Sweett Group plc (formerly Cyril Sweett Group plc)

Annual report and financial statements 2012 International construction and property consultancy

Sweett Group plc (formerly Cyril Sweett Group plc)

Who we are Sweett Group is a global business with expertise in property and infrastructure professional services. Our services include cost management, programme and project management, strategic advisory and PPP/PFI investment and consultancy services. Clients tell us that we are experienced, professional and collaborative in our approach. We aim to forge long term, successful relationships with all stakeholders in the property and infrastructure industry. ―Global knowhow, local delivery‖ is the essence of our business and our reach enables us to put global best practice to use in the local markets we serve. For more information about our projects and services: www.sweettgroup.com Connect with us on [Twitter logo] [Facebook logo] [LinkedIn logo]

Sweett Group plc (formerly Cyril Sweett Group plc)

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How we have performed Financial highlights GAAP measures

2012 2011

£m £m

Revenue 72.8 72.8

Operating (loss) / profit (0.2) ♦ 2.4

(Loss) / profit before tax (1.0) ♦ 2.3

Net assets 28.8 30.9

Basic (loss) / earnings per share (2.1) p 2.6 p

Dividend per share 0.5p 1.3 p

♦ After the impact of exceptional administrative expenses of £1.2m (2011: £1.0m) and amortisation of acquired intangible assets of £0.5m (2011: £0.4m).

Non GAAP measures

2012 2011

Operating profit before the impact of exceptional administrative expenses and amortisation of acquired intangible assets £1.6m

£3.8m

Tax adjusted (loss)/earnings per share before

exceptional administrative expenses (0.5) p 3.7 p

Lock up (measured as the aggregate days‘ activity represented by debtors and work in progress – see financial review for further details) 87 days

94 days

Operational highlights

Record order book demonstrating a healthy split between the Group‘s main sectors and geographies

Continued growth in Asia Pacific with staff numbers in the region increased by almost 30% to 680

Group rebranding strengthened Sweett Group‘s global offering and cross selling opportunities to international client base

Successful entry into energy sector in the UK

Launch of three year strategy focused on improved margins and cash generation

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What we do Why us?

Sweett Group understands that clients select a company with a reputation for delivering quality advice, open communication, sector knowledge and value for money. When you work with Sweett Group you can expect: Credibility

We have a history and reputation for service delivery. Expertise We have people experienced in applying expert knowledge. We use our 'global knowhow' to deliver local, sustainable solutions. Assurance We deliver every time, accurately and in a professional, independent way.

Value We optimise our clients' ideas, budget and time. Our values

Our values define everything we do. From the manner in which we engage with clients and stakeholders, through to the methodologies we employ and the way we deliver success. The values that form the foundation of our business are: Client success We optimise our clients' investment by understanding their business. We want our clients to succeed.

Collaboration We collaborate across disciplines, across territories, with our clients, with our partners and within our territories.

Professionalism We undertake our work with professionalism. We approach each other with integrity and trust. Our professionalism, knowledge and creativity are critical to success. Our people

Sweett Group employs the best talent the industry has to offer. In addition we employ individuals who are aligned with our organisational values and demonstrate a professionalism that our clients expect from us. We take a strategic approach to selecting and developing our team. We first seek to identify the skills, experience, capability and passion of each individual. We then harness and develop these attributes to strengthen the skills of the group as a whole and provide further value to clients through a broader service offering.

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Our service offering Cost management Sweett Group is one of the world's leading cost management consultancies. We operate across a number of sectors, advising clients worldwide on cost prediction, cost management, value for money, procurement and delivery issues. We seek to eliminate risk at every opportunity and maximise the efficient delivery of a project. Services

Programme & project management We recognise that the environment in which our clients operate is dynamic and that the ability to both initiate and respond to change is critical to the success of any operation. In the built environment it is our ability to deliver a comprehensive programme and project management service to our clients wherever in the world they may be doing business that sets us apart. Services

contract administration programme & portfolio management

project management planning & programming

Advisory services Our advisory services focus on assisting clients in responding to the constantly changing internal and external pressures on their business / organisation. We aim to improve and make best use of resources and to manage risks and opportunities to ensure that optimal outcomes are achieved. Our scope of service includes strategic advisory services and specialist services. Specialist services

building surveying health & safety

community & stakeholder consultation management consultancy

capital allowances & property tax high performance buildings

dispute resolution operational commissioning

due diligence project audit & recovery

energy services research

expert witness risk management

facilitation services sustainability consultancy

framework set up & management training

health planning urban planning context analysis

Strategic advisory services

business case & strategy development property portfolio advice

development management strategic procurement & contract advice

facilities management consultancy value management

project appraisals PPP/PFI We advise governments, public sector purchasers, SPVs, contractors, funders and operators with an unrivalled range of management, cost and other technical skills. We provide advice on all technical aspects, from sustainability and whole life services, to financial and investment advice. We also have a specialist company that manages and invests in Special Purpose Vehicles (SPVs) in PFI and PPP projects. The business specialises in key niche sectors: health, education, blue light, social housing, student accommodation and waste. Services

consultancy investment

independent certifier technical advisor

benchmarking quantity surveying

cost planning & pre contract cost control risk advice

feasibility & master planning services engineering cost management

insurance valuations tender documentation and evaluation

post contract cost control value engineering

procurement & contract advice whole life costing / life cycle costing

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Our sectors - Revenue by sector

£’000

Commercial (Offices & Industrial) 19.0% 13,884

Defence 1.0% 743

Education 7.9% 5,717

Energy, Waste & Utilities 0.5% 337

Health 18.2% 13,286

Hotel & Leisure 7.8% 5,675

Life Sciences 1.0% 692

Other Public Sector 6.6% 4,782

Prisons 0.1% 68

Retail & Mixed Use 13.5% 9,864

Social Housing (Residential) 13.5% 9,857

Transport & Infrastructure 10.9% 7,901

100.0% 72,806

Where we operate

Revenue by region Staff breakdown by region

Europe: £40.1m Europe: 34%

MEAI: £9.8m MEAI: 15%

Asia Pacific: £22.9m Asia Pacific: 51%

The Americas MEAI

Locations: Employees: 200

New York City * Locations:

Washington D.C. * Abu Dhabi Dubai

Bangalore Mumbai

Chennai Riyadh

Delhi

Europe Asia Pacific

Employees: 450 Employees: 680

Locations: Locations:

Aberdeen Hull Bangkok Macau

Belfast Leeds Beijing Shanghai

Birmingham London Changsha Shenzhen

Bristol Madrid Chengdu Wuhan

Cambridge Manchester Chongqing Brisbane

Cardiff Munich * Guangzhou Melbourne

Coleraine Newcastle Guiyang Shenyang

Dublin Norwich Ho Chi Minh City Singapore

Edinburgh Paris Hong Kong Sydney

Exeter Plymouth Kuala Lumpur * Tokyo *

Florence * Southampton

Glasgow Truro

* Alliance / joint venture locations

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Chairman’s Statement “I remain heartened by the continued support, collaboration and professionalism exhibited on a daily basis by our colleagues across the world, which will continue to set us apart from our peers as we build a stronger Sweett Group.” It is my pleasure to present Sweett Group plc's annual report and accounts for 2012. The last twelve months have seen the shape and size of our business evolve as we have continued to deliver on our strategy of creating a more diversified, global Group. We entered 2012 having already been through a significant period of difficult market conditions in our traditional home markets. In the UK and UAE, these conditions continued throughout the year, impacting both revenues and margins. Our Asia Pacific business, buoyed by increasing revenues in China, was negatively impacted by losses in Australia during the first half of the year. The need to defer revenue recognition from two PFI asset divestments and the accounting treatment for a forward foreign exchange contract contributed to the Group missing its internal profit target for the year by over £2m, which was disappointing. However, we are confident, following the completion of the Inverclyde divestment in July of this year, that we have moved into the next year in a stronger position, having built a solid platform for the future, The Board believes it is appropriate to prepare the financial statements on a going concern basis and is confident that it has the right strategy and action plan to operate within the requirements of the Group‘s bank covenants (see Note 1 to the financial statements). Our net debt levels at March 2011 were £5m and having reached nearly £11m at September 2011 were reduced to just over £8m at March 2012. Construction markets in Europe continue to be affected by low levels of economic activity and the impact of the Eurozone crisis and related austerity measures. Although our European order book has fallen by some 47% since 2008, it has remained at a consistent level for the last 15 months, a sign that we are competing well and gaining market share, despite challenging conditions. Our operations in the Middle East, Africa and India (MEAI) were drastically impacted by the Arab Spring. By adjusting our cost base and focusing on winning work in new markets such as Saudi Arabia and Oman we are seeing a pick-up in activity in the region. Expanding our presence in Asia Pacific has been one of our key focus areas in the last 12 months, resulting in staff numbers growing by almost 30% to approximately 680. Our global capability, built on successfully developing a critical mass in key trade and industrial hubs around the world, has and will continue to benefit the Group greatly. Our outstanding reputation has been strengthened further during the year through the launch of a global brand, with all of our entities now operating under the Sweett Group identity. Having a brand that reflects the integrated, independent service offering that our global, corporate clients expect is one of our key strengths. During the year Eamonn Kerr resigned from the Group and I would like to thank Eamonn on behalf of the Board of Directors for his work in pioneering Sweett Group's international expansion. In November 2011 the Board of Directors invited Kim Berry, Managing Director, Asia Pacific, to join the Board as an Executive Director and in only a short space of time his presence within our senior management team has been a great help in accelerating our global expansion and integration strategies. We remain cautious of construction markets generally but our strong geographical spread gives confidence in our successfully providing high quality services to our clients around the world to maintain our position as a leading independent provider. I also remain heartened by the continued support, collaboration and professionalism exhibited on a daily basis by our colleagues across the world, which will continue to set us apart from our peers as we build a stronger Sweett Group.

Michael Henderson, Chairman

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Business Review Contents

Three year strategy

Review of operations Europe (excluding Investments)

Investment activities

Middle East, Africa, India (MEAI)

Asia Pacific

Developments in North America

Rebrand

Outlook

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Chief Executive’s Review Business Review

“Despite challenging market conditions across Europe and the Middle East our staff have worked relentlessly to ensure we continue to gain market share in our traditional home markets, whilst growing our presence in the Asia Pacific region, a testament to our ability to provide our clients with exceptional levels of service.” After a difficult start to the financial year, as a result of well documented challenging trading conditions in Europe and operational losses in the Middle East, we took action to de-centralise our administrative functions, reducing costs in both regions. The second half of the year saw an improvement in the Group‘s trading activities, as well as a reduction in our debt levels. We had planned for earnings to be realised from the divestment of two PFI assets during the year. Due to prolonged negotiations, together with the deferral of the profit attribution from these, our overall profit for the current year has fallen below expectations. The requirement to defer profits was a large setback as was the crystallisation under IAS39 of exchange rate losses which are shown as finance costs. The result of these adjustments meant that our performance in the year was a reversal in fortune as we report a loss before tax of £1.0m after the impact of £1.7m of exceptional and amortisation of acquired intangibles. This is clearly a disappointment; however our cost-cutting actions mean that we have started the current financial year in a much stronger position. During the year, the vision and expertise of our staff have made our investments in international expansion and diversification across new sectors and services a success, building a stronger, more diversified Sweett Group. Our order book now shows a healthy split between our main sectors, as does our revenue generation, which stands at 55% in Europe and 45% in the rest of the world. The growth of our Asia Pacific business, driven largely by the successful integration of our operations in China, and our ability to capitalise on a seamless regional presence, has continued at a substantial pace during the year. We have now almost doubled our staff numbers in China from around 300 in 2010, with revenues increasing by approximately 21% during the same period. Whilst our growth in Asia Pacific has been a key component of our improved performance, it has been very encouraging to see momentum returning to some of our core UK markets as well as the success the Group has had in entering new sectors such as energy and utilities, as a result of the significant investment over the last two years. Our ability to combine our global presence with local knowhow is what sets us apart from many of our competitors. Our clients come back to us as a result of the independent advice we provide them with, which is reflected in the success of their projects. Across the Group we are driving greater collaboration, which combined with our greater global footprint, is attracting a wider range of clients. The commitment exhibited by our staff, both towards our clients and in support of each other is something I am very proud of.

Three year strategy Having successfully built a globally diversified business operating under a single, unified brand, the Group‘s strategy moving forward will focus on a three year programme of organic growth, aimed at consolidating the global footprint we have developed whilst at the same time improving our margins and cash generation. The strategy plans to grow the business largely through organic means, with recruitment of key personnel in sectors or locations where our plan has identified additional expertise is required to fully develop the opportunity. We will focus on extending our sector expertise in Europe, diversifying our presence and service offering in Asia Pacific and further developing our presence in North America. We will carefully target any investment in the Middle East, North Africa and India, but will aim to be flexible by operating in new territories as and when our clients need support. As much of our strategy relies on using existing systems and resources, we aim to adopt a flexible approach to the pace of our expansion, should the economic environment deteriorate. The Group‘s increased revenue is predominantly expected to come from continued investment in Asia Pacific, where our progress in geographic expansion across mainland China and Southeast Asia, as well as diversifying our service offering by building a project management and strategic advisory expertise, is expected to deliver encouraging levels of growth over the next three years.

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In Europe, the Group has invested in growth sectors such as energy and infrastructure and has secured framework appointments in both. Continuing to win work in these new sectors, combined with increasing market share in our existing areas of expertise, downsizing our PPP/PFI investment exposure and keeping overhead costs under tight control, are expected to result in improved cash generation and operating profit over the period. Growth in our international operations will also bring inward investment into our European operations, as we capitalise on opportunities to cross-sell our services to an increasingly large base of corporate clients, hoteliers and retailers. Improvements in the Group‘s margins will be driven by the reductions in the Group‘s cost base achieved during 2011/2012, which will result in cost savings of some £2m being realised in the current year. As the Group‘s operations in China mature, this will also contribute improved operating margins. In terms of cash flow, we have made some good progress in reducing our lock up (debtors and work in progress). However we have also been financing growth and additional working capital in developing our global footprint. With this footprint now in place we see that the next phase of our development can be focused more sharply on delivering improved margins and cash generation.

Review of operations Group financial performance

Revenue for the year was £72.8m (2011: £72.8m). The pre-tax loss (2011: profit of £2.3m) was £1.0m after exceptional expenses, amortisation of acquired intangibles and net finance costs. The results were severely affected by first half losses in Australia and the Middle East and during the second half, delays in reaching financial close on a major PFI project, the deferral of asset disposals and finance costs relating to Australia. Basic (loss) / earnings per share were (2.1) pence (2011: 2.6 pence) and operating margins were (0.2)% (2011: 3.3%). Our current order book is approximately £90m, a increase from last year‘s reporting date of 6% (2011: £84m). The Board has proposed a final dividend in respect of the year of 0.3p per share which, together with the interim dividend, totals 0.5p per share for the year. The final dividend will be paid on 12 October 2012 to shareholders on the register on 14 September 2012. Europe (excluding Investments) Revenue from Europe, which includes the Group‘s operations in the UK, Ireland and Continental Europe was down to £39.8m (2011: £43.2m), accounting for 55% of the Group‘s revenue. In overall terms Europe profits were £2.4m (2011: £2.9m). The order book stands at £33m (2011: £37m). Performance of our core activities was weak in the first half of the year with profit after exceptional items of £0.3m (2011:£1.5m). Following the restructuring actions announced in the first half of the year, the second half was a significant improvement and delivered £1.6m in operating profit. The operating margin on a pre-exceptional basis was 7.6% (2011:7.9%) as a result of the stronger second half performance. The full effect of the restructuring actions will be realised increasingly during the current year. Our European order book continues to reflect the short-term nature of contracts across the region. An increasing proportion of UK turnover is being achieved from frameworks which, with the exception of contracted projects, are not included in our order book projections. Our investment in the energy sector has been rewarded with our appointment on the NNB Genco (part of EDF Energy) framework for their new build nuclear programme, initially for the reactors at Hinkley C, Somerset. Further framework appointments in the energy and utilities sectors for Babcock, Dounreay Site decommissioning, Northern Gas Networks and United Utilities will provide the group with long term opportunities in the infrastructure market. Despite cuts in UK public sector spending, we continue to win work across the central government and local authority sectors around the country. During the past 12 months we have secured over 15 major framework appointments, including the North London Strategic Alliance and North West Construction Hub. In the health sector, we have secured framework appointments with a number of NHS Trusts, including Imperial Healthcare, Central & Northwest London and NHS Shared Business Services across England. Our sustainability team was recently appointed on the new pan-government three-year environmental and sustainability consultancy framework agreement by the Government Procurement Service (GPS), a significant win for the Group and evidence of our strength in the environmental arena.

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Although activity levels across Europe continue to be suppressed by uncertainty surrounding the Euro zone crisis, we are capitalising on pockets of activity across the private sector, both in the UK and across Continental Europe. We continue to maintain our strong market position in the retail sector with appointments from Land Securities, Hammerson and Stanhope on major retail schemes in addition to working with blue chip retail clients such as Primark and Tesco and a predominance of high end retailers such as Selfridges, Jimmy Choo, Louis Vuitton and Shanghai Tang. Our commercial sector team has also won a number of commissions across the UK, including a regional programme and fit-out framework with Royal Bank of Scotland across northern England and Scotland and a framework appointment with Jaguar Land Rover. In Southern Europe, the Group has secured a commission for the Milan Hilton, further strengthening our hospitality sector portfolio. Investment activities Revenue from the Group‘s PFI/PPP business totalled £0.4m (2011: £1.4m). Segment losses were £0.7m (2011: £0.3m) and were offset by a gain of £0.44m on the sale of our interest in the South Ayrshire Schools PFI project. This activity has continued to develop new opportunities, despite a delay in reaching financial close on the Leeds Social Housing PFI project. The process of recycling existing investments has also taken longer than expected, though our investment in the South Ayrshire Schools PFI project for a total consideration of £787,500 was completed in the first half-year. In January 2012, we announced an agreement to dispose of our investment in the Inverclyde Schools PFI project for a total consideration of £2,192,860. The latter completed in July 2012 and therefore the profits were deferred into the current year. In April 2012, we announced the conditional sale of our investment in the Dumfries & Galloway Schools PFI project. However the Group has since withdrawn from this sale and will seek alternative divestment routes during the current financial year. Middle East, Africa, India (MEAI) Revenue from MEAI accounted for 13.4% of Group revenues at £9.8m (2011: £10.6m). Segment losses were £1.2m (2011: break even) and the order book is £6m (2011: £7m). Our performance in the Middle East was lower than expected, as a result of project postponements and cancellations resulting from the Arab Spring and continued depressed market conditions and investor sentiment across the region. Losses in the first half of the year were £0.7m. Whilst losses in the second half were £0.5m this included a £0.3m charge for exceptional costs. Conditions in the region are reflected in our order book, which stood at £13m 24 months ago and fell to as low as £4m, before rising to its current level. Following a reorganisation of our management team in the region and a reduction in both operational and overhead costs, we are now experiencing a pick-up in bidding activity across the region. The increased bidding activity has resulted in a number of recent project commissions and extensions, including the 90-storey Capital Market Authority Tower in Riyadh. In the health sector we have secured a high-profile commission from the Khalifa bin Zayed Foundation to provide cost and project management services on a new-build hospital in Sharjah and in the aviation sector we have secured commissions with Etihad Airways and the Dubai Aviation City Corporation. The hospitality sector remains one of our strongest in the Middle East, with current commissions with Raffles Hotel, Le Meridien, Grand Hyatt and developers such as Kingdom Hotel Investments. Following our cost reduction actions the region has returned to profitability during the first quarter of the current year. In India, the Group is benefiting from buoyant markets in Delhi and Bangalore, whilst conditions in Chennai and Mumbai remain challenging. With a regional management team across its four offices now in place, the Group aims to continue to grow its presence across India. Asia Pacific Revenue from Asia Pacific accounted for 32% of Group revenues at £22.9m (2011: £17.6m). Segment profits were £1.3m (2011: £1.8m) and the order book stands at £51m (2011: £40m). The Group‘s operations in China and Hong Kong (previously Widnell Limited) continue to perform better than expected at the time of its acquisition both in terms of revenues and profits, contributing approximately £15m of revenues and £1.5m of net profit. The segment‘s operating margin on a pre exceptional basis for the entire region was 8.1% (2011:13.0%) weighed down by our performance in Australia.

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Our performance in North Asia was very strong with first half profits of £1.2m (2011; £0.4m). Second half performance was still satisfactory at £0.7 (2011:£1.2m) although the results were beginning to reflect a slow-down in the China construction markets. Nevertheless, the operating margin for the year on a pre-exceptional basis was 13.7% (2011:20.0%), encouraging given the levels of investment in new resources that are being dedicated to the region. The performance of the Australian business was particularly disappointing with £0.6m of operational losses in the year, which was sustained substantially in the first half of the year as the result of weak trading, issues with two contracts and re-assessment of long service and annual leave provisions. The growth of our presence in China and Hong Kong is one of the main contributors to the Group‘s increased diversification during the year. We now employ over 600 staff across China, with a further 80 staff across Southeast Asia and Australia. With an experienced Asia Pacific management team now in place, we are focusing considerable efforts on cross-selling services and sector expertise throughout North Asia, Southeast Asia and Australia, including the development of full project management dispute resolution and programme management services to complement our well established cost management offering in China. In China, the Group enjoys a large blue-chip client base which includes numerous listed Hong Kong and Chinese developers, international businesses investing in the country and multi-national corporates and retailers. The Group has mature and sizeable offices in the first tier cities of Shanghai, Beijing and Guangzhou and established and expanding offices in the fast-growing second tier cities of Shenzhen, Chengdu, Chongqing, Tianjin, Wuhan, Changsha and Shenyang. While we anticipate some fluctuations in the Chinese economy, we believe that it will continue to grow significantly over the long term and will enable the Group to benefit from cross-selling opportunities with existing international clients as they invest in the country's growing domestic market, as has already been the case with clients such as Nike, Merlin Entertainments, Tesco and Blackrock. Similarly, we are able to capitalise on the flow of outward investment from China by supporting existing clients such as Shanghai Tang, Shangri-la Hotels and Huawei as they develop their global presence. In Southeast Asia our expansion is being led out of our established offices in Singapore and Hong Kong together with the investment we have made in our office in Thailand, recent registration in Vietnam and joint ventures established in Malaysia and Japan. Operations in the region are now benefitting from the adoption of the single brand and the integrated approach of the Asia Pacific management team resulting in new commissions in the corporate real estate, hospitality and leisure sectors. As indicated, the Group‘s progress in the Asia Pacific region as a whole was held back by losses in Australia during the first half of the year. However, our Australian business is benefiting from growth across other parts of Asia Pacific, as a result of cross-selling opportunities and returned to profitability during the second half of the year. This recovery was complemented with a number of significant wins including a framework appointment with the Australian Department of Defence and successful investments in developing our cost management service offering. Developments in North America The successful progression of the Group‘s alliance partnership with VVA LCC, a New York based project management consultancy, has resulted in the signing of a joint venture agreement in May, 2012. The joint venture company, VVA Sweett, is incorporated in the State of New York, with each party owning 50% of the joint venture company‘s shares. Through the joint venture, the Group will market its cost management services to North American corporate clients, as well as offer existing clients project management and cost management services across North America. Rebrand In order to further strengthen its leading position and help integrate its acquisitions, the Group embarked on a global rebrand during the year at a cost of approximately £100,000. The process, which saw the consolidation of four brands into one, was completed in April 2012. All wholly-owned businesses in the Group are now operating under the Sweett Group brand with most of the entities renamed. Cyril Sweett Group plc was renamed Sweett Group plc on 23 January 2012.

