margin erosion and extension of credit terms were applied
to all these contracts it would put further pressure on cash flow. Such
pressure would hamper the Group's plans for overseas expansion and further
reduce the likelihood of a return to dividend payments. In such circumstances,
the Morson Board may be forced into action to preserve cash flow at the
expense of revenue and profit. The Management Team believe that such
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action, whilst necessary, could have a detrimental impact on Morson's share
price.
As a result of margin erosion and increased costs, the Morson Directors believe
the Group has to work harder to stand still in terms of profits.
Morson Projects
The trading of Morson Projects has deteriorated over the past two years as it
is achieving lower gross profit margins and incurring increased overhead costs.
Morson Projects has a different business model to core recruitment operations
requiring longer term investment in often fixed price contracts which the
Morson Directors believe to be inherently more risky than core recruitment. To
demonstrate this further on 7 May 2012, Morson Projects received an
unquantified claim from a client regarding a specific piece of work. In the
limited time since the claim was received Morson Projects has not received full
details of the claim, the circumstances surrounding the claim and quantification
of the claim. Accordingly the merits of the claim have not been fully assessed,
but this claim may lead to litigation in due course. The Management Team
believes Morson Projects has strong defences to any such claim and, in any
event, carries professional indemnity insurance which should mitigate the
position and, to the extent there is any merit in the claim, Morson Projects may
also have claims against third parties regarding the work involved. Whilst the
Management Team are confident about the outcome of this claim and are
proceeding with the Offer as previously envisaged, the Bank have concluded
that there is a risk of a cash loss and have put further clauses into their facility
agreement which relate specifically to this claim, as set out in paragraph 8.
Morson Projects also requires more working capital and fixed asset expenditure.
The Management Team believes that this activity is not well understood by the
stock market and that the value of Morson Projects is not truly reflected in
Morson's market capitalisation. As a result, it is the Management Team's belief
that this business unit would sit better as part of a private company.
These factors, taken together, have reduced the visibility previously enjoyed
by the Morson Board when forecasting profitability, increasing the risk that the
Group will perform below market expectations. Mindful of the share price impact
that arises from the publication of negative news, the Management Team
believes that shareholder value could be considerably eroded if future market
expectations fail to be met.
Cash flow and dividends
In its trading statements issued in December 2011 and February 2012, the
Morson Board highlighted that the Group's cash position had been negatively
impacted by the lengthening of some trading cycles and the investment in
development of overseas opportunities which has led to a substantial increase
in net debt. These factors contributed to the decision to suspend dividend
payments by the Company. In light of the current trading environment and the
business transition referred to above, the Company can offer no guarantee that
dividend payments will be recommenced when the position is next reviewed as
part of the interim results process in September 2012. The Management Team
believe that a number of shareholders invested in the Company to take
advantage of dividend income. As a result, the Management Team believes
that, in light of the change of circumstances, it is appropriate to put forward
the Offer so that such Morson Shareholders can receive value for their
shareholding in Morson at a premium to the pre-announcement share price.
The Offer Price
The Offer is to be funded through the Management Team's own resources, bank
leverage and the Offer Loan Notes. The valuation of Morson at the Offer Price
is principally a function of the leverage made available by Barclays to make the
Offer. The Offer values Morson at a level at which the Management Team
believe future debt service can be achieved without putting at risk the
continuing stakeholders' investment and employment prospects of the staff
employed in the Group.
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6. Background to the Recommendation
The Independent Director has considered the terms of the Cash Offer and
recommends, having been so advised by WH Ireland Limited, that all Morson
Shareholders should accept the Cash Offer for their Morson Shares at a price of
50 pence per Morson Share.
The Independent Director believes that, for reasons set out below, in the
absence of an offer for the Company, there can be no guarantee that Morson
Shareholders (especially those with significant shareholdings) will be able to sell
their entire shareholding in Morson in the market, should they wish to do so, at
a price of 50 pence or better, in the short to medium term.
In addition, given the receipt of irrevocable undertakings amounting to 57.37

per cent. of Morson's issued share capital, there is a likelihood that if the Offer
proceeds Morson will be delisted, and that shareholders choosing not to accept
the Offer would be unable easily to realise value for their shareholdings and
experience the elevated risks attached to investment in an unquoted company.
The Independent Director therefore advises that each Morson Shareholder

should consider carefully the information set out below in making a decision as
to whether to accept the Offer.
In deciding to recommend the Cash Offer, the Independent Director has taken
into account the factors set out below. This is not intended to be an
exhaustive list of relevant factors and Morson Shareholders should consider
their individual circumstances carefully before deciding whether to accept the
Offer.
The economic and trading environment
- Macroeconomic weakness in the Company's principal geographic markets,

accompanied by a general fiscal tightening that has significantly, negatively
impacted a number of the Group's larger customers who rely on defence and
other spending by governments for substantial amounts of their revenues;
- Industry overcapacity, in the Morson Projects business in particular, which

has resulted from falling demand, leading to significantly increased competition
for contracts, and accompanying reduction in profit margins and deterioration in
other terms;
- Risks associated with the business plan being pursued by the Management
Team. It is probable that underperforming operations such as the UK projects
and permanent recruitment businesses will require further restructuring and that
development of the overseas businesses will continue to require substantial
investment; and
- Demands on the Company's cash flow from impending contract renewals, the
need to renew existing banking facilities during 2013 and 2014, continued
efforts to develop underperforming areas of the Group and the need to reduce
indebtedness which are likely to impact the ability of the Company to reinstate
dividend payments.
Incentivisation of directors and key staff
- The Independent Director would draw Morson Shareholders' attention to the

likely negative impact on the business and motivation and morale of key senior
managers if the current process does not conclude with the successful
completion of the Offer.
The market in Morson Shares
- The Company is exposed to the infrastructure and capital goods markets,

which are highly cyclical and can in periods of recession therefore fall out of
favour with investors;
- Over recent years the Company's share price has declined from over £2.50 to
around 80p in the second half of 2011, and fallen further to around 40p
following announcement of the dividend suspension in December 2011. This
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decline indicates negative market sentiment, arising from concerns around the
sector and the underlying trading performance of the Company, as well as the
suspension of the dividend. It appears unlikely that catalysts for a significant
improvement in the market perception of the Company will arise in the short to
medium term, particularly given the challenges posed to a return to dividends
by the Company's indebtedness and other demands on cashflow;
- The lack of trading liquidity in Morson Shares, arising in part from the large
shareholding of the Management Team, has made it challenging for potential
new investors to become Morson Shareholders and is believed to be likely to
have deterred others. The average daily trading volume in Morson Shares for
the 12 month period ended 24 May 2012 was 53,984 Morson Shares being 0.1
per cent. of Morson's existing issued share capital;
- The shareholding of the Management Team (46.78 per cent.) is likely to deter
others from making a competing offer for the Company; and
- The level of irrevocable acceptances secured for the Offer is such that as the
Offer proceeds the probability that the Company will be delisted is significant
and in this situation the liquidity of shareholders would be substantially
curtailed, restricting further their ability to realise value for their Morson
Shareholdings .
Accordingly, the Independent Director believes that the Cash Offer represents
an appropriate way for Morson Shareholders to realise value for their
investment at a premium to the prevailing share price.
It should be noted however that the Independent Director's recommendation

only applies to the Cash Offer and does not apply to the Loan Note Alternative,
as he considers that whilst the nominal value at completion of the Loan Note
Alternative may be the same as that of the Cash Offer, additional risk attaches
to the Loan Note Alternative, arising from inter alia, the possibility that the
Company will in due course become a private limited company, the significant
increase in the indebtedness of the Company that will arise should the Offer
proceed and the claims of other creditors (including Barclays) ranking ahead of
the Loan Note Alternative.
7. Irrevocable Undertakings to Accept the Offer
In aggregate, MMGG has received irrevocable undertakings to accept or procure

acceptance of the Offer in respect of a total of 26,014,380 Morson Shares,
representing 57.37 per cent. of the existing issued share capital of Morson.
Details of these undertakings are set out in Appendix IV. Morson Shareholders
should be aware that the Management Team has irrevocably undertaken to
accept the Loan Note Alternative in respect of their entire combined interests
of 21,209,630 Morson Shares amounting to approximately 46.78 per cent. of
the existing issued share capital of Morson.
8. Financing of the Offer
Full acceptance of the Offer (other than in respect of the interests of the
Management Team), in cash, will result in the payment by MMGG of
approximately £12.067 million in cash to Morson Shareholders. The cash
consideration provided by MMGG in support of the Cash Offer is being financed
by debt financing being provided by Gerard Anthony Mason and Barclays.
MMGG has entered into a facilities agreement with Barclays whereby Barclays
will provide certain facilities to assist in financing the consideration under the
Offer and any squeeze out of shares following the Offer, the costs of the Offer
and refinancing certain existing financial indebtedness of the Morson Group. The
facilities, which amount to up to £14 million, comprise a term loan of up to £12
million which is repayable in quarterly instalments over a four year period from
the date on which the Offer is declared unconditional and a term loan of up to
£2million which is repayable on the date which falls four years from the date on
which the Offer is declared unconditional. In certain circumstances, the
facilities may be repayable earlier, including in circumstances where the claim
against Morson Projects referred to in paragraph 5 above involves Morson
Projects incurring an aggregate liability equal to or in excess of £1 million taking
into account any relevant net insurance recovery (after taking into account
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any excess payable in respect of such insurance recovery).
MMGG has entered into a facility agreement with Gerard Anthony Mason
whereby he will provide £2,500,000 of loans to assist in financing the
consideration under, and the costs of, the Offer. Repayment of this facility is
due on 30 June 2017. In certain circumstances, these facilities may be
repayable earlier. In any event, repayment of this facility issubject to the terms
of the Intercreditor Agreement.
SPARK Advisory Partners Limited is satisfied that sufficient resources are

available to MMGG to satisfy in full the cash consideration payable pursuant to
the Offer.
9. Information on MMGG
MMGG was incorporated in England and Wales on 5 March 2012 for the purpose
of making the Offer. All of the issued ordinary shares in MMGG are owned by
the Management Team comprising Gerrard Godfrey Mason (Chairman), Gerard
Anthony Mason (Group Chief Executive), Paul John Gilmour (Group Finance
Director) and Kevin Patrick Gorton (Group Managing Director).
To date, MMGG has neither traded nor engaged in any activities, other than
those in relation to its incorporation, re-registration as a public limited
company, the issuing of shares to the Management Team and the making of the
Offer.
10. Information on Morson
Morson operates through three main subsidiaries, Morson Human Resources

Limited, which trades as Morson International, and Morson Wynnwith Limited,
both of which provide specialist engineering and technical personnel and Morson
Projects Limited, which provides outsourced engineering and project
management design services.
Nuclear, aerospace, rail and power are the core markets in which Morson
operates. However, a wide range of ancillary engineering and design markets
also draw on the Group's engineering talent. The Morson Board believes that
other areas, including telecommunications, oil and gas, marine and automotive
provide opportunities for growth. Morson seeks to work in partnership with its
customers in order to seek to establish common goals for efficiency, innovation
and technical expertise. This approach provides Morson with knowledge of the
needs and aims of clients, enabling Morson to make changes and improvements
to its service. The Morson Board believes that success in its markets can be
achieved by securing and maintaining long-term relationships with customers.
Morson released its preliminary final results on 30 March 2012 and published its
annual report and accounts for the year ended 31 December 2011 on 17 April
2012. The annual report is available on Morson's website.
11. Current trading and future prospects of MMGG
To date, MMGG has neither traded nor engaged in any activities, other than
those in relation to its incorporation, its re-registration as a public limited
company, the issuing of shares to the Management Team and the making of the
Offer.
MMGG currently has in issue 50,000 ordinary shares of £1 each which are fully
paid and which are held by the Management Team as follows:
MMGG Shareholder Number of ordinary shares in MMGG held
Gerrard Godfrey Mason 23,600
Gerard Anthony Mason 23,600
Paul John Gilmour 1,400
Kevin Patrick Gorton 1,400
12. Management and Employees
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The MMGG Board attaches great importance to the skills and experience of the
management and employees of Morson. The MMGG Board has provided
assurances to the Independent Director that, upon the Offer becoming or being
declared unconditional in all respects, the existing employment rights of all
employees of Morson will be fully safeguarded.
No change is expected to the current locations of the Group's places of

business.
In addition, following the Offer becoming unconditional in all respects, key

members of the Management Team will remain in their current roles with no
changes to their current terms and conditions of employment.
The Independent Director of Morson has agreed to resign subject to and with
effect from the Offer being declared unconditional in all respects. Particulars of
the payments to the Independent Director in respect of termination of his
appointment as a director (and in accordance with the terms of his letter of
appointment) will be set out in full in the Offer Document).
13. Morson Share Option Schemes
The Offer extends to any Morson Shares which are unconditionally allotted or
issued whilst the Offer remains open for acceptance (or by such earlier time
and/or date as MMGG may, subject to the Code and/or with the consent of the
Panel, determine, but not being earlier than the date on which the Offer
becomes or is declared unconditional as to acceptances) as a result of the
exercise of options or other awards granted under the Morson Share
Schemes. Participants in the Morson Share Schemes will be contacted
separately regarding the effect of the Offer on their options and MMGG and
Morson will make appropriate proposals to the holders of any in-the-money
options. However, as has been outlined in paragraph 5 above, at the Offer
Price, none of the options granted under the Morson Share Option Schemes
would be in-the-money options.
14. Disclosure of Interests in Morson
Other than pursuant to the irrevocable undertakings referred to in paragraph 7

above, MMGG confirms that it does not currently hold any interest in Morson
Shares.
MMGG is, however, acting in concert with the Management Team which has the
interests in Morson Shares set out below:
Name Number of Morson Percentage

Shares holding
G G Mason1 9,984,215 22.02
G A Mason2 10,906,090 24.05
P J Gilmour 630,000 1.39
K P Gorton 611,200 1.35
Note
1. Of these Morson Shares included in G G Mason's holding, 921,875 are held by the trustees of a
discretionary trust of which G G Mason is a trustee.
2. Of these Morson Shares included in G A Mason's holding, 921,875 are held by the trustees of a
discretionary trust of which G G Mason is a trustee. T hese shares are included in G A Mason's holding by
reason of the inclusion of G A Mason's children as beneficiaries. G A Mason has no beneficial interest in
these shares.
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15. Securities in Issue
As at the close of business on, 24 May, 2012, there were 45,343,750 Morson
Shares in issue.
16. Cancellation of Trading, Re-registration and compulsory

acquisition
If MMGG acquires or agrees to acquire, by virtue of its shareholding and

acceptances of the Offer, issued share capital carrying 75 per cent. or more of
the voting rights of Morson, MMGG intends to procure that Morson applies for
cancellation of the trading in Morson Shares on AIM not less than 20 Business
Days following MMGG first having acquired or agreed to acquire such issued
share capital and thereafter to procure that the Company is re-registered as a
private limited company. However, even though the Company would no longer
be a public company, it would still remain subject to the provisions of the City
Code for a period of 10 years from its re-registration as a private limited
company.
If sufficient valid acceptances of the Offer are received and/or sufficient

Morson Shares are otherwise acquired, MMGG intends to apply the provisions of
sections 979 to 982 (inclusive) of the Companies Act to acquire compulsorily
any outstanding Morson Shares to which the Offer relates.
17. General
The Offer Document will be posted to Morson Shareholders as soon as

practicable and, in any event (save with the consent of the Panel), within 28
days of the date of this announcement.
The Offer will be made solely by the Offer Document and the Form of
Acceptance, which will contain the full terms and conditions of the Offer,
including details of how the Offer may be accepted.
Appendix V contains definitions of the terms used in this announcement.
18 Offer-related arrangements
MMGG and Morson entered into an agreement on 14 March 2012 (the

"Confidentiality Agreement") pursuant to which, amongst other things, MMGG
has undertaken to (i) keep confidential certain non-public information it
receives relating to the Morson Group, (ii) use such information solely for the
purpose of evaluating a possible offer for Morson and (iii) not to disclose such
information to third parties (other than certain permitted disclosees) unless
required by law, regulation, a court of competent jurisdiction or any
governmental or competent regulatory authority.
MMGG has further undertaken that subject to certain limited exclusions, during
the period of two years from the date negotiations cease it will not directly or
indirectly solicit, endeavour to entice away or offer to employ or to enter into
any contract for services with any person who is (i) in a managerial,
supervisory, technical or sales capacity of any member of the Morson Group or
(ii) is a consultant to any member of the Morson Group where the person in
question has confidential information or would be in a position to exploit any
member of the Morson Group's trade connections.
MMGG has entered into a facility agreement with Gerard Anthony Mason,
further details of which are set out in paragraph 8 above.
19 Documents on display
Copies of the following documents will, subject to certain restrictions relating to

persons in Restricted Jurisdictions, be made available free of charge on MMGG's
and Morson's websites at www.MMGG.co.uk and www.Morson.com respectively
by no later than 12:00 p.m. (London time) on the Business Day following this
announcement until the end of the Offer Period:
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- this announcement;
- the irrevocable undertakings referred to in paragraph 7 above and described

in Appendix IV to this announcement;
- the facilities agreement and the facility agreement referred to in paragraph 8

above;
- the Intercreditor Agreement referred to in paragraphs 4 and 8 above; and
- the Confidentiality Agreement referred to in paragraph 18 above.
Neither the content of the websites referred to in this announcement nor the
content of any website accessible from hyperlinks on MMGG's website and/or
Morson's website (or any other website) is incorporated into, or forms part of,
this announcement.
PRESS ENQUIRIES
For further information contact:
MMGG
Ged Mason 0161 707 1516
Paul Gilmour 0161 707 1516
Morson
Ian Knight 07775 941804
SPARK Advisory Partners Limited (financial adviser to MMGG)

Matt Davis, Partner 020 3368 3552
Mark Brady, Partner 020 3368 3551
W H Ireland Limited (financial adviser to Morson)

Adrian Hadden, Managing Director 020 7220 1751
Nick Field, Corporate Finance Executive 020 7220 1658
Apart from the responsibilities, if any, which may be imposed on SPARK Advisory
Partners Limited by the Financial Services and Markets Act 2000, the European
or the regulatory regimes established thereunder or the Code, SPARK Advisory
Partners Limited does not accept any responsibility whatsoever for the
contents of this announcement or for any statements made or purported to be
made by it or on its behalf in connection with the Offer. SPARK Advisory
Partners Limited accordingly disclaims all and any liability whether arising in tort,
contract or otherwise (save as referred to above) which it might otherwise
have in respect of this announcement or any such statement.
Apart from the responsibilities, if any, which may be imposed on W H Ireland

Limited by the Financial Services and Markets Act 2000, the European
or the regulatory regimes established thereunder or the Code, W H Ireland
Limited does not accept any responsibility whatsoever for the contents of this
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5/24/13
announcement or for any statements made or purported to be made by it or on
its behalf in connection with the Offer. W H Ireland Limited accordingly
disclaims all and any liability whether arising in tort, contract or otherwise (save
as referred to above) which it might otherwise have in respect of this
announcement or any such statement.
SPARK Advisory Partners Limited, which is authorised and regulated in the

United Kingdom by the Financial Services Authority, is acting exclusively for
MMGG and no-one else in connection with the Offer and will not be responsible
to any person other than MMGG for providing the protections afforded to
customers of SPARK Advisory Partners Limited or for providing advice in relation
to the Offer or any other matter referred to in this announcement.
SPARK Advisory Partners Limited has given and not withdrawn its written
consent to the release of this announcement with the inclusion of the
reference to its name in the form in which it is included.
W H Ireland Limited, which is authorised and regulated in the United Kingdom by

the Financial Services Authority, is acting exclusively for Morson in connection
with the Offer and will not be responsible to any person other than Morson for
providing the protections afforded to clients of W H Ireland Limited or for
providing advice in relation to the Offer or any other matter referred to in this
announcement.
W H Ireland Limited has given and not withdrawn its written consent to the
release of this announcement with the inclusion of the reference to its name in
the form in which it is included.
This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities. Any acceptance or other response to
the Offer should be made only on the basis of information contained or referred
to in the Offer Document which MMGG intends to despatch shortly to Morson
Shareholders and, for information only, to holders of options under the Morson
Share Schemes.
overseas shareholders will be contained in the Offer Document.
overseas shareholders will be contained in the Offer Document. Unless
otherwise determined by MMGG and permitted by applicable law and regulation,
subject to certain exceptions, the Offer is not being made and will not be
made, directly or indirectly, in or into, and the Offer will not be capable of
acceptance from a Restricted Jurisdiction. Accordingly, unless otherwise
determined by MMGG, copies of this announcement, the Offer Document, the
Form of Acceptance and any other related document are not being, and must
not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent
in or into or from a Restricted Jurisdiction and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as doing so
may be a breach of applicable law and regulation in that jurisdiction and may
make invalid any purported acceptance of the Offer by persons in any such
jurisdiction. This announcement does not constitute an offer in a Restricted
Jurisdiction and the Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or otherwise from or within any Restricted
Jurisdiction. Accordingly this announcement is not being, and should not be,
mailed, transmitted or otherwise distributed, in whole or in part, in or into or
from any Restricted Jurisdiction.
Morson Shareholders (including, without limitation, nominees, trustees

or custodians) must not forward this announcement to any Restricted
Jurisdiction.
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CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This document contains certain forward-looking statements with respect to the

financial condition, results of operations and business of the Morson Group and
certain plans and objectives of the boards of directors of Morson and MMGG.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements often
use words such as "anticipate", "target", "expect", "estimate", "intend", "plan",
"goal", "believe", "will", "may", "should", "would", "could" or other words of similar
meaning. These statements are based on assumptions and assessments made
by the Management Team and MMGG in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate.
Forward-looking statements also include statements about MMGG's beliefs and

expectations related to the Offer being declared wholly unconditional, benefits
that would be afforded to customers, and benefits to MMGG that are expected
to be obtained as a result of the Offer being declared wholly unconditional.
There can be no assurance that the Offer will be declared wholly
unconditional. By their nature, forward-looking statements involve risk and
uncertainty, and the factors described in the context of such forward-looking
statements in this announcement could cause actual results and developments
to differ materially from those expressed in or implied by such forward-looking
statements.
Should one or more of these risks or uncertainties materialise, or should

underlying assumptions prove incorrect, actual results may vary materially from
those described in this announcement.
The statements contained in this announcement are made as at the date of

this announcement, unless some other time is specified in relation to them, and
service of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such
date. Nothing contained in this document shall be deemed to be a forecast,
projection or estimate of the future financial performance of Morson or MMGG
except where expressly stated.
All subsequent oral or written forward looking statements attributable to MMGG

or Morson or any of their respective members, directors, officers or employees
or any persons acting on their behalf are expressly qualified in their entirety by
the cautionary statement above. All forward looking statements included in this
announcement are based on information available to MMGG and Morson on the
date hereof and are made only as of the date of this announcement. Undue
reliance should not be placed on such forward looking statements.
Subject to compliance with the Code, neither Morson nor MMGG intends, or
undertakes any obligation, to update any information contained in this
announcement.
APPENDIX I
Conditions and Certain Further Terms of the Offer
A. Conditions of the Offer
The Offer will be subject to the following conditions:
(a) valid acceptances of the Offer being received (and not, where permitted,
withdrawn) by 1.00 p.m. on the first closing date (or such later time(s) and/or
date(s) as MMGG may, subject to the rules of the Code or with the consent of
the Panel, decide) in respect of not less than 90 per cent. (or such lesser
percentage as MMGG may decide) in nominal value of the Morson Shares to
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which the Offer relates, and not less than 90 per cent. (or such lesser
percentage as MMGG may decide) of the voting rights carried by the Morson
Shares to which the Offer relates, provided that this condition will not be
satisfied unless MMGG shall have acquired or agreed to acquire, whether
pursuant to the Offer or otherwise, Morson Shares carrying in aggregate more
than 50 per cent. of the voting rights then exercisable at a general meeting of
Morson including, to the extent (if any) required by the Panel, any voting rights
attaching to any Morson Shares which are unconditionally allotted before the
Offer becomes or is declared unconditional as to acceptances pursuant to the
exercise of any outstanding conversion or subscription rights or otherwise. For
the purposes of this condition:
(i) Morson Shares which have been unconditionally allotted but not
issued before the Offer becomes or is declared unconditional as
to acceptances, whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise, shall
be deemed to carry the voting rights which they will carry upon
issue; and
(ii) the expressions "Morson Shares to which the Offer relates"

and "associates" shall be construed in accordance with sections
974 to 991 of the Companies Act 2006;
(b) each clearance or consent of, filing with, or notice to, any Third Party (as
defined below) that is reasonably considered by MMGG to be necessary or
appropriate in connection with the Offer or its implementation, including the
acquisition of any share or securities in, or control of, any member of the Wider
Morson Group, in any country, territory or jurisdiction in which a member of the
Wider MMGG Group or the Wider Morson Group is established or conducts
business, having been granted, filed or delivered (as appropriate), in each case
in terms satisfactory to MMGG;
(c) no antitrust regulator, central bank, government or governmental, quasi-

governmental, supranational, statutory, regulatory or investigative body,
authority, court, trade agency, association or institution or professional or
environmental body or any other similar person or body whatsoever in any
relevant jurisdiction (each a "Third Party") having, without the consent of
MMGG, decided to take, institute, implement or threaten any action,
proceedings, suit, investigation, enquiry or reference or having required any
action to be taken or information to be provided or otherwise having done
anything or having made, proposed or enacted any statute, regulation, order or
decision or having done anything which would or might reasonably be expected
to:
(i) make the Offer or its implementation, or the acquisition or the

proposed acquisition by MMGG of any shares or other securities
in, or control or management of, Morson or the Wider Morson
Group void, unlawful, illegal or unenforceable in any jurisdiction,
or otherwise directly or indirectly restrain, prohibit, restrict,
prevent or delay the same or impose additional conditions or
financial or other obligations with respect thereto, or otherwise
challenge or interfere therewith, or require adverse amendment
to the Offer or the acquisition of any shares or other securities
in, or control or management of, Morson by MMGG;
(ii) require, prevent or materially delay the divestiture or alter the

terms envisaged for any proposed divestiture by MMGG or any
member of the Wider MMGG Group of any Morson Shares or of
any shares in a member of the Wider Morson Group;
(iii) require, prevent or materially delay the divestiture or alter the

terms envisaged for any proposed divestiture by any member of
the Wider MMGG Group or by any member of the Wider Morson
Group of all or any material portion of their respective businesses,
assets or property, or (to an extent which is material in the
context of the Offer or the Wider Morson Group concerned taken
as a whole) impose any limit on the ability of any of them to
conduct their respective businesses (or any of them) or to own
or control any of their respective assets or properties or any part
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(iv) impose any material limitation on, or result in any material delay
in, the ability of any member of the Wider MMGG Group or any
member of the Wider Morson Group to acquire, hold or exercise
effectively, directly or indirectly, all or any rights of ownership of
Morson Shares or any shares or securities convertible into Morson
Shares or to exercise voting or management control over any
member of the Wider Morson Group or any member of the Wider
MMGG Group in any such case which is material in the context of
the Wider Morson Group;
(v) except pursuant to Chapter 3 of Part 28 of the Companies Act

require any member of the Wider MMGG Group and/or of the
Wider Morson Group to acquire or offer to acquire any shares or
other securities (or the equivalent) in and/or indebtedness of any
member of the Wider Morson Group owned by or owed to any
Third Party in circumstances which would impose on any member
of the MMGG Group or any member of the Morson Group a liability
which is material in the context of the Wider MMGG Group or the
Wider Morson Group as the case may be;
(vi) impose any material limitation on the ability of any member of the
Wider MMGG Group and/or of the Wider Morson Group to
integrate or co-ordinate its business, or any material part of it,
with the business of any member of the Wider Morson Group or of
the Wider MMGG Group respectively; or
(vii) otherwise adversely affect any or all of the businesses, assets,

prospects, profits or financial or trading position of any member
of the Wider Morson Group or any member of the Wider MMGG
Group to an extent which is material in the context of the Offer
or any such group taken as a whole,
and all applicable waiting and other time periods during which any Third Party
could institute, implement or threaten any such actions, proceedings, suit,
investigation, enquiry or reference under the laws of any relevant
jurisdiction, having expired, lapsed or been terminated;
(d) all necessary filings and applications having been made and all necessary
waiting and other time periods (including any extensions thereof) under any
applicable legislation or regulations of any relevant jurisdiction having
expired, lapsed or been terminated and all statutory or regulatory obligations
in any relevant jurisdiction having been complied with in each case as may
be necessary in connection with the Offer and its implementation or the
acquisition or proposed acquisition by MMGG or any member of the Wider
MMGG Group of any shares or other securities in, or control of, Morson or
any member of the Wider Morson Group and all authorisations, orders,
recognitions, grants, consents, clearances, confirmations, licences,
certificates, permissions and approvals ("Authorisations") which are
material and necessary or appropriate for or in respect of the Offer or the
acquisition or proposed acquisition by MMGG of any shares or other
securities in, or control of, Morson or the carrying on by any member of the
Wider Morson Group of its business or in relation to the affairs of any
member of the Wider Morson Group having been obtained in terms and in a
form reasonably satisfactory to MMGG from all appropriate Third Parties and
all such Authorisations remaining in full force and effect and all filings
necessary for such purpose having been made and there being no notice or
intimation of any intention to revoke, suspend, restrict or amend or not
renew the same at the time at which the Offer becomes or is declared
wholly unconditional in each case where the absence of such Authorisation
would have a material adverse effect on the Wider Morson Group or on the
Wider MMGG Group taken as a whole;
(e) except as publicly announced by Morson prior to 25 May 2012 through a

Regulatory Information Service (an "RIS") or disclosed in writing to MMGG
prior to 25 May 2012, there being no provision of any arrangement,
agreement, licence or other instrument to which any member of the Wider
Morson Group is a party or by or to which any such member or any of its
respective assets is or are or may be bound, entitled or subject or any
circumstance which, in consequence of the making or implementation of the
Offer or the proposed acquisition of any shares or other securities in, or
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5/24/13
control of, Morson by MMGG or because of a change in the control or
management of Morson or otherwise, could reasonably be expected to result
in (to an extent which is material in the context of the Wider Morson Group
taken as a whole):
(i) any indebtedness or liabilities actual or contingent of, or any

grant available to, any member of the Wider Morson Group being
or becoming repayable or capable of being declared repayable
immediately or prior to its stated maturity or the ability of any
such member to borrow monies or incur any indebtedness being
withdrawn or inhibited or capable of being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other

security interest over the whole or any material part of the
business, property, assets or interests of any member of the
Wider Morson Group or any such security (whenever created,
arising or having arisen) being enforced or becoming enforceable;
(iii) any such arrangement, agreement, licence or instrument or the

rights, liabilities, obligations, or interests of any member of the
Wider Morson Group under any such arrangement, agreement,
licence or instrument (or any arrangement, agreement, licence or
instrument relating to any such right, liability, obligation, interest
or business) or the interests or business of any such member in
or with any other person, firm, company or body being or
becoming capable of being terminated or adversely modified or
adversely affected or any adverse action being taken or any
onerous obligation or liability arising thereunder;
(iv) any asset or interest of any member of the Wider Morson Group
being or failing to be disposed of or charged (otherwise than in
the ordinary course of business) or ceasing to be available to any
member of the Wider Morson Group or any right arising under
which any such asset or interest could be required to be
disposed of or charged or could cease to be available to any
member of the Wider Morson Group;
(v) any member of the Wider Morson Group ceasing to be able to

carry on business under any name under which it presently does
so;
(vi) any member of the Wider MMGG Group and/or of the Wider
Morson Group being required to acquire or repay any shares in
and/or indebtedness of any member of the Wider Morson Group
owned by any Third Party;
(vii) any change in or effect on the ownership or use of any

intellectual property rights owned or used by any member of the
Wider Morson Group;
(viii) the value or financial or trading position of any member of the

Wider Morson Group being prejudiced or adversely affected in a
manner which would be material in the context of the Wider
Morson Group taken as a whole; or
(ix) the creation of any material liability, actual or contingent, by any

member of the Wider Morson Group (other than in the ordinary
course of business),
and no event having occurred which, under any provision of any such
arrangement, agreement, licence or other instrument, might reasonably be
expected to result in any of the events referred to in this condition (e) to an
extent which would be material in the context of the Wider Morson Group
taken as a whole;
(f) since 31 December 2011 and except as disclosed in Morson's annual report
and accounts for the year ended 31 December 2011 or as disclosed by or on
behalf of Morson to MMGG or its advisers in writing prior to 25 May 2012 or
as otherwise publicly announced by Morson on or prior to 25 May 2012
through a RIS, no member of the Wider Morson Group having:
(i) issued or agreed to issue or authorised or proposed the issue of
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additional shares or securities of any class, or securities
convertible into or exchangeable for shares, or rights, warrants or
options to subscribe for or acquire any such shares, securities or
convertible securities (save for issues between Morson and any
of its wholly-owned subsidiaries or between such wholly-owned
subsidiaries and save for options as disclosed to MMGG granted
under the Morson Share Option Schemes before 25 May 2012 or
the issue of any Morson Shares allotted upon the exercise of
options granted before 25 May 2012 under the Morson Share
Schemes) or redeemed, purchased, repaid or reduced or
proposed the redemption, purchase, repayment or reduction of
any part of its share capital or any other securities;
(ii) recommended, declared, made or paid or proposed to

recommend, declare, make or pay any bonus, dividend or other
distribution whether payable in cash or otherwise other than any
distribution by any wholly-owned subsidiary within the Morson
Group;
(iii) save as between Morson and its wholly-owned subsidiaries,

effected, authorised, proposed or announced its intention to
propose any change in its share or loan capital which in each
case would be material in the context of the Wider Morson Group
taken as a whole;
(iv) save as between Morson and its wholly-owned subsidiaries,

effected, authorised, proposed or announced its intention to
propose any merger, demerger, reconstruction, arrangement,
amalgamation, commitment or scheme or any material acquisition
or disposal or transfer of assets or shares (other than in the
ordinary course of business) or any right, title or interest in any
assets or shares or other transaction or arrangement in respect
of itself or another member of the Wider Morson Group which in
each case would be material in the context of the Wider Morson
Group taken as a whole;
(v) acquired or disposed of or transferred (other than in the ordinary

course of business) or mortgaged, charged or encumbered any
assets or shares or any right, title or interest in any assets or
shares (other than in the ordinary course of business) or
authorised the same or entered into, varied or terminated or
authorised, proposed or announced its intention to enter into,
vary, terminate or authorise any agreement, arrangement,
contract, transaction or commitment (other than in the ordinary
course of business and whether in respect of capital expenditure
or otherwise) which is of a loss-making, long-term or unusual or
onerous nature or magnitude, or which involves or could involve
an obligation of such a nature or magnitude, in each case which
is material in the context of the Wider Morson Group taken as a
whole;
(vi) entered into any agreement, contract, transaction, arrangement

or commitment (other than in the ordinary course of business)
which is material in the context of the Wider Morson Group taken
as a whole;
(vii) entered into any contract, transaction or arrangement which

would be restrictive on the business of any member of the Wider
Morson Group or the Wider MMGG Group or which is or could
involve obligations which would or might reasonably be expected
to be so restrictive;
(viii) issued, authorised or proposed the issue of or made any change

in or to any debentures, or (other than in the ordinary course of
business) incurred or increased any indebtedness or liability,
actual or contingent, which is material in the context of the
Wider Morson Group taken as a whole;
(ix) been unable or admitted that it is unable to pay its debts or

having stopped or suspended (or threatened to stop or suspend)
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payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business or proposed or
entered into any composition or voluntary arrangement with its
creditors (or any class of them) or the filing at court of
documentation in order to obtain a moratorium prior to a
voluntary arrangement or, by reason of actual or anticipated
financial difficulties, commenced negotiations with one or more of
its creditors with a view to rescheduling any of its indebtedness;
(x) made, or announced any proposal to make, any change or

addition which is material in the context of the Wider Morson
Group as a whole to any retirement, death or disability benefit or
any other employment-related benefit of or in respect of any of
its directors, employees, former directors or former employees;
(xi) save as between Morson and its wholly-owned subsidiaries,

granted any lease or third party rights in respect of any of the
leasehold or freehold property owned or occupied by it or
transferred or otherwise disposed of any such property, in each
case which is material in the context of the Wider Morson Group
as a whole;
(xii) entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any service
agreement with any director or senior executive of Morson or any
director or senior executive of the Wider Morson Group;
(xiii) taken or proposed any corporate action or had any legal

proceedings started or threatened against it for its winding-up
(voluntary or otherwise), dissolution, striking-off or reorganisation
or for the appointment of a receiver, administrator (including the
filing of any administration application, notice of intention to
appoint an administrator or notice of appointment of an
administrator), administrative receiver, trustee or similar officer of
all or any material part of its assets or revenues or for any
analogous proceedings or steps in any jurisdiction or for the
appointment of any analogous person in any jurisdiction;
(xiv) made any amendment to its memorandum or articles of

association;
(xv) waived or compromised any claim or authorised any such waiver

or compromise, save in the ordinary course of business, which is
material in the context of the Wider Morson Group taken as a
whole;
(xvi) taken, entered into or had started or threatened against it in a

jurisdiction outside England and Wales any form of insolvency
proceeding or event similar or analogous to any of the events
referred to in conditions (i)(ix) and (xiii) above; or
(xvii) agreed to enter into or entered into an agreement or

arrangement or commitment or passed any resolution or
announced any intention with respect to any of the transactions,
matters or events referred to in this condition (f);
(g) except as publicly announced by Morson prior to 25 May 2012 through a RIS
or disclosed in writing to MMGG prior to 25 May 2012 and save as disclosed
in the annual report and accounts of Morson for the financial year ended 31
December 2011, since 31 December 2011:
(i) there having been no material adverse change or deterioration in

the business, assets, financial or trading position or profits or
prospects of the Wider Morson Group taken as a whole;
(ii) no material litigation, arbitration proceedings, prosecution or

other legal proceedings to which any member of the Wider
Morson Group is or may become a party (whether as claimant or
defendant or otherwise), and no material enquiry or investigation
by or complaint or reference to any Third Party, against or in
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respect of any member of the Wider Morson Group, having been
threatened, announced or instituted or remaining outstanding by,
against or in respect of any member of the Wider Morson Group in
any way which is material in the context of the Wider Morson
Group taken as a whole; and
(iii) no contingent or other liability having arisen or become apparent

or increased which might be reasonably likely in either case to
have a material adverse effect on the Wider Morson Group taken
as a whole;
(h) save as disclosed by or on behalf of Morson to MMGG or its advisers in

writing prior to 25 May 2012 MMGG not having discovered:
(i) that any financial, business or other information concerning

Morson or the Wider Morson Group which is contained in the
information publicly disclosed at any time by or on behalf of any
member of the Wider Morson Group either publicly or in the
context of the Offer contains a misrepresentation of fact which
has not, prior to 25 May 2012, been corrected by public
announcement through an RIS or omits to state a fact necessary
to make the information contained therein not misleading;
(ii) any information which affects the import of any such information
as is mentioned in condition (h)(i); or
(iii) that any member of the Wider Morson Group is subject to any
liability, contingent or otherwise, which is not disclosed in the
annual report and accounts of Morson for the financial year
ended 31 December 2011
in each case which has or may reasonably have a material adverse effect in
the context of the Wider Morson Group taken as a whole;
(i) save as disclosed by or on behalf of Morson to MMGG or its advisers in

writing prior to 25 May 2012, MMGG not having discovered that:
(i) any past or present member of the Wider Morson Group has failed
to comply with any and/or all applicable legislation or regulation,
of any jurisdiction with regard to the disposal, spillage, release,
discharge, leak or emission of any waste or hazardous substance
or any substance likely to impair the environment or harm human
health or animal health or otherwise relating to environmental
matters, or that there has otherwise been any such disposal,
spillage, release, discharge, leak or emission (whether or not the
same constituted a non-compliance by any person with any such
legislation or regulations, and wherever the same may have taken
place) any of which disposal, spillage, release, discharge, leak or
emission would be likely to give rise to any liability (actual or
contingent) on the part of any member of the Wider Morson
Group and which is material in the context of the Wider Morson
Group taken as a whole; or
(ii) there is, or is likely to be, for that or any other reason
whatsoever, any liability (actual or contingent) of any past or
present member of the Wider Morson Group to make good, repair,
reinstate or clean up any property or any controlled waters now
or previously owned, occupied, operated or made use of or
controlled by any such past or present member of the Wider
Morson Group, under any environmental legislation, regulation,
notice, circular or order of any government, governmental, quasi-
governmental, state or local government, supranational,
statutory or other regulatory body, agency, court, association or
any other person or body in any jurisdiction and which is material
in the context of the Wider Morson Group taken as a whole.
MMGG reserves the right to waive all or any of conditions (c) to (i) inclusive,
in whole or in part.
Condition (b) must be fulfilled or waived within 21 days after the later of the
first closing date of the Offer and the date on which condition (a) is fulfilled
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and conditions (c) to (i) inclusive must be satisfied as at, or waived on or
before, midnight on the 21st day after the later of the first closing date of
the Offer and the date on which condition (a) is fulfilled (or in each such
case such later date as MMGG may, with the consent of the Panel, agree),
failing which the Offer will lapse provided that MMGG shall be under no
obligation to waive or treat as fulfilled any of conditions (c) to (i) inclusive
by a date earlier than the latest date specified above for the fulfilment
thereof notwithstanding that the other conditions of the Offer may at such
earlier date have been fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment.
Except with the Panel's consent, MMGG will not invoke any of the above
conditions (except for the acceptance condition in (a) and the conditions in
(b) above) so as to cause the Offer not to proceed, to lapse or to be
withdrawn unless the circumstances which give rise to the right to invoke
the relevant conditions are of material significance to MMGG in the context
of the Offer.
B. Certain Further Terms of the Offer
Except where the context otherwise requires, referenc es in this Part B of this
Appendix and in the Form of Acceptance (i) to the Offer shall mean the Offer
and shall include any revision or extension thereof and (ii) to the Offer
becoming unconditional shall include references to the Offer becoming or being
declared unconditional and shall be construed as references to the Offer
becoming or being declared unconditional as to acceptances whether or not
any other condition of the Offer remains to be fulfilled. References to
acceptance of the Offer shall include deemed acceptance of the Offer.
1. Acceptance period
(a) The Offer will initially remain open for acceptance until 1.00 p.m. on the first
closing date. Although no revision is envisaged, if the Offer (in its original or
previously revised form) is revised it will remain open for acceptance for a
period of at least 14 days (or such other period as may be permitted by the
Panel) from the date of posting of written notification of the revision to
Shareholders. Except with the consent of the Panel, no such written
notification of the revision of the Offer may be posted to Shareholders after 46
days after the posting of the Offer Document or, if later, the date which is 14
days before the last date on which the Offer can become unconditional.
(b) The Offer, whether revised or not, shall not (except with the consent of the
Panel) be capable of becoming unconditional after midnight 60 days after the
posting of the Offer Document (or on any earlier date beyond which MMGG has
stated (and not, where permitted, withdrawn such statement) that the Offer
will not be extended), nor of being kept open after that time unless it has
previously become unconditional. However, MMGG reserves the right, with the
permission of the Panel, to extend the Offer to later times and/or dates.
Except with the consent of the Panel, MMGG may not, for the purpose of
determining whether the condition as to acceptances set out in paragraph (a)
of Part A of this Appendix (the "acceptance condition") has been satisfied,
take into account acceptances received or purchases of Morson Shares in
respect of which all relevant electronic instructions or documents are received
by Capita Registrars after 1.00 p.m. on the 60th day after the posting of the
Offer Document (or any earlier time or date beyond which MMGG has stated
that the Offer will not be extended and in respect of which it has not
withdrawn that statement) or such later time and/or date as the case may be
to which the Offer has been extended. If the Offer is extended beyond
midnight on the 60th day after the posting of the Offer Documentacceptances
received and purchases made in respect of which relevant electronic
instructions or documents have been received by Capita Registrars after 1.00
p.m. on the relevant date may (except where the Code otherwise permits) only
be taken into account with the agreement of the Panel.
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(c) If the Offer becomes unconditional, it will remain open for acceptance for not
less than 14 days from the date on which it would otherwise have expired. If
the Offer has become unconditional and it is stated by MMGG that the Offer will
remain open until further notice, then not less than 14 days' notice will be given
to those holders of Morson Shares who have not accepted the Offer prior to
the closing of the Offer.
(d) If a competitive situation arises after MMGG has given a "no extension"
statement or a "no increase" statement (as referred to in the Code), MMGG
may (if it has specifically reserved the right to do so at the time such
statement was made or otherwise with the consent of the Panel) choose not to
be bound by or withdraw the terms of such statement and be free to extend
or increase the Offer, provided that notice is given to that effect as soon as
possible and in any event within four business days after the announcement of
the competing offer and Shareholders are informed in writing thereof or, in the
case of Shareholders with registered addresses outside the United Kingdom or
whom MMGG knows to be nominees holding Morson Shares for such persons, by
announcement in the United Kingdom at the earliest practicable opportunity. If
MMGG has given a "no increase" statement or a "no extension" statement,
MMGG may (if it has specifically reserved the right to do so at the time such
statement was made or in such other circumstances as may be permitted by
the Panel) choose not to be bound by the terms of such statement if it would
otherwise prevent the posting of an increased or improved Offer which is
recommended for acceptance by the Independent Director.
(e) If a competitive situation arises and is continuing 60 days after the posting of
the Offer Document, MMGG will enable holders of Morson Shares in
uncertificated form who have not already validly accepted the Offer but who
have previously accepted the competing offer to accept the Offer by a special
form of acceptance to take effect 60 days after the posting of the Offer
Document. It shall be a condition of such special form of acceptance being a
valid acceptance of the Offer that (i) it is received by Capita Registrars on or
before 60 days after the posting of the Offer Document, (ii) the relevant
Shareholder shall have applied to withdraw his acceptance of the competing
offer but that the Morson Shares to which such withdrawal relates shall not
have been released from escrow before the 60th day after the posting of the
Offer Document by the escrow agent to the competing offer and (iii) the
Morson Shares to which the special form of acceptance relates are not
transferred to escrow in accordance with the procedure for acceptance set out
in the letter from MMGG contained in the Offer Document on or before 60 days
after the posting of the Offer Document, but an undertaking is given that they
will be so transferred as soon as possible thereafter. Shareholders wishing to
use such forms of acceptance should apply to Capita Registrars on 0871 664
0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK
between 9.00a.m. and 5.30p.m. Monday to Friday. Calls to the Capita
Registrars 0871 664 0321 number are charged at 10 pence per minute (including
VAT) plus any of your service provider's network extras. Calls to the Capita
Registrars +44 20 8639 3399 number from outside the UK are charged at
applicable international rates. Different charges may apply to calls made from
mobile telephones and calls may be recorded and monitored randomly for
security and training purposes. Capita Registrars cannot provide advice on the
merits of the Offer nor give any financial, legal or tax advice. Notwithstanding
the right to use such special form of acceptance, holders of Morson Shares in
uncertificated form may not use a form of acceptance (or any other purported
acceptance form) for the purpose of accepting the Offer in respect of such
shares.
(f) For the purpose of determining at any particular time whether the acceptance
condition has been satisfied, MMGG shall not be bound (unless otherwise
required by the Panel) to take into account any Morson Shares which have
been unconditionally allotted or issued before such time unless Capita Registrars
has received written notice on behalf of MMGG, from Morson or its agents, at
the address specified in paragraph 3(a) below of the relevant details of such
allotment or issue before that time. Notification by telex or facsimile or other
electronic transmission will not be sufficient notice for these purposes.
2. Announcements
(a) Without prejudice to paragraph 3 below, by 8.00 a.m. on the business day
following the day on which the Offer is due to expire or becomes or is declared
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unconditional or is revised or extended (as the case may be) (or such later time
or date as the Panel may agree) (the "relevant day") , MMGG will make an
appropriate announcement to a Regulatory Information Service (an "RIS") of
the position. Such announcement will also state (unless otherwise permitted
by the Panel):
(i) the total number of Morson Shares and rights over Morson Shares
(as nearly as practicable) for which acceptances of the Offer have
been received, specifying the extent to which acceptances have been
received from persons acting in concert with MMGG or in respect of
shares which are the subject of an irrevocable commitment or letter of
intent procured by MMGG or its associates;
(ii) details of any relevant securities (as defined by the Code) of Morson in
which MMGGor any person acting in concert with it has an interest or
in respect of which any such person has a right to subscribe in each
case specifying the nature of the interests and rights concerned.
Similar details of any short positions (whether conditional or absolute
and whether in the money or otherwise), including any short position
under a derivative, any agreement to sell or any delivery obligation or
right to require another person to purchase or take delivery, will also
be stated;
(iii) details of any relevant securities of Morson in respect of which MMGGor

any of its associates has an outstanding irrevocable commitment or
letter of intent;
(iv) details of any relevant securities of Morson which MMGG or any person
acting in concert with it has borrowed or lent, other than any
borrowed shares which have been on-lent or sold; and
(v) the total number of shares which MMGG may count towards
satisfaction of the acceptance condition,
and will specify in each case the percentage of each class of relevant
securities of Morson represented by these figures.
Any decision to extend the date and/or time by which the acceptance condition
has to be fulfilled may be made at any time up to, and will be announced not
later than, 8.00 a.m. on the relevant day (or such later time and/or date as the
Panel may agree) and the announcement will state the next expiry time and
date (unless the Offer is then unconditional, in which case the announcement
may state that the Offer will remain open until further notice). In computing
the number of shares which MMGG may count towards satisfaction of the
acceptance condition, there may, at the discretion of MMGG, be included or
excluded for announcement purposes acceptances and purchases which are
not complete in all respects or are subject to verification provided that such
acceptances or purchases of Morson Shares may only be included if they could
be counted towards fulfilling the acceptance condition in accordance with
paragraph 6(j) below and the provisions of the Code.
(b) References in this Appendix to the making of an announcement or giving of

notice by MMGG include the release of an announcement by public relations
consultants or by SPARK Advisory Partners Limited, in each case on behalf of
MMGG, and the delivery by hand, telephone, telex or facsimile transmission or
other electronic transmission of an announcement to a RIS. An announcement
made otherwise than to a RIS will be notified simultaneously to a RIS (unless
the Panel otherwise agrees).
(c) Without limiting the manner in which MMGG may choose to make any public
statement and subject to MMGG's obligations under applicable law, including the
Code, MMGG will have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making release to a
RIS.
3. Rights of withdrawal
(a) If MMGG, having announced the Offer to be unconditional, fails to comply by
3.30 p.m. on the relevant day (as defined in paragraph 2 of this Part B) (or 26/42
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such later time(s) and/or date(s) as the Panel may agree) with any of the
other requirements specified in paragraph 2(a) above, an accepting certificated
Shareholder may (unless the Panel otherwise agrees) immediately thereafter
withdraw his acceptance by written notice (as defined in paragraph 3(d) below)
given by post or by hand (during normal business hours only) to Capita
Registrars Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU on behalf of MMGG. Alternatively, in the case of Morson Shares
in uncertificated form, withdrawals can be effected in the manner set out in
paragraph 3(e) below. Subject to paragraph 1(b) above, this right of
withdrawal may be terminated not less than eight days after the relevant day
by MMGG confirming, if that is the case, that the Offer is still unconditional and
complying with the other requirements specified in paragraph 2(a) above. If
any such confirmation is given, the first period of 14 days referred to in
paragraph 1(c) above will run from the date of such confirmation and
compliance.
(b) If by 1.00 p.m. on the 42nd day after the posting of the Offer Document (or
such later time(s) and/or date(s) as the Panel may agree) the Offer has not
become unconditional, an accepting Shareholder may withdraw his acceptance
at any time thereafter at the address and in the manner referred to in
paragraph 3(a) above (or, in the case of Morson Shares in uncertificated form,
in the manner set out in paragraph 3(e) below) before the earlier of:
(i) the time that the Offer becomes unconditional; and
(ii) the final time for lodgement of acceptances which can be taken
into account in accordance with paragraph 1(b) above.
If the Panel determines that Morson is not permitted to invoke, or cause or

permit MMGG to invoke, a condition to the Offer, it may instead determine that
Shareholders shall be entitled to withdraw their acceptances on such terms and
by such time as the Panel may determine and notwithstanding that the Offer
has become unconditional as to acceptances. The Panel may also determine
that the timetable applicable to the Offer shall be varied in such manner as it
may determine. Exercise of such withdrawal rights by accepting Shareholders
could result in the Offer, if it has by then become unconditional as to
acceptances, ceasing to be unconditional as to acceptances.
(c) If after a competitive situation has arisen MMGG chooses not to be bound by a
"no extension" statement or a "no increase" statement in accordance with
paragraph 1(d) above, any Shareholder who accepts the Offer after the date of
such statement may withdraw his acceptance thereafter at the address and in
the manner referred to in paragraph 3(a) above (or, in the case of Morson
Shares held in uncertificated form, in the manner set out in paragraph 3(e)
below) not later than the eighth day after the date of posting of written notice
to that effect by MMGG to the relevant Shareholders.
(d) Except as provided by this paragraph 3, acceptances of the Offer shall be

irrevocable. In this paragraph 3 "written notice" (including any letter of
appointment, direction or authority) means notice in writing bearing the original
signature(s) of the relevant accepting Shareholder(s) or their agent(s) duly
appointed in writing (evidence of whose appointment, in a form reasonably
acceptable to MMGG, is produced with the notice). Notification by telex or
facsimile or other electronic transmissions or copies will not be sufficient. No
notice which is postmarked in or otherwise appears to have been sent from any
Restricted Jurisdiction will be treated as valid.
(e) In the case of Morson Shares held in uncertificated form, if withdrawals are
permitted pursuant to paragraphs 3(a), (b) or (c) above, an accepting
Shareholder may withdraw his acceptance through CREST by sending (or, if a
CREST sponsored member, procuring that his CREST sponsor sends) an ESA
instruction to settle in CREST in relation to each Electronic Acceptance to be
withdrawn. Each ESA instruction must, in order for it to be valid and settle,
include the following details:
· the number of Morson Shares to be withdrawn, together with their ISIN

number, which is GB00B0R7WP21;
· the member account ID of the accepting shareholder, together with his

participant ID;
· the member account ID of the Escrow Agent included in the relevant
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Electronic Acceptance, relevant to the option elected for, together with the
Escrow Agent's participant ID, which is RA10;
· the CREST transaction ID of the Electronic Acceptance to be withdrawn to

be inserted in the shared note field;
· the intended settlement date for the withdrawal;
· the corporate action number for the Offer which is allocated by Euroclear UK
& Ireland and can be found by viewing the relevant corporate action details
in CREST; and
· input with standard delivery instruction priority of 80.Any such withdrawal

will be conditional upon Capita Registrars verifying that the withdrawal
request is validly made. Accordingly, Capita Registrars will, on behalf of
MMGG, reject or accept the withdrawal by transmitting in CREST a receiving
agent reject (AEAD) or receiving agent accept (AEAN) message.
(f) Immediately (or within such longer period not exceeding 14 days, as the Panel
may permit) upon an accepting shareholder validly withdrawing his acceptance:
(i) in respect of Morson Shares held in certificated form the share

certificate(s) and/or other document(s) of title will be returned by post
(or such other method as may be approved by the Panel) at the risk of
the Shareholder concerned, to the person or agent whose name and
address is set out in the Form of Acceptance or, if no address is set
out, to the first-named holder at his registered address; and
(ii) in respect of Morson Shares held in uncertificated form Capita

Registrars will give instructions to Euroclear UK & Ireland to transfer all
Morson Shares held in escrow balances and in relation to which it is
the Escrow Agent for the purposes of the Offer to the original available
balances of the Shareholder concerned.
(g) Morson Shares in respect of which acceptances have been properly withdrawn
in accordance with this paragraph 3 of this Part B may subsequently be re-
assented to the Offer by following one of the procedures described in the Offer
Document, at any time while the Offer remains open for acceptance.
(h) Any question as to the validity (including time of receipt) of any notice of
withdrawal will be determined by MMGG whose determination (save as the Panel
otherwise determines) will be final and binding. None of MMGG, Morson, Capita
Registrars or any other person will be under any duty to give notification of any
defect in any notice of withdrawal or will incur any liability for failure to do so.
4. The Loan Note Alternative
(a) As an alternative to receiving cash under the Offer, Morson Shareholders may
elect to receive the Loan Note Alternative in respect of their total shareholding,
which subject to the terms of the Offer, is available to accepting Morson
Shareholders for as long as the Offer remains open for acceptance. Morson
Shareholders who elect to receive Offer Loan Notes must accede to the terms
of the Intercreditor Agreement.
(b) No election for the Loan Note Alternative will be valid unless the following has
occurred by the time and date on which the Loan Note Alternative closes:
(i) if the Morson Shares to which the acceptance relates are in

certificated form, receipt of the Form of Acceptance containing a valid
acceptance of the Offer and a valid election for the Loan Note
Alternative (including acceding to the Intercreditor Agreement), duly
completed in all respects and accompanied by all relevant share
certificate(s) and/or other documents(s) of title; or
(ii) if the Morson Shares to which the acceptance relates are in

uncertificated form, settlement of an Alternative TTE instruction in
favour of the Escrow Agent in relation to those Morson Shares, in
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accordance with the procedures described in the Offer Document.
Shareholders are also required to accede to the Intercreditor
agreement.
(c) If (in respect of Morson Shares held in certificated form) any Form of
Acceptance which includes an election for the Loan Note Alternative is either
received after the time and date the Loan Note Alternative has closed or is
received before such time but is not valid or complete in all respects at such
time and date, such election shall, for all purposes, be void and the Morson
Shareholder purporting to make such election shall not, for any purpose, be
entitled to receive any consideration under the Loan Note Alternative, but the
acceptance, if otherwise valid, shall be deemed to be an acceptance of the
basic terms of the Offer in respect of the number of Morson Shares inserted
or deemed to be inserted in Box 1 of the Form of Acceptance and the relevant
Morson Shareholder will, on the Offer becoming or being declared wholly
unconditional, be entitled to receive the consideration due under the basic
terms of the Offer.
(d) If (in respect of Morson Shares held in uncertificated form) any alternative
TTE Instruction in favour of the Escrow Agent is made but the Shareholder
does not accede to the terms of the Intercreditor Agreement either before
the time and date the Loan Note Alternative has closed or such agreement so
acceding is received before such time but is not valid or complete in all
respects at such time and date, such election shall, for all purposes, be void
and the Morson Shareholder purporting to make such election shall not, for
any purpose, be entitled to receive any consideration under the Loan Note
Alternative, but the acceptance, if otherwise valid, shall be deemed to be an
acceptance of the terms of the Offer in respect of the number of Morson
Shares in respect of which the alternative TTE Instruction relates and the
relevant Morson Shareholder will, on the Offer becoming or being declared
wholly unconditional, be entitled to receive the consideration due under the
basic terms of the Offer.
5. Revised Offer
(a) Although no revision of the Offer is envisaged, if the Offer (in its original or any
previously revised form(s)) is revised (either in its terms or conditions or in the
value or form of the consideration offered or otherwise) (which MMGG reserves
the right to do) and such revision represents on the date on which such
revision is announced (on such basis as SPARK Advisory Partners Limited may
consider appropriate) an improvement (or no diminution) in the value of the
consideration compared with that previously offered, the benefit of the revised
Offer will (subject to paragraphs 5(b), 5(c) and 7 below) be made available to a
Shareholder who has accepted the Offer (in its original or previously revised
form(s)) and not previously withdrawn such acceptance (a "Previous
Acceptor").
The acceptance by or on behalf of a Previous Acceptor of the Offer (in its

original or any previously revised form(s)) shall, subject as provided below, be
deemed an acceptance of the Offer as so revised and shall also constitute a
separate appointment of MMGG or SPARK Advisory Partners Limited or any
director of MMGG as his attorney and agent to accept any such revised Offer
on behalf of such Previous Acceptor and, if such revised Offer includes
alternative forms of consideration, to make elections and/or accept such
alternative forms of consideration in such proportions as such attorney and/or
agent in his absolute discretion thinks fit and to execute on behalf of and in the
name of such Previous Acceptor all such further documents (if any) as may be
required to give effect to such acceptances and/or elections. In making any
such acceptance or election, such attorney and/or agent shall take into
account the nature of any previous acceptances and/or elections made by the
Previous Acceptor and such other facts or matters as he may reasonably
consider relevant.
(b) The deemed acceptances and/or elections referred to in paragraph 5(a) above
shall not apply and the authorities conferred by paragraph 5(a) above shall not
be exercised if, as a result thereof, a Previous Acceptor would (on such basis
as SPARK Advisory Partners Limited may advise MMGG) receive less in
aggregate consideration than he would have received as a result of his
acceptance of the Offer in the form in which it was originally accepted by him
or on his behalf unless the Previous Acceptor has previously otherwise agreed
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in writing. The authorities conferred by paragraph 5(a) of this Part B shall not
be exercised in respect of any election available under the revised Offer save in
accordance with this paragraph 5(b).
(c) The deemed acceptances and/or elections referred to in paragraph 5(a) above
shall not apply and the authorities conferred by paragraph 5(a) above shall be
ineffective to the extent that a Previous Acceptor (i) in respect of Morson
Shares in certificated form, shall lodge, within 14 days of the posting of the
document pursuant to which the revision of the Offer referred to in paragraph
5(a) above is made available to the Shareholders (or such later date as MMGG
may determine), a form in which he validly elects to receive the consideration
receivable by him under that revised Offer in some other manner than that set
out in his original acceptance or (ii) in respect of Morson Shares in
uncertificated form, sends (or, if a CREST sponsored member, procures that his
CREST sponsor sends) an ESA instruction to settle in CREST in relation to each
Electronic Acceptance in respect of which an election is to be varied. Each
ESA instruction must, in order for it to be valid and settle, include the following
details:
· the number of Morson Shares in respect of which the changed election is

made, together with their ISIN number, which is GB00B0R7WP21 ;
· the member account ID of the Previous Acceptor, together with his

participant ID;
· the member account ID of the Escrow Agent included in the relevant

Electronic Acceptance, relevant to the option elected for, together with
the Escrow Agent's participant ID, which is RA10;
· the CREST transaction ID of the Electronic Acceptance in respect of

which the election is to be changed;
· the intended settlement date for the changed election;
· the corporate action number for the Offer which is allocated by Euroclear
UK & Ireland and can be found by viewing the relevant corporate action
details in CREST;
· input with standard delivery instruction priority of 80;
and, in order that the desired change of election can be effected, must
include:
· the member account ID of the Escrow Agent relevant to the new election.
Any such change of election will be conditional upon Capita Registrars verifying
that the request is validly made. Accordingly, Capita Registrars will, on behalf
of MMGG, reject or accept the requested change of election by transmitting in
CREST a receiving agent reject (AEAD) or receiving agent accept (AEAN)
message.
(d) The authorities referred to in this paragraph 5 and any acceptance of a revised
Offer and/or election pursuant thereto shall be irrevocable unless and until the
Previous Acceptor becomes entitled to withdraw his acceptance under
paragraph 3 above and duly and validly does so.
(e) MMGG reserves the right to treat an executed Form of Acceptance or TTE
instruction relating to the Offer (in its original or any previously revised form(s))
which is received after the announcement or issue of the Offer in any revised
form as a valid acceptance of the revised Offer and such acceptance shall
constitute an authority in the terms of this paragraph 5 mutatis mutandis on
behalf of the relevant Shareholder.
6. General
(a) Except with the consent of the Panel, the Offer will lapse unless all the
conditions (other than the acceptance condition) have been fulfilled by or (if
capable of waiver) waived by or (where appropriate) determined by MMGG in its
reasonable opinion to be or to remain satisfied as at midnight on the 42nd day
after the posting of the Offer Document or within 21 days after the date on
which the Offer becomes or is declared unconditional, whichever is the later or
such later date as MMGG, with the consent of the Panel, may decide. If the
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Offer is referred to the Competition Commission before the later of the first
closing date and the date when the Offer becomes or is declared unconditional,
the Offer will lapse. If the Offer lapses for any reason, the Offer will cease to
be capable of further acceptance and Shareholders who have accepted the
Offer and MMGG will cease to be bound by acceptances delivered on or before
the date on which the Offer so lapses.
(b) All communications, notices, certificates, documents of title and remittances to

be delivered by or to or sent to or from Shareholders or as otherwise directed
will be delivered by or to or sent to or from them (or their designated agents)
at their risk.
(c) The expression "Offer Period" when used in this document means the period
commencing on the date of this announcement until whichever of the following
dates shall be the latest: (i)the first closing date, (ii) the date on which the
Offer lapses and (iii) the date on which the Offer becomes wholly unconditional.
(d) All references in the Offer Document and in the Form of Acceptance to the first
closing date, shall (except in paragraphs 1(a) and 6(c) above and where the
context otherwise requires)be deemed, if the expiry date of the Offer shall be
extended, to refer to the expiry date of the Offer as so extended.
(e) Except with the consent of the Panel, settlement of the consideration to which
any Shareholder is entitled under the Offer will be implemented in full in
accordance with the terms of the Offer without regard to any lien, right of set-
off, counterclaim or other analogous right to which MMGG may otherwise be, or
claim to be, entitled as against such Shareholderand will be effected by the
despatch of cheques or the crediting of CREST accounts or the issue and
despatch of Offer Loan Note certificates:
(i) in the case of acceptances received, complete in all respects (including

the relevant transfer to escrow or (as applicable) receipt of the relevant
share certificate(s) and/or other document(s) of title or indemnities
satisfactory to MMGG), by the date on which the Offer becomes or is
declared unconditional in all respects, and will be effected by the dispatch
of cheques or the crediting of CREST accounts within 14 calendar days of
such date or the issue and despatch of Offer Loan Note certificates; or
(ii) in the case of acceptances of the Offer received, complete in all

respects, after the date on which the Offer becomes or is declared
unconditional in all respects, but while it remains open for acceptance,
within 14 calendar days of such receipt.
All cash payments (other than payments made by means of CREST) will be
made in pounds sterling by cheque drawn on a branch of a UK clearing bank.
Unless otherwise determined by MMGG, no consideration will be sent to any
address in a Restricted Jurisdiction.
(f) The instructions, authorities and provisions contained in, or deemed to be

incorporated in, the Form of Acceptance constitute part of the terms of the
Offer. Words and expressions defined in this document have the same
meanings when used in the Form of Acceptance unless the context otherwise
requires.
(g) The Offer and all acceptances thereof and all elections thereunder or pursuant
thereto and the Form of Acceptance, Electronic Acceptance and all contracts
made pursuant thereto and action taken or made or deemed to be taken or
made under any of the foregoing shall be governed by and construed in
accordance with English law.
(h) Any omission to despatch this document, the Form of Acceptance or any notice
required to be given under the terms of the Offer to, or any failure to receive
the same by, any person to whom the Offer is made or should be made shall
not invalidate the Offer in any way or create any implication that the Offer has
not been made to any such person. Subject to paragraph 7 below, the Offer
extends to any such person and to all Shareholders to whom this document and
the Form of Acceptance may not have been despatched or by whom such
documents may not be received and such persons may collect the relevant
documents from Capita Registrars at its address set out in paragraph 3(a)
above.
(i) MMGG and SPARK Advisory Partners Limited reserve the right to treat
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acceptances of the Offer as valid if received by or on behalf of either of them
at any place or places or in any manner determined by either of them otherwise
than as stated in this document or in the Form of Acceptance. Neither MMGG,
nor any agent acting on behalf of MMGG, shall have any liability to any person
for any loss or alleged loss arising from any decision as to the treatment of
acceptances of the Offer or otherwise in connection therewith.
(j) Notwithstanding the right reserved by MMGG to treat an acceptance of the

Offer as valid even though (in the case of Morson Shares held in certificated
form) the relevant Form of Acceptance is not entirely in order or not
accompanied by the relevant share certificate(s) and/or other document(s) of
title, except with the consent of the Panel:
(i) an acceptance of the Offer will only be counted towards fulfilling the
acceptance condition if the requirements of Note 4 and, if applicable,
Note 6 of Rule 10 of the Code are satisfied in respect of it;
(ii) a purchase of Morson Shares by MMGG or its nominee(s) (or, if MMGG is

required to make an offer under Rule 9 of the Code, a person acting in
concert withMMGG) will only be counted towards fulfilling the acceptance
condition if the requirements of Note 5 and, if applicable, Note 6 of Rule
10 of the Code are satisfied in respect of it; and
(iii) Morson Shares which have been borrowed by MMGG will not be counted
towards fulfilling the acceptance condition.
Save as set out in paragraphs 1(e) and 6(c) above , the Offer may not be
accepted otherwise than by means of a form of acceptance or TTE instruction.
(k) Except with the consent of the Panel, the Offer will not become unconditional
unless Capita Registrars has issued a certificate to MMGG or SPARK Advisory
Partners Limited (or their respective agents) which states the number of
Morson Shares in respect of which acceptances have been received and the
number (if any) of Morson Shares otherwise acquired, whether before or during
the Offer Period, which comply with paragraph 6(j) above.
(l) If the Offer does not become unconditional in all respects:
(i) in respect of Morson Shares held in certificated form the share

certificate(s) and/or other document(s) of title will be returned by post
(or such other method as may be approved by the Panel) within 14 days
of the Offer lapsing, at the risk of the Shareholder concerned, to the
person or agent whose name and address is set out in the Form of
Acceptance or, if no address is set out, to the first-named holder at his
registered address; and
(ii) in respect of Morson Shares held in uncertificated form Capita

Registrars will, immediately after the lapsing of the Offer (or within such
longer period as the Panel may permit, not exceeding 14 days after the
lapsing of the Offer), give instructions to Euroclear UK & Ireland to
transfer all Morson Shares held in escrow balances and in relation to
which it is the Escrow Agent for the purposes of the Offer to the original
available balances of the Shareholders concerned.
(m) For the purposes of this document, the time of receipt of a TTE instruction, an
ESA instruction or an Electronic Acceptance shall be the time at which the
relevant instruction settles in CREST.
(n) All powers of attorney and authorities on the terms conferred by or referred to
in this Part B or in the Form(s) of Acceptance are given by way of security for
the performance of the obligations of the Shareholder concerned and are
irrevocable in accordance with section 4 of the Powers of Attorney Act 1971,
except in the circumstances where the donor of such power of attorney or
authority validly withdraws his acceptance in accordance with paragraph 3
above.
(o) If sufficient Morson Shares are acquired by MMGG, whether pursuant to

acceptances of the Offer or otherwise, MMGG intends to apply the provisions of
sections 974 to 991 of the Companies Act 2006 to acquire compulsorily any
outstanding Morson Shares. If MMGG acquires or agrees to acquire, by virtue
of its shareholding and acceptances of the Offer, issued share capital carrying
75 per cent. or more of the voting rights of Morson, MMGG intends to procure
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that Morson applies for cancellation of the trading in Morson Shares on AIM not
less than 20 business days following MMGG first having acquired or agreed to
acquire such issued share capital and thereafter to procure that the Company
applies to be re-registered as a private limited company under the Companies
Act,
(p) No acknowledgement of receipt of any Form of Acceptance, share certificate(s)

and/or other document(s) of title, or of any TTE instruction will be given by
MMGG or Spark Advisory Partners Limited or any of their respective agents.
(q) The Offer will be made by an Offer Document to be issued within 28 days of the
date of this announcement and will be capable of acceptance from and after
that time. The Offer will be notified to certain Shareholders by means of an
advertisement to be inserted in the London Gazette promptly following the date
of the Offer Document. Copies of this document, and, once issued, the Offer
Document, the Form of Acceptance and any related documents are or will be
available for collection from Capita Registrars, The Registry, 34 Beckenham
Road, Beckenham, Kent, BR3 4TU.
(r) In relation to any acceptance of the Offer in respect of a holding of Morson

Shares which are held in uncertificated form in CREST, MMGG reserves the right
to make such alterations, additions or modifications to the terms of the Offer as
may be necessary or desirable to give effect to any acceptance of the Offer,
whether in order to comply with the facilities or requirements of CREST or
otherwise to confer on MMGG or, as the case may be, the relevant Shareholder
the benefits and entitlements provided for under the terms of the Offer,
provided that such alterations, additions or modifications are consistent with
the requirements of the Code or are otherwise made with the consent of the
Panel.
(s) MMGG may, with the agreement of the Independent Director and the Panel,
elect to implement the acquisition by way of a court sanctioned scheme of
arrangement under Part 26 of the Companies Act. Any such scheme of
arrangement will be implemented on the same terms (subject to appropriate
amendments), so far as applicable, as those which would apply to the Offer.
(t) If the Panel requires MMGG to make an offer for any Morson Shares under the
provisions of Rule 9 of the Code, MMGG may make such alterations to the
Conditions, including condition (a) of Part A of this Appendix, as are necessary
to comply with the provisions of that rule.
7. Overseas Shareholders of Morson
(a) The making of the Offer in, or to, certain persons who are citizens, residents or
nationals of, jurisdictions outside the United Kingdom may be prohibited or
affected by the laws of the relevant jurisdiction. Shareholders in that position
should inform themselves about and observe any applicable legal or regulatory
requirements. It is the responsibility of any such person wishing to accept the
Offer to satisfy himself as to the full observance of the laws and regulatory
requirements of the relevant jurisdiction or territory in connection therewith,
including the obtaining of any governmental, exchange control or other
consents which may be required, or the compliance with other necessary
formalities and the payment of any issue, transfer or other taxes due in such
jurisdiction. Any such shareholder will be responsible for any payment of any
issue, transfer or other taxes or other requisite payments due in such
jurisdiction by whomsoever payable, and MMGG and Spark Advisory Partners
Limited and any person acting on their behalf shall be entitled to be fully
indemnified and held harmless by such shareholder for any such issue, transfer
or other taxes as such person may be required to pay.
If you are an Overseas Shareholder and are in any doubt as to your

position, you should consult your independent financial adviser in the
relevant jurisdiction.
(b) In particular, the Offer is not being made, directly or indirectly, in a Restricted
Jurisdiction, or by use of the mails of or by any means or instrumentality of
interstate or foreign commerce of, or of any facilities of a national securities
exchange of, any Restricted Jurisdiction. This includes, but is not limited to,
the post, facsimile transmission, e-mail, telex, the internet and telephone. The
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Offer cannot be accepted by any such use, means or instrumentality or from
within any Restricted Jurisdiction. Accordingly, copies of this document, the
Offer Document with the Form of Acceptance and any related offering
documents, are not being mailed or otherwise distributed or sent into any
Restricted Jurisdiction, including to Shareholders with registered addresses in
any Restricted Jurisdiction, or to persons whom MMGG knows to be nominees,
trustees or custodians holding Morson Shares for such persons. Persons
receiving such documents (including, without limitation, custodians, nominees
and trustees) must not distribute or send them in, into or from any Restricted
Jurisdiction, or use such mails or any such means or instrumentality for any
purpose, directly or indirectly, in connection with the Offer, and doing so will
render invalid any related purported acceptance of the Offer. Persons wishing
to accept the Offer must not use such mails or any such means, instrumentality
or facility for any purpose directly or indirectly related to the acceptance of the
Offer.
Envelopes containing a Form of Acceptance must not be postmarked in any

Restricted Jurisdiction, or otherwise despatched from any Restricted
Jurisdiction, and all acceptors must provide addresses outside any Restricted
Jurisdiction for the remittance of cash or the return of the Form of Acceptance,
Morson share certificate(s) and/or other document(s) of title.
(c) Notwithstanding the other provisions of this paragraph 7, MMGG may at its sole
discretion provide cash consideration to a person in or resident of any
Restricted Jurisdiction if requested to do so by or on behalf of that person and
if MMGG and/or SPARK Advisory Partners Limited is satisfied in that particular
case that to do so will not constitute a breach of any securities or other
relevant legislation of any Restricted Jurisdiction, as appropriate.
APPENDIX II
A - Summary of the Terms of the Offer Loan Notes
The Offer Loan Notes
The Offer Loan Notes will be created by a resolution of the MMGG Board (or a duly
authorised committee thereof) and will be constituted by the Offer Loan Note
Instrument executed as a deed by MMGG.
The issue of the Offer Loan Notes will be conditional on the Offer being declared
wholly unconditional.
The Offer Loan Notes will not be transferable.
No application will be made for the Offer Loan Notes to be listed or dealt in on any
stock exchange.
The Offer Loan Notes will not be qualifying corporate bonds for United Kingdom
taxation purposes for Morson Shareholders who are individuals.
The Offer Loan Notes will bear interest at 4% per annum but this interest will be
accrued and only paid when the Offer Loan Notes are redeemed. The Offer Loan
Notes are, on the face of the Offer Loan Note Instrument, redeemable on 1 January
2018. However, payments under the Offer Loan Notes are subject to the terms of
the Intercreditor Agreement and it cannot be guaranteed that redemption will occur
on that date. The Offer Loan Notes are and shall remain unguaranteed, unsecured
and unsubordinated.
MMGG may, at any time, elect to redeem all or any part of the Offer Loan Notes (or
any Offer Loan Notes or part of any Offer Loan Notes held by certain Offer Loan
Noteholders as the board of MMGG may elect), but subject to the terms of the
Intercreditor Agreement.
The Offer Loan Note Instrument
The Offer Loan Note Instrument will contain provisions, among other things, to the
effect set out below. 34/42

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(a) Form and status
The Offer Loan Notes will be issued by MMGG, credited as fully paid, in denominations
or multiples of 50 pence nominal value and shall be held subject to and with the
benefit of the conditions and the provisions set out in the Offer Loan Note
Instrument. The Offer Loan Notes constitute direct, unsecured obligations of MMGG
but subject to the terms of the Intercreditor Agreement with Barclays.
(b) Interest
Interest shall accrue at the rate of 4% per annum but such interest shall not be
compounded and not paid until redemption of the Offer Loan Notes.
(c) Redemption
Subject to the Intercreditor Agreement, MMGG may, at any time, elect to redeem all
or any part of the Offer Loan Notes (or any Offer Loan Notes or part of any Offer
Loan Notes held by certain Offer Loan Noteholders as the board of MMGG may elect)
at par (together with any accrued interest), without penalty, by serving written
notice on the Offer Loan Noteholders in question in advance of any such redemption
specifying the amount of the Offer Loan Notes which are to be redeemed.
The Offer Loan Notes are, on the face of the Offer Loan Note Instrument,
redeemable on 1 January 2018. However, payments under the Offer Loan Notes are
subject to the terms of the Intercreditor Agreement with Barclays and it cannot be
guaranteed that redemption will occur on that date.
(d) Purchase and cancellation
Subject to the Intercreditor Agreement, MMGG may purchase Offer Loan Notes at
any time from any person. All Offer Loan Notes purchased by MMGG shall be
cancelled and MMGG may not reissue the same.
(e) Transfer
An Offer Loan Noteholder may not transfer his interest in any Offer Loan Notes.
(f) Modification
Subject to the Intercreditor Agreement, the Offer Loan Note Instrument and the
rights of the Offer Loan Noteholders may be modified, abrogated, compromised or
extinguished with the sanction of a special resolution of the Offer Loan Noteholders.
Under the terms of the Offer Loan Note Instrument, a special resolution is defined as
a resolution passed at a meeting of the Offer Loan Noteholders (duly convened and
held in accordance with the provisions of Schedule 3 of the Offer Loan Note
Instrument) by a majority consisting of not less than 51% of the persons voting (in
person or by proxy) upon a show of hands and, if a poll is demanded, by a majority
consisting of not less than 51% of the votes given (in person or by proxy) on the
poll.
(g) Governing law
The Offer Loan Notes and the Offer Loan Note Instrument will be governed by, and
construed in accordance with, English law.
B - Summary of the Intercreditor Agreement
The Intercreditor Agreement has been entered into on 24 May 2012 between
Barclays Bank PLC (in various capacities), Gerard Anthony Mason and MMGG and the
companies named therein (as debtors and intra-group lenders). Following the Offer
being declared wholly unconditional and Morson being re-registered as a private
limited company, certain members of the Morson Group are required to accede to the
terms of the Intercreditor Agreement. It is a term of the Offer that persons
accepting the Offer and electing for the Loan Note Alternative must, for such
election to be valid, accede to the terms of the Intercreditor Agreement as
subordinated lenders. Morson Shareholders should be aware that the terms of the
Intercreditor Agreement make it uncertain when any payments, whether of interest
or principal or otherwise, may be made pursuant to the Offer Loan Notes
notwithstanding the terms of the Offer Loan Note Instrument.
The Intercreditor Agreement contains provisions, among other things, to the effect
set out below.
(a) Ranking
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The parties to the Intercreditor Agreement (including those who accede to its terms)
agree that monies owed to Barclays under the terms of its various facilities (which
currently include the facilities referred to in paragraph 8 of this announcement as well
as other facilities made available to members of the Morson Group (e.g. an overdraft
facility, a confidential invoice discounting facility, hedging and other facilities) (as
amended or varied or supplemented from time to time) will rank in priority to any
monies payable under the Mason Loan, the Offer Loan Notes and any intra group
obligations between MMGG and members of the Morson Group.
Monies payable after Barclays has been repaid in full or as permitted by the
Intercreditor Agreement will firstly be repaid pursuant to the Mason Loan, secondly
the Offer Loan Notes and thirdly any intra group obligations between MMGG and
members of the Morson Group.
(b) Security
The parties to the Intercreditor Agreement (including those who accede to its terms)
agree that any security granted will secure monies due to Barclays which ranks, as
referred to in (a) above in priority to other security. Barclays has security by a
debenture granted by both MMGG and the Morson Group and will take, inter alia,
further security from the Morson Group following the Offer being declared wholly
unconditional and Morson being re-registered as a private limited company. The
Mason Loan is secured in MMGG and he will take, inter alia, further security from the
Morson Group following the Offer being declared wholly unconditional and Morson
being re-registered as a private limited company which will rank behind that of
Barclays as referred to in (a) above. The Offer Loan Notes are neither guaranteed or
secured.
(c) Payments
The terms of the Intercreditor Agreement mean that payments to Barclays can be
made without restriction. Payments in respect of the Mason Loan are subject to
certain conditions, and/or the satisfaction of certain financial covenants and the
receipt of certain information and certificates from MMGG. In addition, payments in
respect of the Mason Loan may be made in certain circumstances where the
Company is deemed to have excess cashflow (as defined in the Intercreditor
Agreement) but there can be no certainty such circumstances will occur. Payments
under the Offer Loan Notes cannot be made until Barclays have been repaid to their
satisfaction and in any event only with the consent of Gerard Anthony Mason whilst
the Mason Loan remains outstanding in whole or in part.
(d) Amendments to Offer Loan Notes
Whilst the Offer Loan Note Instrument permits amendments in certain circumstances,
no amendments (unless of a minor or administrative nature) may be made without the
consent of Barclays (whilst they have any of their facilities outstanding) and Gerard
Anthony Mason (whilst any of the Mason Loan remains outstanding).
(e) Enforcement
No enforcement action may be taken by Gerard Anthony Mason in respect of the

Mason Loan until Barclays have been repaid to its satisfaction and by the holders of
the Offer Loan Notes in respect of amounts due under the Offer Loan Notes until
Barclays have been repaid to their satisfaction and the Mason Loan has been repaid.
APPENDIX III
Sources and Bases of Information
Unless otherwise stated in this announcement:
1. The value attributed to the issued share capital of Morson is based on

45,343,750 Morson Shares in issue as at 24 May 2012, being the last
practicable date prior to the date of this announcement.
2. The financial information relating to Morson has been extracted (without

any adjustment) from the audited consolidated financial statements of
Morson for the relevant years, prepared in accordance with IFRS.
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3. All prices quoted for Morson Shares have been derived from the Daily Official
List and represent Closing Prices on the relevant dates(s).
APPENDIX IV
Part 1: Irrevocable Undertakings to accept the Cash Offer
Name of Morson Number of Morson Percentage of

Shareholder Shares Morson issued
share capital
HSBC Global Custody 185,350 0.41

Nominee (UK) Ltd A/C
912109 (1)(2)
HSBC Global Custody 2,090,000 4.61

Nominee (UK) Ltd A/C
811597 (1)(2)
Statestreet Nominees Ltd 2,450,000 5.40

A/C 2GHL (1)(2)
BNP Paribas Securities 59,400 0.13

Nominees Ltd Des: 309304
(1)(2)
I G Knight (1) 20,000 0.04
Note
These irrevocable undertakings cease to be binding if:
1. the Offer Document is not posted by 30 June 2012; or
2. prior to the Offer being declared unconditional a person other than the Offeror
announces a firm intention to make an offer to acquire the entire issued share
capital of the Company at a price not less than 10 per cent. above the value of
the Offer.
Part 2: Irrevocable Undertakings to accept the Offer Loan Notes
Irrevocable Undertakings
Name of Morson Number of Morson Percentage of

Shareholder Shares Morson issued
share capital
G G Mason (1) 9,984,215 22.02
G A Mason (2) 9,984,215 22.02
P J Gilmour 630,000 1.39
K P Gorton 611,200 1.35
Note
1. Of the Morson Shares included in G G Mason's holding, 921,875 are held by

the trustees of a discretionary trust of which G G Mason is a trustee.
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2. The Morson Shares included in G A Mason's irrevocable undertaking are
921,875 less than those in G A Mason's director's interests. The interests
include the Morson Shares referred to in Note 1 above, over which G A
Mason has no ability to accept the Offer.
APPENDIX V
Definitions
In this announcement the following expressions have the following meaning:
"Accounting Date" 31 December 2011
"AIM" the AIM market of the London Stock

Exchange
"Announcement Date" 25 May 2012
"Authorisations" authorisations, orders, recognitions,

grants, consents, licences,
confirmations, clearances, permissions
and approvals
"Barclays" Barclays Bank PLC
"Business Day" any day (other than a Saturday or

Sunday or a public holiday) on which
banks generally are open for business in
London (other than solely for
settlement and trading in euro)
"Capita Registrars" A trading name of Capita Registrars

Limited
"Cash Offer" the recommended cash offer to be

made by MMGG to acquire all of the
issued and to be issued Morson Shares
on the terms and subject to the
conditions to be set out in the Offer
Document and the Form of Acceptance
and, where the context so requires,
any subsequent revision, variation,
extension or renewal thereof
"Closing Price" the closing middle-market quotation of

a Morson Share as derived from the
Daily Official List
"Code" or "City Code" the City Code on Takeovers and

Mergers as from time to time
interpreted by the Panel
"Companies Act" or the Companies Act 2006, as amended

"Companies Act 2006"
"Daily Official List" the official list of share prices produced

by the London Stock Exchange
the directors of Morson and "Director"

"Directors" 38/42
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means any one of them
"Disclosed" fairly disclosed in writing by or on

behalf of Morson to MMGG or its
advisers
"first closing date" the date falling 21 days after the date
on which the Offer Document is posted
"Form of Acceptance" the form of acceptance and authority

relating to the Offer which will
accompany the Offer Document
"FSA" the Financial Services Authority of the

United Kingdom
"FSMA" the Financial Services and Markets Act

2000, as amended
"HS2" High Speed 2 which is a planned high-

speed railway between London and the
Midlands, Northern England and,
potentially at a later stage, the central
belt of Scotland
"Independent Director" Ian Graham Knight, the only Director

who is not also a member of the
Management Team
"intellectual property" all patents, trademarks, trade names,

service marks, copyrights, designs,
databases and any applications
therefore, schematics, technology,
know‑how, computer software,
programs or applications (in both
source code and object code form),
and tangible or intangible proprietary
information or material
"Intercreditor the intercreditor agreement to be

Agreement" entered into between amongst others,
MMGG (in various capacities), Barclays
and Gerard Anthony Mason (and others
from time to time) on 24 May 2012,
further details of which are set out in
the Offer Document and the Form of
Acceptance
"legal proceedings" actions, suits, proceedings,

investigations, references or enquiries
"Loan Note Alternative" the option whereby Morson

Shareholders may elect to receive Offer
Loan Notes instead of all of the cash
consideration to which they would
otherwise be entitled under the Offer
"London Stock London Stock Exchange plc

Exchange"
"Management Team" or each of Gerrard Godfrey Mason, Gerard

"Management" Anthony Mason, Paul John Gilmour and
Kevin Patrick Gorton
"Mason Loan" the loan to MMGG from Gerard Anthony

Mason described in paragraph 8 of this
announcement
39/42
5/24/13
"MMGG" or "Offeror" MMGG Acquisition PLC registered with
company number 07976532 and whose
registered office is at c/o Atticus Legal
LLP, Castlefield House, Liverpool Road,
Manchester, M3 4SB
"MMGG Board" or the board of directors of MMGG

"MMGG Directors"
"Morson" or "Company" Morson Group plc registered with

company number 05111937 and whose
registered office is at Adamson House,
Centenary Way, Salford, Manchester,
M50 1RD
"Morson Board" or the board of directors of Morson

"Morson Directors"
"Morson Group" or Morson, its subsidiaries and its

"Group" subsidiary undertakings
"Morson Projects" Morson Projects Limited, a subsidiary of

the Company
"Morson Shareholders" the holders of Morson Shares from time

or "Shareholders" to time
"Morson Shares" the existing unconditionally allotted or

issued and fully paid ordinary shares of
five pence each of Morson and any
further such shares which are
unconditionally allotted or issued fully
paid, or credited as fully paid, before
the date on which the Offer closes (or
before such earlier date as MMGG may,
subject to the Code, decide, not being
earlier than (a) the date on which the
Offer becomes or is declared
unconditional as to acceptances or (b),
if later, the first closing date of the
Offer)
"Morson Share The Morson Enterprise Management

Schemes" Incentive Scheme 2006, the Morson
Unapproved Share Option Scheme 2006
and the Morson Group plc 2008
Discretionary Share Option Plan UK
Approved Addendum
"Offer" the offer to be made by MMGG to

acquire all of the issued and to be
issued Morson Shares on the terms and
subject to the conditions to be set out
in the Offer Document and the Form of
Acceptance and, where the context so
requires, any subsequent revision,
variation, extension or renewal thereof
and includes any election available in
connection with it
"Offer Document" the document to be sent to Morson

Shareholders and, for information only,
to holders of options under the Morson
Share Schemes which will contain the
Offer
"Offer Loan Note an instrument to be executed by MMGG

Instrument" creating the Offer Loan Notes
40/42
5/24/13
"Offer Loan holders of Offer Loan Notes from time
Noteholders" to time
"Offer Loan Notes" the unguaranteed and unsecured loan

notes in MMGG to be issued as an
alternative to the Cash Offer, further
details of which are set out in the Offer
Document and the Form of Acceptance
"Offer Price" the sum of 50 pence per Morson Share
"Opening Price" the opening middle-market quotation of

a Morson Share as derived from the
Daily Official List
"Panel" the Panel on Takeovers and Mergers
"Publicly Announced" specifically disclosed in the annual

report and accounts of Morson for the
year ended on the Accounting Date, in
this announcement or in any other
announcement made to a Regulatory
Information Service since the date of
publication of such report and accounts
and prior to the Announcement Date
"Regulatory as defined in the UK Listing Rules

Information Service"
"relevant persons" governments, governmental,

quasi‑governmental, supra-national,
statutory, investigative, regulatory or
administrative bodies or trade agencies,
associations, institutions or courts, or
professional or environmental bodies, or
any other persons or bodies
whatsoever in any jurisdiction
"Restricted Jurisdiction" the United States, Canada, Japan,

Australia and any other jurisdiction
where local laws or regulations may
result in a significant risk of civil,
regulatory or criminal exposure for
MMGG or Morson if information or
documentation concerning the Offer is
sent or made available to Morson
Shareholders in that jurisdiction
"SPARK Advisory SPARK Advisory Partners Limited,

Partners" financial adviser to MMGG
"Subsidiary has the same meaning as in section

Undertaking" 1162 of the Companies Act 2006 of
England and Wales
"Subsidiary" has the same meaning as in section

1159(1) of the Companies Act 2006
"substantial interest" a direct or indirect interest in 20 per

cent or more of the equity capital of an
undertaking
"TTE Instruction" a transfer to escrow instruction (as

defined by the Crest manual issued to
CrestCo from time to time)
"third party" person, firm, company or body
"UK" or "United the United Kingdom of Great Britain and

Northern Ireland and its dependent
Kingdom" 41/42
5/24/13
territories
"UK Listing Rules" means the Listing Rules made by the

FSA under section 73A of FSMA
"United States" or "US" the United States of America, its

territories and possessions, any state
of the United States and the District of
Columbia and all other areas subject to
its jurisdiction
"US Securities Act" the US Securities Act 1933, and the

rules and regulations promulgated under
it
"Wider Morson Group" as the context requires, Morson, its

subsidiaries, subsidiary undertakings,
associated undertakings and any other
body corporate, partnership, joint
venture or person in which Morson
and/or such undertakings (aggregating
their interests) have a direct or indirect
interest in 20 per cent. or more of the
voting or equity capital or equivalent
"Wider MMGG Group" as the context requires, MMGG, its

subsidiaries, subsidiary undertakings,
associated undertakings and any other
body corporate, partnership, joint
venture or person in which MMGG
and/or such undertakings (aggregating
their interests) have an interest of
more than 20 per cent. of the voting or
equity capital or equivalent
In this document references to time are to London time.

END
OFFBCGDUSGDBGDS
42/42
5/24/13 Harvard Int plc | Final Results | FE InvestEgate
Harvard Int plc

Final Results
RNS Number : 7448J
Harvard International PLC
05 July 2011
Harvard International plc (AIM: HAR)

Preliminary unaudited results for the year ended 31 March 2011
Harvard International plc ("Harvard", "the Company" or "the Group") is a distributor of
consumer electrical goods in the UK and Australia.
Key Points
· Sales for the current period £61.2m (2010: £77.4m)
· Sales were impacted adversely by a number of factors including a lull in the UK Digital
Switchover (DSO) timetable and the very difficult retail market
· Group total pre tax profit £0.9m (2010: Loss £4.3m)
· Operating profit for the period from continuing operations £0.7m (2010: £1.2m)
· No impact from discontinued items in 2011
· UK recovered in the second half led by Set Top Box (STB) sales to customers in
preparation for the DSO timetable and improved interest in iLuv Apple accessories
· Australia produced a better second half performance supported by improved sales in

STB and DAB+ sectors where innovative new products have gained market share
· Cash at 30 June 2011 was £16.0m
· In line with the Group's business plan, new appointments continue to be made which
strengthen the Group's technical, product and marketing teams
Bridget Blow, Chairman, comments:

"We made good progress in 2010/11 and the investment put in place will support and extend our
strategic objectives. It is now clear that for the current financial year producers and retailers of
consumer electronics are continuing to face challenging market conditions and we have
consequently reduced our expectations whilst maintaining investment in our development
programme. The Group's financial position continues to be strong."
5 July 2011
ENQUIRIES:
www.investegate.co.uk/ArticlePrint.aspx?id=201107050700057448J 1/12
Harvard International plc Tel: 020 8238 7650
Mike Ashley, Chief Executive
Colin Grimsdell, Finance Director
Anthony Parker, Media & Analysts Tel: 07791 201467
The restructuring and downsizing programme is now well established and, for the first time in over 5
years, the Board is able to present shareholders with accounts unaffected by discontinued activities.
Our new business plan is from a position of stability that we believe will deliver sustainable profit
whilst protecting our strong cash position.
Investment in improving our technical understanding and capabilities, in combination with the
expansion of the marketing and sales teams, is starting to produce tangible benefits, and new
opportunities to leverage the Group's strengths are being sought.
Group Performance
Against a backdrop of continued weakness in the global economy, particularly in the consumer
electronics sector, the Group has continued with the programme to improve operational efficiency
and address growth opportunities.
Sales for the current period totalled £61.2m (2010: £77.4m) resulting in an operating profit of
£0.7m (2010: £1.2m). After a relatively weak performance in the first half of the period, sales
recovered led by the UK's digital switch over (DSO) timetable and seasonal demand for the iLuv
product range. The Australian market was particularly difficult in the first half but began to recover in
the second half with strong sales in the STB and DAB+ sectors. Net cash at the end of the period
remained strong at £13.5m (2010: £28.9m). A special dividend totalling £10.1m was paid to
shareholders in October. Working capital requirements have increased in response to the timing of
the UK DSO programme.
Progress is being made in developing the Group's growth platform through new investment in
people, marketing and external partnerships such as the recently announced venture with ANT plc.
Through improving our own understanding of technologies, and partnering with selected industry
leaders, we now have an exciting pipeline of new and differentiated products in development
through which to extend and enhance the Group's positioning in our target segments.
Looking into the near future, demand for DTR functionality, and the convergence of digital
broadcasting and broadband services, will mean that ownership of proprietary technology will be
critically important in successfully delivering new products to the mass market. We are positioning
Harvard to be a supplier of choice for retailers and consumers in this space.
The current difficult market environment has widened the possibility to acquire, or partner with,
other businesses, products or brands. The Board is actively investigating opportunities as they are
identified.
Dividend
The Board is not proposing the payment of an ordinary dividend. A special £10.1m dividend was paid
to shareholders on 15 October 2010.
Board Changes
Geoff Brady was appointed as an Independent Non-Executive Director. He is currently the Non-
Executive Chairman of Robert Dyas, a convenience non-food retailer. Geoff brings substantial retail
and marketing knowledge to the Boardroom.
Paul Selway-Swift retired as an Independent Non-Executive Director of the Company at the Annual
General Meeting 2010, where it was noted that the Company wished to thank Paul for his
substantial contribution to the Group over the last twelve years.
Colin Grimsdell, Finance Director and Company Secretary, has given notice of his intention to leave
the business during August 2011. In his time at the Company Colin has contributed to the stabilising
of the business ready for the next stage of its strategy. We wish Colin well in future.
A further announcement will be made when a new Finance Director has been appointed.
Outlook
We have made good progress with our plans and the investment we are making both supports and
extends our strategic objectives. Trading conditions for producers and retailers of consumer
electronics have been challenging, and are expected to remain so for the foreseeable future. We
have therefore reduced forecasts and adjusted budgets for the current financial year, so as to retain
tight control of inventory levels and working capital. The Group's financial position continues to be
strong.
BRIDGET BLOW
Chairman
5 July 2011
Chief Executive Officer's Report

During the last year we have set about the task of carefully putting in place an infrastructure and
commercial culture capable of competing and growing the existing business in the dynamic Digital
Vision and Apple Accessory markets.
Now that our business platform is established, we have begun to actively invest in our growth
potential. Over the longer term, our strategic intent is for Harvard designed and branded products to
account for a much higher percentage of the Group's turnover, enabling us to capture and retain a
larger share of the total value chain.
To this end we are developing our market positioning through the introduction of a thoroughly
researched new brand, View21™; significantly upgrading our technological capability, so as to drive
new product development (Digital Television Recorder, Digital Internet); expanding marketing and
sales capabilities to increase awareness and demand for iLuv Apple accessories and investigating the
possibility of increasing our rate of progress through complimentary acquisitions and partnerships.
The Board believes that the combined benefits accruing from this strategic investment, will increase
our future incremental rate of growth and profitability in both the UK and Australia.
Brands
We have conducted extensive consumer market research in the digital vision segment. This focussed
on the competitive structure of the DTR segment, where there is growing demand but few brands.
Through our analysis of the data, we have developed a clear market positioning for our newly
created brand, View21™, which will be launched in the 2nd half of 2011/12.
The View21™ brand is positioned to address the needs of more technically savvy consumers,
offering class leading features, greater functionality and enhanced design at affordable prices. Our
Goodmans brand will continue to offer good value products at lower price points. As part of our
branding strategy the Grundig brand is being withdrawn in the UK.
New Product Development
In the past Harvard's product range has been dominated by sourcing products directly from our
supplier base. Going forward, we will increasingly design our own products whilst continuing to
outsource manufacture. New product development will address the needs of both UK and Australian
consumers.
To better support our in-house technical team we have entered into a partnership with ANT plc, a
specialist software designer. This co-operative venture is developing an advanced range of market
leading DTR products which will be launched later this year under the View21™ brand. With
increased marketing support this will enable us to compete in a higher value segment of the market.
The need for ownership of proprietary technologies will result in much greater barriers to entry in
the digital vision segment, particularly at the entry level end of the market. This has created a
substantial opportunity, in partnership with leading retailers, to develop new technically enhanced
products for their in-house own label budget ranges.
As the UK's DSO programme ends in 2012, we will already be supplying a growing demand for an
upgraded range of premium digital vision products.
Marketing and Sales
To maximise the potential returns from iLuv's comprehensive range of Apple accessories we are
making significant investment to improve the effectiveness of our marketing and sales activities. The
commercial team has been strengthened with experienced sales personnel recruited from prominent
competitors in the Apple Accessories sector. This investment will lead our strategy to grow iLuv's
market share through accessing new distribution channels in mobile phone network stores, on-line
retailers and specialist accessory vendors. In addition to this we have agreed a new 10 year
distribution agreement for the UK and the business is exploring options for distribution in Australia.
A newly appointed brand manager is now supporting the sales drive, through greater marketing and
promotional activity, to build greater awareness and interest among retail outlets in this high quality
brand.
Platform Expansion
To enable us to maximise and then expand beyond our current capacity, and in the longer term to
capture and retain a larger share of the total value chain, we need to examine ways of increasing our
potential growth.
We are actively investigating opportunities to extend the existing business platform through
acquisition, licensing or partnership with additional complimentary businesses, products or brands in
both Australia and the UK. These can then be incorporated into the current business model and
leveraged through using the Group's existing infrastructure and variable cost model.
The agreements with ANT plc, regarding technological partnership, and with iLuv, extending our
licensing agreement, represent the first steps taken in delivering this strategic plan.
Financial Review
The past year saw the Group return to profitability, excluding corporate disposals, for the first time
since 2005, and report numbers unaffected by discontinued activities arising from the earlier
restructuring programme. There is now a sound financial basis against which to report future
progress.
The first half loss of £0.6m was principally the result of a disappointing performance in Australia,
especially when compared with the unusually strong outcome in the same period the previous year,
and the disappointing HD Freeview launch, where sales only achieved a fraction of market
expectations. Despite the occurrence of the football World Cup, consumers failed to appreciate the
benefits of trading up to the higher standard, instead showing greater appetite for DTR products.
The second half was much stronger, more than recovering the first half loss, with the UK DSO
timetable resulting in strong orders for STB's for retailer own label branded products and the
Government's target help scheme. Australia also experienced a seasonal recovery with STB demand
also helped by the regional DSO programme and strong sales in DAB+ radio products where Harvard
is the local market leader.
iLuv continued to launch products and broaden awareness of the product range, building the
platform from which this years new investment is expected to deliver strong growth. iLuv's market
share increased year on year but still only represents a fraction of the UK's £480m Apple Accessories
market.
The Group's financial position remains healthy with a net cash position of £13.5m. Net interest
received in the year amounted to £0.2m.
UK
Overall demand for consumer goods, particularly electronic products, has been weak. Spending
power has been curtailed by a number of factors including price increases for essential food and fuel
items, a rise in the rate of vat, wage restraint, public sector spending cuts and relatively high
unemployment levels.
Much of this has yet to fully impact upon the economy but is expected to have an increasing
influence on household disposable income in the months ahead. March 2011 saw a fall in overall
demand for consumer electronic products of 17% when compared with the previous year. The
decreased consumer demand has had an adverse effect on orders from some of our major
customers.
Digital Media Boxes (DMB)
After a lull in the UK Government's DSO timetable in 2010, with only 11% of households
experiencing DSO, momentum picks up in 2011 with 33% of households due to switch in each of
the next two years, before the programme's completion at the end of 2012. Demand for STB's
continues to respond to the DSO timetable however a growing proportion of consumers, in regions
yet to switch from analogue, already have access to digital through the purchase of integrated digital
TV's or subscription to pay per view services (SKY, Virgin).
The 'free to air' STB business will increasingly move away from the Standard Definition (SD) low cost
Freeview boxes to more complex, higher value, products such as High Definition (HD) DTR, and
STB's which will facilitate the convergence of Digital TV and internet content. Demand for HD STB's
in 2010 got off to a slow start but interest is expected to steadily increase as the price differential
with SD narrows.
The need to upgrade and broaden the Group's technical capability was a key task in 2010/11, to
ensure that we possess sufficient skills in both software and hardware design, to deliver premium
quality Digital TV Recorders (DTR), demand for which is growing strongly from a low base. A new
Chief Technical Officer position was created and the technical team was expanded.
The first half of 2011/12 will see our partnership with ANT deliver the first View21™ branded
products with more higher specification HD DTR's following later in the year. Further evidence of our
growing technical competence comes with the launch of dedicated App's for Apple iPad, iPhone and
iPod Touch products which enable wireless interactivity between these products and our digital
media boxes.
The launch of YouView, the subscription free, connected digital TV platform, is expected in 2012
ahead of the London Olympics and will require the availability of easy to use, affordable, well
designed DTRs to enable consumers to access the service. It is likely that TV manufacturers will start
to integrate this functionality into their product designs but the relative expense of upgrading TV
sets should support TV recorder demand.
Apple Accessories
Apple accessories continue to outperform the broader consumer electronics market as Apple
continues to deliver a successful product pipeline. Awareness of the New York iLuv brand has grown
with many positive product reviews appearing in consumer electronics media. Headphones, iPad
cases and other accessories sold well through a limited number of distributors offering
encouragement for further growth as new retailers are signed up.
Our strategy is to take advantage of the market's highly fragmented structure to grow our market
share through investment in our marketing, promotional and sales activities. This will extend
awareness, interest and demand for the iLuv brand; deepen appreciation of the comprehensiveness
and high quality of the range, and heighten understanding of the opportunity to provide a 'one stop
shop' service for retailers.
The enlarged and dedicated sales team will focus not only on traditional high street retailers and
supermarkets but will increasingly open up new channels including mobile phone network stores, on-
line retailers and dedicated accessory outlets.
As part of our long term strategic plan, and commitment to this market segment, Harvard has
entered into an agreement with iLuv regarding a significant deepening and extension of the current
partnership agreement, both in the UK and Australia. iLuv has recently further extended its product
portfolio through a partnership endorsement with Samsung on the Galaxy tablet and smartphone
range.
Sales over the next few years are expected to benefit strongly from the Group's investment in sales
and marketing throughout 2011/12.
Australia
Consumer spending remains subdued despite evidence of recovery in some other sectors of the
economy. The Government's spending cuts targeting a reduction of the budget deficit, and interest
rate rises to curtail inflationary pressure, continue to depress consumer demand.
The structure of the consumer electronics market in Australia is less competitive than in the UK and
as a result operating margins are stronger, delivering a higher return on investment. Our operational
structure in Australia has a broader base than the UK and we are actively considering opportunities
to extend both the breadth and depth of the Australian business.
The Group's focus on the digital vision and Apple accessory markets will result in the increasing
importance of these segments, benefiting from the new product pipeline and the launch of brand
View21™.
The strategy in 2011/12 is targeted at maintaining and increasing our strong market shares of the
STB, DTR and Digital Radio categories. Having already grown to represent a 15% share of the STB
market, through the Bush and Grundig brands, and with new innovative products and the launch of
View21™ to come, we are confident of further progress.
Australia's DSO timetable is still in its infancy, with the major cities not due to switch until 2013, but
Harvard has already been awarded contracts to supply regions in Queensland and Victoria. The Group
is strongly positioned to take advantage of increased consumer interest in digital products through its
well established retailer network.
Last year we were the first producer to supply digital 'free to air' STB's equipped with an electronic
programme guide (EPG) and DTR products will follow in 2011. Harvard's speed to market was also
demonstrated through the successful launch of its Digital+ DAB radios which have already captured a
25% market share.
The Apple accessories market, in line with our Group strategy, is an opportunity that we are keen to
develop, leveraging our existing infrastructure and operational variable cost model. Under a new
agreement with iLuv we will start to supply a limited number of products in the fourth quarter of
2011, building towards marketing the full range by the end of 2012.
MIKE ASHLEY
5 July 2011
Consolidated Income Statement

31 March 31 March
2011 2010
Notes £'millions £'millions
Revenue 2 61.2 77.4
Cost of sales (52.4) (65.2)
Gross profit 8.8 12.2
Net operating expenses 3 (8.1) (11.0)
Operating profit 0.7 1.2
Finance costs 4 - -
Finance income 4 0.2 0.2
Profit before tax 0.9 1.4
Taxation 5 (0.5) (0.7)
Profit for the period from continuing operations 0.4 0.7
Loss for the period from discontinued operations - (5.7)
Profit/(loss) for the period 0.4 (5.0)
Attributable to:
Equity holders of the parent 0.4 (5.0)
Earnings per share (in pence) 6
Basic
- Continuing operations 0.7p 1.5p
- Discontinuing operations - (11.3)p
- Total 0.7p (9.8)p
Diluted
- Continuing operations 0.7p 1.5p
- Discontinuing operations - (11.3)p
- Total 0.7p (9.8)p
Consolidated Statement of Comprehensive Income
Profit/(loss) for the period 0.4 (5.0)

Other comprehensive income
Exchange differences on translation of overseas operations - 0.4
Exchange difference on disposal - (0.2)
Other comprehensive income net of tax - 0.2
Total comprehensive income (all attributable to owners of the parent) 0.4 (4.8)
Consolidated Statement of Financial Position
31 March 31 March
2011 2010
£'millions £'millions
Non-current assets
Property, plant & equipment 0.5 0.7
Total non-current assets 0.5 0.7
Current assets
Inventories 7.2 4.4
Trade receivables and other receivables 13.0 5.6
Income tax recoverable - 0.1
Cash and cash equivalents 13.5 28.9
Total current assets 33.7 39.0
Total assets 34.2 39.7
Current liabilities
Trade and other payables 13.7 9.7
Income tax payable 0.4 -
Provisions 0.5 0.7
Total current liabilities 14.6 10.4
Total liabilities 14.6 10.4
Net assets 19.6 29.3
Equity attributable to equity holders of the parent

Share capital 5.1 5.1
Share premium 3.2 3.2
Capital redemption reserve 15.4 15.4
Investment in own shares (2.3) (2.3)
Translation reserve (7.6) (7.6)
Share based payments reserve 0.5 0.7
Retained earnings 5.3 14.8
Total equity 19.6 29.3
Consolidated Statement of Changes in Equity
Share
Share Capital Investment based
Share premium redemption in own Translation payment Retained
capital account reserve shares reserve reserve earnings Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Group:
At 1 April 2010
5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3
Transactions with
owners:
Dividends Paid - - - - - - (10.1) (10.1)
Transfer relating
to lapsed options - - - - - (0.2) 0.2 -
Total
transactions
with owners - - - - - (0.2) (9.9) (10.1)
Profit for the - - - - - 0.4

period - 0.4
Total
comprehensive
income - - - - - - 0.4 0.4
At 31 March
2011 5.1 3.2 15.4 (2.3) (7.6) 0.5 5.3 19.6
Share
Share Capital Investment based
Share premium redemption in own Translation payment Retained
capital account reserve shares reserve reserve earnings Total
(£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m) (£'m)
Group:
At 1 April 2009
5.1 3.2 15.4 (2.3) (7.8) 1.1 19.4 34.1
Transactions with
owners:
Transfer relating
to lapsed options - - - - - (0.4) 0.4 -
Total
transactions
with owners - - - - - (0.4) 0.4 -
Loss for the - - - - - - (5.0) (5.0)

period
Other
comprehensive
income
Exchange
difference on
disposal - - - - (0.2) - - (0.2)
Exchange
difference on
translation of
overseas
operations - - - - 0.4 - - 0.4
Total
comprehensive
income - - - - 0.2 - (5.0) (4.8)
At 31 March
2010 5.1 3.2 15.4 (2.3) (7.6) 0.7 14.8 29.3
Consolidated Statement of Cash Flows

31 March 31 March
2011 2010
Notes £'millions £'millions
Cash flow from operating activities
Cash used by operations 8 (5.5) (5.4)
Tax paid - (0.4)
Net cash used in operating activities (5.5) (5.8)

Interest received 0.2 0.2
Purchase of property, plant and equipment - (0.1)
Sale of discontinued activities (net) - 10.0
Net cash flow from investing activities 0.2 10.1

Dividends paid (10.1) -
Net cash used in financing activities (10.1) -
Net (decrease)/increase in cash and cash equivalents (15.4) 4.3

Net foreign exchange differences - (0.1)
Cash and cash equivalents at beginning of year 28.9 24.7
Cash and cash equivalents at end of year 13.5 28.9
Notes to the statement
1. General information
The unaudited financial information set out above does not constitute statutory accounts for the purposes of
Section 435 of the Companies Act 2006 but is derived from those financial statements and as such, does not
contain all information required to be disclosed in the financial statements prepared in accordance with International
Financial Reporting Standards ("IFRS"). Statutory accounts for 2011 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The auditors have agreed to the issue of these results and
expect to issue an unqualified audit report on the 2011 accounts following formal completion of the audit.
The financial information in respect of the year ended 31 March 2010 has been produced using extracts from the
statutory accounts prepared under International Financial Reporting Standards. The statutory accounts for this
period have been filed with the Registrar of Companies. The auditors' report on these accounts was unqualified.
The financial information presented in this statement has been prepared using accounting policies consistent with
International Financial Reporting Standards as endorsed by the European Union. The accounting policies are the
same as those published by the Group in the Annual Report & Accounts for the year ended 31 March 2010 which is
available on the Group's website www.harvardplc.com.
These results were approved by the directors on 4th July 2011. Copies of the 2011 Report and Accounts are being
sent to shareholders in due course. Further copies will be available at the Company's registered offices at Harvard
House, The Waterfront, Elstree Road, Elstree Herts WD6 3BS.
2. Segmental Reporting
Revenue and segmental profit has been disclosed by three operating segments of UK Digital, UK other CE and Rest
of the World CE in the manner that the information is presented to the Boards of Directors (being the 'Chief
Operating Decision Makers') in accordance with IFRS8.
Continuing operations:
Year ended 31 March 2011 Year ended 31 March 2010

Rest of Rest of
UK UK other the UK UK Other the World
Digital CE World CE Total Digital CE CE Total
£'millions £'millions £'millions £'millions £'millions £'millions £'millions £'millions
Revenue
External sales 25.6 22.4 13.2 61.2 30.9 30.2 16.3 77.4
Inter-segment sales - - - - - - - -
Segment profit 3.7 1.8 3.0 8.5 5.1 2.4 4.5 12.0
Total assets 14.9 12.9 6.5 34.3 17.3 17.2 4.7 39.2 *
Total liabilities (7.5) (6.3) (0.9) (14.7) (4.7) (4.8) (0.9) (10.4)
Total net assets 7.4 6.6 5.6 19.6 12.6 12.4 3.8 28.8
Capital
expenditure - - - - 0.1 - - 0.1
Depreciation
charge 0.1 0.1 - 0.2 0.1 0.1 0.1 0.3
* Total assets at 31 March 2010 exclude £0.5m for expected earnout from the Grundig disposal as this relates to a
discontinued operation.
Segment figures can be reconciled to the corresponding Group figures as follows:

31 March 31 March
2011 2010
Segment profit 8.5 12.0
Overheads not allocated to segments (7.8) (10.8)
Group operating profit 0.7 1.2
The geographical analysis of turnover of continuing operations by geographical location of customer is as follows:

31 March 31 March
2011 2010
Revenue
United Kingdom 47.9 61.1
Australia 13.2 15.0
Rest of Europe 0.1 1.3
61.2 77.4
The geographical location of non-current assets of continuing operations is as follows:

31 March 31 March
2011 2010
United Kingdom 0.3 0.4
Australia 0.1 0.1
Hong Kong 0.1 0.2
0.5 0.7
One UK customer represents 24% (2010: 16%) of total Group revenue during the year. Revenue from this
customer is included in both UK Digital and UK other CE segments.
3. Net Operating expenses
Year ended 31st March 2011 Year ended 31st March 2010
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
£'millions £'millions £'millions £'millions £'millions £'millions
Selling and distribution 2.5 - 2.5 4.1 0.3 4.4
Administration 5.6 - 5.6 6.9 6.0 12.9
8.1 - 8.1 11.0 6.3 17.3
4. Finance costs/income

31 March 2011 31 March 2010
Finance costs comprise:
Interest on bank loans and overdrafts repayable
within 5 years - -
Finance income comprises:
Bank interest receivable 0.2 0.2
5. Taxation
Year ended
31 March Year ended
2011 31 March
£'millions 2010 £'millions
The tax charge comprises:
UK corporation tax on profits for the year at 28% (2010:28%) - -

Adjustments for previous periods - -
Non-UK taxation
- Current 0.3 0.5
- Adjustment in respect of prior years 0.2 -
Total current taxation 0.5 0.5
Deferred tax - Origination and reversal of temporary timing differences - 0.2
Adjustments in respect of prior years - -
Total taxation charge in the income statement 0.5 0.7
Factors affecting taxation charge:
The taxation expense on the profit for the year differs from the amount computed by applying the corporation tax rate to the
profit before taxation as a result of the following factors:
Profit before tax on continuing operations 0.9 1.4
Loss before tax from discontinuing operations - (5.7)
Profit/(loss) for the period before tax 0.9 (4.3)
Notional tax charge/(credit) at UK rate of 28% (2010:28%) 0.3 (1.2)
Effects of:
Non allowable and non taxable items 0.3 4.8
Disposal of discontinued activities - (0.8)
Tax losses not recognised 0.1 (1.9)
Different tax rates on non-UK profits (0.1) (0.2)
Adjustments to tax charges for previous periods: Non-UK taxation (0.1) -
Total taxation charge 0.5 0.7
6. Earnings per ordinary share
Basic earnings per share are based upon earnings of £0.4 million (2010 : £(5.0) million) and 50,589,140 (2010 :
50,578,573) Ordinary Shares being the weighted average number of Ordinary Shares in issue during the twelve
months ended 31 March 2011 excluding the shares held by The ESOP Trust. Basic earnings per share on continuing
activities are based upon earnings of £0.4 million (2010 : £0.7 million) and discontinued operations are based upon
earnings of £nil million (2010 : £(5.7) million).
Diluted earnings per share are based upon earnings of £0.4 million (2010 : £(5.0) million) and 51,284,857 (2010 :
50,578,573) Ordinary Shares allowing for the exercise of outstanding share options exercisable at a price below
the average fair value during the period and the shares held by the ESOP Trust. Diluted earnings per share on
continuing activities are based upon earnings of £0.4 million (2010 : £0.7 million) and on discontinued operations
upon earnings of £nil million (2010 : £(5.7) million).
Potential Ordinary Shares of 696,513 have been excluded from the prior year computation of diluted EPS as the
shares are anti-dilutive.
7. Dividends
31 March 31 March
2011 2010
Special dividend 10.1 -
10.1 -
The company paid a special dividend of 20p per ordinary share on 15 October 2010 to shareholders on
the register at 1 October 2010.
8. Cash flow from operating activities:

31 March 31 March
2011 2010
Operating profit from continuing operations before impairment of properties 0.7 1.2
Operating loss from discontinuing operations - (5.3)
0.7 (4.1)
Adjustment for:
Depreciation of property, plant & equipment 0.2 0.3
(Increase)/decrease in receivables (7.4) 3.1
(Increase)/decrease in inventories (2.8) 1.8
Increase/(decrease) in payables 4.0 (2.5)
Decrease in provisions (0.2) (4.0)
Cash flow used by operating activities (5.5) (5.4)
Net Cash
Cash and cash equivalents comprise cash at bank and bank overdrafts all with a maturity of three months or less.

END
FR UGUUAMUPGGAC
5/24/13 Harvard Int plc | Statement re. Possible Offer | FE InvestEgate
Harvard Int plc
Statement re. Possible Offer

RNS Number : 9185P
Harvard International PLC
10 October 2011
For immediate release

10 October 2011
Statement re Possible Offer
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE

OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION
This is an announcement falling under Rule 2.4 of the City Code

and does not constitute an announcement of a firm intention to
make an offer or to pursue any other transaction under Rule 2.7
of the City Code. Accordingly, Harvard Shareholders are advised
that there can be no certainty that a formal offer for Harvard will
be forthcoming, even in the event that the pre-conditions set out
in paragraph 3 below are satisfied or waived.
Possible Cash Offer

for
Harvard International plc ("Harvard")
by
Geeya Technology (HongKong) Limited ("Bidco")
a wholly owned direct subsidiary of
Chengdu Geeya Technology Co., Ltd ("Geeya")
1. Introduction
The directors of Bidco, Geeya and Harvard are pleased to announce that
agreement in principle has been reached between Harvard, Geeya and
Bidco on the terms of a Possible Offer for the entire issued and to be
issued share capital of Harvard by Bidco, a wholly owned direct
www.investegate.co.uk/ArticlePrint.aspx?id=201110101736559185P 1/11
subsidiary of Geeya. Geeya reserves the right to implement any Offer

through another of its wholly owned subsidiaries if it so chooses.
The pre-conditions set out in paragraph 3 will be required to be satisfied

or waived prior to any Offer being made.
This Announcement is made under Rule 2.4 of the City Code and does
not constitute an announcement of a firm intention to make an offer or to
pursue any other transaction under Rule 2.7 of the City Code.
Accordingly, Harvard Shareholders are advised that there can be
no certainty that a formal offer for Harvard by Geeya or Bidco will
be forthcoming, even in the event that the pre-conditions set out
in paragraph 3 below are satisfied or waived.
2. The Possible Offer
If the Possible Offer proceeds, Harvard Shareholders would receive:
for each issued and to be issued Harvard Share 45 pence

in cash
The Possible Offer would value the entire existing issued share capital of
Harvard at approximately £23.1 million and would represent a premium
of 100 per cent. to the Closing Price of Harvard Shares of 22.5 pence on
AIM on 27 September 2011 (being the last Business Day immediately
prior to the date on which Harvard announced that it had received an
approach from Geeya that might lead to an offer for Harvard)
Any offer for Harvard would be subject to terms and conditions

customary for a recommended offer subject to the City Code and would
also be conditional upon the approval of Geeya shareholders.
The Harvard Directors, who have been so advised by Investec, have

indicated they are supportive of unanimously recommending the
Possible Offer. In providing advice to the Harvard Directors, Investec has
taken into account the Harvard Directors' commercial assessment of the
Possible Offer.
Commenting on the Possible Offer, Mr Zhou, Chairman of Geeya said:
"We are delighted to announce the possible

acquisition of Harvard, which, if it proceeds,
would represent a significant step in the
implementation of Geeya's strategy to expand
our geographical presence, gain retail exposure
for our set-top boxes and benefit from the value
of Harvard's brands. We look forward to
work ing with Harvard's management and
employees to finalise this possible acquisition."
Commenting on the Possible Offer, Ms Bridget Blow, Chairman of

Harvard said:
"The approach from Geeya represents an

attractive opportunity for shareholders to
realise a substantial premium to the current
share price and recognises the value of the
company's brands (such as Goodmans) and
its investment in STB technology."
3. Pre-conditions to the Offer Announcement

The issue of an Offer Announcement by Geeya or Bidco pursuant to

Rule 2.7 of the City Code is subject to satisfaction or waiver of the
following pre-conditions:
i. the unanimous recommendation of the Harvard Directors of

the terms of any such Offer, having been advised by Investec
that the terms of such an Offer are fair and reasonable;
ii. the receipt of all necessary approvals from regulatory

authorities in China relating to the Offer, including the
following:
o project approval for outbound investment from the

Development and Reform Commission of Sichuan
Province in China;
o approval for outbound investment from the
Ministry of Commerce of China at provincial level;
o approval for the remittance of foreign exchange
out of China from the State Administration of
Foreign Exchange of China; and
o approval of the Possible Offer by the China
Securities Regulatory Commission.
iii. the receipt by Geeya of irrevocable commitments from

the Directors of Harvard in respect of their entire beneficial
holdings of Harvard shares to accept the Offer; and
iv. the approvals of the Offer by the board of directors of

Geeya and the Geeya shareholders at a general shareholders'
meeting of Geeya.
Geeya reserves the right to waive any of these pre-conditions, but even
if all of these pre-conditions are satisfied or waived, there can be
no certainty that a firm offer will be forthcoming.
On 28 September 2011 Harvard announced that it had received an

approach from Geeya that might lead to a possible offer for Harvard.
On 19 September 2011 changes to the City Code took effect relating to

the requirement for a potential offeror to "put up or shut up" or obtain a
deadline extension following a possible offer announcement. These
changes require that by no later than 5.00 p.m. on the 28th day
following a possible offer announcement (i.e. 26 October 2011) Geeya
must, unless the Panel has consented to an extension of this 28 day
deadline, announce either a firm intention to make an offer or that it
does not intend to make an offer, in which case the announcement will
be treated as an announcement to which Rule 2.8 of the City Code
applies.
Geeya has informed Harvard that obtaining the regulatory consents

referred to above may take 4 months from the date of this
announcement, or potentially longer. In light of this, Harvard confirms
that it currently intends to approach the Panel for an extension to this
deadline in due course. This deadline will only be extended with the
consent of the Panel in accordance with Rule 2.6(c) of the City Code.
Where the Panel consents to an extension of the deadline, Harvard shall

make an announcement setting out the new deadline and commenting
on the status of negotiations between Harvard and Geeya as well as the
anticipated timetable for satisfying or waiving the pre-conditions to
Geeya Bidco announcing a firm intention to make an offer.
Every effort is being made by Harvard and Geeya to ensure that the
period in which regulatory consents are obtained is as short as
possible.
4. Information on Geeya and Bidco
Geeya
Geeya is a public company admitted to trading on the Shenzhen Stock

Exchange in China. Geeya manufactures and supplies digital television
network equipment and its products include a full series of digital TV
products from head-end to terminal-end, including digital television
support systems and consumer digital appliances, including digital set
top boxes. Geeya was founded in 1999and is based in Chengdu, China.
As at 31 December 2010, Geeya had consolidated total assets of

RMB809.9 million (approximately £79.4 million) and reported a net profit
for the year ended 31 December 2010 of RMB53.8 million
(approximately £5.1 million).
Geeya's current intention is to finance any Offer through a combination

of its existing cash resources and bank facilities.
Bidco
Bidco is a newly incorporated Hong Kong company formed for the

purpose of potentially making the Offer and is wholly owned by Geeya.
5. Information on Harvard
Harvard is a public company admitted to trading on AIM (trading symbol:

HAR). Harvard operates within the global consumer electronics market
focusing on added value digital vision products, such as TV set-top
boxes and recorders, targeting specific local market opportunities such
as the UK's popular, free-to-air TV services. In addition, Harvard markets
a range of accessories for Apple's iPod, iPhone and iPad products in
the UK under the iLuv brand. It is also a major supplier of digital vision,
radio, and other personal consumer electrical products in Australia.
Harvard has comprehensive product development, procurement and
logistical operations based in the UK, Hong Kong and China.
6. Reasons for the Possible Offer
Geeya currently sells its existing products to Chinese based

businesses and has very limited experience of product exporting and no
previous retail experience. It has, however, recently been seeking to
expand its geographical presence and gain retail exposure for its set-top
boxes.
The Possible Offer presents an opportunity for Geeya to address both of

these strategic aims as Harvard has strong business links and
significant sales with retailers in both the UK and Australia.
7. Current trading of Harvard
In its annual report for the year ended 31 March 2011, Harvard reported
a profit before tax of £0.9 million on turnover of £61.2 million and had net
assets of £19.6 million as at 31 March 2011.
8. Support for the Possible Offer by the Harvard Directors
The Harvard Directors, who have been so advised by Investec, have

indicated they are supportive of unanimously recommending the
Possible Offer. In providing advice to the Harvard Directors, Investec has
taken into account the Harvard Directors' commercial assessment of the
Possible Offer.
9. Background to and reason for the Harvard Directors' support

for the Possible Offer
In May 2011, discussions commenced between Harvard and Geeya. A

meeting between the Chief Executive Officer of Harvard and the
Chairman of Geeya in July 2011 subsequently lead to proposals from
Geeya for the Possible Offer.
If the Possible Offer proceeds to a formal Offer, it will provide an

opportunity for Harvard Shareholders to realise their investment in
Harvard at a significant premium to the current market price, payable in
cash.
10. Break Fee Agreement
Geeya and Harvard have entered into an agreement providing for the
payment to Harvard of a break fee of £500,000 (such sum to be paid into
escrow within 30 days of the release of this announcement) if, inter alia,
a formal offer document is not posted to Harvard shareholders by Geeya
on or before 30 March 2012.
11. General
The implications of the Possible Offer for Overseas Shareholders may

be affected by the laws of the relevant jurisdiction. Any persons who are
subject to the laws of any jurisdiction other than the UK should inform
themselves about and observe any applicable requirements. It is the
responsibility of each Overseas Shareholder to satisfy himself as to the
full observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental, exchange control
or other consents which may be required, or the compliance with other
necessary formalities which are required to be observed and the
payment of any issue, transfer or other taxes due in such jurisdiction.
This announcement and any Offer will be governed by English law and
will be subject to the jurisdiction of the English courts. This
announcement and any Offer will be subject to the applicable
requirements of the City Code.
Appendix I to this announcement provides details of the basis of

calculations and sources of certain information included in this
announcement.
Appendix II to this announcement contains definitions of certain terms

used in this announcement.
In accordance with Rule 30.4 of the City Code, a copy of this

announcement will be published on the following website:
www.harvardplc.com
Enquiries:
Harvard International plc

Bridget Blow, Chairman 020 8238 7650
Mike Ashley, Chief Executive Officer
Investec, financial adviser, nominated

adviser and corporate broker to
Harvard 020 7597 4000
James Grace
Seymour Pierce, financial adviser to

Geeya and Bidco
Jonathan Wright 020 7107 8000
Tom Sheldon
Seymour Pierce, which is authorised and regulated in the United

Kingdom by the Financial Services Authority, is acting exclusively as
financial adviser to Geeya and Bidco and no-one else in connection with
the Possible Offer and will not be responsible to anyone other than
Geeya and Bidco for providing the protections afforded to clients of
Seymour Pierce or for providing advice in relation to the Possible Offer,
the contents of this announcement or any other matter referred to
herein. Neither Seymour Pierce nor any of its affiliates owes or accepts
any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person
who is not a client of Seymour Pierce in connection with this
announcement, any statement contained herein or otherwise.
Investec, which is authorised and regulated in the United Kingdom by

the Financial Services Authority, is acting exclusively as financial
adviser to Harvard and no-one else in connection with the Possible Offer
and will not be responsible to anyone other than Harvard for providing
the protections afforded to clients of Investec or for providing advice in
relation to the Possible Offer, the contents of this announcement or any
other matter referred to herein. Neither Investec nor any of its affiliates
owes or accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of Investec in connection with this
announcement, any statement contained herein or otherwise.
The release, distribution or publication of this announcement in

jurisdictions other than the UK may be restricted by law and therefore
any persons who are subject to the laws of any jurisdiction other than
the UK should inform themselves about and observe any applicable
requirements. Copies of this announcement and any documentation
relating to the Possible Offer are not being, and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from any Restricted Jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send such documents in or into or from
a Restricted Jurisdiction. Any Offer, if it proceeds (unless otherwise
determined by Geeya and Bidco and permitted by applicable law and
regulation) will not be made, directly or indirectly, in or into, or by the
use of the mails, or by any means of instrumentality (including without
limitation, telephonically or electronically) of interstate or foreign
commerce of, or any facilities of a national securities exchange of any
Restricted Jurisdiction, and such Offer will not be capable of
acceptance from or within any Restricted Jurisdiction.
This announcement is not intended to and does not constitute or form

any part of an offer to sell or an invitation to purchase or the solicitation
of an offer to subscribe for any securities or the solicitation of any vote

or approval in any jurisdiction pursuant to the Possible Offer, any
subsequent Offer or otherwise. If it proceeds, any Offer will be made
solely on the terms set out in the Offer Document.
This announcement, including information included or incorporated by

reference in this announcement, may contain "forward-look ing
statements" concerning Harvard, Geeya and Bidco. Generally, the words
"anticipate", "believe", "continue", "estimate", "expect", "forecast",
"intend", "may", "plan", "project", "should" and "will" or similar
expressions identify forward-look ing statements. Such statements
reflect the relevant company's current views with respect to future
events and are subject to risk s and uncertainties that could cause the
actual results to differ materially from those expressed in the forward-
look ing statements. Many of these risk s and uncertainties relate to
factors that are beyond the companies' abilities to control or estimate
precisely, such as changes in general economic and business
conditions, changes in currency exchange rates and interest rates, lack
of acceptance of new exchange rates and interest rates, introduction of
competing products or services, lack of acceptance of new products or
services, changes in business strategy and the behaviour of other
mark et participants and therefore undue reliance should not be placed
on such statements. Neither Harvard, Geeya or Bidco nor their
respective affiliates undertak es any obligation to update publicly or
revise forward-look ing statements, whether as a result of new
information, future events or otherwise, except to the extent legally
required.
The Bidco Directors and the Geeya Directors accept responsibility for
the information contained in this announcement other than information
relating to Harvard, the Harvard Directors and members of their
immediate families, related trusts and persons connected with them
(within the meaning of section 252 of the Act).
To the best of the k nowledge and belief of each of the Bidco Directors
and the Geeya Directors (each of whom has tak en all reasonable care
to ensure that such is the case), the information contained in this
announcement for which they are responsible is in accordance with the
facts and does not omit anything lik ely to affect the import of such
information.
The Harvard Directors accept responsibility for the information

contained in this announcement relating to Harvard, the Harvard
Directors and members of their immediate families and persons
connected with them (within the meaning of section 252 of the Act)
(save in each case for information on Bidco's future plans for Harvard
and its management and employees).
To the best of the k nowledge and belief of the Harvard Directors (each
of whom has tak en all reasonable care to ensure that such is the case),
the information contained in this announcement for which they are
responsible is in accordance with the facts and does not omit anything
lik ely to affect the import of such information.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or

more of any class of relevant securities of an offeree company or of any
paper offeror (being any offeror other than an offeror in respect of which it
has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the

announcement in which any paper offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be
made by no later than 3.30 pm (London time) on the 10th business day
following the commencement of the offer period and, if appropriate, by
no later than 3.30 pm (London time) on the 10th business day following
the announcement in which any paper offeror is first identified. Relevant
persons who deal in the relevant securities of the offeree company or of
a paper offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the offeree
company or of any paper offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
paper offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any paper offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a
person to whom Rule 8.3(b) applies must be made by no later than 3.30
pm (London time) on the business day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or

understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper offeror,
they will be deemed to be a single person for the purpose of Rule 8.3.
Details of the offeree and offeror companies in respect of whose relevant

securities Opening Position Disclosures and Dealing Disclosures must
be made can be found in the Disclosure Table on the Takeover Panel's
website at www.thetakeoverpanel.org.uk, including details of the number
of relevant securities in issue, when the offer period commenced and
when any offeror was first identified. You should contact the Panel's
Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt
as to whether you are required to make an Opening Position Disclosure
or a Dealing Disclosure.
Rule 2.10 Requirement
In accordance with Rule 2.10 of the City Code, Harvard confirms that,
as of the date of the announcement, it has in issue 51,275,685 ordinary
shares of 10 pence each (excluding ordinary shares held in treasury).
The International Securities Identification Number ("ISIN") number of
the ordinary shares is GB0000130756.
APPENDIX I
BASES AND SOURCES OF INFORMATION
1. The value attributed to the entire issued share capital of Harvard is

based upon the 51,275,685 Harvard Shares in issue as at the date
of this announcement.
2. Unless otherwise stated, all prices for Harvard Shares are the
closing middle market quotation derived from AIM on the relevant
date.
3. References to a percentage of Harvard Shares are based on the

number of Harvard Shares in issue as set out in paragraph 1 above.
4. The exchange rates used to convert Renminbi into Sterling are

£1:RMB10.1961 for Geeya's 2010 consolidated net assets and
£1:RMB10.4489 for Geeya's 2010 net profit.
APPENDIX II
DEFINITIONS
In this announcement, unless the context otherwise requires, the

following expressions have the following meanings:
Act the Companies Act 2006 including any

statutory modification or re-enactment
thereof from time to time in force
AIM the AIM market operated by the London

Stock Exchange
Bidco Geeya Technology (HongKong) Limited
Bidco Directors the Directors of Bidco at the date of this

announcement
Business Day a day (other than a Saturday or a

Sunday) on which clearing banks are
generally open for the transaction of
usual banking business in the City of
London
City Code the City Code on Takeovers and

Mergers
China The People's Republic of China
Closing Price the closing middle market quotation of a

share as derived from AIM
Conditions the conditions to the implementation of

the Offer and the Possible Offer to be

set out in any Offer Announcement and
'Condition' means any one of them
Geeya Chengdu Geeya Technology Co., Ltd
Geeya Directors the directors of Geeya at the date of the

announcement
Harvard or the Company Harvard International plc
Harvard Directors the Directors of Harvard at the date of

this announcement
Harvard Shareholders holders of Harvard Shares
Harvard Shares the fully paid ordinary shares of 10

pence each in the capital of Harvard
Investec Investec Bank plc, which is authorised

and regulated in the UK by the Financial
Services Authority to carry on
investment business, as financial
adviser to Harvard
London Stock Exchange London Stock Exchange plc
Offer if an Offer Announcement is released,

the proposed recommended cash offer
by Bidco on the Principal Terms for the
entire issued and to be issued ordinary
share capital of Harvard, including,
where the context so requires, any
subsequent revision, variation,
extension or renewal thereof
Offer Announcement an announcement by Geeya or Bidco of

a firm intention to make an offer for the
entire issued and to be issued share
capital of Harvard on the Principal
Terms under Rule 2.7 of the City Code
Offer Document In relation to any Offer Announcement,

the document to be sent to Harvard
Shareholders and others which will
contain the terms and conditions of the
Offer and certain information about
Harvard, Bidco and Geeya
Offer Period has the meaning given to it in the City

Code
Overseas Shareholders Harvard Shareholders who are resident

in, ordinarily resident in, or citizens of,
jurisdictions outside the UK
Panel the Panel on Takeovers and Mergers
Possible Offer the possible Offer contemplated by

Bidco
Pounds or £ pounds sterling, the lawful currency of

the UK
Principal Terms in relation to any Offer Announcement,

the Offer referred to in such
announcement being on terms that (i)
the price payable for each Harvard
Share is no less than 45 pence per
Harvard Share, (ii) such price is payable
in cash; and (iii) the Offer is subject to
the Conditions
Restricted Jurisdiction subject always to the requirements of

Rule 30.3 of the City Code in relation to
the distribution of offer documentation to
jurisdictions outside the UK, any
jurisdiction where extension of the
Possible Offer would violate the law of
that jurisdiction
RMB Renminbi, the lawful currency of China
Seymour Pierce Seymour Pierce Limited, which is

authorised and regulated in the UK by
the Financial Services Authority to carry
on investment business, as financial
adviser to Geeya and Bidco
UK or the United Kingdom the United Kingdom of Great Britain and

Northern Ireland (and its dependent
territories)
The expressions 'subsidiary', 'subsidiary undertaking', 'undertaking' and

'associated undertaking' have the meanings given by the Act including
any statutory modification or re-enactment of them for the time being in
force. All references to time in this document are to London time.
Words importing the singular shall include the plural and vice versa, and
words importing the masculine gender shall include the feminine or
neutral gender.

