Weir Group Inc. — Annual Report 2010

Jun 30, 2010

ANNUAL REPORT AND FINANCIAL STATEMENT WATERMAN GROUP PLC 2010

• 29 Financial Review
• 31 Corporate Responsibility
• 34 Statement of Directors' Responsibilities
• 35 Directors' Remuneration Report
  • 40 Corporate Governance Report
  • 43 Directors' Report
• 45 Independent Auditors' Report to the Group
• 46 Consolidated Income Statement
• 46 Consolidated Statement of Comprehensive Income
• 47 Consolidated Balance Sheet
• 48 Consolidated Cash Flow Statement
• 49 Consolidated Statement of Changes in Shareholders' Equity
• 50 Notes to the Consolidated Financial Statements
• 74 Independent Auditors' Report to the Company
  • 75 Parent Company Financial Statements

• 76 Notes to the Parent Company Financial Statements

  • 81 Five Year Results Summary
  • 81 Advisers
  • 81 Financial Calendar
  • 82 Waterman Presence

• 01 Financial Highlights

• 02 Chairman's Statement
• 05 Operational Review
• 07 Civil & Transportation
• 11 Structures
• 15 Building Services
• 19 Energy, Environment & Design
• 23 26 International Board of Directors

	2010	2009
Revenue	£83.2m	£122.4m
(Loss)/earnings before interest, tax, depreciation and amortisation*	(£2.3m)	£6.3m
(Loss)/Profit before tax*	(£5.0m)	£2.6m
Profit before tax, exceptional items and amortisation of acquired intangible assets	£1.1m	£3.1m
Net debt at 30 June	£6.4m	£10.2m
Net asset value per share	110p	126p
Dividend per share	1.8p	2.2p

Notes

* The pre tax loss includes a provision of £5.6m for certain exceptional items.

The last year has been particularly challenging for Waterman Group as we have responded to the extreme and protracted downturn in the private sector which has affected our business worldwide. Effective measures have been taken to protect the long term future of the company as our workload reduced. Shareholders should be aware that in making these changes, your Board has had to balance the need to reduce costs while maintaining the skills base for our future. Inevitably, margins and short term profitability have been impacted. But, across the Company, we are focused upon growth. Property leases take time to unwind, however I am glad to report that, over the near future, a considerable amount of surplus office space will be released. This alone will begin to return the Group to a more normal level of profitability.

RESULTS

In the year to 30 June 2010, Waterman Group achieved a revenue of £83.2m (2009: £122.4m). Pre tax profit was £0.6m before provisions of £5.6m for exceptional items which resulted in a statutory pre tax loss of £5.0m (2009: profit of £2.6m).

The exceptional items are for the following:-

• In Ireland, the write off of irrecoverable • trade receivables and unbilled amounts • on contracts related to clients affected by • the depressed economy and lack of • progress on the release of NAMA • (National Asset Management Agency) • funding to support developers.
• In the UK and Ireland, the write off of the • cost of unused office space, which is the • result of the rationalisation of regional • offices and the integration of teams from • Boreham, a company the Group acquired • three years ago, into our Waterman offices • following the end of their earn out period.
• In Poland, Belgium and Romania, the • write off of irrecoverable trade receivables, • unbilled amounts due on contracts, • goodwill, assets and the cost of unused • office space.

FUNDING

During the year, the Group has made working capital management a priority. Net debt has been reduced to £6.4m (2009: £10.2m) and the Group debtor days have reduced to 91 (2009: 109). Effective working capital management has remained a priority and strict financial controls have been implemented. As a result, all the senior management teams are focused upon the need to maintain a tight financial discipline and a strong approach to risk management.

Cash and cash equivalents at the year end amounted to £4.9m. Our principal bank loans are on quarterly repayment terms through to 2017. In addition, we have mortgages on one of our two property assets in London and Leeds and repayments will continue until 2021. In August 2010, our main bank, HSBC, waived the requirement for a covenant test at 30 June 2010 and 31 December 2010 following agreement to the provision for the exceptional items.

STRATEGY

Prior to the global recession, we were part way through our strategic plan for diversification of the business both through geographical spread and increased engineering specialisms. Our vision was to become "international consultant of choice" for our clients and employees and to achieve this by sustainable growth through a process of organic expansion and selective acquisitions.

Clearly, the world has experienced a period of turmoil and the markets we operate within have changed considerably. As a result, our structure has had to evolve. We have made good progress on legacy issues and most of the action which was required has been taken. Inevitably, this had led to a number of departures from the Group. This is regrettable but action was needed to rebase Waterman for its future. Another important cost reduction has been to reduce the scale of our property infrastructure.

Beyond cutting costs, we adopted an interim strategy, which can be described as 'proactively defensive'. While cost reduction was needed, decisions have been made with the aim of protecting the long term shareholder value. We have re-aligned our employee numbers to be more in balance with predicted workload. In some instances, we have retained core skills and this has affected profitability in the short term. However, this investment is, we believe, necessary in order to preserve our strong

reputation and to provide professional services in markets where we anticipate future recovery and growth.

We have rationalised our offices to provide better communication and to make our operations more efficient. IT plays an increasingly important role in the business since it is helping us to manage our workload and increase utilisation. Where possible, we have moved work between offices to provide revenue for our operations in locations where workload on local projects have been impacted by the recession. Looking to the future, advances in technology provides an interesting opportunity for us to improve efficiency, build margins and restore profitability.

Our aspiration is to "stand out from the crowd" in the markets in which we operate. Our original vision to be "international consultant of choice" for our clients and employees is still our objective. However, we will be more focused on geographical areas where we are already established or where we can provide a consultancy offer which is different from our competitors.

Our strategy for long term growth is to focus upon four hub regions and to maintain a number of satellite offices in key geographical locations. This combination will provide us with the opportunity to focus upon improving utilisation while maintaining client relationships and our market presence.

The UK, which contributes a high proportion of our revenue, is a significant hub for the Group. While the market may remain subdued in the near future we are confident that it will return to growth. For example, The City and West End of London are short of major office developments and there is encouraging progress by a number

of developers who are starting projects. Waterman is one of the leading firms in London and this recovery will be important while the public sector is downsized. Other markets such as infrastructure and power will also recover since, as a growth economy, the UK has to have a transport system and energy supply which aids business.

Overseas, our resources are being re-focused into three main international hubs which are Australia, Middle East and CIS. Europe will be managed by our UK and Irish operations. Our India office is currently providing outsourcing resource for our UK operations as well as providing opportunities in the local market. It is central to our strategy as particular offices progress, that we build resources to support that growth.

Eighty per cent of our revenue is from the UK and Australia and our future growth will be primarily aligned with the technical excellence and professional relationships built up over many years by our teams in these countries. Our strategy to drive overseas growth will be to increase the leverage of the skills and resources within our established UK and Australian hubs.

PEOPLE

Our utilisation rates have been lower than forecast during the financial year and we have continued to review the alignment of our resources with our anticipated workload. This has resulted in employee numbers decreasing from 1,494 to 1,216 over the period, with an associated one off charge of £0.65m being absorbed within our declared profit for the financial year.

In early 2009, we consulted with our employees and agreed a voluntary reduction in salaries of 10% or more across the majority of the business. During 2010, we have partially reinstated salaries where prospects and profitability have improved within our business sectors. I would like to thank all staff for their agreement in accepting salary reductions to support the company. In the next financial year, the increased salary costs will potentially lower margins. However, it is vital that we maintain the goodwill of our staff and continue to invest in them, as our main asset.

CHANGE IN OWNERSHIP OF WATERMAN EMIRATES PTY LTD

On 3 November 2009, Waterman Group became owner of 100% of the share capital of Waterman Emirates Pty Ltd. Previously, 20% of the share capital of Waterman Emirates Pty Ltd was held by a minority shareholder.

PROPERTY

On 24 November 2009, Waterman Group completed the sale of a 580m2 freehold office property in Southwark, London which was surplus to requirements for £1.57m. The property was revalued in 2004 upon the introduction of IFRS and a small profit has been recognised over its IFRS book value.

Waterman Group owns two further properties in London and Leeds and these are both fully occupied by the company.

DIVIDEND

The Board is proposing to pay a final year dividend of 0.9p per share (2009: 0.9p) payable on 11 January 2011 to shareholders on the register on 17 December 2010. This final dividend, with the interim dividend of 0.9p which was paid on 31 March 2010, makes a total dividend for the year of 1.8p (2009: 2.2p).

OUTLOOK

Following the actions taken over the last year, we have positioned the business for emerging opportunities in our core markets. I would add that this has been achieved without recourse to shareholders for additional funds, indeed net debt has been reduced, and while maintaining key client relationships.

Our strategy for profitable growth is three fold. On one level we will continue to focus upon removing costs which do not produce long term value. The reduction of our property leases will, we estimate, improve our profitability by at least £1.7m progressively on a full year basis by the end of 2011/12. A second objective is to align resources with future workload. Coupled with this is the need to return each of our business units to profitability and to capitalise on the investment we have made in senior management. It is they who maintain

our client relationships, provide our technical excellence and generate opportunities. Client relationships remain central to a people business like Waterman.

The third and most important objective is to return to revenue growth. We are witnessing some positive signs of private sector development schemes returning with new commissions on projects. This will result in fee income and profit in the next two years. London is already short of major schemes moving forward. In the UK public sector, uncertainty remains about the extent of government spending reductions and the possible impact on our revenue.

Looking to overseas growth, we have targeted those regions and sectors where Waterman has a highly competitive position. Our hub strategy has the advantage of maintaining client facing staff while allowing utilisation to be improved.

We look to the future with a renewed degree of confidence, albeit with our usual element of caution. Management has taken most of the action required to return your company to a more normal level of profitability. In terms of growth, Waterman is a well respected firm and, as both the UK and international economies recover, we expect to win a good flow of work from clients who have retained us over many years. On behalf of the Board, I would like to thank them for their support and look forward to continuing the relationship into the future.

Finally, I must thank the staff at Waterman. Their commitment and professionalism has been first class during these most demanding times.

Roger Fidgen Chairman 27 October 2010

Waterman operates within the UK in four segmental profit centres based on the following engineering disciplines which provide 69% of the Group revenue:-

Civil and Transportation Structures Building Services Energy, Environment & Design

Each engineering discipline works in a range of sectors in both the private and public markets. Professional advice and designs provided by the Group range from planning consultancy such as environmental impact assessments and transportation studies, through to detailed design and facilities management.

Overseas, we operate in each country as a multi-discipline business, providing a range of services to a multitude of sectors. Work is generally in the private markets, although in Australia and Ireland we are also involved in the public markets.

Waterman has traded through a difficult period when property markets in the UK and overseas have remained subdued by the downturn in the economy. Specific actions have been taken to align the business with future workload and prospects. Good progress has been made on many legacy issues and we can now focus on the future. A considerable amount of surplus office space will be released over the next two years which will increase our profitability.

Although our markets are brighter than before, there is reason to expect a slow recovery. Government finances in deficit, reduced stimulus measures, rising borrowing margins, higher inflation and risks for falling asset prices may all be contributory factors. We remain alert to opportunities which will arise and the risk that new threats may become apparent.

Waterman is a company with a strong track record in its core markets and whilst we will be entering a period of economic austerity we believe that there will still be a requirement for a quality service.

Nicholas Taylor Chief Executive 27 October 2010

Waterman's civil engineering and transportation businesses have been working on projects in the rail, highway, transportation, public sector, power, waste and energy markets.

Consultancy framework agreements continue to provide a significant proportion of the workload and it is anticipated that this will continue in the coming year especially in the waste, energy and transport markets.

RAIL

Waterman continues to be involved in a range of rail projects in London and the South East. Work has just been completed for major infrastructure works at Kings Cross station in London for joint clients Network Rail and Argent. Waterman has subsequently been appointed on the first stages of the Royal Arsenal Woolwich Crossrail station box for Berkeley Homes where 'GRIP 4' work has been successfully completed and follow on work has been secured.

Transport for London (TfL) has appointed Waterman for a four year consultancy framework for the provision of civil, structural and M&E engineering services and project management services specifically for Railway Engineering Assets, such as stations and depots.

As part of a national business improvement plan, Network Rail has commissioned Waterman to provide civil and structural engineering design on a new National Centre for 3,000 staff. It is being designed to maximise future flexibility of uses and is located close to Milton Keynes railway station.

Waterman's AutoRail™ asset database is widely used by the rail industry and continues to be developed to meet the changing needs of Network Rail, train operating companies and rail contractors.

HIGHWAYS AND TRANSPORT

Under the Project Support Framework agreement with the Highways Agency (HA), Waterman has carried out a number of major consultancy commissions in addition to the supply of up to twenty project and programme management staff to HA regional offices.

As part of the framework, Waterman is working with the HA to progress a major £110m Managed Motorway scheme from J18 to J20 of the M62 Motorway. The project incorporates Active Traffic Management (ATM) and hard shoulder running and has progressed to the design development phase.

Waterman continues to have a successful partnership with Dudley MBC and is working on the £12m Burnt Tree Island Junction Improvement Scheme in the West Midlands which is now under construction.

Thetford SUE (Sustainable Urban Extension) is a proposed residential and commercial extension immediately adjacent to the urban area north of Thetford. Waterman is assessing the impact to the A11 and the road network within the town to provide proposals for the necessary upgrades.

TRANSPORTATION AND DEVELOPMENT INFRASTRUCTURE

Work has re-commenced on the £500m Eastgate development in Leeds for Hammerson. The project is a major city centre regeneration scheme comprising retail, office, gym and medical centre. Waterman is providing environmental, transport and flood risk assessment as part of the planning application and will be undertaking civil and structural design services on the scheme.

Master planning studies, especially for major overseas projects, are contributing to an increasing workload. Flood risk assessments and associated sustainable drainage design remain a key element of development and infrastructure planning and the company is a leading provider of these services, constantly developing new solutions to meet the increasing demands of challenging legislation.

Construction commenced in April 2010 on the £40m Manufacturing Technology Centre at Ansty Park, Coventry. Waterman is providing full multi-disciplinary services on the project and has been novated to the Design and Build Contractor. The building will be approximately 12,000m2 with provision for 50% expansion and will be used for the development of advanced and innovative manufacturing techniques linked to the aerospace market. The development is targeted to BREEAM excellent standard utilising the BRE Green Guide to Specification.

Waterman has remained active within the residential market. Projects at design stage include the 500 unit Tithe Park scheme in Southend for Lansbury and a mixed use scheme in Castle Donington for Miller Homes and Clowes Developments including 1,000 residential units. Projects at planning stage include a 300 home development in the Green Belt in East Tilbury, Essex for Cordea Savills and a development for Bellway Homes in Cuckfield.

Tesco remains a major client in the retail market and Waterman has continued to provide specialist transport advice on new and existing stores. Projects have included new superstores in Gillingham, Fareham, Carluke, Kirkwall and Amesbury. The company is also advising on a large number of the smaller format stores and improvements to the traffic management for existing Tesco stores throughout the UK and Ireland.

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PUBLIC SECTOR

Waterman's many framework agreements with councils and other public sector agencies continue to provide a significant workload. Work ranges from small scale design and transport planning projects to larger master planning and public realm work. Waterman is currently working for a number of local authorities in the North West on bridge and structural inspection contracts.

Waterman has recently completed a district infrastructure study for Horsham District Council (HDC). The study is one of the key components to assist HDC in its review of the Local Development Framework Core Strategy. It provided a database on future infrastructure requirements to assist HDC in making decisions on the deliverability of growth and the development of the preferred strategy for the district to 2026 and beyond.

Through its strategic intermediary relationships the company continues to source new project commissions for an array of public realm design and master planning projects. This includes the redevelopment of Attercliffe in Sheffield and the second phase of Neptune Developments' £60m regeneration of New Brighton seafront for Wirral Metropolitan Borough Council. Waterman has been appointed by Bradford Metropolitan District Council for the regeneration of Bradford-Shipley Canal Road Corridor.

SECONDMENT SERVICES

The Group's provider of secondment services, Waterman Aspen, delivered a turnover and contribution ahead of budget for the financial year. This performance was despite a severe hardening of its core public sector market in the final quarter.

The company continues to work on a number of strategic frameworks and during the year was appointed on a four year framework agreement for Transport for London, covering traffic management services and the supply of contract staff.

The public sector will be under pressure for some time and at present new secondments in this market are difficult to achieve, pending the results of the comprehensive spending review in October. It is hoped that the company's non-reliance on capital projects will enable the expertise of its workforce of over 200 to continue to be deployed in support of its traditional public sector clients. In addition, the stated aims of the new government in downsizing the public sector are likely to present opportunities for the company as roles and responsibilities are outsourced to the private sector.

The company is actively pursuing secondment opportunities in new markets, particularly power and energy and it is anticipated that these will provide increasing workload during the coming financial year.

POWER, WASTE AND ENERGY

Workload in the power, waste and energy markets has continued to increase. Transport planning services have been in demand for the waste and renewable energy markets with key projects including the Energy from Waste (EfW) and Materials Recovery Facility at Rookery South Pit in Bedfordshire for Covanta Energy; the provision of traffic and transportation advice for the new Kibworth recycling facility in Leicestershire; and input to the Bedford & Luton waste strategy plan.

The company has secured wind farm projects for Energiekontor, IMS Windpower, Peel Energy, RES Group and Nuon Renewables on projects including Asfordby Wind Farm, Leicestershire and Lillyhall Wind Farm, Cumbria. Waterman has also been commissioned via its strategic partner, Keppie Planning, on the progression of six wind farms across Scotland.

Waterman has a framework agreement with Scottish and Southern Energy for the provision of civil engineering consultancy services and has been appointed on the North of Scotland transmission network upgrade. This includes improvements to five substations, the civils works associated with the 400kv Beauly to Denny project and the new dc electrical connection from the Western Isles to Beauly. The framework is expected to provide significant workload for the next two to three years.

The power team continues to assist many of the UK power companies to maintain and improve power generating plants. This expertise is also being used in the planning of replacement generating capacity and it is hoped that projects will be progressed in the latter half of this financial year.

HEALTH AND SAFETY

Waterman Health & Safety provides consultancy services to clients in the public and private sectors, and also acts as Waterman Group's health and safety advisor.

CDM co-ordinator services form the most significant proportion of Waterman Health & Safety's revenue. As this service is an integral part of the construction industry, the market for these services has hardened. However, the division continues to perform well as it has a number of long term commissions in the healthcare sector and new framework agreements have been added during the year.

It is anticipated that the improving building sector market will result in an expansion of the division's workload during the next financial year.

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Waterman's structural business has maintained a consistent performance during the year, meeting its financial targets despite the uncertainty in the UK building sector due to the poor economic climate.

The implications of the public sector spending cuts are still to be determined and the full effects will not be clear until after the October public spending review. However, there has been an increase in private sector building activity. Levels of enquiries for new projects and commissions for feasibility and planning application work are encouraging and Waterman is well placed to take advantage of any economic improvement in the coming year.

URBAN REGENERATION

Waterman's structural, civil and environmental teams have continued to advise on the 200,000m2 retail led Eastgate development in Leeds, for which a new planning application is expected to be submitted in the near future. Initial feasibility studies on the 100,000m2 Westgate development in Oxford have recently commenced. During the year, work has been undertaken on a new planning application for Worthing Gateway, a 95,000m2 mixed use development adjacent to Worthing Station. The project involves structural, building services, environmental and specialist traffic and transportation input and Waterman is currently providing input for the forthcoming planning application. Station Hill, a mixed use scheme in Reading, for Sackville Developments (Reading) Ltd has received planning approval and Waterman is currently awaiting instructions to commence the next phase of design.

HOTELS

Construction work with Galliford Try has commenced on the 4 star Crowne Plaza Hotel at Heythrop Park Complex, Chipping Norton, near Oxford and the project also involves the refurbishment of part of the existing country park hotel.

A number of additional hotel projects are also progressing at the planning stage such as a new hotel for Festival Inns in Edinburgh.

RESIDENTIAL

Joint venture clients Grosvenor and Native Land's NEO Bankside development is under construction adjacent to Tate Modern in London. Waterman Structures has been appointed to provide planning advice on another striking Rogers Stirk Harbour + Partners designed riverside development, this time for client St James. Tideway Wharf, Battersea, which comprises six new blocks ranging from 12-20 storeys, will provide 780 new apartments and a hotel.

Student accommodation remains a buoyant sector for Waterman. Structural teams have been involved in the design of a number of developments in central London. NIDO at Spitalfields for Blackstone is a 34 storey tower providing over 1,000 high quality student apartments and is nearing completion in 2010. For Unite, 233 student apartments were completed in Southwark in June 2010 and a further 325 apartments are under construction in Holloway Road. Further new commissions include a 500 bed development at Winchester University for Osborne Developments and a 170 bed development at Bentley House, Euston for the Wellcome Trust.

COMMERCIAL

Waterman has been appointed by The Crown Estate to provide design services on its major developments in the Regent Street and St James's area of London. Quadrant 3 is the redevelopment of the former Regent Palace Hotel into circa 40,000m2 of retail, commercial and residential space. The largest and most prestigious development of The Crown Estate, it is currently ahead of programme with completion due in late 2011. Quadrant 2 is the refurbishment of an existing building adjacent to the Café Royal and is due to commence on site shortly. Block W4 (155-167 Regent Street) and Block W5 (169-181 Regent Street) are retail / commercial blocks due for redevelopment with a total development area of 40,000m2 and planning permission for Block W4 has recently been granted. Gateway is a 30,000m2 retail / commercial / residential block at Piccadilly Circus, with retained façades and totally new structural framing. Demolition is anticipated to commence shortly with the new construction during 2011.

Waterman has been working on the design of a new National Centre for Network Rail at Milton Keynes where planning work was completed in 2010 and construction work is now being progressed. The new Ordnance Survey headquarters in Southampton for Kier Property is advancing well on site.

Waterman is appointed on a number of projects in central London which are at planning stage. Work has re-commenced for Land Securities on a site at Hillgate and Ludgate where a 40,000m2 development is proposed.

Detailed design work is being carried out on 8-10 Hanover Street, London, a new development of high quality offices and residential units for CORE. Waterman is also providing structural and building services design on a new, 14 storey 22,000m2 office building at Bevis Marks for CORE/ Monteverde Group. The design incorporates re-use of the piled foundations and it will be one of the largest schemes in the City of London to adopt this strategy. Detailed designs are being finalised on 8-10 Moorgate which is a mixed use City office development for Schroeders / Stanhope, involving the construction of new high quality space behind retained facades to Moorgate and Tokenhouse Yard.

Also in the City of London, Waterman is at the early design stage for two corporate headquarters buildings. At Finsbury Circus, designs are being developed for CORE and Union Investment Real Estate for a 20,000m2 major refurbishment including facade replacement, additional storeys and internal modifications. Structural and fire engineering monitoring design services are being provided for UBS on a 70,000m2 new building at 5 Broadgate.

Waterman continues to be involved in fit-out works for several landmark buildings across London including: 125 Old Broad Street (formerly London Stock Exchange) for various tenants including DTZ, Watermark Place (now renamed as Angel Lane) for Nomura Bank, Ropemaker Place for Markit and Macquarie, and 1 Finsbury Circus for Stephenson Harwood.

Waterman has been retained under framework agreements to provide structural advice on major London estates for both landlord and tenant modifications and maintenance strategies. The estates include The County Hall - Riverside Building on the South Bank for Metropolitan Estate Management Services Ltd and the Tower 42 Estate for the Tower Partnership.