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Outlook The last four years, during which time the global economy and construction industry in particular has experienced significant challenges, have been transformational for Sweett Group. The impact of the global economic recession, financial turmoil in the euro-zone and political instability in parts of the Middle East have necessitated difficult decisions to adjust the size and structure of our business, resulting in annualised savings of £2m being realised in the current year. Having implemented these, whilst diversifying our presence and expertise, the Group now has a solid platform from which to deal with lower levels of activity in the developed world, whilst having the ability to expand in growth markets. The outlook for the construction sector across the regions in which we operate varies considerably. In Asia Pacific, the Group‘s main growth market, we will benefit from an encouraging order book but are also mindful of the slowing growth currently being experienced in the region. In Europe, the economic recession and instability across the euro-zone, together with further planned reductions to UK spending, will continue to have a negative impact on public sector spending and construction activity as a whole. We do not anticipate this gap will be filled by the private sector in the short term and we expect market volumes and pricing levels to continue to be challenging. However, the Group‘s entry into new markets such as energy and infrastructure and our success in securing framework appointments across a variety of sectors does provide encouragement. We remain cautious about construction markets in the Middle East, Africa and India. We are encouraged by increased levels of bidding, in particular in the UAE and are focusing on developing new business opportunities in growth markets such as Saudi Arabia, Oman and Qatar. Our business in India continues to benefit from private sector investments across the country‘s main business and trade hubs. In North America, where we now have a joint venture company with VVA, a leading New York based project management firm, we are seeing some initial cross-selling opportunities, as well as opportunities to provide cost management services to our JV partner‘s existing clients. Trading during the first four months of the current financial year has been in line with Management‘s expectation, with each reporting region seeing significant increases in profits compared to the same period last year. Our order book currently stands at £90m, with a healthy split across Europe, MEAI and Asia Pacific. I am confident that the dedication of our staff and quality of service that they provide to our clients will continue to contribute to building a stronger Sweett Group.

Dean Webster, Chief Executive Sweett Group plc

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Financial Review Trading performance

The year to 31 March 2012 was a further year of consolidation for Sweett Group in the UK, where revenues decreased, whilst activity levels overseas increased overall following the acquisition of Widnell Limited in the previous year. Group revenue was £72.8m (2011: £72.8m). There was a loss before taxation, after the impact of £1.2m of exceptional expenses and £0.5m of amortisation of acquired intangibles as described in Note 5 to the financial statements, of £1.0m (2011: profit of £2.3m). This loss was exacerbated by profit recognition on two non-concluded PFI asset sales being deferred. The Inverclyde Schools disposal completed in July 2012 such that the gain has already been recognised in the current year. The Dumfries & Galloway Schools disposal is being pursued under a revised structure with the intention of concluding a transaction in the current year also. Furthermore, there was a charge to finance costs of £0.6m relating to the change in fair value of a derivative financial instrument under IAS39. This is covered in more detail below. The primary segmental analysis in Note 3 to the financial statements details the segmental revenue and result. In aggregate the Group‘s gross margin decreased from 35.9% to 29.5%, with segmental margins affected mainly by continued competitive pressure in the UK, losses arising in France, contract issues in the Middle East and Australia and staff retention issues in Hong Kong and China. Despite reductions in administrative expenses, the segment results are each affected by these issues. An increase at the half year in work in progress on achievement of preferred bidder status on the Leeds Social Housing project of £362,000 has been de-recognised in the full year operating loss, due to the continued delay in financial close of the project. Details of exceptional costs and other items affecting the result for the year are provided at Note 5 to the financial statements. Exceptional costs of £1,263,000 (2011: £956,000) comprised in the main restructuring costs of £1,193,000 (2011: £694,000). Other items which are material to an understanding of the results, also detailed in Note 5 to the financial statements, totalled £500,000 (2011: a credit of £400,000) of which £602,000 related to the change in fair value of a derivative financial instrument under IAS39. There was little change in the exchange rates to sterling of our major trading currencies and little impact on either revenues or profits at the pre-interest level.

Cash performance

Cash (used by) / generated from operations was £(2.8m) (2011: £1.5m). Note 27 to the financial statements analyses this usage, which arises largely through working capital outflows. In particular, the Group‘s work in progress net of fees in advance increased to £5,766,000 (2011: £4,149,000) and gross receivables to £20,510,000 (2011: £19,272,000), though overdue amounts reduced to £6,486,000 (2011: £9,272,000) and there was a reduction in the impairment provision to £1,787,000 (2011: £2,370,000). The lock-up calculation, which measures the number of days‘ activity included within work in progress and debtors, incorporates an annualisation of revenues based on the last three months‘ revenues. Management of working capital is a key issue as the Group expands, particularly in the Asia Pacific region, and steps are being taken to improve its management such that operating cash flows are expected to improve.

Key Performance Indicators

A number of metrics are used to monitor financial performance. These include turnover, operating profit, cash collection, pre-exceptional administration costs, earnings per share and lock-up. Most of these Key Performance Indicators remained stable in the last year. The pre-exceptional administration expenses (loss) / earnings per share were (0.5)p (2011: 3.7p) and the average number of lock-up days for the final quarter was 87 (2011: 94). These have been covered in more detail in the business review. The financial performance by segment is reported in Note 3 to the financial statements.

Underlying profit margins

The gross profit margin was 29.5% (2011: 35.9%) and the operating profit margin was 0% (2011: 3.3%). The operating profit margin before exceptional administrative expenses was 1.5% (2011: 4.7%). Internal forecasts for the current year indicate a recovery in the gross margin, in part through the full-year impact of cost savings made in late 2011 and better trading profiles in Australia and the Middle East, Africa and India region.

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Finance costs

Note 4 to the financial statements discloses a cost of £0.6m relating to the change in fair value of a derivative financial instrument under IAS39. The circumstances were that a forward foreign exchange contract valued at AUD$11.1m to hedge advances in Australian dollars to a subsidiary company, the bulk of which were capitalised in September 2011, was rolled into a replacement instrument on maturity in March 2012 and is being accounted for as a derivative rather than a hedge. The hedge is effective for AUD8.5m, being the Group‘s net asset exposure to Australia, from 1 April 2012 having failed the stringent IAS39 documentation requirements for the year ended 31 March 2012. The balance of the contract is hedging advances to Australia.

Tax

The charge for the year of £391,000 on a reported loss of £1,021,000 arises predominantly through the impact of expenses not deductible for tax purposes and deferred tax relief not recognised. The 2011 charge of £680,000 was affected by lower tax rates on overseas earnings and the reversal of expenditure disallowed in previous periods, net of the determination of prior year liabilities.

Earnings per share

Basic (loss) / earnings per share decreased to (2.1) p (2011: 2.6 p) and fully diluted (loss) / earnings per share decreased to (2.1) p (2011: 2.6 p). Tax-adjusted (loss) / earnings per share prior to exceptional administrative expenses was (0.5) p (2011: 3.7 p).

Balance sheet

The Group ended the year with:

- Net borrowings of £8.2m, compared with £4.9m at 31 March 2011; - Net assets of £28.8m, which compared with net assets of £30.9m at 31 March 2011; - Work in progress (net of fees in advance) of £5.8m compared with £4.1m at 31 March 2011;

and - Trade receivables of £19.3m compared with £17.8m at 31 March 2011.

We continue to invest in property, plant and equipment and computer software to ensure that, as the business environment becomes more complex and technology evolves, the Group‘s IT systems and equipment are kept up-to-date and properly serve the business.

Banking facilities

The Group funds its activities through cash generated from operations and supplemented, where necessary and appropriate, with bank borrowings and asset funding. The Group‘s principal banker is Bank of Scotland plc, part of the Lloyds Bank group, which provides Sweett Group with overdraft, revolving credit, loan and contract guarantee facilities as well as a letter of credit facility in relation to the ongoing equity and debt obligations of the Group‘s PPP investment projects. At 31 March 2012, the amount undrawn under the Group‘s credit lines was £7m (2011: £7m). All of the borrowings under the Group‗s credit lines are shown in the financial statements as current liabilities. The reason for this is that two of the financial covenants, being the cash flow cover and gearing covenants, were infringed at 31 March 2012. Bank of Scotland plc has subsequently granted a waiver. The Bank of Scotland plc facility agreements contain five separate financial covenants being:

Net worth shall not at any time be less than £25m

The ratio of EBITDA to Total Interest shall not at any time be less than 4:1

The ratio of Net Operating Cash flow to Bank Debt Service on each test date shall not be less than 1.1:1

The ratio of Total Net Debt to EBITDA shall not at any time exceed 3:1

The value of CS Investments PPP investment portfolio as detailed in the annual audited accounts shall be no greater than 25% of the consolidated net assets

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Going concern

A detailed examination of the Group‘s cash flow and trading forecasts has been undertaken to enable the board to conclude that the Group can operate within its banking covenants such that it could be established that the Group should continue to prepare its financial statements on the going concern basis. Further information on going concern appears within Note 1 to the financial statements.

Internal Controls

In the established parts of the Group there are well developed policies and procedures to support a sound internal control environment. These policies are being rolled out across the enlarged Group but this standardisation is not yet complete. Systems enhancements over the next two years, based on the roll-out of the UK‘s Agresso ERP system across the group‘s overseas businesses, will further strengthen internal controls. Meanwhile more intense management review processes are in operation and it is intended to form a treasury committee to oversee matters of treasury control in an international environment. The corporate governance section of this Report outlines further issues of internal control within the Group.

Dividends

An interim dividend for the year to 31 March 2012 of 0.2 pence per share at a cost of £133,000 (2011: 0.5 pence per share at a cost of £325,000) was paid on 16 January 2012 to all shareholders on the register on 16 December 2011. The directors are recommending a final dividend of 0.3p per share at a cost, assuming no issues of shares in the intervening period, of £200,000 (2011: 0.8 pence at a cost of £530,000) which, if approved by the shareholders at the AGM, will be paid on 12 October 2012 to all shareholders on the register on 14 September 2012. A dividend reinvestment service is available through the Registrar.

Employee Benefit Trust

The Group‘s Employee Benefit Trust (EBT) is a separately administered discretionary trust in Jersey for the benefit of employees. Shares owned by the EBT are shown as a reduction in capital and reserves as Treasury shares. Periodically, payments are made by Sweett Group to the EBT to reimburse the EBT for awarding shares or transferring shares to employees on the exercise of options.

Share Incentive Plan

The Share Incentive Plan (SIP), originally launched in February 2001, enables UK resident employees to acquire shares in the Group out of untaxed income and provides a tax-efficient means of awarding shares to employees. Dividends received by the plan in cash are used to purchase additional shares on behalf of employees. Free shares may be awarded to qualifying employees based on remuneration. Shares held in the plan which have not been allocated to individual employees are shown as a reduction in capital and reserves as Treasury shares. The granting of matching shares whereby individuals‘ purchases of SIP shares were matched on a 4 for 5 basis was withdrawn with effect from 31 December 2010.

Summary

Sweett Group‘s underlying trading performance is expected to improve as the result of past cost reduction programmes and attention to consolidating its present global operations.

Chris Goscomb

Chief Financial Officer

Sweett Group plc (formerly Cyril Sweett Group plc)

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Governance

Although not required to do so by the AIM Rules, the directors have chosen to give selected disclosures on the main principles of the UK Corporate Governance Code 2010 (“the Code”) in so far as is practicable for a business of its size and nature. The Board is committed to high standards of Corporate Governance and considers sound governance and transparency to be fundamental to achieving its objective of enhancing shareholder value. Michael Henderson Non-executive Chairman

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Board of Directors

Michael Henderson FCA, FRSA, KHS

Non-Executive Chairman

Date Appointed: Appointed as Non-Executive Director in 1998 and Chairman in 2010. Committee Membership: Nominations Committee, Remuneration Committee, Audit Committee Skills & Experience: Michael enjoys a long standing reputation for his expertise and network in industrial

and financial management. Other Appointments: At present Michael is also Chairman of the Advisory Board of Quexco Inc., the

largest lead producer in the world. Past Appointments: He was Managing Director and Chief Executive of Cookson Group plc (a former

FTSE 100 company) for 12 years and has also been a Director of Guinness Mahon Holdings PLC and Tioxide Group PLC. He was also Chairman of Henderson Crosthwaite Ltd.

Age: 73

Dean Webster MBA, BSc, FRICS, MAPM

Chief Executive Officer

Date Appointed: Joined the Board in 2000 and was appointed CEO in 2005. Skills & Experience: Dean joined the Company in 1980, qualified as a member of the RICS in 1986, is a

member of the Association of Project Managers and has a Henley MBA. Between 1995 and 2004 Dean was responsible for steering the Company‘s project management business. Dean now drives the Group's overall strategy and the performance of the Group‘s overall business operations.

Age: 52

Chris Goscomb FCA

Chief Financial Officer

Date Appointed: January 2009. Skills & Experience: Chris‘ construction industry background brings valuable experience to Sweett Group

in both its UK and international business. Past Appointments: Prior to joining the board, Chris had worked as the Group Treasurer for nearly 2

years. Before he joined Sweett Group, Chris was Finance Director of EMCOR (UK) Limited and previously Group Finance Director of Biwater plc.

Age: 60

Derek Pitcher BSc, FRICS Dip.Proj.Man

Director of European Operations

Date Appointed: Derek joined Sweett Group in 1978, became a Partner at the age of 30 and Managing Director of the Quantity Surveying business in 1996. He joined the Board in 2000.

Skills & Experience: Derek is a managing Director with responsibility for the Group‘s operations in Europe, the Middle East and India. He is a Board Director of VVA Sweett joint venture in America, is responsible for a number of key accounts in the commercial and retail sectors and has led the Group‘s move into the nuclear and manufacturing sectors.

Other Appointments: Derek is the Honorary Treasurer of the British Council of Shopping Centres and an active member of BCO, Design and Build Foundation and also the RICS Procurement panel.

Age: 53

Sweett Group plc (formerly Cyril Sweett Group plc)

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Kim Berry LLB (HONS), MRICS, MHKIS, MCIarb, RPS (QS), F.PFM

Managing Director of Asia Pacific

Date Appointed: November 2011. Skills & Experience: Kim joined the Company in 1982 and became Managing Director of the Group‘s

operations in China and Hong Kong in 1987, building it into a business with over 500 staff across 12 offices. Kim is responsible for operations across the Asia Pacific region. Kim is a member of the RICS, HKIS, CIArb and holds an Honours Degree in Law. Kim serves on the RICS Hong Kong QS Faculty Committee and is a past member of the HKIS QS Divisional Council and a past Chairman of the HK Association of Consultant Quantity Surveyors.

Age: 58

Roger Mabey CMG, FCIOB, FRSA

Non-Executive Director

Date Appointed: September 2003. Committee Memberships: Chairman of the Remuneration Committee, Member of Nomination Committee and

Audit Committee. Skills & Experience: Roger has a wealth of knowledge of operating in international and UK construction

markets. He has 40 years‘ experience in the construction and property industry. He is currently, a Fellow of the Chartered Institute of Building and a Fellow of the Royal Society of Arts.

Other Appointments: Roger is the Chairman for Housing Solutions Limited and in 1997 was made a CMG (Companion of the Order of St Michael and St George) in recognition for export achievement and services to the construction industry.

Past Appointments: Managing Director at Bovis International Ltd and as Director at Bovis Lendlease Ltd. Aged: 67

Paul Nicholas Woollacott, BSc, CIGEM

Non-Executive Director - Senior Independent Director

Date Appointed: November 2007. Committee Membership: Chairman of the Nomination Committee, Member of Audit Committee and

Remuneration Committee. Skills & Experience: A former FTSE 100 Executive Director who has wide experience of developing,

acquiring and disposing of businesses in the UK and overseas. He has also had direct responsibility for running a workforce of over 15,000 people with still more contractors. As Senior Independent Director of Enterprise plc he was involved in its move from the AIM market to a full listing and then later, as Chairman, he oversaw its move into private-equity ownership. Subsequently, he was similarly involved in the transition of Goldshield plc from public to private-equity ownership.

Past Appointments: Senior Independent Director Goldshield plc, Chairman Enterprise plc, Board Member University of Hertfordshire, Group Managing Director Lattice plc and over 20 more national and international directorships.

Age: 64

Jeffrey Hewitt, FCA, MA, MBA

Non-Executive Director

Date Appointed: August 2010. Committee Membership: Chairman of the Audit Committee, Member of Nomination Committee and

Remuneration Committee. Skills & Experience: Jeff is a chartered accountant and has substantial experience as a Director of listed

companies, latterly in non-executive roles. He holds an Oxford MA in Chemistry and an MBA emphasising Finance and Marketing from Stanford, California.

Other Appointments: At present Jeff is also Director and Chairman of the Audit Committee of Cookson Group Plc, Director and Chairman of the Audit and Management Engagement Committee of Foreign & Colonial Investment Trust plc, Director and Chairman of the Audit Committee of Cenkos Securities plc and Chairman of Electrocomponents Pension Trustees.

Past Appointments: Jeff's past appointments are External Chairman of the Audit and Risk Committee of John Lewis Partnership and Executive Director of Electrocomponents Plc, Unitech Plc and Coats Plc.

Age: 64

Sweett Group plc (formerly Cyril Sweett Group plc)

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Corporate Governance Details are provided below of how the Company applies those parts of the Code which it believes to be appropriate.

Leadership

The Chairman is responsible for leadership of the Board and for ensuring effectiveness of the Board as a whole. The Board‘s role is to determine the strategic direction of the Group within a framework of best practice corporate governance and prudent and effective controls, which enables risks to be assessed and managed. It sets the Group's values and standards, including matters relating to corporate social responsibility, and ensures that its obligations to its shareholders and others are understood and met. The roles of the Chairman and Chief Executive are separate and clearly defined and a Senior Independent Director has been appointed. The role of the Non-executive Directors is to challenge constructively and review executive proposals, including the development of strategy. The Board‘s annual two day strategy retreat was held in March, which all Directors attended, and which gave the Board the opportunity to work in a very focussed way on the Group‘s strategy for the coming year. All Directors are expected to attend all meetings of the Board, and of those Committees on which they serve, and to devote sufficient time to the Company‘s affairs to enable them to fulfil their duties as Directors. The table below details the attendance of Directors at Board and Committee meetings they were eligible to attend in the year: Board Executive

Dean Webster 8/8 Derek Pitcher 7/8 Chris Goscomb 8/8 Eamonn Kerr 5/6 Kim Berry 2/2 Board Audit Remuneration Nomination Non-executive

Michael Henderson 8/8 3/3 3/3 4/4 Roger Mabey 8/8 3/3 3/3 4/4 Nicholas Woollacott 8/8 3/3 3/3 4/4 Jeff Hewitt 8/8 3/3 3/3 4/4

Specific responsibilities reserved to the Board include:

The acquisition or disposal of a business or of shares in a company;

The establishment of a new business or closure of an existing business;

The annual budget and strategic plan;

Significant capital expenditure, IT equipment and leasing arrangements;

Proposed contracts satisfying specific criteria;

Changes to the organisational structure or management structure; and

Dividend policy.

Effectiveness

The Board comprises four executive and four non-executive Directors, meeting every other month and additionally when necessary. In the reporting period there were 8 formal Board meetings and also a 2-day strategic planning workshop dealing with shorter term budgeting and longer term planning issues. Sub-committees of the Board meet as required. The Executive directors have long and deep experience of business in the sectors in which the company operates. This is complemented by the expertise of the Non-executive directors who have strong track records of running both large and smaller companies in diverse sectors both nationally and internationally. This collective mix of skills and experience is a major contribution to the proper functioning of the Board, ensuring matters are constructively challenged and fully debated and that no individual or group dominates the Board‘s decision-taking process.

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Directors are appointed by the Board on the recommendation of the Nomination Committee, for specified terms. They are subject to periodic re-appointment by shareholders and statutory provisions regarding removal. This applies equally to Non-executive directors and, because the non-executive Chairman of the Company has served on the Board in excess of nine years, with effect from 10 September 2010 he is subject to annual re-election at the Company‘s Annual General Meeting. The Board has determined that the Chairman continues to be independent in character and judgement and that the Company is fortunate to have someone of his calibre and expertise to lead it. Each non-executive Director has significant external commercial experience and brings this experience and judgement to the Board. The Board considers that all of the non-executive Directors are independent of management and have no business or other relationships which could materially interfere with or affect the exercise of their independent judgement. None has previously been involved in the management of the Company. Nicholas Woollacott was appointed Senior Independent Director on 30 November 2010. When required he presides at meetings of the Board and shareholders in the absence of the Chairman and is available should occasion arise where there is a need to convey concerns to the Board other than through the Chairman, the Chief executive and the other executive Directors. All Directors have access to the advice and services of the Company Secretary and there is a procedure for Directors to seek independent professional advice, in furtherance of their duties, at the Company‘s expense. The Company Secretary is responsible for advising the Board, through the Chairman, on all governance matters. Under the direction of the Chairman, the Company Secretary ensures that the information presented to the Board is timely and of sufficient quality to enable members to make informed decisions and ensures good information flows within the Board and its Committees and between Senior Management and non-Executive Directors. The Board is committed to evaluating its own performance, that of its Committees and its individual Directors. Individual Board members (executive and non-executive) are evaluated annually on similar timing to the Company-wide appraisal system. This is led by the Chairman of the Board generally and by the Senior Independent Director in relation to the Chairman. The Board conducted its last effectiveness review in 2009 and although the Code recommends a review be conducted every year, the Board considers it to be more reasonable to hold the effectiveness review when required rather than every year. The Board will be conducting an effectiveness review in 2013. Nominations Committee The members of the Nominations Committee are the non-executive Directors. It meets at least twice a year and is responsible for reviewing the Board‘s structure, size, composition, balance of skills, experience, independence and knowledge. During the period the Nominations Committee advised the Board on appointments and resignations to and from the Board, succession planning, as well as reviewing the position of Chairman. A new executive Director was appointed to the Board in November 2011. As the candidate had a proven and impressive track record of achievement in the Asia Pacific Region and proved to be an ideal candidate for the role, no search agents were used on this occasion. The candidate‘s knowledge and abilities in running the Group‘s Far Eastern operations were seen as a valuable addition to the Board and an important step given the Group‘s ambitions in that region. When considering a new candidate the Nominations Committee takes into consideration relevant experience, knowledge, skills and suitability for the Board and the Company to ensure the best possible leadership and strength on the Board. Succession planning for the Group, Senior Management and the Board are in place and are continually updated as part of a Company-wide succession planning programme. The Nominations Committee leads this process for the Board. During the year the Nominations Committee assessed the appropriateness of the non-executive Chairman and concluded that although he had served in excess of nine years, he remains fully independent in character and judgement and continues to be an ideal leader for the Board, bearing in mind his very extensive business experience and expertise.

