Weir Group Inc. — Annual Report 2012

Jun 30, 2012

Contents

• Highlights
• Chairman's Statement
• Operational Review
• Structures
• Civil & Transportation
• Building Services
• Energy, Environment & Design
• International
• Board of Directors
• Financial Statement
• Financial Review
  • Corporate Responsibility
• Statement of Directors' Responsibilities
• Directors' Remuneration Report
• Corporate Governance Report
• Directors' Report
• Independent Auditors' Report to the Group
• Consolidated Income Statement
• Consolidated Statement of Comprehensive Income
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement
• Consolidated Statement of Changes in Equity
• Notes to the Consolidated Financial Statements
• Independent Auditors' Report to the Company
• Parent Company Financial Statements
• Notes to the Parent Company Financial Statements
• Five Year Results Summary
• Company Information and Advisers
• Financial Calendar
• Waterman Presence

Highlights

Chairman's Statement

The last financial year has seen a further period of consolidation for Waterman Group (the "Group") and strengthening of the business for the future.

With 70% of our revenue generated from the UK, our performance has been closely aligned with the domestic economy. During 2012, we have witnessed increased activity in the property sector by UK developers, but intense competition for available workload is constraining fees and hence margins. Against this background we have focused on re-building our long term order pipeline and have been particularly successful in the residential, retail and commercial markets from our London based clients.

Overseas, our Australian business has experienced a period of high profitability, this was however partially offset by losses in the Middle East, Russia and Kazakhstan as projects were suspended or delayed.

The sale and leaseback of Pickfords Wharf, Waterman's head office in London in November 2011 has enhanced our financial position, de-gearing the business and leaving the group with net funds of £0.9m at 30 June 2012.

Results

In the year to 30 June 2012, Waterman Group achieved revenue of £68.8m (2011: £74.1m). The adjusted pre tax profit is £1.0m (2011: £1.1m) and this includes an exceptional charge of £60k (2011: £123k charge). The adjusted pre tax profit before exceptional items is £1.1m (2011: £1.2m). The adjusted pre tax profit excludes £0.5m (2011: £0.5m) for amortisation of acquired intangible assets.

As at 30 June 2012, total net assets per share were 109p (2011: 112p) and tangible net assets per share were 52p (2011: 53p).

People

Our employee numbers have reduced by 9% over the last twelve months to 961 with an associated one-off charge of £1.3m being identified as an exceptional item for the year. As described above, this largely reflects the strategic decision to reduce our exposure to our UK Civil and Transportation consultancy businesses in response to subdued activity and margin pressure. In addition, we have taken steps to reduce our exposure to a drop in property related workload in the Middle East, Russia and Kazakhstan as these markets have become more uncertain.

Overall, revenue per head has improved by 11% and adjusted profit before taxation per head has improved by 35% over the last two financial years, reflecting our determination to maximise operating efficiency whilst preserving our core project delivery capability.

We have already refreshed and strengthened our operational boards by the promotion of the next generation of directors so that relationships with our clients are reinforced; and we are now in the process of reviewing the composition of the Plc Board to ensure that it too can continue to contribute effectively to Waterman's future development.

Property

On 17 November 2011, the Group completed the sale and leaseback of Waterman's freehold property, Pickfords Wharf, Clink Street, London for the sum of £11.9m. Full details of the disposal were previously announced to shareholders on 18 October 2011 and the transaction was approved at the shareholder's General Meeting on 10 November 2011.

Waterman owns a commercial property of 950 square metres on the outskirts of Leeds which is occupied by Group companies. The property was last valued in 2004 in accordance with the change to IFRS accounting and the asset value included in the accounts is £1.446m.

During the year as current leases have expired on our regional offices we have negotiated better terms in new or existing premises. In addition, we have been able to reduce our office space requirements by 3,000 square metres which will lower our future cash outflow on property costs by £0.4m per annum in aggregate.

Earnings and Dividend

Basic earnings per share is a loss of 0.3p (2011: profit of 0.4p) and adjusted earnings per share before amortisation of acquired intangible assets and exceptional items is a loss of 1.0p (2011: profit of 1.8p). Earnings per share reflect an unusual combination of factors, including a tax adjustment on UK profits of £270,000 following resolution of a review of tax charged in previous years, a high profit contribution (and hence minority charge) from the Group's Australian operations and tax charges on the individual exceptional items. We expect that earnings per share in future periods are likely to reflect more accurately underlying operating performance, as Group tax charges revert to something closer to the standard UK rate.

The Board is proposing to pay a final dividend of 0.2p per share (2011: 0.1p). This will be payable on 11 January 2013 to shareholders on the register on 14 December 2012. This final dividend with the interim dividend of 0.1p which was paid on 4 April 2012, makes a total dividend for the year of 0.3p (2011: 0.2p). This final dividend is in accordance with the previously declared policy intention of a one third/two thirds split between interim and final dividend.

Outlook

Waterman continues to perform consistently in uncertain markets. Following the recent restructuring, the Group is able to be more competitive and is well positioned to capitalise on the opportunities that any recovery will bring.

Our operations in the UK and Australia generate 85% of our revenue. Both these markets are mature and whilst they remain competitive we continue to win our share of new opportunities from our established clients. The markets in our other overseas locations in Russia, the Middle East and Europe are less predictable and we have re-focused our efforts on certain key clients to provide more profitable workload.

Waterman has secured over 55% of forecast revenue for the current financial year which is a similar level to twelve months ago and demonstrates the Group's underlying resilience. We have recruited additional specialists in several markets such as telecommunications, data and energy as we anticipate further opportunities and growth in these areas.

However, market conditions continue to act as a brake on our operating performance and we see no reason to anticipate any meaningful easing in the competitive environment in the current financial year.

Looking further ahead, we believe that there are grounds for some optimism. Waterman retains its strong brand and our loyal and experienced employees are our key asset. The strength of our client relationships will continue to assist us in securing work in the future as the economy and tenant demand start to recover. Our current workload includes a significant element of early-cycle planning work on residential, retail and commercial development projects for blue chip clients. This early involvement creates a strong pipeline of prospects where there is a high probability of further project assignments for Waterman as these projects enter the development phase in future years.

On behalf of the Board, I would like to express our appreciation to all our clients, staff and shareholders for their continued support.

Roger Fidgen Chairman 6 November 2012

Operational Review

We have progressed with our strategy to gain a greater share of our core markets from our existing clients to generate future margin and revenue growth, to target investments in new non property markets, to reduce fixed overhead costs and to reduce our exposure to markets which no longer give a prospect of a return in the short to medium term.

During the last year we have generated an increase in opportunities and appointments in the property markets and are currently working on active projects with developers and investors such as Land Securities, Hammerson, CapCo, The Crown Estate, Lend Lease, Capital Shopping Centres, Argent, Native Land, Grosvenor, Exemplar, Stanhope, Mount Anvil, Berkeley Group, CORE, Legal and General, Aviva, British Land and Henderson Global Investors. We are currently providing advice on over 2.2m square metres of future potential development.

The proceeds from the sale and leaseback of our London head office have enabled us to advance our strategy for investments in new markets and to complete several restructuring exercises to remove costs which are not generating long term value, thereby increasing our effectiveness in the markets in which we operate.

We have amalgamated our Civil and Transportation consultancy businesses in the UK to form a more focused and sustainable operation with concentrated centres of excellence. Private sector transportation opportunities remain subdued in the UK regions so we have invested in tendering for public sector frameworks to provide additional revenue to supplement our current workload. We have been successful in winning eight local authority frameworks of three or four year duration which are expected to generate annual fees of circa £2m in aggregate. In our specialist Civil and Transportation outsourcing business we have reduced the number of non productive staff which has enabled us to become more competitive and over the last six months we have witnessed an increase in the number of seconded staff to the public sector.

The management of our Building Services business has been rejuvenated with the appointment of a new generation of directors and following a period of consolidation we have been successful in winning new commissions for developments in London and the UK regions.

Overseas, in Kazakhstan and Abu Dhabi, we have significantly reduced our local presence following the suspension and delay to two major projects impacting on our profitability and cash flow. We have made an exceptional provision of £1.1m for unpaid debt and work in progress on these two projects where recoverability is in doubt following the necessary restructuring. In Kazakhstan, we have retained a minimal local presence and in Abu Dhabi we have re-focused our business on providing engineering services for medium sized developments and data centres to provide a more stable workload.

In Australia, we have recruited two new directors who are targeted to generate growth in the telecommunications, ICT and defence markets. We have successfully won commissions to provide resources associated with the Australian government's commitment to install a high speed broadband connection to 93% of homes. This significant appointment has involved staff from each of our three offices in Sydney, Melbourne and Brisbane, surveying existing telephone exchanges to accommodate the new fibre optic cabling and distribution network and carrying out designs for the necessary upgrade of the facilities.

Waterman operates within the UK in four segmental profit centres based on the following engineering disciplines which provide 70% of the Group revenue.

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.

30%

International

Overall, 62% of Group revenue is generated from the private property sector with the remainder being generated from the public sector and regulated industries.

Structures

Waterman's structural business has delivered another strong performance this year. Both the private and public sectors have remained subdued but results have benefited from strong, long standing relationships with clients in the commercial property sector. New projects have been secured and prospects for the long term are improving.

Utilisation levels are high and recruitment is planned for certain areas of the business.

The continued development of building information modelling (BIM) and 3D software is helping to deliver greater efficiency on projects.

Commercial

London's commercial office sector continues to generate significant work with both long term projects and new commissions. Land Securities instructed the demolition of the existing buildings at Ludgate and Waterman is engaged to complete the detailed design and procurement stage of the project. This will deliver two buildings providing 40,000m2 of Grade A commercial space. In addition, work has proceeded on the scheme design of 1 New Street Square for Land Securities, a striking building providing 14 storeys of Grade A office space.

In January 2012, construction began on 6 Bevis Marks to deliver 22,000m2 of office space for CORE. The design makes use of existing foundations and this combined with strengthening works saves time and contributes to the sustainability aspects of the project. Work has begun on site at 8-10 Hanover Square for Morgan Capital to provide new offices and residential units.

Structural works were completed on the refurbishment of 12-15 Finsbury Circus for Union Investment Real Estate and CORE. The new National Centre for Network Rail at Milton Keynes is structurally complete and will be occupied later this year.

New commercial projects which are expected to provide work in the immediate future include 100 Cheapside, a 14,000m2 office and retail development for Quadrant Estates and Topland's 33 King William Street project with Greycoat/CORE, which will provide 30,000m2 of office space over eleven storeys.

Residential

NEO Bankside, the Waterman designed residential development next to Tate Modern in London, added to its growing list of awards with a commendation at the Structural Steel Design Awards 2012, sponsored by

BCSA and TATA Steel. The project has now won more than a dozen awards and is fast becoming a modern icon. Three of the four main residential pavilions are now complete with the fourth currently nearing completion of the fit out. Construction is well underway on the final buildings in the NEO Bankside development: a commercial office on Southwark Street and a striking gymnasium structure within the development's grounds. Both were designed by Waterman with project architect Rogers Stirk Harbour and Partners.

Good progress has been made on the prime residential development at Alpha Place in Chelsea for joint venture clients Native Land and Grosvenor. The 25 apartment scheme includes a pool and gymnasium housed in the extensive underground structure. The large column free entertaining and living areas presented significant challenges for Waterman's structural team, requiring innovative design solutions to be developed. The contractor has now commenced work on site and the final designs and construction details are currently being completed.

Waterman is continuing work at Wandsworth Town Square for Mount Anvil. This mixed use, two acre development will provide 416 residential units, 1,000m2 of commercial office space, retail units and a new square as the focal point with much improved public amenity space.

In the centre of Bradford, Waterman has been appointed by Aspire to design the first phase of an affordable housing scheme, comprising 75 apartments. The full scheme will deliver 705 units in 5 phases.

Student accommodation also continues to provide opportunities. Work at Winchester University for Osborne Developments has now been completed and a further project at Southampton is expected to commence in late 2012 involving 1,000 apartments.

In Regent Street, AirW1 (formerly Quadrant 3) was completed in October 2011 and provides seven floors of office space, retail at ground floor and three basements. Many features of the former building, the 1920's Regent Palace Hotel, have been retained including the notable façades, the Atlantic Bar and Grill and Titanic Rooms. The project won the Building Magazine Project of the Year award at the 2012 Building Awards and was winner of the New London Awards 2012 office category.

// Waterman's structural business has delivered another strong performance this year. Both the private and public sectors have remained subdued but results have benefited from strong, long standing relationships with clients in the commercial property sector. //

// NEO Bankside, the Waterman designed residential development next to Tate Modern, added to its growing list of awards with a commendation at the Structural Steel Design Awards 2012 //

Retail

Workload in the retail sector has increased gradually during the year. Further progress has been made on the 100,000m2 Trinity Leeds project as well as other large retail developments at Crawley, Lakeside, Newport, Stoke on Trent, Milton Keynes, Selly Oak, Telford and Wandsworth. New appointments have been received for projects at Bluewater, Leamington Spa and Watford and are progressing well. Waterman also continues to advise Tesco on the Express roll-out programme and other new supermarket stores across the country.

Urban Regeneration

The Crown Estate has continued the development of its two major central London portfolios: Regent Street and the St James's area.

In Regent Street, AirW1 (formerly Quadrant 3) was completed in October 2011 and provides seven floors of office space, retail at ground floor and three basements. Many features of the former building, the 1920's former Regent Palace Hotel, have been retained including the notable façades, the Atlantic Bar and Grill and Titanic Rooms. The project won the Building Magazine Project of the Year award at the 2012 Building Awards and was winner of the New London Awards 2012 office category. Its energy strategy has set a new benchmark in central London for a sustainable development.

The Quadrant 4 project is a proposed redevelopment of the former annex to the Regent Street Hotel to provide a residential scheme comprising one, two and three bed apartments. Feasibility studies have been completed and a planning application is due to be submitted in late 2012.

Waterman is also working on Quadrant 2 (South) located on the corner of Regent Street and Air Street. The proposals will unite the upper floors of the two buildings to provide large, single floor plates for commercial use.

The redevelopment of Block W4, 163-185 Regent Street is progressing well on site. The project will provide 5,000m2 of prime retail space and 13,000m2 of contemporary offices. A ground breaking ceremony on 7 June 2012 marked the completion of the first stage of the building process. The proposal for the adjacent Block W5 is to regenerate two listed buildings to provide 2,800m2 of flagship retail space and 7,500m2 of grade A office space. Completion is scheduled for the first quarter of 2015. In conjunction with the redevelopment of Regent Street and the St James's area, Waterman's structural teams are advising on the refurbishment and conversion of buildings in the vicinity for residential use. These include Albany House, 80-82 Mortimer Street and Ogle Street.

St James's Market

Commercial redevelopment of two blocks to create 20,000m2 of office and 4,500m2 of retail, restaurant and leisure space

Work has also started in the St James's area with Waterman providing structural consultancy services on the St James's Gateway development. Located in the heart of the West End between Piccadilly and Jermyn Street, the scheme will consolidate seven existing buildings to provide 5,000m2 of commercial offices, 2,000m2 of retail and 1,700m2 of residential units with improvements to public realm in Eagle Place, Jermyn Street, Piccadilly and Lower Regent Street.

Redevelopment proposals were launched for three sites in The Crown Estate's St James's Portfolio to deliver 28,000m2 of mixed use accommodation. The principal scheme, St James's Market, is a commercial redevelopment of two blocks to create 20,000m2 of office and 4,500m2 of retail, restaurant and leisure space between Haymarket and Regent Street. By preserving the historic façades and using world class architectural design for the buildings, the new development will provide high quality accommodation within a traditional setting.

In Leeds, progress has been made on the extensive Eastgate development and following some re-planning to suit the retail market, a revised scheme is now moving forward.

Waterman is involved in the next stage of City Sentral in the centre of Stoke on Trent. The 41,800m2 scheme will include a new bus station, a wide range of new

shops, cafes and restaurants, a cinema complex, a hotel and improved parking. In addition, Waterman is working on the refurbishment and major extension of the Westgate Centre in Oxford and the bus and coach station site in Exeter, both for The Crown Estate and Land Securities; Worthing Gateway adjacent to Worthing Station for Hanson Capital Management; and the regeneration site at Kings Cross for Argent.

Energy / Industrial

Work on the Dewar Place substation redevelopment in Edinburgh for Scottish Power is nearing completion. A major power plant is being installed and the substation will be fully operational in 2013. Good progress has been made on the Northallerton and Hertfordshire waste to energy plants and further projects are expected to proceed in the year ahead.

Work has continued on a number of projects with Princes Foods. The new production building and syrup room at its Bradford complex has started on site and feasibility studies have been completed for the Cardiff and Manchester plants.

Civil & Transportation

Market conditions have remained challenging for Waterman's civil and transportation consultancy business. Restructuring has continued throughout the year in order to reduce unit costs whilst refocusing the skill base to serve those markets with the potential to provide increased workload. The power, energy and waste sectors continue to show growth and there has also been some recovery in public sector consultancy. The transport sector has also provided a significant workload in the year, whilst in the private sector, demand for development infrastructure planning and design services has remained challenging.

Outside London, Waterman's markets have remained extremely competitive and uncertain. Low utilisation of these regional teams has negatively impacted on overall profitability of the civil and transportation business.

Development Planning and Infrastructure Design

Waterman has built on its expertise in the key engineering aspects of development planning, namely transport planning, flood risk and water management, utility and land quality assessments. Teams are located throughout the UK providing these services across a wide range of market sectors.

Schemes within the urban regeneration market have been focused on obtaining planning permission for a revised development mix which reflects the changed economic conditions. Work has continued on the Eastgate development in Leeds with minor amendments to planning submitted in early 2012. Detailed design is expected to commence in autumn 2012. The team is also working on the masterplan for the Central Milton Keynes shopping centre and has commenced work on planning applications for the refurbishment and redevelopment of the two principal shopping centres in central Croydon. In the West Midlands, Waterman's multidisciplinary engineering services helped to gain Planning Approval in February 2012 for The Junction retail and office park which will regenerate derelict industrial land close to Oldbury town centre.