EDUCATION

The Building Schools for the Future (BSF) programme was curtailed due to the government's review of capital spending. Waterman had been appointed on commissions in Luton, Essex and Kent which were cancelled. However, Waterman is in the early stages of design at Birmingham BSF where Heartlands Academy has been allocated future funding. BSF projects already underway and for which future funding has been confirmed include Middlesbrough BSF, where three secondary special schools are in construction and a further community college is in detailed design and Tameside, where seven new schools are either being designed or under construction.

Outside nationally funded programmes, Waterman is working on the design of a number of schools in Hainault and Redbridge as part of a local framework agreement. Two schools have been designed and two more remain in the development pipeline with design expected to commence in late 2010. Waterman is also designing a new media centre for Manor CE School in York.

As a result of its outstanding contribution to the successful delivery of the extensions to Parkside School in Bradford and Prince Henry School in Otley, Waterman was awarded Consultant of the Year 2009 by Willmott Dixon Construction.

New build works for the Learning and Skills Council (LSC) funded Leyton Sixth Form College have been successfully completed. Waterman is now designing the refurbishment works for the retained buildings on the campus.

In Scotland, the Scottish Futures Trust has issued its first PPP/PFI Expression of Interest through Renfrewshire and Midlothian Council and Waterman is collaborating on contractor led opportunities for these works. Design is proceeding on Port Glasgow Joint Campus for two secondary schools on a single campus and works have recently completed as part of the West Lothian Council PPP for three secondary schools.

RETAIL

In August 2010, work recommenced on the 93,000m2 Trinity Leeds retail and leisure development for Land Securities. The £350m scheme, due to open in 2013, will comprise four levels of retail, three of which interface with the adjoining streets. Further ongoing appointments include: new stores for J Sainsbury at Nine Elms and Wandsworth, both of which have large residential components; work with Tesco on the Express roll-out programme and further new Tesco stores; a number of new stores and extensions for Wm Morrison Supermarkets in the North and Midlands.

GOVERNMENT AND DEFENCE

The new 10,000m2 Westminster Magistrates Court at Marylebone Road, London for Laing O'Rourke is nearing completion.

HEALTHCARE

Healthcare projects in London include the £15m paediatric extension to the Chelsea and Westminster Hospital, which has progressed to site and Waterman has been appointed onto the framework agreement at Homerton Hospital. Construction is underway on the Community Hospital at Selby which combines with a new civic centre. In Derbyshire, Waterman has been appointed on an extension to the Bramble Lodge residential home near Ilkeston.

INDUSTRIAL

The Laing O'Rourke Advance Pre-cast Concrete Manufacturing Facility at Steetley, Nottinghamshire was completed in February 2010. Waterman provided full multidisciplinary engineering services.

Work on a major new electricity substation in Edinburgh at Dewar Place has made considerable progress this year. The relationship established with client Scottish Power led to Waterman being invited to participate in a group wide framework agreement and it is anticipated that this will create further opportunities. This project also provides a development opportunity above the substation and work on the 50,000m2 commercial scheme concept has made progress in 2010.

Commissions have continued with appointments on behalf of Princes Foods at sites in Cardiff, Eden Valley and Bradford where it is expected the new production building will be instructed following the feasibility study. A number of new process lines have been commissioned for Coca Cola Enterprises at Abbeywell and Edmonton.

Waterman's building services business has been working on a variety of public sector projects in the year, especially in health and education. Although enquiries have been reduced due to government fiscal policy, the business has retained a strong position in the London commercial sector, which has offset this trend.

Sector based marketing has indicated that the commercial sector in London is improving and there is movement in the retail and residential sectors, where an increased workload is anticipated for the year ahead.

SUSTAINABILITY AND LOW ENERGY

Waterman's specialist skills in green building design are utilised on all projects. During the year, Waterman completed the Audi Dealership in Croydon, the first building of its kind in the UK to be awarded a BREEAM Excellent rating. The VW Group is now targeting this rating for all of its new Audi showrooms. The Royal Oldham Hospital has also achieved a BREEAM Excellent rating and Loreto Sixth Form College in Manchester was named as one of the most successful sustainable buildings at the 2010 BREEAM Awards. The project was funded by the Learning Skills Council and won the BREEAM Further Education award. One Watermark Place in London, a commercial office scheme, was shortlisted in the Sustainability Awards 2009 for the Sustainable Project of the Year. Waterman is committed to the protection of the environment and sustainable design using renewable energy systems is a feature of its projects.

EDUCATION

The focus of the education business continues to be via the City Academy and Building Schools for the Future (BSF) programmes and local authority schools generally. Waterman is designing the new £18m Heartlands Academy for Bovis Lend Lease and has been appointed for St Albans Academy, both within the Birmingham BSF programme. Design is underway on Fir Vale School and Owler Brook School for the Sheffield BSF programme. Waterman has been appointed by Willmott Dixon for a new £5m HealthTec Building in Walsall, which

is the first purpose built health education learning facility in the UK. Chelsea Academy, part of the academy framework, is due for completion in 2010. The £30m school in the heart of Chelsea will welcome 800 pupils when it opens. Work continues on several schools in East London which are due for completion in June 2011: Leyton Sixth Form College, Newbridge Special Needs School, Hainault Secondary Modern School and Harpley School. Swanlea and Morpeth Schools in East London are under construction as part of the Tower Hamlets BSF Programme and the £15m Fulwood Academy in Preston has been approved for construction as part of the Lancashire BSF programme.

HEALTHCARE

Projects in the healthcare sector have progressed with new medical centres completed in Birkenhead and Chesterfield for LSP Developments and a GP owned partnership in Solihull. The recently completed Freshney Green Primary Care Centre in Grimsby, for LSP Developments, was named Healthcare Property of the Year at the Health Investor Awards 2010. New commissions have been secured in Leicester and Alcester for Assura Group and in Westbury for a GP owned partnership.

RETAIL

The new £25m retail development in Worcester City Centre for joint venture clients Richardson and Carillion has commenced on site and includes a new Asda store, retail units and multi storey car park.

Waterman is working with a number of car retailers in the UK. Showrooms are being designed for Audi in Maidstone and Swindon and refurbishments are being carried out for Ford in Liverpool and the Mercedes-Benz headquarters in Milton Keynes.

INDUSTRIAL

The 12,000m2 Manufacturing Technology Centre (MTC) at Ansty Park, Coventry is under construction and is programmed for completion next year. The Laing O'Rourke's Pre-cast Concrete Manufacturing Facility at Steetley, Nottinghamshire was completed in February 2010. The construction of the major new electrical substation in Edinburgh at Dewar Place has continued during the year with the potential of a 50,000m2 commercial scheme above.

GOVERNMENT AND DEFENCE

Waterman continues to provide building services design to the Aspire Defence Capital Works (ADCW) PFI project, valued at approximately £1.8bn. The team is based at Aldershot and on average 50-70 projects are under construction simultaneously with one building a week being completed. It is predicted that the work volume will remain constant until December 2010 and negotiations for 2011 are underway.

RESIDENTIAL

Waterman has been appointed to provide building services design for the Phase 1 of the €65m redevelopment of the social housing complex at O'Devaney Gardens in Dublin for Dublin City Council. The scheme will include 500 homes, community centre, retail and public space and the regeneration of the area is proposed over 3 phases up to 2018.

ARCHITECTURAL LIGHTING DESIGN

Waterman's architectural lighting design team continues to work on a diverse range of projects. The government legislation on energy using products and the consequential advance in LED technology continue to have an impact on design criteria. Working in conjunction with Waterman Emirates, the team has been commissioned on the Ibn Hani Bay Resort project in Syria. Projects in the UK include 6 Bevis Marks, 12-15 Finsbury Circus and Anchor House, all in London. The scope of work covers areas such as receptions, lift lobbies, restaurants, plus conference / meeting rooms.

COMMERCIAL

The year has seen a number of new commissions for commercial office developments in London, together with a number of dormant projects restarting.

Waterman has been appointed on a number of major projects by CORE. Building services design is underway at 6 Bevis Marks with a proposed start on site in early 2011. This scheme will deliver 22,000m2 of commercial office and retail space. Waterman is taking the redevelopment of 12-15 Finsbury Circus to planning submission stage in 2010. Design work is in progress on this 20,000m2 office scheme, which is due to start on site in 2011. The redevelopment will include the rationalisation of existing riser and plant space to accommodate an additional storey of office space and improved floor area with new M&E services throughout. Scheme design is underway for the redevelopment of 82 -84 Piccadilly, a 30,000m2 development including commercial office, high quality residential, retail and affordable housing use.

The 8-10 Moorgate project for Stanhope restarted in spring 2010 after being stalled for two years. Waterman is appointed to progress the scheme though to tender with an intended construction start next year. The £45m scheme includes facade retention of the Moorgate elevation as well as a residential building and retail unit.

Massador Establishment Ltd appointed Waterman for the Anchor House redevelopment in London. Full building services design is being provided for the 3,500m2 office scheme which is currently being designed to tender stage.

Further work was carried out on the 240 Blackfriars Road development in London to accommodate the latest requirements of Part L of Building Regulations 2010 and a 12% increase in floor area due to the addition of two floors. The building will now be 20 storeys high and become a major landmark on the south side of Blackfriars Bridge.

Waterman is providing building services design as part of a multi-disciplinary appointment for two Land Securities commercial developments - 30 Old Bailey and 60 Ludgate Hill which sit together at the junction of their respective streets. The schemes will provide 40,000m2 of high quality office space plus retail facilities at ground level for 30 Old Bailey and at ground and basement levels for 60 Ludgate Hill. The work has included strategic advice to deliver low energy solutions that improve on the requirements of the 2010 Building Regulations by at least 10%.

The fit out of Macquarie Bank's 20,000m2 building at Ropemakers in London is due for completion in early 2011. Due to the high levels of heat generated, the trading desks will utilise internal desk cooling and this will be combined with high level chilled beams.

Waterman worked with Sir Robert McAlpine to secure the American Express HQ development in Brighton and has now been appointed to provide full design services for the 33,555m2 office / call centre and 3,235m2 data centre buildings. The office building includes staff restaurant, gym and shops.

Following the integration of the Group's three environmental businesses into a single division, Waterman Energy, Environment & Design, the new management team has worked on consolidating the business and positioning it for recovery in the environmental sector. Over the year, the focus has been on the core services and sectors which have contributed to Waterman's strong profile and reputation.

This process has resulted in reduced operating costs and improved efficiency across the business and it is now well placed to take advantage of new opportunities. Work has continued on the innovation of new services and products, with the successful launch of the EnviroRisk Wizard and Carbon Manager in the year, offering exciting prospects for the business moving forward.

DUE DILIGENCE AND ENVIRONMENTAL MANAGEMENT

The economic conditions have significantly impacted on the number of transactions in the UK and internationally and therefore on the level of environmental due diligence advice provided by the team during the first half of the financial year. However, the second half of the year saw a significant upturn in the level of enquiries and appointments, with the team delivering commercially focused due diligence support to a mix of property developers, institutional investors and private equity houses. This leaves Waterman well positioned to take advantage of the upturn in the economy.

A key commission completed in the year was the due diligence assessment of the former RAF airbase at Upper Heyford in Oxfordshire. Following completion of the due diligence stage, Waterman has been commissioned to undertake a number of environmental assessments at the site. Current work includes the investigation of the 13km former jet fuel distribution system and the complex network of former fuel storage tanks and bunkers; the preparation of an Environmental Impact Assessment (EIA); and sustainability appraisal to support the redevelopment of the site for over 1,000 new homes and various employment uses.

A major development for the team was its appointment to provide exclusive environmental risk screening of HSBC plc's commercial real estate lending in March 2010. The EnviroRisk Wizard seeks to provide commercially focused rapid turnaround support to the bank, assisting relationship managers to understand, manage and mitigate significant environmental risks associated with lending. A sophisticated online platform has been developed for the ordering and review of reports and over one hundred and sixty valuation surveyors now use the system.

Greenspace, Waterman's other online product, has held up extremely well during the recession, with over 95% of clients continuing their annual subscription to this bespoke environmental, health and safety update service. The service continues to be used by a wide range of clients including Shell, Petroplus, Britvic, Goodyear, NHS Scotland, Scottish Water, GE, Accenture and GVA Grimley.

In response to growing market and legislative concerns, the service launched its third online application in early 2010. Carbon Manager provides a user-friendly tool to help clients manage, measure and monitor carbon emissions from their businesses.

The team's Director, Anna Bacon, was appointed to the British Venture Capital Association's Responsible Investment Advisory Board in the year. In June 2010, Waterman co-authored the Board's first publication, a guide for private equity houses to help them take first steps to improved corporate social responsibility.

ENVIRONMENTAL ASSESSMENT

Waterman has continued to secure a steadily increasing stream of urban regeneration and other property related Environmental Impact Assessment (EIA) and sustainability work, despite a contracted market and intense competition.

This includes work for clients taking forward both new projects and revised designs for schemes that already have planning consent. On behalf of Westminster City Council, Waterman is completing an EIA at North Wharf Gardens, a residential led scheme in Paddington Basin, and was retained by Stanhope / Schroders to undertake the EIA of revised proposals for Ruskin Square, Croydon which will deliver approximately 100,000m2 of commercial use and around 500 homes. Waterman was also appointed by Hammerson to complete the EIA of its new proposals for Eastgate Quarters, Leeds providing approximately 125,000m2 of retail, restaurant and leisure uses. Waterman has completed the EIA for Ballymore's new proposals for Leamouth Peninsula, providing around 1,700 new homes. Waterman has also been appointed by Ballymore to provide EIA and sustainability services for its masterplan proposals at Nine Elms.

In Scotland, Waterman undertook the EIA and prepared an Environmental Management Plan for Cruden Estates Ltd's proposals for removal of a colliery spoil heap to create a platform for residential development at Cadzow, Hamilton. Additionally, the EIA was undertaken for the commercial redevelopment of a 230 hectare site adjacent to the M74 at Poniel, South Lanarkshire on behalf of Scottish Resources Group Estates Ltd.

The team has further developed its capability in complex atmospheric dispersion modelling and design mitigation in response to local authorities' intensified concerns over air quality, particularly for new housing in urban areas. The noise monitoring and assessment team has also been expanded.

Waterman's team of experienced licensed BRE assessors has continued to provide a full suite of BREEAM, Code for Sustainable Homes and LEED assessments. Notable projects include Quadrant 3 for The Crown Estate / Stanhope and Ravensbourne College for Bovis Lend Lease, both predicted to achieve BREEAM Excellent. The team is undertaking Strategic Environmental Assessments for the Eastbourne Town Centre Area Action Plan and Selby Site Allocations Development Plan Document on behalf of the Local Planning Authorities.

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BROWNFIELD REGENERATION

Despite very challenging market conditions, the Land Quality Team has maintained its position as a leading specialist in brownfield regeneration and has received commissions on some of the UK's most technically demanding and challenging projects. Work has continued on the development of the former Steetley Colliery site in Nottinghamshire. Following successful completion of Phase 1 and construction of Laing O'Rourke's manufacturing facility, the team has been developing a full EIA for Phase 2, together with a Remediation Strategy of the wider Masterplan site. The 85 hectare site comprises a former colliery, quarry, landfill and refractory plant.

Within the education sector, Waterman has been providing land quality and remediation advice on the Middlesbrough Schools BSF on behalf of Willmott Dixon. Further appointments include the Diocese of York Framework Agreement and the provision of land quality, landscape, BREEAM and ecology consultancy services on a major extension to Manor School in York. New commissions include the Trinity Leeds shopping and leisure development for Land Securities and Laing O'Rourke, together with the next phase of the Hungate York residential and commercial scheme for Crosby Lend Lease, which requires the remediation of one of the UK's first town gas works. Environmental consultancy support is also being provided at Edgewater Park, a 15 hectare residential development of a former factory and foundry for Morris Homes. Waterman's specialists employ the latest risk assessment techniques and advise on remediation technologies to deliver cost effective and pragmatic solutions in order to reduce environmental liability and maximise value. Such specialist knowledge and skills have been recognised nationally with several senior engineers and scientists achieving IEMA SiLC (Specialist in Land Condition) status.

ECOLOGY, ARCHAEOLOGY, LANDSCAPE PLANNING AND DESIGN

Waterman is providing detailed ecology, landscape and archaeology advice to the Berryfields Consortium in the discharge of planning conditions and reserved matters applications for a Major Development Area to the north of Aylesbury in Buckinghamshire. Similar mitigation inputs are involved on Taylor Wimpey's redevelopment of a former asylum in Kent.

Members of the landscape, arboriculture and heritage teams have been involved in the planning submission for a new residential development on a former military oil tank site in Swanvale, Falmouth on behalf of Wainhomes.

The landscape and heritage teams have worked on various Bellway projects in London this year, including sites in Bexley, Hackney and Poplar, to produce combined assessments of townscape and built heritage. The heritage team also supported a successful Conservation Area Consent application at the Poplar site for demolition within an area designated for its 1950's Festival of Britain architecture.

EIA survey work is being undertaken for various wind farms including one at HMP Standford Hill on the Isle of Sheppey for Partnerships for Renewables and one near Bicester for Ecotricity.

The landscape, ecology and archaeology teams have provided expert evidence at a number of planning direct inquiries on projects such as a new housing development adjacent to an Area of Outstanding Natural Beauty (AONB) and a new secondary school on greenbelt land north of Stevenage.

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The international business has had a challenging year as the world economies have struggled to recover from the effects of the financial crisis.

This has affected all offices to a greater or lesser extent apart from offices in Australia and China where workload and profitability have been maintained.

Most offices have suffered from the costs of downsizing, with excess overheads being a financial drag and Waterman now looks forward to a year of consolidation and focus as the markets recover.

COMMONWEALTH OF INDEPENDENT STATES (CIS)

Offices in Moscow, Russia and Almaty, Kazakhstan share resources on projects in the two countries. Over the last twelve months trading conditions have been particularly difficult as developments continued to be delayed and as a result the staff levels have been adjusted in line with workload.

Scheme design is currently being progressed on Khamovniki, a mixed use residential complex of 444,600m2 in Moscow for Metalloinvest-Development. Waterman is designing a new Marriott Hotel in Krasnodar, Russia and has completed due diligence consultancy advice on the airport hotel at Almaty, Kazakhstan for Radisson.

In September we were appointed for the multi-discipline engineering design of the 100,000m2 French Centre by MAG which is a mixed use development in Almaty, Kazakhstan.

EUROPE

Waterman's Irish consultancy business, Moylan, has experienced a very challenging year, with both public and private sector capital investment in development works contracting very significantly for the second year in succession. As a result, the business has had to downsize and restructure to align itself to meet current market requirements. A number of the firm's major projects have been deferred in the last year, and provision has been made against outstanding debt and work in progress on these schemes. In spite of the challenging conditions, the company

has maintained its core expertise and has increased its share of a much reduced overall market. Work continues on a number of large projects in Ireland and some notable new commissions have been won in the last year.

The infrastructure team has successfully completed the new four platform Clongriffen Railway station in Dublin. Construction has commenced on major urban road and drainage improvement works in Dun Laoghaire. Public sector commissions continue to be won. The company has been appointed to support Dublin City Council to carry out a masterplan review and to provide engineering design for Phase 1 of redevelopment works for the O'Devaney Gardens urban regeneration scheme in Dublin. Recent appointments include a new multi-user education campus in Monaghan, a new head office and operations control centre facility at Dublin Airport for Aer Lingus and detailed design work on six major new schools.

In Central Europe, Waterman predominantly works in the private development sector. Following recent concerns about the speed of economic recovery in the region, a provision has been made for irrecoverable trade receivables and unbilled amounts on contracts with clients in Poland, Belgium and Romania. As part of this review, further provisions have been made for the write off of goodwill, assets and office space. In future, projects in Poland and Romania will be managed by Waterman's UK and Irish teams.

MIDDLE EAST

It has been another challenging year in the Middle East region. Dubai's economic problems have meant that little new work is available there, following the dramatic reduction in construction activity that occurred in late 2008 and early 2009. Whilst several major Dubai developers are making progress in financial restructuring, a return to normal activity in that market will be delayed while the current excess of vacant space built during the boom years is absorbed.

In Abu Dhabi, work is progressing well on the 450,000m2 mixed use Al Muneera development at Al Raha Beach. Construction work continues, supported by a substantial site-based Waterman team, with completion due in the latter half of 2011.

In the facility management market, major new long term agreements have been confirmed with two key clients. A three year contract has been signed for the delivery of operational and technical management of the region's largest and most advanced data centre for Injazat Data Systems. In addition, a three year Framework Agreement was signed for the ongoing provision of FM and technical support for Abu Dhabi Motorsport Management at the Yas Marina Circuit which hosts the Abu Dhabi Grand Prix and numerous other major motorsports events.

Waterman continued to extend its services beyond the United Arab Emirates (UAE) and into new markets within the MENA (Middle East and North Africa) region. In Sudan, the firm was appointed as infrastructure and utilities consultant to the large mixed use Al Musheirab project being developed in Khartoum by Qatari Diar. With fewer building projects generally available at present, infrastructure work provides an opportunity to extend services into an alternative and less cyclical sector.

In Syria, Waterman has been appointed as the structural engineering consultant by Majid Al Futtaim on its large retail mall project at Sabboura, outside Damascus. The first scheme of its kind in Syria, the project occupies a prime site accessible from three capital cities; Damascus, Beirut and Amman. Design work is expected to continue into the first half of 2011, with construction commencing shortly thereafter.

Also in Syria, Waterman has been appointed on Qatari Diar's large mixed use Ibn Hani project at Lattakia, on the Mediterranean coast as civil, structural and building services engineers for the design of a range of buildings including residential apartments and townhouses, retail, clubhouse and leisure amenities and mosque. Design of the project will continue into 2011, with construction commencing in early 2011.

CHINA

China's economy continues to grow and Waterman's Tianjin office has been involved in a variety of projects. These commissions have provided work for our international offices.

Waterman completed its specialist consultancy and site supervision work for the new Tianjin Haihe Bridge which opened for traffic in July 2010. During the year, the company's role continued as technical advisor for a new waste to energy incinerator project in Tianjin Binhai. This is the first of a new generation of incinerators and is targeted to become one of the lowest carbon profile thermal projects in the country. Further projects in Tianjin include a new 20km2 ecology park and the 60,000m2 Beitang Yuehai hotel and apartments.

INDIA

Waterman's office in Chennai has been established as the outsourcing base for its structural engineering businesses. Whilst this has been the office's primary role since opening in September 2008, it has recently been involved in local projects, in particular a new warehouse facility in Goa.

AUSTRALIA

The Australian business has been a significant contributor to Waterman's international operations during the global downturn. Work has mainly been focused on local Australian projects mostly from public sector opportunities.

The Sydney office has done well in a year where economic trends in New South Wales have made for difficult trading conditions. Main areas of activity have been in sectors such as healthcare, education, public housing, court houses, police stations, telecommunications and commercial fit-out. A number of engineering awards were received during the year including, ACEA 2009 Awards of Excellence, AIRAH 2009 Excellence in Sustainability, Australian Master Builders 2009 National Export Award and ATUG 2010 Best Communications Initiative.

New Waterman projects included the new AUS \$180m University of Technology Sydney's Broadway Building which will house the Engineering and IT Faculty; Concord Hospital Clinical Services Centre Nurse Training facility; major upgrades for two telecommunication data centres; new transmitter stations for Broadcast Australia replacing the burnt out infrastructure after the 'Black Thursday' fires in Victoria; some large commercial fit-out projects; and five new police stations across New South Wales. Waterman was successful in pre-qualifying with the NSW Resitech social housing agency which led to major commissions for social housing projects as part of the Federal Government's stimulus funding package. Waterman has also been successful in securing numerous stimulus funded Trade Training Facilities at schools across NSW.