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Accountability

The Board is responsible for establishing, reviewing and maintaining the Group‘s systems of internal control and risk management and ensuring that these systems are effective for managing the business risk within the Group. The Group has established a framework for identifying, evaluating and managing significant risks faced by the Group. It is the responsibility of the management to ensure that the controls and procedures that operate within the framework are followed and that the Board is kept fully appraised of any risks and control issues, both operational and financial. The Board recognises that any system of internal control exists to minimise the risk of failure rather than eliminate it and that any system of internal control can only provide reasonable, not absolute, assurance against material misstatement or loss. Work to reduce operational and financial risks and to improve the control environment is ongoing across the Group and will include the formation of a treasury committee in the current year. The risk management of joint ventures and strategic partnerships is agreed between the parties and periodic reviews carried out where appropriate. The Group reviews the effectiveness of the risk management system and its internal controls annually. Following on from the assignments performed last year in the UK and overseas by KPMG LLP, the internal auditors, an Internal Control Self Assessment Review has recently been introduced by them in respect of all of the Group‘s trading entities. This has supported the directors in assessing the effectiveness of the group‘s system of internal control. The outputs are being used to identify future internal audit priorities and assignments. This exercise is part of the ongoing process for identifying, evaluating and managing the significant risks faced by the group. The roll-out of a standardised Agresso ERP system, already embedded in the UK, across the group is expected to improve significantly the internal control environment. The UK product has been improved during the year and implementation in the overseas businesses is scheduled to commence later in the financial year. Audit Committee The Company‘s Audit Committee comprises the non-executive Directors and meets not less than three times per year. Jeff Hewitt, a qualified accountant, is Chairman of the Committee. The Board is satisfied that Mr Hewitt has the necessary recent and relevant experience to meet the requirement in the Code. The Company‘s Chief Executive Officer, Chief Financial Officer and the Company‘s auditors, PricewaterhouseCoopers LLP and internal audit providers KPMG LLP, are normally invited to attend Audit Committee meetings and other executives are invited to attend as and when appropriate. The Audit Committee operates under formal terms of reference that were reviewed in the year. The terms of reference authorise the Committee to obtain external professional advice as necessary. The main role and responsibilities of the Audit Committee are:

To review the half-year and annual financial statements and reports thereon, of the Company before their submission to the Board;

To review the process whereby the Board assesses the effectiveness of the Group‘s internal control and risk management systems;

To consider other topics, as defined by the Board, such as the Company‘s policies for preventing or detecting fraud, its code of corporate conduct/business ethics, or the policies for ensuring that the company complies with relevant regulatory and legal requirements;

To review the performance of the Company‘s external and internal auditing functions;

To review the results and cost effectiveness of the audit and the independence and objectivity of the external auditors;

To make recommendations to the Board on the appointment of the external auditors, the audit fee and any questions of resignation or dismissal relating to the auditors; and

To strengthen the independent position of the Company‘s external auditors by providing channels of communication between them and the non-executive Directors.

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The main responsibilities of the Audit committee as discharged during the period were as follows:

At its meetings in June and November 2011, the Audit Committee reviewed the Company‘s Half-Yearly Report and Annual Results Announcement/Annual Report and Accounts, respectively. On both occasions, the Committee received reports from management on significant aspects of the Group‘s financial statements and reports from the Auditors identifying any accounting or judgemental issues requiring its attention;

At each of the three meetings held during the year, the Committee received reports from the internal auditor, KPMG, which considered, among other things, the ongoing internal audit programme, which included an Internal Control Self Assessment Questionnaire; and

The Committee also reviewed the External Auditors‘ control findings and monitored the updating of the risk register by management.

The Audit Committee is responsible for making recommendations to the Board in relation to the appointment, reappointment and removal of the Auditors. The Committee takes into consideration a number of factors including the quality of reports provided by the auditors and of advice given, the level of understanding demonstrated of the Company‘s businesses, the objectivity of the auditors‘ views on the controls throughout the Company, ability to co-ordinate a global audit, the cost competitiveness of the auditors, the tenure of incumbent auditors and the periodic rotation of the senior audit management assigned to the audit of the Company. Having considered these factors the Committee agreed to recommend the auditors for reappointment. As PwC has a long standing tenure as the Company‘s Auditor, the rotation of the senior audit partner was made at the commencement of the year. Where the auditors have provided non-audit services, the committee has ensured protection of their objectivity and independence taking account of relevant ethical guidance. Details of all fees paid to the auditors are included within Note 5 to the financial statements. The outsourced internal auditors, KPMG LLP, report to the Committee, which reviews and approves the internal audit work programme each year. An Internal Control Self Assessment Questionnaire was rolled out towards the end of the period on a global basis. The purpose of the control self assessment was to improve control consciousness amongst Sweett Group entities and give the Group comfort that the minimum standard of controls is in place across the key financial and IT processes within each entity, as well as identify gaps or weaknesses in the existing control framework against which to put action plans. It forms an important part of the Group approach to ensuring effective compliance with good corporate governance practice and will assist in setting priorities for the coming year. The Group has established a whistleblowing policy as part of its ethical guidelines to encourage openness and an environment where any relevant matter can be reported to management. The policy was rolled out across the Group during the year. A helpline is operated 24 hours a day, seven days a week, by an external organisation that specialises in these services. The policy was rolled out in English and Chinese and the facility is available to all group employees. An Anti Bribery and Corruption policy was developed during the year and training was rolled out to all employees globally. The training was conducted through an e-learning module and further information on Anti Bribery and Corruption is available to all staff on the intranet. The Board applies a zero tolerance approach to any breach of the Anti Bribery and Corruption Policy.

Remuneration

The Board has established a Remuneration Committee which meets at least twice a year and in the past year met 3 times. It reviews the performance of the executive Directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interest of shareholders. During the year the Committee implemented the PSP approved by shareholders at the last General Meeting. Options were granted to Executive Directors Dean Webster, Derek Pitcher and Chris Goscomb. The PSP was designed by external consultants, with performance conditions that are stretching and promote the long-term success of the Company. Further details on the PSP can be found in the Directors‘ remuneration report on pages 25 to 29.

Relations with shareholders

The Board is committed to a continuing dialogue with its shareholders. The Chairman ensures that the views of shareholders are communicated to the Board as a whole.

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Following the announcement and presentation of the interim and year end results, there is a series of formal meetings with institutional shareholders. These meetings enable the executive Directors to appraise the investors of the Group‘s business and future plans and the shareholders can communicate any concerns they may have. The Group‘s brokers and financial PR advisors provide feedback from the shareholder and analyst meetings and present the results to the Board. The Group‘s investor relations section on its website contains information on the Group‘s financial results and its stock exchange announcements. Additionally, the AGM provides a useful interface with shareholders. All shareholders are invited to attend the AGM and all members of the Board will be available at the meeting to answer questions. Full Interim and Annual Reports are made available to all shareholders. For and on behalf of the Board Danielle Pass Company Secretary 3 September 2012

Sweett Group plc (formerly Cyril Sweett Group plc)

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Risk management and principal risks and uncertainties

Risk management

Risk management involves identifying the principal risks relating to the Group and its business objectives, establishing appropriate controls to manage those risks and ensuring that associated monitoring and reporting systems are in place. The Group‘s risk management process balances the cost of mitigation or elimination against the perceived risk exposure and is consistent with the prudent management of a diverse professional organisation. As with internal controls, risk and its management vary in some of our international operations for reasons of scale and, for companies acquired, in the immediate post-acquisition period. The Group is exposed to a range of risks and uncertainties, the principal ones of which are:

Market conditions

Changes in the prevailing general market conditions present a risk to operations, in particular because construction spend can vary significantly depending on the economic outlook. Some of the market sectors in which the Group operates are funded and regulated by government bodies. These sectors are subject to changes in government policy, spending, regulation and procurement practices. The Group is also at risk, particularly in developed markets from continuing static or reducing spend in the private sector, which is a function of changing demand patterns and lack of funding availability. Further, there is a risk posed by the ongoing global financial crisis, recently exacerbated by instability in the Euro zone.

We mitigate these risks by continuing to diversify across a broad spectrum of sectors and geographies, regularly monitoring public sector spending patterns and ensuring that our resource levels are aligned to market activity with key employees retained within the business.

Growth and integration

The Group‘s policy is to spread its risks by developing overseas. This brings its own risks in terms of control of the targets and their integration into the Group, its systems and business practices.

These risks are mitigated by thorough due diligence reviews of potential targets, particularly of their finances and human resources, by internal and external means and also through a prompt and structured introduction of the Group‘s policies, procedures, standards and management control systems.

Financial

Financial risks are inherent in the Group‘s business, mainly in respect of liquidity and covenant compliance, which could affect considerations of going concern as highlighted in Note 1 to the financial statements, foreign currency, interest rates, credit and capital. The Board reviews and agrees policies for managing each of these risks and they are summarised at Note 28 to the financial statements. The principal foreign exchange exposures in the group relate to net assets in overseas subsidiary undertakings and cross-border inter-company loans from the UK. The bulk of the latter were capitalised during the year. The Australian dollar exposure continues to be hedged. It is the Group‘s policy that no speculative trading in financial instruments shall be undertaken.

Systems and IT

In common with most businesses, the Group is dependent on its operational and IT systems and their reliability for the protection of its intellectual capital, service delivery and the availability of timely management information. There is a latent risk of downtime, data loss, insufficient capacity and disparity in the manner in which the core systems are operated. Management is mitigating these risks by moving all of the Group‘s businesses onto a common ERP system with consistent operating criteria, infrastructure, back-up and disaster recovery. Work to fully integrate recent overseas acquisitions into the standard Group IT infrastructure configuration continues as well as constant review and upgrade of local processing and data transfer capacity.

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Reputation

The Board considers reputational risk to be one of the most significant risks in a professional service organisation. Our reputation for being able to deliver large projects to a high technical standard is critical to how our clients perceive the business, how we are portrayed in the public arena and thus our ability to secure new commissions. Awareness of the importance of the Group‘s reputation and individual integrity underpins our business ethics and culture. Management mitigates this risk by ensuring that robust cost and project management systems are linked to internal quality processes, which are regularly audited by independent consultants against industry standards. These delivery processes are supported by policies and procedures which reinforce the importance of high ethical standards.

People

The Board is proud of the dedication and commitment of the people who work for the Group and grateful for their continued contribution despite challenging market conditions. The Group aims to provide clients with excellence in service delivery based on trust, continuity and understanding of each client‘s business objectives. Attracting and retaining talented professionals therefore remains a key objective of the Group. To mitigate the risk of staff attrition, the Group maintains a number of staff awards and recognition programmes, a clear, transparent career structure with promotion based on merit and a comprehensive ongoing programme of training and educational support. Staff are regularly updated on progress in the business and invited to put forward their suggestions and opinions for improvements in the overall performance of the business. Individual development needs and career aspirations are discussed as part of the annual performance review and the regular ―one to one‖ processes.

Health, safety and the environment The Group‘s business is concerned with the built environment and this presents risks and impacts in terms of health, safety and the environment. Should the Group‘s policy or practice in this area prove inadequate there is a consequent risk to employees, clients, contractors and third parties. In mitigation, given that the Group takes its health, safety and environmental responsibilities very seriously, policies are in place setting out its approach to these matters. The Group‘s policies are supported by a range of more detailed guidance and documentation, which have now been standardised across the regions of operation and are subject to audit checks. In addition, the company has specialist teams engaged in the delivery of specialist external professional services in both Health & Safety and Sustainability. The experience and knowledge of these teams is drawn upon to inform our own internal processes.

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Directors’ remuneration report

Unaudited information The following disclosures are sufficient to meet the AIM rules requirements.

Remuneration Committee

The Remuneration Committee comprises the non-executive Directors of the Company and is chaired by Roger Mabey.

Executive Directors’ remuneration policy

The Remuneration Committee determines the overall remuneration package for each executive Director, with the aim of attracting, motivating and retaining executive directors of a high calibre. To this end, the Remuneration Committee takes external independent advice where it considers it appropriate to do so. Basic salary The salary of each executive Director is determined by the Committee, taking into account their personal performance and the prevailing rates in the employment market for executives of comparable status, responsibility, skill and position in other relevant companies. When determining Directors‘ salaries the Committee is always sensitive to pay and employment conditions throughout the Group. Executive bonus scheme Entitlement to all amounts due under the Executive bonus scheme for the years to 31 March 2010 and 2011 were waived. Nothing is due in respect of 2012. Share Option Plans The executive Directors hold options under the Enterprise Management Incentive share options scheme, the HMRC approved Company Share Option Plan and the unapproved Company Share Option Plan. The Company no longer qualifies to grant further options under the Enterprise Management Incentive scheme. New scheme rules for both the approved and unapproved plans were put in place in June 2010, the approved scheme rules having received consent from HMRC. The Executive Directors previous participation in award of share options has been replaced by the PSP scheme detailed below. Performance Share Plan („PSP‟)

As explained earlier and in last year‘s report, the executive Directors received no further share options under the EMI scheme as a new performance share plan (‗PSP‘) was implemented during the year. The Committee made awards under the PSP to three of the executive Directors in the last financial year and intends to make awards to all four and one Executive Committee member in the current financial year. The conditions and performance criteria governing the new scheme for a 3 year performance period are cumulative earnings per share targets, lock-up days targets and relative total shareholder returns performance targets, each applying to a third of achievable awards. Details are provided below.

Details of the PSP structure are set out below.

Year of Grant Level of award Performance period

Performance Conditions

Weighting of performance conditions

2011 75% of salary Three years Cumulative EPS

Total Shareholder Return

Average Lock-up days

33.33%

33.33%

33.33%

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The performance conditions: Cumulative Earnings per Share („EPS‟) One third of the total number of shares subject to an option (rounded down to the nearest whole number of Shares) is subject to the EPS Performance Condition. The EPS Performance Condition is that cumulative EPS must be at least 15.0 pence. After the first year‘s performance, the Remuneration Committee found it appropriate to amend this performance criterion to at least 10.0 pence for the 3 years 2013/14/15 to make it more fair and reasonable. Vesting under the EPS condition is as follows:

Performance Condition Granted in 2011 To be granted in 2012

Cumulative EPS Less than 15p 0% Less than 10p 0%

15p 25% 10p 25%

Between 15p &

18p

Between 25% and

100%*

Between 10p &

14p

Between 25%

and 100%*

18p or more 100% 14p or more 100%

*On a straight line basis

The Total Shareholder Return and Average Lock-up Days‘ performance conditions remained unchanged. Total Shareholder Return („TSR‟) One third of the total number of shares subject to an option (rounded down to the nearest whole number of Shares) is subject to the TSR Performance Condition. The TSR Performance Condition is that the Company's Total Shareholder Return over the performance period must be at least equal to the Total Shareholder Return of the Index over the same period. Vesting under TSR Performance Condition is as follows:

Performance Condition Granted in 2011 To be granted in 2012

Total Shareholder Return Exceed index by 20% 100%

Exceed index by 20% 100%

Equal to index 25% Equal to index 25%

Between the above levels 100%*

Between the above levels 100%*

Less than the index 0% Less than the index 0%

* On a straight line basis

Lock-up Days Any shares subject to an option that are not subject to the EPS Performance Condition or the TSR Performance Condition are subject to the Lock-up Days Performance Condition. The Lock-up Days Performance Condition is that the percentage reduction in the Company's average lock-up days over the Performance Period must be at least 2%. Vesting under Lock-up Days Performance Condition is as follows:

Performance Condition Granted in 2011 To be granted in 2012

Average Lock-up days Less than 2% 0% Less than 2% 0%

2% 25% 2% 25%

Between 2% and 9%

Between 25% & 100%*

Between 2% and 9%

Between 25% & 100%*

Equal to or greater than 9% 100%

Equal to or greater than 9% 100%

*On a straight line basis

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Other benefits Each of the executive Directors is provided with the use of a car or receives an annual cash allowance in lieu of this provision. Each also has the option of receiving the benefit of private medical insurance for themselves and / or their spouse and / or children. Other benefits provided include the payment of professional subscriptions and access to the Group‘s gym membership scheme.

Non-executive Directors’ remuneration policy

The remuneration of the non-executive Directors is determined by the Board and the level of remuneration reflects the time commitment and responsibilities of their roles.

Service contracts

Details of the Directors‘ service agreements are set out below: Directors

Date of agreement

Notice period by Company

Notice period by director

Executives

Dean Webster 31 October 2007 12 months 12 months

Derek Pitcher 31 October 2007 12 months 12 months

Christopher Goscomb 1 April 2010 12 months 12 months

Kim Berry 1 April 2012 12 months 12 months

Non-executives

Michael Henderson 31 October 2007 3 months 3 months

Roger Mabey 31 October 2007 3 months 3 months

Nicholas Woollacott 21 November 2007 3 months 3 months

Jeffrey Hewitt 29 July 2010 3 months 3 months

Directors’ emoluments

Directors

Salary/ fees

£000

Benefits in kind

£000

Compensation for loss of

office

Total 2012 £000

Total 2011 £000

Pension 2012 £000

Pension 2011 £000

Executives

Dean Webster 187 4 - 191 171 21 16

Derek Pitcher 135 15 - 150 157 10 10

Christopher Goscomb 127 1 - 128 127 17 11 Eamonn Kerr * (executive from 12 March 2010 to 1 December 2011) 87 1

183 271 135 4 6 Kim Berry * (executive from 1 December 2011) 49 1 - 50 - 1 -

Non-executives

Michael Henderson 75 - - 75 57 - -

Roger Mabey 33 - - 33 34 - -

Nicholas Woollacott 33 - - 33 33 - -

Jeffrey Hewitt 33 - - 33 22 - -

Francis Ives - - - - 38 - -

759 22 183 964 774 53 43

* Emoluments in respect of the period during which they served as directors.

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The compensation for loss of office payment to Mr E Kerr, who resigned on 1 December 2011, comprised payment in lieu of notice of £107,250, compensation for loss of employment of £47,400, gratuity arising from his employment in the United Arab Emirates of £19,500, contribution towards accommodation and flights after employment of £8,000 and contribution towards Mr Kerr‘s legal costs of £1,000. The discretionary elements of this compensation were approved by the Remuneration Committee and were paid in respect of past services to the company. The Directors are not accruing benefits under the defined benefit pension scheme (2011: £nil). The executive directors were not entitled to bonuses in respect of 2012 (2011: £8,000, which was waived).

Directors’ share options

At the end of the year, the following Directors had unexercised options to purchase Ordinary shares:

Director Date of Grant

Earliest exercise date Expiry date

Exercise price

(pence per

share)

Number at 31

March 2011

Granted in the year

Exercised in the year

Lapsed in the year

Number at 31

March 2012

D Webster 28/11/2005 28/11/2008 28/11/2015 33.5 59,701 - - - 59,701

31/10/2007 31/10/2010 31/10/2017 110.0 100,000 - - - 100,000

20/04/2009 20/04/2012 20/04/2019 33.0 153,939 - - - 153,939

D Pitcher 06/10/2003 06/10/2006 06/10/2013 20.8 216,346 - - - 216,346

28/11/2005 28/11/2008 28/11/2015 33.5 59,701 - - - 59,701

31/10/2007 31/10/2010 31/10/2017 110.0 75,000 - - - 75,000

20/04/2009 20/04/2012 20/04/2019 33.0 108,788 - - - 108,788

C Goscomb 31/03/2008 31/03/2011 31/03/2018 94.5 30,000 - - - 30,000

20/04/2009 20/04/2012 20/04/2019 33.0 106,061 - - - 106,061

E Kerr * 06/10/2003 06/10/2006 06/10/2013 20.8 96,154 - - - 96,154

28/11/2005 28/11/2008 28/11/2015 33.5 44,776 - - - 44,776

16/10/2006 16/10/2009 16/10/2016 42.7 75,000 - - - 75,000

31/10/2007 31/10/2010 31/10/2017 110.0 50,000 - - - 50,000

20/04/2009 20/04/2012 20/04/2019 33.0 106,061 - - - 106,061

* E Kerr resigned on 1 December 2011 and his options lapsed on 30 June 2012.

None of the terms and conditions of the share options was varied during the year. All options were granted in respect of qualifying services.

Performance Share Plan (‘PSP’)

Director Date of Grant

Shares allocated

during the year

Shares vesting during

the year

Shares lapsed during

the year

Total share allocations

outstanding as at

31 March 2012

Market price of shares on day before award

Performance period of EPS and

lock up

Performance period of

TSR

Earliest Vesting

date Dean Webster 09/12/2011 668,317 - - 668,317 0.205

01/04/2011 – 31/03/2014

09/12/2011 – 10/12/2014

09/12/2014

Derek Pitcher 09/12/2011 501,238 - - 501,238 0.205

01/04/2011 – 31/03/2014

09/12/2011 – 10/12/2014

09/12/2014

Chris Goscomb 09/12/2011 482,673 - - 482,673 0.205

01/04/2011 – 31/03/2014

09/12/2011 – 10/12/2014

09/12/2014

Sweett Group plc (formerly Cyril Sweett Group plc)

29

None of the terms and conditions of the PSP share options was varied during the year. All options were granted in respect of qualifying services. The awards have no exercise price as they are nil-cost options. They are used solely as the basis for computing cash bonuses that may become due under the PSP.

The market price of the Company's shares at the end of the financial year was 23p and the range of market prices during the year was 16.5p to 47p.

Directors’ interests in shares

The interests of the Directors (including their spouses‘ interests) in the shares of the Company at 31 March 2012 were as follows:

Directors At 31 March 2012 At 31 March 2011

Ordinary Shares Ordinary Shares

Dean Webster 1,017,061 990,634

Derek Pitcher 1,679,454 1,619,645

Christopher Goscomb 206,370 160,068

Eamonn Kerr (resigned on 1 December 2011) - 251,231

Michael Henderson 372,011 340,181

Roger Mabey 309,198 291,148

Nicholas Woollacott 93,000 73,000

Jeffrey Hewitt 30,000 30,000

Kim Berry (appointed on 1 December 2011) 3,427,186 -

Pensions

None of the current Directors is a member of the Final Salary Pension Scheme.

This report has been approved by the Board and was signed on behalf of the Board by:

Roger Mabey

Chairman of the Remuneration Committee 3 September 2012

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Report of the Directors The Directors present their report and the audited consolidated financial statements of Sweett Group plc and its subsidiary undertakings for the year ended 31 March 2012.

Principal activities

The principal activities of the Group, through its subsidiary undertakings, continue to be the provision of construction cost consultancy, project management and other specialised consultancy services, including building surveying. During the year these services were delivered through a network of wholly-owned companies and offices in Asia Pacific, including Hong Kong and China, Australia, France, India, Ireland, the Middle East, Spain and the UK. The Group has branches in Abu Dhabi, Dubai and Sri Lanka, The principal activity of the Company is that of a holding company. The Company is domiciled in the UK.

Business review

Details of the Group‘s performance and activities during the year are contained in the Chairman‘s Statement, the Chief Executive‘s Review and the Financial Review on pages 5 to 14. A commentary on banking and going concern issues is contained in the Financial Review on pages 12 to 14.

Results

The results for the year and the Group‘s financial position at the end of the year are shown in the attached financial statements.

Change of name

The Company‘s name was changed from Cyril Sweett Group plc to Sweett Group plc on 23 January 2012 as part of the Group‘s global rebranding initiative.

Future developments

An indication of future developments is contained in the Chairman‘s Statement and the Chief Executive‘s Review on pages 5 to 11.