END
OFDFFEFMSFFSEDS
5/24/13 B.P. Marsh &Partners | Partial Disposal and Trading Update | FE InvestEgate
B.P. Marsh &Partners
Partial Disposal and Trading Update

RNS Number : 0582B
B.P. Marsh & Partners PLC
27 March 2013
Date: 27th March 2013

On behalf of: B.P. Marsh & Partners Plc ("the Company", "the
Group" or "B.P. Marsh")
For immediate release

B.P. Marsh & Partners Plc
Partial Disposal of Hyperion Investment
and Trading Update
· £29.2m cash consideration for disposal of 80%
of holding
· Increase of £4.3m on last published valuation
· Retention of 2.76% stake
· Repayment/cancellation of Directors' Loan
facility on completion

Partial Disposal of shareholding in Hyperion Insurance Group
Limited ("Hyperion")

B.P. Marsh & Partners Plc, (AIM: BPM), a niche venture capital
provider to early stage financial services businesses, announces that
it has agreed to sell 80% of its holding (5,623,520 shares) in
Hyperion to the global growth equity firm General Atlantic for a cash
consideration of £29,242,304; this equates to £5.20 per A Ordinary
Share. The Group most recently valued its 13.8% shareholding
(7,029,400 shares) at £31,132,000 pre-tax at 31st July 2012.
Therefore the proposed disposal of 80% of its stake at this price
www.investegate.co.uk/ArticlePrint.aspx?id=201303271627580582B 1/7
would represent an effective uplift of £4,336,704 upon this most

recent published valuation.

On completion, the Company will retain a 2.76% stake in Hyperion
subject to a Call Option arrangement which will allow General
Atlantic to purchase the Company's remaining stake of 1,405,880 A
Ordinary Shares of Hyperion at £5.20 per share. The Call Option will
expire and fall away upon the third anniversary of Completion or
upon Hyperion undertaking an Initial Public Offering ("IPO"),
whichever is the earlier. Under the Call Option the Group could
receive a further £7,310,576 in cash if exercised. Based upon the last
published valuation of these shares this would represent an
effective uplift of £1,084,176.

The Share Purchase Agreement includes an anti-embarrassment
provision, which provides that if Hyperion undertakes an IPO within
12 months of completion, at a price at or in excess of £6.25 per A
Ordinary Share, there will be an additional adjustment amount
payable to the Group and 3i, up to a maximum of £0.30 per A
Ordinary Share. From the Group's perspective, this provision could
result in a maximum additional amount of £2,108,820 in
consideration becoming payable to the Seller; however Hyperion's
value would need to have increased by at least £1.40 per A Ordinary
Share within the following 12 months and the right market
conditions would need to be in place for a successful IPO, for this
maximum additional consideration to become payable.

The transaction values Hyperion at an equity value of £250 million.
Completion will be conditional upon FSA approval, competition
clearance in Germany and Regulatory clearance in Texas, Spain and
Singapore together with B.P. Marsh shareholder approval.

B.P. Marsh was instrumental in co-founding and funding Hyperion in
1994, with an initial equity investment of £25,000 and an overall
equity investment of £4,320,403 over the subsequent 18 years. Since
then, B.P. Marsh has overseen Hyperion's growth through a
longstanding partnership and provision of working capital finance,
to which the Board of B.P. Marsh has been committed, including
spearheading the Strategic Finance Committee which led to 3i
joining as fellow investors in 2008. Since inception Hyperion has
grown from five staff based in London to over 1,400 staff in 28
countries producing over £110m in revenues for the financial year
ending 30th September 2012.

The Company made a partial disposal of 1,193,500 A Ordinary
Shares of Hyperion on 16th May 2012 for a cash consideration of
£4,535,300, after which it remained holding its current stake,
representing approximately a 13.8% shareholding in Hyperion.

As part of the agreement, and subject to banking consent, the Group
has agreed to provide approx. £6.1m at an interest rate of Bank of
England Base rate + 5%, minimum 7.5% for a minimum term of 12

months to refinance existing shareholder loans, including
£2,754,392 that B.P. Marsh had provided to Hyperion. As such
approx. £3.35m in cash from the sale of shares will be used to
finance this loan. The Loan will be repayable on an IPO or a change
of control of Hyperion or 3rd October 2017, whichever is the earlier,
but following the first anniversary of this facility Hyperion will be
able to pre-pay prior to these events on the giving of three months'
notice.

Commenting, Brian Marsh OBE, Executive Chairman, said:

"This is a major landmark in the Company's history. We recognise that
we have achieved the job we set out to do over 18 years ago - now the
time is right for a larger investor to take Hyperion forward to the next
stage of its development. We are therefore taking this opportunity to
divest of 80% of our Hyperion shareholding and to use the proceeds to
identify other investments which have the potential to deliver similarly
exceptional returns in the years ahead."

David Howden, Chief Executive and Founder of Hyperion stated:

"B.P. Marsh has been with us from the beginning when we were a five
person insurance broker; 18 years later Hyperion is an international
insurance group, employing 1,400 people in over 60 offices operating
out of 28 countries. On behalf of the whole team at Hyperion, I would
like to thank B.P. Marsh for their ongoing support and we are pleased
they retain a 2.76% shareholding."

As a result of this arrangement, and subject to Completion, the
Group expects to have additional net funds available of approx.
£20m (net of tax and loan funding) which will enable the
cancellation of the £4.325m Directors' Loan Facility (£2.075m drawn
down to date).

Strategy

The B.P. Marsh Board has given the sale of this stake in Hyperion
extensive consideration and the Board is unanimous in its support
for the Company to continue with business as usual, and to reinvest
these proceeds in its existing portfolio and in new ventures within
its existing investment criteria, as has been its philosophy since
1994. The unwavering aim of Management is to work diligently on
increasing the share price through growing the overall net asset
value of the Group by continuing to focus on making and disposing
of investments in the financial services sector, in particular the
International Specialty Insurance Intermediary Market.

The Board intends to instigate a progressive dividend policy and will
be keeping under review going forward, inter alia, the possibility of
making a buyback of the Company's shares.

The Group focuses on minority investment opportunities in financial
services businesses, typically taking an equity stake of between 15%
and 45%. The investment goal remains unchanged; to take minority
positions in businesses with strong management teams and good
growth potential. In addition, the Group aims to support and
develop the companies within its investment portfolio when suitable
opportunities to do so arise. The Company has seen some
interesting developments in its key heartland, the Lloyd's Insurance
broking market, and is confident that its Management team will be
well placed and able to capitalise on the significantly enhanced deal-
flow it has witnessed of late. The Company is currently considering a
number of new investments, both on its own behalf and via
companies within its portfolio, including a specialist Underwriting
Agency writing on behalf of the Lloyd's Market, and a specialist
Insurance Broking Operation.

Directors' Loan Facility

At 31st January 2013, the Group had cash balances of £1.79m and a
Directors' Loan facility of £4.325m. The Board has drawn down
£2.075m of its Directors' Loan in order to ensure that sufficient
funds are available to pursue the various new business
opportunities that it is currently investigating, however it is the
Board's intention to fully repay and cancel the Directors' Loan
facility as soon as the funds are received on completion of the
proposed disposal.

Trading Update

B. P. Marsh is pleased to provide the market with an update on
trading on its other primary investments:
LEBC Holdings Limited ("LEBC")

LEBC Group Limited ("LEBC Group") the trading subsidiary of LEBC,
has announced a significant turnaround in its financial performance,
which sees the national IFA and employee benefits consultancy
secure a year-on-year turnaround in profit before tax of £1.1m
(FY2012 profit of £543,784 versus FY2011 loss of £577,271), on a
turnover of £10.2m, for the year ended 30 September 2012.

The Edinburgh-headquartered firm, which has 13 branches
throughout the United Kingdom, has also reported a positive start to
the New Year, with strong revenue and profit growth.

The Group is also happy to announce that LEBC Group won the
award for Best Retirement Advisor at the Money Marketing
Financial Services Awards 2013. This is a fine vindication of the
service offering provided by LEBC.

The Group can confirm that LEBC (the holding company for LEBC
Group) has completed the acquisition of Sesame Bankhall Group's
remaining 10% stake in LEBC Group, which Sesame has held since
its initial investment in LEBC Group in 2000. LEBC Group is now a
100% subsidiary of LEBC.

Besso Insurance Group Limited ("Besso")

On 1st November 2012 the Group increased its shareholding by
6.71% for a cash consideration of £0.78m. The Group's equity
interest in Besso increased from 30% to 36.71% as a result (with
economic rights over 36.48%).

This further investment was made alongside a consortium of
American investors, who are well-known to Besso's business, who
acquired 5.85% of Besso for a cash consideration of £0.70m.

Subsequent to the above, Besso had a positive 2012 financial year
and is in the final stages of negotiations to complete several value
accretive acquisitions. The Group, having worked alongside Besso's
Management team in reviewing these investments, is of the opinion
that these would be positive additions to Besso.

Summa Insurance Brokerage SL ("Summa")

Despite the economic environment in Spain, Summa grew revenue in
2012 and maintained a satisfactory profit margin, which is in stark
comparison to many other insurance operations in the Spanish
market.

Notwithstanding the above the Group has been working alongside
Summa's Management team to develop their interaction with the
Lloyd's and London Market, and has made various introductions to
augment Summa's service offering to their clients.

The Group has also assisted Summa in the sourcing and recruitment
of a new Chief Financial Officer so as to further improve the
infrastructure for growth within this investment.

The Broucour Group Limited ("Broucour")

By 31st January 2013 Turner Butler Limited, a specialist SME
business sales agency and a subsidiary of Broucour reached £0.5m
revenue in just six months trading since its acquisition for £0.4m on
27th July 2012, over double its budgeted target. This acquisition was
funded by loan financing provided by the Group. As a result of this
performance the first loan repayment of £0.05m was made in March
2013, over two months ahead of schedule.
Full Year Results

The Board expects to report the Group's results for the year ended
31st January 2013, on or around 4th June 2013.

General Meeting

Under the AIM Rules for Companies, the partial disposal of the
Company's Hyperion shareholding is deemed to be a disposal
resulting in a fundamental change of business and is therefore
subject to approval of Shareholders in a general meeting. As part of
the transaction, Brian Marsh, who owns a personal shareholding in
the Company of 59.2 per cent., has provided an Irrevocable
Undertaking that he will be voting in favour of the resolution to
approve the transaction. The Company will be shortly sending a
Circular to all Shareholders which sets out in detail the terms of the
disposal and contains a notice of a general meeting of the Company
at which the consent of Shareholders to the transaction will be
sought. The Circular will also be available on the Company's website
at www.bpmarsh.co.uk.

Enquiries to:

B.P. Marsh & Partners Plc
www.bpmarsh.co.uk
Brian Marsh OBE
+44 (0)20 7233 3112

Nominated Adviser & Broker
Panmure Gordon
Hugh Morgan, Fred Walsh
+44 (0)20 7886 2500

PR Adviser
bpmarsh@redleafpr.com
Redleaf Polhill
+44 (0) 20 7382 4747
Emma Kane

Notes to Editors:

About B.P. Marsh & Partners Plc

B.P. Marsh's current portfolio contains nine companies. More
detailed descriptions of the portfolio can be found at
www.bpmarsh.co.uk.

Since formation over 20 years ago, the Company has assembled a
management team with considerable experience both in the financial
services sector and in managing private equity investments. Many of
the directors have worked with each other in previous roles, and all
have worked with each other for at least four years.

Prior to Brian Marsh's involvement in the Company, he spent many

years in insurance broking and underwriting in Lloyd's as well as
the London and overseas market. He has over 30 years' experience
in building, buying and selling financial services businesses,
particularly in the insurance sector.

Jonathan Newman is a Chartered Management Accountant and is the
Group Director of Finance and has over 15 years' experience in the
financial services industry. Jonathan advises investee companies
through three non-executive board appointments and evaluates new
investment opportunities.

Daniel Topping is a Member of the Chartered Institute of Securities
and Investment (MCSI) and an Associate of the Institute of Chartered
Secretaries and Administrators (ACIS), having graduated from the
University of Durham in 2005. Dan joined B.P. Marsh in February
2007 having started his career at an accountancy firm. In 2011 he
was appointed as a director of B.P. Marsh and currently has a
number of non-executive appointments over four investee
companies and evaluates new investment opportunities.

Camilla Kenyon was appointed as Head of Investor Relations at B.P.
Marsh in February 2009, having four years' prior experience with
the Company. Camilla holds two non-executive appointments, is
Chair of the New Business Committee and is a Member of the
Investor Relations Society.

Natasha Dunbar has over 18 years' experience in the financial
services industry. Having joined the Company in 1994 she was made
managing director in March 2002, subsequently becoming a non-
executive director of the Company in 2008, a position she held for
five years. Natasha was reappointed as a Director in February 2013
and holds non-executive appointments at three of the Group's
investee companies.

END
MSCQDLFLXXFLBBQ
5/24/13 B.P. Marsh &Partners | Final Results | FE InvestEgate
B.P. Marsh &Partners

Final Results
RNS Number : 3634E
B.P. Marsh & Partners PLC
30 May 2012
Date: 30th May 2012

On behalf of: B. P. Marsh & Partners Plc ("BP Marsh", "the Company", "the Group")
Embargoed until: 0700hrs
B. P. Marsh & Partners Plc

Final Results
B. P. Marsh & Partners Plc (AIM: BPM), a niche venture capital provider to early stage financial services
businesses, announces its audited Group final results for the year to 31st January 2012.
The highlights of the results are:
¡ Net asset value up 7.8% to £50.1m, the first time exceeding £50m
(2011: £46.5m)
¡ Net asset value per share of 171p (2011: 159p)
¡ Share price trading at 48.2% discount to Net Asset Value (as at 28th May 2012)
¡ Consolidated profit after tax up 40.3% to £3.6m (2011: £2.6m)
¡ Dividend of 1p per share declared
¡ Annual compound growth rate of 12% achieved
¡ £3.5m of cash currently available for further investments, plus a further £4.325m Directors' loan facility
available; a total of £5.5m excluding commitments to existing investments
I am pleased to present the audited Consolidated Financial Statements of B. P. Marsh & Partners Plc for the
year ended 31st January 2012.
We live and work in a world of seemingly wall-to-wall turmoil. Macro-economic news regularly drowns those
of us who read it or listen to it in a sense of dismay: Europe and North America seem to stagger from one
debt-ridden crisis to another, whilst our own country hovers stubbornly around a state of technical recession.
Financial Services, our particular area of operation, lies at the heart of this storm, it seems, and the media
offers little cheering news from which to take heart.
Against this background, we should be much encouraged by the fact that our small Company continues to
make steady progress. Our very modest debts (which at 31st January 2012 were £1.25m) are owed, not to
any rapacious outside lender, but to our own Directors, who are content enough to expose their own cash to
our Company in this way.
We continue to make a profit from our activities, not a loss; and, our net asset values have again risen, this
year by 7.8% to a total of £50.1m, for the first time exceeding £50m.
Of our portfolio the largest, Hyperion Insurance Group Limited ("Hyperion"), forges ahead with enviable
www.investegate.co.uk/ArticlePrint.aspx?id=201205300700073634E 1/27
momentum. We recently took the opportunity to sell approximately 15% of the Group's holding in Hyperion
at a cash price of 380p per share. The sale proceeds, which amount to £4.5m, will allow the Company to
repay the £1m outstanding Directors' Loan, provide funds for follow-on investment to promote growth and
expansion within the Company's portfolio of investee companies and ensure funds are available for new
opportunities. The Group has been an investor in Hyperion for 17 years and is very much looking forward to
continuing to support management through the Company's remaining, and significant, 16.19% shareholding in
Hyperion.
However, we are not immune to the pressures of the global financial outlook and HQB Partners Limited
("HQB"), the proxy solicitation and corporate governance advisory partnership in which the Group held a
27.72% stake, unfortunately entered into administration just before year-end, on 13th January 2012.
Financial Performance
At 31st January 2012, the net asset value of the Group was £50.1m (2011: £46.5m), after making allowance
for deferred corporation tax, an increase of 7.8%. This equates to a net asset value of 171p per ordinary
share as at 31st January 2012 (2011: 159p).
The Group has therefore achieved an annual compound growth rate of 12.0% after running costs, realisations,
losses and distributions and having made an appropriate allowance for deferred corporation tax since the
Group's establishment in 1990 (excluding £10.1m raised on flotation).
Reflecting investment portfolio movement, including the unrealised increase on revaluation of the portfolio, the
consolidated profit on ordinary activities after tax for the year was £3.6m (2011: profit of £2.6m) an increase
of 40.3%. However, excluding portfolio movement the Group made a pre-tax profit of £0.11m (2011: profit
of £0.15m). The Group aims each year to at least break even on an underlying basis, before taking into
account any portfolio movement.
Deferred Tax
The Consolidated Financial Statements to 31st January 2012 do not reflect the Government's recently
announced reduction in corporation tax from 26% to 24% with effect from 6th April 2012 as this has not yet
been substantively enacted. If this does become substantively enacted, it would reduce deferred tax liabilities
by £0.6m based upon the portfolio valuation at 31st January 2012 and therefore increase overall net asset
value by the same amount.
Shareholders
The Board believes that the Group's prospects remain good, despite the continued bleak outlook for the
global economy. The Directors continue to explore all opportunities for realisations and development within
the portfolio.
Summary of Developments in the Portfolio
During the financial year ended 31st January 2012, the following developments took place within the Group
and its portfolio:
· Acquisition of further 11% of Besso Insurance Group Limited ("Besso")
In April 2011, the Group acquired a further 11.29% shareholding and additional loan stock in Besso for
£1.5m, taking its total equity holding in the group to 34%; £1.25m of this further investment was financed from
the £4.325m Directors' loan facility that was put in place in June 2010.
The transaction saw Michael Wade joining Besso as its new Chairman, taking a 15% stake in place of Union
Hamilton Reinsurance Limited (part of the Wells Fargo corporation).
· HQB Administration
HQB, the proxy solicitation and corporate governance advisory partnership in which the Group held a
27.72% stake, entered into administration on 13th January 2012.
By 31st January 2011, the Group had written off its investment value in HQB from an investment cost of
£35,000 in February 2005. The outstanding loan of £140,000 (at 31st January 2011) was repaid in full prior
to HQB entering administration.
Trading Update:
· US Risk (UK) Limited
Acquisition of James Hampden International Insurance Brokers Limited
US Risk (UK), in which the Group invested in June 2010, acquired the specialist international reinsurance and
insurance broking company James Hampden International Insurance Brokers Ltd, which is headquarted in the
City of London and operates in the Lloyd's and international insurance markets. The transaction also involved
the acquisition of a 75% stake in Abraxas Insurance AG, the Swiss Underwriting Agency.
The acquisition, funded by the Group's original equity investment, is in line with US Risk (UK)'s strategy for
growth and development, and further adds to its capabilities as a specialist insurance intermediary in the
Lloyd's and London Market.
· Besso Insurance Group Limited
Exercise of Call Option
Under the terms of the transaction announced on 1st April 2011 and described above, the Group acquired an
11.29% stake in Besso, increasing the Group's combined holding to 34%. As part of the transaction the
Group entered into a Call Option with Besso, allowing Besso the option to buy-back the equivalent of 4% of
these shares at any point during the following 24 months.
The Call Option was accordingly exercised by Besso on 16th March 2012 in respect of the full 4%. Besso
cancelled these shares upon buy-back with the intention of issuing equivalent shares up to the same number to
an employee incentive scheme. As a result of the Call Option being exercised, and a subsequent issue of the
same amount of shares to management, the Group's overall holding in Besso stands at 30%.
The Group also agreed to provide Besso with a further £578,698 of loan funding in order to facilitate the
exercise of the Call Option. This transaction therefore had no cash impact for the Group.
B.P. Marsh supports Besso's aims of aligning senior management with shareholders by the exercise of the
Option and believes that this will enable Besso to optimise opportunities for strategic growth and
development.
· Hyperion Insurance Group Limited
Disposal of stake in CFC Underwriting Limited ("CFC")
In April 2012 Hyperion reached agreement to sell its majority stake in CFC to a consortium of private
investors and the management team, subject to FSA approval.
Queen's Award for Enterprise 2012
Hyperion has been awarded the Queen's Award for Enterprise in International Trade for the second time.
Hyperion's first Queen's Award was granted in 2007 for outstanding achievement in international trade over a
three year period. At this point Hyperion had 25 offices in 13 countries, and in the three year application
period its overseas earnings increased by more than £8 million. However, in this, the Jubilee year, Hyperion
won the award for continuous achievement over a six year period. Hyperion now has 52 offices in 28
countries, with overseas earnings growth increasing by over 2.5 times, and therefore we believe this award
has been rightly deserved in recognition of Hyperion's consistent ability to grow profitably.
Partial Sale
On the 16th May 2012, the Group sold 1,193,500 shares in Hyperion for a cash consideration of £4.54m to
Murofo Investments S.L. (an existing Hyperion shareholder), representing an IRR of 40.4% on these shares
since they were acquired in November 1994. BP Marsh will retain a 16.19% shareholding in Hyperion,
having reduced its 18.94% stake by 2.75%. The transaction was pro-rata ex-dividend.
Directors' Loan
£1.25m of loans were used to fund the Besso acquisition in March 2011 as set out above. £0.25m was
repaid in February 2012 from working capital, and the remainder will be repaid in full in June 2012 from the
sale of shares in Hyperion. The £4.325m facility will remain available for drawdown for investment
opportunities.
Dividend
The Directors are pleased that the Group has reached the stage in its development where they are able to
recommend the payment of a dividend of 1p per share (£0.3m). The intention of the dividend payment is to
reward shareholders for supporting the Group and, whilst no assurances can be given, the Directors hope to
be in a position to recommend further dividend payments in future years.
Business Strategy
The Group typically invests amounts of up to £2.5m and only takes minority equity positions, normally
acquiring between 15% and 45% of an investee company's total equity. Based on our current portfolio, the
average investment has been held for approximately 9 years. The Group requires its investee companies to
adopt certain minority shareholder protections and appoints a director to its board. The Group's successful
performance track record is based upon a number of factors that include, amongst other things, a robust
investment process, the management's considerable experience of the Financial Services sector and a flexible
approach towards exit-strategies.
At the year end, the Group had £0.7m in cash, plus a further £3.075m Directors' loan facility available, of
which it had committed to provide a further £2.3m of loan funding for its existing investments, leaving £1.5m
available for new opportunities.
Following the receipt of £4.5m from the partial sale of Hyperion, and allowing for the £1.0m repayment of the
Directors' loan and a £0.3m dividend, the Group currently has £3.5m in cash, plus a further £4.325m
Directors' loan facility available. As the Group had made commitments to provide a further £2.3m of funding
for its existing investments, this leaves £5.5m available for new opportunities.
Investment Opportunities
Having realigned the Group's approach to seeking out new investment opportunities in early 2011, using a
more targeted method and building on existing networks, the Group received a strong inflow of opportunities
during the year and believes that this trend will continue.
The New Business Department gave detailed consideration to a number of these; including propositions from
within the insurance intermediary and wealth management sectors. The Board will continue to pursue
opportunities in the best interests of the Group's shareholders.
The Group's investment strategy remains unchanged; to take minority positions in profitable businesses with
strong management teams and good growth potential. The Directors consider that the Group remains unique
in its investment sector and we continue to see a large number of investment opportunities with good
management and business plans that fit with our tried and tested business strategy.
Brian Marsh OBE

30th May 2012
Final Dividend
No dividends were paid for the year (2011: £292,861). The directors recommend a final dividend of £292,861
(1p per share) in respect of the current year, payable on 30th July 2012 to shareholders on the register at the
close of business on 6th July 2012.
Investments
As at 31st January 2012 the Group's equity interests were as follows:
Amberglobe Limited
(www.amberglobe.co.uk)
In March 2008 the Group assisted in establishing Amberglobe, a business sales platform that provides
valuation and negotiation services for the sale of SME businesses in the sub £3m sector.
Date of investment: March 2008
Equity stake: 49.0%
31st January 2012 valuation: £98,000
Besso Insurance Group Limited

(www.besso.co.uk)
In February 1995 the Group assisted a specialist team departing from insurance broker Jardine Lloyd
Thompson Group in establishing Besso Holdings Limited. The company specialises in insurance broking for
the North American wholesale market and changed its name to Besso Insurance Group Limited in June 2011.
Date of investment: February 1995
Equity stake: 34.00%
31st January 2012 valuation: £4,181,000
HQB Partners Limited

In January 2005 the Group made an investment in HQB Partners, a company which provides strategic
transaction advice, proxy solicitation services, voting analysis and investor relations services. HQB entered
into administration in January 2012.
Date of investment: January 2005
31st January 2012 valuation: £0
Hyperion Insurance Group Limited

(www.hyperiongrp.com)
The Group first invested in Hyperion in 1994. Hyperion owns, amongst other things, an insurance broker
specialising in directors' and officers' ("D&O") and professional indemnity ("PI") insurance. A subsidiary of
Hyperion became a registered Lloyd's insurance broker. In 1998 Hyperion set up an insurance managing
general agency specialising in developing D&O and PI business in Europe.
Date of investment: November 1994
Equity: 19.4%, although this could dilute down to 18.3% with the Group retaining an economic
interest of approx. 19.2% post-dilution. (NB: Following the partial disposal of shares the current
equity holding is 16.19%, which could dilute down to 15.63%, although the Group would retain an
economic interest of approx. 16.4%)
LEBC Holdings Limited

(www.lebc-group.com)
In April 2007 the Group invested in LEBC, an Independent Financial Advisory company providing services
to individuals, corporates and partnerships, principally in employee benefits, investment and life product areas.
Date of investment: April 2007
Paterson Squared, LLC

(www.paterson2.com)
Paterson Squared was founded by a group of professionals from the actuarial, capital markets and
reinsurance advisory sectors in conjunction with the Group. The company uses sophisticated modelling
techniques to assess risk, with a view to providing counter-party risk transaction advice.
Date of investment: April 2004
Equity stake: 22.5%
31st January 2012 valuation: £0
Portfolio Design Group International Limited

(www.surrendalink.co.uk)
In March 1994 the Group invested in the Portfolio Design Group, a company which sells with-profits life
endowment policies to large financial institutions. In 2002 the company diversified into investment
management.
Date of investment: March 1994
Equity stake: 20.0%
Randall & Quilter Investment Holdings plc

(www.rqih.com)
Randall & Quilter Investment Holdings is an AIM listed run-off management service provider and acquirer of
solvent insurance companies in run-off. The Group invested in Randall & Quilter in January 2010, the result of
a share exchange with the Group's shareholding in JMD Specialist Insurance Services Group Limited, which
Randall & Quilter have now wholly acquired.
Equity stake: 1.35%
31st January 2012 valuation: £658,000
Summa Insurance Brokerage, S. L.

(www.grupo-summa.com)
In January 2005 the Group provided finance to a Spanish management team with the objective of acquiring
and consolidating regional insurance brokers in Spain.
US Risk (UK) Limited

(www.oxfordinsurancebrokers.co.uk)
In July 2010 the Group completed its investment in US Risk (UK), the parent company of Oxford Insurance
Brokers Limited, a London-based Lloyd's insurance and reinsurance broker.
Date of investment: July 2010
Equity stake: 30%
These investments have been valued in accordance with the accounting policies on Investments set out in note
1 of the Consolidated Financial Statements.
Consolidated Financial Statements
FOR THE YEAR ENDED 31ST JANUARY 2012
Notes 2012 2011

£'000 £'000 £'000 £'000
GAINS ON INVESTMENTS 1
Realised (losses) / gains on disposal of investments
1,12 (20) 350
Impairment of investments and loans 14 (339) (446)
Unrealised gains on investment revaluation 12 4,592 2,971
4,233 2,875
INCOME
Dividends 1 661 599
Income from loans and receivables 1 859 599
Fees receivable 1 594 820
2,114 2,018
OPERATING INCOME 2 6,347 4,893
Operating expenses 2 (1,817) (1,837)
OPERATING PROFIT 4,530 3,056
Financial income 2,4 - 2

Financial expenses 2,3 (104) (28)
Carried interest provision 2,16 32 (7)
Exchange movements 2,8 (51) (10)
(123) (43)
PROFIT ON ORDINARY ACTIVITIES

BEFORE EXCEPTIONAL ITEMS 4,407 3,013
Exceptional item 5,6 (30) -

BEFORE TAXATION 8 4,377 3,013
Taxation 9 (732) (415)

AFTER TAXATION ATTRIBUTABLE TO
EQUITY HOLDERS 20 £3,645 £2,598
Earnings per share - basic and diluted (pence) 10 12.4p 8.9p
The result for the year is wholly attributable to continuing activities.
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
31ST JANUARY 2012
Group Company
Notes 2012 2011 2012 2011

£'000 £'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 14 33 - -

Investments 12 50,624 47,143 39,965 36,320
Loans and receivables 13 5,983 4,403 10,155 10,155
56,621 51,579 50,120 46,475
CURRENT ASSETS
Trade and other receivables 14 2,093 1,672 - -

Cash and cash equivalents 666 515 1 1
TOTAL CURRENT ASSETS 2,759 2,187 1 1
TOTAL ASSETS 59,380 53,766 50,121 46,476
LIABILITIES
NON-CURRENT LIABILITIES
Loans and other payables 15 (1,250) - - -
Carried interest provision 16 (299) (331) - -
Deferred tax liabilities 17 (7,415) (6,683) - -
TOTAL NON-CURRENT
LIABILITIES (8,964) (7,014) - -
CURRENT LIABILITIES
Trade and other payables 18 (295) (276) - -
TOTAL CURRENT LIABILITIES (295) (276) - -
TOTAL LIABILITIES (9,259) (7,290) - -

NET ASSETS £50,121 £46,476 £50,121 £46,476
CAPITAL AND RESERVES -

EQUITY
Called up share capital 19 2,929 2,929 2,929 2,929

Share premium account 20 9,370 9,370 9,370 9,370
Fair value reserve 20 24,656 20,883 37,821 34,176
Reverse acquisition reserve 20 393 393 - -
Retained earnings 20 12,773 12,901 1 1
SHAREHOLDERS' FUNDS -
EQUITY 20 £50,121 £46,476 £50,121 £46,476
The Financial Statements were approved by the Board of Directors and authorised for issue on 29th May 2012
and signed on its behalf by:
B.P. Marsh & J.S. Newman
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes 2012 2011

£'000 £'000
Cash from operating activities

Income from loans to investees 859 599
Dividends 661 599
Fees received from investment activity 594 820
Operating expenses (1,817) (1,837)
Exceptional item - termination payment (30) -
(Increase) / decrease in receivables (95) 4
Increase / (decrease) in payables 20 (93)
Depreciation 11 23 22
Net cash from operating activities 215 114
Net cash used by investing activities

Purchase of property, plant and equipment 11 (4) (6)
Purchase of investments 12 (735) (1,437)
Proceeds from investments 51 18
Net cash used by investing activities (688) (1,425)
Net cash from / (used by) financing activities

Advances of borrowings 15 1,250 -
Net payments of loans to investee companies (515) (827)
Financial income 4 - 2
Financial expenses 3 (104) (28)
Dividends paid 7 - (293)
Net cash from / (used by) financing activities 631 (1,146)
Change in cash and cash equivalents 158 (2,457)
Cash and cash equivalents at beginning of the period 515 2,972

Exchange movement (7)* -*
Cash and cash equivalents at end of period £ 666 £ 515
*The exchange movement as noted in the Consolidated Statement of Comprehensive Income is a loss of £51k (2011: loss of
£10k). The exchange movement in the Consolidated Statement of Cash Flows excludes an exchange loss of £44k (2011:
loss of £10k) relating to the revaluation of a loan denominated in Euros as this is a non-cash movement.
COMPANY STATEMENT OF CASH FLOWS
No Company Statement of Cash Flows has been prepared as there has been no cash flow movement in the
Company during the current period. The only cash flow movement in the previous period related to dividends
received from a subsidiary company, which were then paid to the Company's members. Accordingly the
Company's "cash and cash equivalents" balance as at 31st January 2012 is £1k (2011: £1k).
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
Group Company
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Opening total equity 46,476 44,171 46,476 44,171

Total recognised income and expense for period 3,645 2,598 3,645 2,598
Dividends paid - (293) - (293)
TOTAL EQUITY £50,121 £46,476 £50,121 £46,476
Refer to Note 20 for detailed analysis of the changes in the components of equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of preparation of financial statements
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as adopted for use by the European Union ("IFRS"), and in accordance with the
Companies Act 2006.
The consolidated financial statements have been prepared under the historical cost convention as modified
by the revaluation of certain financial assets and financial liabilities through profit and loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates particularly in relation to investment valuation. It also requires management to
exercise its judgement in the process of applying the Group's accounting policies.
New standards effective during the year
None of the new standards, interpretations or amendments, which are effective for the first time in these
consolidated financial statements, has had a material impact on these consolidated financial statements.
Basis of consolidation
The Group financial statements consolidate the results and net assets of the Company and all of its
subsidiary undertakings.
Business combinations
The results of subsidiary undertakings are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Control exists where the Group has the power
to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
All business combinations are accounted for by using the acquisition accounting method. This involves
recognising identifiable assets and liabilities of the acquired business at fair value. Goodwill represents the
excess of the fair value of the purchase consideration for the interests in subsidiary undertakings over the
fair value to the Group of the net assets and any contingent liabilities acquired. The one exception to the
use of the acquisition accounting method was in 2006 when B.P. Marsh & Partners Plc became the legal
parent company of B.P. Marsh & Company Limited in a share for share exchange transaction. This was
accounted for as a reverse acquisition, such that no goodwill arose, and a merger reserve was created
reflecting the difference between the book value of the shares issued by B.P. Marsh & Partners Plc as
consideration for the acquisition of the share capital of B.P. Marsh & Company Limited. This compliance
with IFRS 3 also represented a departure from the Companies Act.
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group
transactions are eliminated in preparing the consolidated financial statements.
Associates are those entities in which the Group has significant influence, but not control, over the
financial and operatingpolicies. Investments that are held as part of the Group's investment portfolio are
carried in the Consolidated Statement of Financial Position at fair value even though the Group may have
significant influence over those companies. This treatment is permitted by IAS 28 Investment in
Associates ("IAS 28"), which requires investments held by venture capital organisations to be excluded
from its scope where those investments are designated, upon initial recognition, as at fair value through
profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the
profit or loss in the period of the change. The Group has no interests in associates through which it carries
on its business.
Business combinations (continued)
No Statement of Comprehensive Income is prepared for the Company, as permitted by Section 408 of the
Companies Act 2006. The Company made a profit for the year of £3,644,959 (2011: profit of £2,598,106,
prior to a dividend distribution of £292,861).
Investments
All investments are designated as "fair value through profit or loss" assets and are initially recognised at
the fair value of the consideration. They are measured at subsequent reporting dates at fair value.
The Board conducts the valuations of investments. In valuing investments, the Board applies guidelines
issued by the International Private Equity and Venture Capital Valuation ("IPEVCV") Committee. The
following valuation methodologies have been used in reaching the fair value of investments, some of which
are in early stage companies:
a) at cost, unless there has been a significant round of new equity finance in which case the investment
is valued at the price paid by an independent third party. Where subsequent events or changes to
circumstances indicate that an impairment may have occurred, the carrying value is reduced to reflect
the estimated extent of impairment;
b) by reference to underlying funds under management;
c) by applying appropriate multiples to the earnings and revenues of the investee company; or
d) by reference to expected future cash flow from the investment where a realisation or flotation is
imminent.
Both realised and unrealised gains and losses arising from changes in fair value are taken to the
Consolidated Statement of Comprehensive Income for the year. In the Consolidated Statement of
Financial Position the unrealised gains and losses arising from changes in fair value are shown within a
"fair value reserve" separate from retained earnings. Transaction costs on acquisition or disposal of
investments are expensed in the Consolidated Statement of Comprehensive Income.
Income from investments
Income from investments comprises:
a) gross interest from loans, which is taken to the Consolidated Statement of Comprehensive Income on
an accruals basis;
b) dividends from equity investments are recognised in the Consolidated Statement of Comprehensive
Income when the shareholders rights to receive payment have been established; and
c) advisory fees from management services provided to investee companies, which are recognised on
an accruals basis in accordance with the substance of the relevant investment advisory agreement.
Carried interest provision

This represents the amount payable to a director in the event of a particular investment being sold and is
calculated on the fair value of that investment at the end of each reporting period.
Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation. Depreciation is provided at rates
calculated to write off the property, plant and equipment cost less their estimated residual value, over their
expected useful lives on the following bases:
Furniture & equipment - 5 years
Leasehold fixtures and fittings - over the life of the lease
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies at the reporting period are translated at
the exchange rate ruling at the reporting period.
Transactions in foreign currencies are translated into sterling at the foreign exchange rate ruling at the
date of the transaction.
Exchange gains and losses are recognised in the Consolidated Statement of Comprehensive Income.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently
payable is based on the estimated taxable profit for the year. Taxable profit differs from net profit as
reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or
substantially enacted by the date of the Consolidated Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and of liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and it is accounted for using the liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary differences
arise from goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each date of the Consolidated Statement of
Financial Position and reduced to the extent that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realised. Deferred tax is charged or credited to the Consolidated Statement of
Comprehensive Income, except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current assets and liabilities on a net basis.
Pension costs
The Group operates a defined contribution scheme for some of its employees. The contributions payable
to the scheme during the period are charged to the Consolidated Statement of Comprehensive Income.
Operating leases
Rentals under operating leases are charged on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-
line basis over the period until the date the rent is expected to be adjusted to the prevailing market rate.
Financial assets and liabilities

Financial instruments are recognised in the Consolidated Statement of Financial Position when the Group
becomes party to the contractual provisions of the instrument. De-recognition occurs when rights to cash
flows from a financial asset expire, or when a liability is extinguished.
Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12
months after the reporting period which are classified as non-current assets.
Loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue
costs associated with the borrowings. After initial recognition, these are subsequently measured at
amortised cost using the effective interest method, which is the rate that exactly discounts the estimated
future cash flows through the expected life of the liabilities. Amortised cost is calculated by taking into
account any issue costs and any discount or premium on settlement.
Trade and other receivables

Trade and other receivables in the Consolidated Statement of Financial Position are initially measured at
original invoice amount and subsequently measured after deducting any provision for impairment.
Cash and cash equivalents

Cash and cash equivalents in the Consolidated Statement of Financial Position comprise cash at bank and
in hand and short-term deposits with an original maturity of three months or less. For the purposes of the
Consolidated Statement of Cash Flows, cash and cash equivalents comprise cash and short-term deposits
as defined above and other short-term highly liquid investments that are readily convertible into cash and
are subject to insignificant risk of changes in value, net of bank overdrafts.
Trade and other payables

Trade and other payables are stated based on the amounts which are considered to be payable in respect
of goods or services received up to the date of the Consolidated Statement of Financial Position.
International Financial Reporting Standards in issue but not yet effective

At the date of authorisation of these consolidated financial statements, the International Accounting
Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC")
have issued the following standards, which are effective for annual accounting periods beginning on or
after the stated effective date.
Effective for periods
beginning on or after
IAS 12 - Limited Scope Amendment

(Recovery of Underlying Assets) 1st January 2012
IFRS 7 - Financial Instruments: Disclosures
(Amendment) 1st July 2011
IAS 1 - Presentation of Items of Other Comprehensive Income

(Amendment) 1st January 2012
IFRS 10 - Consolidated Financial Statements 1st January 2013

IFRS 13 - Fair Value Measurement 1st January 2013
IFRS 9 - Financial Instruments 1st January 2015
The Group is currently assessing the impact of IFRS 13 and IFRS 9. All other standards and
interpretations are not expected to have a material impact on the consolidated financial statements.
2. SEGMENTAL REPORTING
The Group operates in one business segment, provision of consultancy services to as well as making and
trading investments in financial services businesses.
The Group identifies its reportable operating segments based on the geographical location in which each
of its investments is incorporated and primarily operates. For management purposes, the Group is
organised and reports its performance by two geographic segments: UK & Channel Islands and Non-UK
& Channel Islands.
If material to the Group overall (where the segment revenues, reported profit or loss or combined assets
exceed the quantitative thresholds prescribed by IFRS 8 Operating Segments ("IFRS 8")), the segment
information is reported separately.
The Group allocates revenues, expenses, assets and liabilities to the operating segment where directly
attributable to that segment. All indirect items are apportioned based on the percentage proportion of
revenue that the operating segment contributes to the total Group revenue (excluding any unrealised gains
and losses on the Group's non-current investments).
Each reportable segment derives its revenues from three main sources. These are described in further
detail in Note 1 under 'Income from investments'.
All reportable segments derive their revenues entirely from external clients and there are no inter-
segment sales.
Geographic segment Geographic segment Group

1: 2:
UK & Channel Islands Non-UK & Channel
Islands
2012 2011 2012 2011 2012 2011

£'000 £'000 £'000 £'000 £'000 £'000
Operating income / (loss) 6,044 5,524 303 (631) 6,347 4,893

Operating expenses (1,307) (1,353) (510) (484) (1,817) (1,837)
Segment operating profit / (loss) 4,737 4,171 (207) (1,115) 4,530 3,056
Financial income - 2 - - - 2
Financial expenses (75) (21) (29) (7) (104) (28)
Carried interest provision 32 (7) - - 32 (7)
Exchange movements (8) - (43) (10) (51) (10)
Exceptional items (30) - - - (30) -
Profit / (loss) before tax 4,656 4,145 (279) (1,132) 4,377 (3,013)
Income tax (805) (732) 73 317 (732) (415)
Profit / (loss) for the year £ 3,851 £ 3,413 £ £ (815) £ £ 2,598
(206) 3,645
2. SEGMENTAL REPORTING (continued)
Geographic segment Geographic Group

1: segment 2:
UK & Channel Islands Non-UK & Channel
Islands
2012 2011 2012 2011 2012 2011
£'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment 13 29 1 4 14 33
Investments 45,717 41,207 4,907 5,936 50,624 47,143
Loans and receivables 4,833 2,952 1,150 1,451 5,983 4,403
50,563 44,188 6,058 7,391 56,621 51,579
Current assets
Trade and other receivables 1,404 1,361 689 311 2,093 1,672
Cash and cash equivalents 666 515 - - 666 515
Deferred tax assets - - 50 326 50 326
2,070 1,876 739 637 2,809 2,513
Total assets 52,633 46,064 6,797 8,028 59,430 54,092

Loans and other payables (1,250) - - - (1,250) -
Carried interest provision (299) (331) - - (299) (331)
Deferred tax liabilities (7,465) (7,009) - - (7,465) (7,009)
(9,014) (7,340) - - (9,014) (7,340)
Current liabilities
Trade and other payables (295) (276) - - (295) (276)
Total liabilities (9,309) (7,616) - - (9,309) (7,616)
Net assets £ 43,324 £38,448 £ 6,797 £8,028 £ 50,121 £46,476
Additions to property, plant and 4 6 - - 4 6

equipment
Depreciation of property, plant and 21 19 2 3 23 22

equipment
Impairment of investments and 239 446 100 - 339 446

loans
3. FINANCIAL EXPENSES 2012 2011

£'000 £'000
Other interest £ 104 £ 28
4. FINANCIAL INCOME 2012 2011
£'000 £'000
Bank interest - 2
Other interest - -
£ - £ 2
5. STAFF COSTS
The average number of employees, including all directors (executive and non-executive), employed by the
Group during the year was 16 (2011: 16). All remuneration was paid by B. P. Marsh & Company
Limited.
The related staff costs were: 2012 2011

£'000 £'000
Wages and salaries 1,055 1,021
Social security costs 125 130
Pension costs 37 38
£1,217 £1,189
In addition, staff were paid £Nil (2011: £60,000) out of the B. P. Marsh Employee Benefit Trust in the
year (see Note 6 below). This cost was not reflected in the Consolidated Statement of Comprehensive
Income in the prior year as it was funded through prior year contributions.
Included within the wages and salaries total above was a one-off compensation payment of £30,000 made
to a director (see Note 6 below) who left the Group during the year. This has been included in the
Consolidated Statement of Comprehensive Income as an exceptional item.
6. DIRECTORS' EMOLUMENTS
2012 2011
The aggregate emoluments of the directors were: £'000 £'000
Management services - remuneration 794 758
Fees 36 16
Pension contributions - remuneration 24 21
£854 £ 795
In addition to the above, Mr S. S. Clarke has an entitlement to a gain based on a carried interest, as
outlined in Note 16.
Included within the management services total above was a one-off compensation payment of £30,000
made to a director who left the Group during the year. This has been included in the Consolidated
Statement of Comprehensive Income as an exceptional item.
2012 2011
£'000 £'000
Highest paid director
Emoluments 191 95
Long term incentive payments - 200
Pension contribution - 9
£ 191 £ 304
The highest paid director disclosure for the prior year includes a payment of £60,000 out of the B. P.
Marsh Employee Benefit Trust. This cost was not reflected in the Consolidated Statement of
Comprehensive Income in the prior year as it was funded through prior year contributions.
The Company contributes into its defined contribution pension scheme on behalf of certain employees and
directors. Contributions payable are charged to the Consolidated Statement of Comprehensive Income in
the period to which they relate.
During the period, 4 directors (2011: 2) accrued benefits under the defined contribution pension scheme.
7. DIVIDENDS 2012 2011

£'000 £'000
Ordinary dividends
Final dividend paid:

1 pence each on 29,286,143 Ordinary shares - 293
£ £ 293
-
8. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

2012 2011
£'000 £'000
The profit for the period is arrived at after charging:
Depreciation of owned tangible fixed assets 23 22
Auditors remuneration :-
Audit fees for the Company 21 23
Other services:
-Audit of subsidiaries' accounts 7 11
-Taxation 10 8
-Other advisory 30 11
Exchange loss 51 10
Operating lease rentals of land and buildings 112 115
9. TAXATION 2012 2011

£'000 £'000
The charge for tax comprises:
UK corporation tax charge for the year - -

Deferred tax charge for the year (Note 17) 732 415
£ 732 £ 415
Factors affecting the charge for the year

Profit on ordinary activities before tax 4,377 3,013
Tax at 26.32% on profit on ordinary activities (2011: 28%) 1,152 844

Effects of:
Non taxable net unrealised gains (1,217) (830)
Capital losses on disposal of investments 5 -
Other effects:
Management expenses utilised 214 141
Non-taxable income (dividends received) (174) (168)
Corporate tax charge for the year £ - £ -
There are no factors which may affect future tax charges except as set out in Note 17.
10. EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE

EQUITY SHAREHOLDERS
2012 2011
£'000 £'000
Earnings
Earnings for the purpose of basic and diluted earnings per share
being net profit attributable to equity shareholders 3,645 2,598
Earnings per share - basic and diluted 12.4p 8.9p
Number of shares Number Number

Weighted average number of ordinary shares for the purposes of
basic earnings per share 29,286,143 29,286,143
Number of dilutive shares under option Nil Nil

dilutive earnings per share
29,286,143 29,286,143
11. PROPERTY, PLANT AND EQUIPMENT Leasehold

Furniture & Fixtures &
Equipment Fittings Total
£'000 £'000 £'000
Group
Cost
At 1st February 2010 57 51 108
Additions 6 - 6
Disposals - - -
At 31st January 2011 63 51 114

Additions 4 - 4
Disposals - - -
At 31st January 2012 67 51 118
Depreciation
Eliminated on disposal - - -
Charge for the year 6 16 22
At 31st January 2011 44 37 81

Eliminated on disposal - - -
Charge for the year 9 14 23
At 31st January 2012 53 51 104
Net book value

At 31st January 2012 £ 14 £ - £ 14
At 31st January 2011 £ 19 £ 14 £ 33
At 31st January 2010 £ 19 £ 30 £ 49
12. NON-CURRENT INVESTMENTS
Group Shares in
investee
companies
Total
£'000
At valuation
At 1st February 2010 42,745
Additions 1,437
Disposals (10)
Provisions -
Unrealised gains in this period 2,971
At 31st January 2011 £47,143

Additions 735
Disposals (1,846)
Provisions -
At 31st January 2012 £50,624
At cost
Additions 1,437
Disposals (10)
Provisions -
At 31st January 2011 £19,375
Additions 735
Disposals (1,846)
Provisions -
At 31st January 2012 £18,264
The principal addition in the year relates to the acquisition on 31st March 2011 of a further 11.29%
shareholding in Besso Insurance Group Limited (formerly known as Besso Holdings Limited) for
£735,000, with a further consideration of £300,000 payable under certain events (Note 23).
The principal disposal in the year relates to the redemption on 31st March 2011 of the Group's £1,775,000
preferred shares (at par) in Besso Insurance Group Limited. The subsequent subscription for £2,540,000
of 14% loan stock on the same date from Besso Insurance Group Limited is included within loans and
receivables under non-current assets.
On 13th January 2012 HQB Partners Limited ("HQB"), an associated company, was placed into
administration. As at 31st January 2012 the Group had invested a total of £175,000 in HQB (£35,000
equity at cost which was held at a nil fair value and £140,000 loan financing which was repaid in full
during the year).
12. NON-CURRENT INVESTMENTS (continued)
Group (continued)
The unquoted investee companies, which are registered in England except Summa Insurance Brokerage
S. L. (Spain), Preferred Asset Management Limited (Jersey), Close Horizons Limited (Isle of Man) and
Paterson Squared, LLC (USA), are as follows:
% holding Date Aggregate Post tax
of share information capital and profit/(loss)
Name of company capital available to reserves for the year Principal activity
£ £
Amberglobe Limited 49.00 30.04.11 (738,940) (88,008) Business sales platform
Besso Insurance Group 34.02 31.12.11 7,037,589 (1,776,321) Investment holding

Limited company
HQB Partners Limited 27.72 31.12.10 (42,855) (164,777) Investor relations

consultants
Hyperion Insurance 19.36 30.09.11 47,176,000 7,539,000 Insurance holding
Group Limited company
LEBC Holdings Limited 21.94 30.09.11 220,503 (403,504) Independent financial

advisor company
Portfolio Design Group 20.00 31.12.11 6,881,966 (460,272) Fund managers of traded
International Limited endowment policies
Morex Commercial Limited 20.00 31.12.11 402,668 (89,640) Trading in secondary life
policies
Preferred Asset 20.00 30.09.11 228,907 98,790 Fund management

Management Limited company
Close Horizons Limited 20.00 31.12.11 1,288,961 97,589 Investment holding
company
Paterson Squared, LLC 22.50 31.12.10 364,411 279,575 Independent reinsurance
transaction consultants
Summa Insurance 48.625 31.12.10 9,105,823 409,057 Consolidator of regional

Brokerage, S. L. insurance brokers
U.S. Risk (UK) Limited 30.00 31.12.11 2,697,273 (110,157) Holding company for
insurance intermediaries
In addition, as a result of the disposal of the Group's interest in JMD Specialist Insurance Services Group
Limited in the year to 31st January 2010, the Group acquired an investment of £698,750 in respect of
650,000 ordinary shares in Randall & Quilter Investment Holdings Plc ("R&Q"). In June 2010 the Group
acquired 40,000 additional ordinary shares in R&Q and in September 2010, as a result of a 91 for 94 share
capital consolidation, the number of ordinary shares held by the Group reduced by 22,022 to 667,978.
During the year R&Q made two 'return of value' distributions to shareholders through the issue and
subsequent cancellation of new shares. The Group elected to receive these distributions (£29,725 in June
2011 and £21,375 in October 2011) as 'capital' receipts rather than the dividend (income) alternative. The
Group has treated these distributions as disposal proceeds and reduced the cost base of this investment
accordingly, resulting in a £19,839 realised loss on disposal of investment which is reflected in the
Consolidated Statement of Comprehensive Income for the year. As at 31st January 2012 the Group held
1.35% of the share capital of R&Q. R&Q is an AIM listed company.
The aggregate capital and reserves and profit / (loss) for the year shown above are extracted from the
relevant local GAAP accounts of the investee companies except for those of Hyperion Insurance Group
Limited which are prepared under IFRS.
Under UK GAAP the HQB Partners Limited accounts have included the Group's 27.72% interest as a
long-term creditor. As this is in reality an equity investment, the aggregate capital and reserves shown
have therefore been adjusted to include this as equity and the profit has been adjusted by the dividend paid
out.
Shares in
Company group
undertakings
£'000
At valuation
Additions -
At 31st January 2011 £ 36,320

Additions -
At 31st January 2012 £ 39,965
At cost
Additions -
At 31st January 2011 £ 2,143

Additions -
At 31st January 2012 £ 2,143
Shares in group undertakings

All group undertakings are registered in England and Wales. The details and results of group
undertakings, which are extracted from the UK GAAP accounts of these companies, are as follows:
Aggregate Profit/(loss)
% capital and for the
Holding reserves at year to
of share 31st January 31st January
Name of company Capital 2012 2012 Principal activity
£ £
B.P. Marsh & 100 47,380,300 (363,509) Consulting services
Company Limited and investment
holding company
Marsh Insurance 100 10,751,463 116,462 Investment

Holdings Limited holding company
B.P. Marsh & Co. Trustee 100 1,000 - Dormant

Company Limited
Marsh Development 100 1 - Dormant

Capital Limited
13. LOANS AND RECEIVABLES - Group Company
NON-CURRENT
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Loans to investee companies (Note 25)
5,983 4,403 - -
Amounts due from subsidiary
undertakings - - 10,155 10,155
£ 5,983 £ 4,403 £ 10,155 £ 10,155

See Note 25 for terms of the loans.
14. TRADE AND OTHER Group Company

RECEIVABLES - CURRENT
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Trade receivables 388 221 - -
Less provision for impairment of
receivables (123) (68) - -
265 153 - -
Loans to investee companies (Note 1,415 1,089 - -
25)
Other receivables 7 6 - -
Prepayments and accrued income 406 424 - -
£ 2,093 £ 1,672 £ - £ -
Included within trade receivables is £244,952 (2011: £153,057) owed by the Group's participating interests.
Trade receivables are provided for based on estimated irrecoverable amounts from the fees and interest
charged to investee companies, determined by the Group's management based on prior experience and
their assessment of the current economic environment.
Movement in the allowance for doubtful debts:

Group Company
2012 2011 2012 2011

£'000 £'000 £'000 £'000
Balance at 1st February 68 20 - -

Increase in allowance recognised in the
Statement of Comprehensive Income
55 48 - -
Balance at 31st January £ 123 £ 68 £ - £ -
In determining the recoverability of a trade receivable, the Group considers any change in the credit
quality of the trade receivable from the date credit was initially granted up to the reporting date.
The Group's net trade receivable balance includes debtors with a carrying amount of £263,552 (2011:
£153,580) which are past due at the reporting date for which the Group has not provided as there has not
been a significant change in credit quality and the amounts are still considered recoverable. The Group
does not hold any collateral over these balances.
Ageing of past due but not impaired:

Group Company
2012 2011 2012 2011

£'000 £'000 £'000 £'000
0 - 30 days 63 52 - -
31 - 60 days 65 68 - -
61 - 90 days 12 17 - -
More than 90 days 123 16 - -
£ 263 £ 153 £ - £ -
£339,000 (2011: £446,000) has been provided against loans to investee companies in the year. The total
provision against loans relating to Fixed Asset Investments therefore stands at £785,000 (2011: £446,000).
See Note 25 for terms of the loans and Note 24 for further credit risk information.
15. LOANS AND OTHER PAYABLES
During the year, the Group utilised £1,250,000 of a loan facility totalling £4,325,000, which certain
directors agreed to provide to the Group during the year to 31st January 2011 (Note 25). This draw down
was used to finance the Besso Insurance Group Limited related transaction as outlined in Note 12 above.
The loan facility is secured on the assets of the Company, accrues interest at a rate of UK Base Rate +
4% (subject to a minimum of 6.5%), and is repayable in full by 9th June 2013. As at 31st January 2012
£1,250,000 of this facility remained drawn down (2011: £Nil).
Interest on this loan facility of £103,524 (2011: £28,083) was charged to the Consolidated Statement of
Comprehensive Income for the current year (Note 3).
16. CARRIED INTEREST Group Company

PROVISION
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Carried interest provision 299 331 - -
£ 299 £ 331 £ - £ -
This carried interest provision represents S. S. Clarke's entitlement to a maximum of 20% of any gain,
after deducting expenses and following the repayment of all loans, redemption of all preference shares,
loan stock and equivalent finance provided by the Company, on the sale of certain agreed investments of
the Company and its subsidiaries.
No amounts were paid under this contract during the year (2011: £Nil).
17. DEFERRED TAX LIABILITIES - Group Company

NON- CURRENT
£'000 £'000
At 1st February 2010 6,268 -
Charged to Statement of
Comprehensive Income 415 -
At 31st January 2011 £ 6,683 £ -
At 1st February 2011 6,683 -

Charged to Statement of
Comprehensive Income 732 -
At 31st January 2012 £ 7,415 £ -
The directors estimate that, if the Group were to dispose of all its investments at the amount stated in the
Consolidated Statement of Financial Position, £7,415,000 (2011: £6,683,000) of tax on capital gains would
become payable by the Group at a corporation tax rate of 26% (2011: 27%).
The Government recently announced a reduction in the corporation tax rate from 26% to 24% with effect
from 6 April 2012. As this was not substantively enacted at the year end, this rate of 24% has not been
used in calculating the deferred tax liabilities arising from the unrealised gains on the revaluation of the
Group's investments. This rate is expected to be used in next year's consolidated financial statements once
substantively enacted.
If the lower rate of 24% had been used in these consolidated financial statements, the deferred tax
liabilities would have been reduced from the current £7,415,000 to £6,845,000 resulting in an increase in
net assets of £570,000.
18. TRADE AND OTHER PAYABLES Group Company

- CURRENT
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Trade payables 37 37 - -
Other taxation & social security costs 45 17 - -
Accruals and deferred income 213 222 - -
£ 295 £ 276 £ - £ -
19. CALLED UP SHARE CAPITAL 2012 2011

£'000 £'000
Allotted, called up and fully paid
29,286,143 Ordinary shares of 10p each (2011: 29,286,143) 2,929 2,929
£ 2,929 £ 2,929
20. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group Share Reverse

Share premium Fair value acquisition Retained
capital account reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1st
February 2,929 9,370 18,057 393 13,422 44,171
2010
Profit for
the year - - 2,826 - (228) 2,598
Dividends
Paid - - - - (293) (293)
At 31st
January £2,929 £9,370 £20,883 £ 393 £12,901 £46,476
2011
At 1st
February 2,929 9,370 20,883 393 12,901 46,476
2011
Profit for
the year - - 3,773 - (128) 3,645
At 31st
January £2,929 £9,370 £24,656 £ 393 £ 12,773 £50,121
2012
20. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (continued)
Company Share
Share premium Fair value Retained
capital account reserve earnings Total
£'000 £'000 £'000 £'000 £'000
At 1st February 2010 2,929 9,370 31,871 1 44,171

Profit for the year - - 2,305 293 2,598
Dividends paid - - - (293) (293)
At 31st January 2011 £2,929 £9,370 £34,176 £ 1 £46,476
At 1st February 2011 2,929 9,370 34,176 1 46,476
Profit for the year - - 3,645 - 3,645
At 31st January 2012 £2,929 £9,370 £37,821 £ 1 £50,121
21. OPERATING LEASE COMMITMENTS
The Group and Company was committed to making the following future aggregate minimum lease
payments under non‑cancellable operating leases:
2012 2011
Land and Land and
buildings buildings
£'000 £'000
Earlier than one year £ 84 £ 119

Between two and five years £ 329 £ -
On 26th December 2011 the Group entered into a new five year lease on its current office premises.
22. LOAN AND EQUITY COMMITMENTS
On 10th March 2008 the Group entered into an agreement to provide a loan facility of £630,000 to
Amberglobe Limited, an investee company. An additional loan facility of £65,000 was agreed on 30th
November 2009 increasing the total facility to £695,000. As at 31st January 2012 £685,000 of this facility
had been drawn down.
On 1st April 2009 the Group entered into an agreement to provide a loan facility of £400,000 to LEBC
Group Limited ("LEBC"), an investee company. On 27th January 2012 the Group received notice to
cancel this loan facility. As at 31st January 2012 no amounts had been drawn down and following full
settlement of the Commitment Fee due for the period to the end of the agreement (1st April 2012) on 3rd
February 2012, the agreement was terminated.
On 22nd July 2010 the Group entered into an agreement to provide a loan facility of £1,950,000 to US
Risk (UK) Limited, an investee company. As at 31st January 2012 none of this facility had been drawn
down.
23. CONTINGENT LIABILITIES
On 31st March 2011 the Group entered into a Sale and Purchase Agreement with Union Hamilton
Reinsurance Limited ("UHRL") to acquire a further 11.29% shareholding in Besso Insurance Group
Limited ("Besso") for £735,000 (as outlined in Note 12). Under the terms of the agreement, if the Group
decided to sell all or a proportion of the shares acquired on 31st March 2011 to another party, or where a
trigger event was to occur (being the sale of Besso to a specified third party), within an 18 month period
from 31st March 2011, the Group would become liable to pay UHRL the cash element of any additional
consideration receivable for the shares in excess of the amount originally paid by the Group, capped at
£300,000. This liability will expire on 30th September 2012.
The Group has entered into long-term incentive arrangements with certain employees and directors.
Provided they remain in employment with the Group as at specified dates in the future, the Group has
agreed to pay bonuses totalling £325,000 together with the Employers' National Insurance due thereon.
£250,000 and £75,000 are due to be paid on 1st October 2012 and 1st October 2013 respectively. No
amount has been included in these financial statements as the performance conditions relating to these
incentives had not been met at the year end.
24. FINANCIAL INSTRUMENTS
The Group's financial instruments comprise loans to participating interests, cash and liquid resources and
various other items, such as trade debtors, trade creditors, other debtors and creditors and loans. These
arise directly from the Group's operations.
The Group has not entered into any derivatives transactions.
It is, and has been throughout the period under review, the Group's policy that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group's financial instruments are price risk, credit risk, liquidity risk,
interest rate cash flow risk and currency risk. The Board reviews and agrees policies for managing each
of these risks and they are summarised in the Group Report of the Directors under "Financial Risk
Management".
Interest rate profile

The Group has cash balances of £666,000 (2011: £515,000), which are part of the financing arrangements
of the Group. The cash balances comprise bank current accounts and deposits placed at investment rates
of interest, which ranged up to 0.1% p.a. in the period (2011: deposit rates of interest ranged between
0.1% p.a. and 0.3% p.a.). During the period all cash balances were held in immediate access accounts
(2011: maturity periods ranged between immediate access and 1 month).
Currency hedging
During the period, the Group did not engage in any form of currency hedging transaction (2011: None).
Financial liabilities
The Company had borrowings amounting to £1,250,000 as at 31st January 2012 (2011: None). Please
refer to Note 15 for further details.
Fair values
The Group has adopted the amendment to IFRS 7 for financial instruments which are measured at fair
value at the reporting date. This requires disclosure of fair value measurements by level of the following
fair value measurement hierarchy:
· Level 1: Quoted prices unadjusted in active markets for identical assets or liabilities;
· Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, observed either directly as prices or indirectly from prices; and
· Level 3: Inputs for the asset or liability that are not based on observable market data.
The following table presents the Group's assets and liabilities that are measured at fair value at 31st
January 2012:
Level 1 Level 2 Level 3 Total

£'000 £'000 £'000 £'000
Assets
Investments designated as
"fair value through profit or
loss" assets 658 - 49,966 50,624
£658 - £49,966 £50,624
The Group's assets and liabilities that are measured at fair value at 31st January 2011 are presented in the
following table:
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Investments designated as
"fair value through profit or
loss" assets 610 - 46,533 47,143
£610 - £46,533 £47,143
25. RELATED PARTY DISCLOSURES
The following loans owed by the associated companies of the Company and its subsidiaries were
outstanding at the year end:
2012 2011
£ £
Amberglobe Ltd 685,000 670,000

Besso Holdings Ltd 2,940,000 400,000
HQB Partners Ltd - 140,000
Hyperion Insurance Group Ltd 2,846,642 3,277,142
Paterson Squared, LLC 100,000 100,000
€ €
Summa Insurance Brokerage S. L. 1,942,678 1,577,990
The loans are typically secured on the assets of the investee companies and an appropriate interest rate is
charged based upon the risk profile of that company.
During the year, the Group utilised part of an agreed £4,325,000 loan facility with the directors, or other
related parties (the "Lenders"), including Mr B. P. Marsh (£425,000 of a total £3,500,000 facility drawn
down), Ms J. K. N. Dunbar (£500,000 drawn down in full), Mr P. J. Mortlock (£250,000 drawn down in
full) and Mrs M. Newman (£75,000 drawn down in full) which is secured on the assets of the Company.
On 1st November 2010 the Group and the Lenders entered into a Deed of Variation to the original Loan
Agreement dated 9th June 2010 whereby Brian Marsh Enterprises Limited became the new lender of the
£3,500,000 proportion of the loan facility previously provided by Mr B. P. Marsh (as noted above). Mr B.
P. Marsh, the Chairman and majority shareholder of the Company is also the Chairman and majority
shareholder of Brian Marsh Enterprises Limited. Ms J. K. N. Dunbar (a director and shareholder of the
Company) and Ms C. S. Kenyon (a director of the Company) are also directors and minority shareholders
of Brian Marsh Enterprises Limited.
The loan accrues interest at a rate of UK Base Rate + 4%, subject to a minimum of 6.5%, and is
repayable in full by 9th June 2013. Interest is payable on a quarterly basis. This rolling facility bears a
charge of 1% p.a. on any undrawn amount. As at 31st January 2012 £1,250,000 of this facility had been
drawn down (2011: None).
Income receivable, consisting of consultancy fees and interest on loans credited to the Consolidated
Statement of Comprehensive Income in respect of the associated companies of the Company and its
subsidiaries for the year were as follows:
2012 2011
£ £
Amberglobe Limited 46,668 58,963

Besso Insurance Group Limited 511,199 184,676
HQB Partners Limited 7,575 28,826
Hyperion Insurance Group Limited 366,618 490,591
LEBC Group Limited 98,910 80,177
Oakbridge Insurance Services, LLC - 52,250
Paterson Squared, LLC 7,392 28,256
Portfolio Design Group International Limited 36,000 36,000
Summa Insurance Brokerage S. L. 119,545 391,510
U.S. Risk (UK) Limited and related entities 208,508 28,756
In addition, the Group made management charges of £35,000 (2011: £39,000) to Marsh Christian Trust.
Mr B. P. Marsh, the Chairman and majority shareholder of the Company, is also the Trustee and Settlor
of Marsh Christian Trust.
The Group also made management charges of £15,000 (2011: £Nil) to Brian Marsh Enterprises Limited.
S. S. Clarke is entitled to a maximum of 20% of any gain, after deducting expenses and following the
repayment of all loans, redemption of all preference shares, loan stock and equivalent finance provided by
the Company, on the sale of certain agreed investments of the Company and its subsidiaries. The carried
interest provided for at the year end was £299,000 (2011: £331,000).
All the above transactions were conducted on an arms length basis.
Of the total dividend payments in the prior year of £292,861, £187,334 was paid to the directors and/or
parties related to them (2012: £Nil).
26. POST BALANCE SHEET EVENTS
On 24th February 2012 the Group repaid £250,000 of the £1,250,000 directors' loan outstanding as at 31st
January 2012. Following the repayment, the balance of the directors' loan stood at £1,000,000 from the
total available facility of £4,325,000. On 16th May 2012 the Group gave notice to repay the outstanding
loan on 18th June 2012.
On 16th March 2012 the Group made a partial disposal of 4.02% of its total 34.02% equity interest in
Besso Insurance Group Limited ("Besso") for consideration of £278,698. The partial disposal was made
from an 11.29% equity interest in Besso originally acquired on 31st March 2011 by B. P. Marsh &
Company Limited, a wholly owned subsidiary of the Company, which at the time increased the Group's
overall holding from 22.73% to 34.02%. The 4.02% disposal represented the proportion of shares which
were available for buy-back by Besso following the exercise of a Call Option agreement (entered into on
26th May 2011) for subsequent issue to management under a share incentive scheme. As a result of the
Call Option being exercised, the Group's overall holding in Besso currently stands at 30%.
On 19th March 2012, in order to facilitate both the exercise of the Call Option above and the
upfront payment of a three year loan arrangement fee to the Group totalling £300,000, the Group agreed
to provide £578,698 of further loan funding to Besso (in addition to the £400,000 loan facility already
drawn down as at 31st January 2012), bringing the total amount of loans outstanding to date to £978,698,
excluding £2,540,000 of loan notes. Both the partial disposal and the provision of further loan funding had
no cash impact for the Group.
On 5th April 2012 the Group entered into a Monitoring Agreement with U.S. Risk Insurance Group, Inc.
(the USA-domiciled parent company of U.S. Risk (UK) Limited ("U.S. Risk"), an associated company).
Under the agreement, the Group will assist in providing certain services to U.S. Risk Insurance Group,
Inc. including review, oversight and audit of certain aspects of the day to day operations of U.S. Risk and
its subsidiaries, in return for an annual "Monitoring Services Fee" equivalent to the Bank of England base
rate plus 4% (subject to a minimum of 11% per annum) of £1,396,417. This fee arrangement replaces the
Group's entitlement to a preference dividend of the equivalent amount (effective from 1st January 2011)
as set out in the original agreements between the Group and U.S. Risk entered into in July 2010.
On 11th April 2012 Hyperion Insurance Group Limited ("Hyperion"), in which the Group had a 19.4%
equity interest as at 31st January 2012, announced that it had reached agreement (subject to FSA
approval) to sell its majority stake in CFC Underwriting Ltd ("CFC") to a consortium of private investors
and the management team. The net proceeds expected from the sale are £3.5m higher than the net value
of CFC included within the Group's 31st January 2011 valuation of Hyperion. This has resulted in the
Group's proportionate value of Hyperion increasing by £0.7m at 31st January 2012 as a result.
On 18th April 2012, the Group subscribed to 126,833 2p voting only shares in Besso for consideration of
£2,537. The purpose of this subscription was for the Group, as a founder shareholder, to maintain its 30%
voting rights in Besso.
On 17th May 2012 the Group made a disposal of 2.75% of its total 18.94% equity interest in Hyperion
Insurance Group Limited ("Hyperion"). 1,193,500 shares (from a total holding of 8,222,900 shares) were
sold to an existing Hyperion shareholder and co-investor, Murofo Investments S.L., for a cash
consideration of £4,535,300. As at the date of this report the Group's overall holding in Hyperion stood at
16.19%.
On 24th May 2012 the Group subscribed for a further £25,000 of 14% loan stock in Besso. The loan
stock is in addition to the £2,540,000 already held by the Group as at 31st January 2012, bringing the total
held to £2,565,000 at the date of this report.
27. ULTIMATE CONTROLLING PARTY
The directors consider Mr B. P. Marsh to be the ultimate controlling party.
Notice
The financial information set out above does not constitute B.P. Marsh & Partners Plc's statutory accounts for
the year to 31st January 2012 but is derived from those accounts. The statutory accounts for the year to 31st
January 2012 have not yet been delivered to the Registrar of Companies. The auditors have reported on
those accounts and have given the following opinion:-
· the financial statements give a true and fair view of the state of the Group's and of the Company's
affairs as at 31st January 2012 and of the Group's profit for the year then ended;
· the Group's financial statements have been properly prepared in accordance with IFRSs as adopted
by the EU;
· the Company financial statements have been properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Approval
The financial statements were approved by the Board of Directors on 29th May 2012 for their release on
30th May 2012.
Analyst Briefing
An analyst briefing, hosted by Brian Marsh OBE, Chairman, Jonathan Newman, Finance Director, and fellow
Directors Millie Kenyon and Dan Topping will be held at 10:00 a.m., on 30th May 2012 at B. P. Marsh &
Partners Plc, 2nd Floor, 36 Broadway, London SW1H 0BH.
Please contact Redleaf Polhill on 020 7566 6738 or BPMarsh@redleafpr.com if you wish to attend.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk

Brian Marsh OBE / Camilla Kenyon +44 (0)20 7233 3112
Nominated Adviser & Broker

Panmure Gordon
Paul Lumbis / Fred Walsh +44 (0)20 7459 3600
PR to BP Marsh
Redleaf Polhill Ltd +44 (0)20 7566 6738
Emma Kane bpmarsh@redleafpolhill.com
Notes to Editors:
About B.P. Marsh

B.P. Marsh's current portfolio contains nine companies. More detailed descriptions of the portfolio can be
found at www.bpmarsh.co.uk.
Over the past 20 years, the Company has assembled a management team with considerable experience both
in the financial services sector and in managing private equity investments. Many of the directors have worked
with each other in previous roles, and all have worked with each other for at least four years.
Prior to Brian Marsh's involvement in the Company, he spent many years in insurance broking and
underwriting in Lloyd's as well as the London and overseas market. He has over 30 years' experience in
building, buying and selling financial services businesses, particularly in the insurance sector.
Jonathan Newman is a Chartered Management Accountant and is the Group Director of Finance and has
over 15 years' experience in the financial services industry. Jonathan advises investee companies through three
non-executive board appointments and evaluates new investment opportunities.
Daniel Topping is a Member of the Chartered Institute of Securities and Investment (MCSI) and an Associate
Member of the Institute of Chartered Secretaries and Administrators (ACIS) having joined the Company in
2007. Dan was appointed director in 2011 and currently holds four non-executive board appointments
through which he advises investee companies and he also evaluates new investment opportunities.
Camilla Kenyon was appointed as Head of Investor Relations at B. P. Marsh in February 2009, having four
years prior experience with the Company. Camilla holds two non-executive appointments, is Chair of the
New Business Committee and is a Member of the Investor Relations Society.
- ends -
END
FR SEEFWUFESEFI
5/24/13 RAB Capital plc | Final Results | FE InvestEgate
RAB Capital plc
Final Results
RNS Number : 0192D
RAB Capital plc
16 March 2011
RAB Capital plc

("RAB" or "the Company")
Announcement of audited results for the year ended 31 December 2010
16 March 2011
Summary
· Company operations significantly restructured; cost base reduced

· Assets under management $1.06 billion (December 2009: $1.35 billion)
· Encouraging overall risk adjusted performance by RAB investment strategies: award winning
performance by RAB Energy Fund
· New team to manage the RAB Europe Fund
· Modest inflows into remaining funds over later months of the year
· UCITS funds to be launched in H1, 2011
Year End Position
· Balance sheet remains strong: net current assets and investments £82.0 million (2009: £98.7
million) after outlay of £3.3 million (2009: £12.5 million) on buybacks and dividends
· Net current assets and investments per Ordinary share 17.4p* (2009: 20.9p)
· Final dividend of 0.10p per Ordinary share (2009: second interim: 0.50p) proposed to give total
dividends for the year of 0.20p per Ordinary share (2009: 1.10p)
* based on 470,471,248 shares in issue excluding shares held in treasury at 31 December 2010
2010 Trading Summary
· Revenue down 15% to £11.9 million (2009: £13.9 million)

· Restructuring charge of £3.5 million
· Loss after tax of £19.4 million (2009: loss £3.1 million after tax)
· Basic and diluted loss per Ordinary share 4.10p (2009: loss 0.65p)
Charles Kirwan-Taylor, Chief Executive, said:
"In 2010 we bedded in the changes made in 2009 to our investment and risk management processes
and achieved good risk adjusted returns in a number of our funds, however, our results for the year are
not satisfactory. As we indicated in September last year, we took proactive steps to restructure our
business significantly so as to be in a position to return to profitability. We start 2011 much leaner and
more focused, and I am confident in the prospects for our strategies."
Michael Alen-Buckley, Executive Chairman, commented:
"We are encouraged by the outlook for the launch of UCITS vehicles for our European and natural
resource strategies, and by the good performance of a number of our funds in 2010. We are confident
www.investegate.co.uk/ArticlePrint.aspx?id=201103160700210192D 1/16
that the actions we have taken in 2010 leave us well-positioned to meet the challenges ahead and to
take advantage of market opportunities as the macro-economic environment improves."
Further Enquiries:
RAB Capital plc 020 7389 7000

Charles Kirwan-Taylor
Adam Grant
M: Communications 020 7920 2331

Nick Miles
Charlotte Kirkham
Nominated Adviser: Macquarie Capital (Europe) Limited 020 3037 5231

Jonny Franklin-Adams
Executive Chairman's and Chief Executive's statement
Summary
2010 was another year of transition for RAB. Over the year we bedded in the changes to our
investment and risk management procedures that we have put in place since January 2009. In general
during the year hedge fund investors remained focused on liquidity and size and tended to shy away
from sectors perceived as cyclical. For the most part funds flows in the industry in 2010 favoured
larger groups managing above $5 billion rather than groups of our size. This climate, coupled with a
realistic assessment of the difficulties experienced by the firm in 2008, made it apparent to us that a
quick return to organic growth in our business was unlikely. We therefore concluded that a change in
the shape of our operations to reflect the more challenging circumstances in the industry was the best
option by which we could return to profitability, maintain our focus on delivering good risk adjusted
returns for investors and position the business for a more gradual growth profile over the years ahead.
As a result we have streamlined our offering to focus on a core suite of funds. We closed five
strategies that we judged were too small, too volatile or offered investors insufficiently attractive returns
to prosper. In so doing we have streamlined our business by reducing staff levels by over 30% since
the beginning of 2010; our non staff cost base has also been considerably reduced through a thorough
review of the costs and efficiency of our operations and third party services. Throughout this exercise
we have been very conscious to preserve the improvements to our risk management and governance
processes that we have established since the end of 2008 and to maintain an excellent investment
capability supported by a first class operating platform.
The table below sets out our offering to investors following the Group's restructuring, divided into funds
centred around natural resources and funds centred around the European markets. The Company also
maintains a small fund of funds. The table sets out the performance of each fund within each group.
AUM and Strategy performance for the twelve months to 31 December 2010 %
Natural Resources (AUM:$816 million) RAB Energy Fund 46.58
RAB Octane Fund 24.73
RAB Special Situations Fund -7.59
RAB Global Mining and Resources
Fund 22.84
Europe (AUM:$225 million) RAB Europe Fund -3.10
RAB European Credit Opportunities
Fund 9.48
RAB Cross Europe Fund 0.14
Fund of Funds (AUM $18 million) RAB External Managers Fund 2.54
Within our Natural Resources group, RAB Energy was an outstanding performer in 2010, topping
several league tables and, in February 2011, winning the EuroHedge Award for best Global Equity
Fund in 2010. The fund has continued to exploit the asymmetrical risk return characteristics offered by
small and midsized oil and gas companies undertaking high impact drilling programmes over the year,
and the managers of the fund have displayed skill both in the selection and timing of their individual
investments as well as in hedging the fund so as to dampen the volatility of the portfolio. RAB Octane
also performed well. The outlook for small and mid-cap oil and gas companies in 2011 looks
extremely robust. The background of strengthening oil prices and equity markets has enabled these
companies to rebuild their balance sheets thus facilitating an active drilling programme which is the
lifeblood of the sector. RAB Global Mining and Resources also had a successful year in 2010,
outperforming particularly volatile markets in the first half of the year through adept hedging in the
various downdrafts the sector experienced during that period, which left it well placed to take
advantage of strong markets in the second half.
RAB Special Situations has continued to restructure its portfolio in order to generate the liquidity that
may be necessary to meet redemptions when the fund reopens later this year; the scale of these
redemptions will be known in April. We believe that the current environment continues to yield some
exceptional value opportunities in the listed early stage natural resources space and once the future
shape of the fund is clear we look forward to taking advantage of those opportunities on behalf of
investors who choose to remain invested in the strategy.
Within our European group, RAB Europe had a mixed year, faltering in May but recovering well over
the rest of the year. In December a new team of managers joined RAB and is now managing this
strategy, as well as continuing to manage the Polaris Prime Europe Fund, a fund which the team
brought into the Company on their arrival and which will be run in parallel with RAB Europe. Our new
team has an admirable long term record and we believe they will offer good risk adjusted returns going
forward; we regard this as a very positive development for the funds, and for RAB itself.
RAB European Credit Opportunities had another good year in 2010 following the very good year it
enjoyed in 2009. Despite low European merger and acquisition activity, RAB Cross Europe managed
to achieve its twelfth consecutive year of profitable trading. The market outlook for these funds
remains encouraging.
Assets under management ("AUM")
AUM at the year end amounted to $1.06 billion (2009: $1.35 billion). This reduction in AUM in the
year included $124 million in discontinued strategies and $53 million in redemption classes repaid to
investors. The remainder of the change in AUM can be attributed to a reduction in the funds managed
within the Company's fund of funds following a large repatriation of capital by a European bank in the
summer of 2010 (as noted in our interim report) and to a decline in the value of RAB Special
Situations, offset in part by modest inflows in the second half of the year and performance in our more
successful funds, notably RAB Energy and RAB European Credit Opportunities. The AUM at the year
end included $19 million in redemption classes which have since been repaid; no further redemption
classes remain outstanding.
Over the last several months the Company has intensified its marketing activities so as to
communicate to clients the changes that have been made over the last two years and to ensure that
the performance and characteristics of the funds managed by the Group are well understood. We
believe that this effort is now beginning to be recognised. In February 2011 we launched a new UCITS
version of our European strategy, the RAB Prime Europe UCITS Fund on the SEB Prime Solutions
platform. We expect shortly to launch two other UCITS funds within our Natural Resources group of
funds. We are encouraged by the opportunities available to UCITS strategies and by the prospects for
both these funds and more generally for the other funds within our stable.
Financial performance
The Group reported a loss after tax of £19.4 million compared with a loss after tax last year of £3.1
million. The Board recognises that this performance is unsatisfactory and has taken steps to reduce
costs significantly as we mention above, the benefits of which will be seen in 2011. Further details of
the financial performance are shown in the Business Review.
Dividend
The Board propose a final dividend of 0.10p per Ordinary share to be paid on 4 May 2011 (2009:
second interim: 0.50p), making the total dividend for the year of 0.20p per share (2009: 1.10p).
Outlook and strategy
The Group's results for 2010 were clearly unsatisfactory and we have taken significant steps to
restructure the business. We enter 2011 in better shape to meet the future than we have been in at
any time since the credit crisis in 2008. As the year turned our AUM were broadly the same as they
had been when we set out on our restructuring in September as the assets lost in fund closures have
been replaced by organic growth and inflows across our more successful funds. Our cost structure is
now much more appropriate for a business of our size and we believe the current market will favour
many of our most successful strategies which offers an encouraging outlook for our revenues. We are
both encouraged by the recent investor response to the performance and positioning of our offering and
excited by the possibilities offered by the UCITS versions of the funds we have mentioned here.
We do face some challenges this year, not least the resumption of redemptions within RAB Special
Situations and we are realistic about the impact that this may have on the level of our assets.
However, the impact that these redemptions may have on the overall profitability of the Group may be
mitigated by the return to standard fee arrangements. Our strategy is to focus on those areas of our
activity where we can demonstrate a successful record of investment on behalf of our clients and to
build out those areas through a strong and consistent marketing effort to service our existing clients
well and so as to expand the scope of our client base where possible. At the same time we may
consider the launch of complementary strategies which either reinforce or fill out the Group's offering to
investors. We believe our fund management teams, governance and risk control, operational
infrastructure and the professional teams supporting our business are first class and we are optimistic
that these qualities will serve us well as we seek to rebuild the business.
We would like to conclude by thanking our investors and shareholders for their continued support and
our employees for their hard work in 2010.
Michael Alen-Buckley and Charles Kirwan-Taylor

Executive Chairman and Chief Executive
15 March 2011
Business review
Financial review
The results for the year ended December 2010 reflect the need for a transformation of the Group's
business, which we undertook in the second half. We closed a number of unprofitable strategies, and
reduced our costs, maintaining emphasis on marketing to drive sales and to prepare for new UCITS
product launches.
Income statement
The Group's operating loss before taxation, amortisation, impairments and restructuring costs was
£11.4 million (2009: £6.4 million). This reflects a significant reduction in gains on available-for-sale
financial assets and a reduction in revenue while costs reduced year on year. The loss after taxation
was £19.4 million (2009: £3.1 million) after taking impairments of goodwill and deferred acquisition
costs and restructuring costs of £8.4 million (2009: nil).
The reduction in revenue in the year of 15% from the prior year to £11.9 million (2009: £13.9 million)
reflects lower management fees of £9.2 million (2009: £10.7 million) from the fall in AUM over the year
and a reduction in performance fees to £2.4 million (2009: £2.8 million).
Prospectively, the percentage of AUM at or close to its high water mark is increasing as fund
performance moves the net asset values towards previous highs and new assets are absorbed into
successful strategies. Performance fees are typically only payable on an increase in net asset values
above the highest level the fund has previously achieved or the value at which a new investor enters the
fund.
In addition to the above, the Group incurred net losses of £0.4 million on available-for-sale financial
assets (2009: gain £3.3 million). Exceptional charges were taken this year relating to restructuring of
the business and impairment of goodwill and deferred acquisition costs of £8.4 million (2009: nil).
Fixed costs, including amortisation of intangible assets, fell to £17.7 million from £19.3 million due to
continued operational improvements and a focus on increased efficiency. Variable incentive
compensation charges rose marginally to £5.8 million (2009: £5.7 million).
The tax credit this year is £0.8 million (2009: credit £3.9 million). In 2010, the credit excludes a
significant proportion of the potential future benefits of accumulated tax losses. 2009 was unusual as
it included adjustments in respect to prior periods largely relating to the reversal of tax charges and
increased recognition of tax credits on disposals of available-for-sale financial assets.
RAB has made an adjusted free cash loss after tax of £8.2 million in the year ended 31 December
2010. The table below shows the split between accounting loss adjusted for non-cash items such as
assets impairments, depreciation and intangible asset amortisation and share incentivisation related
costs and adjusted for non-recurring restructuring costs:
Adjusted free cash loss after tax

2010 2009
£'000s £'000s
Impairment of available-for-sale financial assets 1,570 812
Impairment of intangible assets 4,150 -
Impairment of tangible assets 177 -
Depreciation of tangible assets 1,093 825
Share based payments charge 520 307
Taxation 831 3,852
Free cash loss after taxation (11,485) (659)
Onerous lease provision 556 -
Redundancy and related costs 2,755 -
Adjusted free cash loss after taxation (8,174) (659)
Balance Sheet
RAB has continued to maintain a strong balance sheet with over £81 million in net current assets and
available-for-sale financial assets at the year end (2009: £98 million). The sum of available-for-sale
financial assets fell during the year from £47.3 million to £40.9 million primarily due to disposals and
impairments. The significant majority of the Group's holdings in available-for-sale financial assets are
investments in funds managed by RAB, including an uncrystallised net gain of £1.9 million (2009: £1.2
million).
Group net assets at the end of 2010 were £85.6 million compared to £107.3 million at the beginning of
the year, reflecting the fact that the Group spent £0.5 million repurchasing shares and paid £2.8
million in dividends during the year, with movements in reserves accounting for the remainder.
Shareholder returns
The Group's policy is to pay dividends and to vary the size of the dividend to reflect the financial
performance of the Group. The Board has considered the current market environment and the financial
performance of the Group in the current year in determining the level of the dividend. Accordingly, the
Board has decided to recommend a final dividend of 0.10p per share. The total dividend for the full year
amounts to 0.20p per share (2009: 1.10p). In view of the financial performance of the Group, the Board
felt that a reduction in the total dividend is appropriate. The dividend policy will be kept under review in
light of the Group's performance and the strength of the balance sheet.
During the year the Group bought back 3.6 million Ordinary shares for total consideration of £0.5
million. Both the Group and Company continue to be well capitalised and the Board remains confident
about the future of the business.
Risk management
The Group takes a cautious and pro-active approach to risk management and takes its governance
and risk management obligations very seriously and has put in place an infrastructure that aims to
deliver standards consistent with these obligations. Its key components comprise the initial
establishment and closure of a fund, fund governance, regulation of the relevant management
company, independent fund administration, independent prime brokers and custodians, external fund
audits, and a risk management framework setting out internal governance and controls. The Board
reviews the Group's key risks and how they are managed and reported.
The Group's risk landscape has been simplified by the rationalisation of its offering. Notwithstanding
this, the Group continues to develop its risk management systems and has modified its processes to
elevate the level and frequency of engagement of the Group's risk team with each investment
strategy.
Regulation
RAB has two operating companies, London-based RAB Capital plc and Hong Kong-based RAB
Capital (Asia) Limited, which are regulated by the Financial Services Authority ("FSA") and the
Securities and Futures Commission ("SFC") respectively. As such the Group is subject to the
conduct of business rules, compliance requirements and minimum capital standards of those bodies.
RAB is also admitted to listing on the Alternative Investment Market of the London Stock Exchange
and is subject to the disclosure requirements and governance processes that this status demands.
Risk framework
The Executive Committee has resolved that the appropriate governing body for the risk framework of
the Group is the Investment and Risk Committee ("IRC"). However, formal ratification and approval of
group risk control is performed by the Board.
The IRC empowers the business to be entrepreneurial and to take on risk actively; however, risk must
be fully understood and adequately measured to ensure that the risk exposure is appropriate for the
returns anticipated, and is consistent with the Group's long-term goals and obligations to its
stakeholders. The objective is to safeguard the assets both of the Group and its clients, whilst
allowing sufficient operating freedom to secure a satisfactory return. The IRC reports to the Board on
the management of investment risks.
The Group's 'Statement of Risk Appetite' defines the level and nature of risks to which senior
management considers it is acceptable to expose the Group. It therefore defines the boundaries of
activity that the Board intends for the firm. The Board sets and approves annually risk appetite
statements for all areas of actual or potential significant risk to the business. Adherence to these risk
appetites is monitored on a regular basis and is part of the overarching risk management framework
operating within the Group.
Principal risks
The Group's principal risks are considered to be operational risk, employee risk and business risk.
The Group is also exposed to credit risk, liquidity risk and market risk arising from the assets and
liabilities on its balance sheet, particularly the Group's investments in available-for-sale financial
assets.
Operational risk
Operational risk is the potential for economic loss and/or reputational damage due to a serious error or
failure of operations. The Group has implemented an operational risk framework designed to monitor
and assess operational risks across the business.
Operational risk is further managed through organisational and financial controls. The controls of each
department have been assessed by managers who have sufficient experience to determine key risks
within their department. These assessments are reviewed and challenged by senior management to
gain assurance that controls are appropriate and operating effectively.
If losses are incurred through specified risks the Group has insurance to mitigate the cost of any such
loss. The insurance policy will only be activated in the event of a serious control failure or significant
unforeseen circumstances. The following operational risk areas are insured: professional indemnity
and fraud, directors' and officers' liability insurance, business interruption and employer's and public
liability.
Employee risk
In common with most businesses, the Group's employees are essential to its continued growth and
success. The ability to attract, retain and develop talented people is vital for delivering stakeholder
value and also for managing the other principal risks.
The Group offers competitive remuneration packages to employees, including a discretionary bonus
scheme. All staff receive training to ensure competence in their role and receive performance
appraisals. Controls over the recruitment process are also critical to minimising employee risks.
Business risk
The Group's income is largely derived from managing investors' assets. Fund managers make
investment decisions with the aim of delivering good returns over time whilst managing the investment
risk of each fund. Business risk is the risk that sustained poor performance and conditions in global
markets negatively affect investment sentiment and ultimately the Group's core income stream.
In aggregate the RAB funds are exposed to the global equity, credit and fixed income markets. The
firm is also exposed to the risk of redemptions undermining the earnings base of the business.
The governance processes that are followed for the management of investment risk in the funds are
intended to follow a cycle that commences with limit setting, continues through oversight of fund/risk
management, and concludes with a process of regular informed enquiry. Each strategy will have a
limit structure put in place that will address many tighter constraints than those imposed by the
relevant fund's prospectus.
Credit risk
Credit risk is the risk of financial loss to the Group if the counterparty to a financial instrument fails to
meet its contractual obligation, and arises principally from fees due from funds and deposits placed
with financial institutions. Fees due from funds are continually reviewed to ensure timely collection of
amounts due.
Credit risk associated with cash and cash equivalents is managed by placing all deposits with banks
or financial institutions with a long-term credit rating of 'A' (according to Moody's and Standard &
Poors) or higher. No more that one third of the Group's cash is placed with any single institution of
credit rating 'AA' or higher and no more than one quarter is placed with any institution with a single 'A'
credit rating.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial
liabilities.
The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's reputation.
The Group maintains a portfolio of short-term deposits across a range of financial institutions to ensure
that sufficient liquidity is maintained within the Group as a whole. The liquidity position is monitored
on a daily basis and the month end position is included in the management information presented to
the Board.
Mark et risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange and
equity prices, affect the Group's income and/or the value of certain assets. RAB's primary exposure to
interest rates is in relation to cash on deposit. The Group's exposure to market risk stems primarily
from fees being earned predominantly in US Dollars and Euros and from its holdings in available-for-
sale financial assets. To manage foreign exchange risk all non-Sterling revenues are usually converted
to Sterling promptly on receipt and forward foreign exchange contracts are sometimes used to hedge
non-Sterling debtors.
Industry best practices

Consistent with the goal of setting high operating standards RAB was an original member of the
UK/European based Hedge Fund Working Group, which initiated and established the Hedge Fund
Standards Board ("HFSB") best practice standards. RAB was also a founder signatory to the HFSB
Standards and makes an annual declaration in respect of conformity to these standards.
Regulatory capital
From 1 January 2008, the Group fully adopted the new FSA rules, which implement the Capital
Requirements Directive ("CRD") and prescribe a minimum capital requirement. For regulated limited
licence investment firms the minimum capital requirement is the higher of:
· base capital requirement of €50,000; or

· the fixed overhead requirement; or
· the credit risk requirement and market risk requirement.
The base capital requirement for RAB has reduced during the year from €125,000 to €50,000 as the
Group has relinquished its permission for client money activities.
The Group manages its capital to ensure that all entities within the Group are able to operate as going
concerns and exceed any minimum externally imposed capital requirements. The Group also
maintains sufficient capital to allow investment to seed or promote funds managed by the Group, or
make strategic business investments. As a minimum the Group seeks to hold enough cash and cash
equivalents to cover its FSA imposed fixed overhead requirement and working capital requirement
together with a capital cushion.
Group's regulatory capital position

Group
2010 2009
£000s £000s
Equity attributable to the equity holders of the parent 85,602 107,258
Less goodwill and other intangibles

- Goodwill (3,925) (8,075)
- Other intangible assets - (370)
Material holdings deduction

- Investment in Prestige Asset Management Co., Ltd (158) (215)
Capital resources 81,519 98,598
At 31 December 2010 the Group had regulatory capital resources of £81.5 million (2009: £98.6
million), significantly in excess of its minimum requirement of £7.2 million (2009: £10.3 million). The
reduction in regulatory capital resources is in part as a result of £3.3 million returned to shareholders
through dividends and share buy backs.
Adam Grant
Finance Director and Chief Operating Officer
15 March 2011
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the financial position and business of
RAB Capital plc. Such statements and forecasts involve risk and uncertainty because they relate to events and depend
upon circumstances that will occur in the future. There are a number of factors which could cause actual results or
developments to differ materially from those expressed or implied by these forward-looking statements and forecasts.
The forward-looking statements and forecasts are based on information known to the Directors at the date of this
announcement and represent their current view. The Directors do not undertake to update or revise any such forward-
looking statements in the light of new information, future events or otherwise, and nothing in this announcement should
be construed as a profit forecast.
Copies of this announcement are available on the RAB website at www.rabcap.com.

For the year ended 31 December 2010
2010 2009
Note £000s £000s
Revenue 3 11,897 13,934
Net (loss)/gain on available-for-sale financial assets 8 (410) 3,327
Interest receivable and similar income 282 913
Gross income 11,769 18,174
Cost of sales (117) (12)
Net income 11,652 18,162
Operating loss before taxation, amortisation, impairment and
restructuring costs (11,403) (6,354)
Amortisation of intangible assets (370) (494)
Share of post-tax results from associates (57) (101)
Operating loss before taxation, impairments and restructuring costs (11,830) (6,949)
Impairment of goodwill, and deferred acquisition costs (4,878) -
Restructuring costs (3,488) -
Operating loss before taxation 4 (20,196) (6,949)
Taxation 5 831 3,852
Loss after taxation attributable to equity holders of the parent (19,365) (3,097)
Basic loss per Ordinary share 7 (4.10)p (0.65)p

Diluted loss per Ordinary share
7 (4.10)p (0.65)p
All of the above amounts relate to continuing activities.
Consolidated statement of comprehensive income

2010 2009
£000s £000s
Loss for the financial year (19,365) (3,097)
Net gain/(loss) on available-for-sale financial assets, net of tax 406 (941)
Currency translation differences 70 (133)
Total comprehensive income attributable to equity holders of the parent (18,889) (4,171)
Consolidated balance sheet

As at 31 December 2010
2010 2009
Note £000s £000s
Assets
Non-current assets
Goodwill 3,925 8,075
Other intangible assets - 370
Investment in associates 158 215
Property, plant and equipment 718 1,881
Deferred tax assets 9 - 645
Available-for-sale financial assets 8 40,877 47,290
Total non-current assets 45,678 58,476
Current assets
Current tax assets 2,857 5,344
Total current assets 50,516 59,466
Total assets 96,194 117,942
Liabilities
Deferred tax liabilities 9 (1,171) (2,671)
(1,171) (2,671)
Current liabilities
Provisions (2,254) (636)
Total current liabilities (9,421) (8,013)
Net assets 85,602 107,258
Equity
Called up share capital 10 477 505
Other reserves 10,366 15,198
Equity attributable to the equity holders of the parent 85,602 107,258
Consolidated statement of changes in equity

Called Share
up share premium Other Retained Total
capital account reserves earnings equity
Note £000s £000s £000s £000s £000s
At 1 January 2009 504 46,428 17,507 59,189 123,628
Loss for the financial year - - - (3,097) (3,097)
- Net loss on available-for-sale financial
assets, net of tax - - (941) - (941)
- Currency translation differences - - - (133) (133)
Transactions with equity holders:
- Option exercises using shares held in
treasury - 32 - - 32
- Share-based payments charge - - - 307 307
- Purchase of own shares - - - (1,245) (1,245)
- Transferred from shares to be issued 1 1,367 (1,368) - -
- Dividends paid 6 - - - (11,293) (11,293)
At 31 December 2009 505 47,827 15,198 43,728 107,258
Loss for the financial year - - - (19,365) (19,365)
- Net gain on available-for-sale financial
assets, net of tax - - 406 - 406
- Currency translation differences - - - 70 70
Transactions with equity holders:
- Option exercises using shares held in
treasury - 5 - - 5
- Share-based payments charge - - - 520 520
- Purchase of own shares - - - (457) (457)
- Transfer on shares cancelled (30) - 30 - -
- Transferred from shares to be issued 2 1,306 (1,308) - -
- Dividends paid 6 - - - (2,835) (2,835)
- Transferred from merger reserve - - (3,960) 3,960 -
At 31 December 2010 477 49,138 10,366 25, 621 85,602
Consolidated cash flow statement

2010 2009
Note £000s £000s
Loss on ordinary activities after taxation (19,365) (3,097)
Share of post-tax results from associates 57 101
Impairment of goodwill 4,150 -
Impairment of deferred acquisition costs 728 -
Depreciation of property, plant and equipment 1,093 825
Impairment of property, plant and equipment 177 -
Amortisation of deferred acquisition costs 32 -
Share-based payments charge 520 307
Net loss/(gain) on available-for-sale financial assets 8 410 (3,327)
Interest receivable and similar income (282) (913)
Taxation 5 (831) (3,852)
(12,941) (9,462)
Changes in operating assets and liabilities

Decrease in trade and other receivables 2,650 7,172
Decrease in trade and other payables (210) (6,107)
Increase/(decrease) in provisions 1,618 (2,328)
Cash used in operating activities (8,883) (10,725)

Taxation refund 2,199 4
Net cash outflow used in operating activities (6,684) (10,721)
Cash flows generated from investing activities
Dividends received - 245
Decrease in assets held for sale - 825
Purchase of property, plant and equipment (98) (713)
Disposal of property, plant and equipment - 24
Purchase of available-for-sale financial assets (36,927) (42,745)
Deferred acquisition costs (780) -
Disposal of available-for-sale financial assets 8 43,651 56,114
Net cash inflow generated from investing activities 6,128 14,418
Cash flows generated from financing activities

Equity dividends paid 6 (2,835) (11,293)
Issue of Ordinary share capital 10 5 32
Repurchase of own shares 10 (457) (1,245)
Net cash outflow used in financing activities (3,287) (12,506)
Net decrease in cash and cash equivalents (3,843) (8,809)
Effect of exchange rate changes 30 (162)
Cash and cash equivalents at 1 January 45,479 54,450
Cash and cash equivalents at 31 December 41,666 45,479
1. Statutory accounts
In the current year the Company and the Group have adopted all of the standards and
interpretations issued by the International Accounting Standards Board and the International
Financial Reporting Interpretations Committee that are relevant to its operations and effective
for the Group's financial year beginning on 1 January 2010.
The results for the year ended 31 December 2010 are audited. The financial information
included in this statement does not constitute the Group's statutory accounts within the
meaning of Section 434 of the Companies Act 2006 for the years ended 31 December 2009 or
2010. The financial information for 2009 has been derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies and include the Independent
Auditor's report on those accounts which was unqualified. The accounts are expected to be
sent to shareholders no later than 29 March 2011 and will be delivered to the Registrar of
Companies after the Annual General Meeting to be held on 28 April 2011 at the Company's
registered office,1 Adam Street, London WC2N 6LE.
Further copies of the report will be available from the Company Secretary at the registered
office address, and on the Company's website at www.rabcap.com.
The consolidated financial statements have been prepared under the historical cost
convention, except for the measurement at fair value of available-for-sale financial assets and
derivative financial instruments.
3. Revenue
Key components of revenue are:
2010 2009
£000s £000s
Management fees 9,235 10,748
Performance fees 2,408 2,846
Other fees 254 340
Revenue 11,897 13,934
4. Operating loss before taxation
(A)Operating loss before taxation
2010 2009
£000s £000s
Operating loss before taxation has been arrived at after charging:
Staff costs 14,751 15,311
Operating leases 1,430 1,451
Foreign exchange loss 281 460
(B) Free cash loss after taxation
Management views free cash (loss)/earnings after taxation as an important measure of performance.
The measure excludes non-cash charges.
2010 2009
£000s £000s
Impairment of available-for-sale financial assets 1,570 812
Impairment of goodwill 4,150 -
Impairment of fixed assets 177 -
Share-based payments charge 520 307
Free cash loss before taxation (12,316) (4,511)
Effective tax credit - income statement credit 831 3,852

Free cash loss after taxation (11,485) (659)
5. Taxation
(A) Analysis of tax charge for the year
2010 2009
£000s £000s
Current tax on income for the year 1 (2,070)
Adjustments in respect of previous periods 338 (1,732)
Current tax charge/(credit) 339 (3,802)
Deferred tax credit (see Note 9) (1,170) (50)

Tax credit in the consolidated income statement (831) (3,852)
(B) Factors affecting the tax charge for the year
2010 2009
£000s £000s
Loss on ordinary activities before taxation (20,196) (6,949)
Tax credit on loss on ordinary activities at standard UK corporation tax rate of
28% (2009: 28%) (5,655) (1,946)
Effect of:
Disallowed expenses and non-taxable income 720 88
Trading losses not recognised 3,270 -
Adjustments in respect of available-for-sale financial assets (677) (124)
Share based payments in excess of tax credits recognised 180 33
Adjustments in respect of goodwill/intangibles 892 (31)
Adjustments in respect of prior periods 338 (1,732)
Other 101 (140)
Tax credit in the income statement (831) (3,852)
Effective tax rate 4.1% 55.4%
6. Dividends
2010 2009
£000s £000s
Amounts recognised as distributions to equity holders in the year:
Prior year final paid: nil (2009: 1.80p) per 0.1p Ordinary share - 8,469
Prior year second interim paid: 0.50p (2009: nil) per 0.1p Ordinary share 2,362 -
Current year interim paid: 0.10p (2009: 0.60p) per 0.1p Ordinary share 473 2,824
Total dividends paid in the year 2,835 11,293
On 15 March 2011, the Directors declared a final dividend in respect of the financial year ended 31
December 2010 of 0.10p per Ordinary share (second interim 2009: 0.50p), or £470,471 (2009:
£2,352,000) based on the Ordinary shares in issue and excluding those held in treasury at 31
December 2010. The final dividend (2009: second interim) has not been included as a liability in these
7. Loss per Ordinary Share
The calculations of basic and diluted loss per Ordinary share are based on the loss for the year of
£19,365,000 (2009: loss £3,097,000) and on the following share capital data:
2010 2009
Basic weighted average number of Ordinary shares 471,967,688 475,937,418
Dilutive effect of share-based payments 1,002,184 1,526,065
Dilutive effect of shares to be issued for acquisition of the Pi business 1,455,317 2,986,755
Diluted weighted average number of Ordinary shares 474,425,189 480,450,238
Where the Group has incurred a loss for the year no dilution arises, despite the diluted weighted
average number of Ordinary shares being greater than the basic weighted average number of Ordinary
shares. As a result the basic and diluted loss per Ordinary share are the same for the year.
8. Available-for-sale financial assets

(A) Movement in fair value
2010 2009
£000s £000s
At 1 January 47,290 59,240
Additions 36,927 42,745
Disposals (43,651) (56,114)
Gain on movement in fair value 311 1,419
At 31 December 40,877 47,290
Included within available-for-sale financial assets are:

Uncrystallised net gain 1,943 1,222
Impairments (3,268) (5,550)
B) Net gain/(loss) recognised in income statement
2010 2009
£000s £000s
Proceeds on disposal 43,651 56,114
Original book cost less impairment charges (42,491) (51,975)
Net gain on disposal 1,160 4,139
Impairment charge in year (1,570) (812)
Net (loss)/gain (410) 3,327
9. Deferred taxation
Deferred tax asset and liability balances are as follows:
2010 2009
£000s £000s
Deferred tax assets
Realised and unrealised losses on available-for-sale financial assets 1,130 396

Trading losses carried forward - 329
Goodwill impairment in excess of allowances 257 -
Share-based payments 27 62
Other - 95
Deferred tax assets 1,847 994
Deferred tax liabilities
Unrealised gains on available-for-sale financial assets 518 349

Undistributed profits in overseas subsidiaries 2,476 2,647
Other 24 24
Deferred tax liabilities 3,018 3,020
Net deferred tax liability (1,171) (2,026)
Disclosed as:
Deferred tax assets - 645
Deferred tax liabilities (1,171) (2,671)
Net deferred tax liability (1,171) (2,026)
The Group has not realised a deferred tax asset in respect of accumulated trading losses due to the
uncertainty around the timing and use of such losses. The amount of unrecognised deferred tax asset
in respect of these losses at 31 December 2010 is £3.7 million (2009: £nil).
A deferred tax asset is recognised in respect of realised and unrealised losses on available-for-sale
financial assets to the extent that management believes they are recoverable against realised gains in
future periods. This is usually the level of the Group's unrealised gains at the balance sheet date. The
amount of unrecognised deferred tax asset in respect of realised and unrealised capital losses at 31
December 2010 is £1.0 million (2009: £1.1 million).
To the extent that profits arising from overseas subsidiaries and associates may result in additional
taxes, appropriate amounts have been provided for.
The deferred tax asset in respect of equity settled share-based payments is calculated as the
difference between market price of the share and exercise price of the option ("intrinsic value") at the
end of the period multiplied by the proportion of the vesting period that has elapsed and the expected
tax rate at exercise. To the extent that the deferred tax asset exceeds the related cumulative
employee share-based payments charge multiplied by the tax rate less cumulative tax credits on the
exercise of share options credited to the income statement, the excess deferred tax asset is credited
to equity.
The movements on deferred tax assets during the year were:
2010 2009
£000s £000s
Net deferred tax liability at 1 January (2,026) (3,043)
Credited/(charged) to the income statement (see Note 5)

Share-based payments (35) 38
Goodwill impairment in excess of allowances 257 -
Realised and unrealised losses offsetable against unrealised gains on
available-for-sale financial assets 1,080 (631)
Trading losses (realised)/recognised in year (329) 329
Profits arising in overseas subsidiaries 171 270
Other (95) (1)
1,170 50
(Charged)/credited to equity
Fair value movement on available-for-sale financial assets (315) 967
(315) 967
Net deferred tax liability at 31 December (1,171) (2,026)
10. Called up share capital
Allotted, called up and fully paid
Ordinary shares Convertible shares Total

Number Number
of shares £000s of shares £000s £000s
At 1 January 2009 503,703,360 504 1,000,000 - 504
Transfer from shares to be
issued 1,540,764 1 - - 1
Cancellation of C2
Convertible shares - - (1,000,000) - -
At 31 December 2009 505,244,124 505 - - 505
Transfer from shares to be
issued 1,540,767 2 - - 2
Cancellation of shares held
in treasury (30,000,000) (30) - - (30)
At 31 December 2010 476,784,891 477 - - 477
2010 2009
Number of Number of
shares shares
Consisting of:
Held in treasury 6,313,643 32,762,643
With voting rights 470,471,248 472,481,481
476,784,891 505,244,124
Convertible shares
On 25 September 2009 the Convertible shares were transferred to the Company for nil consideration
and were cancelled.
Option exercises
The Group operates share-based incentive schemes for employees which can be settled by issuing
new shares or from shares held in treasury.
Ordinary share buyback

At the AGM in May 2010 the Company renewed the Directors' authority to make share buybacks
provided that these are in the best interest of the Company and increase the net asset value per
share. During the year the Company bought 3,611,000 Ordinary shares (2009: 9,315,065) for a total
consideration of £0.5 million (2009: £1.2 million). Total consideration included transaction costs of
£2,984 (2009: £7,428).
The cost of the Ordinary shares bought back has been deducted from retained earnings. Upon
cancellation the capital redemption reserve is credited with the nominal value of the Ordinary shares
cancelled.
Shares held in treasury
2010 2009
Number of Number of
shares shares
At 1 January 32,762,643 15,285,071
Forfeited contingent consideration shares - 6,704,109
Purchased from Employee Benefit Trust - 1,878,398
Shares purchased back by the Company 3,611,000 9,315,065
Cancellation of shares held in treasury (30,000,000) -
Used for option exercises (60,000) (420,000)
At 31 December 6,313,643 32,762,643

END
FR GGUGWWUPGGBA
5/24/13 Abbeycrest PLC | Final Results | FE InvestEgate
Abbeycrest PLC
Final Results
Abbeycrest PLC
12 May 2004
For Release 12 May 2004
Preliminary results for the 12 months ended 29 February 2004

- Return to profit; Increased dividend for year; Borrowings further reduced;
- Results of Strategic Business Review being successfully implemented;
Abbeycrest plc, the UK's leading jewellery manufacturing and distribution

business, announces preliminary results for the twelve months ended 29 February
2004.
In his statement to shareholders, Chairman, Michael Lever said:
'The year ended 29 February 2004 has been one of considerable change and
progress in the re-building of the Group. The Group has returned to profit and
the reduction in borrowings has accelerated driven by continued tight stock
control. Management has been strengthened at both plc and subsidiary level and
the first stages of the business review process at the Group's main UK
distribution business, G & A has been completed.'
Results:
• Turnover of £97m (2003: £99.1m)
• Profit before tax and goodwill of £1.9m (2003: £0.3m loss)
• Profit attributable to shareholders of £0.8m (2003: £1.0m loss)
• Basic earnings per share of 3.5p (2003: 4.1p loss)
• Recommended final dividend per share of 1.0p making total for year of
2.0p (2003: 1.0p)
• Group stock levels further reduced during year by £4.7m to £27.5m
• Total borrowings at year end reduced by £4.6 m to £20.4m;
• Total net assets at year end of £26.9m
Trading highlights:
• Completion of business review of G & A under new Managing Director,

Andrew Clark
• Transfer of all activity from Birmingham facility ongoing to Leeds and

Thailand
• Abbeycrest (Thailand) Ltd completed first year of operations at new

site in Lamphun, with production and cost targets being met or
exceeded.
• Essex International manufacturing moved to Lamphun site; recently

opened sales office in New York to reverse decline in US sales
• Hong Kong based DCL had satisfactory year although first half trading
affected by SARS.
On current trading and prospects, Mr Lever added:
'...Overall, in the UK the Group has performed to expectation for the early weeks
of the current financial year. Internationally, both DCL and Essex have shown
improving levels of third party business, reversing last year's trend. The
challenge facing the Group this year is to implement the actions resulting from
the G & A Ltd business review efficiently and as quickly as possible.
The progress already made on stock levels will be continued, with more vigorous
range management in the UK which, we anticipate, will result in still lower
inventory levels within G & A and further reductions in borrowings and gearing.
With regard to our Far East operations, we are energetically pursuing
opportunities in the USA and emerging markets and hope to report progress on
these later this year.'
Enquiries:
Michael Lever, Chairman

Phil Walker, Chief Executive
Abbeycrest plc
Tel: 0113 284 5702
www.investegate.co.uk/ArticlePrint.aspx?id=200405120700045563Y 1/6
Paul Vann/Victoria Stephens
Binns & Co PR Ltd
Tel: 0117 3179477
Mob: 07768 807631
Chairman's Preliminary Results Statement
The year ended 29 February 2004 has been one of considerable change and progress
in the re-building of the Group. The Group has returned to profit and the
reduction in borrowings has accelerated, driven by continued tight stock
control. In addition, the management of the Group has been strengthened at both
plc and subsidiary level and the first stages of the business review process at
the Group's main UK distribution business, G & A Ltd (G & A) has been completed.
The details of this latter process were outlined in my business review update on
9 March and progress to date is covered in the detailed G & A UK business
section of this statement below.
Results:
For the year ended 29 February 2004, Group turnover reduced by 2.1% to £97m.
Pre-tax profit (£1.6m) before goodwill (£0.3m) was £1.9m (2003 - £0.3m loss).
After tax and minority interests the profit attributable to shareholders was
£0.8m (2003 - £1.0m loss). Basic earnings per share was 3.5p (2003 - 4.1p loss).
Dividends:
The progress on reducing borrowings and the return to profit this year leads the
directors to recommend a final dividend of 1p per share, making a total for the
year of 2p (2003 - total dividend 1p). The dividend will be paid on 15 July to
those shareholders on the register at the close of business on Friday 25 June
2004.
Balance Sheet:
I am delighted to report that the progress reported in my statement twelve

months ago has continued and, indeed has accelerated. The supply chain and stock
planning disciplines reported last year have resulted in year-end Group stock
levels of £27.5m, a reduction on the previous financial year of £4.7m (2003 -
reduction £4.2m). Overall, this means that Group stock levels have reduced by
over 24% in the last two years.
The progress on stock holding has naturally fed through into reduced borrowings.
Total borrowings at 29 February 2004 (including leased gold) stood at £20.4m, a
reduction on the previous year-end of £4.6m (2003 - reduction £3.6m). This has
resulted in year-end gearing of 73% (2003 - 88%).
At 29 February 2004 total net assets, excluding minority interests, were £26.9m
equating to £1.08 per share.
Banking:
The decision has been taken that from May 2004, the Group will move its banking
facilities to HSBC. The new arrangements with HSBC give the Group committed
facilities for up to five years (as opposed to the previous annual facilities)
and also generate worthwhile cost savings. Clearly, HSBC's global presence also
better suits the international nature of the Group's activities.
Business Review - The UK:
The focus throughout the year within G & A has been on two matters: firstly,
completion of the business review under the auspices of the new Managing
Director, Andrew Clark; and secondly ensuring that the balance sheet improvement
process, outlined above, continues. The success of the work to control stock
levels and borrowings is self-evident and continues. The first stage of the
business review process was completed by the G & A board of directors on
schedule, by the financial year-end. Details of the review have already been
communicated through the statements issued in January and March. The major
project involved in the review is the transfer of all activity from the
Birmingham facility and its subsequent closure. This difficult decision was
taken in March and I am pleased to say that progress is ahead of schedule and
18ct gemset manufacture has already transferred to our Leeds site. An update on
the transfer of gold jewellery parts manufacture to Thailand will be given at
the time of our interim results announcement.
Brown & Newirth Ltd, our market leading wedding ring manufacturer has again
performed very well, increasing turnover by 12% and pre-tax profit by 17%.
Excellent product development and a widening of the product range beyond the
traditional wedding market, continues to underpin this sales and profits growth.
DRT Jewellery Ltd (DRT) has again recorded a small pre-tax loss, though this was
due to costs incurred in transferring to DRT various activities from the Group's
Birmingham facility during the year. Turnover and gross margin both grew, the
latter by over 20% which does provide an optimistic note on which to commence
the current financial year.
Eric's Jewellers Ltd has again performed well, increasing both turnover and net
profit. It continues to provide a useful outlet for excess stocks generated
within the G & A business.
Overseas:
Abbeycrest (Thailand) Ltd (ATL) has completed its first year of operations in
the new purpose-built site in Lamphun, Northern Thailand. This plant assembles
finished gold jewellery from parts and kits currently manufactured in
Birmingham. Production commenced in February 2003 with a totally new workforce
and management group, trained by our UK manufacturing team. The transfer of
assembly to this business, from Birmingham, has gone extremely well with
service, production and cost targets all being met or exceeded. This company has
been profitable in the financial period under review.
Essex International pcl (Essex) based in Thailand, has been engaged in a

wide-ranging re-organisation. The company's factory in Chiang Mai was closed in
the year and activity moved to the ATL site, a process that went extremely
smoothly. Around the time of the year-end, activity was also moved from the
company's Bangkok site, again to Lamphun, centering all the Group's Thai-based
production on one site. The challenge for Essex in the current financial year
will be to capitalise on the Group's recently established sales office in New
York to reverse the decline in sales in its key US market, which has continued
for several years. Although sales have declined in the year to £5.3m (a 16%
decline), profit before tax of £43k was recorded (2003 - £248k loss).
Dynamic Creations Ltd (DCL), based in Hong Kong, had a satisfactory year,
although profits were lower owing mainly to a reduction in third party business.
This was due to the SARS crisis early in the year, preventing the company
attending several trade fairs.
Current Trading:
As anticipated in our budgeting for the current financial year, the UK jewellery
market remains extremely competitive and trading conditions have been tough.
Overall, in the UK the Group has performed to expectation for the early weeks of
the current financial year.
Internationally, both DCL and Essex have shown improving levels of third party
business, reversing last year's trend.
Prospects:
The challenge facing the Group this year is to implement the actions resulting
from the G & A business review efficiently and as quickly as possible. This
involved withdrawal from some less profitable and operationally complex UK
business sectors and a sharper focus on commercial activity (both product
development and selling) to exploit targeted business sectors. The progress
already made on stock levels will be continued, with more vigorous range
management in the UK which, we anticipate, will result in still lower inventory
levels within G & A and further reductions in borrowings and gearing.
With regard to our Far East operations, we are energetically pursuing

opportunities in the USA and emerging markets and hope to report progress on
these later this year.
Michael Lever
Chairman
May 2004
Consolidated Profit and Loss Account

For the year ended 29 February 2004
Unaudited
2004 2003
£'000 £'000
Turnover - Existing operations 96,991 99,099

- Less share of joint venture (202) (259)
--------------------------
- Continuing operations 96,789 98,840
I---------------------------------------------------------I
Operating profit I - Before goodwill 3,616 1,956 I
I - Goodwill (net) (253) (233)I
I---------------------------------------------------------I
- Continuing operations 3,363 1,723
Share of operating loss in joint venture (27) (6)
Net profit on disposal of tangible fixed assets 78 -
Interest receivable 308 241
Interest payable and similar charges (2,114) (2,521)

--------------------------
Profit/(loss) on ordinary activities before taxation 1,608 (563)
Tax on profit/(loss) on ordinary activities (425) 132

--------------------------
Profit/(loss) on ordinary activities after taxation 1,183 (431)
Minority equity interests (334) (568)

--------------------------
Profit/(loss) for the year 849 (999)
Dividends paid and proposed on equity shares (500) (249)

--------------------------
Retained Profit/(loss) for the year 349 (1,248)

--------------------------
Earnings/(loss) per share - basic 3.5p (4.1p)

- diluted 3.4p (4.1p)
Dividends per share 2.0p 1.0p
Consolidated Balance Sheet

As at year ended 29 February 2004
Unaudited
2004 2003
£'000 £'000
Fixed assets
Negative goodwill (325) (407)
--------------------------
1,919 2,172
Tangible fixed assets 7,767 10,663

Investments 540 540
--------------------------
8,307 11,203
Investment in joint venture:

Share of gross assets 190 166
Share of gross liabilities (175) (125)
--------------------------
15 41
--------------------------
10,241 13,416
--------------------------
Current assets
Stocks 27,452 32,200
Debtors 17,827 17,706
Cash at bank and in hand 5,791 7,917
--------------------------
51,070 57,823
Creditors
Amounts falling due within one year 29,441 37,917
--------------------------
Net current assets 21,629 19,906
Total assets less current liabilities 31,870 33,322
Creditors
Amounts falling due after more than one year 3,685 4,909
Provisions for liabilities and charges 96 123

--------------------------
Net assets 28,089 28,290
--------------------------

Shares to be issued 580 580
Merger reserve 199 199
Profit and loss account 18,424 18,861
--------------------------
Equity shareholders' funds 26,877 27,314
Minority equity interests 1,212 976
--------------------------
Total capital employed 28,089 28,290
--------------------------
Consolidated Cash Flow Statement

Unaudited
Notes 2004 2003
£'000 £'000
Net cash inflow from operating activities 1 6,803 6,126
Returns on investments and servicing of 2 (1,814) (2,468)

finance
Taxation (482) (456)
Capital expenditure and financial investment 2 1,092 (2,809)
Equity dividends paid (498) (1,045)

--------------------------
Cash inflow/(outflow) before financing 5,101 (652)
Financing 2 (840) 2,437

--------------------------
Increase in cash in the year 3 4,261 1,785
--------------------------
Notes to the Year End Financial Statements

For year ended 29 February 2004
1. Reconciliation of operating profit to net cash inflow from operating

activities
Unaudited
2004 2003
£'000

Decrease in value of own shares - -
Amortisation of goodwill 253 233
(Profit)/loss on sale of tangible fixed assets (12) 53
Decrease in stocks 4,377 4,077
(Increase)/decrease in debtors (674) 1,937
Decrease in creditors (2,223) (3,858)
--------------------------
--------------------------
2. Analysis of cash flows
Unaudited
2004 2003
Returns on investments and servicing of finance £'000

Interest element of finance lease rental payments - (2)
Dividend paid to minority interest (98) (151)
--------------------------
Net cash outflow from returns on investments and (1,814) (2,468)
servicing of finance --------------------------
Capital expenditure and financial investment

Purchase of tangible fixed assets (1,203) (3,080)
Sale of tangible fixed assets 2,295 271
--------------------------
Net cash inflow/(outflow) from capital expenditure 1,092 (2,809)
and financial investment --------------------------
Financing
Issue of ordinary share capital - 10
New secured loan 480 6,500
Repayment of secured loan (1,300) (650)
Repayment of loan notes - (3,399)
Capital element of finance lease rental payments (20) (24)
--------------------------
Net cash (outflow)/inflow from financing (840) 2,437
--------------------------

For year ended 29 February 2004
3. Reconciliation of net cash flow to the movement in net debt
Unaudited
2004 2003
£'000
Increase in the period 4,261 1,785

Cash outflow/(inflow) and decrease/ 840 (2,427)
(increase) in debt and lease financing
--------------------------
5,101 (642)
New finance leases - (28)

Exchange difference - (71)
--------------------------
5,101 (741)
Net debt at the

beginning of the year (24,243) (23,502)
Net debt at the
end of the year (19,142) (24,243)
Analysis of net At 29 February

debt 2004
At 1 March Exchange Non Cash

2003 Cashflow Movement Movement
£'000 £'000 £'000 £'000 £'000
Cash at bank 7,917 (2,126) - - 5,791

and in hand
Overdrafts (26,252) 6,387 - - (19,865)
---------------------------------------------------------------
(18,335) 4,261 - - (14,074)
Debt due after

one year (4,550) 888 - - (3,662)
Debt due within

one year (1,300) (68) - - (1,368)
Finance Leases (58) 20 - - (38)

---------------------------------------------------------------
(5,908) 840 - - (5,068)
---------------------------------------------------------------
(24,243) 5,101 - - (19,142)
---------------------------------------------------------------
Unaudited
2004 2003
£'000
Bank loans and overdrafts (19,865) (26,252)

Gold leasing (1,149) (676)
Finance leases (38) (31)
Cash 5,791 7,917
Deferred consideration (150) (150)
Medium term loan (5,030) (5,850)
------------------------------
(20,441) (25,042)
------------------------------
Net assets 28,089 28,290
------------------------------
Gearing 73% 88%

(continued)
Note 5
The accounting policies used in this preliminary statement are consistent with
those applied in the financial statements for the financial period ended 28
February 2003.
Note 6
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 29 February 2004 or 28 February
2003. The financial information for the year ended 28 February 2003 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditor's reported on these accounts; their report
was unqualified and did not contain a statement under s237(2) or (3) Companies
Act 1985. The statutory accounts for the year ended 29 February 2004 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the company's Annual General Meeting.
Note 7
The auditors have not reported on the financial statements for the year ended 29
February 2004, nor have any such financial statements been delivered to the
Registrar of Companies.
Note 8
Earnings/(loss) per share have been calculated based on the profit/(loss) for
the financial year of £849k (2003 - loss £999k) using the weighted average
number of shares in issue during the period of 24,276,241 (2003 - 24,269,362).
The fully diluted number of shares used was 24,873,620 (2003 - 24,819,099). The
proposed final dividend of 1p per share will be paid on 15 July 2004 to
shareholders on the register on 25 June 2004.
Note 9
Copies of the Report and Accounts are being sent to shareholders on the 16 June
2004 and will be available to members of the general public at that date from
the Company Secretary, Abbeycrest Plc, Peter Rosenberg House,11/15 Wilmington
Grove, Leeds, LS7 2BQ.