Waterman's relationship with Sydney Airport FM Group continues to develop with ongoing building services and structural

commissions. The company has also pre-qualified with the capital projects group which opens up the potential for further major commissions. This experience has assisted Waterman in winning structural engineering commissions at Brisbane airport.

Waterman continues to provide engineering services for part of a new rail interchange in the south west of Sydney and for a major residential development at Airlie Beach in North Queensland. Successful completions include the Dee Why Grand mixeduse development and the major refurbishment of the heritage listed Queen Victoria Building in Sydney.

The Melbourne office has completed another successful year both in terms of securing prestigious new commissions and in completing existing projects. The new commissions are generally in the health and education sectors where the government is continuing to sponsor projects and secondly in the residential sector where there is a demand for new low cost residences. Work is progressing on site on the AU \$1.0bn Royal Children's Hospital and the company is also involved in the preparation of the technical brief on behalf of the State Government of Victoria for the new AU \$1.0bn world class comprehensive cancer centre to be built in Parkville. Waterman has obtained a 5 star Green Star rating for building services designs at Swinburne University Advanced Technology Centre.

The Brisbane office has seen some tough trading conditions during the year. Despite this, it has managed to complete a number of schools projects, a warehouse and cold room facility, a project for Gold Coast airport, and an array of small to medium sized projects. Further work has been secured including the base building upgrade of a 17 level commercial building at 340 Adelaide Street, Brisbane.

ROGER FIDGEN - NON-EXECUTIVE CHAIRMAN

• MEMBER OF THE AUDIT AND RISK COMMITTEE
• CHAIRMAN OF THE NOMINATION COMMITTEE
• CHAIRMAN OF THE REMUNERATION COMMITTEE

JOHN ARCHIBALD - SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR - CHAIRMAN OF THE AUDIT AND RISK COMMITEE - MEMBER OF THE NOMINATION COMMITTEE - MEMBER OF THE REMUNERATION COMMITTEE

• GEOFFREY WRIGHT INDEPENDENT NON-EXECUTIVE DIRECTOR - MEMBER OF THE AUDIT AND RISK COMMITTEE - MEMBER OF THE NOMINATION COMMITTEE
• MEMBER OF THE REMUNERATION COMMITTEE

GRAHAM HISCOCKS - EXECUTIVE DIRECTOR - COMPANY SECRETARY

NICHOLAS TAYLOR	- CHIEF EXECUTIVE - CHAIRMAN OF WATERMAN STRUCTURES LTD - MEMBER OF THE NOMINATION COMMITTEE
ARTHUR AUSTIN	- EXECUTIVE DIRECTOR - CHAIRMAN OF WATERMAN INTERNATIONAL HOLDINGS LTD - CHAIRMAN OF WATERMAN ENERGY, ENVIRONMENT & DESIGN LTD - DIRECTOR OF WATERMAN STRUCTURES LTD
BARRY GORE	- EXECUTIVE DIRECTOR - CHAIRMAN AND MANAGING DIRECTOR OF WATERMAN BUILDING SERVICES LTD - DIRECTOR OF WATERMAN INTERNATIONAL HOLDINGS LTD
CRAIG BERESFORD	- EXECUTIVE DIRECTOR - MANAGING DIRECTOR OF WATERMAN STRUCTURES LTD
JOHN WAITING	- EXECUTIVE DIRECTOR - MANAGING DIRECTOR OF WATERMAN BOREHAM LTD - DIRECTOR OF WATERMAN TRANSPORT AND DEVELOPMENT LTD - DIRECTOR OF WATERMAN ASPEN LTD
SIMON HARDEN	- EXECUTIVE DIRECTOR - MANAGING DIRECTOR OF WATERMAN INTERNATIONAL HOLDINGS LTD

Financial Review

The financial review should be read in conjunction with the operational review on pages 5 to 25 of the Annual Report.

Summary of Financial Performance

Revenue, profits and earnings per share have declined in response to the continued downturn in the private sector. Revenue for the year decreased to £83.2m (2009: £122.4m), with a reduction in UK project revenues of 31%, and a reduction in international revenues of 35%. Profit before tax, adjusted for the impact of £5.64m of exceptional items (2009: £nil) and £0.51m of amortisation of acquired intangibles (2009: £0.49m), decreased to £1.11m (2009: £3.08m). The adjusted profit before tax margin was 1.3% (2009: 2.5%).

Operating cash flow remained positive with £3.36m of cash generated from operations, after paying £0.65m of redundancy costs. Effective cash and working capital management has been a key priority this year. Net debt has reduced by £3.82m to £6.37m at 30 June 2010 and Group debtor days have reduced to 91 (2009: 109).

Net assets are £33.80m (2009: £38.63m), representing 110p of net assets per share (2009: 126p) of which 56p (2009: 70p) per share relates to net assets excluding goodwill.

Exceptional Items

Exceptional items of £5.64m were incurred in the second half of the year. The items are detailed in note 5 of the consolidated financial statements. There was no cash outflow in the year as a result of the exceptional items. However, there will be a cash outflow in relation to restructuring costs of £0.12m in the new financial year and the vacant property provisions will be paid out over the remaining lease terms.

Taxation

In the year, a taxation credit of £0.66m (2009: credit £0.19m) has been recognised. The taxation credit is mainly due to a £0.83m reduction of prior year liabilities as a result of the effect of R&D taxation credits and current year results. The taxation credit includes the release of the provision of £0.2m made for prior year tax matters that is no longer required, a charge of £0.08m in respect of overseas tax losses and a charge of £0.36m in respect of the gain arising on the sale of freehold property. After adjustment for these items, the adjusted credit of £0.9m represents an effective tax rate of 17.8% on the loss before tax (2009: 30.2% on the profit before tax).

Earnings Per Share

Earnings per share are impacted by the amortisation of acquired intangibles and the £5.64m charge for exceptional items. Basic and diluted earnings per share amount to a loss of 15.1p (2009: earnings of 8.6p), reflecting the significant impact of exceptional items in the year. The weighted average number of ordinary shares during the year was 30.48m (2009: 29.40m).

Dividend

The board reviews the Group's earnings per share, cash position and future prospects when recommending the final dividend for approval. The board is recommending a final dividend of 0.9p per share (2009: 0.9p) giving a total dividend for the year of 1.8p (2009: 5.1p). The dividend, if approved by the shareholders, will be paid on 11 January 2011 to those shareholders on the register at 17 December 2010.

Financing

At the year end, despite £0.65m of redundancy costs during the year, the net debt position of the Group had reduced by £3.82m to £6.37m (2009: £10.19m). Cash balances increased to £4.91m, with no overdraft facility in use at year end (2009 Cash less overdrafts: £3.96m). Total borrowings have reduced to £11.28m (2009: £16.35m).

The Group's principal banking facilities are provided by HSBC Bank Plc and include an overdraft facility of £4m and term loans totalling £7.27m. These are secured against the fixed and floating assets of the Group. The term loans are on quarterly repayment terms through to 2017. The Group has £3.91m of mortgage facilities owing to Nationwide Building Society. These are secured against our head office building and are repayable by 2021. In addition, the Group has access to on demand facilities of a further £3.37m in the UK and overseas.

The term loans are subject to covenants which are tested half yearly. On 18 August 2010, as a result of the exceptional items of £5.64m, HSBC agreed to waive the requirement for a covenant test at 30 June 2010 and 31 December 2010. Prior to the exceptional items, the Group had significant headroom within the financial covenants at year end. The net finance cost of the group decreased to £0.39m (2009: £0.94m) reflecting a £0.12m write back of interest upon deferred consideration payable, lower than average overdraft balances through the year and the impact of lower interest rates.

Cash Flow

At year end, net debt amounted to £6.37m (2009: £10.19m), a reduction of £3.82m. Cash and cash equivalents increased by £0.95m, whilst total borrowings have reduced from £16.35m to £11.28m. Cash generated from operating activities was £3.36m (2009: £6.54m), after £0.65m of redundancy costs. Capital expenditure reduced to £0.14m from £0.82m in 2009, which was unusually high due to the implementation of a new financial management system. Cash flow benefited from the sale of one of our freehold properties for net proceeds of £1.57m.

	2010	2009
	£'000	£'000
Operating (loss)/profit	(4,650)	3,524
Depreciation and amortisation	2,350	2,758
Decrease in working capital	5,209	355
Other items	448	(95)
Cash flow from operating activities	3,357	6,542

A summary reconciliation between operating loss and operating cash flow is shown above. Net debt of £6.37m (2009: £10.19m) represents a manageable gearing ratio of 17% (2009: 22%) on net assets.

Freehold Property

The Group revalued its freehold property portfolio to its fair value at 01 July 2004 of £9.25m (2009: £10.75m) in accordance with IFRS transitional arrangements. In the opinion of the directors, the freehold properties have a current market value which is not less than the values in the accounting records.

Key Performance Indicators

The principal metrics used to monitor financial performance are revenue, revenue per head, operating profit, operating profit per head, staff utilisation, cash collection and aged debt management. These are reported against budget and prior year performance with explanations for major variances. In addition, future workload is monitored by sector by reference to the success of bid and tender submissions for new work and variations to existing work appointments.

During the last year, most trading indicators have fallen in response to the continued economic downturn and the financial performance by each sector is reported in note 2, Segmental Reporting. Within the balance sheet, many indicators have benefited as a result of improved cash collection.

Treasury

The Group manages its internal and external funding in response to its operational and investment requirements. Generally, the Group maintains sufficient cash to meet its day to day operations, but will consider external funding for major capital expenditure such as property and acquisitions. The Group's financial instruments include borrowings, cash and liquid resources and trade debtors. The main risks comprise interest rate risk, liquidity risk, credit risk and foreign currency risk. The Group's policies for managing these risks are summarised in note 1 to the consolidated financial statements. The Group does not trade in financial instruments.

Risk and Uncertainties

The Group's primary objective is to deliver strong long term shareholder value through the delivery of a profitable and effective engineering and environmental consultancy service. To achieve this, the board sets a strategy for future operations based upon its expectation of future opportunities and market conditions. Inevitably, such investment decisions require reasonable judgement of the risks to be taken in order to drive future growth.

The main risks and uncertainties set out below are based upon management's best estimates and reasonable judgements set out in note 1 to the consolidated financial statements. A wide range of factors may cause the actual outcomes to differ from our estimates and none of these statements should be construed as a profit forecast.

Business environment – economic, political and market factors may affect the Group's business strategy. External market conditions are considered at monthly board meetings and an annual strategy review takes place when these external factors are addressed.

Market conditions – the Group provides design consultancy services on building, environmental, infrastructure and transportation projects to private and public sector clients in the UK and overseas. Demand from clients will usually reflect the economic conditions prevailing within each market and may suffer during periods of slowdown or recession. The risk of lower demand or client failure is mitigated by providing a wide range of consultancy services to a diverse range of clients in many countries.

Profit margins – we operate within a mature market where a range of consultants are able to meet client demand. We aim to optimise profit by maximising revenue whilst maintaining effective control over costs. When demand for our services reduces or project revenues decline, our profit and margins will be affected. We mitigate against this risk by minimising the value of fixed cost commitments and maximising the variable costs which can be reduced quickly and at minimum cost.

Finance – appropriate funding facilities need to be in place to meet the Group's working capital requirements and fund growth through enhanced capital expenditure or acquisitions. Insufficient facilities may impact upon our ability to conduct current trading or exploit future opportunities. We manage this risk by ensuring that adequate funding facilities are available to meet our short and medium term requirements, both in the UK and overseas. The Group's cash position is carefully monitored with regular forecasts of expected cash flows and monitoring of compliance against lenders covenants.

Foreign exchange – the Group performs work in many overseas markets and contracts in various currencies. This presents an exposure to currency risk on business transactions where revenues and costs are in different currencies, and translation of assets and liabilities from local currency into sterling. We manage these risks by matching revenues and costs in the same currency wherever possible, establishing natural hedges where available or purchasing foreign currency hedges where this is considered to be appropriate.

People – as a consultancy providing services to our clients, our staff are our greatest asset. To maintain staff loyalty and support, we aim to provide a range of interesting and challenging work performed in comfortable working conditions and with financial rewards which meet or exceed the market average.

Service quality – it is essential that we deliver a high quality cost effective service to all of our clients. Failure to meet quality standards will result in liability insurance claims and disappointed clients. To mitigate the risk of service quality failure, we maintain high levels of staff training supported by effective quality systems and internal checking procedures. We also maintain high levels of insurance cover as a precaution against failure in the design or delivery of our service.

Alex A Steele Finance Director 27 October 2010

Corporate Responsibility

Mission Statement

"To develop innovative, economic and sustainable solutions that successfully meet the needs of our clients, whilst adding value and a better quality of life for all. In doing so, we aim to provide an exciting and rewarding work environment for our employees and a successful, dynamic Group, meeting the aspirations of all our stakeholders."

Sustainability is an important part of the future of Waterman Group.

Governance

Waterman has a structure of governance that is key to ensuring that we deliver on all our goals and aspirations for sustainability. Our Plc Management Board cascades information down through our General Management Board who are in turn responsible for feeding important strategic information to our company boards, directors, team leaders, and ultimately every member of our staff.

Management Systems

We are pleased to have maintained quality and environmental management systems certified to ISO 9000 and ISO 14001 in order to guarantee continued high standards of service delivery and environmental management. Our health and safety system has been updated to meet the requirements of OHSAS 18001 and we are currently implementing the system in our UK offices.

Our principal environmental achievements over the last 12 months have been:

• Reduction of energy usage due to central shut down of computers outside working hours
• Continuation of a Bike to Work Scheme
• Reduction of energy costs by office rationalisation
• Connection of drinking water dispensers from bottled to tap water
• Increased levels of recycled materials (paper and other consumables)

In order to achieve a more sustainable purchasing strategy, Waterman is shortly to introduce a single supplier for stationery and other consumables.

Measures taken to reduce water use in offices continue to have the desired effect with further small reductions in average water use per head and average use per square metre of office space.

Carbon Dioxide Emissions From Business Travel

The total carbon emissions for road transport have significantly reduced and rail, bus and taxi usage has increased. There has also been a small increase in air travel. CO2 emissions per employee have increased but this is due to a reduction in staff numbers.

Annual Energy Use Water Use (m3/head)

Health And Safety

The Group's policy and safe working procedures aim to prevent accidents and ill health by providing and maintaining adequate control of risks arising from all work activities within its offices or at associated site locations. These were reviewed and revised during the year and made available to all employees. The Group places the highest priority on the protection of its employees, construction industry workers not in its employment and individuals affected by our activities.

Through correct delegation of responsibilities, the principal objectives are to undertake to:

• Maintain safe and healthy working environments
• Consult employees on matters affecting their health and safety
• Provide information, instruction, training and supervision to all employees in order to enable them to undertake their work safely, taking health and safety • into consideration
• Provide and maintain safe plant and equipment
• Ensure safe handling and use of substances

The Group's senior management fully support and are committed to all health and safety issues and provide sufficient funds and resources to enable correct implementation of the policy, whilst meeting the expectations of stakeholders. The successful implementation of the policy relies on all responsibilities being fulfilled and continuous improvement through regular monitoring and reviews.

Waterman Health & Safety (a division of Waterman Transport and Development Ltd.) continues to advise senior management on health and safety and staff wellbeing. The division reviews the Group's health and safety policy and procedures, advises upon new and impending changes to legislation and provides health and safety training to fire marshals and office health and safety managers.

The Group's health and safety system conforming with OHSAS 18001:2007 has been launched to all UK based employees. Compliance with this will be externally assessed by NQA as part of their next programme of routine audits. This will result in OHSAS 18001:2007 being added into the Waterman Integrated Management System.

Health and safety training is delivered to all UK based employees and many international employees using a web based system hosted and maintained by the provider. This training is monitored by health and safety e-learning administrators appointed by the Group. The overall system is managed by Waterman Health & Safety who also provide training and workshops.

The Group operates a health and safety consultative committee comprising of representatives from operating companies, which is responsible for consulting with staff on health and safety matters and passing concerns and recommendations to senior management.

Waterman Health & Safety undertakes an annual office and company health and safety inspection to assess the Group's overall health and safety performance and compliance with existing legislation and good practice. This audit showed that the health and safety performance and systems of each operating company and office are continuing to be maintained to a high standard.

We have had no serious incidents or breach of our policy, nor have we been involved in any prosecutions or complaints regarding health and safety. There have also been no reports of injuries in the last three years.

Clients And Projects

As consultants, we are always trying to extend the boundaries of design, whilst respecting the needs of the environment. A number of award-winning projects have been completed this year and three examples are summarised below:

Latitude East, Sydney, was awarded five out of five stars by the National Australian Built Environment Rating System (NABERS) and ranks among Australia's five most efficient buildings. Waterman AHW used energy-saving strategies that led to a building that emits 40% less carbon dioxide than the benchmark required for the top NABERS rating. This was achieved without the use of green energy by a highly efficient lighting design (including maximising the use of natural light), reducing heat transmission from the building and a building management control system which minimises energy use.

The 'Art at the Centre, Slough' scheme won the ICE Community Engineering Award. The scheme was the first step in a regeneration programme for the town centre. Waterman and landscape architects Allen Scott Ltd worked closely with artists to inject colour, style and uniqueness to the contemporary design. The scheme included modernistic colour contrasting paving, complementary street lighting and seating as well as imaginative use of open spaces along the High Street. The spaces created within the pedestrianised zone were uncluttered to allow freedom of movement and security and a 20mph zone was implemented, with traffic calming, revised parking layout and new pedestrian crossings.

The BREEAM Further Education Award was won by Loreto Sixth Form College in Manchester. Waterman provided building services engineering for the scheme that included sustainability initiatives such as natural ventilation, night cooling, high thermal mass structures, ground source heat pumps, solar water heating, photovoltaic cells, chiller waste heat reclaim and rainwater harvesting.

Through its board, Waterman monitors client testimonials, compliments and complaints and these are promptly addressed.

Human Resources

Our dedicated and talented workforce is our most valuable asset and in the current economic climate it has been important to retain a dynamic work environment focused and committed to providing innovative engineering solutions that meet our client needs. We continue to offer a flexible benefits package (reviewed annually), part-time hours, sabbaticals and intercompany transfers where possible to meet the needs of our varied workforce. We are continuing to work towards Investors in People (IIP) accreditation.

Waterman maintains its support of its National Graduate Forum. The aim of the forum is to provide a way for graduates to identify common interests, build relationships, improve training possibilities, encourage working groups of budding chartered engineers and ultimately to ensure our graduates feel there is improved support in their professional and personal career development. In addition, a students' sponsorship scheme has been introduced, whereby students receive financial support through academic training and are provided with the opportunity of work placements during vocational periods.

Workforce Diversity

	30 June 2010	30 June 2009
Female employees (UK)	24%	33%
Ethnic minority employees (UK)	15%	15%
Female managerial grade	2%	7%
Ethnic minority managerial	6%	6%
Number of staff on temporary contracts	11%	12%
Annual sickness rate	1%	2%

Community

We believe in giving back to the community and are involved in many community and charity projects. In particular, Better Bankside – a Business Improvement District in London provides a focus for community involvement. The Group has supported initiatives to help families and the young with particular emphasis on those not in full time education, employment or training.

Sustainability Policy

The Group is committed to achieving a high level of awareness of the ethical and commercial importance of sustainability to the organisation and wherever practicable, to integrating sustainable and responsible practice into its day-to-day operations.

Sustainable development is the means of ensuring a better quality of life for all, now and in the future. It means effective conservation of the environment and prudent use of resources. It means equality of social progress and the maintenance of high, stable levels of economic growth through working towards achieving more with less resource. It means more efficient use of energy to help reduce greenhouse gases and climate change impact.

Within its working practices the Group will:

Clarify to all companies and staff the aims of sustainability

Strive to select contractors and suppliers on the basis of shared values and standards of sustainable practice

Work in partnership with clients, contractors, architects and other consultants to achieve the aims of sustainability so as to:

• Protect and enhance the natural and built environment wherever possible
• Encourage the sustainable use of resources at all times
• Reduce waste generation and dispose of waste responsibly
• Reduce consumption of energy in construction and use
• Promote the use of sustainable modes of transport
• Assist in the creation of sustainable communities
• Follow best international practice on environmental legislation and standards
• Promote sustainable design, development and construction practices

Seek continual improvement in the sustainability performance of all aspects of our business and report our performance for the benefit of all stakeholders

Within the operation and management of its affairs, the Group will strive to:

• Adopt an holistic approach to business planning and practice, to include non-financial measures of success
• Implement quality, health and safety and environmental management systems to maintain continual improvement in these areas
• Provide a high standard of working environment for all employees and promote the adoption of a healthy work-life balance
• Promote efficiency in energy and water usage and paper and consumables recycling in all its places of business
• Support and encourage wherever possible staff members' participation in charitable or community activities
• Promote travel plans for all offices
• Support all professional and administrative activities with appropriate training, coaching and advice
• Conduct its business with the highest standards of professional and personal integrity and honesty

Environmental Policy

The Group is committed to achieving a high standard of environmental awareness at all levels within the organisation and to promoting environmentally responsible practice both within the workplace and beyond. The Group believes that everyone has a part to play in safeguarding and enhancing the environment. The guiding principles of the Group's environmental policy are to strive to:

• Prevent pollution and protect and enhance the natural environment wherever possible
• Encourage the sustainable use of natural resources
• Regularly set, and monitor the achievement of, objectives and targets to promote the continual improvement in environmental performance of • all aspects of our business
• Reduce waste generation through re-use and recycling wherever practicable and dispose of all waste responsibly and safely
• Comply with relevant environmental legislation and adopt internal standards based on international best practice
• Encourage all staff to adopt energy, water and resource efficiency and conservation measures
• Promote awareness of environmental issues amongst staff, clients and other interested parties
• Select contractors and suppliers and materials that meet acceptable environmental standards
• Promote environmentally sympathetic design and construction practice wherever possible
• Promote the best use of environmentally sustainable modes of transport and
• Document, implement, maintain and communicate this policy to all employees

The Group aims to develop and refine its environmental policy by remaining abreast of current and future best practice developments and corporate environmental standards. To this end, it supports the work of organisations such as the Environment Council, CIRIA, the Chartered Institute of Waste Management, British Urban Regeneration Council and is a corporate member of the Institute of Environmental Management and Assessment.

Statement Of Directors' Responsibilities

The directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material • departures disclosed and explained in the group and parent company financial statements respectively;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors, whose names and functions are listed on pages 26 and 27 confirm that, to the best of their knowledge:

• the group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, • liabilities, financial position and loss of the group; and
• the directors' report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the • group, together with a description of the principal risks and uncertainties that it faces.

In accordance with Section 418, directors' reports shall include a statement, in the case of each director in office at the date the directors' report is approved, that:

(a) so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and

(b) he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

By Order of the Board of Directors

Graham R Hiscocks Company Secretary 27 October 2010

Directors' Remuneration Report

The Directors' Remuneration Report has been prepared in compliance with chapter 6 of the Companies Act 2006 and also meets the requirements of the Listing Rules of the Financial Services Authority and the Combined Code published by the Financial Reporting Council.

This report sets out the Company's policy on the remuneration of executive and non-executive directors together with details of directors' remuneration packages and service contracts. The report consists of unaudited information with the exception of the sections entitled Directors' Interests in Shares, Remuneration of Directors, Long Term Incentive Plan, Conditional Share Bonus Awards and Interests in Share Options. A resolution to approve this report will be proposed to shareholders at the AGM on 03 December 2010.