Dividends

The Directors recommend the payment of a final dividend of 0.3p per share (£200,000) (2011: 0.8p (£530,000)), making, with the interim dividend of 0.2p per share (£133,000), a total dividend of 0.5p per share (£333,000) (2011: 1.3p (£855,000)).

Post balance sheet events

On 26 July 2012 the Company announced the completion of the disposal of the Group‘s interest in the Inverclyde Schools PFI Project. This disposal was the conclusion of a pre-paid option agreement entered into in January 2012 under which the consideration of £2,192,860 was paid immediately in cash.

Directors and their interests in the shares of the Company

The Directors who held office during the year and up to the date of signing the financial statements were as follows:

Dean Webster Michael Henderson (non-executive)

Derek Pitcher Roger Mabey (non-executive)

Christopher Goscomb Nicholas Woollacott (non-executive)

Kim Berry (appointed on 30 November 2011) Jeffery Hewitt (non-executive)

Eamonn Kerr resigned on 1 December 2011.

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Details of the Directors‘ interests in shares in the Company appear in the Directors‘ remuneration report on pages 25 to 29.

Substantial interests in shares

As at 30 August 2012, the following interests in 3% or more of the Company‘s ordinary share capital had been notified to the Company:

Number of shares Percentage held

Cyril Sweett Trustee Company Limited 10,067,955 15.18

Octopus Investments Nominees Limited 6,986,859 10.54

Close Asset Management Limited 5,747,512 8.80

Mr Kim Berry 3,452,186 5.21

Mr Francis Ives 2,894,141 4.36

Treasury shares

Treasury shares included in the annual financial statements comprise Sweett Group plc (formerly Cyril Sweett Group plc) ordinary shares held by the Sweett Group Employee Benefit Trust and the Sweett Group Share Incentive Plan, details of which are included at Note 24 to the annual financial statements.

Employment policy

The Group is an Equal Opportunity Employer in the UK and its policy is to ensure greater diversity and inclusion. It seeks to ensure that all employees and job applicants are given equal opportunity, irrespective of their sex, race, ethnic origin, disability, age, marital status, sexual orientation or religious affiliation in all respects of employment and training and that no such person is placed at a disadvantage by requirements or conditions which cannot be shown to be justified. The Group encourages, where possible, the employment of disabled people and retention of those who become disabled during their employment with the Group. Such individuals will be encouraged and supported to take advantage of the Group‘s learning and developments initiatives and career progression opportunities. The Group seeks to ensure that all its businesses operate sound and progressive employment policies and promotes initiatives to attract and retain talent and promote employee engagement. Consultation and communication with employees continues at all levels, with the aims of ensuring that their views are taken into account when decisions are made that are likely to affect their interests, that information is promulgated on matters of concern to them, that all employees are aware of the financial and economic factors that may affect the performance of their business units and of the Group as a whole. This is achieved, for example, by a regular CEO blog on the intranet. The Group encourages employees‘ interest in its financial performance through various share schemes, details of which are included at Notes 24 and 25 to the financial statements. The Group‘s strategy is to position itself as an employer of choice in its sector.

Environmental policy

The Group recognises the benefits of sustainable construction and protecting the environment whilst carrying out construction projects and associated activities. All activities are undertaken in a manner that manages the Group‘s environmental impact, fulfils opportunities to enhance the environment, prevents pollution, minimises waste, controls noise, uses materials and resources efficiently and protects wildlife. The Group has underpinned its commitment to managing the environmental impact of its operations by gaining ISO 14001 certification for the Environmental Management System for its head office with a programme underway for roll out to other regional offices in the UK. It is working to deliver environmental objectives of: reducing waste and encouraging recycling, investigating ways of minimising resource consumption and developing environmental requirements for new offices.

Sweett Group plc (formerly Cyril Sweett Group plc)

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Sweett Group‘s corporate goal is to leverage its environmental expertise to create the most cost effective solutions for the sustainable built environment by:

embedding sustainability expertise into its core services to enable staff to actively contribute to the sustainability of projects;

increasing the degree to which all staff have developed their sustainability knowledge; and

appointing an expert specifically tasked with supporting the operational business with the tools and data they need to realise this goal.

Sweett Group has signed up to the UK‘s Waste and Resources Action Programme (WRAP) voluntary agreement. This is a commitment to halving the amount of construction, demolition In the previous year, Sweett Group signed up to the UK‘s Waste and Resources Action Programme (WRAP) voluntary agreement. This is a commitment to halving the amount of construction, demolition and excavation waste going to landfill by 2012 through promoting a best practice approach to waste minimisation and management. Sweett Group was the first cost consultancy business to make this commitment, driven by its goal of helping clients to reduce cost and improve environmental performance. The Group complies with environmental legislation and environmental codes of practice applicable to the construction industry.

Corporate social responsibility

Sweett Group recognises the value of Corporate Social Responsibility (CSR) and resources are devoted to improving environmental, economic and social impact in the areas in which the Group operates. It strives to continually improve its CSR strategy, encompassing four main areas: Charity In the year, the Group focused its fundraising activities on its nominated corporate charity, Maggie‘s Cancer Caring Centres. It has also recently commenced project management pro-bono work for the charity. In addition, it supports efforts by staff to raise funds for other specific causes that align with the CSR strategy.

Community Over the past year, the Group has worked to strengthen ties with local communities to create better local environments. Project directors are responsible for maintaining good relationships and ensuring business is conducted in a socially responsible manner. Over the coming year the intention in the UK is to build on work in the community by implementing an education programme to assist students in local schools with their literacy and numeracy skills. This will offer unique staff development opportunities and ultimately build strong and long-lasting relationships with children from a wide-range of backgrounds where learning transpires for staff and students alike. Environment

The Group‘s commitment to environmental issues is detailed under Environmental Policy above. People

As a diverse and expanding business, Sweett Group continues to deliver high quality service to its clients as well as providing a supportive work environment with ongoing career development prospects for staff. The CSR strategy is a mechanism for boosting morale, fostering team spirit and improving the health and well being of staff. To this end, the Group has introduced a range of initiatives and also runs an achievement awards programme to recognise and reward dedication and exceptional performance amongst staff.

Health and safety policy

It is the Group‘s policy to fulfil its duties under the Health and Safety at Work Act 1974 and all other associated acts and legal obligations applicable to the construction industry in the UK and overseas. The Health and Safety Policy sets out the arrangements in place, including the roles and responsibilities of all relevant parties, for managing health and safety across the organisation.

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Hazards specific to Sweett Group have been identified and any further actions to reduce or control these are prioritised in a health and safety plan which sets out the objectives for continual improvement in health and safety management and aims to ensure that the Group achieves best practice. Where necessary the Policy is supported by more detailed guidance. All guidance is reviewed and updated on a regular basis to ensure that it remains legally compliant, is accurate and reflects contemporary best practice. The Policy and Plan are reviewed at least annually when there are changes in legislation that may affect the organisation or changes in work practices. The Group provides suitable and sufficient resources to implement the arrangements set out in the Policy, including information, instruction and training as required. All staff are informed of their responsibility to take care of their own health and safety and actively participate and co-operate with the Group to enable it to discharge its statutory responsibilities and fulfil its desire for continual improvement in all safety, health and welfare matters.

Supplier payment policy

The Group applies a policy of agreeing and clearly communicating terms and conditions for business transactions with its suppliers. Payment is then made in accordance with these terms, subject to terms and conditions being met by the suppliers. As at 31 March 2012 the Group had 41 (2011: 21) days of purchases in trade payables and the Company had no trade payables (2011: none).

Whistleblowing policy

The Group has established a whistleblowing policy as part of its ethical guidelines to encourage openness and an environment where any relevant matter can be reported to management. This policy was rolled out across the Group during the year.

Directors’ and officers’ liability insurance

In so far as permitted by law, every Director shall be indemnified by the Company against all costs, charges, expenses, losses or liabilities incurred in the execution and discharge of the Directors‘ duties, power or office. The Company maintains Directors‘ and officers‘ liability insurance, the terms and indemnity limits of which are reviewed annually and considered to be adequate. This insurance was in place during the financial year and also at the date of approval of the financial statements.

Risks and uncertainties

Details of the principal risks and uncertainties faced by the Group can be found under Risk Management and Principal Risks and Uncertainties on pages 23 and 24.

Corporate governance

A report on the Group‘s corporate governance compliance is set out in the corporate governance section of this annual report on pages 15 to 22.

Donations

During the year, the Group made various charitable contributions totalling £3,759 (2011: £8,288) details of which are as follows:

2012 2011

£ £

Children‘s charities - 2,550

Charities Aid Foundation and other registered charities 2,561 4,163

Other non registered charities 875 950

Donations of £200 or less: 10 (2011: 10) 323 624

3,759 8,288

There were no political donations during the year (2011:£nil).

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Disclosure of information to auditors

In the case of each of the Directors at the time of approval of this report, each Director confirms that:

so far as the Director is aware, there is no relevant audit information of which the company's auditors are unaware: and

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

Auditors

PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a resolution that they be re-appointed will be proposed at the annual general meeting.

Going concern

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group‘s financial statements. Further details on going concern are set out in Note 1 to the financial statements. The board notes that the matters set out therein, were their impact aggregated, indicate the existence of a material uncertainty which may cast doubt about the Group's ability to continue as a going concern. Nevertheless, the directors are confident that they have the right strategy and action plan to operate within the requirements of the bank covenants and, on this basis, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group‘s financial statements.

Forward-looking statements

Certain statements in this annual report and accounts are forward-looking. Although the group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risk and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Annual General Meeting

The Annual General Meeting of the shareholders will be held in the Chicago/Hong Kong conference rooms at Holborn Gate, 26 Southampton Buildings, London WC2A 1PB on Wednesday 26 September 2012. The Notice of Meeting and the explanatory notes will be included in the notice to be sent to all shareholders.

By order of the Board Danielle Pass Company Secretary 3 September 2012

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Statement of directors’ responsibilities in respect of the annual report and the financial statements 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 and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 applicable IFRSs as adopted by the European Union have been followed,

subject to any material departures disclosed and explained in the financial statements; 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 comply with the Companies Act 2006. 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. Signed on behalf of the Board on 3 September 2012 Dean Webster Christopher Goscomb Director Director

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Independent Auditors’ Report to the Members of Sweett Group plc

We have audited the group and parent company financial statements (the ‗‗financial statements‘‘) of Sweett Group plc (formerly Cyril Sweett Group plc) for the year ended 31 March 2012 which comprise the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of changes in equity and the Company statement of changes in equity, the Consolidated and Company statement of cash flow 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 and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors‘ responsibilities set out on the previous page, the directors are responsible for the preparation of the 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 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 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 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 financial statements give a true and fair view of the state of the Group‘s and of the Parent Company‘s affairs as at 31 March 2012 and of the Group‘s loss and the Group‘s and Parent Company‘s cash flows for the year then ended;

the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

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Emphasis of matter - going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in Note 1 concerning the Group's and parent company's ability to continue as a going concern. The directors have undertaken a wide range of sensitivity tests relating to the principal assumptions underlying the Group's ability to maintain compliance with financial covenants to the Group's principal banker, Bank of Scotland plc. Additionally, the directors believe they will be successful in maintaining the level of the existing overdraft facility and in rolling over the revolving credit facility due for renewal in September 2013, but this does remain subject to the bank's full acceptance procedures, These conditions, along with the other matters disclosed in Note 1 may, if considered in aggregation, indicate the existence of material uncertainties which may cast significant doubt about the Group's and parent company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group and parent company were unable to continue as a going concern.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, the information given in the Report of the Directors for the financial year for which the

financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following 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 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.

Simon O‘Brien (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 3 September 2012

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Consolidated Income Statement for the year ended 31 March 2012

Note

2012

2011

£’000 £’000

Revenue 3 72,806 72,828

Cost of sales (51,349) (46,646)

Gross profit 21,457 26,182

Profit on disposal of available for sale financial assets 13 445 -

Administrative expenses before the following: (20,321) (22,422)

Exceptional administrative expenses 5 (1,263) (956)

Amortisation of acquired intangibles 11 (480) (368)

Total administrative expenses (22,064) (23,746)

Operating profit before the following: 1,581 3,760

Exceptional administrative expenses 5 (1,263) (956)

Amortisation of acquired intangibles 11 (480) (368)

Operating (loss) / profit (162) 2,436

Finance income 4 233 244

Finance cost 4 (1,092) (341)

Net finance cost 4 (859) (97)

(Loss) / profit before taxation (1,021) 2,339

Income tax expense 7 (391) (680)

(Loss) / profit for the year from continuing operations attributable to owners of the parent (1,412) 1,659

Basic (loss) / earnings per share (pence) 9 (2.1) 2.6

Diluted (loss) / earnings per share (pence) 9 (2.1) 2.6

The notes on pages 46 to 96 are an integral part of these financial statements. The parent Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Company‘s Income Statement and Statement of Comprehensive Income. The loss for the Company for the year was £3,321,000 (2011: £1,990,000).

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Consolidated Statement of Comprehensive Income for the year ended 31 March 2012

2012 2011

Note £’000 £’000

(Loss) / profit for the year (1,412) 1,659

Other comprehensive income

Exchange differences on translation of foreign operations (12) (210)

Valuation gain on available for sale financial assets 13 472 1,015 Tax on valuation gain on available for sale financial assets 7 (94) (242)

Actuarial (loss) / profit pension scheme 21 (1,236) 472

Tax on actuarial (loss) / profit pension scheme 7 147 (284)

Other comprehensive (expense) / income, net of tax (723) 751

Total comprehensive (expense) / income attributable to equity holders of the parent (2,135) 2,410

The notes on pages 46 to 96 are an integral part of these financial statements.

Total comprehensive (expense) / income attributable to owners of the parent arose from continuing operations. Items in the statement above are disclosed net of taxation. The income tax relating to each component of other comprehensive income is disclosed in Note 7.

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Consolidated Balance Sheet as at 31 March 2012

2012 2011

Note £’000 £’000

Non-current assets

Goodwill 10 16,100 16,080

Other intangible assets 11 3,439 3,880

Property, plant and equipment 12 1,517 1,287

Financial assets available for sale 13 2,062 1,595

Trade and other receivables 13 3,329 2,485

Deferred income tax asset 15 1,322 1,134

Total non-current assets 27,769 26,461

Current assets

Trade and other receivables 16 30,256 27,836

Cash and cash equivalents 17 2,268 3,842

32,524 31,678

Total assets 60,293 58,139

Current liabilities

Borrowings 18 (10,485) (8,123)

Derivative financial instrument 18 (602) -

Trade and other payables 19 (16,081) (14,484)

Current income tax liabilities (1,200) (314)

Total current liabilities (28,368) (22,921)

Non-current liabilities

Borrowings 18 (20) (691)

Trade and other payables 19 - (1,533)

Deferred income tax liability 15 (668) (390)

Provisions for other liabilities and charges 20 - -

Retirement benefit obligations 21 (2,408) (1,659)

Total non-current liabilities (3,096) (4,273)

Total liabilities (31,464) (27,194)

Net assets 28,829 30,945

Equity

Share capital 22 6,631 6,506

Share premium 23 13,475 13,122

Treasury shares 24 (60) (140)

Share option reserve 25 600 505

Other reserves 1,985 1,619

Retained earnings 6,198 9,333

Total equity shareholders’ funds 28,829 30,945

The notes on pages 46 to 96 are an integral part of these financial statements. The financial statements on pages 38 to 96 were authorised for issue by the Board of Directors on 3 September 2012 and were signed on its behalf. Dean Webster Christopher Goscomb Director Director

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Company Balance Sheet as at 31 March 2012

2012 2011

Note £’000 £’000

Non-current assets

Goodwill 10 2,703 2,703

Investments 13a 40,878 28,083

Deferred income tax asset 15 578 432

Total non-current assets 44,159 31,218

Current assets

Trade and other receivables 16 3,459 5,670

Cash and cash equivalents 17 34 59

3,493 5,729

Total assets 47,652 36,947

Current liabilities

Borrowings 18 (7,040) (1,811)

Derivative financial instrument 18 (602) -

Trade and other payables 19 (10,607) (1,425)

Total current liabilities (18,249) (3,236)

Non-current liabilities

Borrowings 18 - (666)

Retirement benefit obligations 21 (2,408) (1,659)

Total non-current liabilities (2,408) (2,325)

Total liabilities (20,657) (5,561)

Net assets 26,995 31,386

Equity

Share capital 22 6,631 6,506

Share premium 23 13,475 13,122

Treasury shares 24 (60) (140)

Share option reserve 25 600 505

Retained earnings 6,349 11,393

Total equity shareholders’ funds 26,995 31,386

The notes on pages 46 to 96 are an integral part of these financial statements. The financial statements of Sweett Group plc (formerly Cyril Sweett Group plc), registered company number 3452251, on pages 38 to 96 were authorised for issue by the Board of Directors on 3 September 2012 and were signed on its behalf. Dean Webster Christopher Goscomb Director Director

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Consolidated statement of changes in equity for the year ended 31 March 2012

Group

Share

capital

Share

premium

Treasury

shares

Share option

reserves

Other

reserves

Retained earnings

Total

equity

Note £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 31 March 2010 5,860 12,142 (11) 369 1,056 8,380 27,796

Comprehensive income

Profit for the year - - - - - 1,659 1,659 Other comprehensive income: Exchange differences on translation of foreign operations - - - - (210) - (210) Valuation gain on available for sale financial assets - - - - 1,015 - 1,015 Actuarial gain on pension scheme - - - - - 472 472 Deferred tax on items taken directly to equity - - - - (242) (284) (526)

Total other comprehensive expense - - - - 563 188 751

Total comprehensive income - - - - 563 1,847 2,410

Transactions with owners:

Dividends 8 - - - - - (841) (841) Employee share option scheme

- value of services provided 25 - - - 140 - - 140

- exercise of awards 25 - - - (4) - 4 - Excess of the cost of shares awarded under share scheme over the appropriation price - - - - - (57) (57)

Additions during the year 24 - - (129) - - - (129) New shares issued during the year 23 646 980 - - - - 1,626

Transactions with owners 646 980 (129) 136 - (894) 739

At 1 April 2011 6,506 13,122 (140) 505 1,619 9,333 30,945

Comprehensive income

Loss for the year - - - - - (1,412) (1,412) Other comprehensive income: Exchange differences on translation of foreign operations - - - - (12) - (12) Valuation gain on available for sale financial assets - - - - 472 - 472 Actuarial loss on pension scheme - - - - - (1,236) (1,236) Deferred tax on items taken directly to equity - - - - (94) 147 53

Total other comprehensive expense - - - - 366 (1,089) (723)

Total comprehensive income - - - - 366 (2,501) (2,135)

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Group

Share

capital

Share

premium

Treasury

shares

Share option

reserves

Other

reserves

Retained earnings

Total

equity

Note £’000 £’000 £’000 £’000 £’000 £’000 £’000

Transactions with owners:

Dividends 8 - - - - - (663) (663) Employee share option scheme

- value of services provided 25 - - - 101 - - 101

- exercise of awards 25 - - - (6) - 6 -

Revaluation of treasury shares acquired for acquisition consideration - - - - - 23 23 Disposal of shares during the year 24 - - 80 - - - 80 New shares issued during the year 23 125 353 - - - - 478

Transactions with owners 125 353 80 95 - (634) 19

At 31 March 2012 6,631 13,475 (60) 600 1,985 6,198 28,829

Other reserves comprise cumulative exchange gains recorded through the statement of changes in equity of £454,000 (2011: £466,000) and fair value adjustments to available for sale financial assets of £1,531,000 (2011: £1,153,000) and these are not available for distribution. The notes on pages 46 to 96 are an integral part of these financial statements.

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Company statement of changes in equity for the year ended 31 March 2012

Company

Share

capital

Share

premium

Treasury

shares

Share option

reserves

Retained earnings

Total

equity

Note £’000 £’000 £’000 £’000 £’000 £’000

At 31 March 2010 5,860 12,142 (11) 369 14,089 32,449

Comprehensive income

Loss for the year - - - - (1,990) (1,990)

Other comprehensive income:

Actuarial gain on pension scheme - - - - 472 472 Deferred tax on items taken directly to equity - - - - (284) (284)

Total other comprehensive income - - - - 188 188

Total comprehensive income - - - - (1,802) (1,802)

Transactions with owners:

Dividends 8 - - - - (841) (841)

Employee share option scheme

- value of services provided 25 - - - 140 - 140

- exercise of awards 25 - - - (4) 4 - Excess of the cost of shares awarded under share scheme over the appropriation price - - - - (57) (57)

Additions during the year 24 - - (129) - - (129)

New shares issued during the year 23 646 980 - - - 1,626

Transactions with owners 646 980 (129) 136 (894) 739

At 1 April 2011 6,506 13,122 (140) 505 11,393 31,386

Comprehensive income

Loss for the year - - - - (3,321) (3,321)

Other comprehensive income:

Actuarial loss on pension scheme - - - - (1,236) (1,236) Deferred tax on items taken directly to equity - - - - 147 147

Total other comprehensive expense - - - - (1,089) (1,089)

Total comprehensive income (4,410) (4,410)

Transactions with owners:

Dividends 8 - - - - (663) (663)

Employee share option scheme

- value of services provided 25 - - - 101 - 101

- exercise of awards 25 - - - (6) 6 - Revaluation of treasury shares acquired for acquisition consideration - - - - 23 23

Disposal of shares during the year 24 - - 80 - - 80

New shares issued during the year 23 125 353 - - - 478

Transactions with owners 125 353 80 95 (634) 19

At 31 March 2012 6,631 13,475 (60) 600 6,349 26,995

The notes on pages 46 to 96 are an integral part of these financial statements.

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Consolidated and Company Statement of Cash Flow for the year ended 31 March 2012

2012 2011

Note Group Company Group Company

£’000 £’000 £’000 £’000

Cash flows from operating activities

Cash flows from operations 27 (2,785) (3,975) 1,470 (9)

Interest paid (426) (335) (264) (8)

Income taxes received / (paid) 570 250 (815) -

Net cash (used in) / generated from operating activities (2,641) (4,060) 391 (17)

Cash flows from investing activities

Interest received 312 - 98 -

Proceeds on disposal of available for sale financial assets 788 - - - Proceeds on account of the future disposal of available for sale financial assets 33 2,193 - - - Purchase of property, plant and equipment (922) - (351) -

Purchase of intangible assets (463) - (545) -

Increase in financial assets 13 (1,261) - (1,608) -

Settlement of deferred consideration (687) - (785) - Acquisition of subsidiary, net of cash acquired 26 - - (598) -

Net cash used in investing activities (40) - (3,789) -

Cash flows from financing activities

Dividends paid 8 (663) (663) (841) (841)

Repayments of borrowings (8,810) (4,837) (91) (91)

Repayments of obligations under finance leases (5) - (12) -

Proceeds on issue of Ordinary shares 55 55 112 112

Decrease / (increase) in treasury shares 80 80 (129) (129)

Proceeds from borrowings 9,400 9,400 2,522 1,000

Net cash generated from / (used in) financing activities 57 4,035 1,561 51

Net (decrease) / increase in cash and cash equivalents (2,624) (25) (1,837) 34

Cash, cash equivalents and bank overdrafts at the beginning of the year 1,467 59 3,364 25

Exchange losses on cash, cash equivalents and bank overdrafts (15) - (60) -

Cash, cash equivalents and bank overdrafts at the end of the year 17 (1,172) 34 1,467 59

The notes on pages 46 to 96 are an integral part of these financial statements.