In Scotland, the Laurieston Transformation and Regeneration project in Glasgow is under construction and further phases are due to commence design in 2013. On a smaller scale, design work has commenced on the Mill Street development in Aberystwyth, which encompasses the relocation of a large substation to provide a retail and residential development within the town centre. In July, planning permission was received for the redevelopment of Spanish City in Whitley Bay. This project for the Robertson Group aims to regenerate an historic part of the town and it is expected to progress over the coming year.

The residential sector has shown signs of recovery during the period and Waterman is working on projects throughout the UK. Work has continued on the 1,200 unit South Sebastopol scheme at Torfaen in Wales for Barratt Homes and the Welsh Assembly Government. Following a planning refusal in April 2012, the scheme is now subject to a planning appeal, and Waterman has been appointed to provide expert witness input. Construction work is almost complete on the first phase of the Horsted Park development in Chatham, Kent for Countryside Properties which when complete will comprise over 200 units and a residential care facility. Work on further phases is due to start in 2013. Infrastructure engineering support has been given to a planning application for a phased 670 residential unit development on the former RAF Cardington Airfield, the home of the R101 Airship, on behalf of Fosbern Manufacturing with construction expected to start in 2013.

During the year, Waterman was appointed by Robertson/ West Highland Housing Association to provide engineering consultancy services for the Dunbeg Corridor Development at Oban in Scotland. This residential led development is part of a long term plan to address the housing shortage in this part of Scotland and should provide work for the Scottish team for a number of years. In the East Midlands, Mansfield District Council granted planning in October 2011 for the Lindhurst development, a 169ha site to the south of Mansfield which will include 1,750 houses, 23ha of employment land, 5ha of commercial land as well as a new primary school and local centre. The team is now retained by the Lindhurst Group for the discharge of planning conditions and to progress the first phase of the development. Waterman has an increasing portfolio of residential schemes and is working for a number of the major house builders.

Projects for Tesco have provided a significant proportion of the work in the retail sector. However, due to a reassessment by Tesco of its development needs, there was a significant reduction in projects in the second half of the financial year. Waterman has over twenty current

Developments for Tesco have historically provided a significant proportion of Waterman's transportation planning work and the company is currently involved in over twenty projects.

// Market conditions have remained challenging for Waterman's civil and transportation consultancy business. //

// Eight public sector local authority frameworks have been secured in the last twelve months. //

projects with Tesco and work has recently restarted on a number of developments that were postponed in February 2012. Design work has commenced on Tesco's mixed use retail, leisure and residential scheme in Streatham.

In other sectors, the Scottish team has carried out a number of projects for Malcolm Group on its portfolio of distribution centres, with ongoing projects moving forward during the next financial year. In the education sector, the Port Glasgow Joint Campus is in the construction phase and due for completion in 2013. Healthcare is also providing workload throughout the UK with projects that range from hospital facilities to GP and dental facilities. In June, work recommenced on the Ballymena Health Care Centre in Northern Ireland, a project that has been on hold for the last twelve months. Consultancy work has also recently started for the MIRA Technology Park (former Motor Industry Research Association) development close to Tamworth. Initial work includes pre-planning services for flood risk and ground conditions for the first phase of the development, as well as advice for the associated offsite improvements to the A5 Trunk Road.

Waterman has been appointed by Glasgow 2014 to provide engineering consultancy services for the works necessary to prepare Hampden Park Stadium and other facilities for the 2014 Commonwealth Games. Construction has commenced on site and will continue until the opening of the Games.

Power, Energy and Waste

Power, energy and waste remain target sectors for the company and there has been a steady increase in workload throughout the year.

Waterman has strong relationships with a range of power generators in the UK and the power team has maintained its workload on a range of both maintenance and upgrade projects. Work continues on Selective Catalytic Reduction (SCR) and Selective Non-Catalytic Reduction (SNCR) schemes and feasibility studies for biomass fuel replacement projects.

A significant number of projects are being carried out for the Transmission, Distribution and Renewable Energy divisions of Scottish and Southern Energy. Five large substations are currently at the construction phase as part of the grid reinforcement scheme for the north of Scotland. In addition, Waterman is carrying out a major site investigation for a new 70km cable route which will be part of the system to connect proposed wind farms on the Western Isles to the electricity grid at Inverness. Work has also started on updating the flood risk assessments for over 200 substations in Scotland.

Feasibility studies have continued on a number of planning applications for single wind turbines located throughout Scotland. Over 200 technical reports have been submitted in support of individual turbine planning applications and Waterman's involvement will continue throughout the next financial year. As a result of this work, the team has gained significant experience in all aspects of wind farm design and is currently at the early stages of design for multi-turbine wind farms.

Energy management is generating an increasing proportion of the company's revenue. In May 2012, Waterman was appointed to carry out an energy audit and design of the resultant refurbishment works for

the Proctor and Gamble facility in Newcastle. Five additional facilities are currently being assessed. Similar commissions are being carried out on behalf of the NHS in Scotland with projects at the Southern General Hospital and Glasgow Royal Infirmary.

Detailed designs have been completed for the proposed £12m lightweight aggregate processing facility for Lytag at Drax Power Station in North Yorkshire. Construction work is due to start imminently. Waterman has also been assisting Lytag with a proposal for a similar facility in India and a decision on whether the project will go ahead is expected towards the end of 2012.

Waterman is also providing pre-planning services for access roads, geotechnics, hydrology and hydrogeology for a proposed new limestone quarry in north Nottinghamshire.

Transport

Waterman has increased its workload in the rail sector during the year. Designs have progressed well on the Royal Arsenal and Woolwich Station structure and this £75m Crossrail project for Berkeley Homes is anticipated to complete in 2013. In addition to the civil engineering structure for the station, Waterman has been commissioned to design further phases of the development.

Design of station upgrades as part of the National Station Improvement Programme has continued with over ten projects being completed during the year. Waterman is continuing to receive project commissions under this programme and it is anticipated that workload will be maintained in the next financial year.

In Manchester, Waterman has an engineering consultancy contract with Metrolink RATP, which operates the tram system. Several commissions have been completed during the year and further appointments for projects have been received for the next twelve months.

Waterman's AutoRailTM asset database continues to be the primary source of information for the UK rail network. The company has been reappointed by Network Rail to keep information updated and to issue quarterly updates to subscribers which include Network Rail, train operating companies, consultants and contractors.

The rail team in London has continued to offer a specialised service which provides developers with the necessary assessments of the impact of new developments on the assets of London Underground and Network Rail. This has allowed planning approvals to be obtained for challenging projects. Work is currently being carried out for the major scheme at King's Cross for Argent Estates and Johnson House in Belgravia for Berkeley Homes.

In the highway sector, design work was completed on the second phase of the Bedford Southern bypass for Bedford Borough Council. Statutory and legal processes are being completed with a view to starting construction in spring 2013. Waterman is anticipating further work on this project during the construction phase. A series of smaller highway improvement projects have been designed during the year both for development infrastructure works and public sector consultancy frameworks.

Waterman has a continuing framework with British Airways and this has resulted in projects at both Gatwick and Heathrow Airports. The team has also carried out projects at London City Airport and is currently bidding for a series of projects which the airport is proposing to carry out as part of its long term development plan.

Public Sector

Waterman has been successful in gaining new frameworks as well as retaining existing ones. Its long term commission with Bexley Borough Council was retained in October 2011 after a competitive tendering process. The framework with Crawley Borough Council (CBC) was also retained in March 2012. Both frameworks provide a significant volume of work for the London and South East division and the team has recently been appointed by CBC to provide maintenance and refurbishment consultancy advice for two reservoirs. One of these involves reconstruction of the dam of the Ifield 64,000m3 capacity reservoir. In the North, Waterman was appointed to the YORconsult framework in May 2012 and this is expected to provide work in the coming year.

In Scotland, the company has frameworks with Fife, East Dumbarton, East Ayrshire, Dumfries and Galloway and Borders Councils, all of which are providing work for the team.

Waterman will continue to pursue public sector frameworks during the coming year as part of a strategy to maintain workload over a diverse range of markets.

Secondment Services

Demand for all the services of Waterman Aspen, the Group's secondment and outsourcing company, has shown a gradual and sustained recovery since January 2012. The core local and highway authority markets have stabilised and Waterman continues to provide support to more than 40 local authorities with professional and technical staff working in co-located teams with clients.

The Midlands Highways Alliance Professional Services Partnership has provided a significant volume of work during the year and the company is targeting further frameworks in conjunction with the consultancy teams. Waterman has also been targeting other markets and has gained a significant level of work from the rail sector. This remains a key area for expansion.

During the year, restructuring of the company has continued and it now has a cost base commensurate with the anticipated volume of work for the immediate future.

Health and Safety

Waterman Health and Safety provides consultancy services to clients across all the market sectors in which Waterman operates.

It has a range of long and short term projects throughout the UK, operating as a national division. Currently, framework agreements are in place with Enfield and Bexley Councils and the University of Plymouth and major projects such as Broadmoor Redevelopment, Tate Britain, Bristol Schools and the Haggerston and Kingsland regeneration project in London are underway.

The team has also undertaken a number of interesting projects relating to the London 2012 Olympics and Paralympics. These included the refurbishment of the external concrete at Herne Hill Velodrome which is a practice venue for cyclists; new lighting to Tower Bridge that incorporated facilities for light displays with the bridge changing colour to bronze, silver and gold to celebrate the medals won by Team GB; and new lighting to six bridges crossing the River Thames from London Bridge to the Golden Jubilee Bridge.

Lindhurst Development

A 169ha site to the south of Mansfield which will include 1,750 houses, 23ha of employment land, 5ha of commercial land as well as a new primary school and local centre.

Building Services

Despite challenging market conditions, Waterman's building services team has continued to operate successfully across a range of market sectors. The past twelve months have seen significant restructuring which has created a fitter and more dynamic team, capable of delivering a high quality service from a reduced cost base.

Commercial

Waterman has secured a number of commissions for new work in the commercial sector. These include the Savile Row scheme for Allied London and Axa's No.1 St Paul's Churchyard office and retail scheme, both in London, together with new offices for GDF Suez in Leeds. Various projects in London are at or near construction stage including Finsbury Square for Pembroke Real Estate; 1 and 2 New Ludgate for Land Securities; 8-10 Moorgate, a 17,172m2 project for Stanhope; and the 6 Bevis Marks and Finsbury Circus House schemes, of 14,800m2 and 13,000m2 respectively, both for CORE. Construction work has continued on the new 36,790m² American Express Headquarters in Brighton, with the main office building expected to be completed at the end of 2012.

Residential

There have been signs of recovery in the residential sector and Waterman has continued to secure commissions for prestigious residential and mixed use schemes. In London, where the market remains buoyant, work includes Skyline, a £125m scheme in the Docklands designed by Terry Farrell providing 749 residential units and 7,800m2 of commercial and retail space; the £50m Cremorne Wharf project of 0.39 hectares for the Royal Borough of Kensington and Chelsea and the Union Street project for Mount Anvil which is currently proceeding to tender. Student accommodation is also an important part of this market and a new commission has been secured via Quintain Estates on behalf of the Wellcome Trust for Bentley House, a 160 bed scheme in London, whilst work continues on projects for Manchester Metropolitan University and Chester University.

Healthcare

The construction of the new £40m Mother and Baby Unit at the Royal Oldham Hospital on behalf of The Pennine Healthcare Trust is nearing handover. This ProCure 21 scheme followed on from the highly successful Radiotherapy Unit at the same hospital which was completed last year.

Education

Work secured in association with Turner & Townsend through the Office of Government Commerce framework is ongoing, with college schemes at Blackpool and Wirral under construction and the Cheadle and Marple and Hugh Baird college projects due out to tender shortly. Heartlands Academy, Fulwood Academy and St Albans Academy, part of the Lend Lease BSF Academies scheme, are due for completion in 2012, together with Middlesbrough BSF on behalf of Willmott Dixon.

Industrial & Manufacturing

Following the completion of the £40m Manufacturing Technology Centre in Coventry in 2011, Waterman has been appointed for feasibility and concept studies for a £20m extension to the development, incorporating a new academy, a secure research facility and conference facilities. Waterman has also been appointed by Laing O'Rourke on a major extension to the Precast Concrete Facility at Steetley, which opened in 2010 and was originally designed by Waterman.

Several commercial projects in London are at or near construction stage including Finsbury Square for Pembroke Real Estate; 1 and 2 New Ludgate for Land Securities; 8-10 Moorgate, a 17,172m2 project for Stanhope; and the 6 Bevis Marks and Finsbury Circus House schemes, of 14,800m2 and 13,000m2 respectively, both for CORE.

// Waterman's building services business has continued to operate successfully across a range of market sectors. //

Skyline

£125m scheme in the Docklands designed by Terry Farrell providing 749 residential units and 7,800m2 of commercial and retail space

Data Centres

The demand for data facilities has remained strong. Waterman's newly formed Critical Systems group continues to win commissions with prestigious data centre operators such as Ark Continuity, Amex, Talk Talk and the Telecity Group. Following completion of successful projects with Ark Continuity, further commissions have been won for new data centre facilities across two of its campuses, Spring Park and Cody Park. Having completed a number of single point of failure studies for Talk Talk, further appointments have been won to implement the recommendations on a number of its sites. Waterman completed Data Hall 1 for the MOD at Abbeywood, Bristol and has since been appointed to oversee the design and installation of Data Hall 2. Waterman undertook the detailed design for the Amex Data Centre in Brighton and this was handed over in July 2012.

Hotels

Waterman has been appointed on the redevelopment of the Grade II listed Bow Street Magistrates Court in London's Covent Garden into a 100 bedroom boutique hotel. In addition, design work on the 160 bedroom Field of Mars Hotel in Russia has been completed in conjunction with Gensler Architects.

Retail

Waterman was the building services designer for the refurbishment of the Marks & Spencer store at Meadowhall in Sheffield. Construction work is well underway at Hermiston Retail Park in Consett for Aviva.

Defence

Based at Aldershot, Waterman's Aspire team has provided consultancy services for the seventh year on Project Allenby and Connaught. The £1.5bn Aspire construction project is the largest PFI project in the UK providing technical, administrative and residential accommodation for military and civilian staff. It is anticipated that the team will remain on site until 2013.

Field of Mars Hotel

Design work on the 160 bedroom Field of Mars Hotel in Russia has been completed in conjunction with Gensler Architects

// Waterman has secured a number of commissions for new work in the commercial sector. These include the Savile Row scheme for Allied London and Axa's No.1 St Paul's Churchyard office and retail scheme, both in London, together with new offices for GDF Suez in Leeds. //

Energy, Environment & Design

Waterman's environmental business exceeded expectations this year, delivering significantly improved profitability and retaining its position as one of the UK's leading environmental consultancies.

The strategy continues to focus on increasing market share, building on established centres of excellence and using this expertise to diversify into other sectors. Innovative services continue to be developed, which add real value for clients and reduce their environmental risks.

Due Diligence & Environmental Management

It has been another excellent year for Waterman's due diligence team, consolidating its reputation as a leading service provider in this area. Appointments in the aviation sector continued, with the team advising on a number of significant airport transactions including BAA's disposal of Edinburgh Airport, the proposed purchase of the long term concession agreement for Puerto Rico's Luis Muñoz Marín International Airport on behalf of Ferrovial and supporting AENA, the Spanish Government's airport operator in the proposed concession agreements to run Barcelona and Madrid Airports.

The team also continued to provide environmental due diligence advice on major property transactions including Stanhope's acquisition of the BBC Television Centre in Wood Lane and British Land's acquisition of the Daily Mail Group's Harmsworth Quay Print Works. The team has also developed a sustainability assessment tool for property acquisition and existing asset management, which is currently being trialled by a number of key clients.

Waterman's Greenspace corporate environmental, health, safety and carbon management services were expanded in order to retain a leading market position. New applications include the Superuser function which allows efficient and cost effective control of multisite portfolios through a single login, complemented by a growing international service which allows multinational corporations to manage operations and/or supply chain exposures. The team has supported clients in their international operations in Sweden, Holland and Australia.

Brownfield Regeneration

Work continued on the redevelopment of the 100 hectare former Steetley Colliery site in Nottinghamshire for Laing O'Rourke, with the enabling works package due for completion in late 2012. The package included the relocation of existing sensitive ecological habitats to two specially formed wildlife areas and the creation of six level platforms for future development as an industrial park.

At the former 500 hectare US Air Force Base in Upper Heyford, Oxfordshire, following a lead in time of almost two years, work to empty, clean and make safe the former fuel storage and 23km fuel pipeline distribution system was completed in February. A significant amount of work remains to be undertaken at the site for the mixed use, residential, community and commercial development. Waterman has been appointed to undertake much of the relevant future work relating to this scheme.

Waterman provided land quality, ecology and archaeology consultancy services in support of a planning application for the former Ford foundry in Leamington Spa for a mixed use scheme comprising a food store, car park, hotel, office, commercial units and public open space. Following the grant of planning, demolition and remediation work commenced on site in October 2011 with Waterman providing a technical monitoring role. This work was successfully completed to allow the main development to commence.

Waterman has been retained as lead EIA consultant for several high profile schemes including Ruskin Square, Croydon (previously Croydon Gateway), Station Hill in Reading and Ram Brewery, Wandsworth.

// Waterman's environmental business exceeded expectations this year, delivering significantly improved profitability and retaining its position as one of the UK's leading environmental consultancies. //

Elizabeth House

Developers Chelsfield and London & Regional retained Waterman's EIA expertise to support their £600m investment to transform the area, creating a new business district and a dramatic new public space in front of Waterloo Station, London.