Unaudited Information

Remuneration Committee

The remuneration committee has written terms of reference and reviews the remuneration policy for the executive and non-executive directors. The committee determines the level of remuneration and incentives for each executive director, and also considers these matters for the senior management of the Group as a whole. Total remuneration packages are reviewed annually.

The committee comprises Roger S Fidgen (Chairman), John G Archibald and Geoffrey H Wright who have served throughout the year. The committee met twice during the year and members of the committee have no personal financial interest in the Company other than as shareholders, no personal conflicts of interest and no day to day responsibility for business operations.

The remuneration of the non-executive directors is determined by the executive directors.

During the year, no external party has provided advice that materially assisted the remuneration committee.

Remuneration Policy

The Company's policy is to attract, motivate and retain executives of a high calibre who will assist it to maintain and develop its competitive position and enhance shareholder value. The committee aims to achieve this by ensuring that remuneration packages are competitive whilst remaining in line with the performance of the Group and in the interests of shareholders. The main elements of the executive directors' remuneration packages are:

• a) Basic salary, pension contributions and benefits in kind
• b) Performance related annual bonus payment
• c) Performance related awards under the Long Term Incentive Plan and Company Share Option Plan
• d) Free shares awarded under the Share Incentive Plan

The non-executive directors receive an agreed level of fees but do not receive any bonus payments, pension contributions or any other benefits as noted above.

a) Basic Salary, Pension Contributions And Benefits In Kind

Basic salary is reviewed annually having regard to:

• individual performance
• salaries paid by companies of similar size in the same sector
• the current financial performance of the Group
• the relationship between the remuneration of directors and other employees
• the effect of local living costs if directors are resident overseas

Pension contributions are currently paid at the rate of 10% of base salary, prior to any temporary adjustments.

Benefits in kind include the provision of a company car or car allowance, private health insurance and rail season ticket.

b) Performance Related Annual Bonus

The Group operates an executive bonus scheme which rewards executive directors and management within the Group upon the achievement of financial targets.

The scheme is in two parts. Under the scheme, up to 15% of profit before taxation is made available for distribution between executive directors and management. Bonuses payable to executive directors and management take account of the performance of the Group, its operating divisions and the individual. No bonuses were awarded in the financial year ended 30 June 2010.

In addition, members of the Board receive an allocation of shares in the Company which will be deferred for a period of three years. These deferred shares are held by the trustees of the Company's Employee Benefit Trust. No conditional share bonuses were awarded in the year in respect of the financial year ended 30 June 2009.

The remuneration committee considers the bonus scheme to be both challenging and an incentive to the executive directors and management to meet the Group's strategic objectives.

c) Performance Related Awards Under The Long Term Incentive Plan And Company Share Option Plan

The Long Term Incentive Plan was introduced following shareholder approval at the 2005 AGM. It rewards executive directors and senior management within the Group upon attainment of financial targets. Executive directors will be entitled to receive their awards if the Group's growth in basic EPS exceeds the growth in the Retail Price Index (RPI) by an average of 3% per annum for the three financial years following the award date. Senior management must satisfy this condition to receive 50% of their award and will receive the remaining 50% if the profit before tax of their respective divisions grows by an average of 3% per annum above the growth in RPI during the same period.

The remuneration committee granted no conditional awards over shares in the Company to executive directors and senior management under the Long Term Incentive Plan during the year.

No new share options were granted during the year.

d) Free Shares Awarded Under The Share Incentive Plan

The remuneration committee approves the distribution of free shares in the Company to staff under the Group's Share Incentive Plan arrangements. The executive directors also participate in this scheme and receive an appropriation of shares in line with the scheme rules. No shares were awarded under this scheme during the current year in respect of the year ended 30 June 2009.

Directors' Service Contracts

Currently, executive directors' service contracts are not for a fixed term, but may be terminated by either party in accordance with the notice period. There are no specific contractual provisions in relation to the payment of any termination payments over and above the stated notice period. In addition, at least one third of the board is required to retire by rotation each year. The details of the service contracts of the currently serving directors are as follows:

	Contract date	Notice period
R S Fidgen (Non-executive Chairman)	01 July 2004	None
N J Taylor	06 January 2003	12 months
J A Austin	27 April 1988	6 months
B J Gore	20 December 1991	6 months
G R Hiscocks	19 February 2010	6 months
C W Beresford	06 January 2003	6 months
J F G Waiting	01 July 2005	6 months
S D Harden	01 July 2007	6 months
A A Steele	19 February 2010	12 months
J G Archibald (Non-executive)	06 January 2003	3 months
G H Wright (Non-executive)	01 June 2007	None

Audited Information

Directors' Interests in Shares			Contingent	Contingent
			Long Term	Long Term	Conditional	Conditional
			Incentive Plan	Incentive Plan	Share Bonus	Share Bonus
	Shares	Shares	shareholding	shareholding	Awards	Awards
Name	30 June 2010	30 June 2009	30 June 2010	30 June 2009	30 June 2010	30 June 2009
R S Fidgen (Non-executive Chairman)	35,000	35,000	-	-	-	-
N J Taylor	42,438	42,438	20,000	30,000	53,000	53,000
J A Austin	491,938	491,938	20,000	30,000	35,000	35,000
B J Gore	96,975	96,975	20,000	30,000	46,000	46,000
G R Hiscocks	86,110	86,110	20,000	30,000	35,000	35,000
C W Beresford	62,123	62,123	20,000	30,000	35,000	35,000
J F G Waiting	31,815	30,016	20,000	30,000	35,000	35,000
S D Harden	19,771	19,771	20,000	25,000	35,000	35,000
A A Steele *	-	-	5,000	5,000	-	-
J G Archibald (Non-executive)	6,052	6,052	-	-	-	-
G H Wright (Non-executive)	20,000	20,000	-	-	-	-

'Shares' are the directors' beneficial holdings in the ordinary shares of the Company and in respect of the executive directors include shares held in trust under the Company's Share Incentive Plan (SIP) being free shares granted under the rules of this scheme. Further details of the Contingent Long Term Incentive Plan and Conditional Share Bonus Awards are set out in the separate tables below.

* The 2009 Contingent Long Term Incentive Plan shareholding of A A Steele is as at the date of her appointment on 19 February 2010.

N J Taylor purchased 26,990 ordinary shares on 4 and 5 October 2010. His total beneficial shareholding at 22 October 2010 is 69,428. All other directors' shareholdings remain unchanged at 22 October 2010.

Remuneration of Directors

		Waived
	Base salary	base salary			Total	Total	Pension	Pension
	and fees	and fees	Benefits	Bonus	2010	2009	2010	2009
Name	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
R S Fidgen (Non-executive Chairman)	30	(3)	-	-	27	29	-	-
N J Taylor	225	(23)	29	-	231	308	23	23
J A Austin	160	(16)	11	-	155	199	16	15
B J Gore	180	(18)	16	-	178	245	18	18
G R Hiscocks	150	(15)	15	-	150	197	15	15
C W Beresford	166	(17)	14	-	163	210	17	16
J F G Waiting	170	(17)	9	-	162	220	17	16
S D Harden	160	(16)	11	-	155	204	16	16
A A Steele *	45	(4)	4	-	45	-	4	-
J G Archibald (Non-executive)	25	(2)	-	-	23	24	-	-
G H Wright (Non-executive)	25	(2)	-	-	23	24	-	-
Total	1,336	(133)	109	-	1,312	1,660	126	119

* Remuneration reported for A A Steele relates to the period from her appointment on 19 February 2010 to the end of the financial year.

In March 2009 the Group implemented cost reduction measures that included salary reductions for the majority of staff. In response to the difficult trading conditions all of the directors chose to unconditionally waive 10% of their base salary and fee entitlements. Entitlement to pension and performance related pay remained unchanged. The salary and fee waivers continued throughout the year ended 30 June 2010 and have continued into the current financial year subject to ongoing review from time to time.

Benefits provided and bonuses paid to executive directors are detailed within the Remuneration Policy section of this report. Pension contributions are only paid upon contractual base salary and are paid to personal pension plans. No bonuses were awarded in the current year in respect of the performance of the company during the year ended 30 June 2009.

Long Term Incentive Plan (LTIP)

At 30 June 2010, the following directors held conditional awards to subscribe for shares in the Company which are dependent upon the Company's future earnings per share growth as detailed within the Remuneration Policy section of this report. Awards are made at nil exercise price.

	Award	Earliest	Market price	Number of shares at	Number granted in	Number lapsed in	Number of shares at
Name	date	vesting date	at award date	30/06/09	year	year	30/06/10
N J Taylor	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
J A Austin	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
B J Gore	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
G R Hiscocks	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
C W Beresford	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
J F G Waiting	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	10,000	-	10,000	-
S D Harden	14/11/2008	14/11/2011	85p	10,000	-	-	10,000
	16/11/2007	16/11/2010	174p	10,000	-	-	10,000
	14/11/2006	14/11/2009	154p	5,000	-	5,000	-
A A Steele*	14/11/2008	14/11/2011	85p	5,000	-	-	5,000
Total				210,000	-	65,000	145,000

* The 2009 Contingent Long Term Incentive Plan shareholding of A A Steele is as at the date of her appointment on 19 February 2010.

No shares were awarded in the LTIP to executive directors in the year ended 30 June 2010. On 14 November 2009 65,000 shares awarded under the LTIP on 14 November 2006 lapsed as the specified performance conditions were not achieved and no awarded shares vested on that date. At 30 June 2010 LTIP awards maturing between 2010 and 2011 remained in respect of 145,000 ordinary shares (2009: 210,000) and the value of these awards was £nil (2009: £nil).

Conditional Share Bonus Awards

At 30 June 2010, the following directors held conditional bonus awards to subscribe for shares in the Company which are exercisable between three and ten years from the award date. Awards are made at nil exercise price.

Name	Award date	Earliest vesting date	Market price at award date	Number of shares at 30/06/09 and 30/06/10
N J Taylor	10/12/2008	10/12/2011	59p	38,000
	14/11/2007	14/11/2010	199.5p	15,000
J A Austin	10/12/2008	10/12/2011	59p	25,000
	14/11/2007	14/11/2010	199.5p	10,000
B J Gore	10/12/2008	10/12/2011	59p	33,000
	14/11/2007	14/11/2010	199.5p	13,000
G R Hiscocks	10/12/2008	10/12/2011	59p	25,000
	14/11/2007	14/11/2010	199.5p	10,000
C W Beresford	10/12/2008	10/12/2011	59p	25,000
	14/11/2007	14/11/2010	199.5p	10,000
J F G Waiting	10/12/2008	10/12/2011	59p	25,000
	14/11/2007	14/11/2010	199.5p	10,000
S D Harden	10/12/2008	10/12/2011	59p	25,000
	14/11/2007	14/11/2010	199.5p	10,000
Total				274,000

No shares were awarded, vested or lapsed under this scheme during the year ended 30 June 2010. At 30 June 2010 Conditional Share Bonus Awards maturing between 2010 and 2011 remained in respect of 274,000 ordinary shares (2009: 274,000).

Interests in Share Options

At 30 June 2010, the following directors held options to subscribe for shares in the Company under the 2007 Company Share Option Plan and the 1993 Executive Share Option Plan:

Name	Award date	No. of shares under option at 01/07/09 and 30/06/10	Exercise price/ market price at award date	Exercise period
N J Taylor	03/08/2007	15,000	179.5p	31/10/2010-
J A Austin	03/08/2007	15,000	179.5p	02/08/2017 31/10/2010- 02/08/2017
B J Gore	03/08/2007	15,000	179.5p	31/10/2010-
G R Hiscocks	03/08/2007	15,000	179.5p	02/08/2017 31/10/2010-
C W Beresford	03/08/2007	15,000	179.5p	02/08/2017 31/10/2010- 02/08/2017
J F G Waiting	15/11/2002	50,000	44.5p	15/11/2005- 14/11/2012
	03/08/2007	15,000	179.5p	31/10/2010- 02/08/2017
S D Harden	03/08/2007	15,000	179.5p	31/10/2010- 02/08/2017
Total		155,000

No share options were awarded, exercised or lapsed under these schemes during the year ended 30 June 2010. The share options awarded on 3 August 2007 will not vest as the Group's growth in basic EPS has not exceeded the growth in the RPI by an average of 3% per annum for the three financial years from 1 July 2007 to 30 June 2010. The closing mid market price of the Company's shares on 30 June 2010 was 43.5p (2009: 41.5p) and ranged between 33p and 59.5p during the year.

By order of the Board of Directors

Corporate Governance Report

The Company is required to explain how it complies with the Combined Code on Corporate Governance ("the Code") published by the Financial Reporting Council in June 2008 and to confirm whether or not it has complied with the Code's provisions. This report, together with the Directors' Remuneration Report on pages 35 to 39 describes how the Company has applied the principles and complied with the associated provisions of the Code.

Statement Of Compliance

The Company is committed to maintaining high standards of corporate governance. The Board seeks to ensure that the governance framework operated by the Company is effective and enables it to comply with best practice principles as set out in the Code. Details of the Company's share capital structure are disclosed within the Directors' Report on page 43. The directors consider that, throughout the year ended 30 June 2010, the Company has complied with all provisions of the Code.

The Board Of Directors

The board is responsible for the effective management of the Company, the stewardship of the Group's assets and the establishment and maintenance of a framework of internal controls which enables risk to be assessed and managed. It sets the strategic aims for the business, ensures that resources are adequate and provides oversight of operational and management performance. It sets the Company's standards and values and aims to ensure that it meets its obligations to all stakeholders.

There is a formal schedule of matters reserved for decision by the board or its committees including strategy, corporate governance, approval of annual budgets, approval of company accounts, major capital investments, risk management, senior management appointments, acquisitions, disposals and significant financing matters.

The board has a regular schedule of monthly meetings to consider matters reserved for its decision and other matters of significance to the business. An agenda with appropriate supporting papers including management accounts is issued in advance of each board meeting to enable directors to be made aware of matters to be discussed. Meetings are generally held in London but occasionally held in regional offices to help directors to gain an appreciation of local issues. Minutes of each board meeting are issued after each meeting and approved at the following meeting.

The company provides briefings from external advisers on legal, commercial and health and safety developments. Directors are encouraged to update their skills, CPD and knowledge of the company on a regular basis. The advice and services of the Company Secretary are available to all directors.

Board Balance And Independence

The board currently comprises eight executive and three non-executive directors. The roles of the Chairman and Chief Executive are separate and there is a clear division of responsibilities between each position. The Chairman, Roger Fidgen, is responsible for leadership and effectiveness of the board and its governance. The Chief Executive, Nicholas Taylor, is responsible for the operational management and leadership of the Group.

The eight executive directors have a wide range of experience and represent the principal disciplines and services within the Group. Nicholas Taylor was appointed Chief Executive in July 2007. In February 2010, following a review by the nomination committee, Ms Alex Steele was appointed to the board. All other directors have served throughout the year.

The three non-executive directors, all of whom have served throughout the year and demonstrated the required degree of independence, have wideranging experience developed over many years in business. Their contribution to the running of the business has been both influential and effective. Roger Fidgen was appointed as Group Chairman in May 2005 having joined the Company as a non-executive director in 2004. He has worked in the property industry for over 30 years, most recently as senior partner of the leading international cost consultancy, Gardiner and Theobald. Our senior independent non-executive director, John Archibald joined the board in 2003 and has worked in banking and finance for over 30 years, most recently with Robert Fleming Plc. Geoffrey Wright joined the board in June 2007 following his retirement as construction director at Hammerson plc. The Chairman and nonexecutive directors meet without the executive directors present on at least one occasion each year.

The directors believe that the composition of the board provides an appropriate balance of skills, experience and knowledge with which to conduct its business, and that the overall composition of the board remains well balanced and appropriate to meet its shareholder needs and corporate governance obligations.

At least one third of the board is required to retire by rotation each year. In addition, newly appointed directors will stand for election by shareholders at the first annual general meeting following their appointment. All directors have access to the advice and services of the Company Secretary and to independent professional advice at the Company's expense. No independent advice was taken during the year. The Company maintains insurance cover against the legal costs of defending directors and officers against civil proceedings taken against them by third parties and in respect of damages resulting from an unsuccessful defence.

Committees Of The Board

The three principal committees of the board are the audit and risk committee, the remuneration committee and the nomination committee. These committees exclusively comprise of non-executive directors with the exception of the nomination committee of which Nicholas Taylor is also a member. Other directors attend meetings by invitation. Minutes of the audit and risk committee are circulated to and reviewed by the board.

The board's committees meet regularly to enable them to discharge their responsibilities. Each committee has terms of reference which are reviewed annually by the board.

The audit and risk committee operates to ensure that the Company's audit and internal control responsibilities are met. Its terms of reference address the provisions of the Combined Code 2008 in relation to audit committees and auditors and are available on request from the registered office. The committee has throughout the year comprised the three non-executive directors with John Archibald as Chairman. John is a chartered accountant and all members of the committee have relevant business and financial experience.

During the year, the committee met on four occasions. Three meetings were with the Company's auditors to receive their audit plan for the year end audit and to receive their reports following the interim review and year end audit. One meeting was held to review the effectiveness of the internal control and risk management procedures operated by the Group. The committee also reviewed the adequacy of the Company's policies on whistleblowing and bribery, monitored the cost effectiveness of audit and non-audit work performed by the external auditors and reviewed their independence. Where the auditors have provided non-audit services, the committee have ensured that auditor objectivity and independence was safeguarded taking account of relevant ethical guidance.

The remuneration committee reviews the remuneration arrangements for the directors. A summary of the work performed by this committee and its terms of reference are set out in the Directors' Remuneration Report.

The nomination committee is responsible for nominating candidates to the board, taking account of the balance of skills, knowledge and experience of the board members. Throughout the year, this committee has comprised the three non-executive directors together with Nicholas Taylor, Chief Executive. Roger Fidgen has chaired the committee throughout the year. The committee's terms of reference are available upon request from the Company Secretary. The committee met on two occasions during the year and recommended the appointment of Ms Alex Steele who succeeded Graham Hiscocks as Finance Director.

Board and Committee Meeting Attendance

The following table details the attendance of directors at board and committee meetings during the year:

		Board		Audit and Risk Committee		Remuneration Committee		Nomination Committee
Name	Held	Attended	Held	Attended	Held	Attended	Held	Attended
Executive Directors
N J Taylor	12	12	4	4**	2	2**	2	2
J A Austin	12	11	-	-	-	-	-	-
B J Gore	12	9	-	-	-	-	-	-
G R Hiscocks	12	12	4	4**	-	-	-	-
C W Beresford	12	9	-	-	-	-	-	-
J F G Waiting	12	12	-	-	-	-	-	-
S D Harden	12	11	-	-	-	-	-	-
A A Steele*	4	4	1	1**	-
Non-Executive Directors
R S Fidgen	12	11	4	3	2	2	2	2
J G Archibald	12	11	4	4	2	2	2	2
G H Wright	12	9	4	3	2	2	2	2

* A A Steele was appointed on 19 February 2010.

**N J Taylor attended meetings of the remuneration and audit and risk committees by invitation since he is not a committee member. G R Hiscocks and A A Steele attended meetings of the audit and risk committee by invitation since they are not committee members.

Performance Evaluation

As part of its commitment to ensure its effectiveness, a performance evaluation of the board, its committees and directors was performed during the year. The evaluation was led by the Chairman and Chief Executive and its results were published to and reviewed by the board. Performance measurement criteria were reviewed and updated to ensure that they met the requirements of the Code. The board considered that the use of an external third party adviser to assist with this process was not necessary.

The criteria used for the evaluation of the board's performance included the effectiveness of strategic planning and implementation, risk management and internal control, effectiveness of board members at meetings and the Company's relationship with its stakeholders – shareholders, employees, clients and the community. The evaluation process reassured the board that it was operating effectively and fulfilling its governance obligations. The areas for improvement identified by the evaluation process will be actioned during the following year. This performance evaluation process will be repeated annually.

The criteria used for the performance evaluation of the board's three committees were based upon the terms of reference for each committee. Each committee was found to be operating effectively, maintaining high standards of governance and responding to best practice developments.

Individual performance evaluations were undertaken against a checklist of tailored criteria and objectives. Performance evaluations for the executive directors were performed by the Chief Executive and reviewed by the non-executive directors. An evaluation of the performance of the Chief Executive and senior independent non-executive director was performed by the Chairman. The performance of the Chairman was evaluated by the Chief Executive and senior independent non-executive director. The performance of the third non-executive director was evaluated by the Chairman and senior independent non-executive director. Where individual performance weaknesses were identified, programmes for improvement have been prepared which will be actioned during the following year.

Internal Control

The board has overall responsibility for reviewing and approving the Group's system of internal control and for monitoring the adequacy and effectiveness of the financial, compliance and operational controls and risk management systems. It is a management responsibility to implement the agreed policies on risk management and internal control.

On behalf of the board, the audit and risk committee performs an annual review of the risks affecting all operating companies and the effectiveness of the procedures by which these risks are promptly identified and effectively communicated. Any issues arising from this review are presented for attention by the board.

The board confirms that there is a continuing system in operation for identifying, evaluating and managing risks and that the system has operated throughout the year under review and continues to operate. However the system is designed to mitigate risk rather than eliminate it and can only provide reasonable and not absolute assurance against material misstatement or loss. The Group's controls and procedures are reviewed each year with the objective of managing rather than limiting the risk of system failure.

The key features of the system of internal control operated by the Group are as follows:

• The Group publishes its mission statement, culture and values on its website. We emphasise our values of client focus, sustainability, staff • care, technical excellence, teamwork and corporate development
• The Group board regularly discusses matters such as corporate governance, risk management, strategic planning and financial reporting
• The Group purchases insurance with limits of indemnity which are reviewed each year to provide adequate protection against potential losses • arising from project liability and all other operational risks
• A clearly defined organisational structure exists with levels of authority and division of responsibility
• An executive director from the Group board also sits on the board of each principal operating company who reports significant matters • regarding risks or business performance for their attention or decision
• Group strategy is reviewed in detail once each year with ongoing monitoring at board meetings and interim updates when required
• Detailed budgets are prepared annually by operating company management and approved by the Group board. The financial performance • of each principal operating company is monitored each month against budget and prior year results. Reforecasting of financial projections is • undertaken quarterly
• Key performance indicators are reported monthly by each discipline with an explanation for significant variances from forecast or budget
• The Chief Executive and Finance Director provide monthly reports to the board on actual results achieved by the operating companies which • are consolidated at Group level together with updated forecasts and future prospects
• Systems are in place to enable project managers to review the financial progress of each ongoing project at any time. Profits are only • recognised when the ultimate outcome of a project can be reasonably foreseen and anticipated losses are written off as soon as they • are identified
• Fees proposals for large projects are reviewed and approved by two or more experienced directors. Material changes to costs or revenues or • unexpected events which occur during the project are reported to the board
• The Group board approves the annual capital expenditure budget and authorises major capital and revenue expenditure commitments
• Operating company boards exercise operational and financial management and control. The managing director of each principal operating • company sits as its representative on the Group Management Board which has responsibility for operational matters which are common to all • Group companies
• The Group employs suitably qualified management who are responsible for the operation of effective financial systems and controls, • the financial reporting process and for managing treasury risk
• Effective procedures are in place to protect the security of data held on the Group's IT systems and to ensure that an effective disaster • recovery plan can be operated
• The Group operates quality monitoring and validation processes to minimise the risk of errors, mistakes or delays which may lead to liability • insurance claims
• The Group provides detailed policy guidance and relevant training to staff on health and safety matters. A review of health and safety matters • is regularly undertaken at board meetings

The board has determined that it is not necessary to employ an internal audit function at this time. However, this matter will be regularly reviewed.