Abbeycrest PLC
Final Results
Abbeycrest PLC
25 May 2005
For Release 7.00am 25 May, 2005
Results for the year ended 28 February 2005
Abbeycrest plc, the UK's leading jewellery manufacturing and distribution

business, announces results for the year ended 28 February 2005.
Results
For the year ended 28th February 2005, Group turnover reduced by 15.0% to
£82.3m. Pre-tax profit before goodwill and exceptional items was £1.3m (2004 -
£1.8m). After tax, minority interest and exceptional items the loss attributable
to shareholders was £0.6m (2004 - £0.9m profit). Basic loss per share was 2.4p
(2004 - 3.9p profit).
The current year's results have been adversely impacted by a legal dispute with
a major Chinese supplier, leading to a loss of business. This has been offset by
the effect of more appropriate stock valuation accounting at G & A Limited (G &
A) and the release of certain specific provisions which are no longer required.
The exceptional items reported relate to the on-going reorganisation of the

Group's manufacturing operations (£1.3m) and the legal costs in relation to the
dispute with a major Chinese supplier which has now been amicably settled
(£0.3m).
Dividends
A continued reduction in borrowings and the imminent completion of the

restructuring programme leads the directors to recommend a final dividend of
1.0p per share making a total for the year of 2.0p (2004 - total dividend 2.0p).
The dividend will be paid on 14th July to all shareholders on the register at
the close of business on Friday 24th June 2005.
Balance Sheet
In a difficult period of declining sales, strict stock control has been

maintained and Group stock levels have reduced marginally to £27.0m from £27.5m.
Debtor balances were £1.8m lower at £16.0m. Net debt at the year-end was £18.7m,
a reduction on the 2004 year-end of £1.6m. In the light of the capital
expenditure in the year of £1.6m, this represents further evidence of the
commitment to debt reduction and cash generation.
Business Review
The major restructuring of the Group's activities is now virtually complete. Our
gold jewellery manufacturing operations in Birmingham will close finally in June
2005 and the Group will begin to realise the cost savings from operating its
manufacturing primarily in a Far East labour cost environment.
As well as the imminent opening of the fully integrated gold plant, a brand new
gem factory has been constructed on an adjacent plot to address the growing
demand for the products produced by Essex International pcl (Essex). This plant
was successfully opened in April 2005. More details are provided in the
manufacturing review below.
www.investegate.co.uk/ArticlePrint.aspx?id=200505250700057066M 1/10
Having state-of-the-art manufacturing plants in the Far East for both gem and
gold has enabled the Abbeycrest Group to position itself uniquely in the UK
market. The Group now offers a full menu of services to UK retailers from full
stock-holding, fulfilment and category management through to direct bulk supply
of product to the customer at the factory gate. The UK market is changing
markedly with many large customers looking to source directly at least some
element of their jewellery requirements from outside the UK; we are now in a
position to react positively to any customer requirements of this nature.
Our commitment to debt reduction remains and I am pleased that the Group's
borrowings continue to reduce despite a year of significant capital expenditure.
The UK trading environment has been difficult for Abbeycrest with sales during
the key Christmas period being generally depressed coupled with a significant
reduction in sales levels to one of our major customers. Taking this into
account, the level of profit before exceptionals compared with last year
demonstrates a better level of cost control than hitherto. B & N continues to be
profitable in line with last year.
Manufacturing
As noted above, the Group will shortly be able to manufacture parts and assemble
gold jewellery in Abbeycrest Thailand Limited's (ATL) dedicated facility in
Northern Thailand. This will include, for the first time, in-house production of
the raw material, gold strip. This latter process not only affords further cost
savings but also opens up the ability to efficiently manufacture new product
categories, such as gold tubing which has great market potential.
The new state-of-the-art gem plant is next door to the gold factory. This has
relieved capacity pressures which became evident last year as demand for Essex
gem products grew. The opportunity has been taken to merge ATL and Essex with
the combined entity going forward under the ATL banner with effect from April
2005. Again, this will simplify operations and enable cost savings to be
achieved in areas such as administration and information technology.
The logic of the expansion of Abbeycrest's productive capacity in Thailand is

two-fold. Firstly, almost without exception, major UK customers have begun to
expect direct import of key products from low labour cost manufacturing areas in
an effort to reduce product prices. Without our own manufacturing capacity, this
business may well have been lost. Now Abbeycrest can offer a direct import
service, uniquely backed up by local sales liaison in the UK. The second
advantage is that Dynamic Creations Ltd (DCL), our Hong Kong based business, can
also begin to utilise the additional capacity in Thailand. This alleviates a
recent problem for DCL, which has been the availability of reliable
sub-contracted manufacturing from the Chinese mainland.
Commercial
The vulnerability of the Group due to the reliance of G & A on a small number of
large customers has been demonstrated during the last financial year by the
impact of a 40% reduction in order intake from a major customer. As reported in
November 2004, this was precipitated by a legal dispute with a major Chinese
supplier, which effectively prevented this supplier's products being offered for
sale. Since Christmas, this dispute has been amicably settled and the products
in question are once again being considered by Abbeycrest's customers.
A major drive has been launched this year to attract new major retail customers
for the business. This has proved most promising and, amongst other
opportunities, G & A will be undertaking a trial of fine jewellery with a major
UK retailer in the last quarter of this calendar year. If successful, this could
be a major step forward in distribution outlets for the Group. In addition, the
Group has targeted the UK's specialist jewellery chains as an opportunity to
increase sales. These specialists have historically had the knowledge and
contacts to purchase product directly from manufacturers and have therefore been
reluctant to trade substantially with G & A. Since Christmas, these retailers
have been approached with a view to buying directly from our factories in
Thailand, backed by local sales support in the UK. The reaction has been
positive and this business segment should prove a significant growth area.
Outside of the UK, Essex (now merged with ATL) has had a promising year with
turnover growing by 38% and has recorded a profit before exceptional items for
the first time in several years. With the growth of business in North America,
the increasing demand in the UK for direct import of product and the facilities
and capacity offered by the brand-new factory, the prospects for gem sales are
excellent.
ATL has consolidated the excellent performance of the first year of operations
with another set of solid financial figures. Turnover and profit were steady at
£7.2m and £0.5m respectively. As noted, the project to move parts stamping from
the UK and commence raw material manufacture in Thailand is on target for
imminent completion.
DCL has had difficulty in finding reliable manufacturing capacity on the Chinese
mainland. Despite this, turnover increased by 20% to £11.4m though profits
declined from £1.1m to £0.9m due to increased overheads related to the number of
sub-contract manufacturers, which it has been necessary to manage throughout the
year. The availability of the new factory in Thailand will help alleviate this
issue.
Current Trading and Prospects
The Group's major market remains the UK and the difficulties experienced by many
retailers since Christmas have been well documented. The Abbeycrest Group is
being directly affected by these difficulties and order intake for the first two
months of the current financial year is lower than last year. However, the
Abbeycrest Group will imminently be at the end of a two-year restructuring
exercise. The Group now stands able to begin to reap the benefits of volume
manufacturing being performed in a low labour cost environment. In addition, two
sets of infrastructure in Thailand will be replaced by one as Essex and ATL are
merged.
Overall, despite a more difficult retail environment in the UK, the Directors
are confident of the outlook and prospects for the Group for the year ending 28
February 2006 particularly because of the reduced cost base arising from the
relocation of the Group's volume manufacturing to Thailand.
Michael Lever
Executive Chairman
Enquiries:
Paul Vann Binns & Co PR Limited

Tel: 07768 807631
Consolidated Profit and Loss Account
Notes 2005 2004

Unaudited Audited
£'000 Restated
£'000
Turnover (including share of joint ventures) 82,464 96,991

Less share of joint venture (201) (202)
------- -------
Turnover 82,263 96,789
Operating Profit 1,204 3,363
Share of operating loss in joint venture (47) (27)
Net profit on disposal of tangible fixed assets - 78
Interest receivable 918 308
------------------------------------------------------- ------- -------
Profit before taxation, goodwill amortisation and

exceptional items 1,285 1,783
Goodwill amortisation (213) (253)
Exceptional items 2 (1,568) 78

------------------------------------------------------- ------- -------
(Loss)/profit on ordinary activities before (496) 1,608

taxation
Tax on (loss)/profit on ordinary activities 91 (425)

------- -------
(Loss)/profit on ordinary activities after (405) 1,183

taxation
Minority equity interests (187) (236)

------- -------
(Loss)/profit for the financial year 5 (592) 947
Dividends paid and proposed on equity shares 4 (507) (500)

------- -------
Retained (loss)/profit for the year (1,099) 447

------- -------
(Loss)/earnings per share - basic 3 (2.4p) 3.9p

- diluted (2.4p) 3.8p
Adjusted earnings per share - basic 3 2.1p 3.6p

- diluted 2.1p 3.5p
Dividends per share 2.0p 2.0p
All of the above results are derived from

continuing operations.
Consolidated Statement of Total Recognised Gains And Losses
Notes 2005 2004

Unaudited Audited
£'000 Restated
£'000
(Loss)/profit for the financial year (592) 947
Loss on foreign currency translation (152) (786)

------- ------
Total recognised gains and losses relating to the period (744) 161
------- ------
Prior year adjustment 1 249
-------
Total recognised gains and losses since last annual report (495)
-------
Notes 2005 2004

Unaudited Audited
£'000 Restated
£'000
Fixed assets
Negative Goodwill (236) (325)
------- -------
1,564 1,919
Tangible fixed assets 7,675 7,767

------- -------
9,239 9,686
Investment in joint venture:
Share of gross assets - 190
Share of gross liabilities - (175)
------- -------
9,239 9,701
------- -------
Current assets
Stocks 27,015 27,452

Debtors 16,019 17,827
Cash at bank and in hand 1,619 730
------- -------
44,653 46,009
Creditors
Amounts falling due within one year (20,180) (24,380)
------- -------
Total assets less current liabilities 33,712 31,330
Creditors
Amounts falling due after more than one year (7,560) (3,685)
Provisions for liabilities and charges (88) (96)

------- -------
Net assets 26,064 27,549
------- -------

Called up equity share capital 2,538 2,488
Shares to be issued - 580
Merger reserve 199 199
Profit and loss account 17,169 18,133
------- -------
Equity shareholders' funds 5 25,395 26,586

Minority equity interests 669 963
------- -------
Total capital employed 26,064 27,549
------- -------

2005 2004
Notes Unaudited Audited
£'000 Restated
£'000
Net cash inflow from operating activities 6 6,375 5,654

Returns on investments and servicing of finance 7 (1,976) (1,814)
Taxation (480) (482)
Capital expenditure and financial investment 7 (1,583) 1,092
Acquisitions and disposals 7 (200) -
Equity dividends paid (507) (498)
------- -------
Cash inflow before financing 1,629 3,952
Financing 7 7,027 (1,313)

------- -------
Increase in cash in the year 9 8,656 2,639

------- -------
Notes to the preliminary announcement
1. Basis of preparation of preliminary announcement

The accounting policies used in this preliminary announcement are consistent
with those applied in the financial statements for the financial year ended 29
February 2004, with the exception of the accounting policy in respect of own
shares and the reclassification of dividends paid to minority interests.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 28 February 2005 or 29 February
2004. The financial information for the year ended 29 February 2004 is derived
from the statutory accounts for that year, adjusted for the restatements noted
above, which have been delivered to the Registrar of Companies. The auditors
reported on these accounts: their report was unqualified and did not contain a
statement under s237(2) or (3) Companies Act 1985. The statutory accounts for
the year ended 28 February 2005 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the company's Annual
General Meeting.
UITF38 'Accounting for ESOP Trusts', issued in December 2003, has been adopted
for the year ending 28 February 2005. The abstract requires any investment in
own shares by the company to be recorded as a reduction in shareholders' funds.
The adoption of UITF38 implemented by prior year adjustment has resulted in a
reduction in shareholders' funds of £540,000 at 28 February 2005 (29 February
2004: £540,000).
The adoption of UITF38 has no impact on the consolidated profit and loss account
or the consolidated statement of total recognised gains and losses for the year
ended 28 February 2005 and the year ended 29 February 2004.
The prior year adjustment reported in the consolidated statement of total

recognised gains and losses is a correction of a previous accounting
misclassification of dividends paid to minority interests. The result of this
adjustment is to reduce minority interests at 29 February 2004 by £249,000, to
increase the profit and loss account reserve at 29 February 2004 by £249,000,
and to increase the profit for the financial year ended 29 February 2004 by
£98,000. The adjustment has no impact on reported net assets and all comparative
amounts have been restated.
The auditors have not yet reported on the financial statements for the year
ended 28 February 2005, nor have any such financial statements been delivered to
the Registrar of Companies. The content of this report is, therefore, unaudited.
Copies of the 2005 Report and Accounts are being sent to shareholders during
June 2005 and will be available to members of the general public shortly
thereafter from the Company Secretary, Abbeycrest Plc, Peter Rosenberg House, 11
/15 Wilmington Grove, Leeds, LS7 2BQ.
2. Operating exceptional items
Exceptional items reported within the operating profit from

continuing operations are as follows: 2005
Unaudited
£'000
Reorganisation costs 1,128

Restructuring of senior UK management 170
Legal costs 270
-------
1,568
-------
The reorganisation costs relate to the restructuring of the Group manufacturing

business into one purpose built site in Northern Thailand and the associated
closure of facilities in Birmingham, UK and Bangkok, Thailand, together with a
realignment of the remaining UK senior management structure.
The exceptional legal costs have been incurred by G & A Limited, a wholly owned
subsidiary undertaking of the company. G & A Limited was engaged in litigation
with a key supplier in connection with an exclusive supply agreement, which has
now been settled.
(continued)
3. (Loss)/earnings per share

(Loss)/earnings per share have been calculated based on the loss for the
financial year of £592,000 (2004 - profit of £947,000) using the weighted
average number of shares in issue during the period of 24,637,885 (2004 -
24,276,241). The fully diluted number of shares used was 24,637,885 (2004 -
24,873,620).
Adjusted basic and diluted earnings per share have been calculated so as to
exclude the exceptional items that have arisen during 2004 and have been
provided in order that the effect of these one-off items can be fully
appreciated.
Adjusted earnings used in the calculation of adjusted basic and diluted earnings
per share reconciles to basic earnings as follows:
2005 2004
Unaudited Audited
£'000 Restated
£'000
(Loss)/profit for the financial year as used in the

calculation of basic earnings per share (592) 947
Exceptional items 1,568 (78)

Tax effect thereon at 30% (470) -
------- -------
Adjusted earnings for the year 976 869

------- -------
4. Dividends
The proposed final dividend of 1p per share will be paid on 14 July 2005 to
shareholders on the register on 24 June 2005.
5. Reconciliation of movement in equity shareholders' funds

2005 2004
Unaudited Audited
£'000 Restated
£'000
(Loss)/profit for the financial year (592) 947
Dividends paid and proposed on equity shares (507) (500)

-------- -------
(1,099) 447
Net exchange adjustments 135 (786)
Adjustments to shares to be issued (227) -
-------- -------
Net decrease in equity shareholders' funds (1,191) (339)
Opening equity shareholders' funds (originally

£26,877,000 at 1 March 2004 before deducting net prior
year adjustment of £291,000) 26,586 26,925
-------- -------
Closing equity shareholders' funds 25,395 26,586

-------- -------
(continued)
6. Reconciliation of operating profit to net cash inflow

from operating activities 2005 2004
Unaudited Audited
£'000 Restated
£'000

Amortisation of goodwill 213 253
Profit on sale of tangible fixed assets (1) (12)
Decrease in stocks 397 4,377
Decrease/(increase) in debtors 2,020 (674)
Increase/(decrease) in creditors 913 (3,372)
------- -------
------- -------
7. Analysis of cash flows 2005 2004

Unaudited Audited
£'000 Restated
£'000
Returns on investments and servicing of finance

Dividend paid to minority interest (194) (98)
------- -------
Net cash outflow from returns on investments and
servicing of finance (1,976) (1,814)
------- -------
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,591) (1,203)

Purchase of intangible assets (35) -
Sale of tangible fixed assets 43 2,295
------- -------
Net cash (outflow)/inflow from capital expenditure and
financial investment (1,583) 1,092
------- -------
Acquisitions
Deferred consideration paid (200) -
------- -------
(200) -
------- -------
Financing
New secured loan 10,087 480

Repayment of secured loan (5,849) (1,300)
Capital element of finance lease rental payments (14) (20)
Leased gold movement 2,803 (473)
------- -------
Net cash inflow/(outflow) from financing 7,027 (1,313)

------- -------
For the year ended 28 February 2005 (continued)
8. Reconciliation of net cash flow to the movement in net debt

2005 2004
Unaudited Audited
£'000 Restated
£'000
Increase in cash during the year 8,656 2,639

(Increase)/decrease in borrowings (7,027) 1,313
------- -------
1,629 3,952
Net debt at the beginning of the year (20,291) (24,243)

------- -------
Net debt at the end of the year (18,662) (20,291)
------- -------
9. Analysis of net debt (Unaudited)
At At 28
1 March Cashflow February
2004 £'000 2005
Restated £'000
£'000
Cash at bank and in hand 730 889 1,619
Overdrafts (14,804) 7,767 (7,037)
------ ------- -------
(14,074) 8,656 (5,418)
Debt due after one year (3,662) (3,882) (7,544)

Debt due within one year (1,368) (356) (1,724)
Finance leases (38) 14 (24)
Leased gold debt (1,149) (2,803) (3,952)
------ ------- -------
(6,217) (7,027) (13,244)
------ ------- -------
(20,291) 1,629 (18,662)
------ ------- -------
10. Analysis of gearing
2005 2004
Unaudited Restated
£'000 £'000
Bank loans and overdrafts (7,037) (14,804)
Leased gold debt (3,952) (1,149)
Finance leases (24) (38)
Cash 1,619 730
Medium term loan (9,268) (5,030)
------- -------
(18,662) (20,291)
------- -------
Net Assets 26,064 27,549
------- -------
Gearing 72% 74%

5/24/13 Abbeycrest PLC | Interim Results | FE InvestEgate
Abbeycrest PLC
Interim Results
Abbeycrest PLC
23 November 2005
For Immediate release Wednesday 23 November 2005
Abbeycrest plc
Interim Results for the six months ended 31 August 2005
Chairman's Interim Statement
Overall Review of Results
As noted in the trading statement issued in August, the jewellery sector has
been disproportionately affected by the overall slowdown in the UK economy.
Indeed the statistics issued by the UK assay offices indicate that the level of
hallmarking of gold jewellery in the UK is down year-on-year by approximately
25%. The issue of the consumer being reluctant to purchase has been exacerbated
by
retailers aggressively de-stocking as their trading performance comes under more

pressure. Clearly, this has had a fundamental effect on the trading performance
of our major UK subsidiary, G&A Ltd and this is dealt with more fully below.
Since August the trading performance of the Group has matched internal
expectations, and as at the date of this statement, the directors anticipate
achieving the Board's full year financial expectations.
G&A Ltd (G & A)
As noted above, the downturn in the market has adversely affected G&A's trading
with virtually every customer. The speed of the change has clearly exposed the
overhead base that existed at the previous year end as being inappropriate and,
as notified in August, a fundamental cost reduction
exercise has commenced. At the date of this statement, G&A has exited trading
with those customers where the cost of doing business was disproportionate to
the relevant revenue opportunity and appropriate savings have been realised.
The first half year figures still contain the last few months of cost relating
to the Birmingham operation which is now closed and all activity moved to
Thailand. The second half year will see these savings being realised in full as
well as the benefit, for the first time, of manufacturing our own materials and
components.
The margin achieved by G&A in this six month period has also been adversely
affected by several factors.
* Unlike previous years, the majority of stock returns from customers have
occurred in the first half year instead of after the season. An element of
this stock has had to be written down and disposed of, all of which has been
reflected in the gross margin.
* The last few months of Birmingham operation were exceptionally costly as

double running capacity was maintained to safeguard against potential
problems in Thailand.
www.investegate.co.uk/ArticlePrint.aspx?id=200511230700405324U 1/22
* A significant amount of sales, sourced from third parties, to a major UK

customer was moved to a direct import basis on much lower margins.
Clearly, the first two of these factors will not affect the second half to the
same extent.
More positively, a jewellery trial being undertaken with a major UK general

retailer is progressing well and holds out the prospect of significant new
business for G&A next financial year.
In addition, important UK customers who had previously moved away from G&A in
order to buy direct from the Far East are being introduced to our own
manufacturing operations in that part of the world. In this way, business lost
to G&A in the past can be picked up by the Group's overseas operations.
Brown & Newirth Ltd (B&N)
Following an approach by the management team, negotiations commenced with a view

to a management buyout. These negotiations broke down in the late stages of this
deal and the aborted costs are contained in exceptional items in these
statements. There are now no plans to dispose of this subsidiary. The key
members of the B&N team have now been incentivised to grow B&N as part of the
Abbeycrest Group.
B&N has not been immune from the retail downturn and both sales and margin have
suffered in the first half year in comparison to last year. Recent trading has
been robust, however, and the signs are that the re-focused management are
beginning to buck the market trends.
Abbeycrest Thailand Ltd (ATL)
Now that all manufacturing takes place on one site the activities of Essex
International pcl (Essex) have been transferred to the ATL corporate banner, and
Essex itself is being wound down as a corporate entity. This clearly allows cost
synergies and avoids the practical obligations inherent in Essex being a Thai
public company.
The Gem division of ATL (previously Essex) has seen turnover growth of over 30%
and, under the new factory management, the key operating metrics of gold loss,
rework and outwork are now at or below 'best practice' levels. There is plenty
of spare capacity in this modern plant and these efficiency improvements coupled
with the interest of UK retailers who direct import bodes well for next
financial year.
The Gold division of ATL has, as already reported absorbed ex-Birmingham

activity and introduced gold strip production, a first for the Group. The
opportunity is now being taken to aggressively quote for volume gold jewellery
business both in the UK and worldwide.
Dynamic Creations Ltd (DCL)
Trade at DCL has suffered as duty changes have adversely affected Hong Kong
exporters and the impact of lower demand from G&A has hit. There is a clear
opportunity to use our own Thai manufacturing capacity rather than Chinese
mainland contractors and plans are now being executed to make this change over
the next nine months. Again, this will enable significant cost savings to be
made.
IMS Pty Ltd (IMS)
The Group has exited this joint venture vehicle in Australia and the costs of
exit are included in exceptional items. The venture has never made profit, and
had little prospect, in the directors view, of making any meaningful
contribution.
Prospects
The directors see no immediate prospect of this downturn in the market reversing
and have budgeted going forward accordingly. The cost reduction plans outlined
in August are being expedited and will largely be complete by the year end, as
will a withdrawal from peripheral activities in all areas (customer, product and
geographical). The extent of these savings will mean that the Group will have a
much lower cost base and break-even point. This should enable Abbeycrest to move
back toward profit next financial year even with the likelihood of a sustained
consumer market downturn.
Michael Lever
Chairman
Enquiries:
Phil Walker, Chief Executive

Abbeycrest plc
Tel 0113 2854702
Paul Vann
Winningtons Financial
Tel: 07768 807631
For the six months ended 31 August 2005

to 31 August to 31 August to 28 February
2005 Unaudited 2004 Unaudited 2005 Unaudited
Notes
£'000 £'000 £'000
Turnover 28,851 34,218 82,597

---------- ----------- -----------
Operating (loss)/ (4,423) (1,688) 1,541
profit
Interest 444 336 918

receivable
Interest payable and (1,180) (997) (2,571)

similar charges
(Loss)/profit before 2 (4,243) (1,343) 1,456

taxation and
exceptional items
Exceptional items (916) (1,006) (1,568)

----------- ----------- ----------
Loss on ordinary (5,159) (2,349) (112)
activities
before taxation
Tax on loss on 1,681 555 35

ordinary
activities
----------- ------------ ---------
Loss on ordinary
activities
after taxation (3,478) (1,794) (77)
----------- ------------ ----------
Discontinued
operations
Loss for the period (328) (14) (47)

from discontinued
operations
----------- ------------ ----------
Loss for the (3,806) (1,808) (124)

period
------------ ------------ ----------
Profit attibutable 46 127 187

to minority
interests
Loss attributable to (3,852) (1,935) (311)

equity shareholders
------------- ------------- -----------
(3,806) (1,808) (124)
------------- ------------- -----------
Loss per share - 3 (15.5)p (7.9)p (1.2)p

basic
- diluted 3 (15.5)p (7.9)p (1.2)p
As at 31 August 2005
31 August 31 August 28 February

2005 2004 2005
Unaudited Unaudited Unaudited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 1,866 1,866 1,866
Intangible assets 399 732 616
Investment in joint venture - 1 -
Deferred tax assets 426 154 426
----------- ----------- -----------
10,330 9,311 9,967
----------- ----------- -----------
Current assets
Inventories 28,728 31,931 27,015
Financial assets 47 - -
Cash and cash equivalents 509 130 1,619
----------- ------------ -----------
46,544 51,275 44,227
----------- ----------- -----------
Liabilities
Current liabilities
- Borrowings (17,986) (17,375) (8,761)
- Derivative financial (156) - -
instruments
Obligations under finance (8) (5) (8)
leases
----------- ----------- -----------
(27,640) (26,734) (19,926)
------------- ------------ ------------
Net current assets 18,904 24,541 24,301
- Borrowings (6,681) (8,400) (7,544)
Provisions - - (30)

leases
----------- ---------- -----------
(6,695) (8,421) (7,590)
Net assets 22,539 25,431 26,678

=========== ========== ===========
Shareholders' equity
Share capital 2,538 2,538 2,538
Shares to be issued - 50 -
Equity reserves 199 199 199
Cumulative translation (81) (179) (258)
reserves
Hedging reserves (140) - -
----------- ----------- ------------
Total shareholders' equity 21,887 24,723 26,009
Minority interest in equity 652 708 669
=========== =========== ============
Total equity 22,539 25,431 26,678
Consolidated statement of recognised income and expense


2005 2004 2005
£'000 £'000 £'000
Loss after taxation (3,806) (1,808) (124)
Exchange movement 177 (179) (258)
Total recognised expense (3,629) (1,987) (382)
relating to the period
-------------- ------------- ----------
Attributable to:
Equity holders of the (3,629) (1,987) (382)
parent
Minority interests (46) (127) (187)
------------- ----------- ----------
(3,675) (2,114) (569)
------------- ----------- ---------
Consolidated statement of changes in shareholders' equity


2005 2004 2005
£'000 £'000 £'000
Total equity at beginning of 26,678 27,985 27,985
period
Adoption of IAS 32 and IAS 39 (190) - -

----------- ----------- ----------
Total equity at beginning of 26,488 27,985 27,985
period - restated
Total recognised expenses

attributable to equity
holders of the parent (3,629) (1,987) (382)
Issue of share capital - (177) (227)

Ordinary dividends on equity (257) (250) (504)
shares
Minority interests (63) (140) (194)

------------ ---------- ----------
Total equity at end of period 22,539 25,431 26,678

------------ ----------- -----------

to 31 August to 31 August to 28
February
2005 2004 2005
Note £'000 £'000 £'000
Cash (used in)/generated from (7,959) (5,741) 6,428
operations 6
Interest paid (1,196) (1,120) (2,700)
Taxation received/(paid) 40 40 (533)
Net cash (outflow)/inflow from
operating activities (8,671) (6,491) 4,113
----------- -------- ---------
Cash flow from investing activities
Purchase of property, plant and (1,568) (293) (1,591)
equipment
Proceeds from sale of property,
plant and machinery 398 40 43
Purchase of intangible fixed assets - - (35)
Deferred consideration paid - - (200)
Net cash (used in)/generated from
investing activities (1,170) (253) (1,783)
---------- --------- ---------
Cash flow from financial activities
Proceeds from issue of new bank - 10,087 10,087
loans
Repayment of borrowings (863) (5,030) (5,849)
Capital element of finance lease (2) (9) (14)
rental payments
Leased gold movement 4 691 606 2,803
Dividends paid to shareholders (257) (254) (507)

Dividends paid to minority interests (63) (140) (194)
financing activities (494) 5,260 6,326
----------- --------- --------
Net (decrease)/increase in cash 4 (10,335) (1,484) 8,656
Cash and bank overdrafts at beginning

of period (5,418) (14,074) (14,074)
Cash and bank overdrafts at end of (15,753) (15,558) (5,418)
period
----------- --------- ---------
Cash and bank overdrafts comprise:

Bank overdrafts (16,262) (15,688) (7,037)
----------- --------- ---------
(15,753) (15,558) (5,418)
----------- --------- ----------
Notes to the Interim Report

The financial information in this interim report has been prepared on the basis
of all International
Financial Reporting Standards that had been published by 31 December 2004 and
apply to accounting periods beginning on or after 1 January 2005. The standards
used are those endorsed by the EU together with those standards and
interpretations that had been issued by the IASB but had not been endorsed by
the EU at the time of preparing these statements (October 2005), but are
expected to be endorsed by the year end.
During 2005 further standards and interpretations may be issued that will be
applicable for financial years beginning on or after 1 January 2005 or that are
applicable to later accounting periods but may be adopted early. The Group's
first IFRS financial statements may, therefore, be prepared in accordance with
some different accounting policies from the financial information presented
here. Additionally, IFRS is currently being applied in the United Kingdom, and
in a large number of other countries simultaneously, for the first time.
Furthermore, due to a number of new and revised standards included within the
body of standards that comprise IFRS, there is not yet a significant body of
established practice on which to draw in forming opinions regarding
interpretation and application. Accordingly, practice is continuing to evolve.
At this preliminary stage, therefore, the full financial effect of reporting
under IFRS as it will be applied and reported on in the Group's first IFRS
financial statements cannot be determined with certainty and may be subject to
change.
Appendix I to this report contains the Group's statement of the transition to

International Financial Reporting Standards ('the transition statement'). This
statement describes the likely impact of the transition from UK GAAP to IFRS on
the Group's equity, net income and cash flows as well as providing each of the
reconciliations required by IFRS 1.
The accounting policies followed in the preparation of this interim report are
set out in full in the transition statement and have been consistently applied
to all the years presented except for those relating to the classification and
measurement of financial instruments. The Group has made use of the exemption
available under IFRS 1 to only apply IAS 32 and IAS 39 from 1 March 2005.
The comparative figures for the financial year ended 28 February 2005 are not
the Group's statutory accounts for the financial year. Those accounts, which
were prepared under UK GAAP in accordance with the Companies Act 1985, have been
reported on by the Company's auditors and delivered to the registrar of
companies. The report of the auditors was unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.
The interim accounts for the six months ended 31 August 2005 have not been
audited, nor have the interim accounts for the equivalent period in 2004. The
interim accounts for the six months ended 31 August 2004 were approved by the
Board of Directors on 22 November 2004.
Copies of the announcement will be sent to shareholders and are available to

members of the general public from the Company Secretary, Abbeycrest plc, Peter
Rosenberg House, 11/15 Wilmington Grove, Leeds, LS7 2BQ, or via the company
website at www.abbeycrest.co.uk.

2005 2004 2005
£'000 £'000 £'000
Reorganisation costs 439 789 1,128

Legal costs - 217 270
Aborted transaction costs 477 - -
Restructuring of senior UK - - 170
management
-------- --------- --------
916 1,006 1,568
-------- --------- --------
The reorganisation costs relate to the restructuring of the Group manufacturing

operations into one purpose built site in Northern Thailand and the associated
closure of facilities in Birmingham, UK and Bangkok, Thailand.
The aborted transaction fees relate to legal fees and other associated costs
incurred by Abbeycrest plc, in relation to the proposed management buy-out of
B&N.
The discontinued operation costs relate to the IMS joint venture in Australia.
3. Loss per share
Basic loss per share have been calculated using the weighted average number of
shares in issue during the period of 24,637,885 (2004: 24,501,784). Diluted
earnings per share have been calculated using 24,776,241 (2004: 24,606,725)
shares.

2005 2004 2005
£'000 £'000 £'000
(Decrease)/increase in cash and
bank overdrafts (10,335) (1,484) 8,656
Decrease in leased gold (691) (606) (2,803)
Increase/(decrease in debt 865 (5,048) (4,224)
------------ ---------- -----------
Change in net debt resulting (10,161) (7,138) 1,629
from cash flows in period
Movement in net debt during the (10,161) (7,138) 1,629

period
Net debt at beginning of period (18,662) (20,291) (20,291)
----------- ------------ ------------

Net debt at end of the period (28,823) (27,429) (18,662)
----------- ------------- -------------
5. Analysis of net debt

2005 2004 2005
£'000 £'000 £'000
(excluding bank overdrafts)
Bank overdrafts (16,262) (15,688) (7,037)

Leased gold debt (4,643) (1,755) (3,952)
Long term borrowings (8,405) (10,087) (9,268)

leases
------------ ----------- -------------
(28,823) (27,429) (18,662)
------------ ----------- -------------
6. Reconciliation of operating (loss)/profit to net cash (outflow)/inflow from

operating activities

2005 2004 2005
£'000 £'000 £'000
Operating (loss)/profit (4,423) (1,688) 1,541
Depreciation 720 675 1,629
Loss/(profit) on sale of 95 1 (1)

tangible fixed assets
Sale of joint venture (361) - (2)

(Increase)/decrease in stock (1,663) (4,509) 377
(Increase)/decrease in (1,153) (1,354) 1,992
debtors
(Decrease)/increase in (984) 1,134 892

creditors
Adoption of IAS 39 (190) - --

----------- ---------- ----------
(7,959) (5,741) 6,428
------------ ----------- ---------
Appendix I
Transition to IFRS
Introduction
Abbeycrest plc prepared its 2004/05 consolidated financial statements in

accordance with accounting standards issued by the UK Accounting Standards
Board, the pronouncements of the Urgent Issues Task Force, relevant Statements
of Standard Accounting Practice and in compliance with the Companies Act 1985.
With effect from 1 March 2005, Abbeycrest plc will prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards, International Accounting Standards and interpretations issued by the
International Financial Reporting Interpretation Committee and its predecessor
body (together 'IFRS'). The standards to be applied, which will be adopted for
the first time for the purpose of preparing consolidated financial statements
for the year ending 28 February 2006, will be those issued by the International
Accounting Standard Board ('IASB') and endorsed by the European Union ('EU') as
at 28 February 2006. Abbeycrest plc presents below the effects of the transition
to IFRS and the accounting policies and transitional exemptions or choices it
has applied in adopting IFRS. Reconciliations of retained profit and equity for
the comparative periods are shown to illustrate the impact of the move from UK
GAAP to IFRS and more detailed explanations are given for the year ended 28
February 2005.
Transition effects
IFRS 1 'First Time Adoption of International Financial Reporting Standards'

permits those companies adopting IFRS for the first time, to take certain
exemptions from the full requirements of IFRS in the transition period.
Abbeycrest plc will take the following key exemptions.
(a) The effect of changes in foreign exchange rates: Under IAS 21, cumulative
translation differences on the consolidation of subsidiaries are being
accumulated for each individual subsidiary from the date of transition to IFRS
and not from the original acquisition date.
(b) Financial Instruments: Financial Instruments will be designated as a

financial asset or liability at fair value (with the fair values taken through
the profit and loss account), or as available for sale on the adoption date of
1 March 2005, rather than at the date of initial recognition. IAS32, IAS39 and
IFRS4 will not be applied to the comparative financial statements included in
the first set of IFRS accounts. Financial instruments in the comparative year
continue to be presented in accordance with the previous accounting policy.
(c) Business combinations: IFRS 3 will be applied prospectively from the

transition date to IFRS with no restatement of previous business combinations.
(d) Share-based payments: IFRS 2 has been adopted from the transition date and
is only being applied to equity instruments (for example share options and
share scheme awards), granted on or after 7 November 2002 and not vested on the
effective date of the standard.
Abbeycrest plc has elected not to take up the option of full retrospective
application of the standard.
Overview of impact
The move from UK GAAP to IFRS does not impact the Group strategy or commercial
decisions, nor does it significantly change any of the prime financial
statements or cash flows of the Group.
The main areas of change impacting the financial statements for the year ended
28 February 2005, arising from the move to IFRS are as follows:
(a) The cessation of goodwill amortisation and derecognition of negative

goodwill, together with the introduction of impairment annual tests.
(b) Restatement of dividends on a declared basis.
(c) Change to the accounting treatment for long-term share incentive plans.
(d) Accounting for profits and losses of foreign subsidiaries at average

exchange rates.
In addition to the above, there are presentational changes arising from the move
to IFRS. These changes are dealt with using IAS 1 'Presentation of Financial
Statements'. The presentational changes are not significant.
In the following section, a more detailed explanation of the IFRS adjustments in

respect of the year-ended 28 February 2005 is provided. The reconciliation
schedules included in that section use UK GAAP numbers as a starting point, but
are presented using the IFRS format.
In summary, the impact of IFRS on the key reported results for 28 February 2005,
is as follows:
UK GAAP Change IFRS

£'000 £'000 £'000
Group Turnover 82,263 334 82,597
Profit before tax, goodwill amortisation and 1,285 136 1,421

exceptional items
Loss before tax (496) 337 (159)

Net assets 26,064 614 26,678
Net debt 18,662 - 18,662
Gearing 72% 2% 70%
Reconciliations of UK GAAP to IFRS for comparative periods
The following reconciliations provide a quantification of the effect of the
transition to IFRS.
Six months Year

ended ended
31 August 28 February
2004 2005
Note £'000 £'000
Loss sustained under UK GAAP (2,453) (1,099)
IFRS 3 - non amortisation of goodwill 1 167 302

IFRS 3 - negative goodwill written off 1 (12) (89)
to profit and loss
IFRS 2 - LTIP provision release 2 - (38)
IAS 10 - restatement of dividends on 3 4 3
paid basis
IAS 21 - translation of overseas results
at average exchange rate 5 109 106
------------ -----------
Loss sustained under IFRS (2,185) (815)
------------ -----------
28 February 31 August 28 February

2004 2004 2005
Note £'000 £'000 £'000
Total equity under UK GAAP 27,549 24,836 26,064
IFRS 3 - non amortisation of - 167 302
goodwill 1
IFRS 3 - write-off of positive (236) (236) (236)
goodwill 1
IFRS 3 - write-off of negative 325 313 236
goodwill 1
IFRS 2 - reversal of LTIP 96 96 58
provision release 2
IAS 10 - restatement of
dividends on declared basis 3 251 255 254
----------- ----------- -----------
Total equity under IFRS 27,985 25,431 26,678
----------- ------------ -------------
Effect of IFRS on Consolidated Income Statement
UK GAAP IFRS 3 IFRS 2 IAS 10 IAS 38 IAS 21 IFRS

Share
based Dividends Intangible Foreign
Goodwill payments Paid Assets Exchange
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover 82,263 -- -- -- -- 334 82,597
Cost of (60,200) -- -- -- -- (189) (60,389)

sales
-------- -------- -------- --------- --------- -------- -------
Gross profit 22,063 -- -- -- -- 145 22,208
Other
operating
expenses (20,859) 213 (38) -- -- 17 (20,667)
-------- ---- ----- ---- ---- ------- -------
Operating 1,204 213 (38) -- -- 162 1,541
profit
Share of (47) -- -- -- -- -- (47)

operating loss
in joint
venture
Interest 918 -- -- -- -- -- 918

receivable
Interest (2,571) -- -- -- -- -- (2,571)

payable and
similar
charges
Profit before 1,285 -- (38) -- -- 174 1,421

taxation,
goodwill
amortisation
and
exceptional
items
Goodwill (213) 213 -- -- -- -- --

amortisation
Exceptional (1,568) -- -- -- -- -- (1,568)

items
------ ---- ----- ----- ----- ----- ------
Loss on (496) 213 (38) -- -- 162 (159)
ordinary
activities
before
taxation
Tax on (loss)/ 91 -- -- -- -- (56) 35

profit on
ordinary
activities
------ ----- ------ ----- ------ ------ -----

Loss on (405) 213 (38) -- -- 106 (124)
ordinary
activities
after
taxation
Minority (187) -- -- -- -- -- (187)

interests
Loss for the

financial
year (592) 213 (38) -- -- 106 (311)
------ ----- ----- ----- ----- ----- ----
Dividends paid (507) -- -- 3 -- -- (504)

and proposed
on equity
shares
Retained loss
for the
financial
year (1,099) 213 (38) 3 -- 106 (815)
======== ==== ==== ==== ==== ==== ======
28 February 2005
UK GAAP IFRS 3 IFRS 2 IAS 10 IAS 38 IAS 21 IFRS
Share
based Dividends Intangible Foreign
Goodwill payments Paid Assets Exchange
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Assets
Non-current
assets
Goodwill 1,800 66 -- -- -- -- 1,866

Negative (236) 236 -- -- -- -- --
goodwill
Intangible -- -- -- -- 616 -- 616
assets
Property, 7,675 -- -- -- (616) -- 7,059
plant and
equipment
Deferred tax 426 -- -- -- -- -- 426
assets
------- ----- ----- ---- ---- ----- ------
9,665 302 -- -- -- -- 9,967
------- ----- ----- ---- ---- ----- ------
Current
assets
Inventories 27,015 -- -- -- -- -- 27,015

Trade and 15,593 -- -- -- -- -- 15,593
other
receivables
Cash and cash 1,619 -- -- -- -- -- 1,619
equivalents
------ ---- ---- ---- ---- ----- ------
44,227 -- -- -- -- -- 44,227
------ ---- ---- ---- ---- ----- ------
Liabilities
Current
liabilities
Trade and (11,157) -- -- -- -- -- (11,157)
other
payables
Bank (8,761) -- -- -- -- -- (8,761)
overdrafts
and loans
Obligations (8) -- -- -- -- -- (8)
under finance
leases
Short term (254) -- -- 254 -- -- --
provisions
-------- ---- ---- ---- ---- ---- --------
(20,180) -- -- 254 -- -- (19,926)
-------- ---- ---- ---- ---- ---- --------
Net current 24,047 -- -- -- -- -- 24,301

assets
------ ---- ---- ---- ---- ---- -------
Non-current
liabilities
Bank loans (7,544) -- -- -- -- -- (7,544)

Long term (88) -- 58 -- -- -- (30)
provisions
Obligations (16) -- -- -- -- -- (16)
under finance
leases
------- ---- ---- ---- ---- ---- ------
(7,648) -- 58 -- -- -- (7,590)
-------- ---- ---- ---- ---- ---- -------
Net assets 26,064 302 58 254 -- -- 26,678
Shareholders
equity
Share 2,538 -- -- -- -- -- 2,538

capital
Share 5,489 -- -- -- -- -- 5,489
premium
account
Equity 199 -- -- -- -- -- 199
reserves
Cumulative -- -- -- -- -- (258) (258)
translation
reserves
Retained 17,169 302 58 254 -- 258 18,041
earnings
------ ---- ---- ---- ---- ---- -------
Total 25,395 302 58 254 -- -- 26,009

shareholder
equity
Minority 669 -- -- -- -- -- 669
interest in
equity
------- ---- ---- ---- ---- ---- -------
Total 26,064 302 58 254 -- -- 26,678

equity
Explanation of IFRS adjustments to prime financial statements

for 28 February 2005
1. Goodwill:
Under UK GAAP negative goodwill was carried in the balance sheet relating to the
purchase of Essex International Pcl. Under IFRS negative goodwill is recognised
in the income statement immediately and, therefore, it has been written back to
reserves at the date of transition.
Positive goodwill created on the acquisitions of Brown & Newirth Limited and DRT
Jewellery Limited, was previously amortised over a ten year useful life. IFRS 3
requires goodwill to be carried in the balance sheet and reviewed annually for
impairment. Any impairment is written off to the income statement.
Applying this change results in a write-off of all the goodwill in respect of

DRT Jewellery Limited of £236,000 at the date of transition.
The carrying value of the goodwill in Brown & Newirth Limited is restated to the
value at transition and no impairment adjustment is required.
The goodwill amortisation charge to the profit and loss account, booked under UK
GAAP, has been written back in the IFRS income statement.
2. Share based payments:
The Long Term Share Incentive Plan accrual, which was booked to cover the cost
of future share issues under the scheme is not required under IFRS and has
therefore been released from the balance sheet. The movement during the year has
been excluded from the income statement.
3. Dividends paid and proposed:
Under UK GAAP, dividends were accrued for in the financial statements when
proposed by the Directors. Under IAS 10, dividends are accounted for only when
they have been declared.
Therefore, the final dividend proposed at 28 February 2005 is not recognised in

the balance sheet at that date under IFRS.
4. Intangibles:
Under IAS38 computer software is classified as an intangible asset. The book

values of such assets have been transferred from tangible into intangible fixed
assets.
5. Foreign exchange on the retranslation of foreign subsidiaries:
The translation of the results of foreign subsidiaries was previously performed

under the closing rate method. IAS 21 requires the profit and loss accounts of
foreign subsidiaries, to be translated at average rates throughout the year.
These differences, together with those already brought forward in the accounts,
have been transferred to the new cumulative translation reserve within equity.
Impact of IAS 32 and 39 on Interim Statement Opening Balance Sheet - 01.03.05
IAS 32 and IAS 39, relate to the classification and measurement of financial
instruments. Abbeycrest plc has made use of the exemptions under IFRS1 to apply
only these two standards from 1 March 2005.
The change arising as at 1 March 2005 is in respect of the measurement of

derivative financial instruments amounts to a decrease in net assets of
£190,000.
The impact of this change for the results to 31 August 2005, can be seen in the
consolidated statement of changes in shareholders' equity provided in this
Interim Statement.
The Group's policy is to hedge a proportion of future foreign currency exposure

through the purchase of foreign currency forwards. From 1 March 2005, the Group
has achieved hedge accounting under IFRS in respect of such cash flow hedges,
and therefore the gains or losses on revaluation of relevant forward contracts
are taken to reserves and not the income statement.
Impact of IFRS on the cash flow statement

IFRS has had no material impact on the cashflow statement.
Group accounting policies under IFRS
1. Basis of Preparation
These interim financial statements have been prepared, for the first time, on
the basis of the IFRS accounting policies set out below. The disclosures
required by IFRS 1 concerning the transition from UK GAAP are included in this
statement. Abbeycrest has chosen an adoption date to IFRS of 1 March 2004
(the start of its 2005 financial year). These policies have been consistently
applied to all the periods presented except for those relating to the
classification and measurement of financial instruments under IAS 32 and 39.
Abbeycrest has made use of the exemption available under IFRS 1 to only apply
these two standards from 1 March 2005. The policies applied to financial
instruments for 2004 and 2005 are disclosed separately below.
Abbeycrest's consolidated financial statements were prepared in accordance with

UK Generally Accepted Accounting Principles (UK GAAP) until 28 February 2005.
UK GAAP differs in some areas from IFRS. In preparing Abbeycrest's 2005
consolidated interim financial statements, management has amended certain
accounting, valuation and consolidation methods applied in the UK GAAP financial
statement to comply with IFRS. The comparative figures in respect of 2005 were
restated to reflect these adjustments, except as described in the accounting
policies.
Reconciliations and descriptions of the effect of the transition from UK GAAP to
IFRS on the Group's equity and its net income and cash flows are included in
this statement.
The accounts have been prepared under the historical cost convention.
The preparation of accounts in accordance with IFRS requires management to make

estimates and assumptions that affect the:
(i) reported amounts of assets and liabilities;
(ii) disclosure of contingent assets and liabilities at the date of the

accounts; and
(iii) reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The most significant
techniques for estimation are described in the accounting policies below:-
2. Basis of Consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more
than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date on which control ceases.
The purchase method of accounting is used to account for the acquisition of

subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the Group's share of
the net assets of the subsidiary acquired, the difference is recognised directly
in the income statement.
Inter-company transactions, balances and unrealised gains on transactions

between Group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset
transferred. Subsidiaries' accounting policies have been changed where necessary
to ensure consistency with the policies adopted by the Group.
Goodwill arising on the acquisition of Brown & Newirth Limited prior to the date
of transition to IFRS has been retained at the previous UK GAAP values, as no
adjustment was required on transition. The goodwill relating to the purchase of
DRT Jewellery Limited has been written off to reserves on translation, as
indicated by the impairment test. The remaining goodwill will be subject to
impairment tests at least annually.
3. Foreign currency
(a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The consolidated financial
statements are presented in Sterling, which is the Company's functional and
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses resulting from the settlement of foreign
currency transactions and from the translation at the year-end exchange rate of
monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement, except where hedge accounting is applied as set out
below.
(c) Group companies
The results and financial position of all Group entities (none of which has the
currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at
the closing rate of the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average
exchange rates; and
(iii) all resulting exchange differences are recognised as a separate component

of equity (cumulative translation adjustment).
4. Turnover
Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership have been transferred to the buyer. No revenue is
recognised if there are significant uncertainties regarding recovery of the
amount due, associated costs or the possible return of goods.
Revenue is measured at the fair value of the consideration received or

receivable and represents amounts due for goods and services provided in the
normal course of business, net of discounts, VAT and other sales related taxes.
5. Patents, trademarks and software
Patents, trademarks and software are included in the balance sheet as intangible
assets where they are clearly linked to long term economic benefits for the
Group. In this case they are measured initially at purchase cost and then
amortised on a straight-line basis over their estimated useful lives.
All other costs on patents, trademarks and software are expensed in the income
statement as incurred.
6. Share-based payments
In accordance with the transitional provisions, the Group has applied the
requirements of IFRS 2 'Share-based payments' to all grants of equity
instruments after 7 November 2002 that were unvested at the date of transition
to IFRS.
The Group issues equity settled share-based payments to certain employees. These
are measured at fair value at the date of grant. This fair value is then
expensed on a straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is measured by the use
of a modified binomial model. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations. The
charge is adjusted at each balance sheet date to reflect the actual number of
forfeitures, cancellations and leavers during the period.
7. Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an

expense as they fall due.
8. Interest
Interest income is accrued on a time basis, by reference to the principal

outstanding and at the effective interest rate applicable.
9. Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on differences

between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences.
In contrast, deferred tax assets are only recognised to the extent that it is
probable that future taxable profits will be available against which the
temporary differences can be utilised (which, in particular, requires an
assessment of the time horizon over which taxable profits will arise to offset
brought forward losses). Liabilities are not recognised for taxable temporary
differences arising on investments in subsidiaries, associates and joint
ventures where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
All deferred tax balances are calculated using the tax rates that are expected
to apply in the period when the liability is settled or the asset is realised.
This means using tax rates that have been enacted or substantially enacted by
the balance sheet date.
Deferred tax assets and liabilities are offset to the extent that they relate to
taxes levied by the same tax authority and they are in the same taxable entity,
or a group or taxable entities where the tax losses of one entity are used to
offset the taxable profits of another.
Both current and deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Property, plant and equipment is recorded at original cost less accumulated

depreciation and any recognised impairment loss. Cost includes professional
fees and, for assets constructed by the Group, any related works to the extent
that these are directly attributable to the acquisition or construction of the
asset.
The gain or loss arising on disposal of an asset is determined as the difference

between the sale proceeds and the carrying amount of the asset and is
recognised in income.
Subsequent costs are included in the varying value of an asset when it is

probable that additional future economic benefits will flow to the Group and the
cost of the item can be measured reliably. All other repairs and renewals are
charged to the income statement as incurred.
11. Depreciation, amortisation and impairment of tangible and intangible fixed

assets.
Depreciation or amortisation is provided so as to write off, on a straight-line

basis, the cost of tangible and intangible fixed assets including those held
under finance leases. These charges are commenced from the dates the assets are
available for their intended use and are spread over their estimated useful
economic lives. The estimated useful lives of assets are reviewed regularly and,
when necessary, revised. Accelerated depreciation or amortisation is provided
where an asset is expected to become obsolete before the end of its normal
useful life or if events or changes in circumstances indicate that an impairment
loss needs to be recognised, as discussed below. No further charges are provided
in respect of assets that are fully written down but are still in use.
The estimated useful lives for the main categories of tangible and intangible
assets are:
Freehold and long leasehold buildings 2% straight line

Short leasehold buildings Over the lease term
Motor vehicles 25-33% straight line/reducing balance
Equipment 10-50% straight line/reducing balance
Software 33% straight line/reducing balance
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that the carrying amount of those assets may not be recoverable through
continuing use. If any such indication exists, the recoverable amount of the
asset is reviewed in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(or cash generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately.
12. Leases
Rentals payable under operating leases are charged to income on a straight-line

basis over the term of the lease. Benefits received and receivable as an
incentive to enter into an operating lease are also spread on a straight-line
basis over the term of the lease.
13. Trade receivables
Trade receivables are recognised at amortised cost, less provision for

impairment. A provision for impairment of trade receivables is established when
there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables. The amount of
the provision is the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the effective
interest rate. The amount of the provision is recognised in the income
statement.
14. Inventories
Inventories of raw materials are valued at the lower of cost and net realisable
value where cost comprises raw materials, production costs and inclusion of
appropriate overhead. Cost is determined using the 'first in first out' method.
Stocks of leased gold, together with the related liability, are stated at the
market value of gold at the balance sheet date. Gold where the liability has
been settled is stated at cost. Provision is made for obsolete, slow moving or
defective items where appropriate.
15. Cash and cash equivalents
Cash and cash equivalents include cash in hand and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities on the balance
sheet.
16. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs

incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the Group has an

unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
17. Segmental reporting:
All businesses within the Abbeycrest Group are involved in the manufacture and
sale of fine jewellery, this is treated as the primary business segment.
Geographical segments are used as the secondary format for segmental reporting.
This will be disclosed by source and therefore shows the spread of activity,
location of significant business assets and capital investment.
18. Accounting estimates and judgements
The Group's critical accounting policies under IFRS, have been set by management
with the approval of the Audit Committee. The application of these policies
requires estimates and assumptions to be made concerning the future and
judgements to be made on the applicability of policies to particular situations.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Under IFRS an estimate or judgement may be considered critical if it involves

matters that are highly uncertain, or where different estimation methods could
be reasonably have been used, or if changes in the estimate that would have a
material impact on the Group's results are likely to occur from period to
period.
19. Accounting for derivative financial instruments and hedging activities.
From 1 March 2004 to 28 February 2005
Transactions in foreign currencies are recorded at the rate of exchange on the

date of the transaction. All monetary assets and liabilities denominated in
foreign currencies are translated at the actual rate of exchange ruling at the
balance sheet date. Any gain or loss arising from a change in exchange rates
subsequent to the date of the transaction is included as an exchange gain or
loss in the profit and loss account.
The Group uses derivative financial instruments to reduce exposure to foreign
exchange risk and interest rate movements. The Group does not hold or issue
derivative financial instruments for speculative purposes. For a forward foreign
exchange contract to be treated as a hedge the instrument must be related to
actual foreign currency assets or liabilities or to a probable commitment.
It must involve the same currency or similar currencies as the hedged item and
must also reduce the risk of foreign currency exchange movements on the Group's
operations. Gains and losses arising on these contracts are recognised in the
profit and loss account when the contract matures.
If an instrument ceases to operate as a hedge, because the underlying hedged

position is eliminated, the instrument is marked to market and any resulting
profit or loss recognised at that time.
From 1 March 2005 onwards
Derivatives are initially recognised at fair value on the date a derivative

contract is entered into and are subsequently remeasured at their fair value.
The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. The Group designates certain derivatives as either: hedges of
the fair value of recognised assets or liabilities or a firm commitment (fair
value hedge); hedges of highly probable forecast transactions (cash flow hedge);
or hedges of net investments in foreign operations.
The Group documents at the inception of the transaction the relationship between
hedging instruments and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items.
(a) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are recognised in equity. The gain or
loss relating to the ineffective portion is recognised immediately in the income
statement.
Amounts accumulated in equity are recycled in the income statement in the

periods when the hedged item will affect profit or loss (for example, when the
forecast sale that is hedged takes place). However, when the forecast
transaction that is hedged results in the recognition of a non-financial asset
(for example, inventory) or a liability, the gains and losses previously
deferred in equity are transferred from equity and included in the initial
measurement of the cost of the asset or liability.
When a hedging instrument expires or is sold, or when a hedge no longer meets

the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to the income statement.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Such

derivatives are marked to market at each balance sheet date, with the changes in
the fair value of the derivatives taken through the income statement.
Abbeycrest PLC
Final Results
Abbeycrest PLC
28 June 2006
For Immediate Release 28 June 2006
ABBEYCREST PLC
Preliminary Results for the Year ended 28 February 2006
Results
For the year ended 28th February 2006 Group turnover reduced by 15.0% to £70.2m.
Loss before taxation on continuing operations was £7.1m (2005 - £0.1m). Loss
before taxation and exceptional items was £3.6m (2005 - £1.5m profit). After
tax, minority interest and exceptional items the loss attributable to equity
shareholders was £7.8m (2005 - £0.3m). Basic loss per share was 31.1p (2005 -
1.2p)
Dividends
In the light of the results for the year the directors are unable to recommend
payment of a dividend.
Balance Sheet
In difficult circumstances, control over working capital has been excellent.

Whilst the gold price has increased by 40% from year-end to year-end, the level
of stock held by the Group has reduced by £3.6m (13.4%). More noteworthy is the
fact that Net Debt has increased only slightly year on year by around
£180,000 despite the trading losses suffered and the exceptional costs noted in
more detail below.
Overview
The year under review has been an extraordinarily challenging one for the Group.
The difficulties experienced were as follows:-
1. Re-banking
A re-banking process was forced on the Group at short notice and to an
extremely demanding timetable. This process has taken up a substantial
element of senior management time since December.
Included in exceptional items for the year are the following expenses:-
• Additional bank fees and charges £210,000

• Accountants monitoring fees imposed by the bank
and other due diligence and legal charges £254,000
It is important to note that these are the fees charged in 2005/06. There
are further bank related charges which amount to around £700,000 which
will appear in the 2006/07 accounts as exceptional items covering charges
levied since 1st March. Also in the 2006/07 accounts will be arrangement
fees of around £400,000 relating to the new facilities.
As part of the refinancing the company has completed the disposal of the
Group's Leeds headquarters and UK distribution centre for a gross
consideration of £3.3m (£3.1m net of bond and costs) payable in cash. The
net book value of the property is £2.5m.
2. Gold price
The price of gold has seen an unprecedented rise over the last twelve
months. The increase in price of the Group's main raw material by 40%
since last year has meant that pressure on borrowings has been constant.
Excellent stock control has been exercised to counteract this trend.
3. Market conditions
The fine jewellery market in the UK has suffered a major downturn, with
the weight of gold product hall-marked in the UK declining by 26% in 2005
year-on-year. It is clear the sector has suffered disproportionately in
the overall retailing downturn and this has clearly adversely affected
the Group's performance.
Restructuring
The restructuring of the Group was accelerated and broadened during the year to
take account of the worsening trading environment. Much of this has already been
referenced in previous statements but a summary is:-
www.investegate.co.uk/ArticlePrint.aspx?id=200606281555413256F 1/7
• Final closure of the Birmingham site and commissioning of gold strip

rolling plant in Thailand.
• Disposal of the operations of DRT Ltd.
• Disposal of the operations of the joint venture, IMS Ltd.
• Closure of 18ct manufacturing at G & A Ltd.
• Investment in sales software and web-site to replace 50% of salesforce
for the UK independent sector.
• Downsizing of the UK workforce across all departments and at all levels
to save overhead.
• Merging of Essex pcl into Abbeycrest Thailand Ltd to take advantage of
synergies.
The only aspect of the restructuring remaining is the final move of the majority
of DCL production from China to our own factory in Thailand. This was held up by
a legal dispute with the 25% shareholder of DCL. The dispute has now been
resolved satisfactorily and this transfer can now be completed.
Outlook
The restructuring process has been painful and has resulted in exceptional costs
of around £1.9m in the year 2005/06. However, the result is a reduction in
recurring costs going forward of well over £3m p.a. as well as the eradication
of the losses sustained in the DRT and IMS operations. In short, assuming no
significant deterioration in current market conditions, management is confident
that the restructuring and cost savings programme will return the Group to
profitability in 2006/07.
In addition, subsequent to the re-banking and as a consequence of control over

the Group's working capital, the Group's borrowings to date have reduced by
approximately £6m year on year. Management is confident that this level of
improvement will be sustained for the remainder of the financial year.
The re-banking has resulted in secured, committed facilities from Burdale

Financial and HSBC. These facilities are appropriate for the Group's seasonal
requirements. Management is delighted that the re-banking process has been
completed successfully.
Review of subsidiary operations
Far East Manufacturing
Abbeycrest Thailand Limited

As noted in the half-year statement, gold strip production has successfully
commenced in Thailand as well as the merging of gemset manufacturing, previously
carried out under the auspices of Essex pcl, with the activities of Abbeycrest
Thailand Limited. We now operate a gold division and gem division from one site.
This has enabled us to commence the eradication of duplicate expenditure.
In the gold division of ATL, profits for the year have risen by around 20% to
£0.5m. In a period disrupted by the introduction of untried processes this is a
creditable performance.
In the gem division of ATL volumes have continued to grow, with turnover
increasing by around 20% year-on-year. Despite a significant element of
disruption, due to the accelerated move of DCL production from Chinese
sub-contractors, the ATL gem division has recorded a second year of
pre-exceptional profits following several years of losses.
Dynamic Creations Limited

DCL continued to contribute profitably, although sales volumes were affected by
the lower demand from G&A.
G&A
As already reported, the cost-saving program implemented during 2005 has been
fully delivered. A key fact to be noted in the 2005/06 accounts is the decline
in gross margin that has been experienced. This was touched on in the interim
statement but is worthy of further analysis. The factors behind the decline can
be classified as:-
• The gold price increase has left the absolute margin unchanged but
reduced the percentage margin. This is the biggest single influence on the
margin decline in the year.
• As the gold price has increased, the company has increased the normal
rate of stock cleansing. The fact that the company's banker reduced the
facilities available to the business to much lower levels also increased
the imperative for raising cash through stock 'melts'.
• During the year, a significant amount of sales sourced from third
parties were moved to a direct import basis on nominal margins.
• The last months of running the Birmingham operation were very
inefficient which had a deleterious effect on margin in the first half of
the year.
Brown & Newirth

B&N has not been immune to the overall downturn in the market with both sales
and margin suffering such that cash gross margin was some 11% lower than the
previous year. In addition, the aborted sale of the business has resulted in
both professional and other fees of around £500,000, charged as an exceptional
cost, together with additional revenue cost of around £190,000 which represents
incentivisation plans for the management. I am pleased to say that trading for
B&N in the 2006 wedding season has been very pleasing, representing an uplift on
the previous year.
Staff
During the past year, our people have completed the final stages of a
fundamental restructure of the Group. We have also incurred the added
complication of delivering the rebanking process as reported above. Our
management and staff have risen magnificently to these challenges and have truly
delivered a business operation in far better shape going forwards. They deserve
our thanks and great respect for their achievements in this period.
Current Trading
As noted above, whilst there has been no particular improvement in market

conditions during the first months of 2006, the cost saving measures introduced
during 2005/06 have put the Group in a good position to cope with these
challenging trading conditions and, indeed, management will continue to seek
savings wherever these are available. The levels of trade experienced in the
first quarter of the current financial year are in line with the expectations
set by management.
I would like to take this opportunity to thank our customers and suppliers for
their unanimous support during a difficult period, it has been much appreciated.
The management look forward to being able to devote their energy to growing the
new, leaner business.
Michael N. Lever
Chairman
28 June 2006
Unaudited Consolidated Income Statement

Notes Year Year

To 28 February To 28 February
2006 2005
£'000 £'000
--------- ---------
Continuing Operations
Revenue 70,210 82,597
--------- ---------
Operating (loss)/profit (5,573) 1,541
Interest receivable 1,013 918
--------- ---------
(Loss)/profit before taxation and
exceptional items (3,619) 1,456
Exceptional items 2 (3,508) (1,568)
--------- ---------
Loss from continuing operations (7,127) (112)

Taxation (charge)/credit (255) 35
--------- ---------
Loss for the year from continuing
operations (7,382) (77)
Discontinued operations
Loss for the year from discontinued
operations (315) (47)
--------- ---------
Loss for the financial year (7,697) (124)
========= =========
Profit attributable to minority 78 187

interests
Loss attributable to equity shareholders (7,775) (311)
--------- ---------
(7,697) (124)
========= =========
Loss per share - basic 3 (31.1)p (1.2)p

- diluted 3 (31.1)p (1.2)p
Unaudited Consolidated Balance Sheet

As at 28 February 2006
28 February 28 February
2006 2005
£'000 £'000
--------- ---------
Assets
Non-current assets
Intangible assets 266 616
Deferred tax assets 227 426
--------- ---------
10,084 9,967
--------- ---------
Current assets
Derivative financial instruments 15 -
--------- ---------
37,200 44,227
--------- ---------
Liabilities
Current liabilities
- Borrowings (13,601) (8,769)
Derivative financial instruments (25) -
--------- ---------
(27,554) (19,926)
--------- ---------
- Borrowings (524) (7,560)
Provisions - (30)
--------- ---------
(524) (7,590)
--------- ---------
Net assets 19,206 26,678
========= =========
Shareholders' equity
Share capital 2,538 2,538
Equity reserves 199 199
Cumulative translation reserves 343 (258)
Hedging reserves (10) -
--------- ---------
Total shareholders' equity 18,517 26,009
Minority interest in equity 689 669
--------- ---------
========= =========
Unaudited Consolidated statement of changes in shareholders' equity

Year Year
2006 2005
£'000 £'000
Total equity at beginning of period 26,678 27,985

Adoption of IAS32 and IAS39 (190) -
--------- ---------
Total equity at beginning of period -
restated 26,488 27,985
Total recognised expenses attributable to
equity holders of the parent (7,096) (382)
Movement on hedging reserve 129 -
Issue of share capital - (227)
Ordinary dividends on equity shares (257) (504)
Minority interests (58) (194)
--------- ---------
Total equity at end of period 19,206 26,678
========= =========
Unaudited Consolidated Cash Flow Statement
Notes Year Year

2006 2005
£'000 £'000

Cash generated from operations 6 3,457 6,428
Interest received 1,013 918
Taxation received/(paid) 85 (533)
--------- ---------
========= =========
Cash flow from investing activities

Purchase of property, plant and
equipment (2,123) (1,591)
Proceeds from sale of property, plant
and equipment 413 43
Purchase of intangible assets - (35)
Deferred consideration paid - (200)
--------- ---------
Net cash used from investing activities (1,710) (1,783)
========= =========
Cash flow from financing activities

Net proceeds from issue of new bank
loans - 10,087
Finance lease principal payment (30) (14)
Leased gold movement 4 1,938 2,803
Dividends paid to shareholders (257) (507)
Dividends paid to minority interests (58) (194)
--------- ---------
financing activities (139) 6,326
========= =========
Net increase in cash and cash equivalent 4 123 8,656

Cash and bank overdrafts at beginning of
period (5,418) (14,074)
--------- ---------
Cash and bank overdrafts at end of
period (5,295) (5,418)
========= =========
Cash and bank overdrafts comprise:

--------- ---------
(5,295) (5,418)
========= =========
Notes on the unaudited preliminary announcement
The unaudited financial statements to 28 February 2006 are the first to be
prepared on the basis of International Financial Reporting Standards as adopted
in the EU (IFRS). Where appropriate, the Group has amended accounting policies
to comply with those Standards and interpretations that had been issued by the
IASB at the time of preparing these statements.
These accounting policies are set out in full in the Group's Interim Statement
as at 31 August 2005 and have been applied consistently for the years presented,
except for those relating to the classification and measurement of financial
instruments. The Group has made use of the exemption under IFRS1 to only apply
IAS32 and IAS39 from 1 March 2005.
The comparative figures for the financial year ended 28 February 2005 are not
the Group's statutory accounts for the financial year. Those accounts, which
were prepared under UK GAAP in accordance with the Companies Act 1985, have been
reported on by the Company's auditors and delivered to the registrar of
companies. The report of the auditors was unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.
The impact of IFRS was shown in detail in the interim statement.
Year Year
2006 2005
£'000 £'000
Group manufacturing re-organisation 653 1,128

Legal costs - 270
Aborted transaction costs 477 -
G & A Ltd restructuring 745 170
Dynamic Creations Ltd legal costs 122 -
Disposal of DRT Ltd 375 -
Re-banking costs to February 2006 464 -
Stock reduction programme 672 -
--------- ---------
3,508 1,568
========= =========
The Group manufacturing re-organisation costs relate to the restructuring of

all manufacturing operations into one purpose built site in Northern Thailand
and the associated closure of factories in Birmingham, UK and Bangkok,
Thailand.
The aborted transaction costs relate to legal fees and other associated costs
incurred by Abbeycrest plc in relation to the proposed management buy-out of B
& N Ltd.
The G & A Ltd restructuring costs relate mainly to redundancy and associated
costs resulting from significant head count reduction and streamlining or
closure of certain departments.
Dynamic Creations Ltd (DCL) legal costs are in respect of a dispute between the
minority interest holder in DCL and Abbeycrest plc. This dispute has been
settled subsequent to the year-end by the acquisition of the minority
interest's shareholding in DCL by Abbeycrest plc. The consideration paid was
significantly less than the net asset value of the minority interest.
The disposal of DRT Ltd resulted in a loss on assets and certain redundancy
costs.
The re-banking costs relate to facility fees and monitoring costs imposed on
the company by its bankers during the year.
The stock reduction programme was initiated post year-end as a one-off exercise
to generate additional cash for the Group's needs going forwards. The resulting
provision against stock in the year end balance sheet and subject to provision
is treated as an exceptional cost for 2005/06.
3. (Loss)/earnings per share

Basic loss per share has been calculated using the weighted average number of
shares in issue during the period of 24,776,241 (2005: 24,776,241). Diluted
earnings per share have been calculated using 24,776,241 (2005: 24,776,241
shares.
Year Year
2006 2005
£'000 £'000
Increase in cash and bank overdrafts 123 8,656

Increase in leased gold (1,938) (2,803)
Decrease/(increase) in debt 1,637 (4,224)
--------- ---------
Change in net debt resulting from cash flows
in year (178) 1,629
--------- ---------
Net debt at beginning of the period (18,662) (20,291)
--------- ---------
Net debt at end of the period (18,840) (18,662)
========= =========
5. Analysis of net debt
28 February 28 February
2006 2005
£'000 £'000
Cash and cash equivalents (excluding bank

overdrafts) 1,175 1,619
Leased gold debt (5,890) (3,952)
Bank loans (7,536) (9,268)
Obligations under finance leases (119) (24)
--------- ---------
(18,840) (18,662)
========= =========
At the year end £7.1m of bank loans were payable on demand.
6. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities
Cash generated from operations
Year Year
2006 2005
£'000 £'000
Operating (loss)/profit (5,888) 1,541

Loss/(profit) on sale of property, plant and
equipment 287 (1)
Sale of joint venture - (2)
Decrease in inventories 3,805 377
Decrease in receivables 3,055 1,992
Increase in payables 788 892
Adoption of IAS39 (62) -
--------- ---------
========= =========

5/24/13 BloomsburyPublishing | Final Results | FE InvestEgate
BloomsburyPublishing
Final Results
RNS Number : 3833J
Bloomsbury Publishing PLC
30 March 2010
Bloomsbury Publishing Plc

30 March 2010
BLOOMSBURY PUBLISHING Plc

("Bloomsbury" or "the Group")
Preliminary Results for the Year Ended 31 December 2009
2009 saw a strong performance by the Group despite difficult trading conditions.
Financial highlights
The highlights for 2009 include:
· Revenue of £87.22m (2008: £99.95m - publication of HP7 Paperback and The Tales of Beedle the Bard)
· Adjusted pre-tax profit of £7.71m (2008, £11.85m - publication of HP7 Paperback)*
· Basic earnings per share of 6.77p (2008, 10.67p - publication of HP7 Paperback), adjusted basic earnings
per share of 7.56p (2008, 10.96p)*
· Profit from Bloomsbury USA of £0.45m before central cost recharges (2008: £0.38m)
· Net cash of £35.04m (2008: £51.91m)
· Final dividend per share increased 5% to 3.65p (2008: 3.47p). Full year dividend per share increased by
5% to 4.43p (2008: 4.22p)
* adjusted figures are stated before the amortisation of intangibles and impairment of goodwill.
Operating highlights
· Profits ahead of consensus market forecasts achieved in difficult trading conditions and against high
comparatives including paperback release of HP7 in 2008
· Strong sales driven by an excellent publishing programme including River Cottage Everyday by Hugh
Fearnley Whittingstall, The Suspicions of Mr Whicher by Kate Summerscale, The Guernsey Literary and
Potato Peel Pie Society by Mary Ann Shaffer and Annie Barrows, Ordinary Thunderstorms by William
Boyd and The Fat Duck Cookbook by Heston Blumenthal
· Strong pipeline of releases for 2010 including launch of newly designed edition of Harry Potter on 1s t
November
· Strengthened academic publishing division with acquisitions of Tottel Publishing and Hodder Education
Humanities list
Nigel Newton, Chief Executive, said:
"This is a strong set of results, ahead of consensus market forecasts achieved under difficult trading conditions,
and demonstrates the strength of our portfolio. We have further strengthened our academic division with the
two new acquisitions. Trading has been excellent in the first quarter of 2010 with a range of new bestsellers
(including the Number 1 bestseller Operation Mincemeat) and a major six-figure rights deal concluded in
January.
The two Qatar management services partnerships will have an important year in 2010. Three major movies,
Nanny McPhee; Eat, Pray, Love; and Harry Potter and the Deathly Hallows Part One, will drive further sales of
these proven bestsellers in 2010. The success of Bloomsbury's Public Library Online initiative and other
Bloomsbury innovations will see us at the forefront of the digital opportunity. The marketplace will remain
rocky in 2010 and will continue to throw the unexpected at all businesses but I am confident that Bloomsbury is
as well positioned as it could be to prosper in this environment with our high hit rate in trade publishing, our
expansion in academic and professional publishing, our strong balance sheet and our entrepreneurial mission. "
For further information, please contact:
Nigel Newton, Chief Executive, Bloomsbury Publishing Plc +44(0)20 7494 6015
Daniel de Belder / Rosanne Perry, Bell Pottinger +44(0)20 7861 3232
BLOOMSBURY PUBLISHING PLC

2009
The last year has been one of the most turbulent since the Depression. Across the world it has challenged the
economic survival of country, corporation and consumer alike. It has accelerated a shift of the world's economic
axis. And it is engendering a fundamental reassessment of political ideology across the planet as governments
have sought to play their part in keeping the ship afloat. The world has been brought together by the crisis, and
yet new divisions are emerging as a result.
I can think of no other conditions like them in living memory - in the corporate world they have tested to the
limit the fundamental ethos and strategies of business organisations. Some have been found wanting and their
businesses have collapsed. Others have prospered, their businesses reinforced and their competitive positions
enhanced.
Bloomsbury entered the crisis with a clear strategy, a strong financial position, an experienced and established
management team, a strengthened governance structure, and the enduring determination of its Founder and
Chief Executive, Nigel Newton, and the Executive Directors on the Board, Richard Charkin and Colin Adams, to
preserve the entrepreneurialism and cultural backbone which have driven this Company and the Group for
almost a quarter of a century.
That strategy involves the stabilisation of the Group's revenue streams through the steady development of its
Professional and Academic arm, the further growth of its successful ventures in the Gulf, constant and rigorous
attention to its core trade publishing activities and digitisation of its activities across the entire Group.
Behind this strategy lies a deep and almost instinctive understanding of the transformational forces at work in
the publishing industry and an ability to respond to them. Thus, for example, the key acquisitions in building
the Group have been in the Specialist arm of the Group - they have been targeted and measured, are integrating
well and have all been manageable and within the financial resources of the Group. The new Qatar ventures
have been beneficial to Bloomsbury, but they have also widened the cultural bandwidth of the Group with a
country with the highest potential, resources and influence in the Middle East. The unremitting housekeeping
of the Trade arm of the Group has seen its US business revived and a steady, sustaining flow of revenues from
the core activity which forms the basis of a good publishing company. In all these activities, digitisation of the
platforms, delivery systems and infrastructure has been an underlying driver. The growing force and
opportunities of new delivery systems for the published product is a constant reference point for the Board and
the Group's management.
These and other initiatives fit within a strategy which has served the Group well when others have been found
wanting. Bloomsbury is in good shape to capitalise on the potential of the year ahead.
Charles Black will retire at this year's Annual General Meeting. His wisdom, balance and deep understanding of
the publishing industry will be sorely missed. He brought into Bloomsbury A&C Black, a five generation
business founded by his family in 1807. A&C Black is core to Bloomsbury's Academic and Professional business.
Charles is the Senior Independent Director of the Group and Chairman of its Audit and Remuneration
Committees. There is no replacing such a mix of talent, intuition and integrity and Charles leaves behind an
enduring legacy which will benefit all the Group's stakeholders for decades to come.
Michael Mayer, according to The Combined Code on Corporate Governance, loses his independence and will
retire at the end of his ninth year. A good company is constantly balancing the costs of conformance governance
(not necessarily consistent with good governance) with the economics of a vibrant and successful business, and
Michael, through his incisive grasp of the economics of business, invaluable knowledge of the process of
acquisition economics and corporate financial husbandry, a deep and abiding loyalty to the Group and his
instinctive understanding of the role of the Non-Executive Director, has made an immense contribution to
Bloomsbury and challenged this balance to the limit. His departure at the end of this year is a sad one for the
Group and he, too, will be sorely missed.
On behalf of the Group and all its stakeholders, I thank them both for their invaluable contribution - a
contribution impossible to recognise fully in a few words on a sheet of paper.
However, change brings opportunity, and the Nominations Committee is well advanced, using the services of an
independent search firm, in the selection of two new Directors from an impressive list of candidates to replace
Charles and Michael when they retire.
Finally, the contribution of each and every one of the people who work in this Group cannot be over-stated.
Led by an Executive team strengthened the year before last by Richard Charkin's arrival - now a key
management asset of the Group - it is they who have ensured that its strategy is executed and its ethos and
culture developed and enhanced. The acquisitions have brought with them talent and skills which have
enriched Bloomsbury and the conditions of the last two years have toughened and seasoned the entire team.
On behalf of the Board and all the stakeholders of this Group, they have our sincere thanks.
In summary, driven by a team of dedicated professionals working throughout this Group, it is the Board's
intention that Bloomsbury will continue to change and adapt to the rapidly developing dynamics of the
publishing industry. It is far from certain that the turbulence of the past two years is over, but the Group is well
placed to exploit the opportunities of the future.
Jeremy Wilson
Chairman
30 March 2010
Chief Executive's statement
Overview
This excellent set of results, ahead of consensus market forecasts and in a difficult environment against a strong
comparative year, demonstrates the strength of the portfolio of revenue streams in the Group. The growth in
the Specialist Division was augmented by the acquisitions of the legal and tax publisher Tottel, now renamed
Bloomsbury Professional, and the Hodder Education Humanities list. Both have performed well and made good
contributions to the Group.
In the second half of 2009, the Trade Division launched one of its strongest lists to date. Major titles included
River Cottage Everyday by Hugh Fearnley-Whittingstall, The Fat Duck Cookbook by Heston Blumenthal and
Ordinary Thunderstorms by William Boyd. Major backlist sellers included A Thousand Splendid Suns and The Kite
Runner by Khaled Hosseini, Eat, Pray, Love by Elizabeth Gilbert, the seven Harry Potters, The Suspicions of Mr
Whicher by Kate Summerscale and The Guernsey Literary and Potato Peel Pie Society by Mary Ann Shaffer and
Annie Barrows.
In November 2009 Borders, the UK retail bookshop chain, closed. While the amount owed to us by Borders was
covered by existing bad debt provisions, the long-term impact is a reduced number of high-street booksellers.
At the same time we are seeing an increase in online book sales, partially offsetting the high-street retail
decline.
E-book revenues are small but growing and there has been a considerable uplift in activity in the last twelve
months including the Amazon Kindle released internationally. We are looking for opportunities to create new
revenue streams from our digital files by content aggregation and innovative marketing.
Revenue for the Group was £87.22m (2008, £99.95m including Harry Potter and the Deathly Hallows in paperback
and The Tales of Beedle the Bard). Revenues from the UK were £58.89m (2008, £71.06m). Revenues from the US
were £18.78m (2008, £17.32m). Revenues from Continental Europe generated by Berlin Verlag, were £9.55m
(2008, £11.57m).
The Board manages the financial performance of the Group based on the geographic location of its operating
units and subsidiaries. Accordingly the paragraphs which follow discuss financial performance separately for
operations based in the UK, North America and Continental Europe. The Group has also entered into various
arrangements to provide management services to entities in Qatar. These entities are not controlled by the
Group and accordingly are not consolidated. The Group earns management and consultancy income from these
contracts and financial performance under these contracts is discussed according to the geographic location of
the Bloomsbury operating unit providing these services.
Profit before tax for the Group was £7.13m (2008, £11.63m). Profit before tax before intangibles amortisation
and goodwill impairment was £7.71m (2008, £11.85m). Basic earnings per share was 6.77 pence (2008, 10.67
pence). Diluted earnings per share was 6.74 pence (2008, 10.67 pence). Basic earnings per share before
intangibles amortisation and goodwill impairment was 7.56 pence (2008, 10.96 pence). Diluted earnings per
share before intangibles amortisation and goodwill impairment was 7.53 pence (2008, 10.96 pence).
At the year end the Group had net cash balances of £35.04m (2008, £51.91m) after the net cash consideration of
£10.31m (2008, £7.43m) paid for the two (2008, four) acquisitions made during the reporting period. We
continue to invest in future growth through acquiring new authors and titles and specialist publishing
companies. Our strong balance sheet puts us in an excellent position to take advantage of these opportunities
as they arise. As at 31 December 2009 the Group had under contract 1,073 titles (2008, 1,139) for future
publication, with a gross investment of £23.7m (2008, £26.4m). After payment of the initial tranches of advances
to authors, our liability for future cash payments on these contracted titles at that date was £13.4m (2008,
£15.6m). The reduction in the number of titles in our forward publishing program is part of our strategy to give
greater focus on each title published and increase the potential to create bestsellers.
UK
The UK performance was very good even compared to the previous year which saw the release of Harry Potter
and the Deathly Hallows in paperback.
Specialist Division
Bloomsbury increased its presence in academic and professional publishing with the acquisition of Tottel
Publishing, now renamed Bloomsbury Professional, and Hodder Education's higher education Humanities list in
July. Both have comfortably matched our expectations for 2009. The Bloomsbury Professional list has proved
highly resilient in the face of the difficult economic climate. Many of the titles remain essential publications
and are part of routine expenditure by law and accounting firms.
Notable successes in 2009 included Documentary Credits (4th ed) and Joint Ventures and Shareholders'
Agreements (3rd ed), both aimed at the top end of the commercial law market. Subscription and loose-leaf
publishing remained strong throughout the year. The Irish Legal System (5th ed), the standard first year
undergraduate text book, was a major success. The Scottish law market held up extremely well, and 2nd edition
of Drafting Wills in Scotland was well received. The key to driving revenue growth for Bloomsbury Professional
is the migration of our content to an online platform. We are also continuing to search for law and tax
acquisitions to build critical mass.
At Berg, our Oxford based academic publisher, sales in 2009 exceeded expectations, with impressive growth in
journals sales. Berg has launched seven journals in the past four years and acquired three, and the investment
in these new titles is now resulting in double digit growth in revenue both in 2009 and projected for 2010.
Subscription publications are more recession-resistant than other print products, are less price sensitive, are
sold direct to the customer at low discount and subscription income is received upfront. Berg's journals are
essential for academics in their respective subject areas and are less susceptible to library cuts. Berg's sales to
the higher education sector, as with other lists in the Specialist division, have benefited from the 6% increase in
student numbers in the UK since September 2009. These counter-cyclical qualities are another reason for
Bloomsbury's increased investment in professional and academic publishing.
Bloomsbury Academic's digital platform will be launched in May 2010 and the digital subscription-based Berg
Fashion Library in May 2010, a substantial academic resource aimed at academicsand students of fashion,
costume and the applied arts, which will be sold and distributed by Oxford University Press ("OUP"). The fit
between the Berg Fashion Library and OUP's Grove Dictionary of Art is excellent. Berg has recently agreed an
image bank partnership with the Victoria and Albert Museum to display its costume images within the Library.
Later in 2010 we are publishing the ten-volume Berg Encyclopedia of World Dress and Fashion. This monumental
work, the work of hundreds of scholars and experts worldwide, will be Bloomsbury's most substantial new
reference work in 2010.
Several long-term projects are underway in the Gulf. In September 2008 a publishing company was established
in Doha by the Qatar Foundation which will publish children's books, novels, non-fiction for adults and children,
academic monographs and reference works both in Arabic and in English. The mission of Bloomsbury Qatar
Foundation Publishing (BQFP) is also to promote reading and writing development and to transfer publishing
skills into Qatar. Excellent progress was made on all fronts during 2009 under our management service contract
with Qatar Foundation. BQFP brought out a dual-language Arabic / English edition of The Selfish Crocodile in
April 2009 to mark Qatar's first World Book Day which BQFP spearheaded in association with the UK's World
Book Day organisation and Qatar University. BQFP also hosted book groups, writing and reading courses and
other reading development initiatives. The first publishing list will be launched in April with the Arabic
language edition of the The Gruffalo as the lead children's title and on the adult side Nothing To Lose But Your
Life (in Arabic and English) by Suad Amiry, the Palestinian writer whose first novel Sharon and My Mother-in-
Law was an international success. The cultural collaboration of Britain and Qatar will be celebrated by a
reception hosted by Her Majesty the Queen and the Duke of Edinburgh at Windsor Castle in April to mark the
launch of Bloomsbury Qatar Foundation Publishing.
In September we published QFINANCE - The Ultimate Resource. The website (www.qfinance.com) and the book
were launched with major events in Doha, London and New York. QFINANCE, the result of Bloomsbury's
partnership with the Qatar Financial Centre Authority, is a comprehensive information resource focussed on
best practice for finance professionals.
In 2009 Bloomsbury Academic implemented its organic growth strategy and also acquired the 300 title upper
level Humanities textbook backlist from Hodder Education. Textbook sales exceeded expectations as student
numbers expanded during the year. Earlier in the year iFactory was appointed to develop the Bloomsbury
Digital Platform. Bloomsbury Academic will be the first imprint of the Group launching its new website on the
platform in the spring of 2010. Academic library purchasing, which is core to the monograph programme, is
moving to e-books quite rapidly now, especially in the US. The transition to e-book sales holds exciting
opportunities as multimedia content is added by authors to enhance scholarly communications.
Arden Shakespeare, acquired in December 2008, was incorporated into our core drama list alongside Methuen
Drama. The list has already benefited from Methuen Drama's specialist sales and marketing in the UK. In the
USA Arden was launched as part of the new US publishing division, Bloomsbury Academic and Professional.
Arden released released Double Falsehood in March 2010, the controversial play which Shakespeare was said to
have contributed to.
John Wisden and Co is now fully integrated into A&C Black. Sales of the Almanack were increased in 2009, partly
as a result of a marketing partnership with the county cricket boards and the Middlesex County Cricket Club.
Wisden Cricketers' Almanack was published in e-book format for the first time in 2009, along with an e-book
Wisden Collection for libraries.
In response to the growing number of e-book retailers and increased demand for digital content, more than one
thousand of A&C Black books will be offered for sale as e-books in 2010. Two significant new ornithology e-
book collections in 2010 will be The Poyser Library and The Helm Family Guides, which will be available as e-
books and as print on demand editions. Many of these titles have long been out of print and are sought after by
collectors and ornithologists.
We will also be publishing with a range of partners who link us to our markets, including The Federation of
Small Businesses (Good Small Business Guide), The Royal Shakespeare Company (The RSC Toolkit for Teachers),
The RSPB (including Gardening for Wildlife) and The Wildlife Trust (Birds in Your Garden). We have also entered
into an important new CD-publishing agreement for theatre titles with The Royal Academy of Dramatic Art
(RADA).
Trade Division
2009 was a year where we benefited from enduring bestsellers across the adult list, many of them from our
backlist. One of the strongest sellers in the year was Kate Summerscale's The Suspicions of Mr Whicher, winner
of the Samuel Johnson Prize, Richard & Judy Bookclub Best Read and the Galaxy Book of the Year, reaching No 1
on The Sunday Times non-fiction paperback bestseller list. The two Khaled Hosseini novels, The Kite Runner and
A Thousand Splendid Suns, sold strongly all year. Our word-of-mouth bestseller, Eat, Pray, Love, continues to
sell robustly with a film starring Julia Roberts in the pipeline. We had a Richard & Judy bookclub title in Sue
Miller's new novel, The Senator's Wife, an Orange Prize shortlist in Kamila Shamsie's Burnt Shadows and a new
word-of-mouth bestseller in The Guernsey Literary and Potato Peel Pie Society by Mary Ann Shaffer and Annie
Barrows. New novels were published by three of Bloomsbury's biggest authors Margaret Atwood, John Irving
and William Boyd - and by a new author to our list, Colum McCann, with his novel Let the Great World Spin,
which won the National Book Award and went to No 1 in the Irish bestseller list.
Non-fiction bestsellers included Last Fighting Tommy, The Life of Harry Patch; Richard van Emden's Sapper
Martin; Family Britain, David Kynaston's follow up to Austerity Britain; and the follow up to Al Gore's bestseller
Inconvenient Truth, Our Choice. 2009 also saw the addition to the list of Monty Don with his Ivington Diaries and
the extraordinary success of two food titles: River Cottage Every Day by Hugh Fearnley Whittingstall and The Fat
Duck Cookbook by Heston Blumenthal.
2010 got off to a great start with the new Elizabeth Gilbert, Committed; Operation Mincemeat, the new book by
Ben McIntyre (author of bestseller Agent Zigzag), was number 1 for four weeks; and the paperback of Liz
Jensen's Rapture, which was chosen for the new TV Book Club. Highlights of the year ahead also include the
film tie-in edition of Eat, Pray, Love, the paperback of William Boyd's Ordinary Thunderstorms, and new novels
by Barbara Trapido, Sue Miller and Jon McGregor, whose Even the Dogs has been tipped for the Man Booker
Prize. Highlights for the autumn in non-fiction include the Authorised History of the Secret Intelligence Service
and a companion to the hit TV series Cranford. We continue to build our highly successful food list, to
concentrate on building and promoting our backlist and we will also be publishing more up-market crime
fiction. Five crime novels will be published in 2010 and the ex chief of MI5, Stella Rimmington, has joined
Bloomsbury with a two-book deal. We continue to find and nurture new talent. We will publish eight first
novels in 2010, one of which has been chosen for a major bookshop promotion, and another of which has been
longlisted for the Impac Prize.
On the Children's list The Graveyard Book by international best-selling author Neil Gaiman was published
simultaneously in an adult as well as a children's edition. It won the Teenage Children's Book Award and has
been long listed for the Carnegie Medal. Troubadour by Mary Hoffman was short-listed for the Costa Award for
Children's Literature.
Harry Potter performed extremely well during the year and sales increased on the back of the success of the
sixth film, Harry Potter and the Half-Blood Prince. Sales of the boxed sets were particularly good. We have an
extensive programme of re-jacketing Harry Potter which will be launched in July. The film of HP7 is released in
November.
In June 2010 we have a new book by bestselling author of Holes Louis Sachar entitled The Cardturner.
We launched Bloomsbury's Public Library Online in May 2009, a concurrent-user online-access subscription
service to deliver themed digital bookshelves into UK public libraries. Themes include Reading Groups,
Children's History, Teen Fiction, Wisden and Arden Shakespeare. Online access sold on a subscription model is a
proven digital delivery model for reference books which we have extended to trade fiction and non-fiction.
This has already sold into many library authorities nationwide providing online access to 3.5m potential users.
In March 2010 we rebranded as Bloomsbury's Public Library Online. Faber have joined it with a Poetry shelf and
Quercus with a Crime shelf, including the international bestselling author Stieg Larsson. We are in discussion
with other UK publishers with a view to expanding this initiative to provide a wide range of bestsellers digitally
to UK public libraries enabling them to remain relevant to their local communities. Berlin Verlag has also
launched a German language version and there is potential for further overseas development.
US
The US turned in a good performance for the year. The Academic list was also launched. In 2010 the A&C Black
list, which has previously been sold by a third party agency, will become part of the new Bloomsbury Academic
and Professional Division in the US. The Methuen and Arden lists are already being sold through the Division
and are becoming a significant force in the US drama market. The benefits of this strategy are bearing fruit as it
is enabling greater focus on growing the lists by means of a dedicated US marketing team, a presence at the
major academic conferences and countrywide sales representation. Berg's US list will join them in 2011.
Bloomsbury's new relationship in Qatar agreed in December 2009 is to develop a global academic and research
journals publishing business for Qatar Foundation in Doha using the Open Access publishing model via a digital
online publishing portal. This venture is owned by Qatar Foundation and will be managed by Bloomsbury
Information Ltd. These long-term database and management contracts with leading organisations are part of our
strategy to grow the specialist business.
My Horizontal Life was in the top 15 on The New York Times paperback non-fiction list every week during 2009.
Logicomix was on The New York Times paperback graphic novel bestseller list for 18 weeks and Methland two
weeks on the extended The New York Times hardcover non-fiction bestseller list. The Children's list had a
number of strong performing titles including Perfect Chemistry by Simone Elkeles, Freckleface Strawberry and
The Dodgeball Bully by Julianne Moore which was on The New York Times bestseller list for six weeks. Disney
released The Princess and the Frog which is based on ED Baker's The Frog Princess published by Bloomsbury USA
and this has provided the opportunity to re-promote her backlist.
Germany
The German market proved to be a difficult one for Berlin Verlag with its first operating loss since 2004. Some
key titles did not meet expectations including the paperback of Jonathan Littell's Die Wohlgesinnten the
hardcover of which had been a major bestseller in the previous year. The backlist continued to hold up well
with ongoing sales from Khaled Hosseini's The Kite Runner as well as Elizabeth Gilbert's Eat, Pray, Love. The
paperback publication of Khaled Hosseini's A Thousand Splendid Suns quickly made its way to the top of the
bestseller list and became one of the top selling titles of the year for Berlin.
Working closely with customers we have made reductions in the initial print runs for books which has reduced
the risk of overstocks. The print contract for the paperback list was moved to the UK at the beginning of 2010 as
UK prices are considerably lower.
Berlin Verlag sells and distributes Bloomsbury UK's English language books and the underlying revenues have
seen a consistent year-on-year increase. Building on the success of this we have moved A&C Black and Arden
from their third-party sales agency arrangements to Berlin's sales force in January 2010. This will give increased
focus on the list and will also retain within the Group the commission paid on those sales. This revenue stream
is also growing as Berlin now provides sales and distribution to other publishers. . Two publishers, Parthas and
Blumenbar, are due to join in 2010.
Berlin is a trade publishing house and its performance is driven by the number of bestsellers it publishes each
year. To provide greater earnings potential we will be starting an English and German language academic
business in 2010 specialising in the Humanities and Social Sciences. The first titles will be published in 2011.
Dividend
The Directors are recommending a final dividend of 3.65 pence per share (2008, 3.47 pence) making a total of
4.43 pence per share (2008, 4.22 pence) for the year. This represents a 5% increase in the full-year dividend. The
final dividend will be payable on 1 July 2010 to Ordinary Shareholders on the register at the close of business on
21 May 2010.
Management and staff

I would like to thank all my colleagues for their tremendous contribution in a very busy year where we have
seen major strategic as well as operational achievements. I would also like to thank Charles Black and Mike
Mayer who will retire as Non-Executive Directors during the year for their profound contribution to the Board.
They will be greatly missed.
Current trading, developments and prospects

We have a strong balance sheet with in excess of £35 million on deposit, and, though investment income will be
less than in 2009 due to the reduction in interest rates and lower average cash balances, we are in a good
position to expand our Specialist operation in the UK, US and Germany as we make new acquisitions, and to
pursue organic growth for our existing Divisions.
For the 2010 financial period we will be moving the year-end to the end of February. The 2010 interim will be to
30 June and we will have an additional interim report as at 31 December with a full period-end reporting on 28
February 2011. With the sixty day reporting deadline for the interim accounts we are finding it increasingly
difficult to see shareholders and get the maximum level of press coverage as many other companies announce
their results at the same time. This change will enable us to identify returns of unsold copies we will receive
from the book trade after the Christmas selling season.
This is a strong set of results, achieved under difficult trading conditions, and demonstrates the strength of our
increasingly diverse revenue streams. We have further strengthened our academic division with the two new
acquisitions. Trading has been excellent in the first quarter of 2010 with a range of new bestsellers (including
the Number 1 bestseller Operation Mincemeat) and a major six figure rights deal in January.
The two Qatar management services partnerships will have an important year in 2010. Three major movies,
Nanny McPhee; Eat, Pray, Love; and Harry Potter and the Deathly Hallows Part One, will drive further sales of
these proven bestsellers in 2010. The success of Bloomsbury's Public Library Online initiative and other
Bloomsbury innovations will see us at the forefront of the digital opportunity. The marketplace will remain
rocky in 2010 and will continue to throw the unexpected at all businesses but I am confident that Bloomsbury is
as well positioned as it could be to prosper in this environment with our high hit rate in trade publishing, our
expansion in academic and professional publishing, our strong balance sheet and our entrepreneurial mission.
Nigel Newton
Founder and Chief Executive
30 March 2010
Financial Review
Results
Revenue for the Group for 2009 was £87.22m (2008, £99.95m). The Group was working against a strong
comparative year with the publication of Harry Potter and the Deathly Hallows in paperback and The Tales of
Beedle the Bard in 2008. Bloomsbury had a very good second half weighted publishing programme in 2009 with
strong performances in both the UK and the US.
Bloomsbury's segmental analysis is by geographic breakdown, which follows the Group's international
publishing strategy. Revenue in the UK was £58.89m (2008, £71.06m). Harry Potter and the Deathly Hallows
paperback and The Tales of Beedle the Bard were published in 2008. There were strong sales performances in
2009 from River Cottage Everyday by Hugh Fearnley-Whittingstall, The Fat Duck Cookbook by Heston
Blumenthal, The Suspicions of Mr Whicher by Kate Summerscale and The Guernsey Literary and Potato Peel Pie
Society by Mary Ann Shaffer and Annie Barrows. A number of backlist titles performed well with continued sales
from A Thousand Splendid Suns and The Kite Runner; Eat, Pray, Love and Harry Potter. Profit before investment
income, finance costs and tax in the UK was £6.57m (2008, £8.15m). US revenue was £18.78m (2008, £17.32m)
which was primarily due to the success of titles including My Horizontal Life by Chelsea Handler, The Nasty Bits
by Anthony Bourdain and The Fat Duck Cookbook. Profit in the US before investment income finance costs tax
and central costs recharged from the UK was £0.45m (2008, £0.38m). For Continental Europe, revenue, which was
generated by Berlin Verlag, was £9.55m (2008, £11.57m). Berlin was operating in a difficult market which
resulted in some key titles that did not meet expectations including the paperback of Jonathan Littell's Die
Wohlgesinnten which was a bestseller last year in hardback. The lower revenue contributed to a loss before
investment income finance costs, tax and central costs recharged from the UK of £0.57m (2008, profit, £0.19m). A
recovery is expected in 2010 and further reductions in the cost base are being made.
The Group's divisional structure is split into three main operating areas: Children's, Adult and Reference
publishing. Under the current Group structure Children's and Adult form the Trade Publishing Division, and
Reference the Specialist Publishing Division. All three Divisions operate in the UK, US and Germany. For 2009
the breakdown of revenue between the three areas was: Children's 26% (2008, 38%), Adult 44% (2008, 42%) and
Reference 30% (2008, 20%).
Revenue in Children's was £22.98m (2008, £38.33m). Harry Potter and the Deathly Hallows paperback and Beedle
the Bard were published in 2008. Harry Potter continued to perform well as did The Graveyard Book by Neil
Gaiman. Gross profit for Children's for 2009 was £11.55m (2008, £17.10m). The reduction in gross profit was due
to a strong 2008 comparative along with a write-back in the returns provision in 2008 of £5.1m which related to
the provision brought forward in 2007. Contribution before administrative expenses was £8.35m (2008,
£13.65m).
Adult revenue was £37.89m (2008, £42.03m). 2008 benefited from the UK paperback publication of A Thousand
Splendid Suns. Although revenue decreased, a number of titles continued to sell well including The Kite Runner
(UK and Germany), A Thousand Splendid Suns (UK and Germany), Eat, Pray, Love (UK and Germany), The Fat Duck
Cookbook (UK and USA), The Guernsey Literary and Potato Peel Pie Society (UK), The Suspicions of Mr Whicher
(UK) and River Cottage Everyday (UK). Gross profit for Adult for 2009 increased 16.4% to £17.84m (2008, £15.32m),
with the contribution before administrative expenses up 38.3% to £11.02m (2008, £7.97m). The main reason for
the increase in gross profit was lower provisions against unearned advances being charged in the year. In 2008
there was an additional advance provision made of £5.4m.
Reference revenue increased 34.5% to £26.35m (2008, £19.59m). The revenue growth was primarily due to the
full year impact of the 2008 acquisitions of Featherstone, Berg, Wisden and Arden Shakespeare and revenues
from the acquisitions of Tottel Publishing, renamed Bloomsbury Professional, and Hodder Education's Higher
Education Humanities list in July. The gross profit for 2009 was up 29.2% to £13.99m (2008, £10.83m), with the
contribution before administrative expenses up 24.2% to £8.57m (2008, £6.90m).
Rights revenue, which includes subsidiary rights, electronic database income, management contracts and
income derived from third-party agencies, was £9.23m (2008, £9.30m). The contribution attributable to this
revenue was £6.64m (2008, £5.84m). The increase in contribution was due to a combination of reasonable
margin deals concluded along with profit being recognised on deliverables under existing contracts. £4.94m
(2008, £4.50m) of the profit was generated in the Specialist Publishing Division and £1.70m (2008, £1.34m) was
generated in the Trade Publishing Division.
Gross profit for the Group for the year was £43.38m (2008, £43.25m). Gross profit margin increased to 49.7%
(2008, 43.3%). The increase in the gross profit margin was primarily due to lower royalty costs charged to the
Income Statement than in 2008, lower provisions against unearned advances and the increased contribution
from higher margin rights revenues. Royalty costs decreased to £10.03m (2008, £13.96m) and represented 11.5%
of revenues (2008, 14.0% of revenues). Royalty rates vary according to the type of books published in the year.
Provisions against unearned advances charged to the Income Statement were £3.44m (2008, £9.13m) and
represented 3.9% of revenues (2008, 9.1% of revenues). Books returned by customers are credited to the
returns provision. Within the overall returns provision charge for the year, there was a write-back in the returns
provision relating to changes in assumptions made in respect of the provision brought forward from 2008 which,
as a result of the level of returns actually received during 2009, is no longer required. The value of the write-
back to the Income Statement is £0.58m (2008, £5.16m). Stock provisions charged to the Income Statement
decreased to £2.21m (2008, £2.83m) and represented 2.5% of revenues (2008, 2.8% of revenues).
Marketing and distribution costs increased by 4.7% to £15.44m (2008, £14.74m). £0.8m of the increase was due to
adverse exchange rate movements on the Euro and US dollar. In addition, in 2008 there was a number of high
value revenue generating titles which incurred a lower distribution charge as a proportion of revenue.
Administrative expenses before amortisation of intangible assets increased 5.9% to £21.19m (2008, £20.01m),
£0.99m of the increase was due to adverse exchange rate movements on the Euro and the US dollar and £0.60m
related to overheads on the acquisition of Tottel Publishing. The IFRS2 options charge for the year was £0.09m
(2008, £0.19m).
Profit before investment income, finance costs and taxation was £6.17m (2008, £8.40m). Profit before
investment income and amortisation of intangible assets was £6.75m (2008, £8.50m). Profit before investment
income and amortisation of intangible assets and goodwill impairment was £6.85m (2008, £8.61m).
Investment income decreased to £1.11m (2008, £3.29m) as a result of lower average cash balances during the
year and lower rates of interest earned on those balances.
The effective corporation tax rate for the year was 30.1% (2008, 32.6%). The decrease in the rate from 2008
mainly reflects the write-back in an overprovision from prior years. The Group continues to recognise deferred
tax assets in respect of brought forward tax losses of Bloomsbury USA and Berlin Verlag which we expect will be
utilised in the foreseeable future.
Basic earnings per share was 6.77 pence (2008, 10.67 pence). Diluted earnings per share was 6.74 pence (2008,
10.67 pence). Basic earnings per share before amortisation of intangible assets and goodwill impairment was
7.56 pence (2008, 10.96 pence). Diluted earnings per share before amortisation of intangible assets and goodwill
impairment was 7.53 pence (2008, 10.96 pence).
Balance sheet
Non-current assets
Intangible assets increased to £37.60m (2008, £27.54m) primarily due to the acquisition of two companies
during the year, namely legal and tax publisher Tottel, now renamed Bloomsbury Professional, and the
Hodder Education Humanities list.
Current assets
Inventories decreased 1.4% to £16.35m (2008, £16.59m). Underlying stock holding has remained relatively
stable over the last twelve months. On a like for like basis with 2008 overseas stocks benefitted with a
positive exchange movement of £0.56m which was partially offset with new inventories on the acquisition
of Tottel and the Hodder Education Humanities list.
Trade and other receivables decreased 3.0% to £47.51m (2008, £48.98m). Trade receivables decreased
5.8% to £21.60m (2008, £22.94m). The level of receivables at the end of the year reflects the lower
revenues during the year and the stronger second half weighting of the publishing programme. Since
books sold are generally returnable by customers, the Group makes a provision against books sold in the
accounting period. The unused provision at the year-end is then carried forward as an offset to trade
receivables in the balance sheet, in anticipation of further book returns subsequent to the year end. A
provision for the Group of £6.51m (2008, £7.78m) for future returns relating to 2009 and prior year sales
has been carried forward in trade receivables at the balance sheet date. This provision at margin
represents 7.5% (2008, 7.8%) of revenues. Within trade and other receivables, prepayments and accrued
income decreased 1.1% to £25.42m (2008, £25.71m). Net provisions of £3.44m (2008, £9.13m) against
advances to authors on titles published ('advance provisions') were made during the year. Within
prepayments and accrued income there were provisions brought forward on titles of £1.61m (2008, £ nil)
that were no longer required. This amount has been used to provide against other titles where those
amounts are considered not to be recoverable. There was also a reduction in the amount invested in
future unpublished titles which is part of our strategy to give greater focus for each title published and
increase the potential to create bestsellers.
Equity and liabilities
As at 31 December 2009 total equity stood at £112.68m (2008, £113.67m). The decrease was due to retained
earnings of £1.87m (2008, £4.76m) offset by the translation loss on consolidation of the assets and liabilities of
overseas subsidiaries in other comprehensive income of £2.95m (2008, gain £8.45m), partially offset by the
increase in the share-based payment reserve due to the share-based payment charge for the year of £0.09m
(2008, £0.19m), which is also included in retained earnings.
Current liabilities decreased 26.6% to £24.16m (2008, £32.92m). Accruals and deferred income, which is included
in trade and other payables, decreased to £15.39m (2008, £24.01m). Accruals and deferred income includes
royalty payments to authors, which vary from year to year depending on revenue and the authors' royalty rates
which typically escalate on triggered thresholds as volume sales increase.
Cash flow
The Group had a net cash outflow from operating activities before tax of £2.56m for the year (2008, £16.34m cash
inflow). This was mainly attributable to royalty payments on books sold in the second half of 2008 with the
royalty due to authors at the end of March 2009. Corporation tax paid during the year was £1.73m (2008, £6.18m).
During the year £1.41m (2008, £3.03m) of interest was received from deposits, and £3.13m (2008, £2.98m) of
dividends were paid. £10.31m, net of cash acquired, was spent on the two businesses acquired during the year
(2008, £7.43m). The Group's cash on the balance sheet as at 31 December 2009 was £35.04m (2008, £51.91m).
Colin Adams ACA


for the year ended 31 December 2009
Notes 2009 2008
£'000 £'000
Revenue 2 87,217 99,948
Cost of sales (43,839) (56,698)

______ ______

Marketing and distribution costs (15,441) (14,742)
Administrative expenses -
amortisation of intangible assets (584) (102)
Administrative expenses -
impairment of goodwill - (111)
Administrative expenses - other (21,186) (19,896)
______ ______
Profit before investment income,

finance costs and tax 6,167 8,399
Investment income 1,105 3,285
Finance costs (145) (51)
______ ______
Income tax expense 3 (2,146) (3,793)
______ ______
Profit for the year, attributable to 4,981 7,840

owners of the parent company
______ ______
Basic earnings per share 5 6.77p 10.67p
______ ______
Diluted earnings per share 5 6.74p 10.67p

______ ______
2009 2008
£'000 £'000

______ ______
Exchange differences on translating
foreign operations (2,950) 8,453
Deferred tax on share based payments 21 34
______ ______
Other comprehensive income for the (2,929) 8,487
year net of tax ______ ______
Total comprehensive income for the 2,052 16,327
year net of tax attributable to owners of the ______ ______
parent company

at 31 December 2009
2009 2008
£'000 £'000
ASSETS
Non-current assets
Intangible assets 37,598 27,543
Deferred tax assets 1,965 2,152
______ ______
Total non-current assets 40,624 31,138
______ ______
Current assets
______ ______
Total current assets 98,895 117,479
______ ______
TOTAL ASSETS 139,519 148,617

______ ______
EQUITY AND LIABILITIES
Equity attributable to owners of the
parent
Ordinary shares 922 922
Share-based payment reserve 2,393 2,305
Translation reserve 4,604 7,554

______ ______
Total equity 112,684 113,672
______ ______
Liabilities
Deferred tax 2,234 1,451
Retirement benefit obligations 91 18
Other payables 353 558
______ ______
Total non-current liabilities 2,678 2,027
______ ______
Current liabilities
Current tax liabilities 1,088 315
______ ______
Total current liabilities 24,157 32,918
______ ______
______ ______
TOTAL EQUITY AND LIABILITIES 139,519 148,617

______ ______
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO OWNERS OF THE

PARENT
Ordinary Share Capital Share-based Translation Retained Total

shares premium redemption payment reserve earnings
reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Attributable to owners of
the parent
Balances at 1 January 2008 920 39,191 20 2,114 (899) 58,723 100,069
Other comprehensive
income:
Exchange differences on - - - - 8,453 - 8,453

translating foreign
operations
Deferred tax on share- - - - - - 34 34

based payments
______ ______ ______ ______ ______ ______ ______
Total comprehensive - - - - 8,453 7,874 16,327
income for the year
Transactions with owners

in their capacity as
owners:
Share-based payments - - - 191 - - 191
Dividends - - - - - (2,980) (2,980)
Purchase of shares by the - - - - - (134) (134)

Employee Benefit Trust
Share issues 2 197 - - - - 199

______ ______ ______ ______ ______ ______ ______
Total transactions with 2 197 - 191 - (3,114) (2,724)
owners for the year
______ ______ ______ ______ ______ ______ ______
Balances at 31 December 922 39,388 20 2,305 7,554 63,483 113,672
2008
Other comprehensive
income:
Exchange differences on - - - - (2,950) - (2,950)

translating foreign
operations
Deferred tax on share- - - - - - 21 21

based payments
______ ______ ______ ______ ______ ______ ______
Total comprehensive - - - - (2,950) 5,002 2,052
income for the year

in their capacity as
owners:
Share-based payments - - - 88 - - 88
Dividends - - - - - (3,128) (3,128)

______ ______ ______ ______ ______ ______ ______
Total transactions with - - - 88 - (3,128) (3,040)
owners for the year
______ ______ ______ ______ ______ ______ ______
Balances at 31 December 922 39,388 20 2,393 4,604 65,357 112,684
2009 ______ ______ ______ ______ ______ ______ ______

2009 2008
£'000 £'000
Adjustments for:
Goodwill impairment - 111
Profit on sale of property, plant and equipment (9) (12)
Share-based payment charges 88 191
Investment income (1,105) (3,285)
Finance costs 145 51
______ ______
7,499 9,635
(Increase) / decrease in inventories (76) 38
(Increase) / decrease in trade and other receivables (98) 33,350
Decrease in trade and other payables (9,888) (26,686)
______ ______
Cash (used in) / generated from operations (2,563) 16,337
Income taxes paid (1,734) (6,183)
______ ______
Net cash (used in) / generated from operating activities (4,297) 10,154
______ ______
Proceeds from sale of property, plant and equipment 23 30
Purchase of businesses, net of cash acquired (10,307) (7,433)
Interest received 1,409 3,026
______ ______
______ ______
Purchase of shares by the Employee Benefit Trust - (134)
Equity dividends paid (3,128) (2,980)
______ ______
Net cash used in financing activities (3,162) (3,165)
______ ______
Net (decrease) / increase in cash and cash equivalents (16,638) 2,258

Exchange (loss) / gain on cash and cash equivalents (234) 2,092
______ ______
______ ______
NOTES
1. The above financial information does not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The above figures for the year ended 31 December 2009 are an abridged version of the
Company's accounts which will be reported on by the Company's auditors before dispatch to the shareholders and
filing with the Registrar of Companies. The preliminary announcement was approved by the Board on 29 March
2010.
The consolidated financial information has been prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU). The
accounting policies applied in 2009 are consistent with those applied in the Financial Statements for 2008 other
than the changes resulting from the implementation of the following accounting standards which were implemented
during the financial year: IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial Statements' and IFRS 7
'Financial Instruments: Disclosures - Amendment; Improving Disclosures About Financial Instruments'.
The statutory accounts for the year ended 31 December 2008 have been lodged with the Registrar of
Companies. These accounts received an audit report which was unqualified and did not include any reference to
matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement
under section 237(2) or section 237(3) of the Companies Act 1985.
NOTES
2 Segmental analysis
As the main thrust of the Group's growth is to develop its international publishing strategy, the internal reporting
to the chief operating decision maker is by geographical segments. Management has determined the operating
segments based on these reports. All segments derive their revenue from book publishing, sale of publishing
and distribution rights, sponsorship and database contracts. The analysis by geographical segment is shown
below.
Year ended 31 December 2009

United North Continental Eliminations and Total
Kingdom America Europe unallocated costs
£'000 £'000 £'000 £'000 £'000
Revenue
External sales 58,888 18,777 9,552 - 87,217
Inter-segment sales * 480 - 134 (614) -
_______ _______ _______ _______ _______
Total revenue 59,368 18,777 9,686 (614) 87,217
_______ _______ _______ _______ _______
Result
Segment result before central costs 6,284 450 (567) - 6,167
Central cost recharges 284 (152) (132) - -
_______ _______ _______ _______ _______
Segment result 6,568 298 (699) - 6,167
Investment income 1,101 4 - - 1,105

Finance costs (145) - - - (145)
_______ _______ _______ _______ _______
Profit / (loss) before taxation 7,524 302 (699) - 7,127
Income tax expense - - - (2,146) (2,146)
_______ _______ _______ _______ _______
Profit / (loss) for the year 7,524 302 (699) (2,146) 4,981
_______ _______ _______ _______ _______
Other Information
Amortisation of intangible assets 548 36 - - 584
Actuarial losses 111 - - - 111
Share-based payment charges 88 - - - 88
_______ _______ _______ _______ _______
* Inter-segment sales are charged at prevailing market rates.
NOTES
2. Segmental analysis (continued)

United North Continental Eliminations and Total
Kingdom America Europe unallocated costs
£'000 £'000 £'000 £'000 £'000

Revenue
External revenue 71,062 17,317 11,569 - 99,948
Inter-segment revenue * - - 213 (213) -
_______ _______ _______ _______ _______
Total revenue 71,062 17,317 11,782 (213) 99,948
_______ _______ _______ _______ _______
Result
Segment result before central costs 7,836 378 185 - 8,399
Central cost recharges 316 (130) (186) - -
_______ _______ _______ _______ _______

Segment result 8,152 248 (1) - 8,399
Investment income 3,253 11 21 - 3,285

Finance costs (51) - - - (51)
_______ _______ _______ _______ _______
Profit before taxation 11,354 259 20 - 11,633
Income tax expense - - - (3,793) (3,793)
_______ _______ _______ _______ _______
Profit for the year 11,354 259 20 (3,793) 7,840
_______ _______ _______ _______ _______
Other Information
Amortisation of intangible assets 67 35 - - 102
Impairment of goodwill 111 - - - 111
Actuarial gains 44 - - - 44
Share-based payment charges 191 - - - 191
_______ _______ _______ _______ _______
* Inter-segment sales are charged at prevailing market rates.
NOTES
External sales by destination
Source
United North Continental Total
Kingdom America Europe
£'000 £'000 £'000 £'000
Destination
United Kingdom (country of 38,517 - - 38,517

domicile) _______ _______ _______ _______
North America 3,568 18,404 - 21,972
Continental Europe 5,550 - 9,552 15,102
Australasia 3,809 - - 3,809
Far and Middle East 5,427 373 - 5,800
Rest of the world 2,017 - - 2,017
_______ _______ _______ _______
Foreign Countries 20,371 18,777 9,552 48,700
_______ _______ _______ _______
Total external sales 58,888 18,777 9,552 87,217
_______ _______ _______ _______
United Kingdom (country of 48,585 - - 48,585

domicile) _______ _______ _______ _______
North America 2,038 16,729 - 18,767
Continental Europe 7,748 - 11,569 19,317
Australasia 5,947 - - 5,947
Far and Middle East 4,986 588 - 5,574
Rest of the world 1,758 - - 1,758
_______ _______ _______ _______
Foreign Countries 22,477 17,317 11,569 51,363
_______ _______ _______ _______
Total external sales 71,062 17,317 11,569 99,948
_______ _______ _______ _______
NOTES
Business Divisions
The Group's business is organised in three operating areas: Trade (Adult), Trade (Children's) and Specialist.
The following table provides the breakdown of revenue and divisional result for these areas.

Trade Trade Total Specialist Unallocated Total
(Adult) (Children's) Trade
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 37,892 22,977 60,869 26,348 - 87,217

Cost of sales (20,056) (11,427) (31,483) (12,356) - (43,839)
_______ _______ _______ _______ _______ _______
Gross profit 17,836 11,550 29,386 13,992 - 43,378
Marketing and distribution costs (6,814) (3,203) (10,017) (5,424) - (15,441)

_______ _______ _______ _______ _______ _______
Contribution before administration 11,022 8,347 19,369 8,568 - 27,937
expenses _______ _______
Administrative expenses (16,470) (5,013) (287) (21,770)
_______ _______ _______ _______
Divisional result 2,899 3,555 (287) 6,167
Investment income - - 1,105 1,105

Finance costs - - (145) (145)
_______ _______ _______ _______
Profit before taxation 2,899 3,555 673 7,127
Income tax expense - - (2,146) (2,146)
_______ _______ _______ _______
Profit for the year 2,899 3,555 (1,473) 4,981
_______ _______ _______ _______
NOTES
Year ended 31 December Trade Trade Total

2008 (Adult) (Children's) Trade Specialist Unallocated Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 42,031 38,330 80,361 19,587 - 99,948

Cost of sales (26,713) (21,229) (47,942) (8,756) - (56,698)
_______ _______ _______ _______ _______ _______
Gross profit 15,318 17,101 32,419 10,831 - 43,250
Marketing and distribution (7,353) (3,454) (10,807) (3,935) - (14,742)

costs _______ _______ _______ _______ _______ _______
Contribution before 7,965 13,647 21,612 6,896 - 28,508
administration expenses _______ _______
Administrative expenses (17,248) (2,826) (35) (20,109)
_______ _______ _______ _______
Divisional result 4,364 4,070 (35) 8,399
Investment income - - 3,285 3,285

Finance costs - - (51) (51)
_______ _______ _______ _______
Profit before taxation 4,364 4,070 3,199 11,633
Income tax expense - - (3,793) (3,793)
_______ _______ _______ _______
Profit for the year 4,364 4,070 (594) 7,840
_______ _______ _______ _______
Due to the seasonality of the business, the Group's revenues and gross profit are weighted towards the second half
of the year.
NOTES
3. Taxation
(a) Tax charge for the year

2009 2008
£'000 £'000
Based on the profit for the year:
UK corporation tax 2,159 3,195
(Over) / under provision in respect of prior year (246) -

Overseas taxation - current year 61 197
_______ _______
1,974 3,392
Deferred tax
- UK 172 109
- Overseas - 292
_______ _______
2,146 3,793
_______ _______
(b) Factors affecting tax charge for the year
The tax assessed for the year is different from the standard rate of corporation tax in the UK (28%). The differences
are explained below:
2009 2008
£'000 £'000

______ ______
Profit on ordinary activities multiplied by the standard rate of

corporation tax in the UK of 28% (2008, 28.5%) 1,996 3,315
Effects of:
Non-deductible revenue expenditure 73 19
Income not taxable - (12)
Non-qualifying depreciation 52 64
Share-based payments - 95
Indexation allowance - (28)
Different rates of tax on overseas results 6 79
Tax losses not utilised 116 266
Adjustment to tax charge in respect of previous periods

- current tax (246) (3)
- deferred tax 149 (2)
______ ______
Tax charge for the year 2,146 3,793
______ ______
4. Dividends
For the prior year
A final dividend for 2008 of 3.47 pence per share (£2,554,000) was paid to the equity shareholders on 1 July
2009, being the amount proposed by the Directors, and subsequently approved by the shareholders at the 2009
Annual General Meeting (2008, final dividend for 2007 paid in 2008 of 3.30 pence per share, £2,428,000).
For the current year
On 20 November 2009 an interim dividend of 0.78 pence per share (£574,000) was paid to the equity
shareholders (2008, 0.75 pence per share, £552,000).
The Directors propose that a final dividend of 3.65 pence per share will be paid to the equity shareholders on 1
July 2010. Based on the number of shares currently in issue, the final dividend will be £2,689,000. This dividend is
subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in
these financial statements.
The basic earnings per share has been calculated by reference to earnings of £4,981,000 (2008, £7,840,000) and
a weighted average number of Ordinary Shares in issue after deducting 88,760 (2008, 88,760) shares held by the
Employee Benefit Trust of 73,594,863 (2008, 73,503,495). The diluted earnings per share has been calculated by
reference to earnings of £4,981,000 (2008, £7,840,000) and a weighted average number of Ordinary Shares of
73,920,795 (2008, 73,506,869) which takes account of share options and awards.
The reconciliation between the weighted average number of shares for the basic earnings per share and the diluted
earnings per share is as follows:
2009 2008
Number Number
Weighted average number of shares for
basic earnings per share 73,594,863 73,503,495
Dilutive effect of share options and 325,932 3,374
awards
______ ______
diluted earnings per share 73,920,795 73,506,869
______ ______
The earnings per share are shown below:
2009 2008
Basic earnings per share 6.77p 10.67p

______ ______
Diluted earnings per share 6.74p 10.67p
______ ______
The adjusted earnings per share before amortisation of intangible assets of £584,000 (2008, £102,000) and
impairment of goodwill of £nil (2008, £111,000) are shown below:
2009 2008
Adjusted basic earnings per share 7.56p 10.96p

______ ______
Adjusted diluted earnings per share 7.53p 10.96p
______ ______
6. Acquisitions
On 1 July 2009 Bloomsbury Publishing Plc acquired the whole of the issued share capital of Tottel Publishing
Limited for a cash consideration of £9,962,000. Tottel Publishing Limited is an independent professional and
academic publisher in the UK and Ireland. The acquisition has been accounted for by the purchase method of
accounting. The goodwill of £5,579,000 arising on this acquisition has been capitalised on the Group balance
sheet. Identifiable intangible assets of £5,611,000 were recognised on the acquisition and a deferred tax liability
of £1,200,000 was provided against these assets. A deferred tax asset of £86,000 has also been recognised for
pre acquisition losses of Tottel Publishing Limited. The goodwill on acquisition arises from the expected
profitability of the acquired business and the significant cost synergies expected to arise after the acquisition. It
also comprises benefits that cannot be separately recognised such as its existing workforce, customer base and
relationships with writers.
On 9 July 2009 A&C Black acquired the business and net assets of Hodder Humanities for a cash
consideration of £462,000. It will be managed under the Bloomsbury Academic imprint. The acquisition has
been accounted for by the purchase method of accounting. The goodwill of £146,000 arising on the acquisition
has been capitalised in the group balance sheet. Identifiable intangible assets of £273,000 were recognised on
the acquisition and no provision was required for deferred tax liability against these assets. The goodwill is
attributable to the expected profitability of the acquired business and the synergies expected to arise after the
acquisition.
7. Annual General Meeting

The Annual General Meeting will be held at 12 noon on Friday 28 May 2010 at 36 Soho Square, London W1D
3QY.
8. Report and Accounts
Copies of the Report and Accounts will be circulated to shareholders in May and can be viewed after the posting
date on the Bloomsbury website.
Colin Adams ACA


END
FR SEUFUUFSSEED
5/24/13 Barratt Developments | Final Results | FE InvestEgate
Barratt Developments
Final Results
RNS Number : 0935D
Barratt Developments PLC
10 September 2008
10 September 2008
BARRATT DEVELOPMENTS PLC
Results for the financial year ended 30 June 2008
Highlights:
Completions for the full year were 18,588 (2007: 17,168), an increase of 8.3%. As a result, Group revenue rose
by 16.7% to £3,554.7m (2007: £3,046.1m). On a like-for-like(1) basis, completions were down 13.8%.
The average selling price increased by 6.0% to £183,100 (2007: £172,800), reflecting a change in product and
geographical mix and benefiting from a number of high value sales in premium London locations. On an
underlying basis, excluding the effect of change in product mix, the average selling price decreased by
approximately 5%.
Operating margin(2) decreased to 15.5% (2007: 16.9% (3)) and was down 1.7% on a like-for like(1) basis.
Profit before tax pre exceptional costs decreased by 13.0% to £392.3m (2007: £451.0m(3)). Exceptional
costs (2) totalled £255.0m and comprised £208.4m impairment of inventories, £30.7m impairment of goodwill
and intangible assets and £15.9m restructuring costs (2007: £26.2m). Profit before tax was £137.3m (2007:
£424.8m(3)).
Adjusted basic earnings per share before exceptional costs (2) was 79.6 pence (2007: 123.0 pence(3)). Basic
earnings per share was 25.0 pence (2007: 115.4 pence(3)).
Owned and controlled plots of land totalled 78,700, 4.2 years supply at current completion rates.
Net borrowings were £1,652.4m (2007: £1,301.2m), and have decreased by £86.1m since 31 December 2007.
Financial structure strengthened, with revised covenant package agreed and £400m refinancing completed.
Forward sales at 30 June 2008 were £697.6m (2007: £1,413.8m). £538.7m of the £697.6m forward sales were
contracted as compared to £865.9m contracted in the prior year, a decline of 37.8%. As of 31 August 2008,
forward sales had increased to £783.3m.
Given the performance of the business for the full year and the Board's view on the outlook for the current year,
no final dividend for 2007/8 will be paid. The total dividend paid for the year ended 30 June 2008 is 12.23 pence
per share, being the interim dividend paid in May.
Mark Clare, Group Chief Executive of Barratt Developments commented:
'Whilst we have produced a satisfactory set of results in an extremely challenging market, there is little prospect for any
material improvement in trading conditions until mortgage finance and customer confidence return. In the meantime, we have
successfully refinanced our business. Our focus today and looking forward is to maximise sales revenues, reduce costs and
generate cash to reduce debt.'
(1) 'Like-for-like' basis assumes that the acquisition of Wilson Bow den w as completed upon the first day of the comparative
financial period. Wilson Bow den achieved 6,052 completions, revenue of £1,422.1m, operating profit of £219.2m, and a
profit before tax of £191.7m in the 12 months ended 30 June 2007. Prior to acquisition, Wilson Bow den achieved 4,401
completions, revenue of £1,042.5m, operating profit of £165.3m (including £22.7m of exceptional costs) and a profit before
tax of £141.2m.
(2) Before exceptional costs, comprising impairment of inventories, goodw ill and intangible assets, and restructuring costs of
£255.0m of w hich £173.1m related to the housebuilding business and £81.9m to the commercial developments business
(2007: £26.2m, of w hich £25.6m related to the housebuilding business and £0.6m to the commercial developments
business). Post-tax exceptional items include related tax of £66.8m (2007: £6.5m).
(3) The results for the year ended 30 June 2007 have been restated as explained in note 2.
A financial analysts' presentation will be broadcast live on the Barratt Developments corporate website,
www.barrattdevelopments.co.uk, from 9.00am today. A playback facility will be available shortly after the presentation has
finished.
The financial analysts' presentation slides will be available on the Barratt Developments corporate website,
www.barrattdevelopments.co.uk, from 9:00am today, together with photographic images of
Bob Lawson, Mark Clare and a selection of Barratt developments.
Further copies of the announcement can be obtained from the Company Secretary's office at:
Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire,
LE67 1UF.