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Notes to the Financial Statements 1. General information Sweett Group plc is a public limited company with shares listed on the Alternative Investment Market and is incorporated and domiciled in the United Kingdom under the Companies Act 2006. The address of the registered office is 60 Gray‘s Inn Road, London, WC1X 8AQ. The Company is the parent company of a group of international companies and the principal activities of the Group include the provision of construction cost consultancy, project management and other specialised consultancy services, including building surveying. These activities are carried out in Europe, with a separate Investments business, Middle East, Africa and India (MEAI) and Asia Pacific, the Group‘s operating segments.

Basis of preparation The Group‘s and parent company‘s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the Companies Act 2006 applicable to companies reporting under IFRS as they apply to the financial statements of the Group and the parent company for the year ended 31 March 2012. The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, as modified by available-for-sale financial assets, and financial assets and financial liabilities at fair value through profit or loss. The parent company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present its own income statement and statement of comprehensive income.

Going concern The Group‘s activities are funded by a combination of long-term equity funds, a reducing loan, revolving credit and overdraft facilities from the principal banker, Bank of Scotland plc, and smaller overdraft facilities overseas. In considering the ability of the Group to meet its financial obligations as they fall due, the Board has considered the expected trading performance of the group, including pressures on margins and working capital emanating from the continuing economic climate, the level of overheads and interest to be funded, loan repayments and payments in respect of past and future acquisitions. It has also considered the impact of the disposal of available for sale financial assets. The Board has modelled a wide range of scenarios in respect of each of these variables with particular regard to future compliance with the financial covenants to Bank of Scotland plc listed in the preceding financial review. The Directors‘ believe that the principal sensitivities and actions taken in order to maintain covenant compliance include:

The timely disposal of our PFI/PPP investments including Plymouth Lift and Dumfries & Galloway for approximately £700,000 and £2.2m respectively. However, the timing of these transactions remains uncertain;

The cessation of future commitments to PPP investments by entering into joint venture arrangements with external funders;

The inability of all parties to secure funding for the Leeds Social Housing project. Whilst all parties are working towards financial close and we have tested the sensitivity of continuing delays, should it not close we have a material risk in terms of unrecoverable work in progress and bid costs amounting to some £800,000;

Maintaining trading volumes and enhanced gross margins (forecast at 34% compared with the 29.5% achieved in the year to 31 March 2012), deriving principally through operating efficiencies resulting from the restructuring in 2012 and a return to profitability in Australia and the Middle East. Also, the directors believe they have a strong order pipeline to support forecast sales levels in 2012 and 2013;

Extending the terms for the payment of deferred consideration of £3.1m to the former shareholders of Widnell Limited, all of which is now due under the terms of the July 2010 share purchase agreement. The vendors, all of whom continue to work within the Sweett Group, have represented that they will accept future payments such that there is no detrimental impact on the funding of the Group or its covenant compliance. Whilst there is no legally binding agreement in place to extend the terms, the directors believe it is reasonable to assume this deferral within their assessment of going concern;

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Improving working capital management. The directors are implementing enhanced working capital processes and undertaking a training programme for all operational directors which they forecast will result in cash flow improvements in excess of £3m. However, there remains some uncertainty as to how long it will take for the benefits of these processes to result in cash flow improvements;

The Directors‘ believe that they will be successful in maintaining the level of the existing overdraft facility and in rolling over the revolving credit facility due for renewal in September 2013. Whilst these matters are still to be formally approved by the bank, the directors believe that they have a good relationship with their lender and have received informal assurances that the facilities will remain in place. However, this does remain subject to the bank's full acceptance procedures.

The Board notes that the matters set out above, were their impact aggregated, indicate the existence of a material uncertainty which may cast doubt about the Group's ability to continue as a going concern. Nevertheless, the directors are confident that they have the right strategy and action plan to operate within the requirements of the bank covenants and, on this basis, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group‘s financial statements. These financial statements do not include the adjustments that would result if the Group or the Parent Company were unable to continue as a going concern.

2. Significant accounting policies The principal accounting policies in the preparation of this financial information are set out below. These policies have been consistently applied to financial statements for the years ended 31 March 2012 and 31 March 2011, unless otherwise stated.

Standards, amendments and interpretations effective New accounting standards and interpretations have been adopted during the year as follows: IAS 24 (revised), ‗Related party disclosures‘ (effective 1 January 2011) - This revised standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. It clarifies and simplifies the definition of a related party. The adoption of this standard has not had an impact on Group‘s financial reporting in the current year. IFRIC 19, ‗Extinguishing financial liabilities with equity investments‘ (effective 1 July 2010). This interpretation clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished through the debtor issuing its own equity instruments to the creditor. A gain or loss is recognised in the profit and loss account based on the fair value of the equity instruments compared to the carrying amount of the debt. The adoption of this IFRIC has not had an impact on Group‘s financial reporting in the current year.

Standards, amendments and interpretations effective in 2012 but not relevant The following standards, amendments and interpretations are mandatory for the first time for the current accounting period but are not relevant to the group‘s operations:

Amendment to IFRIC 14—‗Prepayments of a minimum funding requirement‘;

Amendment to IFRS 1, ‗First time adoption‘, on financial instrument disclosures.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2011 and not early adopted by the group.

Amendment to IFRS 1, ‗First time adoption‘, on fixed dates and hyperinflation (effective 1 July 2011) - not yet EU endorsed;

Amendment to IAS 12, ‗Income taxes‘ on deferred tax (effective 1 January 2012) - not yet EU endorsed;

Amendment to IAS 19 'Employee benefits' (effective date 1 July 2012) - not yet EU endorsed; Amendment to IAS 1, ‗Financial statement presentation‘ regarding other comprehensive income (effective 1 July 2012) - not yet EU endorsed;

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IFRS 9 'Financial instruments' - classification and measurement' (effective date 1 January 2013) - not yet EU endorsed;

IFRS 10 'Consolidated financial statements' (effective date 1 January 2013) - not yet EU endorsed;

IFRS 11, ‗Joint arrangements‘ (effective 1 January 2013) - not yet EU endorsed;

IFRS 12 'Disclosures of interests in other entities' (effective date 1 January 2013) - not yet EU endorsed;

IFRS 13 'Fair value measurement' (effective date 1 January 2013) - not yet EU endorsed;

IAS 27 (revised 2011) ‗Separate financial statements‘ (effective 1 January 2013) - not yet EU endorsed;

IAS 28 (revised 2011) ‗Associates and joint ventures‘ (effective 1 January 2013) - not yet EU endorsed;

IFRIC 20, ‗Stripping costs in the production phase of a surface mine‘ (effective 1 January 2013) - not yet EU endorsed;

Amendment to IAS 32 'Financial instruments: presentation on offsetting financial assets and financial liabilities.' (effective 1 January 2014);

Amendment to IFRS 7 'Financial instruments: Disclosures' on derecognition' (effective 1 July 2011) - endorsed 23 November 2011.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

Basis of consolidation The consolidated financial statements incorporate the financial information of Sweett Group plc (formerly Cyril Sweett Group plc) and all of its subsidiary undertakings made up to 31 March 2012, adjusted to eliminate intra-group balances, transactions, income and expenses. The Group has used the acquisition method of accounting to consolidate the results of subsidiary undertakings, which are included from the date of acquisition.

Business combinations are accounted for under the acquisition method. On acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.

The consideration transferred for an acquisition is measured at fair value of the consideration given, equity instruments issued and liabilities incurred or assumed at the date of exchange. This includes any contingent consideration. 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. Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. Investments in subsidiaries are stated at cost less provisions for impairment where appropriate. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate, being the date at which control passes.

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions and balances are eliminated on consolidation.

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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 corporate costs are costs incurred centrally which are neither directly nor reasonably attributable to individual segments. Unallocated assets and liabilities include certain items which cannot be directly attributed to individual segments.

Foreign currency translation Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income. Gains or losses on the translation of opening and closing net assets of subsidiary undertakings denominated in foreign currencies are recognised in other comprehensive income.

The consolidated financial information is presented in pounds sterling, which is the company‘s functional and presentation currency. On consolidation, income statements and cash flows of foreign entities are translated into pounds sterling at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling at the balance sheet date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate ruling at the balance sheet date. The Group, through its ownership of branches and subsidiaries based outside the UK, has foreign currency-denominated assets and liabilities. To mitigate the effect of currency exposure arising from net investments overseas, the Group selectively hedges those exposures, where material, using borrowings denominated in foreign currency or financial hedging instruments. The financial statements are presented in sterling to the nearest thousand (£‘000).

Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, value added tax and other sales related taxes and after eliminating intra-group sales. Contract work in progress When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract by reference to the stage of completion. Contract costs are recognised as expenses by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. Variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured. The group uses the ‗percentage-of-completion method‘ to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. On the balance sheet, the group reports the net contract position for each contract as either an asset or a liability. A contract represents an asset where costs incurred plus recognised profits (less recognised losses) exceed progress billings; a contract represents a liability where the opposite is the case. Where the outcome of a contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

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Pre-contract costs Pre-contract costs are capitalised and treated as work in progress only if they can be separately identified, measured reliably and it is probable that the related contract will be won. Until this time, all such costs are expensed to the income statement in the period in which they are incurred. To the extent that contract terms do not allow for payment of bid costs at financial close of PPP contracts, such costs are amortised over the length of each contract. Time-based contracts Revenue on time-based products is recognised in line with labour hours delivered.

Finance income Interest income is recognised in the income statement as it is earned.

Finance cost Interest expense is recognised in the income statement as it accrues. Changes in fair value of derivative instruments that do not qualify for hedge accounting, or have not been designated as hedges, are recognised in the income statement within finance costs / income as they arise.

Dividend Dividend income is recognised when the right to receive payment is established.

Intangible assets

(i) Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group‘s interest in the fair value of the identifiable assets and liabilities of a subsidiary or associate at the date of acquisition. For subsidiaries, goodwill is recognised as an intangible asset and is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill is allocated to Cash Generating Units (CGUs) for the purpose of impairment testing. The allocation is made to those CGUs that are expected to benefit from the business combination in which the goodwill arose identified according to operating segments. Goodwill is held at cost less accumulated impairment losses. (ii) Computer software

Acquired computer software licences are capitalised on the basis of costs incurred to acquire and bring to use the specific software. Computer software licences are held at cost and amortised on a straight-line basis over three years. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs directly associated with identifiable and unique software products controlled by the Group and which are expected to generate economic benefits beyond one year are recognised as intangible assets and amortised over their estimated useful economic lives. Computer software is held at cost less accumulated amortisation and any impairment losses. (iii) Other intangible assets

Other 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 such an intangible asset is its cost less any accumulated amortisation and any accumulated impairment loss. Useful economic lives of intangible assets are assessed on acquisition to be either indefinite or finite. Amortisation is charged as appropriate on those intangibles with finite lives. The identified fair value of customer relationships and order books acquired on business combinations is being amortised over a period of between 7 and 10 years.

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Property, plant and equipment Property, plant and equipment mainly comprises furniture, fixtures and equipment and is shown at cost less subsequent accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of these assets.

Subsequent costs are included in the asset‘s carrying amount 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. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated to write off their cost less residual value over their expected useful lives.

The rates of depreciation used for the assets are as follows:– Fixtures and fittings 20% - straight line Computer hardware 25% - 50% - straight line

The assets‘ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is included in the income statement.

Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested 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. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision at the balance sheet date is the best estimate of the consideration required to settle the present obligation taking into account the risks and uncertainties surrounding the obligation. Where there is a material effect the expected future payments are discounted. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset only if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Financial assets Financial assets are classified as ‗available for sale‘ financial assets and ‗loans and receivables‘. Available for sale financial assets are non derivative financial assets and are recorded at fair value less transaction costs. Gains and losses arising from changes in fair value are recognised directly in the statement of comprehensive income, until the asset is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the income statement for the period. Impairment losses on available for sale financial assets are not reversed. Loans and receivables are classified as financial assets when they are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are initially measured at fair value and subsequently measured at amortised cost using the effective interest method less accumulated impairment losses.

Trade receivables Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. 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. The amount of the provision is recognised in administrative expenses.

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Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held with banks. Bank overdrafts are shown within current financial liabilities on the balance sheet. For the purposes of the statement of cash flows, cash and cash equivalents are net of bank overdrafts.

Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the company‘s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company‘s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects and is included in equity attributable to the company‘s equity holders.

Impairment of financial assets

(a) Assets carried at amortised cost The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‗loss event‘) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

significant financial difficulty of the issuer or obligor;

a breach of contract, such as a default or delinquency in interest or principal payments;

the group, for economic or legal reasons relating to the borrower‘s financial difficulty, granting to

the borrower a concession that the lender would not otherwise consider;

it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

the disappearance of an active market for that financial asset because of financial difficulties; or

observable data indicating that there is a measurable decrease in the estimated future cash flows

from a portfolio of financial assets since the initial recognition of those assets, although the

decrease cannot yet be identified with the individual financial assets in the portfolio, including:

adverse changes in the payment status of borrowers in the portfolio; and national or local

economic conditions that correlate with defaults on the assets in the portfolio. The group first assesses whether objective evidence of impairment exists. The amount of the loss is measured as the difference between the asset‘s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset‘s original effective interest rate. The asset‘s carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument‘s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor‘s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

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(b) Assets classified as available for sale The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria referred to in (a) above. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the separate consolidated income statement. Impairment losses recognised in the separate consolidated income statement on equity instruments are not reversed through the separate consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the separate consolidated income statement. Impairment testing of trade receivables is described at Note 16.

Financial liabilities Financial liabilities are classified as either financial liabilities ‗at fair value through profit or loss‘, or other financial liabilities. Financial liabilities are classified as ‗at fair value through profit or loss‘ where the financial liability is either held for trading or it is designated as ‗at fair value through profit or loss‘. Financial liabilities carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the (Loss)/Profit for the financial year. Gains or losses arising from changes in the fair value of the financial liabilities at fair value through profit or loss category are presented in the (loss)/profit for the financial year. Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and subsequently at amortised cost. Financial assets and financial liabilities are recognised in the Group‘s balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are presented as current liabilities if expected to be settled within 12 months; otherwise, they are classified as non-current.

Derivative financial instruments and hedge accounting Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as hedges of a net investment in a foreign operation (net investment hedge). Any gain or loss on the hedging instrument relating to the effective portion of a net investment hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or sold. Changes in fair value of derivative instruments that do not qualify for hedge accounting, or have not been designated as hedges, are recognised in the income statement within finance costs / income as they arise. These derivative instruments are designated at fair value through profit or loss.

Borrowings Interest-bearing bank loans and overdrafts are initially recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

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

Investments The company‘s investments in subsidiaries are accounted for in the financial statements at cost less any provision for impairment.

Leases Leases of property, plant and equipment by which the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of fair value and the estimated present value of the underlying lease payments, with a corresponding liability established. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in liabilities. The interest element of the finance cost is charged to the income statement over the lease period. Property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset‘s useful life and the lease term. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than in a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related tax asset is realised or the tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax relating to items recognised directly in equity is recognised in equity and not in the consolidated income statement. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.

Employee benefits Pension obligations Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-administered funds. The Group has both defined benefit and defined contribution plans. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The pension cost for defined benefit schemes is assessed in accordance with the advice of qualified independent actuaries. The liability records the defined benefit obligation at the balance sheet date less the fair value of plan assets. Independent actuaries calculate the obligation annually using the ―projected unit‖ funding method. Actuarial gains and losses are recognised in full in the period in which they occur. They are not recognised in the income statement and are presented in the statement of comprehensive income. Past-service costs are recognised immediately in the consolidated income statement, unless the changes to the scheme are conditional upon employees remaining in service for a specified period, in which case the past-service costs are amortised on a straight line basis over this period.

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A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions are recognised as an expense in the income statement when they are due.

Share based payments The company operates executive and employee share schemes. For all grants of share options and awards, the fair value as at the date of grant is calculated using the Black-Scholes option pricing model and the corresponding expense is recognised over the period to which the associated employee‘s service relates. The company has taken advantage of the transitional provisions of IFRS 2 only to recognise equity settled awards granted after 7 November 2002 that had not vested before 1 January 2005. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. The Group recognises the impact of the revision to original estimates, if any, in the income statement with a corresponding adjustment to equity. The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

Employee Benefit Trust (EBT) The company‘s EBT is a separately administered discretionary trust for the benefit of employees. The assets of the EBT mainly comprise shares in the company. The assets, liabilities, income and costs of the EBT are consolidated in the financial information. The investment in own shares is treated as a deduction in Shareholders‘ Funds.

Dividend distribution Dividend distribution to the Company‘s shareholders is recognised as a liability in the Group‘s accounts in the period in which the dividends are approved by the Company‘s shareholders.

Exceptional and other 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, notwithstanding that such items may be recurring in nature. These are shown on the face of the income statement as exceptional administrative expenses. Exceptional items do not include adjustments to amounts payable in respect of acquisitions in previous years, which are required to be charged or credited to the income statement under IFRS 3 (revised). Other items which are recurring in nature but which warrant separate disclosures include the amortisation of acquired intangibles. Earnings and diluted earnings per share are calculated after exceptional and other items whilst earnings per share before pre-exceptional administration expenses are calculated after amortisation of acquired intangibles.

Critical accounting estimates and significant judgements The preparation of the financial information 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 a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, all of which are on the basis that the Group is a going concern as addressed in Note 1 to these financial statements, are addressed below:

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(a) Estimated impairment of goodwill.

The Group tests annually whether goodwill has suffered any impairment, in accordance with the

Group‘s accounting policy. In determining the recoverable amount of all cash generating units it is

necessary to make a series of assumptions to estimate the present value of future cash flows. In each

case, these key assumptions have been made by management reflecting past experience and future

expectations. The main assumptions within forecast operating cash flows include the achievement of

future sales, the costs to be incurred and the anticipated after tax profit. The goodwill has a carrying value of £16.1m (2011: £16.1m) at the year end.

(b) Deferred contingent consideration Where deferred consideration in respect of acquisitions is payable, this may be contingent upon future events or the acquired business‘ performance. The most probable outcome of these future events is estimated to ascertain the fair value of the obligation. Any change to this outcome will be reflected in the statement of comprehensive income in future periods, unless affected by the transitional provisions in IFRS3 (revised). Further details are given in Note 19.

(c) Revenue recognition The Group uses the percentage of completion method in accounting for its fixed price contracts to deliver services. Use of the percentage of completion method requires the Group to estimate the work performed to date as a proportion of the expected work for the whole contract. In respect of pre-contract costs, where such costs relate to a PFI or PPP bid, a view is taken as to probability of award with reference to progress on contract negotiations and the likely date of achievement of preferred bidder status. The Group will also assess the ability to bill and collect these amounts when determining revenue to be recognised. Due to the volume and complexity of the Group‘s many contracts in existence at any one time it is not practicable to quantify how changes to the assumptions used for each individual contract would affect the Group‘s financial statements.

(d) Available for sale financial assets The Group classifies each of its investments in PFI and PPP projects as available for sale financial assets. The value of these is assessed at the balance sheet date based on offers received or contracted by third parties for the sale of equivalent assets. A sensitivity exists in that values may change from year to year as a function of changes in market conditions. A 10% change in the market prices used would alter the fair value adjustment to equity by £500,000. Further details of available for sale assets are given in Note 13.

(e) Impairment of trade receivables 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. A further 3% of impairment beyond that already recognised would reduce the book value of trade receivables by £600,000. Further details are given in Note 16.

(f) Pension benefits The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note 21.

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3. Segmental analysis 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 being the Board. The Board considers Sweett Group‘s business and internal reporting by geography, being Europe (excluding the Investments business), Investments, the Middle East, North Africa & India and Asia Pacific. All four categories generate revenues from the provision of quantity surveying, project management and specialist services / management consultancy and the Investments business generates profits on the disposal of its PPP/PFI financial assets available for sale. The Investments business has been identified as a separate segment due to its size and the nature of its business. Its activities have therefore been dis-aggregated in the segmental analysis. This represents a change to previous reporting and the comparative amounts have been restated. Its reported revenue comprises fees generated from bid management activity within the PPP/PFI arena. Proceeds from assets sold are dealt with as part of the profit on disposal of available for sale financial assets computation. The Board assesses performance based on a measure of earnings before interest and tax (EBIT). This measurement is net of intra-group trading balances and this basis excludes the effects of corporate and central costs. Interest income and expenditure are not included in the result for each operating segment that is reviewed by the Board.

2012

Europe (excluding

Investments)

Investments

Middle East, Africa and

India Asia

Pacific Total

£’000s £’000s £’000s £’000s £’000s

Gross revenue 40,911 395 10,005 22,885 74,196

Inter-segment revenue (1,144) - (246) - (1,390)

External revenue 39,767 395 9,759 22,885 72,806

Segment results before exceptional administrative expenses and amortisation of acquired intangibles 2,938 (712) (676) 1,859 3,409

Exceptional administrative expenses and amortisation of acquired intangibles (510) - (568) (509) (1,587)

Segment results after exceptional administrative expenses and amortisation of acquired intangibles 2,428 (712) (1,244) 1,350 1,822

Unallocated corporate costs * (1,984)

Finance income 233

Finance expense (1,092)

Loss before taxation (1,021)

Income tax expense (391)

Loss for the year (1,412)

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Other profit and loss disclosures

Europe (excluding

Investments)

Investments

Middle East, Africa and

India Asia

Pacific Total

£’000s £’000s £’000s £’000s £’000s

External revenue by service provided

Cost consultancy / quantity surveying 20,345 - 5,360 16,031 41,736

Project management 12,851 - 3,292 5,365 21,508 Specialist services / management consultancy 6,571 395 1,107 1,489 9,562

39,767 395 9,759 22,885 72,806

Profit on disposal of available for sale financial assets - 445 - - 445

Depreciation 364 - 74 242 680

Amortisation 448 - 82 379 909

Balance sheet disclosures

Segmental assets 24,982 7,705 5,880 21,726 60,293

Segmental liabilities 20,394 2,940 1,237 6,892 31,463

Capital additions 967 - 100 318 1,385

* Unallocated corporate costs comprise directors‘ remuneration, advertising, public relations, corporate financing costs, legal and professional fees and exceptional administrative expenses incurred by Sweett Group plc (formerly Cyril Sweett Group plc). They include for the year ended 31 March 2012 £156,000 of exceptional administrative expenses. The Group is domiciled in the UK. Its revenue from external customers in the UK is £38.2m (2011: £42.6m) and from external customers from other countries is £34.6m (2011: £30.2m). Capital additions comprise the acquisition of property, plant and equipment and other intangible assets. The assets of the segments include intangible assets, property, plant and equipment, assets from finance leases, financial assets, trade receivables and other receivables, deferred tax assets and cash and cash equivalents. The liabilities comprise trade and other payables, current tax liabilities, financial liabilities, deferred tax liabilities, provisions and retirement benefit obligations. The total of non-current assets other than financial instruments and deferred taxation located in the UK is £14.1m (2011: £14.0m) and the total of such non-current assets in other countries is £7.0m (2011: £7.3m). Sales between segments are transacted at arms‘ length. External revenue reported to the Board is measured in a manner consistent with that in the income statement.