Investor Relations

The board recognises the importance of maintaining effective communication with its shareholders. This is achieved by attendance at meetings and by the issue of reports and newsletters.

The Company provides full disclosure of its activities, financial performance, risks and future prospects in its annual and interim reports. These are made available to stakeholders in paper and electronic formats. The Company also issues newsletters to illustrate projects undertaken and other matters of interest.

All shareholders are invited to attend the Annual General Meeting at which the Group's Annual Report and Financial Statement are approved, and when directors will be present to respond to questions. The Chairmen of the Company's three committees will answer questions relating to the operation of the committees and the work undertaken. The Chief Executive and Finance Director meet with the Company's principal shareholders, brokers, analysts and the media following the announcement of the year end and interim results and on other occasions as required. Feedback reports from institutional shareholders are compiled by the Company's broker and issued to the board to ensure that directors gain an understanding of the views of current and potential shareholders. The Chairman and senior non-executive director also make themselves available to meet with principal shareholders when required.

Directors' Report

The directors present their report, together with the audited financial statements for the year ended 30 June 2010.

Principal Activities And Review Of Business Operations

The principal activity of Waterman Group plc is that of a holding company. The principal activity of its subsidiary undertakings is the provision of design services and advice in the fields of civil, structural, mechanical, electrical and power engineering together with environmental and health and safety consultancy.

The Chairman's Statement together with the Operational and Financial Reviews provide a detailed commentary on the Group's performance and activities during the year, the risks to which it is exposed and details of its current activities and proposed developments. The business Key Performance Indicators are reported in the Financial Review and the environmental performance data is reported in the Corporate Responsibility Report.

Results And Dividends

The financial results for the year are set out in the Consolidated Income Statement. The loss attributable to equity shareholders was £4,614,000 (2009: £2,517,000 profit) and net assets as at 30 June 2010 were £33,797,000 (2009: £38,628,000). The directors recommend the payment of a final dividend of 0.9p which, together with the interim dividend of 0.9p paid in March 2010 makes a total distribution of 1.8p (2009: 5.1p) for the year. If approved at the Annual General Meeting (AGM) to be held on 03 December 2010, the final dividend will be paid on 11 January 2011 to shareholders on the register at close of business on 17 December 2010.

Directors And Their Interests

The directors of the Company at the date of this report and throughout the year are shown in the Directors' Remuneration Report.

John Archibald, Simon Harden, Nicholas Taylor and Geoffrey Wright retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-election. In accordance with the Articles of Association, Alex Steele will retire and offer herself for election to the Board. Short biographies of the five directors are set out on a separate circular to shareholders accompanying the Annual Report and Financial Statement.

None of the directors held any interest, either during or at the end of the financial year, in any material contract or arrangement with the Company or any subsidiary undertaking. Details of directors' service contracts and directors' interests in shares and options are shown in the Directors' Remuneration Report.

Substantial Interests In Shares

Other than directors' interests, as at 30 September 2010, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following interests of over 3% of its issued ordinary share capital:

	Number of shares held	%
P Gyllenhammar	5,301,550	17.2
Liontrust Asset Management	2,074,163	6.7
Universities Superannuation Scheme	1,985,000	6.4
F Clampitt	1,691,995	5.5
Gartmore Fledgling Trust plc	1,299,662	4.2
Executors of A G Thomson deceased	1,050,000	3.4

Share Capital

As at the date of this report, the Company's share capital consists of 30,758,824 issued and fully paid ordinary shares each with a nominal value of 10p listed on the London Stock Exchange. Shares may be held in certificated or uncertificated form. Further details of the Company's authorised and issued share capital, including changes during the year, are disclosed in note 18 to the consolidated financial statements.

Supplier Payment Policy

The Group agrees payment terms with its suppliers when it enters into contracts or relationships. The Group complies with the payment terms when it is satisfied that the supplier has delivered the goods or services in accordance with the agreed terms and conditions. The Group does not follow an established standard for the payment of suppliers.

At 30 June 2010, the Group had 64 days (2009: 71 days) purchases outstanding. The Company had 92 days (2009: 129 days) purchases outstanding.

Employment Policy

As a consultancy business, Waterman Group recognises that its staff are its most important asset. Staff are kept informed of developments within the Group through regular announcements, newsletters and electronic communications. Regular staff meetings enable their views to be taken into consideration.

The Group places great importance on its ability to attract and retain staff of the highest calibre. This is achieved by offering competitive salaries and benefits, accompanied by effective training and the creation of career development opportunities throughout the Group. Most companies now operate a flexible benefit scheme which enables staff to select from a range of benefits. A bonus payment scheme exists for current staff to introduce new staff with the requisite skills to join the Group.

Waterman operates an equal opportunities policy and is committed to ensuring that its workplaces are free from discrimination of any kind. Recruitment and employment decisions are made on the basis of fair and objective criteria. The requirements of job applicants and existing members of staff who suffer from disability are considered to ensure that wherever possible, reasonable adjustments are made to enable them to enter into or remain in employment with the Group.

Corporate Governance And Corporate Responsibility

A report on the Group's corporate governance and corporate responsibility principles and compliance is set out in the Corporate Governance and Corporate Responsibility sections of this report.

Financial Risk Management Policies

The Group's risk management objectives, exposure and policies are set out in note 1 to the consolidated financial statements.

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. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the consolidated financial statements and notes. The Group has considerable financial resources together with long term contracts with a number of customers and suppliers across different geographic areas and industries. An analysis of the Group's borrowing facilities are disclosed in note 17 'Financial Liabilities-Borrowings'. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic climate. After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statement.

Events After The Balance Sheet Date

There were no disclosable events after the balance sheet date as at the date of this report.

Fixed Assets

Information relating to the current market value and the book value of the Group's land and freehold property is disclosed in the Financial Review.

Donations

Charitable donations during the year amounted to £6,513 (2009: £8,646). Individual amounts of greater than £200 were donated for the following purposes: health and medical £1,289 and homeless £1,734. A further £1,000 was donated to non-specific charitable organisations. No political donations were made during the year.

Annual General Meeting

The AGM will be held at 10:30 am on 03 December 2010. Formal notice and details of the meeting are set out on a separate circular to shareholders accompanying the Annual Report and Financial Statement. At the 2009 AGM, the shareholders approved a resolution giving the Company authority to purchase up to 10 per cent of its issued ordinary share capital for the purposes of section 166 of the Companies Act 2006. This authority, which expires on 03 December 2010, has not been used and a resolution for its renewal will be proposed at the 2010 AGM.

Information relating to treasury shares purchased in the year is set out in note 27 to the consolidated financial statements.

Auditors And Disclosure Of Information To Auditors

A resolution for the re-appointment of PricewaterhouseCoopers LLP, who have indicated their willingness to continue in office as auditors, and authorising the directors to determine their remuneration will be proposed at the Annual General Meeting.

For each of the persons who were directors at the time this report was prepared, the following applies:

• so far as the directors are aware, there is no relevant audit information (i.e. information needed by the Company's auditors in connection with preparing • their report) of which the Company's auditors are unaware; and
• the directors have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to • establish that the Company's auditors are aware of that information.

By Order of the Board

Graham R Hiscocks Company Secretary 27 October 2010

Independent Auditors' Report To The Members Of Waterman Group Plc

We have audited the group financial statements of Waterman Group plc for the year ended 30 June 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Shareholders' Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Respective Responsibilities Of Directors And Auditors

As explained more fully in the Directors' Responsibilities Statement set out on page 34, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope Of The Audit Of The Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion On Financial Statements

In our opinion the group financial statements:

• give a true and fair view of the state of the group's affairs as at 30 June 2010 and of its loss and cash flows for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the lAS Regulation.

Opinion On Other Matters Prescribed By The Companies Act 2006

In our opinion:

• the information given in the Directors' Report for the financial year for which the group financial statements are prepared is consistent with the • group financial statements; and
• the information given in the Corporate Governance Statement set out on pages 40 to 42 with respect to internal control and risk management • systems and about share capital structures is consistent with the financial statements.

Matters On Which We Are Required To Report By Exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a Corporate Governance Statement has not been prepared by the parent company.

Under the Listing Rules we are required to review:

• the directors' statement, set out on page 44, in relation to going concern; and
• the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the June 2008 • Combined Code specified for our review.

Other Matter

We have reported separately on the parent company financial statements of Waterman Group Plc for the year ended 30 June 2010 and on the information in the Directors' Remuneration Report that is described as having been audited.

Fiona Kelsey (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 27 October 2010

Consolidated Income Statement

for the year ended 30 June 2010

		Year ended
		30 June 2010	30 June 2009
	notes	£'000	£'000
Revenue-continuing operations	2	83,244	122,401
Employee benefits expense	3	(51,472)	(72,487)
Other operating charges pre exceptional items	4	(28,434)	(43,632)
Exceptional items	5	(5,638)	-
Other operating charges post exceptional items		(34,072)	(43,632)
Operating expenses		(85,544)	(116,119)
(Loss) / earnings before interest, taxes, depreciation and amortisation (EBITDA)		(2,300)	6,282
Depreciation of property, plant and equipment	12	(1,461)	(1,835)
Amortisation of other intangible assets	11	(889)	(923)
Operating profit pre exceptional items		988	3,524
Exceptional items	5	(5,638)	-
Operating (loss) / profit post exceptional items		(4,650)	3,524
Interest payable	6	(560)	(1,256)
Interest receivable		166	318
(Loss) / profit before taxation		(5,044)	2,586
Taxation	7	657	188
(Loss) / profit for the financial year from continuing operations (see below)		(4,387)	2,774
(Loss) / profit attributable to - Equity shareholders	20	(4,614)	2,517
Profit attributable to - Minority interests		227	257
		(4,387)	2,774
Basic (loss) / earnings per share	9	(15.1p)	8.6p
Diluted (loss ) / earnings per share	9	(15.1p)	8.5p
Dividend paid per share	8	1.8p	5.1p
Dividend proposed per share	8	0.9p	0.9p

Consolidated Statement Of Comprehensive Income

for the year ended 30 June 2010

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
(Loss) / profit for the financial year from continuing operations (see above)	(4,387)	2,774
Other comprehensive income / (expense) :
Currency translation adjustments	739	515
Deferred tax credit for the year	-	20
Share based payments credit	(111)	(204)
Change in valuation of own shares held by Employee Benefit Trust	(4)	(31)
Employee Benefit Trust profit /(loss)	4	(212)
Other comprehensive income for the year (net of tax)	628	88
Total comprehensive (expense) / income for the year	(3,759)	2,862
Total comprehensive (expense) / income attributable to –Equity shareholders	(4,336)	2,490
Total comprehensive income attributable to – Minority interests	577	372

The notes on pages 50 to 73 are an integral part of these consolidated financial statements.

Consolidated Balance Sheet

as at 30 June 2010

		2010	2009
	notes	£'000	£'000
ASSETS
Non-current assets
Goodwill	10	16,483	17,290
Other intangible assets	11	1,648	2,458
Property, plant and equipment	12	10,888	13,901
Loan and receivables	13	10	10
Deferred taxation asset	24	239 29,268	390 34,049
Current assets
Trade and other receivables	15	38,182	50,987
Cash and cash equivalents		4,908	6,158
		43,090	57,145
Total assets		72,358	91,194
LIABILITIES
Current liabilities
Trade and other payables	16	(22,809)	(31,307)
Financial liabilities - borrowings	17	(7,563)	(4,598)
Current tax liability		- (30,372)	(326)
Non-current liabilities			(36,231)
Financial liabilities - borrowings	17	(3,720)	(11,753)
Provisions	23	(4,255)	(3,801)
Deferred taxation liability	24	(214)	(781)
		(8,189)	(16,335)
Total liabilities		(38,561)	(52,566)
Net assets		33,797	38,628
EQUITY
Share capital	18	3,076	3,076
Share premium reserve	20	11,881	11,880
Merger reserve	20	3,144	3,144
Revaluation reserve	20	584	1,491
Profit and loss reserve	20	13,331	17,308
Total shareholders' equity		32,016	36,899
Minority interest		1,781	1,729
Total equity		33,797	38,628

The financial statements on pages 46 to 73 were authorised for issue by the directors on 27 October 2010 and are subject to the approval of the shareholders at the AGM on 03 December 2010. They were signed on behalf of the directors by:-

R S Fidgen N J Taylor Director Director

Consolidated Cash Flow Statement

for the year ended 30 June 2010

		Year ended	Year ended
		30 June 2010	30 June 2009
	notes	£'000	£'000
Cash flows from operating activities
Cash generated from operations (see below)		3,357	6,542
Interest paid		(686)	(1,003)
Interest received		166	318
Tax paid		(1,002)	(1,514)
Net cash from operating activities		1,835	4,343
Cash flows from investing activities
Deferred consideration paid		(425)	(1,250)
Purchase of other intangible assets		(6)	(354)
Purchase of property, plant and equipment (PPE)		(141)	(817)
Proceeds from sale of PPE and other intangible assets		1,589	32
Net cash from/(used in) investing activities		1,017	(2,389)
Cash flows from financing activities
Share issues		-	32
Repayment of borrowing		(1,196)	(1,002)
Repayments on finance leases		(53)	(24)
Equity dividends paid	8	(1,073)	(1,733)
Purchase of shares by Waterman Trustees Limited	27	-	(359)
Net cash used in financing activities		(2,322)	(3,086)
Net increase/(decrease) in cash, cash equivalents and overdrafts		530	(1,132)
Effect of exchange rate changes	22	418	498
Net increase/(decrease) in cash, cash equivalents and overdrafts	22	948	(634)

Reconciliation of (Loss)/profit for the financial year to cash generated from operations		Year ended 30 June 2010 £'000	Year ended 30 June 2009 £'000
Loss / (profit) for the financial year		(4,387)	2,774
Taxation	7	(657)	(188)
Interest payable	6	560	1,256
Interest receivable		(166)	(318)
Amortisation of other intangible assets	11	889	923
Depreciation	12	1,461	1,835
Impairment of Goodwill	10	317	-
Impairment of PPE	12	300	-
Profit on disposal of PPE and other intangible assets		(58)	(7)
Shares granted under the Conditional Share Bonus award		-	116
Share based payments credit		(111)	(204)
Changes in working capital
Decrease in trade and other receivables		15,232	10,234
Decrease in trade and other payables		(10,534)	(9,316)
Increase / (decrease) in provisions		511	(563)
Cash generated from operations (see above)		3,357	6,542

The notes on pages 50 to 73 are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Shareholders' Equity

for the year ended 30 June 2010

		Share			Profit	Total
	Share	premium	Merger	Revaluation	and loss	shareholders'	Minority	Total
	capital	reserve	reserve	reserve	reserve	equity	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 01 July 2008	2,910	11,832	2,358	1,491	16,250	34,841	1,658	36,499
Currency translation adjustments	-	-	-	-	400	400	115	515
Deferred tax charge for the year	-	-	-	-	20	20	-	20
Share based payments credit for the year	-	-	-	-	(204)	(204)	-	(204)
Adjustment in respect of Share Incentive Plan	-	-	-	-	(31)	(31)	-	(31)
Loss on disposal of own shares	-	-	-	-	(212)	(212)	-	(212)
Net (expense) / income recognised directly in equity	-	-	-	-	(27)	(27)	115	88
New ordinary shares issued	166	48	786	-	-	1,000	-	1,000
Profit for the financial year	-	-	-	-	2,517	2,517	257	2,774
Dividend paid	-	-	-	-	(1,432)	(1,432)	(301)	(1,733)
Balance at 30 June 2009	3,076	11,880	3,144	1,491	17,308	36,899	1,729	38,628
Currency translation adjustments	-	-	-	-	309	309	430	739
Reserve transfer on disposal of Land and freehold
property *	-	-	-	(1,271)	1,271	-	-	-
Deferred tax transfer on disposal of Land and
freehold property*	-	-	-	364	(364)	-	-	-
Share based payments credit for the year	-	-	-	-	(111)	(111)	-	(111)
Change in valuation of own shares held by
Employee Benefit Trust	-	-	-	-	(4)	(4)	-	(4)
Employee Benefit Trust profit	-	-	-	-	4	4	-	4
Reserve transfer on change in ownership of
Waterman Emirates Pty Limited	-	-	-	-	80	80	(80)	-
Net (expense) / income recognised directly in equity	-	-	-	(907)	1,185	278	350	628
New ordinary shares issued	-	1	-	-	-	1	-	1
(Loss) / profit for the financial year	-	-	-	-	(4,614)	(4,614)	227	(4,387)
Dividend paid	-	-	-	-	(548)	(548)	(525)	(1,073)
Balance at 30 June 2010	3,076	11,881	3,144	584	13,331	32,016	1,781	33,797

* Further detail on the reserve and deferred tax transfers on the disposal of Land and freehold property are disclosed in note 12 and 7c to the consolidated financial statements respectively.

Notes To The Consolidated Financial Statements

1 Accounting Policies

Accounting Convention

The consolidated financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS) and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The company is a limited liability company incorporated and domiciled in the UK. The principal accounting policies which have been consistently applied to the prior year, unless otherwise stated, in the preparation of the consolidated financial statements are set out below.

Basis Of Preparation

The consolidated financial statements for the years ended 30 June 2010 and 30 June 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU on the historical cost basis with the exception of land and freehold property which have been modified to fair value at the date of transition to IFRS and separately identifiable intangibles acquired on business combinations which have been measured at fair value.

Application Of New IFRSs and Interpretations

a) The following new IFRS and amendment to IFRS have been applied by the Group with effect from 01 July 2009.

• IAS 1 Presentation of financial statements (Amendment effective 01 July 2009) The revised standard requires 'non-owner changes in equity' to be presented separately from 'owner changes in equity' in a statement of comprehensive income. The Group has chosen to present two performance statements (the income statement and statement of comprehensive income) to comply with IAS 1. Comparative information has been re-presented so that it is also in conformity with the revised standard.
• IFRS 8 Operating segments (effective 01 July 2009) This standard replaces IAS 14 'Segment Reporting'. It requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes.

Since both of the above changes in accounting policy are presentational there is no impact on the Group's reported loss or net assets.

b) The following standards, amendments to standards and interpretations are effective in the current financial year but have had no material impact on the Group's consolidated financial statements:

• IAS 19 Employee benefits (Amendment, effective 01 July 2009)
• IAS 23 Borrowing costs (Amendment, effective 01 July 2009)
• IAS 27 Consolidated and separate financial statements (Amendment, effective 01 July 2009)
• IAS 32 Financial instruments: presentation (Amendment, effective 01 July 2009)
• IAS 36 Impairment of assets (Amendment, effective 01 July 2009)
• IAS 38 Intangible assets (Amendment, effective 01 July 2009)
• IAS 39 Financial Instruments: Recognition and measurement on eligible hedged items (Amendment, effective 01 July 2009)
• IFRS 1 First time adoption (Amendment, effective 01 July 2009)
• IFRS 2 Share based payments on vesting conditions and cancellations (Amendment, effective 01 July 2009)
• IFRS 3 Business combinations (Amendment, effective 01 July 2009)
• IFRS 7 Financial Instruments: Disclosures (Amendment, effective 01 July 2009)
• IFRIC 12 Service concession arrangements (Amendment, effective 01 July 2009)
• IFRIC 13 Customer loyalty programmes relating to IAS 18, revenue (Amendment, effective 01 July 2009)
• IFRIC 14 IAS19 the limit on a defined benefit asset, minimum funding requirements and their interaction (Amendment, effective 01 July 2009)
• IFRIC 16 Hedges of a net investment in a foreign operation (effective 01 July 2009)
• IFRIC 17 Distributions of non-cash assets to owners (effective 01 July 2009)
• Annual improvements 2008 (Amendments, effective 01 July 2009)

c) At the date of authorisation of these financial statements, the following standards, amendments to standards and interpretations were in issue but not yet effective and have not been adopted early by the Group:

• IFRS 1 First time adoption of IFRS additional exemptions (Amendment, effective 01 July 2010)
• IFRS 2 Share based payments group cash settled transactions (Amendment, effective 01 July 2010)
• IAS 24 Related party disclosures (Amendment, effective 01 July 2011)
• IAS 32 Financial instruments: Presentation on classification of rights issues (Amendment, effective 01 July 2010)
• IFRIC 14 Prepayments of a minimum funding requirement (Amendment, effective 01 July 2010)
• IFRIC 15 Arrangements for construction of real estates (effective 01 July 2010)
• IFRIC 18 Transfer of assets from customers (effective 01 July 2010)
• IFRIC 19 Extinguishing financial liabilities with equity instruments (effective 01 July 2010)

Annual improvements 2009 (Amendments, effective 01 July 2010)

Basis Of Consolidation

The consolidated financial statements consist of the accounts of Waterman Group plc and all of its subsidiaries (together 'the Group') as at 30 June each year. Subsidiaries are those entities over which the Group has the power to govern financial and operating policies, generally accompanying a shareholding that confers more than half of the voting rights. The results of the subsidiary undertakings acquired have been included from the date of acquisition being the date when control passed. All intra group trading and profits are eliminated on consolidation.

Business Combinations

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 cash consideration 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 identifiable net assets acquired is recorded as goodwill. Subsidiaries accounting policies have been aligned where necessary to ensure consistency with the policies adopted by the Group.

Foreign Currency Translation

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the balance sheet date and any exchange differences are taken to the Consolidated Income Statement. On consolidation, income statements and cash flows of foreign subsidiaries are translated from their functional currency into the Group's functional currency of pounds sterling using average rates that existed during the accounting period. The balance sheets of foreign subsidiaries and goodwill arising on consolidation are translated into pounds sterling at the rates of exchange ruling at the balance sheet date. Gains or losses on the translation of opening and closing net assets are recognised in the Consolidated Statement of Comprehensive Income and cumulatively in the Group's reserves.

Sources Of Estimation Uncertainty

The preparation of the financial statements requires the Group to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Significant Judgements

The Group believes that the most significant critical judgement areas in the application of its accounting policies are revenue recognition and the assessment of the percentage of completion achieved. The Group assesses contract progress and determines the proportion of contract work completed at the balance sheet date in relation to the total contract works. Other principal areas in which judgements have been made are provisions in respect of potential liability insurance claims and the impairment of trade receivables.

Segmental Reporting

The directors regard the Group's primary segments of business to be building services, civil and transportation, energy, environment and design, structures and international multi-disciplinary. The secondary segments of business are the geographic regions in which the Group operates.

Revenue

Revenue is stated net of VAT and is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. For short term contracts, the amount of revenue recognised reflects the work completed.

The Group has a number of long term contracts that span more than one financial period. In calculating revenue, the percentage of completion method is used, based on a review of contract progress and the proportion of contract work completed in relation to the total contract works. Profits are only recognised where they can be reliably measured, which is normally after the contract has reached 40% completion. Full provision is made for all known or anticipated losses on each contract immediately such losses are identified. Contract costs comprise direct labour, direct expenses and attributable overheads.

Gross amounts due from customers are stated at the value of the costs incurred plus recognised profits (less recognised losses) where they exceed progress billings. Progress billings not yet paid by customers are included within trade and other receivables. To the extent that progress billings exceed costs incurred plus recognised profits (less recognised losses) they are included in trade and other payables.