Mark Clare, Group Chief Executive
Mark Pain, Group Finance Director
For analyst/investor enquiries, please contact:

Susie Bell, Acting Head of Investor Relations 020 7299 4880
For media enquiries, please contact:

Dan Bridgett, Head of External Affairs 020 7299 4873
Maitland
Liz Morley 020 7379 5151
Neil Bennett
Group Chief Executive's statement
We have achieved satisfactory results for the year against the backdrop of a rapidly deteriorating UK housing
market. With the successful renegotiation of our debt covenants, we have now strengthened our financial
structure and have refocussed the business on clear priorities: sales delivery, cost efficiency and cash
management to reduce debt.
Our operational performance

After a relatively stable start to the financial year, we saw a sharp decline in the UK housing market following the well-
publicised financial difficulties of Northern Rock. Whilst there was some recovery in our sales following Christmas, the
fourth quarter was particularly challenging for the Group. Sales became extremely difficult in the traditionally strong spring
selling season, with cancellation rates rising to 37.4% during the second half as a result of the severe rationing of
mortgage finance.
Total completions for the year, whilst up on a statutory basis, decreased on a like-for-like(1) basis by 13.8% to 18,588.
However, difficult trading conditions, particularly in the fourth quarter, have led to a more significant reduction in forward
sales and we consequently expect lower completion volumes in 2008/9. At the year-end forward sales totalled £697.6m of
which £538.7m was contracted.
The overall average selling prices of the properties sold increased by 6.0% as a result of continued changes in our product
mix. However, we saw an underlying reduction of around 5%, mainly in the last quarter of the year, as a result of pressure
on prices and increased sales incentives.
Declining volumes and prices were partially offset by underlying improvements in the efficiency of the Group. Wilson
Bowden synergies of £33m were delivered against the target of £30m set for 2007/8 with a series of additional cost
reduction programmes, put in place 18 months ago, delivering an additional £20m of cost savings. Whilst these
improvements have reduced the impact of lower volume and selling prices, overall Group profit from operations before
exceptional costs(2), on a like-for-like(1) basis, fell by 21.5% with an operating margin before exceptional costs(2) of
15.5%.
Tight control of land spend helped to reduce our net debt to £1.65bn at the end of the second half. However, as a prudent
response to future market conditions, we have agreed with our banks and private placement note holders to amend our
covenant package. In addition, we have recently signed a new three-year £400m facility and have reached agreement to
extend £350m of our existing £400m revolving credit facility. These debt facilities do not mature until 2011.
Competing in today's market
With the successful refinancing of the business, a good deal of the uncertainty about our future has been removed.
However, there is little prospect of an immediate housing market recovery as mortgage finance remains highly constrained.
We have therefore put in place detailed plans to drive improved operational performance in the key areas of sales, costs
and cash.
Improved sales delivery

In current market conditions the effectiveness of the Group's marketing and sales capability will have a significant impact
on our business performance in terms of maximising revenue. We have put additional investment into sales training and
site marketing. Both our major brands, David Wilson Homes and Barratt Homes, have been refreshed, and there has been
significant investment in our 'online' media activity. 'New media' marketing campaigns are currently driving circa 70% of
sales leads and we expect this low-cost channel to continue to grow.
New products aimed at helping our customers overcome the current barriers in the housing market have also been
introduced. Shared-equity products such as Dream Start and Head Start have proved particularly successful and we will
continue to innovate in these areas.
Part-exchange is an important sales channel in the current market. Our ability to sell second-hand products is a key
determinant of the extent to which we can use this offering and last year we sold over 1,900 second-hand properties
through our Oakleaf network.
Reducing costs
Although we have made good progress on cost reduction, there is still considerable scope to improve the efficiency of the
Group. Cost reduction programmes across the business are well established and are continuing to reduce construction
and supply costs. We expect these programmes to deliver £40m of savings in 2008/9.
We have introduced additional cost saving measures to take account of the further deterioration in the market. During July
we announced that we would further rationalise our divisional structure, and together with savings in other divisions this has
resulted in the loss of approximately 1,200 jobs. The vast majority of these people have now left the organisation. This
rationalisation will bring the total number of divisions down from 44, at the time of the Wilson Bowden acquisition, to 26.
These initiatives are likely to result in further savings of around £40m per annum, the majority of which will be delivered in
2008/9 at a cost of £15m.The structure, whilst much leaner, still provides us with nationwide coverage and the sound
foundations for growth when the market picks up.
We also remain on track to deliver approximately £60m of annualised savings arising from the integration of Wilson
Bowden during 2008/9.
Managing Cash
Cash control will continue to be central to our objectives. Land spend in 2008/9 is likely to reduce to around £568m,
almost all of which relates to contractual commitments - a reduction of £400m on 2007/8. Work in progress is being tightly
controlled and we will continue to carefully match construction rates to projected sales rates. We will only start on new
sites or new phases where we are confident of sales rates; so the number of sites will fall to an average of around 500 for
2008/9.
Whilst we have a minimal exposure to large, owned tranches of strategic land and high rise flatted developments, we have
incurred pre-tax write-downs to the value of land and work in progress of £208.4m, of which £51.2m related to commercial
developments. It is anticipated that a portion of these write-downs will enable the Group to release cash from work in
progress more quickly.
We are progressing with the process to divest the assets from the Wilson Bowden Developments portfolio which have a
potential cash value of around £200m. We hope to be able to move the majority of these through to completion over the
next six to twelve months.
Long-term value
At the same time as focussing on current market conditions, as far as possible we will seek to protect the longer-term
value creating qualities of the organisation. This means continuing to invest in our people, improving the quality of
construction, safety standards, customer service, and ensuring that we develop our products to meet customers'
preferences and changing regulatory requirements.
The importance of our continued emphasis on safety and quality was underlined by the tragic death of a resident at the
Azure development, Bedfont, caused, it appears, by carbon monoxide poisoning. Our sympathies lie very much with the
families of those involved at this time. We are working with the relevant authorities to understand the full cause of the
incident.
Investing in people
At the heart of our capability is a high quality and dedicated work force. Their skill and expertise has once again been
demonstrated by winning 73 National House-Building Council ('NHBC') 'Pride in the Job' quality awards for the quality of our
construction teams. This is the highest number of awards ever made to a single business in the 26 year history of the
scheme. It follows the unprecedented achievement of winning both of the NHBC Supreme Awards - the very highest
construction awards for major housebuilders.
Driving up quality
We have continued to focus on driving up the quality of everything we do and improving customer satisfaction. Customer
service must remain a high priority for the Group and against a background of considerable organisational change, the
number of our customers that would 'recommend us to a friend' has remained at 88% (2007: 88% on a like-for-
like(1) basis).
We have seen significant improvement in the health and safety performance of the Group. The reportable injury incidence
rate was 656 per 100,000 people employed - a reduction of 23.5% on the previous year.
Product innovation
We continually review our product range to ensure that it meets customer and regulatory requirements. For example, our
specialist regeneration skills have enabled us to continue to win large, high value development opportunities with limited
cash outlay. Whilst it is inevitable that much needed regeneration of many areas will now be significantly slower as a
result of market conditions, we continue to be well placed to compete when opportunities arise.
Part of our success in this area is due to the increasingly strong social and environmental credentials of the Group. These
were further reinforced by the construction of the country's first zero carbon code level six house by a major housebuilder,
and by winning the first English Partnerships Carbon Challenge. This will lead to the construction of the nation's first zero
carbon community at Hanham Hall, near Bristol.
Current trading and outlook
There remains considerable uncertainty about the near-term prospects for the sector with market recovery dependent on
an improvement in the availability of mortgage finance and customer confidence. Whilst market conditions during the first
two months of the new financial year have been broadly stable, they remain extremely challenging. In the last four weeks
net private sales rates have been down around 30% on prior year. Pricing continues to be under pressure with higher
incentive levels being required. Whilst we will deliver further cost savings during the year, we expect to see downward
pressure on margins.
We will continue to focus on sales effectiveness, cost reduction and cash generation. When confidence returns, the
enhanced capability and lower cost structure of our organisation will ensure that we are in a strong position to compete in
the market and capitalise on available opportunities.
Mark Clare
Group Chief Executive
9 September 2008
Business review
This has been a very challenging year for the Group. Although the year started with relatively normal seasonal trends, the
impact of interest rate rises and the liquidity squeeze affecting the availability and cost of mortgage finance led to a more
difficult market place from September onwards.
The market worsened further from the beginning of April with selling prices coming under increased pressure and sales
rates per site falling. In the context of this intensely difficult market, the Group has delivered a satisfactory performance
with 18,588 completions (2007: 17,168) and profit from operations before exceptional costs (2) of £550.2m (2007: £513.3m
(restated)). As a result of inventory write-downs of £208.4m and other exceptional costs (2) of £46.6m, the Group's profit
from operations was £295.2m (2007: £487.1m (restated(3))).
The key performance indicators of the business are discussed in the table below.
Key performance indicator 2008 2007 Movement

Operational
Residential completion 18,588 17,168 8.3% Discussed in the
numbers section entitled
Average sales price £183,100 £172,800 6.0% 'Housebuilding'
Residential turnover divided by the
number of completions
Land bank plots 78,700 86,400 (8.9%) Discussed in the
Number of residential plots ow ned section entitled
and controlled 'Land'
Customer recommendation 88% 88% on a like- - Discussed in the
levels for-like(1) basis section entitled
The percentage of customers w ho 'Quality and service'
w ould 'recommend us to a friend'
Percentage of our workforce 90% 62% 28% Discussed in the
that are fully CSCS carded section entitled 'Our
and qualified people and
expertise'
Percentage of developments 71% 78% of Barratt (7%) Discussed in the
built on brownfield land Homes section entitled
developments 'Environment'
Reportable injury incidence 656 857 (23.5%) Discussed in the
rate restated to section entitled
Rate per 100,000 people employed include all Wilson 'Health and Safety'
Bow den
reportable
accidents
Financial
Revenue £3,554.7m £3,046.1m 16.7% Discussed in the
Profit from operations (3) £295.2m £487.1m (39.4%) Group Finance
Profit before tax (3) £137.3m £424.8m (67.7%) Director's Review
Earnings per share(3)Profit after 25.0p 115.4p (78.3%)
tax divided by the w eighted average
number of ordinary shares in issue
Housebuilding
We completed 18,588 properties in the year, up from 17,168 in the prior year. These completions delivered housebuilding
total revenue of £3,414.2m (2007: £3,001.4m) and a housebuilding profit from operations before exceptional costs (2) of
£530.0m (2007: £506.8m (restated(3))). Of our total completions, 14,803 were private sales (2007: 14,335), up 3.3%. Sales
of social housing units increased by 33.6% to 3,785 sales (2007: 2,833).
On a like-for-like(1) basis, total completions decreased by 13.8%. Private completions were 18.4% lower whilst social
completions were 10.1% higher. Social housing sales represented 20.4% of the Group's sales in the current year, versus
15.9% in the prior year on a like-for-like(1) basis.
The average sales price for the year was £183,100, which was up by 6.0% on the prior year and by 1.3% on a like-for-
like(1) basis. The small increase on a like-for-like(1) basis reflects a 3.9% increase, from £197,600 to £205,400, in the
average selling price of our private sales; a 3.9% increase in the price of our social units, to £95,900; offset by an increase
in the proportion of social sales from 15.9% in the prior year to 20.4% this year. The increase of 3.9% in the average
selling price of private homes benefits from a change in our mix of sales, since despite a fall of approximately 5% in the
underlying sales prices and a 1.2% fall in the average size of unit sold, our overall average sales price has benefited from a
number of high value sales in premium London locations.
The decrease in completions on a like-for-like(1) basis illustrates the challenging markets that the sector is facing. Over
the course of the financial year, market conditions have progressively deteriorated. The year started with relatively normal
seasonal trends in July and August, despite the well publicised issues impacting upon the US housing and sub-prime
markets. From September onwards the market was affected by the collapse of Northern Rock, the impact of five interest
rate rises and the 'credit crunch' on the availability and cost of mortgages. In the third quarter we experienced an uplift in
visitor numbers and sales rates compared to the first half. However, this improvement proved to be short-lived with a
significant deterioration in the market from the beginning of April.
Housebuilding profit from operations before exceptional costs (2) was £530.0m (2007: £506.8m (restated(3))) giving a margin
of 15.5% (2007: 16.9% (restated(3))). The decrease in operating margin can be explained by a number of factors. Firstly,
our underlying average selling prices have decreased by around 5%, which has reduced margins by 4%, reflecting the
pressure upon sales prices particularly during the last quarter. In addition, increased selling costs further reduced margins
by 0.6%. We have already referred to our cost reduction programme and this along with mix changes has benefited the
margin by 2.7%. Land sales and other income also added 0.5% to the margin.
The Group is implementing the following further measures to reduce its costs.
We have in place a programme to reduce build costs by: changing specifications and improving build processes,
renegotiating subcontractor rates, and reducing the cost of most major materials. These measures are expected to deliver
£40m of annual cost savings in 2008/9, of which £20m was achieved in the current financial year.
In addition, the operational integration of the Wilson Bowden acquisition has been completed with £33m of cost savings
being achieved in the current financial year. The Group remains on track to deliver approximately £60m of annualised cost
savings in 2008/9 compared to the costs of the two organisations prior to acquisition.
During the year ended 30 June 2008, the Group has incurred £15.9m of restructuring and reorganisation costs. These
include redundancies made during the year, divisional office closures, reorganisations, and contract termination costs.
At the beginning of July we announced that we would be closing two divisions and merging a further eight divisions into
four. This has reduced the number of operating divisions within the business to 26, down from 35 at the end of last year
and 44 at the time of the acquisition of Wilson Bowden and has resulted in the loss of approximately 1,200 jobs. This
reorganisation along with other cost savings across the business is expected to deliver annualised savings of £40m. We
expect to deliver the majority of these cost savings in 2008/9. The cost of these changes is anticipated to be £15m, of
which most will be incurred in the first half of 2008/9.
Commercial developments
Commercial developments delivered a revenue of £140.5m (2007: £44.7m) and a profit from operations before exceptional
costs (2) of £20.2m (2007: £6.5m). Exceptional costs (2) in the commercial developments segment were £81.9m consisting
of full impairment of the goodwill and intangible assets created upon acquisition of £30.7m and impairment of inventories of
£51.2m. The operating loss of the commercial developments segment was £61.7m. This performance reflected the
increasingly difficult market conditions and the pressure upon yields in the commercial property market.
During the year ended 30 June 2008, we completed our 194,600 square feet Riverside Exchange office development
in Sheffield, which was pre-let to the Home Office. We continue to make excellent progress on our forward-sold 102,000
square feet office development in the centre of Manchester, which we expect to complete in the autumn.
With regard to our industrial portfolio, we completed the sale of a 48,000 square feet unit let to Parcel Force at our
Cambuslang site in Glasgow, and we also completed the sales of a 56,000 square feet unit to Takeuchi and a 27,500
square feet unit to Vindon Scientific at our prestigious development in Rochdale.
On the retail side, we are on target to complete our redevelopment of Wrexham town centre during 2008/9, delivering
382,000 square feet of prime retail space. Here, we have 90% of lettings either secured or under offer. In addition, as
preferred developer, we continue to push forward with our town centre retail and office regeneration schemes in readiness
to proceed when the market returns.
We are progressing with the process to divest the assets from the Wilson Bowden Developments portfolio which have a
potential cash value of around £200m. We hope to be able to move the majority of these through to completion over the
next six to twelve months.
Land
The Group land bank consists of both owned and controlled plots, and plots where offers have been accepted.
2008 2007
plots plots
Owned and controlled 78,700 86,400
Offers accepted 13,700 23,300
Total 92,400 109,700
Land additions during the year were £922m (2007: £1,013m). The Group has an extensive owned and controlled land bank,
which is sufficient to meet our requirements at current completion rates for 4.2 years (2007: 4.0 years) and therefore
almost all of the cash expenditure in 2008/9 on land will relate to contractual commitments already entered into.
During the year, the Group has impaired its inventories by £208.4m, further details of which are provided in the Group
Finance Director's review on pages 14 and 15. After this impairment, our land bank has a carrying value of £3,117.5m
(2007: £3,266.9m (restated(3))).
At 30 June 2008, 98% of our supply for the next financial year had detailed planning permission. In addition we have
10,900 acres of strategic land which we carry at its current realisable value until the Group obtains all necessary planning
consents, so as to minimise the Group's exposure to risk from this portfolio.
Core strengths
Our core strengths of geographic and product diversity, quality and service, and people and expertise remain robust.
Geographic and product diversity

The Group offers a wide product range, from first time buyer to luxury apartments and family homes with prices ranging
from under £68,000 to £11 million, and an average selling price of £183,100. The Group trades using the Barratt
Homes, David Wilson Homes and Ward Homes brands. Barratt Homes is focussed upon urban regeneration, apartments
and traditional houses whilst David Wilson Homes predominantly focusses upon family homes. Ward Homes is a regional
brand based in Kent.
We operate throughout Great Britain and at 30 June 2008 we were selling from 585 sites (2007: 590 sites) spread over 32
(2007: 35) divisions. The post year-end announcement regarding divisional closures and mergers will reduce our number of
operating divisions to 26, but will not reduce either our product range or our geographical reach.
The provision of affordable homes continues to be a key component of our activities with the Group completing 3,785
homes for housing association partners during the year at an average selling price of £95,900. We are one of the leading
providers in the industry of affordable homes for rent, shared ownership or low cost homes for sale. We believe that our
strength in this area provides opportunities for the Group's further growth especially in light of Government policy.
We continue to be committed to delivering affordable homes for first time buyers. We have continued to invest in our range
of popular and pioneering iPad homes and during the year have legally completed 312 homes (2007: 120) and at 30 June
2008 had planning permission for over 700 homes not yet under construction. We are building iPads on developments in
locations including Edinburgh, Leeds, Cardiff and Swansea, enabling as many people as possible to benefit from these
innovative and affordable homes. We have also supported 1,459 buyers throughout the country with our own shared-equity
products where we retain a proportion of the home interest-free for a specified period. In addition, during the year we
completed 232 homes (2007: 133) under the English Partnerships' First Time Buyer Initiative at developments across the
country including Leeds, Liverpool, Torquay and Brentwood. We have also participated in schemes to allow key workers to
get onto the property ladder; for example at our Bloomsbury Terrace development in London almost 40% of the units are
available for key workers who can purchase a minimum of 35% of the property with English Partnerships providing the
remainder of the funds.
During the year we have made progress with a number of key regeneration schemes and sites.
In London, we recently began building 63 homes in one of London's largest regeneration schemes, a new Docklands
community of 2,700 homes around the Canada Water basin in Southwark. As well as new homes, the project will include
a new library, civic plaza, leisure amenities and green space. A key feature of the development will be the use of 10%
renewable energy. We also recently started work upon the first major residential element, comprising 250 homes, of the
£160m transformation of Dalston, Hackney. This project will provide over 550 homes plus shops, a library and a new Tube
station, and will include environmentally-friendly measures such as green roofs and combined heat and power generation.
In the Midlands, we have been selected by Birmingham City Council to redevelop the Shard End Crescent shopping parade
into a state of the art 'urban village centre'. The £33m scheme will contain approximately 2,000 square metres of retail,
around 190 new homes, a new community library and neighbourhood office, and a new vicarage. All of the facilities will be
arranged around a central square to create a safe, secure and pleasant living environment.
We have also started work upon a major riverside regeneration scheme in Tyneside, at the former Stella South power
station site at Blaydon. This scheme will provide 275 new Barratt homes.
Quality and service

As a Group we are committed to offering the highest standards of customer service and to operating in a transparent
way. Our customers are central to all of our business operations and as such we continue to develop our service by
listening to our customers, monitoring our performance and adopting best practice throughout the organisation. In the year
ended 30 June 2008, our overall customer satisfaction rating has improved to 81% (2007: 80% on a like-for-like(1) basis). In
addition, 88% of customers responded that they would 'recommend us to a friend' (2007: 88% on a like-for-like(1) basis), a
satisfactory achievement against a backdrop of considerable change in the business and the market. As part of our
commitment to customer service, we continue to train and develop all of our employees to ensure the highest standards
are met and we are further developing our customer service IT systems to support this.
The quality of our product offerings has been recognised once again this year with our construction teams winning an
industry leading 73 National House-Building Council ('NHBC') 'Pride in the Job' quality awards, an improvement on last
year's achievement of 71 awards. This excellent performance is a new record for the Group and is the largest number ever
awarded to a single business. In addition, in 2007, Barratt became the first housebuilder to win both of the industry's most
prestigious awards, for large housebuilders, for quality workmanship with two of our site managers, Jamie Bishop and Paul
Robinson, winning Supreme Awards in the large builder and multi-storey categories.
We were also named 'Homebuilder of the Year' at the Mail on Sunday British Homes Awards and we won awards for the
best housing project (Great West Quarter), best small house (eScape at Eden Village, Sittingbourne) and were joint winner
of the best affordable housing development (Tachbrook Triangle). At the 'Your New Home' Awards the best city
development was awarded for our 'The Zone' development in Bristol. In the 'Hot Property' Awards we won platinum awards
for the best waterside development (Bakers Mill, Sudbury), best value for money development (Forest Place,
Walthamstow) and best family homes (Kings Meadow, Newmarket).
Our people and expertise

We recognise that one of our key strengths as a Group is our people. The extent of the decline in the housing market and
the unprecedented lack of access to mortgages has meant that we, in common with all other housebuilders, have had to
reduce costs right across the organisation. It is deeply regrettable that the challenging market conditions have meant that
we have had to look closely at our structure and as a result have seen around 1,200 talented people leave the Group.
Despite the current economic environment, it is important that we continue to develop and invest in our people and their
expertise to ensure the continued success of our business.
Our Graduate Recruitment and Development Programme has been a success. We have 39 graduates participating in a two
year multi-disciplinary programme of both on-job and off-job modules. All of the graduates have completed volunteering
activities in the local community, supporting our corporate responsibility strategy.
We have embedded succession planning processes across the business with bi-annual reviews in place. Every individual
identified on the succession plan with the potential to progress in the next two years has a personal development plan.
This plan may involve items such as attending our Leadership Development programme or having a coach or mentor to
promote development.
We conducted our first Engagement Survey in January 2008, which has enabled us to ascertain how we can make our
business a better place to work and become an employer of choice. We have also introduced human resources key
performance indicators to enable us to measure the success of our people strategy more effectively and to enable us to
take appropriate action on staff turnover, retention, sickness, absence and capability.
We have continued to make progress towards our target of a fully Construction Skills Certification Scheme ('CSCS') carded
and qualified workforce, including our subcontractors, by 2010. At present, 90% (2007: 62%) of our workforce, including
subcontractors, has achieved this target.
Environment
During the year, we have made substantial progress in pursuing our environmental agenda to enable us to respond to the
challenge made by the Government's requirement for all new homes to be zero carbon by 2016.
We have completed building the 'Green House' prototype home at the Business Research
Establishment's Innovation Park using an award winning design developed by architects Gaunt Francis. The Minister for
Housing, the Right Honourable Caroline Flint MP, officially opened this home in May 2008. This is the first house to be
built by a mainstream housebuilder that meets the highest level, code level six, of the Government's code for Sustainable
Homes which will emit zero carbon on average over the course of a year. The home includes innovative eco-friendly
features such as heavyweight construction that mitigates peaks and troughs of temperature change within the house, an
air source heat pump to convert the energy of air into heat supplying the house, solar hot water panels, automatic window
shutters to prevent the house over-heating in the summer and photovoltaic panels to supply power. The home is now the
subject of rigorous scientific testing over the next two years assessing every aspect of its design, construction and
materials. We intend to take the most successful aspects of the design and apply them to future homes that we build.
We are to develop Hanham Hall, near Bristol into the first large-scale zero carbon community in Britain, having won the
first site of English Partnerships' Carbon Challenge. The community will comprise 200 homes and commercial space and
is due to be completed in 2011. All of the homes on the site will meet the requirements for code level six of the
Government's Code for Sustainable Homes, which will enable a family living there to reduce its carbon footprint by 60%.
The development will also include many environmentally friendly features including a combined heat and power plant
generating carbon neutral energy, a sustainable urban drainage system and retention of existing hedgerows and trees. We
continue to look to include carbon saving measures on our developments, and 21 of our sites, where we registered legal
completions in the year ended 30 June 2008, incorporated a renewable energy source on-site. These included solar
panels, wind turbines and combined heat and power units.
We continue to build the majority of our developments on brownfield sites, with 71% (2007: 78% of Barratt Homes
developments) of our developments in the year being built upon brownfield land, which significantly exceeds the
Government's target of 60%.
The Group continues to make excellent progress in accreditation of divisions to the environmental standard ISO 14001. We
previously reported that all Barratt divisions had achieved accreditation and that we would target the
eight David Wilson Homes divisions this year. This has been achieved and all the Group's divisions are now accredited to
the standard.
The Group has reviewed its overall objectives for environmental management and has set targets for improved on-site and
office performance. To assist the divisions all of the Safety, Health and Environmental management team are undergoing
accredited training to enable membership of the Institute of Environmental Management and Assessment ('IEMA').
Health and safety
The Group considers health and safety to be of paramount importance for its employees, customers and the general
public.
The Group is saddened to report the death of one person and serious illness of another at a completed development
at Bedfont Lakes in West London in February 2008. The primary cause appears to be carbon monoxide poisoning from a
gas heating installation. We continue to work closely with the authorities in their investigation and our thoughts remain with
the families of those involved in the incident.
Notwithstanding this tragic event, we have continued to make good progress in the field of health and safety with a
reduction in our reportable injury incidence rate to 656 per 100,000 persons employed, a reduction of 23.5% on the
previous year (the enlarged Group had a reportable injury incidence rate of 857 for 2006/7).
In addition, we have revitalised and reissued our Safety, Health and Environmental management system and have further
strengthened our in-house team. This has provided the focus to enable overall improvements in our performance with all
divisions achieving over 88% compliance following monitoring visits to developments.
The Group continues with certifying divisions to the heath and safety standard OHSAS 18001. At 30 June 2008, 27 of the
32 housebuilding divisions and Wilson Bowden Developments were certified to this level, and we aim to have all remaining
divisions certified by the end of 2008.
Corporate responsibility
As outlined in the sections above the Group has continued to make good progress on corporate responsibility throughout
the year.
The Group's 2008 Corporate Social Responsibility Report will contain further details on our progress in corporate
responsibility and will be found on the Group's website, www.barrattdevelopments.co.uk, later this year.
Group key risks
The Group's financial and operational performance is subject to a number of risks. The Board seeks to ensure that
appropriate processes are put in place to manage, monitor and mitigate these risks which are identified in the table below.
The Group recognises that the management of risk is fundamental to the achievement of Group targets. As such all tiers of
management are involved in this process.
Principal risks of the Group include, but are not limited to:
Risk Mitigation
Market
Response to changes in the macroeconomic The Executive Directors conduct a weekly meeting which
climate including buyer confidence and interest reviews key trading indicators, including sales rates,
rates visitor levels and levels of incentives and cash flow
projections.
Availability of mortgage finance for our The Executive Directors monitor on a weekly basis the
purchasers number of reservations that require mortgages.
The Group has a policy of giving mortgage providers

complete transparency regarding house purchase prices
alongside any discounts or other incentives in order that
they have appropriate information upon which to base
their lending decision.
Provision of high quality product and service to The Group has a comprehensive approach to quality,
maintain brand quality and minimise remedial service and customer care enshrined in the 'Forward
costs through Quality' initiative and customer care code of
practice.
Liquidity
Availability of sufficient borrowing facilities to The Group actively maintains a mixture of long-term and
enable the servicing of liabilities as they fall medium-term committed facilities that are designed to
due ensure that it has sufficient available funds for operations.
The Group's borrowings are typically cyclical throughout

the financial year and as such the Group maintains
sufficient headroom to cover these requirements. On a
normal operating basis the Group has a policy of
maintaining headroom of £250m of available committed
facilities.
The Group has in place a comprehensive detailed regular

forecasting process encompassing profitability, working
capital and cash flow that is fully embedded in the
business. These forecasts are further stress tested at a
Group level to ensure that adequate headroom within our
facilities and banking covenants is maintained.
Inability of the Group to refinance its facilities The Group has a policy that the maturity of its committed
as they fall due facilities and private placement notes is at least three
years on average.
Land
Securing sufficient land of appropriate size and Each division produces a detailed site-by-site monthly
quality to provide profitable growth subject to analysis of the amount of land currently owned,
the available borrowing facilities committed and identified. These are consolidated
upwards for regular review at Board level. In addition,
each operating division holds weekly land meetings.
Every land acquisition is subject to a formal appraisal

procedure and is required to achieve an overall Group
defined hurdle rate of return.
Government regulation
Delays obtaining required planning and The Group has considerable in-house technical and
technical consents planning expertise devoted to achieving implementable
planning consents.
Consequence of changes in tax legislation The Group has adopted a low risk strategy to tax
planning and potential and actual changes in tax
legislation are monitored by both our industry
experienced in-house finance teams and our external tax
advisors.
Construction
Failure to identify and achieve key construction The Group's weekly reporting identifies the number of
milestones properties at key stages of construction. Projected
construction rates are evaluated as part of the monthly
forecasting cycle.
Excessive investment in work in progress The build status of all sites is reported weekly and
compared to sales taken on each site.
Failure to promptly identify cost overruns The total costs on every site in progress are evaluated
once a quarter and reviewed by the divisional
management teams.
Innovative design and construction techniques The Group ensures that it is at the forefront of design and
are not employed construction techniques by a combination of in-house
technical departments, the employment of external
consultants and an ongoing commitment to building
experimental house types.
Health and safety The Group has a dedicated health and safety audit
department which is independent of the management of
the operating divisions.
Consideration of the impact of construction The Group regularly monitors a number of environmental
schemes upon the environment and social impact indicators. The results of this will appear in our
surroundings Corporate Social Responsibility Report later this year.
People
Ability of the Group to attract and retain a The Group has a comprehensive Human Resources
sufficiently skilled and experienced workforce policy in place which includes apprentice schemes, a
Graduate Recruitment Programme, succession planning,
Adequate succession planning to retain and training schemes tailored to each discipline and the
develop key management skills Group has set itself the target of having a fully CSCS
carded and qualified workforce by 2010.
Underfunding of the Group's obligations in An actuarial valuation is conducted every three years.
respect of the defined benefit pension scheme The Group reviews this and considers what additional
contributions are necessary to make good this shortfall.
Details of the Group's management of liquidity risk, market risk, credit risk and capital risk in relation to financial
instruments is provided in the financial statements.
Group Finance Director's review
The Group has delivered a satisfactory performance in the current year in the context of the difficult market in which we
have been operating. Performance highlights are as follows:
Revenue was up 16.7% to £3,554.7m (2007: £3,046.1m)

Total completions increased by 8.3% to 18,588 (2007: 17,168)
Profit from operations before exceptional costs (2) increased by 7.2% to £550.2m (2007: £513.3m (restated(3)))
Exceptional costs (2) comprised an impairment of inventories of £208.4m, an impairment of goodwill and
intangibles of £30.7m and reorganisation costs of £15.9m
Profit from operations was £295.2m (2007: £487.1m (restated(3)))
Operating margin before exceptional items (2) was 15.5% (2007: 16.9% (restated(3))).
Operating margin was 8.3% (2007: 16.0% (restated(3)))
Profit before tax was £137.3m (2007: £424.8m (restated(3)))
Adjusted earnings per share before exceptional costs (2) was 79.6p (2007: 123.0p (restated(3)))
Basic earnings per share was 25.0p (2007: 115.4p (restated(3)))
Segmental analysis
The Group has two segments, being housebuilding and commercial developments. These segments reflect the different
product offerings and market risks facing these areas of the business.
The table below shows the respective contributions for these segments to the Group:
Commercial
Housebuilding Developments Total
£m £m £m
Revenue 3,414.2 140.5 3,554.7
Profit from operations before 550.2
530.0
exceptional costs (2) 20.2
Profit/(loss) from operations 356.9 (61.7) 295.2
An analysis of the operational performance of these segments is provided within the Business review.
Exceptional costs
During the year, the Group has recognised a number of items which due to their size and unusual nature have been
disclosed as exceptional costs.
i) Impairment of inventories
The total impairment of land and work in progress, recognised in exceptional cost of sales, in the year was £208.4m,
which comprised £151.2m housebuilding, £51.2m commercial developments and £6.0m of historic Barratt and Wilson
Bowden acquisition fair value adjustments.
The Group conducted a review of the carrying value of its housebuilding land at 30 June 2008 in accordance with normal
practice and accounting standards. This review was carried out on a site-by-site basis using valuations incorporating
forecast sales rates and average selling prices that reflect both current and anticipated trading conditions. We paid
particular attention to high-risk sites including large and complex sites, apartment blocks outside London and sites with
low sales rates. The review also considered sites that have not yet been started and larger, more capital-intensive sites
where it may be more appropriate to realise cash through sale of the assets rather than developing the site through to
completion. As a result of the review, the Group recognised an impairment of the housing land bank of £151.2m in the year
ended 30 June 2008.
The Group also reviewed the land and work in progress held within its commercial developments business for impairment
on a development-by-development basis. This identified the need for an impairment of £51.2m in the year ended 30 June
2008. This review reflects the marketplace currently experienced within commercial development and in particular declining
yields. We have also considered the carrying value of sites where it may be more sensible to realise cash rather than to
continue to develop the site.
In addition, the Group had £6.0m of fair value uplift that had not been recovered through cost of sales which arose on
historic Barratt and Wilson Bowden acquisitions. Due to the current difficult market place, these balances have been
written off on the basis that the fair values adopted do not reflect current market conditions.
ii) Impairment of goodwill and intangible assets

On the acquisition of Wilson Bowden, the Group recognised goodwill of £816.7m and intangible assets related to the
brands acquired of £107.0m. These were split between the housebuilding and commercial developments businesses, with
£792.2m of goodwill and £100.0m of brand value attributed to our housebuilding business and £24.5m of goodwill and
£7.0m of brand value attributed to the commercial developments business.
In accordance with the requirements of accounting standards the Group has conducted its annual review of the carrying
value of goodwill and intangible assets. This review was conducted by comparing discounted future cash flows with the
carrying value of assets at the balance sheet date. The cash flows were generated using our current five-year business
plan beyond which we used a long-term growth rate, in accordance with accounting standards, of 2.5% based upon the
expected long-term growth rate of the UK economy. The business plan used in the analysis contains the Directors' current
view of expected changes in selling prices for completed houses and site costs to complete. The discount rate used in the
impairment review is 10%, being the Group's estimated pre-tax weighted average cost of capital. As a result of the
impairment review, no impairment was recognised on the housebuilding business and all of the goodwill related to the
commercial developments business, £24.5m, was impaired.
On acquisition, the David Wilson Homes brand was designated as having an indefinite life as the Group intends to hold and
support the brand for an indefinite period and there are no factors that would prevent it from doing so. The Wilson Bowden
Developments brand was designated as having a ten-year life as it is a business-to-business brand operating in niche
markets. During the year, £0.8m of the Wilson Bowden Developments brand was amortised. As a result of the Group's
impairment review, the Housebuilding brand was not impaired but the Wilson Bowden Developments brand was fully written
off, resulting in an exceptional charge to the income statement of £6.2m. This impairment is driven by declining
commercial property yields, which affects the ability of this brand to generate future revenues.
The total impairment of goodwill and intangible assets recognised in exceptional operating expenses in the income
statement was therefore £30.7m, comprising a commercial developments goodwill impairment of £24.5m and the
impairment of the Wilson Bowden Developments brand of £6.2m.
iii) Restructuring and reorganisation costs

During the year the Group incurred £15.9m of restructuring and reorganisation costs. These costs include redundancy
costs arising from both divisional closures and reorganisations during the year, and costs related to office closures and
contract severance. No charge for the reorganisation announced on 3 July 2008, estimated at £15m, has been included in
the income statement for the year ended 30 June 2008.
Tax
The Group corporation tax charge for the year was £50.9m, an effective rate of 37.1%. When the impairment of goodwill of
£24.5m, which is not allowable for tax purposes, is excluded the effective rate is 31.5%.
The tax charge of £50.9m comprises a total current year tax charge of £53.7m (33.2% of profit before tax excluding the
impairment of goodwill) and a total prior year tax credit of £2.8m.
The Group's current year effective tax rate of 33.2% is higher than the standard rate of 29.5% due to writing off the deferred
tax asset on anticipated tax relief on share options, as well as disallowable costs and tax on joint ventures, partially offset
by contaminated land relief.
Dividend
The Board has decided that no final dividend will be paid for the year ended 30 June 2008. The total dividend for the year is
therefore the interim dividend of 12.23 pence per share, which was paid in May 2008. Going forward, the Board will take
due consideration of market conditions, the Group's trading performance and cash resources in determining future dividend
policy.
Balance sheet
The net assets of the Group decreased by £54.3m to £2,843.7m. The decrease reflects the retained loss of £39.6m, after
inventory write-downs, goodwill impairments, other exceptional costs and dividends paid in the year and other reserves
movements of £16.5m offset by £1.8m issues of share capital during the year (including £1.3m on Wilson Bowden share
option schemes). Significant movements in the balance sheet include:
The Group's book value of land was £3,117.5m (2007: £3,266.9m (restated(3))) a decrease of £149.4m. This
decrease includes land additions of £922m offset by land usage and the impairment of land explained above.
During the current year, the Group reduced its actual expenditure on land following the deterioration in the
market to £1.0 billion from the £1.5 billion expenditure anticipated at the beginning of the year. It is our intention
in the forthcoming year to only commit cash where land is already contracted.
Work in progress of the Group at 30 June 2008 was £1,569.3m (2007: £1,368.5m). We are actively reducing our
investment in work in progress and as a result the value has fallen by £134.0m since 31 December 2007.
Part-exchange properties and other inventories were £143.2m (2007: £104.5m) with the increase reflecting the
current demand for this as an incentive. In accordance with normal commercial practice, the Group provides
against these properties when they are taken onto our balance sheet and we continue to actively manage and
trade through these properties.
Group net debt increased by £351.2m to £1,652.4m over the full year. However, since December 2007, net debt
has reduced by £86.1m reflecting reduced land spend and work-in-progress.
Goodwill and intangibles assets decreased by £31.5m to £892.2m reflecting the amortisation and impairments
explained above.
The pension fund deficit on the Barratt Homes defined benefit pension scheme reduced by £7.6m in the year to
£70.7m, reflecting the additional contributions that the Group has made to reduce the deficit.
Trade and other payables decreased by £179.1m to £1,405.9m reflecting a £109.2m decrease in land payables.
Other assets and liabilities have increased by £51.6m during the year.
Cash flow
The tables below explain the increase in the Group's borrowings.
Group net debt at the year-end was £1,652.4m (2007: £1,301.2m).
Year Half year Half year Year Half year Half year
ended ended ended ended ended ended
30 June 31 Dec 30 June 30 June 31 Dec 30 June
2008 2007 2008 2007 2006 2007
£m £m £m £m £m £m
Net (debt)/cash at start of year (1,301.2) (1,301.2) (1,738.5) 34.9 34.9 (226.7)
Operating cash flow 91.4 (244.4) 335.8 139.5 (147.3) 286.8

Tax and net interest paid (251.9) (105.7) (146.2) (148.3) (68.0) (80.3)
Free cash flow (160.5) (350.1) 189.6 (8.8) (215.3) 206.5
Acquisitions (31.0) 1.3 (32.3) (1,245.9) - (1,245.9)

Investments in joint ventures (47.2) (6.9) (40.3) (14.2) - (14.2)
Net fixed asset
proceeds/(purchases) 16.9 2.0 14.9 (4.6) (2.8) (1.8)
Dividends (126.0) (83.8) (42.2) (77.1) (49.7) (27.4)
Share issue and disposals 0.5 0.5 - 14.5 6.2 8.3
Cancelled swaps (3.6) - (3.6) - - -
Purchase of shares for LTPP
awards (0.3) (0.3) - - - -
Net debt at end of year (1,652.4) (1,738.5) (1,652.4) (1,301.2) (226.7) (1,301.2)
An analysis of the Group's free cash flow is as follows:
Year Half year Half year Year Half year Half year
ended ended ended ended ended ended
30 June 31 December 30 June 30 June 31December 30 June
2008 2007 2008 2007 2006 2007
£m £m £m £m £m £m
Operating profit before
exceptional costs(2) 550.2 274.9 275.3 513.3 196.6 316.7
Exceptional costs(2) (255.0) (7.2) (247.8) (26.2) - (26.2)
Total non cash items 12.6 (6.8) 19.4 (16.7) (6.2) (10.5)
Land, work in progress and
other inventories (22.1) (432.0) 409.9 (267.4) (320.9) 53.5
Other working capital (194.3) (73.3) (121.0) (63.5) (16.8) (46.7)
Operating cash flow 91.4 (244.4) 335.8 139.5 (147.3) 286.8
Net interest paid (137.1) (50.3) (86.8) (27.8) (8.7) (19.1)
Taxation (114.8) (55.4) (59.4) (120.5) (59.3) (61.2)
Free cash flow (160.5) (350.1) 189.6 (8.8) (215.3) 206.5
The increase in net debt of £351.2m during the year is made up of an outflow of £437.3m in the first half and an inflow of
£86.1m in the second half. The inflow during the second half reflects our strategy of decreasing land spend and work in
progress (inventories fell £409.9m, excluding the £68.0m increase due to acquisitions; a £201.5m net decrease plus
£208.4m fall due to exceptional impairment) offset by an outflow in other working capital and a decrease in land payables of
£14.1m.
Other cash movements include net interest payments of £137.1m, tax payments of £114.8m, dividend payments of
£126.0m and proceeds from the issue of share capital of £0.5m (excluding the proceeds from the issue of shares under
Wilson Bowden share schemes).
The Group is committed to reducing the level of borrowings of the business over the short-term and has focussed the
business upon maximising cash generation whilst ensuring that on a site-by-site basis we maintain an appropriate balance
between volume and margin.
Treasury
The Board approves treasury policies and certain day-to-day treasury activities have been delegated to a Treasury
Operating Committee that in turn regularly reports to the Board. The Group operates a centralised treasury function which
does not speculate and operates within guidelines established by the Board and the Treasury Operating Committee.
The Group has a conservative treasury risk management strategy which includes a target that 60-80% of year-end debt
should be at fixed rates of interest. At 30 June 2008, 63.0% of the Group net debt was fixed (2007: 72.4%). Group interest
rates are fixed using both swaps and fixed rate debt instruments. Net bank interest was covered 4.0 times before
exceptional costs (2) (2007: 12.8 times covered).
Borrowing facilities and refinancing
At the year-end, the Group's committed facilities had an average life of 3.3 years, headroom of £870.0m, and we continued
to operate within all of our banking covenants.
However, in the light of current market conditions, the Board considered that it would be a prudent approach to extend our
short-term refinancing requirements and seek a more flexible covenant package which would be more suitable in the
current trading environment.
Therefore, on 9 July 2008, the Company entered into a new £400m three-year committed revolving credit facility and agreed
(subject to contract) to extend the maturity date of £350m of the existing £400m revolving credit facility to expire at the
same date as the new facility. On 6 August 2008, the Company redeemed £400m of the existing acquisition facility.
In addition, the Company agreed with its bankers and private placement investors to amend its financial covenants. The
interest covenant has been replaced with a cash flow covenant and the gearing and minimum tangible net worth covenants
have been relaxed. These amendments were signed on 5 August 2008 and all conditions precedent were satisfied on 6
August 2008.
The new covenant package and revolving credit facility led to the weighted average cost of the Group's borrowings
increasing to circa 9.75% from 6 August 2008.
As a result of the agreements reached with our bankers and private placement investors, we have put in place a more
appropriate capital structure for the Group.
In conclusion
This has been a very challenging financial year for all housebuilders. We have taken appropriate measures to reflect the
significant market downturn. Earnings have proved robust and we have continued to maintain asset quality. The refinancing
and revised covenant package recently put in place was an important step in ensuring that the Group has strong foundations
to weather market conditions which are likely to remain difficult for the foreseeable future.
Mark Pain
9 September 2008

for the year ended 30 June 2008
2008 2008 2008 2007 2007 2007

Before Exceptional Before Exceptional
Exceptional costs Exceptional costs
costs (note 4) Costs (note 4) (restated*)
(restated*)
Note £m £m £m £m £m £m
Continuing
operations
Revenue 3 3,554.7 - 3,554.7 3,046.1 - 3,046.1
Cost of sales (2,872.5) (208.4) (3,080.9) (2,446.1) - (2,446.1)
Gross profit 682.2 (208.4) 473.8 600.0 - 600.0
Administrative (132.0) (46.6) (178.6) (86.7) (26.2) (112.9)
expenses
Profit from 3 550.2 (255.0) 295.2 513.3 (26.2) 487.1
operations
Finance 5 12.8 - 12.8 3.5 - 3.5
income
Finance costs 5 (168.1) - (168.1) (64.8) - (64.8)
Share of post- (2.6) - (2.6) (1.0) - (1.0)
tax loss from
joint ventures
Profit before 392.3 (255.0) 137.3 451.0 (26.2) 424.8
tax
Tax 6 (117.7) 66.8 (50.9) (133.0) 6.5 (126.5)
Profit for the 274.6 (188.2) 86.4 318.0 (19.7) 298.3
year from
continuing
operations
Profit for the 274.6 (188.2) 86.4 318.0 (19.7) 298.3

year
attributable to
equity
shareholders
Paid/proposed
dividends per
ordinary share
Interim paid 7 12.23p 11.38p
Final proposed 7 - 24.30p
Earnings per
share from
continuing
operations
Basic 8 25.0p 115.4p
Diluted 8 24.9p 113.5p
* The results for the year ended 30 June 2007 have been restated as explained in note 2.
Consolidated statement of recognised income and expense

2008 2007
(restated*)
Note £m £m
Profit for the year 86.4 298.3
Revaluation of available for sale financial assets 15 (4.6) (0.7)
Foreign exchange loss 15 (1.8) -
Net fair value gains on cross currency swaps designated 15 7.4 -
as cash flow hedges
Net fair value (losses)/gains on interest rate swaps 15 (19.1) 12.3
designated as cash flow hedges
Losses on cancelled interest rate swaps deferred in equity 15 (3.6) -
Amortisation of losses on cancelled interest rate swaps 15 0.1 -
deferred in equity
Tax credited to equity 15 3.1 0.8
Total recognised income for the year attributable to 67.9 310.7
equity shareholders
Consolidated balance sheet

at 30 June 2008
2008 2007
(restated*)
Note £m £m
Assets
Non-current assets
Intangible assets 10 100.0 107.0
Goodwill 9 792.2 816.7
Property, plant and equipment 11 15.9 37.4
Investments accounted for using the equity method 65.5 20.9
Available for sale financial assets 66.9 37.3
Trade and other receivables 2.8 5.0
Deferred tax assets - 2.5
Derivative financial instruments - swaps 10.1 12.3
1,053.4 1,039.1
Current assets
Inventories 12 4,830.0 4,739.9
Cash and cash equivalents 13 32.8 182.1
Current tax assets 20.6 -
4,984.3 5,063.7
Total assets 6,037.7 6,102.8
Liabilities
Loans and borrowings 13 (1,031.5) (1,456.6)
Trade and other payables (242.1) (100.6)
Retirement benefit obligations (70.7) (78.3)
Deferred tax liabilities (22.7) -
Derivative financial instruments - swaps (9.5) -
(1,376.5) (1,635.5)
Current liabilities
Loans and borrowings 13 (653.7) (26.7)
Trade and other payables (1,163.8) (1,484.4)
Current tax liabilities - (58.2)
(1,817.5) (1,569.3)
Total liabilities (3,194.0) (3,204.8)
Net assets 2,843.7 2,898.0
Equity
Share capital 14 34.7 34.7
Merger reserve 1,109.0 1,107.7
Hedging reserve (3.4) 7.8
Retained earnings 1,496.8 1,541.7
Total equity 15 2,843.7 2,898.0
Consolidated cash flow statement

2008 2007
Note £m £m
Net cash outflow from operating activities 16 (170.4) (12.3)
Cash flows from investing activities 11 (5.4) (7.9)

Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment 22.3 3.3
Acquisition of subsidiaries net of cash acquired 17 (31.0) (811.6)
Investments accounted for using the equity method (47.2) (14.2)
Net cash outflow from investing activities (51.4) (826.9)

Proceeds from issue of share capital 0.5 3.9
Disposal of own shares - 10.6
Dividends paid 7 (126.0) (77.1)
Cancelled swaps (3.6) -
Purchase of shares for LTPP awards (0.3) -
Loan drawdowns 201.9 1,040.6
Net cash inflow from financing activities 72.5 978.0
Cash and cash equivalents at beginning of year 182.1 43.3
Cash and cash equivalents at end of year 32.8 182.1
1. Accounting policies
These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'),
International Financial Reporting Interpretations Committee ('IFRIC') interpretations and Standing Interpretations
Committee ('SIC') interpretations endorsed by the European Union ('EU') and with those parts of the Companies Act 1985
applicable to companies reporting under IFRS and therefore the Group financial statements comply with Article 4 of the
EU International Accounting Standards Regulation. The financial statements have been prepared under the historical cost
convention as modified by the revaluation of available for sale financial assets, derivative financial instruments and share-
based payments. A summary of the more significant Group accounting policies is set out below.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are
based on the Directors' best knowledge of the amounts, actual results may ultimately differ from those estimates. The
most significant estimates made by the Directors in these financial statements are set out in 'Critical accounting
judgements and key sources of estimation uncertainty' within the financial statements.
Adoption of new and revised standards
In the year ended 30 June 2008, the Group has adopted IFRS7 'Financial Instruments: Disclosures'. IFRS7 has expanded
the disclosure requirements of the Group regarding financial instruments. The adoption of this standard has not had any
impact upon the profit or net assets of the Group in either the current or comparative year.
In the current financial year, the Group has also adopted the amendment to IAS1 'Presentation of Financial Statements
Capital Disclosures'. This amendment has expanded the disclosures provided by the Group about the management of its
capital resources. The adoption of this amendment has not had any impact upon the profit or net assets of the Group in
either the current or comparative year.
The Group financial statements include the results of the holding company and all its subsidiary undertakings made up to
30 June. The financial statements of subsidiary undertakings are consolidated from the date when control passes to the
Group using the purchase method of accounting and up to the date control ceases. All transactions with subsidiaries and
inter-company profits or losses are eliminated on consolidation.
All of the subsidiary's identifiable assets and liabilities, including contingent liabilities, existing at the date of acquisition
are recorded at their fair values. All changes to those assets and liabilities, and the resulting gains and losses that arise
after the Group has gained control of the subsidiary are included in the post-acquisition income statement.
Jointly controlled entities
A jointly controlled entity is an entity in which the Group holds an interest with one or more other parties where a
contractual arrangement has established joint control over the entity. Jointly controlled entities are accounted for using the
equity method of accounting.
Jointly controlled operations
The Group enters into jointly controlled operations as part of its housebuilding and property development activities. The
Group's share of profits and losses from its investments in such jointly controlled operations are accounted for on a direct
basis and are included in the consolidated income statement. The Group's share of its investments' assets and liabilities
are accounted for on a directly proportional basis in the consolidated balance sheet.
Revenue
Revenue is recognised at legal completion in respect of the total proceeds of building and development and an appropriate
proportion of revenue from construction contracts is recognised by reference to the stage of completion of contract
activity. Revenue is measured at the fair value of consideration received or receivable and represents the amounts
receivable for the property, net of discounts and VAT. The sale proceeds of part-exchange properties are not included in
revenue.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable.
Construction contracts
Revenue is only recognised on a construction contract where the outcome can be estimated reliably. Revenue and costs
are recognised by reference to the stage of completion of contract activity at the balance sheet date. This is normally
measured by surveys of work performed to date. Contracts are only treated as construction contracts when they have been
specifically negotiated for the construction of a development or property. When it is probable that the total costs on a
construction contract will exceed total contract revenue, the expected loss is recognised as an expense in the income
statement immediately.
Amounts recoverable on construction contracts are included in trade receivables and stated at cost plus attributable profit
less any foreseeable losses. Payments received on account for construction contracts are deducted from amounts
recoverable on construction contracts.
Payments received in excess of amounts recoverable on construction contracts are included in trade payables.
Exceptional items
Items that are both material in size and unusual or infrequent in nature are presented as exceptional items in the income
statement. The Directors are of the opinion that the separate recording of exceptional items provides helpful information
about the Group's underlying business performance. Examples of events that, inter alia, may give rise to the classification
of items as exceptional are the restructuring of existing and newly-acquired businesses, gains or losses on the disposal of
businesses or individual assets and asset impairments, including currently developable land, work in progress and
goodwill.
Restructuring costs
Restructuring costs are recognised in the income statement when the Group has a detailed plan that has been
communicated to the affected parties. A liability is accrued for unpaid restructuring costs.
Profit from operations
Profit from operations includes all of the revenue and costs derived from the Group's operating businesses. Profit from
operations excludes finance costs, finance income, the Group's share of profits or losses from joint ventures and tax.
Dividends
Interim dividends are recognised in the financial statements at the time that they are paid, and final dividends are
recognised at the time of agreement by the shareholders at the Annual General Meeting.
The Company recognises dividends from subsidiaries at the time that they are received.
Segmental reporting
The Group consists of two separate segments for management reporting and control purposes, being housebuilding and
commercial development. The Group manages these segments separately due to the different operational and commercial
risks that they face. These segments therefore comprise the primary reporting segments within the financial statements.
As all of the Group's operations are within the United Kingdom, which is one economic environment in the context of the
Group's activities, there are no geographic segments to be disclosed.
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the consideration over the fair value of the
separately identifiable net assets and liabilities acquired.
Goodwill arising on acquisition of subsidiary undertakings and businesses is capitalised as an asset and reviewed for
impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the cash-generating units of the Group at
acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. If the
recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment is recognised immediately in the
income statement and is not subsequently reversed.
Intangible assets
Brands
Internally generated brands are not capitalised. The Group has capitalised as intangible assets brands that have been
acquired. Acquired brand values are calculated using discounted cash flows. Where a brand is considered to have a finite
life, it is amortised over its useful life on a straight-line basis. Where a brand is capitalised with an indefinite life, it is not
amortised. The factors that result in the durability of brands capitalised are that there are no material legal, regulatory,
contractual, competitive, economic or other factors that limit the useful life of these intangible assets.
The Group carries out an annual impairment review of indefinite life brands by performing a value-in-use calculation, using
a discount factor based upon the Group's pre-tax weighted average cost of capital.
Investments
Interests in subsidiary undertakings are accounted for at cost less any provision for impairment.
Where share-based payments are granted to the employees of subsidiary undertakings by the parent Company, they are
treated as a capital contribution to the subsidiary and the Company's investment in the subsidiary is increased
accordingly.
Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is provided to write off the
cost of the assets on a straight-line basis to their residual value over their estimated useful lives. Residual values and
asset lives are reviewed annually.
Freehold properties are depreciated on a straight-line basis over 25 years. Freehold land is not depreciated. Plant is
depreciated on a straight-line basis over its expected useful life, which ranges from one to seven years.
Inventories
Inventories are valued at the lower of cost and net realisable value on a weighted average cost basis. Cost comprises
direct materials, direct labour costs and those overheads which have been incurred in bringing the inventories to their
present location and condition.
Land held for development, including land in the course of development, is initially recorded at fair value. Where, through
deferred purchase credit terms, the fair value differs from the amount that will ultimately be paid in settling the liability, this
difference is charged as a finance cost in the income statement over the period of settlement. Due to the scale of the
Group's developments, the Group has to allocate site-wide development costs between units built in the current year and
in future years. It also has to estimate costs to complete on such developments. In making these assessments there is a
degree of inherent uncertainty. The Group has developed internal controls to assess and review carrying values and the
appropriateness of estimates made.
Leases as lessee
Operating lease rentals are charged to the income statement in equal instalments over the life of the lease.
Leases as lessor
The Group enters into leasing arrangements with third parties following the completion of constructed developments until
the date of the sale of the development to third parties. Rental income from these operating leases is recognised in the
income statement on a straight-line basis over the term of the lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised in the income
statement on a straight-line basis over the lease term.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. In accordance with the transitional
provisions, IFRS2 'Share-based Payments' has been applied to all grants of equity instruments after 7 November 2002 that
had not vested at 1 January 2005.
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured either using
Present-Economic Value models or Monte Carlo models dependent upon the characteristics of the scheme. The fair value
is expensed in the income statement on a straight-line basis over the vesting period, based on the Group's estimate of
shares that will eventually vest where non-market vesting conditions apply.
Tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax
in the future have occurred at the balance sheet date.
Deferred tax is calculated at the rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal
of the underlying timing differences can be deducted.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against
current tax liabilities and when they relate to taxes levied by the same tax authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Pensions
Defined contribution
The Group operates defined contribution pension schemes for certain employees. The Group's contributions to the
schemes are charged against profits in the year in which the contributions fall due.
Defined benefit
The cost of providing benefits under the defined benefit scheme is determined using the Projected Unit Credit Method. The
assets of the defined benefit pension scheme are measured at fair value. The liabilities of the defined benefit pension
scheme are measured on an actuarial basis and discounted to present value. The net obligation is calculated by a
qualified independent actuary and is recognised as a liability in the balance sheet.
The Group uses a corridor approach when accounting for actuarial gains and losses. The corridor used is the greater of:
10% of the present value of the defined benefit obligation at the end of the previous year; or
10% of the fair value of plan assets at the end of the previous year.
The amount recognised in the income statement is the excess of unrecognised actuarial gains and losses over the
corridor spread over the expected average working lives of members of the scheme.
The operating and financing costs of the defined benefit pension scheme are recognised in the income statement.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to
the contractual provisions of the instrument.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
The Group derecognises a financial liability only when the Group's obligations are discharged, cancelled or they expire.
Financial assets
Non-derivative financial assets are classified as either 'available for sale financial assets' or 'loans and receivables'. The
classification depends on the nature and purpose of the financial assets and is determined at the time of initial
recognition.
Available for sale financial assets

Zero coupon loans granted as part of sales transactions that are secured by way of a legal charge on the respective
property are classified as being available for sale and are stated at fair value. Fair value is determined in the manner
described in the notes to the financial statements.
Gains and losses arising from changes in fair value are recognised directly in equity in retained earnings, with the
exceptions of impairment losses and interest calculated using the 'effective interest rate' method, which are recognised
directly in the income statement. Where the investment is disposed of, or is determined to be impaired, the cumulative
gain or loss previously recognised in equity is included in the income statement for the period.

Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than twelve months after the balance
sheet date, which are classified as non-current assets and are measured at amortised cost less an allowance for any
uncollectable amounts. The net of these balances are classified as 'trade and other receivables' in the balance sheet.
Trade and other receivables are classified as 'loans and receivables'.
Impairment of financial assets

Trade and other receivables are assessed for indicators of impairment at each balance sheet date and are impaired where
there is objective evidence that the recovery of the receivable is in doubt.
Objective evidence of impairment could include significant financial difficulty of the customer, default on payment terms or
the customer going into liquidation.
The carrying amount of trade and other receivables is reduced through the use of an allowance account. When a trade or
other receivable is considered uncollectable, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in the income statement.
For financial assets classified as available for sale, a significant or prolonged decline in the value of the property
underpinning the value of the loan is considered to be objective evidence of impairment. In respect of available for sale
financial assets, impairment losses previously recognised through the income statement are not reversed through the
income statement. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.

Cash and cash equivalents include cash and balances in bank accounts with no notice or less than three months notice
from inception and are subject to an insignificant risk of changes in value.
Cash and cash equivalents are classified as 'loans and receivables'.
Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the contractual arrangements entered into.
Equity instruments
Equity instruments consist of the Company's ordinary share capital and are recorded at the proceeds received, net of
direct issue costs.
All non-derivative financial liabilities are classified as 'other financial liabilities' and are initially measured at fair value, net of
transaction costs. Other financial liabilities are subsequently measured at amortised cost using the 'effective interest rate'
method.
Other financial liabilities consist of bank borrowings and trade and other payables.
Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least twelve months after the balance sheet date.

Trade and other payables on normal terms are not interest bearing and are stated at amortised cost.
Trade and other payables on extended terms, particularly in respect of land, are recorded at their fair value at the date of
acquisition of the asset to which they relate by discounting at prevailing market interest rates at the date of recognition.
The discount to nominal value, which will be paid in settling the deferred purchase terms liability, is amortised over the
period of the credit term and charged to finance costs using the 'effective interest rate' method.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Where bank agreements include a legal right of offset for in hand and overdraft balances, and the Group intends to net
settle the outstanding position, the offset arrangements are applied to record the net position in the balance sheet.
Finance income and charges are accounted for using the 'effective interest rate' method in the income statement.
Finance costs are recognised as an expense in the income statement in the period to which they relate.
Derivative financial instruments
The Group has entered into derivative financial instruments in the form of interest rate swaps and cross currency swaps to
manage the interest rate and foreign exchange rate risk arising from the Group's operations and sources of finance. The
use of financial derivatives is governed by the Group's policies approved by the Board of Directors as detailed in notes to
the financial statements.
The swap arrangements are designated as hedging instruments, being either hedges of a change in future cash flows as a
result of interest rate movements, or hedges of a change in future cash flows as a result of foreign currency exchange rate
movements.
The fair value of hedging derivatives is classified as a non-current asset or a non-current liability if the remaining maturity of
the hedging relationship is more than twelve months and as a current asset or a current liability if the remaining maturity of
the hedge relationship is less than twelve months.
Hedge accounting
All of the Group's interest rate and cross currency swaps are designated as cash flow hedges. At the inception of the hedge
relationship the Group documents the relationship between the hedging instrument and the hedged item, along with its risk
management objectives and its strategy for undertaking various hedged transactions. In addition, at the inception of the
hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting the
changes in cash flows of the hedged items.
Details of the fair values of the interest rate and cross currency swaps are provided in notes to the financial statements.
Movements on the hedging reserve in equity are detailed in note 15.
Cash flow hedge

To the extent that the Group's cash flow hedges are effective, gains and losses on the fair value of the interest rate and
cross currency swap arrangements are deferred in equity in the hedging reserve until realised. On realisation such gains
and losses are recognised within finance charges in the income statement. To the extent that any hedge is ineffective,
gains and losses on the fair value of these swap arrangements are recognised immediately in finance charges in the
income statement.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is terminated or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss deferred in equity remains in equity and is recognised when the
forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.
Government grants
Government grants are recognised in the income statement so as to match with the related costs that they are intended
to compensate. Grants related to assets are deducted from the carrying amount of the asset. Grants related to income
are deducted from the related expense in the income statement.
2. Prior year adjustment
IAS2 'Inventories' and IAS39 'Financial Instruments: Recognition and Measurement' require that the Group's land
purchases on deferred terms should be recorded at the discounted present value at the date of purchase. The value of the
discount is expensed through finance costs in the income statement over the period of the deferral, with the associated
land payable being increased to the settlement value over the period of deferral. The land value carried in inventories is
reduced by the value of the discount and this therefore reduces land cost of sales in the income statement over the
duration of the site.
The Group adopted the above policy upon transition to IFRS at 1 July 2004. The calculation methodology adopted at
transition, and subsequently applied, did not discount any deferred term land payable at inception for the first twelve
months that it was due to remain outstanding. The Group has reviewed this calculation methodology in the current year
and considers that it is appropriate to discount any deferred term land payable for the entire period of deferral.
The Group has therefore recalculated the adjustment made for deferred term land payables and, due to the fact that the
impact of the change is considered by the Directors to be material, it has adjusted the results presented at 30 June 2007
by means of a prior year adjustment.
The effect of this calculation change is summarised below:
Year ended At
30 June 1 July
2007£m 2006£m
Income statement
Cost of sales 6.1 -
Finance costs (9.1) -
Decrease in profit before tax (3.0) -
Tax 0.9 -
Decrease in profit for the period (2.1) -
Balance sheet
Deferred tax asset 2.5 4.7
Non-current assets 2.5 4.7
Inventories (29.7) (34.8)
Current assets (29.7) (34.8)
Deferred tax liabilities 3.1 -
Non-current liabilities 14.2 19.2
Net assets (13.0) (10.9)
Equity
Retained profits at the start of the period (10.9) (10.9)
Retained profit movement in the period (2.1) -
Equity (13.0) (10.9)
Earnings per share

Basic (0.8p) -
Diluted (0.8p) -
3. Segmental analysis
The Group consists of two separate segments for management reporting and control purposes, being housebuilding and
commercial developments. The Group presents its primary segment information on the basis of these operating segments.
As the Group operates in a single geographic market, the United Kingdom, no secondary segmentation is provided.
Commercial 2008 Commercial 2007

Housebuilding developments Total Housebuilding developments Total
Units Units Units Units Units Units
Residential 18,588 - 18,588 17,168 - 17,168
completions
(restated*) (restated*)
£m £m £m £m £m £m
Revenue 3,414.2 140.5 3,554.7 3,001.4 44.7 3,046.1
Result
Profit from 530.0 20.2 550.2 506.8 6.5 513.3
operations
before
restructuring
costs and
impairment of
goodwill,
intangible
assets and
inventories
Impairment of - (30.7) (30.7) - - -

goodwill and
intangible
assets
Impairment of (157.2) (51.2) (208.4) - - -
inventories
Restructuring (15.9) - (15.9) (25.6) (0.6) (26.2)
costs
Profit/(loss) 356.9 (61.7) 295.2 481.2 5.9 487.1
from operations
Share of post- (2.2) (0.4) (2.6) (0.9) (0.1) (1.0)
tax loss from
joint ventures
Profit/(loss) 354.7 (62.1) 292.6 480.3 5.8 486.1
from operations
including post-
tax loss from
joint ventures
Finance income 12.8 3.5
Finance costs (168.1) (64.8)
Tax (50.9) (126.5)
Profit for the 86.4 298.3
year from
continuing
operations
Other £m £m £m £m £m £m
information
Capital 5.0 0.4 5.4 7.9 - 7.9
additions
Amortisation of - 0.8 0.8 - - -
intangible
assets
Impairment of - 24.5 24.5 - - -
goodwill
Impairment of - 6.2 6.2 - - -
intangible
assets
Depreciation 6.4 0.3 6.7 4.8 0.1 4.9
Commercial 2008 Commercial 2007

Housebuilding developments Total Housebuilding Developments Total
(restated*) (restated*)
Balance sheet £m £m £m £m £m £m
Segment 5,787.5 329.1 6,116.6 5,624.9 314.6 5,939.5
assets
Elimination of (132.3) (21.3)
inter-company
balances
5,984.3 5,918.2
Deferred tax - 2.5
assets
Current tax 20.6 -
assets
Cash and cash 32.8 182.1
equivalents
Consolidated 6,037.7 6,102.8
total assets
Segment (1,529.7) (88.7) (1,618.4) (1,565.1) (119.5) (1,684.6)

liabilities
Elimination of 132.3 21.3
inter-company
balances
(1,486.1) (1,663.3)
Deferred tax (22.7) -
liabilities
Current tax - (58.2)
liabilities
Loans and (1,685.2) (1,483.3)
borrowings
Consolidated (3,194.0) (3,204.8)
total liabilities
4. Exceptional costs
Impairment of inventories
At 30 June 2008, the Group conducted a review of the net realisable value of its land and work in progress carrying values
of its sites in the light of the current deterioration in the UK housing market. Where the estimated future net present
realisable value of the site is less than its carrying value within the balance sheet, the Group has impaired the land and
work in progress value. This has resulted in an impairment of £208.4m. Further details on this impairment are given in note
12.
Impairment of goodwill
At 30 June 2008, the Group conducted an impairment review of its goodwill as explained in note 9. This resulted in an
impairment charge of £24.5m for the year.
Impairment of intangible assets

At 30 June 2008, the Group conducted an impairment review of its brands as explained in note 10. This resulted in an
impairment charge of £6.2m for the year.
Restructuring costs
During the year ended 30 June 2008, the Group has incurred £15.9m (2007: £26.2m) of costs in relation to reorganising
and restructuring the business, including redundancy costs of £3.7m (2007: £12.2m) where existing employees could not
be retained within the Group.
2008 2007
(restated*)
Recognised in the income statement £m £m
Finance income on short-term bank deposits (2.3) (3.5)
Imputed interest on available for sale financial assets (2.9) -
Interest receivable on swaps (3.3) -
Other interest received (4.3) -
Finance income (12.8) (3.5)
Interest on bank overdrafts and loans 142.3 43.5
Amortisation of losses on cancelled interest rate 0.1 -
swaps
Imputed interest on deferred term land payables* 20.7 18.4
Finance costs related to employee benefits 1.7 2.9
Other interest payable 3.3 -
Finance costs 168.1 64.8
Net finance costs 155.3 61.3
6. Tax
2008 2007
(restated*)
Analysis of the tax charge for the year £m £m
Current tax
UK corporation tax on profits for the year 56.6 121.6
Adjustment in respect of previous years (20.6) (1.5)
36.0 120.1
Deferred tax
Origination and reversal of temporary differences (2.9) 4.9
Adjustment in respect of previous years 17.8 1.5
14.9 6.4
Tax charge for the year 50.9 126.5
In addition to the amount charged to the income statement, deferred tax of £3.1m (2007: £2.5m charged) was credited
directly to equity (note 15) and corporation tax of £nil (2007: £3.3m) was credited directly to equity.
Factors affecting the tax charge for the year
The tax assessed for the year is higher (2007: lower) than the standard rate of corporation tax in the UK for the period of
29.5% (2007: 30.0%). The differences are explained below:
2008 2007
(restated*)
£m £m
Profit before tax multiplied by the standard rate of 40.5 127.4
corporation tax of 29.5% (2007: 30.0%)
Effects of:
Goodwill impairment not deductible for tax purposes 7.2 -
Other expenses not deductible for tax purposes 7.1 2.7
Additional tax relief for land remediation costs (1.9) (1.7)
Adjustment in respect of previous years (2.8) -
Tax in respect of joint ventures 0.8 -
Impact of change in rate on future deferred tax - (1.9)
balances
Tax charge for the year 50.9 126.5
The impact of the change introduced in the Finance Act 2007 regarding the reduction in the corporation tax rate from April
2008 from 30% to 28% has been incorporated into the Group's tax charge and deferred tax provided.
At 30 June 2007, the Group recognised a deferred tax asset of £5.8m in relation to the anticipated tax relief available on
the future exercise of options under the Barratt Share Option and Long-Term Performance Plans. As a result of the fall in
the Company's share price since that date, the anticipated tax relief on future exercises is now lower and accordingly the
attributable deferred tax asset recognised as at 30 June 2008 is £nil. This has resulted in a charge to the income
statement of £3.3m, included within other expenses not deductible for tax purposes in the table above, the balance being
charged to equity.
7. Dividends
2008 2007
£m £m
Prior year final dividend of 24.30p per share (2006: 83.8 49.7
20.69p)
Interim dividend 12.23p per share (2007: 11.38p) 42.2 27.4
126.0 77.1
Proposed final dividend for the year ended 30 June - 83.8
2008 of nil (2007: 24.30p) per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of £86.4m
(2007: £298.3m (restated*)) by the weighted average number of ordinary shares in issue during the year, excluding
those held by the Employee Benefit Trust which are treated as cancelled, which were 345.0m (2007: 258.6m).
Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of £86.4m
(2007: £298.3m (restated*)) by the weighted average number of ordinary shares in issue adjusted to assume conversion
of all potentially dilutive ordinary shares from the start of the year, giving a figure of 346.7m (2007: 262.8m).
The earnings per share from continuing operations were as follows:
2008 2007
(restated*)
pence pence
Basic earnings per share 25.0 115.4
Adjusted basic earnings per share 79.6 123.0
Diluted earnings per share 24.9 113.5
Adjusted diluted earnings per share 79.2 121.0
The calculation of basic, diluted, adjusted basic and adjusted diluted earnings per share is based upon the following data:
2008 2007
(restated*)
£m pence £m pence
Earnings for basic and diluted earnings per share 86.4 25.0 298.3 115.4
Add: restructuring costs 15.9 4.6 26.2 10.1
Add: impairment of goodwill and intangible assets 30.7 8.9 - -
Add: impairment of inventories 208.4 60.4 - -
Less: tax effect of above items (66.8) (19.3) (6.5) (2.5)
Earnings for adjusted basic and adjusted 274.6 79.6 318.0 123.0
diluted earnings per share
Earnings are adjusted, removing restructuring costs, impairments of goodwill, intangible assets and inventories and the
related tax, to reflect the Group's underlying profit.
9. Goodwill
2008 2007
£m £m
Cost
At 1 July 816.7 -
Acquisitions in the year - 816.7
At 30 June 816.7 816.7
Accumulated impairment losses
At 1 July - -
Impairment losses for the year 24.5 -
At 30 June 24.5 -
Carrying amount
At 1 July 816.7 -
At 30 June 792.2 816.7
Goodwill cost of £792.2m relates to the housebuilding segment and £24.5m relates to the commercial developments
segment.
The Group conducts its annual impairment review of goodwill and intangibles together for both the housebuilding and
commercial developments segments. Any impairment identified is allocated first to goodwill and then to intangible assets.
The impairment review was performed at 30 June 2008 and compared the value-in-use of the housebuilding and
commercial developments segments with the carrying value of their tangible and intangible assets and allocated
goodwill.
The value-in-use was determined by discounting the expected future cash flows of the housebuilding and commercial
developments segments. The key assumptions for the value-in-use calculations were those regarding the discount
rates, expected changes in selling prices and sales volumes for completed houses and expected changes in site costs
to complete. The Directors estimate discount rates using pre-tax rates that reflect current market assessments of the
time value of money and risks appropriate to the housebuilding and commercial developments businesses and
therefore the discount rate that is considered by the Directors to be appropriate is a pre-tax risk adjusted discount rate
of 10% being the Group's estimated pre-tax weighted average cost of capital. Changes in selling prices, sales volumes
and direct costs are based upon past experience and expectations of future changes in the market taking into account
external market forecasts.
The Directors have used the Group's current budget and internal forecasts for the first five years of the forecast cash
flows. Following year five, the Group extrapolates cash flows in perpetuity using an estimated growth rate of 2.5%,
which is based upon the expected long-term growth rate of the UK economy.
As a result of this review the Group has fully impaired the goodwill of the commercial developments business by
£24.5m reflecting declining commercial property yields and the impact upon the future profit stream of the business.
The impairment has been recognised within exceptional administrative expenses in the income statement.
10. Intangible assets
Brands Total
£m £m
Cost
At 1 July 2006 - -
Acquisitions in the year 107.0 107.0
At 30 June 2007 107.0 107.0
At 30 June 2008 107.0 107.0
Amortisation
At 1 July 2006 - -
At 30 June 2007 - -
Charge for the year 0.8 0.8
Impairment 6.2 6.2
At 30 June 2008 7.0 7.0
Carrying amount
At 30 June 2007 107.0 107.0
At 30 June 2008 100.0 100.0
Brands
The Group does not amortise the housebuilding brand acquired with Wilson Bowden, being David Wilson Homes, valued at
£100.0m, as the Directors consider that this brand has an indefinite useful economic life due to the fact that the Group
intends to hold and support the brand for an indefinite period and there are no factors that would prevent it from doing so.
The brand of Wilson Bowden Developments (valued at £7.0m prior to amortisation) was being amortised over ten years as
it is a business-to-business brand operating in niche markets.
The Group tests indefinite life brands annually for impairment, or more frequently if there are indications that they might be
impaired.
An impairment review was conducted using the calculations and assumptions as explained in note 9. As a result of this
review an impairment of £6.2m has been recorded in relation to the Wilson Bowden Developments brand to reduce the
carrying value of this asset to £nil. This impairment has been recognised within exceptional administrative expenses in the
income statement.
Plant and
Property equipment Total
£m £m £m
Cost
At 1 July 2006 5.2 14.7 19.9
Additions 3.9 4.0 7.9
Acquired with subsidiary 15.5 7.6 23.1
Reclassification 1.5 (1.5) -
Disposals (0.7) (1.2) (1.9)
At 30 June 2007 25.4 23.6 49.0
Additions 1.8 3.6 5.4
Reclassifications 0.9 (0.9) -
Disposals (16.7) (13.5) (30.2)
At 30 June 2008 11.4 12.8 24.2
Depreciation
At 1 July 2006 - 7.8 7.8
Charge for the year 0.3 4.6 4.9
Reclassification 0.5 (0.5) -
Disposals - (1.1) (1.1)
At 30 June 2007 0.8 10.8 11.6
Charge for the year 2.4 4.3 6.7
Reclassifications 0.4 (0.4) -
Disposals (1.9) (8.1) (10.0)
At 30 June 2008 1.7 6.6 8.3
Net book value
At 30 June 2007 24.6 12.8 37.4
At 30 June 2008 9.7 6.2 15.9
Authorised future capital expenditure that was contracted, but not provided for in these financial statements amounted to
£nil (2007: £nil).
12. Inventories
2008 2007
(restated*)
£m £m
Land held for development 3,117.5 3,266.9
Construction work in progress 1,569.3 1,368.5
Part-exchange properties 137.9 97.9
Other inventories 5.3 6.6
4,830.0 4,739.9
The Directors consider all inventories to be essentially current in nature although the Group's operational cycle is such
that a proportion of inventories will not be realised within twelve months. It is not possible to determine with accuracy
when specific inventory will be realised as this will be subject to a number of issues such as consumer demand and
planning permission delays.
At 30 June 2008, the Group conducted a review of the net realisable value of its land and work in progress carrying
values of its sites in the light of the current deterioration in the UK housing market. Where the estimated future net
present realisable value of the site was less than its carrying value within the balance sheet, the Group has impaired the
land and work in progress values. This has resulted in an exceptional impairment of £208.4m. The key judgement in
estimating the future profit stream is the evaluation of the likely sales prices. Following this impairment £557.0m (2007:
£nil) of inventories are valued at fair value less costs to sell rather than at historical cost.
The value of inventories expensed in 2008 and included in cost of sales was £2,714.2m (2007: £2,348.3m (restated*))
including £10.4m (2007: £3.5m) of inventory write-downs incurred in the course of normal trading and a reversal of £5.4m
(2007: £1.4m) on inventories that were written down in a previous accounting period, but excluding the £208.4m
exceptional impairment. The £5.4m reversal arose mainly due to obtaining planning approval on strategic land and other
interests that had previously been written down to net realisable value.
The value of inventories written down and recognised as an expense in 2008 totalled £218.8m (2007: £3.5m), being the
£208.4m classified as an exceptional cost and the remaining £10.4m incurred in the normal course of trading.
13. Net debt
Net debt is defined as cash and cash equivalents, bank overdrafts and interest bearing borrowings.
2008 2007
£m £m
Bank overdrafts (7.5) (26.7)
Net cash and cash equivalents 25.3 155.4
Bank loans (1,355.3) (1,273.2)
Loan notes (46.4) (101.6)
Private placement notes (276.0) (81.8)
Net debt (1,652.4) (1,301.2)
14. Share capital
2008 2007
£m £m
Authorised: 439,460,000 (2007: 402,850,000) ordinary shares 43.9 40.3
of 10p each
Allotted and issued ordinary shares of 10p each fully paid: 34.7 34.7
346,718,019 ordinary shares (2007: 346,511,877)
The authorised share capital of the Company was increased to 439,460,000 from 402,850,000 on 27 November 2007.
The issued share capital of the Company was increased during the year to 346,718,019 ordinary shares of 10p each by
the issue of:
85,630 (2007: 840,300) ordinary shares of 10p each for a cash consideration of £479,107 (2007: £3,909,080)
in satisfaction of options duly exercised in accordance with the rules of the share option plans
120,512 (2007: 102,571,785) ordinary shares as £1,313,581 (2007: £1,118,032,457) of the consideration for
the acquisition of Wilson Bowden Limited
The Barratt Developments PLC Employee Benefit Trust (the 'EBT') holds 1,711,046 (2007: 1,714,046) ordinary shares in
the Company. The cost of the shares, at an average of 165.9 pence per share (2007: 164.6 pence per share), was
£2,838,386 (2007: £2,821,186). The market value of the shares held by the EBT at 30 June 2008, at 58.0 pence per share
(2007: 993.0 pence per share), was £992,407 (2007: £17,020,477). The shares are held in the EBT for the purpose of
satisfying options that have been granted under The Barratt Developments PLC Executive and Employee Share Option
Plans. These ordinary shares do not rank for dividend and do not count in the calculation of the weighted average number
of shares used to calculate earnings per share until such time as they are vested to the relevant employee.
15. Reconciliation of movements in equity
Total
(restated*)
£m
Balance at 1 July 2006 as previously reported 1,539.9
Prior year adjustment (10.9)
Balance at 1 July 2006 as restated 1,529.0
Profit for the year 298.3
Revaluation of available for sale financial assets (0.7)
Net fair value gains on interest rate swaps designated as cash flow hedges 12.3
Tax credited to equity 0.8
Total income recognised for the period attributable to equity shareholders 310.7
Disposal of own shares 10.6
Dividends (77.1)
Issue of share capital 1,122.0
Share issue costs (0.1)
Share-based payments 4.4
Amounts transferred to the income statement (1.5)
Balance at 30 June 2007 2,898.0
Profit for the year 86.4
Revaluation of available for sale financial assets (4.6)
Foreign exchange loss (1.8)
Net fair value gains on cross currency swaps designated as cash flow hedges 7.4
Net fair value losses on interest rate swaps designated as cash flow hedges (19.1)
Losses on cancelled interest rate swaps deferred in equity (3.6)
Amortisation of losses on cancelled interest rate swaps deferred in equity 0.1
Tax credited to equity 3.1
Total income recognised for the period attributable to equity shareholders 67.9
Dividends (126.0)
Issue of share capital 1.8
Share-based payments 2.3
Purchase of shares to satisfy LTPPs (0.3)
Balance at 30 June 2008 2,843.7
16. Cash flows from operating activities
2008 2007
(restated*)
£m £m
Profit for the year from continuing operations 86.4 298.3
Tax 50.9 126.5
Share of post-tax loss from joint ventures 2.6 1.0
Profit from operations 295.2 487.1
Foreign exchange loss (1.8) -

Gains on swap arrangements transferred to the income - (1.5)
statement
Amortisation of deferred loss on swaps 0.1 -
Amortisation of intangible assets 0.8 -
Impairment of intangible assets 6.2 -
Depreciation 6.7 4.9
Impairment of goodwill 24.5 -
Share-based payments 2.3 4.4

Imputed interest on deferred term land payables (20.7) (18.4)
Imputed interest on available for sale financial assets 2.9 -
Finance costs related to employee benefits (1.7) (2.9)
Revaluation of available for sale financial assets (4.6) (0.7)
Profit on disposal of property, plant and equipment (2.1) (2.5)
Total non-cash items 12.6 (16.7)
Increase in inventories (22.1) (267.4)

Decrease/(increase) in trade and other receivables 43.0 (10.1)
Decrease in trade and other payables (207.7) (56.1)
(Increase)/decrease in available for sale financial assets (29.6) 2.7
Total movements in working capital (216.4) (330.9)
Interest paid (147.0) (31.3)

Tax paid (114.8) (120.5)
Net cash outflow from operating activities (170.4) (12.3)
17. Acquisitions
The Group acquired the entire issued share capital of three entities during the year being:
Acquired on: 5 December 2007

Unitary Limited
Acquired on: 3 January 2008

Chancerygate (Lionel Road) Limited
Acquired on: 4 April 2008

Yeovil Developments Limited
The total cash consideration was £54.6m, £22.3m of which is deferred. These companies were solely acquired for the land
and land options that they hold. The book value of land acquired was £20.3m and the fair value was £68.0m which was
offset by a deferred tax creditor of £nil (£13.4m at fair value). No goodwill arose on these acquisitions.
The acquisitions did not contribute to the revenue or profit of the Group for the year and would not have done had these
companies been acquired on 1 July 2007.
Additionally, the Group received cash contributions under the Wilson Bowden SAYE scheme of £1.3m in the year.
18. Contingent liabilities
The Company has guaranteed certain bank borrowings of its subsidiary undertakings, amounting to £0.8m at the year-end
(2007: £8.4m). This guarantee relates to a loss making subsidiary. The liability of the Group, which is equal to the net
liabilities of this subsidiary, has been provided within the consolidated financial statements.
The Group has entered into counter-indemnities in the normal course of business in respect of performance bonds. Certain
subsidiary undertakings have commitments for the purchase of trading stock entered into in the normal course of
business.
19. Related party transactions
Disposal of WBD (Atlantic Square) Limited to Capella Developments Limited and Development Management
Agreement with Capella Consultancy Limited
On 30 June 2008, a wholly owned subsidiary of the Group, WBD (Atlantic Square) Limited, was sold by Wilson Bowden
Developments Limited to Capella Developments Limited for total consideration of £4.3m (on a debt and cash free basis). In
addition, the Group entered into a Development Management Agreement with Capella Consultancy Limited, a sister
company of Capella Developments Limited, in respect of the management by Capella Consultancy Limited of certain of the
Group's other Scottish properties and interests. The maximum consideration (including in respect of certain performance-
related incentive arrangements) under the Development Management Agreement is £2.5m.
Capella Developments Limited and Capella Consultancy Limited were related parties of the Barratt Group because, at
completion, each company was an associate of James Fitzsimons who was a former director of Wilson Bowden
Developments Limited, WBD (Atlantic Square) Limited and certain other companies within the Group.
At 30 June 2008, there was no outstanding balance due to the Group from either Capella Developments Limited or Capella
Consultancy Limited.
20. Post balance sheet event
On 9 July 2008, the Company entered into a £400m three-year committed revolving credit facility. In addition, £350m of the
existing £400m five-year revolving credit facility (effective from 2 February 2005) was extended on 6 August 2008 to match
the maturity period of the new three-year £400m revolving credit facility. The remaining £50m of this facility expires on 1
February 2010.
On 9 July 2008, the Company agreed with its bankers and private placement investors to amend the financial covenants to
support the Group through the current difficult economic climate. The amendments were signed on 5 August 2008 and all
conditions precedent were satisfied on 6 August 2008. From 6 August 2008 the weighted average interest rate paid by the
Group increased to circa 9.75%.
21. Statutory Accounts
The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June
2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of
Companies and those for 2008 will be delivered following the Company's Annual General Meeting. The auditors have
reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis
without qualifying their report and did not contain statements under sections 237(2) or (3) Companies Act 1985.
Whilst the financial information included in this preliminary announcement has been computed in accordance with
International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to
comply with IFRS as adopted for use in the EU.

END
FR SSAESUSASESU
Barratt Developments
Final Results
RNS Number : 2010O
14 September 2011
14 September 2011

Annual Results Announcement
Mark Clare, Group Chief Executive commented:
"We have made considerable progress in rebuilding profitability - by optimising selling prices, improving
operational efficiency and securing new higher margin land. Whilst we expect progress to continue,
further recovery in the housing market remains dependent on improving economic conditions and the
ability of our customers to secure mortgage finance."
Highlights
· Total completions, including joint ventures, for the full year were 11,171 (2010: 11,377)
· Private average selling price (excluding joint ventures) up 7.4% for the full year to £198,900 (2010:
£185,200) due to active management of mix
· Overall underlying selling prices were stable for the period, but with regional variations
· 50% increase in operating profit before operating exceptional items to £135.0m (2010: £90.1m)1, with
full year operating margin before operating exceptional items increasing to 6.6% (2010: 4.4%)
· Second half housebuild operating margin2 of 8.0% against 5.9% for the previous year
· The Group returned to profit before exceptional costs for the full year3 of £42.7m (2010: loss of
£33.0m)
· Refinancing package in place providing the Group with c. £1 billion of committed facilities and private
placement notes, improving balance sheet efficiency
· Net debt of £322.6m (2010: £366.9m) as at 30 June
· Net tangible asset value per share of £2.11 (2010: £2.08 per share) at 30 June 20114
· For the first 11 weeks of our current financial year, we achieved average net private reservations of
183 per week, 10.2% above the same period last year. On a per active site basis this equates to a
private sales rate of 0.49 (2010 equivalent period: 0.48)
1
Profit from operations w as £127.3m (2010: £74.3m) after operating exceptional items of £7.7m (2010: £15.8m)
2
Housebuild margin is profit from operations before operating exceptional costs for the housebuilding segment divided by
revenue for the housebuilding segment
3
After exceptional costs of £54.2m (2010: £129.9m) the Group made a loss before tax for the year of £11.5m (2010:
£162.9m)
4
Net tangible asset value per share calculated as net assets, less intangible assets and goodw ill, divided by number of
allotted and issued ordinary shares
www.investegate.co.uk/ArticlePrint.aspx?id=201109140700132010O 1/46
-ends -
Certain statements in this document may be forward looking statements. By their nature, forward looking
statements involve a number of risks, uncertainties or assumptions that could cause actual results to
differ materially from those expressed or implied by those statements. Forward looking statements
regarding past trends or activities should not be taken as representation that such trends or activities will
continue in the future. Accordingly undue reliance should not be placed on forward looking statements.
There will be an analyst and investor meeting at 8.30am today at UBS, Room 25, 7th Floor, 1 Finsbury
Avenue, London, EC2M 2PP. The presentation will be broadcast live on the Barratt Developments
corporate website, www.barrattdevelopments.co.uk, from 8.30am today. A playback facility will be
available shortly after the presentation has finished.
The presentation slides will be available on the Barratt Developments corporate website,
www.barrattdevelopments.co.uk, from 8.30am today.
Further copies of this announcement can be obtained from the Company Secretary's office at:
Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville,
Leicestershire, LE67 1UF.

Mark Clare, Group Chief Executive 020 7299 4898
David Thomas, Group Finance Director 020 7299 4896
Analyst / investor enquiries

Susie Bell, Head of Investor Relations 020 7299 4880
Media enquiries
Dan Bridgett, Head of External Affairs 020 7299 4873
The Maitland Consultancy

Liz Morley 020 7379 5151
Neil Bennett
Chairman's statement
This has been a further year of recovery for the Group. We have remained focused on our key priorities
and have delivered a significant improvement in the profitability of the Group whilst continuing to see
further progress in quality and customer service.
Market conditions
The housing market in the UK has remained constrained. The key restriction on the new build industry
remains the availability of adequate mortgage finance, particularly with higher loan to value products.
With continuing low levels of new build activity, there remains a fundamental imbalance between annual
housing demand and supply which will continue to widen unless the underlying causes are addressed.
There is considerable demand for housing but the mortgage market is not supporting this and it will
clearly take time for the market to function in a more normal way.
As a result of Government policy, we are seeing changes in the planning process and the implementation
of 'localism', empowering communities to have more control over local development. We have responded
positively to these changes and each of our businesses continues to engage directly with their local
communities.
We welcome the introduction of the Government's FirstBuy scheme, designed to stimulate the market by
providing equity share loans to first-time buyers, in the absence of more normal mortgage lending.
Our response
Our response to the current market restrictions has been clear and consistently pursued. Our priorities
have been optimising selling prices, improving operational efficiency and targeted land spend. As a result,
we have driven significant margin improvement in each of the last two years.
Importantly, improvements in operational efficiency have not been at the expense of quality. The Group
has, for the second consecutive year, achieved Home Builders Federation ('HBF') Five Star status. This is
the highest achievable level in terms of customer satisfaction and whether they would recommend us to a
friend. Additionally, under the National House-Building Council ('NHBC') 'Pride in the Job' scheme, our site
managers have won more quality awards than any other housebuilder for the seventh year running.
This high level of quality is central to our pricing policy. We are committed to achieving an appropriate
return for the outstanding homes that we build and we have the right sales and marketing capabilities to
achieve this.
Private average selling price increased by 7.4% to £198,900 during the year compared with 2010. This
was driven by the business actively changing the profile of the products we build - more family houses
and less flats.
Longer term financing arrangements

We were pleased to complete our debt refinancing in May 2011. This provides the Group with around £1
billion of committed facilities and private placement notes to May 2015, with some of the Group's
arrangements extending as far as 2021.
Our improved operational performance and strong cash management contributed to a further reduction in
debt levels by the year end.
No dividend will be paid in respect of the 2011 financial year. However, the Board remains committed to
reinstating the payment of dividends when it is appropriate to do so.
New land to improve margins further

Since we re-entered the land market in mid-2009, we have had two good years of land buying and
invested a total of £981.3m. We have secured terms on around 22,000 plots and this will represent the
foundation of our future business and margin growth. We have maintained our long-term relationships with
land vendors, and also developed new relationships, through a very difficult period for the industry. We
have maintained a disciplined approach. Wherever possible we are acquiring land on deferred terms and
during the year we increased our hurdle rates to ensure that we are increasingly selective about the
opportunities we secure.
Our employees
In the year I have visited many of our local offices and housing developments. I am always impressed by
the enthusiasm and ability of our employees. It is through their efforts that we lead the industry on
service, quality and the standard of our sites. The efficiency and quality of our operation would not be
possible without the skills and commitment of our employees and I do wish to record the Board's thanks
to all our people.
The future
We have returned to profit before exceptional items which is an important milestone. We recognise that
economic uncertainty and mortgage availability will continue to influence the housing market. However,
we have a skilled workforce, an evolving land bank and a strengthened financial position. We are at the
forefront of addressing many of the changes that will shape the industry in future years: evolving customer
demand; design and environmental standards; and changes in planning. With these strengths we remain
well equipped to compete now and in the future.
Bob Lawson
Chairman
Group Chief Executive's review

This has been a year of good progress against a challenging backdrop, particularly in the first half of our
financial year.
We have achieved a 50% increase in profit from operations before operating exceptional items, agreed
terms on 8,861 plots of land, were awarded HBF Five Star status for a second consecutive year, and
refinanced our business until 2015.
We are well placed to secure further margin growth although the housing market is likely to remain
challenging.
Performance
We increased profit from operations before operating exceptional items by 50% from £90.1m to £135.0m
with a significant improvement in operating margin before operating exceptional items to 6.6% (2010:
4.4%).
Our second half housebuild operating margin before operating exceptional items improved to 8.0% against
5.9% the previous year, demonstrating the strength of our margin improvement over the period.
The Group returned to profitability in the year with a profit before tax and exceptional items of £42.7m
(2010: loss of £33.0m). Our improved operational efficiency and continued tight control over the timing of
land expenditure and working capital, enabled us to reduce net debt to £322.6m at 30 June 2011 (30 June
2010: £366.9m).
Our priorities
Our overriding objective is to rebuild profitability and we have set out three clear priorities to achieve this:
· optimising selling prices;

· improving operational efficiency; and
· targeted land buying.
We have made considerable progress in each of these areas. Our intent is to deliver these priorities,
whilst tightly controlling the balance sheet, thereby managing overall levels of debt given the uncertain
economic environment.
Optimising selling prices

During the year we have focused on securing the best price for every sale. Across the Group we have
focused on maximising value rather than driving volumes. Procedures are in place to ensure strict pricing
disciplines in every development.
Average selling price (excluding joint ventures) rose by 2.3% to £178,300 (2010: £174,300), with private
average selling prices increasing by 7.4% to £198,900 (2010: £185,200). These increases were mainly as
a result of changes in mix including from flats to houses.
The first half of the year was significantly affected by weak consumer confidence, particularly around the
Government's Comprehensive Spending Review in October 2010. The net private reservation rate per
active site per week for the first half was 0.39 (H1 2010: 0.49). In the second half of the year we saw a
significant improvement with a net private reservation rate per active site per week of 0.48 (H2 2010: 0.52).
As a result, the net private reservation rate per active site per week during the year reduced from an
average of 0.50 to an average of 0.44.
We are building a higher proportion of houses to satisfy customer demand and in the last twelve months
we have redesigned both our Barratt and David Wilson house types. In the year, 66% of completions were
houses compared with 60% during the prior year. Improvements in our marketing capability have been an
important factor in driving sales. New leads generated from our websites have continued to increase and
our centralised call centre, which was established in the last financial year, is operating well. At the point
of sale, further resources have been invested in improving conversion rates through the enhanced
presentation of our sales centres and on-site sales technology.
Our unique five-year warranty continues to provide a point of difference from our competitors. This covers
fixtures and fittings and is additional to the ten-year NHBC warranty on the fabric of the building. During
the year this feature has been working effectively as an incentive for the customer.
Operational efficiency
Driving operational efficiency has remained a significant focus for the Group. Our supply contracts for
materials continue to be reviewed and renegotiated as appropriate and we purchase an increasingly
significant proportion of our materials centrally.
We continue to review our supply chain to create efficiencies by introducing new suppliers and altering
build specifications where appropriate. Standard house-type costs are benchmarked across the Group
every six months to ensure the lowest cost is achieved whilst maintaining the quality of our homes.
Overall, we have seen total housebuilding costs (including infrastructure) reduce by 1.4% per square foot
in the year. Going forward, it is likely that some pressure will continue to be felt as raw material prices
rise due to underlying commodity price increases.
Further efficiency savings and reductions in operating costs have been achieved through the ongoing
focus on our Quality and Cost programme which promotes and shares best practice in the build process
across the Group.
We have further reduced our administration expenses in the year and will continue to review these going
forward.
Land and planning

Our strategy continues to be to optimise our existing land holdings by getting the best possible prices for
our products whilst replanning sites and reducing build and associated costs. In the last twelve months
we have replanned a further 60 sites. In particular, we have continued to be successful at replacing flats
with new purpose-designed house types. This ensures that we are building the right mix of products for
our customers, particularly given the lending restrictions which still favour houses over flats.
During the year we continued to invest in land which met our clearly defined hurdle rates in terms of
profitability and return on capital, providing attractive returns at current selling prices. Recently acquired
higher margin land is now driving margin improvement. The Group's strategy is focused on acquiring land
in prime locations, (for example with excellent transport links), and on land that is relatively advanced in
terms of gaining planning consents. We have seen prices for land firming in the South East as other
housebuilders are targeting this area. We have maintained our discipline of not chasing prices up and
have continued to adopt an acquisition strategy that is not unduly focused on any specific geographic
area.
For the full year we agreed terms on £454.1m of land purchases, the majority of which we will acquire on
the basis of deferred payment. This equates to 88 sites and 8,861 plots of which 86% are for houses.
The forecast average selling price on this land is c. £205,000 based on current prices.
Total cash expenditure on land in the year was £261m (2010: £253m).
Land creditors as at 30 June 2011 were £700.7m (2010: £566.8m). The year on year increase in land
creditors reflects the significant proportion of newly acquired land that has been acquired on deferred
terms. Land creditors due within the next 12 months total £349.1m (2010: £266.6m), with £351.6m (2010:
£300.2m) due thereafter. In the period to 31 December 2011, we expect land creditors will remain fairly
constant, dependent upon the satisfaction of contractual conditions, for example planning permission.
At 30 June 2011, the Group's owned and unconditional land bank stood at 47,917 plots (2010: 50,948
plots) with an additional 12,166 plots (2010: 11,392 plots) under conditional contracts, giving a total of
60,083 plots (2010: 62,340 plots). This equates to approximately 5.4 years (2010: 5.6 years) of owned
and controlled land based on 2011 completion volumes. We anticipate reducing our owned and
unconditional land bank, based on prior year completion volumes, over the next couple of years to around
four years supply and the conditional land bank to around one years supply.
Of the Group's owned and unconditional plots (47,917 plots), less than 24% by value is made up of
impaired land. 47% by value consists of non-impaired land where the average gross margin is c. 10% and
the remaining 29% consists of land acquired since re-entering the land market in mid-2009 with an
average gross margin of more than 20% based on current house prices.
Our underlying assumptions for impairment calculation purposes are for low single digit selling price and
cost inflation. In the past year, we have only seen a small improvement in underlying prices, but we have
continued to deliver further cost reductions. We recognise that the Group is not immune to future pricing
trends in the wider housing market and we will continue to review the trading environment and our
impairment assumptions during the year to 30 June 2012.
At the end of June 2011, the Group had detailed planning consent for 96% of budgeted volumes for the
current financial year, with a further 3% having outline planning consent. For FY 2012/13 70% of
forecasted volumes has detailed planning consent, with a further 12% having outline planning consent.
In addition, we have c. 11,400 (2010: c. 11,000) acres of strategic land which are regularly reassessed
until the necessary planning consents are obtained. They are carried at the lower of cost and net
realisable value minimising our exposure to risk. Strategic land is expected to produce an increasing
proportion of our operational land in future years. In the next few years planning consents are expected on
sites containing around 15,000 units.
Government policy
In May 2010 the Government announced proposals to change significantly the planning process and
implement 'localism' thereby empowering the local communities to have more control over and
consequently derive financial benefit from local development. At the same time, it was confirmed that
there would be cuts in public expenditure in areas such as social housing. Against this backdrop there
has been some disruption to the planning and housing development landscape but the short-term impact
on our business has been limited. A high percentage of our land bank has outline or detailed planning
consent and we have a significant level of contracted Government funding for affordable housing.
More recently, the Government has focused on growth strategies and in recognising the economic
multiplier effect of housing development they have encouraged local development, with a move towards a
'planning presumption in favour of sustainable development'.
The 2011 Budget announcements contained a number of positive measures for housebuilders. The
introduction of a new Government backed shared equity scheme, FirstBuy, provides an important selling
tool for the industry given the limited availability of higher loan to value ('LTV') mortgages, particularly for
the new build sector. The Group has a strong track record of maximising the benefits of the previous
HomeBuy Direct scheme and this new initiative is likely to reduce the requirement for our own shared
equity products going forward. We have received an allocation of £24.9m of funding under the FirstBuy
scheme which will fund the purchase of around 1,400 homes, with Barratt and the Homes and
Communities Agency ('HCA') jointly providing up to 20% shared equity on each home purchased from us.
The 2011 Budget also included proposals to increase the supply of new housing through the accelerated
release of public land, the reduction of regulatory cost and improvements in planning. We have already
been successful in securing land through the existing Delivery Partner Panel ('DPP') initiative and expect
this further commitment to be an important source of land for the Group going forward.
We remain committed to working closely with local communities and councils to ensure that we can
provide their required housing to high environmental and design standards. This will need genuine
partnerships and new ways of collaborating, many of which are already emerging. We are determined to
be at the forefront of any changes.
The mortgage market

The availability and affordability of mortgages is a key catalyst for underlying housing demand. The level of
mortgage approvals has reduced dramatically in the past four years from the peak seen in 2007.
The mortgage market for new build housing is dominated by a limited number of lenders. There have been
some changes in the respective market shares during the year primarily driven by the return of Building
Societies and the changes in lending criteria from certain lenders. Some lenders still provide a lower LTV
on new build houses when compared to second hand houses. There is typically a LTV of 90% on second
hand but only 80% on new build. There does not appear to be any justification for this differential and it
clearly disadvantages housebuilders and their customers. This discrepancy is a driver of lower demand for
new homes. Shared equity schemes including Government schemes such as HomeBuy Direct and the
new FirstBuy scheme have proved popular due to this discrepancy.
Partner of choice
During the year we have made progress in securing land through innovative arrangements and
partnerships.
Our specialist Urban Regeneration team, working with our divisions, contracted 1,147 units on six sites
through public sector partnerships with a gross development value of c. £180m.
We have been actively bidding for sites through the three area based DPPs that were established in 2010
by the HCA. To date, we have been successful on four bids accounting for up to 734 plots and are
actively involved in ten ongoing bids.
We believe the Government's recent announcement of its intention to increase the release of public land
to build up to 100,000 new homes is a positive step. Barratt has a good track record of working with
public sector partners and should be well positioned to capitalise on this initiative. We are already
working on a number of public sector partnership sites including North Prospect in Plymouth, Heritage
Park in Silverdale, Staffordshire and Elba Park near Sunderland.
Joint venture and partnership opportunities

We continue to explore joint venture ('JV') and partnership opportunities which allow us to access projects
that may not otherwise be available or reduce the investment required and improve the return on capital
employed through construction management or marketing fees.
We have established JVs with London & Quadrant, one of the country's largest Residential Social
Landlords, to develop two London residential sites:
· a 27-storey residential tower at Alie Street on the edge of the City of London. This development will
deliver 235 units of which 64 will be affordable housing; and
· 375 new private flats beside Arsenal's Emirates stadium. The development will comprise three
residential towers with units ranging from studios to penthouses.
Barratt will receive a fee for construction and marketing services as well as 50% of the net profit.
We have also established two additional JVs, in East Grinstead and Worthing, with the Wates Group
('Wates'), one of the UK's largest building and construction companies. This brings our total JVs with
Wates to four.
Commercial development revenue was £49.2m (2010: £35.1m). This included revenue from the design and
build for a major retailer of an 867,000 sq ft distribution centre in Rochdale. This project was completed in
April 2011. The Group's commercial development operations made a profit from operations of £0.8m
(2010: loss of £6.1m).
The Group's commercial development operation was also successful during the year in securing a
redevelopment agreement for Basildon town centre, in partnership with our housebuilding operations.
Quality, service and design

During the last year we have updated both the Barratt and David Wilson Homes brands with internal
layouts designed around modern living. The new designs were well received by consumers and we are
starting to roll out both new ranges - 'County' and 'Classic'. Our commitment to delivering the highest
quality product and excellent customer service has been acknowledged by our customers both through
our internal survey where 98% (2010: 97%) of customers would recommend us to a friend and our
achievement of HBF Five Star housebuilder status for a second successive year. High quality products
have contributed to the drive for profitability through achieving optimum selling prices and reducing costs.
Health, safety and the environment

We continue to place a high priority on the safety of our employees, contractors, customers and the
wider community within which we operate. During the financial year our Injury Incidence Rate ('IIR') was
539 (2010: 582) per 100,000 persons employed which is a 7.4% decrease on last year's figure. We
remain committed to improving health and safety and have an Executive Health and Safety Committee,
which reports to the Board, to drive further improvement.
We aim to secure a position as the lowest cost provider complying with the Code for Sustainable Homes
(the 'Code'). During the year we built 3,071 homes to Code Level 3 or above and we are already starting to
build developments at higher Code levels where required. We are establishing improved and lower cost
methods which are allowing us to reduce the cost of compliance. We are well advanced with the
development of ways of building a Code Level 4 house to satisfy the criteria without the need for
renewable sources of energy.
We are progressing our development at Hanham Hall, the UK's first large-scale zero carbon housing
development. We have cleared the site, built the first two zero carbon houses and commenced the
renovation of the original listed Hanham Hall building.
As well as seeking technological solutions, we will continue to discuss with Government the most cost-
effective way of meeting the environmental challenges facing the industry.
Refinancing
We undertook a complete debt refinancing in May 2011. This provides the Group with around £1 billion of
committed facilities and private placement notes to May 2015, with some of the Group's arrangements
extending as far as 2021. The effective cost of borrowing will be reduced as a result of improving the
balance of the facilities between term debt and that needed to meet our working capital requirements,
with the term debt reducing from £903m to £311m.
The covenant package is similar to before, and the facilities provide appropriate headroom above our
current forecast debt requirements. Net debt as at 30 June 2011 was £322.6m (2010: £366.9m).
Exceptional costs of £46.5m, relating to the refinancing and the cancellation of interest rate swaps, have
been charged to the income statement.
Outlook
The outlook for the housing market remains challenging as a result of continuing constraints on the
availability of mortgage finance and overall economic uncertainty.
Whilst we saw greater stability in the second half, trading conditions remain challenging in some areas
outside the South East. Our London business continues to perform particularly well, reflecting its strong
position across the capital.
We will continue to drive profitability through optimising the value of the homes we sell, delivering
additional outlets from our new higher margin land whilst maintaining a tight control over costs and
improving operational efficiency.
Since the end of the last financial year, sales performance has been in-line with normal seasonal trends.
Given the increase in active sites this has meant we saw weekly net private reservations increase by
10.2% over the previous year. Net private reservations have averaged 0.49 (2010: 0.48) per active site per
week. Cancellation rates have remained low at an average of 12.4% (2010: 12.1%) for the year to date.
We are targeting an increase in total completions for this financial year, driven by increasing numbers of
outlets rather than higher sales rates. We expect average active site numbers to be around 400 (2011:
364) for the year as a whole. Forward sales at 11 September 2011 were £855.7m (2010: £865.1m)
representing 5,541 plots (2010: 5,404 plots).
Our primary focus continues to be on optimising selling prices. We expect to see a further shift in product
mix, with houses likely to represent around 70% of total volumes, resulting in a further increase in private
average selling price. In addition, the percentage of our completions that will be delivered from newer
higher margin sites is set to increase to around 35% this year which will enable us to continue to drive
margins higher.
Mark Clare
Group Finance Director's review
Results
The Group has returned to making a profit before exceptional items and has reduced its net debt against
the backdrop of a challenging market with continuing constrained mortgage availability.
Performance metrics were as follows:
· Revenue was £2,035.4m (2010: £2,035.2m).

· Total completions (1) decreased by 1.8% to 11,171 (2010: 11,377).
· Profit from operations before operating exceptional items (2) increased by 50% to £135.0m (2010:
£90.1m).
· Operating exceptional items (2) comprised reorganisation costs of £7.7m (2010: £11.0m) and an
impairment of inventories of £nil (2010: £4.8m).
· Profit from operations was £127.3m (2010: £74.3m).
· Operating margin before operating exceptional items (2)was 6.6% (2010: 4.4%).
· Loss before tax was £11.5m (2010: £162.9m).
· Adjusted profit per share before exceptional items (3)was 2.7p (2010: loss of 2.9p).
· Basic loss per share was 1.4p (2010: 14.5p).
(1) Total completions of 11,171 (2010: 11,377) comprise private completions of 8,444 (2010: 9,455), social completions of
2,634 (2010: 1,870) and joint venture completions of 93 (2010: 52).
(2) Operating exceptional items, comprising restructuring costs and in 2010 exceptional inventory impairments, w ere £7.7m
(2010: £15.8m) of w hich £7.7m (2010: £11.0m) related to the housebuilding business and £nil (2010: £4.8m) related to the
commercial developments business.
(3)Exceptional items comprise operating exceptional items of £7.7m (2010: £15.8m), exceptional finance costs arising from the
refinancing of £46.5m (2010: £114.1m arising from the amended financing arrangements) and the related tax credit on
exceptional items of £14.9m (2010: £35.4m).
Segmental analysis
The Group's operations comprise two segments, housebuilding and commercial developments. These
segments reflect the different product offerings and market risks facing the business.
The table below shows the respective contributions for these segments to the Group:
Commercial
Housebuilding developments Total
£m £m £m
Revenue 1,986.2 49.2 2,035.4
Profit from operations before operating
134.2 0.8 135.0
exceptional items 2
Profit from operations 126.5 0.8 127.3
An analysis of the operational performance of these segments is provided within the Business review.
Exceptional items
The Group incurred exceptional items before tax in the year of £54.2m (2010: £129.9m). This comprised
operating exceptional items of £7.7m (2010: £15.8m) and exceptional finance costs of £46.5m (2010:
£114.1m).
Operating exceptional items

i) Restructuring costs
During the year, the Group continued to adjust its operations in light of current trading conditions resulting
in £7.7m (2010: £11.0m) of reorganisation and restructuring costs.
ii) Impairment of land and work in progress

The Group has completed a site-by-site impairment review using valuations incorporating forecast sales
rates and average selling prices that reflect both current and anticipated trading conditions. The
impairment reviews include low single digit house price and build cost inflation assumptions in future
periods.
Since overall gross margin achieved across the Group's developments were primarily in-line with those
incorporated into prior period impairment reviews no further exceptional impairment was required at 30
June 2011, although there were gross impairment reversals and charges of £65.0m (2010: £57.4m) due to
variations in market conditions across housebuilding sites. Changes arising from normal trading, such as
planning status, resulted in a net inventory impairment charge of £5.4m (2010: £7.4m) included within
profit from operations.
During the year ended 30 June 2011, we have experienced variation in house price movements by region
and should the actual house price movements for the current financial year differ from that expected in the
impairment review then further impairments or reversals in impairments of the carrying value of our land
bank may be required.
We recognise that the Group is not immune to future pricing trends in the wider housing market and we
will continue to review the trading environment and our impairment assumptions during the year to 30
June 2012.
Financing exceptional item

On 11 May 2011 the Company announced the agreement of a complete debt refinancing package. As a
result of this, and the cancellation of £288m of interest rate swaps due to the reduction in term debt and
revision of interest rate hedging policy, the Company incurred £46.5m of exceptional refinancing costs.
In the prior financial year, the amendment of the Company's financing arrangements resulted in
exceptional costs of £114.1m.
The tax benefit of the operating and financing exceptional items was £14.9m (2010: £35.4m).
Finance cost
The net finance charge before exceptional costs for the year was £92.4m (2010: £121.6m). This included
a non-cash finance charge of £22.0m (2010: £30.9m). After financing exceptional costs of £46.5m (2010:
£114.1m), the net finance charge for the year was £138.9m (2010: £235.7m).
For the financial year ending 30 June 2012 we currently expect that our blended rate of interest will be
between 7.5% and 8%. The cash interest for our 2012 financial year is forecast to be c. £70m, a saving
of around £5m p.a. from the estimated equivalent cost under our previous financing arrangements. In
addition, we are forecasting a non-cash interest charge in our 2012 financial year of c. £20m.
Tax
The Group's tax charge for the year was £2.3m (2010: credit of £44.5m). This differed from the effective
rate for the year of 27.5% mainly due to the impact of the reduction in the corporation tax rate from 28%
to 26% and its impact upon the Group's deferred tax asset and adjustments relating to prior periods.
During the year, the Group received tax repayments totalling £4.5m (2010: £53.8m).
For the financial year ending 30 June 2012 we expect the total taxation charge to be around the effective
rate of corporation tax of 25.75%. This excludes the impact of the charge arising from the reduction in the
value of the Group's deferred tax asset due to the reduction in the standard rate of corporation tax to 25%.
Dividend
The Directors are not recommending payment of a final dividend in respect of the year ended 30 June
2011. The Board is committed to reinstating the payment of dividends, and will, when it becomes
appropriate to do so.
Income recognised in equity

During the year income of £41.5m (2010: expense of £3.6m) has been recognised in equity predominantly
relating to actuarial gains on the defined benefit pension scheme and movements on interest rate swaps.
Balance sheet
The net assets of the Group increased by £29.9m to £2,930.1m primarily reflecting the actuarial gains
upon the defined benefit pension scheme and the loss after tax for the year of £13.8m.
Net tangible asset value increased by 1.5% to £2,037.9m (2010: £2,008.0m) and net tangible asset value
per share at 30 June 2011 was £2.11 (2010: £2.08 per share).
Significant movements in the balance sheet included:
· The Group's book value of land was £2,189.7m (2010: £2,308.7m), a decrease of £119.0m. This
decrease included land additions of £395m offset by land usage and disposals.
· Group work in progress at 30 June 2011 was £1,023.2m (2010: £981.4m). The increase of £41.8m
reflects the increase in the Group's site numbers at the year end. Stock and work in progress has
been closely controlled throughout the year. Unreserved stock units as at 30 June 2011 totalled 2.2
units (2010: 2.2 units) per active site.
· Group net debt decreased by £44.3m to £322.6m over the full year.
· Goodwill and intangible assets remained at £892.2m as the annual impairment review of the entire
housebuilding business and brand indicated that no impairment was required at the year end.
· The Group had a corporation tax asset of £3.2m (2010: liability of £2.8m) and a deferred tax asset of
£143.2m (2010: £173.3m). During the year the Group received £4.5m (2010: £53.8m) of tax
repayments. The Group's deferred tax asset decreased by £30.1m mainly due to the reduction in
corporation tax rate to 26%, the reduction in defined benefit pension liability and movements upon
derivative financial instruments. The changes to corporation tax rates announced in the 2011 Budget
will further reduce the future value of the Group's deferred tax asset. As the changes were not
substantively enacted at 30 June 2011, they are not reflected in the Group's deferred tax asset. The
reduction in corporation tax rate from 26% to 25%, which has been enacted since the balance sheet
date, will reduce the Group's deferred tax asset by £5.5m to £137.7m.
· The pension fund deficit on the Barratt Developments defined benefit pension scheme decreased by
£34.3m in the year to £11.8m mainly due to contributions to the scheme and recognition of an
experience gain upon liabilities following the trustees' triennial actuarial valuation.
· Trade and other payables were £1,379.7m (2010: £1,313.5m) including an increase of £133.9m in
land payables from £566.8m to £700.7m reflecting increased land acquisitions on deferred payment
terms during the year.
Net debt
Group net debt at the year end was £322.6m (2010: £366.9m). As we increase site numbers, make
payment for new land approvals and build work in progress, for completions in the spring, particularly in
London, we expect net debt as at 31 December 2011 to be around £650m to £700m (2010: £537.0m). In
line with normal seasonal trends we would expect net debt to reduce to £400m to £450m as at 30 June
2012.
Treasury
In May we announced the agreement of a complete debt refinancing package. This provides the Group
with around £1 billion of committed facilities and private placement notes to May 2015, with some of the
Group's arrangements extending as far as 2021. The effective cost of borrowing has been reduced as a
result of improving the balance of the facilities between term debt and that needed to meet our working
capital requirements, with term debt having reduced from £903m to £311m. The covenant package is
similar to before and the facilities provide appropriate headroom above our current forecast debt
requirements.
As a result of the reduction in the level of our term debt, and a revision to our interest rate hedging policy,
we have cancelled £288m of interest rate swaps, leaving a balance of £192m in place.
The Group has a conservative treasury risk management strategy which includes a current target that 30-
60% of the Group's median gross borrowings calculated on the latest three-year plan should be at fixed
rates of interest. Group interest rates are fixed using both swaps and fixed rate debt instruments.
In conclusion
During the year, the Group has successfully driven improvements in profitability through optimising sales
prices, tight cost control and reducing the interest charge. These improvements have resulted in the
Group's profit of £42.7m (2010: loss of £33.0m) before tax and exceptional costs. After exceptional costs
of £54.2m (2010: £129.9m) the Group made a loss before tax for the year of £11.5m (2010: loss of
£162.9m).
The refinancing during the year provides the Group with sufficient committed facilities for its expected
requirements. Looking forward, the Group remains committed to driving profitability through getting the
best possible prices for its products, delivering increased outlets from its new higher margin land and
continuing to control costs.
David Thomas
Business review
Our performance
This was another year of recovery. We have made good progress in terms of rebuilding the profitability of
the Group against a tough market backdrop. The first half was particularly challenging with the end of the
Government HomeBuy Direct scheme and reduced customer confidence in light of the Government's
Comprehensive Spending Review in October 2010. Whilst we saw greater stability during the second half
of our financial year, trading conditions remain challenging in some areas outside the South East. Our
London business continues to perform particularly well, reflecting our strong position across the capital.
We delivered a profit from operations before operating exceptional items of £135.0m (2010: £90.1m) at a
margin of 6.6% (2010: 4.4%). After operating exceptional items of £7.7m (2010: £15.8m), our profit from
operations was £127.3m (2010: £74.3m).
The increase in operating margin before operating exceptional items is explained by a number of factors.
We achieved a 1.1% improvement upon revenue per square foot on housebuilding completions and a
1.4% reduction per square foot on housebuilding build costs (including infrastructure). These coupled with
other items resulted in a gross margin of 11.2%, a 2.4% increase on the prior year. Administrative costs
before exceptional restructuring costs reduced year-on-year from £94.7m to £92.8m. Overall we achieved
a 50% improvement in operating margin before operating exceptional items in the year.
Housebuilding
During the year, we operated from an average of 364 (2010: 360) active sites.
Total completions were 11,171 (2010: 11,377) including 93 (2010: 52) from joint ventures in which we have
a share. Housebuilding completions totalled 11,078 (2010: 11,325), a decrease of 2.2% reflecting the
lower reservation rate during the year, especially in the first half. Housebuilding revenue totalled
£1,986.2m (2010: £2,000.1m). Of the housebuilding completions, private were 8,444 (2010: 9,455), and
social were 2,634 (2010: 1,870). Social housing completions represented 23.8% of completions in the
year, versus 16.5% in the prior year reflecting the higher level of site openings during the period and the
phasing of social delivery from existing sites.
Net private reservations per active site per week in the second half were 0.48 (H2 2010: 0.52), a
significant improvement on the first half performance (H1 2011: 0.39). For the full year, net private
reservations per active site per week were 0.44 (2010: 0.50). The cancellation rate for the full year was
20.6% (2010: 18.0%).
Our average selling price increased by 2.3% to £178,300 (2010: £174,300) as a result of changes in mix.
Overall, underlying sales prices were broadly flat in the financial year. However, we have seen variation by
region, with relative strength in the South East and in particular London.
Private average selling prices increased by 7.4% to £198,900 (2010: £185,200) primarily due to a number
of mix changes including an increased proportion of houses compared to flats and a shift in geographical
mix. Seeking to derive the optimum sales price on every plot that we sell has remained a key focus for
the business during the year. On private completions, we achieved a 4.5% increase in the average
revenue per square foot to £200.3 (2010: £191.7).
Our social average selling price decreased by 6.0% to £112,300 (2010: £119,500) due to changes in mix
offset by an increase in the average square footage of our social completions of 1.4% to 810 square foot
(2010: 799 square foot).
Whilst the availability of mortgage finance at higher loan to value ratios remains constrained, shared
equity products continue to be an important sales tool for the Group. During the year, 22.0% (2010:
27.0%) of our completions used shared equity products. Of these completions, 609 (5.5%) (2010: 1,735
(15.3%)) used HomeBuy Direct and the remainder used our own Headstart or Dreamstart schemes.
We welcome the launch of the Government's new shared equity scheme, FirstBuy, in which we have
secured an allocation of £24.9m and seen good early interest. Under FirstBuy, qualifying purchasers will
be offered a loan of up to 20% of the value of the property, jointly funded by Barratt and the HCA.
Part-exchange has remained an effective selling tool, with 14.6% (2010: 9.6%) of our completions in the
year supported by this. We continue to manage carefully our commitment and exposure to part-exchange
properties which stood at £78.9m (2010: £47.6m) at 30 June 2011.
During the year we have continued to drive operational efficiencies from strong build controls, the use of
standard house types, waste reduction, central procurement, value engineering and re-planning of sites.
Overall, we have seen a reduction in total build costs (including infrastructure) with the cost per square
foot reducing by 1.4%. We will continue to work in partnership with our suppliers to find ways to mitigate
increases in material costs, driving for lower total cost solutions whilst continuing to maintain our very
high build standards. We will also continue to target further cost reductions and efficiency savings by
further standardisation of our specifications without compromising brand differentiators or the high quality
and safety standards that we operate to.
The benefits of our strategies of optimising the sales price of every plot, controlling our costs and targeted
land buying can be seen in the year with a significant improvement in our housebuilding operating margin
before operating exceptional items to 6.8% (2010: 4.6%) and 8.0% (2010: 5.9%) for the second half of the
financial year. Our housebuilding profit from operations before operating exceptional items for the year
was £134.2m (2010: £91.4m). After operating exceptional items of £7.7m (2010: £11.0m), the
housebuilding profit from operations was £126.5m (2010: £80.4m).
Conditions in the commercial property market outside London remain challenging, with both weak
economic growth and a constrained lending environment limiting demand. However, despite this, the
operating performance from our commercial development segment improved.
Revenue from the commercial developments business totalled £49.2m (2010: £35.1m) with a profit from
operations before operating exceptional items of £0.8m (2010: loss of £1.3m). There were no exceptional
items (2010: £4.8m) resulting in a profit from operations of £0.8m (2010: loss of £6.1m).
During the year, in addition to delivering 45,000 square foot of stock property disposals, we completed
construction of a 867,000 square foot warehouse and distribution centre in Rochdale for JD Sports and we
completed the sale of a 73,000 square foot foodstore in South Shields, occupied by Morrisons, to a
private investor. We have also exchanged contracts with Sainsbury's to provide a 35,000 square foot
foodstore at a site at Chapelford, Warrington, which is scheduled for completion in spring 2012.
On the retail front, we continue to progress our town centre redevelopment schemes including securing a
redevelopment agreement for Basildon town centre, in partnership with our housebuilding operations.
The homes we build

Our aim is to be recognised as the nation's leading housebuilder creating communities where people
aspire to live.
Geographic and product diversity

We operate throughout Britain under the Barratt Homes and David Wilson Homes brands, and in Kent
and elsewhere in the South East under the Ward Homes brand. At 30 June 2011, we were selling from
377 (2010: 339) active sites across 25 divisions.
We continue to operate across a broad spectrum of the market, creating homes for sale, shared
ownership and affordable rental properties. We also work with Government agencies and housing
associations on a diverse range of urban regeneration schemes. Private selling prices during the financial
year ranged from £31,500 to £1.5m, with a private average selling price for the year of £198,900 (2010:
£185,200).
During the year, we completed 609 (2010: 1,735) homes under the HomeBuy Direct scheme including
448 from the initial allocation of HomeBuy Direct, which ceased at the end of September 2010. In addition
to this scheme, we also supported 1,823 (2010: 1,325) purchasers with our own shared equity schemes.
The provision of social housing remains a key component of our activities with 2,634 (2010: 1,870) homes
completed during the financial year ended 30 June 2011 at an average selling price of £112,300 (2010:
£119,500).
Land and planning

Our strategy has remained to replan existing sites and undertake targeted land buying to deliver future
margin growth. We have detailed planning consents in place on 96% (2010: 95%) of land required for
2012 forecast completions and outline consent in respect of an additional 3% (2010: 3%).
Our land bank

Our land bank consists of both owned and controlled plots. At 30 June 2011, we had 60,083 (2010:
62,340) owned and controlled plots consisting of 47,917 (2010: 50,948) owned and unconditional plots
and 12,166 (2010: 11,392) plots under conditional contracts. This amounts to a 5.4 year (2010: 5.6 year)
owned and controlled land bank at 2011 financial year completions volumes. In addition, we have c.11,400
(2010: c.11,000) acres of strategic land which are regularly reassessed until the necessary planning
consents are obtained, and carried at the lower of cost and net realisable value minimising our exposure
to risk from these strategic land holdings.
Strategic land is expected to produce an increasing proportion of our operational land in future years. In
the next few years planning consents are expected on c. 15,000 units.
At 30 June 2011, our land bank had a carrying value of £2,189.7m (2010: £2,308.7m) with an average
housebuilding cost per plot of £43,600 (2010: £43,100). The average selling price of the plots within our
land bank is currently expected to be c. £183,000 giving an average plot cost to average selling price ratio
of 24% (2010: 24%).
Our land bank carrying value has been reviewed for impairment at 30 June 2011 and no additional net
exceptional impairment charge was required. The impairment review includes an allowance for low single
digit house price and build cost inflation. During the year ended 30 June 2011, we have experienced
variation in house price movements by region and should the actual house price movements for the
current financial year differ from that expected in the impairment review then further impairments or
reversals in impairments of the carrying value of our land bank may be required.
Land acquisition
Each division has a dedicated land buying team with local knowledge and experience. These teams
identify land suitable for development and secure planning permission to enable new homes to be built.
This capability, combined with our strategic land portfolio, is designed to ensure that we have sufficient
land to meet customer demand.
Our future growth and profitability is influenced by the quality of the land that we purchase and develop.
During the year we continued to invest in land which met our clearly defined hurdle rates in terms of
profitability and return on capital, providing attractive returns at current selling prices. For the full year we
agreed terms on £454.1m of land purchases, the majority of which we will acquire on the basis of deferred
payment. This equates to 88 sites and 8,861 plots of which 86% are for houses. The forecast average
selling price on this land is c. £205,000, based on current prices.
Land approvals Year ended 30 June 2011 Mid-2009 to 30 June 2010

Total approved £454.1m £527.2m
Total number of plots 8,861 13,359
Location
- South : North (by value) 49% : 51% 66% : 34%
- South : North (by plots) 41% : 59% 51% : 49%
Vendor
- Government : Private (by plots) 10% : 90% 34% : 66%
Type
- Houses : Flats (by plots) 86% : 14% 77% : 23%
During the financial year, land additions were £395m (2010: £339m) and £261m (2010: £253m) was spent
on land resulting in land creditors at 30 June 2011 of £700.7m (2010: £566.8m) of which £349.1m (2010:
£266.6m) fall due within one year.
We expect our cash expenditure for land to increase during our 2012 financial year reflecting the
payments, as they fall due, of deferred amounts upon the land purchases acquired since re-entering the
land market in mid-2009.
Planning
In the year to 30 June 2009 we started the replanning of a number of our sites to replace flats with
houses, a process which has continued in the current financial year. The proportion of our completions
which were houses in the financial year was 66% (2010: 60%). Outside London, houses were 74% (2010:
66%) of completions.
At 30 June 2011, detailed planning consents were in place on 96% (2010: 95%) of land required to meet
our forecast activity for the 2012 financial year. In addition, we had outline planning consents on a further
3% (2010: 3%) of our forecast completion volumes.
Sustainability
We have previously reported under the title of Corporate Responsibility. However, during the year we have
moved to operating under a sustainability policy which is available at www.barrattdevelopments.co.uk and
therefore this year we report under that heading.
We have identified and assessed the key sustainability risks facing the business, which include
Environmental, Social and Governance ('ESG') risks, and have grouped these into four key philosophies
so that we can manage them effectively. The four philosophies: People, Partners, Planet and Customers
are underpinned by our commitment to financial performance and Health and Safety. Each is led by a
member of the Executive Committee who is responsible for developing and implementing sustainability
related objectives and targets to achieve the overall sustainability strategy set by the Board. This ensures
that sustainability issues are embedded in the normal course of business and decisions affecting
sustainability issues can be implemented swiftly at an operational level. This process ensures that
adequate information in relation to ESG matters is available to the Board. Significant ESG risks that
could impact on the future of the business are included in the principal risks and uncertainties section.
We publish a sustainability report each year that explains our approach and our management of
sustainability, governance and risk, and includes the actions we have taken during the year to improve
sustainability performance. Sustainability disclosures in this Report and the Sustainability Report,
including disclosures on ESG matters, are based on information collected annually and from regular
management information. This information is subject to independent review and internal audit.
People
One of our key strengths is our people. Despite the current economic environment it is important to
continue to develop their expertise. Accordingly, we have continued to invest in our vocational and
leadership training programmes as well as employee development, engagement and recognition.
The Barratt Academy (the 'Academy') combines professional training (on-site and in the classroom)
across three separate roles: apprentices; site managers; and technical/commercial disciplines. The core
elements of the Academy include: a dedicated coach for each delegate; departmental rotations; and
support for continuous professional development, which leads to a nationally accredited Construction
Skills award.
The apprenticeship scheme comprises both trade and technical apprenticeships. Apprenticeships last for
two years. The quality of our apprenticeship scheme was recognised in June 2011, when it was highly
commended in the Apprenticeships National Awards 2011 for Large Employer of the Year. We are
delighted that one of our 2010 apprentices was awarded Apprentice of the Year for the North East region.
We have a graduate development programme which aims to recruit high potential talent into the business.
The programme lasts for two years and graduates are given the opportunity to spend time in each of our
operational departments, whilst attending business and personal development courses. Alongside the
formal training programme, graduates are encouraged to undertake voluntary projects in their local
community and as part of their project management module. Our current graduates are working on
projects with the homeless charities Centrepoint and Broadway.
In addition we offer specialist skills training in core areas, such as health and safety, construction and
design and deliver a suite of internally designed and delivered management and leadership training
courses. These are designed to assist employees to develop the skills required to progress from middle
management through to senior management and other high performance leadership roles.
During the year, we have remained focused on employee engagement with our fourth annual engagement
survey being undertaken in 2011. These bespoke voluntary surveys allow us to develop engagement plans
throughout our business to seek to drive further improvement. We continue to recognise outstanding
performance of our employees through quarterly and annual divisional awards and annual national awards
for Site Managers, Sales Advisers, Apprentices, Individual Excellence and Team Excellence. In addition,
we continue to operate an instant recognition scheme and in the year ended 30 June 2011 have given
1,200 prizes or an extra day's holiday to some employees.
The expertise of our construction teams has again been recognised externally, with 80 (2010: 82) of our
Site Managers winning 'Pride in the Job' quality awards from the National House-Building Council. This is
more than any other housebuilder for an unprecedented seventh consecutive year.
Our target is to have a fully certified Construction Skills Certification Scheme ('CSCS') workforce,
including subcontractors. At 30 June 2011, 97% (2010: 97%) of the Group's workforce, including
subcontractors, was fully CSCS certified.
Partners
We recognise that we cannot achieve our long-term goals acting independently from our stakeholders and
therefore we strive to create and maintain partnerships with stakeholders built on trust, loyalty and mutual
respect.
We work with Government agencies and private landowners to identify and bring forward land for
development, often improving its environmental condition in the process. We work with suppliers to help
them bring forward the new technologies that we need to meet increasingly challenging building standards
and with subcontractors to help them improve their environmental and safety standards.
We aim to create communities where people aspire to live and we can only achieve this by working with
existing communities. We engage in dialogue with local people and local authorities in order to seek to
address any impact that our developments may have on the local environment and infrastructure. We
regularly hold public exhibitions for our developments where we invite the community and local authority
to talk to our specialist planners and architects about their concerns and aspirations for developments.
We also hold an internal annual design competition which promotes high standards of design focused on
the layout of developments, the creation of places where our customers want to live and compliance with
our own and national design standards.
We have always been concerned with housing affordability issues and have worked closely with financial
institutions and Government for a number of years to improve access to mortgage funding for customers.
As a result we are currently working with a number of partners to help people gain access to appropriate
housing.
We believe the Government's recent announcement of its intention to increase the release of public land
to build up to 100,000 new homes is a positive step. Barratt has a good track record of working with
public sector partners and should be well positioned to capitalise on this initiative. We are already
working on a number of public sector partnership sites including North Prospect in Plymouth, Heritage
Park in Silverdale, Staffordshire and Elba Park near Sunderland.
We continue to build the majority of our developments on brownfield sites, with 67% (2010: 70%) of our
legal completions in the year being on brownfield land.
Joint venture and partnership opportunities

We continue to explore JV and partnership opportunities which allow us to access projects that may
otherwise not be available, or reduce substantially the investment required.
Work on site at Barratt's first major partnership with London & Quadrant, the 27-storey residential tower
at Alie Street on the edge of the City of London, started earlier this year. This development will deliver 235
units of which 64 will be affordable housing.
We are pleased to have recently announced our second major 50:50 JV with London & Quadrant to build
375 new private homes beside Arsenal's Emirates stadium. The development will comprise three
residential towers with units ranging from studios to penthouses.
Barratt will receive a fee for construction and marketing services as well as 50% of the net profit.
Planet
Our development activities have the potential to impact significantly on the environment and we are
subject to a stringent regulatory regime, including planning and technical requirements. We follow an
environmental agenda which focuses on managing our environmental impact, by helping our customers to
understand this and improving the environmental standards of what we build and making our supply chain
more sustainable.
During 2010 we worked with The Carbon Trust to review how we control energy consumption and following
this review have introduced an energy efficiency programme to seek to reduce the energy use of our
business without impacting upon production. Our recently launched 'Green Team' aims to focus all of our
divisions and offices in this area with the aim of reducing our energy usage and cost.
Construction waste segregated on site for recycling

09 - 73%
10 - 91%
11 - 95%
We monitor the proportion of construction waste segregated for recycling on site, which this year
improved to 95% (2010: 91%). In addition, all divisions within the Group continue to operate an
environmental management system certified to ISO14001 which is subject to regular monitoring and
audit.
Customers
We are committed to offering the highest standards of quality and customer service. We seek to develop
our quality and service standards by listening to customers, monitoring performance and adopting best
practice throughout the Group.
Policies
We seek to listen to our customer's needs, whilst providing the highest standards of service and quality,
as well as providing value for money. This, along with our 10 point 'Customer Care Charter', ensures we
maintain our commitment to understand our customers throughout their journey with us.
New product range

We have carefully considered customer preferences in the development of the Barratt and David Wilson
product ranges. Both brands have been updated in the last year with internal layouts designed with
modern living in mind, providing free flowing living areas and natural light. The new designs were well
received by consumers and we are starting to roll out both new ranges.
Customer feedback indicates that Barratt homes remain value for money and offer customers high quality
practical living space. The room proportions have been designed to ensure that they are large enough to
accommodate our typical customer's furniture requirements whilst ensuring our external designs are
aesthetically pleasing. Due to smart, ergonomic design a Barratt customer can expect a wide range of
features, creating great value for money.
Following customer feedback, our David Wilson family homes have been provided with more generous
circulation space that delivers an overall sense of grandeur and includes features such as more 'indulgent'
kitchens, en suite bathrooms with larger baths and the use of multiple roof lights in bedrooms.
Communicating with our customers

Our sales and marketing team has continued to promote our brands throughout the year using focused
marketing campaigns. This included use of the internet, radio and direct mail, targeted incentives and
discounts for customers as well as tools such as shared equity products and part-exchange.
We recognise that the online market continues to change at a rapid pace. We will continue to enhance
our online user experience and quality of content through greater use of e-brochures, video, 360 degree
tours, imagery of planned developments and house types, in addition to comprehensive information about
the local area. In the last year we have significantly increased the information provided online and this
approach is set to continue.
We have already invested heavily in our online capabilities and technology at our sales centres and we
continue to upgrade this to seek to ensure that our Sales Advisors can make the sales process as
smooth and simple as possible.
Assisting with mortgage products

We also recognise the importance of assisting customers to seek to find suitable financial products to
purchase their new homes. The Group's Lender Relations Manager works closely with mortgage lenders
in order to assure them that the homes built by the Group are of a high quality which they can confidently
lend on.
All our divisions and brokers have implemented our Group wide processes for dealing with lenders and
surveyors. These ensure that we provide them with transparency in relation to our products and the
financial arrangements between the Group and our customers. These standards exceed the industry
requirements as specified by the Council of Mortgage Lenders and the processes are subject to regular
internal audit.
In addition to existing lenders, we actively pursue relationships with new lenders to the UK new build
market in order to support the development of new financial products. Most recently this has taken the
form of affordable 'top up loans' on a secured and unsecured basis which give customers access to
alternative means of bridging the deposit gap.
Customer satisfaction
Our high quality homes have been recognised independently by the achievement for the second year
running of Five Star builder status in the HBF annual customer satisfaction survey. This shows that over
90% of our customers questioned were satisfied with the quality of their new home and would recommend
us to a friend.
We monitor customer satisfaction with all of our customers being independently contacted nine weeks
after legal completion and asked to complete a survey. Over the last five years these surveys have shown
increases in customer satisfaction and we are pleased that in the year ended 30 June 2011 98% (2010:
97%) of our customers would 'Recommend us to a Friend'. We monitor the results of the survey on a
monthly basis throughout our business.
Five-year warranty
We are the only volume housebuilder to offer a five-year warranty which covers fixtures and fittings that is
additional to the ten-year NHBC warranty on the fabric of the building.
Health and safety

We consider health and safety to be of paramount importance for our employees, customers and the
public. All our divisions are certified to the health and safety standard OHSAS 18001 which is verified by a
programme of internal and external audits. This ensures that we have consistent and appropriate
standards in place and is complemented by our own comprehensive Safety, Health and Environmental
Management System. We continually monitor our performance by carrying out regular compliance audits
on all sites and by regular management and Board reviews. During the year we carried out over 4,000
monitoring visits and achieved an average of 96% compliance (2010: 96%).
We use our reportable Injury Incidence Rate ('IIR') as a key performance indicator to measure health and
safety performance on a monthly and yearly basis. During the financial year ended 30 June 2011 our IIR
reduced by 7.4% to 539 (2010: 582) per 100,000 persons employed. We are committed to seeking to
reduce the IIR year-on-year and we are working with our suppliers, partners and local communities to
minimise the risk of injury.
Injury Incidence Rate per 100,000 persons em ployed

08 - 656
09 - 571
10 - 582
11 - 539
At the NHBC Health and Safety Awards 2011 our site managers were recognised for high health and
safety performance - 14 site managers received commended awards of whom seven received highly
commended awards and Tony Bird, Site Manager from our Bristol Division, was also awarded the
Regional Award for the Central Region.
The prosecution is proceeding against third parties arising from the incident at Bedfont, London in
February 2008, where carbon monoxide poisoning from a gas heating system installed by contractors
caused the death of one person and left another seriously ill is proceeding. We continue to work closely
with the authorities.
Condensed consolidated income statement

2011 2011 2011 2010 2010 2010

Before Exceptional Before Exceptional
exceptional item s exceptional items
item s (note 6) items (note 6)
Notes £m £m £m £m £m £m
Continuing
operations
Revenue 5 2,035.4 - 2,035.4 2,035.2 - 2,035.2
Cost of sales (1,807.6) - (1,807.6) (1,850.4) (4.8) (1,855.2)
Gross 227.8 - 227.8 184.8 (4.8) 180.0
profit/(loss)
Administrative (92.8) (7.7) (100.5) (94.7) (11.0) (105.7)
expenses
Profit/(loss) 5 135.0 (7.7) 127.3 90.1 (15.8) 74.3
from
operations
Finance income 7 18.0 - 18.0 13.4 - 13.4
Finance costs 7 (110.4) (46.5) (156.9) (135.0) (114.1) (249.1)
Net finance costs 7 (92.4) (46.5) (138.9) (121.6) (114.1) (235.7)
Share of post-tax 0.1 - 0.1 (1.5) - (1.5)
profit/(loss) from
joint ventures
Share of post-tax - - - - - -
profit from
associates
Profit/(loss) 42.7 (54.2) (11.5) (33.0) (129.9) (162.9)
before tax
Tax 8 (17.2) 14.9 (2.3) 9.1 35.4 44.5
Profit/(loss) for 25.5 (39.3) (13.8) (23.9) (94.5) (118.4)
the year
Profit/(loss) for 25.5 (39.3) (13.8) (23.9) (94.5) (118.4)
the year
attributable to
equity
shareholders
Loss per share

from
continuing
operations
Basic and diluted 9 (1.4)p (14.5)p
Condensed consolidated statement of comprehensive income

2011 2010
Notes £m £m
Loss for the year (13.8) (118.4)
Other comprehensive (expense)/income
Amounts deferred in respect of effective cash flow hedges (23.6) (43.6)
Actuarial gains/(losses) on defined benefit pension schemes 16 22.0 (26.3)
Fair value adjustment on available for sale financial assets 2.5 -

Tax (charge)/credit on items taken directly to equity 8 (1.7) 19.9
Net loss recognised directly in equity (0.8) (50.0)
Amortisation of losses on cancelled interest rate swaps 7 - 0.2
deferred in equity
Amounts reclassified to the income statement in respect of 7 28.5 14.1
hedged cash flows
Amounts reclassified to the income statement in respect of 29.8 50.1
hedged cash flows no longer expected to occur - exceptional
Tax charge on items taken directly to equity 8 (16.0) (18.0)
Net profit transferred 42.3 46.4
Total comprehensive income/(expense) recognised for 27.7 (122.0)
the year attributable to equity shareholders
Condensed consolidated statement of changes in shareholders' equity

at 30 June 2011
Share- Total
Share Share Merger Hedging Own based Retained retained
capital premium reserve reserve Shares payments earnings earnings* Total
£m £m £m £m £m £m £m £m £m
At 1 July 2009 34.7 206.6 1,109.0 (63.9) (2.8) 14.9 1,033.1 1,045.2 2,331.6
Loss f or the y ear - - - - - - (118.4) (118.4) (118.4)
Amounts def erred in respect of ef f ectiv e - - - (43.6) - - - - (43.6)
cash f low hedges
Amounts reclassif ied to the income - - - 14.1 - - - - 14.1
statement in respect of hedged cash f lows
no longer expected to occur - exceptional
Amortisation of losses on cancelled interest - - - 0.2 - - - - 0.2
rate swaps def erred in equity
Actuarial losses on pension scheme - - - - - - (26.3) (26.3) (26.3)
Tax on items taken directly to equity - - - (5.8) - 0.4 7.3 7.7 1.9
Total comprehensive expense - - - 15.0 - 0.4 (137.4) (137.0) (122.0)
recognised for the year ended 30 June
2010
Share-based pay ments - - - - - (0.2) - (0.2) (0.2)
Issue of shares 61.8 - - - - - 658.7 658.7 720.5
Fees relating to issue of shares - - - - - - (27.5) (27.5) (27.5)
Purchase of shares by Employ ee Benef it - - - - (2.2) - - (2.2) (2.2)
Trust
Transf er of share-based pay ments charge - - - - - (1.9) 1.9 - -
f or non-v ested options
At 30 June 2010 96.5 206.6 1,109.0 (48.9) (5.0) 13.2 1,528.8 1,537.0 2,900.2
Loss f or the y ear - - - - - - (13.8) (13.8) (13.8)
Amounts def erred in respect of ef f ectiv e - - - (23.6) - - - - (23.6)
cash f low hedges
no longer expected to occur - exceptional
Fair v alue adjustments on av ailable f or sale - - - - - - 2.5 2.5 2.5
f inancial assets
Actuarial gains on pension scheme - - - - - - 22.0 22.0 22.0
Tax on items taken directly to equity - - - (10.4) - - (7.3) (7.3) (17.7)
Total comprehensive expense - - - 24.3 - - 3.4 3.4 27.7
recognised for the year ended 30 June
2011
Share-based pay ments - - - - - 1.8 0.4 2.2 2.2
At 30 June 2011 96.5 206.6 1,109.0 (24.6) (5.0) 15.0 1,532.6 1,542.6 2,930.1
* On 23 September 2009 the Company announced a fully underw ritten Placing (the 'Placing') and Rights Issue (the 'Rights
Issue'), raising gross proceeds of £720.5m. The equity issue w as completed on 4 November 2009. Ordinarily, the excess of
the proceeds over the nominal value of the share capital w ould be credited to non-distributable share premium account.
How ever, the Placing and the Rights Issue w ere effected through a structure w hich resulted in the excess of the proceeds
over the nominal value of the share capital issued being recognised w ithin retained earnings.
Condensed consolidated balance sheet

at 30 June 2011
2011 2010
Notes £m £m
Assets
Non-current assets
Other intangible assets 100.0 100.0
Goodwill 10 792.2 792.2
Property, plant and equipment 5.6 6.7
Investments accounted for using the equity method 102.8 79.9
Available for sale financial assets 11 169.4 136.3
Deferred tax assets 143.2 173.3
Derivative financial instruments - swaps 14 25.0 32.7
1,343.9 1,321.9
Current assets
Inventories 12 3,296.8 3,342.3
Cash and cash equivalents 13 72.7 546.5
3,431.4 3,954.9
Total assets 4,775.3 5,276.8
Liabilities
Trade and other payables (352.5) (300.8)
Retirement benefit obligations 16 (11.8) (46.1)
Derivative financial instruments - swaps 14 (37.0) (72.4)
(806.8) (1,337.9)
Current liabilities
Trade and other payables (1,027.2) (1,012.7)
(1,038.4) (1,038.7)
Total liabilities (1,845.2) (2,376.6)
Net assets 2,930.1 2,900.2
Equity
Share capital 17 96.5 96.5
Merger reserve 1,109.0 1,109.0
Hedging reserve (24.6) (48.9)
Retained earnings 1,542.6 1,537.0
Total equity 2,930.1 2,900.2
Condensed consolidated cash flow statement

2011 2010
Notes £m £m
Net cash inflow from operating activities 18 100.2 291.4

Purchase of property, plant and equipment (0.7) (0.4)
Acquisition of subsidiaries net of cash acquired (1.1) -
(Increase)/decrease in investments accounted for using the equity
method (22.8) 1.8

Net cash (outflow)/inflow from investing activities (20.2) 7.9

Proceeds from issue of share capital - 720.5
Share issue costs - (27.5)
Purchase of shares by Employee Benefit Trust - (2.2)
Make-whole fee on redemption of private placement notes - (4.9)
Hedging termination costs (27.1) (49.7)
Other fees related to amendment of financing arrangements (8.6) (6.5)
Loan repayments (518.1) (561.3)
Net cash (outflow)/inflow from financing activities (553.8) 68.4
Cash and cash equivalents at the beginning of year 546.5 178.8
Cash and cash equivalents at the end of year 13 72.7 546.5
Notes to the condensed consolidated financial statements

1. Cautionary statement
The Chairman's statement, Group Chief Executive's statement, Business review and Group Finance
Director's review contained in this Annual Results Announcement, including the principal risks and
uncertainties (note 23), have been prepared by the Directors in good faith based on the information
available to them up to the time of their approval of this report solely for the Company's shareholders as a
body, so as to assist them in assessing the Group's strategies and the potential for those strategies to
succeed and accordingly should not be relied on by any other party or for any other purpose and the
Company hereby disclaims any liability to any such other party or for reliance on such information for any
such other purpose.
This Annual Results Announcement has been prepared in respect of the Group as a whole and
accordingly matters identified as being significant or material are so identified in the context of Barratt
Developments PLC and its undertakings in the consolidation taken as a whole.
Whilst the financial information included in this Annual Results Announcement has been prepared in
accordance with International Financial Reporting Standards ('IFRS') as issued by the International
Accounting Standards Board ('IASB'), International Financial Reporting Interpretations Committee ('IFRIC')
interpretations and Standing Interpretations Committee ('SIC') interpretations as adopted and endorsed by
the European Union ('EU'), this announcement does not itself contain sufficient information to comply with
IFRS. Full financial statements that comply with IFRS are included in the 2011 Annual Report and
Accounts which will be circulated to shareholders in October 2011 and made available at
www.barrattdevelopments.co.uk at that point.
The accounting policies adopted are consistent with those followed in the preparation of the Group's 2011
Annual Report and Accounts which have not changed significantly from those adopted in the Group's
2010 Annual Report and Accounts. A summary of the more significant Group accounting policies is set
out below.
This Annual Results Announcement has been prepared under the historical cost convention as modified
by the revaluation of available for sale financial assets, derivative financial instruments and share-based
payments. The preparation of condensed financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on the Directors' best
knowledge of the amounts, actual results may ultimately differ from those estimates. The most significant
estimates made by the Directors in these condensed financial statements are set out in 'Critical
accounting judgements and key sources of estimation uncertainty' (note 4).
Going concern
In determining the appropriate basis of preparation of the financial statements, the Directors are required
to consider whether the Group can continue in operational existence for the foreseeable future.
The Group's business activities, together with factors which the Directors consider are likely to affect its
future development, financial performance and financial position are set out in the Group Chief Executive's
review and the Business review. The material financial and operational risks and uncertainties that may
impact the Group's performance and their mitigation are outlined in the principal risks and uncertainties
and financial risks including liquidity risk, market risk, credit risk and capital risk are outlined in note 15.
The financial performance of the Group is dependent upon the wider economic environment in which the
Group operates. As explained in the principal risks and uncertainties (note 23), factors that particularly
impact upon the performance of the Group include changes in the macroeconomic environment including
buyer confidence, availability of mortgage finance for the Group's customers and interest rates.
On 10 May 2011 the Group agreed a complete debt refinancing package. This provides the Group with
around £1 billion of committed facilities and private placement notes to May 2015, with some of the
Group's arrangements extending as far as 2021. The covenant package is similar to before and the
facilities provide appropriate headroom above our current forecast debt requirements.
Accordingly, after making enquiries, the Directors have formed a judgement, at the time of approving the
financial statements, that there is a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future, being at least twelve months from the date of
the financial statements. For this reason, they continue to adopt the going concern basis in preparing the
Adoption of new and revised standards

In the year ended 30 June 2011, the Group has adopted:
Amendment to IFRS2 'Group cash-settled share-based payment transactions'; Amendment to IFRS1

'Additional Exemptions for First-time Adopters' and 'Limited Exemption from Comparative IFRS7
Disclosures for First-time Adopters'; Amendment to IAS32 'Classification of rights issues'; IFRIC19
'Extinguishing Financial Liabilities with Equity Instruments'; and Improvements to IFRSs (issued in April
2009).
The adoption of these standards, interpretations and amendments has not had any impact upon the profit
or net assets of the Group in either the current year or comparative year and has not required any
additional disclosures.
The Group financial statements include the results of Barratt Developments PLC (the 'Parent Company'),
incorporated in the UK, and all its subsidiary undertakings made up to 30 June. The financial statements
of subsidiary undertakings are consolidated from the date when control passes to the Group using the
purchase method of accounting and up to the date control ceases. All transactions with subsidiaries and
intercompany profits or losses are eliminated on consolidation.
All of the subsidiaries' identifiable assets and liabilities, including contingent liabilities, existing at the date
of acquisition are recorded at their fair values. All changes to those assets and liabilities and the resulting
gains and losses that arise after the Group has gained control of the subsidiary are included in the post-
acquisition income statement.
Jointly controlled entities

A jointly controlled entity is an entity in which the Group holds an interest with one or more other parties
where a contractual arrangement has established joint control over the entity. Jointly controlled entities
are accounted for using the equity method of accounting.
Jointly controlled operations

The Group enters into jointly controlled operations as part of its housebuilding and property development
activities. The Group's share of profits and losses from its investments in such jointly controlled
operations is accounted for on a direct basis and is included in the consolidated income statement. The
Group's share of its investments, assets and liabilities is accounted for on a directly proportional basis in
the Group balance sheet.
Associated entities
An associated entity is an entity, including an unincorporated entity such as a partnership, in which the
Group holds a significant influence and that is neither a subsidiary nor an interest in a joint venture.
Associated entities are accounted for using the equity method of accounting.
Revenue
Revenue is recognised at legal completion in respect of the total proceeds of building and development
and an appropriate proportion of revenue from construction contracts is recognised by reference to the
stage of completion of contract activity. Revenue is measured at the fair value of consideration received or
receivable and represents the amounts receivable for the property, net of discounts and VAT. The sale
proceeds of part-exchange properties are not included in revenue.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
Construction contracts
Revenue is only recognised on a construction contract where the outcome can be estimated reliably.
Variations to, and claims arising in respect of, construction contracts, are included in revenue to the
extent that they have been agreed with the customer. Revenue and costs are recognised by reference to
the stage of completion of contract activity at the balance sheet date. This is normally measured by
surveys of work performed to date. Contracts are only treated as construction contracts when they have
been specifically negotiated for the construction of a development or property. When it is probable that
the total costs on a construction contract will exceed total contract revenue, the expected loss is
recognised as an expense in the income statement immediately.
Amounts recoverable on construction contracts are included in trade receivables and stated at cost plus
attributable profit less any foreseeable losses. Payments received on account for construction contracts
are deducted from amounts recoverable on construction contracts.
Payments received in excess of amounts recoverable on construction contracts are included in trade
payables.
Exceptional items
Items that are material in size or unusual or infrequent in nature are presented as exceptional items in the
income statement. The Directors are of the opinion that the separate presentation of exceptional items
provides helpful information about the Group's underlying business performance. Examples of events that,
inter alia, may give rise to the classification of items as exceptional are the restructuring of existing and
newly-acquired businesses, refinancing costs, gains or losses on the disposal of businesses or individual
assets, pension scheme curtailments and asset impairments, including land, work in progress, goodwill
and investments.
Restructuring costs
Restructuring costs are recognised in the income statement when the Group has a detailed plan that has
been communicated to the affected parties. A liability is accrued for unpaid restructuring costs.
Profit/(loss) from operations

Profit/(loss) from operations includes all of the revenue and costs derived from the Group's operating
businesses. Profit/(loss) from operations excludes finance costs, finance income, the Group's share of
profits or losses from joint ventures and tax.
Segmental reporting
The Group consists of two separate segments for internal reporting regularly reviewed by the chief
operating decision maker to allocate resources to the segments and to assess their performance, being
housebuilding and commercial developments. These segments therefore comprise the primary reporting
segments within the financial statements. All of the Group's operations are within Britain, which is one
geographic market in the context of managing the Group's activities.
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the consideration over the fair
value of the separately identifiable net assets and liabilities acquired.
Goodwill arising on acquisition of subsidiary undertakings and businesses is capitalised as an asset and
reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units
expected to benefit from the synergies of the combination at acquisition. Cash-generating units to which
goodwill has been allocated are tested for impairment at least annually. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit
pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss is recognised
immediately in the income statement and is not subsequently reversed.
Intangible assets
Brands
Internally generated brands are not capitalised. The Group has capitalised as intangible assets brands
that have been acquired. Acquired brand values are calculated using discounted cash flows. Where a
brand is considered to have a finite life, it is amortised over its useful life on a straight-line basis. Where a
brand is capitalised with an indefinite life, it is not amortised. The factors that result in the durability of
brands capitalised are that there are no material legal, regulatory, contractual, competitive, economic or
other factors that limit the useful life of these intangible assets.
The Group carries out an annual impairment review of indefinite life brands as part of the review of the
carrying value of goodwill, by performing a value-in-use calculation, using a discount factor based upon
the Group's pre-tax weighted average cost of capital.
Investments
Interests in subsidiary undertakings are accounted for at cost less any provision for impairment.
Where share-based payments are granted to the employees of subsidiary undertakings by the Parent
Company, they are treated as a capital contribution to the subsidiary and the Company's investment in
the subsidiary is increased accordingly.