Pre-Planning Services, Sustainability & Environmental Impact Assessment (EIA)

Waterman retained its position as one of the leading providers of pre-planning EIA services for urban regeneration projects, and was appointed for a number of high profile schemes during the year. The team delivered three key EIAs for Lend Lease's regeneration of Elephant & Castle in London: the Heygate Masterplan which relates to the redevelopment of the Heygate Estate to provide a residential led, mixed use scheme with between 2,300 and 2,469 new homes; Phase One of the Heygate Masterplan, comprising a detailed planning application for a further 235 homes adjacent to the south-east of the Elephant and Castle Heygate Masterplan site; and the detailed planning application for the St Mary's Residential scheme, which comprises a 37 storey tower and a 4 storey pavilion building providing 284 residential units, retail and flexible office use.

Drawing upon a long historic involvement with the former P&O Estates' Elizabeth House site, adjacent to Waterloo Station in London, developers Chelsfield and London & Regional retained Waterman's EIA expertise to support their £600m investment to transform the area, creating a new business district and a dramatic new public space in front of Waterloo Station. The EIA was successfully delivered to accompany the submission of the planning application in April 2012.

// Waterman retained its position as one of the leading providers of pre-planning EIA services for urban regeneration projects, and was appointed for a number of high profile schemes during the year. //

The team has been retained as lead EIA consultant for several high profile schemes including Stanhope's Ruskin Square, Croydon (previously Croydon Gateway) and Station Hill in Reading; Minerva's Ram Brewery, Wandsworth; Augur Group's 25 hectare mixeduse redevelopment of the former Vauxhall Motors' manufacturing site at Napier Park and Stirling Place, Luton; Hammerson's proposed retail led, mixed use redevelopment of the Whitgift Centre in Croydon; and British Land's Harmsworth Quay project.

The team has continued to increase its regional presence, completing the EIAs for the regeneration of Macclesfield Town Centre for Wilson Bowden Developments, for a site in St Helens which is being developed as an industrial facility by Canmoor Developments, and for a new 120-unit residential development at Edmonstone in south-east Edinburgh.

Waterman's landscape, archaeology and ecology teams have continued to provide pre-planning services to a number of property developers and house builders across the UK, gaining a number of planning permissions including the redevelopment of the former Gloucester College of Art and Technology for Linden Homes and Vesta's wind turbine construction plant at Sheerness.

Building on Waterman's reputation and core expertise in property, significant progress has also been made in diversifying the business with a number of key, non-property commissions. These include an EIA for a revised restoration of a landfill, a 5MW photo voltaic array at a former colliery in Kent, and dam reconstruction and de-silting works, together with general landscape and ecological enhancement at a reservoir in East Sussex. In Scotland, the team completed a number of assessments for small scale wind farms and hydroelectric proposals at sites in Perthshire, Lanarkshire and Ayrshire, motorway improvement works on the M90 in Fife and continuing EIA and related work on several proposed energy from waste sites.

In the public sector, the team completed technical studies associated with lake improvement works and a site development constraints analysis for Crawley Borough Council, whilst the assessment of two landfill sites for Kent County Council is ongoing. In addition, Waterman's acoustics team was appointed to the UK Government's Environmental and Sustainability Advice Framework and the sustainability team has been awarded funding from the Technology Strategy Board for a climate change adaptation strategy for a new civic and office building in Northampton.

Ruskin Square, Croydon, United Kingdom

International

Waterman's Australian business has delivered an excellent result but other offices within the international business have continued to experience challenging market conditions. Following restructuring, good progress has been made in matching overheads to the reduced workload and reorganising the business to meet the demands of the market conditions. Focused efforts have been made to maintain sustainable workload in four main regions; Australia, Middle East, Europe and CIS.

Australia

The Australian business has continued to make a significant contribution to Waterman's international operations. Work has focused on local projects across Australia from the public and private sectors.

The Sydney office has performed well in a year where New South Wales' market conditions have been depressed with fierce competition in the conventional buildings market. Telecommunications work has been a significant part of the Sydney office workload, particularly designs associated with the rollout of the National Broadband Network infrastructure and fibre cabling.

Other areas of activity have been in sectors such as education, public housing, seniors living, police stations, court houses and high density residential developments. Waterman has recently been appointed for the fire and hydraulics design of the new St Vincents & Mater Health Service, Sydney redevelopment project, encompassing both the refurbishment of the existing private hospital building and a new 25,000m2 wing.

The Sydney office has established a specialist Information & Communications Technology (ICT) division which provides integrated ICT solutions for large buildings, campus and defence facilities. A team has also been established to undertake contestable electrical design for the supply authorities in New South Wales and Queensland. This includes for aerial, underground and substation design works which would otherwise be done by the authority.

Waterman has provided a building services review on Barangaroo, the A\$2 billion waterfront urban regeneration project for Lend Lease in Sydney and has subsequently been appointed on the Barangaroo Headland Park and Cultural Centre for mechanical

services design. The team continues to provide engineering services for part of a new rail interchange in south west Sydney. Building services design has been undertaken for a number of universities, including the Engineering and IT building at the University of Technology, Sydney.

Despite the difficult economic environment, the Melbourne office has completed another financially successful year. The team has focused efforts on securing commissions that continue to receive government funding in the health care, education and local government sectors. In addition, there is substantial activity in the residential sector.

Designs have been completed for a prestigious residential development in Chapel Street, Prahran and for the Essendon Football Club, which is the fourth football sports complex to be designed by the Melbourne office. Construction work on both of these projects has commenced.

In the health care sector, work has commenced on a major infrastructure upgrade for the Royal Eye and Ear Hospital, which is the first stage of a A\$160m project. Work is ongoing for Stage 3 of Frankston Hospital development and its new Emergency Department, an A\$80m project which is due for tender in early 2013. Technical reviews for the new Victorian Comprehensive Cancer Centre project in Parkville are being undertaken, together with the design of the A\$50m Albury and Wodonga Regional Cancer Centre.

Three regional swimming and leisure complexes are under design, with the first of these due for tender in late 2012. Waterman has extensive experience in this market having already completed seven major swimming complexes.

Consultancy advice in the Australian healthcare sector includes the new Victorian Comprehensive Cancer Centre project in Parkville and the design of the Albury and Wodonga Regional Cancer Centre.

// Waterman's Australian business has delivered an excellent result but other offices within the international business have continued to experience challenging market conditions. //

Waterman continues to secure work in the education sectors, focusing on projects that benefit from government funding. Design is currently underway for the A\$11m Blackburn High School and the A\$20m Surf Coast Secondary College, both in Melbourne.

The Brisbane office has had a steady year of trading. The main areas of activity have been in the commercial office, retail and industrial sectors carrying out small projects for companies such as Mirvac, NAB bank and Charter Hall.

Recent appointments for Waterman in Australia include structural engineering designs for The Quay, a mixed use development in Sydney, numerous health care projects and football clubs in Victoria, and a major new residential housing complex in Sydney for Defence Housing Australia.

Middle East

Waterman's Emirates company started the year with a reasonable workload, but due to the suspension of a major project in Abu Dhabi this was not sustained and it was necessary to restructure the office. The operation is now well placed to deliver high quality design and facilities management (FM) services to its key clients in the region.

Construction of the Al Muneera project at Al Raha Beach in Abu Dhabi was successfully completed at the end of 2011 and a small team will remain involved during the contractor's twelve month defects period. Waterman's FM services on framework contracts for Injazat and at Yas Marina were successfully delivered during the year. The hotel refurbishment for MAF Group in Dubai is now on site and Waterman is providing construction

supervision services with completion anticipated at the end of 2012.

Waterman completed the delivery of the Information and Communications Technology strategy and principles for the Dohaland project in Qatar and will monitor its implementation during the design and construction phases. Also in Qatar, the ICT design for the Doha Convention Centre and Tower project has progressed and the detailed design for the fit out of the new headquarters for Barwa has been completed.

In the wider Middle East and North Africa region, several commissions have progressed to completion. The detailed design of the Khams Shamat retail project for Dubai based MAF Group was completed in the first half of the year. In Sudan, the construction drawing stage has been completed for the infrastructure for the Musheireb, a mixed use development in Khartoum.

Recent new appointments include full engineering design for a major retail centre at Kish Island in the Persian Gulf and for a hotel and office development in Lebanon.

Europe

Waterman's European operations continued to experience challenging trading conditions in the last year. The eurozone crisis has seen the demand for services remain subdued, with clients more cautious about moving forward with projects. A return to growth in European operations is not anticipated until the economic outlook for Europe improves. However, the cost of the company's European operations has been adjusted in line with income and Waterman is well placed to take advantage of any upswing in demand.

In Ireland, Waterman has maintained market share under very difficult conditions. The Irish construction sector has shrunk for five consecutive years now, but despite this, the Dublin office has remained busy.

The education sector continues to be the single biggest source of work for the office, with five major school projects under construction during the last year, including a large education campus in Monaghan providing primary, secondary and tertiary education facilities on a single site. A further four projects involving redevelopment of schools are at design stage. Waterman has also been appointed, as part of a multidisciplinary team, following an international design competition to develop a new prototype 1,000 pupil second level college for the Irish Department of Education and Skills.

The retail sector continues to provide a steady workload for the Dublin teams, with a number of new commissions being secured from retail chains for supermarket developments at sites throughout Ireland, including some mixed use, town centre schemes. Retailers are taking advantage of the value that is available in the property and construction sectors in Ireland at present to expand their penetration into the market.

The last year has seen recognition of the expertise within Waterman in due diligence and site assessment, with the Dublin team now regularly retained to advise on distressed and incomplete property assets in respect to options for making safe and the potential for building out the developments. Clients include all the major banks

Khamovniki

In Russia, Waterman has commenced the design of the second phase of the 444,600m2 residential development in Moscow, having already completed the first phase.

and receivers in Ireland. Further growth is expected in this market over the coming year, as financial institutions continue to work through property assets under their control. This should lead to more substantial commissions as decisions are made to enhance value on sites in key locations.

The latter part of the year has seen the first signs of developer activity returning to the Irish market, albeit on a small scale. Commissions have been secured for planning stage input on new phases of three large development sites in the Dublin area, while the design of small residential phases of the Honeypark and Adamstown developments is also being undertaken.

While the year ahead is likely to remain challenging for Waterman's operations in Ireland, the first signs of a slow recovery are evident, and a gradual return to more sustainable trading is expected over the next few years.

In Central Europe, the private development market has consolidated but is not yet showing a growth in opportunities. In Poland, Waterman has been appointed to carry out due diligence work, BREEAM assessments and pre-planning studies for various sites. This has been complemented by new commissions for design services for a retail centre in the east of Poland, a factory extension for a pension fund in the south of Poland and a number of refurbishment projects to existing retail centres in several major cities. The level of enquiries rose towards the end of the year with opportunities arising in Poland, Romania and Ukraine.

The London based team has undertaken a multidisciplinary feasibility study for a new hotel and leisure complex in the Russian Far East, which is due to proceed to design stage over the next few months.

Design has been completed recently for a new 17 storey residential tower on the beachfront in Accra, Ghana, and work on a second tower will continue into the new financial year. Expert advice and due diligence services have also been provided for developments in Zanzibar, Bucharest and Germany.

Commonwealth of Independent States (CIS)

Waterman's offices in Moscow, Russia and Almaty, Kazakhstan share resources on projects in the two countries. Over the last twelve months, trading conditions have remained difficult as developments won did not commence to the expected programme and postponed projects did not recommence as expected. However, during the fourth quarter of the year, an increase in enquiries was seen and a number of new projects were secured, providing a good order book for the coming year. Also, the opportunity was taken to relocate to more appropriate offices in Moscow as the current lease expired.

Stage 2 of the Khamovniki Project, a mixed use residential complex of 444,600m2 in Moscow for Metalloinvest-Development, commenced in March 2012 and will continue to provide good workload throughout the year. Stage 1 construction is progressing well and additional work is expected to be instructed on this project. Construction work on Smolensky Basage, a 60,000m2 new, mixed use development in Moscow commenced in July 2011 and the sub-structure is now complete on site with design work continuing in the office.

New projects were won and design commenced in the year including the conversion of a historical building in St Petersburg to hotel and residential use and concept design for a major new hotel in Sochi. Waterman was also appointed for utilities design for the masterplan stage of the prestigious Skolkovo Project in Moscow. A new hotel for Hyatt in Rostov was secured during the last quarter of the year and a combined team from London and Moscow have commenced design work.

The multidisciplinary engineering design of the 100,000m2 French Centre, a mixed use development in Almaty, Kazakhstan was completed during the year. However, following completion of this project, due to difficult trading conditions in the area, the Almaty office was reduced to a nominal presence maintaining company registration and design licenses to allow Waterman to service new projects when the market improves.

China

Workload in China over the year has been very light due to government measures to reduce inflation and prevent overheating of the economy. However, Waterman has now been invited to take part in a limited competition for the design of the National Maritime Museum in Tianjin. It is also expected that the imminent leadership changes may lead to some easing of constraints, thus allowing funding for new projects in 2013.

Nicholas Taylor Chief Executive 6 November 2012

Board of Directors

Roger Fidgen Non-Executive Chairman

John Archibald Senior Independent Non-Executive Director

Geoffrey Wright Independent Non-Executive Director

Alex Steele Finance Director

Nicholas Taylor Chief Executive

Craig Beresford Executive Director

Simon Harden Executive Director

John Waiting Executive Director

Financial Statement Contents

• Financial Statement
• Financial Review
• Corporate Responsibility
• Statement of Directors' Responsibilities
• Directors' Remuneration Report
• Corporate Governance Report
• Directors' Report
• Independent Auditors' Report to the Group
• Consolidated Income Statement
• Consolidated Statement of Comprehensive Income
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement
• Consolidated Statement of Changes in Equity
• Notes to the Consolidated Financial Statements
• Independent Auditors' Report to the Company
• Parent Company Financial Statements
• Notes to the Parent Company Financial Statements
• Five Year Results Summary
• Company Information and Advisers
• Financial Calendar
• Waterman Presence

Financial Review

The year to 30 June 2012 has seen a further period of consolidation for Waterman Group and strengthening of the business for the future.

In November 2011, we sold our head office, Pickfords Wharf through a sale and leaseback arrangement. The sale has significantly enhanced our financial position, reducing total borrowings by £7.2m and leaving the Group with net funds of £0.9m at 30 June 2012 (30 June 2011: net debt of £8.6m). The Group took the opportunity made by the sale of the property to restructure parts of the business.

Revenue and Profit

The UK, where 70% of our revenue is generated, has remained challenging with intense competition constraining fees and margins. Overseas, in the Middle East, Russia and Kazakhstan both revenue and profits were impacted by projects being suspended or delayed. However, our Australian business performed well and benefited from the strength of the Australian dollar. Revenue for the year was £68.8m (2011: £74.1m). Adjusted profit before taxation, before the impact of £60,000 of net exceptional expense (2011: £123,000 expense) and £0.5m (2011: £0.5m) of amortisation of acquired intangibles was £1.1m (2011: £1.2m).The operating profit margin was 1.5% (2011: 1.4%).

Exceptional Items

Exceptional items incurred in the current year comprise of the profit on sale of the property (£4.1m) offset by £4.2m of exceptional costs before tax. Exceptional costs comprise mainly of restructuring costs within our civils and transportation, and Emirates and Kazakhstan businesses. The exceptional cost taken in the current year will lead to overhead savings in future years. Further details are included within note 5 to the consolidated financial statements.

Taxation

There was a taxation credit in the year of £40,000 (2011: taxation charge of £173,000). Taxation was significantly affected by a £623,000 credit (2011: £167,000) due to the deductibility of the exceptional restructuring costs incurred within the UK. The capital gains tax payable on the sale of the property was offset by UK tax losses.

Earnings per Share

Basic and diluted (loss)/earnings per share amounted to (0.3p) (2011: 0.4p). Earnings per share reflect an unusual combination of factors, including a high profit contribution (and hence minority charge) from the Group's Australian operations, a tax charge on UK profits of £270,000 following resolution of a review of tax charged in previous years and tax charges on the individual exceptional items.

Dividends

In accordance with the Group's previously declared intention for a one third/two thirds split between interim and final dividend, the board has proposed a full year dividend of 0.3p (2011: 0.2p). A final dividend of 0.2p per share (2011: 0.1p per share) is proposed for the year to 30 June 2012 which, if approved by the shareholders, will be paid on 11 January 2013 to shareholders on the register at 14 December 2012.

Balance Sheet

At 30 June 2012, the Group had net assets of £33.6m (30 June 2011: £34.3m). Net assets per share were 109p (2011: 112p) and tangible net assets per share were 52p (2011: 53p). Included within fixed assets is a property in Leeds with a net book value of £1.4m.

Financing

At the year end, the Group had net funds of £0.9m (2011: net debt of £8.6m). Cash balances increased to £4.0m (2011: £1.4m) and total borrowings reduced to £3.1m (2011: £10.0m) providing substantial headroom against available facilities. The Group's principal banking facilities are provided by HSBC Bank plc and include an overdraft facility of £4m and a term loan of £2.1m. The term loan is repayable by quarterly instalments until 2017. The term loan is subject to three financial covenants which are tested half yearly. In addition, the Group has access to on demand facilities of a further £3.2m in the UK and overseas. The net finance costs of the Group, prior to an exceptional interest charge of £284,000, amounted to £211,000 (2011: £437,000).

Cash Flow

Net funds were £0.9m at 30 June 2012 (2011: Net debt of £8.6m). The movement is shown below:

	Year to	Year to
	30 June 2012	30 June 2011
	£'000	£'000
Cash generated from / (used in) operations	152	(409)
Proceeds from sale of PPE and capital expenditure	11,112	(437)
Net interest	(492)	(432)
Tax	(183)	(305)
Repayment of borrowings	(7,912)	(1,298)
Dividends paid to Owners of the parent	(62)	(303)
Dividends paid to Non-controlling interest	(904)	(383)
Currency movements	(124)	70
Net cash inflow / (outflow)	1,587	(3,497)
Net funds / (debt) at 30 June	883	(8,618)

Cash generated from/ (used in) operations was £0.2m (2011: (£0.4m)). Restructuring payments of £1.2m (2011: £0.4m) have been made during the year.