Employee Benefits

a) Pension Obligations

The Group maintains a number of defined contribution schemes including a stakeholder scheme which is available to all qualifying staff. Company contributions to these schemes are charged to the consolidated income statement in the year to which they relate.

b) Share Incentive Plan (SIP)

The Group operates the SIP to reward and encourage its executives and staff. The SIP appropriates company shares to staff up to a value of 5% of the Group's profit before taxation each year by using funds provided by the Group. The distribution of issued shares is arranged through Waterman Trustees Limited, a related company formed to administer the Employee Benefit Trust (EBT) which controls the SIP. Shares held by the EBT at the balance sheet date are disclosed as a deduction from total shareholders' equity.

c) Share Based Payments

The Group operates a Company Share Option Plan, an Executive Share Option Scheme and a Long Term Incentive Plan. For all grants of share options and share awards, the fair value as at the date of grant is calculated using an appropriate option pricing model and the corresponding expense is recognised over the vesting period.

Exceptional Items

Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional items and are disclosed within their relevant business segment within note 2, Segmental Reporting.

Goodwill

Goodwill recognised under UK GAAP prior to 01 July 2004 (and subsequent to 01 July 1998), the date of transition to IFRS, is stated at net book value as at this date and has been frozen in accordance with IFRS 3 'Business Combinations'. Goodwill on business combinations recognised subsequent to 01 July 2004 is initially measured at cost being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units for impairment testing. The recoverable amount of goodwill has been based on value in use as represented by the net present value of future cash flows discounted using the Group's weighted average pre-tax real cost of capital.

Other Intangible Assets

Computer software licences acquired are capitalised on the basis of the costs incurred to acquire and bring to use specific software. Intangible assets identified in a business combination are capitalised at fair value as at the date of acquisition. Following initial recognition, the carrying amount of an intangible asset is its cost or fair value less any accumulated amortisation and any accumulated impairment losses. Useful lives of intangible assets are assessed on acquisition and amortisation is charged as appropriate on a straight line basis. The annual amortisation rates applicable are as follows:

Computer software	20%-33%
Customer relationships arising on business combinations	17%
Order books arising on business combinations	33%

Impairment Of Goodwill And Other Intangible Assets

The entity assesses at each reporting date whether an asset may be impaired by estimating its recoverable amount. If the recoverable amount is less than the carrying value, an impairment charge is required.

Property, Plant And Equipment (PPE) And Depreciation

PPE is stated at cost or fair value when acquired, less depreciation and when appropriate, provision for impairment. Freehold property has been revalued to its fair value as at the date of transition to IFRS and is now held at deemed cost. On disposal of a revalued asset, the relevant amount in the Revaluation reserve is transferred to the Profit and Loss Reserve.

Depreciation is provided at rates calculated to write off the cost or fair value of PPE by equal annual instalments over their expected useful lives, having regard to their residual values, and is subject to an impairment review. Land is not depreciated. The annual depreciation rates applicable are as follows:

Freehold buildings	2%
Plant, equipment and motor vehicles	15% - 33%
Freehold land is not depreciated

Financial Instruments

The Group's financial assets and liabilities are recorded at fair value less amortised cost, apart from the net assets and liabilities of overseas subsidiary undertakings which are translated into pounds sterling at rates of exchange ruling at the balance sheet date. They are classified as current or non-current according to when the receipt or payment falls due. The fair value of financial assets and liabilities of the Group are considered to be materially equivalent to their book value.

Financial Assets

The group classifies its financial assets depending on the purpose for which the financial assets were acquired. Management determined this classification at initial recognition as detailed below:

Loan 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 that are greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group's loans and receivables comprise Trade and other receivables and Cash and cash equivalents in the Consolidated Balance Sheet.

Trade Receivables

Trade receivables are recognised initially at fair value and subsequently 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. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Consolidated Income Statement within Other operating charges. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against Other operating charges in the Consolidated Income Statement.

Cash And Cash Equivalents

Cash and cash equivalents in the Consolidated Cash Flow Statement include cash and bank balances, short term deposits and bank overdrafts (included in Financial Liabilities-Borrowings in the Consolidated Balance Sheet).

Trade And Other Payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

Borrowings

Borrowings are initially recognised at fair value and subsequently at amortised cost.

Leases

Finance lease agreements, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Finance costs are charged to the Consolidated Income Statement over the period of the agreement. Obligations under finance leases are included in Financial Liabilities-Borrowings net of finance costs allocated to future periods. Capitalised leased assets are depreciated over the shorter of the estimated life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Rentals paid under operating leases are charged to the Consolidated Income Statement as incurred on a straight-line basis over the lease term.

Current And Deferred Tax

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax relating to items recognised directly in equity is recognised in equity and not in the Consolidated Income Statement.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is likely that an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount can be reasonably estimated. Where the Group expects all or some of the obligation to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Consolidated Income Statement net of any reimbursement.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date. If material, provisions are determined by discounting the expected future cash flows using rates that reflect current market assessments of the time value of money.

Share Capital

Ordinary shares are classified as equity.

Dividend

Dividend distribution to the Company's shareholders is recognised as a liability in the consolidated financial statements when approved.

Financial Risk Management

The Group centrally manages borrowings, investing of surplus funds and financial risks. The objective of holding financial investments is to provide efficient cash and tax management and effective funding for the Group. The Group's financial instruments comprise borrowings, cash, deferred consideration and provisions along with various items, such as trade receivables and payables. The Group also has overdraft facilities in place to optimise the use of its resources. It is and continues to be the Group's policy that no speculative trading in derivatives shall be undertaken.

In accordance with IFRS 7, the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet certain requirements. No such arrangements have been identified.

The main risks arising from the Group's activities are liquidity risk, foreign currency risk, interest rate risk and credit risk. The board reviews and agrees policies for managing each of these risks which have remained unchanged throughout the year.

Liquidity Risk

Liquidity risk is the risk that suitable sources of funding for the Group's business activities may not be available. The Group's liquidity is managed centrally with operating companies forecasting their cash requirements to the parent company. In managing this risk, the Group has access to a range of funding at competitive rates through capital markets and banks. The parent company centrally co-ordinates relationships with banks, borrowing requirements, foreign exchange requirements and cash management. The Group believes that it has access to sufficient funding by using undrawn committed borrowing facilities to meet foreseeable borrowing requirements together with the use of retained profits and new equity.

The Group has continued with its policy of ensuring that there are sufficient funds to meet the expected funding requirements of the Group's operations and investment opportunities whilst monitoring its liquidity position through budgetary procedures, cash flow analysis and bank covenant reviews. The Group has a Dun and Bradstreet credit risk rating of 4 which is the highest available.

Foreign Currency Risk

The Group's exposure to exchange rate fluctuations arises on the translation of overseas net assets and profits into pounds sterling for accounting purposes together with contracts not undertaken in the Group's functional currency. The board continues to regularly consider and monitor the issue of such balance sheet exposure to minimise the impact of any exchange rate movements on operating profit by regular reporting to management. Management will implement appropriate hedging procedures should a potential material risk be identified.

Interest Rate Risk

Interest expense reflects the cost of the Group's borrowings. Interest income arises from investment of cash and short term deposits held by the Group. Interest rate risk is managed by monitoring market rates to ensure that optimal returns are achieved.

Credit Risk

The Group has no significant concentrations of credit risk. The Group has implemented policies that require appropriate credit checks on potential customers before sales commence and only uses financial institutions with high credit ratings.

2 Segmental Reporting

a) Primary Segmental Analysis

The Chief Operating Decision Maker has been identified as the Board. The Board reviews the Group's internal management accounts in order to analyse performance and allocate resources. The segments shown below have been determined based on this information. The Board assesses the business from both a business discipline and geographic perspective. The five disciplines are Building services, Civil and transportation, Energy, environment and design, Structures and International multi-disciplinary. Performance is assessed on the basis of operating profit as disclosed in the Consolidated Income Statement before exceptional items. Revenue is reported and assessed on a consistent basis with revenue reported in the Consolidated Income Statement.

**Adjusted operating profit / (loss)	264	802	(841)	1,057	221	1,503
Loss attributable to equity shareholders						(4,614)
Profit attributable to minority interests						(227)
Taxation						657
Loss before taxation						(5,044)
Net finance costs						(394)
Operating profit / (loss) post exceptional items	121	(95)	(992)	1,057	(4,741)	(4,650)
Exceptional items	(107)	(555)	(151)	-	(4,825)	(5,638)
Operating profit / (loss) pre exceptional items	228	460	(841)	1,057	84	988
Amortisation	(81)	(481)	(39)	(24)	(264)	(889)
Depreciation	(90)	(405)	(99)	(104)	(763)	(1,461)
EBITDA pre exceptional items	399	1,346	(703)	1,185	1,111	3,338
Revenue	8,112	32,142	5,965	10,901	26,124	83,244
Revenue- internal	(729)	(5,980)	(983)	(2,784)	9,510	(966)
Revenue - total	8,841	38,122	6,948	13,685	16,614	84,210
Consolidated Income Statement	£'000	£'000	£'000	£'000	£'000	£'000
30 June 2010	services	transportation	and design	Structures	multi-disciplinary*	Total
	Building	Civil and	environment		International
			Energy,

**Adjusted operating profit / (loss)	303	2,319	(1,681)	2,776	301	4,018
Profit attributable to equity shareholders						2,517
Profit attributable to minority interests						(257)
Taxation						188
Profit before taxation						2,586
Net finance costs						(938)
Operating profit / (loss)	267	1,977	(1,681)	2,776	185	3,524
Amortisation	(84)	(507)	(42)	(40)	(250)	(923)
Depreciation	(116)	(469)	(130)	(182)	(938)	(1,835)
EBITDA	467	2,953	(1,509)	2,998	1,373	6,282
Revenue	11,336	40,010	9,980	21,150	39,925	122,401
Revenue- internal	(530)	(1,832)	(2,737)	(3,710)	(17,653)	(26,462)
Revenue - total	11,866	41,842	12,717	24,860	57,578	148,863
Consolidated Income Statement	£'000	£'000	£'000	£'000	£'000	£'000
30 June 2009	services	transportation	and design	Structures	multi-disciplinary*	Total
	Building	Civil and	environment		International
			Energy,

*The international multi-disciplinary business segment consists primarily of the building services and structures disciplines.

** Adjusted operating profit is reported after adding back the amortisation charge on acquired intangible assets of £515,000 (2009: £494,000) and exceptional items of £5,638,000 (2009: £nil).

A segmental analysis of net finance costs has not been disclosed as the directors are of the opinion that its components cannot be meaningfully analysed across regions and classes of business. Internal revenue is work done on behalf of fellow group undertakings on an arm's length basis.

a) Primary Segmental Analysis (continued)

			Energy,
	Building	Civil and	environment		International
30 June 2010	services	transportation	and design	Structures	multi-disciplinary	Unallocated	Total
Consolidated Balance Sheet	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Goodwill	680	8,838	965	-	6,000	-	16,483
Other segment assets	4,730	19,153	1,013	16,452	14,457	(1,099)	54,706
Total segment assets	5,410	27,991	1,978	16,452	20,457	(1,099)	71,189
Unallocated assets
Current tax assets							930
Deferred tax assets							239
Total assets							72,358
Segment liabilities	(2,605)	(3,223)	(921)	(5,394)	(9,573)	(2,153)	(23,869)
Unallocated liabilities
Financial liabilities							(11,283)
Current tax liabilities							(3,195)
Deferred tax liabilities							(214)
Total liabilities							(38,561)
Capital expenditure	-	5	-	-	210	(42)	173
			Energy,
	Building	Civil and	environment		International
30 June 2009	services	transportation	and design	Structures	multi-disciplinary	Unallocated	Total
Consolidated Balance Sheet	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Goodwill	680	9,935	965	-	5,710	-	17,290
Other segment assets	3,054	19,393	7,186	16,331	30,095	(2,155)	73,904
Total segment assets	3,734	29,328	8,151	16,331	35,805	(2,155)	91,194
Segment liabilities	(2,164)	(2,192)	(1,543)	(9,602)	(14,148)	(1,594)	(31,243)
Unallocated liabilities
Financial liabilities							(16,351)
Corporation and other current tax liabilities							(4,191)
Deferred tax liabilities							(781)
Total liabilities							(52,566)
Capital expenditure	35	83	36	8	591	391	1,144

Other than those disclosed in the table above, unallocated assets principally comprise of cash and cash equivalents, other intangible assets and property, plant and equipment that are controlled by the parent company. Unallocated liabilities are primarily trade payables and accruals controlled by the parent company.

b) Geographic Segmental Analysis

30 June 2010	UK £'000	Europe £'000	Rest of the world £'000	Group £'000	Total £'000
External revenue – by client location	57,122	8,196	17,926	-	83,244
Segment assets – by location of asset	51,832	4,780	15,676	(1,099)	71,189
Capital expenditure	5	164	46	(42)	173
	UK	Europe	Rest of the world	Group	Total
30 June 2009	£'000	£'000	£'000	£'000	£'000
External revenue – by client location	82,476	19,188	20,737	-	122,401
Segment assets – by location of asset	57,545	19,711	16,093	(2,155)	91,194
Capital expenditure	162	182	409	391	1,144

The Rest of the world external revenue, segment assets and capital expenditure are principally based in Australia and the Middle East.

3 Employee Benefits Expense

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Staff costs including executive directors remuneration amounted to:
Wages and salaries	44,284	61,573
Termination benefits	650	2,105
Social security costs	4,449	6,406
Credit in respect of share based payment awards	(111)	(204)
Pension costs	2,200	2,607
	51,472	72,487
The average monthly number of employees including executive directors during the year were as follows:
	Number	Number
Technical	977	1,410
Non-technical	230	301
	1,207	1,711

The average monthly number of contract staff during the year was 110 (2009: 181).

Pensions contributions outstanding at 30 June 2010 were £169,444 (2009: £180,000).

The total gain realised by directors on the exercise of executive share options during the year was £nil (2009: £5,325).

4 Other Operating Charges

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Other operating charges / (gains) include:
During the year the Group (including its overseas subsidiary undertakings) obtained
the following services from the Company's auditor and its associates:
Fees payable to the Company's auditor for the audit of parent company and consolidated financial statements	83	73
Fees payable to the Company's auditor and its associates for other services:
-the audit of the parent company's subsidiary undertakings pursuant to legislation	168	194
-other services pursuant to legislation	27	27
Operating lease rentals
- property	4,012	3,648
- plant and equipment	810	807
Gain on foreign exchange	(661)	(1,410)
Profit on disposal of fixed assets	(58)	(7)
Rents receivable	(286)	(203)
Impairment of receivables on a limited number of overseas projects	-	2,800

5 Exceptional Items

The following is an analysis of the exceptional items arising within the Group during the year, all of which have been included in the Consolidated Income Statement.

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Vacant office space	1,407	-
Work in progress and trade receivables provisions	3,498	-
Impairment of goodwill and property, plant and equipment (PPE)	617	-
Other restructuring costs	116	-
Exceptional items	5,638	-

a) Vacant office space: A provision of £1.4m has been made as an exceptional cost in respect of vacant leasehold charges primarily made up of rent, a) rates, and service charges payable by the Group over the remaining lease terms on vacated properties. The Group is actively seeking to sub-let a) these properties.

b) Work in progress and trade receivable provisions: A provision of £3.5m has been made against work in progress and trade receivable balances in b) Ireland and Poland.

c) Impairment of goodwill and PPE: Following a review of the value of the assets of the Belgian business, an impairment charge of £462,000 has been c) made against the goodwill and PPE as the carrying values were considered to be unsupportable by the directors. An additional £155,000 of impairment c) charge relates to PPE within vacated office space. Further information on the impairment of goodwill is disclosed in note 10 to the consolidated financial c) statements.

d) Other restructuring costs: Relates mainly to redundancy and other restructuring costs within the Polish business.

6 Interest Payable

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Interest payable on bank loans and overdrafts	571	935
Interest payable on other loans	99	98
Interest payable on hire purchase contracts	14	7
(Unwinding of discount)/discount on liability insurance provisions and deferred consideration	(124)	216
Interest payable	560	1,256

7 Taxation

a) Analysis Of Credit In The Year

	Year ended 30 June 2010	Year ended 30 June 2009
	£'000	£'000
United Kingdom
Corporation tax at 28% (2009: 28%)	(298)	927
Adjustments in respect of prior years	(743)	(360)
	(1,041)	567
Foreign tax
Corporation taxes	475	410
Adjustments in respect of prior years	(85)	44
Total current tax	(651)	1,021
United Kingdom
Origination and reversal of temporary differences	(34)	(1,160)
Adjustments in respect of prior years	28	(49)
Total deferred tax	(6)	(1,209)
Taxation	(657)	(188)

b) Factors Affecting Taxation For The Year

The following table shows a reconciliation from the theoretical corporation tax credit, using the UK corporation tax rate for 2010 of 28% to the reported tax credit. The reconciling items represent, other than the impact of tax rate differentials and changes, non-taxable income or non-deductible expenses arising from the difference between the local tax base and the reported financial statements. The total tax charge in future years will be affected by any changes in the corporation tax rates in force in the countries in which the Group operates as shown in note 13 to the consolidated financial statements.

	Year ended 30 June 2010	Year ended 30 June 2009
	£'000	£'000
(Loss) / profit before taxation	(5,044)	2,586
Taxation on (loss) / profit at standard UK rate of 28% (2009: 28%)	(1,412)	724
Effects of:
Expenses not deductible for tax purposes	147	239
Adjustments in respect of prior years	(800)	(365)
Adjustments in respect of foreign tax rates	41	42
Capital transactions	356	-
Losses not utilised	932	-
Underwater share options	-	176
Unremitted earnings	-	(1,168)
Unallowable losses	79	174
Utilisation of losses brought forward	-	(10)
Total taxation	(657)	(188)

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Property, plant and equipment	364	-
Share based payments	-	20
	364	20

Deferred taxation on the revaluation of a freehold property was credited to the Revaluation reserve upon its disposal during the year. Corporation tax was then charged to the Profit and Loss Reserve.

8 Dividends

Dividends charged to equity in the year	Year ended 30 June 2010 £'000	Year ended 30 June 2009 £'000
Final dividend paid in January 2010 of 0.9p (2008: 3.8p) per share	274	1,054
Interim dividend paid in March 2010 of 0.9p (2009: 1.3p) per share	274	378
Total dividend paid in year of 1.8p (2009: 5.1p) per share	548	1,432
Final dividend proposed for payment in January 2011 of 0.9p (2010: 0.9p) per share	273	272

A dividend of £525,140 (2009: £301,391) was paid to the minority interest by a subsidiary undertaking during the year.

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The final dividend will be paid on 11 January 2011 to all members on the shareholders register at 17 December 2010.

The Employee Benefit Trust has waived its entitlement to dividends which has reduced the 2010 interim dividend paid by £4,373 (2009: £6,527) and the 2009 final dividend paid by £4,373 (2008: £10,801).

9 Earnings per Share

	2010 Loss	2010 Weighted average number of shares	2010 Per share amount	2009 Earnings	2009 Weighted average number of shares	2009 Per share amount
Basic (loss) / earnings per share:	£'000	(thousands)	(pence)	£'000	(thousands)	(pence)
(Loss)/earnings attributed to equity shareholders Effect of dilutive share schemes	(4,614) -	30,483 -	(15.1) -	2,517 -	29,403 444	8.6 (0.1)
Diluted (loss) / earnings per share	(4,614)	30,483	(15.1)	2,517	29,847	8.5

The basic (loss) / earnings per share has been calculated on the (loss) / profit attributable to equity shareholders for the year and based on a weighted average of 30,483,157 (2009: 29,402,826) ordinary shares in issue and ranking for dividend during the year. The diluted (loss) / earnings per share also takes account of share options and LTIP shares potentially convertible into new shares and the calculation is based on a weighted average of 30,483,157 (2009: 29,846,686) shares in issue during the year.

	Group
	£'000
Cost
01 July 2008	17,363
Acquisitions through business combinations	64
Disposals	(18)
Exchange rate adjustments	58
01 July 2009	17,467
Reduction	(1,097)
Exchange rate adjustments	607
30 June 2010	16,977
Impairment
01 July 2008 and 2009	177
Charge for the year	317
30 June 2010	494

Net book amount 30 June 2010 30 June 2009 16,483 17,290

The reduction to goodwill during the year arose on the re-assessment of the cost of the acquisition of Waterman Boreham Limited.

Goodwill is tested for impairment in accordance with IAS 36 'Impairment of assets' at least annually. The recoverable amount of goodwill has been based on value in use as represented by the net present value of future cash flows. Cash flows are projected forward for five years based on the Group's approved budgets and strategic plans between 2011 and 2015, beyond which they are inflated by between 2-2.25% per annum depending on the maturity of the markets in which the cash generating unit (CGU) is operating. The cash flows of all CGU's are then discounted using the Group's weighted average pre-tax real cost of capital of 9%. The latest impairment test performed on a consistent basis with that of a year earlier demonstrated that the total headroom between the recoverable amount of goodwill and the carrying value of the Goodwill, PPE and Other Intangible assets for all CGU's was £38.8m at 30 June 2010 (2009: £32.2m).

Following the impairment test at the year end, a goodwill impairment charge of £0.3m has been recognised through the Consolidated Income Statement in respect of the Belgian CGU leaving a recoverable amount of £nil. The charge resulted from the directors' conclusion that the carrying amount of goodwill was unsupportable with the recoverable amount. No reasonable change to the assumptions would lead to any further impairment in any CGU. The carrying amounts of goodwill by segment are set out in note 2 to the consolidated financial statements.

		Customer
	Computer software	relationships	Order book	Total
	£'000	£'000	£'000	£'000
Cost
01 July 2008	2,208	2,541	204	4,953
Additions	272	-	-	272
Transfers from PPE	334	-	-	334
Exchange rate adjustments	(5)	9	-	4
01 July 2009	2,809	2,550	204	5,563
Additions	32	-	-	32
Transfers to PPE	(2)	-	-	(2)
Disposals	(111)	-	-	(111)
Exchange rate adjustments	5	115	-	120
30 June 2010	2,733	2,665	204	5,602
Amortisation
01 July 2008	1,325	562	45	1,932
Charge for the year	429	426	68	923
Transfers from PPE	279	-	-	279
Disposals	(27)	-	-	(27)
Exchange rate adjustments	(3)	1	-	(2)
01 July 2009	2,003	989	113	3,105
Charge for the year	374	447	68	889
Transfers from PPE	24	-	-	24
Disposals	(109)	-	-	(109)
Exchange rate adjustments	(4)	49	-	45
30 June 2010	2,288	1,485	181	3,954
Net book amount
30 June 2010	445	1,180	23	1,648
30 June 2009	806	1,561	91	2,458

Transfers relate to the reclassification of computer software that were previously reported as property, plant and equipment in note 12 to the consolidated financial statements. There are no intangible assets with indefinite lives.

12 Property, Plant And Equipment

	Land & freehold	Plant, equipment
	property	& motor vehicles	Total
	£'000	£'000	£'000
Cost or valuation
01 July 2008	10,749	11,346	22,095
Additions	-	872	872
Transfers to other intangible assets	-	(334)	(334)
Disposals	-	(50)	(50)
Exchange rate adjustments	-	241	241
01 July 2009	10,749	12,075	22,824
Additions	-	141	141
Transfers from other intangible assets	-	2	2
Disposals	(1,500)	(572)	(2,072)
Exchange rate adjustments	-	152	152
30 June 2010	9,249	11,798	21,047
Depreciation
01 July 2008	272	7,036	7,308
Charge for the year	68	1,767	1,835
Transfers to other intangible assets	-	(279)	(279)
Disposals	-	(25)	(25)
Exchange rate adjustments	-	84	84
01 July 2009	340	8,583	8,923
Charge for the year	65	1,396	1,461
Impairment charge for the year	-	300	300
Transfers to other intangible assets	-	(24)	(24)
Disposals	(33)	(452)	(485)
Exchange rate adjustments	-	(16)	(16)
30 June 2010	372	9,787	10,159
Net book amount
30 June 2010	8,877	2,011	10,888
30 June 2009	10,409	3,492	13,901

Included in the above are fixed assets that have been acquired under finance leases. The net book value of these assets is £24,320 (2009: £126,845) and accumulated depreciation on these assets is £166,422 (2009: £70,321).