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is provided to write off the cost of the assets on a straight-line basis to
their residual value over their estimated useful lives. Residual values and asset lives are reviewed
annually.
Freehold properties are depreciated on a straight-line basis over 25 years. Freehold land is not
depreciated. Plant is depreciated on a straight-line basis over its expected useful life, which ranges from
one to seven years.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost comprises direct materials, direct
labour costs and those overheads which have been incurred in bringing the inventories to their present
location and condition.
Land held for development, including land in the course of development, is initially recorded at discounted
cost. Where, through deferred purchase credit terms, the carrying value differs from the amount that will
ultimately be paid in settling the liability, this difference is charged as a finance cost in the income
statement over the period of settlement.
Due to the scale of the Group's developments, the Group has to allocate site-wide development costs
between units built in the current year and in future years. It also has to estimate costs to complete on
such developments. In making these assessments there is a degree of inherent uncertainty. The Group
has developed internal controls to assess and review carrying values and the appropriateness of
estimates made.
Lease as lessee
Operating lease rentals are charged to the income statement in equal instalments over the life of the
lease.
Leases as lessor
The Group enters into leasing arrangements with third parties following the completion of constructed
developments until the date of the sale of the development to third parties. Rental income from these
operating leases is recognised in the income statement on a straight-line basis over the term of the lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying
amount of the leased asset and recognised in the income statement on a straight-line basis over the
lease term.
Share-based payments
The Group issues both equity-settled and cash-settled share-based payments to certain employees. In
accordance with the transitional provisions, IFRS2 'Share-based Payments' has been applied to all grants
of equity instruments after 7 November 2002 that had not vested at 1 January 2005.
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is
measured either using Black-Scholes, Present-Economic Value or Monte Carlo models dependent upon
the characteristics of the scheme. The fair value is expensed in the income statement on a straight-line
basis over the vesting period, based on the Group's estimate of shares that will eventually vest where non-
market vesting conditions apply.
Non-vesting conditions are taken into account in the estimate of the fair value of the equity instruments.
Cash-settled share-based payments are measured at fair value at the date of grant and are re-measured
both at the end of each reporting period and at the date of settlement with any changes in fair value being
recognised in the income statement for the period. Fair value is measured initially and at the end of each
reporting period using a Black-Scholes model and at the date of settlement as cash paid.
Tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit
as reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the balance sheet date. Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or events that result in an
obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance
sheet date.
Deferred tax is calculated at the rates that are expected to apply in the period when the liability is settled
or the asset is realised based on tax rates enacted or substantively enacted at the balance sheet date.
Deferred tax is charged or credited in the income statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of
all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits
from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets
and liabilities are offset when there is a legally enforceable right to set-off current tax assets against
current tax liabilities and when they relate to taxes levied by the same tax authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Pensions
Defined contribution
The Group operates defined contribution pension schemes for certain employees. The Group's
contributions to the schemes are charged in the income statement in the year in which the contributions
fall due.
Defined benefit
For the defined benefit scheme, the cost of providing benefits is determined using the Projected Unit
Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and
losses are recognised in full in the period in which they occur. They are recognised outside profit or loss
and presented in the statement of comprehensive income.
Past service cost, until the scheme ceased to offer future accrual of defined benefit pensions to
employees from 30 June 2009, was recognised immediately to the extent that the benefits were already
vested, and otherwise was amortised on a straight-line basis over the average period until the benefits
become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value
of the scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the
present value of available refunds and reductions in future contributions to the scheme.
Borrowing costs
The Group capitalises borrowing costs directly attributable to the acquisition, construction or production
of a qualifying asset as part of the cost of the asset where developments are considered to fall under the
requirements of IAS23 (Revised). Otherwise, the Group expenses borrowing costs in the period to which
they relate through the income statement.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of
the asset to another entity.
The Group derecognises a financial liability only when the Group's obligations are discharged, cancelled
or they expire.
Financial assets
Non-derivative financial assets are classified as either 'available for sale financial assets' or 'loans and
receivables'. The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.

Non-interest bearing loans granted as part of sales transactions that are secured by way of a second
legal charge on the respective property are classified as being available for sale and are stated at fair
value. Fair value is determined in the manner described in note 11.
Revenue from transactions involving available for sale financial assets is recognised at the fair value of
consideration receivable.
Gains and losses arising from changes in fair value are recognised in equity within other comprehensive
income. Gains and losses arising from impairment losses, changes in future cash flows and interest
calculated using the 'effective interest rate' method are recognised directly in the income statement.

Trade and other receivables are financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than
twelve months after the balance sheet date, which are classified as non-current assets and are measured
at amortised cost less an allowance for any uncollectable amounts. The net of these balances are
classified as 'trade and other receivables' in the balance sheet.
Trade and other receivables are classified as 'loans and receivables'.
Impairment of financial assets

Trade and other receivables are assessed for indicators of impairment at each balance sheet date and are
impaired where there is objective evidence that the recovery of the receivable is in doubt.
Objective evidence of impairment could include significant financial difficulty of the customer, default on
payment terms or the customer going into liquidation.
The carrying amount of trade and other receivables is reduced through the use of an allowance account.
When a trade or other receivable is considered uncollectable, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in the income
statement.
For financial assets classified as available for sale, a significant or prolonged decline in the value of the
property underpinning the value of the loan or increased risk of default are considered to be objective
evidence of impairment.
In respect of debt instruments classified as available for sale financial assets, increases in the fair value of
assets previously subject to impairment, which can be objectively related to an event occurring after
recognition of the impairment loss, are recognised in the income statement to the extent that they reverse
the impairment loss.

Cash and cash equivalents include cash and balances in bank accounts with no notice or less than three
months notice from inception and are subject to an insignificant risk of changes in value.
Cash and cash equivalents are classified as 'loans and receivables'.
Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the contractual arrangements
entered into.
Equity instruments
Equity instruments consist of the Company's ordinary share capital and are recorded at the proceeds
received, net of direct issue costs.
All non-derivative financial liabilities are classified as 'other financial liabilities' and are initially measured at
fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost
using the 'effective interest rate' method.
Other financial liabilities consist of bank borrowings and trade and other payables.
Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least twelve months after the balance sheet date.

Trade and other payables on normal terms are not interest bearing and are stated at amortised cost.
Trade and other payables on extended terms, particularly in respect of land, are recorded at their fair
value at the date of acquisition of the asset to which they relate by discounting at prevailing market
interest rates at the date of recognition. The discount to nominal value, which will be paid in settling the
deferred purchase terms liability, is amortised over the period of the credit term and charged to finance
costs using the 'effective interest rate' method.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue
costs.
Where bank agreements include a legal right of offset for in hand and overdraft balances, and the Group
intends to settle the net outstanding position, the offset arrangements are applied to record the net
position in the balance sheet.
Finance income and charges are accounted for using the 'effective interest rate' method in the income
statement.
Finance costs are recognised as an expense in the income statement in the period to which they relate.

The Group has entered into derivative financial instruments in the form of interest rate swaps and cross
currency swaps to manage the interest rate and foreign exchange rate risk arising from the Group's
operations and sources of finance. The use of financial derivatives is governed by the Group's policies
approved by the Board of Directors as detailed in notes 13 and 14.
The interest rate and cross currency swap arrangements are designated as hedging instruments, being
either hedges of a change in future cash flows as a result of interest rate movements, or hedges of a
change in future cash flows as a result of foreign currency exchange rate movements.
The fair value of hedging derivatives is classified as a non-current asset or a non-current liability if the
remaining maturity of the hedging relationship is more than twelve months and as a current asset or a
current liability if the remaining maturity of the hedge relationship is less than twelve months.
Hedge accounting
All of the Group's interest rate and cross currency swaps are designated as cash flow hedges. At the
inception of the hedge relationship the Group documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives and its strategy for undertaking various
hedged transactions. In addition, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is highly effective in offsetting the changes in cash flows of
the hedged items.
Details of the fair values of the interest rate and cross currency swaps are provided in notes 13, 14 and
15. Movements on the hedging reserve in equity are detailed in the statement of changes in shareholders'
equity.
Cash flow hedge

To the extent that the Group's cash flow hedges are effective, gains and losses on the fair value of the
interest rate and cross currency swap arrangements are deferred in equity in the hedging reserve until
realised. On realisation, such gains and losses are recognised within finance charges in the income
statement.
To the extent that any hedge is ineffective, gains and losses on the fair value of these swap arrangements
are recognised immediately in finance charges in the income statement.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is
recognised in profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is terminated or no longer
qualifies for hedge accounting. At that time, any cumulative gain or loss deferred in equity remains in
equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in
equity is recognised immediately in profit or loss.
Government grants
Government grants are recognised in the income statement so as to match with the related costs that
they are intended to compensate. Grants related to assets are deducted from the carrying amount of the
asset. Grants related to income are included in the appropriate line within the income statement.
Kickstart
The Group has been granted assistance for the development of a number of sites under the Homes and
Communities Agency ('HCA') 'Kickstart' scheme. Where receipts under the Kickstart scheme relate to
grants they are accounted for in accordance with the policy for Government grants stated above.
In addition the Group has received cash upon specific sites under the 'Kickstart equity' scheme which is
repayable in future periods, as the sites to which it relates are developed, along with the share of the
profits or losses attributable to the HCA arising from the sites. This liability is included within borrowings
and is initially recognised at fair value by discounting it at prevailing market interest rates at the date of
recognition. The discount to nominal value, which will be paid in settling the liability, is amortised over the
expected life of the site and charged to finance costs using the 'effective interest rate' method. Gains and
losses arising from changes in fair value of the liability related to the HCA's share of the profits or losses
of the site are recognised directly in the income statement.
4. Critical accounting judgements and key sources of estimation uncertainty

In accordance with the requirements of IFRS, the Group has detailed below the critical accounting
judgements made and the key sources of estimation uncertainty within the 2011 Annual Report and
Accounts.
a) Critical accounting judgements

In the process of applying the Group's accounting policies, which are described in the accounting policies
note, the Directors have made no individual judgements that have a significant impact upon the financial
statements, apart from those involving estimations, which are dealt with below.
b) Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet dates, are discussed below.
Carrying value of land and work in progress

The Group's principal activity is housebuilding and commercial development. The majority of the
development activity is not contracted prior to the development commencing. Accordingly, the Group has
in its balance sheet at 30 June 2011 current assets that are not covered by a forward sale. The Group's
internal controls are designed to identify any developments where the balance sheet value of land and
work in progress is more than the lower of cost or net realisable value.
As a result of the downturn in the market in 2007/08 and continued market uncertainties, the Group
conducts ongoing six-monthly reviews of the net realisable value of its land and work in progress. Where
the estimated net realisable value of the site was less than its current carrying value within the balance
sheet, the Group has impaired the land and work in progress value. The Group historically recognised
exceptional charges in respect of impairment within both the housebuilding and commercial developments
business segments. The inception and utilisation of these provisions is set out in the table below:
Year ended 30 June Housebuilding Commercial Total

developments
£m £m £m
Impairment charged
2008 157.2 51.2 208.4
2009 431.5 68.0 499.5
2010 7.4 4.8 12.2
2011 5.4 - 5.4
Total 601.5 124.0 725.5
Impairment utilised
2008 - - -
2009 262.7 86.3 349.0
2010 91.7 4.8 96.5
2011 71.4 13.8 85.2
Total 425.8 104.9 530.7
Impairment remaining
2008 157.2 51.2 208.4
2009 326.0 32.9 358.9
2010 241.7 32.9 274.6
2011 175.7 19.1 194.8
In 2011, this review resulted in no (2010: £nil) net exceptional impairment charge for the housebuilding
business. Due to performance variations upon individual housebuilding sites, there were gross exceptional
impairment charges and reversals of £65.0m (2010: £57.4m). In addition, due to changes arising from
normal trading, such as planning status, there was a net inventory impairment charge of £5.4m (2010:
£7.4m) included within profit from operations. There was no (2010: £4.8m) net impairment for the
commercial developments business although there were gross impairment charges and reversals of
£1.2m (2010: gross impairment of £7.3m and gross reversal of £2.5m) due to performance variations upon
individual commercial sites.
Excluding the operating impairment charge of £5.4m (2010: £7.4m), included within gross profit is a
benefit of £4.7m (2010: charge of £5.8m) relating to the realisation of written down inventory above its
originally estimated net realisable value.
The key judgements in these reviews were estimating the realisable value of a site which is determined by
forecast sales rates, expected sales prices and estimated costs to complete. Sales prices were
estimated on a site-by-site basis based upon local market conditions and took into account the current
prices being achieved upon each site for each product type. In addition, the estimation of future sales
prices included an allowance on a site-by-site basis for low single digit sales price inflation in future
periods. The estimation of costs to complete also included an allowance for low single digit build costs
inflation in future periods.
At 30 June 2011 the Group had a total land holding of £2,189.7m of which £2,068.8m is land held for
current housing development. Of this £494.4m is made up from impaired land, £979.4m consists of non-
impaired land purchased prior to mid-2009 where the gross margin is on average c. 10% and the
remaining £595.0m has an average gross margin of more than 20% based on current house prices.
In the past six months, in general, the Group has not seen an improvement in underlying prices, but has
continued to deliver further cost reductions. If the UK housing market were to change beyond
management expectations in the future, in particular with regards to the assumptions around likely sales
prices and estimated costs to complete, then further adjustments to the carrying value of land and work in
progress may be required.
The land held at the balance sheet date that has already been impaired is most sensitive to the
judgements being applied and the potential for further impairment or reversal. Forecasting risk also
increases in relation to those sites that are not expected to be realised in the short to medium term. The
Group's current forecasts indicate that, by volume, around 25% of the impaired sites are expected to be
realised within one year, 16% within one to two years, and 59% in more than two years.
The Group estimates that the impairment sensitivity for the housebuilding business to an immediate
uniform fall in house prices across the UK, from those prevailing as at 30 June 2011, is as follows:
Uniform fall in Indicative

national house prices impairment
% £m
5 300
10 490
These estimates are illustrative as any changes in house prices have historically tended to be weighted
either positively or negatively towards particular geographic regions of the UK, they exclude any
sensitivity upon our commercial developments segment. In addition, variances in future build cost inflation
from that allowed for in the Group's base calculation would impact upon the impairment sensitivity. The
value of impairment is prior to attributing any tax credit that may accrue for future use.
Estimation of costs to complete

In order to determine the profit that the Group is able to recognise on its developments in a specific
period, the Group has to allocate site-wide development costs between units built in the current year and
in future years. It also has to estimate costs to complete on such developments. In making these
assessments there is a degree of inherent uncertainty. The Group has developed internal controls to
assess and review carrying values and appropriateness of estimates made.
Recognition of profit where developments are accounted for under IAS11 'Construction
Contracts'
The Group applies its policy on contract accounting when recognising revenue and profit on partially
completed contracts. The application of this policy requires judgements to be made in respect of the total
expected costs to complete each site. The Group has in place established internal control processes to
ensure that the evaluation of costs and revenues is based upon appropriate estimates.
Impairment of goodwill
The determination of the impairment of goodwill of the housebuilding business requires an estimation of
the value-in-use of the housebuilding cash-generating unit as defined in note 10. The value-in-use
calculation requires an estimate of the future cash flows expected from the housebuilding business,
including the anticipated growth rate of revenue and costs, and requires the determination of a suitable
discount rate to calculate the present value of the cash flows. The discount rate used is based upon the
average capital structure of the Group and current market assessments of the time value of money and
risks appropriate to the Group's housebuilding business. Changes in these may impact upon the Group's
discount rate in future periods. The carrying amount of goodwill at 30 June 2011 was £792.2m with no
impairment recognised during the year ended 30 June 2011. Further information is set out in note 10.
Impairment of brands
The determination of the impairment calculation for the Group's indefinite life brand, David Wilson Homes,
requires an estimation of the value-in-use of the brand. The value-in-use calculation requires an estimate
of the future cash flows expected from this brand, as part of the review of the carrying value of goodwill,
including the anticipated growth rate of revenue and costs, and requires the determination of a suitable
discount rate to calculate the present value of the cash flows. The discount rate used is based upon the
average capital structure of the Group and current market assessments of the time value of money and
risks appropriate to the Group's housebuilding business. Changes in these may impact upon the Group's
discount rate in future periods. The carrying amount of indefinite life brands at 30 June 2011 was £100.0m
with no impairment recognised during the year ended 30 June 2011.
Deferred tax assets

At 30 June 2011 the Group recognised a net deferred tax asset of £143.2m comprising of gross deferred
tax assets of £175.2m and gross deferred tax liabilities of £32.0m. £157.0m related to losses that arose
during the year and preceding years, predominantly as a result of the refinancing and land impairments,
that are to be carried forward and relieved against profits arising in future periods. The judgement to
recognise the deferred tax asset is dependent upon taxable profits arising in the same company as the
losses originally arose and the Group's expectations regarding future profitability including site revenue
and cost forecasts for future years which contain a degree of inherent uncertainty.
Defined benefit pension scheme

The Directors engage a qualified independent actuary to calculate the Group's liability in respect of its
defined benefit pension scheme. In calculating this liability it is necessary for actuarial assumptions to be
made, which include discount rates, salary and pension increases, price inflation, the long-term rate of
return upon scheme assets and mortality. As actual rates of increase and mortality may differ from those
assumed, the pension liability may differ from that included in these financial statements.
Hedge accounting
The majority of the Group's facilities are floating rate, which exposes the Group to increased interest rate
risk. The Group has in place £192.0m (2010: £480.0m) (note 14) of floating-to-fixed interest rate swaps.
The Group has adopted hedge accounting for these swaps on the basis that it is highly probable that
there is sufficient forecast debt to match with the period of swaps. If this basis was not met in future then
any changes in fair value of the swaps would be recognised in the income statement, rather than in
equity. During the year ended 30 June 2011, there was a gain of £6.1m (2010: loss of £31.2m) included in
equity related to these swaps.
In addition, the Group has $267.2m (2010: $187.2m) of cross currency swaps to manage the cash flow
risks related to foreign exchange, arising from the Group's sources of US Dollar denominated finance.
These swaps are designated as a cash flow hedge against future foreign exchange rate movements. If the
hedges ceased to be highly effective then any changes in fair value of the swaps would be recognised in
the income statement, rather than equity. During the year ended 30 June 2011, there was a loss of £8.2m
(2010: gain of £13.6m) included in equity related to these swaps.

The Group holds available for sale financial assets principally comprising interest free loans granted as
part of sales transactions that are secured by way of a second legal charge on the respective property.
The loans are held at the present value of expected future cash flows taking into account the estimated
market value of the property at the estimated time of repayment. At 30 June 2011 the asset recognised
on the balance sheet was £169.4m (2010: £136.3m).
The Group consists of two separate segments for management reporting and control purposes, being
housebuilding and commercial developments. The segments are considered appropriate for reporting
under IFRS8 'Operating Segments' since these segments are regularly reviewed internally by the Group
Board without further significant categorisation. The Group presents its primary segment information on
the basis of these operating segments. As the Group operates in a single geographic market, Britain, no
secondary segmentation is provided.
2011 2010
Com m ercial Commercial
Housebuilding developm ents Total Housebuilding developments Total
Units Units Units Units Units Units
Residential
com pletions 11,078 - 11,078 11,325 - 11,325
Incom e £m £m £m £m £m £m
statem ent
Revenue 1,986.2 49.2 2,035.4 2,000.1 35.1 2,035.2
Cost of sales (1,764.4) (43.2) (1,807.6) (1,819.9) (30.5) (1,850.4)
before impairment
of inventories
Gross profit before 221.8 6.0 227.8 180.2 4.6 184.8
impairment of
inventories
Administrative (87.6) (5.2) (92.8) (88.8) (5.9) (94.7)
expenses before
restructuring costs
Profit/(loss) from 134.2 0.8 135.0 91.4 (1.3) 90.1
operations before
impairment of
inventories and
restructuring costs
Net exceptional - - - - (4.8) (4.8)
impairment of
inventories
Restructuring costs (7.7) - (7.7) (11.0) - (11.0)
Profit/(loss) from 126.5 0.8 127.3 80.4 (6.1) 74.3
operations
Share of post-tax 0.1 - 0.1 (0.9) (0.6) (1.5)
profit/(loss) from
joint ventures
Profit/(loss) from 126.6 0.8 127.4 79.5 (6.7) 72.8
operations including
post-tax
profit/(loss) from
joint ventures
Finance costs - non (110.4) (135.0)
exceptional
Finance costs - (46.5) (114.1)
exceptional
Loss before tax (11.5) (162.9)
Tax (2.3) 44.5
Loss for the year (13.8)
from continuing
operations (118.4)
2011 2010
Com m ercial Commercial
Housebuilding developm ents Total Housebuilding developments Total
Balance sheet £m £m £m £m £m £m
Segment assets 4,549.5 101.0 4,650.5 4,531.5 126.6 4,658.1
Elimination of (94.3) (101.1)
intercompany
balances
4,556.2 4,557.0
Cash and cash 72.7 546.5
equivalents
Consolidated total 4,775.3 5,276.8
assets
Segment liabilities (1,480.0) (42.8) (1,522.8) (1,473.4) (59.7) (1,533.1)

Elimination of 94.3 101.1
intercompany
balances
(1,428.5) (1,432.0)
Loans and (416.7) (941.8)
borrow ings
Consolidated total (1,845.2) (2,376.6)
liabilities
Other inform ation £m £m £m £m £m £m

Capital additions 0.7 - 0.7 0.4 - 0.4
Depreciation 1.7 0.1 1.8 3.5 0.1 3.6
Debt refinancing
The Group agreed a complete debt refinancing package in May 2011 and incurred costs of £46.5m
comprising of refinancing fees of £8.6m, accelerated amortisation of previously capitalised refinancing
fees of £8.1m and interest rate swap cancellations and adjustments of £29.8m.
During the year ended 30 June 2010 the Group incurred a charge of £114.1m relating to its amended
financing arrangements. Details as to the composition of this charge can be found in the Group's Annual
Report for the year ended 30 June 2010 which is available on the Company's website
www.barrattdevelopments.co.uk.
Impairment of inventories
During the year the Group reviewed the net realisable value of its land and work in progress carrying
values of its sites. This resulted in no (2010: £nil) further exceptional impairment of the housebuilding
inventories and no (2010: £4.8m) further exceptional impairment of the commercial developments
inventories. The total net exceptional impairment for the year was £nil (2010: £4.8m). Further details are
provided in note 12.
Restructuring costs
During the year ended 30 June 2011, the Group incurred £7.7m (2010: £11.0m) of costs in relation to
reorganising and restructuring the business, including redundancy costs of £3.7m (2010: £0.6m).

2011 2010
Recognised in income statement £m £m
Finance income on short-term bank deposits (1.2) (0.5)
Imputed interest on available for sale financial assets (13.6) (7.0)
Other interest receivable (3.2) (5.9)
Interest on bank overdrafts and loans 46.2 63.7
Amortisation of losses on cancelled interest rate swaps - 0.2
Imputed interest on deferred term land payables 27.6 26.5
Finance costs related to employee benefits 0.9 1.6
Amounts reclassified to the income statement in respect of
hedged cash flows 28.5 14.1
Foreign exchange (gains)/losses on US Dollar debt (7.0) 11.9
Amortisation of facility fees 6.2 9.4
Imputed interest on Kickstart equity funding 0.9 0.2
Other interest payable 7.1 7.4
Finance costs before exceptional items 110.4 135.0
Net finance costs before exceptional items 92.4 121.6
Exceptional finance costs
Make-whole fee on redemption of private placement notes - 23.9
Hedging termination costs 29.8 52.7
Write-off of previous facility unamortised fees 8.1 31.0
Other fees related to amendment of financing arrangements
8.6 6.5
Exceptional finance costs 46.5 114.1
Total finance costs 156.9 249.1
Net finance costs 138.9 235.7
8. Tax
2011 2010
Analysis of the tax charge/(credit) for the year £m £m
Current tax
UK corporation tax on losses for the year - -
Adjustment in respect of previous years (10.5) (0.4)
(10.5) (0.4)
Deferred tax
Origination and reversal of temporary differences (4.4) (46.0)
Adjustment in respect of previous years 7.6 1.9
Impact of reduction in corporation tax rate 9.6 -
12.8 (44.1)
Tax charge/(credit) for the year 2.3 (44.5)
In addition to the amount charged to the income statement, deferred tax of £17.7m (2010: credit of £1.9m)
was charged directly to equity.
Factors affecting the tax charge/(credit) for the year

The tax rate assessed for the year is higher (2010: lower) than the standard rate of corporation tax in the
UK of 27.5% (2010: 28.0%). The differences are explained below:
2011 2010
£m £m
Loss before tax (11.5) (162.9)
Loss before tax multiplied by the standard rate of
corporation tax of 27.5% (2010: 28.0%) (3.2) (45.6)
Effects of:
Other expenses not deductible for tax purposes 0.4 1.3
Additional tax relief for land remediation costs (1.7) (1.6)
Adjustment in respect of previous years (2.9) 1.5
Tax in respect of joint ventures (0.1) 0.4
Tax on share-based payments 0.2 (0.5)
Impact of change in tax rate on deferred tax asset 9.6 -
Tax charge/(credit) for the year 2.3 (44.5)
Legislation reducing the main rate of corporation tax from 28% to 26% with effect from 1 April 2011 was
substantively enacted on 29 March 2011. Accordingly, the current year tax charge has been provided for
at an effective rate of 27.5% and the closing deferred tax asset has been provided for at a rate of 26%.
An additional reduction in the main rate of corporation tax from 26% to 25% with effect from 1 April 2012
was enacted within the Finance Act 2011 on 5 July 2011. As this reduction was not substantively
enacted by the balance sheet date, its effect has not been reflected.
Further reductions in the main rate of corporation tax of 1% per annum to 23% by 1 April 2014 have been
announced by the Government but have not yet been substantively enacted, therefore their effect has not
been reflected.
The proposed reductions in the main rate of corporation tax from 26% to 23% by 1 April 2014 are
expected to be enacted separately each year. If the deferred tax assets and liabilities of the Group were
all to reverse after 2014, the effect of the reduction from 26% to 23% would be to reduce the net deferred
tax asset by £16.5m. To the extent that the net deferred tax asset reverses more quickly than this, the
impact of the rate reductions on the net deferred tax asset will be reduced.
9. Loss per share

Basic loss per share is calculated by dividing the loss for the year attributable to ordinary shareholders of
£13.8m (2010: £118.4m) by the weighted average number of ordinary shares in issue during the year,
excluding those held by the Employee Benefit Trust which are treated as cancelled, which was 961.4m
(2010: 815.9m).
There is no difference between basic and diluted loss per share for the Group as the Group was loss
making.
The (losses)/earnings per share from continuing operations were as follows:
2011 2010
pence pence
Basic and diluted loss per share (1.4) (14.5)
Adjusted basic earnings/(loss) per share 2.7 (2.9)
The calculation of basic, diluted and adjusted basic (loss)/earnings per share is based upon the following
data:
2011 2011 2010 2010
£m pence £m pence
Loss for basic and diluted loss per share (13.8) (1.4) (118.4) (14.5)
Add: exceptional finance costs 46.5 4.8 114.1 14.0
Add: exceptional impairment of inventories - - 4.8 0.6
Add: restructuring costs 7.7 0.8 11.0 1.3
Less: tax effect of above items (14.9) (1.5) (35.4) (4.3)
Profit/(loss) for adjusted basic earnings/(loss) per
share 25.5 2.7 (23.9) (2.9)
Losses are adjusted, removing exceptional finance costs, exceptional impairment of inventories,
restructuring costs and the related tax to reflect the Group's underlying profit/(loss).
10. Goodwill
2011 2010
£m £m
Cost
At 30 June and 1 July 816.7 816.7
Accumulated impairment losses
At 30 June and 1 July 24.5 24.5
Carrying amount
At 30 June and 1 July 792.2 792.2
The Group's goodwill has a carrying value of £792.2m relating to the housebuilding segment. The goodwill
relating to the commercial developments segment, with cost of £24.5m, was fully impaired in the year
ended 30 June 2008.
The Group conducts an annual impairment review of goodwill and intangibles together for both the
housebuilding and commercial developments segments. The impairment review was performed at 30 June
2011 and compared the value-in-use of the housebuilding segment with the carrying value of its tangible
and intangible assets and allocated goodwill. The Group allocates any identified impairment first to
goodwill and then to assets on a pro rata basis, which in the case of the Group is its intangible assets
and property, plant and equipment.
The value-in-use was determined by discounting the expected future cash flows of the housebuilding
segment. The first two years of cash flows were determined using the Group's approved detailed site-by-
site business plan. The cash flows for the third to fifth years were determined using Group level internal
forecasted cash flows based upon expected volumes, selling prices and margins, taking into account
available land purchases and work in progress levels. The cash flows for year six onwards were
extrapolated in perpetuity using an estimated growth rate of 2.5%, which was based upon the expected
long-term growth rate of the UK economy.
The key assumptions for the value-in-use calculations were:
· Discount rate: this is a pre-tax rate reflecting current market assessments of the time value of money
and risks appropriate to the Group's housebuilding business. Accordingly the rate of 12.3% (2010
restated: 11.1%) is considered by the Directors to be the appropriate pre-tax risk adjusted discount
rate being the Group's estimated long-term pre-tax weighted average cost of capital. This rate used in
the 30 June 2011 impairment review is calculated using the average capital structure of the Group
during the financial year. The sensitivities disclosed below have been recalculated using this discount
rate and the comparatives restated accordingly. In the prior year the Group calculated the discount
rate using the capital structure of the Group at the balance sheet date. The Directors consider that
the use of the average capital structure of the Group during the financial year is more appropriate due
to the cyclicality of the Group's borrowing requirements. Accordingly the discount rate of 11.3%
quoted in the prior year has been restated as 11.1% to enable comparability between the financial
years. Using the capital structure of the Group at the balance sheet date as applied in the prior year,
the discount rate would be 12.6% (2010: 11.3%).
· Expected changes in selling prices for completed houses and the related impact upon operating
margin: these are determined on a site-by-site basis for the first two years dependent upon local
market conditions and product type. For years three to five these have been estimated at a Group
level based upon past experience and expectations of future changes in the market taking into
account external market forecasts.
· Sales volumes: these are determined on a site-by-site basis for the first two years dependent upon
local market conditions, land availability and planning permissions. For years three to five these have
been estimated at a Group level based upon past experience and expectations of future changes in
the market taking into account external market forecasts.
· Expected changes in site costs to complete: these are determined on a site-by-site basis for the first
two years dependent upon the expected costs of completing all aspects of each individual
development including any additional costs that are expected to occur due to the business being on
an individual development site for longer due to current market conditions. For years three to five
these have been estimated at a Group level based upon past experience and expectations of future
changes in the market taking into account external market forecasts.
The conclusion of this impairment review was that the Group's goodwill related to the housebuilding
segment was not impaired.
The impairment review of goodwill and intangible assets at 30 June 2011 was based upon current
expectations regarding sales volumes, expected changes in selling prices and site costs to complete in
the uncertain conditions within the UK housing market and used a discount rate considered appropriate to
the position and risks of the Group. The result of the impairment review was that the recoverable value of
goodwill and intangible assets exceeded its carrying value by £428.5m (2010 restated: £819.6m).
Applying the discount rate based upon the capital structure of the Group at the balance sheet date, as
used in the impairment review in the prior financial year, the recoverable value of goodwill and intangible
assets exceeded its carrying value by £321.4m (2010: £707.5m).
If the UK housing market and expectations regarding its future were to deteriorate with either operating
margins reducing by 1.5% per annum (2010 restated: 2.6% per annum) or the appropriate discount rate
were to increase by 1.0% (2010 restated: 1.7%) and all other variables were held constant, then the
recoverable value of goodwill and intangible assets would equal its carrying value. Further information is
given in Critical accounting judgements and key sources of estimation uncertainty.
11. Available for sale financial assets

2011 2010
£m £m
At 1 July 136.3 86.5
Additions 40.6 52.2
Disposals (7.3) (3.3)
Imputed interest 13.6 7.0
Net impairment taken through income statement (16.3) (6.1)
Fair value adjustment taken through other
comprehensive income 2.5 -
At 30 June 169.4 136.3
Available for sale financial assets principally comprise interest free loans which are granted as part of
sales transactions and for which the cash flows receivable are based on the value of the property at
redemption. These loans are secured by way of a second legal charge on the respective property (after
the first mortgage). These loans are held at the present value of expected future cash flows taking into
account the estimated market value of the property at the estimated time of repayment. The income
statement includes a net impairment of £16.3m (2010: £6.1m) in cost of sales.
The net impairment of the available for sale financial assets taken through the income statement relates
to borrower default and the impact of the decline in UK house prices on the present value of the estimated
future cash flows of these assets.
12. Inventories
2011 2010
£m £m
Land held for development 2,189.7 2,308.7
Construction work in progress 1,023.2 981.4
Part-exchange properties 78.9 47.6
Other inventories 5.0 4.6
3,296.8 3,342.3
a) Nature of inventories
The Directors consider all inventories to be essentially current in nature although the Group's operational
cycle is such that a proportion of inventories will not be realised within twelve months. It is not possible to
determine with accuracy when specific inventory will be realised as this will be subject to a number of
issues such as consumer demand and planning permission delays.
b) Impairment of inventories
At 30 June 2011 the Group reviewed the net realisable value of its land and work in progress carrying
values of its sites. The impairment review compared the estimated future net present realisable value of
development sites with their balance sheet carrying value. This review resulted in no (2010: £nil) net
exceptional impairment charge for the housebuilding business. Due to performance variations upon
individual housebuilding sites, there were gross exceptional impairment charges and reversals of £65.0m
(2010: £57.4m). In addition, due to changes arising from normal trading, such as planning status, there
was a net inventory impairment charge of £5.4m (2010: £7.4m) included within profit from operations.
There was no (2010: £4.8m) net impairment for the commercial developments business, although there
were gross impairment charges and reversals of £1.2m (2010: gross impairment of £7.3m and gross
reversal of £2.5m) due to performance variations upon individual commercial sites.
The key judgements in these reviews were estimating the realisable value of a site which is determined by
forecast sales rates, expected sales prices and estimated costs to complete. Sales prices were
estimated on a site-by-site basis based upon local market conditions and took into account the current
prices being achieved upon each site for each product type. In addition, the estimation of future sales
prices included an allowance on a site-by-site basis for low single digit sales price inflation in future
periods. The estimation of costs to complete also included an allowance for low single digit build cost
inflation in future periods. Further information regarding these judgements is included within critical
accounting judgements and key sources of estimation uncertainty.
In the past six months, in general, the Group has not seen an improvement in underlying prices, but has
continued to deliver further cost reductions. If the UK housing market were to change beyond
management expectations in the future, in particular with regards to the assumptions around likely sales
prices and estimated costs to complete, then further adjustments to the carrying value of land and work in
progress may be required.
Following these impairments £793.1m (2010: £1,208.1m) of inventories are valued at fair value less costs
to sell rather than at historical cost.
c) Expensed inventories
The value of inventories expensed in 2011 and included in cost of sales was £1,696.7m (2010: £1,735.2m)
including £11.8m (2010: £13.0m) of inventory write-downs incurred in the course of normal trading and a
reversal of £0.4m (2010: £1.9m) on inventories that were written down in a previous accounting period, but
excluding the £nil (2010: £4.8m) exceptional impairment and £5.4m (2010: £7.4m) operating impairment.
The value of inventories written down and recognised as an expense in 2011 totalled £17.2m (2010:
£25.2m), being the £nil (2010: £4.8m) classified as an exceptional impairment, the £5.4m (2010: £7.4m)
operating impairment and the remaining £11.8m (2010: £13.0m) incurred in the normal course of trading.
13. Loans and borrowings
a) Net debt
Net debt at the year end is shown below:
2011 2010
£m £m
Non-current borrowings
Bank loans (175.2) (726.9)
Private placement notes (230.3) (191.7)
Total non-current borrowings (405.5) (918.6)
Current borrowings
Bank overdrafts - -
Loan notes (0.3) (0.3)
Private placement notes - (11.2)
Kickstart equity funding (10.9) (11.7)
Total current borrowings (11.2) (23.2)
Total borrowings (416.7) (941.8)

Foreign exchange swaps 21.4 28.4
Net debt (322.6) (366.9)
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with a
maturity of three months or less. Net debt is defined as cash and cash equivalents, bank overdrafts,
interest bearing borrowings and foreign exchange swaps. The Group includes foreign exchange swaps
within net debt as these swaps were entered into to hedge the foreign exchange exposure upon the
Group's US Dollar denominated private placement notes. The Group's foreign exchange swaps have both
an interest rate and an exchange rate element and only the exchange rate element on the notional
amount of the swap is included within the net debt note above.
The Group's derivative financial instruments at the year end are shown below:
2011 2010
£m £m
Foreign exchange swap - exchange rate element
21.4 28.4
Foreign exchange swap - interest rate element 2.6 3.8
24.0 32.2
Interest rate swaps (36.0) (71.9)
Net derivative financial instruments (12.0) (39.7)
b) Drawn debt facilities

The drawn debt at 30 June comprises:
2011 2010
£m £m
Non-current
Bank loans 175.2 726.9
Private placement notes 230.3 191.7
Total non-current borrowings 405.5 918.6
Current
Bank overdrafts - -
Loan notes 0.3 0.3
Private placement notes - 11.2
Kickstart equity funding 10.9 11.7

Total current borrowings 11.2 23.2
Total borrowings 416.7 941.8
The weighted average interest rates, including fees, paid in the year were as follows:
2011 2010
% %
Bank loans net of swap interest 7.4 8.1
Loan notes 0.5 2.0
Private placement notes 11.5 11.6
The principal features of the Group's drawn debt facilities at 30 June 2011 were as follows:
i) Committed facilities
· A committed £740.5m revolving credit facility of which £192.0m was drawn at 30 June 2011,
made available under a credit agreement dated 5 February 2007 (as amended from time to
time and most recently with effect from 10 May 2011). The maturity date on this debt is 26
April 2012.
· A committed £225.0m revolving credit facility of which £nil was drawn at 30 June 2011 made
available under a facility agreement dated 2 February 2005 (as amended from time to time and
most recently with effect from 10 May 2011). On 10 May 2011, £125.0m of the facility was
cancelled and the maturity date on this debt was amended from 16 November 2012 to 26 April
2012.
· A committed £225.0m revolving credit facility of which £nil was drawn at 30 June 2011, made
available under a facility agreement dated 9 July 2008 (as amended from time to time and
most recently with effect from 10 May 2011). On 10 May 2011, £125.0m of the facility was
cancelled and the maturity date on this debt was amended from 16 November 2012 to 26 April
2012.
As part of the May 2011 refinancing, future facility commitments were agreed as follows:
· From 26 April 2012, new committed £770.0m revolving credit facilities, reducing to £680.0m
in October 2013, were made available under credit agreements dated 10 May 2011. The
maturity date on this debt is 10 May 2015.
· A new £100.0m term loan of which £nil was drawn at 30 June 2011, of which 25% is
scheduled to be repaid on 1 July 2019, 25% on 1 July 2020 and 50% on 1 July 2021.
ii) Fixed rate Sterling private placement notes

· The Group repaid £12.0m of fixed rate Sterling private placement notes on their maturity date of
29 October 2010. The remaining £65.8m of fixed rate Sterling private placement notes expire
between 23 April 2018 and 23 April 2020.
iii) Fixed rate US Dollar private placement notes

· New US Dollar private placement notes of $80.0m due on 23 August 2017 were issued
pursuant to note purchase agreements dated 10 May 2011.
· Existing US Dollar ten-year private placement notes of $42.6m issued pursuant to a note
purchase agreement dated 23 April 2008 (as amended from time to time and most recently
with effect from 10 May 2011).
· US Dollar five-year private placement notes of $20.6m issued pursuant to a note purchase
agreement dated 23 April 2008 (as amended from time to time and most recently with effect
from 10 May 2011).
· US Dollar ten-year private placement notes of $124.0m issued pursuant to a note purchase
agreement dated 23 August 2007 (as amended from time to time and most recently with effect
from 10 May 2011).
iv) Floating rate Sterling loan notes

The Group had £0.3m (2010: £0.3m) Sterling loan notes at 30 June 2011. These loan notes are
repayable at 30 June or 31 December each year at the option of the noteholder or, to the extent not
previously repaid, are due in December 2012, and are subject to floating rates of interest linked to
LIBOR.
v) Bank overdrafts and uncommitted money market facilities

The Group also uses various bank overdrafts and uncommitted borrowing facilities that are subject
to floating interest rates linked to UK bank rate, LIBOR and money market rates as applicable. All
debt is unsecured.
14. Derivative financial instruments - swaps
The Group has entered into derivative financial instruments to manage interest rate and foreign exchange
risks as explained in note 15. The Group does not enter into any derivatives for speculative purposes.
2011 2010
Asset Liability Asset Liability
£m £m £m £m
Designated as cash flow hedges
Non-current
Interest rate swaps - (36.0) - (71.9)
Foreign exchange swaps 25.0 (1.0) 32.7 (0.5)
Total derivative financial instruments 25.0 (37.0) 32.7 (72.4)
a) Interest rate swaps

The Group enters into derivative transactions in the form of swap arrangements to manage the cash flow
risks, related to interest rates, arising from the Group's sources of finance.
All of the Group's interest rate swap arrangements contain a clause that allows the Group or the
counterparty to cancel the swap in May 2015 at fair value.
Swaps with a notional amount of £288.0m were cancelled during the year following the refinancing.
Cumulative losses on interest rate swaps of £29.8m were recognised in exceptional finance costs in the
income statement following these cancellations.
As at 30 June 2011 the Group had outstanding net floating rate Sterling debt of £175.5m (2010: £727.2m).
In obtaining this funding the Group sought to achieve certainty as to both the availability of, and income
statement charge related to, a designated proportion of anticipated future debt requirements.
The Group has entered into swap arrangements to swap £192.0m (2010: £480.0m) of this debt into fixed
rate Sterling debt in accordance with the Group treasury policy outlined in note 15. After taking into
account swap arrangements the fixed interest rates applicable to the debt were as follows:
Amount Fixed rate payable Maturity
£m %
60.0 6.08 2017
19.5 6.18 2017
32.5 5.83 2017
30.0 5.94 2022
50.0 5.63 2022
192.0
The swap arrangements are designated as a cash flow hedge against future interest rate movements. The
fair value of the swap arrangements as at 30 June 2011, which is based on third party valuations, was a
liability of £36.0m (2010: £71.9m) with a gain of £6.1m (2010: loss of £31.2m) charged directly to equity in
the year.
There was no ineffectiveness to be taken through the income statement during the year or the prior year.
b) Foreign exchange swaps

The Group enters into derivative transactions in the form of swap arrangements to manage the cash flow
risks related to foreign exchange arising from the Group's sources of finance denominated in US Dollars.
As at 30 June 2011 the Group had outstanding fixed rate US Dollar loan notes of $267.2m (2010:
$187.2m).
The Group has entered into swap arrangements to swap all of this debt into fixed rate Sterling debt in
accordance with the Group treasury policy outlined in note 15. After taking into account swap
arrangements the fixed interest rates applicable to the debt were as follows:
Amount Fixed rate payable Maturity
$m %
18.2 8.98 2013
1.0 10.95 2013
1.4 10.78 2013
103.7 6.61 2017
7.5 10.55 2017
12.8 9.75 2017
80.0 8.14 2017
33.7 9.24 2018
3.6 12.23 2018
5.3 11.37 2018
267.2
The swap arrangements are designated as cash flow hedges against future foreign exchange rate
movements. The hedges match the contractual initial receipt, the final settlement and match 82% of the
interest payments. The fair value of the swap arrangements as at 30 June 2011, which is based on third
party valuations, was an asset of £24.0m (2010: £32.2m) with a loss of £8.2m charged (2010: gain of
£13.6m credited) directly to equity in the year.
There was no ineffectiveness to be taken through the income statement during the year or the prior year.
15. Financial risk management
The Group's operations and financing arrangements expose it to a variety of financial risks that include
the effects of changes in debt market prices, credit risks, liquidity risks and interest rates. The most
significant of these to the Group is liquidity risk and, accordingly, there is a regular, detailed system for
the reporting and forecasting of cash flows from the operations to Group management to ensure that risks
are promptly identified and appropriate mitigating actions taken by the central treasury department.
These forecasts are further stress tested at a Group level on a regular basis to ensure that adequate
headroom within facilities and banking covenants is maintained. In addition, the Group has in place a risk
management programme that seeks to limit the adverse effects of the other risks on its financial
performance, in particular by using financial instruments, including debt and derivatives, to hedge interest
rates and currency rates. The Group does not use derivative financial instruments for speculative
purposes.
The Board approves treasury policies and certain day-to-day treasury activities have been delegated to a
centralised Treasury Operating Committee, which in turn regularly reports to the Board. The treasury
department implements guidelines that are established by the Board and the Treasury Operating
Committee.
a) Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its liabilities as they fall due. The Group
actively maintains a mixture of long-term and medium-term committed facilities that are designed to
ensure that the Group has sufficient available funds for operations. The Group's borrowings are typically
cyclical throughout the financial year and peak in April and May and October and November of each year,
due to seasonal trends in income. Accordingly the Group maintains sufficient facility headroom to cover
these requirements. On a normal operating basis the Group has a policy of maintaining headroom of up to
£150.0m. The Group identifies and takes appropriate actions based upon its regular, detailed system for
the reporting and forecasting of cash flows from its operations. At 30 June 2011, the Group had
committed bank and other facilities of £1,501.6m (2010: £1,615.3m) and total facilities of £1,547.8m
(2010: £1,676.5m). The Group's drawn debt against these facilities was £405.8m (2010: £930.1m). This
represented 27.0% (2010: 57.6%) of available committed facilities at 30 June 2011. In addition the Group
had £72.7m (2010: £546.5m) of cash and cash equivalents.
The Group was in compliance with its financial covenants at 30 June 2011. At the date of approval of the
financial statements the Group's internal forecasts indicate that it will remain in compliance with these
covenants for the foreseeable future being at least twelve months from the date of signing the financial
statements.
The Group's objective is to minimise refinancing risk. The Group therefore has a policy that the average
maturity of its committed bank facilities and private placement notes is at least two years on average with
a target of three years. At 30 June 2011, the average maturity of the Group's facilities was 3.7 years
(2010: 2.6 years).
The Group maintains certain committed floating rate facilities with banks to ensure sufficient liquidity for
its operations. The undrawn committed facilities available to the Group, in respect of which all conditions
precedent had been met, were as follows:
2011 2010
Expiry date £m £m
In less than one year 228.5 -
In more than one year but not more than two years - -
In more than two years but not more than five years 770.0 700.0
In more than five years 100.0 -
1,098.5 700.0
In addition, the Group had £46.2m (2010: £61.2m) of undrawn uncommitted facilities available at 30 June
2011.
b) Market risk (price risk)

i) UK housing market risk
This section specifically discusses UK housing market risk in the context of the financial instruments in
the Group balance sheet.
The Group is subject to the prevailing conditions of the UK economy and the Group's earnings are
dependent upon the level of UK house prices. UK house prices are determined by the UK economy and
economic conditions including employment levels, interest rates, consumer confidence, mortgage
availability and competitor pricing. However, the Group does seek to maintain an appropriate geographic
spread of operating divisions and an appropriate product mix to mitigate any risks caused by local
economic conditions. The Group has detailed procedures to manage its market related operational risks
which include:
· a weekly review of key trading indicators, including reservations, sales rates, visitor levels, levels of
incentives, competitor activity and cash flow projections;
· the provision to mortgage providers with complete transparency of house purchase prices alongside
any discounts or other incentives in order that they have appropriate information upon which to base
their lending decision; and
· collaboration with key mortgage lenders to ensure that products are appropriate wherever possible for
their customers.
The UK housing market affects the valuation of the Group's non-financial assets and liabilities and the
critical judgements applied by management in these financial statements, including the valuation of land
and work in progress, goodwill and brands.
The Group's financial assets and liabilities which are directly linked to the UK housing market are as
follows:
Linked to UK Not linked to UK
housing market housing market Total
£m £m £m
30 June 2011
Non-derivative financial assets 169.4 109.5 278.9
Non-derivative financial liabilities - (1,644.0) (1,644.0)
Derivatives - (12.0) (12.0)
169.4 (1,546.5) (1,377.1)
30 June 2010
Non-derivative financial assets 136.3 582.4 718.7
Non-derivative financial liabilities - (2,036.6) (2,036.6)
Derivatives - (39.7) (39.7)
136.3 (1,493.9) (1,357.6)
The value of the Group's available for sale financial assets is directly linked to the UK housing market. At
30 June 2011 these assets were carried at a fair value of £169.4m (2010: £136.3m).
Sensitivity analysis
At 30 June 2011, if UK house prices had been 5% lower and all other variables were held constant, the
Group's house price linked financial assets and liabilities, which are solely available for sale financial
assets, would decrease in value, excluding the effects of tax, by £8.1m (2010: £5.2m) with a
corresponding reduction in both the result for the year and equity.
ii) Interest rate risk
The Group has both interest bearing assets and interest bearing liabilities. Floating rate borrowings
expose the Group to cash flow interest rate risk and fixed rate borrowings expose the Group to fair value
interest rate risk.
The Group has a policy of maintaining both long-term fixed rate funding and medium-term floating rate
funding so as to ensure that there is appropriate flexibility for the Group's operational requirements. The
Group has entered into swap arrangements to hedge cash flow risks relating to interest rate movements
on a proportion of its debt and has entered into fixed rate debt in the form of Sterling and US Dollar
denominated private placements.
The Group has a conservative treasury risk management strategy. The proportion of the Group's median
gross borrowings calculated on the latest three-year plan that should be at fixed rates of interest is
determined by the average expected interest cover for that period. The current target is for 30-60% to be
at fixed rates of interest. Due to the cyclicality of our borrowings throughout the year, at 30 June 2011,
99.3% (2010: 70.4%) of the Group's gross borrowings were fixed. Group interest rates are fixed using
both swaps and fixed rate debt instruments.
The exposure of the Group's financial liabilities to interest rate risk is as follows:
Non-
Fixed interest
Floating rate rate bearing
financial financial financial
liabilities liabilities liabilities Total
£m £m £m £m
30 June 2011
Financial liabilities (excluding derivatives) 175.5 230.3 1,238.2 1,644.0
Impact of interest rate swaps (192.0) 192.0 - -
Financial liability exposure to interest rate
risk (16.5) 422.3 1,238.2 1,644.0
30 June 2010
Financial liabilities (excluding derivatives) 727.2 202.9 1,106.5 2,036.6
Impact of interest rate swaps (480.0) 480.0 - -
Financial liability exposure to interest rate
risk 247.2 682.9 1,106.5 2,036.6
Floating interest rates on Sterling borrowings are linked to UK bank rate, LIBOR and money market rates.
The floating rates are fixed in advance for periods generally ranging from one to six months. Short-term
flexibility is achieved through the use of overdraft, committed and uncommitted bank facilities. The
weighted average interest rate for floating rate borrowings in 2011 was 2.4% (2010: 3.2%).
Sterling private placement notes of £65.8m (2010: £77.8m) were arranged at fixed interest rates and
exposed the Group to fair value interest rate risk. The weighted average interest rate for fixed rate Sterling
private placement notes for 2011 was 11.9% (2010: 11.8%) with, at 30 June 2011 a weighted average
period of 7.9 years (2010: 7.7 years) for which the rate is fixed.
US Dollar denominated private placement notes of £145.0m (2010: £125.1m) were arranged at fixed
interest rates and exposed the Group to fair value interest rate risk. The weighted average interest rate for
fixed rate US Dollar denominated private placement notes, after the effect of foreign exchange rate swaps,
for 2011 was 11.0% (2010: 11.2%) with, at 30 June 2011, a weighted average period of 5.9 years (2010:
6.8 years) for which the rate is fixed.
In the year ended 30 June 2011, if UK interest rates had been 50 basis points higher/lower and all other
variables were held constant, the Group's pre-tax loss would increase/decrease by £0.4m (2010: £1.8m),
the Group's post-tax loss would increase/decrease by £0.3m (2010: £1.3m) and the Group's equity would
decrease/increase by £0.3m (2010: £1.3m).
iii) Foreign exchange rate risk

As at 30 June 2011, the Group has fixed rate US Dollar denominated private placement notes of $267.2m
(2010: $187.2m). In order to mitigate risks associated with the movement in the foreign exchange rate,
the Group has a policy of fully hedging the principal of its US Dollar denominated debt and a significant
proportion of the interest payments. The Group therefore entered into foreign exchange swap
arrangements on the issue of its US Dollar denominated debt, all of which are designated as cash flow
hedges. Accordingly the Group has no net exposure to foreign currency risk on the principal of its US
Dollar debt. The foreign exchange swaps match 82% of the interest payments and therefore the Group is
subject to foreign exchange rate risk upon the remaining 18%.
Details of the Group's foreign exchange swaps are provided in note 14.
In the year ended 30 June 2011, if the US Dollar per Pound Sterling exchange rate had been $0.20
higher/lower and all other variables were held constant, the Group's pre-tax loss would increase/decrease
by £0.7m (2010: £0.4m), the Group's post-tax loss would increase/decrease by £0.5m (2010: £0.3m) and
the Group's equity would decrease/increase by £0.5m (2010: £0.3m).
c) Credit risk
In the majority of cases, the Group receives cash upon legal completion for private sales and receives
advance stage payments from Registered Social Landlords for social housing. The Group has £169.4m
(2010: £136.3m) of available for sale financial assets which expose it to credit risk, although this asset is
spread over a large number of properties. As such, the Group has no significant concentration of credit
risk, with exposure spread over a large number of counterparties and customers.
The Group manages credit risk in the following ways:
· The Group has a credit policy that is limited to financial institutions with high credit ratings as set by
international credit rating agencies and has a policy determining the maximum permissible exposure
to any single counterparty.
· The Group only contracts derivative financial instruments with counterparties with which the Group
has an International Swaps and Derivatives Association Master Agreement in place. These
agreements permit net settlement, thereby reducing the Group's credit exposure to individual
counterparties.
The maximum exposure to any counterparty at 30 June 2011 was £15.8m (2010: £100.0m) of cash on
deposit with a financial institution. The carrying amount of financial assets recorded in the financial
statements, net of any allowance for losses, represents the Group's maximum exposure to credit risk.
d) Capital risk management (cash flow risk)

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern
in order to provide returns for shareholders and meet its liabilities as they fall due whilst maintaining an
appropriate capital structure.
The Group manages as capital its equity, as set out in the condensed consolidated statement of changes
in shareholders' equity, its bank borrowings (being overdrafts, loan notes and bank loans) and its private
placement notes, as set out in note 13.
The Group is subject to the prevailing conditions of the UK economy and the Group's earnings are
dependent upon the level of UK house prices. UK house prices are determined by the UK economy and
economic conditions including employment levels, interest rates, consumer confidence, mortgage
availability and competitor pricing. The management of these operational risks is set out in the principal
risks and uncertainties (note 23).
In addition, the other methods by which the Group can manage its short-term and long-term capital
structure include adjusting the level of ordinary dividends paid to shareholders (assuming the Company is
paying a dividend), issuing new share capital, arranging debt to meet liability payments, and selling
assets to reduce debt.
16. Retirement benefit obligations
The Group operates defined contribution and defined benefit pension schemes.
Defined contribution schemes

2011 2010
Contributions during the year £m £m
Group defined contribution schemes consolidated income statement charge 6.4 6.5
At the balance sheet date there were outstanding contributions of £0.5m (2010: £0.2m), which were paid
on or before the due date.
Defined benefit scheme

The Group operates a funded defined benefit pension scheme in the United Kingdom, the Barratt Group
Pension & Life Assurance Scheme (the 'Scheme') which, with effect from 30 June 2009, ceased to offer
future accrual of defined benefit pensions. Alternative defined contribution pension arrangements are in
place for current employees.
A full actuarial valuation of the Scheme as at 30 November 2010 is being carried out by the Trustees. The
preliminary results of this valuation have been updated to 30 June 2011 by a qualified independent
actuary. Under the current funding agreement with the Trustees the Group has agreed to make
contributions to the Scheme of £13.3m per annum until 30 November 2015 to address the Scheme's
deficit. The Group also continues to meet the Scheme's administration expenses, death in service
premiums and Pension Protection Fund levy. The Group and Trustees are currently discussing the results
of the actuarial valuation at 30 November 2010 and expect to reach a conclusion on this in advance of the
statutory deadline which is 29 February 2012.
At the balance sheet date there were outstanding contributions of £1.1m (2010: £1.1m).
The assets of the defined benefit scheme have been calculated at fair (bid) value. The liabilities of the
Scheme have been calculated at each balance sheet date using the following assumptions:
Principal actuarial assumptions 2011 2010

Weighted average assumptions to determine benefit obligations
Discount rate 5.50% 5.40%
Rate of compensation increase N/A N/A
Rate of price inflation 3.50% 3.20%
Weighted average assumptions to determine net cost
Discount rate 5.40% 6.30%
Expected long-term rate of return on plan assets 5.96% 6.31%
Rate of compensation increase N/A N/A
Rate of price inflation 3.20% 3.40%
Members are assumed to exchange 10% of their pension for cash on retirement.
The assumptions have been chosen by the Group following advice from Mercer Human Resource
Consulting Limited, the Group's actuarial advisers.
The following table illustrates the life expectancy for an average member on reaching age 65, according to
the mortality assumptions used to calculate the Scheme liabilities:
Male Female
Retired member born in 1935 (life expectancy at age 65) 21.6

years 24.8 years
Non-retired member born in 1965 (life expectancy at age 65) 24.5
years 27.8 years
The base mortality assumptions are based upon the PA92 mortality tables. The Group has carried out a
mortality investigation of the Scheme's membership to ensure that this is an appropriate assumption.
Allowance for future increases in life expectancy is made in line with the medium cohort projection, with
an underpin on the annual rate of improvement in mortality of 1%.
The sensitivities regarding the principal assumptions used to measure the Scheme liabilities are set out
below:
Assumption Change in assumption Increase in
Scheme liabilities
Discount rate Decrease by 0.1% £5.1m (2.0%)
Rate of inflation Increase by 0.1% £3.1m (1.2%)
Life expectancy Increase by 1 year £6.3m (2.5%)
The amounts recognised in the consolidated income statement were as follows:
2011 2010
£m £m
Interest cost 13.1 12.4
Expected return on Scheme assets (12.2) (10.8)
Total pension cost recognised in finance costs in the
consolidated income statement 0.9 1.6
Total pension cost recognised in the consolidated income
statement 0.9 1.6
The amounts recognised in the Group statement of comprehensive income were as follows:
2011 2010
£m £m
Expected return less actual return on Scheme assets (18.5) (17.6)
(Gain)/loss arising from changes in the assumptions underlying the
present value of benefit obligations (3.5) 43.9
Total pension (income)/cost recognised in the consolidated
statement of comprehensive income (22.0) 26.3
The amount included in the consolidated balance sheet arising from the Group's obligations in respect of
its defined benefit pension scheme is as follows:
2011 2010
£m £m
Present value of funded obligations 250.6 248.3
Fair value of Scheme assets (238.8) (202.2)
Deficit for funded Scheme/net liability recognised in the
consolidated balance sheet at 30 June 11.8 46.1
2011 2010
£m £m
Net liability for defined benefit obligations at 1 July 46.1 31.5
Contributions received (13.2) (13.3)
Expense recognised in the consolidated income statement 0.9 1.6
Amounts recognised in the consolidated statement of comprehensive
income (22.0) 26.3
Net liability for defined benefit obligations at 30 June 11.8 46.1
A deferred tax asset of £3.1m (2010: £12.9m) has been recognised in the Group balance sheet in relation
to the pension liability.
Movements in the present value of defined benefit obligations were as follows:
2011 2010
£m £m
Present value of benefit obligations at 1 July 248.3 201.9
Interest cost 13.1 12.4
Actuarial (gain)/loss (3.5) 43.9
Benefits paid from Scheme (7.3) (9.9)
Present value of benefit obligations at 30 June 250.6 248.3
Movements in the fair value of Scheme assets were as follows:
2011 2010
£m £m
Fair value of Scheme assets at 1 July 202.2 170.4
Expected return on Scheme assets 12.2 10.8
Actuarial gain on Scheme assets 18.5 17.6
Employer contributions 13.2 13.3
Benefits paid from Scheme (7.3) (9.9)
Fair value of Scheme assets at 30 June 238.8 202.2
The analysis of Scheme assets and the expected rate of return at the balance sheet date were as
follows:
2011 2010
Expected Expected
Percentage return on Percentage of return on
of Scheme Scheme Scheme Scheme
assets assets assets assets
Equity securities 50.3% 7.30% 51.5% 7.14%
Debt securities 49.5% 4.77% 47.6% 4.78%
Other 0.2% 0.50% 0.9% 0.50%
Total 100.0% 6.10% 100.0% 5.96%
To develop the expected long-term rate of return on assets assumption, the Group considered the current
level of expected returns on risk free investments (primarily Government bonds), the historical level of risk
premium associated with other asset classes in which the portfolio is invested and the expectations for
future returns of each asset class. The expected return for each asset class was then weighted based on
the actual asset allocation to develop the expected long-term rate of return on assets assumption for the
portfolio.
The actual return on Scheme assets was as follows:
2011 2010
£m £m
Actual return on Scheme assets 30.7 28.4
The five-year history of experience adjustments arising on Scheme (liabilities)/assets was as follows:
2011 2010 2009 2008 2007

Present value of defined benefit obligations (£m) (250.6) (248.3) (201.9) (208.8) (232.8)
Fair value of Scheme assets (£m) 238.8 202.2 170.4 171.6 167.9
Deficit in the Scheme (£m) (11.8) (46.1) (31.5) (37.2) (64.9)
Experience adjustment in Scheme liabilities (£m) 6.8 - - 11.4 (13.2)
Percentage of Scheme liabilities (%) 2.7 - - 5.5 (5.7)
Experience adjustment in Scheme assets (£m) 18.5 17.6 (20.5) (17.3) 7.6
Percentage of Scheme assets (%) 7.7 8.7 (12.0) (10.1) 4.5
Amount recognised in the consolidated statement
of comprehensive income (£m) (22.0) 26.3 14.1 (20.1) (13.4)
Percentage of Scheme assets (%) (9.2) 13.0 8.3 (11.7) (8.0)
The cumulative amount of actuarial gains and losses since 30 June 2005 recognised in the consolidated
statement of comprehensive income is a gain of £15.1m.
The expected employer contribution to the defined benefit pension scheme in the year ending 30 June
2012 is £13.3m.
17. Share capital
2011 2010
£m £m
Allotted and issued ordinary shares
10p each fully paid: 965,341,126 ordinary shares (2010: 965,215,015) 96.5 96.5
During the year, 6,841,830 awards of the Company's shares were granted under the Company's Executive
Long-Term Performance Plan and 1,491,892 options were granted under the SAYE Scheme.
During the year, 126,111 shares were issued to satisfy early exercises under the 2009 SAYE Scheme.
The Barratt Developments PLC Employee Benefit Trust (the 'EBT') holds 3,858,573 (2010: 3,929,314)
ordinary shares in the Company. The cost of the shares held by the EBT, at an average of 120.7 pence
per share (2010: 128.8 pence per share) was £4,655,452 (2010: £5,062,765). The market value of the
shares held by the EBT at 30 June 2011 at 114.2 pence per share (2010: 94.8 pence per share) was
£4,406,490 (2010: £3,724,990). The shares are held in the EBT for the purpose of satisfying options that
have been granted under The Barratt Developments PLC Executive and Employee Share Option Plans.
These ordinary shares do not rank for dividend and do not count in the calculation of the weighted average
number of shares used to calculate earnings per share until such time as they are vested to the relevant
employee.
18. Cash flows from operating activities
2011 2010
(restated*)
£m £m
Loss for the year from continuing operations (13.8) (118.4)
Tax 2.3 (44.5)
Share of post-tax (profit)/loss from joint ventures (0.1) 1.5
Profit from operations 127.3 74.3
Amortisation of deferred loss on swaps - 0.2

Impairment of inventories - exceptional - 4.8
Impairment of inventories - non exceptional 5.4 7.4
Impairment of available for sale financial assets 16.3 6.1
Share-based payments charge/(credit) 1.4 (0.6)
Imputed interest on deferred term land payables (27.6) (26.5)
Imputed interest on available for sale financial assets 13.6 7.0
Amortisation of facility fees (6.2) (9.4)
Imputed interest on Kickstart equity funding (0.9) (0.2)
Write-off of previous facility unamortised fees (8.1) (31.0)
Finance costs related to employee benefits (0.9) (1.6)
Total non-cash items (5.2) (40.2)
Decrease in inventories 72.1 186.3

Increase/(decrease) in trade and other payables 23.2 198.2
Increase in available for sale financial assets (46.7) (55.9)
Total movements in working capital 51.1 304.7
Interest paid (77.5) (101.2)

Tax received 4.5 53.8
Net cash inflow from operating activities 100.2 291.4
* For consistency of presentation of cash flow s w ith the year ended 30 June 2011, £7.4m of non-exceptional inventory
impairment has been reclassified in the year ended 30 June 2010. Non-cash items have increased by £7.4m from an outflow
of £47.6m to £40.2m and the movement in inventories has reduced by £7.4m from £193.7m to £186.3m.
The balance sheet movements in land and available for sale financial assets include non-cash movements
due to imputed interest. Imputed interest is therefore included within non-cash items in the note above.
a) Contingent liabilities related to subsidiaries

The Company has guaranteed certain bank borrowings of its subsidiary undertakings.
Certain subsidiary undertakings have commitments for the purchase of trading stock entered into in the
normal course of business.
In the normal course of business the Group has given counter indemnities in respect of performance
bonds and financial guarantees. Management estimate that the bonds and guarantees amount to
£434.1m (2010: £399.0m), and confirm that at the date of these financial statements the possibility of
cash outflow is considered minimal and no provision is required.
b) Contingent liabilities related to joint ventures

At 30 June 2011, the Group has an obligation to repay £0.9m (2010: £0.9m) of grant monies received by a
joint venture upon certain future disposals of land.
The Group also has a number of performance guarantees in respect of its joint ventures, requiring the
Group to complete development agreement contractual obligationsin the event that the joint ventures do
not perform their obligations under the terms of the related contracts.
c) Contingent liabilities related to associates

During the year, the Group provided bank guarantees to the value of £3.1m (2010: £nil) to one of its
associates.
d) Contingent liabilities related to subsidiaries, joint ventures and associates

Provision is made for the Directors' best estimate of all known legal claims and all legal actions in
progress. The Group takes legal advice as to the likelihood of success of claims, counterclaims and all
other actions and no provision is made where the Directors consider, based on that advice, that the
action, claim or counterclaim is unlikely to succeed, or a sufficiently reliable estimate of the potential
obligations cannot be made.
i)Incident at Battersea Park Road, London

One of the principal subsidiaries within the Group is BDW Trading Ltd ('BDW'). On 26 September 2006 at
Battersea Park Road, London, a tower crane supplied to BDW (with operator) by a third party contractor
collapsed. The collapse of the crane was not contained within the boundaries of the site and the crane
operator and a member of the public were killed. In addition, significant damage was caused to a
neighbouring block of flats and shops which resulted in the evacuation of a number of local residents due
to concerns about structural stability. There is an ongoing criminal investigation by the London
Metropolitan Police and the Health and Safety Executive to ascertain whether any of the parties involved
are criminally liable for manslaughter or under relevant health and safety legislation. Although no
assurance can be given, the Board has been advised that on the information available as at 12 September
2011, being the last practicable date prior to the publication of this Annual Results Announcement, the
risk of a finding of criminal liability against BDW appears low. A number of civil claims brought against
BDW in connection with the same incident have now been settled. All such claims are covered by the
Group's insurance, to the extent not recoverable from the third party contractor's insurers.
ii)Incident at Bedfont Azure Lakes

On 28 February 2008, a resident was found dead and another seriously injured in housing association
accommodation at the Bedfont Azure Lakes site that was developed by BDW. It is believed that the
cause of both the death and the serious injury was due to carbon monoxide poisoning. Following
investigations by the Police and the Health and Safety Executive, criminal proceedings are being pursued
against the plumbing and heating sub-contractor selected by BDW for the development, and against an
individual registered gas engineer. The criminal charges are understood to include alleged manslaughter
caused by gross negligence and breach of gas safety legislation. It is also understood that the criminal
trial against these defendants is now scheduled for March 2012. Meanwhile the Police and Health and
Safety Executive investigations are still ongoing. Civil claims have been made against BDW by both the
housing association and by various residents on the estate where the incident occurred. A number of
claims have been settled by the Group's insurers but the remainder are still outstanding and are being
dealt with by the Group's insurers, although the extent to which these are covered by the Group's
insurance or the insurance of other parties cannot, at present, be clearly ascertained.
The Group has identified the Directors of the Company, the Group pension scheme, the Group's joint
ventures and joint venture partners, and its key management as related parties for the purposes of IAS24
'Related Party Disclosures'. There have been no transactions with those parties during the year ended 30
June 2011 that have materially affected the financial position or performance of the Group during this year.
All transactions with subsidiaries are eliminated on consolidation.
a) Remuneration of key personnel

Disclosures related to the remuneration of key personnel as defined in IAS24 'Related Party Disclosures'
will be provided in the 2011 Annual Report and Accounts.
b) Transactions between the Group and its joint ventures

The Group has entered into transactions with its joint ventures in respect of funding and development
management services (with charges made based on the utilisation of these services). These transactions
totalled £2.4m (2010: £1.9m) and £0.3m (2010: £0.3m). In addition, one of the Group's subsidiaries, BDW
Trading Limited, contracts with a number of the Group's joint ventures to provide construction services.
The amount of outstanding loans and interest due to the Group from its joint ventures at 30 June 2011
was £111.0m (2010: £88.0m) which are included in Group investments. The amount of other outstanding
payables to the Group from its joint ventures at 30 June 2011 totalled £nil (2010: £nil). The Group provided
bank guarantees to the value of £nil (2010: £26.0m) to its joint venture partners during the year.
c) Transactions between the Group and its associates

The Group has not entered into any transactions with its associates in the year.
The Group provided bank guarantees to the value of £3.1m to one of its associates during the year.
The Group did not have any associates in the year ended 30 June 2010.
21. Seasonality
The Group, in common with the rest of the housebuilding industry, is subject to the main spring and
autumn house selling seasons, which also result in peaks and troughs in the Group's debt profile and
working capital requirements. Therefore, any weakness in the macroeconomic environment which affects
these peak selling seasons can have a disproportionate impact upon the Group's results for the year.
22. Statutory Accounts
The consolidated financial statements for the year ended 30 June 2011 have been approved by the
Directors and prepared in accordance with International Financial Reporting Standards ('IFRS') as issued
by the International Accounting Standards Board ('IASB'), International Financial Reporting Interpretations
Committee ('IFRIC') interpretations and Standing Interpretations Committee ('SIC') interpretations as
adopted and endorsed by the European Union ('EU').
Barratt Developments PLC's 2011 Annual Report and Accounts will be circulated to shareholders in
October 2011 and will be made available on its website www.barrattdevelopments.co.uk at that point. The
financial information set out herein does not constitute the Company's statutory accounts for the year
ended 30 June 2011 (as defined in Sections 434 and 436 of the Companies Act 2006) but is derived from
the 2011 Annual Report and Accounts and the accounts contained therein. Statutory accounts for 2011
will be delivered to the Registrar of Companies following the Company's Annual General Meeting which
will be held on 16 November 2011. The auditor has reported on these accounts; their report was
unqualified and did not contain statements under Section 495 (4)(b) of the Companies Act 2006.
The comparative figures for the year ended 30 June 2010 are not the Company's statutory accounts for
the financial year but are derived from those accounts which have been reported on by the Company's
auditor and will be delivered to the Registrar of Companies as stated above. The 2011 report of the
auditor is unqualified and does not contain statements under Section 498 (2) or (3) of the Companies Act
2006.
Whilst the financial information included in this Annual Results Announcement has been prepared in
accordance with IFRS, this announcement does not itself contain sufficient information to comply with
IFRS as adopted for use in the EU.
23. Principal risks and uncertainties
The Group's financial and operational performance is subject to a number of risks. The Board seeks to
ensure that appropriate processes are put in place to manage, monitor and mitigate these risks, of which
the principal risks are identified in the table below. The Group recognises that the management of risk is
fundamental to the achievement of Group targets. As such management throughout the Group are
involved in this process.
Risk Description Relevance to strategy Mitigation
Market Changes in the The majority of homes built by A w eekly review is undertaken of key
macroeconomic environment the Group are purchased by trading indicators, including reservations,
including unemployment, individuals w ho rely on the sales rates, visitor levels, incentives,
buyer confidence, availability availability of mortgages. The competitor activity and cash flow
of mortgage finance, interest confidence of buyers and projections and, w here possible,
rates, competitor pricing, falls their ability to obtain appropriate management action is taken.
in house prices or land mortgages or other forms of
values or a failure of the financing are impacted by the The Group's internal systems clearly
housing market to recover macroeconomic environment. identify the impact of sales price changes
further, may lead to a fall in Accordingly, customer on the margins achievable and as a
the demand for houses demand is sensitive to minimum the Group performs asset
w hich in turn could result in changes in economic impairment review s tw ice a year.
impairments of the Group's conditions.
inventories, goodw ill and The Group w orks w ith key mortgage
intangible assets. The Group's ability to grow its lenders to ensure that products are
business partly depends on appropriate w herever possible for its
Cost reduction measures may securing land or options over customers.
adversely affect the Group's sites and having adequate
business or its ability to resources to build sufficient The Group has developed a 'Planning for
respond to future homes to meet demand. The Recovery' programme to seek to ensure
improvements in market Group's ability to do this can that appropriate systems are in place for
conditions. be impacted by cash and w hen market conditions further improve,
profit constraints (see also keeps its cost base tightly controlled and
the Liquidity, Land and manages cost reduction measures via
Construction risks sections the stew ardship of the Executive.
below ).
Liquidity Unavailability of sufficient The Group maintains The Group has agreed its debt
borrow ing facilities to enable committed facilities of refinancing w hich provides around £1
the servicing of liabilities different duration that are billion of committed facilities and private
(including pension funding) designed to ensure that it has placement notes to May 2015.
and the inability to refinance sufficient available funds for
facilities as they fall due, operations. The Group's The Group has in place a comprehensive
obtain surety bonds, or borrow ings are cyclical regular forecasting process
comply w ith borrow ing during the financial year and encompassing profitability, w orking
covenants. Furthermore there peak around April/May and capital and cash flow that is fully
are risks to management of October/November each year embedded in the business. These
w orking capital such as as, due to seasonal trends in forecasts are regularly stress tested to
conditional contracts, build income, these are the ensure that adequate headroom w ithin
costs, joint ventures and the calendar points w hen the facilities and banking covenants is
cash flow s related to them. Group has the highest maintained. On a normal operating basis
w orking capital requirements. the Group has a policy of maintaining
facility headroom of up to £150m.
The Group maintains
sufficient facility committed The Group has a comprehensive regular
debt headroom and in addition forecasting process for bond
has a number of trade requirements.
finance and surety facilities
that are designed to ensure The Group is in compliance w ith its
that the Group has sufficient borrow ing covenants and at the date of
bonds available. approval of the 2011 Annual Report and
Accounts, the Group's internal forecasts
indicate that it w ill remain in compliance
w ith these covenants for the foreseeable
future being at least tw elve months from
the date of signing of the 2011 Annual
Report and Accounts.
People Inability to recruit and/or The Group aims to attract, The Group has a comprehensive Human
retain employees w ith retain and develop a Resources policy w hich includes
appropriate skill sets or sufficiently skilled and apprentice schemes, a graduate
sufficient numbers of such experienced w orkforce in programme, succession planning and
employees. order to maintain high training schemes tailored to each
standards of quality and discipline. The Group continues to target
customer service. a fully Construction Skills Certification
Scheme carded and qualified w orkforce.
Subcontractors Shortages or increased costs The Group uses The Group adopts a professional
and suppliers of materials and skilled subcontractors to perform the approach to site management and seeks
labour, the failure of a key majority of w ork on sites. This to partner w ith its supply chain. The
retains flexibility to commence
supplier or the inability to Group has a policy of having multiple
w ork on new sites and
secure supplies upon enhances the Group's build suppliers for both labour contracts and
appropriate credit terms could cost efficiency. material supplies and contingency plans
increase costs and delay should any key supplier fail.
construction.
Land Inability to secure sufficient The Group needs to purchase Potential land acquisitions are subject to
land of appropriate size and sufficient quantities of good formal appraisal, w ith those approved
quality to provide profitable quality land at attractive required to achieve an overall Group
grow th. prices in order to be in a defined hurdle rate of return and to meet
position to commence the Company's strategic criteria for
construction and enhance the grow th. Each division produces a
Group's ability to deliver detailed site-by-site monthly analysis of
strong profit grow th as the the amount of land currently ow ned,
housing market recovers. committed and identified. These are
consolidated for regular review at senior
management and Board level. In addition,
each operating division holds w eekly land
meetings.
Governm ent Inability to adhere to the The Group's land portfolio The Group consults w ith the Government
regulation increasingly stringent and consists of land for the short both directly and through industry bodies
complex regulatory and medium term as w ell as to highlight potential issues and has
environment, including strategic land. considerable in-house technical and
planning and technical planning expertise devoted to complying
requirements affecting the The Group seeks to meet w ith regulations and achieving
housing market and regulatory and planning implementable planning consents.
regulatory requirements more requirements to obtain the
generally. planning permission required The Group has appropriate policies and
to develop homes and technical guidance manuals in place to
communities. assist employees to achieve regulatory
compliance and the standards of
business conduct expected of them.
Construction Failure to identify and achieve The Group builds homes and The Group's w eekly reporting identifies
key construction milestones, communities in Britain ranging the number of properties at key stages of
including: the impact of from houses to large scale construction. Projected construction
adverse w eather conditions, flatted developments. rates are evaluated as part of the
the failure to identify cost monthly forecasting cycle. Development
overruns promptly, design projects, including returns and cash
and construction defects, flow s, are monitored regularly by
and exposure to divisional management teams and the
environmental liabilities could Group obtains legal and other
delay construction, increase professional advice w hen required.
costs, reduce selling prices
and result in litigation and The Group regularly monitors a number of
uninsured losses. environmental impact indicators, the
results of w hich are disclosed in the
In addition, large development Group's Sustainability Report.
projects, including commercial
developments, are complex Appropriate insurance cover is
and capital intensive and maintained for the Group's main risks.
changes may negatively
impact upon cash flow s or
returns.
Health and Health and safety breaches Health and safety is a key The Group has a dedicated health and
Safety can result in injuries to issue in the housebuilding safety audit department w hich is
employees, subcontractors sector. Given the inherent independent of the management of the
and site visitors, delays in risks associated w ith it and operating divisions. Health and safety
construction, increased management of it, it is of audits are undertaken on a regular basis
costs, reputational damage, paramount importance to the and processes are modified as required
criminal prosecution and civil Group. Senior management w ith a view to seeking continuous
litigation. and the Board review health improvement. Performance is review ed
and safety matters on a by the Safety, Health and Environment
regular basis and aim to Committee that meets quarterly. Each
reduce injury incidence rates month, health and safety reports are
by implementing policies and cascaded by each division, for review by
procedures aimed at keeping the Executive Committee and Board,
staff and visitors free from w hich also receives a direct report every
injury. six months from the Safety, Health and
Environment Director.
Inform ation Failure of the Group's IT The ability to be able to A dedicated IT team regularly monitors
Technology systems, in particular those optimise prices and ensure and maintains Group IT systems to
relating to surveying and operational efficiency is ensure continued functionality. A fully
essential to the Group's
valuation, could adversely tested disaster recovery programme is in
performance. The Group's
impact the performance of integrated management place.
the Group. systems enable the Group to
maintain tight control
especially w ith regards to
surveying and valuation.
Details of the Group's management of liquidity risk, market risk, credit risk and capital risk in relation to financial instruments are
provided in note 15.
Details of the Group's contingent liabilities are provided in note 19.
24. Directors' responsibility statements
The Directors' responsibility statements are made in respect of the full Annual Report financial statements
not the condensed statements required to be set out in this Annual Results Announcement.
The 2011 Annual Report and Accounts comply with the United Kingdom's Financial Services Authority
Disclosure Rules and Transparency Rules in respect of the requirement to produce an annual financial
report.
The Directors confirm that, to the best of each person's knowledge:
a) the Group and Parent Company financial statements contained in the 2011 Annual Report and
Accounts have been prepared in accordance with International Financial Reporting Standards ('IFRS') as
issued by the International Accounting Standards Board, International Financial Reporting Interpretations
Committee interpretations and Standing Interpretations Committee interpretations as adopted and
endorsed by the European Union, and those parts of the Companies Act 2006 applicable to companies
reporting under IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss
of the Company and of the Group taken as a whole; and
b) the management report contained in the 2011 Annual Report and Accounts includes a fair review of the
development and performance of the business and the position of the Company and the Group taken as a
whole, together with a description of the principal risks and uncertainties they face.
The Directors of Barratt Developments PLC and their functions are listed below:
Robert Lawson, Chairman
Mark Clare, Group Chief Executive
Steven Boyes, Group Board Executive Director
Clive Fenton, Group Board Executive Director
David Thomas, Group Finance Director
Tessa Bamford, Non-Executive Director
Robert Davies, Senior Independent Director
Roderick MacEachrane, Non-Executive Director
Mark Rolfe, Non-Executive Director
William Shannon, Non-Executive Director (resigned 21 October 2010)
Approved by order of the Board on 13 September 2011
M S Clare
D F Thomas
Registered office
Barratt Developments PLC,

Barratt House,
Cartwright Way,
Forest Business Park,
Bardon Hill,
Coalville,
Leicestershire,
LE67 1UF
Tel: 01530 278 278

Fax: 01530 278 279
www.barrattdevelopments.co.uk
Corporate office
Barratt Developments PLC,

Kent House,
1st Floor,
14-17 Market Place,
London,
W1W 8AJ
Tel: 020 7299 4898

Fax: 020 7299 4851
Company information
Registered in England and Wales. Company number 604574

END
FR SFLSILFFSEDU
5/24/13 Gleeson (M J) Group | Interim Announcement | FE InvestEgate
Gleeson (M J) Group
Interim Announcement
RNS Number : 8283N
Gleeson(M J)Group PLC
25 February 2009
Wednesday 25 February 2009
MJ GLEESON GROUP PLC - INTERIM ANNOUNCEMENT
Gleeson (GLE.L) the urban regeneration and strategic land specialist, announces its results for the half year to 31
December 2008.
During the period, market conditions facing the housebuilding industry, which had been described in the 2008
Annual Report as 'the worst in living memory', deteriorated further as the problems associated with a very restricted
supply of credit have been increasingly exacerbated by the onset of an exceptionally severe recession.
Key Points - Financial
Revenue from continuing operations decreased by 37% to £30.6m, substantially reflecting

reductions in units sold and average selling price
Excluding exceptionals, the pre-tax loss was £5.4m (2007: £0.3m)
Exceptional items totalled £18.3m, of which £16.7m relates to write-downs of land
and work in progress by Gleeson Regeneration & Homes
and Gleeson Strategic Land (£11.0m) and Gleeson Commercial Property
Developments (£5.7m). Exceptionals of £7.1m are additional to those announced in the Interim
Management Statement on 19 November 2008
The loss before tax is £23.7m (2007: £0.3m) and the loss per share on continuing operations is
44.98p (2007: 0.52p)
Total shareholders' equity of £135.9m at 31 December 2008 compared with £159.2m at 30 June
2008, equating to net assets per share of 260p and 304p, respectively
Net cash at 31 December 2008 totalled £7.1m, a decrease of £14.8m in the period, of which
deferred payments for land acquisitions accounted for £10.6m. The Board expects the Group to
continue to be cash positive not only at the year end but also well beyond
Key Points - Commercial
Gleeson Regeneration & Homes and Gleeson Strategic Land recorded an operating loss of £14.7m
(2007: £0.7m); excluding exceptionals, the 2008 loss would have been £3.2m
www.investegate.co.uk/ArticlePrint.aspx?id=200902250700118283N 1/14
Gleeson Regeneration & Homes recorded units for revenue purposes totalling 150 (2007: 224) ,
down 33%, at an average selling price of £101,000 (2007: £145,000), down 30%
Gleeson Commercial Property Developments, in run off since March 2007, recorded an operating
loss of £6.3m (2007: profit of £0.3m); excluding exceptionals, the 2008 loss would have been
£0.6m
Gleeson Strategic Land recorded no material land transactions during the period, as was the case
with the comparable period, but planning consent was secured on greenfield housing sites in West
Sussex and Essex, which are due to deliver 320 homes
The Group's headcount since June 2008 (excluding that of Powerminster Gleeson Services, which
was unchanged) has been reduced by nearly 60%
The annual run-rate for central costs going forward has been significantly reduced to approximately
£2.8m from £6.1m for the year ended 30 June 2008
Dermot Gleeson, Chairman, stated 'Although there are some signs of increased interest on the part of potential
buyers, the continuing dearth of mortgage finance means that the housing market is likely to remain extremely weak
for at least the remainder of 2009. Against this background, the Group's strategy remains to maximise cash inflows
without sacrificing value and to minimise cash outflows by restricting building expenditure in the main to the
construction of presold social housing projects. The Group continues to invest selectively in its Powerminster
Gleeson Services and Gleeson Strategic Land businesses.
The Group has a strong balance sheet and overheads have been substantially reduced, without compromising the
quality and effectiveness of the Group's core skill base and competencies. Accordingly, the Group is well-placed to
withstand a prolonged downturn in demand and to resume growth once liquidity and confidence return to the
market.'
Enquiries:
M J Gleeson Group plc 01252-360 300

Chris Holt (GCEO)
Alan Martin (GFD)
Bankside Consultants
Charles Ponsonby 020-7367 8851
Market and Business Overview
In the 2008 Annual Report, I described the market conditions facing the housebuilding and commercial property
industries as the worst in living memory. They have since deteriorated further as the problems associated with a very
restricted supply of credit have been increasingly exacerbated by the onset of an exceptionally severe recession.
This worsening of the economic climate has inevitably had an adverse financial impact on Gleeson Regeneration &
Homes. A review of the carrying value of the Group's residential land and work in progress has led to an £11.0m write
down, representing 9% of this asset class.
The Group has also reviewed the values of those commercial developments not yet sold by Gleeson Properties (which
is in run-off). As a result, these have been written down by £5.7m, representing 30% of this asset class.
In response to the extraordinary challenges with which housebuilders are confronted, the Group has continued to
reduce costs and prioritise cash generation. The Group's headcount since June 2008 (excluding the headcount of
Powerminster Gleeson Services which is unchanged) has been reduced by nearly 60%. The consequent reduction in
costs, coupled with a very considerable cut back in the rate of housebuilding, means that the Group currently expects
to be cash positive not only at the year end but well beyond.
Housing need in the United Kingdom is high and is forecast to grow. The Board therefore remains convinced that in
the medium to long term demand in the housing market will return. When it does so, the Group's contracted pipeline
of regeneration projects and its substantial strategic land bank will provide it with opportunities for substantial
growth.
Results
Revenue from continuing operations decreased by 37% to £30.6m (2007: £48.9m). £14.2m of this decrease is a result
of reductions in the number of units sold and in the average selling price.
The Group's continuing operations incurred a loss before exceptional items and tax of £5.4m (2007: £0.3m).
Exceptional charges comprised £18.3m, which may be analysed as follows:
£m £m
Write-down of land and WIP:
Gleeson Regeneration & Homes and Gleeson Strategic Land 11.0
Gleeson Commercial Property Developments 5.7
16.7
Redundancy provision 1.1
Excess property provision 0.5
18.3
£7.1 m of this provision is additional to that indicated in the Interim Management Statement of 19 November 2008.
The additional write down is due to deteriorating market conditions, with £1.7m relating to Gleeson Commercial
Property Developments and £5.4m relating to Gleeson Regeneration & Homes and Gleeson Strategic Land.
Discontinued operations produced a post-tax profit of £0.1m (2007: £nil).
The financial results for the six months to 31 December 2008, along with comparables, are as follows:

2008 2007 30 June 2008
£m £m £m
Group revenue - continuing

operations 30.6 48.9 94.6
Operating (loss)/profit - continuing operations:

Gleeson Regeneration & Homes and
Gleeson Strategic Land (14.7) (0.7) (16.3)
Gleeson Capital Solutions (0.5) 0.7 2.3
Powerminster Gleeson Services 0.3 0.4 1.1
Group Overhead (2.7) (3.1) (6.1)
Ongoing Businesses (17.6) (2.7) (19.0)
Gleeson Commercial Property
Developments (6.3) 0.3 (1.2)
Gleeson Construction Services (0.1) - (4.1)
Operating loss (24.0) (2.4) (24.3)
Net finance income 0.3 2.1 3.5
Loss before tax (23.7) (0.3) (20.8)
Tax 0.2 - -
Loss after tax (23.5) (0.3) (20.8)
Net cash 7.1 27.9 21.9

Shareholders' funds 135.9 179.4 159.2
Net assets per share 260p 344p 304p
Loss per share - continuing
operations (44.98)p (0.52)p (39.9)p
Operational Review
Gleeson Regeneration & Homes and Gleeson Strategic Land
An operating loss of £14.7m (2007: £0.7m) was recorded for the period. Included within these results are exceptional
costs of £11.5m, with £11.0m relating to the write down of land and work in progress, £0.2m relating to excess
property costs and £0.3m relating to the cost of redundancies.
Gleeson Regeneration & Homes recorded units for revenue purposes totalling 150 (2007: 224) at an average selling
price of £101,000 (2007: £145,000). Of these, 111 (2007: 178) were from the northern trading regions of the North
West and Yorkshire. The balance of 39 (2007: 46) were from the southern trading region. The decrease in unit sales
is predominantly a result of the market conditions noted previously. The focus during the period has been to ensure
that the build programme for private developments is aligned to the reduced level of consumer demand and to
continue to build to contract for Housing Associations. The headcount for the business unit decreased by 70% in the
period.
Gleeson Strategic Land recorded no material land transactions during the period under review, as was the case in the
comparable period. At 31 December 2008, the Group had 3,793 acres (2007: 3,479 acres) held under 69 (2007: 67)
option and development agreements. During the period planning consent was secured on greenfield housing sites in
West Sussex and Essex, which are due to deliver 320 homes. In addition, a further 216 acres have been secured
under option to be promoted through the planning process.
Gleeson Capital Solutions
An operating loss of £0.5m (2007: profit £0.7m) was recorded for the period. Included within these results are
exceptional costs of £0.5m relating to excess property costs and the cost of redundancies. The prior period
included the benefits of the financial close on Cheshire Extra Care Homes.
The business unit remains prominent within its targeted market place and has been shortlisted as one of two bidders
on two PFI investment opportunities. If successful, these projects will deliver long term equity returns to this
business unit as well as provide Gleeson Regeneration & Homes with housing development opportunities and
Powerminster Gleeson Services with long-term facilities management contracts.
At 31 December 2008, the business held investments in four core PFI projects and one non-core PFI projects.
Powerminster Gleeson Services
An operating profit of £0.3m (2007: £0.4m) was recorded for the period. Although the facilities management and
maintenance markets have become more competitive, Powerminster Gleeson Services has maintained its order book
at £158m and continues to generate positive cash flow.
Group Overheads
Group overheads for the period under review totalled £2.7m (2007: £3.1m), which included £0.6m of exceptional
costs to cover redundancies and excess property provisions. Following the redundancies, which affected the Company
Secretariat, Group Finance and Human Resources, the annual run rate has been significantly reduced from £6.1m for
the year ended 30 June 2008 to approximately £2.8m.
Gleeson Commercial Property Developments
Although the results of this business are included within operating profit, it is in run-off, as announced in March
2007.
An operating loss of £6.3m (2007: profit £0.3m) was recorded for the period under review. The result included an
exceptional write down of £5.7m on the carrying value of the remaining developments.
Gleeson Construction Services
The Group sold certain contracts, assets and liabilities of Gleeson Building Contracting Division to Gleeson Building
Limited (now re-named GB Building Solutions Limited) in August 2005. Any financial results arising from contracts,
assets and liabilities retained by the Group are recorded within operating profit. A loss of £0.1m was recorded in the
period (2007: £nil).
Balance Sheet and Cash Flow
Total shareholders' equity of £135.9m was £23.5m (14.8%) lower than 30 June 2008 of £159.2m, due to the post-
tax loss incurred in the period.
The Group's net cash balance at 31 December 2008 was £7.1m, a cash outflow of £14.8m in the period. Included in
this cash outflow were payments for land acquisitions which were contracted for on a deferred payments basis
totalling £10.6m. The Group has further land payment commitments of £0.1m for the remainder of the financial year.
Investing activities generated £4.0m from the disposal of ground rents, interest received and the liquidation of
fixed income deposits. Financing activities generated £0.3m.
Board Changes
The Board announced at the Annual General Meeting on 12 December 2008 that Paul Wallwork, the Group Chief
Executive, would be resigning with effect from 31 December 2008. Paul was appointed to the Board in January 2006
as Group Finance Director and became Group Chief Executive in January 2007, having previously served as Interim
Group Chief Executive since July 2006. The Board would like to thank Paul for his strong and energetic leadership of
the Group through an extremely challenging period.
The Board also announced at the Annual General Meeting the appointment, as Group Chief Executive, with effect
from 1 January 2009, of Chris Holt who, since May 2007, has been Group Finance Director and prior to that held the
position of Interim Group Finance Director from August 2006. To replace Chris Holt, the Board announced the
appointment of Alan Martin as Group Finance Director with effect from 1 January 2009. Alan was previously Group
Financial Controller, a position he has held since November 2006.
The Board announced on 23 December 2008 the appointment of Christopher Mills as a non-executive Director, with
effect from 1 January 2009. Christopher Mills is a Partner and Chief Investment Officer of North Atlantic Value LLP, a
substantial shareholder since March 2005, with a current shareholding of 18.2% in the Company.
Dividends
Notwithstanding current expectations for the Group to remain cash positive, given the result for the
period, combined with the continuing weakness of the housing market, the absence of visibility as to when stability
will return and the Board's commitment to prioritising cash management, the Board has decided not to declare an
interim dividend for the year to 30 June 2009.
Risks and Uncertainties
The principal risks and uncertainties that have been identified as being capable of affecting the Group's performance
in the second half are set out below:
Employment security, interest rates and mortgage availability
These factors are the key determinants of house buyers' confidence. With the UK economy in recession, employment
prospects have become increasingly uncertain. Although interest rates are now at their lowest ever level, the
availability of mortgage finance remains scarce. Until buyer confidence returns to the market and mortgage finance
becomes more readily available, the Group will continue to be unable to predict private unit sales with any accuracy.
To minimise cash outflows, the Group continues to build in a controlled and limited manner, principally social and
affordable housing stock on a pre-agreed contract basis for Housing Associations, thereby reducing its exposure to
demand risk to the private sector.
Demand for land with planning consent
The Group derives profit from the sale to other developers of land which it acquires through the exercise of option
agreements when it succeeds in obtaining appropriate planning consents. It is difficult to predict with any precision
the date by which options are likely to become exercisable. Moreover, there is inevitably some uncertainty in current
circumstances about the appetite of developers for acquiring new sites. The Group will only exercise options over
land when it believes that, by doing so, shareholder value will be maximised.
Demand for commercial property
Since March 2007, the Group has been engaged in running off its commercial property development portfolio.
Demand for small scale commercial properties has been significantly affected by the reduced availability and greater
cost of finance and by a lack of confidence in values. When the Group is able to let completed development
properties, rather than to sell them at an unacceptable price, it will retain them, benefiting from the rental income
until the property investment market improves.
Prospects
Although there are some signs of increased interest on the part of potential buyers, the continuing dearth of
mortgage finance means that the housing market is likely to remain extremely weak for at least the remainder of
2009. Against this background, the Group's strategy remains to maximise cash inflows without sacrificing value and
to minimise cash outflows by restricting building expenditure in the main to the construction of presold social housing
projects. The Group continues to invest selectively in its Powerminster Gleeson Services
and Gleeson Strategic Land businesses.
The Group has a strong balance sheet and overheads have been substantially reduced, without compromising the
quality and effectiveness of the Group's core skill base and competencies. Accordingly, the Group is well-placed to
withstand a prolonged downturn in demand and to resume growth once liquidity and confidence return to the market.
Dermot Gleeson
Chairman

for the six months to 31 December 2008
Six months to
31 December
Six months to 31 December 2008 2007 Y ear to 30 June 2008
Unaudited Unaudited Unaudited Unaudited Audited Audited Audited

Before Exceptional Bef ore Exceptional
Exceptional Items Exceptional Items
Items Note 5 Items Note 5
£000 £000 £000 £000 £000 £000 £000
Continuing operations
Rev enue 30,588 - 30,588 48,908 97,969 (3,376) 94,593
Cost of sales (27,979) (16,741) (44,720) (41,111) (87,318) (8,884) (96,202)
Gross profit/(loss) 2,609 (16,741) (14,132) 7,797 10,651 (12,260) (1,609)
Administrativ e expenses (8,713) (1,586) (10,299) (10,691) (22,100) (5,180) (27,280)

Prof it on sale of inv estments in
PFI projects - - - - 1,194 - 1,194
Prof it on sale of inv estment

and owner occupied properties 208 - 208 224 1,868 - 1,868
Valuation (loss)/gains on
inv estment properties (59) - (59) 26 1,290 - 1,290
Share of prof it of joint v entures
(net of tax) 228 - 228 213 218 - 218
Operating loss (5,727) (18,327) (24,054) (2,431) (6,879) (17,440) (24,319)
Financial income 642 - 642 2,360 4,044 - 4,044
Financial expenses (295) - (295) (244) (551) - (551)
Loss before tax (5,380) (18,327) (23,707) (315) (3,386) (17,440) (20,826)
Tax 168 - 168 42 1 - 1
Loss for the period from

continuing operations (5,212) (18,327) (23,539) (273) (3,385) (17,440) (20,825)
Prof it f or the period f rom
discontinued operations (net of
tax) 87 - 87 - 975 - 975
Loss for the period
attributable to equity holders
of the parent company (5,125) (18,327) (23,452) (273) (2,410) (17,440) (19,850)
Loss per share attributable

to equity holders of parent
company
Basic (44.81) (0.52) (38.03)
Diluted (44.81) (0.52) (38.03)
Loss per share from

continuing operations
Basic (44.98) (0.52) (39.90)
Diluted (44.98) (0.52) (39.90)

as at 31 December 2008

31 Decem ber
2008 31 December 2007 30 June 2008
£000 £000 £000
Restated
Non-current assets
Investment property 2,941 5,600 4,813
Investments in joint ventures 3,277 3,043 3,050
Loans and other investments 14,994 21,786 21,860
Deferred tax assets 3,711 3,215 3,889
37,283 46,129 45,626
Current assets
Inventories 77,359 91,201 81,667
UK corporation tax 1,893 353 2,130
Assets reclassified as held for sale - 2,680 -
148,168 194,750 172,897
Total assets 185,451 240,879 218,523
Provisions (4,400) - (4,364)
Deferred tax liabilities (328) - (328)
(4,728) - (4,692)
Current liabilities
Provisions (2,401) (850) (3,266)
(44,791) (61,437) (54,592)
Total liabilities (49,519) (61,437) (59,284)
Net assets 135,932 179,442 159,239
Equity
Revaluation reserve - 657 -
Total equity 135,932 179,442 159,239

Six m onths to Six months to
31 Decem ber 31 December Year to 30
2008 2007 June 2008
£000 £000 £000
Loss before tax from continuing operations (23,707) (315) (20,826)
Profit/(loss) before tax from discontinued operations 87 - (955)
(23,620) (315) (21,781)
Depreciation of property, plant and equipment 135 316 1,016

Share-based payments 116 216 492
Profit on sale of investment and ow ner occupied properties (208) (224) (1,868)
Profit/(loss) on sale of other property, plant and equipment (31) 20 (30)
Profit on sale of investments in PFI projects - - (1,194)
Impairment of investments in joint ventures 5,165 - -
Valuation loss/(gain) on investment properties 59 (26) (1,290)
Share of profit of joint ventures (net of tax) (228) (213) (218)
New ground rents capitalised - (5) (25)
Financial income (805) (2,360) (4,044)
Financial expenses 295 244 551
Operating cash flow s before m ovem ents in w orking
capital (19,122) (2,347) (28,391)
Decrease/(increase) in inventories 4,308 (9,319) 215

Decrease in receivables 5,183 18,790 21,230
Decrease in payables (9,657) (14,104) (17,092)
Cash utilised in operating activities (19,288) (6,980) (24,038)
Tax received 583 695 1,139

Tax paid - (2,313) (2,594)
Interest paid (399) (97) (98)
Net cash flow s from operating activities (19,104) (8,695) (25,591)
Proceeds from disposal of net assets held for sale - 105 3,743
Proceeds from disposal of assets and liabilities - Engineering
Division - - 3,100
Proceeds from disposal of investment and ow ner occupied
properties 2,166 208 3,075
Proceeds from disposal of other property, plant and equipment 31 131 160
Proceeds from disposal of investments in PFI projects - - 1,898
Interest received 444 1,569 2,511
Purchase of property, plant and equipment (145) (733) (861)
Net decrease in loans to joint ventures and other investments 1,550 1,011 613
Net cash flow s from investing activities 4,046 2,291 14,239
Proceeds from issue of shares 184 144 149
Purchase of ow n shares - (115) (109)
Ow n shares disposed 77 - -
Dividends paid - (3,809) (4,855)
Net cash flow s from financing activities 261 (3,780) (4,815)
Net decrease in cash and cash equivalents (14,797) (10,184) (16,167)
Cash and cash equivalents at beginning of period 21,875 38,042 38,042
Cash and cash equivalents at end of period 7,078 27,858 21,875
Consolidated Statement of Recognised Income and Expenses


Six m onths to
31 Decem ber Six months to 31 Year to 30
2008 December 2007 June 2008
£000 £000 £000
Loss for the period attributable to equity

holders of the parent com pany (23,452) (273) (19,850)
Revaluation of ow ner-occupied property - (19) -
Deferred tax (expense)/credit on ow ner-occupied property - (43) 90
Net (expense)/income recognised directly in equity - (62) 90
Total recognised expense for the period attributable

to equity holders of the parent com pany (23,452) (335) (19,760)
NOTES TO THE FINANCIAL STATEMENTS
The consolidated Interim Report of the Group for the six months ended 31 December 2008 has been prepared in
accordance w ith IAS 34 'Interim Financial Reporting' and International Financial Reporting Standards ('IFRS') as
adopted for use in the European Union ('EU') and in accordance w ith the Disclosure and Transparency Rules of the Financial Services
Authority.
The Interim Report does not include all the information and disclosures required in annual financial statements, and
should be read in conjunction w ith the Group's annual financial statements for the year ended 30 June 2008.
The financial information contained in this Interim Report does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. The financial information contained in this Interim Report has been neither audited nor review ed by the
auditors.
The comparative figures for the year ended 30 June 2008 have been extracted from the 2008 annual financial statement, prepared in
accordance w ith IFRS, as adopted for use in the EU and as applied in accordance w ith the provision of the Companies Act 1985, w hich have
been filed w ith the Registrar of Companies. The auditors' report on these accounts w as unqualified and did not contain a statement under
section 237(2) or 237(3) of the Companies Act 1985.
The follow ing restatement has been made to the 31 December 2007 comparatives:
- reclassification of £850,000 from Trade and other payables to Provisions.
The restatement has no impact on the Income Statement or Net Assets.
This Interim Report w as approved for issue by the Board of Directors on 24 February 2009.
The accounting policies adopted are consistent w ith those of the annual financial statements for the year ended 30 June 2008, as described in
those financial statements.
3. Responsibility statem ent

The Directors confirm that this consolidated Interim Report has been prepared in accordance w ith IAS34 and that the Chairman's Statement and
the notes to the financial statements herein includes a fair review of the information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8R
(disclosure of related party transactions and changes therein).
4. Segm ental Analysis

Six m onths to
31 Decem ber Six months to 31 Year to 30 June
2008 December 2007 2008
£000 £000 £000
Revenue
Continuing activities:
Gleeson Regeneration & Homes and Gleeson Strategic Land 19,601 33,751 64,015
Gleeson Capital Solutions 30 854 1,200
Pow erminster Gleeson Services 9,426 9,734 19,538
Gleeson Commercial Property Developments 1,531 3,040 8,250
Gleeson Construction Services - 1,529 1,590
30,588 48,908 94,593
Discontinued activities:
Gleeson Construction Services 2,225 6,874 12,385
Total revenue 32,813 55,782 106,978
(Loss)/profit on activities
Gleeson Regeneration & Homes and Gleeson Strategic Land (14,672) (712) (16,296)
Gleeson Capital Solutions (528) 722 2,338
Pow erminster Gleeson Services 282 429 1,088
Gleeson Commercial Property Developments (6,304) 270 (1,196)
Gleeson Construction Services (83) - (4,130)
(21,305) 709 (18,196)
Group Activities (2,749) (3,140) (6,123)
Financial income 642 2,360 4,044
Financial expenses (295) (244) (551)
Loss before tax (23,707) (315) (20,826)
Tax 168 42 1
Loss for the period from continuing operations (23,539) (273) (20,825)
Profit for the period from discontinued operations and gain on sale of
discontinued operations (net of tax) 87 - 975
Loss for the period attributable to equity holders of the

parent com pany (23,452) (273) (19,850)
Im pairm ent of inventories

During the 6 months to 31 December 2008, the Group conducted review s of the net realisable value of its land and w ork in progress carrying
values of its sites in the light of the current deterioration in the UK housing and commercial property markets. Where the estimated future net
present realisable value of the site is less than its carrying value w ithin the balance sheet, the Group has impaired the land and w ork in
progress value.
Im pairm ent of am ounts due from construction contracts

During the 6 months to 31 December 2008, the Group conducted a review of the net realisable value of amounts due from construction
contracts in the light of the current deterioration in the UK housing market. Where the estimated future net present realisable value is less than
its carrying value w ithin the balance sheet, the Group has impaired the carrying value.
Im pairm ent of loans to joint ventures

During the 6 months to 31 December 2008, the Group conducted a review of the net realisable value of loans to
joint ventures in the light of the current deterioration in the UK commercial property market. Where the value of the property held w ithin the joint
venture has decreased due to the deterioration in the commercial property market resulting in the loan not being recoverable in full, the Group
has impaired the loan to the recoverable amount.
Restructuring costs
During the 6 months to 31 December 2008, the Group incurred £1.6m of costs in relation to reorganising and restructuring the business,
including redundancy costs of £1.1m w here existing employees could not be retained w ithin the Group.
These exceptional costs may be summarised as follow s:

31 Decem ber 31 December Year to 30 June
2008 2007 2008
£000 £000 £000
Impairment of inventories 9,805 - 7,284

Impairment of amounts due from construction
contracts 1,771 - 3,376
Impairment of loans to joint ventures 5,165 - -
Onerous contract - - 1,600
Restructuring costs 1,586 - 5,180
18,327 - 17,440
6. Discontinued operations
The Group disposed of certain assets and liabilities of the Gleeson Engineering Division of Gleeson Construction Services to Black and Veatch
Limited ('B&V') in a prior period and treated this as a Discontinued Operation. A small number of contracts w ere legally retained but the
operations w ere taken over by B&V on the Group's behalf on a cost plus basis. Consequently, the Group has no involvement in the day to
day running of these contracts and acts as an intermediary. At the time of the sale, the remaining costs to complete the contracts w ere
considered insignificant in relation to the separately identifiable division as a w hole.

2008 2007 2008
£000 £000 £000
Revenue 2,225 6,874 12,385

Cost of sales (2,216) (6,941) (12,877)
Gross profit / (loss) 9 (67) (492)
Administrative expenses (85) 67 (463)

Operating loss (76) - (955)
Financial income 163 - -

Profit before tax 87 - (955)
Tax - - 1,930
Profit for the period from discontinued

operations 87 - 975
Earnings per share

2008 2007 2008
p p p
Basic 0.17 0.00 1.87
Diluted 0.17 0.00 1.85
The cash flow statement includes the follow ing relating to profit on discontinued operations:
2008 2007 2007
£000 £000 £000
Operating activities 87 - (955)

87 - (955)
From continuing and discontinued operations
The calculation of the basic and diluted earnings per share is based on the follow ing data:
Earnings Unaudited Unaudited Audited

Six m onths to Six months to 31 Year to 30
31 Decem ber December 2007 June 2008
2008
£000 £000 £000
Earnings for the purposes of basic earnings per share, being net (loss)/profit
attributable to equity holders of the parent company:
Loss from continuing operations (23,539) (273) (20,825)
Profit from discontinued operations 87 - 975
Earnings for the purposes of basic and diluted earnings per share (23,452) (273) (19,850)
Num ber of shares

2008 2007 2008
No. 000 No. 000 No. 000

basic earnings per share 52,334 52,171 52,197
Effect of dilutive potential ordinary shares:
Share options - 220 574

diluted earnings per share 52,334 52,391 52,771

2008 2007 2008
p p p
Basic (44.98) (0.52) (39.90)
Diluted (44.98) (0.52) (39.90)
From discontinued operations

2008 2007 2008
p p p
Basic 0.17 0.00 1.87
Diluted 0.17 0.00 1.85

2008 2007 2008
p p p
Basic (44.81) (0.52) (38.03)
Diluted (44.81) (0.52) (38.03)
8. Related Party Transactions
During the period the Group provided goods and services to related parties totalling £0.5m (six months to
31 December 2007: £1.3m; 12 months to 30 June 2008: £2.0m).
The amounts ow ed by related parties at 31 December 2008 totalled £25.0m (31 December 2007: £33.2m;
30 June 2008: £28.6m).

END
IR EAXALAFPNEFE
5/24/13 Gleeson (M J) Group | Replacement Preliminary Annou | FE InvestEgate
Gleeson (M J) Group
Replacement Preliminary Annou

RNS Number : 6096Z
24 September 2009
The following amendments have been made to the Preliminary Announcement released today at 7.00 a.m.
under RNS No 5720Z.
Deferred tax liabilities: (291) replaces (271)
Total liabilities: (37,637) replaces (37,674)
All other details remain unchanged.
The full amended text is shown below.
Thursday 24 September 2009
MJ GLEESON GROUP PLC - PRELIMINARY ANNOUNCEMENT
Gleeson (GLE.L), the urban regeneration and strategic land specialist, announces its results for the year to 30
June 2009.
During the year, market conditions in the housebuilding sector continued to deteriorate, as indicated in the
Interim Announcement of 25 February 2009 and the Interim Management Statement of 15 May 2009. Since
the year end, however, there have been some signs of improvement in buyer interest.
Revenue from continuing operations decreased by 42% to £55.0m (2008: £94.6m), mainly
reflecting substantial reductions in both units sold and average selling price.
Excluding exceptionals, the pre-tax loss was £8.3m (2008: £3.4m).
Exceptional charges totalled £46.0m (2008: £17.4m), of which £44.6m (2008: £12.3m)
was non-cash and related to downward asset revaluations.
The loss before tax from continuing operations was £54.3m (2008: £20.8m), equating to a
loss per share of 109.3p (2008: 39.9p).
Year end total shareholders' equity decreased by 35% to £103.4m (2008: £159.2m),
www.investegate.co.uk/ArticlePrint.aspx?id=200909241223086096Z 1/26
representing net assets per share of 197p (2008: 304p), also down 35%.
Year end net cash totalled £10.9m, which compares with £7.1m at 31 December 2008 and
£21.9m at 30 June 2008. Since the year end, net cash has risen to £16.0m.
Gleeson Regeneration & Homes and Gleeson Strategic Land made an operating loss of £
43.7m (2008: £16.3m) on revenue of £34.2m (2008: £64.0m); excluding exceptionals, the
loss was £6.3m (2008: £1.2m).
Gleeson Regeneration & Homes sold 317 (2008: 436) units, down 27%, at an average selling
price of £102,000 (2008: £149,000), down 32%, reflecting a higher proportion of sales to
registered social landlords.
Gleeson Strategic Land made no land sales, but increased its portfolio of options to 3,755
(2008: 3,621) acres
Powerminster Gleeson Services (social housing maintenance) traded well, making an operating
profit of £1.0m (2008: £1.1m) on revenue of £18.7m (2008: £19.5m), and increased its
already substantial order book to £169.5m (2008: £158.8m).
Gleeson Commercial Property Development (in run-off) now has only three sites remaining.
The central overhead reduced by 41% to £3.6m (2008: £6.1m), of which £0.6m (2008:
£0.7m) was exceptional.
Dermot Gleeson, Chairman, stated 'Although conditions in the housing market remain very difficult,
particularly in respect of regeneration areas in the North of England, recent months have seen some signs of
improvement in buyer interest. Visitor levels have increased, selling prices appear to be stabilising, at least for
the time being, and reservations in the current financial year are ahead of prior year comparables.
It is too early, however, to call an end to the downturn. Mortgage availability remains very restricted and a
high proportion of sales at the lower end of the market are only possible on a shared equity basis. Moreover,
it remains to be seen how severely the continuing rise in unemployment will affect housing demand.
Against this background, the Group's main focus will continue to be on rigorous cost control and cash
generation. This will enable it to lay the solid foundations on which sustained growth can be achieved once
more normal conditions return.'
Enquiries:

Chris Holt (GCEO)
Alan Martin (GFD)
During the year, market conditions in the housebuilding sector continued to deteriorate, as indicated in the
Interim Announcement of 25 February 2009 and the Interim Management Statement of 15 May 2009. As a
result, there has been a further substantial decrease in revenue and a more than doubling of the pre-tax loss.
Since the year end, however, there have been some signs of improvement in buyer interest.
Financial Overview
Revenue from continuing operations decreased by 42% to £55.0m (2008: £94.6m). £29.8m of this £39.6m
decrease resulted from the combined impact of a 27% reduction in housing unit sales, from 436 to 317, and a
32% decrease in average selling price ('ASP'), from £149,000 to £102,000.
A loss before tax from continuing operations of £54.3m (2008: £20.8m) was recorded. This included
exceptional charges of £46.0m (2008: £17.4m), of which £44.6m (2008: £12.3m) was non-cash and related
to downward asset revaluations.
Discontinued operations generated a post-tax profit of £0.9m (2008: £1.0m).
The year end total equity attributable to equity holders of the parent company decreased by 35% to £103.4m
(2008: £159.2m), representing net assets per share of 197p (2008: 304p). Net cash at 30 June 2009 was
£10.9m (2008: £21.9m), an increase of £3.8m since 31 December 2008.
Business Review
The Group's continuing operations comprise ongoing business units and business units in run-off.
The Group's ongoing business units - Gleeson Regeneration & Homes and Gleeson Strategic Land,
Gleeson Capital Solutions and Powerminster Gleeson Services - had differing result profiles, which are set
out in detail below.
Gleeson Regeneration & Homes and Gleeson Strategic Land continued to trade poorly due to weak market
conditions. Unit sales were low and there were no strategic land sales. Gleeson Strategic Land has, however,
added to its portfolio of options and now has 3,755 acres (2008: 3,621 acres) under option. Exceptional
charges of £37.4m (2008: £15.1m) were incurred within these businesses, of which £0.3m related to
shrinking the business and £37.1m related to a reduction in value of land, amounts recoverable on contracts
and work in progress.
Gleeson Capital Solutions recorded a loss of £0.1m (2008: £2.3m), before exceptional costs to restructure
the business of £0.5m (2008: £nil). In the year, no PFI investments were sold and no new PFI projects
reached financial close.
Powerminster Gleeson Services made a pre-tax profit of £1.0m (2008: £1.1m) and increased its already
substantial long term order book to £169.5m (2008: £158.8m).
The Group's business units in run-off comprise Gleeson Commercial Property Developments and Gleeson
Building Contracting Division within Gleeson Construction Services Limited.
Gleeson Commercial Property Developments has been in run-off, starting no new schemes and liquidating its
portfolio, since March 2007. In the year, four sites were sold out, with five (two of them small) remaining at
the year end; two of these (one small) have subsequently been sold. The weak market conditions have not
only prolonged this run-off but have also resulted in an exceptional charge of £7.5m relating to the reduction
in the value of the portfolio. At 30 June 2009, the net asset value of the portfolio was £11.5m (2008:
£19.7m).
Gleeson Building Contracting Division recorded a loss of £0.1m (2008: £4.1m).
Group Activities (the central overhead) reduced by 41% to £3.6m (2008: £6.1m), which included
exceptional charges of £0.6m (2008: £0.7m).
Board
Paul Wallwork resigned as Group Chief Executive with effect from 31 December 2008. Paul was appointed
Group Finance Director in January 2006, Interim Group Chief Executive in July 2006 and Group Chief
Executive in January 2007. I would like to thank Paul for his strong and energetic leadership through an
extremely challenging period.
Chris Holt was appointed Group Chief Executive with effect from 1 January 2009. Chris had been Group
Finance Director since May 2007 and prior to that held the position of Interim Group Finance Director from
August 2006.
Alan Martin was appointed Group Finance Director with effect from 1 January 2009. Alan had been Group
Financial Controller since November 2006.
Christopher Mills was appointed a non-executive Director with effect from 1 January 2009. Christopher is
Chief Investment Officer of North Atlantic Value LLP, which has been a substantial shareholder since March
2005 and currently has a shareholding of 18.1% in the Company.
Since 1 January 2009, the Board has comprised two Executive Directors, four Non-Executive Directors
(three of whom are considered to be independent) and myself as Non-Executive Chairman.
Employees
The average number of employees reduced in the year to 311 (2008: 394), and the number at the year end
was 286 (2008: 382), of which 196 (2008: 188) are employed in Powerminster Gleeson Services.
The Board would like to thank all employees for their commitment and continuing dedication during the year,
especially given the difficult and uncertain market conditions with which the Group has had to contend.
Although conditions in the housing market remain very difficult, particularly in respect of regeneration areas in
the North of England, recent months have seen some signs of improvement in buyer interest. Visitor levels
have increased, selling prices appear to be stabilising, at least for the time being, and reservations in the
current financial year are ahead of prior year comparables.
It is too early, however, to call an end to the downturn. Mortgage availability remains very restricted and a
high proportion of sales at the lower end of the market are only possible on a shared equity basis. Moreover,
it remains to be seen how severely the continuing rise in unemployment will affect housing demand.
Against this background, the Group's main focus will continue to be on rigorous cost control and cash
generation. This will enable it to lay the solid foundations on which sustained growth can be achieved once
more normal conditions return.
Dividends
No dividend is proposed for the year to 30 June 2009.
Dermot Gleeson
Chairman
BUSINESS REVIEW
Management has reacted to the worst housing market in generations by reducing costs and conserving cash.
Actions have been taken to ensure that the Group is well positioned to grow once economic conditions
improve.
Group Businesses and Strategy
Gleeson is predominantly a housebuilder, focused on the regeneration sector and with particular emphasis on
creating sustainable communities.
The Group comprises ongoing businesses and businesses in run-off:
Ongoing Businesses
Gleeson Regeneration & Homes and Gleeson Strategic Land - Gleeson Regeneration & Homes
focuses on estate regeneration and housing development on brownfield land in the north of England. Its
current strategy, in response to very weak market conditions, has been to minimise build and labour spend on
sites and maximise cash flow by selling stock plots.
Gleeson Strategic Land focuses on the selective identification and purchase of options over land in the south
of England, with the objective of successfully expediting these land options through the planning process.
Powerminster Gleeson Services - focuses on both planned and emergency response work on third party
property assets and on long-term maintenance programmes supporting Gleeson PFI projects which include
lifecycle replacements. Its current strategy is to continue to focus on social housing maintenance, both within
the estates that the Group regenerates and from the wider social housing market.
Gleeson Capital Solutions - manages the Group's PFI investments in social housing and takes the lead in
developing and investing in new PFI opportunities that bring work to both Gleeson Regeneration & Homes
and Powerminster Gleeson Services together with equity returns on the investments. Its strategy is to grow its
portfolio of investments.
Group Activities - comprises the Board, Company Secretary and Group Finance.
Businesses in Run-off
Gleeson Commercial Property Developments - previously engaged in commercial property

development, mainly in the south of England, and has been in run-off since March 2007.
Engineering and Building Contracting - the Group sold certain contracts, assets and liabilities of the
Engineering Division in October 2006 to Black & Veatch Limited and of the Building Contracting Division in
August 2005 to Gleeson Building Limited (now GB Building Solutions Limited), a management buy-out
vehicle. The run-off activity of the former is reported as a discontinued operation, whilst that of the latter is
reported as a continuing operation.
Operating Risk Statement
The Group has established risk management procedures, involving the identification, control and monitoring of
risks at various levels within the organisation. However, there are other significant risks out of the Group's
control which could affect its business, which include but are not limited to the following:
Risks common to the Group
Funding - The Group must have sufficient cash resources and facilities to finance its operations.
Health & Safety - The Group must have adequate systems and procedures in place to mitigate, as far as
possible, the dangers inherent in the execution of work in the Group's continuing businesses.
People - The Group must attract and retain the right people to ensure the Group's long-term success.
Insurance - The Group must maintain suitable insurance arrangements to underpin and support the many
areas in which the Group is exposed to risk or loss.
Information Technology - The Group must have suitable systems to ensure that a reliable flow of
information operates throughout the Group and that the risk of system loss is mitigated by appropriate
contingency plans.
Risks specific to Gleeson Regeneration & Homes and Gleeson Strategic Land
National and Regional Economic Conditions - The housebuilding industry is sensitive to availability of
mortgage finance, employment levels, private and buy-to-let housing demand, interest rates, and consumer
confidence. A continuation of the current poor conditions overall will have a negative impact on these
business units.
Planning - There is a risk of unanticipated delays in planning approvals and the imposition of onerous
conditions.
Valuations - There is no certainty that asset values have reached a low point.
Risks specific to Powerminster Gleeson Services
Pricing - Managing the cost of delivering the required services and service levels against the price that can be
obtained for those services is a key metric within this business unit.
Execution - To recruit and retain quality personnel to ensure that contracted service levels are consistently
delivered or exceeded in order to achieve customer satisfaction, thereby enhancing the opportunity for repeat
business and avoiding contract penalties.
Risks specific to Gleeson Capital Solutions
Government Policy - The business unit is dependent upon the Government's continued commitment to PFI
procurement as a means of funding regeneration.
Bid Costs - Substantial bid costs can be incurred, without recovery, in seeking to procure new investments.
Risks specific to Businesses in Run-off
Market conditions - The business' ability to sell off the remaining development sites profitably depends
upon there being no further deterioration in the commercial property market.
Engineering and Building Contracting
Completion of retained projects - These businesses must complete outstanding work on retained projects
within the provisions made by management.
Latent defects - The Group did not dispose of all of its historical contracts, which means that it is exposed
to any latent defects that may arise within 12 years of completion of a project.
Performance
Gleeson Regeneration & Homes and Gleeson Strategic Land
The business segment's results for the year, which included exceptional charges of £37.4m (2008: £15.1m),
were as follows -:
2009 2008
Revenue £34.2m £64.0m
Operating Loss £(43.7)m £(16.3)m
The exceptional items are detailed as follows -:
2009 2008
Non-cash valuation write down of land and work in £37.1m £10.7m
progress
Restructuring costs £0.3m £4.4m
£37.4m £15.1m
Gleeson Regeneration & Homes
Colin Rossiter was appointed Managing Director of this business unit with effect from March 2009. Colin has
eight years of experience with the Group and combines this appointment with his role as Managing Director
of Gleeson Capital Solutions.
In response to the continuing very low level of customer demand and the generally poor market conditions
seen across the sector, the business unit maintained an emphasis on conserving cash by halting speculative
building and selling stock units.
With the reduced activity levels, it has been necessary to reduce office and site staff numbers and these
decreased during the year by more than one-half, from 136 to 58.
The business unit has nine regeneration sites, all of which - apart from Ashford, Kent - are in the North. In
addition, the business unit has two non-regeneration sites.
During the year, 317 (2008: 436) units were sold, of which private sales totalled 160 (2008: 268) and sales
to Registered Social Landlords ('RSLs') totalled 157 (2008: 168). ASP for private sales was £107,000
(2008: £175,000) and for sales to RSLs was £97,000 (2008: £109,000).
Unit sales as recognised in Revenue
2009 2009 2009 2008 2008 2008

ASP ASP
Units % £'000 Units % £'000
Private Sales* 160 51 107 268 61 175
RSL Sales 157 49 97 168 39 109
Total 317 100 102 436 100 149
* Includes equivalent units for sites which are treated as long-term contracts
Unit sales as Handed Over
2009 2009 2009 2008 2008 2008

ASP ASP
Units % £'000 Units % £'000

Private Sales 156 41 130 224 67 176
RSL Sales 221 59 99 110 33 104
Total 377 100 112 334 100 152
Market sector analysis
2009 2009 2009 2008 2008 2008

ASP ASP
Units % £'000 Units % £'000
Private Sales - 1 & 2 63 17 96 86 26 141
beds
Private Sales - 3 beds 57 15 142 101 30 168
Private Sales - 4 beds 30 8 154 33 10 248
Private Sales - 5 or 6 2 264 4 1 530
more beds
RSL Sales 221 58 99 110 33 104
Total 377 100 112 334 100 152
Product mix analysis
2009 2009 2009 2008 2008 2008

ASP ASP
Units % £'000 Units % £'000
Apartments 52 14 88 88 26 140
Three storey 40 11 141 30 9 171
Room in roof 10 3 267 23 7 289
Traditional - other 54 14 138 83 25 186
RSL Sales 221 58 99 110 33 104
Total 377 100 112 334 100 152
2009 2008
% brownfield land units 100 95
Gleeson Strategic Land
As a supplier of consented development land to the market, the problems currently experienced by the
housebuilding sector have resulted in poor market conditions. Land values have fallen substantially and the
Board anticipates that any sales receipts will be spread over a longer period as housebuilders will look to
balance cash inflows with land purchase costs. Despite this, the Group is positioning itself to bring sites to the
market during the current financial year.
During the year, Gleeson Strategic Land has reacted to market conditions by concentrating on securing
planning approvals. In addition and in accordance with Group policy on cash
conservation, Gleeson Strategic Land has restricted the number of new opportunities pursued. During the
year, four new opportunities were secured (235 acres, including one site that is allocated for 100 units)
At the year end, the portfolio totalled 3,755 (2008: 3,621) acres, most of which is in
Southern England (Buckinghamshire, Dorset, Hampshire, Kent, Oxfordshire, Surrey, Sussex and Wiltshire).
Regional Planning Policy - The Government's Regional Planning Policy is embodied in policy documents
known as the South West, South East, East of England and West Midlands Regional Spatial Strategies
(RSS). These advanced through their legislative process during the year, with the South East RSS now
adopted. Gleeson Strategic Land controls some 900 acres of land identified specifically within growth areas
identified in these policy documents.
The Group's landholdings are predominately in locations where the Government wishes to see an increase in
housing delivery and this is reflected within the district-wide housing provision set out in each RSS. This will
assist in the future promotion of the Group's land opportunities.
Local Development Frameworks (LDFs) - At the district council level, planning policy is contained within
LDFs. These frameworks contain the local policy endorsed by each district to guide development, usually
over the next 10 years. They seek to implement the policy of the RSSs and identify specific site allocations.
Gleeson Strategic Land is engaged in promoting the Group's landholdings through the LDF process to secure
allocations. In total, the Group holds 430 acres allocated in adopted or emerging LDFs or Local Plans.
Planning Applications - Gleeson Strategic Land has planning applications lodged awaiting consent on 3
sites equating to 22 acres of residential land and 6 acres of commercial land. During the year, one of these
sites (100 units) was purchased in anticipation of consent, to maximise future profit.
Planning Consents - During the year, planning consent was secured on 2 sites, which means that the Group
currently holds in excess of 1,700 plots of consented residential land.
Gleeson Capital Solutions holds investments in four PFI projects, namely Grove Village, an estate
regeneration project in Manchester; Stanhope, an estate regeneration project in Ashford, Kent; Avantage, an
extra care homes project in Cheshire; and Leeds Independent Living, a social housing project in Leeds.
Two of the PFI projects recently won prestigious national awards. Stanhope won an award for the
Development/Maintenance/Regeneration Team of the Year at the Inside Housing, Housing Heroes Awards
and the Leeds Independent Living scheme won an award for Best Community/User Involvement in a project
at the Public Private Finance Awards.
2009 2008
Revenue - £1.2m
Operating (Loss)/Profit (£0.6)m £2.3m
During the year, no projects achieved financial close (2008: two, generating fee income of £1.2m).
The last remaining non-core investment, in Stirling Water Seafield Limited, was disposed of during the year
for a profit of £nil (2008: two, for a profit of £1.2m).
The business unit remains active in the market and is currently bidding for a regeneration project. In the year,
it incurred £0.3m (2008: £0.4m) of speculative bid costs which were expensed.
Powerminster Gleeson Services
2009 2008
Operating Profit £1.0m £1.1m
Operating Margin 5.3% 5.6%
Keith Shivers was appointed Managing Director of this business unit in April 2009. Keith was previously
Group Operations Director and has 25 years of experience with the Group.
Powerminster Gleeson Services had another successful year, with the following notable contract awards: the
In Communities gas servicing and repair contract in Bradford, which was secured for a further four years;
electrical installation works as part of the Leeds Independent Living PFI; and several estate management
contracts in Manchester. In addition, the business expanded its geographical reach with new contracts in
South Derbyshire, Staffordshire and Cheshire. The confirmed order book at 30 June 2009 was £169.5m
(2008: £158.8m).
The business was awarded the ROSPA President's Award for safety, having secured a ROSPA Gold Award
for the tenth consecutive year.
Although the results of this business are included within continuing operations, the business is in run-off, as
announced on 30 March 2007.
The poor market conditions of 2008 continued into 2009, necessitating valuation write-downs, included
within exceptional charges, of £7.5m.
As of 30 June 2009, the business had five (2008: nine) sites remaining, all of which were build complete.
These developments had a net book value of £11.5m (2008: £19.7m). Since 30 June 2009, the business has
sold out of two sites. The pre-sold development described in last year's Report & Accounts did not
complete, resulting in the purchaser forfeiting the deposit of £0.6m. The remaining developments comprise a
trade park at Luton, a retail and flat development in Barnes, South West London, and a single unit at an office
development in Petersfield, Hampshire.
Gleeson Construction Services
2009 2008
The Group retained sufficient assets and liabilities after the disposal of its Gleeson Building Contracting
Division in August 2005 for the results of these retained assets and liabilities to be classified as continuing.
The business unit continued to resolve outstanding matters during the year, with the loss recorded being the
running costs of the unit.
2009 2008
The Group disposed of sufficient assets and liabilities of its Gleeson Engineering Division in October 2006
such that the results of these retained assets are classified as discontinued.
The retained element of the Gleeson Engineering Division recorded an operating loss for the year of £0.2m
(2008: £1.0m), which represented the running costs of the business unit.
Group Activities
These consist of the Board, Company Secretary and Group Finance. The charge for the year was £3.6m
(2008: £6.1m), of which £0.6m (2008: £0.7m) was exceptional.
FINANCE REVIEW
Overview
The financial results for the year reflected the continuing difficult trading environment in which the Group
operated.
The loss before tax from continuing operations of £54.3m (2008: £20.8m) included exceptional charges of
£46.0m (2008: £17.4m). The exceptional charges comprise:
a £44.6m non-cash charge for asset valuation write-downs;

a £1.4m provision for surplus office space, over the balance of their leases, and redundancies;
Key Performance Indicators
2009 2008
Gleeson Regeneration & Homes and Gleeson Strategic Land recorded an operating loss of £43.7m (2008:
£16.3m) on revenue of £34.2m (2008: £64.0m). Included within the operating loss is an exceptional charge
of £37.4m (2008: £15.1m), detailed as follows:
a £37.1m non-cash charge for asset valuation write-downs;

a £0.3m provision for surplus office space, over the balance of their
leases, and redundancies.
Gleeson Capital Solutions recorded an operating loss of £0.6m (2008: profit £2.3m) on revenue of £nil
(2008: £1.2m). Included within the operating loss are exceptional charges totalling £0.5m (2008: £nil) to
provide for surplus office space and redundancies. No projects for which Gleeson Capital Solutions is
bidding achieved financial close during the year. The last non-core PFI project was sold during the year for
£nil profit.
Powerminster Gleeson Services recorded a profit of £1.0m (2008: £1.1m) on revenue of £18.7m (2008:
£19.5m). As expected, operating margin declined, to 5.3% (2008: 5.6%), as the prior year had been aided
by certain non-recurring events. The confirmed order book as at 30 June 2009 was £169.5m (2008:
£158.8m).
Gleeson Commercial Property Developments made an operating loss of £8.0m (2008: £1.2m) on revenue of
£2.1m (2008: £8.3m). Included within the operating loss are non-cash exceptional charges totalling £7.5m
(2008: £1.6m), with £1.5m to write down asset valuations and £6.0m for the impairment of the joint venture
loans. At 30 June 2009, the five remaining development sites had a net book value of £11.5m (2008: nine
sites with a net book value of £19.7m).
Gleeson Construction Services, the continuing element of which comprises the run-off of the Gleeson Building
Contracting Division, recorded revenue of £nil (2008: £1.6m), on which an operating loss of £0.1m (2008:
£4.1m) was recorded.
Discontinued Operations
Discontinued operations comprise those assets and liabilities of the Gleeson Engineering Division which were
not sold to Black & Veatch in October 2006. During the year, revenue of £3.8m (2008: £12.4m) was
recorded. A profit after tax of £0.9m (2008: £1.0m) was generated, reflecting a tax credit of £0.9m arising
from adjustments to prior year tax calculations.
Interest
Net interest income of £0.9m (2008: £3.5m) was lower due to the decreased level of net cash balances
maintained by the Group throughout the year, along with significantly reduced interest rates.
Tax
A net tax charge for continuing operations, excluding tax for joint ventures, of £2.7m (2008: £nil) has been
recorded in the Income Statement. The tax charge includes the write-off of deferred tax assets of £2.8m
relating to tax losses, as usage of the losses cannot be forecast with certainty. The Group now has £88.1m
(2008: £39.1m) of tax losses which can be carried forward indefinitely.
The total tax charge, including tax on discontinued operations and tax attributable to joint ventures, was
£1.9m (2008: credit £1.9m). The net deferred tax asset has decreased to £0.6m (2008: £3.6m), largely due
to the write-off noted above.
Earnings per Share
Basic and diluted loss per share was 107.5p (2008: basic and diluted loss of 38.0p). For continuing
operations only, the basic and diluted loss per share was 109.3p (2008: basic and diluted loss of 39.9p).
Balance Sheet
At 30 June 2009, shareholders' funds totalled £103.4m (2008: £159.2m). Non-current assets decreased to
£22.1m (2008: £45.6m) due to trade receivables becoming a current asset, the write-down of the deferred
tax asset and impairment of loans to a number of joint ventures. Net current assets decreased to £85.4m
(2008: £118.3m), predominately due to the impairment of inventories.
Cash Flow, Treasury Risk Management and Bank Facilities
The Group experienced a cash outflow for the year of £11.0m (2008: £16.2m), resulting in a net cash
balance at 30 June 2009 of £10.9m (2008: £21.9m).
Operating cash flows, including working capital movements, utilised £20.4m (2008: £24.0m). Net taxes
refunded totalled £3.4m (2008: net payment £1.5m) and cash inflows from investing activities were £6.4m
(2008: £14.2m). Net cash flows from financing activities generated £nil (2008: outflow £4.8m). No dividends
were paid during the year.
The Group's cash balances are centrally pooled and invested, ensuring the best available returns are achieved
consistent with retaining sufficient liquidity for the Group's operations. The Group only deposits funds with
financial institutions which have a minimum credit rating of AA.
As the Group operates wholly within the UK, there is no requirement for currency risk management.
In June 2007, a three year £50m revolving credit facility was signed with a consortium of banks comprising
HSBC Bank (the Group's principal banker), Barclays Bank and Allied Irish Bank.
Pension
The Group operates a defined contribution pension scheme. A charge of £0.7m (2008: £0.9m) was recorded
in the Income Statement for pension contributions. The Group has no exposure to defined benefit pension
plans.
Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance
and position, are set out in the Business Review. The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described above. In addition, the notes to the financial statements
include the Group's objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and
liquidity risk.
The Group meets its day-to-day working capital requirements through its current cash resources. The current
economic conditions create uncertainty, particularly over the level of demand for the Group's goods and
services and the availability of bank finance in the foreseeable future.
The Group has a committed £50m bank facility which expires in June 2010. The Group's forecasts and
projections, even utilising pessimistic assumptions as to trading performance, show that the Group is able to
operate without this bank facility for the foreseeable future. The Group will shortly be reducing this facility to
£15m.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the annual Report and Accounts.