The working capital inflow/(outflow) amounted to £1.8m during the year (2011: (£3.3m)), principally due to the reduction in trade receivable balances reflecting the decrease in debtor days from 90 days at 30 June 2011 to 86 at 30 June 2012.

£11.5 million of net proceeds were received as a result of the sale and leaseback of our head office, of which £3.7m was used to repay the mortgage facilities on the property and £3.5m of term loans with HSBC. We continue to make annual capital repayments of £0.4m (2011: £1.2m) on our one remaining term loan.

Dividends of £0.9m (2011: £0.4m) were paid to the minority shareholders of our Australian operations.

Key Performance Indicators

A number of metrics are used to monitor financial performance. These include turnover, revenue per head, operating profit, fee earner utilisation, cash collection and aged debt and work in progress management. These are monitored against budget and targets. Most of these Key Performance Indicators remained stable in the current year. The financial performance by sector is reported in note 2, Segmental Reporting.

Treasury

The Group's financial instruments include borrowings, cash and liquid resources and trade receivables. 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.

Risks and Uncertainties

The Group's primary objective is to deliver strong long term shareholder returns 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 6 November 2012

Corporate Responsibility

Corporate Responsibility is a key part of Waterman's ethos. This commitment to our clients, suppliers, employees and the communities in which we work is embodied in our Mission Statement:

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 it delivers on all its goals and aspirations for sustainability. The Plc Management Board cascades information to the UK Management Board and International Management Board which 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

Waterman has maintained quality and environmental management systems certified to ISO 9001 and ISO 14001 in order to guarantee continued high standards of service delivery and environmental management. Incorporation of the Waterman health and safety policy and safe working practices into the existing integrated management system has been finalised and the system is now certified to OHSAS 18001 as well as ISO 9001 and ISO 14001.

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

• Continued roll out of Lync communications system throughout UK offices reducing need to travel leading to increased levels of home working and increased use of video conferencing throughout UK offices
• Introduced improved Ride2Work scheme to encourage a healthier lifestyle whilst striving to increase numbers adopting this travel option
• Further office rationalisation resulting in reduced energy and water usage, and carbon emissions from travel between offices
• Continued adoption of virtual servers as a replacement for hard servers contributing towards reduced power consumption
• Wider recycling of waste and IT consumables

Environmental Performance

Road	400
Air	350
Rail
Bus & Taxi	300
	250

The total carbon emissions for road transport,air, rail, bus and taxi usage have slightly increased due to the overall reduction in the number of offices although the increase in rail travel does highlight the shift to more sustainable modes of transport.

200

Total tonnes CO2 equivalent Kg CO2 equivalent/head

CO2 emissions per employee have also increased but this is due to a reduction in the headcount of staff who would not normally travel and attend meetings.

Energy

Energy is used in our offices for heating and lighting and the operation of IT and other office equipment. We have carried out energy audits of our UK based offices in order to monitor usage with a view to maximise energy efficiency and reduce carbon emission through staff training, good housekeeping and actively managing control systems.

Water Use

Our principal use of water is in kitchen and washroom facilities and is not one of our significant environmental impacts.

Transport - Business Travel

We operate a sustainable travel policy for the promotion of a more environmentally sustainable mode of transport. This includes:

• Promoting public transport as the preferred option for our staff when travelling on business, rather than travelling by car or taxi;
• IT systems to allow flexible and home working, reducing the need for long car journeys into our offices;
• Providing shower facilities and cycle racks at our offices where we can, to encourage staff to cycle to work;
• Interest free season ticket loans for our staff to enable use of public transport;
• No parking facilities provided at our office in central London;
• Relocating new offices within walking distance of a train station, where practicable; and
• Providing visitors to our offices with detailed maps showing public transport options for reaching us.

Employee Health and Safety Compliance

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; and
• 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 & 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 resulted 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 & 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.

Projects

Waterman works to extend the boundaries of design, whilst respecting the needs of the environment. A number of award-winning projects have been completed this year.

July 2012	Green GOOD DESIGNTM Award	Winner One Angel Lane
April 2012	British Parking Awards	Shortlisted for Best Car Park Refurbishment Southampton Road Car Park
Dec 2011	Lord Mayors Design Awards	Awarded Lord Mayors Special Award Knop Law Primary School
Dec 2011	Lord Mayors Design Awards	Winner in the Accessibility Category Knop Law Primary School

Nov 2011	World Architectural Festival Award	Winner of World House of the Year Small House
Nov 2011	REIA 2011	Shortlisted for Adviser of the Year: Technical Waterman
Nov 2011	Lord Stafford Awards	Shortlisted in The Open Collaboration Category: Manufacturing Technology Centre, Coventry

Through its board, Waterman monitors client testimonials, compliments and complaints and these are promptly addressed. Ensuring that we meet our client's needs and expectations has resulted in a high level of repeat business. We evaluate our suppliers and where possible use those with environmental systems in place. In order to achieve a more sustainable purchasing strategy, we are gradually reducing the number of suppliers, particularly for computer equipment, stationery items and cars

Human Resources

Waterman recognises the value and contribution of all employees and, through continuous development and training, our core skills and experience are both enhanced and retained, ensuring that we continue to provide innovative engineering and environmentally focused solutions that meet our clients' needs.

Attracting and retaining our highly-skilled workforce is achieved through the opportunity for both personal and career development, identified as a result of Waterman's performance management process, which not only supports the retention of employees, but provides for technical excellence at all levels, both on an individual and team basis.

The Waterman flexible benefits scheme is a key part of our reward strategy, with a host of benefits provided on a salary sacrifice basis, reviewed annually. In this year Waterman introduced a 'Ride to Work' scheme, gym membership and dental insurance, all of which help to promote the health and wellbeing of our employees.

As a part of our employment policies and practices, Waterman recognises that during their careers with the company there will, at times, be lifestyle changes that affect our employees. For this purpose we work with our staff to look at ways in which we can support those changes and are able to offer flexible working, sabbaticals, secondments and/or intercompany transfers.

As a result of our investment in our workforce and the implementation of a performance and results focused appraisal scheme, we are committed to working towards Investors in People (IIP) certification.

Waterman has recently become a member of a consortium of industry related companies involved in the Civil Engineering Apprenticeship Scheme and in liaison with South Thames College, Waterman has invested in and supports the professional development of apprentices within the company. This is in addition to the sponsorship of students through academic training, both at University and through day release at local educational establishments. Our sponsorship students receive financial support and are provided with the opportunity of work placements during vocational periods, securing employment with Waterman once they have graduated from University. Our 'day release' students, already in employment with us, have the benefit of gaining valuable 'on-the-job' experience and knowledge from our senior engineering and environmental consultant teams, supported also through our mentoring and coaching schemes.

Our Graduate Forum continues to support the professional and personal development of our graduates throughout the company and provides them with the opportunity to identify common interests, build relationships, improve training possibilities and encourages working groups of budding chartered engineers.

Workforce Diversity

	30 June 2012	30 June 2011
Female employees (UK)	22%	22%
Ethnic minority employees (UK)	12%	17%
Female managerial grade	8%	8%
Ethnic minority managerial grade	6%	6%
Number of staff on temporary contracts	14%	11%
Annual sickness rate	1%	1%

Community

We believe in giving back to the community and continue to be involved in many community and charity projects. Better Bankside, which is a long term initiative for Waterman, providing a focus for community involvement with the company supporting such events as Christmas gift aid, with both Waterman and our staff providing gifts to help families, the young and aged, with particular emphasis on those not in full time education, employment or training.

Members of our staff volunteer for a number of charitable initiatives, within their own communities and in the regions within which we operate, both in the UK and overseas. Staff from London, Manchester and Melbourne, Australia were involved in voluntary charity events during this year, a major one being WaterAid, where a number of employees have organised fund raising events with both staff and clients, to help raise £20,000 over a two year period for the Maji Programme in Tanzania. Other charities have included Macmillan, other cancer charities and children's hospitals, all of which are fully supported by Waterman, who also contribute towards the sponsorship of individuals.

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; and
• 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 in the Directors' Remuneration Report 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 profit 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.

By Order of the Board of Directors

Graham Hiscocks Company Secretary 6 November 2012

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 UK Corporate Governance 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 7 December 2012.

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 Geoffrey Wright (Chairman), Roger Fidgen and John Archibald 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 and receiving remuneration for the provision of their services, 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. In determining remuneration, consideration will be given to reward levels throughout the Group as well as in the external employment market. The Group aim to reward all employees fairly, based upon their role, their performance and salary levels in the wider market. 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:

a) individual performance

• b) salaries paid by companies of similar size in the same sector
• c) the current financial performance of the Group
• d) the relationship between the remuneration of directors and other employees
• e) 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, fuel 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 2012.

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 2011. Any bonus and deferred shares in respect of the year ended 30 June 2012 will be paid during the year ended 30 June 2013 following approval by the remuneration committee.

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 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 2011.

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. The details of the service contracts of the currently serving directors are as follows:

Name	Contract date	Notice period
R S Fidgen (Non-executive Chairman)	1 July 2004	None
N J Taylor	6 January 2003	12 months
C W Beresford	6 January 2003	6 months
J F G Waiting	1 July 2005	6 months
S D Harden	1 July 2007	6 months
A A Steele	19 February 2010	12 months
J G Archibald (Non-executive)	6 January 2003	3 months
G H Wright (Non-executive)	1 June 2007	None

Audited Information

Directors' Interests in Shares

Name	Shares 30 June 2012	Shares 30 June 2011	Contingent Long Term Incentive Plan shareholding 30 June 2012	Contingent Long Term Incentive Plan shareholding 30 June 2011	Conditional Share Bonus Awards 30 June 2012	Conditional Share Bonus Awards 30 June 2011
R S Fidgen (Non-executive Chairman)	35,000	35,000	-	-	-	-
N J Taylor	84,428	84,428	-	10,000	38,000	38,000
C W Beresford	72,123	72,123	-	10,000	25,000	25,000
J F G Waiting	41,815	41,815	-	10,000	25,000	25,000
S D Harden	29,771	29,771	-	10,000	25,000	25,000
A A Steele	-	-	-	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.

N J Taylor purchased 700 shares on 9 October 2012. His total benefical shareholding at 31 October is 85,128. All other directors' shareholdings remain unchanged at 31 October 2012.

Remuneration of Directors

Name	Salary and fees paid £'000	Paid benefits £'000	Bonus £'000	Total 2012 £'000	Total 2011 £'000	Pension 2012 £'000	Pension 2011 £'000
R S Fidgen (Non-executive Chairman)	33	-	-	33	27	-	-
N J Taylor	225	30	-	255	231	23	23
C W Beresford	170	14	-	184	167	17	17
J F G Waiting	153	8	-	161	161	17	17
S D Harden	144	13	-	157	155	16	16
A A Steele	140	16	-	156	127	14	12
J G Archibald (Non-executive)	29	-	-	29	23	-	-
G H Wright (Non-executive)	28	-	-	28	23	-	-
Total	922	81	-	1,003	914	87	85

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 respect of the performance of the company during the year ended 30 June 2011.

In 2011 temporary salary reductions were retained throughout the year whereas in 2012 salaries were partially reinstated. The salaries of the nonexecutive directors were increased to align with salaries in comparable companies in 2012.

Long Term Incentive Plan (LTIP)

At 30 June 2012, 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.

Name	Award date	Vesting date	Market price at award date	Number of shares at 30/06/11	Number lapsed in year	Number of shares at 30/06/12
N J Taylor	14/11/2008	14/11/2011	85p	10,000	10,000	-
C W Beresford	14/11/2008	14/11/2011	85p	10,000	10,000	-
J F G Waiting	14/11/2008	14/11/2011	85p	10,000	10,000	-
S D Harden	14/11/2008	14/11/2011	85p	10,000	10,000	-
A A Steele	14/11/2008	14/11/2011	85p	5,000	5,000	-
Total				45,000	45,000	-

No shares were awarded in the LTIP to executive directors in the year ended 30 June 2012. On 14 November 2011 45,000 shares awarded under the LTIP on 14 November 2008 lapsed as the specified performance conditions were not achieved and no awarded shares vested on that date. At 30 June 2012 LTIP awards remained in respect of nil ordinary shares (2011: 45,000).

Conditional Share Bonus Awards

At 30 June 2012, 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 30/06/11	Number of shares at 30/06/12
N J Taylor	10/12/2008	10/12/2011	59p	38,000	38,000
C W Beresford	10/12/2008	10/12/2011	59p	25,000	25,000
J F G Waiting	10/12/2008	10/12/2011	59p	25,000	25,000
S D Harden	10/12/2008	10/12/2011	59p	25,000	25,000
Total				113,000	113,000

No shares were exercised (2011: 45,000) under this scheme during the year ended 30 June 2012. At 30 June 2012 Conditional Share Bonus Awards maturing before December 2018 remained in respect of 113,000 ordinary shares (2011: 113,000).

Interests in Share Options

At 30 June 2012, the following director held options to subscribe for shares in the Company under the 1993 Executive Share Option Plan:

		Number of shares under	Exercise price/
Name	Award date	option at 1/07/11 and 30/6/12	market price at award date	Exercise period
J F G Waiting	15/11/2002	50,000	44.5p	15/11/2005-14/11/2012

During the year, no share options lapsed (2011: 105,000) under this scheme. The closing mid market price of the Company's shares on 30 June 2012 was 48p (2011: 37p) and ranged between 26.5p and 62p during the year.

By order of the Board of Directors

Geoffrey Wright Chairman of the Remuneration Committee 6 November 2012

Corporate Governance Report

Chairman's Report

I am pleased to report upon the work of the Waterman Group board during the last financial year. The board balances its time between forward looking matters such as strategy, business development and opportunities for growth and improvement, and oversight matters such as financial performance, risk management, compliance and monitoring. Board meetings have been wide ranging, taking account of the challenges and opportunities presented in our markets and determining how best to respond.

Reports from each business discipline are presented at board meetings. The Chief Executive reports upon the key issues, strategy and investor relations. The Finance Director reports upon financial performance and future projections whilst the three executive directors review business progress, prospects and opportunities for their areas of responsibility. This allows the other directors to challenge and debate the performance achieved, future prospects and strategic proposals.

Each year, a full board performance evaluation is undertaken covering achievement during the year, risk management and contribution to board decision making. This review also aims to identify any skills gaps and training needs. The directors currently in office are listed on pages 26 to 27. There have been no changes during the year and no director has a service contract for a term exceeding one year.

The following pages describe how the company complies with the UK Corporate Governance Code. I hope you will find these and the entire Annual Report and Accounts to be both useful and informative.

Roger Fidgen Non-executive Chairman

Compliance with the UK Corporate Governance Code

Waterman Group plc and its subsidiaries (the Group) continues to be committed to maintaining high standards of corporate governance. As a company listed on the London Stock Exchange, it is required to explain how it complies with the UK Corporate Governance Code ("the Code") published by the Financial Reporting Council in June 2010 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 38 describes how the Company has applied the principles of the Code and complied with the associated provisions during the year.

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. The directors consider that, throughout the year ended 30 June 2012, the Company has complied with all of the principles of the Code, except provision B.7.1 detailed below which apply to a company which is not included in the FTSE 350.

John Archibald has served on the board as a non-executive director for nine years and should be subject to annual re-election in compliance with provision B.7.1 of the UK Corporate Governance Code. He has confirmed his intention to resign and will stand down before the 2013 AGM. He was last re-elected to the board in December 2010.

The nomination committee is currently considering alternative candidates to succeed John Archibald as senior non-executive director and after the appropriate consultations the board expects to be able to make an announcement in the near future. Until the new appointment is confirmed, the board recommends that he remains in his current position and role. Although he has served for more than nine years, the board considers that he remains independent for the following reasons; he performs no executive management duties, he holds an immaterial shareholding in the company and he continues to constructively challenge the executive management and helps develop proposals on strategy. Furthermore, the board believes that the results of John Archibald's recent formal performance review demonstrate that he carries out his duties as a non-executive director effectively and that he continues to show the required commitment to his role.

The Board of Directors

The board met on 14 occasions during the year. The board's role is to promote the success of the company for the benefit of shareholders by providing entrepreneurial leadership. In so doing, the directors must have regard to the interests of the company's employees and other stakeholders, the risks and consequences of its decisions and the need to maintain the company's reputation for high standards of business conduct.

The board will set the company's strategic aims and objectives and ensure that sufficient resources are in place to enable the company to deliver long term value to shareholders. The board sets the Company's standards and values and aims to ensure that it meets its obligations to its stakeholders and others.

The board currently comprises five executive and three non-executive directors. All directors act in a manner which they consider to be in the best interests of the company, consistent with their statutory duties. The five executive directors have a wide range of experience. Nicholas Taylor, a civil and structural engineer was appointed Chief Executive in July 2007. In February 2010, Alex Steele, a chartered accountant, was appointed to the board as Finance Director. John Waiting, Craig Beresford and Simon Harden are qualified engineers who have operational responsibility for delivering engineering and environmental services to clients in the principal regions in which the Group operates. All directors have served throughout the year.

The three non-executive directors, all of whom have served throughout the year have wide-ranging experience developed over many years in business. Their contribution to the running of the business has been both influential and effective. They have demonstrated their independence of character and judgement by challenging the reports presented to the board and the proposals and recommendations made by the executive directors. None of the non-executive directors has been employed by the company, has close family ties with the company or is a significant shareholder in the company.