On 24 November 2009, Waterman Group completed the sale of a freehold office property. The Group's freehold properties were revalued on transition to IFRS as at 01 July 2004 by independent qualified valuers. The valuations were undertaken in accordance with the Appraisal and Valuation Standards of the Royal Institute of Chartered Surveyors by GVA Grimley and BH2, who are both firms of independent chartered surveyors. The valuations were based on active market prices and reflect the existing value of the properties concerned.

These valuations have been incorporated into the Group financial statements and the resulting revaluation adjustments have been credited to the revaluation reserve net of deferred tax with this revaluation surplus not being distributable under English law. If the land and freehold property were carried at cost, the carrying amount would have been £8.0m (2009: £8.3m).

Certain group assets have been used as security for borrowings as disclosed in note 17 to the consolidated financial statements.

			30 June 2010 30 June 2009 £'000 £'000
Loan and receivables at net book value			10 10
The following companies are the principal subsidiary undertakings at 30 June 2010 and all are consolidated:
	Country of registration/ incorporation	Class and percentage of ordinary equity and votes held	Nature of business
Waterman AHW Pty Limited	Australia	80%	Mechanical, electrical and structural consultancy*
Waterman AHW (Qld) Pty Limited	Australia	80%	Mechanical, electrical and structural consultancy*
Waterman AHW (Victoria) Pty Limited	Australia	41%	Mechanical, electrical and structural consultancy****
Waterman Aspen Limited	England	100%	Engineering outsourcing consultancy**
Waterman Boreham Limited	England	100%	Traffic engineering and transport planning consultancy
Waterman Building Services Limited	England	100%	Mechanical and electrical consultancy
Waterman Consulting Engineers India Private Limited	India	100%	Structural engineering consultancy
Waterman Emirates Pty Limited	Australia	100%	Mechanical, electrical and structural consultancy*
Waterman Energy, Environment & Design Limited	England	100%	Environmental, energy, waste and power engineering consultancy
Waterman International (Asia) Pty Limited	Australia	80%	Intermediate holding company*
Waterman International Limited	England	100%	Multi-discipline consultancy*

100% 100% 100% 100% 100% 100% 100% 100% 100% Multi-discipline consultancy* Intermediate holding company Multi-discipline consultancy* Structural engineering consultancy

Civil engineering consultancy

Intermediate holding company

Structural engineering and project management consultancy*

Civil and structural engineering consultancy*

Civil and structural engineering consultancy***

The equity of these subsidiary undertakings is directly held by the Company except where indicated by asterisks.

England England Poland England Belgium China England

Republic of Ireland Republic of Ireland

* interest held indirectly through Waterman International Holdings Limited

** interest held indirectly through Waterman Transport & Development Limited

*** interest held indirectly through Moylan Engineering Limited

Waterman International (London) Limited Waterman International Holdings Limited Waterman International Polska Sp z.o.o.

Waterman Technology Ltd Co (Beijing) Waterman Transport & Development Limited Moylan Consulting Engineers Limited

Waterman Structures Limited

Moylan Engineering Limited

Waterman TCA N.V.

**** Waterman AHW (Victoria) Pty Limited is fully consolidated because the Group indirectly controls more than 50% of its voting rights through its control of Waterman International (Asia) Pty Limited

Waterman International Limited operates from branches in Moscow, Russia and Almaty, Kazakhstan and purchased Waterman Emirates Pty Limited from Waterman International (Asia) Pty Limited on 03 November 2009. From this date Waterman Emirates Pty Limited became wholly owned by Waterman Group Plc (2009: holding of 80%).

14 Construction Contracts

	Group	Group
	30 June 2010	30 June 2009
	£'000	£'000
Total costs incurred	134,871	158,814
Profit recognised as income (less recognised losses)	22,658	36,306
Work in progress for third parties	157,529	195,120
Invoicing on account to customers	(155,629)	(194,627)
	1,900	493
Of which work in progress for third parties is disclosed as:
Amounts due from customers on long term contracts (note 15)	10,799	14,640
Amounts due to customers on long term contracts (note 16)	(8,899)	(14,147)
	1,900	493

15 Trade and Other Receivables

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Trade receivables	31,290	39,242
Less: Provision for impairment of receivables	(9,112)	(7,334)
Trade receivables (net)	22,178	31,908
Amounts due from customers on long term contracts (note 14)	10,799	14,640
Other receivables	614	1,306
Current tax asset	930	-
Prepayments and accrued income	3,661	3,133
	38,182	50,987

As of 30 June 2010, trade receivables of £12.8m (2009: £13.3m) were considered for potential impairment. The amount provided for these balances was £9.1m (2009: £7.3m).The allocation of the provision according to the date from the issue of invoice is as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Less than 30 days	51	-
Between 30 and 60 days	28	-
Between 60 and 90 days	36	10
Between 90 and 120 days	52	-
Greater than 120 days	8,945	7,324
	9,112	7,334

As of 30 June 2010, trade receivables of £12.8m (2009: £20.8m) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables from the date of issue is as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Less than 30 days	-	-
Between 30 and 60 days	3,017	4,768
Between 60 and 90 days	1,565	2,494
Between 90 and 120 days	758	1,640
Greater than 120 days	7,456	11,893
	12,796	20,795

15 Trade and Other Receivables (continued)

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Sterling	27,012	28,773
US dollar	117	1,372
Euro	3,441	7,580
Australian dollar	4,401	4,058
Russian rouble	1,351	4,318
Polish zloty	75	1,189
UAE dirham	1,737	3,697
Indian rupee	48	-
	38,182	50,987

Movements on the Group provision for impairment of trade receivables are as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
At 01 July	7,334	3,350
Provision for receivables impairment	4,528	5,313
Receivables written off during the year as uncollectible	(2,489)	(297)
Unused amounts reversed	(663)	(1,062)
Exchange rate adjustments	402	30
At 30 June	9,112	7,334

16 Trade and Other Payables

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Trade payables	4,791	6,892
Amounts due to customers on long term contracts (note 14)	8,899	14,147
Other taxes and social security	3,195	3,865
Other payables	1,156	2,088
Accruals	4,768	4,315
	22,809	31,307

17 Financial Liabilities - Borrowings

	Group	Group
	30 June 2010	30 June 2009
	£'000	£'000
Current
Bank loans	7,518	1,141
Bank overdrafts	-	2,198
Finance leases	45	52
Deferred consideration	-	1,207
	7,563	4,598
Non-current
Bank loans	3,659	11,249
Finance leases	61	100
Deferred consideration	-	404
	3,720	11,753

The Group had term loans totalling £7.3m and a mortgage of £3.9m disclosed above within Bank loans at 30 June 2010.

The Group has four sterling bank loans which are repayable between 2016 and 2021. Three of these loans are at floating interest rates of which two are between 1% and 1.25% above LIBOR and one at 1% above bank base rate as at 30 June 2010. The final sterling bank loan is at a fixed interest rate of 6.99%. The Group also has a Euro bank loan which is repayable in 2013 at a floating interest rate of 1.25% above EURIBOR. These loans are secured on the Group's London head office and by a fixed and floating charge over certain Group assets.

The term loans are subject to three financial covenants which are tested half yearly. On 18 August 2010 the bank agreed to waive the requirement for a covenant test at 30 June 2010 and 31 December 2010. As the waiver was agreed post year end, the term loans have been classified as current at 30 June 2010. The loans will be reclassified as long term loans in the 31 December 2010 interim accounts.

The maturity profile of the carrying amount of the Group's non-current liabilities at 30 June 2010 was as follows:

	Bank loans £'000	Finance leases £'000	Deferred consideration £'000	2010 Total £'000	Bank loans £'000	Finance leases £'000	Deferred consideration £'000	2009 Total £'000
Between one and two years	277	32	-	309	1,215	100	404	1,719
Between two and five years	789	29	-	818	3,931	-	-	3,931
In more than five years	2,593	-	-	2,593	6,103	-	-	6,103
	3,659	61	-	3,720	11,249	100	404	11,753

17 Financial Liabilities - Borrowings (continued)

All of the Group's liabilities are included in the table below except for current and deferred tax liabilities. The carrying amounts of those liabilities are denominated in the following currencies:

	30 June 2010 Floating rate financial liabilities £'000	30 June 2010 Fixed rate financial liabilities £'000	30 June 2010 £'000	30 June 2009 Floating rate financial liabilities £'000	30 June 2009 Fixed rate financial liabilities £'000	30 June 2009 £'000
Trade and other payables
- Sterling	-	-	15,552	-	-	21,961
- US dollar	-	-	174	-	-	(4,322)
- Chinese renminbi	-	-	4	-	-	145
- Euro	-	-	2,311	-	-	2,877
- Australian dollar	-	-	1,313	-	-	4,477
- UAE dirham	-	-	2,191	-	-	2,815
- Russian rouble	-	-	931	-	-	2,981
- Polish zloty	-	-	314	-	-	373
- Indian rupee	-	-	19	-	-	-
	-	-	22,809	-	-	31,307
Bank loans and overdrafts
- Sterling	8,666	2,108	10,774	11,503	2,239	13,742
- Euro	403	-	403	565	-	565
- Australian dollar	-	-	-	281	-	281
Deferred consideration
- Sterling	-	-	-	1,247	-	1,247
- Australian dollar	-	-	-	364	-	364
Finance lease obligations
- UAE dirham	-	8	8	-	13	13
- Euro	-	98	98	-	139	139
	9,069	2,214	11,283	13,960	2,391	16,351

The fair value of the financial liabilities approximates to their book values. The finance lease interest rates are in the range 3.6% to 4.2%. Assets held under finance leases are secured on the assets concerned.

The minimum lease payments under finance leases fall due as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Within one year	50	48
Between one and five years	65	127
	115	175
Future finance charges	(9)	(23)
Present value of finance lease liabilities	106	152

18 Called Up Share Capital

The share capital of the Company comprises ordinary shares of 10p each. Shares were issued during the year at an issue price of 40.0p (2009: 30.0p to 134.1p) and a weighted average share price of 40.0p (2009: 60.5p).

		Authorised		Issued and fully paid
	No '000	£'000	No '000	£'000
At 01 July 2009	41,000	4,100	30,756	3,076
Issued in respect of the LTIP (note 19b)	-	-	3	-
At 30 June 2010	41,000	4,100	30,759	3,076

The rights and obligations attaching to the Company's ordinary shares, in addition to those conferred on their holders by law, are set out in the Company's Articles of Association. On a show of hands, every shareholder present in person or by proxy has one vote and, on a poll, every shareholder present in person or by proxy has one vote for each share which they hold in accordance with the Companies Act 2006.

Under the Company's Executive Share Option Scheme and Company Share Option Plan, options may be granted to Group employees (including the directors) enabling them to subscribe for ordinary shares.

19 Share Based Payments

During the year, the Group had three share based payment arrangements in operation of which further details are set out below:

a) Share Option Scheme

The share option schemes make awards to Group employees (including the executive directors) which are settled in equity. The schemes permit options to be granted at an exercise price no lower than the market price of the Company's shares at the time of grant. Options vest after three years and must be exercised within ten years of the date of grant.

A summary of awards outstanding at 30 June 2010 is as follows:

Date option granted	Exercise price per share	Exercisable from	Exercisable to	2010 unexercised	2009 unexercised
13/02/01	90p	13/02/04	12/02/11	23,000	23,000
15/11/02	44.5p	15/11/05	14/11/12	213,000	274,900
03/08/07	179.5p	31/10/10	02/08/17	615,000	695,000
				851,000	992,900

During the year, options for nil ordinary shares (2009: 65,000) were exercised and satisfied by the creation of new ordinary shares for a total consideration of £nil (2009: £31,950) and options over 141,900 ordinary shares lapsed (2009: 85,000). At 30 June 2010, options exercisable between 2010 and 2017 by the issue of new ordinary shares at prices ranging from 44.5p to 179.5p remained unexercised in respect of 851,000 ordinary shares (2009: 992,900).

The Group has used the Black-Scholes model to value its share options, with no vesting conditions other than time and continuous service. The expected volatility for the share option arrangements is based on historical volatility determined by the analysis of daily share price movements over the seven years prior to the date of grant.

b) Long Term Incentive Plan (LTIP)

The LTIP for executive directors and senior management makes awards which are settled in equity. The performance conditions for executive directors are for the Group's growth in basic EPS to exceed the growth in the UK Retail Price Index by an average of 3% per annum over three years. The additional criterion for senior management is for the profit before tax of their respective divisions to grow by an average of 3% per annum in excess of the growth in RPI over three years. Senior management will receive 50% of their award entitlement upon the achievement of each target.

No shares were awarded in the LTIP to executive directors and senior management during the year. On 14 November 2009, 2,500 shares awarded under the LTIP on 14 November 2006 vested upon the achievement of the specified performance conditions whilst a further 132,500 awarded shares lapsed during the year. At 30 June 2010 LTIP awards maturing between 2010 and 2011 remained in respect of 210,000 ordinary shares (2009: 345,000).

The Group used the Black-Scholes model to value its LTIP shares using the market price at the date of grant adjusted for the non-receipt of dividends until the vesting date is reached. A summary of awards outstanding at 30 June 2010 is as follows:

Award date	Scheme maturity	Maximum term	Awards outstanding at 30 June 2010	Awards outstanding at 30 June 2009
14/11/06	3 years	3 years	-	115,000
16/11/07	3 years	3 years	110,000	120,000
14/11/08	3 years	3 years	100,000	110,000
			210,000	345,000

19 Share Based Payments (continued)

Further information on the Long Term Incentive Plan award during the prior year is: -

14/11/08
110,000
3
Nil
85
15
31.32
Nil
2.8
4.86
73.5

c) Share Incentive Plan

Information in relation to the cash settled Share Incentive Plan can be found in note 27 to the consolidated financial statements.

20 Reserves

	Share premium	Merger	Revaluation	Profit and loss
	reserve	reserve	reserve	reserve
	£'000	£'000	£'000	£'000
01 July 2009	11,880	3,144	1,491	17,308
Loss attributable to equity shareholders	-	-	-	(4,614)
Dividends paid	-	-	-	(548)
Premium on the issue of new shares	1	-	-	-
Exchange rate adjustments	-	-	-	309
Change in valuation of own shares held by Employee Benefit Trust	-	-	-	(4)
Employee Benefit Trust profit	-	-	-	4
Share based payments	-	-	-	(111)
Reserve transfer on disposal of Land and freehold property	-	-	(1,271)	1,271
Reserve transfer on change in ownership of Waterman Emirates Pty Limited	-	-	-	80
Deferred tax transfer on disposal of Land and freehold property	-	-	364	(364)
30 June 2010	11,881	3,144	584	13,331

The merger reserve represents the value received in excess of nominal value on shares issued pursuant to business combinations where company law prohibits the recording of a premium. Included within the profit and loss reserve balance brought forward is an amount of £1,133,000 (2009: £1,133,000) relating to the write off of purchased goodwill prior to the introduction of FRS 10.

21 Reconciliation of Net Cash Flow to Net Debt

	Group	Group 30 June 2009
	30 June 2010
	£'000	£'000
Decrease in cash balances in the year	(1,668)	(269)
Decrease / (increase) in bank overdrafts in the year	2,198	(863)
Increase / (decrease) in cash in the year	530	(1,132)
Net decrease in borrowings	2,896	2,963
Decrease in net debt resulting from cash flows	3,426	1,831
Exchange rate adjustments	392	473
Decrease in net debt in the year	3,818	2,304
Net debt at 01 July 2009	(10,193)	(12,497)
Net debt at 30 June 2010	(6,375)	(10,193)

	Group	Cash	non-cash	Exchange	Group
	01 July 2009	flow	changes	movements	30 June 2010
	£'000	£'000	£'000	£'000	£'000
Cash balances	6,158	(1,668)	-	418	4,908
Bank overdrafts	(2,198)	2,198	-	-	-
Cash, cash equivalents and overdrafts	3,960	530	-	418	4,908
Current
Bank loans	(1,141)	1,196	(7,590)	17	(7,518)
Finance leases	(52)	53	(53)	7	(45)
Deferred consideration	(1,207)	425	832	(50)	-
Non-current
Bank loans	(11,249)	-	7,590	-	(3,659)
Finance leases	(100)	-	39	-	(61)
Deferred consideration	(404)	-	404	-	-
	(14,153)	1,674	1,222	(26)	(11,283)
Total	(10,193)	2,204	1,222	392	(6,375)

Other non-cash changes of £1,222,000 relate to £1,097,000 and £139,000 final adjustments to the deferred consideration and interest payable respectively on the acquisition of Waterman Boreham Limited less £14,000 of interest payable on finance leases.

23 Provisions

		Onerous	Group	Group
	Liability Insurance	Lease	30 June 2010	30 June 2009
	£'000	£'000	£'000	£'000
01 July	3,801	-	3,801	4,340
Charged to the consolidated income statement	2,214	1,407	3,621	3,682
Utilised	(71)	-	(71)	(1,094)
Released to the consolidated income statement	(3,026)	-	(3,026)	(3,096)
Exchange rate adjustments	(56)	(15)	(71)	-
Unwinding of discount / (Discount)	1	-	1	(31)
30 June	2,863	1,392	4,255	3,801

This represents management's best estimate of costs to be incurred in respect of potential liability insurance claims and onerous lease contracts. The directors believe that all potential liability insurance claims will be settled within 2 years and all potential onerous lease contract provisions will be settled within 3 years. All provisions have been discounted at the applicable nominal forward short-end Government liability rate as at 30 June 2010 where appropriate.

Further detail on onerous lease provisions on vacant office space is disclosed in note 5 to the consolidated financial statements.

24 Deferred Taxation

Deferred tax is provided in full on temporary differences under the liability method using a tax rate of 27% (2009: 28%) which is the standard rate of UK corporation tax with effect from 1 April 2011.

Deferred tax liability

	Group	Group
	30 June 2010	30 June 2009
	£'000	£'000
At 01 July	781	1,983
Credited to the consolidated income statement	(205)	(1,202)
Credited to equity	(364)	-
Exchange rate adjustments	2	-
At 30 June	214	781

Deferred tax of £nil (2009: £1,168,000) has been credited to the Consolidated Income Statement following a change in UK tax legislation regarding unremitted overseas earnings which took effect from 01 July 2009. The credit to equity in the current year relates to the tax associated with the sale of a UK freehold property.

Deferred tax asset

	Group 30 June 2010	Group 30 June 2009
	£'000	£'000
At 01 July	390	363
(Charged) / credited to the consolidated income statement	(199)	3
Credited to equity	-	20
Exchange rate adjustments	48	4
At 30 June	239	390

An analysis of the deferred tax balances and the movements in temporary differences of deferred tax assets and liabilities during the year (prior to the offsetting of balances within the same tax jurisdiction permitted by IAS 12) are shown below:

	Group 01 July 2009 £'000	Equity £'000	Income £'000	Foreign exchange £'000	Rate change £'000	Group 30 June 2010 £'000
Property, plant and equipment	(314)	364	65	(3)	(12)	100
Other intangible assets	(460)	-	143	(20)	3	(334)
Provisions	457	-	(89)	69	(15)	422
Pensions	23	-	23	-	-	46
Rolled over gains	(217)	-	-	-	8	(209)
Capital losses carried forward	120	-	(120)	-	-	-
(Liability)/asset	(391)	364	22	46	(16)	25

	Group			Foreign	Rate	Group
	01 July 2008	Equity	Income	exchange	change	30 June 2009
	£'000	£'000	£'000	£'000	£'000	£'000
Property, plant and equipment	(381)	-	67	-	-	(314)
Other intangible assets	(608)	-	148	-	-	(460)
Provisions	455	-	(2)	4	-	457
Pensions	23	-	-	-	-	23
Share based payments	156	20	(176)	-	-	-
Rolled over gains	(217)	-	-	-	-	(217)
Capital losses carried forward	120	-	-	-	-	120
Unremitted overseas earnings	(1,168)	-	1,168	-	-	-
(Liability)/asset	(1,620)	20	1,205	4	-	(391)

24 Deferred Taxation (continued)

Full provision has been made for deferred taxation assets and liabilities which have been offset only to the extent that they relate to the same taxation regime. The deferred tax assets and liabilities at 30 June 2010, without taking into consideration the offsetting balances within the same jurisdiction are £568,000 (2009:£600,000) and £543,000 (2009:£991,000) respectively. The assets and liabilities are expected to reverse in more than one year aside from assets of £150,000 (2009:£223,000) and liabilities of £24,000 (2009:£220,000) which are expected to reverse in less than one year from the balance sheet date.

Deferred tax has been calculated using estimates based on the current manner of recovery of the assets' value on property, plant and equipment not eligible for capital allowances, that is recovery through continued use in the business unless the asset is held for sale. This method assumes no tax relief will be available; therefore, no tax base is available for inclusion within the calculation of deferred tax unless the assets' value is recoverable through sale rather than continued use.

The key assumptions in the calculation of deferred tax are set out below:

a) Capital expenditure – the percentage of capital expenditure that would quality for tax relief, incurred by each unit, has been estimated based on prior years' historical experience of the split between qualifying and non-qualifying expenditure.

b) Depreciation – the depreciation rate for assets that do not qualify for the initial recognition exemption has been estimated based on actual data for the most recent accounting periods.

c) Overseas tax losses – are not recognised to the extent that the losses cannot be utilised in the foreseeable future based on the latest profit projections for that territory.

25 Related Party Transactions

The directors have identified 18 (2009: 19) key management personnel whose compensation was as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Short term benefits	2,109	2,822
Credit in respect of share based payments	-	(88)
Post employment benefits	201	213
	2,310	2,947

26 Financial Commitments

There was £nil of capital expenditure contracted but not provided for at the year end (2009: £3,905).

The Company and certain of its subsidiary undertakings cross guaranteed the bank loans of the Group at 30 June 2010. Invoice discounting facilities provided to two subsidiary undertakings are secured by a fixed and floating charge over the assets of those companies.

At 30 June 2010 the future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	Property		Plant and equipment
	Group 30 June 2010 £'000	Group 30 June 2009 £'000	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Commitment expiring: - within one year - within two to five years - after five years	3,487 6,271 2,909	3,621 9,264 5,296	478 397 -	678 899 -
	12,667	18,181	875	1,577

27 Employee Benefit Trust (EBT)

The Group operates a Share Incentive Plan (SIP) to reward and encourage its executives and staff. The SIP is satisfied by issued shares and controlled through the EBT.

The SIP appropriates Company shares to staff up to a value of 5% of the Group's profit before taxation each year. The EBT is able to appropriate such shares using funds provided by the Group to meet obligations under the SIP. During the year, no (2009:nil) shares were appropriated to staff in respect of profits earned during the year ended 30 June 2009 and no charge has therefore been borne by the participating Group companies. The EBT purchased no (2009:367,828) issued shares during the year at a cost of £nil (2009:£359,861). Since the year end, the EBT has purchased no further shares. The Group has £16,316 of accruals (2009: £nil) for payments to be made under the SIP in 2011.