2009 2009 2009 2008 2008 2008

Be fore Before
Exce ptional Exce ptional Exceptional Exceptional
Ite ms Ite ms Items Items
Note 4 Note 4
£000 £000 £000 £000 £000 £000
Continuing ope rations
Revenue 59,740 (4,741) 54,999 97,969 (3,376) 94,593
Cost of sales (55,635) (33,917) (89,552) (87,318) (8,884) (96,202)
Gross profit/(loss) 4,105 (38,658) (34,553) 10,651 (12,260) (1,609)
Administrative expenses (14,103) (7,341) (21,444) (22,100) (5,180) (27,280)

Profit on sale of investments in PFI
projects - - - 1,194 - 1,194
Profit on sale of investment and
owner-occupied properties 340 - 340 1,868 - 1,868
Valuation gains on investment
properties - - - 1,290 - 1,290
Share of profit of joint ventures (net
of tax) 498 - 498 218 - 218
O pe rating loss (9,160) (45,999) (55,159) (6,879) (17,440) (24,319)
Financial income 1,444 - 1,444 4,044 - 4,044
Financial expenses (576) - (576) (551) - (551)
Loss be fore tax (8,292) (45,999) (54,291) (3,386) (17,440) (20,826)
T ax (2,652) - (2,652) 1 - 1
Loss for the ye ar from
continuing ope rations (10,944) (45,999) (56,943) (3,385) (17,440) (20,825)
Discontinue d ope rations

Profit for the year from
discontinued operations (net of tax) 920 - 920 975 - 975
Loss for the ye ar attributable to
e quity holde rs of the pare nt
company (10,024) (45,999) (56,023) (2,410) (17,440) (19,850)
Loss pe r share attributable to

e quity holde rs of pare nt
company
Basic and diluted (107.48) (38.03)
Loss pe r share from continuing

ope rations

at 30 June 2009
2009 2008
£000 £000
Restated
Non-current assets
Investment properties 1,140 3,278
Investments in joint ventures 1,888 3,050
Loans and other investments 14,582 21,860
Deferred tax assets 862 3,889
22,084 45,626
Current assets
UK corporation tax 2 2,130
118,919 172,897
Total assets 141,003 218,523
Provisions (3,803) (4,364)
Deferred tax liabilities (291) (328)
(4,094) (4,692)
Current liabilities
Provisions (1,624) (3,266)
UK corporation tax (5) -
(33,543) (54,592)
Net assets 103,366 159,239
Equity
Share capital 1,052 1,047
Total equity 103,366 159,239
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND

EXPENSE
2009 2008
£000 £000
Loss for the year attributable to equity

holders of the parent company (56,023) (19,850)
Deferred tax on owner-occupied property - 90

Net income recognised directly in equity - 90
Total recognised loss for the year

attributable
to equity holders of the parent company (56,023) (19,760)

2009 2008
£000 £000
Loss before tax from continuing operations (54,291) (20,826)
Loss before tax from discontinued operations (4) (955)

(54,295) (21,781)
Depreciation of property, plant and equipment 289 1,016

Impairment of loans to joint ventures 5,950 -
Share-based payments 56 492
Profit on sale of investment and owner-occupied properties (340) (1,868)
Profit on sale of other property, plant and equipment (22) (30)
Profit on sale of investments in PFI projects - (1,194)
Valuation gains on investment properties - (1,290)
Share of profit of joint ventures (net of tax) (498) (218)
New ground rents capitalised (3) (25)
Financial income (1,628) (4,044)
Financial expenses 576 551
Operating cash flows before movements in working

capital (49,915) (28,391)
Decrease in inventories 31,587 215

Decrease in receivables 19,753 21,230
Decrease in payables (21,798) (17,092)
Cash utilised in operating activities (20,373) (24,038)
Tax received 3,398 1,139

Tax paid - (2,594)
Net cash flows from operating activities (17,465) (25,591)
Proceeds from disposal of net assets held for sale - 3,743
Proceeds from disposal of investments in joint ventures 1,659 -
Proceeds from disposal of assets and liabilities - Engineering
Division - 3,100
Proceeds from disposal of investment and owner-occupied
properties 2,492 3,075
Proceeds from disposal of other property, plant and
equipment 42 160
Proceeds from disposal of investments in PFI projects - 1,898
Interest received 910 2,511
Net decrease in loans to joint ventures and other investments 1,403 613
Net cash flows from investing activities 6,422 14,239
Proceeds from issue of shares 255 149

Purchase of own shares (161) (109)
Dividends paid - (4,855)
Net cash flows from financing activities 94 (4,815)
Net decrease in cash and cash equivalents (10,949) (16,167)
NOTES
Statement of Compliance
Both the Company financial statements and the Group financial statements have been prepared and approved
by the Directors in accordance with International Financial Reporting Standards as adopted by the EU
('IFRSs').
The financial information set out above does not constitute the Company's statutory accounts for the years
ended 30 June 2009 or 2008 but is derived from those accounts. Statutory accounts for 2008 have been
delivered to the registrar of companies, and those for 2009 will be delivered in due course. The auditors have
reported on those accounts; their reports (i) were unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985 in respect of the accounts for 2008 nor a
statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2009.
Assets and liabilities in the financial statements have been valued at historic cost except where otherwise
indicated in these accounting policies.
Judgements made by management in the application of IFRSs that have significant effect on the financial
statements and estimates include the carrying value of land held for development, work in progress,
investment in subsidiaries, loans to joint ventures, amounts recoverable on contracts and trade receivables.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements. The following restatements have been made:
- reclassification of £1,535,000 in the prior year from Freehold investment properties to Available
for sale financial assets within Trade and other receivables.
The consolidated financial statements incorporate the financial statements of the Company and all its
subsidiary undertakings. Joint ventures are accounted for using the equity method of accounting.
Revenue recognition
Revenue represents the fair value of work done on contracts performed during the year on behalf of
customers or the value of goods and services delivered to customers. Revenue is recognised as follows:
Revenue from Construction Services activities represents the value of work carried out during the
year, including amounts not invoiced.
Revenue from Property sales is recognised at the earlier of when contracts to sell are completed
and title has passed or when unconditional contracts to sell are exchanged.
Revenue from Homes sales, other than construction contracts, is recognised when contracts to sell
are completed and title has passed.
Revenue from rental income from investment properties is recognised as the Group becomes
entitled to the income.
Revenue and margin on construction contracts are recognised by reference to the stage of completion of the
contract at the accounts date. The stage of completion is determined by valuing the cost of the work
completed at the accounts date and comparing this to the total forecasted cost of the contract. Full provision
is made for all forecasted losses. Variations in contract work, claims and incentive payments are included to
the extent that it is probable that they will result in revenue and that they are capable of being reliably
measured.
Prudent provision against claims from customers or third parties is made in the year in which the Group
becomes aware that a claim may arise.
Exceptional items
Items that are both material in size and unusual or infrequent in nature are presented as exceptional items in
the income statement. The Directors are of the opinion that the separate recording of exceptional items
provides helpful information about the Group's underlying business performance. Examples of events that may
give rise to the classification of items as exceptional are the restructuring of existing and newly-acquired
businesses, gains or losses on the disposal of businesses or individual assets and asset impairments, including
land, work in progress and amounts recoverable on construction contracts.
Restructuring costs
Restructuring costs are recognised as exceptional items in the income statement when the Group has a
detailed plan that has been communicated to the affected parties. A liability is accrued for unpaid restructuring
costs.
Leasing
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are charged to the income statement on a straight-line basis over the period of the lease.
Amounts due from construction contract customers

Amounts due from construction contract customers represent the value of work carried out at the balance
sheet date, less a provision for foreseeable losses less progress billings (see revenue recognition accounting
policy).
For management purposes, the Group is organised into five operating divisions, Gleeson Regeneration &
Homes and Gleeson Strategic Land, Gleeson Capital Solutions, Powerminster Gleeson Services, Gleeson
Commercial Property Developments and Gleeson Construction Services. The divisions are the basis on
which the Group reports its primary segment information.
Segment information about the Group's continuing operations, including joint ventures, is presented below:
2009 2008
£000 £000
Revenue
Gleeson Regeneration & Homes and Gleeson Strategic
Land 34,169 64,015
Gleeson Capital Solutions 30 1,200
Powerminster Gleeson Services 18,681 19,538
Gleeson Commercial Property Developments 2,086 8,250
Gleeson Construction Services 33 1,590
54,999 94,593
Gleeson Construction Services 3,828 12,385
Total revenue 58,827 106,978
(Loss)/profit on activities
Land (43,728) (16,296)
Gleeson Capital Solutions (614) 2,338
Powerminster Gleeson Services 967 1,088
Gleeson Commercial Property Developments (8,028) (1,196)
Gleeson Construction Services (142) (4,130)
(51,545) (18,196)
Group Activities (3,614) (6,123)
Financial income 1,444 4,044
Financial expenses (576) (551)
Loss before tax (54,291) (20,826)
Tax (2,652) 1
Loss for the year from continuing operations (56,943) (20,825)
Profit for the year from discontinued operations net of

tax) 920 975
Loss for the period attributable to equity holders of

the parent company (56,023) (19,850)
All rental incomes totalling £84,000 (2008: £399,000), are reported within the Gleeson Commercial Property
Developments segment, with the balance of the Gleeson Commercial Property Developments segment
revenue being sale of commercial properties. All revenue for the Gleeson Construction Services segment is in
relation to long term contracts. In addition, £(2,308,000) (2008: £22,194,000) of long term contract revenue
is reported within the Gleeson Regeneration & Homes and Gleeson Strategic Land segment. The
reassessment of revenue forecasts on the long term contract, where revenues are not fixed, generated
negative revenue in the current year. The balance of revenue in the Gleeson Regeneration & Homes
and Gleeson Strategic Land segment relates to the sale of residential properties and land. Service revenues
are reported by Gleeson Capital Solutions and Powerminster Gleeson Services.
The Group disposed of certain assets and liabilities of the Gleeson Engineering Division of Gleeson
Construction Services to Black and Veatch Limited ('B&V') in a prior period and treated this as a
Discontinued Operation. A small number of contracts were legally retained but the operations were taken
over by B&V on the Group's behalf on a cost plus basis. Consequently, the Group has no involvement in the
day-to-day running of these contracts and acts as an intermediary. At the time of the sale, the remaining costs
to complete the contracts were considered insignificant in relation to the separately identifiable division as a
whole.
2009 2008
£000 £000
Revenue 3,828 12,385

Cost of sales (3,795) (12,877)
Gross profit/(loss) 33 (492)
Staff costs - -
Other expenses (221) (463)
Operating loss (188) (955)
Financial income 184 -

Loss before tax (4) (955)
Tax 924 1,930
Profit for the period from discontinued operations 920 975
Impairment of inventories and contract provisions

At 30 June 2009, the Group conducted a review of the net realisable value of its land and work in progress
carrying values of its sites in the light of the condition of in the UK housing market.
Where the estimated net present realisable value of the site is less than its carrying value within the balance
sheet, the Group has impaired the land and work in progress value.
Impairment of amounts due from construction contracts

At 30 June 2009, the Group conducted a review of the net realisable value of amounts due from construction
contracts in the light of the condition of the UK housing market. Where the estimated net present realisable
value is less than its carrying value within the balance sheet, the Group has impaired the carrying value.
Onerous contract
At 30 June 2009, the Group accrued £nil (2008: £1.6m) to cover lease guarantees that are expected to be
claimed on a vacant investment property.
Impairment of loans to joint ventures

At 30 June 2009, the Group conducted a review of the net realisable value of loans to joint ventures in the
light of the condition of the UK commercial property market. Where the estimated net present realisable
value is less than its carrying value within the balance sheet, the Group has impaired the carrying value.
Restructuring costs
During the year, the Group incurred £1.4m (2008: £5.2m) of costs in relation to reorganising and
restructuring the business, including redundancy costs of £0.9m (2008: £2.2m) where existing employees
could not be retained within the Group.
These exceptional costs may be summarised as follows:
2009 2008
£000 £000
Impairment of inventories and contract provisions 33,917 7,284
Impairment of amounts due from construction contracts 4,741 3,376
Onerous contract - 1,600
Impairment of loans to joint ventures 5,950 -
Restructuring costs 1,391 5,180
45,999 17,440
2009 2008
£000 £000
Land 37,443 15,140
Gleeson Capital Solutions 469 -
Gleeson Commercial Property Developments 7,513 1,600
Group Activities 574 700
45,999 17,440
5. Tax
Continuing Discontinued
operations operations Total
2009 2008 2009 2008 2009 2008
£000 £000 £000 £000 £000 £000
Current tax:
Corporation tax - - - - - -
Adjustment in respect of prior
years (338) 251 (924) (1,930) (1,262) (1,679)
(338) 251 (924) (1,930) (1,262) (1,679)
Deferred tax:
Current year expense/(credit) 2,990 (252) - - 2,990 (252)
Corporation tax
expense/(credit) for the year 2,652 (1) (924) (1,930) 1,728 (1,931)
Joint ventures tax expense for

the year 189 49 - - 189 49
Total tax 2,841 48 (924) (1,930) 1,917 (1,882)
Corporation tax was reduced from 30% to 28% on 1 April 2008. The weighted average tax is calculated at
28% (2008: 29.5%) of the estimated assessable profit for the year.
The charge for the year can be reconciled to the profit per the income statement as follows:
2009 2008
£000 £000
Loss before tax on continuing operations (54,291) (20,826)

Add joint venture tax for the year 189 49
(54,102) (20,777)
Loss before tax from discontinued operations (4) (955)
Loss before tax (54,106) (21,732)
Tax charge at standard rate (15,150) (6,411)

Tax effect of:
Non-taxable profits on disposal of discontinued
operations - (352)
Expenses that are not deductible in determining
taxable profits (18) 356
Tax reliefs not recognised in the income statement (35) (301)
Losses arising in the year carried forward 13,908 4,917
Utilisation of tax losses not previously recognised (3) -
Non-taxable profits on property sales - (321)
Changes in tax rates - (21)
Losses from prior years no longer recognised 2,812 -
Adjustments in respect of prior years 403 251
Tax charge/(credit) and effective tax rate for the year 1,917 (1,882)
6. Dividends
2009 2008
£000 £000
Amounts recognised as distributions to equity holders in the
period:
Final dividend for the year ended 30 June 2008 of

nil p (2007: 7.30p) per share - 3,811
Interim dividend for the year ended 30 June 2009
of nil p (2008: 2.00p) per share - 1,044
- 4,855
There is no final dividend proposed for the year ended 30

June 2009 (2008: nil p per share) - -
7. Loss per share

The calculation of the basic and diluted earnings per share is based on the following data:

The calculation of the basic and diluted earnings per share is based
on the following data:
Earnings
2009 2008
£000 £000
Earnings for the purposes of basic earnings per share, being net
profit or loss
attributable to equity holders of the parent company
Loss from continuing operations (56,943) (20,825)
Profit from discontinued operations 920 975
Loss for the purposes of basic and diluted earnings per share (56,023) (19,850)
Number of shares
2009 2008
No. 000 No. 000

basic earnings per share 52,126 52,197
Share options - 574

diluted earnings per share 52,126 52,771

2009 2008
p p
From discontinued operations

2009 2008
p p
Basic 1.76 1.87
Diluted 1.76 1.85

2009 2008
p p
8. Related Party Transactions
During the period the Group provided goods and services to related parties totalling £0.5m (2008: £2.0m).
The amounts owed by related parties at 30 June 2009, totalled £21.9m (2008: £28.6m).

END
FR FZLFLKKBBBBF
Gleeson (M J) Group
Interim Announcement
RNS Number : 5727H
24 February 2010
24 February 2010
MJ GLEESON GROUP PLC - INTERIM ANNOUNCEMENT
Gleeson (GLE.L), the urban regeneration and strategic land specialist, announces its results for the six
months to 31 December 2009.
· Revenue fr om continuing oper ations incr eased by 17% to £36.0m (2008: £30.6m)
· A pr e-tax pr ofit on continuing oper ations of £0.3m (2008: loss £23.7m) was made
· Net cash incr eased in the per iod by £9.5m to £20.4m and today stands at £28.1m
· Concluding that the Gr oup has excess cash, the Boar d has decided to pay a special dividend per
shar e of 15p
· Gleeson Regeneration & Homes made an operating loss of £1.5m (2008: loss of £11.7m) on
the sale of 101 (2008: 150) units, down 33%, at an average selling price of £134,000 (2008:
£101,000), up 33%
· Like-for -like sales showed a modest incr ease in pr ice; the incr ease in aver age selling pr ice was
pr imar ily a r esult of a change in the mix of pr oduct sold
· Gleeson Str ategic Land made an oper ating pr ofit of £2.4m (2008: loss of £3.0m) on the sale of two
land sales (2008: nil), gener ating r evenue of £9.8m (2008: £nil), and incr eased its por tfolio of
options to 3,858 (2008: 3,793) acr es
· Power minster Gleeson Ser vices' oper ating pr ofit slightly decr eased to £0.2m (2008: £0.3m), but
the or der book incr eased to £163m (2008: £158m)
· The Gr oup continued the r un-off of Gleeson Commer cial Pr oper ty Developments with pr oper ty
disposals in the per iod gener ating r evenue of £3.6m. Subsequent to the per iod end, the Gr oup
completed the sale of its last two r emaining commer cial pr oper ty developments.
· Gr oup over heads fur ther r educed to £1.1m (2008: £2.7m)
Dermot Gleeson, Chairman, stated: "Although very limited in scale, there have been signs of a modest
improvement in house buyer interest since the year end and Gleeson Regeneration & Homes is now
seeking selectively to acquire new low cost development sites in areas in the North of England where
there are opportunities to take advantage of much reduced land values. Gleeson Strategic Land
completed two profitable land sales in the South of England.
It is still too early to be confident that the modest improvement in the housing market referred to above
heralds a sustained recovery. However, the Group continues to have a strong balance sheet and costs
across the Group have been substantially reduced without compromising the quality and effectiveness
of the Group's skill base. Accordingly, the Group is well-placed to withstand, if necessary, a prolonged
further period of weak demand and to resume profitable growth once confidence and liquidity return to
the market."
www.investegate.co.uk/ArticlePrint.aspx?id=201002240700075727H 1/13
Enquiries:
Chris Holt (GCEO)
Alan Martin (GFD)
Rose Oddy 020-7367 8853
Market and Business Ov erv iew
In the 2009 Report & Accounts, I commented that there had been signs of a modest improvement in
house buyer interest since the year end. Although very limited in scale, this improvement has, broadly
speaking, been maintained and Gleeson Regeneration & Homes is now seeking selectively to acquire
new low cost development sites in areas in the North of England where there are opportunities to take
advantage of much reduced land values. We are continuing to reduce build costs and to review our
house designs in order to make our new homes more affordable.
During the period, Gleeson Strategic Land completed two profitable land sales in the South of
England.
Continuing restrictions on mortgage availability, particularly for first time buyers, combined with the
widespread uncertainty surrounding employment prospects, mean that, by historical standards, housing
demand is likely to remain subdued for some time. However, housing need in the United Kingdom is
high and forecast to grow. The Board therefore remains convinced that, in the medium to long term,
the housing market will return to higher levels of activity than we are currently witnessing. When this
happens, the Group's contracted pipeline of regeneration projects and its strategic land bank will
provide opportunities for substantial growth.
Results
Revenue from continuing operations increased by 17.6% to £36.0m (2008: £30.6m). Revenue from
Gleeson Regeneration & Homes decreased due to a reduction in the number of units sold,
notwithstanding the increase in unit selling price. Gleeson Strategic Land recorded revenue of £9.8m
(2008: £nil) resulting from two land sales in the period (2008: Nil). Revenue from Powerminster
Gleeson Services at £8.9m was £0.5m lower than in the comparable period last year. Revenue from
Gleeson Commercial Property Developments, in the latter stages of its run-off, increased to £3.6m
(2008: £1.5m).
The Group's continuing operations recorded a pre-tax profit of £0.3m (2008: loss £23.7m).
Discontinued operations recorded a post-tax loss of £47k (2008: profit £0.1m).
Operational Rev iew
An operating loss of £1.5m (2008: loss £11.7m) was recorded for the period. The prior year loss
included £8.4m of exceptional costs relating to the write down of land and work in progress and £0.5m
of restructuring costs; the Group did not make any further provision for write downs of land and work in
progress in the period.
Gleeson Regeneration & Homes recorded units for revenue purposes totalling 101 (2008: 150) at an
average selling price of £134,000 (2008: £101,000). Like-for-like sales showed a modest increase in
price; the increase in average selling price was primarily a result of a change in the mix of product
sold. Of the units sold, 29 (2008: 54) were sales to Registered Social Landlords ("RSLs"). The prior
period included a bulk sale of units to an investor; excluding this, the trend of unit sales to private
purchasers was upward.
Gleeson Strategic Land
An operating profit of £2.4m (2008: loss £3.0m) was recorded for the period as a result of Gleeson
Strategic Land concluding two land transactions (2008: nil) involving the sale of 22 acres of land. The
prior year loss included £2.6m of exceptional costs relating to the write down of land and work in
progress.
During the period, amended planning approval was achieved on a 73 unit scheme, making it ready for
disposal and a promotional agreement was entered into on a 30 acre site.
At 31 December 2009, the Group had 3,858 (2008: 3,793) acres held under 68 (2008: 69) option
/development agreements or freeholds.
An operating profit of £0.3m (2008: loss £0.5m) was recorded for the period.
The business unit remains prominent within its targeted market place and has been shortlisted as one
of two bidders for a social housing PFI project in the North of England. If successful, this will deliver
equity returns to Gleeson Capital Solutions, provide Gleeson Regeneration & Homes with a significant
housing development opportunity and secure for Powerminster Gleeson Services a long-term facilities
management contract.
At 31 December 2009, the business unit retained investments in five PFI projects.
Pow erminster Gleeson Serv ices
An oper ating pr ofit of £0.2m (2008: £0.3m) was r ecor ded for the per iod. Competition in the facilities
management and maintenance mar kets has continued to intensify; nonetheless, Power minster Gleeson
Ser vices' or der book at 31 December 2009 incr eased to £163m (2008: £158m) and the business continues to
gener ate a positive cash flow.
Group Ov erheads
Group overheads totalled £1.1m (2008: £2.7m) for the period. The prior year included £0.6m of
exceptional costs relating to redundancies and provisions relating to rented properties that are now
surplus to requirements. Costs continue to be tightly controlled and the current forecast for overhead
costs for the year to June 2010 is approximately £2.1m.
Gleeson Commercial Property Dev elopments
Although the results of this business are included within operating profit, it is in run-off, as announced
in March 2007.
An operating loss of £0.1m (2008: loss £6.3m) was recorded for the period. During the period, three
commercial property developments and the retail lease at the Barnes development were sold,
generating aggregate revenue of £3.6m. Subsequent to the period end, the Group completed the sale
of its last two remaining commercial property developments.
Gleeson Construction Serv ices
The Group sold certain contracts, assets and liabilities of Gleeson Building Contracting Division to
Gleeson Building Limited (now re-named GB Building Solutions Limited) in 2005. Any financial results
arising from contracts, assets and liabilities retained by the Group are recorded within operating profit.
A pre-tax loss of £46k was recorded for the period (2008: loss £0.1m).
The Group sold certain contracts, assets and liabilities of Gleeson Engineering Division to Black &
Veatch Ltd in 2006. Any financial results arising from contracts, assets and liabilities retained by the
Group are treated as a Discontinued Operation. A post-tax loss of £47k was recorded for the period
(2008: profit £0.1m).
Balance Sheet, Cash Flow and Banking Facilities
Total shareholders' equity stood at £103.8m at 31 December 2009 compared to £103.4m at 30 June
2009. This equates to net assets per share of 197.4p and 196.5p, respectively.
The Group's net cash balance at 31 December 2009 was £20.4m, a net cash inflow of £9.5m in the
period. Subsequent to the period end, the Group's net cash balance has further increased by £7.7m to
£28.1m.
The Group has reviewed the need for continuing with its banking facilities, which expire on 26 June
2010, and concluded that it has no further requirement for them. Accordingly, these facilities will be
terminated prior to their expiry date.
Special Div idend
Alongside the review of its banking facilities, the Group has reviewed its short and long term cash needs
and concluded that the Group has cash in excess of its requirements. Accordingly, the Board has
decided to pay a special dividend of 15p a share to shareholders on the register at the close of business
on 5 March 2010. This special dividend, whose total cost is £8.0m, will be paid on 31 March 2010.
Risks and Uncertainties
The principal risks and uncertainties that have been identified as being capable of affecting the
Group's performance in the second half are set out below:
Housing Demand
Security of employment, interest rates and mortgage availability are the key determinants of house
buyers' confidence. With both the UK and global economies remaining fragile, and with a General
Election to be held during the period, employment prospects remain uncertain. Although interest rates
remain at a low level, mortgage finance remains scarce, particularly for high loan-to-value mortgages.
To minimise cash outflows in this difficult environment, the Group continues to build to demand in a
strictly controlled manner.
Planning consents
The Group derives profit from the sale to other developers of land which it acquires through the
exercise of option agreements when it succeeds in obtaining appropriate planning consents. Although
the demand for consented land has recently increased, it is difficult to predict with any precision the
date by which planning consents can be obtained.
Prospects
It is still too early to be confident that the modest improvement in the housing market referred to above
heralds a sustained recovery. However, the Group continues to have a strong balance sheet and costs
across the Group have been substantially reduced without compromising the quality and effectiveness
of the Group's skill base. Accordingly, the Group is well-placed to withstand, if necessary, a prolonged
further period of weak demand and to resume profitable growth once confidence and liquidity return to
the market.
Dermot Gleeson
Chairman


Six months to Six months to
31 December 31 December Year to
2009 2008 30 June 2009
£000 £000 £000
Revenue 35,971 30,588 54,999

Cost of sales (31,321) (44,720) (89,552)
Gross profit/(loss) 4,650 (14,132) (34,553)
Profit on sale of investment properties 15 208 340
Valuation losses on investment properties - (59) -
Share of profit of joint ventures (net of tax) 312 228 498
Operating profit/(loss) 115 (24,054) (55,159)
Financial income 338 642 1,444

Profit/(loss) before tax 325 (23,707) (54,291)
Tax - 168 (2,652)

Profit/(loss) for the period from
continuing operations 325 (23,539) (56,943)
(Loss)/profit for the period from discontinued
operations (net of tax) (47) 87 920
Profit/(loss) for the period attributable to

equity holders of the parent company 278 (23,452) (56,023)
Profit/(loss) per share attributable to

equity holders of parent company

0.53
Profit/(loss) per share from continuing

operations
Basic and diluted 0.62 (44.98) (109.25)

as at 31 December 2009

31 December 31 December 30 June
2009 2008 2009
£000 £000 £000
Non-current assets
Investment property 1,033 2,941 1,140
Investments in joint ventures 2,184 3,277 1,888
Loans and other investments 13,428 14,994 14,582

Deferred tax assets 852 3,711 862
26,557 37,283 22,084
Current assets
Inventories 40,556 77,359 50,080
UK corporation tax - 1,893 2
115,361 148,168 118,919
Total assets 141,918 185,451 141,003
Provisions (3,347) (4,400) (3,803)
Deferred tax liabilities (291) (328) (291)
(3,638) (4,728) (4,094)
Current liabilities
Provisions (1,313) (2,401) (1,624)
UK corporation tax (6) - (5)
(34,470) (44,791) (33,543)
Total liabilities (38,108) (49,519) (37,637)
Net assets 103,810 135,932 103,366
Equity
Total equity 103,810 135,932 103,366

For the six months to 31 December 2009

Six months to Six months to Year to
2009 2008 2009
£000 £000 £000
Profit/(loss) before tax from continuing
operations 325 (23,707) (54,291)
(Loss)/profit before tax from discontinued
operations (47) 87 (4)
278 (23,620) (54,295)
Depreciation of property, plant and

equipment 125 135 289
Share-based payments 152 116 56
Profit on sale of investment properties (15) (208) (340)

Profit on sale of other property, plant and
equipment - (31) (22)
Impairment of loans to joint ventures - 5,165 5,950
Valuation loss on investment properties - 59 -
Share of profit of joint ventures (net of tax) (312) (228) (498)
New ground rents capitalised - - (3)

Financial income (338) (805) (1,628)
Financial expenses 128 295 576
Operating cash flows before movements
in working capital 18 (19,122) (49,915)
Decrease in inventories 9,524 4,308 31,587

(Increase)/decrease in receivables (1,904) 5,183 19,753
Decrease/(increase) in payables 472 (9,657) (21,798)

Cash generated by/(utilised in) operating
activities 8,110 (19,288) (20,373)
Tax received - 583 3,398
Interest paid (118) (399) (490)
Net cash flows from operating activities 7,992 (19,104) (17,465)
Consolidated Cash Flow Statement (continued)

For the six months to 31 December
2009

2009 2008 2009
£000 £000 £000
Proceeds from disposal of investments in - - 1,659
joint ventures
Proceeds from disposal of investments 121 2,166 2,492
Proceeds from disposal of other property,
plant and equipment - 31 42
Net increase in loans to joint ventures and
other investments 1,239 1,550 1,403
Net cash flows from investing activities 1,452 4,046 6,422
Proceeds from issue of shares 82 184 255
Purchase of own shares (52) - (161)
Own shares disposed - 77 -
Net cash flows from financing activities 30 261 94
Net increase/(decrease) in cash and

cash equivalents 9,474 (14,797) (10,949)
Cash and cash equivalents at

beginning of period 10,926 21,875 21,875
Cash and cash equivalents at end of

period 20,400 7,078 10,926
Statement of Changes in Equity
Share Capital
Share premium redemption Retained
capital account reserve earnings Total
£000 £000 £000 £000 £000
At 1 July 2008 1,047 5,611 120 152,461 159,239

Share issue 3 182 - - 185
Purchase of own shares - - - (156) (156)
Share-based payments - - - 116 116
Loss for the period - - - (23,452) (23,452)
At 31 December 2008 1,050 5,793 120 128,969 135,932

Share-based payments - - - (60) (60)
Loss for the period - - - (32,571) (32,571)
At 30 June 2009 1,052 5,861 120 96,333 103,366

Share-based payments - - - 152 152
Loss on hedge of net
investment in joint venture - - - (17) (17)
Profit for the period - - - 278 278
At 31 December 2009 1,054 5,942 120 96,694 103,810
Notes To The Financial Statements
The consolidated Interim Report of the Group for the six months ended 31
December 2009 has been prepared in accordance with IAS 34 "Interim Financial
Reporting" and International Financial Reporting Standards ('IFRS') as adopted for
use in the European Union ('EU') and in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority.
The half year report does not constitute financial statements as defined in Section
434 of the Companies Act 2006 and does not include all of the information and
disclosures required for full annual statements. It should be read in conjunction with
the annual report and financial statements for the year ended 30 June 2009 which is
available either on request from the Group's registered office, Integration House, Rye
Close, Ancells Business Park, Fleet, Hampshire, GU51 2QG or can be downloaded
from the corporate website www.mjgleeson.com.
The comparative figures for the financial year ended 30 June 2009 are not the
Company's statutory accounts for that financial year. Those accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was (i) unqualified, (ii) did not include a
reference to any matters which the auditors drew attention to by way of emphasis
without qualifying their report and (iii) did not contain statements under Section 498
(2) or (3) of the Companies Act 2006.
This Interim Report was approved for issue by the Board of Directors on 23 February
2010.
The accounting policies adopted are consistent with those of the annual financial
statements for the year ended 30 June 2009, as described in those financial
statements. IFRS 8, Operating Segments has been adopted in the financial year
and the disclosure is as shown in note 4.
3. Responsibility statement
The Directors confirm that this consolidated Interim Report has been prepared in
accordance with IAS34 and that the Chairman's Statement and the notes to the
financial statements herein includes a fair review of the information required by DTR
4.2.7R (indication of important events during the first six months and description of
principal risks and uncertainties for the remaining six months of the year) and DTR
4.2.8R (disclosure of related party transactions and changes therein).
4. Segmental Analysis

2009 2008 2009
£000 £000 £000
Revenue
Gleeson Regeneration & Homes 13,574 19,601 33,103
Gleeson Strategic Land 9,832 - 1,066
Gleeson Capital Solutions - 30 30
Powerminster Gleeson Services 8,925 9,426 18,681
Gleeson Commercial Property Developments 3,573 1,531 2,086
Gleeson Construction Services 67 - 33
35,971 30,588 54,999
Gleeson Construction Services 196 2,225 3,828
Total revenue 36,167 32,813 58,827
Profit/(loss) on activities
Gleeson Regeneration & Homes (1,493) (11,678) (37,824)
Gleeson Strategic Land 2,379 (2,994) (5,904)
Gleeson Capital Solutions 298 (528) (614)
Powerminster Gleeson Services 229 282 967
Gleeson Commercial Property Developments (105) (6,304) (8,028)
Gleeson Construction Services (46) (83) (142)
Group Activities (1,147) (2,749) (3,614)
Operating profit/(loss) 115 (24,054) (55,159)
Financial income 338 642 1,444
Profit/(loss) before tax 325 (23,707) (54,291)
Tax - 168 (2,652)
Profit/(loss) for the period from continuing
operations 325 (23,539) (56,943)
(Loss)/profit for the period from discontinued

operations (net of tax) (47) 87 920
Profit/(loss) for the period attributable to

equity holders of the parent company 278 (23,452) (56,023)
Impairment of inventories and contract provisions

During the 6 months to 31 December 2009, the Group conducted a review of the net
realisable value of the land and work in progress carrying values of its sites. The
estimated future net present realisable value of the sites at 31 December 2009 is
considered to equal their carrying value within the balance sheet and therefore no
impairment has been recognised in the period.
Impairment of amounts due from construction contracts

realisable value of amounts due from construction contracts. The estimated future
net present realisable value of amounts due at 31 December 2009 is considered to
equal their carrying value within the balance sheet and therefore no impairment has
been recognised in the period.
Impairment of loans to joint ventures

realisable value of loans to joint ventures. The estimated future net present value of
the property held within the joint ventures at 31 December 2009 is considered to
equal the carrying value of the loans within the balance sheet and therefore no
impairment has been recognised in the period.
Restructuring costs
In previous periods the Group incurred costs in relation to reorganising and
restructuring the business, including redundancy costs where existing employees
could not be retained within the Group. No such costs were incurred in the 6
months to 31 December 2009.
These exceptional costs may be summarised as follows:

2009 2008 2009
£000 £000 £000
Impairment of inventories and contract

provisions - (9,805) (33,917)
Impairment of amounts due from
construction contracts - (1,771) (4,741)
Impairment of loans to joint ventures - (5,165) (5,950)
Restructuring costs - (1,586) (1,391)
- (18,327) (45,999)
5. Exceptional costs (continued)
Exceptional costs by income statement category:

Six months to Year to
Six months to 31 31 December 30 June
December 2009 2008 2009
£000 £000 £000
Revenue - - (4,741)
Cost of sales - (16,741) (33,917)
Gross profit/(loss) - (16,741) (38,658)
Administrative expenses - (1,586) (7,341)

Operating profit/(loss) - (18,327) (45,999)
Financial income - - -
Financial expenses - - -
Profit/(loss) before tax - (18,327) (45,999)
Tax - - -
Profit/(loss) for the period from
continuing operations - (18,327) (45,999)
(Loss)/profit for the period from
discontinued operations (net of tax) - - -
Profit/(loss) for the period attributable

to equity holders of the parent
company - (18,327) (45,999)
The Group disposed of certain assets and liabilities of the Gleeson Engineering
Division of Gleeson Construction Services to Black and Veatch Limited ("B&V") in a
prior period and treated this as a Discontinued Operation. A small number of
contracts were legally retained but the operations were taken over by B&V on the
Group's behalf on a cost plus basis. Consequently, the Group has no involvement in
the day to day running of these contracts and acts as an intermediary. At the time
of the sale, the remaining costs to complete the contracts were considered
insignificant in relation to the separately identifiable division as a whole.

2009 2008 2009
£000 £000 £000
Revenue 196 2,225 3,828

Cost of sales (196) (2,216) (3,795)
Gross profit - 9 33
Administrative expenses (47) (85) (221)

Operating loss (47) (76) (188)
Financial income - 163 184

(Loss)/profit before tax (47) 87 (4)
Tax - - 924
(Loss)/profit for the period from

discontinued operations (47) 87 920
The calculation of the basic and diluted earnings per share is based on the following
data:
Earnings Unaudited Unaudited Audited

2009 2008 2009
£000 £000 £000
Earnings for the purposes of basic earnings per

share, being net profit/(loss) attributable to equity
holders of the parent company
Profit/(loss) from continuing operations 325 (23,539) (56,943)

(Loss)/profit from discontinued operations (47) 87 920
Earnings for the purposes of basic and diluted

earnings per share 278 (23,452) (56,023)
Number of shares 2009 2008 2009

No. 000 No. 000 No. 000
Weighted average number of ordinary shares for

the purposes of basic earnings per share 52,248 52,334 52,126

Share options - - -
Weighted average number of ordinary shares for
52,248 52,334 52,126
the purposes of diluted earnings per share
From continuing operations 2009 2008 2009

p p p
From discontinued operations 2009 2008 2009

p p p
Basic and diluted (0.09) 0.17 1.76
From continuing and discontinued

operations 2009 2008 2009
p p p
Identity of related parties
The Group has a related party relationship with its joint ventures and key
management personnel.
Transactions between the Company and its subsidiaries, which are related parties,
have been eliminated on consolidation and are not disclosed in this note.
Provision of goods and services to joint ventures

2009 2008 2009
£000 £000 £000
Gleeson Capital Solutions 262 493 527
262 493 527
Sales to related parties were made at market rates.
Amounts owed by and owed to joint ventures are analysed below:
The amounts owed by joint ventures at 31 December 2009 totalled £33,398,000 (31
December 2008:£25,039,000; 30 June 2009: £21,867,000)
No amounts were owed to joint ventures at 31 December 2009 (31 December 2008:
£nil; 30 June 2009: £nil)
The amounts outstanding are unsecured and will be settled in cash. No guarantees
have been given or received. No provisions have been made for doubtful debts in
respect of amounts owed by related parties.
Group Pension Scheme
The Group operates a defined contribution pension plan. The assets of the pension
plan are held separately from those of the Group in funds under the control of the
trustees. During the 6 months to 31 December 2009 the defined contribution
pension plan was closed and members were invited to join a new stakeholder
scheme established by the Group.
The total pension cost charged to the income statement in the 6 months to 31
December 2009 was £206,000 (6 months to 31 December 2008: £335,000; year to
30 June 2009: £660,000) Contributions paid to the defined contribution pension plan,
prior to its closure, were £99,000 with £107,000 being paid to the new stakeholder
scheme thereafter.
At 31 December 2009, contributions of £53,000 (31 December 2008: £65,000; 30

June 2009: £47,000) due in respect of the current reporting period had not been paid
over to the pension plan. Since the period end, this amount has been paid.

END
IR EAXADAEFEEFF
5/24/13 French Connection | Interim Results | FE InvestEgate
French Connection
Interim Results
RNS Number : 1982Z
French Connection Group PLC
17 September 2009
17th September 2009
FRENCH CONNECTION GROUP PLC

Half-Year Statement
for the six months ended 31 July 2009
French Connection Group PLC today announces its interim results for the six months ended
31 July 2009.
Turnover increased 4% to £116.9 million (2008: £112.4 million) with the consolidation of our
Japan business and new UK/Europe sites offset by declines in wholesale turnover;
Like-for-like sales in UK/Europe grew by 2% driven by a resilient performance from French
Connection ladies' wear and e-commerce;
Gross margin was 50.8% compared to 51.8% previously, primarily affected by the
weakness of Sterling;
Underlying savings of 9% were achieved in the controllable cost base. Reported operating
expenses increased as a result of the addition of the Japan business and new retail
locations in UK/Europe;
The Group loss before taxation was £12.8 million (compared to £5.4 million in the
comparable period excluding £1.9 million gain on disposal of leased property);
Balance sheet remains strong with no borrowings, closing net cash of £23.7 million and
tightly controlled inventory.
Stephen Marks, Chairman, commented on the results:
'Following on from the second half of last year, our business continues to be severely affected by difficult
retail environments in all of our markets around the world. In addition to the underlying trading issues we
have faced over recent periods, this has had a severe impact on our financial performance during the first
six months of the year. Both turnover and gross margin have been weak and although we have made
substantial savings in operating expenses, the trading result has declined significantly compared with last
year. The core business continues to show encouraging development with continuing growth in French
Connection ladies' wear.'
In the light of the trading conditions experienced over the past year the Board has been engaged in a
strategic review of all of our businesses with a view to enhancing both profitability and cash generation. The
review is focused on the international activities of the Group, loss making business segments and central
overheads. Initial results from the review have included the closure of our Northern European retail
operations and a reduction in head office staffing. It is our intention to implement further measures over the
next six months.'
Looking to the second half of the financial year we are aiming to achieve a small improvement on last
year's operating result from our current operations while also making the strategic changes necessary to
stem the recent losses.'
Enquiries:
Stephen Marks/Neil Williams/Roy Naismith French Connection +44(0)20 7036 7063
Tom Buchanan/Deborah Spencer Brunswick +44(0)20 7404 5959
Dear Shareholders,
Following on from the second half of last year, our business continues to be severely affected by difficult retail
environments in all of our markets around the world. In addition to the underlying trading issues we have faced
over recent periods, this has had a severe impact on our financial performance during the first six months of
the year. Both turnover and gross margin have been weak and although we have made considerable savings
in operating expenses, the trading result has declined significantly compared with last year.
In the six months to 31 July 2009, Group revenue was £116.9 million, a 4% increase over the equivalent period
last year. Growth generated by our additional retail locations, most notably from the inclusion of our stores
in Japan, and like-for-like growth in the UK was offset by declines in the wholesale businesses.
The Group gross margin at 50.8% was 1.0% below last year, affected by increases in the Sterling cost of
product bought in Euros and Dollars and the level of discounting applied in the period, particularly in North
America.
Group operating expenses were £8.2 million higher in the period. Increases in our costs included £12.2 million
associated with new retail space (including the Japan business), the effect of exchange rates on overseas
costs translated into Sterling and cyclical increases in rents and rates. Excluding these items the controllable
operating expenses were reduced by £4.0 million in the period as a result of our efforts to reduce the cost
base.
The operating loss for the period was £12.9 million. In the comparable period of the previous year the
operating loss was £6.0 million, before inclusion of the benefit of gains on the disposal of lease interests
amounting to £1.9 million. The results for the period include six months of losses in our Japan business which
was acquired in July 2008 and therefore was included in the comparative period for only one month. This had
the effect of increasing the reported loss by £1.6 million. The overall loss in Sterling terms was exacerbated by
a considerably less favourable exchange rate, increasing both the cost of sales (by £2.0 million) and
the Sterling equivalent of overseas losses (by £0.8 million). Notwithstanding this, trading in the period and the
operating result was weaker than we expected.
At 31 July 2009 net cash amounted to £23.7 million (2008: £34.8 million). Inventory levels of both old and
current season products have been reduced during the period, with the clearances having a negative impact
on the margin achieved.
Within our core businesses there continues to be encouraging elements of progress. Overall like-for-like sales
in UK/Europe increased 2% in the period. Once again, the core French Connection ladies' wear ranges
performed well during the period under review, reporting continued sales growth on a like-for-like basis within
our retail business and Toast has had another very strong season. We continue to work to build on this
momentum and to replicate this success in our men's wear business.
In North America like-for-like retail sales declined by 3% despite increased promotional discounting targeted at
clearing excess inventory early in the period. The North America market continues to be very difficult with little
expectation of an improvement in the short term.
Our wholesale customers also continue to be affected by the poor state of retail markets resulting in declines
in forward orders and in-season purchasing in all of our markets.
In the light of the trading conditions experienced over the past year the Board has been engaged in a strategic
review of all of our businesses with a view to enhancing both profitability and cash generation in these difficult
times. The review is focused on the international activities of the Group, loss making business segments and
central overheads. Initial results from the review have included the closure of our Northern European retail
operations and a reduction in head office staffing. It is our intention to implement further measures over the
next six months.
Looking to the second half of the financial year we are targeting to achieve a small improvement on last year's
operating result from our current operations while also making the strategic changes necessary to stem the
recent losses.
Stephen Marks
Chairman and Chief Executive
17 September 2009
BUSINESS REVIEW
Operating segments
Six months to Intra

31 July 2009 Group
UK/Europe North America Rest of the World Total
Whole- Whole- Whole-

sale sale sale
Retail Total Retail Total Retail Total
£m £m £m £m £m £m £m £m £m £m £m
Rev enue 59.8 18.8 78.6 17.4 8.5 25.9 5.9 6.5 12.4 116.9
Gross prof it 35.8 4.7 40.5 9.1 2.5 11.6 4.0 1.4 5.4 1.9 59.4
Gross margin 59.9% 25.0% 51.5% 52.3% 29.4% 44.8% 67.8% 21.5% 43.5% 50.8%
Trading expenses (41.6) (5.1) (46.7) (11.8) (1.8) (13.6) (5.7) (0.8) (6.5) (66.8)
Operating contribution (5.8) (0.4) (6.2) (2.7) 0.7 (2.0) (1.7) 0.6 (1.1) 1.9 (7.4)
Common ov erhead costs (2.6) (1.8) (4.4)
Licensing income 2.4 1.0 (1.9) 1.5
Div isional operating loss (6.4) (3.8) (0.1) - (10.3)
Group management ov erheads (2.6)
Operating loss before financing costs (12.9)
Net f inancing income 0.1
Operating loss (12.8)
Share of losses of joint v entures -
Loss before taxation (12.8)
Six months to Intra

31 July 2008 Group

sale sale sale
£m £m £m £m £m £m £m £m £m £m £m
Rev enue 55.5 24.1 79.6 15.3 8.8 24.1 1.1 7.6 8.7 112.4
Gross prof it 35.4 7.0 42.4 9.0 3.1 12.1 0.6 1.7 2.3 1.4 58.2
Gross margin 63.8% 29.0% 53.3% 58.8% 35.2% 50.2% 54.5% 22.4% 26.4% 51.8%
Operating contribution (2.8) 0.8 (2.0) (1.5) 1.4 (0.1) (0.1) 1.0 0.9 1.4 0.2
Gain on disposal 0.6 1.3 1.9
Div isional operating (loss)/prof it (2.4) (0.7) 1.7 - (1.4)
Operating loss before financing costs (4.1)
Net f inancing income 0.8
Operating loss (3.3)
Share of losses of joint v entures (0.2)
Loss before taxation (3.5)
Overview of Group results

In the six months to 31 July 2009, Group revenue was £116.9 million, a £4.5 million or 4% increase over the
equivalent period last year. Increases were generated by like-for-like growth in the UK/Europe retail division of
£1.0 million, a net increase in retail space in UK/Europe of £2.9 million, the inclusion of the Japan business for
the whole period of £4.8 million and the effect of translation into Sterling of our overseas operations at
significantly lower exchange rates of £7.9 million. These increases were offset by decreases in our wholesale
businesses totalling £9.8 million (including further transfers of business to the retail channel) and declines
in North America retail of £2.3 million.
The Group gross margin at 50.8% was 1.0% below last year. The increase in proportion of Group sales being
delivered from the higher-margin retail divisions has contributed an increase in the mixed Group margin of 270
basis points. This has been offset by a 170 basis point decrease from the effect of the weakness
of Sterling on the cost of product bought in Euros and Dollars. The remaining decrease of 200 basis points
was caused by higher levels of discounting particularly in North America.
Group operating expenses were £8.2 million higher in the period, including a full period of trading of
our Japan business amounting to £5.0 million and the exaggerating effect of the change in exchange rates on
overseas costs amounting to £4.1 million. In the UK/Europe retail division, changes in the retail portfolio have
given rise to a net increase in operating expenses of £1.5 million and cyclical increases in rents and rates
have added a further £1.3 million to the cost base. As part of our cost-cutting initiatives, head-count at our
head offices has been reduced and the one-off cost of these changes amounted to £0.3 million. After taking
account of these increases in costs, the remaining decrease in operating expenses amounted to £4.0 million.
This has been generated by restrictions in advertising budgets, reductions in head office staffing and other
targeted cost savings across all areas of the business. The savings achieved represent 9% of the controllable
operating expenses.
Licence income increased from £1.4 million to £1.5 million with continued growth from our eyewear licensee.
The operating loss before financing costs for the period was £12.9 million. In the comparable period of the
previous year the operating loss was £6.0 million, before inclusion of the benefit of gains on the disposal of
lease interests amounting to £1.9 million.
Further analysis of the trading results by division for the first six months of the year and expectations for the
second half of the year is set out below.
United Kingdom and Europe - Retail

Retail revenue in UK/Europe was 8% ahead at £59.8 million (2008: £55.5 million). On a like-for-like basis,
sales were 2% higher compared to the same period last year with French Connection ladies' wear again
performing well. The remaining increase in the retail turnover derives from a net 3% increase in space traded
compared to the same period last year, largely from new department store concessions over the past 12
months.
Eleven additional concessions within House of Fraser department stores were opened during the six-month
period, building on the success of the existing locations opened during last year. Conversely nine locations
including all of our stores and concessions in Northern Europe were closed towards the end the period. We
will continue to review our retail portfolio and where possible we will close stores which do not make an
appropriate contribution.
The gross margin achieved in the UK/Europe retail locations was 59.9% compared to 63.8% in the
comparable period last year. The decrease in the gross margin arose mainly from the impact of weak
exchange rates on the Sterling cost of products bought in foreign currencies. The margin has also been
adversely affected by additional outlet stores. Compared with the same period last year we are now operating
three further outlet locations so that the weighting of discounted sales in the period is higher. These additional
outlets have been very successful in clearing our out-of-season inventory. End-of-season sales discounting
within our main store portfolio was at a similar level to last year and due to careful buying we were able to
maintain our full-price stance throughout the season until the traditional end-of-season sale.
Trading overheads increased by 9%, of which 4% related to the changes in the store portfolio in the period,
including the new concessions. A further 3% arose from inflationary increases in the rent and rates charges
including a significant increase in relation to our Bond Street store. Although negotiations are taking account of
the current weak market for high street rentals, settlements continue to reflect the significant inflation seen in
rents over the past five years. The remaining increase includes costs associated with developing the Toast
business.
The net operating loss was £5.8 million (2008: loss of £2.8 million).
There is little evidence that the fashion retail market in UK/Europe will recover in the short term and we will
continue to operate cautiously in relation to managing inventory and reducing overheads where possible. In the
second half our target is to maintain like-for-like sales levels in our retail stores following the growth achieved
last year while continuing to grow our e-commerce businesses. Gross margins are expected to be slightly
lower than last year due to the weaker exchange rates, while it is expected that operating expenses will be
similar to the first half.
United Kingdom and Europe - Wholesale

Wholesale turnover during the period was affected by a marked reduction in orders for our men's wear
product as our customers reacted to the decline in the men's wear market. Deliveries of French Connection
ladies' wear were broadly similar to the comparable period but overall turnover fell by £5.3 million to £18.8
million. The gross margin fell to 25.0% (2008: 29.0%) with the decrease due to the effect of
weaker Sterling values on the cost of products sourced from overseas and the effect of stock clearances.
Overheads have been reduced by 18% to £5.1 million (2008: £6.2 million) as we focus on ensuring efficiency
in all areas of expenditure.
The net operating contribution from UK/Europe Wholesale was a loss of £0.4 million, a decrease of £1.2
million compared to the equivalent period last year.
Forward orders for Winter 2009 and Summer 2010 are reflecting the difficult environment and our customers'
caution with their buying budgets. We are expecting a 5% decline in sales in the second half compared with
last year.
UK/Europe division
Together, the retail and wholesale businesses in UK/Europe contributed an operating loss of £6.2 million
(2008: loss of £2.0 million).
Common overhead costs for the division fell by £0.4 million to £2.6 million reflecting a reduction in advertising
and promotion expenditure in the period.
Other income in the UK/Europe division of £2.4 million (2008: £2.0 million) includes both licence receipts from
external licensees and royalties charged to Group companies which are purely internal. The licence income
from external sources amounted to £1.5 million (2008: £1.4 million) with continued growth from our eyewear
licence.
The operating result for the UK/Europe division was a loss of £6.4 million for the period (2008: loss of £3.0
million before gain on lease disposals).
North America - Retail

The weakening of Sterling over the past year has had a marked impact on the Sterling-reported results of
our North America operations, increasing the reported figures by over 20% compared to last year.
The retail environment in North America has continued to be difficult and increasingly affected by promotional
discounting on the high street. The performance of our retail stores was also affected by the clearance of
excess inventory carried forward from last year through an extended sale period and deeper discounting in our
outlet stores. On a like-for-like basis sales in our retail stores fell by 3% although all of the decline was
accounted for by reduced volumes in our outlet stores where it would appear that increased discounting on
the high street is drawing shoppers away from the specialist outlet locations. Following a re-launch of the
website, our e-commerce sales grew substantially from a previously low level.
Total retail sales in the period amounted to £17.4 million, a 14% increase over the prior period £15.3 million. In
Dollar terms however, total sales fell by 13% reflecting both the decline in like-for-like sales and changes in the
retail portfolio; three larger stores have been closed and two smaller stores opened over the last eighteen
months.
The gross margin, at 52.3% (2008: 58.8%), was affected by the extension of the sale period and deeper
discounting in the outlet stores.
Overheads were reduced by 13% in Dollar terms, mainly due to the changes in the retail portfolio.
In Sterling terms, costs increased by 12% due to the weaker exchange.
The net operating result was a loss of £2.7 million (2008: loss of £1.5 million). We expect the North
America retail market to remain difficult throughout the second half and that therefore any growth over last
year will be difficult to achieve.
North America - Wholesale

Sales to our wholesale customers in North America in the period amounted to £8.5 million (2008: £8.8 million)
but underlying sales in Dollar terms declined by 26% as department stores reduced their buying budgets.
Continued clearance of old-season product and reduced full-price sales had the effect of reducing the gross
margin to 29.4% for the period (2008: 35.2%). Overheads for the wholesale business were reduced by 21% in
Dollar terms and showed a small increase once translated to Sterling.
The operating contribution from the North America wholesale business for the period was £0.7 million (2008:
£1.4 million).
Taking into account the weakness of the US consumer market we expect sales and margin in the second half
to follow the lead of the first half.
North America division

Together, the retail and wholesale operations in North America generated a loss of £2.0 million at the
operating level (2008: loss of £0.1 million). In line with operating expenses, common overhead costs were
significantly reduced in Dollar terms with savings implemented in headcount and marketing expenditure.
The net divisional operating loss was £3.8 million compared to a loss of £2.0 million in the prior year before
inclusion of the benefit of the one-off income from disposal of lease interests.
Rest of the World - Retail

The Group absorbed our joint venture partner's share of the Japan retail business in July 2008. The results
currently under review therefore include a full six months of trading of that business whereas the comparative
data reflects only one month of trading last year.
In the first six months of the financial year the Japan retail business generated total turnover of £5.9 million and
a loss of £1.7 million. The expenses of the business included payments of licence royalties and other charges
to other parts of the Group amounting to £0.5 million. In the equivalent period last year, the Group results
included turnover of £1.1 million and an operating loss of £0.1 million in relation to the Japan business for the
month of July.
Disappointingly, trading in Japan has deteriorated compared to last year following a sharp down-turn
in Japan's economy. Sales in the period fell by 17% on a like-for-like basis and despite store closures and
head office restructuring the trading improvements planned have not been realised. No significant
improvements in the Japan economy are expected in the short term and in the second half the trading
performance compared to that reported last year will be affected by the 30% reduction of the value
of Sterling against the Japanese Yen compared to this time last year.
Rest of the World - Wholesale

Revenue in our wholesale business based in Hong Kong decreased by £1.1 million to £6.5 million. This
represented a 14% decrease in Sterling terms but a 34% decline in Hong Kong Dollar terms. This decline was
partly due to the change in status of the Japan business which is no longer a third party customer of the Hong
Kong business. Excluding this the decline in sales was 26% and reflects reduced orders from most of our
licensees including Australia, China and India as a result of reductions in retail activity in their markets.
The gross margin generated by this business is affected by the mix of sales and while core margins were
unchanged, the blended gross margin decreased marginally to 21.5% (2008: 22.4%). Overheads were
trimmed by 9% in Dollar terms but showed a small increase in Sterling terms. Net operating profit for the
period was £0.6 million compared with £1.0 million achieved last year.
Rest of the World division

Taking the new retail channel in Japan along with the wholesale channel based in Hong Kong the Rest of the
World division generated an operating loss of £1.1 million in the six month period (2008: profit of £0.9 million).
The Hong Kong business also earns commission income from Group companies on shipments to the UK,
North America and Japan. Total income from this channel was £1.0 million (2008: £0.8 million).
The total divisional operating result was a loss of £0.1 million compared to a profit of £1.7 million in the
comparable period due to the inclusion of the full six months trading in Japan.
Group Management
The overheads associated with the central Group management amounted to £2.6 million in the period, £0.1
million less than last year reflecting continuing efforts to reduce costs.
Operating result and financing income

The operating loss before finance income for the period was £12.9 million (2008: loss of £6.0 million before
inclusion of £1.9 million income from disposal of leases).
Net financing income of £0.1 million (2008: £0.8 million) was generated in the period with average net funds
over the year lower than the previous year and interest rates significantly lower.
Group operating loss in the period amounted to £12.8 million (2008: loss of £5.2 million before inclusion of
£1.9 million income from disposal of leases).
In line with the poor performance in the second half of last year the losses generated in the first half are
extremely disappointing. The Board have been engaged in a broad strategic review focused on improving both
profitability and cash flow with particular emphasis on the international businesses, other loss-making
elements of the group and central costs. The review has so far resulted in reductions in central overheads
and other discretionary budgets and the closure of a number of stores in the UK, Northern Europe and North
America. We expect that further initiatives arising from this review will be implemented over the next six
months.
Joint Ventures
Together, the joint venture operations in Hong Kong and China made a small profit and therefore the Group's
share of net profits generated by the joint ventures during the period was £nil (2008: loss of £0.2 million). The
Group's 50% share of the losses of the Japan business is included in the previous year result up to the end of
June 2008 when the Japan business became a wholly owned subsidiary.
In addition to the share of the results reported separately in the income statement, the joint ventures generated
over £0.3 million (2008: £0.6 million including Japan) of licence income and gross margin combined. This
income is reported within Licensing income in the UK/Europe division and in the gross margin within the Rest
of the World wholesale business.
Pre-tax result
The Group loss before taxation was £12.8 million in the period compared to a loss of £5.4 million in the
previous half-year period before inclusion of the gains on lease disposals of £1.9 million.
Taxation
The tax credit for the period of £1.8 million (2008: £0.5 million) is based on the expected full-year effective
rates in each of the Group's tax jurisdictions. The full year tax rate will be very sensitive to changes in levels of
profit or loss generated in the different regions.
Minority interest
The minority interest of £nil million (2008: £nil million) represents the net share of results attributable to the
25% ownerships held by local management in our Canada, Toast and YMC businesses.
Earnings and dividends

Net loss for the period attributable to equity shareholders was £11.0 million (2008: loss of £3.0 million). Loss
per share was 11.5 pence (2008: loss of 3.1 pence per share). The Board does not propose payment of a
dividend.
Working capital and net funds

Due to both the higher average selling price of winter garments and the effect of Christmas and Thanksgiving
sales volumes the business has a marked seasonality in both trading results and cash generation or
utilisation. Historically cash has been utilised in the first half of the financial year and any cash generation has
arisen in the second half of the year with the majority arising in the last quarter.
During the six months to July 2009, cash utilisation was higher than the equivalent period due to the increase
in the trading losses. The decline in cash and cash equivalents in the period has increased to £14.7 million
from £11.9 million last year.
The net increase in working capital in the six month period of £1.8 million compares with an increase of £5.7
million in the comparable period last year. The significant improvement has mainly been generated through
reductions in inventory levels at the period end reflecting both the clearance of old season inventory and tight
control of the new season in-take.
When combined with the cash absorbed by trading activities of £9.9 million (2008: £2.9 million) the cash
utilised by operations amounted to £11.7 million in the period (2008: £8.6 million). Further cash of £2.4 million
(2008: £3.3 million) was utilised by the payment of tax, dividends to minority interests and fixed asset
investments offset by capital contributions from landlords.
The total cash and cash equivalents at 31 July 2009 was £23.7 million (2008: £34.8 million). The Board is
focused on preserving the Group's cash resources and on developing strategies to return the Group to cash
generation. The level of funds within the Group is sufficient to ensure that no external funding will be required
throughout the remainder of this year. The Group retains its banking facilities allowing for loans, overdrafts and
documentary credits up to a net borrowing of £10.2 million.
Related party transactions

There have been no additional related party transactions to those disclosed in the Group's Annual Report &
Accounts for the year ended 31 January 2009.
17 September 2009

Registered Number: 1410568, England
Registered Office: 20-22 Bedford Row, London WC1R 4JS
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE

HALF-YEARLY FINANCIAL REPORT
We confirm that to the best of our knowledge:
the condensed set of financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU;
the interim management report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events
that have occurred during the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the principal risks and uncertainties
for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that
have taken place in the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could do so.
By order of the Board
Stephen Marks Roy Naismith

Chairman and Chief Executive Finance Director
17 September 2009
CONDENSED CONSOLIDATED INCOME STATEMENT
Six Six Year

m onths m onths ended
31 July 31 July 31 Jan
2009 2008 2009
Note £m £m £m
£m £m £m
Revenue 1 116.9 112.4 248.0
Cost of sales (57.5) (54.2) (121.0)
Gross profit 1 59.4 58.2 127.0
Operating expenses (73.8) (65.6) (140.1)

Other operating income 2 1.5 2.4 5.2
Other operating expenses 2 - (1.0) (1.0)
Net gain on sale of property, plant and equipment - 1.9 2.0
Operating loss before financing costs and

im pairm ent of goodw ill
1 (12.9) (4.1) (6.9)
Impairment of goodw ill - - (11.9)
Finance income 0.1 0.8 1.3

Finance expenses - - (0.1)
Net financing incom e 0.1 0.8 1.2
Operating loss (12.8) (3.3) (17.6)
Share of (loss)/profit of joint ventures, net of tax - (0.2) 0.2
Loss before taxation and impairment of goodw ill (12.8) (3.5) (5.5)
Impairment of goodw ill - - (11.9)
Loss before taxation (12.8) (3.5) (17.4)
Income tax credit - UK 2.1 0.8 2.0

Income tax expense - overseas (0.3) (0.3) (1.0)
Total incom e tax credit 1.8 0.5 1.0
Loss for the period (11.0) (3.0) (16.4)
Loss attributable to:

Equity holders of the parent 3 (11.0) (3.0) (16.6)
Minority interest - - 0.2
Basic losses per share 3 (11.5)p (3.1)p (17.3)p
Diluted losses per share 3 (11.5)p (3.1)p (17.3)p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six Six Year

2009 2008 2009
£m £m £m £m £m £m
Other com prehensive incom e
Currency translation differences on foreign currency

net investments
0.1 (0.8) 1.1
loans
(3.3) 0.7 5.5
Effective portion of changes in fair value of cash flow
hedges
(1.9) (0.1) 0.8
Income tax on income and expense recognised
in equity
0.2 - (0.8)
Other com prehensive incom e for the period, net (4.9) (0.2) 6.6
of tax
Total com prehensive incom e for the period (15.9) (3.2) (9.8)
Total com prehensive incom e attributable to:
Equity holders of the parent (15.9) (3.2) (10.0)

Minority interest - - 0.2
Total incom e and expense recognised for the (15.9) (3.2) (9.8)
period
CONDENSED CONSOLIDATED BALANCE SHEET
Restated Restated
31 July 31 Jan
31 July
2008 2009
2009
Note £m £m
£m
Assets
Non-current assets
Intangible assets 2.4 14.3 2.3
Property, plant and equipment 14.1 14.8 15.8
Investments in joint ventures 2.1 1.7 2.4
Deferred tax assets 5.2 2.4 3.0
Total non-current assets 23.8 33.2 23.5
Current assets
Inventories 54.8 59.6 62.6
Trade and other receivables 32.1 34.0 34.1
Current tax receivable 0.2 0.9 0.3
Cash and cash equivalents 4 23.7 35.9 38.4
Derivative financial instruments - 0.1 1.0
Total current assets 110.8 130.5 136.4
Total assets 134.6 163.7 159.9
Finance leases 0.3 1.0 0.7
Deferred tax liabilities 0.8 1.0 0.8
Total non-current liabilities 1.1 2.0 1.5
Current liabilities
Bank loans and overdraft 4 - 1.1 -
Trade and other payables 48.1 51.0 57.4
Current tax payable 0.1 0.5 0.1
Derivative financial instruments 0.9 - -
Total current liabilities 49.1 52.6 57.5
Total liabilities 50.2 54.6 59.0
Net assets 84.4 109.1 100.9
Equity
Called-up share capital 1.0 1.0 1.0
Share premium account 9.4 9.4 9.4

Other reserves 1.0 (0.9) 5.9
Retained earnings 71.8 98.6 83.4
Total equity attributable to equity holders

of the parent 83.2 108.1 99.7
Minority interests 1.2 1.0 1.2
Total equity 84.4 109.1 100.9
The comparative balance sheets for the half year-ended 31 July 2008 and year-ended 31 January 2009 have been restated to
reflect changes in accounting policy following the adoption of IAS 38 as explained in Note 5.
CONDENSED GROUP STATEMENT OF CASH FLOWS
Six Six Year

2009 2008 2009
Note £m £m £m
Adjustments for:
Depreciation 2.7 3.1 8.0
Impairment of goodw ill - - 11.9
Finance income (0.1) (0.8) (1.3)
Finance expense - - 0.1
Share of loss/(profit) of joint ventures - 0.2 (0.2)
Operating loss/(profit) on property, plant and equipment 0.3 (1.9) (2.0)
Income tax credit (1.8) (0.5) (1.0)
Operating loss before changes in

w orking capital and provisions (9.9) (2.9) (0.9)
Decrease/(increase) in inventories 5.5 (5.3) (3.3)
Decrease/(increase) in trade and other receivables 0.6 (3.6) (0.8)
(Decrease)/increase in trade and other payables (7.9) 3.2 6.9
Cash flow s from operations (11.7) (8.6) 1.9
Interest paid - - (0.1)

Income tax paid (0.3) (1.1) (2.2)
Cash flow s from operating activities (12.0) (9.7) (0.4)
Interest received 0.1 0.8 1.2
Investment in joint ventures - (0.2) -
Acquisition of subsidiary - 0.3 0.3
Acquisition of franchises - (0.2) (0.2)
Acquisition of property, plant and equipment (1.6) (1.7) (5.9)
Net proceeds from sale of property, plant and equipment (0.3) 2.0 2.0
Capital contributions received from acquisition of property,
plant and equipment
0.6 - -
Cash flow s from investing activities (1.2) 1.0 (2.6)
Payment of finance lease liabilities (0.3) - (0.4)
Dividends paid (0.6) (3.2) (4.8)
Cash flow s from financing activities (0.9) (3.2) (5.2)
Net decrease in cash and cash equivalents 4 (14.1) (11.9) (8.2)

Cash and cash equivalents at 1 February 38.4 46.7 46.7
Exchange rate fluctuations on cash held (0.6) - (0.1)
Cash and cash equivalents at period end 4 23.7 34.8 38.4

Share Share Hedging Translation Retained Minority Total
capital prem ium reserve reserve earnings interests equity
Total
£m £m £m £m £m £m £m
£m
Balance at 1 February 1.0 9.4 0.2 (0.9) 107.3 117.0 1.0 118.0
2008
Change in accounting (2.5) (2.5) (2.5)

policy
Restated balance
at 1 February 2008 1.0 9.4 0.2 (0.9) 104.8 114.5 1.0 115.5
Loss attributable to equity

(3.0) (3.0) (3.0)
shareholders
Minority interests
Dividends paid in the (3.2) (3.2) (3.2)
period
Currency translation on
foreign (0.8) (0.8) (0.8)
currency net investments
Currency translation
differences on
foreign currency loans 0.7 0.7 0.7
Effective portion of
changes in fair (0.1) (0.1) (0.1)
value of cash flow hedges
Restated balance at 31 1.0 9.4 0.1 (1.0) 98.6 108.1 1.0 109.1
July 2008

shareholders (13.6) (13.6) (13.6)
Minority interests 0.2 0.2
period
foreign 1.9 1.9 1.9
currency net investments
differences on 4.8 4.8 4.8
foreign currency loans
changes in fair 0.9 0.9 0.9
value of cash flow hedges
Income tax on income
and
expense recognised in (0.8) (0.8) (0.8)
equity
Restated balance
at 31 January 2009 1.0 9.4 1.0 4.9 83.4 99.7 1.2 100.9

shareholders (11.0) (11.0) (11.0)
Minority interests
period
foreign currency net 0.1 0.1 0.1
investments
differences on foreign (3.3) (3.3) (3.3)
currency loans
changes in fair value of (1.9) (1.9) (1.9)
cash flow hedges
Income tax on income
and 0.2 0.2 0.2
expense recognised in
equity
Balance at 31 July 2009 1.0 9.4 (0.9) 1.9 71.8 83.2 1.2 84.4
NOTES TO THE HALF-YEAR STATEMENT
Operating segments
Six months to Intra

31 July 2009 Group

sale sale sale
£m £m £m £m £m £m £m £m £m £m £m
Rev enue 59.8 18.8 78.6 17.4 8.5 25.9 5.9 6.5 12.4 116.9
Gross prof it 35.8 4.7 40.5 9.1 2.5 11.6 4.0 1.4 5.4 1.9 59.4
Gross margin 59.9% 25.0% 51.5% 52.3% 29.4% 44.8% 67.8% 21.5% 43.5% 50.8%
Operating contribution (5.8) (0.4) (6.2) (2.7) 0.7 (2.0) (1.7) 0.6 (1.1) 1.9 (7.4)
Div isional operating loss (6.4) (3.8) (0.1) - (10.3)
Operating loss bef ore f inancing costs (12.9)
Six months to Intra

31 July 2008 Group

sale sale sale
£m £m £m £m £m £m £m £m £m £m £m
Rev enue 55.5 24.1 79.6 15.3 8.8 24.1 1.1 7.6 8.7 112.4
Gross prof it 35.4 7.0 42.4 9.0 3.1 12.1 0.6 1.7 2.3 1.4 58.2
Gross margin 63.8% 29.0% 53.3% 58.8% 35.2% 50.2% 54.5% 22.4% 26.4% 51.8%
Operating contribution (2.8) 0.8 (2.0) (1.5) 1.4 (0.1) (0.1) 1.0 0.9 1.4 0.2
Gain on disposal 0.6 1.3 1.9
Div isional operating (loss)/prof it (2.4) (0.7) 1.7 - (1.4)
Operating loss bef ore f inancing costs (4.1)
Financing income has not been separately allocated to the respective divisions as this income is generated by the Group treasury
department which is managed and controlled centrally.
The share of the results of the joint venture operations of £nil (2008: loss of £0.2 million) relate to the Rest of the World retail operations
and are not disclosed in the information above.
Other operating income and expenses

2009 2008 2009
£m £m £m
Licensing income 1.5 1.4 4.2

Negative goodwill on acquisition of subsidiary - 1.0 1.0
1.5 2.4 5.2
Negative goodwill in the prior year relates to the acquisition of the remaining 50% shareholding of French Connection Japan Inc.
Operating expenses of £1.0 million in the prior year relate to fair value adjustments made to the initial 50% investment in French
Connection Japan Inc.
Losses per share
Losses per share of 11.5 pence (2008: 3.1 pence) is based on 95,879,754 shares (2008: 95,879,754) being the weighted average
number of ordinary shares in issue throughout the period, and £11.0 million (2008: £3.0 million) being the loss attributable to equity
shareholders. Diluted losses per share of 11.5 pence (2008: 3.1 pence) is based on 95,879,754 shares (2008: 95,879,754) being the
weighted average number of ordinary shares adjusted to assume the exercise of dilutive options.
The reconciliation to adjusted losses per share which is based on 95,879,754 shares (2008: 95,879,754) is as follows:

31 July Pence 31 July Pence 31 Jan Pence
2009 per 2008 per 2009 per
£m share £m share £m share
Loss attributable to equity shareholders (11.0) (11.5)p (3.0) (3.1)p (16.6) (17.3)p
Impairment of goodwill - - - - 11.9 12.4p
Adjusted losses (11.0) (11.5)p (3.0) (3.1)p (4.7) (4.9)p
Analysis of net funds
31 January Cash Non cash 31 July 31 July

2009 flow changes 2009 2008
£m £m £m £m £m
Cash and cash equivalents in the balance sheet 38.4 (14.1) (0.6) 23.7 35.9
Bank overdrafts - - - - (1.1)
Cash and cash equivalents in the cash flow 38.4 (14.1) (0.6) 23.7 34.8
Finance lease obligations (1.3) 0.3 0.2 (0.8) (1.0)
Net funds 37.1 (13.8) (0.4) 22.9 33.8
5. Prior year adjustment
The Group has adopted the amendments to IAS 38 Intangib le Assets published in May 2008 effective for accounting periods beginning
on or after 1 January 2009.
Expenditure in respect of advertising and promotional activities is now recognised as an expense when the Group has access to the
related goods or has received the related services. Similarly, all sample costs are now expensed as incurred.
This change in accounting policy has been adopted for the six month period-ended 31 July 2009 and has been retrospectively applied to
the comparative audited results for the year-ended 31 January 2009 and unaudited results for the six month period-ended 31 July 2008.
The impact on the balance sheet for both the year-ended 31 January 2009 and six month period-ended 31 July 2008 has been to reduce
trade and other receivables by £2.5 million and to decrease retained earnings by £2.5 million.
There has been no material impact on the condensed consolidated income statement reported in either of the affected periods and
therefore there is no change to the previously reported results.
Statutory accounts and basis of preparation
Reporting entity
French Connection Group PLC is a Company registered in England and Wales and resident in the United Kingdom. These condensed
consolidated half-year financial statements of the Company as at and for the six months ended 31 July 2009 comprise the Company and
its subsidiaries (together referred to as the 'Group') and the Group's interests in joint ventures.
The consolidated financial statements of the Group as at and for the year-ended 31 January 2009 are available upon request from the
Company's registered office at 20-22 Bedford Row, London WC1R 4JS or can be found on the Group
website www.frenchconnection.com.
Statement of compliance
This condensed set of financial statements has been prepared in accordance with the requirements of IAS 34 'Interim Financial
Reporting' as adopted by the EU.
As required by the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Services Authority ('the UK FSA'), other than noted
below, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied
in the preparation of the Company's published consolidated financial statements for the year ended 31 January 2009, which are prepared
in accordance with IFRS as adopted by the EU.
These condensed consolidated half-year financial statements have not been audited or reviewed by auditors pursuant to the Auditing
Practices Board guidance on Review of Interim Financial Information. The comparative figures for year ended 31 January 2009 are not
the Company's statutory accounts for that period. Those accounts have been reported on by the Company's auditors and have been
delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section
237(2) or (3) of the Companies Act 1985.
The Board of Directors approved the condensed consolidated half-year financial statements on 16 September 2009.
6. Statutory accounts and basis of preparation continued

The accounting policies applied by the Group in these condensed consolidated half-year financial statements are the same as those that
applied to the consolidated financial statements of the Group for the year-ended 31 January 2009, with the following exception:
Revised IAS 1 Presentation of Financial Statements (2007) introduces the term 'total comprehensive income', which
represents changes in equity during a period other than those changes resulting from transactions with owners in
their capacity as owners. Total comprehensive income is presented in a single statement of comprehensive income
(effectively combining both the income statement and all non-owner changes in equity in a single statement).
IFRS 8 Operating segments has been adopted. Under IFRS 8, reportable segments are determined on the basis of
those segments whose operating results are regularly reviewed by the Board. These operating results are prepared
on a basis that excludes items considered to be non-underlying in nature. Note 1 of the condensed consolidated
financial statements sets out the Group's reportable segments and sets out reconciliations between these and the
results reported in the income statement and balance sheet. There has been no change to the Operating
Segments note as disclosed in the previous year.
IAS 38 Intangib le Assets has been adopted. Expenditure in respect of advertising and promotional activities is now
recognised as an expense when the Group has access to the related goods or has received the related services.
Similarly, all sample costs are now expensed as incurred.
Key sources of estimation uncertainty

In applying the accounting policies, management has made appropriate estimates in many areas, and the actual outcome may differ
from those calculated. The key sources of estimation uncertainty at the balance sheet date were the same as those that applied to the
consolidated financial statements of the Group for the year-ended 31 January 2009.

The principal treasury risks to the Group arise from exchange rate and interest rate fluctuations. The Board has approved policies for
managing these risks, which are reviewed on a regular basis, including the use of financial instruments, principally forward foreign
exchange contracts. No transactions of a speculative nature are undertaken.
The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the Hong
Kong Dollar and Euro. The Group's policy is to reduce substantially the risk associated with purchases denominated in currencies other
Sterling by using forward fixed rate currency purchase contracts.
There has been no change since the year-end to the major treasury risks faced by the Group or the Group's approach to the management
of these risks.
The Group is dependent on reliable IT systems for managing and controlling its business and for providing efficiency and speed in the
supply chain. The Group's IT function oversees all the systems and has policies and procedures to protect the software, hardware and
data and to prevent unauthorised access to the systems.
The Board confirms that there are ongoing procedures in place for identifying, evaluating and managing significant risks faced by the
Group and that these have been in place for the year under review and up to the date of approval of the annual report and accounts. The
procedures have been reviewed by the Board and accord with the Turnbull Guidance for Directors on the Combined Code.
Going concern
The Group has a strong balance sheet with more than sufficient net funds to finance the working capital requirements over the cycle of a
The Board is focused on preserving the Group's cash and on developing strategies to return the Group to cash generation. The
level of funds is sufficient to ensure that no external funding will be required throughout the remainder of this year. Based on this, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future. For this reason, the Board continues to adopt the going concern basis in preparing the accounts.
Retail locations
31 July 2009 31 January 2009

Locations sq ft Locations sq ft
Operated locations
UK/Europe
French Connection Stores 74 228,988 77 234,550
French Connection Concessions 43 25,175 40 24,908
Nicole Farhi Stores 9 21,598 8 20,212
Nicole Farhi Concessions 12 12,551 12 12,551
Toast Stores 6 7,072 6 7,072
Toast Concessions 1 854 1 854
Great Plains Stores 1 850
Great Plains Concessions 2 1,290
147 297,528 145 300,997
North Am erica
37 142,549 38 145,740
Japan
21 40,850 21 43,355
Total operated locations 205 480,927 204 490,092
French Connection licensed and franchised

UK/Europe 12 16,610 13 20,610
North America 1 2,000 1 2,000
Middle East 16 28,695 14 25,214
Australia 47 66,614 43 62,801
Hong Kong 6 9,336 7 12,416
China 22 32,094 24 34,386
Other 56 54,895 52 52,195
Total licensed and franchised locations 160 210,244 154 209,622
Total Group branded retail locations 365 691,171 358 699,714

END
IR CKAKDOBKDKCD
5/24/13 French Connection | Completion of Strategic Revie | FE InvestEgate
French Connection
Completion of Strategic Revie
RNS Number : 5488I
15 March 2010
15 March 2010
Completion of Strategic Review, Announcement of Sale of a Business and Preliminary Results for the
year ended 31 January 2010
"Restructuring to return French Connection to Profitability"
French Connection Group PLC ("French Connection", "the Group") today announces the completion of its strategic review,
which was instigated early last year with the aim of enhancing both profitability and cash generation. In addition to the measures
previously announced, the Group today announces the closure of loss making operations internationally and the sale of the
Nicole Farhi brand.
The new steps being announced today are as follows:
· the sale of Nicole Farhi to OpenGate Capital for a consideration of up to £5 million. In the year ended 31 January
2010 this business generated revenue of £21.7 million and operating losses of £5.6 million. This sale may require
shareholder approval. A further announcement will be made as soon as possible on this matter; and
· closure of the majority of the under-performing French Connection retail stores in the US at a one-off cost of £6.5
million but leading to an annual reduction in losses of £3.2 million.
Once fully implemented these actions, along with the previously-announced exit from the Japan market, will result in a more
focused business which is expected to be profitable and cash generative providing a solid base from which to develop the
retained brands.
Looking forward strategic focus will be on building on the successes of French Connection, Toast and Great Plains.
French Connection also announces its preliminary results for the year ended 31 January 2010.
Results Highlights are as follows:
· Operating profit from businesses to be retained of £1.3 million (2009: loss of £(0.7)million), on revenue that increased
1% to £200.3 million (2009: £198.6 million)
· Like-for-like sales in the UK/Europe retail business to be retained increased by 2.8% driven by a continued resilient
performance from French Connection ladies' wear, e-commerce and Toast. Forward orders in the UK/Europe
wholesale business increased for the Winter 2010 season
· Reported Group loss after tax, (including losses generated in businesses to be discontinued, closure costs and asset
revaluations associated with the restructuring) was £(24.9) million (2009: loss £(16.4) million)
· Strong balance sheet with closing net cash of £35.7 million, with tightly controlled working capital
· Dividend proposed of 0.5p for the year (2009: total dividend 1.7p)
Commenting on this announcement, Stephen Marks, Chairman and Chief Executive of French Connection said:
"The strategic review is now complete. We have had to make some tough decisions, but our exit from the Japanese market,
the reduction of our US retail presence and the sale of Nicole Farhi, together with a reduction in our overhead base, leaves us
with a continuing business that we expect will be both profitable and cash generative even in the current difficult economic
environment."
"It is sad to see the Nicole Farhi brand leaving the Group, but I am delighted that its new owners are totally committed to
nurturing the brand and the considerable talents of the team so that its full potential is realised."
"In a very difficult economic environment, our ongoing businesses have performed reasonably in the past year. Our
UK/Europe retail business has achieved like-for-like sales growth of 2.8%, and Toast achieved revenue growth of 16%.
Forward orders in our core UK/Europe wholesale business have increased for the Winter 2010 season. This gives us
confidence that the business is returning to sustainable growth for the longer term."
"Our balance sheet remains solid with cash of £35.7 million at the end of the year. Our current advertising campaign is being
www.investegate.co.uk/ArticlePrint.aspx?id=201003150700105488I 1/17
well received by both media and consumers alike and we are now well positioned to benefit from any recovery in the
economy."
Enquiries:

Tom Buchanan/Deborah Spencer Brunswick +44(0)20 7404 5959
Notes to Editors:
French Connection:
Following the changes planned as a result of the strategic review, the French Connection brand will comprise retail or
wholesale businesses in the UK, Europe, the US, Canada, Hong Kong and China along with licensed partners operating in a
number of other countries most notably Australia, Singapore, Thailand and South Africa. In addition the successful brand
licences will continue under which partners produce jewellery, toiletries, shoes and eyewear. Along with the French
Connection brand, the Group operates the Great Plains brand, a wholesale-only ladies' wear range, Toast, an e-commerce
fashion and homeware brand, and YMC, a small men's and women's wear brand and store.
OpenGate Capital:
OpenGate Capital is an opportunistic private equity firm that acquires controlling interests in businesses with solid
fundamentals which exhibit opportunities for operational improvements and growth. Established in 2005, OpenGate Capital
has a global footprint with headquarters in Los Angeles, USA and a principal office in Paris, France. OpenGate is served by a
seasoned team of M&A and operating professionals that bring the skills needed to acquire, operate and build successful
companies. The partners of OpenGate have executed over 75 transactions worldwide ranging from corporate divestitures,
turnaround acquisitions, industry consolidations and other special situations investments across a wide array of industries
and geographical markets.
Completion of Strategic Review
Introduction
French Connection Group PLC ("French Connection") today announces the completion of its strategic review, targeted at
enhancing both profitability and cash generation.
Following a review of all areas of the Group's business, management are making, or have made, the following changes to
improve the Group's profitability:
· the proposed sale of the Nicole Farhi business (announced today)

· closure of loss making retail stores in US (announced today)
· closure of the French Connection business in Japan (previously announced)
· withdrawal from retail operations in Northern Europe (previously announced)
· reduction of central overhead costs (previously announced)
These actions will result in a smaller, more focused and profitable business providing a solid base from which to develop the
retained brands.
Sale of Nicole Farhi business
French Connection Group PLC ("French Connection") today announces that it has exchanged contracts on the sale of the
business and assets of the Nicole Farhi business to Fashion Runway Limited, for a consideration of up to £5 million as
detailed below.
Fashion Runway Limited ("the Purchaser") is the UK acquisition vehicle set up for the purpose of this transaction by
OpenGate Capital, a private equity investor based in Los Angeles, USA and Paris, France.
Nicole Farhi is a highly respected designer label founded within the French Connection Group by Stephen Marks and Nicole
Farhi in 1982. The brand comprises ladies' wear and men's wear designer garment ranges along with homewares,
accessories and other related products. The business operates both its own stand-alone stores and through concessions in
leading department stores in the UK and has a significant wholesale business supplying specialist retailers around the world.
The transaction comprises a sale of the assets and liabilities of the Nicole Farhi business along with a transfer of the relevant
employees and property leases. This transaction may require shareholder approval and is subject to a number of pre-
completion conditions including landlord approvals for lease assignments. A further announcement will be made as soon as
possible.
The consideration of up to £5 million comprises £0.5 million in cash, payable on completion, followed by further payments of
up to £4.5 million in cash, payable from 50% of the net cash generation of the Nicole Farhi business over subsequent years
with an upper limit of £1 million payable per year (upper limit of £500,000 in the first year). Any outstanding consideration will
be settled insofar as possible from any sales proceeds achieved from any subsequent sale of the business by the
Purchaser. The proceeds of the proposed sale will be used by French Connection for general corporate purposes.
French Connection will support the transition of the Nicole Farhi business into new ownership by providing support office
functions and other transitional services for up to two years at no cost to the Purchaser and will also provide financial support
for restructuring costs during the first year of £450,000. French Connection will provide further support to the Purchaser if
required in the form of guarantees or rent deposits of certain premises to facilitate the transfer or underletting of those
premises to the Purchaser.
The gross assets which are subject to the transaction are £11.0 million with a net asset value of £6.5 million including cash of
£1 million. In the year ended 31 January 2010 the Nicole Farhi business generated revenue of £21.7 million and operating
losses of £5.6 million, having been loss making for a number of years. As a result of the sale there is an impairment to the
carrying value of certain of the Nicole Farhi assets on the French Connection consolidated balance sheet at 31 January
2010. The remaining effect of the disposal will be reported in the year ending 31 January 2011.
Closure of US retail stores
French Connection intends to close the majority of its US retail operations as soon as is practical. The portfolio will be
reduced from the 23 current locations to approximately six stores. It is expected that the closure process will be achieved at
a cash cost in the region of £6.5 million and will take up to twelve months to implement. Provisions for costs expected to arise
from the planned closure have been made in the French Connection results for the year ended 31 January 2010.
Following the closures, the ongoing US business will comprise the successful and growing wholesale operation supplying
French Connection product to major department stores and specialty stores across the country. This will be supported by a
small number of retained French Connection branded stores together with an ongoing e-commerce operation.
Preliminary Results for the year ended 31 January 2010

Dear Shareholders,
The last year has proved to be very challenging for the Group, and we have had to use all our experience and expertise built up from over 40 years
of business in order to minimise the effects of the difficult economic climate. This led us to take a series of strategic decisions that, once
concluded over the coming months, will leave the remaining business in a significantly stronger position and should enable the Group to grow
and prosper in the future.
We recognised early in 2009 that it would be necessary to make structural changes to the Group in order to protect the core business for the long
term. The resulting strategic review has now been completed and we have taken some tough decisions but the changes will leave us with a
continuing business that we expect will be both profitable and cash generative, even in the current difficult economic environment. The Group
continues to have substantial cash resources which has been of significant benefit to us enabling us to focus solely on managing business
operations.
Against the prevailing background of difficult economic conditions during the early part of the financial year, the Board reviewed all aspects of the
Group's operations to determine the most appropriate structure for the future. This has resulted in the following actions that have either already
been completed or will be implemented over the coming months:
· the sale of the Nicole Farhi business;

· closure of the majority of the French Connection retail stores in the US;
· closure of all the French Connection business in Japan;
· closure of the under-performing retail operations in Northern Europe; and
· reduction of central overhead costs.
We have already completed the closure of the Japanese and Northern Europe businesses, successfully reduced central overheads and have
entered into an agreement for the disposal of Nicole Farhi. The other actions will take up to twelve months to implement and our aim is to make
the necessary changes with as little impact as possible on the on-going businesses.
Our financial results in the last year can be separated between those businesses which will not be part of the Group in the longer term, and those
core businesses which will continue. These core businesses achieved revenue of £200.3 million in the year to 31 January 2010 (2009: £198.6
million) and the operating profit of these businesses was £1.3 million (2009: loss of £(0.7) million) before gains or losses on disposal of leases.
The loss after tax of the entire Group in the year to 31 January 2010 including the losses generated in businesses which are classified as
discontinued together with closure costs and asset revaluations in relation to the restructuring amounted to £(24.9) million (2009: £(16.4) million).
Cash generated from operations during the year amounted to £2.0 million including a significant release from improved working capital
management during the year. The Group retained £35.7 million of cash at 31 January 2010 (2009: £38.4 million). Based on our confidence in the
expected benefit from the restructuring and our cash position the Board has recommended a dividend of 0.5 pence per share for the year.
The core businesses have performed reasonably in the past year, despite the difficult environment. Our UK/Europe French Connection retail
business has achieved like-for-like growth of 2.8% in the year and Toast achieved a 16% growth in revenue overall. Although this financial year
has been difficult in our UK wholesale business, forward orders are showing an increase for the Winter 2010 season for the first time for some
years. Based on this and the structural changes we have made we are looking forward to a return to overall growth and to position ourselves to
benefit from any recovery in the economy in the longer term. We expect to remain in a net cash position, even after taking account of costs
associated with making the changes to the Group referred to above.
During the year we have continued to see strong growth from the French Connection ladies' wear business both in the retail and wholesale
channels. This performance is in addition to the growth seen for the last three years and provides us with great confidence that the core focus on
fashion forward, high quality merchandise is the correct strategy. Menswear has continued to underperform in the past year, however we are
determined to achieve improvements in this business, and believe the benefit of our efforts is beginning to be seen, with an improvement in recent
performance within our retail stores. This improvement will drive additional profitability so long as it is sustained and we continue to look for
further development in this area.
The importance of the internet as a distribution and marketing channel has continued to grow over the last year and we have invested
considerable effort in this and benefited accordingly. The team that we have in place has done a fantastic job to ensure that we have generated
considerable growth and we look forward to continuing this over the coming year both in the UK and also in Europe and North America.
We have seen consistent growth in Toast over the year. Greater emphasis has been placed on establishing a retail presence in the cities that are
appropriate for Toast, which, coupled with a good growth in sales in the existing shops, has resulted in a good improvement. The mail order
business, underpinned by the distribution of the catalogue, has also continued to grow, with a much greater penetration of orders being taken on
the internet. We have continued to invest in the infrastructure required to enable this business to develop in the future.
Both the product and country licensees have seen good growth over the year. In the UK, toiletries and eyewear have made good advances and we
expect to see this continue in the future. Australia, India and Hong Kong have seen good sales growth over the year driven by additional sites and
organic growth within the existing store portfolios. The plans currently in place indicate that this will continue over the coming year.
We continue to have great confidence in the French Connection brand and to support this we have recently launched a new advertising campaign
aimed at developing perceptions of the brand in the minds of the consumer. The response to date has been very strong with a particularly strong
response on-line where it has caught the imagination of opinion leaders and style conscious consumers. This will run for the remainder of the
season and will help to build brand credibility.
I am personally very sad to see the Nicole Farhi brand leaving the Group, however we believe that the added focus that this change will enable us
to place on the core businesses and the improvement in cash resources will benefit the Group in the long term. I would like to thank all those
involved with Nicole Farhi for all their efforts in the past and wish them all good luck in the future.
The French Connection Group business is built on the hard work and commitment of our employees and this past year has been one of the most
difficult we have all had to face in many years. The headcount reductions that we felt were imperative to make earlier in the year have made their
tasks all the harder. I thank them for their continued dedication, commitment and hard work during this challenging period and look forward to
them seeing the benefit of the changes we have made over the next year.
This has been a very difficult year, however I am confident that the changes we have made will create a solid base for the development of the
business and will enable the Group to return to profitability in the near future.
Stephen Marks
Chairman and Chief Executive 15th March 2010
BUSINESS REVIEW
Introduction
The financial year ended 31 January 2010 has been a very difficult one for the French Connection Group. The world-wide recession had a
significant effect on our trading performance and resulted in the stalling of our recovery. The Board implemented a strategic review at the start of
2009 with the aim of making the changes necessary to return the Group to profit and cash generation as soon as possible. This review has
resulted in the following actions:
· termination of our retail operation in Japan resulting in the closure of 21 stores;

· the implementation of a plan to dispose of the Nicole Farhi business, resulting in an agreement for sale which will be concluded in 2010;
· planned closure of the majority of our retail stores in the US which we expect to complete over the next 12 months;
· closure of the under-performing stores in northern Europe; and
· focused reductions in overhead costs including reductions in the number of staff in each of our three main head office locations around
the world.
These actions and their financial implications are discussed in more detail below along with a review of the business over the financial year. The
implementation of the changes will incur a significant cost during the year ended 31 January 2011 but this will be funded from the existing cash
resources of the Group and, once completed, the continuing businesses will be cash generative. The net cash cost of the changes described
above will be £8.5 million and the net annual impact on the Group's results will be an improvement of £12.5 million.
This business review will focus on the core businesses which are expected to be retained for the longer term, while also commenting on the
changes planned within each reporting segment. Within the statutory annual accounts, the performance of the Group is analysed between
continuing and discontinued activities. The continuing activities include the US retail business that is to be closed during the current year while the
discontinued activities include the Japan business and the Nicole Farhi business (which, at 31 January 2010, was "held for sale"). In the detailed
analyses below the US retail business has been aggregated with these discontinued business and then separated from the results of the
businesses which the Group intends to retain for the longer term.
The total loss after tax of the entire Group for the year ended 31 January 2010 was £(24.9) million (2009: £(16.4) million) which can be further
analysed as follows:
2010 2009
£m £m
Divisional operating profit generated by

businesses w hich are to be retained 5.8 3.8
Group management overheads (4.5) (4.5)
Result of core businesses to be retained 1.3 (0.7)

Disposal of leases (0.8) 2.0
Divisional total 0.5 1.3
Divisional operating loss arising from US

businesses planned for closure (3.2) (3.0)
Provisions and impairments related to the planned
closure of US stores (6.5) -
Impairment of goodw ill - (11.9)

Net finance income 0.1 1.2
Operating loss (9.1) (12.4)
Share of joint ventures 0.4 0.6
Taxation (0.2) 1.0
Loss after taxation (8.9) (10.8)

Loss after taxation of businesses classified as
discontinued in the financial year (9.4) (5.6)
Provisions and impairments related to the
discontinued businesses (6.6) -
Loss after tax for the year (24.9) (16.4)
Restructuring
The restructuring plans described above give rise to exceptional charges in the profit and loss account for the year amounting to £13.1 million.
This comprises:
2010
£m
Costs of closure of the retail business in Japan 2.5

Disposal costs and impairments relating to the
planned disposal of the Nicole Farhi brand 4.1
Costs and provisions relating to discontinued

businesses 6.6
Provisions and impairments related to the

planned closure of US stores 6.5
Total 13.1
The closure of the stores in Japan was substantially completed prior to the year end and, although the accounting cost has included the cost of
exiting leases and meeting obligations for property dilapidations, the net cash impact on the Group will be positive as substantial rent deposits
are returned by the landlords and working capital is reduced.
The Nicole Farhi business has been classified as "held for sale" at 31 January 2010. Transaction costs incurred prior to the year end and
impairments associated with non-current assets have been charged within discontinued activities. In accordance with International Accounting
Standards, certain impairments concerning the current assets to be transferred will be recorded on completion of the transaction which is
expected in the coming months. The disposal accounting in the year to 31 January 2011 will also reflect the sales proceeds and the remaining
costs associated with the disposal.
During March 2010, the Company entered into an agreement with OpenGate Capital under which OpenGate will acquire the assets and liabilities
of the Nicole Farhi business for a consideration of up to £5.0 million. Subject to completion of the disposal it is expected that the accounts for the
year ending 31 January 2011 will reflect an accounting expense in relation to the asset disposal in the region of £4.5 million with a net cash cost of
£3.0 million.
The asset impairments and provisions in relation to the US retail business reflect the Board's best estimate of the costs that will arise from the
closure including associated fees. Management are engaged in the process of identifying the most efficient route to exit the leases. It is expected
that the closure will be completed during the current year and in accordance with International Accounting Standards the results of this business
for the year under review are presented within continuing activities, notwithstanding the action being taken. Subject to finalisation of this closure
during the current year the results for the US retail business shall be presented as discontinued activities in the statutory accounts for the year
ending 31 January 2011.
There were no significant costs associated with the closure of the Northern European stores.
Redundancy costs of £0.3 million were incurred across the Group as a result of the reductions in headcount in the head offices. This cost has
been included in the operating costs of the relevant divisions.
The net cash cost of all of the restructuring is expected to amount to £8.5 million of which £0.8 million has already been incurred. During the year
under review, the businesses will not be retained for the longer term accounted for an operating loss of £12.5 million.
Working capital management

During the year there has been a concerted effort to focus on reducing the working capital levels across the Group. The success of this strategy
has been highlighted in reduced inventory levels. Part of this benefit has arisen from the closure of the Japan activities, but considerably tighter
buying for the newer seasons and success in clearing older inventory has also contributed to the overall reduction. This has led to a cash inflow
from working capital management of some £7.3 million compared with the £2.8 million inflow in the prior year. This has helped to mitigate the
cash outflow that has arisen from the trading losses in the year and to preserve the cash balance of the Group which remains fundamentally
unchanged from the strong position brought forward from the prior year.
Closing cash at 31 January 2010 amounted to £35.7 million (2009: £38.4 million) and existing banking facilities amounting to £10.3 million have
been retained. The Board considers that this funding will provide sufficient working capital for both the development of the on-going businesses
and the restructuring costs.
Divisional analysis
The divisional operating profit arising from the businesses which will be retained after the completion of the restructuring can be further analysed
as follows:
2010 2009
£m £m
UK/Europe 2.6 2.7

North America (0.5) (0.2)
Rest of the World 2.9 3.3
5.0 5.8
Group management overheads (4.5) (4.5)
0.5 1.3
The results of the trading divisions are discussed in more detail below and the results of the businesses which will be retained in the longer term
are identified separately from the total divisional results.
United Kingdom and Europe

Retail
Within the UK/Europe operating region the Group will retain its core French Connection retail portfolio in the UK and Ireland having closed eight
locations in northern Europe early in the financial year. Nine concessions within El Corte Inglais stores in Spain and Portugal are also still in
operation along with the seven Toast retail locations and the French Connection and Toast e-commerce businesses. As part of the disposal
plans relating to the Nicole Farhi business, the 23 Nicole Farhi retail locations in the UK will be transferred or closed. A small number of other
under-performing stores in the UK have also been closed during the year.
Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Revenue 116.4 107.6 131.0 125.3
Gross profit 70.0 66.5 77.6 76.8

Gross margin 60.1% 61.8% 59.2% 61.3%
Trading overheads (69.8) (66.5) (80.7) (78.3)
Operating contribution 0.2 - (3.1) (1.5)
Revenue in the businesses which will be retained increased by 8% to £116.4 million (2009: £107.6 million) and, within that, like-for-like sales
increased by 2.8% driven particularly by e-commerce sales in both French Connection and Toast. The retail portfolio grew during the year through
the addition of a further ten concessions within House of Fraser department stores to bring the total to 31. These ladies' wear concessions have
performed well and make a strong contribution to profit.
The sales performance of the French Connection brand has continued to recover and ladies' wear achieved a further increase in like-for-like sales
of 4.8% over the year, supported by considerable growth in e-commerce. As previously reported, men's wear has performed less well and in order
to address this, the design and merchandising teams are focusing on distinctive positioning for the men's wear ranges which will be supported by
our new advertising campaigns. In the early part of the Summer 2010 season we have seen a small improvement in the performance of the
men's wear ranges.
Toast has achieved remarkable growth during the year, despite the difficult retail environment, achieving a 16% increase in revenue and strong
like-for-like growth in both its retail stores and e-commerce. The retail stores are all showing growth, a new store in Cheltenham has been added
in the new year and other locations are being considered including potential sites in central London to replace the Selfridges concession which
closed towards the end of the financial period.
The gross margin in the ongoing businesses was 60.1% during the year, a decrease of 1.7%. The decreases arose from the effect of weaker
exchange rates through the period, which has the effect of increasing the cost of product imported, and from the effect of additional outlet stores
within the mix. Core margins have remained largely consistent with the previous year and the proportion of sales made during discount periods
remained similar. As can be seen from the balance sheet, stock levels have been tightened considerably and it is hoped that this will have a
beneficial impact on the depth of discounts required to clear the terminal stock in the new financial year.
Underlying overheads in the business have been reduced during the year and are targeted to find further reductions. Despite this, overall store
costs have increased by over 4%, attributable to uncontrollable increases in rents and rates along with volume-based increases arising in the e-
commerce businesses. Five-yearly rent review settlements during the year have, on average, been concluded at lower rates of increase than
previously as a reflection of the softening in the retail sector. However rent reviews concluded in the past year continue to reflect the growth of
rents in the previous five years and the average rent increase settled during the year was equivalent to over 2% per annum. The costs of additional
stores in the period were off-set by savings made from store closures.
The net contribution during the year from the businesses which are to be retained was a profit of £0.2 million (2009: break-even). Trading
improvements will be required in order to generate acceptable operating margins and our aim is to generate these improvements through
increased sales densities within the existing portfolio and from improved gross margins. These improvements will be generated from a
continuation of growth in French Connection ladies' wear, a turn-around in the performance of men's wear and continued tight control of stock
levels. We will also continue to manage the portfolio and, wherever possible, aim to dispose of unproductive retail space in a cost-efficient
manner. Within Toast and e-commerce we aim to maintain the growth momentum seen in the last year, cautiously investing in these businesses
to generate further profitable growth.

Wholesale
Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Revenue 32.8 40.1 39.4 47.5
Gross profit 10.2 12.6 10.9 13.4

Gross margin 31.1% 31.4% 27.7% 28.2%
Operating contribution 1.3 2.2 0.5 1.5
The French Connection and Great Plains wholesale businesses will continue unchanged after the disposal of the Nicole Farhi business.
Wholesale revenue in UK/Europe declined significantly during the year predominantly due to reductions in orders for men's wear products as our
wholesale customers reacted to a slow-down in their volumes over the past 18 months. While the decreases are disappointing, they very much
reflect the mood of our customers who have generally found trading to be difficult over the past year and have responded appropriately. However,
within their stores, ladies' wear continues to perform well in relation to other brands. We have received positive reactions to the 2010 ranges and
we expect an increased order book going into the Winter season for the first time in a number of years. We expect that the development of the
men's wear ranges will reap rewards within the wholesale division in coming seasons, however the cycles associated with a wholesale business
mean that it is likely that this will take longer than in the retail channel.
Gross margins in the wholesale division are a little lower than the previous year with pressures from weaker Sterling.
Overhead costs in the division have been managed considerably lower with savings from reduced selling costs and tighter control of general
overheads.
The net operating contribution from the entire division remained positive, albeit at a lower level due to the decline in volume. The impact on the
division of the restructuring will be to improve the operating contribution, but improvement in the core trading performance remains the key focus of
our work.
United Kingdom and Europe region

Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Regional operating contribution 1.5 2.2 (2.6) -
Common overhead costs (3.9) (4.8) (5.4) (6.7)
Licence income 5.8 4.7 6.7 5.6
3.4 2.1 (1.3) (1.1)
Disposal of lease interest (0.8) 0.6 (0.8) 0.6
Divisional operating result 2.6 2.7 (2.1) (0.5)
The aggregate operating contribution from the retail and wholesale divisions in UK/Europe which will be retained after completion of the
restructuring was a profit of £1.5 million (2009: £2.2 million). Common overheads were trimmed back in the year with a £0.8 million reduction in
advertising and marketing expenditure.
Other income in the UK/Europe region of £5.8 million (2009: £4.7 million) includes both licence receipts from external licensees and also brand
royalties charged to Group companies which are purely internal and are eliminated from the Group result. The licence income from external
sources, which will continue unchanged following the restructuring, increased to £4.7 million (2009: £4.2 million), the growth generated by our
jewellery, toiletries and eyewear licences. In addition, the country licenses especially in Australia, India and Hong Kong have performed well. The
indications are that this will continue in the coming year.
The operating result for the entire UK/Europe division from the businesses which we intend to retain for the longer term was a profit of £3.4 million
(2009: profit of £2.1 million) before losses or gains arising from lease disposals. While the implementation of the restructuring will take some
time and incur costs, the benefits from the planned changes are evident within this reporting segment and overall the performance of these
businesses has improved over the comparable period. Our expectation is that the restructured business will provide a firm base from which to
continue the development of the retained brands and to restore appropriate levels of profitability to the business region and ultimately to the Group
in the longer term.
North America
Within the North America operating region the Group will retain its core French Connection wholesale business in the US along with approximately
six stores which will serve to support the brand presence in the region. The retail portfolio in Canada, comprising 14 stand-alone stores managed
by a separate team in Toronto, will also be retained.
The weakening of Sterling compared with the previous years has had a marked impact on the Sterling-reported results, increasing the Sterling
equivalent of US Dollar-based trading figures by approximately 13% compared to last year. Trading data below is therefore given in the equivalent
of US Dollars to allow accurate comparability.
North America
Retail
Businesses to be
retained Total
2010 2009 2010 2009
$m $m $m $m
Revenue 32.4 31.5 57.0 62.4

Gross profit 18.1 17.8 30.9 36.1
Gross margin 55.9% 56.5% 54.2% 57.9%
Operating contribution (0.8) - (6.7) (5.8)
Operating contribution (£0.5) - (£4.3) (£3.2)
The retail environment in the US has continued to be difficult and increasingly affected by promotional discounting in the full price stores and the
clearance of excess inventory carried over from the previous year. Our business in Canada however has proved more resilient but overall the
margin decreased by 0.5%.
Core costs have also been tightly controlled and operating costs of the US stores were reduced by 4%. In Canada total costs increased as a
result of the three additional stores opened over the past two years. The businesses to be retained recorded a loss of £(0.5) million (2009: break-
even).
North America
Wholesale
Businesses to be
retained Total
2010 2009 2010 2009
$m $m $m $m
Revenue 28.0 33.7 28.4 33.9

Gross profit 9.5 9.8 9.6 10.5
Gross margin 33.9% 29.1% 33.8% 31.0%
Operating contribution £2.9 £1.8 £2.7 £1.9
Sales in our North America wholesale business, which had been making good progress, were affected by the softening of the market during the
year and the consequent decline in demand from our customers along with the clearance of older inventory during the previous year. The margin
recovered somewhat during the year under review as a result of the lower levels of stock clearance. Our relationships with wholesale customers
remain strong and sell-through of our product in their stores has been encouraging. We are working closely with our customers and expect to be
able to build volumes on this solid base.
Trading overheads have been cut back, in particular in selling overheads and administration in recognition of the difficult trading environment.
Overall the net operating contribution from the businesses to be retained was £2.9 million (2009: £1.8 million), a good result given the reduction in
demand.
Businesses to be
retained Total
2010 2009 2010 2009
$m $m $m $m
Regional operating contribution 3.8 3.3 (2.5) (2.4)

Disposal of lease interest - 2.5 - 2.5
Divisional operating result $ (0.8) (0.4) (7.9) (7.3)
Divisional operating result (£0.5) (£0.2) (£5.0) (£4.0)
The businesses which will be retained after completion of the restructuring made a contribution of $3.8 million (2009: $3.3 million).
Common overheads were tightly controlled in the year with particular savings in advertising and promotion although a gain on disposal was not
repeated. The operating result from the region was a loss of $(0.8) million or £(0.5) million.
Rest of the World

Retail
Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Revenue - - 11.8 7.1

Gross profit - - 7.2 4.6
Gross margin 61.0% 64.8%
Trading overheads - - (10.7) (5.8)
Operating contribution - - (3.5) (1.2)
In the Rest of the World operating region the Group has closed the retail business in Japan and this has therefore been classified as a
"discontinued business" in the financial statements for the year ended 31 January 2010.
Rest of the World

Wholesale
The Group will retain its business in Hong Kong which supplies product to our licence partners in Asia, Australia, Africa and South America and
also acts as a liaison office between manufacturers in the region and the UK and North America businesses. The costs within this division which
arise from the Nicole Farhi business will cease to be part of the Group following the disposal of that brand.
Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Revenue 12.7 14.9 12.8 15.0

Gross profit 2.5 3.2 2.5 3.2
Gross margin 19.7% 21.5% 19.5% 21.3%
Revenue in our wholesale business based in Hong Kong fell by 15% in Sterling terms, but 26% in local currency. Almost half of the decline in
revenue arose as a result of the change in status of the Japan business which, following its absorption into the Group during last year, ceased to
be a third party customer of the business. Other declines in sales were seen across many of the licence customers as the world-wide recession
had an impact on demand.
The gross margin generated by this business is affected by the mix of the different supply arrangements with customers and while core margins
were unchanged, the blended gross margin fell to 19.7% (2009: 21.5%).
Overheads were affected last year by a one-off provision against a debt due from a former licensee of £0.3 million. The wholesale division based
in Hong Kong which will be retained generated a net operating contribution of £1.4 million (2009: £1.8 million).
Rest of the World division

Businesses to be
retained Total
2010 2009 2010 2009
£m £m £m £m
Regional operating contribution 1.4 1.8 (2.5) 0.2
Other operating income 1.5 1.5 2.1 1.9
Divisional operating result 2.9 3.3 (0.4) 2.1
The wholesale business in the Rest of the World division generated an operating contribution of a £1.4 million (2009: £1.8 million).
The business in Hong Kong also earns commission income from Group companies on shipments from Hong Kong to the UK and North
America. Total other income from the retained businesses was £1.5 million (2009: £1.5 million). This amount is eliminated from the
consolidated Group results.
Excluding the impact of the Japan business and allowing for the overhead changes which will be effected on the disposal of the Nicole Farhi
brand, the Rest of the World region generated a profit of £2.9 million in the period (2009: £3.3 million).
Group management and net finance income

The overheads arising from the central Group management function amounted to £4.5 million in the year, no change on last year after successive
reductions in the last few years. Net finance income in the year of £0.1 million (2009: £1.2 million) reflected the lower interest rates in the market.
Group operating result
Businesses Total Total

to be US retail Intra "continuing "continuing
retained for closure Group businesses" businesses"
2010 2009
£m £m £m £m £m
Revenue 200.3 14.0 214.3 213.6

Gross profit 100.2 7.1 3.3 110.6 109.2
Gross margin 50.0% 50.7% 51.6% 51.1%
Aggregate operating contributions 5.3 (3.4) 3.3 5.2 5.5
Licence income 7.3 0.7 (3.3) 4.7 4.2
Disposal of lease interest (0.8) - (0.8) 2.0
Trading contribution 5.0 (3.2) - 1.8 2.8
Group management overheads (4.5) (4.5) (4.5)
Divisional operating result 0.5 (3.2) (2.7) (1.7)
Restructuring costs - (6.5) (6.5) -
Impairment of goodw ill - - - (11.9)
Net finance income 0.1 - 0.1 1.2
Operating result 0.6 (9.7) - (9.1) (12.4)
The total operating result of the core businesses within the regions described above and including net finance income of £0.1 million amounts to
an operating profit of £0.6 million. As described above, International Accounting Standards require that the results of the US retail business are
included within "continuing operations" until closure, as shown above. Aggregating these two elements the Group operating result for "continuing
businesses" is a loss of £(9.1) million (2009: (12.4) million).
The total operating result of the regions including both continuing and discontinued operations is set out in the segmental analysis in the statutory
accounts and amounts to a loss of £(12.0) million (2009: £(6.9) million) before closure costs, impairments and financing.
Joint Ventures
The Group is party to two retail joint ventures in Hong Kong and China on a 50% shareholding basis. The joint ventures are directly managed by
locally based management teams and operate retail locations in their respective territories. This business model allows for strategic input from
French Connection to marry with local operational experience to create a mutually beneficial business. From the perspective of the French
Connection Group we benefit from not only our share of any profits generated but also from margin created on supplying product to the
businesses and licence royalty income.
The Group's share of net profits generated by the joint ventures during the year was £0.4 million (2009: £0.6 million).
Taxation
The tax charge for the year of £0.7 million reflects tax charged on profits generated in Hong Kong. No benefit has been recorded for losses
incurred in the US or the UK in the year although those losses remain available to reduce any future taxable profits.
The effective tax rate in future years will vary depending on the level of profit generated and the different geographic locations where it is taxed
since the three principal countries of operation have significantly different tax rates and the Group has substantial tax losses available to offset
profits in the major tax territories.
Minority interest
The minority interest of £nil (2009: £0.2 million) reported in the income statement represents the net share of results attributable to the 25%
ownership held by local management in Canada, Toast and YMC.
The profit and loss account shows a charge, net of tax, of £16.0 million (2009: £5.6 million) reflecting the net losses of the businesses which are
classified as discontinued or held for sale at 31 January 2010 along with the costs and provisions associated with their closure or disposal.
These are primarily the Nicole Farhi business ("held for sale" at the year end) and the Japan business. All other businesses, including the US
retail business which is planned for closure, are included in "continuing operations".

Net earnings for the year attributable to equity shareholders was a loss of £(24.9) million (2009: loss of £(16.6) million). Loss per share was
therefore (26.0) pence (2009: (17.3) pence per share).
The Board has recommended payment of a dividend of 0.5 pence per share. Subject to approval at the Annual General Meeting the dividend will
be paid on 6 July 2010 to shareholders on the register at 26 March 2010 (ex-dividend date 24 March 2010).
Balance sheet
The Group balance sheet at 31 January 2010 reports the assets and liabilities of the discontinued businesses as a separate item from the
balance sheet relating to the continuing businesses. As described above, the continuing businesses include the US retail stores despite the
plans for their closure; they will be classified as discontinued upon their termination.
Fixed assets and investments

Total capital expenditure in the year was £2.8 million, £2.3 million of which was spent on the retail portfolio. The remaining expenditure
represented investment in our warehouse, head offices and computer systems.
The tangible assets at the end of the year represented mostly the remaining un-depreciated capital cost of fitting out our retail stores, head office
and warehouse along with IT hardware and systems. As required by International Financial Reporting Standards an impairment test has been
conducted on assets where there was an indication of impairment. This has resulted in new impairment provisions amounting to £0.7 million in
the year (2009: £1.5 million) in relation to three retail stores.
Based on current plans and expectations, capital expenditure in the new financial year will amount to approximately £2.5 million.
Investments reported on the balance sheet relate to the amount invested in the two joint ventures described above and has decreased following
the absorption of the Japan joint venture into the Group.
Cash generation
Taking the loss for the period and excluding the effects of the restructuring provisions, non-cash items (such as depreciation), taxation and finance
costs net cash outflow from operations was £(5.3) million (2009: £(0.9) million). The changes in working capital described above created a
release of cash of £7.3 million (2009: £2.8 million) resulting in a net cash inflow from operations of £2.0 million (2009: £1.9 million).
After cash outflows from investing and finance activities, the closing cash of the Group decreased by only £2.7 million to £35.7 million (2009: £38.4
million). The Group utilises cash during the cycle of the year, but the cash available to the business has been sufficient to cover the entire
requirement such that the lowest cash position experienced in the last year was £11.3 million and the average cash position over the year was
£21.3 million. In addition to this cash, the Group has working capital overdraft and other facilities of £10.3 million.
The restructuring plans laid out above will give rise to cash costs of approximately £7.7 million during the year ending 31 January 2011. Despite
this the Board expects that the cash available to the Group will be sufficient to fund both this and the working capital requirements of the business
over the year and, while the banking facilities will be retained, it is not expected that they will be utilised on a net basis during the year.
The Board's policy is to maintain a strong capital base, including liquid funds, in order to maintain investor, creditor and market confidence and to
sustain future development of the business.
CONSOLIDATED STATEMENT OF INCOME

Year ended 31 January 2010
2009
2010 Re-presented*
Note £m £m £m £m
Revenue 4 214.3 213.6
Cost of sales (103.7) (104.4)
Operating expenses (117.2) (117.1)

Other operating income 5 4.7 4.2
Net (loss)/gain on sale of property, plant and (0.8) 2.0
equipment
Operating loss before financing, im pairm ents and closure (2.7) (1.7)
costs
Closure costs (6.5) -
Impairment of goodw ill - (11.9)

Finance expenses - (0.1)
Net financing incom e 0.1 1.2
Operating loss (9.1) (12.4)
Share of profit of joint ventures, net of tax 0.4 0.6
Income tax credit - UK 0.5 2.0

Income tax expense - overseas (0.7) (1.0)
Total incom e tax (expense)/credit (0.2) 1.0
Loss for the year from continuing operations (8.9) (10.8)
Loss from discontinued operations, net of tax 3 (16.0) (5.6)
Attributable to:
Equity holders of the parent (24.9) (16.6)

Minority interests - 0.2
Earnings per share
Basic losses per share 7 (26.0)p (17.3)p

Diluted losses per share 7 (26.0)p (17.3)p
Basic losses per share 7 (9.3)p (11.5)p

Diluted losses per share 7 (9.3)p (11.5)p
*See discontinued operations Note 3.

2010 2009
£m £m £m £m
Loss for the period (24.9) (16.4)

Currency translation differences for overseas operations (1.5) 1.1
Currency translation differences on foreign currency loans (0.6) 4.7
Effective portion of changes in fair value of cash flow (1.1) 0.8
hedges
Currency translation differences transferred to profit and
loss, net of tax 0.1 -
Other comprehensive income for the period, net of tax (3.1) 6.6
Total comprehensive income for the period (28.0) (9.8)
Total comprehensive income attributable to:

Equity holders of the parent (28.0) (10.0)
Minority interests - 0.2
Total income and expense recognised for the period (28.0) (9.8)

At 31 January 2010
Restated
2010 2009
Note £m £m
Assets
Non-current assets
Intangible assets 2.4 2.3
Investments in joint ventures 2.6 2.4
Current assets
Inventories 40.8 62.6
Current tax receivable - 0.3
Derivative financial instruments - 1.0
Assets classified as held for sale 8 6.4 -
Finance leases - 0.7
Deferred tax liabilities 0.8 0.8
Total non-current liabilities 0.8 1.5
Current liabilities
Current tax payable 0.5 0.1
Derivative financial instruments 0.1 -
Provisions 8.7 -
Liabilities classified as held for sale 8 4.7 -
Equity
Called-up share capital 1.0 1.0
Share premium account 9.4 9.4
Other reserves 2.8 5.9
Total equity attributable to equity holders of the parent 71.1 99.7

Minority interests 1.2 1.2
The comparative balance sheet for the year ended 31 January 2009 has been restated to reflect changes in accounting policy follow ing the amendment to IAS 38 as
explained in Note 1.

Share Share Hedging Translation Retained Minority Total
capital prem ium reserve reserve earnings Total interests equity
£m £m £m £m £m £m £m £m
Balance at 1 February 2008 1.0 9.4 0.2 (0.9) 107.3 117.0 1.0 118.0
Change in accounting policy (2.5) (2.5) (2.5)

(Note 1)
Restated balance
at 1 February 2008 1.0 9.4 0.2 (0.9) 104.8 114.5 1.0 115.5
Total comprehensive
income for
the period
Loss (16.6) (16.6) 0.2 (16.4)
Other comprehensive
income
Currency translation for
overseas
operations, net of tax 1.1 1.1 1.1
differences
on foreign currency loans, net 4.7 4.7 4.7
of tax
Effective portion of changes
in fair
value of cash flow hedges 0.8 0.8 0.8
Transactions with owners,
recorded directly in equity
Dividends to equity holders (4.8) (4.8) (4.8)
Balance at 31 January 2009 1.0 9.4 1.0 4.9 83.4 99.7 1.2 100.9
Total comprehensive
income for
the period
Loss (24.9) (24.9) - (24.9)
Other comprehensive
income
Currency translation for
overseas
operations, net of tax (1.5) (1.5) (1.5)
differences
(0.6) (0.6) (0.6)
on foreign currency loans, net
of tax
Currency translation differences
transferred to profit and loss, net of 0.1 0.1 0.1
tax
Effective portion of changes
in fair
value of cash flow hedges (1.1) (1.1) (1.1)
Transactions with minority
interests, recorded directly
in equity
Dividends to minority (0.6) (0.6) (0.6)
interests
Balance at 31 January 2010 1.0 9.4 (0.1) 2.9 57.9 71.1 1.2 72.3
Translation reserve
The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations as well as from
the translation of foreign currency loans.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged
transactions that have not yet occurred.