The roles of the Chairman and Chief Executive are separate and there is a clear division of responsibility between each position. The Chairman, Roger Fidgen, is responsible for leadership and effectiveness of the board and for its governance. This includes setting the board's agenda, ensuring that adequate time is available for discussion of all agenda items, ensuring that directors continually update their skills and knowledge and ensuring that the directors receive accurate, timely and clear information. The Chief Executive, Nicholas Taylor, is responsible for implementing strategy, operational management and leadership of the company and the group.

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, internal controls and 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 is issued in advance of each board meeting to enable directors to be made aware of matters to be discussed. Minutes of each board meeting are issued after each meeting and approved by directors at the following meeting.

The company arranges briefings and updates from professional advisors on matters such as legal, commercial and health and safety matters. Directors are encouraged to maintain and refresh their skills, CPD and knowledge of the company and its markets on a regular basis.

The advice and services of the company secretary are available to all directors. In addition, directors may take independent legal or professional advice on company matters at the company's expense. No independent legal or professional advice was taken during the year. The company secretary also assists the audit and risk committee when reviewing the effectiveness of internal controls and risk management and assists the chairman on legal, compliance and corporate governance matters.

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 responsibilities 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 AGM following their appointment.

The Company provides 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 board has delegated certain responsibilities to its three committees, audit and risk, remuneration and nomination. The terms of reference for these committees are set by the board and reviewed annually and are available from the company secretary at the registered office. 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 committee meetings by invitation. Minutes of all committee meetings are circulated to and reviewed by the board.

The board's committees meet sufficiently regularly to enable them to discharge their governance responsibilities.

The Audit and Risk Committee

The principal roles and responsibilities of the audit and risk committee are to:

• a) monitor the integrity of the company's preliminary announcements and financial statements, and any announcements relating to the company's financial performance;
• b) review the adequacy and effectiveness of the company's internal control and risk management systems and internal financial controls;
• c) make recommendations on the re-appointment of the company's external auditor, to monitor his independence and effectiveness and to agree his remuneration and terms of engagement.

The committee met on five scheduled occasions during the year and has, throughout the year, comprised the three non-executive directors with John Archibald as Chairman. All members of the committee have relevant business and financial experience. 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 until his retirement, most recently as senior partner of international cost consultancy, Gardiner and Theobald. Our senior independent director, John Archibald is a chartered accountant who joined the board in 2003 and has worked in banking and finance for over 30 years, most recently with Flemings, until his retirement in 2000. Geoffrey Wright joined the board in June 2007 following his retirement as construction director at Hammerson plc.

Three meetings were held with the Company's auditors to receive their audit plan and to receive their reports following the interim review and annual audit. Two meetings were 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 fees paid to the auditor for audit services, audit related services and other non-audit services are set out in note 4 to the consolidated financial statements.

The Remuneration Committee

This committee met on two scheduled occasions to review the remuneration arrangements for the directors and senior management of the company. The committee comprises the three non executive directors and is chaired by Geoffrey Wright.

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

This 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 met on three occasions during the year. No new appointments to the board have taken place during the year.

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	Remuneration	Nomination
Scheduled Meetings	14	5	2	3
R S Fidgen	13	5	2	3
N J Taylor	14	5*	2*	3
C W Beresford	13	-	-	-
J F G Waiting	13	-	-	-
S D Harden	13	-	-	-
A A Steele	14	5**	-	-
J G Archibald	14	5	2	3
G H Wright	12	5	2	2

* N J Taylor attended meetings of the Remuneration and Audit and Risk Committees by invitation since he is not a committee member.

** A A Steele attended meetings of the Audit and Risk Committee by invitation since she is not a committee member.

Performance Evaluation

In October 2012, the board conducted a formal evaluation of individual directors, its own performance and that of its committees. The evaluation was led by the Chairman and Chief Executive and its results were published to and reviewed by the board. Performance was measured against the principles and provisions set out in the UK Corporate Governance Code. The board considered that the use of an external third party adviser to assist with this process was not necessary. The results of the performance evaluation of the board reassured the directors that it continued to operate effectively and fulfil its governance obligations. No significant issues were raised.

The criteria used for the performance evaluation of the board's three committees were based upon the terms of reference for each committee and the principles and provisions of the UK Corporate Governance Code. Each committee has operated 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. The Chairman confirms that all the directors continue to perform effectively and meet the requirements of their positions. The senior independent director confirms that the chairman continues to perform effectively. Where individual performance weaknesses have been identified, programmes for improvement have been prepared which will be actioned during the next year.

Internal Control and Risk Management

The board is responsible for establishing, reviewing and maintaining the effectiveness of the Group's systems of internal control and risk management, for implementing agreed policies on risk management and for ensuring that the internal control systems and procedures enable effective management of business risks. It is the responsibility of management to ensure that the controls and procedures are followed and that any risk or control issues are promptly brought to the board's attention.

Each year, the boards of the principal operating companies within the Group perform an annual appraisal of the principal risks affecting their businesses, the potential consequences of these risks and the methods by which these risks can be monitored, managed and mitigated. On behalf of the board, the audit and risk committee reviews the results of these appraisals to ensure that the risks have been properly identified and considered and that risks which could have a material effect on the Group's performance or governance are effectively communicated to and reviewed by the board.

The board confirms that there is a system of procedures and controls in operation for identifying, evaluating and managing risks and that the system has operated throughout the year under review and continues to operate. However any system can only provide reasonable and not absolute assurance against material misstatement or loss. The board continuously strives to reduce operational and financial risks and to enhance the control environment in all operating companies within the Group.

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 UK and International Management boards also sits on the board of each principal operating company. He reports upon significant risks to business performance or governance to the Group board via the UK and International Management boards each month; • Group strategy is reviewed annually in detail with ongoing monitoring at monthly board meetings;
• 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 Group, updated forecasts and future prospects;
• Project managers can 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 operating board and, where appropriate, the Group board;
• The Group board approves the annual capital expenditure budget and authorises major capital and revenue expenditure commitments; • Operating company boards exercise operational control and financial management over their businesses. The managing director of each principal operating company sits as its representative on the UK or International Management Board which has responsibility for operational
• matters which are common to all operating companies in that geographic region;
• The Group employs suitably qualified management who are responsible for the operation of effective financial systems and controls 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; and
• 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 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 consolidated financial statements for the year ended 30 June 2012.

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 on page 31.

Results and Dividends

The financial results for the year are set out in the Consolidated Income Statement. The loss attributable to the owners of the parent was £91,000 (2011: £120,000 profit) and net assets as at 30 June 2012 were £33,598,000 (2011: £34,319,000). The directors recommend the payment of a final dividend of 0.2p which, together with the interim dividend of 0.1p paid in April 2012 makes a total distribution of 0.3p (2011: 0.2p) for the year. If approved at the Annual General Meeting (AGM) to be held on 7 December 2012, the final dividend will be paid on 11 January 2013 to shareholders on the register at close of business on 14 December 2012.

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.

Simon Harden, Alex Steele and Geoffrey Wright retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-election. Short biographies of the three directors referred to above 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 31 October 2012, 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	9,007,626	29.3
Liontrust Asset Management	2,199,163	7.1
Universities Superannuation Scheme	1,985,000	6.5
F Clampitt	1,691,995	5.5
Henderson Global Investors	1,239,662	4.0
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 issued share capital, including changes during the year, are disclosed in note 20 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 2012, the Group had 47 days (2011: 58 days) purchases outstanding. The Company had 104 days (2011: 74 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. All UK operating 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. The group is committed to employment policies, which follow best practice, based

on equal opportunities for all employees, irrespective of sex, race, colour, disability or marital status. The group gives full and fair consideration to applications for employment from disabled persons, having regard to their particular aptitudes and abilities. Appropriate arrangements are made for the continued employment and training, career development and promotion of disabled persons employed by the group. If members of staff become disabled the group continues employment, either in the same or an alternative position, with appropriate retraining being given if necessary.

The group systematically provides employees with information on matters of concern to them, consulting them or their representatives regularly, so that their views can be taken into account when making decisions that are likely to affect their interests. Employee involvement in the group is encouraged, as achieving a common awareness on the part of all employees of the financial and economic factors affecting the group plays a major role in maintaining good communication with staff.

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 directors have prepared a cash flow forecast and a forecast for covenant compliance to 30 June 2014. The financial covenants allow for a sensible tolerance in trading performance in relation to the forecasts. The directors are confident that the underlying forecasts are reasonable. In the current economic climate the Group is reliant on the ability of customers to pay debts and on the timing of projects coming on line. In adverse circumstances the board has a number of mitigating actions it could take to ensure covenant compliance. 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 18 '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 outlook. After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statement.

Property, Plant and Equipment

Information relating to 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 £11,882 (2011: £6,032). Individual amounts of greater than £200 were donated for the following purposes: health and medical £3,821, homeless £3,852 and cancer research £1,260. A further £2,949 was donated to non-specific charitable organisations. No political donations were made during the year (2011: £nil).

Annual General Meeting

The AGM will be held at 10 30 am on 7 December 2012. Formal notice and details of the meeting are set out on a separate circular to shareholders accompanying the Annual Report and Financial Statement. Information relating to treasury shares purchased in the year is set out in note 28 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 Companies' auditors in connection with preparing their report) of which the Companies' 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 Companies' auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.

By Order of the Board

Graham Hiscocks Company Secretary 6 November 2012

Company number: 2188844

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 2012 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 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 Statement of Directors' Responsibilities 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 and express an opinion on 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. In addition, we read all the financial and non-financial information in the Annual Report and Financial Statement to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material missstatements or inconsistencies we consider the implications for our report.

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 2012 and of its profit 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 Matter 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.

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.

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 UK Corporate Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on directors' remuneration.

Other Matter

We have reported separately on the parent company financial statements of Waterman Group plc for the year ended 30 June 2012 and on the information in the Directors' Remuneration Report that is described as having been audited.

Simon O' Brien (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 6 November 2012

Consolidated Income Statement

for the year ended 30 June 2012

			Exceptional			Exceptional
								Pre-exceptional items	items (note 5)	Year ended 30 June 2012	Pre-exceptional items	items (note 5)	Year ended 30 June 2011
notes		£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
Revenue	2	68,840	-	68,840	74,097	-	74,097
Employee benefits expense	3	(42,859)	(1,287)	(44,146)	(45,914)	(394)	(46,308)
Other operating charges	4	(23,870)	1,603	(22,267)	(25,232)	351	(24,881)
Operating expenses		(66,729)	316	(66,413)	(71,146)	(43)	(71,189)
Earnings before interest, taxes, depreciation and
amortisation (EBITDA)		2,111	316	2,427	2,951	(43)	2,908
Depreciation of property, plant and equipment	12	(714)	(92)	(806)	(1,048)	(80)	(1,128)
Amortisation of other intangible assets	11	(596)	-	(596)	(731)	-	(731)
Operating profit		801	224	1,025	1,172	(123)	1,049
Finance costs	6	(319)	(284)	(603)	(515)	-	(515)
Finance income		108	-	108	78	-	78
Profit before taxation		590	(60)	530	735	(123)	612
Taxation	7	(583)	623	40	(340)	167	(173)
Profit for the financial year (see below)		7	563	570	395	44	439
(Loss) / profit attributable to – Owners of the parent		(654)	563	(91)	76	44	120
Profit attributable to – Non-controlling interests		661	-	661	319	-	319
		7	563	570	395	44	439
Basic (loss) / earnings per share	9			(0.3p)			0.4p
Diluted (loss) / earnings per share	9			(0.3p)			0.4p

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2012

	Year ended	Year ended
	30 June 2012 £'000	30 June 2011 £' 000
Profit for the financial year (see above)	570	439
Other comprehensive income :
Currency translation adjustments	(333)	708
Deferred tax credit for the year	8	16
Change in valuation of own shares held by Employee Benefit Trust	(13)	47
Employee Benefit Trust profit / (loss)	13	(3)
Other comprehensive (loss) / income for the year	(325)	768
Total comprehensive income for the year	245	1,207
Total comprehensive income attributable to –
Owners of the parent	206	365
Total comprehensive income attributable to –
Non-controlling interests	39	842

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

Consolidated Balance Sheet

as at 30 June 2012

	notes	2012 £'000	2011 £'000
ASSETS
Non-current assets
Goodwill	10	17,110	17,193
Other intangible assets	11	450	968
Property, plant and equipment	12	2,350	10,239
Loan and receivables	13	10	10
Deferred taxation asset	25	1,181	846
		21,101	29,256
Current assets
Trade and other receivables	15	32,675	35,866
Cash at bank	16	3,977	1,411
		36,652	37,277
Total assets		57,753	66,533
LIABILITIES
Current liabilities
Trade and other payables	17	(19,285)	(19,538)
Financial liabilities - borrowings	18	(1,422)	(1,265)
		(20,707	(20,803)
Non-current liabilities
Financial liabilities - borrowings	18	(1,672)	(8,764)
Provisions	19	(1,776)	(2,647)
		(3,448)	(11,411)
Total liabilities Net assets		(24,155) 33,598	(32,214) 34,319
EQUITY ATTRIBUTABLE TO THE OWNERS OF THE PARENT
Share capital	20	3,076	3,076
Share premium reserve		11,881	11,881
Merger reserve	22	3,144	3,144
Revaluation reserve		594	600
Retained earnings		13,002	12,852
		31,697	31,553
Non-controlling interest		1,901	2,766
Total equity		33,598	34,319

The financial statements on pages 46 to 73 were authorised for issue by the directors on 6 November 2012. They were signed on behalf of the directors by:-

Roger Fidgen Nicholas Taylor Chairman Chief Executive

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

Consolidated Cash Flow Statement

for the year ended 30 June 2012

		Year ended	Year ended
		30 June 2012	30 June 2011
	notes	£' 000	£' 000
Cash flows from operating activities
Cash generated from / (used in ) operations (see below)		152	(409)
Interest paid		(600)	(510)
Interest received		108	78
Tax paid		(183)	(305)
Net cash used in operating activities		(523)	(1,146)
Cash flows from investing activities
Purchase of property, plant and equipment (PPE) and other intangible assets		(439)	(441)
Proceeds from sale of PPE and other intangible assets		11,551	4
Net cash from / (used in) investing activities		11,112	(437)
Cash flows from financing activities
Repayment of borrowing		(7,872)	(1,245)
Repayments on finance leases		(40)	(53)
Equity dividends paid-Owners of the parent	8	(62)	(303)
Equity dividends paid-Non-controlling interest	8	(904)	(383)
Net cash used in financing activities		(8,878)	(1,984)
Net increase / (decrease) in cash, cash equivalents and overdrafts		1,711	(3,567)
Cash and cash equivalents at beginning of year	24	1,411	4,908
Exchange (gains) / losses on cash and cash equivalents	24	(124)	70
Cash and cash equivalents at end of year	24	2,998	1,411

		Year ended	Year ended
Reconciliation of Profit for the financial year		30 June 2012	30 June 2011
to cash generated from / (used in) operations	notes	£' 000	£' 000
Profit for the financial year		570	439
Taxation	7	(40)	173
Interest payable	6	603	515
Interest receivable		(108)	(78)
Amortisation of other intangible assets	11	596	731
Depreciation	12	806	1,128
Profit on disposal of PPE and other intangible assets	5	(4,116)	(12)
Changes in working capital:
Decrease in trade and other receivables		2,826	2,019
Decrease in trade and other payables		(338)	(3,531)
Decrease in provisions		(647)	(1,793)
Cash generated from / (used in) operations (see above)		152	(409)

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

Consolidated Statement of Changes in Equity

for the year ended 30 June 2012

	Attributable to the owners of the parent
	Share capital £'000	Share premium reserve £'000	Merger reserve £'000	Revaluation reserve £'000	Retained earnings £'000	Total £'000	Non controlling interest £'000	Total equity £'000
Balance at 1 July 2010	3,076	11,881	3,144	584	12,806	31,491	2,306	33,797
Currency translation adjustments	-	-	-	-	185	185	523	708
Change in UK tax rate on deferred taxation	-	-	-	16	-	16	-	16
Change in valuation of own shares held by Employee Benefit Trust	-	-	-	-	47	47	-	47
Employee Benefit Trust loss	-	-	-	-	(3)	(3)	-	(3)
Other comprehensive income	-	-	-	16	229	245	523	768
Profit for the financial year	-	-	-	-	120	120	319	439
Total comprehensive income	-	-	-	16	349	365	842	1,207
Dividend	-	-	-	-	(303)	(303)	(382)	(685)
Balance at 30 June 2011	3,076	11,881	3,144	600	12,852	31,553	2,766	34,319
Currency translation adjustments	-	-	-	-	289	289	(622)	(333)
Change in UK tax rate on deferred taxation	-	-	-	8	-	8	-	8
Reserve transfer on disposal of Land and freehold property *	-	-	-	(19)	19	-	-	-
Deferred tax transfer on disposal of Land and freehold property*	-	-	-	5	(5)	-	-	-
Change in valuation of own shares held by Employee Benefit Trust	-	-	-	-	(13)	(13)	-	(13)
Employee Benefit Trust profit	-	-	-	-	13	13	-	13
Other comprehensive income	-	-	-	(6)	303	297	(622)	(325)
(Loss) / profit for the financial year	-	-	-	-	(91)	(91)	661	570
Total comprehensive income	-	-	-	(6)	212	206	39	245
Dividend	-	-	-	-	(62)	(62)	(904)	(966)
Balance at 30 June 2012	3,076	11,881	3,144	594	13,002	31,697	1,901	33,598

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

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 public limited company, which is listed on the London Stock Exchange and 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 2012 and 30 June 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. They have been prepared on a going concern basis under the historical cost convention 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 standards, amendments to standards and interpretations are effective for the first time in the current financial year but have had no material impact on the Group's consolidated financial statements:

IFRS 1 Hyper-inflation and fixed dates (Amendments, effective 1 July 2011)

IFRS 7 Financial instruments: disclosures (Amendments, effective 1 July 2011)

IAS 24 Related party disclosures (effective 1 July 2011)

IFRIC 14 Prepayments of a minimum funding requirement (Amendment, effective 1 July 2011)

Annual improvements 2010 (Amendments effective 1 July 2011)

b) 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 (Amendment, effective 1 July 2013)
• IFRS 7 Financial instruments: disclosures (Amendments, effective 1 July 2013)
• IFRS 9 Financial instruments (effective 1 July 2015)
• IFRS 10 Consolidated financial statements (effective 1 July 2013)
• IFRS 11 Joint arrangements (effective 1 July 2013)
• IFRS 12 Disclosures of interests in other entities (effective 1 July 2013)
• IFRS 13 Fair value measurement (effective 1 July 2013)
• IAS 1 Presentation of financial statements on OCI (Amendments, effective 1 July 2012)
• IAS 12 Income taxes on deferred tax (Amendments, effective 1 July 2012)
• IAS 19 Employee Benefits (effective 1 July 2013)
• IAS 27 Separate financial statements (effective 1 July 2013)
• IAS 28 Associates and joint ventures (effective 1 July 2013)
• IAS 32 Financial instruments: Presentation on offsetting financial assets and financial liabilities (Amendment, effective 1 July 2014)
• IFRIC 20 Stripping costs in the production phase of a surface mine (effective 1 July 2013)

Annual improvements 2011 (Amendments effective 1 July 2013)

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. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated.