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2011

Europe (excluding

Investments) Investments

Middle East, Africa

and India Asia

Pacific Total

£’000s £’000s £’000s £’000s £’000s

Gross revenue 43,690 1,402 10,806 17,650 73,548

Inter-segment revenue (471) - (249) - (720)

External revenue 43,219 1,402 10,557 17,650 72,828

Segment results before exceptional administrative expenses and amortisation of acquired intangibles 3,393 (185) 233 2,301 5,742 Exceptional administrative expenses and amortisation of acquired intangibles (482) (78) (300) (464) (1,324)

Segment results after exceptional administrative expenses and amortisation of acquired intangibles 2,911 (263) (67) 1,837 4,418

Unallocated corporate costs * (1,982)

Finance income 244

Finance expense (341)

Profit before taxation 2,339

Income tax expense (680)

Profit for the year 1,659

Other profit and loss disclosures

External revenue by service provided Cost consultancy / quantity surveying 24,339 - 4,389 11,000 39,728

Project management 12,981 - 6,168 6,650 25,799 Specialist services / management consultancy 5,899 1,402 - - 7,301

43,219 1,402 10,557 17,650 72,828

Profit on disposal of available for sale financial assets - - - - -

Depreciation 440 - 123 209 772

Amortisation 267 - 71 259 597

Balance sheet disclosures

Capital additions 815 - 75 1,751 2,641

Segmental assets 25,508 6,435 6,434 19,762 58,139

Segmental liabilities 15,908 900 960 9,426 27,194

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4. Net finance costs

2012 2011

£’000 £’000

Finance income

Interest receivable on bank deposits 9 3

Interest receivable on loan notes 144 223

Other interest receivable 48 -

Dividend income on available for sale financial assets 32 18

233 244

Finance costs

Interest payable on bank and other borrowings (424) (261)

Interest expense on unwinding of discount (64) (77)

Change in fair value of derivative financial instrument (602) -

Finance leases (2) (3)

(1,092) (341)

Net finance costs (859) (97)

The change in fair value of derivative financial instrument relates to a forward foreign exchange contract to hedge advances in Australia dollars to a subsidiary company, the bulk of which were capitalised in September 2011. This was rolled into a replacement instrument on maturity in March 2012 and has been accounted for as a derivative rather than a hedge.

Interest expense on unwinding of discount relates to the notional interest on deferred acquisition consideration.

5. (Loss) / profit before taxation is stated after charging:

2012 2011

£’000 £’000

Employee benefit expense (Note 6) 48,595 47,737

Depreciation of property, plant and equipment 680 772

Amortisation of intangible assets 909 597

Impairment loss (reversed) / recognised on trade receivables (11) 373

Loss on disposal of property, plant and equipment 15 253

Operating lease rentals 3,126 3,583

Auditors‘ remuneration (see below) 239 514

Exchange loss 103 202

Exceptional costs: 2012 2011

£’000 £’000

Restructuring costs 1,193 694

Impairment loss recognised on trade and other receivables 70 262

1,263 956

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, notwithstanding that such items may be recurring in nature. These are shown on the face of the income statement as exceptional administrative expenses.

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Exceptional items do not include adjustments to amounts payable in respect of acquisitions in previous years, which are required to be charged or credited to the income statement under IFRS 3 (revised). Restructuring costs comprise redundancy costs of £0.8m (2011: £0.5m) and other restructuring costs of £0.4m (2011: £0.2m). The impairment loss recognised on trade and other receivables relates to losses incurred as a result of the political unrest in the Middle East.

Profit before taxation contains the following items that are material to an understanding of the results:

2012 £’000

2011 £’000

Release of provisions held on the business combination with Widnell Limited in July 2010

250

-

Release of contingent consideration arising on the business combination with Widnell Limited in July 2010 200 -

Bad debt in Sweett (Australia) Pty Limited (135) -

Impact of new businesses in Thailand and Vietnam (213) -

Release of dilapidations provision - 400

Change in fair value of derivative financial instrument (602) -

(500) 400

Services provided by the Company‘s auditors and its associates:

2012 2011

£’000 £’000

Auditors‘ remuneration for the statutory audit:

- group audit fee 20 20

- audit of subsidiary companies * 175 222 Fees payable to company‘s auditors and its associates for other services:

- taxation and other services 18 109

- other services 26 163

239 514

*The 2011 cost is higher due predominantly to the Widnell Sweett Limited audit fee. The quantum of the non-audit fees for 2011 exceeds that of the audit fees as a result of costs incurred in developing the Group‘s international business.

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6. Directors and employees

2012 2011

Group Company Group Company

£’000 £’000 £’000 £’000

Staff costs, including directors, were as follows:

Wages and salaries 42,610 813 42,435 834

Social security costs 2,864 80 2,864 91

Share based payments 101 26 140 20

Redundancy costs 588 - 489 -

Compensation for loss of office 183 156 - -

Post employment benefit

Defined contribution plan 2,249 59 1,809 39

Total employee benefit expense 48,595 1,134 47,737 984

The average number of employees, including directors, during the year:

Fee earners 1,063 - 794 -

Administration 192 10 169 10

Total staff 1,255 10 963 10

At the year end the accounts included unpaid pension contributions of £69,000 (2011: £67,000).

2012 2011

Group £’000 £’000

Directors’ emoluments

Aggregate remuneration 781 764

Compensation for loss of office 183 -

Gain on exercise of share options - 10

Company contributions to money purchase pension schemes 53 43

1,017 817

2012 2011

£’000 £’000

Highest paid director

Aggregate emoluments 191 171

Company contributions to money purchase pension scheme 21 16

212 187

The highest paid director did not exercise options during the year or the previous year.

2012

Number 2011

Number

Number of directors earning pension entitlement through company money purchase pension scheme 5 4

Directors exercising share options:

Number of directors exercising share options - 1

Key management of the Group are considered to be the directors of the Company.

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7. Income tax expense (a) Analysis of charge in the year 2012 2011

£’000 £’000

Current tax:

UK corporation tax - 144

Overseas tax 798 348

Adjustments in respect of previous years (341) 176

457 668

Deferred taxation:

Origination and reversal of temporary differences – Note 15 (125) (118)

Adjustments in respect of previous years 59 130

Income tax expense - Note 7(b) 391 680

(b) Factors affecting the tax charge for the year:

The tax on the Group‘s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:

2012 2011

£’000 £’000

(Loss) / profit before taxation (1,021) 2,339

Tax calculated at domestic tax rates applicable to profits in the respective entities at 26% (2011: 28%) (265) 655

Tax effect of:

Expenses not deductible for tax purposes 567 (95)

Different tax rates on overseas earnings 9 (246)

Prior year adjustments (other than changes in provisions) (282) 306

Current year charge for deferred tax not recognised 374 -

Impact of deferred tax on changes in tax rates (12) 60

Total taxation 391 680

Since the Group is reporting a loss before taxation with a charge to taxation, there is no weighted average applicable tax rate (2011: 29.0%). The charge, as shown above, arises predominantly through the impact of expenses not deductible for tax purposes, and deferred tax not recognised. The 2011 charge was affected by lower tax rates on overseas earnings and the reversal of expenditure disallowed in previous periods, net of the determination of prior year liabilities that were different from the estimates reflected in the financial statements. In the 2012 Budget statement, the UK Government announced a reduction of 2% in the UK Corporate Tax rate reducing it to 24% effective from 1 April 2012. Further reductions to the main rate are proposed to reduce the rate by 1% per annum to 22% by 1 April 2014. None of these expected rate reductions other than the near-term rate of 24% has been substantively enacted at the balance sheet date and therefore UK deferred tax has been calculated at 24%.

The income tax credited / (charged) to equity during the year was as follows: 2012 2011

£’000 £’000

Deferred taxation:

Fair value reserves in shareholders‘ equity:

- Available-for-sale financial assets (Note 13) (94) (242)

Tax on actuarial loss / (gain) on retirement benefit scheme 147 (284)

53 (526)

Sweett Group plc (formerly Cyril Sweett Group plc)

64

8. Dividends 2012 2011

£’000 £’000

Interim dividend paid of 0.20p per share in respect of the year ended 31 March 2012 (2011: interim dividend paid of 0.5p per share in respect of the year ended 31 March 2011) 133 325

Final dividend paid of 0.80p per share in respect of the year ended 31 March 2011 (2011: final dividend paid of 0.80p per share in respect of the year ended 31 March 2010) 530 516

663 841

Dividend per share in respect of the financial year:

Interim dividend per share paid during the year 0.2p 0.5p

Final dividend per share declared for the year 0.3p 0.8p The Board has declared a final dividend in respect of the year ended 31 March 2012 of 0.3p per share (2011: 0.8p per share) amounting to 0.5p for the year (2011: 1.3p for the year). These financial statements do not reflect the final dividend for 2012.

9. (Loss) / earnings per share 2012 2011

£’000 £’000

(Loss) / profit for the financial year attributable to equity shareholders (1,412) 1,659

Number Number

Weighted average number of shares in issue 65,705,825 62,760,530

Basic (loss) / earnings per share (pence) (2.1) 2.6

Weighted average number of

shares in issue 65,705,825 62,760,530

Adjustment for:

Dilutive effect of share options 115,100 363,611

Weighted average number of ordinary shares for diluted earnings per share 65,820,925 63,124,141

Diluted (loss) / earnings per share (pence) (2.1) 2.6

2012 2011

£’000 £’000

(Loss) / profit for the financial year attributable to equity shareholders (1,412) 1,659

Tax-adjusted exceptional administrative costs 1,067 679

(345) 2,338

Number Number

Weighted average number of ordinary shares 65,705,825 62,760,530

Before exceptional administrative expenses (pence) (0.5) 3.7

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65

Basic Basic (loss) / earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of Ordinary shares in issue during the year excluding Ordinary shares purchased by the company and held as treasury shares (Note 24). The weighted number of shares excludes shares held by employee trusts.

Diluted Diluted (loss) / earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The company‘s dilutive potential ordinary shares are share options. A calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company‘s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Before exceptional administrative expenses Tax-adjusted earnings per share before exceptional administrative expenses are calculated after amortisation of acquired intangibles using the weighted average number of shares.

10. Goodwill

Goodwill

Group £’000

Cost

At 1 April 2010 12,419

Exchange differences 274

Additions 3,979

Transfer to other intangibles (250)

Adjustment to deferred consideration (47)

At 31 March 2011 16,375

Exchange differences 20

At 31 March 2012 16,395

Accumulated impairment

At 1 April 2010, 31 March 2011 and 31 March 2012 (295)

Net book amount

At 31 March 2012 16,100

At 31 March 2011 16,080

At 31 March 2010 12,124

Company Goodwill

£’000

Cost

At 1 April 2010, 31 March 2011 and 31 March 2012 2,940

Accumulated impairment

At 1 April 2010, 31 March 2011 and 31 March 2012 (237)

Net book amount

At 31 March 2012 2,703

At 31 March 2011 2,703

At 31 March 2010 2,703

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66

There were no acquisitions during the year to 31 March 2012. Goodwill brought forward arose predominantly on the acquisitions of Cyril Sweett Limited, Nisbet LLP, BurnsBridge Holdings Pty Limited and Widnell Limited. Goodwill is allocated to the Group‘s cash-generating units (―CGUs‖) in accordance with the segments identified in Note 3 to these financial statements, which is generally the smallest operating level at which the Directors believe that they can prepare appropriate cash flow forecasts. The recoverable amount of all CGUs was determined based on value in use calculations. The calculations used were based on short-term financial projections approved by management. The short-term projections indicated that the value in use of each CGU exceeded the goodwill carrying values. The carrying value of goodwill was tested for impairment at the reporting date. No provision for impairment was considered necessary. On 9 July 2010, the Company announced the acquisition by Cyril Sweett International (Holdings) Limited (now Sweett (International) Holdings Limited) of the entire share capital of Hong Kong-registered Widnell Limited (now Sweett (China) Limited). The fair value of assets and liabilities acquired amounted to £1.2m. On 4 March 2010 Cyril Sweett Australia Pty Limited (now Sweett Group (Australia) Limited) the Company‘s wholly owned subsidiary undertaking in Australia, completed the acquisition of Padgham & Partners Pty Limited. At 31 March 2010, estimated goodwill arising on this acquisition amounted to £1m. During the year to 31 March 2011 a fair value exercise was undertaken resulting in a reclassification of £0.25m from goodwill to other intangibles (Note 11).

Further details of the above acquisitions are included at Note 26. The financial projections used in these calculations were based on the following key data and assumptions:

1. Budgeted revenue and profit after taxation for 2013 as agreed by the Board, is used for the basis of determining projected net profit margins and hence anticipated future cash flows. The Group budget is based on a combination of past performance, the order book and an assessment of future market conditions.

2. Net profit margins were projected forward for each CGU having regard to their relative markets and risk profiles. A growth factor of 3% was applied for each CGU. These cash flows were projected forward for a total of 5 years plus a discounted terminal value at 5 years, with 0% growth rate.

3. Maintaining gross profit margins and net profit margins at 2013 budgeted levels, unless any restructuring actions already in place suggest cost savings and margin improvements are appropriate, across all CGUs.

4. Applying the discount rates ranging from 9% (the Group‘s weighted average cost of capital (WACC)) to 12% pre-taxation, depending on the market conditions relevant to the CGU. The WACC is calculated using the capital asset pricing model according to market data and the level of debt to equity in existence.

5. Sensitivity analysis on the discount rate and growth rates is performed to identify the level of headroom in the calculation for each CGU. A range of changes to assumptions is tested including: an increase of two percentage-points being applied to the discount rate; reducing growth rates by one percentage-point; and assuming zero growth. Previous operating performance is also considered in the context of determining the forecast profits used in the calculations.

The impairment tests showed a high degree of tolerance to increases in the discount rates being used. If the discount rates had been increased by 2% or the growth rate reduced to zero, there would still have been no impairment in any of the CGUs.

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The carrying value of goodwill by segment is as follows:

Group 2012 At 1 April Exchange

differences Additions

Transfers between

segments

Other

adjustments At 31 March

£‘000 £‘000 £‘000 £‘000 £‘000 £‘000 Europe 7,315 - 10 - - 7,325 Middle East, Africa and India 511 - - 79

- 590

Asia Pacific 8,254 10 - (79) - 8,185

Total 16,080 10 10 - - 16,100

Group 2011 Europe 7,211 - 104 - - 7,315 Middle East, Africa and India 324 13 - 174

- 511

Asia Pacific 4,589 261 3,875 (174) (297) 8,254

Total 12,124 274 3,979 - (297) 16,080

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11. Other intangible assets

Group

Order book and customer

relationships

Asset in the

course of construction

Externally acquired

computer software Total

£’000 £’000 £’000 £’000

Cost

At 1 April 2010 1,881 322 1,088 3,291

Exchange differences 79 - 6 85

Additions 1,310 624 146 2,080

Transfer from goodwill 250 - - 250 Acquired on business combinations (Note 26) - - 11 11

Reclassification - (946) 946 -

Disposals - - (342) (342)

At 31 March 2011 3,520 - 1,855 5,375

Exchange differences 5 - 1 6

Additions - - 463 463

Disposals - - (16) (16)

At 31 March 2012 3,525 - 2,303 5,828

Accumulated amortisation and impairment

At 1 April 2010 457 - 747 1,204

Exchange differences 27 - 9 36

Charge for the year 368 - 229 597

Disposals - - (342) (342)

At 31 March 2011 852 - 643 1,495

Exchange differences 1 - - 1

Charge for the year 480 - 429 909

Disposals - - (16) (16)

At 31 March 2012 1,333 - 1,056 2,389

Net book amount

At 31 March 2012 2,192 - 1,247 3,439

At 31 March 2011 2,668 - 1,212 3,880

At 31 March 2010 1,424 322 341 2,087

Further details of the acquisitions made during the year ended 31 March 2011 are included at Note 26. Customer lists and order book values are established in relation to each acquisition having regard to the markets in which the target company operates and the potential longevity of relationships with regard to repeat business. Assets in the course of construction relate to costs incurred in the implementation of an Enterprise Resource Planning management and financial system. This system was successfully implemented on 1 February 2011 in the UK business. The international implementation is scheduled to complete in the year ending 31 March 2014. Amortisation of £909,000 (2011: £597,000) is included in ‗administrative expenses‘.

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12. Property, plant and equipment

Group Fixtures and

fittings Computer hardware Total

£’000 £’000 £’000

Cost

At 1 April 2010 3,072 1,501 4,573

Exchange differences 44 (4) 40

Additions 114 237 351

Acquired on business combinations 199 - 199

Disposals (978) (318) (1,296)

At 31 March 2011 2,451 1,416 3,867

Exchange differences 5 4 9

Additions 571 351 922

Disposals (153) (254) (407)

At 31 March 2012 2,874 1,517 4,391

Accumulated depreciation

At 1 April 2010 1,634 1,198 2,832

Exchange differences 17 2 19

Charge for the year 523 249 772

Disposals (734) (309) (1,043)

At 31 March 2011 1,440 1,140 2,580

Exchange differences 2 4 6

Charge for the year 391 289 680

Disposals (140) (252) (392)

At 31 March 2012 1,693 1,181 2,874

Net book amount

At 31 March 2012 1,181 336 1,517

At 31 March 2011 1,011 276 1,287

At 31 March 2010 1,438 303 1,741

Depreciation expense of £680,000 (2011: £772,000) is included in ‗administrative expenses‘. The Group leases various items of computer hardware under non-cancellable finance lease agreements. The lease terms are between one and five years and ownership of the assets lies with the Group. The net book amount of computer hardware above includes assets held on finance lease with a net book amount of £11,000 (2011: £22,000).

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13. Financial assets

Group Available for

sale assets Loans and

receivables Total

£’000 £’000 £’000

Cost or fair value

At 1 April 2010 540 771 1,311

Additions 40 1,714 1,754

Fair value adjustment 1,015 - 1,015

At 31 March 2011 1,595 2,485 4,080

Additions - 1,182 1,182

Disposals (5) (338) (343)

Fair value adjustment 472 - 472

At 31 March 2012 2,062 3,329 5,391

Financial assets available for sale primarily relate to the capital cost of 19% of the issued share capital of Lift Investments Limited, a company incorporated in England and Wales, 15% of E4D&G Hold Co Limited, a company incorporated in England and Wales, 19% of e4i Holdings Limited, a company incorporated in Scotland and 33.3% of Express Lift Investments Limited, a company incorporated in England and Wales. The Group also owns 50% of ACP hub North Limited, a company incorporated in Scotland, at a cost of £1. The Directors do not believe that the Group is able to exert significant influence over either Express Lift Investments Limited or ACP hub North Limited. These assets are special purpose vehicles involved in the construction of health and educational facilities under PFI/PPP schemes. The balance of risks and rewards derived from the underlying assets is not borne by the Group, and therefore its interest in the equity and subordinated debt is accounted for as a financial asset and is classified as available-for-sale and loans and receivables respectively. Once the construction of these facilities is complete and they are in the operational phase, the fair value of the Group‘s financial asset is measured at each balance sheet date by computing the forecast project cash flows relevant to the Group‘s interest, discounted at current market discount rate, or by reference to an agreed market value. The discount rate currently used is 9% (2011 9%) which the directors believe best represents the current secondary market position. The movement in the fair value of the financial asset since the previous balance sheet date is taken to equity. Cyril Sweett Investments Limited holds 19% of the issued share capital of Lift Investments Limited, to which it has advanced subordinated debt funding on which it earns interest at the rate of 12.5%. The subordinated debt repayable at 31 March 2012 was £378,000 (2011: £466,000) and interest earned during the year was £40,000 (2011: £72,000). The underlying project is Plymouth Lift. In June 2011 Cyril Sweett Investments Limited disposed of its holding of 5% of the issued share capital and subordinated debt of Education 4 Ayrshire (Holdings) Limited. The underlying project was South Ayrshire Schools for £788,000, resulting in a profit of £445,000. Cyril Sweett Investments Limited holds 15% of the issued share capital of E4D&G Hold Co Limited, to which it has advanced subordinated debt funding on which it earns interest at the rate of 12.5%. The subordinated debt repayable at 31 March 2012 was £1,612,000 (2011: £1,667,000) and interest earned during the year was £198,000 (2011: £99,000). Cyril Sweett Investments Limited also received a dividend during the year of £32,000 (2011: £nil). The underlying project is Dumfries & Galloway Schools. Cyril Sweett Investments Limited holds 19% of e4i Holdings Limited, to which it has advanced subordinated debt which has a coupon tare of 12.5%. The subordinated debt repayable at 31 March 2012 was £1,266,000 (2011: £nil). On 26 July 2012 the Company announced the disposal of its interest for £2,193,000. The underlying project was Inverclyde Schools.

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13a. Investments

Company

Shares in subsidiary

undertakings Capital

contribution Total

£’000 £’000 £’000

Cost or fair value

At 1 April 2010 28,143 185 28,328 Capital contribution relating to share based payments - 120 120

At 31 March 2011 28,143 305 28,448

Additions 13,120 - 13,120 Capital contribution relating to share based payments - 75 75

At 31 March 2012 41,263 380 41,643

Provisions for impairment

At 1 April 2010 and 2011 (365) - (365)

Charge for the year (400) - (400)

At 31 March 2012 (765) - (765)

Net book amount

At 31 March 2012 40,498 380 40,878

At 31 March 2011 27,778 305 28,083

During the year the Company acquired 13,119,999 shares of £1 each issued by Sweett (International) Holdings Limited (formerly Cyril Sweett International (Holdings) Limited), a wholly owned subsidiary undertaking. The shares were issued in order to increase the subsidiary‘s capital base in conjunction with the issue of shares by certain of its own wholly owned subsidiaries pursuant to a capital reorganisation exercise. The capital contribution relating to share based payments relates to 5.1 million share options granted by the company to employees of subsidiary undertakings in the Group. Note 25 contains further details of the Group‘s share option schemes. Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid. The Directors have considered the carrying value of the shares in subsidiary undertakings and included a further provision for impairment of £400,000.