2010 2009
Note £m £m
Loss for the period (24.9) (16.4)
Adjustments for:
Impairment of goodwill - 11.9
Restructuring costs 8.7 -
Impairment of assets held for sale 3.8 -
Finance expense - 0.1
Share of profit of joint ventures (0.4) (0.2)
Non-operating loss/(gain) on property, plant and equipment 1.4 (2.0)
Income tax expense/(credit) 0.7 (1.0)
Operating loss before changes in working

capital and provisions (5.3) (0.9)
Decrease/(increase) in inventories 14.5 (3.3)

(Decrease)/increase in trade and other payables (9.9) 6.9
Cash flows from operations 2.0 1.9

Interest paid - (0.1)
Income tax paid (0.7) (2.2)
Cash flows from operating activities 1.3 (0.4)
Acquisition of subsidiary - 0.3
Acquisition of franchise (0.1) (0.2)
Acquisition of property, plant and equipment (2.8) (5.9)
Net (costs)/proceeds from sale of property, plant and equipment (0.6) 2.0
Capital contributions received from acquisition of property, plant
and equipment 0.8 -
Cash flows from investing activities (2.5) (2.6)
Payment of finance lease liabilities (1.2) (0.4)
Cash flows from financing activities (1.8) (5.2)
Net decrease in cash and cash equivalents (3.0) (8.2)

Cash and cash equivalents at 1 February 38.4 46.7
Exchange rate fluctuations on cash held 0.3 (0.1)
Cash and cash equivalents at 31 January 35.7 38.4
NOTES
Consolidated financial statements and accounting policies

The preliminary announcement for the year ended 31 January 2010 has been prepared in accordance with International Accounting Standards
and International Financial Reporting Standards as adopted by the European Union (EU) at 31 January 2010. The annual financial
information presented in the preliminary announcement for the year ended 31 January 2010 is based on, and is consistent with, that in the
Group's audited Financial Statements for the year ended 31 January 2010, and those Financial Statements will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The auditor's report on those Financial Statements is unqualified and does not
contain any statement under Section 498 (2) or (3) of the Companies Act 2006.
These consolidated financial statements have been prepared using the historical cost convention, modified for certain items carried at fair
value, as stated in the accounting policies.
Amendments to IAS 38 Intangib le Assets published in May 2008: expenditure in respect of advertising and promotional activities is now
recognised as an expense when the Group has access to the related goods or has received the related services. Similarly, all sample costs
are now expensed as incurred. This change in accounting policy has been adopted for the year ended 31 January 2010 and has been
retrospectively applied to the comparative audited results for the year ended 31 January 2009. The impact on the balance sheet for the year
ended 31 January 2009 has been to reduce trade and other receivables by £2.5 million and to decrease retained earnings by £2.5 million.
There has been no material impact on the consolidated income statement reported in either of the affected periods and therefore there is no
change to the previously reported results
Statutory accounts
Information in this preliminary announcement does not constitute statutory accounts of French Connection Group and its subsidiaries ("the
Group") within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 January 2009 have been filed
with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain statements under Section 237(2)
or (3) of the Companies Act 1985.
The Group's Annual Report for the year ended 31 January 2010 will be made available in due course and will be available for viewing and
download from the Group's website at www.frenchconnection.com. The Annual Report will be circulated in printed form to shareholders in the
second week of April 2010.
2 Operating segments
2010 UK/Europe North America Rest of the World Intra Total

Group
Retail sale Total Retail sale Total Retail sale Total
£m £m £m £m £m £m £m £m £m £m £m
Rev enue (Note 4) 131.0 39.4 170.4 36.2 18.0 54.2 11.8 12.8 24.6 249.2
Gross prof it 77.6 10.9 88.5 19.6 6.1 25.7 7.2 2.5 9.7 4.1 128.0
Gross margin 59.2% 27.7% 51.9% 54.1% 33.9% 47.4% 61.0% 19.5% 39.4% 51.4%
Trading ov erheads (80.7) (10.4) (91.1) (23.9) (3.4) (27.3) (10.7) (1.5) (12.2) (130.6)
Operating contribution (3.1) 0.5 (2.6) (4.3) 2.7 (1.6) (3.5) 1.0 (2.5) 4.1 (2.6)
Disposal of lease (0.8) (0.8)

interests
Div isional operating loss (2.1) (5.0) (0.4) ( - (7.5)
Operating loss bef ore f inancing, impairments and closure costs (12.0)
Loss f rom continuing operations (2.7)
Loss f rom discontinued operations (Note 3) (9.3)
(12.0)
The share of the results of the joint venture operations of £0.4 million (2009: £0.2 million) relate to Rest of the World retail operations and are not
disclosed in the information above.
Closure costs of £6.5 million (2009: £nil) relate to the US retail business.
2009 UK/Europe North America Rest of the World Intra Total

Group
Retail sale Total Retail sale Total Retail sale Total
£m £m £m £m £m £m £m £m £m £m £m
Rev enue (Note 4) 125.3 47.5 172.8 34.4 18.7 53.1 7.1 15.0 22.1 248.0
Gross prof it 76.8 13.4 90.2 19.9 5.8 25.7 4.6 3.2 7.8 3.3 127.0
Gross margin 61.3% 28.2% 52.2% 57.8% 31.0% 48.4% 64.8% 21.3% 35.3% 51.2%
Trading ov erheads (78.3) (11.9) (90.2) (23.1) (3.9) (27.0) (5.8) (1.8) (7.6) (124.8)
Operating contribution (1.5) 1.5 - (3.2) 1.9 (1.3) (1.2) 1.4 0.2 3.3 2.2
Disposal of lease interests 0.6 1.4 2.0
Div isional operating loss (0.5) (4.0) 2.1 - (2.4)
Operating loss bef ore f inancing, impairments and closure costs (6.9)
Loss f rom continuing operations (1.7)
Loss f rom discontinued operations (Note 3) (5.2)
(6.9)
3 Discontinued operations
The Group's management announced on 2 October 2009 the closure of all of the 21 retail stores in Japan. The Group also closed the
Northern European retail operation during the year which was completed by September 2009.
Discontinued operations also include the Nicole Farhi brand, which was held for sale at the year-end.
These divisions were not discontinued operations or classified as held for sale at 31 January 2009 and the comparative statement of
comprehensive income has been re-presented to show the discontinued operations separately from continuing operations.
2010 2009
Results of discontinued operations £m £m
Revenue 34.9 34.4

Expenses (44.2) (39.6)
Results from operating activities before financing, impairments and

exceptional costs (9.3) (5.2)
Closure costs (2.8) -

Impairment of assets held for sale (3.8) -
Currency translation differences 0.4 -
Results from operating activities before taxation (15.5) (5.2)
Share of loss of joint venture - (0.4)

Income tax (0.5) -
4 Revenue
Continuing Discontinued Consolidated

operations operations operations
2010 2009 2010 2009 2010 2009
£m £m £m £m £m £m
Sale of goods 214.3 213.6 34.9 34.4 249.2 248.0
5 Other operating income
2010 2009
£m £m
Licensing income 4.7 4.2
6 Dividends - equity
2010 Pence 2009 Pence

£m per share £m per share
Final paid for prior financial year - - 3.2 3.3p

Interim paid for current financial year - - 1.6 1.7p
Total dividends paid during the year - - 4.8 5.0p
The Board is proposing a final dividend of 0.5 pence per share (2009: £nil) giving a total dividend for the current financial year of 0.5 pence
per share (2009: 1.7 pence). £0.6 million (2009: £nil) of dividends were paid during the year to the minority shareholders of a subsidiary
undertaking of the Group.
7 Losses per share
Basic losses per share of 26.0 pence per share (2009: 17.3 pence) is based on 95,879,754 shares (2009: 95,879,754) being the weighted
average number of ordinary shares in issue throughout the year, and £24.9 million (2009: £16.6 million) being the loss attributable to equity
shareholders. Diluted losses per share of 26.0 pence per share (2009: 17.3 pence) is based on 95,879,754 shares (2009: 95,879,754)
being the weighted average number of ordinary shares adjusted to assume the exercise of dilutive options.
On continuing operations the basic losses per share of 16.0 pence per share (2009: 11.5 pence) is based on 95,879,754 shares (2009:
95,879,754) being the weighted average number of ordinary shares in issue throughout the year, and £8.9 million (2009: £11.0 million)
being the loss relating to continuing operations.
Con- Con- Dis- Dis- Total

tinuing tinuing continued continued Total Pence
2010 Pence 2010 Pence 2010 per
£m per share £m per share £m share
Con- Con- Dis- Dis- Total

tinuing tinuing continued continued Total Pence
2009 Pence 2009 Pence 2009 per
£m per share £m per share £m share
8 Assets held for sale
The assets and liabilities of the Nicole Farhi brand within the Group are presented as held for sale. At the
date of this report, the Company has announced an agreement with OpenGate Capital of Los Angeles and
Paris under which OpenGate will acquire the assets and liabilities of the Nicole Farhi business for a
consideration of £5.0 million, which is deferred, contingent upon the future results of the business. At 31
January 2010 the disposal group comprised assets of £6.4 million and liabilities of £4.7 million. An
impairment loss of £3.8 million on the assets held for sale has been recognised in discontinued operations.
The assets held for sale are reported within the UK/Europe and North America operating segments.
2010
£m
Assets classified as held for sale

Inventories 2.8
Trade and other receivables 3.6
6.4
Liabilities classified as held for sale

Trade and other payables (4.7)
RETAIL LOCATIONS
31 January 2010 31 January 2009
Operated locations
UK/Europe
Toast Stores 6 7,072 6 7,072
Toast Concessions - - 1 854
YMC Stores 1 505 - -
Great Plains Stores - - 1 850
Great Plains Concessions 2 1,058 - -
123 256,550 125 268,234
North America

UK/Europe 13 16,560 13 20,610
Middle East 16 28,695 14 25,214
Australia 53 76,513 43 62,801
Hong Kong 6 9,336 7 12,416
China 19 27,876 24 34,386
Other 57 55,177 52 52,195
Total branded locations 308 536,794 298 539,343
Stores held for sale
UK/Europe - held for sale

Nicole Farhi Concessions 14 13,251 12 12,551
23 32,804 20 32,763
North America - to be closed

18 81,062 19 84,253
Japan - in process of closure

11 23,630 21 43,355

END
FR LZLLFBXFXBBB
5/24/13 French Connection | Half Year Results | FE InvestEgate
French Connection
Half Year Results
RNS Number : 4410O
19 September 2011
19 September 2011
Half-Year Results for the six month period ended 31 July 2011
French Connection Group PLC ("French Connection", "the Group") today announces a
growth in revenue and profit for the first six months of the financial year.
Highlights
· Revenue up 7% to £102.8 million (2010: £96.5 million*)
· Profit before tax of £0.7 million (2010: £0.2 million*)
· Closing net cash of £30.9 million (2010: £30.2 million)
· Interim dividend increased 20% to 0.6 pence per share (2010: 0.5 pence per
share)
Commenting on this announcement, Stephen Marks, Chairman and Chief

Executive of French Connection said:
"I am happy to report that, in tough retail trading conditions, we achieved growth in like-for-
like retail sales and a substantial increase in both wholesale and licensing income. We
are reporting a profit after tax in the first half of the financial year for the first time since
2008 and we are firmly back on a growth path.
"With the business on a stronger footing, we are in a good position to expand operations
internationally. We see great opportunities to grow revenues from both franchising and
licensing.
"The global appeal of our brand is evident in our continued growth overseas, and over the
next three years we are looking forward to opening as many as 25 more stores in China
under our Joint Venture as well as additional store openings by our franchisees in
Russia, India and Turkey.
"The balance sheet remains very strong with £30.9 million of cash and no debt. The 20%
increase in interim dividend reflects the Group's profitability and cash generation and the
Board's confidence in the future.
"We do not anticipate any easing in the retail environment during the second half of the
year. However we have a proven ability to produce high quality and desirable ranges and
with good increases in wholesale forward orders to support this, we remain confident in
achieving our expectations for the full year."
*Notes
The trading results for the six months ended 31 July 2011 reflect the continuing businesses following
completion of the restructuring at the end of the last financial year.
For comparative purposes, the results for the six month period ended 31 July 2010 have been restated to
separate the continuing core businesses from the businesses which closed during the year ended 31
January 2011.
Therefore, the table above shows the results of the core continuing operations for the two comparable
periods excluding, in the prior period, the results of the businesses which were subsequently closed.
Enquiries:
Stephen Marks/Neil Williams/Roy Naismith French Connection +44(0)20 7036

7063
Kim Fletcher/Catriona McDermott Brunswick +44(0)20 7404
5959
Notes to Editors:
French Connection:
Following the changes as a result of a strategic review implemented in 2010, the French
Connection Group comprises retail and wholesale businesses in the UK, Europe, the US,
Canada, Hong Kong and China along with licensed partners operating in a number of
other countries most notably Australia, India, Singapore, Vietnam, Russia and South
Africa. In addition the Group operates successful brand licences under which partners
produce fragrances, jewellery, toiletries, shoes and eyewear. Along with the French
Connection brand, the Group operates Great Plains, a wholesale-only ladies' wear range,
Toast, an e-commerce fashion and homeware brand, and YMC, a small men's and
women's wear brand.
I am happy to update you on further improvements in the Group's results during the first half of the
financial year. Against the background of difficult retail trading conditions, we achieved growth in
like-for-like retail sales and a substantial increase in both wholesale and licensing income. As a
result, the Group is reporting a profit after tax in the first half of the financial year for the first time
since 2008. This further confirms that we took the correct initiatives in restructuring the Group and
we are firmly back on a growth path. In addition, the balance sheet remains very strong with £30.9
million of cash and no bank debt.
In the six months to 31 July, our on-going business generated a 7% increase in revenue to £102.8
million (2010: £96.5 million). The increase was achieved in a difficult trading environment and is
testament to the quality of our product range and strength of our brand. Despite the revenue
increases, the growth in profitability has been hampered by a reduction in gross margin due to the
increase in VAT and higher input costs. Overheads continue to be tightly controlled.
Licensing has grown to become a very important part of the business and during the period we saw
the launch of "UK Style by French Connection" in Sears stores in the US. This licence agreement
with Li & Fung has made a significant contribution to the increase in royalty income from £1.8
million to £3.0 million.
The profits generated by our joint venture operations in Hong Kong and China, along with the finance
income on the net cash held, also contributed to the Group pre-tax profit of £0.7 million (2010: £0.2
million from core continuing operations).
An additional £0.4 million of net profit was generated in the first half of the year in relation to last
year's disposal of the Nicole Farhi business and is reflected in the Group's result as income from
discontinued operations.
Group profit after tax for the period was £1.0 million, compared with a loss of £(12.7) million last
year, which included the losses arising from the closure and disposal of certain businesses.
In our UK/Europe retail business the feel-good factor generated in April by the good weather, bank
holidays and the Royal Wedding resulted in a surge in sales volumes during the month in contrast
to the beginning of the year. May and June slowed a little but we achieved a very good performance
during the end-of-season sale period. Overall we achieved an increase in gross like-for-like sales of
4.6%.
As expected, rises in input costs and the increase in VAT had an impact on the gross margin which
was lower than the same period last year. The margin was further eroded by the higher amount of
revenue generated during the sale period, although the level of mark-down during the sale was
similar to last year. We do not expect the same level of margin erosion in the second half of the
year, having worked to mitigate the effects of the increased input prices.
We continue to invest in the increasingly important e-commerce channel to maintain class-leading

functionality on our website. Our web sales are supported by both print catalogues and digital
initiatives such as électrique, our fashion blog and the website is now multi-currency, to encourage
growth in international sales. Elsewhere we continue to work hard to limit the increases in
overheads, particularly in rents, which continue to move upwards although more recently at a
significantly reduced rate.
Wholesale revenue in UK/Europe was 19% ahead of last year at £20.3 million (2010: £17.0 million)
reflecting stronger forward orders and the addition of new customers including our new franchisee in
Russia.
Following the restructuring actions we took last year our US business has achieved good growth in
both retail and wholesale during the period. This has been offset, however, by a weakening in
consumer demand in Canada, which equates to half of our retail revenue in the region. Margins
were lower in North America due to the increase in input prices. Overall the division achieved growth
in profits assisted by the licensing income from "UK Style".
In the Rest of the World division we saw further improvement from both our wholly-owned and joint
ventures businesses, with particularly strong like-for-like sales growth in the China and Hong Kong
stores. Our brand has growing international appeal, and we are pleased that during the second half
of the year we will see 16 new locations opening across China, Hong Kong, India, Russia, Korea,
Lebanon and Jordan bringing the total franchised stores to over 200 in over 20 countries.
Additionally, with our joint venture partners in China, it is our intention to open up to a further 25
stores over the next three years. Future store openings are also planned in India, Russia, Korea
and Turkey in the coming years.
The Group held £30.9 million of net cash at 31 July 2011 (2010: £30.2 million), despite the costs
incurred during the second half of last year in restructuring the business and the resumption of
dividend payments. Reflecting the Board's confidence in the future growth of the business, the
Board intends to increase the interim dividend by 20% to 0.6 pence per share (2010: 0.5 pence per
share).
Our core strategy remains to focus on excellent quality and creative new products. Based on this
we aim to grow sales in all of our channels and to develop our international and licensing
businesses. There is an opportunity to improve the profitability of the retail businesses and we are
currently examining all areas which could provide benefit including the store environment, customer
service, product ranges and store portfolio. In relation to this we have recently agreed the profitable
disposal of one of our loss-making stores. We will continue to seek out similar opportunities to
improve the portfolio in a cost-effective manner.
We are clearly seeing benefit from the global strength of the French Connection brand and are also
very well placed domestically to increase profitability further when retail markets recover. We will
continue to look for growth in upcoming years.
Although we do not anticipate any easing in the retail environment during the second half of the
year, we are confident in the quality and desirability of our ranges and the good increases in
wholesale forward orders support this. However, it is difficult to predict how retail sales will develop
over the coming months. The rate of erosion of gross margin compared to last year is expected to
be less than in the first half of the year and with our continued focus on controlling overheads we
remain confident in achieving our expectations for the full year.
Stephen Marks
19 September 2011
BUSINESS REVIEW
Introduction
The tables below show the divisional results of the core continuing operations for the two
comparable periods.
Core continuing operations
Rest
Six m onths to of the Intra
31 July 2011 UK/Europe North Am erica World Group Total
Retail sale Total Retail sale Total sale
£m £m £m £m £m £m £m £m £m
Revenue 54.3 20.3 74.6 10.7 10.2 20.9 7.3 102.8
Gross profit 31.7 6.7 38.4 6.4 3.5 9.9 1.4 1.7 51.4
Gross margin 58.4% 33.0% 51.5% 59.8% 34.3% 47.4% 19.2% 50.0%
Trading overheads (35.4) (3.9) (39.3) (6.9) (1.7) (8.6) (0.7) (48.6)
Operating contribution (3.7) 2.8 (0.9) (0.5) 1.8 1.3 0.7 1.7 2.8
Common overhead costs (2.2) (1.5) - (3.7)
Licensing income 2.4 1.1 1.2 (1.7) 3.0
Divisional operating (loss)/profit (0.7) 0.9 1.9 - 2.1
Central overheads (1.9)

Share of joint ventures 0.4
Finance income 0.1
Profit before tax 0.7
Rest
Six m onths to of the Intra
£m £m £m £m £m £m £m £m £m
Revenue 51.7 17.0 68.7 11.3 9.3 20.6 7.2 96.5
Gross profit 31.7 6.2 37.9 6.7 3.5 10.2 1.4 1.3 50.8
Gross margin 61.3% 36.5% 55.2% 59.3% 37.6% 49.5% 19.4% 52.6%
Operating contribution (1.9) 1.9 - (0.4) 1.9 1.5 0.6 1.3 3.4
Licensing income 2.3 - 0.8 (1.3) 1.8
Divisional operating profit/(loss) 0.3 (0.2) 1.4 - 1.5

Share of joint ventures 0.8
Finance income 0.2
Profit before tax 0.2
Overview of Group results

This review will focus on the comparison of the results of the core continuing operations as set out in
the tables above.
In the six months to 31 July 2011, revenue was £102.8 million. That is a £6.3 million or 7% increase
over the equivalent period last year from the same operations. This increase was generated from
sales in each of our regions with much of the growth arising in the wholesale division in UK/Europe
as a result of strong forward-orders and continued demand during the season.
As expected, rises in input costs and the increase in VAT had an impact on the Group gross margin
which was 260 basis point lower than last year. The margin was also affected by the way the UK
consumer is reacting to the difficult economic situation. They are prepared to spend but they are
focused on good quality while also searching out bargains. We ran our end-of-season sale in much
the same way as last year, but we experienced a very positive reaction from the consumer which
resulted in strong sales growth during this period. In the second half of the financial year we have
mitigated the effect of input prices such that we expect the Group gross margin for the full year will
be 200 basis points lower than last year. Looking further forward, it would appear that cost
pressures are reducing and we expect our gross margin to improve during 2012.
Total Group operating expenses were only 1% higher in the period at £54.2 million reflecting general
inflation and increasing rents in the retail sector, but also good control of other overheads.
Our licence income increased from £1.8 million to £3.0 million including, for the first time, a
contribution from our licence with Li & Fung for the "UK Style by French Connection" brand of
clothing supplied to Sears in the US. Our other licensees also continue to perform well.
Our share of the profits of our joint ventures was £0.4 million (2010: £0.8 million), the prior period
having benefited from a one-off credit. Finance income was £0.1 million (2010: £0.2 million).
The profit before tax of the core continuing operations was therefore £0.7 million compared to £0.2
million for the corresponding operations last year.
In discontinued operations we recorded a gain of £0.4 million representing further income arising
from the disposal of the Nicole Farhi business. Further details of this are given below.
Further analysis of the trading results by division for the first six months of the year and
expectations for the second half of the year are set out below.
United Kingdom and Europe - Retail

In the UK/Europe retail business, which accounts for 53% of Group revenue, we generated growth in
like-for-like gross sales of 4.6% despite the general weakness in the market. Our total net revenue
increased by 5% from £51.7 million to £54.3 million, including a small increase in average space
traded.
Over the period we saw an inconsistent rate of sales growth, with good growth during the good
weather and bank holidays in April and very strong demand once the end-of-season sale started but
rather lacklustre demand in the intervening periods.
We believe this is a result of the caution exercised by the UK consumer in the expectation of
difficult times ahead. However, while shoppers are acting more frugally, they are prepared to spend
under the right circumstances and on quality products, especially when enticed by discounts. Our
approach in this environment is to continue to focus on the quality and design of our products to
encourage our customers to buy. We will resist any temptation to chase the short-term gains that
could come from increasing our discounting which means we will continue to focus only on end-of-
season mark-downs. We believe that this strategy will ensure that we will maintain our position in
the market for the long term.
With a difficult retail market, the increase in VAT, pressure from input costs and increasing rent, the
operating result from this division deteriorated to £(3.7) million (2010: (£1.9) million) in the period.
As we explained in our most recent annual report there is significant opportunity for improvement in
the performance of this division and we are focused on enhancing sales levels and developing the
store portfolio in order to improve the contribution, albeit that it is likely that this will take some time.
United Kingdom and Europe - Wholesale

Wholesale revenue increased by 19% to £20.3 million representing 20% of Group revenue as a
result of strong forward orders for both the Summer season and the new Winter season (which
began delivery at the end of the period). This reflects the strength of our brands, both domestically,
where existing customers continue to invest in a successful and long-standing brand, and also
internationally where we added new customers, notably our new franchisees in Russia, Jordan and
Egypt, all of which are performing well.
As expected, the gross margin was affected by higher input costs, in relation to both commodities
and manufacturing costs, and an impact from the increased proportion of sales to franchisees
resulting in a gross margin of 33.0% (2010: 36.5%).
Overheads remain tightly controlled and the effect of our operational gearing can be seen in the 47%
increase in operating contribution to £2.8 million (2010: £1.9 million).
Forward orders for Winter 2011 and Summer 2012 are both showing good growth compared to this
time last year. This reflects the strength of the brand, the success our wholesale customers have
achieved with our ranges in recent seasons and the quality of the new ranges. Growth in revenue in
the second half will also reflect the level of in-season orders, but we expect to be able to achieve a
10% increase in the value of deliveries in the period.
UK/Europe division
Together, the retail and wholesale businesses in UK/Europe incurred an operating loss of £(0.9)
million (2010: £(0.0) million). Common overhead costs for the division increased by £0.2 million to
£2.2 million reflecting an increased investment in our award-winning advertising campaigns in
support of the brand, a level we intend to maintain to ensure that French Connection retains its
profile in customers' minds.
Other income in the UK/Europe division of £2.4 million (2010: £2.3 million) represents licensing
income discussed further below.

We have eight stores in the US and 13 stores in Canada along with a growing wholesale business in
the US. Together these represent 20% of Group revenue. Following the restructuring actions we
took last year the portfolio is now smaller and the remaining US stores have performed well,
achieving like-for-like growth of over 10%. The margins have been stronger because we have had
considerably less promotional discounting. The Canada market has been more difficult, resulting in
an overall growth in like-for-like sales in the North America region of 0.9%. Overheads reduced from
the previous year with one less store in Canada and the result was slightly lower at £(0.5) million
(2010: £(0.4) million).
In wholesale we achieved a 10% increase in revenue in the period and the margin was lower
resulting in a slightly lower contribution of £1.8 million (2010: £1.9 million).
Savings in central overheads along with income from Li & Fung and the US-based fragrance licence
has resulted in an improvement in overall regional contribution to £0.9 million from a loss of £(0.2)
million.
Rest of the World

Revenue in our wholesale business based in Hong Kong increased a little to £7.3 million (2010: £7.2
million) and represents 7% of Group revenue. With gross margin broadly in-line and overheads
tightly controlled the operating contribution was £0.7 million (2010: £0.6 million).
Total other income was £1.2 million (2010: £0.8 million) including commission income earned on
shipments to the UK and North America which are eliminated in the consolidation.
The total divisional operating result was a profit of £1.9 million compared to a profit of £1.4 million in
the comparable period.
Brand licensing income

We see the strength of our French Connection brand typified in the continuing growth of income
generated through the licensing of the brand to third parties. Licence income from external sources
amounted to £3.0 million (2010: £1.8 million) including the first contribution arising from our
partnership with Li & Fung for the supply of "UK Style by French Connection" clothing to Sears
department stores in the US. This arrangement will generate a minimum of £1.5 million royalty
income in the year ended 31 January 2012 and further income thereafter. In the period we also saw
increased income from our fragrance licence in the US, from Australia and from Specsavers. Our
other licensees also continue to perform well and we are considering further opportunities.
Central overheads and financing income

The overheads associated with the central Group management, including IT and legal costs,
amounted to £1.9 million in the period, £0.4 million less than last year. This reflected our continuing
efforts to reduce costs.
Net finance income of £0.1 million (2010: £0.2 million) was generated in the period with average net
funds over the period of £22.2 million compared with £25.9 million last year.
Joint ventures
Both the joint venture retail operations in Hong Kong and China continue to develop well.
In Hong Kong the stores achieved a 33% growth in like-for-like revenues. The store portfolio has
changed such that total revenue was lower, but operating profit broadly flat.
Our joint venture in China operates 19 locations and it is our intention to open up to a further 25
stores over the next three years. Revenues increased by 14% in the period and operating profit
doubled to a net margin of 10%.
The Group's share of the profits of these two operations amounted to £0.4 million in the period
(2010: £0.8 million, including a non-recurring credit of £0.5 million) and dividends are now being paid
to the Group.
Profit before tax

With increasing sales volumes, controlled overheads and a healthy uplift in licence income the profit
before tax for the period from the continuing businesses improved to £0.7 million in 2011 from a profit
of £0.2 million last year.
The income statement for the period to 31 July 2010 also reported the results of the US stores
which were trading at that time and which have subsequently closed. Aggregating this with the
results of the continuing businesses the total profit before tax for the six months to 31 July 2010
was a loss of £(1.0) million.
The divisional analysis of the loss before tax of the regions for the period to 31 July 2010 including
both continuing and discontinued operations is set out in the segmental analysis at Note 1.
Taxation
The tax charge for the period of £0.1 million (2010: £0.2 million) reflects tax charged on profits
generated in Hong Kong. The rate of tax in the full year will be in the region of 20% although as we
use our tax losses the cash cost will be somewhat less.
We generated further net income of £0.4 million in the period in relation to discontinued operations.
This included income generated from an arrangement associated with last year's sale of the Nicole
Farhi business to OpenGate Capital. Following the disposal, the Group held certain fixed and
floating charges over the assets of the Nicole Farhi business as security in relation to the deferred
contingent consideration. The Group agreed to alter those charges to allow the Nicole Farhi
business to secure bank lending. In return for this, OpenGate agreed to make a cash payment of
£0.6 million to the Group and to make changes to the detailed payment arrangements of the
deferred contingent consideration which will have the effect of accelerating any payment. The £0.6
million has been received and is reflected in the income statement. This was offset by the costs of
disposal of two "202" stores.
Minority interest
The minority interest amounting to £nil (2010: £0.2 million) represents the net share of profits
attributable to the 25% stakes held by the management our Canada, Toast and YMC businesses.

Net profit for the period attributable to equity shareholders was £1.0 million (2010: loss of £(12.5)
million). Earnings per share was 1.0 pence (2010: loss of 13.0 pence per share).
Reflecting our substantial cash reserves and the continued cash generating nature of the business,
an interim dividend of 0.6 pence per share (2010: 0.5 pence) will be paid on 19 October 2011 to
shareholders on the register at 30 September 2011 (ex-dividend date 28 September 2011).
Working capital and net funds

The total cash at 31 July 2011 of £30.9 million was £0.7 million higher than last year's £30.2 million
reflecting strong cash generation in the second half of last year offset by the costs of closure of
stores in the US.
Due to both the higher average selling price of winter garments and the effect of Christmas and
Thanksgiving sales volumes, the business has a marked seasonality in both trading results and
cash generation. Typically cash is utilised in the first half of the financial year and any cash
generation occurs in the second half of the year with the majority arising in the last quarter.
The cash utilisation in the six month period to 31 July 2011 was £3.3 million compared to £3.8
million last year reflecting the improved trading offset by a higher investment in working capital.
Further, the cash position benefited from £1.3 million of cash receipts in relation to the sale of the
Nicole Farhi business and was reduced by payment of the final dividend.
Outlook
Following completion of the restructuring of the business the Group is profitable and cash generative
over the annual cycle. We have retained a significant cash balance through the restructuring
process resulting in a very robust business. Given the risks inherent in our industry, we will continue
to act cautiously and retain our strong cash position.
The fashion business is unpredictable and fast-paced requiring constant creative drive and
leadership. For almost 40 years since its inception in 1972 French Connection's core strength has
been our ability to balance new and exciting ideas with consistent delivery of quality and
affordability: design is the bedrock on which our business is built. This ability to keep ahead of
changes in fashion and consistently create attractive product ranges remains our core strength and
provides the building blocks for our financial performance
The Group has a broad range of distribution channels which we will continue to support including
retail, wholesale, franchising and licensing, each in both domestic and international markets. This
gives us a broad foundation on which to build our business and our aim is to improve the
performance of each of our divisions in order to generate a significantly better net operating margin.
Our wholesale businesses are growing strongly in difficult markets reflecting our brand strength and
design quality. We will continue to work with existing and new customers and to seek out new
international markets in order to provide further opportunities for growth in both the short and long
term.
Our retail portfolios present a significant opportunity for improved performance, especially given the
inherent operational gearing in the business. While cost control and operational standards will
always be key, significant improvement in performance will come mainly from growth in sales
densities. Our careful focus on delivering fashion will ensure that we retain our core strength and
provide resilience during these difficult economic times. Then, as consumer spending increases, we
expect to be in a position to benefit immediately. In the meantime we are working on all operational
areas and more broadly considering actions we can take in order to improve performance. This
includes staff recruitment and training, constant improvement in merchandising and on-going
development of the character of our stores. Longer term and more substantial benefit will come from
changes in the store portfolio to reflect our market position and multiple routes to market. Our UK
store leases expire at an average of six per annum over the next ten years and as renewals are
sought or other financially attractive opportunities arise we will refine the portfolio in order to enhance
the net operating margin in the longer term.
We believe that there will always be a requirement for high street stores to present fashion products
but e-commerce is now a key route to market. We are very proud of the success of our websites,
our customer service and the level of sales now achieved on-line. We will continue to develop the
functionality and services being offered including enhancing the shopping experience and offering
faster and easier options for delivery.
Internationally our brand continues to strengthen. We are working with talented partners in key
growth markets such as China, Hong Kong, India and Russia and these businesses are achieving
strong results encouraging further, careful, expansion. In brand licensing we already have a broad
range of highly successful licensees selling products which both benefit from and enhance our brand
strength and we will continue to search out more opportunities. The profit stream from these
relationships is substantial and it relies on the continued appropriate brand presentation and
positioning which we consider is defined by the quality of our fashion designs.
We also have a small stable of other brands which we support with our infrastructure and
experience. Toast, YMC and Great Plains will continue to play an important role in the growth of the
business, each of them being profitable and achieving growth in the current market.
By continuing to focus on fashion while energetically working to improve all aspects of our day-to-
day operations and building our international brand position we believe that we will achieve growth
during the current economic challenges and then be in a position to build substantial strength over
the longer term. As a result will be able to deliver improving margins and strong cash generation in
order to create value for our shareholders.
Related party transactions

During the period the Group disposed of a retail store and restaurant in London to a company
controlled by Stephen Marks, the Chairman and Chief Executive. The store had focused on Nicole
Farhi products and had been consistently loss-making. The loss on disposal was £0.3 million.
There have been no additional related party transactions to those disclosed in the Group's Annual
Report & Accounts for the year ended 31 January 2011.
__________________________________
19 September 2011
Registered Number: 1410568, England
Registered Office: 20-22 Bedford Row, London WC1R 4JS
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN

RESPECT OF THE HALF-YEARLY FINANCIAL REPORT
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU;
· the interim management report includes a fair review of the information required by:
(a) rule 4.2.7R of the Disclosure and Transparency Rules, being an indication of important
events that have occurred during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) rule 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that
have taken place in the first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that period; and any
changes in the related party transactions described in the last annual report that could do
so.
By order of the Board
Stephen Marks Roy Naismith

Chairman and Chief Executive Finance Director
19 September 2011
CONDENSED CONSOLIDATED INCOME STATEMENT
Six m onths Six m onths Year ended

31 July 2011 31 July 2010 31 Jan 2011
* Re-presented
Core Closed Core Closed
Note £m £m £m £m £m £m £m
Revenue 3 102.8 96.5 5.0 101.5 205.0 8.8 213.8
Cost of sales (51.4) (45.7) (2.5) (48.2) (98.4) (4.8) (103.2)
Gross profit 3 51.4 50.8 2.5 53.3 106.6 4.0 110.6
Operating expenses (54.2) (53.4) (3.7) (57.1) (106.8) (5.9) (112.7)
Other operating income 4 3.0 1.8 - 1.8 5.8 - 5.8
Operating profit/(loss)
before financing 1 0.2 (0.8) (1.2) (2.0) 5.6 (1.9) 3.7
Closure costs - - - - - 3.5 3.5
Finance income 0.1 0.2 - 0.2 0.2 - 0.2

Finance expenses - - - - - - -
Net financing incom e 0.1 0.2 - 0.2 0.2 - 0.2
Operating profit/(loss) 0.3 (0.6) (1.2) (1.8) 5.8 1.6 7.4

Share of profit of joint
ventures, net of tax 0.4 0.8 - 0.8 1.5 - 1.5
Profit/(loss) before taxation 0.7 0.2 (1.2) (1.0) 7.3 1.6 8.9
Income tax expense -

overseas (0.1) (0.2) - (0.2) (0.2) - (0.2)
Total incom e tax expense (0.1) (0.2) - (0.2) (0.2) - (0.2)
Profit/(loss) for the period
from continuing operations 0.6 - (1.2) (1.2) 7.1 1.6 8.7
Profit/(loss) from discontinued
operations, net of tax 2 0.4 - (11.5) (11.5) - (11.1) (11.1)
Profit/(loss) for the period 1.0 - (12.7) (12.7) 7.1 (9.5) (2.4)
* See discontinued operations Note 2.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME
Six Six Year

2011 2010 2011
Note £m £m £m £m £m £m
Profit/(loss) for the period 1.0 (12.7) (2.4)
Other com prehensive incom e

Currency translation differences for overseas operations (0.4) 0.5 -
loans, net of tax 0.2 0.2 0.3
Effective portion of changes in fair value of cash flow
hedges - - 0.1
Currency translation differences transferred to profit and
loss, net of tax - 2.5 2.5
Other com prehensive incom e for the period, net

of tax (0.2) 3.2 2.9
Total com prehensive incom e for the period 0.8 (9.5) 0.5
Profit/(loss) attributable to:

Equity holders of the Company 5 1.0 (12.5) (2.3)
Non-controlling interests - (0.2) (0.1)
Total com prehensive incom e attributable to:

Equity holders of the Company 0.8 (9.3) 0.6
Non-controlling interests - (0.2) (0.1)
Total incom e and expense recognised for the period 0.8 (9.5) 0.5
Earnings per share

Basic and diluted earnings/(losses) per share 5 1.0p (13.0)p (2.4)p
Basic and diluted earnings/(losses) per share 5 0.6p (1.0)p 9.2p
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

2011 2010 2011
Note £m £m £m
Assets
Non-current assets
Intangible assets 2.4 2.4 2.4
Property, plant and equipment 7.5 9.9 8.5
Investments in joint ventures 3.3 3.1 3.4
Deferred tax assets 4.1 4.1 4.1
Total non-current assets 17.3 19.5 18.4

Current assets
Inventories 46.7 42.2 40.3
Trade and other receivables 27.8 23.8 25.6
Cash and cash equivalents 6 30.9 30.2 34.1
Total current assets 105.4 96.2 100.0
Total assets 122.7 115.7 118.4

Deferred tax liabilities 0.9 0.8 0.9
Total non-current liabilities 0.9 0.8 0.9
Current liabilities
Trade and other payables 48.3 43.8 43.1
Current tax payable 1.1 0.7 1.1
Derivative financial instruments - 0.1 -
Provisions 0.9 8.0 1.5
Total current liabilities 50.3 52.6 45.7
Total liabilities 51.2 53.4 46.6
Net assets 71.5 62.3 71.8
Equity
Called-up share capital 1.0 1.0 1.0
Share premium account 9.4 9.4 9.4
Other reserves 5.5 6.0 5.7
Retained earnings 54.6 44.9 54.6
Total equity attributable to equity holders of the 70.5 61.3 70.7

Com pany
Non-controlling interests 1.0 1.0 1.1
Total equity 71.5 62.3 71.8
Non-
Share Share Hedging Translation Retained controlling Total
Six m onths capital prem ium reserve reserve earnings Total interests equity
31 July 2011 £m £m £m £m £m £m £m £m
Balance at 31 January 2011 1.0 9.4 - 5.7 54.6 70.7 1.1 71.8
Profit 1.0 1.0 - 1.0

Other com prehensive
incom e
for overseas operations (0.4) (0.4) (0.4)
of tax 0.2 0.2 0.2
Transactions w ith ow ners
Dividends (1.0) (1.0) (1.0)
Transactions w ith non-
controlling interests,
Dividends (0.1) (0.1)
Balance at 31 July 2011 1.0 9.4 - 5.5 54.6 70.5 1.0 71.5
Non-
Six m onths capital prem ium reserve reserve earnings Total interests equity
31 July 2010 £m £m £m £m £m £m £m £m
Balance at 31 January 2010 1.0 9.4 (0.1) 2.9 57.9 71.1 1.2 72.3
Loss (12.5) (12.5) (0.2) (12.7)
Other com prehensive
incom e
for overseas operations 0.5 0.5 0.5
of tax 0.2 0.2 0.2
transferred to profit and loss
net of tax 2.5 2.5 2.5
Transactions w ith ow ners
Dividends (0.5) (0.5) (0.5)
Balance at 31 July 2010 1.0 9.4 (0.1) 6.1 44.9 61.3 1.0 62.3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Six Year

2011 2010 2011
Note £m £m £m
Adjustments for:
Depreciation and impairment 1.4 1.9 3.7
Restructuring costs - - (3.5)
(Gain)/loss on disposal of discontinued operation, net of tax 2 (0.5) 6.2 5.7
Finance income (0.1) (0.2) (0.2)
Share of profit of joint ventures (0.4) (0.8) (1.5)
Non-operating profit on property, plant and equipment - - (0.2)
Income tax expense 0.1 0.2 0.2
Currency translation differences - 2.5 2.6
Operating profit/(loss) before changes in w orking capital
and provisions 1.5 (2.9) 4.4
(Increase)/decrease in inventories (6.8) (1.0) 0.8
Increase in trade and other receivables (2.7) (0.3) (1.8)
Increase/(decrease) in trade and other payables 4.7 0.4 (0.6)
Cash flow s from operations (3.3) (3.8) 2.8

Income tax (paid)/received (0.1) (0.1) 0.3
Cash flow s from operating activities (3.4) (3.9) 3.1
Interest received 0.1 0.1 0.2
Proceeds from investment in joint ventures 0.4 0.2 0.7
Acquisition of property, plant and equipment (0.4) (0.5) (1.0)
Net proceeds from sale of property, plant and equipment - 0.2 0.3
Disposal of discontinued and closed operations 2 1.3 (1.4) (4.2)
Cash flow s from investing activities 1.4 (1.4) (4.0)
Dividends paid (1.1) (0.5) (1.0)
Cash flow s from financing activities (1.1) (0.5) (1.0)

Net decrease in cash and cash equivalents 6 (3.1) (5.8) (1.9)
Cash and cash equivalents at 1 February 34.1 35.7 35.7
Exchange rate fluctuations on cash held (0.1) 0.3 0.3
Cash and cash equivalents at period end 6 30.9 30.2 34.1

1. Operating segm ents
Rest of
Six m onths to the Intra
£m £m £m £m £m £m £m £m £m
Revenue 54.8 20.3 75.1 10.8 10.2 21.0 7.3 103.4
Gross profit 31.8 6.7 38.5 6.5 3.5 10.0 1.4 1.7 51.6
Gross margin 58.0% 33.0% 51.3% 60.2% 34.3% 47.6% 19.2% 50.0%
Licensing income 2.4 1.1 1.2 (1.7) 3.0

Divisional operating (loss)/profit (0.9) 1.0 1.9 - 2.0
Operating profit before financing and closure costs 0.1
Represented by:
Profit from continuing operations 0.2
Loss from discontinued operations (Note 2) (0.1)

0.1
Rest of
Six m onths to the Intra
£m £m £m £m £m £m £m £m £m
Revenue 54.3 21.9 76.2 17.1 9.4 26.5 7.2 109.9
Gross profit 35.4 5.7 41.1 9.6 3.5 13.1 1.4 1.5 57.1
Gross margin 65.2% 26.0% 53.9% 56.1% 37.2% 49.4% 19.4% 52.0%
Operating contribution (3.0) 1.0 (2.0) (1.8) 1.8 - 0.6 1.5 0.1
Common overhead costs (2.6) (1.9) (4.5)
Divisional operating (loss)/profit (2.0) (1.9) 1.4 - (2.5)
Operating loss before financing and closure costs (4.8)
Represented by:
Loss from continuing operations (2.0)
Loss from discontinued operations (Note 2) (2.8)

(4.8)
Finance income has not been separately allocated to the respective divisions as this income is generated by the Group treasury
department w hich is managed centrally.
The share of the results of the joint venture operations of £0.4 million (2010: £0.8 million) relate to the Rest of the World retail
operations and are not disclosed in the information above.

In the prior financial year on 2 July 2010, the Group completed the sale of the trading, assets and liabilities of the Nicole Farhi
business ("the Disposal Group") to OpenGate Capital ("the Purchaser") for a consideration of up to £5.0 million. At 2 July 2010,
the Nicole Farhi Disposal Group comprised assets of £5.2 million and liabilities of £2.8 million along w ith cash of £1.0 million.
Further, French Connection undertook to support the transition of the Nicole Farhi business into new ow nership by providing
support office functions and other transitional services for up to tw o years at no cost to the Purchaser and also to provide
financial support for restructuring costs during the first year. A total of £2.2 million w as provided in relation to these costs.
Transactional costs of £1.1 million comprising legal and other advisory fees w ere expensed as part of the loss on disposal.
The consideration of up to £5.0 million comprised £0.5 million in cash, paid on completion, follow ed by further payments of up to
£4.5 million in cash, payable from 50% of the net cash generation of the Nicole Farhi business over subsequent years w ith an
upper limit of £1.0 million payable per year (upper limit of £0.5 million in the first year). Any outstanding consideration w ill be
settled insofar as possible from any sales proceeds achieved from any subsequent sale of the business by the Purchaser.
The deferred payments are accounted for as contingent consideration. The Directors assessed the amount of the
consideration to be recognised based on the "virtually certain" criteria set out in IFRS. At 31 July 2010, none of the deferred
consideration w as reflected in the loss on sale. At 31 January 2011 a total of £0.5 million of the total deferred consideration
w as reflected in the loss on sale and w as subsequently received in cash.
In addition to the loss on disposal of £(6.2) million the Disposal Group generated trading losses of £(2.8) million in the period to
31 July 2010 and currency translation differences of £(2.5) million w ere recycled from reserves to the income statement
generating a total loss from discontinued operations w ithin the income statement for the six months ended 31 July 2010 of
£(11.5) million.
By 31 January 2011 this loss had been mitigated by the £0.5 million of deferred consideration accounted for at that time offset
by the continuing trading and currency losses associated w ith tw o former Nicole Farhi stores w hich w ere sold in the six month
period to 31 July 2011.
During the period ended 31 July 2011, the Group received a further £0.6 million from OpenGate Capital relating to payment for
the release of the Group's first charge over the intellectual property rights of the Nicole Farhi business described further in the
Business Review . Further, the Group incurred trading and disposal losses in relation to the final tw o stores sold in the period.
The statement of comprehensive income for the period ended 31 July 2010 has been re-presented in order to reflect minor
changes in the composition of the discontinued operations.
Restated
Six Six Year
Results of discontinued operations 2011 2010 2011
£m £m £m
Revenue 0.6 8.4 10.0
Expenses (0.7) (11.2) (12.8)
Results from operating activities before financing and exceptional costs (0.1) (2.8) (2.8)
Currency translation differences - (2.5) (2.6)
Results from operating activities before taxation (0.1) (5.3) (5.4)

Income tax - - -
Results from operating activities, net of tax (0.1) (5.3) (5.4)

Profit/(loss) on sale of discontinued operation 0.5 (6.2) (5.7)
Effect on loss for the period 0.4 (11.5) (11.1)

2011 2010 2011
Cash flow s utilised in discontinued operations £m £m £m
Net cash used utilised in operating activities (0.3) (3.2) (3.4)
Net cash used from investing activities 1.3 (1.4) (1.9)
Net cash utilised in discontinued operations 1.0 (4.6) (5.3)
Included w ithin investing activities on the cash flow statement for the comparative period ended 31 January 2011 is £2.3 million
of US closure costs relating to continuing operations.

2. Discontinued operations (continued)
Six Six Year
Effect of disposal of the Nicole Farhi business on the financial position 31 July 31 July 31 Jan
of the Group 2011 2010 2011
£m £m £m
Inventories (0.3) (2.8) (2.8)
Trade and other receivables - (2.4) (2.4)
Cash - (1.0) (1.0)
Trade and other payables - 2.8 2.8
Net assets and liabilities (0.3) (3.4) (3.4)

Cash consideration net of costs of disposal 0.8 (0.6) (0.1)
Provisions for cost of transitional services and restructuring costs - (2.2) (2.2)
Profit/(loss) on sale of discontinued operation 0.5 (6.2) (5.7)
3. Revenue and gross m argin
Continuing Discontinued Consolidated

operations operations operations
Restated*
Six Six Year Six Six Year Six Six Year
m onths m onths ended m onths m onths ended m onths31 m onths ended
31 July 31 July 31 Jan 31 July 31 July 31 Jan July 31 July 31 Jan
2011 2010 2011 2011 2010 2011 2011 2010 2011
Sale of goods £m £m £m £m £m £m £m £m £m
Revenue 102.8 101.5 213.8 0.6 8.4 10.0 103.4 109.9 223.8
Gross profit 51.4 53.3 110.6 0.2 3.8 5.2 51.6 57.1 115.8
* See discontinued operations Note 2.
4. Other operating incom e
Six Six Year

2011 2010 2011
£m £m £m
Licensing income 3.0 1.8 5.8

5. Earnings/(losses) per share
Basic earnings or losses per share are calculated on 95,879,754 shares being the w eighted average number of ordinary
shares in all of the periods.
Diluted earnings per share are calculated on 97,080,437 shares being the w eighted average number of ordinary shares in the
period ended 31 July 2011 (95,879,754 shares being the w eighted average number of ordinary shares in the periods ended 31
July 2010 and 31 January 2011; there being no dilutive effect from options).
Basic and diluted earnings/(losses) per share of 1.0 pence per share (2010: (13.0) pence) is based on £1.0 million (2010:
£(12.5) million) being the profit/(loss) attributable to equity shareholders.
On continuing operations the basic earnings/(losses) per share of 0.6 pence per share (2010: restated losses of (1.0) pence)
is based on £0.6 million (2010: restated losses of £(1.0) million) being the profit/(loss) relating to continuing operations
attributable to equity shareholders.
On discontinued operations the basic earnings/(losses) per share of 0.4 pence per share (2010: restated losses of (12.0)
pence) is based on £0.4 million (2010: restated losses of £(11.5) million) being the loss relating to discontinued operations.
The reconciliation to adjusted earnings per share is as follow s:
Restated *
Six Six m onths Restated * Year
m onths Continuing 31 July Continuing ended Continuing
31 July pence 2010 pence 31 Jan pence
2011 per continuing per 2011 per
continuing share £m share continuing share
£m £m
Profit/(loss) attributable to equity
shareholders 0.6 0.6p (1.0) (1.0)p 8.8 9.2p
US closed stores - - 1.2 1.2p 1.9 2.0p
Closure costs provision - - - - (3.5) (3.7)p
Adjusted result and earnings

per share 0.6 0.6p 0.2 0.2p 7.2 7.5p
* See income statement.
6. Analysis of net funds
31 January Cash Non cash 31 July 31 July

2011 flow changes 2011 2010
£m £m £m £m £m
Cash and cash equivalents in the balance sheet and cash flow 34.1 (3.1) (0.1) 30.9 30.2
Net funds 34.1 (3.1) (0.1) 30.9 30.2

7. Statutory accounts and basis of preparation of half-year financial statem ents
Reporting entity
French Connection Group PLC is a Company registered in England and Wales and resident in the United Kingdom. These
condensed consolidated half-year financial statements of the Company as at and for the six months ended 31 July 2011
comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in joint ventures.
The consolidated financial statements of the Group as at and for the year ended 31 January 2011 are available upon request from
the Company's registered office at 20-22 Bedford Row , London WC1R 4JS or can be found on the Group w ebsite
www.frenchconnection.com.
Principal activities
The principal activity of the Group is the international retailing and w holesaling of branded fashion clothing and accessories and
the licensing of its brands.
Statem ent of com pliance

These condensed consolidated half-year financial statements have been prepared in accordance w ith the requirements of IAS
34 'Interim Financial Reporting' as adopted by the EU.
As required by the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"),
the condensed consolidated half-year financial statements has been prepared applying the accounting policies and
presentation that w ere applied in the preparation of the Company's published consolidated financial statements for the year
ended 31 January 2011, w hich are prepared in accordance w ith IFRS as adopted by the EU.
These condensed consolidated half-year financial statements have not been audited or review ed by auditors pursuant to the
Auditing Practices Board guidance on Review of Interim Financial Information. The comparative figures for the year ended 31
January 2011 are not the Company's statutory accounts for that period. Those accounts have been reported on by the
Company's auditors and have been delivered to the Registrar of Companies. The report of the auditors w as (i) unqualified, (ii)
did not include a reference to any matters to w hich the auditors drew attention by w ay of emphasis w ithout qualifying their
report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Board of Directors approved the condensed consolidated half-year financial statements on 19 September 2011.

The accounting policies applied by the Group in these condensed consolidated half-year financial statements are the same as
those that applied to the consolidated financial statements of the Group for the year ended 31 January 2011.
Key sources of estim ation uncertainty

In applying the accounting policies, management has made appropriate estimates in many areas, and the actual outcome may
differ from those calculated. The key sources of estimation uncertainty at the balance sheet date w ere the same as those that
applied to the consolidated financial statements of the Group for the year ended 31 January 2011.

The principal treasury risks to the Group arise from exchange rate and interest rate fluctuations. The Board has approved
policies for managing these risks, w hich are review ed on a regular basis, including the use of financial instruments, principally
forw ard foreign exchange contracts. No transactions of a speculative nature are undertaken.
The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the
Hong Kong Dollar and Euro. The Group's policy is to reduce substantially the risk associated w ith purchases denominated in
currencies other than Sterling by using forw ard fixed rate currency purchase contracts.
There has been no change since the year-end to the major treasury risks faced by the Group or the Group's approach to the
management of these risks.
The Group is dependent on reliable IT systems for managing and controlling its business and for providing efficiency and speed
in the supply chain. The Group's IT function oversees all the systems and has policies and procedures to protect the softw are,
hardw are and data and to prevent unauthorised access to the systems.
The Board confirms that there are ongoing procedures in place for identifying, evaluating and managing significant risks faced
by the Group.
Going concern
The Group has a strong balance sheet w ith more than sufficient net funds to finance the w orking capital requirements over the
cycle of a year. The Board is focused on preserving the Group's cash and on developing strategies to increase the Group's
cash generation. The level of funds is sufficient to ensure that no external funding w ill be required throughout the remainder of
this year. Based on this, the Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason, the Board continues to adopt the going concern basis in
preparing these half-year financial statements.

8. Retail locations
31 July 2011 31 January 2011

Core continuing operations Locations sq ft Locations sq ft
Operated locations
UK/Europe
French Connection/Great Plains Concessions 44 29,156 45 25,837
Toast Stores 9 10,578 9 10.578
YMC Stores 2 1,355 2 1,355
Total UK/Europe 128 264,947 128 259,628
North Am erica
French Connection - US Stores 8 37,227 8 40,862
French Connection - Canada Stores 13 36,535 13 36,535
Total North Am erica 21 73,762 21 77,397

UK/Europe 11 15,430 13 18,460
Middle East 10 20,331 13 25,331
Australia 86 89,810 80 84,800
Hong Kong 7 9,521 6 9,336
China 19 27,334 20 28,562
India 27 23,993 25 21,835
Russia 2 3,637 - -
Other 34 32,479 41 42,035

END
IR LLFIAAEIRLIL
5/24/13 French Connection | Final Results | FE InvestEgate
French Connection
Final Results
RNS Number : 8580Z
13 March 2013
13 March 2013
Preliminary Results for the year ended 31 January 2013
French Connection Group PLC ("French Connection", "the Group") today announces results for its latest financial
year ended 31 January 2013 that are in line with market expectations. The Group is currently implementing significant
changes that are designed to restore the business to profitability.
Results are as follows:
· Revenue down 8% to £197.3 million (2012: £215.4 million)
· Underlying* loss before tax of £(7.2) million (2012: profit of £4.6 million)
· Closing net cash of £28.5 million (2012: £34.2 million) and no debt
· Strong progress in implementing improvement initiatives
Commenting on this announcement, Stephen Marks, Chairman and Chief Executive of French Connection
said:
After a difficult trading year, I am pleased that many of the initiatives we have taken in order to provide a new impetus
to sales growth are beginning to show interesting results. While it is still early days, we see some good progress,
and I am pleased there is some momentum in the business.
The significant changes we have already and will continue to make will help us to improve our financial performance
in this most difficult and competitive of markets. Although it is very early days in the new year, we have seen a better
performance in UK retail, and we expect this to build as the year progresses.
We are managing the business tightly in order to increase full-price sales volumes, limit discounting, manage
inventory levels, control cash and build confidence with our customers.
We have demonstrated our ability to produce fashionable, wearable products over the last 40 years and will continue
to do so with a new and talented design team. With the help of the broad range of improvements in our business, a
strong balance sheet and our global brand strength, we will return the business to profitability.
* Underlying loss is adjusted to exclude the costs of disposal and closure of retail stores (£1.3 million) and the impairment of goodwill
(£2.0 million).
Enquiries:

Tom Buchanan/Charlie Simon Maitland +44(0)20 7379 5151
Notes to Editors:
French Connection:
The French Connection Group comprises retail and wholesale businesses in the UK, Europe, the US, Canada, Hong
Kong and China along with licensed partners operating in a number of other countries most notably Australia, India,
Singapore, Vietnam and South Africa. In addition the Group operates successful brand licences under which
partners produce fragrances, jewellery, toiletries, shoes, furniture and eyewear. Along with the French Connection
brand, the Group operates Great Plains, a wholesale-only ladies' wear range, Toast, an e-commerce fashion and
home wares brand, and YMC, a men's and women's wear brand.
Dear Shareholders,
After a difficult trading year, I am pleased to be able to tell you about the changes we have made in our business. Many of the initiatives we
have taken are beginning to show interesting results and while it is still early days, we see some good progress and feel that we are
moving in the right direction.
As you will be aware, we implemented a review of our retail business in March of last year. We announced a set of detailed initiatives with
the Interim Results in September and I commented then that we expect that the changes will have a growing positive impact on our trading
performance over the next two financial years but would have a limited impact on trading in the remaining part of the year to 31 January
2013. Today we are announcing our financial results for that year.
In the year to 31 January 2013, Group revenue fell 8% to £197.3 million as a result of declines in sales volumes in both our retail and
wholesale businesses in UK/Europe. Gross margin was little changed at 47.9% and overheads continue to be tightly controlled. Group
loss before taxation, goodwill impairment and store disposal costs was £(7.2) million, compared with a profit of £4.6 million last year.
However we ended the year with a strong balance sheet with £28.5 million of cash and no bank debt.
The initiatives we have taken have resulted in some major changes and are progressing well. The changes will help provide a new
impetus to sales growth in both the retail and wholesale businesses. The programme includes:
Store operations
· we have re-engineered a number of in-store processes resulting in a saving in labour hours;
· a revised approach to labour rostering has been developed and is being applied with an emphasis on ensuring the most effective
staff coverage in-store; and
· our training programmes have been developed to focus specifically on selling skills along with improved customer service and this
is being rolled out across our store portfolio.
Customer focused product

· our product ranges are now being developed within a revised framework designed to meet the aspirations and value perceptions of
our core customers more accurately;
· our new design team, including five new members, has created a Winter collection which is more customer focused and will
provide great value;
· the new collection has been well received by our Wholesale customers and our new retail team are confident that we are going
forward with the right product;
· the pricing architecture of these new ranges is now more focused; and
· with our new head of accessory design, we are beginning to see improvements and exciting new products.
Merchandise management
· we have implemented a total change in our buying patterns to give more flexibility and this has resulted in a 30% reduction in new
season inventory levels;
· the reaction speed to our best selling lines has been improved by changing the structure and processes of the relevant
departments; and
· we have worked hard on our gross margin and will be changing our sale periods. By reducing our buying we expect to generate a
better level of gross margin.
Portfolio management
· in a very difficult property market we have successfully negotiated the disposal of two stores in UK/Europe and three stores in North
America. We are in the process of closing one further store and six concessions and we are likely to close two further stores during
the new year. We continue to search for potential tenants for other targeted under-performing stores; and
· we are in on-going discussions with landlords to vacate other stores or to make realistic agreements on future rents.
Strengthened management team

· all the new senior management appointments have been made including the Head of Design who joined in May, Head of Retail
who joined in September, Head of Production and Director of Multi-channel Marketing who both joined in October. There have also
been important changes at other levels.
The initial impact on trading of these changes has been positive, although it is still early days. The changes to in-store operations are
beginning to demonstrate benefit and the Spring/Summer 2013 ranges, which have been supplemented and amended to reflect our
revised positioning, have performed better. This has been achieved on significantly lower inventory levels, therefore giving us the ability to
respond and move more quickly.
It is clear from our market research that the French Connection brand continues to have significant strength and with the improvements in
ranges, selling skills and inventory management outlined above I am confident we will achieve steady and significant improvement in our
trading performance and Group profitability over the next two financial years.
During the year our e-commerce business has continued to perform well and has grown significantly, benefiting from our continued
investment in this area. The introduction of "click-and-collect" and allowing web sales to be returned to stores have been taken up
enthusiastically by our customers and over 10% of our French Connection retail sales in UK/Europe are now through our web store.
Licensing continues to be a very important part of the business highlighting the strength of the brand. Our licensees continue to be very
successful and generate a strong revenue stream for the Group. During the later part of the year we introduced new licensees in the UK
for shoes, children's wear and furniture and in the US for coats, bags and hosiery. As reported last year, a change in strategy at Sears
resulted in the termination of our licence to supply fashion clothing to their stores, but despite this, net royalty income in the year was
significant at £6.5 million (2012: £8.5 million). Looking forward, we expect our new licensees to make a significant contribution to income.
We are continuing to build our international distribution network with additional stores opening in Asia, India and Eastern Europe in the
new year. The new shop fit concept, which we have recently been developing, has successfully launched in China and Hong Kong and
will be used for this new expansion.
The Group remains debt-free and ended the year with a cash position of £28.5 million after payment of last year's dividend during the
year. We monitor and manage our working capital very closely and we have more than sufficient resources to see us through our recovery
programme. However, in order to conserve working capital, the Board has decided that no dividend should be paid for the year (2012: 1.6
pence per share).
The changes we have made and continue to make will improve our financial performance in this most difficult and competitive of markets.
We are managing the business cautiously in order to increase full-price sales volumes, limit discounting, manage inventory levels, control
cash and build confidence with our customers.
I would like to thank all our staff around the world for their continuing efforts and hard work.
Stephen Marks
12 March 2013
BUSINESS REVIEW
Overview of Group Results

In the year ended 31 January 2013 the financial performance of the Group reflected a continuation of the poor trading experienced in the
UK/Europe retail channel from the autumn of 2011 along with a decline in volumes through the UK/Europe wholesale channel.
Conversely, the North America region achieved good growth in wholesale volumes and a robust performance in retail, but the decline in
volumes and consequent decline in gross profit margins in UK/Europe had a significant effect on the Group result. The Group incurred
a loss before taxation, goodwill impairment and the cost of store closures of £(7.2) million. This compared to a profit before tax of £4.6
million in the previous year. After taking into account an impairment of goodwill and the cost of disposal of under-performing stores, the
total loss before tax was £(10.5) million (2012: profit of £5.0 million).
Total revenue was 8% lower than last year reflecting continued good growth in wholesale volumes in North America but declines in all
other channels. Like-for-like sales in Retail in UK/Europe declined by 7.4% and in North America by 4.1% over the year.
Group gross margin was broadly flat at 47.9% with increases in the total value of discounting offset by an increased proportion of sales
in the higher-margin retail channel.
Total Group operating expenses were slightly lower than last year, but included charges arising from the retail review and asset
impairments relating to under-performing stores. The underlying costs declined by 1.3% despite additional investment in the e-
commerce channel.
The net income received from our licensees was £6.5 million in the year. This represented a decline of £2.0 million compared to last
year, largely as a result of the termination of the licence to supply product to the Sears department stores in the US. For the new year we
have agreed a number of new licences which will provide growth.
The resulting loss from operating activities was £(9.1) million (2012: operating profit of £3.3 million).
As a consequence of the poor retail trading experienced in recent seasons, an impairment charge of £2.0 million has been made in relation
to goodwill previously carried on the balance sheet.
Net finance income in the prior year benefited from a one-off £0.8 million credit arising from exchange gains on the repayment of intra-group
financing. The net income in the year to 31 January 2013 of £0.2 million represents interest income on cash deposits held and foreign
currency exchange gains.
Our retail joint ventures in Hong Kong and China have seen a tightening in their respective markets and while total revenue increased in
these joint ventures by 3%, the effect of the increased costs from additional trading space resulted in a small decline in the contribution from
these businesses.
Divisional analysis
These tables set out the segmental analysis of the continuing operations for the two years ended 31 January 2013.
Rest of
the Intra
UK/Europe North Am erica World Group Total

£m £m £m £m £m £m £m £m £m
Revenue 103.4 34.2 137.6 20.0 29.0 49.0 10.7 197.3
Gross profit 56.7 10.6 67.3 11.2 11.5 22.7 2.0 2.6 94.6
Gross margin 54.8% 31.0% 48.9% 56.0% 39.7% 46.3% 18.7% 47.9%
Store disposals and closures (1.1) (1.1) (0.2) (0.2) (1.3)
Operating contribution (16.0) 3.9 (12.1) (1.6) 7.8 6.2 0.5 2.6 (2.8)
Other income 6.8 0.7 1.6 (2.6) 6.5
Divisional operating (loss)/profit (9.6) 3.7 2.1 - (3.8)
Group management overheads (5.3)
Operating loss before financing and goodw ill impairment (9.1)
Rest of
the Intra

£m £m £m £m £m £m £m £m £m
Revenue 111.0 42.1 153.1 22.2 24.3 46.5 15.8 215.4
Gross profit 62.4 13.8 76.2 13.2 9.3 22.5 2.1 2.8 103.6
Gross margin 56.2% 32.8% 49.8% 59.5% 38.3% 48.4% 13.3% 48.1%
Store disposals and closures 0.7 0.7 (0.3) (0.3) 0.4
Other income 7.4 2.0 1.9 (2.8) 8.5
Divisional operating profit 1.8 3.8 2.5 - 8.1
Operating profit before financing 3.3

Retail
Total retail revenue in the UK/Europe division declined by 7% in the year, both in total and on a like-for-like basis; average retail space
barely changed.
As previously reported, this performance is a continuation of the marked decline first noted in Autumn 2011. This prompted an extensive
review of the UK retail business with the help of external consultants and gave rise to a series of initiatives discussed further in the
Chairman's Statement.
The decline in revenue in recent seasons has resulted in higher levels of discounting and greater volumes of product sold during our end-
of-season sales. An important strand of our improvement initiatives is to protect the gross margin rate by reducing the scale of the sale
periods. To this end, the winter sale was delayed by one week compared to last year. The effect of this and other changes to levels of
discounting was to reduce revenue but increase the gross margin rate in the end of season sale. However, total gross margin in the
UK/Europe retail business across the year was a little lower at 54.8% compared to 56.2% last year. The decrease was caused by a
combination of slightly lower core margins and the effect of a higher proportion of sales during the spring sale, earlier in the year.
Retail operating overheads increased by £1.0 million in the year including an impairment charge of £0.5 million (2012: £nil) in relation to
underperforming stores. Overheads have been managed prudently and the underlying increase in the cost base has arisen from
continued investment in our e-commerce businesses and new stores. In addition, the store portfolio management process generated a
charge of £1.1 million comprising premiums paid in relation to the assignment or provisions for the cost of closure of underperforming
stores. In contrast, in the previous year, store disposals generated net income of £0.7 million.
Toast's total revenue during the year was little changed on last year, which was disappointing given the previous rate of growth. The new
Spring season has started very well, however.
Overall the UK/Europe retail business generated a loss of £(16.0) million in the year (2012: £(7.5) million).

Wholesale
Revenue in the wholesale business in UK/Europe declined by 19% during the year. A large portion of the decline arose from the closure
of three high-volume stores operated by our former franchisee in Russia. The remaining decline reflected decreases in orders as a result
of disappointing sales performances in the previous seasons. We expect that the initiatives implemented in relation to the product ranges
as part of the retail review will have a beneficial impact on the wholesale channel in due course.
With much of the decline in volumes arising from full-price customers, the gross margin declined to 31.0% (2012: 32.8%).
Our forward orders for Spring/Summer 2013, a proportion of which was delivered in January 2013, were lower than the equivalent orders
for last year. Orders for Autumn/Winter 2013 are still being taken and the reaction to the range has been positive. However the value of
orders is affected by the previous seasons' sales performance in our customers' outlets and to date the buyers are being cautious. The
forward orders so far are broadly flat on the level achieved at the same time last year.
Overhead costs within the division have been tightly controlled during the year, resulting in a 7% reduction.
This combination of factors lead to a decrease in profit generated by the division to £3.9 million (2012: £6.6 million).
United Kingdom and Europe region

Together, the retail and wholesale businesses in UK/Europe incurred an operating loss of £(12.1) million in the year (2012: £(0.9)
million). Common overhead costs for the region include shared accounting services and brand advertising and marketing. The
advertising budget for the year was cut back from the previous year resulting in over 8% savings.
Other income in the UK/Europe region of £6.8 million (2012: £7.4 million) includes both royalty receipts from external licensees and intra-
group royalties which are eliminated from the Group result. The licence income from external sources in the UK was broadly steady at
£5.3 million with continued good contributions from Boots in relation to their toiletries licence, Specsavers in relation to their eyewear
licence, and our suiting, jewellery and watch licensees amongst others.
The operating result for the entire UK/Europe division was a loss of £(9.6) million compared to a profit of £1.8 million in the previous year.
Clearly we are entirely focused on improving the performance of this division of our business and in particular the retail channel. We are
confident that the combination of the broad-ranging changes, strong cash position and highly regarded brand will return this business to
growth for the long-term.
North America
Retail
Revenue in our retail stores in North America fell to £20.0 million from £22.2 million, mainly due to the impact of the closure of three stores
during the year but also reflecting a decline in like-for-like sales of 4.1%. Higher levels of discounting caused the gross margin to be
lower at 56.0% compared to 59.5% last year. Retail trading overheads were £1.1 million, 8% lower, partly due to the closure of stores.
The store closures were implemented at a cost of £0.2 million and will have a positive impact on profit in the new financial year. The retail
operating loss for the year was £(1.6) million compared to £(0.8) million in the previous year.
Sales through our North America e-commerce sites now represent 10% of our retail revenue in the region with continuing good growth in
the period.
As with the UK we are working to increase the revenue in our stores in North America and this will focus on ensuring that the products we
offer are attractive to our customers and ensuring that operationally we maximise our opportunities. We also continue to review the store
portfolio in order to deal with underperforming locations where possible.
North America
Wholesale
The operating contribution from our North America wholesale division made a further good step forward to £7.8 million for the year
compared to £5.7 million in the previous year on revenue 19% ahead at £29.0 million. Increases came from both existing and new
customers. Forward orders for the new seasons, however, are weaker, and current indications suggest that some of the growth achieved
last year will be reversed. We anticipate that this will be corrected with revised ranges for later in 2013 and beyond.

Together the two North America divisions generated a contribution of £6.2 million (2012: £4.9 million) in the year. Common overhead
costs were similar to last year resulting in a trading profit of £3.0 million, compared to £1.8 million last year.
Last year we reported £2.0 million of licensing income generated from the North America division. This included a royalty contribution
arising from our licence with Li & Fung to supply the "UK Style" range of clothing to Sears department stores across the US. As previously
reported this licence has since been terminated, resulting in a significant decrease in licence income in the year to 31 January 2013.
Despite the reduction in royalty income, the North America division generated an operating profit of £3.7 million compared to £3.8 million
last year.
Rest of World
Wholesale
Revenue from our wholesale business based in Hong Kong fell to £10.7 million in the year (2012: £15.8 million) as a result of reductions
in deliveries to our licensee in Australia in a difficult retail market. The gross margin generated by this business is affected by the mix of
the different supply arrangements with customers and while core margins were unchanged, the blended gross margin increased to
18.7% from 13.3%. With overhead costs unchanged the operating contribution was £0.5 million (2012: £0.6 million).
Other income in Hong Kong includes both buying office commission paid by Group companies in relation to shipments from Hong Kong
to other divisions and buying office commissions and royalties receivable from third parties. Of the £1.6 million income, £1.1 million is
generated from intra‑group business and is eliminated within the Group results. The remainder reflects royalty and buying office
commission from third parties.
Overall the Hong Kong business generated an operating profit of £2.1 million (2012: £2.5 million).
Group management overheads

The overheads arising from Group management functions were £5.3 million (2012: £4.8 million) including the costs associated with the
review of the retail business conducted by specialist consultants. Underlying costs were reduced.
Operating result
The Group's trading divisions generated an operating loss of £(9.1) million in the year (2012: profit of £3.3 million). The significant decline
reflects the sharp down-turn in both retail and wholesale revenues in the year and the magnifying effect of structural operating leverage
within the business: the majority of our cost base, being store costs and the costs of creating our product ranges, are largely fixed.
Impairment, net finance income and joint ventures

A charge of £2.0 million has been recorded in the year in relation to the impairment of goodwill. The goodwill originally arose as a result of
the acquisition of three of our UK franchises over a number of years up to 2009. As a result of the depressed store trading results the
goodwill arising from these acquisitions has been impaired to nil. There is no cash impact of this charge.
Net finance income in the year was £0.2 million (2012: £0.9 million including a one-off exchange gain of £0.8 million). The core finance
income represents the continued low interest rates earned on our cash balances.
The Group is party to two joint ventures, each operating French Connection retail stores, one in Hong Kong and the other in China. The
joint ventures are directly managed by local management teams with strategic input from the Group. From the perspective of the French
Connection Group we benefit from not only our share of the profits generated by the joint venture but also from gross profit generated from
supplying product to the businesses and the receipt of brand royalties.
The Group's share of net profits generated by the joint ventures during the year was £0.4 million, net of local taxes (2012: £0.8 million) and
cash dividends received amounted to £0.9 million. Profitability has softened as a result of both changes in the portfolio of stores and a
softening of retail sales performance in Hong Kong.
Group result
The Group incurred a loss before tax for the year of £(10.5) million (2012: profit of £5.0 million). Excluding the impairment charge and the
cost of disposal of underperforming stores the loss before tax was £(7.2) million (2012: profit of £4.6 million).
Taxation
The tax charge in the year of £0.0 million (2012: £0.5 million) reflects tax charged on profits generated in Hong Kong and minimum taxes
payable in the US offset by prior year credits. No benefit has been recorded for tax losses incurred in the UK in the year. Historical tax
losses generated in the US (which were not previously recognised in the accounts) are being utilised to offset most of the tax charge
arising on profits in the US.
The effective tax rate in future years will vary depending on the level of profit generated and the different geographic locations where it is
taxed since the three principal countries of operation have significantly different tax rates and the Group has substantial tax losses which
should be available to offset profits earned in the UK and US.
The Group disposed of the Nicole Farhi business in July 2010. The "discontinued operations" reported in the income statement for the
year ended 31 January 2012 reflect the residual impact of this transaction.
Non-controlling interests
The non-controlling interest of £(0.2) million (2012: £0.0 million) reported in the income statement represents the net share of results
attributable to the 25% ownership held by local management in Canada, Toast and YMC.
Earnings and dividend

Net earnings attributable to equity shareholders amounted to a loss of £(10.3) million (2012: profit of £4.5 million from the core continuing
operations) and a loss per share of (10.7) pence (2012: earnings of 4.7 pence).
The Board has concluded that no dividend should be paid for the year (2012: dividend of 1.6 pence per share).
Balance sheet and cash flow
The Group balance sheet at 31 January 2013 remains strong with £28.5 million of cash (2012: £34.2 million), no bank borrowings and a
minimum cash position during the year of £10.6 million. The trading operations of the Group utilised cash of only £3.7 million as a result
of a release of cash utilised within working capital, in particular a decrease in inventory of £5.4 million.
Additional investment in fixed assets has been low in recent periods and this year the Group invested £1.7 million (2012: £1.6 million),
being mainly in respect of stores and IT equipment, particularly in relation to the e-commerce business. The restricted capital expenditure
over recent years has resulted in a relatively low depreciation charge of £2.6 million (2012: £2.8 million). In addition, store fixed assets
have been impaired in the year creating an additional charge of £0.5 million.
Our development and growth plans focus on developing the products and customer service and therefore are not capital-intensive.
However should any store refurbishments be implemented then the level of capital expenditure would increase. It is expected that capital
expenditure in the current financial year will be in the region of £2.0 million, subject to any plans arising from the Business Review.
The Board's policy is to maintain a strong capital base, including liquid funds, in order to maintain investor, creditor and market confidence
and to sustain future development of the business. The initiatives taken in order to return the Group to profitability will take some time to
implement and then will have a growing impact over a number of periods. The Board's aim is to achieve at least break-even in the year
ending 31 January 2015 and then to grow in profitability thereafter. The initiatives are not capital intensive, but trading losses in the
intervening period will result in a reduction in cash resources until such time as the Group returns to profitability. Having reviewed the
cash forecasts and the sources of cash funding available to the Group, including detailed discussions with our bankers, Barclays, the
Board has concluded that the Group has access to more than sufficient funds to see it through the implementation of the recovery
initiatives over the next two years.

2013 2012
Note £m £m
Revenue 197.3 215.4
Cost of sales (102.7) (111.8)
Operating expenses (108.9) (109.2)

Other operating income 3 6.5 8.5
Net (loss)/gain on store disposals and closures (1.3) 0.4
Operating (loss)/profit before financing and impairments (9.1) 3.3
Impairment of goodwill (2.0) -

Finance expenses - -
Operating (loss)/profit (10.9) 4.2
Share of profit of joint ventures, net of tax 0.4 0.8
(Loss)/profit before taxation, store disposals, closures and

impairment of goodwill (7.2) 4.6
Net (loss)/gain on store disposals and closures (1.3) 0.4
Impairment of goodwill (2.0) -
(Loss)/profit before taxation (10.5) 5.0
Income tax credit - UK - -

Income tax expense - overseas - (0.5)
Total income tax expense - (0.5)
(Loss)/profit for the year from continuing operations (10.5) 4.5
Profit from discontinued operations, net of tax - 0.8
(Loss)/profit for the year (10.5) 5.3
2013 2012
Note £m £m
Currency translation differences for overseas operations (0.2) 0.3
Currency translation differences on foreign currency loans, net of tax 0.1 (0.2)
Currency translation differences transferred to profit and loss, net of tax - (0.5)
Effective portion of changes in fair value of cash flow hedges - 0.1
Other comprehensive income for the year, net of tax (0.1) (0.3)
Total comprehensive income for the year (10.6) 5.0
(Loss)/profit attributable to:
Equity holders of the Company (10.3) 5.3

Non-controlling interests (0.2) -
Equity holders of the Company (10.4) 5.0

Non-controlling interests (0.2) -
Total income and expense recognised for the year (10.6) 5.0
Earnings per share
Basic and diluted (losses)/earnings per share 5 (10.7)p 5.5p
Basic and diluted (losses)/earnings per share 5 (10.7)p 4.7p

At 31 January 2013
2013 2012
Note £m £m
Assets
Non-current assets
Intangible assets 0.4 2.4
Investments in joint ventures 3.0 3.5
Current assets
Inventories 41.5 46.9
Derivative financial instruments 0.1 0.1
Deferred tax liabilities 0.9 0.9
Total non-current liabilities 0.9 0.9
Current liabilities
Current tax payable - 0.5
Provisions 1.7 0.6
Equity
Called-up share capital 1.0 1.0
Share premium account 9.4 9.4
Other reserves 5.3 5.4
Total equity attributable to equity holders of the Com pany 62.7 74.1
Non-controlling interests 0.8 1.0
Non-
capital prem ium reserve reserve earnings Total interests equity
£m £m £m £m £m £m £m £m
Balance at 31 January 2011 1.0 9.4 - 5.7 54.6 70.7 1.1 71.8
Profit for the year ended 31 January 2012 5.3 5.3 - 5.3

Currency translation differences for
overseas operations 0.3 0.3 0.3
on foreign currency loans, net of tax (0.2) (0.2) (0.2)
transferred to profit and loss, net of tax (0.5) (0.5) (0.5)
Effective portion of changes in fair
value of cash flow hedges 0.1 0.1 0.1

Dividends (1.6) (1.6) (1.6)
Transactions with non-

controlling interests, recorded
directly in equity
Dividends (0.1) (0.1)
Loss for the year ended 31 January 2013 (10.3) (10.3) (0.2) (10.5)

Currency translation differences for
overseas operations (0.2) (0.2) (0.2)
on foreign currency loans, net of tax 0.1 0.1 0.1
Effective portion of changes in fair
value of cash flow hedges - - -

Dividends (1.0) (1.0) (1.0)
Translation reserve
The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations as well
as from the translation of foreign currency loans.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.

2013 2012
Note £m £m
(Loss)/profit for the period (10.5) 5.3
Adjustments for:
Depreciation and impairment 3.1 2.8
Impairment of goodwill 2.0 -
Gain on disposal of discontinued operation, net of tax - (0.9)
Currency translation differences (0.1) (0.6)
Share of profit of joint ventures (0.4) (0.8)
Non-operating loss/(profit) on store disposals and closures 1.3 (0.4)
Income tax expense - 0.5
Operating (loss)/profit before changes in working

capital and provisions (4.7) 5.6
Decrease/(increase) in inventories 5.4 (6.9)
(Decrease)/increase in trade and other payables (6.8) 3.4
Cash flows from operations (3.7) 1.1

Income tax paid (0.5) (0.7)
Cash flows from operating activities (4.2) 0.4
Proceeds from investment in joint ventures 0.9 0.8
Acquisition of property, plant and equipment (1.7) (1.6)
Net (costs)/proceeds from sale of property, plant and equipment (0.2) 0.7
Disposal of discontinued operations 0.4 1.3
Cash flows from investing activities (0.5) 1.5
Cash flows from financing activities (1.0) (1.7)

Cash and cash equivalents at 1 February 34.2 34.1
Exchange rate fluctuations on cash held - (0.1)
Cash and cash equivalents at 31 January 28.5 34.2
NOTES
Consolidated financial statements and accounting policies

The preliminary announcement for the year ended 31 January 2013 has been prepared in accordance with International Accounting
Standards and International Financial Reporting Standards as adopted by the European Union (EU) at 31 January 2013. The
annual financial information presented in the preliminary announcement for the year ended 31 January 2013 is based on, and is
consistent with, that in the Group's audited Financial Statements for the year ended 31 January 2013, and those Financial
Statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditor's report
on those Financial Statements is unqualified and does not contain any statement under Section 498 (2) or (3) of the Companies Act
2006.
These consolidated financial statements have been prepared using the historical cost convention, modified for certain items carried
at fair value, as stated in the accounting policies.
Statutory accounts
Information in this preliminary announcement does not constitute statutory accounts of French Connection Group and its
subsidiaries ("the Group") within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31
January 2012 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified and did not
contain statements under Section 498(2) or (3) of the Companies Act 2006.
The Group's Annual Report for the year ended 31 January 2013 will be made available in due course and will be available for viewing
and download from the Group's website at www.frenchconnection.com. The Annual Report will be circulated in printed form to
shareholders in the second week of April 2013.
2 Operating segments
Rest of
the Intra

£m £m £m £m £m £m £m £m £m
Revenue 103.4 34.2 137.6 20.0 29.0 49.0 10.7 197.3
Gross profit 56.7 10.6 67.3 11.2 11.5 22.7 2.0 2.6 94.6
Gross margin 54.8% 31.0% 48.9% 56.0% 39.7% 46.3% 18.7% 47.9%
Store disposals and closures (1.1) (1.1) (0.2) (0.2) (1.3)
Operating contribution (16.0) 3.9 (12.1) (1.6) 7.8 6.2 0.5 2.6 (2.8)
Other income 6.8 0.7 1.6 (2.6) 6.5
Divisional operating (loss)/profit (9.6) 3.7 2.1 - (3.8)
Operating loss before financing and goodw ill impairment (9.1)
Represented by:
Loss from continuing operations (9.1)
Loss from discontinued operations -
(9.1)
Total assets 31.2 48.8 80.0 7.7 12.8 20.5 6.8 - 107.3
Total liabilities 16.9 15.9 32.8 3.0 3.4 6.4 4.6 - 43.8
Non-current asset additions 1.1 0.2 1.3 0.4 - 0.4 - 1.7
Depreciation 1.3 0.8 2.1 0.5 - 0.5 - 2.6
Impairment losses 0.5 - 0.5 - - - - 0.5
The share of the results of the joint venture operations of £0.4 million (2012: £0.8 million) relate to retail operations in the rest of the world and are
not disclosed in the information above.
Rest of
the Intra

£m £m £m £m £m £m £m
£m £m
Revenue 111.5 42.1 153.6 22.3 24.3 46.6 15.8 216.0
Gross profit 62.5 13.8 76.3 13.3 9.3 22.6 2.1 2.8 103.8
Gross margin 56.1% 32.8% 49.7% 59.6% 38.3% 48.5% 13.3% 48.1%
Store disposals and closures 0.7 0.7 (0.3) (0.3) 0.4
Other income 7.4 2.0 1.9 (2.8) 8.5
Divisional operating profit 1.6 3.9 2.5 - 8.0
Operating profit before financing 3.2
Represented by:
Profit from continuing operations 3.3
Profit from discontinued operations (0.1)
3.2
Total assets 41.8 56.0 97.8 8.6 9.7 18.3 9.0 - 125.1
Total liabilities 18.1 17.9 36.0 2.0 2.9 4.9 9.1 - 50.0
Non-current asset additions 1.0 0.4 1.4 0.1 - 0.1 0.1 1.6
Depreciation 1.4 0.8 2.2 0.6 - 0.6 - 2.8
The divisional table for the year ended 31 January 2012 has been amended for changes to the intercompany charges, none of which impact upon
the Group's pre-tax results.
3 Other operating income
2013 2012
£m £m
Licensing income and buying office commission 6.5 8.5
4 Dividends - equity
2013 Pence 2012 Pence

Final paid for prior financial year 1.0 1.0p 1.0 1.0p
Interim paid for current financial year - - 0.6 0.6p
Total dividends paid during the year 1.0 1.0p 1.6 1.6p
The Board is proposing that no dividend should be paid for the year. No dividends were paid during the year to the minority
shareholders of a subsidiary undertaking of the Group (2012: £0.1 million).
5 (Losses)/earnings per share
Basic (losses)/earnings per share are calculated on 95,899,754 (2012: 95,884,740) shares being the weighted average number of
ordinary shares during the year.
Diluted (losses)/earnings per share are calculated on 95,983,319 shares being the weighted average number of ordinary shares
adjusted to assume the exercise of dilutive options (2012: 96,632,850).
Basic and diluted (losses)/earnings per share of (10.7)pence per share (2012: earnings of 5.5 pence) is based on losses of £(10.3)
million (2012: profits of £5.3 million) attributable to equity shareholders.
On continuing operations the basic (losses)/earnings per share of (10.7) pence per share (2012: earnings of 4.7 pence) is based on
£(10.3) million (2012: £4.5 million) being the (loss)/profit relating to continuing operations.
On discontinuing operations the basic earnings per share of nil pence per share (2012: 0.8 pence) is based on £nil (2012: £0.8
million) being the profit relating to discontinued operations.
The reconciliation to adjusted earnings per share is as follows:
2012
2013 2012 Continuing
2013 pence Continuing pence
(Loss)/profit attributable to equity (10.3) (10.7)p 4.5 4.7p

shareholders
Net loss/(gain) on store disposals and
closures 1.3 1.3p (0.4) (0.4)p
Impairment of goodwill 2.0 2.1p - -
Adjusted (loss)/profit (7.0) (7.3)p 4.1 4.3p
The adjusted earnings per share relates to the core continuing operations and in the opinion of the Directors, gives a better measure
of the Group's underlying performance than the basic losses per share.
RETAIL LOCATIONS
31 January 2013 31 January 2012

Operated locations
UK/Europe
French Connection/Great Plains Concessions 54 36,134 46 32,550
Toast Stores 11 11,407 9 10,578
YMC Stores 2 1,355 2 1,355
141 267,011 128 258,951
North America
French Connection US Stores 8 33,900 8 37,227
French Connection Canada Stores 9 24,325 12 33,935
17 58,225 20 71,162

UK/Europe 10 14,821 11 15,791
Middle East 13 23,842 12 21,797
Australia 92 96,329 85 91,919
Hong Kong 6 7,031 7 9,521
China 21 31,556 18 25,383
India 89 56,129 32 27,645
Other 51 45,240 41 41,416

END
FR JTMLTMBTBBTJ
5/23/13 French Connection | Result of AGM | FE InvestEgate
French Connection
Result of AGM
RNS Number : 8107E
15 May 2013
Results of 2013 Annual General Meeting
15 May 2013
The Board of French Connection Group plc ("the Company") is pleased

to announce that at the Company's Annual General Meeting held today
that all resolutions as set out in the Notice of Meeting contained in the
Annual Report and Accounts for the year ended 31 January 2013 were
passed unanimously on a show of hands, except for ordinary resolution
3 (relating to the re-election of Roy Naismith as a director of the
company), which was withdrawn by agreement of the meeting, as a
result of Mr Naismith having resigned from the position of director on
26th April 2013.
A copy of the resolutions passed as special business at the Annual

General Meeting have been submitted to the National Storage
Mechanism and will shortly be available for inspection
at:http://www.Hemscott.com/nsm.do.
Details of the proxy votes received are available on the French

Connection website at www.frenchconnection.com (follow links to
Investor Relations/Other Reports).
5/23/13 French Connection | Result of AGM | FE InvestEgate

END
RAGAAMITMBTBBFJ
5/24/13 Norcon PLC | Final Results | FE InvestEgate
Norcon PLC
Final Results
RNS Number : 2590B
Norcon PLC
13 April 2012
13 April 2012
Norcon plc
("Norcon" or the "Company")
FINAL RESULTS
For the twelve months ended 31 December 2011
Norcon plc (LSE/AIM: NCON), the global communications network specialist, is pleased to
announce audited and final results for the financial year ended 31 December 2011. The results
conclude a broadly flat year for Norcon as it worked to navigate the widespread global
economic challenges; whilst at the same time continue to take an early advantage of steadily
increasing LTE capital investments taking place in the telecommunications arena.
Trading has been broadly consistent with the management team's revised FY expectations, as
set out in the Trading Update of 15 February 2012:
· Revenue of US$66.6m (FY 2010: US$68.6m)

· Operating profits of US$6.2m (FY 2010: US$7.3m)
· Profit before tax of US$5.4m (FY 2010: US$6.7m)
· Profit after tax of US$3.5m (FY 2010: US$4.3m)
· Cash at year end increased to US$12.5m (FY 2010: US$12.1m)
· Pro forma earnings per share on a basic basis of US$0.07 (FY 2010: US$0.09) with the
number of shares of 48,800,808 during the year compared to the weighted average
number of shares of 47,174,875 the prior year
· Dividend declared related to the final 2011 results of US$1m, a yield of 5% at the
current share price
OPERATIONAL HIGHLIGHTS
· Client engagements in core markets renewed, in addition to new mandates secured in

key expansion territories
· Organisation strengthened with the creation of the role and recruitment of a new Chief
Operating Officer with further key personnel targeted to join in 2012 to support our
geographical as well as services expansion
· Strategy remains unchanged with increased focus on going into new verticals and new
geographies
· Favourable long-term market drivers are in place
Commenting on the results Norcon Chairman, Trond Tostrup, said:
"I am pleased that Norcon has managed to deliver another good year, in spite of global
economic pressures. Thank s to our long term relations with k ey customers and great work by
our team we remain resilient. We have made investments into our future as the Company
continues to increase its geographical reach, as well as the services we offer to our clients. I
firmly believe that our core strengths support our long term growth prospects."
Norcon plc
Arnold Rørholt, Chief Executive Officer +47 90 11 66 90
Marne Martin, Chief Financial Officer +44 (0) 78 13 92 09 74
FTI Consulting
James Melville-Ross, Matt Dixon or Tracey Bowditch +44 (0) 20 7831 3113
finnCap
Corporate Finance - Sarah Wharry, Charlotte Stranner or Rose
Herbert +44 (0) 20 7600 1658
About Norcon:
Established in 1957, Norc on (LSE/AIM: NCON) has been a trusted consultant and project
manager for more than half a century to the private sector and government agencies. These
organisations rely on Norcon to select, implement and maintain a communication infrastructure
that not only matches, but also supports the critical needs of their operations. Norcon's
strength lies in its understanding of complex communication networks and their design.
www.norconplc.com
This has undoubtedly been a difficult year for global business. Given the economic pressures
our economies and our own Norcon business have faced, it is encouraging to report that the
Company has again delivered a profitable outturn to the year ended 31 December 2011.
The growth in our profitability in 2011 has, as outlined in our Trading Update of 15 February
2012, been held back due to some additional cost items and investment in new territories.
To some degree, these challenges mask the positive momentum that has carried through in our
business operations this year. We have strengthened our team creating the position of Chief
Operating Officer. We have also continued to renew our mandates with our closest, most long-
standing customers whilst making additional and early in-roads into new markets and
geographies.
Our focus, as a company and as a Board, remains the pursuit of profitable growth. To that end,
our efforts to expand our business have continued into the start of Financial Year 2012 and will
remain our key priority throughout the year ahead.
We continue to benefit from a dedicated, flexible and highly capable team in the Norcon
Group. This team is our greatest asset as a firm and I thank each and every Norcon colleague
for their commitment, enthusiasm and efforts this year.
Trond Tostrup
Chairman
Chief Executive's Review
Operational Development
In light of the global situation, we are satisfied with our performance for 2011. In 2012, Norcon
will increase emphasis on geographical expansion and the development of new services, thus
speeding up the implementation of its long-term diversification strategy.
Our core business relationships continue to be strong, and we will continue to focus on these,
as they will still be a key to our successful implementation of our geographical and services
expansion. We recently signed a major contract for 2012, and are in the final stages of
negotiating other substantial contracts, which have duration beyond 2012. At the end of April
we will have a new Country Manager in Saudi Arabia in place, who will focus on existing clients
and the establishment of new clients within the Kingdom. We are therefore optimistic with
regards to the potential within Saudi Arabia.
As the telecom industry continues to invest in new technology, currently the roll out of LTE and
FTTH networks which we have developed as a core expertise, we have been able to secure
business with new clients outside our core region in 2011, although initially on a fairly small
scale.
We have added clients in new markets in 2011, such as in Oman, Thailand, Malaysia,
Scandinavia, Russia and Ukraine.
Building a team for the future
Norcon Group has a strong and stable team in place, which has done an impressive job in
maintaining and securing new business in a difficult environment. As we will put strong
emphasis on our geographical and services expansion in 2012 and onwards, we have decided
to use 2012 to build the team to ensure successful implementation of this strategy. We are
very pleased that, as outlined in our Interim Results on 21 September 2011, we have recruited a
new COO with proven expertise in the telecom services industry. He has already made an
impact, working to develop the new service expansion lines and with the right people to support
our future growth plans.
We are thus set to make numerous new select technical and sales hires in 2012 with the
benefits accruing per plan with full effect in 2013. The first few of these additional key hires will
join the business in April 2012, including the recruitment to fill the newly created position of
CTO.
In order to ensure success in our expansion strategy, we have already established a regional
office in the US to service a contract that we have secured with one of the major players in the
business. We will further establish an office for MEA outside of Saudi Arabia, APAC and
Europe. These offices will be staffed by carefully selected individuals with experience from their
respective regions. As part of our strategy, we are also looking to partner with product
companies where we can structure solutions around their offerings.
Effect on 2012 P&L and turnover
The investments we are making in maintaining and building new business for the future will not
give a considerable contribution to turnover until 2013. This is a main driver for our new
initiatives outside our present main region of business. The investments will have an impact on
our profits in 2012, but the Board of Directors believe firmly that it will pay off well in the years
to come.
Norcon's relationships with its core customers continue to be as strong as ever with client
retention rates remaining well above 90% consistent with prior years. The unbilled receivables
as of year end 2011 have been invoiced and receivables are on track for collection as the year
progresses. We therefore expect 2012 to be a strong year in terms of cash generation given
the receivable balances as of year end.
Dividend Policy and Final Dividend for 2011
The Board now proposes to pay out a dividend of at least 25% of net income going forward, on
an annual basis, as a policy. As the Company did not pay an interim dividend for this financial
year, the final dividend for 2011 will be US$1,000,000, payable following the AGM in June 2012.
The Board will in addition consider special dividends each year on a case by case basis.
Our policy will likewise be to pay an interim dividend in the coming years.
Outlook
We remain positive about our ability to win new contracts and position ourselves in 2012,
making additional investments in the development of the company as described. We are
confident that opportunities exist for Norcon to continue to grow organically over the longer term
given the new contracts and investments in our core market, as well as the increased pace of
international diversification. We look forward with confidence to the years ahead and the
contributions our new efforts will bring to the Company.
It is with great excitement that I look forward to the contributions of our expanded team in the
years ahead.
Arnold Rørholt
Financial Review
We are pleased to release our audited numbers for the full year 2011.
Summary
Norcon's performance during the past twelve months has been profitable, albeit at a lower level
than in the prior year as explained above, with stronger net asset position (approximately
US$25m) at the year end.
Revenue for 2011 totalled US$66.6m (FY 2010: US$68.6m). The decrease was primarily due to
a shortfall in new business. Gross profit for 2011 was US$10.7m (FY 2010: US$12.1m).
Gross margin for 2011 was 16% for the year (FY 2010: 18%), due to increased cost of sales
proportionally related to increased competition and start-up expenses in the new projects in
Saudi Arabia as well as the other territories.
Profit before tax of US$5.4m for 2011 compared to the 2010 figure of US$6.7m due to lower
gross margin and higher finance expenses (notably exchange rate losses). Administration
expenses were approximately US$0.3m lower in 2011 than 2010, but not sufficient to
compensate for the lower gross margin.
Profit after tax of US$3.5m for 2011 compared to the 2010 figure of US$4.3m. The percentage
tax accrued for 2011 was 35% versus 36% in 2010. The underlying tax rates in the respective
jurisdictions are detailed in the notes.
Pro forma basic earnings per share were US$0.07 for the full year compared to the US$0.09
earnings per share for 2010. The weighted average number of shares in 2011 was 48,800,808
compared to 47,174,875 in 2010 respectively.
Costs
Cost of sales totalled US$55.9m for the period compared to US$56.5m in 2010. While costs of
sales did decrease, it decreased proportionally less than revenue.
Other operating costs, including net financial, operating and administration expenses totalled
US$4.5m for the period down from US$4.8m in 2010.
Net other costs increased to US$0.8m from US$0.6m, largely related to increased financial
expenses.
Taxation
Taxes were accrued in the amount of US$1.9m during 2011 (FY 2010: US$2.4m). The blended
effective tax rate based on the tax accruals made for each business unit decreased to 35% in
2011 from 36% in 2010. The underlying tax rates in the countries in which we operate are
detailed in the Notes.
Foreign Exchange
The Company is continuing its policy of denominating revenue and expenses either in the local
currency if pegged to the US dollar or in US dollars to the extent feasible. Foreign exchange
translation gains and losses in the period are noted in the accounts, and did increase
significantly in 2012 compared to 2011 primarily due to the fluctuation of the US dollar to the
Kuwaiti dinar.
Cash Flow
Cash flow continues to be positive for the year as a whole. Cash conversion decelerated in
2011 compared to 2010 due to the large volume of unbilled receivables. Such unbilled
receivables were invoiced in 2012 prior to the date of this statement, and collections of such
amounts will create positive cash momentum and increased operational cash conversion in
2012.
Balance Sheet
The Balance Sheet performance of the Company was quite strong.
Gross and net cash balances improved year on year.
As at 31 December 2011, cash was US$12.5m (FY 2010: US$12.1m) with positive net cash of
US$7.1m (FY 2010: US$6.1m).
The Company remains net asset positive, with net assets increasing significantly to US$25.4m
in 2011 (FY 2010: US$22.8m).
Total trade and other receivables increased to US$35.2m from US$31.6m in the prior year.
Trade and unbilled receivable balances increased year on year to a total of US$30.6m from a
total of US$24.6m. Work in Process (unbilled receivables) increased to US$10.1m in 2011
compared to US$4.4m in 2010. Retentions receivable decreased to US$0.5m compared to
US$3.9m in 2010.
Trade payables have increased significantly to US$6.5m as of year end 2011 compared to
US$4.0m in the preceding year.
In non-current liabilities, the accrual related to employees terminal benefits increased to

US$10.5m from US$9.8m with the additional accrual for the year.
The final dividend for 2011 has been declared in the amount of US$1m.
Retained earnings and other reserves totalled US$25.4m as at the end of 2011 compared to
US$22.8m as at the end of the 2010.
International Financial Reporting Standards (IFRS)
The Consolidated Financial Statements of Norcon and its branches and subsidiary companies
have been audited by PKF Savvides & Co Ltd., the Company's auditor. These consolidated
financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union (EU) under the historical cost
convention.
Marne Martin
Chief Financial Officer

2011 2010
US$ US$
Revenue 66.573.366 68.597.874

Cost of sales (55.889.070) (56.445.691)
10.684.296 12.152.183
Net profit from investing activities 38.127 16.574

Administration expenses (4.536.199) (4.881.176)
Other expenses (316) (269)
Operating profit 6.185.908 7.287.312
Finance costs (770.636) (572.476)

Share of results of associates before tax (1.349) (1.365)
Profit before tax 5.413.923 6.713.471
Tax (1.874.408) (2.421.186)

Net profit for the year 3.539.515 4.292.285
Other comprehensive income - -

Total comprehensive income for the year 3.539.515 4.292.285
Attributable to:
Equity holders of the parent 3.549.685 4.294.586
Minority interest (10.170) (2.301)
3.539.515 4.292.285
Basic earnings per share attributable to equity holders of the

parent (cent) 7,27 9,10
Diluted earnings per share attributable to equity holders of the
parent (cent) 7,27 8,72

31 December 2011
2011 2010
US$ US$
ASSETS
Non‑current assets
Investments in associated undertakings 590.211 591.560
750.168 769.894
Current assets
Trade and other receivables 35.263.743 31.556.403
Cash at bank and in hand 12.456.037 12.075.188
47.719.780 43.631.591
Total assets 48.469.948 44.401.485
Equity
Other reserves 14.670.759 14.569.790
Retained earnings 9.742.457 7.324.122
25.350.316 22.831.012
Non-controlling interests 1.835 12.005

Total equity 25.352.151 22.843.017
Non‑current liabilities
Employees' terminal benefits 10.514.890 9.786.806
10.514.890 9.786.806
Current liabilities
Trade and other payables 6.542.573 3.966.278
Borrowings 5.327.290 6.019.868
Current tax liabilities 733.044 1.785.516
12.602.907 11.771.662
Total liabilities 23.117.797 21.558.468
Total equity and liabilities 48.469.948 44.401.485

2011 2010
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments for:
Depreciation of property, plant and equipment 54.560 53.307
Exchange difference arising on the translation of non-
current assets in foreign currencies (405) (1.033)
Exchange difference arising on the translation and
consolidation of foreign companies' financial statements 121.318 (160.663)
Share of loss from associates 1.349 1.365
Loss from the sale of property, plant and equipment 316 269
Interest income (38.127) (16.574)
Interest expense 268.088 322.657
Expense recognized in comprehensive income in respect
of equity‑settled share‑based payments 0 233.340
Cash flows from operations before working capital

changes 5.821.022 7.146.139
(Increase)/ Decrease in trade and other receivables (3.707.340) 6.437.074
Increase/(Decrease) in trade and other payables 2.576.295 (8.892.670)
Increase in employees' terminal benefits 728.084 2.486.311
Cash flows from operations 5.418.061 7.176.854
Tax paid (2.926.880) (2.684.498)
Net cash flows from operating activities 2.491.181 4.492.356
CASH FLOWS FROM INVESTING ACTIVITIES

Payment for purchase of property, plant and equipment (40.172) (137.607)
Proceeds from disposal of property, plant and equipment 4.078 -
Net cash flows from / (used in) investing activities 2.033 (121.033)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of share capital - 6.361.266
Repayments of borrowings (610.341) (501.208)
Interest paid (268.088) (322.657)
Dividends paid (1.151.699) (4.860.000)
Net cash flows (used in) / from financing activities (2.030.128) 677.401
Net increase in cash and cash equivalents 463.086 5.048.724

Cash and cash equivalents:
At beginning of the year 11.992.951 6.944.227
At end of the year 12.456.037 11.992.951
Selected notes to the accounts
1. Incorporation and principal activities
Country of incorporation
The Company NORCON PLC (the ''Company'') was incorporated in the Isle of Man on 2 June
2008, as a company limited by shares under the Isle of Man companies act 2006. On the 28
July 2008, the company became public and had been admitted for trading at the AIM of the
London Stock Exchange. Its registered office is at Fort Anne, Douglas, IM1 5PD, Isle of Man.
The principal activities of the Group, which are unchanged from last year, and are the provision
of project management and outsourcing services as well as consulting engineers. The Group
comprises of the holding company Norcon PLC, registered in the Isle of Man, the subsidiary
company Norconsult Telematics Limited, registered in Cyprus (which includes
branches/operations in Saudi Arabia, U.A.E. Abu Dhabi, Kuwait, Indonesia and Malaysia) and
its subsidiary companies Norconsult Telematics and Company LLC registered in the Sultanate
of Oman, Norconsult Telematics AS registered in Norway, Norcon Global Management &
Consulting Ltd registered in Cyprus, Norconsult Telematics Integrated Solution Co. Ltd
registered in the Republic of Sudan (dormant), Norconsult Telematics Ltd registered in
Southern Sudan (dormant) and the associate company Norconsult Telematics (Saudi) Ltd
registered in the Kingdom of Saudi Arabia.
In 2011 the Group has operated in the following countries: Saudi Arabia, Indonesia, Kuwait,
UAE Abu Dhabi, Oman, Malaysia, Norway, Russia, Ukraine, Sweden and Thailand.
The principal accounting policies adopted in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all years
presented in these consolidated financial statements unless otherwise stated.
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) . The
consolidated financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain
critical accounting estimates and requires Management to exercise its judgment in the process
of applying the Group's accounting policies. It also requires the use of assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Although these estimates are based on Management's best
knowledge of current events and actions, actual results may ultimately differ from those
estimates.
Adoption of new and revised IFRSs
During the current period the Group adopted all the new and revised IFRSs and International
Accounting Standards (IAS), which are relevant to its operations.
At the date of authorisation of these financial statements some Standards were in issue but not
yet effective. The Board of Directors expects that the adoption of these Standards in future
periods will not have a material effect on the consolidated financial statements of the Group
The consolidated entity operates in one business segment (telecommunications, IT and

defence systems consulting) for primary reporting and three geographical segments for
secondary reporting being as follows: Europe, Middle East and Asia.
2011 Europe Middle East Asia Total

US$ US$ US$ US$
Results
Income for the year (1.560.153) 4.549.799 560.039 3.549.685
Assets and Liabilities
Segment assets 2.116.264 44.800.553 1.553.131 48.469.948
Segment liabilities (376.100) (21.470.422) (1.271.275) (23.117.797)
Other segment information
Acquisition/(disposal) of fixed
assets (3.150) 26.241 - 23.091
Depreciation 3.071 51.424 65 54.560
Net cash flow (2.106.108) 2.647.428 (78.234) 463.086
2010 Europe Middle East Asia Total

US$ US$ US$ US$
Results
Income for the year (2.784.282) 6.903.808 175.062 4.294.586
Segment assets 4.220.726 39.724.357 456.402 44.401.485
Segment liabilities (383.215) (20.328.805) (846.448) (21.558.468)
Other segment information
Acquisition/(disposal) of fixed
assets (1.066) 133.597 - 132.531
Depreciation 5.287 46.052 1.968 53.307
Net cash flow 1.961.705 3.128.260 (41.241) 5.048.724
4. Tax
2011 2010
US$ US$
Overseas tax 1.869.820 2.419.326
Defence contribution ‑ current year 4.588 1.860
Charge for the year 1.874.408 2.421.186
The tax on the Group's profit before tax differs from the theoretical amount that would arise
using the applicable tax rates as follows:
2011 2010
US$ US$
Tax calculated at the applicable tax rates 541.392 671.347

Tax effect of allowances and income not subject to tax (541.392) (671.347)
Defence contribution current year 4.588 1.860
Overseas tax during the year 1.869.820 2.419.326
Tax charge 1.874.408 2.421.186
2011 2010
Corporation tax by country of operations: US$ US$
Corporation tax for Kuwait 299.409 371.721
Corporation tax for Saudi Arabia 1.114.772 1.876.221
Corporation tax for South East Asia 417.286 128.865
Corporation tax for Malaysia 3.601 ‑
Corporation tax for Norway 31.914 42.519
Corporation tax for Oman 2.838 ‑
1.869.820 2.419.326
The corporation tax rate is 10%. The Board of Directors has decided to register the company
as a Cyprus tax resident, as it is deemed that the management and control of the company is
exercised in Cyprus. In this respect tax computation under Cyprus tax law has been prepared.
Under certain conditions interest income may be subject to defence contribution at the rate of
15% (10% to 30 August 2011). In such cases this interest will be exempt from corporation tax.
In certain cases, dividends received from abroad may be subject to defence contribution at the
rate of 20% for the tax years 2012 and 2013 and 17% for 2014 and thereafter (in 2011 the rate
was 15% up to 30 August 2011 and 17% thereafter).
Income tax on the Saudi Arabia branch has been provided on the estimated taxable profit at
20% (2010: 20%).
Income tax on the Kuwait branch has been provided on the estimated taxable profit at 15%
(2010: 15%).
Income tax on the SE Asia Operations branch has been provided on the estimated taxable
profit at 25% plus 20% on the profit after tax ‑ repatriation of profits (2010: 28% plus 20% on
the profit after tax ‑ repatriation of profits)
Income tax of the Malaysia branch has been provided on the estimated taxable profit at 25%.
The subsidiary company in Norway is subject to 28% tax of its income.
The subsidiary company in Oman is subject to income tax at the rate of 12% on taxable
income in excess of RO30.000.
5. Profit per share attributable to equity holders of the parent
Basic earnings per share 2011 2010

Profit attributable to shareholders (US$) 3.549.685 4.294.586
Weighted average number of ordinary shares in issue during the

year 48.800.808 47.174.875
Basic earnings per share (cent) 7,27 9,10
Diluted earnings per share 2011 2010
Profit attributable to shareholders (US$) 3.549.685 4.294.586

Ordinary shares issued 48.800.808 48.800.808
Shares deemed to be issued:
Warrants (note) - 411.232
48.800.808 49.212.040
Diluted earnings per share (cent) 7,27 8,72
Note: The warrants expired on 28 July 2011 without been exercised.
6. Dividends
2011 2010
US$ US$
Final dividend paid 1.151.699 4.860.000
1.151.699 4.860.000
In October 2011, the Board of Directors paid dividend of US$1.151.699 out of the 2010
profits.
Dividends are subject to a deduction of special contribution for defence at the rate of 17% (15%
to 30 August 2011) for individual shareholders that are resident in Cyprus. Dividends payable to
non‑residents of Cyprus are not subject to such a deduction.
7. Trade and other receivables
2011 2010
US$ US$
Trade receivables 20.477.765 20.188.922
Retentions receivable 499.875 3.903.438
Unbilled receivables 10.119.654 4.425.238
Directors' current accounts ‑ debit balances - 70.889
Deposits and prepayments 956.863 788.097
Other receivables 3.208.262 2.179.819
Refundable VAT 1.324 -
35.263.743 31.556.403
As at 31 December, the ageing of trade receivables is as follows:
2011 2010
US$ US$
Up to 30 days 5.668.793 9.277.692
31‑ 60 days 4.078.105 5.268.148
61‑ 90 days 2.259.587 4.612.564
91‑120 days 1.736.170 631.473
More than 120 days 6.735.110 399.045
20.477.765 20.188.922
The fair values of trade and other receivables due within one year approximate to their carrying
amounts as presented above.
8. Trade and other payables
2011 2010
US$ US$
Trade payables 4.031.880 1.272.127
Directors' current accounts ‑ credit balances 650 449
Accruals 1.460.015 2.231.711
Other creditors 1.050.028 461.991
6.542.573 3.966.278
The fair values of trade and other payables due within one year approximate to their carrying
amounts as presented above.
The banker of the Group's Saudi Arabia branch has given bank guarantees limited to the
equivalent of US$6.156.450 (2010:US$6.303.153) in respect of contract performance.
Letters of guarantee (Performance Bonds) for the Group's operations in UAE amounting to
US$2.602.200 (2010:US$1.220.400) were in issue as at 31st December 2011. An amount of
US$650.550 (which represents 25% of the performance bond) is blocked from the branch's
bank balances as security for the issue of this performance bond with the remaining balance
being secured by the issue of a corporate guarantee from the branch's ultimate holding
company Norcon Plc. Also a letter of guarantee for AED50.000 for the registration of the
Norconsult Abu Dhabi branch was in issue as at 31st December 2011 (2010:AED50.000).
A bank guarantee amounting to US$242.181 ‑ RO93.000 (2010:US$33.854 ‑RO 13.000) was

issued by the Group's subsidiary in Oman.
10. Annual accounts
Annual accounts for the year ended 31 December 2011 will be sent to shareholders shortly and
will be available to view from the Company's website, www.norconplc.com

END
FR SFMFWEFESEDL
5/24/13 Norcon PLC | Interim Results | FE InvestEgate
Norcon PLC
Interim Results
RNS Number : 6936M
Norcon PLC
20 September 2012
20 September 2012
NORCON PLC
INTERIM RESULTS
For the six month period ended 30 June 2012
Norcon plc (LSE/AIM: NCON), the global communications network specialist

announces unaudited interim results for the six months ended 30 June 2012 (the
"Interim Period"). As highlighted in the Company's announcement of 17
September, results for the period reflect slower than anticipated growth in certain
new projects during the first half, combined with planned expansion investments
designed to spur growth from 2013 onwards.
FINANCIAL HEADLINES:
· Revenue of US$25.3m (H1 2011: US$35.9m)

· Gross profit of US$2.9m (H1 2011: US$6.0m)
· Loss after tax of (US$0.5m) (H1 2011: US$2.4m profit)
· Negative net cash balance of US$1.5m (30 June 2011: US$1.1m net cash)
o Significant proportion of outstanding balances collected post period
end
o Net cash improved by US$7.5m since period end
· Pro forma loss per share of (US$0.01) (H1 2011: US$0.05 profit)
OPERATIONAL HEADLINES:
· Delays in the commencement of certain projects have held back revenue and
profit growth, albeit the turnover for the first half is broadly in line with
expectations:
o Slower than anticipated ramp of 4G projects in key Middle East
marketplace, but with multi-year contracts now in place
o Some delay in the roll-out of other international projects that are now
being worked through and supported by new hires
· Long-term diversification strategy remains unchanged, with important
investments made this half in key hires and expansion opportunities

o Steve Preston appointed as CEO Norconsult Telematics in June, and
now acting CEO of Norcon plc as of 17 September
o Steve Barnett appointed General Manager Saudi Arabia in April
o Appointment, post period end, of Neil Manson as General Manager
UK/Europe
· Geographical and service line growth have remained key priorities in H1:
o New client engagements secured in Southeast Asia
o First two telecom client engagements secured in the US marketplace
o Pipeline in Middle East, Africa and Europe continues to strengthen
· Strong client retention record maintained and developments in the telecom
industry continue to support demand for Norcon's specialised telecom
services
Commenting on the results, Norcon's Chairman, Trond Tostrup, said:
"This first half performance reflects a combination of factors which have served to
significantly impact our profitability in the short term. We continue to believe
strongly in our opportunity to secure profitable and sustainable growth by
expanding in to growth markets and new services. We have pushed ahead with
our investments in that opportunity, expanding our presence in to the US and
continuing to win important mandates in Southeast Asia.
Those investments, however, have come alongside delays to certain new

projects, thereby reducing our margins. We are taking important steps to improve
our performance in our core market in the Middle East, while at the same time,
continue to expect that the investments made in expansion will deliver returns
from 2013 onwards."
CONTACTS:
Norcon plc
Steve Preston, Acting Chief Executive Officer +971 90 11 66 90
Marne Martin, Chief Financial Officer +44 (0) 75 31 12 80 76
FTI Consulting LLP

Matt Dixon or Tracey Bowditch +44 (0) 20 7831 3113
finnCap
Charlotte Stranner, Stuart Andrews +44 (0) 20 7220 0500
ABOUT NORCON:
Established in 1957, Norcon (LSE/AIM: NCON) has been a trusted consultant and
project manager for more than half a century to governments and some of the
world's largest global firms. These organisations rely on Norcon to select,
implement and maintain a communication infrastructure that not only matches, but
also supports the critical needs of their operations. Norcon's strength lies in its
understanding of complex communication networks and their design.
www.norconplc.com
INTERIM STATEMENT FROM THE ACTING CEO, STEVE PRESTON
Overview
Results for this first half paint a mixed picture. At one level, we have continued to
push ahead with our diversification plans, investing in geographies where we see
long term growth potential, and hiring skilled and experienced staff who we believe
can help us to take advantage of that potential. At the same time, however, our
expansion efforts have come alongside certain negative factors that have served
to depress our profitability in the first half.
First, we have seen some delay in the commencement of certain new projects
outside of our core Middle East marketplace. Secondly, we have incurred
additional costs in a key Middle East geography as we moved through a transition
from the close out of completed projects to the commencement of new contracts
won there. These new contracts have been secured with our main client in that
geography and are multi-year in their nature, continuing into 2013 and lending
some degree of stability to our business there. These contracts, however, come
at the same time as a management transition within this client, resulting in less
revenue visibility than we are typically used to and to some delay in the collection
of past receivables.
As a consequence, we have redoubled our efforts to diversify our client base,

specifically in the Middle East, in 2013. We continue to believe very strongly that
the need for our widening services portfolio remains robust, particularly within our
longer term client relationships as they implement the next generation of
technologies (LTE/4G) and Fiber to the Home. As such, these short term delays
do not dilute the importance of the expansion efforts we have undertaken.
However, they have resulted in a short term impact on our profitability, which our
team is now working hard to address.
Our efforts to address this impact may not bear fruit in 2012 and, as such, 2013 is
expected to be a stronger year in terms of profitability.
Operations
The efforts begun several years ago to diversify the business in to new
geographies continue to bear fruit. In this first half we have generated exciting new
business for the Company, most notably in the USA where our newly established
NGMC brand has secured its first two telecom clients in the US. This telecom
services market working for the equipment vendors primarily is exciting as it
broadens Norcon's industry reach. While many of Norcon's competitors carry out
the largest percentage of their work for equipment vendors, Norcon has historically
worked primarily with the operators directly. This strategy overall is continuing, but
with the addition of a new segment of business in NGMC.
Our team has also won a substantial new project in Indonesia and a smaller
project with an equipment vendor that was successfully converted from the
pipeline also in Southeast Asia. This is very positive and strategic for that region
as, after many years and a successful conclusion to our projects there, our
existing engagement in Indonesia is set to end this month. Additional substantial
projects are in the pipeline and we are hopeful that some will be converted in the
Middle East and in Europe before year end 2012.
The Company has also been successful in renewing key contracts in core Middle
East markets and we remain committed to and excited by the opportunities that
exist in this region. However, the volume of business derived from the Middle East
has declined in 2012 as expected, chiefly as a result of factors in the Middle East
where the Company successfully closed a number of the legacy projects but saw
delays in the expected ramp up of new 4G projects in core and other markets. As
a positive, the larger contracts that have been won in the Middle East and
Southeast Asia so far this year are multi-year ones that continue into 2013. Cash
receipts have improved in the Middle East in the second half of the year post-
Ramadan, as they similarly did last year.
Performance
The difficult economic conditions globally have meant that new client wins, other
than in the US, have been delayed for longer than originally anticipated. The
resultant effects of the "Arab Spring" have also had an impact in certain markets.
While the Company continues to have a strong position in the Middle East as a
whole, the overall revenue and profit performance from our largest Middle East
branch in this interim period was reduced compared to the first half of 2011.
Consequently, the Company delivered a decreased turnover in H1 2012 of
US$25.3m (H1 2011: US$35.9m).
Gross margin also declined between interim periods from 18% to 11% due to the
costs of starting new projects, extenuation of the sales cycle and the decreased
margin seen in the first half of 2012 from the Company's largest Middle East
branch for reasons outlined above. The Company's focus continues to rest on
delivering long-term, profitable growth for our shareholders.
Investing for future growth
Norcon has continued to pursue its strategy of revenue diversification and this
remains our long-term goal. An important part of pursuing this growth is ensuring
that we have the personnel necessary to capitalise on it.
As such, we have continued to invest in building our business for the future,
through making key hires. We are especially pleased to announce that Neil
Manson joined the Com pany in August as the General Manager UK/Europe. This
hire, along with previous significant hires the Company made in 2012, will allow us
to continue our strategic initiatives during the course of 2013.
The hires we have made are beginning to make a significant impact on the
business and we continue to believe that the Company will reap the full benefits of
these investments from 2013 and onward, as planned.
Dividend
Payment of the final 2011 dividend will come on 26 October.
The Board does not intend to pay an interim dividend.
People
On behalf of myself and Arnold, I would like to thank all of our Norcon employees
for their continued commitment this half. I am confident that their on-going efforts
will contribute to renewed business successes in the months ahead.
I would also like, on behalf of the Board, to reiterate our thanks to Marne Martin for
her commitment to Norcon and its development in these past five years. We wish
her well in her return to her native USA.
Outlook
At the date of these results, we continue to believe strongly in our opportunity to

secure profitable and sustainable long-term growth by expanding in to growth
markets and new services. We have pushed ahead with our investments in that
opportunity, expanding our presence in to the US and continue to win important
mandates in Southeast Asia and elsewhere.
However, as a result of the factors experienced in the first half of this year, we
have for 2012 as a whole, reduced our expectations. These adjustments have
been based on the forecasting process outlined in our announcement of 17
September. We remain confident that the investments we have made this year will
reap benefits in 2013 and beyond and that our continued focus on the
development and diversification of our business will deliver long term, sustainable
returns.
Steve Preston
Acting Chief Executive Officer
20 September 2012
FINANCIAL REVIEW
Summary
Turnover for the Company during the period was US$25.3m in H1 2012,
compared to US$35.9m in H1 2011. This reduction is chiefly due to the decrease
seen in revenue from the Company's largest Middle East branch when compared
to the same period last year.
Gross profit stood at US$2.9m for the Interim Period compared to US$6.0m in H1
2011. The gross margin of 11% is reduced from 18% in the prior year, again
chiefly due to the decrease in profitability within the Company's largest Middle East
branch and which was too significant to be offset by higher margin projects
elsewhere.
Margins for the newest and most recently secured projects are healthy and as
such the full year gross margin is expected to improve somewhat during the year.
Profit before tax was breakeven for the Interim Period compared to the 2011
interim figure of US$3.3m.
Taxes were accrued of approximately US$0.5m given the applicable taxation in the
profitable branches. The loss after tax is therefore US$0.5m for the Interim Period
compared to the 2011 interim result of US$2.4m largely due to the front-loaded
expenses paid in H1 and the cost of the new hires.
Pro forma loss per share of US$0.01 for the Interim Period compares to the
US$0.05 earnings per share for the first half of 2011 using the same weighted
average share base.
Costs
Costs of Sales totalled US$22.5m for the period compared to a 2011 interim figure
of US$29.9m.
General, administrative and financial expenses totalled US$2.8m for the period,
increased when compared to the 2011 interim figure of US$2.7m by the new hires
and some start-up expenses of the new subsidiaries.
Cash Flow
Cash flow from operations was negative for the period given the large increase in
accounts receivable. As explained below, significant funds have been collected
since the end of the period and operational cash flow has significantly
strengthened in the last few months as a result.
Balance Sheet
At 30 June net cash was negative in the amount of US$1.5m, compared to a

positive net cash figure of US$1.1m. Net cash has improved by US$7.5m since
period end.
Accounts receivable and prepayment balances (including work in process)

remained quite similar in the amount of US$43.0m as at 30 June 2012 compared
to the US$43.9m at half year in 2011. Of the amount as at 30 June 2012,
US$3.2m has been outstanding for more than a year. Significant amounts were
again collected in the summer months since the half year, as reflected in the
improving net cash balances.
Trade and other accounts payable likewise decreased to US$6.9m from US$9.4m
at half year 2011.
The Company's current ratio has decreased from 2.9 at the half year 2011 to 2.8
as at the end of this Interim Period.
The provision for employees' terminal (end of service severance) benefits

decreased slightly to US$9.8m at 30 June 2012 from US$9.9 in 2011, and
decreased significantly by approximately US$2.0m since the half year given the
departure of certain senior personnel.
A Consolidated Statement of Changes to Equity is provided in the unaudited tables

appended to this announcement.
Taxation
Taxes were accrued in the amount of US$0.5m, a reduction on the US$0.9m in

the comparative period last year even though consolidated profit before tax was
approximately zero. This is due to the applicable rate of in-country taxation in the
profitable branches.
Foreign Exchange
Foreign exchange losses in the period were within range and small. The Company
is continuing its policy of denominating revenue and expenses either in the local
currency if pegged to the US dollar or in US dollars to the extent feasible.
The Interim Consolidated Financial Statements of Norcon and its branches and
subsidiary companies ("Norcon Group") are prepared in conformity with all IFRS
Standards (International Financial Reporting Standards, formerly International
Accounting Standards) and Interpretations of the IASB (International Accounting
Standards Board). The same accounting and valuation method as was used for
the 2011 Annual Consolidated Financial Statements was applied. The Interim
Consolidated Financial Statements have not been audited.
As outlined in our announcement of 18 July, I will be transitioning my duties as

Finance Director in order to facilitate a return to my family in the USA. These
duties will be assumed in the interim by the Company's established and
experienced financial team in Cyprus, which will continue to run the finance
function whilst the Board works through its succession planning with regard to the
Finance Director role.
Marne Martin
20 September 2012
FINANCIAL INFORMATION ON NORCON PLC

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2012
6 Months 6 Months
to 30 June to 30 June
2012 2011
US$'000 US$'000
Turnover 25,334 35,878
Cost of sales (22,473) (29,911)
───── ─────
Operating and administrative expenses (2,436) (2,171)
───── ─────
Profit from operations 425 3,796
Depreciation (30) (26)
Finance income/(expense) (383) (500)
───── ─────
Profit before tax 12 3,270
Minority provision (40) -
Income tax expense (429) (858)
───── ─────
Loss/Profit for the half year (457) 2,412
═════ ═════
═════ ═════
US$ US$
Pro forma loss/earnings per share (note r) (0.1) 0.05
═════ ═════
As At 30 As At 30
June 2012 June 2011
US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 160 164
Investments 88 88
Investment in associate 591 592
───── ─────
839 844
───── ─────
Current assets
Work in progress 7,508 28,886
───── ─────
53,069 52,315
───── ─────
Total assets 53,908 53,159
═════ ═════
CONSOLIDATED BALANCE SHEET(Continued)
As At 30 As At 30
June 2012 June 2011
US$'000 US$'000
Share capital 937 937
Legal/LTIP reserve 800 800
Retained earnings* 23,183 23,506
───── ─────
Equity attributable to the equity
holders 24,920 25,243
Minority interest 43 11
───── ─────
24,963 25,255
Provision for employees' terminal benefits 9,809 9,860
───── ─────
Current liabilities
Income tax payable 640 1,373
Short-term loan 11,565 7,288
───── ─────
19,136 18,045
───── ─────
═════ ═════
*see Consolidated Statement of Changes in Equity for more detail.
6 Months 6 Months
to 30 to 30 June
June 2012 2011
US$'000 US$'000
Profit for the year before taxation 12 3,270
Adjustments for:
Depreciation 30 26
Movement in provision for employees' terminal
benefits (706) 73
Movement in foreign exchange/LTIP/other
reserves (20) 43
───── ─────
Operating (loss)/profit before working capital changes (684) 3,412
Increase in receivables/work in progress (7,808) (12,422)
Increase in creditors 379 5,417
───── ─────
Cash generated from operations (8,113) (3,593)
Income tax paid and other items (464) (1,231)
───── ─────
Net cash generated from operating activities (8,577) (4,824)
───── ─────
Payments to acquire fixed assets (40) (13)
───── ─────
Net cash used in investing activities (40) (13)
───── ─────
Net proceeds from borrowing 3,485 (1,628)
Net interest paid - (81)
───── ─────
Net cash used in financing activities 3,485 (1,709)
───── ─────
CONSOLIDATED CASH FLOW STATEMENT (Continued)
6 Months 6 Months
to 30 June to 30 June
2012 2011
US$'000 US$'000
( 5,132) ( 6,546)
Net decrease in cash and cash equivalents
2,752 2,978
Overdraft facility
Cash and cash equivalents at 1 January 12,456 11,993
───── ─────
Cash and cash equivalent at 30 June 10,076 8,425
═════ ═════
Share Retained Other Minority Total

Capital earnings reserves Total interest equity
US$'000
US$'000 US$'000 US$'000 US$'000 US$'000
As at 31
December
2011 937 9,742 14,671 25,350 3 25,353
Net profit
for the half
year - (457) - (457) 40 (417)
Other
activity - - 27 27 - (27)
Declared
dividend - - - - - -
───── ───── ───── ───── ───── ─────
As at 30
June 2012 937 9,285 14,698 24,920 43 24,963
═════ ═════ ═════ ═════ ═════ ═════
NOTES TO THE FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial information is based on the consolidated financial statements of the

Group which have been prepared under the historical cost convention and in
accordance with International Financial Reporting Standards. The Group for the
2012 half year results was composed of those branches and entities (including
Norconsult Telematics, Ltd.) under Norcon plc, the entity created on 2 June 2008
for the purpose of facilitating the listing on AIM on 28 July 2008. Norcon plc owns
100% of Norconsult Telematics, Ltd. The Group entities are unchanged from the
prior period, other than the creating of a subsidiary in the USA, a branch in
Malaysia, and a branch in the UK. A subsidiary in the UK was opened post-period
end.
The principal accounting policies that are followed by the Group are shown below
for a better understanding and evaluation of the financial statements.
a) Basis of preparation
The Interim Consolidated Financial Statements of Norcon and its branches and
subsidiary companies ("Norcon Group") are prepared in conformity with all IFRS
Standards (International Financial Reporting Standards, formerly International
Accounting Standards) and Interpretations of the IASB (International Accounting
Standards Board).
Significant inter-branch balances are eliminated. The financial statements are

prepared in United States Dollars.
b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the

Company, its branches, subsidiaries and associates.
For this purpose a subsidiary is an entity in which the controlling interest is more
than 50% of the voting power and where the company has the power to govern the
financial and operating policies so as to obtain benefits from its activities.
An associate is an entity over which the Group has significant influence and that is
neither a subsidiary nor an interest in a joint venture. Significant influence is the
power to participate in the financial and operating policy decisions of the investee
but without control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting, except when the
investment is classified as held for sale.
The results or subsidiaries acquired or disposed of during the year are included in
the consolidated income statement from the effective date of acquisition or up to
the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of

subsidiaries to bring their accounting policies into line with those used by other
members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on

consolidation.
Minority interests in the net assets (excluding goodwill) of consolidated

subsidiaries are identified separately from the Group's equity therein. Minority
interests consist of the amount of those interests at the date of the original
business combination and the minority's interest in the subsidiary's equity are
allocated against the interests of the Group except to the extent that the minority
has a binding obligation and is able to make an additional investment to cover the
losses.
Goodwill arising on the acquisition of the subsidiaries and associate is recognised

as an asset. The excess of the acquirer's interest in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities over cost is
recognised in the income statement in the year of acquisition. The Group annually
reviews goodwill arising on the acquisition of subsidiaries for any impairment. If
impairment occurs, this is transferred to the income statement.
c) Significant accounting estimates and assumptions
The preparation of financial statements in conformity with IFRS requires the use of
certain critical accounting estimates and judgements. It also requires
management to exercise judgment in the process of applying the Company's
accounting policies. Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Management
anticipates that any estimates and judgements made do not have a material effect
on the results.
d) Foreign exchange
The individual financial statements of each Group entity are presented in the
currency of the primary economic environment in which the entity operates (its
functional currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group entity are expressed in United States
Dollars, which is the functional and presentational currency of the Group.
In preparing the financial statements of the individual entities, transactions in

currencies other than the entity's functional currency (foreign currencies) are
recorded at the rates of exchange prevailing at the dates of the transactions. At
each balance sheet date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the balance sheet date. Non-monetary items
carried at fair value that are denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences are recognised in the income statement in the period in

which they arise.
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are expressed in United States dollars
using exchange rates prevailing at the balance sheet date. Income and expense
items are translated at the average exchange rates for the period, unless
exchange rates fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences
arising, if any, are classified as equity and recognised in the Group's foreign
currency translation reserve. Such exchange differences are recognised in the
income statement in the period in which the foreign operation is disposed of.
e) Revenue recognition
Revenue from a contract to provide services is recognised by reference to the

progress of completion of the contract based on the provisions of each contract.
Revenue from time and material contracts is recognised at the contractual rates
as labour hours are delivered and direct expenses are incurred.
f) Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any
accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets, other

than land and properties under construction, over the estimated useful lives, using
the straight line method.
The estimated useful lives of the assets are as follows:
Months
Furniture, fittings and equipment 15 - 33%
Computer hardware and software 15 - 33%
Motor vehicle 20%
The gain or loss arising on the disposal or retirement of an item of property, plant
and equipment is determined as the difference between the sales proceeds and
the carrying amount of the asset and is recognised in the income statement.
g) Taxation
Tax is calculated as follows:
The current and deferred taxation are recognized as income or expense for the
year.
The provision for income tax and special defence contribution for the year is
calculated in accordance with the Income Tax Laws. Deferred taxation is
calculated on the basis of the rates ruling at the balance sheet date.
The debit balances of the deferred taxation arriving from deductible temporary
differences are recognised to the extent of the anticipated taxable profits.
h) Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the assets is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the
cash generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be

less than its carrying amount, the carrying amount of the asset (or cash-
generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in the income statement, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
i) Financial assets and trade receivables
The Group does not have any financial assets other than trade receivables.
Trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as loans and
receivables. Loans and receivables are measured at cost, less any impairment.
Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
j) Financial liabilities and equity instruments issued by the Group
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity
in accordance with the substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the

assets of an entity after deducting all of its liabilities. Equity instruments issued by
the Company are recorded at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial liabilities 'at fair value through
profit or loss' or 'other financial liabilities'. The Group does not have any financial
liabilities 'at fair value through profit or loss'.
Other financial liabilities, including borrowings, are initially measured at fair value,
net of transaction costs.
Other financial liabilities are subsequently measured at cost with interest expense
recognised on an effective yield basis.
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
k) Provisions
Provisions are recognised when the Group has a present obligation as a result of
a past event and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the amount of
the receivable can be measured reliably.
l) Employees' terminal benefits
Provision is made for amounts payable under applicable local laws and
regulations and employment contracts applicable to employees' accumulated
period of service at the balance sheet date. The provision at the year-end is
calculated by reference to the benefit accrued at that date.
m) Work in progress
Contract work in progress is calculated at cost, plus attributable profit, less the
amount received or receivable as progress payments.
n) Contingent liabilities
Contingent liabilities are disclosed if the confirmation of the expense or loss is

considered possible from future events.
o) Segmental reporting
A segment is a component of the Group distinguishable by economic activity

(business segment) or by its geographical location (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
p) Post balance sheet events
Current assets and liabilities of the company are adjusted to reflect any post
balance sheet events and include additional information for amounts calculated on
the basis ruling at the balance sheet date.
q) Turnover
Value of work executed represents engineering consultancy work executed in the

company's operating markets, stated at invoiced value net of discounts.
r) Earnings/Loss per share
The following reflects the income and share data used in calculating basic and
diluted earnings per share.
Period End:
30 June 30 June
2012 2011
US$'000 US$'000
(457,397) 2,776,007
Profit for the period
═════ ═════
Weighted average number of ordinary
shares used in the Calculation of EPS
(No.) 48,800,808 44,582,832
═════ ═════
US$ US$
Pro forma loss earnings per share (EPS) (0.01) 0.06
═════ ═════
Weighted average number of ordinary
shares used in the Calculation of EPS
(No.) 48,800,808 44,582,832
═════ ═════
US$ US$
(Pro forma loss) / earnings per share
(EPS) (0.01) 0.05
═════ ═════
There is no dilution applicable to the 2012 interim results. The fully diluted EPS as
of 30 June 2011 was likewise US$0.05. The last tranche of the LTIP plan expired
un-earned at the end of 2011. The outstanding warrants in the amount equivalent
to 411,231 ordinary shares were issued to JM Finn Capital Markets Limited in
relation to the admission to AIM as of 28 July 2008 expired as of 28 July 2011.
s) Investment in associates/Investments
The investment in associate relates to the Group's 50% interest in NT Saudi, Ltd.,
a dormant entity. The investment related to amounts in the Kuwaiti investment
fund invested as per the Kuwaiti offset requirement.
t) Short-term loan
The short term loan is secured over the assignment of certain trade receivable
invoices. It carries interest at commercial rates and is repayable within one year.
u) Contingent liabilities
Letters of guarantee for the Company's branch in Saudi

Arabia related to the Saudi Zakat tax amounting to US$6,190,166 were in issue as
at 30 June 2012 (2011: Tax - US$5,181,107 - Bid Bond US$123,333) in respect of
contract performance.
A letter of guarantee for the Company's subsidiary in Oman amounting to US$

242.181-RO93.000 (2011: US$ 0-RO0) was issued as at 30 June 2012..
A letter of guarantee (Performance Bond) for the Company's branch in UAE

amounting to US$2,602,400 was in issue as at 30 June 2011 (2010:
US$1,220,400). An amount of US$650.550 (which represents 25% of the
performance bond) is blocked from the branch's bank balances as security for the
issue of this performance bond with the remaining balance being secured by the
issue of a corporate guarantee from the Branch's ultimate holding company
Norcon Plc. The guarantee in 2011 was 50% secured with a counter guarantee
from a Cyprus bank.
A letter of guarantee for AED50.000 for the registration of the Norconsult Abu
Dhabi branch was in issue as at 30 June 2011 (2010: AED50,000).
v) Financial instruments and risk management
Financial instruments consist of financial assets and financial liabilities. Financial

assets and financial liabilities are recognised on the Group's balance sheet when
the Group becomes a party to the contractual provisions of the instrument.
Financial assets of the Group include investments, cash and cash equivalents,
deposits and receivables.
Financial liabilities of the Group include payables, bank overdraft and other
creditors and accrued liabilities.
The risks involved with financial instruments and the Group's approach to
controlling such risks are explained below:
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, which includes

borrowings, cash and cash equivalents and equity attributable to equity
holders of the parent, comprising issued capital, reserves and retained
earnings as disclosed the statement of changes in equity.
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate
due to changes in foreign exchange rates. The Group's functional
currency is the United States Dollar. The Group does not have significant
exposure in other currencies, other than those recognised and disclosed in
the Financial Statements. The exchange rate for the majority of the
receivables is fixed (i.e. Saudi Arabia) or denominated in United States
Dollars.
Market risk
Market risk is the risk that the value of a financial instrument will fluctuate
as a result of changes in market conditions. The Group is exposed to
market risk with respect to its investments and receivables.
The Group limits its market risk by maintaining a conservative investment

portfolio and continuously monitoring the related factors which affect their
valuation.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates.
The Group has time deposits that are subject to interest rate risk. Interest
rate risk to the Group is the risk of changes in market interest rates
reducing the overall return on its interest bearing time deposits. The Group
limits interest rate risk by following up changes in interest rates in the
currencies in which its time deposits are denominated.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to
discharge an obligation and cause the other party to incur a financial loss.
The Group employs certain policies and procedures in order to maintain
credit risk exposures within reasonable limits.
The Group monitors receivables on an on-going basis and continuously

follows up outstanding balances for collection.
The credit risk on liquid funds is limited, as the counter parties are well
known banks, with high credit rating by international credit rating agencies.
The maximum exposure to credit risk for the Group is represented by the
carrying amount of each financial asset as disclosed in the financial
statements.
Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in raising
funds to meet commitments associated with financial liabilities. Liquidity
requirements are monitored on a regular basis and management is
confident that sufficient funds are available to meet any commitments as
they may arise.
w) Fair value
Fair value is the amount for which an asset could be exchanged or a liability
settled between knowledgeable, willing parties in an arm's length transaction.
The fair value of assets and liabilities, approximate their carrying values at the
balance sheet date, assuming the company will continue as a going concern
without any intention or need to liquidate, undertake transactions on adverse terms
or materially discontinue its operations.
x) A copy of this announcement is available from the Company's website

www.norconplc.com.