Business Combinations

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. All intra-group transactions and balances are eliminated on consolidation.

Transactions and Non-Controlling Interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

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. The estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are addressed in the paragraph below.

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. Due to the volume and complexity of the Group's many contracts in existence at any one time, it is not practical to quantify how changes to the assumptions used for each individual contract would affect the Group's consolidated financial statements. Other principal areas in which judgements have been made with supporting notes where these issues are discussed in further detail are provisions in respect of potential liability insurance claims (note 19), the impairment of trade receivables (note 15), the annual impairment testing of goodwill (note 10) and determining the provision for income taxes (notes 7 and 25).

Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.

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.

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. Variations in contract work, claims and incentive payments are included in the contract revenue to the extent that they have been agreed with the customer and are capable of being reliably measured.

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 as amounts due to customers on long term contracts

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 which are all equity settled. 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

Exceptional items are those that the directors consider are of such unusual size or nature that they are required to be separately disclosed to allow the user of the financial statements to understand the underlying performance of the Group. They are disclosed within their relevant business segment within note 2, segmental information and typically include restructuring costs, property provisions and certain work in progress and trade receivable provisions

Finance Costs

Interest expense is recognised in the consolidated income statement as it is accrued.

Goodwill

Goodwill recognised under UK GAAP prior to 1 July 2004 (and subsequent to 1 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 1 July 2004 is initially measured at cost being the excess of the cost of acquisition paid 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 which is performed annually. 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%

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. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. 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 Retained Earnings.

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

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Income Statement.

Impairment of Non-Financial Assets

Assets that have an indefinite useful life- for example, Goodwill or Intangible assets not ready to use- are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Financial Instruments

Financial assets and liabilities are recognised in the Group's consolidated balance sheet when the Group becomes a party to the contractual provisions of the investment. The Group's financial assets and liabilities are recorded at fair value or 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 invoice discounting facilities (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 using the effective interest method. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Borrowings

Borrowings are initially recognised at fair value net of transaction costs incurred and subsequently at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income Statement over the period of the borrowings using the effective interest method.

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. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

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. Interim dividends are recognised when paid.

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 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 the Group cannot meet its obligations if suitable sources of funding for the Group's business activities are not 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 indicates a minimal credit risk.

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

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 before exceptional items as disclosed in the Consolidated Income Statement. Revenue is reported and assessed on a consistent basis with revenue reported in the Consolidated Income Statement.

			Energy,		International
	Building	Civil and	environment		multi
30 June 2012	services	transportation	and design	Structures	disciplinary*	Unallocated	Total
Consolidated Income Statement	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue - total	6,106	26,358	7,300	12,585	23,123	-	75,472
Revenue- internal	(185)	(1,220)	(837)	(1,946)	(2,444)	-	(6,632)
Revenue	5,921	25,138	6,463	10,639	20,679	-	68,840
EBITDA pre exceptional items	125	16	303	1,241	426	-	2,111
Depreciation and amortisation on
computer software	(68)	(248)	(86)	(119)	(327)	-	(848)
Operating profit / (loss)
pre exceptional items and amortisation on
acquired intangible assets	57	(232)	217	1,122	99	-	1,263
Amortisation on acquired intangible assets	(36)	(274)	-	-	(152)	-	(462)
Allocated exceptional items	(450)	(1,637)	(211)	(117)	(1,477)	-	(3,892)
Exceptional item-profit on sale and
leaseback	-	-	-	-	-	4,116	4,116
Operating profit / (loss)
post exceptional items	(429)	(2,143)	6	1,005	(1,530)	4,116	1,025
Net finance costs pre exceptional items							(211)
Exceptional finance costs							(284)
Profit before taxation							530
Taxation							40
Profit for the financial year							570
Profit attributable to non-controlling interests							661
Loss attributable to the owners of the parent							(91)

			Energy,		International
	Building	Civil and	environment		multi
30 June 2011	services	transportation	and design	Structures	disciplinary*	Total
Consolidated Income Statement	£'000	£'000	£'000	£'000	£'000	£'000
Revenue - total	8,205	29,485	7,063	13,232	21,521	79,506
Revenue - internal	(290)	(1,463)	(546)	(1,587)	(1,523)	(5,409)
Revenue	7,915	28,022	6,517	11,645	19,998	74,097
EBITDA pre exceptional items	541	373	289	1,233	515	2,951
Depreciation and amortisation on
computer software	(134)	(374)	(123)	(175)	(485)	(1,291)
Operating profit / (loss)
pre exceptional items and amortisation on
acquired intangible assets	407	(1)	166	1,058	30	1,660
Amortisation on acquired intangible assets	(36)	(297)	-	-	(155)	(488)
Exceptional items	(84)	(456)	(53)	(35)	505	(123)
Operating profit / (loss)
post exceptional items	287	(754)	113	1,023	380	1,049
Net finance costs						(437)
Profit before taxation						612
Taxation						(173)
Profit for the financial year						439
Profit attributable to non-controlling interests						319
Profit attributable to the owners of the parent						120

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

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. External revenue reported to the board is measured in a manner consistent with that in the consolidated income statement.

			Energy,		International
	Building	Civil and	environment		multi
30 June 2012	services	transportation	and design	Structures	disciplinary	Unallocated	Total
Consolidated Balance Sheet	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Goodwill	680	8,846	965	-	6,619	-	17,110
Other segment assets	3,619	13,653	(605)	14,781	6,749	1,111	39,308
Total segment assets	4,299	22,499	360	14,781	13,368	1,111	56,418
Unallocated assets
Current tax assets							154
Deferred tax assets							1,181
Total assets							57,753
Segment liabilities	(1,226)	(2,601)	(1,106)	(5,284)	(5,933)	(2,051)	(18,201)
Unallocated liabilities
Financial liabilities							(3,094)
Current tax liabilities							(2,860)
Total liabilities							(24,155)
Capital expenditure	1	24	32	-	160	222	439
			Energy,		International
	Building	Civil and	environment		multi
	services	transportation	and design	Structures	disciplinary	Unallocated	Total
30 June 2011 Consolidated Balance Sheet	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Goodwill	680	8,846	965	-	6,702	-	17,193
Other segment assets	5,316	16,748	1,220	16,516	11,583	(3,132)	48,251
Total segment assets	5,996	25,594	2,185	16,516	18,285	(3,132)	65,444
Unallocated assets
Current tax assets							243
Deferred tax assets							846
Total assets							66,533
Segment liabilities	(1,241)	(2,371)	(849)	(5,512)	(7,231)	(1,531)	(18,735)
Unallocated liabilities
Financial liabilities							(10,029)
Current tax liabilities							(3,450)
Total liabilities							(32,214)
Capital expenditure	1	5	29	-	46	360	441

Geographical Segmental Analysis	Rest of
	UK	Europe	the World	Group	Total
30 June 2012	£'000	£'000	£'000	£'000	£'000
External revenue – by client location	48,161	2,403	18,276	-	68,840
Segment assets-by location of asset	41,939	(1,591)	14,959	1,111	56,418
Capital expenditure	57	24	136	222	439
			Rest of
	UK	Europe	the World	Group	Total
30 June 2011	£'000	£'000	£'000	£'000	£'000
External revenue – by client location	54,100	3,435	16,562	-	74,097
Segment assets-by location of asset	50,292	1,199	17,085	(3,132)	65,444
Capital expenditure	35	7	39	360	441

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 30 June 2012 £'000	Year ended 30 June 2011 £'000
Staff costs including executive directors remuneration amounted to:
Wages and salaries	37,519	39,905
Termination benefits (including exceptional items of £1,287,000 (£2011:£394,000))	1,328	554
Social security costs	3,334	3,979
Pension costs	1,965	1,870
	44,146	46,308
The average monthly number of employees including executive directors during the year were as follows :
	Number	Number
Technical	743	822
Non-technical	171	198
	914	1,020

The average monthly number of contract staff during the year was 60 (2011: 65). Pensions contributions outstanding at 30 June 2012 were £159,553 (2011: £199,383).

4 Other Operating Charges

	Year ended 30 June 2012 £'000	Year ended 30 June 2011 £'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	98	96
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	145	143
-other services pursuant to legislation	27	27
Operating lease rentals
- property	2,981	3,614
- plant and equipment	645	856
Gain on foreign exchange	(19)	(12)
Profit on disposal of property, plant and equipment	(4,149)	(12)
Rents receivable	(58)	(112)

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 30 June 2012 £'000	Year ended 30 June 2011 £'000
Employee benefits expense
Other restructuring costs	1,287	394
Other operating charges
Profit on sale and leaseback of Land and freehold property	(4,116)	-
Property provisions and accruals	1,035	(115)
Work in progress and trade receivables provisions	1,478	(236)
	(1,603)	(351)
Depreciation of property, plant and equipment
Depreciation	92	80
Finance costs
Mortgage early repayment charge	284	-
Taxation	(623)	(167)
Total exceptional items	(563)	(44)

• a) Other restructuring costs: Relates mainly to redundancy costs resulting from restructuring within our Building services, Civil and Transportation and Emirates businesses.
• b) Profit on sale and leaseback of Land and freehold property: On 17 November 2011, the Group disposed of its head office, Pickfords Wharf, through a sale and leaseback agreement. The property was sold for £11,914,000. A pre-tax profit of £4,116,000 was recognised on the sale, after transaction costs of £457,000.
• c) Property provisions and accruals: During the year to 30 June 2012, a provision of £1,035,000 (2011: £115,000 release) was made as an exceptional cost in respect of leasehold charges and dilapidation costs on vacated properties or on onerous lease space. The leasehold charges are primarily made up of rent, rates and service charges payable by the Group over the remaining lease term.
• d) Work in progress and trade receivables provisions: Due to the closure of offices both within the UK and Kazakhstan and the restructuring of the UAE business, the Group has made provision against £1,478,000 (2011: £236,000 release) of work in progress and trade receivable balances. Included within the exceptional WIP and receivables provisions is £650,000 which relates to revenue earned in the current year. Every effort is made to collect all contractual amounts due to the Group.
• e) Depreciation of PPE: An additional depreciation charge of £92,000 (2011: £80,000) relates to the accelerated depreciation on PPE within the vacated office space.
• f) Mortgage early repayment charge: As a result of the sale of Pickfords Wharf, the mortgage on the property was repaid in full. An early repayment charge of £284,000 was incurred as a result of the repayment.
• g) Taxation: The taxation credit of £623,000 (2011: £167,000) is due to the deductibility of the UK element of the exceptional items. The CGT payable on the sale of Pickfords Wharf is £233,000. However, UK tax losses are available to offset the gain.

6 Finance Costs

	Year ended 30 June 2012 £'000	Year ended 30 June 2011 £'000
Interest payable on bank loans and invoice discounting facility	270	448
Interest payable on hire purchase contracts	3	5
Other interest payable	44	62
Discount on provisions	2	-
Interest payable pre-exceptional items	319	515
Exceptional item-mortgage early repayment charge (see note 5f)	284	-
Interest payable post-exceptional items	603	515

7 Taxation

a) Analysis of Charge in the Year

	Year ended 30 June 2012 £'000	Year ended 30 June 2011 £'000
United Kingdom
Corporation tax at 25.5% (2011: 27.5%)	(22)	337
Adjustments in respect of prior years	4	237
	(18)	574
Foreign tax
Corporation taxes	375	470
Adjustments in respect of prior years	(61)	(7)
Total current tax	296	1,037
United Kingdom
Origination and reversal of temporary differences	(610)	(442)
Adjustments in respect of prior years	274	(422)
Total deferred tax	(336)	(864)
Taxation	(40)	173

b) Factors Affecting Taxation for the Year

The following table shows a reconciliation from the theoretical corporation tax charge, using the UK corporation tax rate for 2012 of 25.5% (2011: 27.5%) 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 2012 £'000	Year ended 30 June 2011 £'000
Profit before taxation	530	612
Taxation on profit at standard UK rate of 25.5% (2011: 27.5%)	135	168
Effects of:
Expenses not deductible for tax purposes	(688)	389
Adjustments in respect of prior years	217	(192)
Adjustments in respect of foreign tax rates	83	24
Capital transactions	233	-
Non-taxable	(334)	-
Losses not utilised/ (utilised)	314	(216)
Total taxation	(40)	173

The Finance Act 2011 included legislation to reduce the main rate of UK Corporate Tax from 26% to 24% from 1 April 2012. In addition legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013 is expected to be included in the Finance Act 2012. These further changes have not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements. UK deferred tax has been calculated at 24% and there will be no material effect on the deferred tax asset or the tax credit resulting from the changes to be enacted in the Finance Act 2012.

c) Deferred Taxation Credited to Equity

Year ended 30 June 2012	£'000	Year ended 30 June 2011 £'000
Property, plant and equipment	8	16

Deferred taxation on the revaluation of a freehold property was credited to the Revaluation reserve upon its disposal during the current year. Corporation tax was then charged to Retained earnings.

8 Dividends

	Year ended 30 June 2012 £'000	Year ended 30 June 2011 £'000
Dividends charged to equity in the year
Final dividend paid in January 2012 of 0.1p (2011: 0.9p) per share	31	273
Interim dividend paid in April 2012 of 0.1p (2011: 0.1p) per share	31	30
Total dividend paid in year of 0.2p (2011: 1.0p) per share	62	303
Final dividend proposed for payment in January 2013 of 0.2p (2012: 0.1p) per share	62	31

A dividend of £904,427 (2011: £383,031) was paid to the non-controlling interest 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 2013 to all members on the shareholders register at 14 December 2012.

The Employee Benefit Trust has waived its entitlement to dividends which has reduced the 2012 interim dividend paid by £368 (2011: £443) and the 2011 final dividend paid by £368 (2010: £3,986).

9 (Loss) / Earnings per Share

		2012			2011
		Weighted			Weighted
		average	2012		average	2011
	2012	number	Per share	2011	number	Per share
	Loss	of shares	amount	Profit	of shares	amount
	£'000	(thousands)	(pence)	£'000	(thousands)	(pence)
Basic (loss) / earnings per share:
(Loss) / earnings attributed to owners of the parent	(91)	30,553	(0.3)	120	30,501	0.4
Effect of dilutive share schemes	-	-	-	-	8	-
Diluted (loss) / earnings per share	(91)	30,553	(0.3)	120	30,509	0.4

The basic (loss) / earnings per share has been calculated on the (loss) / profit attributable to the owners of the parent for the year and based on a weighted average of 30,552,824 (2011: 30,501,241) ordinary shares in issue and ranking for dividend during the year. The diluted (loss) / earnings per share also takes account of share options potentially convertible into new shares and the calculation is based on a weighted average of 30,552,824 (2011: 30,508,767) shares in issue during the year.

10 Goodwill

30 June 2012	17,604
Exchange rate adjustments	(83)
1 July 2011	17,687
Exchange rate adjustments	710
1 July 2010	16,977
Cost
	Group £'000

Impairment

1 July 2010, 1 July 2011 and 30 June 2012	494

Net book amount

30 June 2012	17,110
30 June 2011	17,193
30 June 2010	16,483

Goodwill is tested for impairment in accordance with IAS 36 'Impairment of assets' at least annually. Goodwill is allocated to the Group's cashgenerating units (CGUs) in accordance with the segments identified in note 2 to these financial statements in order to carry out the impairment test. A summary of goodwill allocation by CGU or group of CGUs at the operating segment level is included in note 2.

10 Goodwill (Continued)

Value in use calculations

The recoverable amount of goodwill has been based on value in use as represented by the net present value of future cash flows expected to be derived from the CGU or group of CGU's. The excess of the value in use to the goodwill carrying values for each CGU gives the level of headroom in each CGU. The internal value in use calculations use cash flow projections projected forward for five years based on the following financial year's approved Group budget and strategic plans of the relevant CGU's for the remaining four years. The budget and strategic plans are based on CGU specific assumptions relating to past performance and the current order book whilst also taking account of the wider macro-economic environment in the sectors in which the CGU's operate. The cash flow projections are then extrapolated beyond five years using a terminal GDP based growth rate. These growth rates reflect the future expectations of the individual CGU or group of CGU's and the maturity of the markets in which they are active and do not exceed the expected long term average growth rates in those markets. The growth rates for the different markets are derived from the IMF's World Economic Outlook that was published in April 2012. The cash flows of all CGUs are then discounted using the Group's discount rates which reflect the specific risks relating to the relevant operating segments and are based on a weighted average pre-tax real cost of capital.

Key Assumptions

	30 June 2012	30 June 2011
Average annual revenue growth rate over the first five years	1.6%-11.3%	1.6%-21.2%
Post five year perpetuity growth rate	2%-2.25%	2%-2.25%
Weighted average pre-tax real cost of capital	9.8%-12%	9%

This range of assumptions has been used for the analysis of each CGU or group of CGUs within the Group's operating segments.