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14. Principal subsidiary undertakings

Group‘s Class of Country of Principal

interest shares held registration activities Sweett (UK) Limited (formerly Cyril Sweett Limited)

100% Ordinary England Construction consultancy

Sweett (International) Holdings Limited (formerly Cyril Sweett International (Holdings) Limited)

100%

Ordinary

England

Intermediate holding company

Sweett (China) Limited (formerly Widnell Sweett Limited) +

100% Ordinary Hong Kong Construction consultancy

Sweett Group (Australia) Pty Limited (formerly Cyril Sweett Australia Pty Limited) +

100% Ordinary Australia Intermediate holding company

BurnsBridge Sweett Holdings Pty Limited +

100%

Ordinary

Australia

Intermediate holding company

Sweett (Australia) Pty Ltd (formerly BurnsBridge Sweett Pty Limited) +

100% Ordinary Australia Construction consultancy

Sweett (Singapore) Pte Limited (formerly BurnsBridge Sweett Pte Limited) +

100% Ordinary Singapore Construction consultancy

Cyril Sweett International Limited + 100% Ordinary Cyprus Intermediate holding company

Sweett Holdings (Cyprus) Limited (formerly Cyril Sweett (Cyprus) Limited) +

100% Ordinary Cyprus Intermediate holding company

Cyril Sweett Saudi Arabia LLC

100%

Ordinary

Saudi Arabia

Construction consultancy

Padgham Sweett (India) Private Limited (formerly Cyril Sweett (India) Private Limited) +

100% Ordinary India Construction consultancy

Cyril Sweett Investments Limited 100% Ordinary England Intermediate holding company

Cyril Sweett Investments (2012) Limited 100% Ordinary England Intermediate holding company Cyril Sweett Investments (2012) No. 2 Limited

100% Ordinary England Intermediate holding company

Cyril Sweett Investment Management Limited

100%

Ordinary

England

Construction consultancy

Cyril Sweett Limited (formerly BoydCreedSweett Limited) +

100% Ordinary Ireland Construction consultancy

Sweett, Iberia S.L.U (formerly Cyril Sweett Espana S.L.U) +

100% Ordinary Spain Construction consultancy

Cyril Sweett France (SAS) 100% Ordinary France Construction consultancy

Cyril Sweett Trustee Company Limited *

100%

Ordinary

England

Corporate Trustee

The above subsidiary undertakings are direct holdings of the Company unless denoted by +. * Cyril Sweett Trustee Company Limited is the corporate trustee of the Cyril Sweett Share Incentive Plan.

The above subsidiary undertakings are all included in these consolidated accounts. A full list of subsidiaries is available on request.

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15. Deferred taxation

The movement in deferred income tax assets and liabilities during the year, without taking into account the off-setting of balances with the same tax jurisdiction, is as follows:

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Deferred tax:

At 1 April 744 432 1,326 716

Foreign exchange (1) - 26 - (Charged) / credited to the income statement 66 (1) (82) -

(Charged) directly to reserves - fair value of available for sale financial assets (94) - (242) - Credited / (charged) directly to reserves – actuarial loss on pension scheme 147 147 (284) (284)

Transfer to other receivables (208) - - -

At 31 March 654 578 744 432

Disclosed as:

Deferred tax asset 1,322 578 1,134 432

Deferred tax liability 668 - 390 -

Deferred tax assets - Group Accelerated depreciation

Retirement benefit

obligation Tax losses Other timing

differences Total

£’000 £’000 £’000 £’000 £’000

At 1 April 2010 220 716 80 459 1,475

Exchange differences - - - 26 26 (Charged) / credited to the income statement 29 - - (41) (12) Charged / credited directly to equity - (284) - - (284)

Impact of changes in tax rate (18) (1) - (52) (71)

At 31 March 2011 231 431 80 392 1,134

Exchange differences - - (2) - (2) (Charged) / credited to the income statement 14 - 147 91 252 Charged / credited directly to equity - 147 - - 147 Reclassification as other receivables - - - (208) (208)

Impact of changes in tax rate (19) - - 18 (1)

At 31 March 2012 226 578 225 293 1,322

Deferred income tax assets are recognised for tax loss carry-forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of £0.5m (2011: £0.2m) in respect of losses amounting £2.1m (2011: £0.8m) that can be carried forward against future taxable income.

Sweett Group plc (formerly Cyril Sweett Group plc)

74

Deferred tax liabilities - Group

Fair value gains

Other timing

differences Total

£’000 £’000 £’000

At 1 April 2010 149 - 149

Charged / (credited) directly to equity 242 - 242

Impact of changes in tax rates (1) - (1)

At 31 March 2011 390 - 390

Exchange differences - (2) (2)

Charged / (credited) to the income statement - 186 186

Charged / (credited) directly to equity 124 - 124

Impact of changes in tax rate (30) - (30)

At 31 March 2012 484 184 668

The deferred tax asset of the Company for the current and the prior year relates solely to the retirement benefit obligation.

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Deferred tax asset estimated to be

recoverable within one year 187 - 270 -

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Deferred tax liability estimated to be

payable within one year 484 - 115 -

16. Trade and other receivables

Current receivables 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Amounts due from customers on long term contracts - Note 16 (a) 6,450 - 5,469 -

Trade receivables 20,510 - 19,272 -

Less: provision for impairment (1,230) - (1,496) -

19,280 - 17,776 -

Amounts due from group undertakings - 3,285 - 5,401

Other receivables 3,299 67 2,736 263

Prepayments and accrued income 1,227 107 1,855 6

30,256 3,459 27,836 5,670

The directors consider that the carrying amount of trade and other receivables approximates their fair value. Trade and other receivables are included as part of financial assets. Amounts due from group undertakings are unsecured, interest free and repayable on demand.

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As at 31 March 2012, trade receivables of £1,787,000 (2011: £2,370,000) were impaired by either a bad debt or credit note provision. The amount of the debt provision was £1,230,000 (2011: £1,496,000). The individually impaired receivables relate to clients‘ inability to raise funding in the current climate, the impact of the recession on clients‘ ability to pay and on-going minor disputes with clients. The level of credit risk is, in the view of the Board, generally low, due to a wide mix of clients in each of the geographical areas in which the Group operates with the exception of the Middle East, Africa and India, where there is a smaller number of clients than elsewhere. The ageing of these receivables is as follows:

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Less than 90 days - - 294 -

Over 90 days 1,787 - 2,076 -

1,787 - 2,370 -

As of 31 March 2012, trade receivables of £6,486,000 (2011: £9,272,000) 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 is as follows:

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Less than 90 days 3,642 - 5,473 -

Over 90 days 2,844 - 3,799 -

6,486 - 9,272 -

The carrying amounts of trade receivables are denominated in the following currencies:

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Pounds Sterling 8,460 - 8,030 -

Euros 659 - 840 -

Dirhams 2,863 - 3,737 -

Indian Rupees 378 - 407 -

Australian Dollars 1,059 - 1,050 -

Singapore Dollars 247 - 314 -

US Dollars 299 - 77 -

Saudi Riyals 36 - 110 -

Hong Kong Dollars 2,303 - 1,120 -

Chinese Renminbis 2,823 - 2,091 -

Thai Baht 153 - - -

19,280 - 17,776 -

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

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

At 1 April 1,496 - 1,865 -

Exchange differences (5) - (21) -

Acquired on business combinations - - 248 -

Provision for receivables impairment 333 - 500 -

Amounts reversed (344) - (127) -

Amounts utilised (250) - (969) -

At 31 March 1,230 - 1,496 -

The other classes of trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the book value of the receivable balances mentioned above. The Group does not hold any collateral as security.

16 (a) Long term contracts 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Total costs incurred plus profits recognised as income (less recognised losses) 130,080 - 126,641 -

Invoicing on account to customers (124,314) - (122,492) -

5,766 - 4,149 -

Of which work in progress for third parties is disclosed as:

Amounts due from customers on long term contracts (Note 16) 6,450 - 5,469 -

Amounts due to customers on long term contracts (Note 19) (684) - (1,320) -

5,766 - 4,149 -

17. Cash and cash equivalents

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Cash at bank and in hand 2,268 34 3,842 59

The Group balance above includes £0.5m (2011: £0.2m) in the form of security deposits in China which are held on trust. Cash and cash equivalents include the following for the purpose of the Statement of Cash Flow:

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Cash at bank and in hand 2,268 34 3,842 59

Bank overdrafts (3,440) - (2,375) -

Cash, cash equivalents and bank overdrafts at the end of the year (1,172) 34 1,467 59

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As a result of the Group‘s cash cycles and low market interest rates, the effective interest rate on cash balances was minimal (2011: minimal).

18. Financial liabilities 2012 2012 2011 2011

Current £’000 £’000 £’000 £’000

Group Company Group Company

Borrowings

Bank overdraft 3,440 - 2,375 -

Bank loans 7,040 7,040 5,743 1,811 Obligations under finance lease and hire purchase contracts 5 - 5 -

10,485 7,040 8,123 1,811

2012 2012 2011 2011

Non-current £’000 £’000 £’000 £’000

Group Company Group Company

Borrowings

Bank loans - - 666 666 Obligations under finance lease and hire purchase contracts 20 - 25 -

20 - 691 666

Bank loans and overdrafts

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Analysis of maturity of debt:

Within one year or on demand 10,480 7,040 8,118 1,811

Between one and two years - - 333 333

Between two and five years - - 333 333

10,480 7,040 8,784 2,477

The fair value of financial liabilities was the same as the carrying value. The Group‘s principal banker is Bank of Scotland plc, which has provided certain facilities secured by a fixed and floating first and only debenture over the assets of Sweett Group plc, including specific charges over the shares in certain subsidiary undertakings, and cross-guarantees of Sweett Group plc and certain subsidiaries. During April 2011 certain of the previously-available facilities were replaced by the facilities set out below, with the amounts drawn on the previous multi-currency revolving credit facility and share purchase loan being repaid. Accordingly, those balances were disclosed as falling due within one year at 31 March 2011. The current arrangements are as follows: 1. A multi-currency revolving credit facility of up to £5m for the financing of acquisitions. The rate of

interest is 3% over LIBOR or EURIBOR and draw downs are repayable in 2013, with prepayment in whole or in part permitted;

2. A term loan of £5m, with interest at 3% over LIBOR and repayable by equal quarterly instalments over five years;

3. An asset financing loan of £1m with interest at 3% over LIBOR and repayable by equal quarterly instalments over three years to 2013;

4. A £5m overdraft facility renewable annually with interest at 3% over Bank of Scotland plc base rate. The next review date is October 2012; and

5. A letter of credit facility for £4.5m, of which £4m is for use in guaranteeing debt obligation to the Group‘s PPP/PFI investments whilst under construction and £0.5m, is earmarked for contract guarantees.

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78

Additionally, £1.1m in overdraft facilities is available to overseas subsidiaries from local sources. Borrowings under all of the Group‗s bank facilities, including those from Bank of Scotland plc, are shown in the financial statements as current as at 31 March 2012. The reason for the is that two of the financial covenants, being the cash flow cover and gearing covenants, were infringed at 31 March 2012. The Bank has granted a retrospective waiver in respect of these infringements.

The present value of finance lease liabilities is as follows: 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Within one year or on demand 7 - 7 -

Between one and two years 22 - 29 -

29 - 36 - Future finance charges on finance leases (4) - (6) -

Present value of finance lease liabilities 25 - 30 -

The total minimum lease payments are as follows: 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Analysis of maturity of debt:

Within one year or on demand 5 - 5 -

Between one and two years 5 - 5 -

Between two and five years 15 - 20 -

25 - 30 -

2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

18 (a) Derivative financial instrument 602 602 - -

Note 4 to the financial statements discloses a cost of £0.6m relating to the change in fair value of a derivative financial instrument under IAS39. This relates to a forward foreign exchange contract to hedge advances in Australian dollars to a subsidiary company, the bulk of which were capitalised in September 2011. This was rolled into a replacement instrument on maturity in March 2012 and has been accounted for as a derivative rather than a hedge.

19. Trade and other payables 2012 2012 2011 2011

Current £’000 £’000 £’000 £’000

Group Company Group Company

Amounts due to customers on long term contracts – Note 16 (a) 684 - 1,320 -

Trade payables 1,871 - 1,650 -

Amounts due to group undertakings - 10,365 - 1,171

Taxes and social security costs 2,619 32 2,170 27

Other payables (see below) 8,302 14 6,321 10

Accruals and deferred income 2,605 196 3,023 217

16,081 10,607 14,484 1,425

Amounts due to group undertakings are unsecured, interest free and repayable on demand.

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Other payables 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Deferred contingent consideration on business combinations 2,048 - 1,894 -

Profit sharing 153 - 178 -

Restructuring costs 67 - 486 - Proceeds on account of the future disposal of available for sale assets 2,193 - - -

Other payables 3,841 14 3,763 10

8,302 14 6,321 10

Non-current 2012 2012 2011 2011

£’000 £’000 £’000 £’000

Group Company Group Company

Deferred contingent consideration on business combinations - - 1,533 -

Further details of deferred contingent consideration on business combinations are shown at Note 26. This includes amounts to be determined by post-combination profit performance.

The carrying amount of trade and other payables approximates to their fair value.

20. Provisions for liabilities and charges

Group

Property dilapidations

provision

£’000

At 1 April 2010 480

Release of provision in the year (435)

Reclassification as payable within one year (45)

At 31 March 2011 -

At 31 March 2012 -

£400,000 of the 2011 provision release is the write-back of dilapidation provisions made in previous years in respect of the Group‘s London head office property.

21. Retirement benefit obligations Defined benefit pension schemes Group and Company

The company‘s funded defined benefit pension scheme was closed to new members from 1 January 1999 and with effect from 30 June 2003 the company stopped making contributions to this scheme for current members in respect of their future service. Contributions that previously would have been paid into this scheme are now being paid into the Sweett Group Personal Pension Scheme, which is a defined contribution pension scheme.

Full actuarial valuations are prepared every three years and the valuation at 30 June 2008 was completed using the following annual growth rate assumptions:

Investment return 5.3% - 6.8%

Salary increases N/A

Pension increases 3.85%

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At the date of the latest completed actuarial valuation completed as at 30 June 2008 the market value of the assets was £9,106,000 which represented 73% of the benefits accrued to members on an ongoing basis, the resulting deficit being £3,297,000. The 30 June 2011 valuation is in the final stages of agreement.

During the year the company contributed £480,000 (2011: £480,000) to the defined benefit pension scheme. A revised schedule which will reduce this level of contribution is being negotiated with the scheme trustees and is due to be finalised shortly. An updated actuarial valuation was carried out at 31 March 2012 by an independent actuary, for the purposes of inclusion of information about the pension scheme in these accounts. The main assumptions used by the actuary were:

% per

annum % per

annum

2012 2011

Rate of increase of salaries n/a n/a Rate of increase of index-linked pensions in payment 3.4% 3.7%

Discount rate 4.7% 5.5%

Inflation assumption 3.4% 3.7%

The assumptions used by management are best estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice. The average life expectancy in years of a pensioner retiring at the age of 65 on the balance sheet date is as follows:

2012 2011

Male 22.9 22.8

Female 26.2 26.1 The average life expectancy in years of a pensioner retiring at the age of 65, 20 years after the balance sheet date, is as follows:

2012 2011

Male 24.8 24.7

Female 28.3 28.2

The amounts recognised in the balance sheet are determined as follows: 2012 2011

£’000 £’000

Fair value of plan assets 11,440 10,769

Present value of funded obligation (13,848) (12,428)

Liability in the balance sheet (2,408) (1,659)

Related deferred tax asset 578 431

Net pension liability (1,830) (1,228)

The amounts recognised in the income statement are as follows: 2012 2011

£’000 £’000

Current service costs - -

Expected return on plan assets (683) (641)

Interest cost 676 696

Total included in administrative expenses (7) 55

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Actuarial (losses) and gains shown in the Statement of Comprehensive Income 2012 2011

£’000 £’000

Actuarial (losses) / gains (1,236) 472

Cumulative losses recognised in the Statement of Comprehensive Income (3,502) (2,266)

Reconciliation of opening and closing balances of the present value of the defined benefit obligation 2012 2011

£’000 £’000

Benefit obligation at beginning of year 12,428 12,741

Interest cost 676 696

Actuarial loss / (gain) 1,025 (393)

Benefits paid (281) (616)

Benefit obligation at end of year 13,848 12,428

Reconciliation of opening and closing balances of the fair value of plan assets 2012 2011

£’000 £’000

Fair value of plan assets at beginning of year 10,769 10,185

Expected return on plan assets 683 641

Actuarial (loss) / gain (211) 79

Contributions by employers 480 480

Benefits paid (281) (616)

Fair value of plan assets at end of year 11,440 10,769

The major categories of plan assets and the expected rate of return at the balance sheet date for each category, is as follows:

Long term rate of return

expected

Fair value

Long term rate of return

expected

Fair value

2012 2012 2011 2011

p.a £’000 p.a £’000

Equities and Property 7.30% 4,528 8.40% 4,425

Fixed Interest 3.80% 5,641 4.90% 5,291

Index Linked Gilts 3.30% 1,266 4.40% 1,045

Cash and Other 0.50% 5 0.50% 8

11,440 10,769

The actual return on assets over the year was: 472 720

Present value of defined obligation:

Funded plans 13,848 12,428

Present value of unfunded obligations 2,408 1,659

Unrecognised actuarial gains (losses) - -

Net liability in balance sheet 2,408 1,659

In 2012 there was a positive return on plan assets of £472,000 (2011: £720,000).

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The contribution to be paid during the financial year to 31 March 2013 is under negotiation with the scheme trustees. Subject to formal documentation being concluded, the annual payments from 1 January 2013 will be reduced to £276,000. The fair value of the scheme‘s assets, which are not intended to be realised in the short term and may be subject to significant change before they are realised, and the present value of the scheme‘s liabilities, which are derived from cash flow projections over long periods, are thus inherently uncertain.

History of scheme assets, obligations and experience adjustments

As at 31

March 2012

As at 31

March 2011

As at 31

March 2010

As at 31

March 2009

As at 31

March 2008

£000s £000s £000s £000s £000s

Present value of defined benefit obligation

13,848 12,428 12,741 9,296 9,199

Fair value of scheme assets

11,440 10,769 10,185 8,006 9,199

Surplus/(deficit) in the scheme

(2,408) (1,659) (2,556) (1,290) -

Experience adjustments arising on scheme liabilities 1,025 (393) 3,251 (117) (1,395) Experience item as a percentage of scheme liabilities 7% (3%) 26% (1%) (15%)

Experience adjustments arising on scheme assets (211) 79 1,658 (1,844) (744) Experience item as a percentage of scheme assets (2%) 1% 16% (23%) (8%)

Money purchase pension schemes

The contribution to the Sweett Group plc group personal pension scheme for the year 1 April 2011 to 31 March 2012 was £785,000 (2011: £844,000). The Company and its UK subsidiaries also contribute to employees‘ personal pension schemes and the charge for the year was £30,500 and £50,500 respectively (2011: £17,500 and £53,500 respectively). Contributions made by subsidiary undertakings outside of the UK to money purchase pension schemes for their employees amounted to £1,383,000 (2011: £893,000).

22. Share capital

Group and company 2012 2011

£’000 £’000

Authorised:

75,000,000 Ordinary shares of 10p each 7,500 7,500

Called up and fully paid:

Ordinary shares of 10p each 6,631 6,506

2012 2011

000’s 000’s

Number of shares

Ordinary shares of 10p each 66,311 65,060

Movement in share capital 2012 2011

£’000 £’000

At 1 April 6,506 5,860

Shares issued (Note 23) 125 646

At 31 March 6,631 6,506

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Movement in share capital 2012 2011

Number Number

000’s 000’s

At 1 April 65,060 58,596

Shares issued (Note 23) 1,251 6,464

At 31 March 66,311 65,060

23. Share premium account

2012 2011

Group and company £’000 £’000

At 1 April 13,122 12,142

Shares issued 353 980

At 31 March 13,475 13,122

On 7 April 2011 the company issued 157,233 ordinary shares of 10 pence each at a premium of 5.9 pence per share, 48,077 ordinary shares of 10 pence each at a premium of 10.8 pence per share and 59,701 ordinary shares of 10 pence each at a premium of 23.5 pence per share in satisfaction of the exercise of share options. On 5 August 2011 the company issued 956,637 ordinary shares of 10 pence each at a premium of 32.7 pence per share, in part satisfaction of the acquisition of Widnell Limited (now Sweett (China) Limited). These shares were issued on behalf of the Company‘s wholly owned subsidiary Cyril Sweett International (Holdings) Limited (now Sweett (International) Holdings Limited), which acquired Widnell Limited. On 18 October 2011 the company issued 29,241 ordinary shares of 10 pence each at a premium of 38.45 pence per share, in part satisfaction of the acquisition of Padgham & Partners Pty Limited and its subsidiary company, Padgham Cost Management Private Limited. These shares were issued on behalf of the Company‘s wholly owned subsidiary Cyril Sweett Australia Pty Limited (now Sweett Group (Australia) Pty Limited), which acquired Padgham & Partners Pty Limited.

24. Treasury shares

2012 2011

Group and company £’000 £’000

At 1 April 140 11

Acquisitions - 129

Disposals (80) -

At 31 March 60 140

As at 31 March 2012, the treasury shares represent 257,705 Ordinary shares of 10 pence each (2011: 356,128 Ordinary shares of 10 pence each) of the company held by the company‘s Employee Benefit Trust and Share Incentive Plan set out below with a value of £60,000 (2011: £140,000). These shares represented 0.4 per cent (2011: 0.1 per cent) of the Company‘s issued share capital. Own shares

On 18 October 2011 the company purchased 100,000 of its own shares at 25p per share and subsequently transferred these to the vendors of Padgham & Partners Pty Limited in part satisfaction of deferred consideration, at a value of 48.45p per share. Sweett Group Employee Benefit Trust

The Employee Benefit Trust was established as a scheme for encouraging or facilitating the holding of shares in the company by or for the benefit of bona fide employees of the company. Assets and

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liabilities recorded by the Employee Benefit Trust are treated as assets and liabilities of the company, but are under the day to day control of trustees. The trustees have the power to grant options over any shares held by the trust or to sell or transfer any such shares to any beneficiaries from time to time provided always that the trustees consider that the grant of options or sale of shares will be advantageous to the beneficiaries. Costs of the Employees Benefit Trust have been recorded as a part of operating expenses of the company. At 31 March 2012 the Employee Benefit Trust held no shares (2011: no shares). Sweett Share Incentive Plan

The Share Incentive Plan was established to enable qualifying employees to acquire shares in the company out of untaxed income and provides a tax efficient means of granting shares to employees. Dividends received by the plan in cash are used to purchase additional shares on behalf of individuals. Free shares are awarded to qualifying employees based on remuneration. At 31 March 2012 the plan held 257,705 shares with a value of £60,000 which had not been allocated to individual employees (2011: 356,128 shares with a value of £140,000).

25. Equity settled share based payments The Company has granted certain unapproved share options together with share options under its Approved Company Share Option Plan (CSOP) and its Enterprise Management Incentive (EMI) scheme, although the Company no longer qualifies to grant further options under the EMI. Options granted have a contractual life of 10 years and are exercisable on the third anniversary from the date of grant. The Group has no legal or constructive obligation to repurchase or settle the options in cash and options lapse if an option holder is not a full-time employee of the Group. During the year the Company also granted nil cost options under the Performance Share Plan (PSP), details of which are provided in the Directors‘ remuneration report. The unexercised options at the end of the year are stated below.