END
IR FKLLFLKFLBBQ
Norcon PLC
Final Results
RNS Number : 9988C
Norcon PLC
23 April 2013
Norcon plc
FINAL RESULTS
For the twelve months ended 31 December 2012
Norcon plc (LSE/AIM: NCON), the global communications network specialist, is

pleased to announce audited results for the financial year ended 31 December
2012. Despite a decline in annual revenues, driven mainly by a slower uptake and
ramp-up of 4G projects in the Middle East during H2, the long-term investment
strategy continued with the engagement of key hires, diversification into new
markets and the expansion of the services portfolio. The combination of these
investments is re-positioning the business to secure a wider customer base in a
more diverse geography set.
· Revenue of US$49.6m (FY 2011: US$66.6m)

· Operating profits of US$0.3m (FY 2011: US$6.2m)
· (Loss)/Profit before tax of US$(0.6m) (FY 2011: US$5.4m)
· (Loss)/Profit after tax of US$(1.7m) (FY 2011: US$3.5m)
· Cash at year-end US$11.0m, of which unrestricted balance is US$4.2m
· Pro forma (loss)/earnings per share on a basic basis of US$(0.03) (FY
2011: US$0.07) with 48,800,808 shares in issue at year end.
OPERATIONAL HIGHLIGHTS
· New CEO and senior management sourced and appointed across the
Norconsult Telematics business.
· Two new business operations started in North America and Europe with
new orders obtained across both.
· Services product portfolio enhanced and extended into Engineering based
solutions.
· New client engagements secured in Asia utilising the combination of
www.investegate.co.uk/ArticlePrint.aspx?id=201304231130029988C 1/12
legacy and newly developed services.
OUTLOOK
In 2013 we will continue to invest in diversification by geography and product. As we
continue to invest in the business we expect the result for 2013 to be in line with
2012, The full financial impact of these investments and cost efficiency measures
will not be significant until 2014 and beyond.
Commenting on the results Norcon Chairman, Trond Tostrup, said:
This has undoubtedly been a challenging year for Norcon. It has been the first year
of our transition plan with a negative result which is mainly due to a slower uptak e
of our products and the additional investments made in personnel and new mark ets
in 2012.To be best positioned for the competitive challenges ahead, we have
substantially reduced the overhead in the holding company, Norcon Plc, whilst
developing a more sophisticated product mix in the operating company, Norconsult
Telematics.
Norcon plc
Trond Tostrup, Chairman +47 901 69 369
Arne Dag Aanensen, Chief Financial Officer +357 99 015 433
finnCap
Corporate Finance - Stuart Andrews, Charlotte Stranner or +44 (0) 20 7220
Rose Herbert 0500
About Norcon:
Established in 1957, Norcon (LSE/AIM: NCON) has been a trusted consultant and
project manager for more than half a century to the private sector and government
agencies. These organisations rely on Norcon to select, implement and maintain a
communication infrastructure that not only matches, but also supports the critical
needs of their operations. Norcon's strength lies in its understanding of complex
communication networks and their design.
www.norconplc.com
This has undoubtedly been a challenging year for Norcon. It has been the first year
of our transition plan with a negative result which is mainly due to a slower uptake
of our products and the additional investments made in personnel and new markets
in 2012.
To be best positioned for the competitive challenges ahead, we have substantially

reduced the overhead in the holding company, Norcon Plc, whilst developing a more
sophisticated product mix in the operating company, Norconsult Telematics.
Our historical exposure in Saudi Arabia is further reduced, the result being an
increased focus on acquiring new clients and projects in other geographical regions
which is already showing results.
Communication plays an important role in all societies across the globe, and the
need for new technologies to expand existing capacity, and to widen product and
service offerings are key for the growth in our market.
Our focus as a company, and as a Board, is to return to profitability and our efforts
to expand our business will remain our key priority going forward. Based on our
position in an expanding market we are convinced of success albeit 2013 will be
another challenging year whilst the cost savings we have made continue to come
into effect.
We benefit from a dedicated and highly capable team in the Norcon Group. This
team is our greatest asset and I thank each and every Norcon colleague for their
commitment, enthusiasm and efforts in this challenging year.
Trond Tostrup
Executive chairman
Financial Review
We are pleased to release our audited numbers for the twelve months ended 31
December 2012.
Summary
2012 has been a difficult year for Norcon with reduced revenue and profit. Despite
this Norcon has invested in new products and geographies whilst still retaining a
strong net asset position of US$ 23m at the year end.
Revenue for 2012 totalled US$49.6m (FY 2011: US$66.6m). The decrease was
primarily due to slower uptake and ramp-up of 4G projects in the Middle
East. Gross profit for 2012 was US$5.8m (FY 2011: US$10.7m).
Gross margin for 2012 was 12% for the year (FY 2011: 16%), due to increased cost
of sales proportionally related to increased competition as well as legacy costs in
connection with restructuring the composition of some projects.
Loss before tax was US$(0.6m) for 2012, compared to profit for 2011 of US$5.4m,
due to lower gross margin and investment into diversification. Administration
expenses were approximately US$0.9m higher in 2012 than in 2011. Due to
restructuring, our administrative expenses were reduced towards the end of 2012
which will be beneficial for the years to come.
Loss after tax was US$(1.7m) for 2012 compared to profit for 2011 of US$3.5m.
The underlying tax rates in the respective jurisdictions are detailed in the notes.
With the restructuring mentioned above we expect a lower underlying tax rate with
reduced overall liability for 2013.
Pro forma basic loss per share was US$(0.03) for the full year compared to the
US$0.07 earnings per share for 2011. The weighted average number of shares for
2012 was 48,800,808 being the same as for 2011.
Costs
Cost of sales totalled US$43.9m for the period compared to US$55.9m in 2011.
Other operating costs, including net, operating and administration expenses totalled
US$5.4m for the period up from US$4.5m in 2011. These increased costs are partly
due to our investment in the market together with legacy costs related to
restructuring of the Company.
Other net costs increased to US$1.0m from US$0.8m, largely related to increased
financial expenses.
Taxation
Taxes were accrued in the amount of US$1.0m during 2012 (FY 2011: US$1.9m).
The underlying tax rates in the countries in which we operate are detailed in the
Notes. Though the Consolidated Statements are giving a negative margin, some
highly profitable projects create taxable profits.
Foreign Exchange
The Company is continuing its policy of denominating revenue and expenses either
in the local currencies if pegged to the US dollar, or in US dollars to the extent
feasible. Foreign exchange translation gains and losses in the period are noted in
the accounts, and remained at similar levels for both years.
Cash Flow
Cash flow was positive for the year as a whole. Our cash position for 2012 is lower
compared to 2011 due to repayment of borrowings and dividends paid out to
shareholders related to the year ended 31 December 2011. 2012 resulted in an
increase in net cash flows from operating activities of US$ 2.6m (FY 2011: 2.5m)
Balance Sheet
The Balance Sheet of the Company remains quite strong.
As at 31 December 2012, cash was US$11.0m (FY 2011: US$12.5m) with positive
net cash of US$8.2m (FY 2011: US$7.1m).
The Company remains net asset positive, with net assets decreasing to US$22.8m
in 2012 (FY 2011: US$25.4m).
Total trade and other receivables decreased to US$30.1m from US$35.2m in the
prior year. Trade and unbilled receivable balances decreased year on year to a total
of US$25.6m from a total of US$30.6m. Work in Process (unbilled receivables)
decreased to US$1.0m in 2012 compared to US$10.1m in 2011. Retentions
receivable increased to US$0.8 m compared to US$0.5 m in 2011.
Trade payables have increased to US$7.7m as of year-end 2012 compared to

US$6.5m in the preceding year.
In non-current liabilities, the accrual related to employees terminal benefits

decreased to US$8.3m from US$10.5m. .
The final dividend of US$ 1.0m paid in 2012 related to 2011 profits.
Retained earnings and other reserves totalled US$22.8m as at the end of 2012
compared to US$25.4m as at the end of the 2011.
The Consolidated Financial Statements of Norcon and its branches and subsidiary
companies have been audited by PKF Savvides & Co Ltd., the Company's auditor.
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union (EU) under the historical cost convention.
Arne Dag Aanensen


2012 2011
US$ US$
Revenue 49.627.733 66.573.366

Cost of sales (43.869.869) (55.889.070)
5.757.864 10.684.296
Other income 11.596 -

Profit from investing activities 31.726 38.127
Administration expenses (5.481.692) (4.536.199)
Other expenses - (316)
Operating profit 319.494 6.185.908
Finance costs (933.028) (770.636)

Share of results of associates before tax (28.944) (1.349)
(Loss)/profit before tax (642.478) 5.413.923
Tax (1.021.918) (1.874.408)

Net (loss)/profit for the year (1.664.396) 3.539.515
Other comprehensive income - -

Total comprehensive (loss)/ income for the
year (1.664.396) 3.539.515
Attributable to:
Equity holders of the parent (1.714.073) 3.549.685
Non‑controlling interests 49.677 (10.170)
(1.664.396) 3.539.515
Basic (loss)/earnings per share attributable

to equity holders of the parent (cent) (3,51) 7,27
Diluted (loss)/earnings per share
attributable to equity holders of the parent
(cent) (3,51) 7,27

31 December 2012
2012 2011
US$ US$
ASSETS
Non‑current assets
Investments in associated undertakings 561.267 590.211
731.155 750.168
Current assets
Trade and other receivables 30.047.453 35.263.743
Cash at bank and in hand 10.998.029 12.456.037
41.045.482 47.719.780
Total assets 41.776.637 48.469.948
Equity
Other reserves 14.778.260 14.670.759
Retained earnings 7.027.917 9.742.457
22.743.277 25.350.316
Non‑controlling interests 51.512 1.835

Total equity 22.794.789 25.352.151
Non‑current liabilities
Employees' terminal benefits 8.382.345 10.514.890
8.382.345 10.514.890
Current liabilities
Trade and other payables 7.723.093 6.542.573
Borrowings 2.718.824 5.327.290
Current tax liabilities 157.586 733.044
10.599.503 12.602.907
Total liabilities 18.981.848 23.117.797
Total equity and liabilities 41.776.637 48.469.948

2012 2011
US$ US$
CASH FLOWS FROM OPERATING
ACTIVITIES
Adjustments for:
Depreciation of property, plant and equipment 66.697 54.560
Exchange difference arising on the translation of
non current assets in foreign currencies 467 (405)
Exchange difference arising on the translation
and consolidation of foreign companies' financial
statements 107.034 121.318
Share of loss from associates 28.944 1.349
Loss from the sale of property, plant and
equipment - 316
Interest income (31.726) (38.127)
Interest expense 416.698 268.088
Cash flows (used in)/from operations before

working capital changes (54.364) 5.821.022
Decrease/(increase) in trade and other
receivables 5.216.290 (3.707.340)
Increase in trade and other payables 1.180.520 2.576.295
(Decrease)/increase in employees' terminal
benefits (2.132.545) 728.084
Cash flows from operations 4.209.901 5.418.061
Tax paid (1.597.377) (2.926.880)
Net cash flows from operating activities 2.612.524 2.491.181
CASH FLOWS FROM INVESTING ACTIVITIES

Payment for purchase of property, plant and
equipment (77.094) (40.172)
Proceeds from disposal of property, plant and
equipment - 4.078
Net cash flows (used in)/from investing
activities (45.368) 2.033
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of borrowings (5.327.290) (610.341)

Interest paid (416.698) (268.088)
Dividends paid (1.000.000) (1.151.699)
Net cash flows used in financing activities (6.743.988) (2.030.128)
Net (decrease) /increase in cash and cash

equivalents (4.176.832) 463.086
Cash and cash equivalents:
At beginning of the year 12.456.037 11.992.951
At end of the year 8.279.205 12.456.037
Selected notes to the accounts
1. Incorporation and principal activities
Country of incorporation
The Company NORCON PLC (the ''Company'') was incorporated in the Isle of Man on
2 June 2008, as a company limited by shares under the Isle of Man companies act
2006. On the 28 July 2008, the company became public and had been admitted for
trading at the AIM of the London Stock Exchange. Its registered office is at Fort Anne,
Douglas, IM1 5PD, Isle of Man.
The principal activities of the Group, which are unchanged from last year, and are the
provision of project management and outsourcing services as well as consulting
engineers. The group comprises of the holding company Norcon PLC, registered in
the Isle of Man, the subsidiary company Norconsult Telematics Limited, registered in
Cyprus (which includes branches/operations in Saudi Arabia, U.A.E. Abu Dhabi,
Kuwait, Indonesia and Malaysia) and its subsidiary companies Norconsult
Telematics and Company LLC registered in the Sultanate of Oman, Norconsult
Telematics AS registered in Norway, the group of Norcon Global Management &
Consulting Ltd registered in Cyprus and its subsidiary undertakings Norcon Global
Management & Consulting Inc and Norcon Global Management and Consulting LLC
registered in the state of Delaware, USA, Norconsult Telematics Integrated Solution
Co. Ltd registered in the Republic of Sudan (dormant), Norconsult Telematics Ltd
registered in Southern Sudan (dormant), Norconsult Telematics (London) Ltd
registered in the United Kingdom and the associate company Norconsult Telematics
(Saudi) Ltd registered in the Kingdom of Saudi Arabia.
In 2012 the group has operated in the following countries: Saudi Arabia, Indonesia,
Kuwait, UAE Abu Dhabi, Oman, Malaysia, Sweden, United Kingdom, Thailand,
Philippines and the United States of America.
The principal accounting policies adopted in the preparation of these consolidated

financial statements are set out below. These policies have been consistently applied
to all years presented in these consolidated financial statements unless otherwise
stated.
The consolidated financial statements have been prepared in accordance with

International Financial Reporting Standards (IFRSs) as adopted by the European
Union (EU). The consolidated financial statements have been prepared under the
historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of
certain critical accounting estimates and requires Management to exercise its
judgment in the process of applying the Group's accounting policies. It also requires
the use of assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on Management's best knowledge of current
events and actions, actual results may ultimately differ from those estimates.
Adoption of new and revised IFRSs
During the current period the Group adopted all the new and revised IFRSs and
International Accounting Standards (IAS), which are relevant to its operations.
At the date of authorization of these financial statements some Standards were in
issue but not yet effective. The Board of Directors expects that the adoption of these
Standards in future periods will not have a material effect on the consolidated
financial statements of the Group.
The consolidated entity operates in one business segment (telecommunications, IT

and defence systems consulting) for primary reporting and four geographical
segments for secondary reporting being as follows: United States of America,
Europe, Middle East and Asia.
2012 United
States of
Europe America Middle East Asia Total
US$ US$ US$ US$ US$
Results
(Loss)/income for the
year (2.235.413) (212.964) (45.766) 780.070 (1.714.073)
Assets and
Liabilities
Segment assets 1.783.893 973.778 37.849.059 1.169.907 41.776.637
Segment liabilities (946.339) (198.980) (16.294.109) (1.542.420) (18.981.848)
Other segment
information
Acquisition/(disposal)
of fixed assets 8.840 3.354 41.445 23.455 77.094
Depreciation 2.058 620 62.637 1.382 66.697
Net cash flow (174.702) 85.293 (4.139.973) 52.550 (4.176.832)
2011 United
States
of
Europe America Middle East Asia Total
US$ US$ US$ US$ US$
Results
Income for the year (1.560.153) - 4.549.799 560.039 3.549.685
Segment assets 2.116.264 - 44.800.553 1.553.131 48.469.948
Segment liabilities (376.100) - (21.470.422) (1.271.275) (23.117.797)
Other segment
information
Acquisition/(disposal)
of fixed assets (3.150) - 26.241 - 23.091
Depreciation 3.071 - 51.424 65 54.560
Net cash flow (2.106.108) - 2.647.428 (78.234) 463.086
4. Tax
2012 2011
US$ US$
Overseas tax 1.017.198 1.869.820
Defence contribution ‑ current year 4.720 4.588
Charge for the year 1.021.918 1.874.408
The tax on the Group's results before tax differs from the theoretical amount that
would arise using the applicable tax rates as follows:
2012 2011
US$ US$
Tax calculated at the applicable tax rates (64.248) 541.392
Tax effect of allowances and income not subject to tax 5.374 (541.392)
Tax effect of tax loss for the year 58.874 -
Defence contribution current year 4.720 4.588
Overseas tax during the year 1.017.198 1.869.820
Tax charge 1.021.918 1.874.408
Corporation tax by country of operations: 2012 2011

US$ US$
Corporation tax for Kuwait 356.086 299.409
Corporation tax for Saudi Arabia 1.114.772
Corporation tax for South East Asia 562.043 417.286
Corporation tax for Malaysia 75.602 3.601
Corporation tax for Norway 23.467 31.914
Corporation tax for Oman - 2.838
1.017.198 1.869.820
The corporation tax rate is 10%. The Board of Directors have decided to register the
company as a Cyprus tax resident, as it is deemed that the management and control
of the company is exercised in Cyprus. In this respect tax computation under Cyprus
tax law has been prepared.
Under certain conditions interest income may be subject to defence contribution at

the rate of 15% (10% to 30 August 2011). In such cases this interest will be exempt
from corporation tax. In certain cases, dividends received from abroad may be subject
to defence contribution at the rate of 20% for the tax years 2012 and 2013 and 17% for
2014 and thereafter (in 2011 the rate was 15% up to 30 August 2011 and 17%
thereafter).
Income tax on the Saudi Arabia branch has been provided on the estimated taxable
profit at 20% (2011: 20%).
Income tax on the Kuwait branch has been provided on the estimated taxable profit at
15% (2011: 15%).
Income tax on the SE Asia Operations branch has been provided on the estimated
taxable profit at 25% plus 20% on the profit after tax ‑ repatriation of profits (2011: 25%
plus 20% on the profit after tax ‑ repatriation of profits).
Income tax of the Malaysia branch has been provided on the estimated taxable profit
at 25% (2011:15%).
The subsidiary company in Norway is subject to 28% tax of its income.
The subsidiary company in Oman is subject to income tax at the rate of 12% on
taxable income in excess of RO30.000.
5. (Loss)/profit per share attributable to equity holders of the parent
2012 2011
(Loss)/profit attributable to shareholders (US$) (1.714.073) 3.549.685
Weighted average number of ordinary shares in issue

during the year 48.800.808 48.800.808
Basic earnings per share (cent) (3,51) 7,27
Diluted earnings per share

2012 2011
US$ US$
(Loss)/profit attributable to shareholders (US$) (1.714.073) 3.549.685
Ordinary shares issued 48.800.808 48.800.808
48.800.808 48.800.808
Diluted earnings per share (cent) (3,51) 7,27
Note: The warrants expired on 28 July 2011 without been exercised.
6. Dividends
2012 2011
US$ US$
Final dividend paid 1.000.000 1.151.699
1.000.000 1.151.699
In October 2012, the Board of Directors paid dividend of US$1.000.000 out of the 2011
profits. The Board of Directors does not recommend the payment of a dividend for the
year 2012.
Dividends are subject to a deduction of special contribution for defence at 20% for the
tax years 2012 and 2013 and 17% for 2014 and thereafter (up to 31 August 2011 the
rate was 15% and was increased to 17% for the period thereafter to 31 December
2011) for individual shareholders that are resident in Cyprus. Dividends payable to
non‑residents of Cyprus are not subject to such a deduction.
7. Trade and other receivables
2012 2011
US$ US$
Trade receivables 24.630.238 20.477.765
Retentions receivable 767.588 499.875
Unbilled receivables 989.318 10.119.654
Deposits and prepayments 871.054 956.863
Other receivables 2.776.536 3.208.262
Refundable VAT 12.719 1.324
30.047.453 35.263.743
As at 31 December, the ageing of trade receivables is as follows:

2012 2011
US$ US$
Up to 30 days 9.808.451 5.668.793
31‑60 days 3.798.733 4.078.105
61‑ 90 days 620.808 2.259.587
91‑ 120 days 82.178 1.736.170
More than 120 days 10.320.068 6.735.110
24.630.238 20.477.765
The fair values of trade and other receivables due within one year approximate to their
carrying amounts as presented above.
8. Trade and other payables
2012 2011
US$ US$
Trade payables 4.851.746 4.031.880
Directors' current accounts ‑ credit balances - 650
Accruals 1.222.818 1.460.015
Other creditors 1.648.529 1.050.028
7.723.093 6.542.573
The fair values of trade and other payables due within one year approximate to their
carrying amounts as presented above.
The bankers of the Saudi Arabia branch have given bank guarantees to the equivalent
of US$6.403.499 (2011:US$6.156.450) in the normal course of the Branch's
business.
Letters of guarantee (Performance Bonds) for the group's operations in UAE Abu
Dhabi amounting to US$2.602.200 (2011:US$2.602.200) were in issue as at 31st
December 2012. An amount of US$650.550 (2011:US$650.550) (which represents
25% of the performance bond) is blocked from the branch's bank balances as
security for the issue of this performance bond with the remaining balance being
secured by the issue of a corporate guarantee from the Branch's ultimate holding
company Norcon Plc. Also a letter of guarantee for AED50.000 for the registration of
the Norconsult Abu Dhabi branch was in issue as at 31st December 2012
(2011:AED50.000).
A bank guarantee amounting to US$10.094 ‑ RO 3.876 (2011:US$242.181 ‑RO

93.000) was issued by the Group's subsidiary in Oman.
The company has provided a corporate guarantee of US$750.000 to its subsidiary

company Norconsult Telematics Limited in favour of Societe Generale Bank‑ Cyprus
Limited as a security among others for credit facilities provided by the bank to the
subsidiaries.
10. Annual accounts
Annual accounts for the year ended 31 December 2012 will be sent to shareholders
shortly and will be available to view from the Company's website,
www.norconplc.com

END
FR SEUSUDFDSEIL
5/24/13 Record PLC | Half Yearly Report | FE InvestEgate
Record PLC
Half Yearly Report

RNS Number : 3284S
Record PLC
18 November 2011
Record plc
PRESS RELEASE
18 November 2011
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER

2011
Record plc, the specialist currency manager, today announces its unaudited interim results
for the six months ended 30 September 2011.
Financial highlights:
· AuME¹ $28.9bn ² down 8% during the six months to 30 September 2011
· Net client inflows during the six months of $1.0bn (six months to 30 September 2010:
net outflow of $2.7bn)
· Profit before tax was £3.7m (six months to 30 September 2010: £7.0m)
· Management fee income for the six months to 30 September 2011 fell to £11.3m (six
months to 30 September 2010: £15.0m)
· Average management fee rates of 11.9 bps for the six months to 30 September 2011
(six months to 30 September 2010: 14.7 bps)
· Operating margin 33% (six months to 30 September 2010: 46%)
· Basic EPS of 1.26 pence (six months to 30 September 2010: 2.26 pence)
· Interim dividend of 0.75p per share payable in December 2011
· Subject to business conditions and a satisfactory outlook, the intention is to
recommend a final dividend of 0.75p per share for the current financial year
· Shareholders' equity decreased to £25.9m (30 September 2010: £29.6m) and
included £19.7m cash (30 September 2010: £27.1m)
¹As a currency manager Record manages only the impact of foreign exchange and not the underlying assets,
therefore its 'assets under management' are notional rather than real. To distinguish this from the AUM of
conventional asset managers, Record uses the concept of Assets under Management Equivalents (AuME) and
by convention this is quoted in US dollars.
²The AuME as reported at 30 September 2011 has been restated by $0.3bn/£0.2bn relating to segregated
currency for return.
www.investegate.co.uk/ArticlePrint.aspx?id=201111180700143284S 1/27
Operating highlights:
· Dynamic Hedging continued to perform in line with client expectations
· Dynamic Hedging represented 38% of AuME at 30 September 2011 (30 September
2010: 37%) but grew to represent 65% of management fee income (30 September
2010: 59%)
· Commencement of a £0.7bn UK-based Dynamic Hedging mandate offset by the loss
of the second largest Dynamic Hedging client ($1.4bn) in early November
· Alpha composite return of +0.02% for six months to 30 September 2011 (year to 31
March 2011 -3.39%)
· During the six months to 30 September 2011 client numbers fell to 43 (46 at 31
March 2011)
· Launch of currency momentum and currency value products planned before the end
of the financial year
Commenting on the results James Wood-Collins, Chief Executive of Record plc, said:
"The financial performance of the business, which delivered reduced pre-tax profits of £3.7m
for the half year, reflects the difficult environment for the Currency for Return Forward Rate
Bias Alpha product and a lower average fee rate for Dynamic Hedging.
"The Dynamic Hedging product has grown over recent years to become 65% of management
fee income. It continued to perform in line with client expectations during the half-year,
although fluctuating risk aversion and shortened trends may cause cost to clients to increase.
The highlight for the period was the commencement of a £0.7bn UK-based Dynamic Hedging
mandate, offset by the loss of our second largest Dynamic Hedging client in early November.
Bouts of risk aversion also caused Forward Rate Bias and Emerging Market Currency for
Return products to underperform in the last three months of the half-year, although the Euro
Stress Fund has performed positively in this environment.
"By the end of the financial year we plan to launch the currency momentum and currency
value products. These combined with the existing Hedging and Currency for Return products
will give Record a suite of eight products, as well as expanding Record's capability to create
bespoke solutions for individual clients. We are confident that this expanded product range is
capable of providing institutional investors with a range of currency management opportunities.
"During the first six months there have been a number of changes in the sales team at
Record, including the recruitment of two senior individuals focussed on the US and
Continental Europe respectively. This initiative, combined with the existing sales team, has
positioned Record to focus on distribution of the expanded product range. It is anticipated
that this focus should lead to additional mandates over the coming twelve months in both
Hedging and Currency for Return."
Analyst briefing
There will be a presentation for analysts at 9.30am on Friday 18 November 2011 at the offices
of JPMorgan Cazenove Limited at 20 Moorgate London EC2R 6DA. A copy of the
presentation will be made available on the Group's website at www.recordcm.com.
Record plc: +44 1753 852222
Neil Record Chairman
James Wood-Collins Chief Executive Officer
Paul Sheriff Chief Operating Officer/Chief Financial

Officer
MHP +44 20 3128 8100
Nick Denton, John Olsen, Vicky Watkins
CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME
six m onths six m onths year
ended ended ended
30 Sep 11 30 Sep 10 31 Mar 11
£'000 £'000 £'000
Revenue 11,167 15,060 28,196
Cost of sales (123) - (102)
Gross profit 11,044 15,060 28,094
Loss on financial instruments held as part of disposal

(191) (90) (1)
group
Taxation (1,043) (1,991) (3,603)
Other comprehensive income - - -
Total com prehensive incom e for the period 2,706 4,981 8,934
Total comprehensive income for the period attributable

to:
Non-controlling interests (75) - 27
Ow ners of the parent 2,781 4,981 8,907
Earnings per share for profit attributable to the equity

holders of the Company during the period (expressed in
pence per share)
Basic earnings per share 1.26p 2.26p 4.03p
Diluted earnings per share 1.26p 2.25p 4.03p

as at as at as at
30 Sep 11 30 Sep 10 31 Mar 11
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 201 263 227
Intangible assets 1,138 765 1,085
1,401 1,090 1,382
Current assets
Derivative financial assets - 62 -
25,896 34,060 31,632

Current assets held for sale (disposal
4,444 850 3,022
group)
Total assets 31,741 36,000 36,036
Current liabilities
Corporation tax liabilities (1,043) (1,925) (1,837)
Derivative financial liabilities (78) - (12)
(4,336) (6,405) (5,938)
Total net assets 27,405 29,595 30,098
Equity
Issued share capital 55 55 55
Equity attributable to ow ners of the parent 25,915 29,595 29,146
Non-controlling interests 1,490 - 952
Total equity 27,405 29,595 30,098
Chairman's statement
Highlights of the period
The six months to 30 September 2011 represented a period of relative stability of clients and
mandates compared to the second half of the year ended 31 March 2011. However, when
compared to the comparable six months of the prior year, this resulted in both lower
management fee income and lower profitability due to the business mix and average fee
income being higher in the prior period. Market conditions were far from stable however,
particularly in the last three months of the half-year, introducing challenges both to the
emergence of investment performance consistent with our long-term expectations, and to
implementation issues, in particular, bank counterparty management.
Dynamic Hedging has grown to represent 65% of our revenue for the six months to 30
September 2011 and has performed in line with client expectations, protecting US clients
from foreign currency weakness and UK clients from foreign currency strength. The highlight
for the period was the commencement of a £0.7bn UK-based Dynamic Hedging mandate,
which has since been offset by the loss of our second largest Dynamic Hedging client
($1.4bn) in early November. Our Currency for Return Forward Rate Bias Alpha product has
continued to experience modest net client outflows with investment performance being flat for
segregated mandates in aggregate, although negative for the pooled funds.
The product range now consists of six products, being two for Hedging and four for Currency
for Return. We are planning to bring a further two to market in the second half of the financial
year, being a currency momentum and a currency value product. Following the development
of these two, Record will have a comprehensive suite of eight products that we will be able to
offer to clients, as well as the ability to combine some of these in "multi-strategy" and
bespoke mandates. This compares to the more limited offering at the time of the IPO when
Record had three distinct products.
Record is focussed on delivering new sales from this enhanced product range. Steps were
taken in the period to strengthen the client team with the addition of a US sales executive and
an executive focussed on continental Europe. The recruitment of a US sales resource is a
proactive initiative to address the increased importance that currency issues are assuming for
US public and private sector pension schemes and other institutional investors.
Assets under Management Equivalents ('AuME') fell to $28.9bn at 30 September 2011,

compared to $31.4bn at 31 March 2011. The largest component of the decrease was equity
market performance of -$3.2bn. Net flows added to AuME over the six months, contributing
$1.0bn. Performance in Currency for Return contributed -$0.1bn and foreign exchange
movements accounted for a -$0.2bn decrease in mandate sizes. The number of clients fell in
the six months to 43 (46 at 31 March 2011), predominantly due to the redemptions by pooled
Currency for Return clients.
Management fees decreased to £11.3m for the six months to 30 September 2011, a decrease
of 25% compared to the six months to 30 September 2010. Given prior valuation levels (or
'high water marks') achieved there were no performance fees earned in the period. Profit
before tax for the period of £3.7m was 47% lower than for the equivalent period in the prior
year.
The operating margin, at 33%, was also less than that achieved in the six months to 30
September 2010 (46%) although the decline was less marked than that in revenues. This
reflects the flexibility in our cost base, which is due mainly to Record's Group Profit Share
(GPS) scheme which sets aggregate profit share at a long term average of 30% of pre-GPS
operating profit.
An interim dividend of 0.75p per share will be paid on 20 December 2011. The Board's
intention, subject to business performance and a satisfactory outlook, is to recommend a final
dividend for the current financial year of 0.75p per share.
Further and more detailed analysis of the results for the period can be found in the Interim
Management Review.
Investment performance
Investment performance during the period has reflected fluctuating bouts of risk aversion
across financial markets, with different implications for different products. Navigating these
bouts of risk aversion continues to prove challenging.
US-based Dynamic Hedging clients have experienced performance reflecting first US Dollar
weakness, during which the product allowed clients to benefit from overseas currency
strength although at some cost, and later US Dollar strength, leading to higher hedge ratios
and protection in particular against Euro and Pound Sterling weakness. Trends have been
relatively short by historical standards, making their efficient capture more challenging.
UK-based Dynamic Hedging clients saw Sterling weakening overall, although only
consistently against the Japanese Yen over the period, with other currencies demonstrating
mixed and volatile behaviour. Overall, the product generated modest underperformance during
the period.
Across all Currency for Return products, the period from April to September 2011 produced
mixed results as risk appetite and aversion fluctuated. Overall Forward Rate Bias Alpha
performance during the period was marginally positive for the ungeared Alpha composite,
demonstrably outperforming passive Forward Rate Bias strategies, although there was a
noticeable dispersion in performance of various accounts. It is increasingly evident given
statements from the Federal Reserve and the Bank of England, as well as a softening of the
European Central Bank's stance on inflation, that significant interest rate differentials are
unlikely to appear between the US Dollar, Pound Sterling, Euro, Japanese Yen and Swiss
Franc in the short term, challenging both active and passive Forward Rate Bias strategies that
have significant exposure to these currencies.
The newer Currency for Return products, in particular the Emerging Market Currency Fund
and the FTSE FRB10 Index Fund, also generated positive returns from April to approximately
June, in line with our long-term investment expectations, before underperforming from
approximately July through to September as risk aversion heightened due to uncertainties in
Europe and the US. The Euro Stress Fund launched at the end of May generated positive
returns towards the end of the period as the Euro weakened following a very volatile path.
Strategy, growth plans and outlook
The Group continues to concentrate on promoting both Passive and Dynamic Hedging
together with those Currency for Return products whose recent track records are encouraging,
as well as engaging with clients to create specific solutions to their currency needs. Where
appropriate, these specific solutions are created with a view to their subsequent scalable
extension to other clients. We have seen a number of enquiries and RFPs and believe we will
secure further hedging mandates in the current financial year.
In the US, where investors continue moving towards Global Equity benchmarks that typically
increase international equity exposure, there is increasing attention towards currency risk.
Whilst Record faces challenges in gaining acceptance for the Dynamic Hedging product with
consultants and clients there remains a good opportunity to build on the track record to date.
In addition to the established Hedging products and Currency for Return products, the Group
has invested in three funds that have been seed funded by Record, including the recently
launched Euro Stress Fund.
The challenge for Record is to gain acceptance in the investment community for both the
existing and new products. The existing sales effort together with recent initiatives to
strengthen the client team will undoubtedly assist in opening up new opportunities for Record.
In order to position Record to benefit from developments in the currency market, the Group
has invested in retaining talented individuals and selectively recruiting additional resources,
enhancing its processes and investing in systems infrastructure, all subject to appropriate
cost control. In particular, the Group's new back office system is currently in the final stages
of testing and should be fully operational in the second half of the financial year.
Record continues to be respected for its currency expertise and should be well positioned to
win new business. Whilst it is clearly disappointing to have lost our second largest Dynamic
Hedging client in early November and to continue to see outflows in the established Currency
for Return Forward Rate Bias Alpha product we think that there are short term opportunities in
both Passive and Dynamic Hedging. In the medium term, and where recent product
performance is positive, growth in Currency for Return should emerge.
Neil Record
Chairman
17 November 2011
Interim Management Review
Business overview
Whilst the first half of the financial year has seen AuME and client numbers decrease when
compared to the preceding six months, the Group delivered pre tax profit of £3.7m and will
pay an interim dividend of 0.75p per share. Although the Group's hedging business has fallen
in AuME terms in the first six months this is largely due to the fall in global equity markets in
this period. There has been a continuation in the reduction of Currency for Return mandates,
most notably for pooled accounts.
The Group now has six currency products and will continue with this diversification through
the launch of currency momentum and currency value products before the end of the current
financial year. The Group is focussed on delivering new sales through continuing to develop
relationships with investment consultants, supplemented by direct marketing by the in-house
client team. The addition of two executives focussed on the US and continental Europe
respectively is an investment in additional sales capability.
The processes that underpin our Dynamic Hedging and Currency for Return products are
fundamentally different.
Dynamic Hedging seeks to allow our clients to benefit from foreign currency strength while
protecting them from foreign currency weakness. Record's Dynamic Hedging product
performs best when currency movements exhibit trends over periods of 12 months or longer.
Performance for US dollar based Dynamic Hedging, for the period from April to September
2011, directly reflected the evolution of the exchange rate for the US Dollar, which
strengthened during the period but followed a volatile path with relatively brief trends. The
period started with US Dollar weakness, and so the product allowed clients to capture most of
the overseas currency strength. Subsequently, the dollar started strengthening in August and
appreciated sharply in September and, as a result, the desired protection was delivered
through higher hedge ratios, especially for the Euro and Sterling exposures.
From the UK perspective, hedging clients saw overall weakening of Sterling. The Japanese
Yen was consistently strong relative to Sterling whereas other currencies demonstrated
mixed and volatile behaviour. The US Dollar strengthened towards the end of the period and
the Swiss Franc dropped in value as a result of the Swiss National Bank's (SNB) intervention.
Overall, the product generated modest underperformance during the period.
Across all Currency for Return products, the period from April to September 2011 produced
mixed results. The core investment process for the Forward Rate Bias Alpha product is the
Trend/Forward Rate Bias (FRB) strategy, which relies on the tendency of higher interest rate
currencies to outperform lower interest rate currencies over the long term. In addition to the
FRB strategy, the Forward Rate Bias Alpha product has a Range Trading strategy which
relies on certain currency pairs trading in a narrow range to each other, and has the
advantage of being generally uncorrelated to the return from the Trend/FRB strategy.
Overall Forward Rate Bias Alpha performance during the period was marginally positive for the
ungeared Alpha composite. There was a noticeable dispersion in performance of various
accounts, primarily as a result of very sharp movements following the intervention by the SNB.
The range trading module consistently generated positive returns while the Trend/FRB
module detracted from value.
For the Emerging Market Currency Fund investment performance was split during the period.
From April to June, the product generated positive returns as the portfolio of Emerging Market
currencies outperformed the basket of Developed Market currencies, with Brazilian Real and
Hungarian Forint being the major contributors. From July to September, the product
generated negative returns as widespread risk aversion saw Emerging Market currencies
weaken. Hungarian Forint, South African Rand and Turkish Lira were the largest contributors
to underperformance.
In a pattern similar to that of the Emerging Market Fund, the FTSE FRB10 Index fund
generated positive returns in the first half of the period and detracted from value towards the
end of the period as risk aversion heightened due to uncertainties in Europe and the US.
The Euro Stress Fund was launched at the end of May and generated positive returns towards
the end of the period as the Euro weakened following a very volatile path. This fund is more
discretionary in style and is managed on a day to day basis by the Portfolio Management
Group.
Returns of Record Umbrella Currency Funds and comparable indices

for the six months to 30 September 2011
Half year Volatility since
Fund name Gearing
return inception p.a.¹
Cash Plus 7 -8.53% 19.53%
UK Equity Plus 6 -19.99% 19.42%

FTSE FRB10 Index² 1.8 -5.04% N/A
Emerging Market Currency³ 1 -9.24% N/A
Euro Stress⁴ 1 +3.11% N/A
Record Alpha composite⁵ +0.02% 2.78%
FTSE Currency FRB 5 GBP Excess return -5.17% 5.87%
FTSE Currency FRB 10 GBP Excess return -2.90% 4.70%⁶
Global equities (S&P 500) ⁷ -14.66% 14.85% 8
¹No volatility data is provided for products with less than 12 months historic data.
²FTSE FRB10 Index fund return data is since inception in December 2010.
³Emerging Market Currency fund return data is since inception in December 2010.
⁴Euro Stress fund return data is since inception in May 2011.
⁵The Record Alpha composite comprises 4 accounts and $0.75bn of assets.
⁶Inception date is 31 December 1987
⁷For comparison only
8 Since December 1987
Client development
Client numbers decreased to 43 at 30 September 2011 (46 at 31 March 2011).
Client numbers
30 September 2011 30 September 2010 31 March 2011
Currency for Return - segregated 7 9 8
Currency for Return - pooled 10 25 13
Currency for Return - combined 17 34 21
Dynamic Hedging 11 10 10
Passive Hedging 22 21 24
Less clients with > 1 product (7) (8) (9)
Total 43 57 46
AuME analysis
As previously noted, the Group's AuME was $28.9bn at 30 September 2011, a decrease of
$2.5bn during the six month period.
AuME movement in the six months to 30 September 2011
$bn
AuME at 31 March 2011 31.4
Net client inflows 1.0
Investment performance impact (0.1)
Equity market impact (3.2)
Foreign exchange impact (0.2)
AuME at 30 September 2011 28.9
Net client flows
During the six months to 30 September 2011 net client inflows were $1.0bn, principally due to
increases in Dynamic and Passive Hedging offset by reductions in pooled and segregated
Currency for Return mandates.
Negative investment performance during the period contributed a $0.1bn decline in AuME
since investment returns are compounded on a geared basis into the AuME of the pooled
funds managed by Record.
Stock and other market performance
Record's AuME is also affected by movements in stock and other market levels because
substantially all the Passive and Dynamic Hedging, and some of the Currency for Return
mandates, are linked to stock and other market levels. Market performance had the largest
impact on AuME, decreasing AuME in the six months to 30 September 2011 by $3.2bn.
Forex
The foreign exchange effect of expressing non-US$ AuME in US$ had a small impact on
AuME of $0.2bn. 70% of the Group's AuME is non-US$ denominated and expressing this in
US$ decreased AuME for the period by $0.2bn.
Product mix
The factors determining the movements in AuME also impact its composition. At 30
September 2011 Currency for Return represented 10% of total AuME, which was split
between segregated (7% of total AuME) and pooled mandates (3% of total AuME). This is
down from 13% at 30 September 2010 and down from 11% at 31 March 2011. Dynamic
Hedging represented $11.1bn and 38% of total AuME at 30 September 2011, up from 37% at
30 September 2010 and unchanged on 31 March 2011. Passive Hedging represented
$14.7bn and 51% of total AuME at 30 September 2011, up from 48% at 30 September 2010
and 50% at 31 March 2011.
AuME by product expressed in US Dollars ($bn)
As at 30 As at 30 As at 31 March
September 2011 September 2010 2011
Currency for Return - segregated 2.0 7% 2.1 7% 2.2 7%
Currency for Return - pooled 0.8 3% 1.9 6% 1.2 4%
Sub-total Currency for Return 2.8 10% 4.0 13% 3.4 11%
Dynamic Hedging 11.1 38% 11.5 37% 11.9 38%
Passive Hedging 14.7 51% 14.8 48% 15.7 50%
Cash 0.3 1% 0.5 2% 0.4 1%
Total 28.9 100% 30.8 100% 31.4 100%
AuME by product expressed in Sterling (£bn)
Currency for Return - segregated 1.3 7% 1.4 7% 1.4 7%
Currency for Return - pooled 0.5 3% 1.2 6% 0.8 4%
Sub-total Currency for Return 1.8 10% 2.6 13% 2.2 11%
Dynamic Hedging 7.2 38% 7.2 37% 7.4 38%
Passive Hedging 9.4 51% 9.4 48% 9.8 50%
Cash 0.2 1% 0.3 2% 0.2 1%
Total 18.6 100% 19.5 100% 19.6 100%
The AuME composition has remained largely unchanged in terms of the underlying base
currencies. Swiss Franc is the base currency for 36% of total AuME at 30 September 2011
(31 March 2011: 33%), US$ is the base currency for 30% of total AuME at 30 September
2011 (31 March 2011: 32%), and Sterling is the base currency for 30% of total AuME at 30
September 2011 (31 March 2011:31%).
AuME by base currency and product
Currency for Return Currency for Return Dynam ic Hedging Passive Hedging
- segregated - Pooled
Base currency 30 Sep

31 Mar 11 30 Sep 11 31 Mar 11 30 Sep 11 31 Mar 11 30 Sep 11 31 Mar 11
(billions) 11
Sterling GBP 0.2 GBP 0.3 GBP 0.5 GBP 0.8 GBP 1.6 GBP 1.2 GBP 3.0 GBP 3.6
US Dollar USD 1.0 USD 1.0 - - USD 7.7 USD 8.9 - -
Sw iss Franc CHF 0.5 CHF 0.5 - - CHF 1.0 CHF 1.0 CHF 7.9 CHF 7.9
Euro - - - - - - EUR 0.9 EUR 1.0
Canadian Dollar CAD 0.2 CAD 0.2 - - - - - -
Total USD 2.0 USD 2.2 USD 0.8 USD 1.2 USD 11.1 USD 11.9 USD 14.7 USD 15.7
AuME by client type ($bn)
Government and public funds 18.4 64% 18.7 61% 18.7 59%
Corporate 6.9 24% 8.2 27% 8.4 27%
Foundations and investment

3.6 12% 3.9 12% 4.3 14%
funds
Total 28.9 100% 30.8 100% 31.4 100%
AuME by client location ($bn)
UK 8.5 29% 9.8 32% 9.7 31%
Europe (excluding UK) 12.9 45% 12.2 40% 12.9 41%
North America 7.5 26% 8.8 28% 8.8 28%
Total 28.9 100% 30.8 100% 31.4 100%
Product development
As highlighted in the Chairman's statement, Record continues to focus on bringing new

products to market with three new products having been launched in the last twelve months.
The Record Currency FTSE FRB10 Index fund, that tracks the FTSE Currency FRB10 Index
has been run for nearly twelve months and has demonstrated successfully that the index can
be replicated and closely tracked. The first emerging market currency pooled fund has also
been run successfully for nearly twelve months with a seed investment of £1m from the
Group.
In June 2011, the Jersey-based Euro Stress fund was launched. This product was similarly
funded with a £1m seed investment from the Group.
Currency momentum and currency value strategies are being explored and it is anticipated
that these products and strategies will be launched before the end of the current financial
year.
Revenue
Management fee income for the six months to 30 September 2011 was £11.3m, which was
25% lower than for the six months to 30 September 2010 (£15.0m). Dynamic Hedging and
Currency for Return products generated lower management fees whilst Passive Hedging
generated higher management fees during the six months to 30 September 2011. In the six
months to 30 September 2011 Dynamic Hedging generated 65% of the management fee
income, with Currency for Return generating 22%. The reduction in Dynamic Hedging
management fee income is primarily due to the tiered fee structure that was introduced for the
largest Dynamic Hedging client from 1 April 2011.
Management fees by product (£m)

Six months ended Six months ended
Year ended 31
30 September 30 September
March 2011
2011 2010
Currency for Return - segregated 1.8 2.7 4.8
Currency for Return - pooled 0.6 2.2 3.1
Sub-total Currency for Return 2.4 4.9 7.9
Dynamic Hedging 7.4 8.8 17.5
Passive Hedging 1.5 1.3 2.7
Total management fee 11.3 15.0 28.1

income
The average fee rate achieved for Dynamic Hedging decreased to 20.2bps (six months to 30
September 2010: 24.0bps) whilst average fee rates for Passive Hedging increased to 3.1bps
(six months to 30 September 2010: 2.9bps). The average segregated Currency for Return
mandate fee rate decreased to 27.6bps whilst the average pooled fund fee rate declined to
18.7bps (29.9bps and 24.2bps respectively for the six months to 30 September 2010).
Record typically offers all Currency for Return clients the choice of paying an asset based
management fee only, or the alternative of management fee plus performance fee. Higher
performance fee rates usually accompany lower management fee rates and vice versa. The
fee combinations are structured so that Record is indifferent between them in the medium
term.
Average management fee rates by product - (bps) ¹
Six months ended Six months ended Year ended 31
30 September 30 September March 2011
2011 2010
Currency for Return - segregated 27.6 29.9 28.3
Currency for Return - pooled 18.7 24.2 23.4
Currency for Return - average 24.5 27.1 26.1
Dynamic Hedging 20.2 24.0 23.9
Passive Hedging 3.1 2.9 2.9
Composite average fee rate 11.9 14.7 14.0
There was no performance fee earned in either the six months to 30 September 2011 or the
year ending 31 March 2011. Performance fee structures are subject to a 'high water mark'
clause that states that cumulative performance, typically since inception of the mandate,
must be above the previous high point on which performance fees were charged before
performance fees are charged again. A fuller explanation of market conditions and the
implications for investment performance of our Currency for Return products is given in the
Chairman's statement.
Expenditure
Expenditure in the six months to 30 September 2011 fell by £0.8m to £7.4m from £8.2m in
the six months to 30 September 2010. The reduction was primarily in the Group Profit Share
(GPS) scheme which was 30% of pre-GPS operating profit in the period, partially offset by an
increase to personnel and non-personnel costs.
Under the GPS scheme rules, the intention is to purchase shares in the market following the
announcement of interim and full year financial results.
¹ bps = basis points = 1/100th of 1 percentage point
Expenditure analysis (£m)

Six months ended Six months ended
Year ended 31
30 September 30 September
March 2011
2011 2010
Personnel costs 3.2 3.0 6.1
Non-personnel costs 2.4 2.1 4.3
Administrative expenditure 5.6 5.1 10.4

excluding Group Profit
Share
Group Profit Share 1.6 3.0 5.3
Total administrative 7.2 8.1 15.7

expenditure
Loss on financial instruments 0.2 0.1 -

held as part of disposal group
Total expenditure 7.4 8.2 15.7
The Group is currently in the process of replacing its back office systems and going forward it
is anticipated that this will result in a small increase in system costs. The new system will
support the Group in its desire to expand its range of products and instruments in the future.
Operating margins
The operating profit for the six months to 30 September 2011 of £3.7m (33% operating
margin) reflects the lower management fee income and lack of performance fees in the period
and compares with the operating profit of £6.9m (46% operating margin) for the same period in
2010. The reduction in management fees of £3.7m compares with the reduction of £3.2m in
operating profit.
Operating cash flow
The Group generated £2.3m of cash flow from operating activities during the six months ended
30 September 2011 (six months ended 30 September 2010: £9.2m). Taxation paid during the
period was £1.8m compared with £2.4m for the six months to 30 September 2010. On 3
August 2011 the Group paid a final dividend of 2.59p per share in respect of the period ended
31 March 2011. This equated to a distribution to shareholders of £5.7m (six months ended 30
September 2010: £1.3m).
The Board's objective is to retain sufficient capital within the business to meet continuing
obligations, to sustain future growth and to provide a buffer against adverse market
conditions. The Group has no debt to repay or to service. Shareholders' funds were £25.9m
at 30 September 2011 (30 September 2010: £29.6m).
Dividends
The Group will pay an interim dividend of 0.75p per share in respect of the six months ended
30 September 2011. The dividend will be paid on 20 December 2011 to shareholders on the
register on 2 December 2011. The dividend payment will equate to a distribution of £1.7m in
total and will leave approximately £18.1m of cash on the balance sheet which is significantly
higher than necessary to satisfy the financial resources and liquidity requirements of the
Financial Services Authority and represents between one and two years of current overhead
cover.
Subject to business conditions in the second half of the financial year and a satisfactory
outlook, the Group currently intends to pay a final dividend of 0.75p for the financial year
ending 31 March 2012. The dividend policy will be further reviewed at the year end.
The principal risks and uncertainties documented in the Annual Report and Accounts for the
year ended 31 March 2011 are still relevant to Record.
The six months to 30 September 2011 has continued to see the risk associated with account
concentration. The proportion of management fee income generated from the largest client
was 28% at 30 September 2011. The proportion of management fee income generated from
the largest five clients was 62% at 30 September 2011 and for the largest ten clients was
81% at 30 September 2011.
The level of AuME and fee income is dependent on currency values, performance of
underlying assets (typically international equities) and the clients' investment strategies.
Cautionary statement
This interim report contains certain forward-looking statements with respect to the financial
condition, results, operations and business of Record. These statements involve risk and
uncertainty because they relate to events and depend upon circumstances that will occur in
the future. There are a number of factors that could cause actual results or developments to
differ materially from those expressed or implied in this interim report. Nothing in this interim
report should be construed as a profit forecast.
Statement of Directors' responsibilities

The Directors of Record plc confirm that, to the best of their knowledge, the condensed set of
financial statements below have been prepared in accordance with IAS 34 'Interim Financial
Reporting', and that the interim management report above includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Neil Record Paul Sheriff
Chairman Chief Operating

Officer/Chief Financial Officer
17 November 2011 17 November 2011
Independent review report to Record plc (the "Company")
Introduction
We have been engaged by the Company to review the condensed set of financial statements
in the half-yearly financial report for the six months ended 30 September 2011 which
comprises the consolidated statement of comprehensive income, consolidated statement of
financial position, consolidated statement of cash flows, consolidated statement of changes
in equity and the related notes. We have read the other information contained in the half-
yearly financial report which comprises only the headlines, Chairman's Statement and interim
management review and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in ISRE
(UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent
Auditor of the Entity'. Our review work has been undertaken so that we might state to the
Company those matters we are required to state to it in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our review work, for this report, or for the conclusion we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in Note 1, the annual financial statements of the group are prepared in
accordance with IFRSs as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of

financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements

(UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent
Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A
review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
condensed set of financial statements in the half-yearly financial report for the six months
ended 30 September 2011 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the Disclosure
and Transparency Rules of the United Kingdom's Financial Services Authority.
Grant Thornton UK LLP
Registered Auditor
Chartered Accountants
London
17 November 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE

INCOME
ended ended ended
30 Sep 11 30 Sep 10 31 Mar 11
Note £'000 £'000 £'000
Revenue 3 11,167 15,060 28,196
Cost of sales (123) - (102)
Gross profit 11,044 15,060 28,094
Loss on financial instruments held as part of disposal

(191) (90) (1)
group
Taxation (1,043) (1,991) (3,603)
Other comprehensive income - - -
Total com prehensive incom e for the period 2,706 4,981 8,934
Total comprehensive income for the period attributable

to:
Non-controlling interests (75) - 27
Ow ners of the parent 2,781 4,981 8,907
Earnings per share for profit attributable to the equity

holders of the Company during the period (expressed in
pence per share)
Basic earnings per share 4 1.26p 2.26p 4.03p
Diluted earnings per share 4 1.26p 2.25p 4.03p

Note as at as at as at
30 Sep 11 30 Sep 10 31 Mar 11
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 201 263 227
Intangible assets 1,138 765 1,085
1,401 1,090 1,382
Current assets
Derivative financial assets 7 - 62 -
25,896 34,060 31,632

Current assets held for sale (disposal
8 4,444 850 3,022
group)
Total assets 31,741 36,000 36,036
Current liabilities
Corporation tax liabilities (1,043) (1,925) (1,837)
Derivative financial liabilities 7 (78) - (12)
(4,336) (6,405) (5,938)
Total net assets 27,405 29,595 30,098
Equity
Issued share capital 9 55 55 55
Equity attributable to ow ners of the parent 25,915 29,595 29,146
Non-controlling interests 12 1,490 - 952
Total equity 27,405 29,595 30,098

Six months ended 30 September 2010
Called up Share Capital Non- Total

Retained
Unaudited share prem ium redem ption controlling shareholders'
earnings
capital account reserve interests equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2010 55 1,809 20 23,816 - 25,700
Dividends paid - - - (1,303) - (1,303)
Employee share options - - - 217 - 217

Transactions w ith
- - - (1,086) - (1,086)
ow ners
Profit for the period - - - 4,981 - 4,981
As at 30 Septem ber
55 1,809 20 27,711 - 29,595
2010
Six months ended 31 March 2011

share prem ium redem ption Retained controlling shareholders'
capital account reserve earnings interests equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 30 Septem ber
55 1,809 20 27,711 - 29,595
2010
Dividends paid - - - (4,420) - (4,420)
Issue of units in funds to

- - - - 925 925
non-controlling interests
Transactions w ith
- - - (4,375) 925 (3,450)
ow ners
Profit for the period - - - 3,926 27 3,953
As at 31 March 2011 55 1,809 20 27,262 952 30,098
Six months ended 30 September 2011

Retained
share prem ium redem ption controlling shareholders'
earnings
capital account reserve interests equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 31 March 2011 55 1,809 20 27,262 952 30,098
Dividends paid - - - (5,726) - (5,726)
Ow n shares held by EBT - - - (459) - (459)

Issue of units in funds to
- - - - 613 613
non-controlling interests
Transactions w ith
- - - (6,012) 613 (5,399)
ow ners
Profit for the period - - - 2,781 (75) 2,706
As at 30 Septem ber
55 1,809 20 24,031 1,490 27,405
2011
CONSOLIDATED STATEMENT OF CASH FLOW

ended ended ended
30 Sep 11 30 Sep 10 31 Mar 11
£'000 £'000 £'000

Adjustments for:
Corporation tax 1,043 1,991 3,603
Finance income (84) (92) (184)
Depreciation of property, plant and equipment 41 106 191
Share-based payments expense 173 217 262
3,879 7,203 12,806
Changes in w orking capital
Decrease in receivables 651 1,441 1,418
(Decrease) / Increase in payables (874) 606 214
(Increase) / Decrease in other financial assets (1,422) 126 (1,985)
Increase / (Decrease) in other financial liabilities 66 (149) (136)
CASH INFLOW FROM OPERATING ACTIVITIES 2,300 9,227 12,317
Corporation taxes paid (1,829) (2,367) (4,076)
NET CASH INFLOW FROM OPERATING ACTIVITIES 471 6,860 8,241
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of intangible assets (53) (230) (679)
NET CASH INFLOW / (OUTFLOW) FROM INVESTING
32 (307) (576)
ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Cash inflow from issue of units in funds 613 - 925
Purchase of treasury shares (459) - -

Dividends paid to equity shareholders (5,726) (1,303) (5,723)
CASH OUTFLOW FROM FINANCING ACTIVITIES (5,572) (1,303) (4,798)
NET (DECREASE) / INCREASE IN CASH AND CASH

(5,069) 5,250 2,867
EQUIVALENTS IN THE PERIOD
Cash and cash equivalents at the beginning of the period 24,728 21,861 21,861
CASH AND CASH EQUIVALENTS AT THE END OF THE
19,659 27,111 24,728
PERIOD
Closing cash and cash equivalents consists of:

Cash at bank and in hand 19,659 27,111 24,728

The condensed set of financial statements included in this half-yearly financial report have
been prepared in accordance with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union. The financial information set out in this
interim report does not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for the year ended 31
March 2011 (which were prepared in accordance with IFRSs as adopted by the European
Union) have been delivered to the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain statements under Section 498(2) or
Section 498(3) of the Companies Act 2006.
2. Significant accounting policies
The condensed financial statements have been prepared under the historical cost convention
modified to include fair valuation of derivative financial instruments.
The accounting policies, presentation and methods of computation applied in the interim
financial statements are consistent with those applied in the financial statements for the year
ended 31 March 2011.
The Directors, who together are the entity's Chief Operating Decision Maker, consider that its
services comprise one operating segment (being the provision of currency management
services) and that it operates in a market that is not bound by geographical constraints. The
Directors receive revenue analysis disaggregated by product, whilst operating costs are
presented on an aggregated basis because this reflects the unified basis in which the
products are marketed, delivered and supported.
(a) Product revenues
The Group has split its currency management revenues by product and fee type. The
Currency for Return products are delivered through both segregated mandates and a pooled
fund structure. Revenues from the three new products (Emerging Market Currency Fund,
FTSE FRB10 Index Fund and Euro Stress Fund) are not material and have been included in
the Currency for Return pooled funds revenues. Other Group activities include consultancy.
Revenue by product and fee type
Six m onths Six m onths

Year ended
ended ended
31 Mar 11
30 Sep 11 30 Sep 10
£'000 £'000 £'000
Dynamic Hedging
Management fees 7,373 8,813 17,539
Performance fees - - -
Passive hedging
Currency for Return segregated funds
Currency for Return pooled funds
Management fees 640 2,177 3,111
Total management fee and performance
11,279 15,003 28,139
fee income
Other Group activities (112) 57 57
Total 11,167 15,060 28,196
(b) Geographical analysis
The geographical analysis of revenue is based on the destination i.e. the location of the client
to whom the services are provided. All revenue originated in the UK.
Revenue by country

30 Sep 11 30 Sep 10 31 Mar 11
£'000 £'000 £'000

UK 3,061 5,070 8,440
US 5,206 6,926 13,604
Switzerland 2,710 2,545 5,343
Other 302 462 752
Total management fee and performance
11,279 15,003 28,139
fee income
Other Group activities (112) 57 57
Total 11,167 15,060 28,196
Other Group activities form less than 1% of the total Group income. This is not considered
significant and they are not analysed by geographical region.
(c) Major clients
During the six months ended 30 September 2011 £3.2m (29%) of the Group's revenue was
accounted for by a single client. During the period, one other client accounted for more than
10% of the Group's revenue contributing £1.4m (13%). This client terminated its mandate in
November 2011 as described in note 14.
Basic earnings per share is calculated by dividing the profit for the financial year attributable
to equity holders of the parent by the weighted average number of ordinary shares in issue
during the year.
Diluted earnings per share is calculated as for the basic earnings per share with a further
adjustment to the weighted average number of ordinary shares to reflect the effects of all
potential dilution.
There is no difference between the profit for the financial year attributable to equity holders of
the parent used in the basic and diluted earnings per share calculations.

Year ended
ended ended
31 Mar 11
30 Sep 11 30 Sep 10
Weighted average number of shares used in
220,683,191 220,874,485 220,965,275
calculation of basic earnings per share
Effect of dilutive potential ordinary shares -
113,523 355,560 306,347
share options
Weighted average number of shares used in
220,796,714 221,230,045 221,271,622
calculation of diluted earnings per share
pence pence pence

Basic earnings per share 1.26 2.26 4.03
Diluted earnings per share 1.26 2.25 4.03
The potential dilutive shares relate to the share options and deferred share awards granted in
respect of the following Group incentive schemes: the Group Bonus Scheme and the Share
Scheme. There were share options and deferred share awards in place at the beginning of
the period over 304,964 shares. During the period options were exercised, or share awards
vested, over 176,532 shares. During the period, the Group granted options over 1,400,000
shares with a potentially dilutive effect. These options were non-dilutive at the period end.
5. Dividends
The dividends paid by the Group during the six months ended 30 September 2011 in respect
of the year ended 31 March 2011 totalled £5,725,864 (2.59p per share). The dividends paid
during the year ended 31 March 2011 totalled £5,722,996 (2.59p per share). The dividends
paid by the Group during the six months ended 30 September 2010 totalled £1,302,689
(0.59p per share), with an accelerated dividend of 2.00p per share having been paid in March
2010.
6. Investments
Record plc is the ultimate parent company of the Record Group and has seven subsidiary
undertakings that are listed below. There are two new subsidiaries in the period, Record
Currency Management (Jersey) Limited which was incorporated in Jersey on 30 March 2011,
and Record Currency Management (US) Inc. which was incorporated in Delaware, US on 30
June 2011. All other subsidiaries are incorporated in England and Wales.
Particulars of subsidiary undertakings
Name Nature of Business

Record Currency Management Limited Currency management services
Record Group Services Limited Management services to other Group undertakings
Record Currency Management (Jersey)
Fund management company
Limited
Record Currency Management (US) Inc. Service company
Record Portfolio Management Limited Dormant
Record Fund Management Limited Dormant
N P Record Trustees Limited Trust company
Record plc's interest in the equity capital of subsidiary undertakings is 100% of the ordinary
share capital in all cases.
The consolidated financial statements include all the subsidiaries listed above, the Record plc
Employee Benefit Trust (EBT) which is a special purpose entity consolidated in accordance
with SIC 12, and three seeded funds (see note 8).
7. Derivative financial assets and liabilities
Derivative financial instruments held for trading
The Group trialled a new product in emerging markets from November 2009 until January
2011, managing a portfolio of forward exchange contracts in order to achieve a return. These
contracts were classified as financial assets held for trading. At 30 September 2011 there
were no outstanding contracts (at 30 September 2010 there were outstanding contracts with a
principal value of £3,363,728; 31 March 2011: £nil). The fair value of the contracts was
calculated using the market forward contract rates prevailing at the period end date. The
maximum exposure to credit risk was represented by the fair value of the positions and this
was mitigated by using cash deposited of £1m as collateral.
As at 30 Sep As at 30 Sep As at 31 Mar

11 10 11
£'000 £'000 £'000
Forward foreign exchange contracts held for
- 28 -
trading
The net gain or loss on forward exchange contracts at fair value is included in other income.
The net gain or loss on financial assets is as follows:

Year ended
ended ended
31 Mar 11
30 Sep 11 30 Sep 10
£'000 £'000 £'000
Net gain / (loss) on forward exchange contracts
- (30) 2
at fair value through profit or loss
Derivative financial instruments held to hedge cash flow
The Group uses forward exchange contracts to reduce the risk associated with sales
denominated in foreign currencies. At 30 September 2011 there were outstanding contracts
with a principal value of £3,627,750 (31 March 2011: £4,361,326; 30 September 2010:
£4,171,559) for the sale of foreign currencies in the normal course of business. The fair value
of the contracts is calculated using the market forward contract rates prevailing at 30
September 2011.

11 10 11
£'000 £'000 £'000
Forward foreign exchange contracts (78) 34 (12)
The net gain or loss on forward foreign exchange contracts held to hedge cash flow is as
follows:

Year ended
ended ended
31 Mar 11
30 Sep 11 30 Sep 10
£'000 £'000 £'000
Net (loss) or gain on fair value through profit or
(19) 209 263
loss
8. Current assets held for sale (disposal group)
From time to time, the Group injects capital into funds operated by the Group to launch or
trial new products (seed capital). The Group invested £1,004,000 in the Record Currency
FTSE FRB10 Index Fund and a further £1,000,000 into each of the Record Currency
Emerging Market Currency Fund and the Record Euro Stress Fund. In all three cases,
Record plc holds a majority of the issued units. In accordance with SIC-12 and IAS 27, such
funds are considered to be under control of the Group and as such the fund becomes a
subsidiary of the Group.
The Group consolidates the assets of its subsidiaries on a line by line basis, but as the
Group is actively seeking to reduce its holding in these seeded funds through the sale of
further units in these funds to external investors and the subsequent redemption of Record's
own investment, the investments in the funds are classified as being a disposal group held for
sale.
The Group previously made a seed investment in the Record Currency Fund Carry 250, and
this was accounted for as a disposal group held for sale on the same basis.
11 10 11
£'000 £'000 £'000
Seed capital classified as being a disposal group
4,444 850 3,022
held for sale
The net loss on financial instruments held as part of a disposal group is as follows:

Year ended
ended ended
31 Mar 11
30 Sep 11 30 Sep 10
£'000 £'000 £'000
Net loss on financial instruments held as part of
191 90 1
disposal group
The net loss on financial instruments held as part of disposal group includes a loss of £74,720
attributable to non-controlling interests.
9. Called up share capital
The share capital of Record plc consists only of fully paid ordinary shares with a par value of
0.025p. All shares are equally eligible to receive dividends and the repayment of capital and
represent one vote at the shareholders' meeting.
As at 30 Sep 11 As at 30 Sep 10 As at 31 Mar 11

£'000 Number £'000 Number £'000 Number
Authorised
Ordinary shares of
100 400,000,000 100 400,000,000 100 400,000,000
0.025p each
Called up, allotted
and fully paid
Ordinary shares of
55 221,380,800 55 221,380,800 55 221,380,800
0.025p each
Changes to the issued share capital
£'000 Number
As at 1 April 2010 55 220,794,732
Adjustment for own shares held by EBT - 220,632
As at 30 September 2010 55 221,015,364
Adjustment for own shares held by EBT - 60,472
As at 31 March 2011 55 221,075,836
Adjustment for own shares held by EBT - (1,223,468)
As at 30 September 2011 55 219,852,368
10 Share-based payments
During the six months ended 30 September 2011 the Group has managed the following share-
based compensation plans:
The Record plc Group Bonus Scheme
Under the terms of the scheme rules, certain employees of the company could elect to
receive a proportion of their bonus in the form of a deferred share award. The number of
shares was calculated based on the residual bonus divided by the market value of the shares
at grant date. The shares were then available to the employee after the vesting period for nil
consideration upon exercise. The final vesting of 48,100 shares under this scheme occurred
in June 2011.
The Record plc Group Profit Share Scheme
Under the terms of the scheme rules, employees and directors of the company may elect to
receive a proportion of their profit share in the form of a share award. Directors and senior
employees receive one third of their profit share in cash, one third in shares ('Earned Shares')
and may elect to receive the final third as cash only or to allocate some or all of the amount
for the purchase of Additional shares. Other employees receive two thirds of their profit share
in cash and may elect to receive the final third as cash only or to allocate some or all of the
amount for the purchase of Additional shares. All employees electing to allocate a portion of
their profit share for the purchase of Additional shares receive a Matching share value using a
multiple decided by the Remuneration Committee.
During the last financial year, significant shareholders were required to take their profit share
in cash and funded the Matching share values for directors and senior employees from their
profit share value. From the start of this financial period, the funding of the Matching share
value is borne from the Profit Share Scheme pool rather than from significant shareholders.
Additionally, those significant shareholders can no longer receive their profit share in cash and
must instead take their profit share in the same way as for all other employees.
All shares the subject of share awards are transferred immediately to a nominee and are
subject to certain lock up arrangements. None of these shares is subject to any vesting or
forfeiture provisions and the individual is entitled to full rights in respect of the shares
purchased. No such shares still under lock up can be sold, transferred or otherwise disposed
of without the consent of the Remuneration Committee.
The Record plc Share Scheme
The Record plc Share Scheme was created for the granting of share awards to senior
employees. During the year ended 31 March 2009 two such employees were granted deferred
share awards upon appointment to the Group. These shares are available to the employee
after the vesting period for nil consideration upon exercise. The shares vest equally on the
second, third and fourth anniversary of appointment. The vesting of the shares is subject to
certain good leaver provisions. The rights to acquire the shares are issued under nil cost
option agreements. The second vesting of shares granted under this scheme occurred in the
period, with 128,432 shares vesting.
The Record plc Share Scheme was amended in the period to facilitate the grant of share
options to certain individuals below Board level selected by the Executive Committee as
having the skills and potential to contribute significantly to the business in the future. The
revised scheme rules allow the grant of tax-approved options (subject to limits) as well as
unapproved options. During August 2011, options were issued to 5 such individuals over a
total of 1,400,000 shares under the unapproved scheme. These options were granted at
market price and will vest evenly over 4 years, subject to employment and performance
conditions.
Share-based payment transactions with cash alternatives
Deferred share awards granted under the Record plc Group Bonus Scheme and the Record
plc Group Profit Share Scheme are accounted for under IFRS 2 as share-based payment
transactions with cash alternatives.
Equity-settled share-based payments
Deferred share awards and options granted under the Record plc Share Scheme are
accounted for under IFRS 2 as equity-settled share-based payment transactions.
The fair value of options granted is measured at grant date using the Black-Scholes formula,
taking into account the terms and conditions under which the instruments were granted.
The fair value amounts for all options issued since Admission were determined using quoted
share prices.
11. Employee Benefit Trust
The Record plc Employee Benefit Trust (EBT) was formed to hold shares acquired to meet
obligations for share awards made to employees. A total of 168,287 ordinary shares were
acquired on 21 December 2007 under the Record plc Flotation Bonus Scheme by the Trust, a
further 282,926 shares have been purchased under the Record plc Group Bonus Scheme and
1,783,531 shares have been purchased under the Record plc Share Scheme. A total of
706,312 shares have vested. The EBT continues to hold 1,528,432 shares at 30 September
2011 (31 March 2011: 304,964; 30 September 2010: 365,436). The holding of the EBT
comprises own shares that have not vested unconditionally to employees of the Group. Own
shares are recorded at cost and are deducted from retained earnings. The EBT is
consolidated in the Group financial statements.
Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the
Group statement of comprehensive income.
12. Non-controlling interests
Record plc has seeded three new funds, the Record Currency FTSE FRB10 Index Fund, the
Record Currency Emerging Market Currency Fund and the Record Currency Euro Stress
Fund. As Record plc holds a majority of issued units in the case of all three seeded funds,
these funds have been consolidated into the Group's accounts. Three other investors have
invested into these funds, and as such have a non-controlling interest in the accounts of
Record Group.
Mark to market value of external holding in seeded funds consolidated

into the accounts of Record Group
As at 30 Sep 11 As at 30 Sep 10 As at 31 Mar 11

£'000 £'000 £'000
Record Currency FTSE FRB10 Index Fund 485 - 510

Record Currency Emerging Market Currency
821 - 442
Fund
Record Currency Euro Stress Fund 184 - -
Total 1,490 - 952
13. Related parties transactions
The related parties transactions during the period are consistent with the categories disclosed
in the Annual Report for the year ended 31 March 2011.
The compensation given to key management personnel is as follows:

ended ended 31 Mar 11
30 Sep 11 30 Sep 10
£'000 £'000 £'000
Short-term employee benefits 1,960 2,583 4,953
Post-employment benefits 170 144 296
Share-based payments 670 883 1,654
Dividends 2,924 657 2,907
5,724 4,267 9,810
14. Post reporting date events
No adjusting or significant non-adjusting events have occurred between the reporting date and
the date of authorisation. However, in November 2011, Record was notified that its second
largest Dynamic Hedging client was terminating its mandate.
Notes to Editors
This announcement includes information with respect to Record's financial condition,

its results of operations and business, strategy, plans and objectives. All statements
in this document, other than statements of historical fact, including words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may",
"will", "continue", "project" and similar expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the Company's future

performance and are subject to risks, uncertainties and assumptions that could cause
the actual future results, performance or achievements of the Company to differ
materially from those expressed in or implied by such forward-looking statements.
The forward-looking statements contained in this document are based on numerous

assumptions regarding Record's present and future business and strategy and speak
only as at the date of this announcement.
The Company expressly disclaims any obligation or undertaking to disseminate any

updates or revisions to any forward-looking statements contained in this
announcement whether as a result of new information, future events or otherwise.

END
IR GGGPGGUPGGMM
5/24/13 Velosi Limited | Final Results | FE InvestEgate
VELOSI LIMITED
FINAL RESULTS
RNS Number : 1434K
Velosi Limited
14 April 2010
Velosi Limited
("VELOSI", "the Group" or "the Company")
Preliminary Results
VELOSI, the AIM quoted provider of Testing, Inspection and Certification services to major national
and multinational oil and gas companies, is pleased to announce its preliminary unaudited results
for the year ended 31 December 2009.
HIGHLIGHTS IN 2009
Strong Financial Performance
· Revenue was steady at US$183.6 million (2008: US$182.1 million).
· Operating profit up 2.7% to US$14.8 million (2008: US$14.4 million)
· Profit on ordinary activities before tax up 13.0% to US$16.8 million (2008: US$14.9 million)
· Profit after tax and non-controlling interests was US$10.4 million (2008: US$9.3 million)
· EPS up 5.1% to 22.8 cents per share (2008: 21.7 cents per share)
· Cash flow generated from operations of US$10.7 million (2008: US$13.2 million)
· Net cash reserves of US$19.7 million maintaining a strong financial position
· Final dividend proposed of 1.5 cents per share (2008: 1.0 cent per share)
Operational Achievements
· Strong forward order book providing excellent visibility on future revenues
· Controlled investment in the Group's global infrastructure
· Opened new offices in Papua New Guinea, Pakistan, Brazil, Thailand and China
John Hogan, Chairman, commented:
"To report a 13.0% increase in profitability, during a year when market conditions have been
extremely challenging, is a very creditable performance. Reported revenue for the Group was
stable in 2009 when compared to last year. However, excluding Nigeria which had to operate under
exceptional circumstances, revenues actually increased by approximately 6.8%. This was
achieved in a year in which oil prices dropped to around US$40 per barrel, resulting in many oil and
www.investegate.co.uk/ArticlePrint.aspx?id=201004140700111434K 1/20
gas companies reducing their expenditure.
Looking ahead, we are seeing signs of recovery in activity alongside a higher and more stable oil
price, with specific regions and countries experiencing an increase in investment in oil and gas
infrastructure projects, although the overall mood in the industry remains cautious. VELOSI has a
strong order book which provides good visibility on future income and while we do not anticipate
significantly improved market conditions, we expect to deliver a positive performance in 2010."
VELOSI Dr Nabil Abdul Jalil 020 7930 0777

Dan Ooi
Strand Hanson James Harris 020 7409 3494
Richard Tulloch
Charles Stanley Mark Taylor 020 7149 6000
Cardew Group Tim Robertson 020 7930 0777
Catherine Maitland
Introduction
I am pleased to report that VELOSI has achieved another good trading performance. The Group
increased profits before tax by 13.0% to US$16.8 million, continued to expand through new office
openings and secured a wide range of new contracts. This was a particularly creditable
performance given the slowdown in investment by the oil and gas majors during 2009. While
across the market overall expenditure on asset integrity services dipped, our revenue levels
remained constant helped by our investment in new projects in specific 'hot spots' around the globe
and by the industry's need to maintain existing oil and gas projects. Excluding income from Nigeria,
where exceptional circumstances reduced our operating ability, revenues actually increased by
approximately 6.8%.
Over the last 18 months, in anticipation of a more challenging market environment, we have
focused on ensuring the Company operates at maximum efficiency and has sufficient cash
reserves to comfortably support the business. As a result of actions taken, our operating margin
increased to 8.1% (2008: 7.9%), being a key driver behind the increase in Group profitability, and
net cash reserves at the year end were US$19.7 million, placing the Company in a strong financial
position.
With a presence in 36 countries, VELOSI offers a global service to the oil and gas majors, providing
an extensive range of Testing, Inspection and Certification services. Our current order book
provides visibility for approximately 60% of 2010 consensus forecast revenues, which is a strong
position to be in at this stage of the year.
VELOSI's global reach ensured the Company was able to offset the challenging market conditions
and generate revenues of US$183.6 million (2008: US$182.1 million). Higher margin contracts and
cost saving initiatives enabled the Company to improve profit margins and deliver a 13.0% increase
in profits before tax to US$16.8 million (2008: US$14.9 million). This was an excellent result in a
difficult market.
Basic earnings per share after minority interests increased by 5.1% to 22.8 cents, compared to
21.7 cents in the previous year, while fully diluted earnings per share after minority interests based
on the weighted average issued share capital as at 31 December 2009 was 22.3 cents, compared
to 19.6 cents in the previous year.
At 31 December 2009, the Group had net cash reserves of US$19.7 million inclusive of cash
placed as margin for bank guarantees, currently classified as other debtors (2008: US$17.6
million). Conserving the Group's balance sheet strength is a key part of our strategy as it provides
the flexibility to comfortably fund the Group's trading activities and take advantage of any
opportunities that may result from the more challenging market environment.
Dividend
The Board has decided to adopt a more progressive dividend policy as a result of the continued
improvement in the trading performance and cash generation of the Group since its IPO in 2006.
The Board is therefore recommending a final dividend of 1.5 cents per share (2008: 1.0 cent per
share), an increase of 50% over the prior year. Subject to shareholders' approval at the Annual
General Meeting, the dividend will be paid on 30 July 2010 to shareholders on the register on 2 July
2010.
Strategy
VELOSI currently operates in 36 countries, up from 20 countries in 2006 when the Company was
admitted to AIM. Revenue has also increased substantially in that period from US$70.2 million in
2006 to US$183.6 million in 2009. We have now entered a more challenging market environment
and we have amended our strategy to reflect this, whilst not losing sight of our core objective which
is to be the leading provider of Testing, Inspection and Certification services to major national and
multinational oil and gas companies.
In 2008, we restructured the business to accommodate the increased size of the Group. A new
management structure was introduced creating regional manager roles, reporting directly to the
Chief Executive Officer, who respectively control the Group's principal geographic areas of activity
being: Africa, Australasia, Europe, the Middle East, and America. This had a positive impact in
2009, enhancing our ability to deliver 'one-stop shop' solutions to our international clients, often
under framework agreements. An example would be Velosi (B) Sdn Bhd in Brunei, where, together
with our joint venture partner, we are contracted to perform QC Surveillance, Specialised Non
Destructive Testing, Asset Integrity, and Corrosion Monitoring and Maintenance Inspection.
During 2009, we continued to expand our global presence opening new offices in Papua New
Guinea, Pakistan, Brazil, Thailand and China. Typically it takes between 12 to 24 months for new
offices to make a positive contribution. Our strategy for opening new offices is a combination of
ensuring that we have a good geographic coverage of the key areas together with accelerating
office openings in current 'hot spots' or areas of growth. An example of this is the recent opening of
our Kazakhstan office in response to the substantial increase in oil and gas investment in
Kazakhstan during 2009.
During 2009, VELOSI also won a number of important contracts. Of particular note Velosi Europe
Limited ("Velosi Europe") won a significant five-year contract with Eskom, the South African state-
owned electricity provider, and Velosi America LLC ("Velosi America") won a Global Manpower
services contract with a multi-national oil and gas company, giving VELOSI preferred supplier
status, along with six others.
We will continue to enter new geographic markets, growing market share in existing markets, and
expanding the Group's service offerings. We are at the same time mindful that the current
environment may provide 'value' opportunities with the potential to generate above average returns,
and the Company's strong financial position should enable it to consider such opportunities. In line
with this strategy, the Company was pleased to announce on 9 February 2010 that it had acquired
from Velosi Malaysia Sdn Bhd the VELOSI trading name in Malaysia.
Appreciation
On behalf of the Board, I wish to extend my thanks to all our employees worldwide for their
commitment, hard work and perseverance throughout 2009, which enabled us to achieve these
creditable results.
Outlook
VELOSI has demonstrated its ability to continue to grow the business despite facing challenging
conditions. We believe this reflects well on the strength of the Company's reputation for excellence
in its fields of expertise and the foundations it has carefully built to manage a global business.
The market environment remains challenging, with our clients seeking to control expenditure on
new projects and trimming costs on existing projects. Nonetheless, there are several 'hot spots' of
activity in Brazil, Australia, Kazakhstan, and West Africa where investment in projects remains high
and where we are well positioned to take advantage of this activity.
The Company's strong order book currently accounts for approximately 60% of 2010 consensus
forecast revenues representing excellent forward visibility. We have net cash reserves of US$19.7
million, ensuring we are in a strong financial position to fund operating activities and, if a suitable
opportunity arises, to fund acquisitions. We will continue to focus on streamlining our operations to
ensure we maximise returns to shareholders, whilst also continuing our policy of controlled
investment in the Group's global infrastructure.
Trading in the first three months of 2010 is in line with management expectations and we therefore
look forward to delivering a positive outcome for the current year.
John Hogan
Chairman
14 April 2010
OPERATIONAL REVIEW
Operational Highlights
Europe
· BP Norge AS contract, the Group's first contract in Norway, remains the largest contributor
to European revenue
· Substantial five-year contract win with South African state-owned electricity provider Eskom
· Inspection Consultancy services contract with Saipem expected to contribute strongly for
the duration of the three year contract
Australasia
· Two-year contracts win with Total E&P Indonesia
· Numerous contract wins in India
· Registered and opened first office in China
Middle East
· Largest contributor to Group revenues
· Saudi office won two-year contract from SBG
· Lifting Equipment services established in all offices
· Extension of VELOSI's Worldwide Inspection contracts with Qatar Petroleum, Ras Gas,
and Qatar Gas
· Two-year contract win from STG, the Russian EPC company responsible for the pipeline
project for Dolphin
· Three-year contract win from Abu Dhabi Port Authority for Vendor Inspection services
Americas
· Significant contract win with a multi-national oil and gas company
· Expansion of ExxonMobil's requirements
· Certification contract win with National Oilwell Varco (NOV) Norway AS
Africa
· Long-term contracts in place with CABGOC in Angola, BOST in Ghana, and Chevron in
Nigeria
· Velosi Nigeria legal proceedings concluded - well placed for significant growth
· Nigeria and Angola offer strong growth opportunities
Overview
2009 has been a year of growth for VELOSI despite the challenging market conditions. During
2009, we continued to win a number of significant contracts and expanded our presence in
geographic regions where oil and gas investment has increased, such as Central Asia, South
America, and Africa. Trading for the first three months of the current financial year has been in line
with our expectations.
Despite the cautious outlook of our major clients, new builds and project-related services are still
taking centre stage in the Group's activities, which is a reflection of the continuous investment in
infrastructure within the oil and gas industry.
Europe
Revenue: US$52.5 million (2008: US$52.0 million), Contribution to Group Revenues: 25.0% (2008:
25.7%)
European revenues grew by 192.2% in 2008, and as a result the 2009 performance is measured
against very strong comparables. Nevertheless this was a robust performance, and the
contribution to Group revenues remained broadly level. The largest contributor was the BP Norge
AS contract, the Group's first contract with BP in Europe and in Norway, which increased its
manpower requirements during the year.
VELOSI was awarded a substantial new five-year Professional Services contract with Eskom, the
South African state-owned electricity provider. The contract was won by Velosi Europe in a 50:50
partnership with Khum MK Investments to provide Quality and Inspection services for Eskom's new
build power plant program. Capital spend on this program is expected to be in excess of US$30
billion and the fees for inspection should be in the region of 3%. The Quality and Inspection services
work will be spread out amongst eight competing inspection authorities. Eskom provides 95%
of South Africa's electricity.
Also of significance, VELOSI was awarded preferred supplier status via UTT logistics bv to
Saipem, a subsidiary of the Italian oil and gas company ENI, and on Total's OML58 upgrade project,
which is expected to contribute significantly to revenue and profit until 2011. VELOSI was also
awarded a one-year rolling contract with KJVG to provide Inspection services for the downstream
EPCM on the multibillion Gorgon LNG project, and its first Pipemill Surveillance contract in
Kazakhstan for the Uralsk Pipeline with KazStroyService, which strategically places VELOSI for
Pipeline Inspection services in Kazakhstan.
While VELOSI won a number of significant contracts during the period, the reduction in activity
caused by the economic downturn allowed VELOSI to prepare for a number of major projects
expected to receive funding during 2010. As a result there is an increase in projected work
throughout 2010 that VELOSI is well positioned to take advantage of. A new office was opened in
Warsaw, Poland, in March 2010, and offices located in Dusseldorf, Germany; Prague, Czech
Republic; and Kolnes, Norway are due to be opened in 2010.
Australasia
17.9%).
Despite the challenging market environment in 2009, Australasia recorded a commendable

revenue of US$34.5 million, and won a number of new contracts across the region in the period.
PT Java Velosi Mandiri won two two-year contracts with Total E&P Indonesia for the provision of
Rope Access Inspection, and Engineering Support services respectively.
In India, Velosi Certification Services (India) Pvt. Ltd. ("Velosi India") was awarded its first long-term
contract with ONGC for Third Party Inspection services for all surface facilities and pipelines, during
all phases of the project over the next four years. Velosi India was also awarded a contract by GAIL
for Project Management and Consultancy, Construction Supervision and QA/QC for Phase I and II
of the Chainsa Jhajjar Spurlines. In addition, Velosi India was awarded the Third Party Quality
Surveillance contract by HPCL-Mittal Pipelines for its 1,050 kilometre crude oil Mundra Bhatinda
Pipeline Projects.
Post year-end, Velosi India was awarded the Third Party Inspection of MHN- Process Platform and
Living Quarters Project, MHN- Process Gas Compressor Project of ONGC, and Third Party
Inspection ("TPI") and QA for Propane, Butane and LPG terminals for IPPL (Indian Oil Petronas
Private Limited) at Ennore, Tamil Nadu.
The Pakistan Branch of Velosi Asset Integrity Ltd won milestone contracts in 2009/2010, which
included the selection of VELOSI as the TPI agent for over 3,100 CNG stations and more than
1,500 pipelines across Pakistan by the Oil & Gas Regulatory Authority ("OGRA") of Pakistan; and
implementation of a Maintenance Optimisation Project for ENI Pakistan.
In Brunei, VELOSI, together with its local joint venture partner QAF Oilfields Services, completed
full mobilisation for its three-year contract with Brunei Shell Petroleum for QC Surveillance,
Specialised NDT, Asset Integrity, Corrosion Monitoring and Maintenance Inspection. A total of 155
personnel were deployed with two-thirds of the work force being locals, reflecting the success of
VELOSI's training and recruitment of those locals for projects.
QA Management Services Pty Ltd ("QAM-Velosi") increased its revenue by approximately 7.0% to
US$4.25 million. Major contracts awarded with EOS for inspection of equipment include the
Woodside North Rankin 2 Project, PSN for the Esso Kipper Tuna Projects, Adelaide Desalination
Plant, Worley Parsons for the Karara Iron Ore Project, Apache and Clough for the Devils Creek
Project. During the year QAM-Velosi became one of the two preferred inspection providers for
Chevron and commenced work on the Gorgon Project, estimated to be valued at US$7.0 million
over the next two years.
Velosi Project Management Limited ("VPML"), in conjunction with Velosi Malaysia Sdn Bhd,
completed a US$2.1 million contract with MISC Berhad for the Pre-Commissioning and
Commissioning for a Floating Storage and Offloading Vessel, and an approximate US$1.1 million
Project Management Consultancy contract with Malaysia Marine Heavy Engineering (MMHE), the
largest yard in the region involving Engineering, Procurement, Pre-Construction, Yard Evaluation,
CAPEX Analyses and Risk Engineering for a prestigious Semi-Submersible Floating Production
System Project. These two contracts mark important milestones for VPML which was established
in 2008.
K2 International Limited, Velosi's 65% owned subsidiary, was awarded a three year contract with
Samsung Heavy Industries Co Ltd ("SHI") estimated to be worth in excess of USD20 million over
three years.
VELOSI registered and opened its first office in China, and commenced operations in Shanghai in
November 2009. New offices have also opened in Papua New Guinea, Thailand, and Myanmar.
Middle East
31.1%).
VELOSI has experienced growth across the Middle East, despite the global market difficulties, with
this region being the largest contributor to Group revenues. New services, such as Lifting
Equipment services and NDT, have been established across the region and made available to
clients. Our Middle Eastern offices have also developed their training function to offer training to
clients, and we have entered into an agreement with TWI UK to sell their training courses to clients.
The Abu Dhabi office also won contracts from ADCO and GASCO for TPI at site and worldwide .
The Saudi office has been awarded projects for Aramco under their General Inspection services
contract. The Qatar office has also won the Management Certification contract for Qatar Gas and
extended the contract for Ras Gas and Qatar Gas. The Oman office has seen its PDO contract
extended, with PDO using VELOSI exclusively for their projects.
Americas
11.1%)
Velosi America won a significant Global Services contract with a multi-national oil and gas
company in the latter half of 2009. VELOSI was one of seven qualified global vendors selected in a
competitive bid process to provide manpower services. Our relationship with ExxonMobil also
continued to grow with the assignment of additional VELOSI personnel to their operations in Angola
and Nigeria.
In a competitive environment, VELOSI made good progress in broadening our visibility with a
number of established clients and developed several new relationships. Highlights include:
Chevron, Plus Petrol, Anadarko, Schlumberger, Tullow Oil, Alstom, TransCanada Pipeline and
SOFEC. Several global Master Service Agreements (MSAs) were renewed, with ConocoPhillips,
Zachary Construction, CB&I, Enersul, J. Ray McDermott and Salym.
Our contract with National Oilwell Varco (NOV) Norway AS is particularly significant, as it involves a
substantial amount of Certification work, a service which VELOSI has been working hard to develop
in this region in 2009. In addition, we continue to work with NOV elsewhere, supplying
comprehensive certification services for Submersible Mobile Offshore Drilling Rigs being delivered
to Gazflot, a subsidiary of Russia's largest company Gazprom. The division also signed several
new contracts with companies working on Fluor's Taneco Refinery in Tatarstan, Russia.
Africa
13.5%)
In a difficult year globally, Africa's long-term contracts with CABGOC in Angola, BOST in Ghana,
and Chevron in Nigeria helped maintain some momentum and enhance its prospects for 2010. We
expect 2010 to be a very busy year for the sub-Equatorial African region, on account of both
existing work and the potential for expansion in various countries in the region. Nigeria and Angola
continue to offer the best growth opportunities.
Ghana
The BOST contract in Ghana has continued through the first quarter and progress has been made
at both Accra Plains Depot (APD) and at Akosombo.Elsewhere in Ghana, the fledgling oil industry
is picking up momentum and this offers potential opportunities with companies such as Tullow Oil,
Modec, Technip, Baker Hughes, Schlumberger and others.
Nigeria
Legal proceedings following the death of our Nigerian partner in September 2007 have hampered
VELOSI's ability to conduct business and grow in Nigeria. These proceedings were satisfactorily
settled in 2009 and Velosi Superintendend Nigeria Limited ("VSNL") is now well positioned to regain
its position as one of the foremost service providers to the oil and gas industry in the country. VSNL
believes 2010 will be a year of growth. VSNL will continue to provide personnel to the Escravos
Project for Chevron, and sees the opportunity to resume working for both ExxonMobil and Shell.
In addition to the provision of personnel, VSNL intends to offer and sell more group services into
Nigeria during the course of the year. We have received requests for Rope Access work to be
provided by our subsidiary K2; Specialised NDT in the form of Long Range Ultrasonics (LRUT) to
be provided by Steel Test (Proprietary) Ltd, also a subsidiary; and Tank Floor Testing services for
Total was successfully completed by Kurtec Inspection Services Sdn Bhd.
Angola
The global economic slowdown prompted a reduction in project spending by CABGOC (a
Chevron/Sonangol Joint Venture) in Angola. Velosi Angola LDA has now managed to return to the
levels of activity achieved prior to the reduction due to a successful Angolanisation programme.
VELOSI also sees opportunities with companies such as BP, Total, ExxonMobil and others that will
be pursued in the course of the year.
Central Asia
0.7%)
Our Russian & Kazakh Certification services division secured several new contracts from
companies working on Exxon Neftgas Limited's offshore Arktun-Dagi project near Sakhalin Island
during 2009.
FINANCIAL REVIEW
Overview
The Company's consolidated financial statements for the year ended 31 December 2009 have
been prepared under International Financial Reporting Standards (IFRS).
Notwithstanding the challenging market in 2009, the Group's financial condition remained relatively
stable. For the year ended 31 December 2009, the Group's operating profit was US$14.8 million, an
increase of 2.7% from last year (2008: US$14.4 million). The Group's cash reserves remained
strong with cash flow from operations of US$10.7 million (2008: US$13.2 million). Net cash flow
from operating activities was US$6.9 million (2008: US$9.9 million). Revenue was US$183.6 million
(2008: US$182.1 million). However, factoring out the significant reduction in revenue contribution
from Nigeria of US$2.2 million (2008: US$12.2 million), the Group's revenue grew to US$181.4
million, an increase of approximately 6.8% from US$169.9 million in 2008. The growth in revenue
was principally driven by operations in Central Asia and the Middle East, where revenue increased
31.6% and 15.8% respectively. During the year, the Middle East was the largest contributing region
to Group revenue, contributing 34.8% to total revenues, followed by Europe and Australasia,
contributing 25.0% and 16.5% respectively.
Profit from ordinary activities before tax for the year was up 13.0% from US$14.9 million in 2008, to
US$16.8 million. Again, if factoring out Nigeria's loss from ordinary activities of US$2.5 million
(2008: Profit of US$0.3 million), the Group's profit from ordinary activities before tax would have
been US$19.3 million (2008: US$14.6 million). This reflects an increase of 32.5%. The Group
recorded an increase of 11.1% in profit after tax, and of the US$12.9 million (2008: US$11.7
million), US$2.5 million was attributable to minority shareholders of the Group (2008: US$2.3
million).
Taxation
The effective tax rate for the Group for the year ended 31 December 2009 was 23% (2008: 22%)
and the tax charge was US$3.8 million (2008: US$3.2 million). The effective tax rate for the Group
is directly correlated with the contributions from the different countries in which we trade and their
varying tax rates.
Share Capital
During the year share capital increased by US$48,000 due to the 2,424,291 new ordinary shares of
US$0.02 each that were issued to the shareholders of K2 Specialist Services Pte Ltd ("K2") on 15
May 2009. This was pursuant to an agreement dated 19 October 2007 between K2 and Velosi
Industries Sdn Bhd following the satisfaction of the entire profit guarantee of SGD4,000,000
(approximately £1.34 million) aggregate profit after tax and minority interests, set for the stipulated
guarantee period and based on achievement of performance targets by K2 for the financial year
ended 31 December 2008.
Cash Flow
Net cash inflow from operating activities was lower at US$6.9 million compared toUS$9.9 million in
2008. This was mainly due to the reduction in payables which was partially offset by the
improvement in debtors' days.
Cash outflow for the Group from investing activities was US$3.8 million (2008: Outflow US$3.1
million). A significant portion of the cash outflow was for the acquisition of shares in Velosi
Superintendend Nigeria Limited in concluding the legal proceedings for the same.
Cash outflow from financing activities was US$3.4 million, compared to a cash inflow of US$7.7
million in 2008, caused mainly by the increase in the amount owing by a related party.
Administrative Expenses
Administrative expenses for the year reduced to US$31.3 million (2008: US$32.1 million). This
reflected the effectiveness of various streamlining efforts taken Group-wide to reduce
administrative expenses during 2009.
Profit Attributable to Minority Interests
Profits attributable to minority interests were US$2.5 million (2008: US$2.3 million). This was
largely attributed to the stronger performance of the Group's part-owned subsidiaries including PSC
Europe SRL and Intec (UK) Limited in Europe; Velosi Certification W.L.L (Qatar) in the Middle East;
Velosi Angola LDA and Steel Test (Proprietary) Ltd in Africa; and Velosi Project Management
Limited in Australasia.
Earnings Per Share and Dividends
Basic earnings per share after minority interests based on the weighted average issued share
capital as at 31 December 2009 were 22.8 cents (2008: 21.7 cents), and fully diluted earnings per
share after minority interest based on the weighted average issued share capital as at 31
December 2009 were 22.3 cents (2008: 19.6 cents). As at 31 December 2009, the Group had net
assets of US$1.63 per share.
As stated in the Chairman's Statement, the Board is proposing a final dividend of 1.5 cents per
share (2008: 1.0 cent per share). The dividend will be paid, subject to shareholder approval at the
Annual General Meeting, on Friday 30 July 2010, to shareholders on the register on Friday 2 July
2010, in sterling converted at the prevailing exchange rate.
GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2009
2009 2008
Notes US$’000 US$’000
(unaudited) (audited)
Revenue 2 183,563 182,072
Cost of sales (138,675) (136,509)
Other operating income 1,141 883
Finance costs (291) (533)
Share of profit of associated companies 2,308 1,006
Profit on ordinary activities before tax 16,796 14,862
Income tax expense

expense 3 (3,848) (3,208)

Exchange differences on translating foreign 0peration 1,298 (2,828)
Other comprehensive income for the year net of tax 1,298 (2,828)
Total comprehensive income for the year 14,246 8,826

Owners of the parent 10,446 9,306
Non - controlling interest 2,502 2,348
12,948 11,654

Owners of the parent 11,342 7,205
Non - controlling interest 2,904 1,621
14,246 8,826
Earnings per ordinary share
Basic earnings per share 4 22.8c 21.7c

Diluted earnings per share 4 22.3c 19.6c
GROUP STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2009
2009 2008
Notes US$'000 US$'000
Assets
Non-current assets
Goodwill 5 8,772 8,307
Other intangible assets 5 1,470 1,744
Investment in associated companies 2,713 1,338
22,615 20,050
Current assets
Amount due from a related party 2,234 1,057
Amount due from associated companies 2,205 1,127
Tax recoverable 159 126
88,445 86,890
Total assets 111,060 106,940

Share capital 7 935 887
Share based payment reserves 1,028 755
Revaluation reserve - 287
Translation reserve (1,268) (2,164)

Total equity attributable to equity holders 66,540 55,062
Non-controlling interest 9,721 7,293
GROUP STATEMENT OF FINANCIAL POSITION (continued)

AS AT 31 DECEMBER 2009
2009 2008
Notes US$'000 US$'000
Current liabilities
Amount due to a related party 56 142
Amount due to associated companies 261 16
Bank and other borrowings 2,316 2,923
Current tax liabilities 2,308 2,421
Hire purchase liabilities 661 658
Deferred consideration 8 1,287 2,673
32,104 42,280
Deferred tax liabilities 6 79 37
Provision for employees end of service benefits 1,030 818
Bank and other borrowings 295 343
Hire purchase liabilities 995 933
Other non-current liabilities 296 174
2,695 2,305
GROUP STATEMENT OF CASH FLOW

2009 2008
US$'000 US$'000
Profit on ordinary activities for the year 16,796 14,862
Adjustments for:
Loss / (gain) on disposal of property, plant and equipment 54 (120)
Property, plant and equipment written off 67 37
Impairment in other investments - 9
Allowance for doubtful debts 2,170 3,568
Allowance for doubtful debts written back (210) (8)
Bad debts written off 117 211
Provision for retirement benefit 239 744
Retirement benefit paid (27) (137)
Share of profit in associated companies (2,308) (1,006)
Interest expense 291 533
Interest income (106) (244)
Foreign exchange loss on operating activities 216 485
Issue of share options 319 330
Operating cash flows before movements in working capital 20,539 21,302

Decrease / (increase) in inventories 1,031 (1,216)
Increase in receivables (3,153) (16,349)
(Decrease) / increase in payables (7,761) 9,494

Tax paid (3,424) (2,770)
Acquisition of property, plant and equipment (3,765) (2,687)

Receipts from sale of property, plant and equipment 1,054 448
Acquisition of new subsidiary companies, net of cash - (1,168)
Acquisition of shares in existing subsidiary companies (1,086) -
Acquisition of new associated companies (51) -
Advance to associated companies (834) (358)
Dividend income from an associated company 777 414
GROUP STATEMENT OF CASH FLOW (continued)
2009 2008
US$'000 US$'000
Proceeds from issue of shares - 8,660

Share issue expenses (58) (445)
Repayments of term loans (80) (132)
Repayments of hire purchase liabilities (754) (251)
(Repayments to) / advance from a related party (1,263) 437
(Repayments to) / advance from directors (348) 109
Dividend paid to shareholders of Velosi Limited (468) (435)
Dividend paid to minority shareholders of subsidiary
companies (476) (208)
Net cash (used in) / from financing activities (3,447) 7,735
Net (decrease) / increase in cash and cash equivalents (305) 14,556
Foreign exchange translation differences 317 (876)
Cash and cash equivalents at the beginning of the year 17,791 4,111
Cash and cash equivalents at the end of the year 17,803 17,791
Cash and cash equivalents comprise:

Current assets - Cash and cash equivalents 20,078 20,641
Current liabilities - Bank overdraft (2,275) (2,850)
17,803 17,791
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Group Share Share Non Total

Capital premium Reserves Total controlling
US$'000 US$'000 interest US$'000
US$'000 US$'000 US$'000
(Unaudited)
Balance at 1
January 2009 887 32,422 21,753 55,062 7,293 62,355
Exchange reserve
arising on
translation of
financial statements
of overseas
subsidiaries - - 896 896 402 1,298
Profit for the year - - 10,446 10,446 2,502 12,948
Total
comprehensive
income for the year - - 11,342 11,342 2,904 14,246
Share allotment 48 1,379 - 1,427 - 1,427
Share issue costs - (58) - (58) - (58)
Acquisition of
subsidiary - - (1,085) (1,085) - (1,085)
Issue of share
options - - 320 320 - 320
Expiry of warrants - 47 (47) - - -
Dividend paid (note
11) - - (468) (468) (476) (944)
Balance at 31
December 2009 935 33,790 31,815 66,540 9,721 76,261
(Audited)
Balance at 1
January 2008 787 21,310 14,653 36,750 5,729 42,479
Exchange reserve
arising on translation
of financial
statements of
overseas subsidiaries - - (2,101) (2,101) (727) (2,828)
Profit for the year - - 9,306 9,306 2,348 11,654
Total comprehensive
income for the year - - 7,205 7,205 1,621 8,826
Share allotment 100 11,112 - 11,212 - 11,212
Acquisition of
subsidiary - - - - 151 151
Issue of share
options - - 330 330 - 330
Dividend paid (note
11) - - (435) (435) (208) (643)
Balance at 31
December 2008 887 32,422 21,753 55,062 7,293 62,355
VELOSI LIMITED
PRELIMINARY RESULTS ANNOUNCEMENT
The financial information set out in this preliminary results announcement does not constitute the
Group's financial statements for the year ended 31 December 2009.
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSand IFRIC interpretations) ("IFRS") and with effective, or issued and early adopted
as at the date of the statement.
Whilst the financial information included in this preliminary announcement has been prepared in
accordance with the recognition and measurement criteria of IFRS, it does not include sufficient
information to comply with IFRS.
The auditors have yet to sign their report on the 2009 financial statements. The financial statements
for the year ended 31 December 2009 will be finalised on the basis of the financial information
presented by the Directors in this preliminary announcement, and will be delivered to the
Companies Registry following the Company's Annual General Meeting. Whilst the auditors have not
yet reported on the financial statements for the year ended 31 December 2009, they anticipate
issuing an unqualified report.
The financial information for the year ended 31 December 2008 is derived from the financial
statements for that year. The auditors have reported on the 2008 financial statements, their report
was unqualified.
The financial information set out in this announcement was approved by the board on 14 April 2010.
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8
requires operating segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker as defined in IFRS 8,
in order to allocate resources to the segment and to assess its performance. In contrast, the
predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of
segments (business and geographical), using a risks and rewards approach, with the entity's
"system of internal financial reporting to key management personnel" serving only as the starting
point for the identification of such segments.
The business of Velosi consists of one business area, provision of Testing, Inspection and
Certification services to major national and multinational oil and gas companies. Since 2008, the
business of Velosi has been re-restructured to accommodate the increased size of the Group. A
new management structure was introduced creating regional manager roles, reporting directly to
the Chief Executive Officer, who respectively control the Group's principal geographic areas of
activity. The Group's business activities are split into six regions - Europe, Middle East, Americas,
Africa, Australasia and Central Asia. These regions are the basis on which information is reported
to the Group Board. The segment result is the measure used for the purposes of resource
allocation, assessment of performance and decision making.
All other segments primarily comprise income and expenses relating to the Group's
administrative functions. Interest income and interest expense are not allocated to segments, as
this type of activity is driven by the central treasury function, which manages the cash position of
the Group. Accordingly, this information is not separately reported to the Board for each
reportable segment.
The adoption of IFRS 8 has not changed the analysis of the Group's results and performance
significantly. Comparative information has been presented in order to comply with the
requirement of this standard. The accounting policies applied in preparing the management
information for each of the reportable segments are the same as the Group's accounting policies
described in note 2. Inter-company balances and transactions between the reportable segments
are eliminated to arrive at the figures in the consolidated accounts.
Middle Central
Europe East Americas Africa Australasia Asia Others Adjustments Consolidated
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
2009 –
(unaudited)
Turnover 52,486 72,901 19,233 28,694 34,503 1,750 - (26,004) 183,563

Gross profit 7,486 14,159 3,770 5,406 11,424 1,271 - 1,372 44,888
Profit before
tax 2,204 6,254 323 653 3,970 793 1,649 950 16,796
Share of
profit of
associates 2,084
Segment
assets 23,789 47,944 10,100 18,076 36,475 1,140 38,261 (64,725) 111,060
Segment
liabilities 20,271 26,403 8,964 16,208 23,040 677 2,037 (62,801) 34,799
2008 –
(audited)
Turnover 51,959 62,961 22,403 27,415 36,329 1,330 - (20,325) 182,072

Gross profit 8,902 11,792 4,047 5,404 12,419 634 - 2,365 45,563
Profit /
(loss) before
tax 1,745 5,346 159 583 5,439 291 (176) 1,475 14,862
Share of
profit of
associates 892
Segment
assets 20,189 40,459 12,634 23,567 32,003 1,218 34,740 (57,870) 106,940
Segment
liabilities 18,208 23,819 11,684 20,652 22,305 1,257 1,380 (54,720) 44,585
Group Group
2009 2008
US$'000 US$'000
Foreign tax
Overseas tax payable 3,240 3,446
Total current tax 3,240 3,446
Deferred tax
Movement in deferred tax position 384 (352)
Taxation on profit from ordinary activities 3,624 3,094
Add: Share of taxation of associated companies 224 114
3,848 3,208
The tax on the Group's profit before tax differs from the theoretical amount that would arise
using the weighted average tax rate applicable to profits for the consolidated entities as
follows:
Group Group
2009 2008
US$'000 US$'000
Profit on ordinary activities before taxation (excluding
share of results of associated companies) 16,796 14,862
Profit on ordinary activities at 13.69% (2008: 14.28%) 2,299 2,122

Tax effects of:
Difference in tax rates of foreign countries 547 1,045
Effect of reduction in tax rate 4 6
Tax redemption and rebates (234) (39)
Utilisation of tax losses - 12
Utilisation of capital allowance (5) (60)
Deferred tax assets not recognised 257 103
Non-taxable income (87) (25)
Adjustment on prior year current and deferred tax 582 12
Others 268 (14)
Effect of taxation of associated companies (92) (30)
3,848 3,208
The applicable tax expense of the Group is derived from the consolidation of all Group
companies' applicable tax based on their respective domestic tax rates.
The applicable tax rate of the Group has decreased from 14.28% to 13.69% mainly due to
the higher proportion of income contributed by the lower tax jurisdiction countries.
The basic and diluted earnings per share is calculated by reference to the earnings
attributable to ordinary shareholders divided by the number of shares in issue as at 31
December, as follows:

2009 2008
US$'000 US$'000
Profit after taxation and minority interest 10,446 9,306
Number Number
Weighted average number of shares for the purpose of
calculating basic earnings per share 45,875,857 42,809,629
Effect of dilutive potential ordinary shares
Deferred consideration 963,612 4,463,847
Weighted average number of shares for the purpose of

calculating diluted earnings per share 46,839,469 47,273,476
Basic earnings per share based on the weighted

average issued share capital as at 31 December 22.8c 21.7c
Diluted earnings per share based on the weighted

average issued share capital as at 31 December 22.3c 19.6c
5. Goodwill and other intangible assets
Other
intangible
assets -
customer Total Total
Goodwill lists 2009 2008
US$'000 US$'000 US$'000 US$'000
(unaudited) (audited) (unaudited) (audited)
At 1 January 8,307 1,744 10,051 9,003
Foreign exchange translation difference 465 66 531 (1,136)
Acquisition of subsidiary companies - - - 2,515
Amortisation - (340) (340) (331)
At 31 December 8,772 1,470 10,242 10,051
Other
intangible
assets -
customer Total Total
Goodwill lists 2008 2007
US$'000 US$'000 US$'000 US$'000
(audited) (audited) (audited) (audited)
At 1 January 7,341 1,662 9,003 2,114
Foreign exchange translation difference (1,012) (124) (1,136) 157
Acquisition of subsidiary companies 1,978 537 2,515 6,812
Realisation on disposal of shares in subsidiary
company - - - (5)
Amortisation - (331) (331) (75)
At 31 December 8,307 1,744 10,051 9,003
6. Deferred tax assets
Group Group
2009 2008
US$'000 US$'000
Unutilised tax losses 29 26
Accelerated capital allowances (29) 21
Provision for impairment 4 317
Others 12 (1)
Deferred tax assets 16 363
Deferred taxation movements are:

Opening balance 363 64
Foreign exchange translation difference 37 (53)
Transfer from income statements (384) 352
Closing balance 16 363
7. Share capital
(a) Share capital
2009 2008
US$'000 US$'000
Authorised:
4,400,000,000 (2008: 4,400,000,000) Ordinary
shares of US$0.02 each 88,000 88,000
Issued:
46,765,871 (2008: 44,341,580) Ordinary shares
of US$0.02 each 935 887
(b) Share issued during the year
Issue value per Share Share

Note share Shares capital premium
GBP US$ US$'000 US$'000
At 1 January 2009 44,341,580 887 32,422
Share issued on 15 (i) 0.39 0.59 2,424,291 48 1,379
May 2009
Share issue costs - - (58)
Expiry of warrant - - 47
46,765,871 935 33,790
(i) On 15 May 2009, 2,424,291 new ordinary shares were issued to the former shareholders
of K2 Specialist Services Pte Ltd ("K2"), pursuant to an agreement dated 19 October 2007
between K2 and Velosi Industries Sdn Bhd, following the satisfaction of the entire profit
guarantee of SGD4,000,000 (approximately £1.34 million) aggregate profit after tax and
minority interests, set for the stipulated guarantee period and based on achievement of
performance targets by K2 for the financial year ended 31 December 2008.
(c) Share options

Weighted Weighted
average average
exercise remaining
Number price per contractual
of shares share life (years)
Balance at 1 January 2009 - exercisable 2,067,708 103p 1.816

Options granted in the year- exercisable 1,360,000 65.5p 2.42
Balance at 31 December 2009 - 3,427,708 87.92p 2.06

exercisable (unaudited)
Balance at 31 December 2008 - 2,067,708 103p 1.816

exercisable
The fair value of the share options granted has been calculated using the Black-Scholes
option-pricing model individually applied to each option granted. The inputs into the model
were as follows:
Issued on
19 May 2009
Share price 66.5p
Exercise price 65.5p
Expected volatility 58.2%
Expected life 3 years
Risk free rate 5%
The expected volatility represents management's best estimate of volatility given the lack of
historical information available regarding share price volatility.
(d) Warrants
Weighted
average
exercise
Number price per
of shares share
Balance at 1 January 2009- exercisable 476,749 90p

Warrants granted in the year- exercisable -
Warrants expired in the year (476,749)
Balance at 31 December 2009 (unaudited) - -
Balance at 31 December 2008 - exercisable 476,749 90p
The fair value of the warrants granted was calculated using the Black-Scholes option-pricing
model individually applied to each warrant granted. The inputs into the model were as follows:
Issued on
21 October 2006
Share price 128p
Exercise price 150p
Expected volatility 35%
Expected life 0 years
Risk free rate 5%
8. Deferred consideration
PSC
Italy K2 Total
US$'000 US$'000 US$'000
Deferred contingent consideration

Outstanding as at 1 January 2009 1,269 1,404 2,673
Foreign exchange translation difference 18 24 42
Consideration settled in the year - (1,428) (1,428)
Outstanding as at 31 December 2009 (unaudited) 1,287 - 1,287
The provisional deferred consideration consists of cash and shares.
On 15 May 2009, 2,424,291 new ordinary shares were issued to shareholders of K2

Specialist Services Pte Ltd ("K2"), pursuant to an agreement dated 19 October 2007
between K2 and Velosi Industries Sdn Bhd, following the satisfaction of the entire profit
guarantee of SGD4,000,000 (approximately £1.34 million) aggregate profit after tax and
minority interests, set for the stipulated guarantee period and based on achievement of
performance targets by K2 for the financial year ended 31 December 2008.
9. Commitments under operating leases
The following are the annual commitments under non-cancellable operating leases:
2009 2008
Land and Land and
buildings buildings
US$'000 US$'000
Operating leases which expire:
Within one year 472 600
In two to five years 125 439
Over five years 127 -
724 1,039
The contingent rent payable is determined by multiplying the monthly charge by the number
of months left until the maturity of the service / lease agreement. For one of the tenancies,
there is an option for the subsidiary to extend the term of the agreement on a yearly basis,
by giving at least 2 months notice and to enjoy the same rate unless the owner of the land
increases the rate. However, if notice is given, the landlord may increase the monthly rate
by 10% after the two years term has expired.
For another tenancy, there is an option for the subsidiary to renew the term of the
agreement for another 3 years. The monthly rental is subject to revision from time to time in
accordance with the rental rate imposed by Housing Development Board of the
landlord. There are no restrictions imposed by lease arrangements such as those
concerning dividends, additional debt, and further leasing.
Group Group
2009 2008
US$'000 US$'000
Letter of guarantee - 819
Performance bond guarantee 2,285 107
11. Dividends
The Directors propose a final dividend of US$0.015 per ordinary share to shareholders in
respect of the financial year ended 31 December 2009 (2008: US$0.01).
12. Post balance sheet events
Pursuant to an agreement dated 9 February 2010, Velosi Limited acquired the Velosi trading
name in Malaysia for a purchase consideration of up to RM23,333,333 (approximately
US$6.803 million). This amount is to be paid by way of issuance of new Velosi shares to be
issued in three tranches with the initial consideration of RM7,933,333 (approximately
US$2.313 million) to be settled by the issue of 1,618,677 consideration shares on 15
February 2010. Subject to the achievement of certain performance criteria towards end of
3rd quarter of 2011, a further RM7,933,333 (approximately US$2.313 million) consideration
shares will be issued. In addition, the remaining balance will be issued upon achievement of
the guaranteed income by end of 30 June 2012.
13. Nature of financial information
These preliminary results will be available on the Company's website www.velosi.com.

Further copies can be obtained from the registered office at 28-34 Hill Street, St Helier,
Jersey, JE4 5TF.

END
FR GMGMDNFVGGZM
5/24/13 Velosi Limited | Half Yearly Report | FE InvestEgate
Velosi Limited
Half Yearly Report

RNS Number : 3550Z
Velosi Limited
21 September 2009
21 September 2009
Velosi Limited ('Velosi', 'the Company' or 'the Group')
Interim Results
Velosi, the AIM listed provider of asset integrity, quality assurance, quality control, engineering and HSE services to major national and multinational oil and gas companies,
is pleased to announce its interim results for the six months ended 30 June 2009.
Highlights
Continuing a track record of significant growth:
H109 H108 %
Turnover US$89.2m US$77.3m 15.4
Profit before tax US$7.9m US$7.2m 10.4
Earnings per share 11.2c 10.4c 8.2
As at 30 June 2009, the Company had net cash reserves of US$19.7 million
Steady flow of new contract wins coupled with 100% retention of existing contracts underpins good visibility on future revenues
Tightened cost base together with improved cash generation has strengthened the Company's financial base
Trading is in line with expectations
John Hogan, Chairman, commented:
'Velosi has again delivered a good set of results despite the more challenging market environment. Based on historic trading patterns, revenues tend to be stronger in the
second half of the year and this, together with the excellent visibility provided by contracted revenues, gives us confidence that we will achieve a good result for the current
year. Despite the weakening commercial environment, the Company's strong underlying operating performance has allowed us to strengthen our financial position. As a
result the Company has a strong balance sheet with net cash of $19.7 million, remains cash generative and continues to increase both revenues and profitability.'
Velosi Dr Nabil Abdul Jalil 020 7930 0777

Dan Ooi
Strand Partners James Harris 020 7409 3494
Charles Mark Taylor 020 7149 6000
Stanley Securities Freddy Crossley
Cardew Group Tim Robertson 020 7930 0777
Shan Shan Willenbrock
Catherine Maitland
I am very pleased to report on what has been a strong period of growth for the business. In the first six months of 2009 the Company has increased revenues and
profits before tax by 15.4% and 10.4% respectively. This is a particularly satisfying performance as we have been able to simultaneously continue to win new contracts
whilst also increasing our cash generation and cash reserves thus creating a financially secure base for the business going forward. Revenue growth has come from our
excellent track record of renewing and extending existing contracts and continuing to add new contracts.
The partial recovery in oil prices is a positive factor but it is less a function of demand and more a result of reduction in supply and the value of the US dollar, and therefore
has not translated into an increase in investment in oil and gas projects. In fact there has been a slowdown in investment, versus historic levels, however, Group revenues
have continued to increase as the slowdown has been offset primarily by new income generated as a result of new office openings. The Company's focus is to continue to
exploit its position as a one stop shop for the major oil and gas companies.
Our ability to retain and win new contracts resulted in turnover increasing by 15.4% to US$89.2 million (2008: US$77.3 million). Profit from ordinary activities before tax for
the period was up 10.4% to US$7.9 million (2008: US$7.2 million), and profit after tax also increased, from US$6.0 million in 2008 to US$6.4 million.
The effective tax rate for the Group for the half year was 19.2% (2008: 16.2%). The effective tax rate for the Group reflects the contributions from the different regions and
their varying tax rates.
Profits attributable to minority interests for the period were US$1.3 million (2008: US$1.6 million).
Basic earnings per share after minority interests increased to 11.2 cents (2008: 10.4 cents) and fully diluted earnings per share after minority interests
were 11.0 cents (2008: 9.4 cents).
Velosi's cash position remains strong. At 30 June 2009, cash and cash equivalents for the Group were US$20.1 million (2008: US$10.7 million). Gearing levels remain low
with short-term bank borrowings amounting to US$2.8 million (2008: US$5.6 million) and long-term bank borrowings amounting to US$1.5 million (2008: US$1.5 million).
Dividend
As previously stated the Board does not propose to pay an interim dividend. The Board does however intend, subject to the availability of distributable reserves and a
satisfactory performance in the second half of the year, to recommend a final dividend to shareholders in respect of the financial year ending 31 December 2009.
Operational Review
During 2009 Velosi has continued to develop the business across its chosen geographic regions, in particular we focused on key areas of continued oil and gas investment
such as Central Asia, South America and Africa. Our strategy to overlay our core inspection work with higher margin services such as asset integrity management
services, project management consultancy, hotwork enclosures and sub sea services has been successful as individual offices are increasingly extending the scope of
services to each client.
Asia & Australasia
Turnover: US$13.5 million (2008: US$14.1 million), Contribution to Group Sales: 15% (2008: 18%)
Revenues from Asia and Australasia remained broadly level, however, we expect revenues to increase in the second half as the offtake for the Samsung Heavy Industries
contract was initially slow but has since come on track. Velosi India has also made good progress with a series of new contract wins with ONGC, GAIL, Bharat
Petroleum and GSPL worth approximately US$6.0 million. In addition, the PPL contract has been expanded to include the assembly and installation of a further 5 derricks.
As a result we expect to see an uplift in contribution from this region in the second half of the financial year.
Europe
Turnover: US$18.5 million (2008: US$19.6 million), Contribution to Group Sales: 21 % (2008: 25%)
European revenues in 2008 grew significantly and therefore this first half performance is against very strong comparables. The largest contributor to Europe has been the BP
Norge AS contract, providing inspection consultancy services in fabrication sites in Norway, the United Kingdom, and Holland amongst other European
countries, which marked the Group's first contract in Norway. The Saipem contract in Italy was deferred slightly to the fourth quarter of 2009 but is still expected to
contribute strongly over the duration of the contract.
Middle East
The Middle East region produced a strong contribution, building on a good result in 2008. A combination of the new offices opened in the previous year with a succession of
new contract wins has consolidated Velosi's leading position in this region. The 5 year Saudi Aramco contract which began in the second half of 2008 is an important part of
our overall success. In addition, Petroleum Development Oman has extended its QA/QC contract for the third time, which covers third party inspection services and is worth
approximately US$30 million over 4 years. Velosi Certification Services LLC also secured a 5 year worldwide vendor inspection and site construction inspection contract in
onshore and offshore locations with ADGAS worth in excess of US$ 10 million.
Africa
The first half of 2009 saw revenues increase to US$15.2 million.. The Group was pleased to see the trading performance recover which was due to good contributions from
across the Group's areas of operation in Africa including; Ghana, Angola, South Africa and Egypt
On April 16 2009 we were awarded a substantial new 5 year contract with the South African state owned electricity provider Eskom. The contract has been won in a 50:50
partnership with Khum MK Investments to provide Quality and Inspection services for Eskom's new build power plant program. Capital spend on this program is expected to
be in excess of US$30 billion and the fees for inspection should be in the region of 1-3%. The Quality and Inspection services work will be spread out
amongst eight competing inspection authorities.
Americas and Former Soviet Union (FSU)
Americas and FSU traded broadly in line with the previous year, has significant strategic importance and continues to make a useful contribution to the overall Group. We
remain confident of our ability to increase revenues by focusing on developing inspection services and securing long term contracts. With existing clients including: UOP
(Honeywell) Inco Australia, Gulf Interstate Engineering, CB&I, GE Vetco Gray, Enersul, J. Ray McDermott, and KBR - there is a very solid base on which to develop.
We have been working hard in 2009 to develop the Russian and Kazakhstan certification work for companies in Canada, and a gradual increase of orders from Canadian
companies is expected towards the end of 2009.
Employees
On behalf of the Board, I would like to take this opportunity to thank all of our employees worldwide for their dedication and continued hard work.
Outlook
Following a period of rapid expansion, the Group has, over the last 12 months, consolidated its position creating a stable platform to continue to grow and generate further
value for shareholders. Cashflow and cash reserves have increased significantly providing the Group with greater flexibility and security.
While oil prices have improved from the lows of around $40 per barrel, this increase is more a function of the curbing of supply and the value of the US$, and is not, in our
opinion, an indication of increasing demand. We therefore view the current market as challenging and we are working to mitigate the slowdown in investment and the natural
tendency for clients in this market to become more price sensitive. Having said that, in recent years the Group has expanded substantially and now operates
from 36 countries with 5 principal offices, up from 27 countries with 4 principal offices in 2006. The new offices opened are contributing strongly and this increased volume is
principally the reason behind our ability to continue to grow revenues in this environment. Together with our now global presence, which provides a natural hedge against
being overly exposed to any one region, we are specifically targeting those geographic regions where the oil and gas majors are continuing to invest such
as Kazakhstan, West Africa, Australia and Brazil. Underpinning this strategic approach is our ongoing focus on ensuring the business operates on a cost efficient basis
thereby maintaining our strong financial base.
We are pleased with our trading performance for the first half of 2009 and with the first three months of the second half nearly completed, together with our visibility on future
revenues, we are confident that we are trading in line with expectations for the full year. Looking ahead, our order book remains strong and we believe we are achieving our
aims of delivering a truly global service offering, providing a range of increasingly diverse and higher margin services.
JOHN HOGAN
CHAIRMAN
VELOSI LIMITED
Consolidated Statement of Comprehensive Income


30 June 2009 30 June 2008 2008
US$'000 US$'000 US$'000
(unaudited) (unaudited) (audited)
Note
Revenue 7 89,187 77,306 182,072

Cost of sales (67,832) (58,232) (136,509)
-------------- -------------- ---------------
Gross profit 21,355 19,074 45,563
Other operating income 735 28 883
-------------- -------------- ---------------
Finance costs (117) (269) (533)
Share of profit of associated companies 865 418 1,006
-------------- -------------- ---------------
Profit on ordinary activities before tax 7,917 7,168 14,862
Income tax expense 3 (1,520) (1,160) (3,208)
-------------- -------------- ---------------
Profit for the period 6,397 6,008 11,654
-------------- -------------- ---------------
Exchange differences on translating foreign 785 - (2,828)

operation
-------------- -------------- ---------------
Other comprehensive income for the period net of 785 - (2,828)
tax
-------------- -------------- ---------------
________ ________ ________
Total comprehensive income for the period 7,182 6,008 8,826
________ ________ ________

Owners of the parent 5,057 4,410 9,306
Non - continuing interest 1,340 1,598 2,348
________ ________ ________
6,397 6,008 11,654

________ ________ ________

Owners of the parent 5,537 4,410 7,205
Non - continuing interest 1,645 1,598 1,621
________ ________ ________
7,182 6,008 8,826

________ ________ ________
Basic earnings per share 5 11.2 cents 10.4 cents 21.7 cents
Diluted earnings per share 5 11.0 cents 9.4 cents 19.6 cents
VELOSI LIMITED

As at 30 June 2009

2009 2008 2008
US$'000 US$'000 US$'000
Note (unaudited) (unaudited) (audited)
Assets
Non-current assets
Goodwill 8,646 7,341 8,307

Other intangible assets 8 1,598 1,549 1,744
Property, plant and equipment 11 9,314 7,325 8,261
Investment in associated companies 12 1,364 1,247 1,338
Other investments - 9 -
-------------- -------------- ---------------
21,372 17,513 20,050
-------------- -------------- ---------------
Current assets

Inventories 4,080 4,610 2,271
Tax recoverable 85 450 126
-------------- -------------- ---------------
86,932 75,567 86,890
-------------- -------------- ---------------
Non-current asset held for sale - 900 -

________ ________ _______
Total assets 108,304 93,980 106,940
________ ________ ________
Share capital 935 869 887

Share premium 33,801 30,226 32,422
Translation reserve (1,685) (63) (2,164)
-------------- -------------- ---------------
Total equity attributable to equity holders 62,186 50,323 55,062
Minority interest 8,803 7,241 7,293
-------------- -------------- ---------------
Total equity 70,989 57,564 62,355
-------------- -------------- ---------------
VELOSI LIMITED

As at 30 June 2009

2009 2008 2008
US$'000 US$'000 US$'000
Note (unaudited) (unaudited) (audited)
Current liabilities

Bank and other borrowings 14 2,824 5,577 3,581
Current tax liabilities 2,493 2,592 2,421
Deferred consideration 9 1,260 3,984 2,673
-------------- -------------- ---------------
34,743 34,512 42,280
-------------- -------------- ---------------
Deferred tax liabilities 36 20 37

Bank and other borrowings 14 1,531 1,549 1,276
Other non-current liabilities 1,005 335 992
-------------- -------------- ---------------
2,572 1,904 2,305
-------------- -------------- ---------------
-------------- -------------- ---------------

-------------- -------------- ---------------
________ ________ _______
Total equity and liabilities 108,304 93,980 106,940
________ ________ ________
VELOSI LIMITED
Consolidated Statement of Cash Flow


30 June 2009 30 June 2008 2008
US$'000 US$'000 US$'000
Net cash from / (used in) operating activities 4,538 (513) 9,928
________ ________ ________

Acquisition of property, plant and equipment (1,338) (1,310) (2,687)
Receipts from sale of property, plant and equipment 11 128 448
Acquisition of new subsidiary companies, net of cash - - (1,168)
(Advance to) / repayment from associated companies (738) 228 (358)
Dividend income from associated company 777 - 414
________ ________ ________
Net cash used in investing activities (1,257) (814) (3,107)
________ ________ ________

Proceeds from issue of shares - 8,660 8,660
Share issue expenses - (391) (445)
Net borrowings (374) 216 (383)
(Repayment to) / advance from related party (101) (402) 437
(Repayment to) / advance from directors (367) (54) 109
Dividend paid to shareholders - - (435)
Dividend paid to minority shareholders of subsidiary
companies (135) (86) (208)
________ ________ ________
Net cash (used in) / from financing activities (977) 7,943 7,735
________ ________ ________
Net increase in cash and cash equivalents 2,304 6,616 14,556

Foreign exchange translation differences 50 - (876)
Cash and cash equivalents at the beginning of the
period 17,791 4,111 4,111
________ ________ ________
Cash and cash equivalents at the end of the period 20,145 10,727 17,791
________ ________ ________
Cash and cash equivalents comprise:

Current assets - Cash and cash equivalents 22,445 15,881 20,641
Current liabilities - Bank overdraft (2,300) (5,154) (2,850)
________ ________ ________
20,145 10,727 17,791

________ ________ ________
VELOSI LIMITED
Consolidated Statement of Changes in Equity

Share Share Minority Total

capital premium Reserves Total interest equity
Unaudited US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January
2008 787 21,310 14,653 36,750 5,729 42,479
Share allotment 82 8,916 - 8,998 - 8,998
Total comprehensive
income - - 4,410 4,410 1,598 6,008
Issue of share options - - 165 165 - 165
Dividend paid - - - - (86) (86)
________ ________ ________ _______ _______ ________
Balance at 30 June 2008 869 30,226 19,228 50,323 7,241 57,564
________ ________ ________ _______ _______ ________
Balance at 1 July 2008 869 30,226 19,228 50,323 7,241 57,564

Share allotment 18 2,196 - 2,214 - 2,214
Total comprehensive
income - - 2,795 2,795 23 2,818
Acquisition of subsidiary - - - - 151 151
Dividend paid - - (435) (435) (122) (557)
________ ________ ________ _______ _______ ________
Balance at 31 December
2008 887 32,422 21,753 55,062 7,293 62,355
________ ________ ________ _______ _______ ________
Balance at 1 January
2009 887 32,422 21,753 55,062 7,293 62,355
Share allotment 48 1,379 - 1,427 - 1,427
Total comprehensive
income - - 5,537 5,537 1,645 7,182
Dividend paid - - - - (135) (135)
________ ________ ________ _______ _______ ________
Balance at 30 June 2009 935 33,801 27,450 62,186 8,803 70,989
________ ________ ________ _______ _______ ________
VELOSI LIMITED
1. General information
Velosi Limited was incorporated in Jersey on 28 March 2006. The principal activity of the Company is investment holding. The principal activities of the Group are
provision of asset integrity management and health, safety, and environment (HSE) services, which cover quality assurance and quality control services. This includes
certification, project verification, quality enhancement and engineering support services.
2. Basis of preparation and significant accounting policies
The interim condensed consolidated statement is unaudited and does not constitute statutory financial statements. The interim condensed consolidated statement
incorporated the results of the Velosi Group for the period from 1 January 2009 to 30 June 2009. The results for the year ended 31 December 2008 have been
extracted from the statutory financial statements' for Velosi Limited for the year ended 31 December 2008 which are prepared under International Financial Reporting
Standards (''IFRS''). The interim report should be read in conjunction with the annual financial statement for the year ended 31 December 2008.
The accounting policies, presentation and methods of computation have been followed in these unaudited financial statements as were applied in the preparation of
the Group's annual financial statements for the year ended 31 December 2008, except for the impact of the adoption of the Standards and Interpretations described
below:-
IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009)
IFRS 8 is a disclosure Standard that has resulted in a redesignation of the Group's reportable segments (see note 7), but has had no impact on the reported results or
financial position of the Group.
IAS 1 (revised 2007) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009)
The revised Standard has introduced a number of terminology changes (including revised titles for the condensed financial statements) and has resulted in a number of
changes in presentation and disclosure. However, the revised standard has had no impact on the reported results or financial position of the Group.
The consolidated financial statements are presented in US Dollars ('US$') and all values are rounded to the nearest US$ '000 except where otherwise indicated.
The Interim Report for the six months ended 30 June 2009 was approved by the Directors on 16 September 2009.

30 June 2009 30 June 2008 2008
US$'000 US$'000 US$'000
Foreign tax:
Overseas tax payable 1,499 1,163 3,446
Total current tax 1,499 1,163 3,446
Deferred tax:
Movement in deferred tax position (51) (42) (352)
Taxation on profit from ordinary activities 1,448 1,121 3,094
Add: Share of taxation of
associated companies 72 39 114
1,520 1,160 3,208
Interim period income tax is accrued based on the estimated average annual effective income tax rate of 19% (Interim period 2008: 16%).
4. Share capital
(a) Share capital (unaudited)
2009 2008
US$'000 US$'000
Authorised:
4,400,000,000 (2008: 4,400,000,000) Ordinary shares of
US$0.02 each 88,000 88,000
Issued:
46,765,871 (2008: 44,341,580) Ordinary shares of US$0.02
each 935 887
(b) Share issued during the period (unaudited)
Issue value per share Share Share

Shares capital premium
GBP US$ US$'000 US$'000
At 1 January 2009 44,341,580 887 32,422
Shares issued on
15 May 2009 0.39 0.59 2,424,291 48 1,379
46,765,871 935 33,801
On 15 May 2009, 2,424,291 new ordinary shares were issued to shareholders of K2 Specialist Services Pte Ltd ('K2'), pursuant to an agreement dated 19 October
2007 between K2 and Velosi Industries Sdn Bhd, following the satisfaction of the entire profit guarantee of SGD4,000,000 (approximately £1.34 million) aggregate
profit after tax and minority interests, set for the stipulated guarantee period.
The basic and diluted earnings per share is calculated by reference to the earnings attributable to ordinary shareholders divided by the number of shares in issue as at
30 June 2009, as follows:

30 June 2009 30 June 2008 2008
USD'000 USD'000 USD'000
Profit after taxation and minority interest 5,057 4,410 9,306
Number Number Number

the purpose of calculating basic earnings
per share 44,971,092 42,419,424 42,809,629
Effect of dilutive potential ordinary

shares:
Share options - 2,067,708 -

Warrants - 476,749 -
Deferred consideration 834,575 1,853,193 4,463,847
the purpose of calculating diluted
earnings per share 45,805,667 46,817,074 47,273,476
Earnings per ordinary share

Basic earnings per share 11.2 cents 10.4 cents 21.7 cents
Diluted earnings per share 11.0 cents 9.4 cents 19.6 cents
6. Dividends
A final dividend of US$435,000 (representing 1 cent per share) in respect of the financial year ended 31 December 2008 was paid on 31 July 2009.
The Directors do not propose to pay an interim dividend. The Directors do intend, subject to the availability of distributable reserves, to recommend a final dividend to
shareholders in respect of the financial year ending 31 December 2009.
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief operating decision maker as defined in IFRS 8, in order to allocate resources to the
segment and to assess its performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of segments
(business and geographical), using a risks and rewards approach, with the entity's 'system of internal financial reporting to key management personel' serving only as
the starting point for the identification of such segments. As a result, following the adoption of IFRS 8, the identification of the Group's reportable segments has
changed.
Europe Middle Americas Africa Australasia Central Asia Others Adjustment Consolidated
East
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
2009
Turnover 23,666 35,749 9,663 15,086 14,105 487 - (9,569) 89,187
Gross profit 3,796 7,197 1,734 1,430 4,689 292 - 2,217 21,355
Profit / (loss)
before tax 1,036 4,489 145 (552) 1,276 75 (600) 2,048 7,917
Adjustments listed above relate to the following:

Share of profit of associates,
net of taxation 793 793
Segment assets 24,062 42,500 11,914 20,718 31,861 552 36,684 (59,987) 108,304
Segment
liabilities 21,082 21,426 10,869 18,240 21,011 560 2,338 (58,211) 37,315
2008
Turnover 21,205 27,766 10,609 9,307 13,122 - 2,128 (6,831) 77,306
Gross profit 3,327 6,265 1,918 1,881 4,375 - 939 369 19,074
Profit / (loss)
before tax 1,100 3,748 274 421 1,892 - (766) 499 7,168
Adjustments listed above relate to the following:

Share of profit of associates,
net of taxation 379 379
Segment assets 18,540 31,963 11,914 16,340 27,242 - 33,946 (45,965) 93,980
Segment
liabilities 16,435 16,812 10,816 13,157 20,104 - 2,550 (43,458) 36,416
8. Other intangible assets

2009 2008 2008
USD'000 USD'000 USD'000
At 1 January 1,744 1,662 1,662

Foreign exchange translation difference 23 - (124)
Acquisition of subsidiary companies - - 537
Amortisation (169) (113) (331)
1,598 1,549 1,744
Acquired intangible assets which consist of customer lists acquired are valued at cost less accumulated amortisation. Amortisation is calculated using the straight
line method over the expected useful life ranging from 5 and 10 years.
9. Deferred consideration

2009 2008 2008
USD'000 USD'000 USD'000
At 1 January 2,673 4,477 4,477

Foreign exchange translation difference 15 - (312)
Acquisition of subsidiary companies - - 1,269
Consideration settled (1,428) (493) (2,761)
1,260 3,984 2,673
The provisional deferred consideration consists of cash and shares.
10. Seasonality
The Group's business operations are not seasonal.
During the period, the Group acquired new plant and machinery at a cost of US$1,761,000 (2008: US$1,350,000). The Group also disposed of plant and machinery
with net book value of US$11,000 (2008: US$128,000).
12. Investment in associated companies
Investment in associated companies has increased as a result of the share of net profit of associated companies, foreign exchange translation difference and dividend
from associated companies.
The following table provides the total amount of transactions, which have been entered into with related parties for the relevant financial year:
Rental received
and receivable
Sales to related Purchases from from related
parties related parties parties
US$'000 US$'000 US$'000
Related parties
Velosi (M) Sdn Bhd 2009 1,349 34 -
2008 1,447 101 31
Associated companies
Velosi LLC 2009 819 17 -
2008 407 17 -
Term and conditions of transactions with related parties
The above transactions were entered into in the normal course of business and were carried out on an arms-length basis.
Amount due from related party
The amount due from related party included under current assets represents unsecured interest free advances repayable on demand. The related party is Velosi (M)
Sdn Bhd. Included in trade and other receivables is an amount of US$1.247 million (2007: US$0.391 million) pledged as security for bank guarantee facilities.
14. Bank and other borrowings

2009 2008 2008
US$'000 US$'000 US$'000
Current
Bank overdrafts 2,300 5,154 2,850
Bank loan 76 128 73
Hire purchase 448 295 658
2,824 5,577 3,581
Non-current
Bank loan 356 1,069 343
Hire purchase 1,175 480 933
1,531 1,549 1,276
4,355 7,126 4,857
These interim results will be available on the Company's website www.velosi.com. Further copies can be obtained from the registered office at Walker House, PO
Box 72, 28-34 Hill Street, St Helier, Jersey JE4 8PN Channel Islands.

END
IR CKKKDBBKBKCB

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Deep

Harriman House, 2013

Spring Group PLC

Preliminary Announcement 2007

Spring continues strong growth in profit and net fee income

Glotel successfully integrated

• Revenues of £432.8 million (2006: £407.3 million)

STRATEGIC AND OPERATIONAL HIGHLIGHTS

• 2007 goals realised - strategic plan ahead of schedule

Peter Searle, Chief Executive Officer, commented:

'During 2007 we achieved a robust financial performance whilst putting

'With the Group increasingly diversified by both geography and market

'2008 has started as 2007 finished, with continuing improvement in key

For further information:

Peter Darraugh, Chief Financial Officer, Spring Group plc

Ben Atwell/Susan Quigley, Financial Dynamics 0207 831 3113

Adrian Hadden, Managing Director, Collins Stewart 0207 523 8353

Information on Spring can be found on www.spring.com

I am pleased to report that 2007 saw a further improvement in the performance of

We announced the successful completion of the acquisition of Glotel plc in July

Annual General Meeting

CHIEF EXECUTIVE OFFICER'S REVIEW

In July we successfully completed the acquisition of Glotel plc. This

Revenue Operating profit

This division comprises the IT Contracting and Permanent Recruitment Services

Improved Business Efficiency

In order to implement best practice and to get maximum economies of scale we

During 2007 we achieved a robust financial performance whilst putting in place

In 2007 the Group generated revenues from continuing operations of £432.8

Gross Profit (Net Fee Income)

The Group continues to focus on the management and improvement of working

As mentioned above, in the Group's operating profit includes £0.5 million of

Earnings per Share and Dividend

Year ended Year ended

Revenue 3 432,826 407,301

Finance income 1,396 943

Profit for the year 5,945 4,819

Earnings per share 5

Non current liabilities

Total liabilities 75,245 64,832

Total equity and liabilities 158,309 139,537

Cash Flow Statement

Exchange losses/(gains) on cash and cash equivalents (21) 7

Notes to the accounts

1 January 2007 16,122 14,574

(continued from table above)

1 January 2007 (5,370) (88) 18 9,765

(continued from table above)

Total other Retained Total

______ ______ ______

1 January 2007 4,325 39,684 74,705

The principal activities of the Group are described in the Chairman's

The Group considers there to be two business segments - Professional

Professional Staffing includes the provision of IT and Telecoms specialists to

Revenue Operating profit

Net finance income 1,148 757

Profit before taxation 7,058 5,378

Depreciation and Capital expenditure

______ ______ ______ ______ ______ ______

1) Intercompany revenue is predominantly priced at cost plus a small

(continued from table above)

Acquisition of Glotel plc

Property, plant and equipment 868 868

__