The distribution of shares through this plan is arranged through Waterman Trustees Limited, a related company formed to administer the EBT and which held 211,938 (2009: 211,938) ordinary shares of 10p in the Company at 30 June 2010. At 30 June 2010 the market value of these shares was £92,193 (2009: £87,955). Dividends on these shares are payable to Waterman Trustees Limited and set against the costs of operating the scheme unless waived.

27 Employee Benefit Trust (EBT) (continued)

The assets of the EBT at 30 June 2010 have been incorporated into the Consolidated Balance Sheet as follows:

	Group 30 June 2010 £'000	Group 30 June 2009 £'000
Cash	1	1
	1	1
Represented by:
Income tax	2	2
Amounts due to parent company	164	164
Accruals	16	16
Retained deficit	(89)	(93)
Own shares at valuation	(92)	(88)
	1	1

28 Financial Instruments

The carrying value of all of the Group's financial assets approximates to their fair value and they are classified as loans and receivables being the total of cash and cash equivalents and trade and other receivables. The carrying value of all of the Group's financial liabilities approximates to their fair value and they are classified as loans and receivables being trade and other payables, current borrowings and non-current borrowings.

Financial Risk Management

The Group's activities expose it to a variety of financial risks, including the effects of foreign currency exchange rates, liquidity and interest rates. An explanation of the board's objectives and strategies for holding and issuing financial instruments is set out in the Financial Review on page 30 with the relevant accounting policies explained in note 1 to the consolidated financial statements.

a ) Foreign Currency Risk

The Group is exposed to foreign exchange risk primarily with respect to the Australian dollar, Euro and US dollar. Most trading activity is denominated in the currencies relevant to the local subsidiaries thereby matching the revenue flows with the cost base.

Floating rate financial assets earn interest based primarily on UK, Euro and Australian base interest rates. The fair value of the financial assets equates to their book values. All of the Group's financial assets are due within one year.

The Group has £4.9m of cash and cash equivalents at the year end held in bank accounts (2009: £6.2m) which is immediately available for use. Cash surplus to short term requirements is usually invested overnight on the money market to earn interest at rates close to the prevailing local base rates.

At 30 June 2010, if sterling had weakened/strengthened by 10% against the Australian dollar with all other variables held constant, the loss for the financial year would have been £283,000 (2009: £31,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of Australian dollar denominated trade receivables.

At 30 June 2010, if sterling had weakened/strengthened by 10% against the Euro with all other variables held constant, the loss for the financial year would have been £428,000 (2009: £5,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of Euro denominated trade receivables and borrowings.

At 30 June 2010, if sterling had weakened/strengthened by 10% against the US dollar with all other variables held constant, the loss for the financial year would have been £88,000 (2009: £82,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of US dollar trade receivables.

The table below shows the extent to which group companies have monetary assets and liabilities in currencies other than their local currency. Foreign exchange differences on retranslation of these balances are taken to the Consolidated Income Statement.

Functional	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009
currency of	Sterling	Sterling	Euro	Euro	AUD	AUD	USD	USD	Other	Other	Total	Total
Group operation	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Sterling	-	-	193	(989)	1,973	3,092	3,574	7,420	1,884	2,201	7,624	11,724
Euro	(500)	237	-	-	(5)	-	-	(27)	18	19	(487)	229
Australian dollar (AUD)	(1,962)	(2,421)	5	-	-	-	2,142	2,141	(1,666)	707	(1,481)	427
US dollar (USD)	(3,428)	(1,911)	51	56	-	(372)	-	-	711	679	(2,666)	(1,548)
Other	(1,729)	(2,421)	(18)	(18)	1,672	(707)	(631)	(515)	-	-	(706)	(3,661)
Total	(7,619)	(6,516)	231	(951)	3,640	2,013	5,085	9,019	947	3,606	2,284	7,171

28 Financial Instruments (continued)

b ) Interest Rate Risk

The weighted average rate of interest on the floating rate financial liabilities is 1.7% (2009: 4.3%). At 30 June 2010, the weighted average rate of interest on the fixed rate liabilities comprises 6.99% (2009: 6.99%) on sterling bank loans with a weighted average of 11 years (2009: 12 years) and 3.7% (2009: 3.7%) on the finance lease obligations with a weighted average of 2 years (2009: 3 years). The deferred consideration does not ordinarily attract interest over its average period to maturity in nil years (2009: 1 year). The provisions are expected to mature within 2 years.

Short term flexibility in liquid resources is achieved by overdraft and invoice discounting facilities. At 30 June 2010, these facilities, where all conditions precedent have been met, were £7.4m (2009: £7.5m) which expire within one year.

At 30 June 2010, if interest rates on UK sterling denominated borrowings had been 50 basis points higher/lower with all other variables held constant, the loss for the financial year would have been £49,000 (2009: £59,000) lower/higher mainly as a result of higher/lower interest expense on floating rate borrowings.

The profile of the Group's financial assets is:

	30 June 2010	30 June 2010		30 June 2009	30 June 2009
	Floating rate	Fixed rate		Floating rate	Fixed rate
	financial	financial		financial	financial
	assets	assets	30 June 2010	assets	assets	30 June 2009
	£'000	£'000	£'000	£'000	£'000	£'000
Cash
- Sterling	1,122	-	1,122	3,518	3,376	6,894
- US dollar	258	-	258	(5,712)	-	(5,712)
- Chinese renminbi	296	-	296	406	-	406
- Euro	604	-	604	(104)	579	475
- Australian dollar	1,438	454	1,892	3,118	-	3,118
- Russian rouble	192	-	192	214	-	214
- UAE dirham	458	-	458	679	-	679
- Other	86	-	86	84	-	84
	4,454	454	4,908	2,203	3,955	6,158

c) Liquidity Risk

All trade and other payables and borrowings are disclosed at their contractual undiscounted values since the impact of discounting is insignificant. The contractual value of deferred consideration is £nil (2009: £1,746,000) which is discounted to £nil (2009:£1,611,000) as per note 17 to the consolidated financial statements.

d) Credit Risk

Concentrations of credit risk with respect to trade receivables are limited due to the Group's adherence to its credit risk policy. Management believes there is no further credit risk provision required in excess of normal provision for doubtful receivables.

Management assesses credit limits on a project by project basis. Levels of working capital balances are reviewed and acted upon on a monthly basis by senior management in order to mitigate such credit risk. Credit risk in respect of cash and deposits is limited and mitigated by the counterparties who are financial institutions with high credit ratings.

e) Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the costs of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio which is calculated as net debt divided by total capital. Net debt is defined as total current and non-current borrowings less cash and cash equivalents. Total capital is calculated as total shareholders' equity as shown in the Consolidated Balance Sheet plus net debt. The gearing ratio at the end of the current year is 16.6% compared to 21.6% as at 30 June 2009. This change is principally due to the reduction in the Group's debt as a result of deferred consideration adjustments, cash receipts during the year and bank loan capital repayments.

29 Ultimate Controlling Party

In the opinion of the directors the Company has no controlling party.

Independent Auditors' Report To The Members Of Waterman Group Plc

We have audited the parent company financial statements of Waterman Group Plc for the year ended 30 June 2010 which comprise the Parent Company Balance Sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective Responsibilities Of Directors And Auditors

As explained more fully in the Directors' Responsibilities Statement set out on page 34, the directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope Of The Audit Of The Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion On Financial Statements

In our opinion the parent company financial statements:

• give a true and fair view of the state of the company's affairs as at 30 June 2010;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion On Other Matters Prescribed By The Companies Act 2006

In our opinion:

• the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

• the information given in the Directors' Report for the financial year for which the parent company financial statements are prepared is • consistent with the parent company financial statements.

Matters On Which We Are Required To Report By Exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from • branches not visited by us; or
• the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the • accounting records and returns; or
• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Other Matter

We have reported separately on the group financial statements of Waterman Group Plc for the year ended 30 June 2010.

Fiona Kelsey (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 27 October 2010

Parent Company Financial Statements

The following parent company financial statements are prepared under UK GAAP and relate to the Company and not to the Group. The statement of accounting policies which have been applied to these accounts can be found on page 76 and a separate independent auditors' report on page 74.

Company Balance Sheet as at 30 June 2010

		2010	2009
	notes	£'000	£'000
Fixed assets
Tangible assets	34	9,177	10,263
Investments	35	19,680	20,893
		28,857	31,156
Current assets
Debtors	36	13,381	14,286
Cash at bank and in hand		2,129	462
		15,510	14,748
Creditors (amounts falling due within one year)	37	(18,704)	(12,170)
Net current (liabilities) / assets		(3,194)	2,578
Total assets less current liabilities		25,663	33,734
Creditors (amounts falling due after more than one year)	37	(3,647)	(11,627)
Net assets		22,016	22,107
Capital and reserves
Called up share capital	40	3,076	3,076
Share premium reserve	41	11,881	11,880
Merger reserve	41	3,144	3,144
Other reserve	41	140	140
Profit and loss reserve	41	3,775	3,867
Equity shareholders' funds	42	22,016	22,107

The financial statements which comprise the Company Balance Sheet and related notes were authorised for issue by the directors on 27 October 2010 and are subject to the approval of the shareholders at the AGM on 03 December 2010. They were signed on behalf of the directors by:-

R S Fidgen N J Taylor Director Director

Notes To The Parent Company Financial Statements

30 Accounting Policies

The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared under the historical cost convention and on a going concern basis in accordance with applicable United Kingdom accounting standards and law.

The more significant accounting policies are set out below. They have all been applied consistently throughout the current and preceding year unless otherwise noted.

Pension Costs

The Company operates a defined contribution scheme including a stakeholder scheme which is open to all qualifying staff. Company contributions to these schemes are charged to the profit and loss account in the year to which they relate.

Share Based Payments

The Company has applied the requirements of FRS 20 Share Based Payment. The Company issues equity settled share based payments to certain employees, which are measured at fair value at the grant date. The fair value determined at the grant date of the share based payments is expensed on a straight line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusting for the effect of non-market based vesting conditions. Fair value is measured by use of the Black-Scholes actuarial model.

Tangible Fixed Assets And Depreciation

Tangible fixed assets are stated at cost when acquired, less depreciation and when appropriate, provision for impairment. Depreciation is provided at rates calculated to write off the cost of tangible fixed assets less estimated residual values over the expected useful economic lives of the assets concerned. The annual rates used are:

Freehold buildings and long leasehold property	2% per annum straight line or lease period if less
Plant, equipment and motor vehicles	15-33% per annum straight line
Freehold land is not depreciated

Investments

Investments are included in the balance sheet at cost less amounts written off, representing impairment in value.

Deferred Taxation

Deferred taxation is provided in full on an undiscounted basis on all timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in tax computations in periods different from those in which they are included in the financial statements.

A net deferred tax asset is regarded as recoverable and is recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient taxable profits in the foreseeable future from which the reversal of the underlying timing differences can be deducted.

Financial Risk Management

The Company policy for managing financial risk is in line with the Group financial risk management policy as set out in note 1 to the consolidated financial statements.

31 Profit For The Year

The Company has not presented its own profit and loss account or cash flow statement as permitted by section 408 of the Companies Act 2006. The parent company profit after tax of £456,064 (2009: £1,596,550) is after dividends receivable from subsidiaries of £548,000 (2009: £2,347,524).

The auditors' remuneration for audit services to the Company was £20,000 (2009: £20,000).

32 Staff Costs Employee costs during the year, including directors, amounted to:

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Wages and salaries	2,315	2,627
Social security costs	259	320
Credit in respect of share based payments	-	(122)
Pension costs	90	132
	2,664	2,957

Average monthly number of employees including executive directors during the year was as follows:

	Number	Number
Non-technical	65	72

Directors' emoluments during the year amounted to:

	Year ended	Year ended
	30 June 2010	30 June 2009
	£'000	£'000
Aggregate emoluments for qualifying services	679	789
Company contributions to money purchase pension schemes	60	53
Eight directors have retirement benefits accruing under money purchase pension schemes (2009: 7).
Highest paid director
Aggregate emoluments including gains on exercise of share options	231	308
Company contributions to money purchase pension scheme	23	22

33 Dividends

Dividends proposed and paid in the year are disclosed in note 8 to the consolidated financial statements.

34 Tangible Assets

	Land and	Plant, equipment
	freehold property	and motor vehicles	Total
	£'000	£'000	£'000
Cost
01 July 2009	8,980	6,486	15,466
Additions	-	31	31
Disposals	(250)	(57)	(307)
30 June 2010	8,730	6,460	15,190
Depreciation
01 July 2009	652	4,551	5,203
Charge for the year	69	832	901
Disposals	(34)	(57)	(91)
30 June 2010	687	5,326	6,013
Net book amount
30 June 2010	8,043	1,134	9,177

8,328

30 June 2009

10,263

1,935

35 Investments

30 June 2010	17,817	1,863	19,680
Return of share capital	(116)	-	(116)
Reduction	(1,097)	-	(1,097)
01 July 2009	19,030	1,863	20,893
	£'000	£'000	£'000
	undertakings	Group undertaking	Total
	Shares in Group	Long term loan to

Further details on the reduction of shares in Group undertakings are disclosed in note 10 to the consolidated financial statements. The return of share capital relates to two non-trading subsidiaries. Further details on the company's principal subsidiary undertakings at 30 June 2010 are disclosed in note 13 to the consolidated financial statements.

36 Debtors

Amounts falling due within one year:	Company 30 June 2010 £'000	Company 30 June 2009 £'000
Trade debtors	15	-
Amounts owed by subsidiary undertakings	11,242	12,055
Other debtors	288	320
Corporation tax	377	780
Prepayments and accrued income	1,459	1,131
	13,381	14,286

Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand. The Company's other debtors include £220,935 relating to deferred taxation (2009: £216,027). Further disclosure on deferred taxation can be found below:

	Company 30 June 2010 £'000	Company 30 June 2009 £'000
The deferred tax asset comprises:
Depreciation in excess of capital allowances	190	179
Short-term timing differences	31	37
	221	216
Asset at the beginning of the year including deferred tax asset on pension accrual	216	106
Amount credited to profit and loss reserve	5	110
Asset at the end of the year including deferred tax asset on pension accrual	221	216

37 Creditors

	Company	Company
	30 June 2010	30 June 2009
Amounts falling due within one year:	£'000	£'000
Bank loans and overdraft	15,930	9,165
Trade creditors	1,275	1,330
Amounts owed to subsidiary undertakings	505	231
Other creditors	8	128
Deferred consideration	-	844
Accruals	986	472
	18,704	12,170

Amounts owed to subsidiary undertakings are unsecured, interest free and repayable on demand.

	Company 30 June 2010		Deferred	Company 30 June 2009
	Bank loans	Bank loans	consideration	Total
Amounts falling due after more than one year:	£'000	£'000	£'000	£'000
Repayable by instalments
Between one and two years	264	1,189	404	1,593
Between two and five years	790	3,931	-	3,931
Between five and ten years	2,593	6,103	-	6,103
	3,647	11,223	404	11,627

Further disclosure relating to the Company's bank loans is shown in note 17 to the consolidated financial statements.

38 Pensions Costs

The Company operates a number of defined contribution schemes including a stakeholder scheme which is available to all qualifying staff. Company contributions to these schemes are charged to the profit and loss account in the year to which they relate. The total amounts charged are disclosed in note 32 to these parent company financial statements.

39 Operating Lease Commitments

		Property		Plant and equipment
	30 June 2010 £'000	30 June 2009 £'000	30 June 2010 £'000	30 June 2009 £'000
Commitment expiring: - within one year	34	191	10	-
- within two to five years - after five years	2,011 588	1,312 970	6 -	11 -
	2,633	2,473	16	11

40 Called Up Share Capital

The detailed breakdown of share capital together with options and awards over the Company's shares outstanding at 30 June 2010 are set out in notes 18 and 19 to the consolidated financial statements.

41 Reserves

	Share		Non
	premium	Merger	distributable	Profit and loss
	reserve	reserve	reserve	reserve
	£'000	£'000	£'000	£'000
01 July 2009	11,880	3,144	140	3,867
Premium on the issue of new shares	1	-	-	-
Profit for the year	-	-	-	456
Dividend	-	-	-	(548)
30 June 2010	11,881	3,144	140	3,775

42 Reconciliation Of Movements In Shareholders' Funds

	Company 30 June 2010 £'000	Company 30 June 2009 £'000
Profit for the year	456	1,597
Dividends	(548)	(1,432)
	(92)	165
Share based payments	-	(208)
New share capital subscribed	1	1,000
Net (decrease) / increase to shareholders' funds	(91)	957
Shareholders' funds as at 01 July	22,107	21,150
Shareholders' funds as at 30 June	22,016	22,107

43 Related Party Transactions

The Company has taken advantage of the exemptions within FRS 8 Related Party Transactions not to disclose transactions between wholly owned Group companies.

The Company does have an interest in subsidiary undertakings where less than 90% of the voting rights are controlled within the Group. Transactions occurred with Waterman AHW Pty Limited in the normal course of business and the year end balance is disclosed below;

	Company
	30 June 2010	30 June 2009
Amounts owed by related party	£'000	£'000
Waterman AHW Pty Limited	86	211

Five Year Results Summary

	2006 £'000	2007 £'000	2008 £'000	2009 £'000	2010 £'000
Revenue	83,680	103,903	136,418	122,401	83,244
Profit / (loss) before taxation	4,214	5,094	6,991	2,586	(5,044)
Profit / (loss) attributable to shareholders	2,749	3,347	3,756	2,517	(4,614)
Basic earnings / (loss) per share	9.7p	11.7p	12.9p	8.6p	(15.1p)

The Five Year Results Summary above relates to the Group consolidated financial statements and not those of the parent company.

Share Dealing Service

A share dealing service is available to existing shareholders to buy or sell the Company's shares via Capita Share Dealing Services. Online and telephone dealing facilities provide an easy to access and simple to use service.

For further information on this service, or to buy or sell shares, please contact www.capitadeal.com for online dealing or 0871 664 0454 for telephone dealing (calls cost 10p per minute plus network extras). Lines are open Monday to Friday from 8 a.m.to 4.30 p.m.

	% of Trade minimum value	Minimum charge	Maximum charge
Telephone	1.5%	£25.00	£102.50
Internet	1.0%	£20.00	£75.00

An additional £1 PTM Levy is applicable for transactions over £10,000 and Stamp Duty applies to all purchases.

Please note that the directors of the Company are not seeking to encourage the shareholders to either buy or sell their shares. Shareholders in any doubt as to what action to take are recommended to seek financial advice from an independent financial adviser authorised by the Financial Services and Markets Act 2000.

Advisers

Stockbrokers And Financial Advisers

Evolution Securities Limited 100 Wood Street London EC2V 7AN

Auditors

PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH

Solicitors

Ashurst Broadwalk House 5 Appold Street London EC2A 2HA

Principal Bankers HSBC Bank plc 8 Victoria Street Westminster London SW1H 0NJ

Registrars And Transfer Office Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

Company Registration Number 2188844

Financial Calendar

03 December 2010	Annual General Meeting 2010
15 December 2010	Ordinary shares quoted ex-dividend
17 December 2010	Record date for proposed final dividend
11 January 2011	Final dividend payable
February 2011	Interim results announced for the six months to 31 December 2010
April 2011	Interim dividend payable
October 2011	Preliminary announcement of results for the year to 30 June 2011
December 2011	Annual General Meeting 2011

Waterman Presence (UK)

Belfast

4th Floor, 51-53 Fountain Street, Belfast, County Antrim BT1 5EB t +44 28 9072 7680 f +44 28 9072 7681

Birmingham

Civic House, 156 Great Charles Street, Queensway, Birmingham B3 3HN t +44 121 212 7700 f +44 121 212 7701

Brentwood

Regent House, Hubert Road, Brentwood, Essex CM24 4JE t +44 1277 238 100 f +44 1277 238 150

Bristol

Merchants House, Wapping Road, Bristol BS1 4RW t +44 117 937 8200 f +44 177 937 8279

Cardiff

38 Cathedral Road, Cardiff CF11 9LL t +44 29 2038 4400 f +44 29 2038 4544

Derby

Lockington Hall Business Centre, Lockington, Derby DE74 2RH t +44 1509 674567 f +44 1509 674623

Dundee

47 Byron Street, Dundee DD3 6QT t +44 1382 832042 f +44 1382 828925

Edinburgh

2 - 4 Canning Street Lane, Edinburgh EH3 8ER t +44 131 221 7020 f +44 131 221 7099

Glasgow

Cumbrae House, 15 Carlton Court, Glasgow G5 9JP t +44 141 418 1900 f +44 141 418 1990

150 West Regent Street, Glasgow G2 2RQ t +44 141 222 4770 f +44 141 222 4771

Inverness

Thistle House Beechwood Park North Inverness IV2 3ED t: +44 1463 898023

Leeds

Bradshaw House, 31 Waterloo Lane, Bramley, Leeds LS13 2JB t +44 113 256 3322 f +44 113 257 5871

Vicarage Chambers, 9 Park Square East, Leeds LS1 2LH t +44 113 209 1540 f +44 113 209 1541

Lingfield

Dippen Hall, Eastbourne Road, Blindley Heath, Lingfield RH7 6JX t +44 1342 893800 f +44 1342 894212

London

Pickfords Wharf, Clink Street, London SE1 9DG t +44 20 7928 7888 f +44 20 7928 3033

Versailles Court, 3 Paris Garden, London SE1 8ND t +44 20 7928 7888 f +44 20 7401 9439

Manchester

South Central, 11 Peter Street, Manchester M2 5QR t +44 161 839 8392 f +44 161 839 8394

Newcastle-upon-Tyne

Generator Studios, Trafalgar Street, Newcastle-upon-Tyne NE1 2LA t +44 191 230 6200 f +44 191 230 6279

Nottingham

Halifax House, Halifax Place, Nottingham NG1 1QN t +44 115 948 2612 f +44 115 948 2610

Sheffield

Belgrave House, 47 Bank Street, Sheffield S1 2DR t +44 114 229 8900 f +44 114 229 8901

Solihull

Stratford Court, Cranmore Boulevard, Shirley, Solihull, West Midlands B90 4QT t +44 121 733 7799 f +44 121 733 6620

Waterman Presence (Overseas)

Australia

Ground Floor, House 4, 249 Coronation Drive, Milton, Brisbane, QLD 4064 t +61 7 3512 7500 f +61 7 3217 5153

Level 4, 10 Help Street, Chatswood, Sydney, NSW 2067 t +61 29 411 9900 f +61 29 415 1717

60 Park Street, South Melbourne, Victoria 3205 t +61 39 685 9900 f +61 39 685 9999

China

107 D.D. Centre, 26 Jie Da Road 3rd Avenue, TEDA, Tianjin 300457 t +86 22 598 35150 f +86 22 598 35110

India

Seshasaai, 4/606, 1st Main Road, Nehru Nagar, Kottivakam, Chennai 6000041 t +91 442 454 2929 f +91 442 454 2931

Ireland

Wilson House, Fenian Street, Dublin 2 t +353 1 664 8900 f +353 1 661 3618

Kazakhstan

Prospekt Dostyk, 117/6, Central Entrance, 8th Floor 050059, Almaty t +7 7272 952616 f +7 7272 952618

Russia

7th Floor, Building 26 Ulitsa Pravdy, Moscow 125040 t +7 495 981 00 07 f +7 495 787 37 17

United Arab Emirates

Al Raha Beach Site, P.O. Box 117448, Abu Dhabi t +971 2 501 7224 f +971 2 501 7018

Festival Tower, L17, Dubai Festival City PO Box 117448, Dubai t +971 4 601 0700 f +971 4 232 9597