Date of grant of option

Option exercise price per share

2012 2011

Shares Shares

‘000 ‘000

Unapproved options

31 October 2007 110.0p 695 695

14 January 2008 110.0p 30 30

1 October 2008 67.5p 160 209

3 April 2009 25.0p 400 400

20 April 2009 33.0p 568 680

9 July 2010 26.5p 75 75

15 December 2010 32.0p 30 30

19 July 2011 39.0p 173 -

2,131 2,119

CSOP

21 September 2001 15.9p - 157

29 January 2007 42.7p 70 70

31 March 2008 94.5p 30 30

3 April 2008 95.5p 157 157

31 July 2008 95.5p 16 16

31 July 2008 52.5p 19 19

3 April 2009 25.0p 100 100

20 April 2009 33.0p 1,814 1,942

4 November 2009 37.5p 19 19

9 July 2010 26.5p 39 115

15 December 2010 32.0p 10 10

19 July 2011 39.0p 699

21 November 2011 21.0p 16

2,989 2,635

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Option exercise price per share

2012 2011

Shares Shares

‘000 ‘000

EMI

6 October 2003 20.8p 313 362

28 November 2005 33.5p 657 819

16 October 2006 42.7p 1,030 1,130

2,000 2,311

Performance Share Plan (PSP)

9 December 2011 Nil 1,652 -

The estimated fair values of these share options range between 5p per share and 20p per share. This was calculated by applying the Black-Scholes option pricing model. The model inputs were the share price at grant date, the appropriate exercise price, expected volatility of 40% (2011: 40%), expected dividend yield of 3.2% (2011: 4.5%), contractual life of ten years and a risk-free interest rate of 5.0% (2011: 5.5%). It was assumed that employees would exercise their options during the first year after the option vesting date. The volatility of 40% represents the average of the volatility of a range of listed companies which operate in the same or similar sector as this company.

The value of employees services provided of £101,000 (2011: £140,000) has been charged to the income statement.

Further details of the three share option plans (not including the PSP) are as follows:

2012 2012 2011 2011

Weighted

average Weighted

average

Number of exercise Number of exercise

options price options price

000’s 000’s

Outstanding at the start of the year 7,065 43.7p 7,454 43.5p

Granted 2,592 26.9p 299 27.2p

Forfeited (620) 37.1p (446) 41.9p

Exercised (265) 20.8p (242) 19.1p

Outstanding at the end of the year 8,772 39.9p 7,065 43.7p

Exercisable at the end of the year 3,176 58.7p 3,263 51.6p

During the year options were exercised in respect of 265,011 shares (2011: 242,164), which were satisfied by the issue of new shares and for which the related weighted average share price at the time of exercise was 40.0p per share (2011: 35.3p).

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Share options outstanding at the end of the year have the following expiry dates and exercise prices:

Exercise price Shares Shares

Expiry date of option per share 2012 2011

21 September 2011 15.9p - 157,233

6 October 2013 20.8p 312,500 360,577

28 November 2015 33.5p 656,713 820,891

16 October 2016 42.7p 1,030,000 1,130,000

29 January 2017 42.7p 70,257 70,257

31 October 2017 110.0p 695,000 695,000

14 January 2018 110.0p 30,000 30,000

31 March 2018 94.5p 30,000 30,000

3 April 2018 95.5p 157,068 157,068

31 July 2018 52.5p 19,047 19,047

31 July 2018 95.5p 15,706 15,706

1 October 2018 67.5p 160,000 208,889

3 April 2019 25.0p 500,000 500,000

20 April 2019 33.0p 2,382,425 2,621,819

4 November 2019 37.5p 18,667 18,667

9 July 2020 26.5p 114,464 189,936

15 December 2020 32.0p 39,930 39,930

19 July 2021 39.0p 871,784 -

21 November 2021 21.0p 15,871 -

9 December 2021 Nil 1,652,228 -

8,771,660 7,065,020

Share option reserve

Group and company 2012 2011

£’000 £’000

At 1 April 505 369

Value of employee services provided 101 140

Transfer to retained earnings on exercise (6) (4)

At 31 March 600 505

26. Acquisitions

The primary reason for recent acquisitions was the strategic need to expand the Group overseas so as to provide a global service offering to our clients. There were no acquisitions during the financial year to 31 March 2012. Details of acquisitions during the previous year are provided below. On 9 July 2010, the Company announced the acquisition by Cyril Sweett International (Holdings) Limited (now Sweett (International) Holdings Limited), effective from 1 July 2010, of the entire share capital of Hong Kong-registered Widnell Limited, the third largest quantity surveying business in the Asia Pacific region, employing nearly 400 people in Hong Kong, mainland China and Macau. The company has been successfully integrated into the Group and has now been rebranded as Sweett (China) Limited. The maximum consideration, a mixture of cash and shares, is £5.2m, of which 60% was settled at completion on 9 July with the balance due with regard to post-acquisition performance on the first and second

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anniversaries of completion. Net tangible assets at completion in excess of the minimum HKD15m (approximately £1.3m) in the contract are scheduled for distribution to the vendors by 1 April 2011. This excess is HKD42m and is included in trade and other payables. The vendors also retain entitlement to 40% of the post-acquisition profits for the current year and 20% for next. The fair value of assets and liabilities acquired amounted to £1.2m and Widnell Sweett Limited contributed revenues of approximately £8.4m during the period since 1 July 2010 and a net profit of approximately £1.4m. Elements of the deferred consideration are contingent upon the satisfactory outcome of certain financial performance criteria. The fair value of the deferred contingent consideration of £2,041,000 was estimated by applying the income approach in the previous year. The fair value estimates are based on a discount rate of 5%. The remaining balance outstanding as at 31 March 2012 is £1,085,000. The remaining element of the deferred contingent consideration of £1,250,000 as at 31 March 2011 has not been discounted since this is expected to be settled within two years from the balance sheet date and therefore the impact of discounting is immaterial. At 31 March 2012 the fair value of this consideration was reduced by £450,000 and credited directly to the income statement (Note 5). The contingent consideration of £800,000 outstanding at 31 March 2012 relates primarily to 40% and 20% respectively of the post-tax profits for the years ended 31 March 2011 and 31 March 2012 which is now know and not expected to change. The fair value of 5,626,558 Ordinary shares issued as part of the consideration paid was based on the average mid market closing share price for the 10 days preceding settlement. Purchase consideration:

2011

£’000

Cash paid 1,773

Direct costs relating to the acquisition -

Fair value of shares issued (Note 23) 1,429

Deferred contingent consideration payable 3,291

6,493

Transaction costs incurred in respect of the acquisition of Widnell Limited amounting to £150,000 were recognised in last year‘s income statement. None of the goodwill recognised is expected to be deductible for income tax purposes. The fair values of assets and liabilities at the dates of acquisition were as follows:

2011

£’000

Cash and cash equivalents 1,175

Property, plant and equipment 199

Other intangible assets 11

Trade and other receivables 4,450

Trade and other payables (4,166)

Current tax liabilities (230)

Finance lease creditors (35)

Provision for employee benefits (200)

Bank overdraft -

Fair value of net assets acquired 1,204

Goodwill 3,979

Other intangible assets 1,310

Total purchase consideration 6,493

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2011

£’000

Purchase consideration and costs settled in cash 1,773 (Cash and cash equivalents) / bank overdraft in subsidiaries acquired (1,175)

Cash outflow on acquisitions 598

The fair value adjustments in respect of intangible assets for both acquisitions relate to customer relationships and order books. These have been valued and further details are given in Note 11 to the consolidated financial statements. Goodwill represents the value of synergies arising from the acquisitions, the acquired workforce and other benefits not capable of valuation.

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27. Cash flows from operations

2012 2012 2011 2011

Group Company Group Company

£’000 £’000 £’000 £’000

(Loss) / profit before taxation (1,021) (3,321) 2,339 (1,990)

Adjustment for:

Finance income (233) (244) -

Finance cost 1,092 937 341 8 Depreciation of property, plant and equipment 680 - 772 -

Amortisation of intangible assets 909 - 597 - Loss on disposal of property, plant and equipment and intangible assets 15 - 253 - Profit on disposal of available for sale financial assets (445) - - - Provision for impairment of subsidiary undertaking - 400 - - Release of provisions held on the business combination with Widnell Limited in July 2010 (250) - - - Release of contingent consideration arising on the business combination with Widnell Limited in July 2010 (200) - - - Defined benefit pension scheme – excess of interest cost over expected return on plan assets (7) (7) 55 55

Share based payments 101 26 140 20

Operating cash flows before movements in working capital 641 (1,965) 4,253 (1907)

(Increase) / decrease in receivables (2,100) 2,385 322 2,292

(Decrease) / increase in payables (846) (3,915) (2,625) 86 Payment to fund the defined benefit pension scheme deficit (480) (480) (480) (480)

(2,785) (3,975) 1,470 (9)

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27 (a) Reconciliation of movement in net debt

2012 2012 2011 2011

Group Company Group Company

£’000 £’000 £’000 £’000

2012 2012 2011 2011

Net decrease in cash, cash equivalents and bank overdraft

(2,624) (25) (1,837) 34

New bank loans raised (9,400) (9,400) (2,522) (1,000)

Repayment of bank loans 8,810 4,837 91 91

Redemption of finance leases 5 - 12 -

Foreign exchange revaluation of bank loans (41) - (112) -

Exchange losses on cash, cash equivalents and bank overdrafts (15) - (60) -

Change in net debt (3,265) (4,588) (4,428) (875)

Net debt at the beginning of the year (4,972) (2,418) (544) (1,543)

Net debt at the end of the year (8,237) (7,006) (4,972) (2,418)

28. Financial risk management The main risks arising from the Group's financial instruments are foreign currency risk, credit risk, interest risk and liquidity risk. The Group seeks to manage these risks in a manner which ensures straightforward administration and operational flexibility, whilst minimising risk. The financial instruments used by the Group comprise internal cash resources, borrowings, receivables and payables arising from normal trading activities, available for sale assets, loans and receivables and investments in subsidiaries. Banking facilities are negotiated to provide working capital and acquisition finance to meet current and future requirements and to hedge foreign currency exposures where appropriate. Liquidity risk

The Group‘s objective is to ensure sufficient cash reserves are available to fund ongoing activities and future development plans. This risk is managed by the policy of regular invoicing on long term contracts and ensuring that banking facilities are negotiated to provide working capital and acquisition finance to meet current and future requirements. The maturity of financial liabilities is as follows:

Group Trade and

Financial other

liabilities payables Total £’000 £’000 £’000

Within one year 10,485 16,080 26,565

Between one and two years 5 - 5

Between two and five years 15 - 15

At 31 March 2012 10,505 16,080 26,585

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Trade and

Financial other

liabilities payables Total £’000 £’000 £’000

Within one year 8,123 14,484 22,607

Between one and two years 338 1,533 1,871

Between two and five years 353 - 353

At 31 March 2011 8,814 16,017 24,831

Company Trade and

Financial other

liabilities payables Total £’000 £’000 £’000

Within one year 7,040 10,607 17,647

Between one and two years - - -

Between two and five years - - -

At 31 March 2012 7,040 10,607 17,647

Trade and

Financial other

liabilities payables Total £’000 £’000 £’000

Within one year 1,811 1,425 3,236

Between one and two years 333 - 333

Between two and five years 333 - 333

At 31 March 2011 2,477 1,425 3,902

The bank facilities at 31 March 2012 were subject to the following covenants:

Net Worth not to be less than £25m including goodwill and intangibles;

Interest cover: EBITDA to Total Interest not to be less than 4:1;

Gearing: Net Borrowings to EBITDA not to be more than 3:1;

Net Operating Cash Flow to Bank Debt Service not to be less than 1.1:1;

Book value of Investment portfolio not to exceed 25% of Consolidated Net Assets. Borrowings under all of the Group‗s bank facilities, including those from Bank of Scotland plc, are shown in the financial statements as current since two of the financial covenants, being the cash flow cover and gearing covenants, were infringed at 31 March 2012. The Bank has granted a retrospective waiver. Note 1 to these financial statements reviews ongoing covenant parameters. The Group had £1,212,000 (2011: £3,842,000) of cash and cash equivalents at the year end immediately available for use.

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Foreign currency risk

Most of the Group's trading activity is denominated in the currency relevant to the trading entity, thereby matching the currency with its cost base. Where contracts are denominated in non-local currency, the policy is to mitigate the risk having regard to all the relevant circumstances, normally by seeking to hedge the resultant currency exposure by way of a contract with the bank. Exposures arising on intra-group balances are similarly hedged, though most of such balances were capitalised during the year to 31 March 2012. The largest exposure to net assets relates to Australia and this exposure is hedged. The use of derivative financial instruments and hedge accounting as a means of managing foreign currency risk is explained more fully in Note 2; significant accounting policies. Note 4 to the financial statements discloses a cost of £0.6m relating to the change in fair value of a derivative financial instrument under IAS39. The circumstances were that a forward foreign exchange contract valued at AUD$11.1m to hedge advances in Australia dollars to a subsidiary company, the bulk of which were capitalised in September 2011, was rolled into a replacement instrument on maturity in March 2012 and is being accounted for as a derivative rather than a hedge. The hedge is effective for AUD8.5m, being the Group‘s net asset exposure to Australia, from 1 April 2012 having failed the stringent IAS39 documentation requirements for the year ended 31 March 2012. The balance of the contract is hedging advances to Australia. Trading in foreign currencies is predominantly in Hong Kong Dollars, Chinese Renminbi, Australian Dollars, Singapore Dollars, Indian Rupees, UAE Dirhams, Saudi Riyals and Euro. If sterling had strengthened/weakened by 10% against these currencies in the year to 31 March 2012, the Group‘s post-tax result would have changed by £0.1m (2011: £0.1m). Interest rate risk The Group has an exposure to interest rate increases on its long term debt. While interest rates remain at their current low levels, this risk has not been hedged, but exposures are under constant review. The Group‘s borrowings at 31 March 2012 were in sterling and Australian dollars (2011: sterling, Australian Dollars and Hong Kong Dollars). The effect of an increase/decrease in interest rates, assuming no change in lenders‘ margins, in the years to 31 March 2012 and 2011 of 20% would have been less than £100,000. Credit risk The Group has no significant concentration of credit risk in terms of unusually large amounts due from individual clients. In the current economic climate, there is an inherent risk in exposure to the property market which the Group seeks to mitigate by regular credit checks, regular payment requirements in its standard terms and conditions and the implementation of appropriate credit control procedures. Capital risk The Group‘s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and 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. Details of the financial covenants with which the Group must comply are stated in the Financial Review. The Group had infringed the cash flow cover and gearing covenants at 31 March 2012 and the Bank has granted a retrospective waiver. The Group monitors capital predominantly on the basis of the gearing ratio, which is calculated as net debt divided by earnings before exceptional items, interest, taxation, depreciation and amortisation (‗adjusted EBITDA‘). Net debt is defined as total current and non-current borrowings less cash and cash equivalents, to the extent immediately available. At 31 March 2012, net debt was £8.2m (2011: £5.0m) and adjusted EBITDA was £2.7m (2011: £4.8m). Accordingly the gearing ratio was 3.1 : 1 (2011: 1 : 1). Credit quality of financial assets

The Group operates in various locations in the UK and overseas and has a large number of blue-chip clients for whom it has provided services for long periods. The Directors believe that the Group‘s client engagement process, through its Management Procedures, provides a sufficient means of identifying and controlling material credit risk. It is not practical for the Group to provide an assessment of the credit quality of financial assets by reference to external credit ratings in all cases, although this approach is used where deemed appropriate. The level of credit risk is, in the view of the Board, generally low, due to a wide mix of clients in each of the geographical areas in which the Group operates with the exception of the Middle East, Africa and India, where there is a smaller number of clients than elsewhere.

Sweett Group plc (formerly Cyril Sweett Group plc)

93

Financial instruments by category

Group 2012 Loans and

receivables Available for sale Total

£’000 £’000 £’000

At 31 March 2012

Assets as per balance sheet

Available for sale financial assets - 2,062 2,062 Trade and other receivables, excluding prepayments 32,358 - 32,358

Cash and cash equivalents 2,268 - 2,268

Total 34,626 2,062 36,688

Other financial liabilities at

amortised cost

Liabilities at fair value through

profit and loss account Total

At 31 March 2012 £’000 £’000 £’000

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) 10,480 - 10,480

Finance lease liabilities 25 - 25 Trade and other payables excluding statutory liabilities 11,347 2,048 13,395

Derivative financial instrument - 602 602

Total 21,852 2,650 24,502

Group 2011 Loans and

receivables Available for sale Total

£’000 £’000 £’000

At 31 March 2011

Assets as per balance sheet

Available for sale financial assets - 1,595 1,595 Trade and other receivables, excluding prepayments 28,466 - 28,466

Cash and cash equivalents 3,842 - 3,842

Total 32,308 1,595 33,903

Other financial liabilities at

amortised cost

Liabilities at fair value through

profit and loss account Total

£’000 £’000 £’000

At 31 March 2011

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) 8,784 - 8,784

Finance lease liabilities 30 - 30 Trade and other payables excluding statutory liabilities 9,934 3,427 13,361

Derivative financial instrument - - -

Total 18,748 3,427 22,175

Sweett Group plc (formerly Cyril Sweett Group plc)

94

Company 2012 Loans and

receivables Investment in

subsidiaries Total

£’000 £’000 £’000

At 31 March 2012

Assets as per balance sheet

Investment in subsidiaries - 40,878 40,878

Trade and other receivables 3,352 - 3,352

Cash and cash equivalents 34 - 34

Total 3,386 40,878 44,264

Other financial liabilities at

amortised cost

Liabilities at fair value through

profit and loss account Total

£’000 £’000 £’000

At 31 March 2012

Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) 7,040 - 7,040 Trade and other payables excluding statutory liabilities 10,575 - 10,575

Derivative financial instrument - 602 602

Total 17,615 602 18,217

Company 2011 Loans and

receivables Investment in

subsidiaries Total

£’000 £’000 £’000

At 31 March 2011

Assets as per balance sheet

Investment in subsidiaries - 28,083 28,083 Trade and other receivables, excluding prepayments 5,670 - 5,670

Cash and cash equivalents 59 - 59

5,729 28,083 33,812

Other financial liabilities at

amortised cost

Liabilities at fair value through

profit and loss account Total

£’000 £’000 £’000

At 31 March 2011

Liabilities as per balance sheet

Borrowings (excluding finance lease liabilities) 2,477 - 2,477

Trade and other payables excluding statutory liabilities 1,398 - 1,398

Derivative financial instrument - - -

Total 3,875 - 3,875

Sweett Group plc (formerly Cyril Sweett Group plc)

95

Fair values The fair values of the Group's financial assets and liabilities approximate to their carrying values.

29. Related party transactions

Group

During the year the Company‘s wholly owned subsidiary Sweett (UK) Limited entered into transactions totalling £7,700 (2010: £11,500) with The British Council of Shopping Centres of which Derek Pitcher is a director. The transactions related to the 2011 annual conference and exhibition as well as various seminars. At the year end nothing was owed to this company (2011: £nil). During the previous year the Company‘s wholly owned subsidiary Sweett (UK) Limited (formerly Cyril Sweett Limited) entered into transactions totalling £5,000 with The British Council of Offices, of which Francis Ives was a director whilst a director of the Company. The transactions related to BCO membership subscriptions, the BCO annual conference and the BCO annual awards ceremony. At the previous year end nothing was owed to this company. Francis Ives resigned as a director on 10 September 2010. The directors are of the opinion that the above transactions were on normal commercial terms. Cyril Sweett Investments Limited holds 19% of the issued share capital of Lift Investments Limited, to which it has advanced subordinated debt funding on which it earns interest at the rate of 12.5%. The subordinated debt repayable at 31 March 2012 was £378,000 (2011: £466,000) and interest earned during the year was £40,000 (2011: £72,000). In June 2011 Cyril Sweett Investments Limited disposed of its holding of 5% of the issued share capital of Education 4 Ayrshire (Holdings) Limited, to which it had advanced subordinated debt funding on which it earned interest at the rate of 13%. The subordinated debt of £339,000 at 31 March 2011 was also disposed of and no interest was earned during the year (2011: £44,000). No dividend income was received during the year (2011: £18,000). Cyril Sweett Investments Limited holds 15% of the issued share capital of E4D&G Hold Co Limited, to which it has advanced subordinated debt funding on which it earns interest at the rate of 12.5%. The subordinated debt repayable at 31 March 2012 was £1,612,000 (2011: £1,667,000) and interest earned during the year was £198,000 (2011: £99,000). Cyril Sweett Investments Limited also received a dividend during the year of £32,000 (2011: £nil). Cyril Sweett Investments Limited holds 19% of e4i Holdings Limited, to which it has advanced subordinated debt which has a coupon tare of 12.5%. The subordinated debt repayable at 31 March 2012 was £1,266,000 (2011: £nil). On 26 July 2012 the Company announced the completion of the disposal of the Group‘s interest in the Inverclyde Schools PFI Project which included the benefit of any interest accruing on the subordinated debt. Company

The Company operates as a holding company for the Group. Balances with other group, companies which are shown at Notes 16 and 19 are unsecured, interest free and repayable on demand. The Company received no dividends from subsidiary undertakings (2011: £nil). Key management compensation for the Company is shown at Note 6.

Sweett Group plc (formerly Cyril Sweett Group plc)

96

30. Operating lease commitments – minimum lease payments Future commitments under non-cancellable operating leases:

2012 2011

£’000 £’000

Land and buildings

Within one year 2,124 1,905

Within two to five years 3,475 1,914

After five years 6 -

5,605 3,819

Plant and machinery

Within one year 192 349

Within two to five years 626 380

818 729

The Group leases land and buildings, plant and machinery under non - cancellable operating lease arrangements, which have various terms and renewal rights.

31. Capital and other financial commitments At 31 March 2012 the Group had no significant capital expenditure commitments (2011: £0.4m).

32. Contingent liabilities

The Group and the Company have contingent liabilities in respect of bonds and guarantees issued to third parties in the normal course of business. At 31 March 2012 the contingent liability amounted to £2.9m (2011: £1.4m) including a guarantee for £2.193m (2011: £nil) to the Inverclyde Schools call option holder which was released in July 2012. Additionally the Company has guaranteed the overdraft facility of Sweett (UK) Limited amounting to £4.9m (2011: £3.9m) and has a contingent risk relating to the eventual settlement value of its derivative financial instrument, the quantum of which is dependent on future currency exchange rates.

33. Post balance sheet events On 26 July 2012 the Company announced the completion of the disposal of the Group‘s interest in the Inverclyde Schools PFI Project. This disposal was the conclusion of a pre-paid option agreement entered into in January 2012 under which the consideration of £2,192,860 was paid immediately in cash. There have been no other significant post balance sheet events.

Sweett Group plc (formerly Cyril Sweett Group plc)

97

Company information Company registration number 03452251 Directors M J G Henderson FCA, FRSA, KHS (Non Executive Chairman) D L Webster MBA, BSc, FRICS, MAPM (Chief Executive Officer) C R J Goscomb FCA (Chief Financial Officer) D R Pitcher BSc, FRICS Dip.Proj.Man (Managing Director Europe)

K Berry LLB (HONS), MRICS, MHKIS, MCIarb, RPS (QS), F.PFM (Managing Director, Asia Pacific)

R S Mabey CMG, FCIOB, FRSA (Non-executive) P N Woollacott BSc, CIGEM (Non-executive) J L Hewitt FCA, MA, MBA (Non-executive) Secretary D M Pass ACIS, BCom Registered office 60 Gray‘s Inn Road London WC1X 8AQ Nominated Adviser Westhouse Securities Limited (formerly Arbuthnot Securities and broker Limited) 20 Ropemaker Street London EC2Y 9AR

Registered Auditors PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Bankers Bank of Scotland plc The Mound Edinburgh EH1 1YZ Registrars Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA Head office 60 Gray‘s Inn Road London WC1X 8AQ Telephone number (0)20 7061 9000 Fax number (0)20 7430 0603 www.sweettgroup.com