Sensitivity Analysis

Goodwill of £8.8m (2011: £8.8m) allocated to the Civil and transportation operating segment includes £6.6m attributable to Waterman Aspen Ltd ('Aspen') and £2.2m attributable to Waterman Transport & Development Ltd. Goodwill of £6.6m (2011: £6.7m) allocated to the International multidisciplinary operating segment includes £1.2m arising on the acquisition of Waterman Moylan Consulting Engineers Ltd ('Moylan') and £5.3m attributable to the acquisition of the Group's Australian businesses. Sensitivity analysis is performed upon the value in use calculations. A range of changes to the assumptions within the calculations are tested including an increase of 1 percentage point to the relevant discount rate and a reduction of 1 percentage point to the applicable perpetuity growth rate. Sensitivity analysis is also performed on the average annual revenue growth over the first five years. The two CGU's most sensitive to changes in the average annual revenue growth assumptions are the Aspen and Moylan CGU's. The sensitivity analysis identified that headroom would be reduced to £1,023,000 and £163,000 respectively on the reduced revenue scenario.

Conclusions

The latest impairment test performed on a consistent basis with that of a year earlier demonstrated that the level of headroom is £25.7m (2011:£42.1m). The board acknowledges the reduction in headroom and have considered the results of the impairment tests and sensitivity analysis. The board is currently satisfied that no provision for impairment is considered necessary but will continue to monitor this situation as required.

11 Other Intangible Assets

	Customer
	Computer software	relationships	Order book	Total
	£'000	£'000	£'000	£'000
Cost
1 July 2010	2,733	2,665	204	5,602
Additions	18	-	-	18
Disposals	(407)	-	-	(407)
Exchange rate adjustments	54	132	-	186
1 July 2011	2,398	2,797	204	5,399
Additions	89	-	-	89
Disposals	(32)	-	-	(32)
Exchange rate adjustments	(25)	(15)	-	(40)
30 June 2012	2,430	2,782	204	5,416
Amortisation
1 July 2010	2,288	1,485	181	3,954
Charge for the year	243	465	23	731
Disposals	(386)	-	-	(386)
Exchange rate adjustments	49	83	-	132
1 July 2011	2,194	2,033	204	4,431
Charge for the year	134	462	-	596
Disposals	(32)	-	-	(32)
Exchange rate adjustments	(16)	(13)	-	(29)
30 June 2012	2,280	2,482	204	4,966
Net book amount
30 June 2012	150	300	-	450
30 June 2011	204	764	-	968

445

1,180

23

1,648

Group

Group

There are no intangible assets with indefinite lives.

30 June 2010

12 Property, Plant and Equipment

	Land & freehold	Plant, equipment &
	property	motor vehicles	Total
	£'000	£'000	£'000
Cost or valuation
1 July 2010	9,249	11,798	21,047
Additions	-	423	423
Disposals	-	(557)	(557)
Exchange rate adjustments	-	144	144
1 July 2011	9,249	11,808	21,057
Additions	-	350	350
Disposals	(7,750)	(1,071)	(8,821)
Exchange rate adjustments	-	(93)	(93)
30 June 2012	1,499	10,994	12,493
Depreciation
1 July 2010	372	9,787	10,159
Charge for the year (including exceptional items)	62	1,066	1,128
Disposals	-	(586)	(586)
Exchange rate adjustments	-	117	117
1 July 2011	434	10,384	10,818
Charge for the year (including exceptional items)	28	778	806
Disposals	(409)	(977)	(1,386)
Exchange rate adjustments	-	(95)	(95)
30 June 2012	53	10,090	10,143
Net book amount
30 June 2012	1,446	904	2,350

8,815 8,877 1,424 2,011 10,239 10,888 30 June 2011 30 June 2010

Included in the above are plant, equipment and motor vehicles that have been acquired under finance leases. The net book value of these assets is £nil (2011: £14,975) and accumulated depreciation on these assets is £167,687 (2011: £192,794).

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 £0.7m (2011: £8.0m).

Certain group assets have been used as security for borrowings as disclosed in note 18 to the consolidated financial statements.

30 June 2012	30 June 2011
£'000	£'000
Loan and receivables at net book value 10	10

The following companies are the principal subsidiary undertakings at 30 June 2012 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 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 Holdings Limited	England	100%	Intermediate holding company
Waterman International Kazakhstan o.o.o.	Kazakhstan	100%	Multi-discipline consultancy*
Waterman International Limited	England	100%	Multi-discipline consultancy*
Waterman International (London) Limited	England	100%	Multi-discipline consultancy*
Waterman Middle East Pty Limited	Australia	100%	Mechanical, electrical and structural consultancy*
Waterman Moylan Consulting Engineers Limited	Republic of Ireland	100%	Civil and structural engineering consultancy***
Waterman Structures Limited	England	100%	Structural engineering consultancy
Waterman (Tianjin) Construction Design Ltd	China	100%	Civil and structural engineering consultancy*
Waterman Transport & Development Limited	England	100%	Civil engineering consultancy
Moylan Engineering Limited	Republic of Ireland	100%	Intermediate holding company

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

* interest held indirectly through Waterman International Holdings Limited

** interest held indirectly through Waterman Transport & Development Limited

*** interest held indirectly through Moylan Engineering Limited

**** 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 a branch in Moscow, Russia.

14 Long Term Contracts

	Group 30 June 2012 £'000	Group 30 June 2011 £'000
Total costs incurred	85,167	110,254
Profit recognised as income (less recognised losses)	12,670	18,420
Work in progress for third parties	97,837	128,674
Invoicing on account to customers	(95,308)	(125,590)
	2,529	3,084
Of which work in progress for third parties is disclosed as:
Amounts due from customers on long term contracts (note 15)	10,243	10,524
Amounts due to customers on long term contracts (note 17)	(7,714)	(7,440)
	2,529	3,084

15 Trade and Other Receivables

	Group	Group
	30 June 2012	30 June 2011
	£'000	£'000
Trade receivables	21,635	28,402
Less: Provision for impairment of receivables	(3,481)	(8,385)
Trade receivables (net)	18,154	20,017
Amounts due from customers on long term contracts (note 14)	10,243	10,524
Other receivables	174	527
Current tax asset	154	243
Prepayments and accrued income	3,950	4,555
	32,675	35,866

As of 30 June 2012, trade receivables of £8.9m (2011: £9.1m) were considered for potential impairment. The amount provided for these balances was £3.5m (2011: £8.4m).The allocation of the provision according to the date from the issue of invoice is as follows:

	Group 30 June 2012 £'000	Group 30 June 2011 £'000
Less than 30 days	4	-
Between 30 and 60 days	6	5
Between 60 and 90 days	-	1
Between 90 and 120 days	-	16
Greater than 120 days	3,471	8,363
	3,481	8,385

As of 30 June 2012, trade receivables of £8.9m (2011: £9.1m) 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 2012 £'000	Group 30 June 2011 £'000
Less than 30 days	-	-
Between 30 and 60 days	2,522	2,354
Between 60 and 90 days	1,713	2,116
Between 90 and 120 days	1,282	1,117
Greater than 120 days	3,402	3,563
	8,919	9,150

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 2012	Group 30 June 2011
Sterling	£'000 24,910	£'000 22,626
Australian dollar	2,664	3,348
UAE dirham	1,777	2,640
Russian rouble	1,573	1,650
Euro	1,397	5,357
Polish zloty	176	(36)
US dollar	98	194
Indian rupee	78	67
Chinese renminbi	2	20
	32,675	35,866

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

	Group 30 June 2012 £'000	Group 30 June 2011 £'000
At 1 July	8,385	9,112
Provision for receivables impairment	1,233	571
Receivables written off during the year as uncollectible	(5,259)	(919)
Unused amounts reversed/ collected	(611)	(856)
Exchange rate adjustments	(267)	477
At 30 June	3,481	8,385

An exceptional provision for receivables impairment of £272,000 (2011: £nil) has been made in respect of a number of overseas projects (see note 5d for further details). The impairment is disclosed within other operating charges in the consolidated income statement. The other classes within Trade and Other Receivables do not contain any impaired assets.

The Group assesses at the balance sheet date whether there is objective evidence of impairment of trade receivables. Evidence of impairment may include that a debtor or group of debtors is experiencing financial difficulty, default in payments, the probability that they will enter bankruptcy or other financial reorganisation, or where observable data indicate that there is a measurable decrease in the estimated future cash flows such as changes in arrears or economic conditions which correlate with defaults.

16 Cash and Cash Equivalents

Cash and cash equivalents include the following for the purposes of the consolidated cash flow statement:

	Group	Group
	30 June 2012	30 June 2011
	£'000	£'000
Cash at bank	3,977	1,411
Drawdown on invoice discounting facility	(979)	-
Cash and cash equivalents	2,998	1,411

The profile of the Group's Cash at bank is:

	30 June 2012 Floating rate financial assets £'000	30 June 2012 Fixed rate financial assets £'000	30 June 2012 £'000	30 June 2011 Floating rate financial assets £'000	30 June 2011 Fixed rate financial assets £'000	30 June 2011 £'000
Sterling	622	-	622	(2,507)	-	(2,507)
Australian dollar	1,452	779	2,231	1,139	554	1,693
Euro	245	669	914	1,136	-	1,136
UAE dirham	208	-	208	160	-	160
US dollar	(142)	-	(142)	670	-	670
Polish zloty	94	-	94	58	-	58
Chinese renminbi	30	-	30	162	-	162
Other	20	-	20	39	-	39
	2,529	1,448	3,977	857	554	1,411

17 Trade and Other Payables

	Group
	30 June 2012	30 June 2011
£'000	£'000
Trade payables	3,034	3,834
Amounts due to customers on long term contracts (note 14)	7,714	7,440
Other taxes and social security	2,860	3,450
Other payables	1,799	1,948
Accruals	3,878	2,866
	19,285	19,538

18 Financial Liabilities - Borrowings

	Group	Group
	30 June 2012	30 June 2011
	£'000	£'000
Current
Drawdown on invoice discounting facility	979	-
Bank loans	415	1,226
Finance leases	28	39
	1,422	1,265
Non-current
Bank loans	1,672	8,733
Finance leases	-	31
	1,672	8,764

The Group had a term loan totalling £2.1m (2011: £6.2m) and a mortgage of £nil (2011: £3.7m) disclosed above within Bank loans at 30 June 2012.

The Group has one sterling bank loan which is repayable in 2017. This loan is at a floating interest rate of 2.75% (2011: 2.75%) above bank base rate as at 30 June 2012 and is secured by a fixed and floating charge over certain Group assets. The Group repaid three floating interest rate loans and one fixed rate loan in full during the year.

The term loan is subject to three financial covenants which are tested half yearly. The maturity profile of the carrying amount of the Group's noncurrent liabilities at 30 June 2012 was as follows:

	2012			2011
	Bank loans	Bank loans	Finance leases	Total
	£'000	£'000	£'000	£'000
Between one and two years	428	1,314	31	1,345
Between two and five years	1,239	3,931	-	3,931
In more than five years	5	3,488	-	3,488
	1,672	8,733	31	8,764

18 Financial Liabilities - Borrowings (Continued)

All of the Group's liabilities are included in the table below. The carrying amounts of those liabilities are denominated in the following currencies:

30 June 2012	30 June 2012		30 June 2011	30 June 2011
Floating rate	Fixed rate		Floating rate	Fixed rate
financial liabilities	financial liabilities	30 June 2012	financial liabilities	financial liabilities	30 June 2011
£'000	£'000	£'000	£'000	£'000	£'000
Trade and other payables
- Sterling	- -	14,133	-	-	13,232
- Australian dollar	- -	1,747	-	-	1,550
- Euro	- -	1,064	-	-	2,380
- UAE dirham	- -	1,004	-	-	1,019
- Russian rouble	- -	934	-	-	1,113
- Polish zloty	- -	209	-	-	13
- US dollar	- -	112	-	-	97
- Indian rupee	- -	70	-	-	10
- Chinese renminbi	- -	12	-	-	124
	- -	19,285	-	-	19,538
Bank loans and invoice discounting facility
- Sterling 3,066	-	3,066	7,764	1,968	9,732
- Euro	- -	-	227	-	227
Finance lease obligations
- UAE dirham	- -	-	-	2	2
- Euro	- 28	28	-	68	68
3,066	28	3,094	7,991	2,038	10,029

All trade and other payables and borrowings are disclosed at their contractual undiscounted values since the impact of discounting is insignificant.

The fair value of the financial liabilities approximates to their book values. The finance lease interest rate is 3.6%. 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 2012 £'000	Group 30 June 2011 £'000
Within one year	29	42
Between one and five years	-	32
	29	74
Future finance charges	(1)	(4)
Present value of finance lease liabilities	28	70

19 Provisions

	Liability	Liability
	insurance	Property	Group	insurance	Property	Group
	claims	provisions	30 June 2012	claims	provisions	30 June 2011
	£'000	£'000	£'000	£'000	£'000	£'000
1 July	2,414	233	2,647	2,863	1,392	4,255
Charged to the consolidated income statement	468	657	1,125	1,092	-	1,092
Utilised	(605)	(348)	(953)	(83)	(670)	(753)
Released to the consolidated income statement	(812)	-	(812)	(1,653)	(552)	(2,205)
Exchange rate adjustments	(224)	-	(224)	189	3	192
Discount	2	(9)	(7)	6	60	66
30 June	1,243	533	1,776	2,414	233	2,647

This represents management's best estimate of costs to be incurred in respect of potential liability insurance claims and property provisions. The directors believe that all potential liability insurance claims and all potential property provisions will be settled within 2 years. All provisions have been discounted at the applicable nominal forward short-end Government liability rate as at 30 June 2012 where appropriate.

Further detail on property provisions are disclosed in note 5 to the consolidated financial statements.

20 Share Capital

The share capital of the Company comprises ordinary shares of 10p each. No shares were issued during the current and prior year.

		Issued and fully paid
	Number	£'000
At 1 July 2011 and 30 June 2012	30,758,824	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.

21 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 2012 is as follows:

2011	2012	Exercisable	Exercisable	Exercise price	Date option
unexercised	unexercised	to	from	per share	granted
213,000	213,000	14/11/12	15/11/05	44.5p	15/11/02

During the current and prior year, no options for ordinary shares were exercised for nil consideration and options over nil ordinary shares lapsed (2011: 638,000). At 30 June 2012, options exercisable in 2012 by the issue of new ordinary shares at a price of 44.5p remained unexercised in respect of 213,000 ordinary shares (2011: 213,000).

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.

Nil shares were awarded in the LTIP to executive directors and senior management during the year. On 14 November 2011 100,000 shares awarded under the LTIP on 14 November 2008 lapsed as the specified performance conditions were not achieved. At 30 June 2012 there were LTIP awards maturing in 2012 in respect of nil ordinary shares (2011: 100,000).

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 2012 is:

			Awards	Awards
Award	Scheme	Maximum	outstanding at	outstanding at
date	maturity	term	30 June 2012	30 June 2011
14/11/08	3 years	3 years	-	100,000

c) Share Incentive Plan

Information in relation to the cash settled Share Incentive Plan can be found in note 28 to the consolidated financial statements.

22 Merger Reserve

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 Retained earnings balance brought forward is an amount of £1,133,000 (2011: £1,133,000) relating to the write off of purchased goodwill prior to the transition to IFRS.

23 Reconciliation of Net Cash Flow to Net Funds / (Debt)

	Group	Group
	30 June 2012	30 June 2011
	£'000	£'000
Increase / (decrease) in cash balances in the year	2,690	(3,567)
Net decrease in borrowings	6,930	1,293
Decrease / (increase) in net debt resulting from cash flows	9,620	(2,274)
Exchange rate adjustments	(119)	31
Decrease / (increase) in net debt in the year	9,501	(2,243)
Opening Net debt	(8,618)	(6,375)
Closing Net funds / (debt )	883	(8,618)

24 Analysis of Net Funds / (Debt)

	Group				Other non-cash	Exchange	Group
	1 July 2011	Cash flow	changes	movements	30 June 2012
	£'000	£'000	£'000	£'000	£'000
Cash at bank	1,411	2,690	-	(124)	3,977
Drawdown on invoice discounting facility	-	(979)	-	-	(979)
Cash and cash equivalents	1,411	1,711	-	(124)	2,998
Current
Bank loans	(1,226)	811	-	-	(415)
Finance leases	(39)	40	(34)	5	(28)
Non-current
Bank loans	(8,733)	7,061	-	-	(1,672)
Finance leases	(31)	-	31	-	-
	(10,029)	7,912	(3)	5	(2,115)
Net funds / (debt)	(8,618)	9,623	(3)	(119)	883

Other non-cash changes of £3,000 relate to interest payable on finance leases.

25 Deferred Taxation

Deferred tax is provided in full on temporary differences under the liability method using a tax rate of 24% (2011: 25%) which is the standard rate of UK corporation tax with effect from 1 April 2012 (see note 7b).

Deferred tax liability	Group 30 June 2012 £'000	Group 30 June 2011 £'000
At 1 July	56	214
Charged / (credited) to the consolidated income statement	23	(163)
Exchange rate adjustments	-	5
At 30 June	79	56

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 2012 £'000	Group 30 June 2011 £'000
At 1 July	902	239
Credited to the consolidated income statement	359	701
Credited to equity	8	16
Exchange rate adjustments	(9)	(54)
At 30 June	1,260	902

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			Foreign	Rate	Group
	1 July 2011	Equity	Income	exchange	change	30 June 2012
	£'000	£'000	£'000	£'000	£'000	£'000
Property, plant and equipment	45	8	(14)	-	(3)	36
Other intangible assets	(191)	-	110	-	2	(79)
Provisions	604	-	(248)	(9)	(6)	341
Pensions	49	-	28	-	-	77
Rolled over gains	(194)	-	194	-	-	-
Losses carried forward	533	-	278	-	(5)	806
Asset	846	8	348	(9)	(12)	1,181

	Group			Foreign	Rate	Group
	1 July 2010	Equity	Income	exchange	change	30 June 2011
	£'000	£'000	£'000	£'000	£'000	£'000
Property, plant and equipment	100	16	(65)	-	(6)	45
Other intangible assets	(334)	-	141	(5)	7	(191)
Provisions	422	-	240	(54)	(4)	604
Pensions	46	-	4	-	(1)	49
Rolled over gains	(209)	-	-	-	15	(194)
Losses carried forward	-	-	533	-	-	533
Asset	25	16	853	(59)	11	846

25 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 2012, without taking into consideration the offsetting balances within the same jurisdiction are £1,260,000 (2011: £1,231,000) and £79,000 (2011: £385,000) respectively. The assets and liabilities are expected to reverse in more than one year aside from assets of £1,000 (2011: £150,000) and liabilities of £79,000 (2011: £21,000) which are expected to reverse in less than one year from the balance sheet date. Deferred tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable.

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.

26 Related Party Transactions

The directors have identified 18 (2011: 19) key management personnel whose compensation was as follows: -

	Group 30 June 2012 £'000	Group 30 June 2011 £'000
Short term benefits	2,336	2,293
Post employment benefits	190	192
	2,526	2,485

No further related party transactions are required to be disclosed for the year ended 30 June 2012.

27 Financial Commitments

There was £19,412 of capital expenditure relating to PPE contracted but not provided for at the year end (2011: £26,810).

The Company and certain of its subsidiary undertakings cross guaranteed the bank loans of the Group at 30 June 2012. Invoice discounting facilities provided to two subsidiary undertakings are secured by a fixed and floating charge over the assets of those companies.

A guarantee has been given by a subsidiary undertaking in the normal course of business for a performance bond of AED 954,475 to cover the performance of work under a group contract.

At 30 June 2012 the future aggregate minimum lease payments under non-cancellable operating leases are as follows: -

	Property		Plant and equipment
	Group	Group	Group	Group
	30 June 2012	30 June 2011	30 June 2012	30 June 2011
	£'000	£'000	£'000	£'000
Commitment expiring:
- within one year	2,129	2,295	428	425
- within two to five years	5,952	4,232	248	338
- after five years	8,271	1,546	-	-
	16,352	8,073	676	763

28 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. The distribution of shares through this plan is arranged through Waterman Trustees Limited, a related company formed to administer the EBT and which held 122,184 (2011: 122,184) ordinary shares of 10p in the Company at 30 June 2012. At 30 June 2012 the market value of these shares was £58,648 (2011: £45,208). Dividends on these shares are payable to Waterman Trustees Limited and set against the costs of operating the schemes unless waived.

The assets of the EBT at 30 June 2012 have been incorporated into the Group Balance Sheet as follows:

	Group 30 June 2012 £'000	Group 30 June 2011 £'000
Cash	12	12
	12	12
Represented by:
Income tax	2	2
Amounts due to parent company	131	131
Accruals	16	16
Retained deficit	(79)	(92)
Own shares at valuation	(58)	(45)
	12	12

29 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 (excluding prepayments of £3,950,000 (2011: £4,555,000)). The carrying value of all of the Group's financial liabilities approximates to their fair value and they are classified as other financial liabilities at amortised cost being the total of trade and other payables (excluding non financial liabilities of £2,860,000 (2011: £3,450,000)), 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 29 with the relevant accounting policies explained in note 1 to the consolidated financial statements.

a ) Foreign Currency Risk

The Group operates in a number of international territories and is exposed to foreign exchange risk primarily with respect to the Australian dollar, Euro and US dollar. Most trading activity is denominated in the relevant local functional currency thereby matching the revenue flows with the cost base. Foreign currency risk arises from a proportion of commercial transactions undertaken in currencies other than the local functional currency, from financial assets and liabilities denominated in currencies other than the local functional currency and on the Group's investments in foreign operations.

Trade receivables, trade payables and bank accounts denominated in currencies other than the local functional currency arising from commercial transactions are immaterial at 30 June 2012. Inter-company funding balances in currencies other than the local functional currency are hedged where this is considered to be appropriate.

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.

At 30 June 2012, if sterling had weakened/strengthened by 10% against the Australian dollar with all other variables held constant, the profit for the financial year would have been £143,000 (2011: £75,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of Australian dollar denominated trade receivables.

At 30 June 2012, if sterling had weakened/strengthened by 10% against the Euro with all other variables held constant, the profit for the financial year would have been £15,000 (2011: £23,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of Euro denominated trade receivables and borrowings.

At 30 June 2012, if sterling had weakened/strengthened by 10% against the US dollar with all other variables held constant, the profit for the financial year would have been £133,000 (2011: £50,000) higher/lower, principally as a result of foreign exchange gains/losses on translation of US dollar trade receivables.

29 Financial Instruments (Continued)

b) Interest Rate Risk

The weighted average rate of interest on the floating rate financial liabilities at 30 June 2012 is 2.6% (2011: 2.6%) with a weighted average of 5 years (2011: 6.6 years). At 30 June 2012, the weighted average rate of interest on the fixed rate liabilities comprises 2.7% (2011: 6.99%) on sterling bank loans with a weighted average of 0 years (2011: 10 years) and 3.6% (2011: 3.7%) on the finance lease obligations with a weighted average of 1 year (2011: 1 year). The provisions are expected to mature within 2 years.

At 30 June 2012, if interest rates on UK sterling denominated borrowings had been 50 basis points higher/lower with all other variables held constant, the profit for the financial year would have been £28,000 (2011: £41,000) lower/higher mainly as a result of higher/lower interest expense on floating rate borrowings.

c) Liquidity Risk

Cash flow forecasting is performed by the operating entities of the Group and aggregated by group finance. Group finance monitors rolling forecasts of the group's liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the group does not breach borrowing limits or covenants on any of its borrowing facilities. These facilities comprise bank overdraft and invoice discounting facilities and provide short term flexibility in liquid resources. At 30 June 2012, these facilities, where all conditions precedent have been met, were £7.2m (2011: £7.5m) which expire within one year. Cash flow forecasting takes into consideration the group's debt financing plans and covenant compliance.

Surplus cash held by the operating entities, above the balance required for short term working capital management, is invested in interest bearing current accounts, time deposits and overnight money market deposits to earn interest at rates close to the prevailing local base rates. At 30 June 2012 the Group has £3.0m of cash and cash equivalents held in bank accounts (2011: £1.4m) which is immediately available for use.

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. The Group has net funds of £0.9m as at 30 June 2012. However, the Group had net debt of £8.6m at 30 June 2011 and a gearing ratio of 21.4% at that date.

30 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 2012 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 Statement of Directors' Responsibilities 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 and express an opinion on 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. In addition, we read all the financial and non-financial information in the Annual Report and Financial Statement to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

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 2012;
• 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 2012.

Simon O' Brien (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 6 November 2012

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 75 and a separate independent auditors' report on page 73.

		2012	2011
Company Balance Sheet as at 30 June 2012	notes	£'000	£'000
Fixed assets
Tangible assets	35	1,204	8,866
Investments	36	19,641	19,641
		20,845	28,507
Current assets
Debtors	37	8,724	10,226
Cash at bank and in hand		-	2,361
		8,724	12,587
Creditors (amounts falling due within one year)	38	(3,435)	(12,524)
Net current assets		5,289	63
Total assets less current liabilities		26,134	28,570
Creditors (amounts falling due after more than one year)	38	(1,672)	(8,733)
Net assets		24,462	19,837
Capital and reserves
Called up share capital	40	3,076	3,076
Share premium reserve	41	11,881	11,881
Merger reserve	41	3,144	3,144
Other reserve	41	140	140
Profit and loss reserve	41	6,221	1,596
Equity shareholders' funds	42	24,462	19,837

The financial statements which comprise the Company Balance Sheet and related notes were authorised for issue by the directors on 6 November 2012. They were signed on behalf of the directors by:-

Roger Fidgen Nicholas Taylor Chairman Chief Executive

The notes on pages 75 to 79 are an integral part of these parent company financial statements.

Notes to the Parent Company Financial Statements

31 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.

Employee Benefits

The Company accounting policy for employee benefits is consistent with the Group employee benefits policy as set out in note 1 to the consolidated financial statements.

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:

Plant, equipment and motor vehicles 15-33% per annum straight line Freehold land is not depreciated

Freehold buildings and long leasehold property 2% per annum straight line or lease period if less

Investments

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

Borrowings

The Company accounting policy for borrowings is consistent with the Group borrowings policy as set out in note 1 to the consolidated financial statements.

Leases

The Company accounting policy for leases is consistent with the Group leases policy as set out in note 1 to the consolidated financial statements.

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 consistent with the Group financial risk management policy as set out in note 1 to the consolidated financial statements.

32 Profit / (loss) for the Year

The Company has not presented its own profit and loss account as permitted by section 408 of the Companies Act 2006. The parent company profit after tax of £4,687,373 (2011: £1,875,942 loss) is after dividends receivable from subsidiaries of £889,000 (2011: £1,309,000) and the profit on disposal of Pickfords Wharf of £4,116,000 as set out in note 5 to the consolidated financial statements.

The auditors' remuneration for audit services to the Company was £20,000 (2011: £20,000).

33 Directors' Emoluments

	Year ended 30 June 2012 £'000	Year ended 30 June 2011 £'000
Aggregate emoluments for qualifying services	438	576
Company contributions to money purchase pension schemes	31	50
Two directors have retirement benefits accruing under money purchase pension schemes (2011: 2).
Highest paid director
Aggregate emoluments including gains on exercise of share options	255	231
Company contributions to money purchase pension scheme	23	23

34 Dividends

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

35 Tangible Assets

	Plant, equipment	Land and
Total	and motor vehicles	freehold property
£'000	£'000	£'000
			Cost
15,395	6,665	8,730	1 July 2011
222	222	-	Additions
(8,941)	(978)	(7,963)	Disposals
6,676	5,909	767	30 June 2012
			Depreciation
6,529	5,774	755	1 July 2011
478	447	31	Charge for the year
(1,535)	(860)	(675)	Disposals
5,472	5,361	111	30 June 2012

Net book amount

30 June 2012	656	548	1,204
30 June 2011	7,975	891	8,866

£'000	£'000	£'000
undertakings	Group undertaking	Total
Shares in Group	Long term loan to

The directors believe that the carrying value of the investments is supported by their underlying net assets. Further details on the company's principal subsidiary undertakings at 30 June 2012 are disclosed in note 13 to the consolidated financial statements.

37 Debtors

	Company	Company
	30 June 2012	30 June 2011
Amounts falling due within one year:	£'000	£'000
Trade debtors	-	3
Amounts owed by subsidiary undertakings	7,144	8,040
Other debtors	257	658
Corporation tax	-	194
Prepayments and accrued income	1,323	1,331
	8,724	10,226

Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand. The Company's other debtors include £248,000 relating to deferred taxation (2011: £303,000). Further disclosure on deferred taxation can be found below:

	Company 30 June 2012 £'000	Company 30 June 2011 £'000
The deferred tax asset comprises:
Depreciation in excess of capital allowances	189	115
Short-term timing differences	30	73
Unutilised losses carried forward	29	115
	248	303
Asset at the beginning of the year including deferred tax asset on pension accrual	303	221
Amount (charged) / credited to profit and loss reserve	(55)	82
Asset at the end of the year including deferred tax asset on pension accrual	248	303

38 Creditors

	Company	Company
	30 June 2012	30 June 2011
Amounts falling due within one year:	£'000	£'000
Bank loans and overdraft	1,276	10,093
Trade creditors	1,028	1,418
Amounts owed to subsidiary undertakings	175	127
Other creditors	132	22
Accruals	824	864
	3,435	12,524

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

	Company	Company
	30 June 2012	30 June 2011
	Bank loans	Bank loans
Amounts falling due after more than one year:	£'000	£'000
Repayable by instalments:
Between one and two years	428	1,314
Between two and five years	1,239	3,931
Between five and ten years	5	3,488
	1,672	8,733

Further disclosure relating to the Company's bank loans is shown in note 18 to the consolidated financial statements.

39 Operating Lease Commitments

At 30 June 2012, the company had annual commitments under non-cancellable operating leases as follows

		Property		Plant and equipment
	30 June 2012 £'000	30 June 2011 £'000	30 June 2012 £'000	30 June 2011 £'000
Commitment expiring:
within one year	30	359	4	-
within two to five years	319	392	-	4
after five years	874	173	-	-
	1,223	924	4	4

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 2012 are set out in notes 20 and 21 to the consolidated financial statements.

41 Reserves

	Share premium	Merger	Other	Profit and loss
	reserve	reserve	reserve	reserve
	£'000	£'000	£'000	£'000
1 July 2011	11,881	3,144	140	1,596
Profit for the year	-	-	-	4,687
Dividend	-	-	-	(62)
30 June 2012	11,881	3,144	140	6,221

The Other non-distributable reserve of £140,000 (2011: £140,000) arose on a group re-organisation in 2003.

42 Reconciliation of Movements in Shareholders' Funds

	Company	Company
	30 June 2012	30 June 2011
	£'000	£'000
Profit / (loss) for the year	4,687	(1,876)
Dividend	(62)	(303)
	4,625	(2,179)
Net increase / (decrease) to shareholders' funds	4,625	(2,179)
Shareholders' funds as at 1 July	19,837	22,016
Shareholders' funds as at 30 June	24,462	19,837

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. Transactions occurred with Waterman AHW Pty Limited in the normal course of business and the year end balance is disclosed below;

	Company	Company
	30 June 2012	30 June 2011
Amounts owed by related party	£'000	£'000
Waterman AHW Pty Limited	86	86

Five Year Results Summary

			Restated
	2008	2009	2010	2011	2012
	£'000	£'000	£'000	£'000	£'000
Revenue	136,418	122,401	83,244	74,097	68,840
Profit / (loss) before taxation	6,991	2,586	(5,044)	612	530
Profit / (loss) attributable to the owners of the parent	3,756	2,517	(5,139)	120	(91)
Basic earnings / (loss) per share	12.9p	8.6p	(16.9p)	0.4p	(0.3p)

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%	£27.50	£150.50
Internet	1.0%	£20.00	£100.00

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.

Company Information and Advisers

Company Registered Office Pickfords Wharf Clink Street London SE1 9DG

Company Registration Number 2188844

Stockbrokers and Financial Advisers
N+1 Singer 12 Smithfield Street London EC1A 9LA (N+1 Singer is the trading name of Nplus1 Brewin LLP)

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

Financial Calendar

7 December 2012	Annual General Meeting 2012
12 December 2012	Ordinary shares quoted ex-dividend
14 December 2012	Record date for proposed final dividend
11 January 2013	Final dividend payable
February 2013	Interim results announced for the six months to 31 December 2012
April 2013	Interim dividend payable
October 2013	Preliminary announcement of results for the year to 30 June 2013
December 2013	Annual General Meeting 2013

Waterman Presence (UK)

Belfast

4th Floor, 51-53 Fountain Street, Belfast, County Antrim BT1 5EB t +44 28 9072 7680 f +44 33 3344 4501

Birmingham

Civic House, 156 Great Charles Street, Queensway, Birmingham B3 3HN t +44 121 212 7700 f +44 333 344 4501

Brentwood

Regent House, Hubert Road, Brentwood, Essex CM14 4JE t +44 1277 238 100 f +44 333 344 4501

Bristol

Merchants House, Wapping Road, Bristol BS1 4RW t +44 117 937 8200 f +44 333 344 4501

Cardiff

38 Cathedral Road, Cardiff CF11 9LL t +44 29 2038 4400 f +44 333 344 4501

Derby

Lockington Hall Business Centre, Lockington, Derby DE74 2RH t +44 1509 674567 f +44 3333 444 501

Edinburgh

2 - 4 Canning Street Lane, Edinburgh EH3 8ER t +44 131 221 7020 f +44 333 344 4501

Glasgow

Third Floor, South Suite, 8 Nelson Mandela Place Glasgow G2 1BT t +44 141 418 1900 f +44 333 344 4501

Inverness

Thistle House, Beechwood Park North Inverness IV2 3ED t: +44 1463 898023 f +44 333 344 4501

Leeds

Bradshaw House, 31 Waterloo Lane, Bramley, Leeds LS13 2JB t +44 113 256 3322 f +44 333 344 4501

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 +44 333 344 4501

London

Pickfords Wharf, Clink Street, London SE1 9DG t +44 20 7928 7888 f +44 333 344 4501

Manchester

South Central, 11 Peter Street, Manchester M2 5QR t +44 161 839 8392 f +44 333 344 4501

Nottingham

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

Perth

Broxden House, Broxden Business Park, Lamberkine Drive Perth PH1 1RA t +44 1738 449 801 f +44 3333 444 501

Sheffield

Belgrave House, 47 Bank Street, Sheffield S1 2DR t +44 114 229 8900 f +44 333 344 4501

Waterman Presence (Overseas)

Australia

Suite 40, 1 Park Road 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

2106B, 21st Floor, TEDA Central Hotel 3rd Avenue, TEDA, Tianjin 300457 t +86 22 66201510 f +86 22 66201510

India

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

Ireland

Marine House, Clanwilliam Place 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

Bld.6, Puteyskiy tupik, Moscow 105064 t +7 495 981 00 07 f +7 495 787 37 17

United Arab Emirates

Office M-29, Bin Arar Tower, Al Najda Street PO Box 112358, Abu Dhabi t +971 2 495 2817 f +971 2 674 0066

G01, Ibn Battuta Gate Office PO Box 117448, Dubai t +971 4 423 1600 f +971 4 454 2490

Pickfords Wharf, Clink Street, London SE1 9DG t +44 (0)20 7928 7888 f +44 (0)333 344 4501 www.watermangroup.com

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