HIGGINS G ROUP ANN UAL RES ULTS 2007 · 2019-07-12 · HIGGINS G ROUP ANN UAL RES ULTS 2007 ªI am pleased to report that th e Higgins Group has deli vered record results for the

HIGGINS GROUP ANNUAL RESULTS 2007

“I am pleased to report that theHiggins Group has delivered record results for the 13th year in succession.”RG Higgins,ACIOB

HIGGINS GROUP PROFIT*

HIGGINS GROUP TURNOVER

* Profit on ordinary activities before taxation.

0

50

100

150

200

250

Turnover / £ million

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Homes

Contracting

0

3

6

9

12

15

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Profit / £ million

JOINTVENTURE COLLABORATION 3

DIRECTORS AND CORPORATE INFORMATION 4

CHAIRMAN’S STATEMENT 5

DIRECTORS’ REPORT 6-7

DIRECTORS’ RESPONSIBILITIES STATEMENT 8

INDEPENDENT AUDITOR’S REPORT 8-9

CONSOLIDATED PROFIT AND LOSS ACCOUNTS 10

CONSOLIDATED BALANCE SHEET 11

COMPANY BALANCE SHEET 12

CONSOLIDATED CASH FLOW STATEMENT 13

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 13

NOTES TO THE ACCOUNTS 14-28

NOTICE OF MEETING 28

Higgins Group PLC Annual Report and Accounts 2007 1

THE ORCHARD, OLD CRAWLEY, SUSSEX

HIGGINS GROUP ANNUAL RESULTS 2007 3

Joint Venture Collaboration“We believe that a collaborative approach is the platform to deliver the Egan agenda and continually improve our business. We have fully embraced it and are continuing to make step changes within our business to optimise the benefits of this approach”.

• An integral, dedicated Orchard focussed Pre-construction and Construction delivery team

• A lead designer capability• Strategic arrangements

with MMC specialists and powerhouse of procurement knowledge to manage integrated supply chains

• A cross subsidy arrangement to augment Housing Corporation grants

• Forward funding arrangements• A commercial approach to

risk sharing with risk/reward strategies

• Mixed tenure enhanced by sales and marketing expertise

• Considerate constructor principles including Health & Safety expertise

• Neighbourhood policies including agreed local charters and codes of conduct

• Sustainable community initiatives including training and local labour

• Bespoke customer focussed aftercare arrangements

The Orchard is an exemplar of the benefi ts that this collaborative approach can bring to the delivery of complex housing solutions within the modern construction agenda.The benefits of this Joint Venture Collaboration between Higgins Construction PLC, Higgins Homes PLC, Higgins Group PLC and Moat Housing Group include the provision of:


Directors and Corporate Information

DirectorsR G Higgins ACIOB (Chairman)S P Higgins BA

M J HigginsP H Lewellen BSc FCA

SecretaryP H Lewellen BSc FCA

Registered OfficeOne Langston RoadLoughtonEssex IG10 3SD

Registered no 2348986

GroupWebsiteswww.higgins-group.co.ukwww.higginshomes.co.ukwww.higginsconstruction.co.ukwww.bassettbusinessunits.co.uk

AuditorKPMG LLP8 Salisbury SquareLondonEC4Y 8BB

BankersHSBC Bank PLCCity Corporate Banking Centre60 Queen Victoria StreetLondon EC4N 4TR

The Royal Bank of Scotland PLCCorporate Banking LondonProperty & Construction9th Floor280 BishopsgateLondon EC2M 4RB

Barclays Bank PLCProperty Finance TeamUK Banking – Larger BusinessFloor 27One Churchill PlaceLondon E14 5HP

The HBOS Group PLCEssex Corporate CentreLyttleton House64 Broomfield RoadChelmsfordEssex CM1 1SW

4 Higgins Group PLC Annual Report and Accounts 2007

I am pleased to report that the Higgins Group has delivered record results for the 13th year in succession.

Turnover increased by 12% to £231 million, profit before taxation has grown to £10.5 million and

shareholders funds stood at £54 million at year end.

Higgins Homes PLC, the Group’s private housing arm, increased sales by 14% to £89 million. Despite some

uncertainty in the financial markets, enquiries have held up since year end and we continue to draw purchasers

by presenting homes of excellent design and specification in attractive locations.

Higgins Construction PLC has been selected to undertake a number of substantial new build and

refurbishment contracts. The Higgins Group is able to undertake major mixed tenure estate regeneration

schemes by combining the project management and construction expertise of Higgins Construction with

the design flair and marketing skills of Higgins Homes.

The south east of England continues to provide the Higgins Group with a rapidly growing market for

affordable housing – though the planning regime is frustrating an orderly throughput of projects. However

the Directors remain confident that the Higgins Group’s impressive growth profile can continue under the

direction of effective management and with a highly professional workforce.

R G Higgins ACIOB

Chairman

30 October 2007

Chairman’s Statement


Introduction

The Directors submit their Annual Report and Financial Statements for the year ended 31 July 2007.

Principal activity

The principal activities of the Group during the period under review were that of building contracting and theacquisition and development of building land.

Review of the business

The Directors are pleased to announce another successful year for Higgins Group PLC. Turnover increased by12% to £231 million for the year ended 31 July 2007 (2006: £206 million) and profit before taxation increasedto £10.5 million (2006: £10.1 million). The Group has maintained a net profit margin of 5% through continuedstrong cost management.

Net assets grew by £9 million to £54 million (2006: £45 million).

Private housebuilding sales have risen by 14% to £89 million (2006: £78 million) with legal completion takingplace on 351 plots (2006: 332).

The contracting arm of the Group, Higgins Construction PLC, has maintained its share of the social housing marketdespite increasing competition.

The Directors are aware of the inherent risks within the Construction and Housebuilding industries. The Directorsmonitor and manage these risks through internal controls and maintaining awareness of the markets withinwhich they operate. Careful site selection and initiatives such as mixed tenure redevelopment, together withthe maintenance of strong relationships with clients and suppliers, will ensure that the Group can adapt tochanging market conditions.

Directors and Directors’ Interests

The names of the Directors who held office throughout the year and at the date of this report and theirinterests in the shares of the Company at the end of the year, were as follows:

Beneficial Interest at 31 July2007 2006

Number Number

R G Higgins 2,208,135 2,208,135S P Higgins 1,619,541 1,619,541M J Higgins 1,619,541 1,619,541P H Lewellen Nil Nil

Dividends

The Directors have not paid an interim or final dividend in the year (2006: interim and final dividend of14p per share). Details of dividend payments are shown in note 16.

Directors’ Report


Creditor payment policy

The Group’s current policy concerning creditors is to:a) agree payment terms with its suppliers when it enters into binding purchase contracts;b) ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms incontracts; andc) abide by the payment terms agreed whenever it is satisfied that the supplier has provided the goods orservices in accordance with the contracts.

For the year to 31 July 2007 the Group’s average payment period from date of invoice or agreement ofvaluation was 19 days (2006: 21 days).

Employment of disabled persons

It is the policy of the Group to employ disabled persons where they are suited to a particular vacancy andto develop their careers by means of training and promotion.

Employee involvement

The Group encourages disclosure of information and employee involvement in matters of concern to theiremployment. Special attention is paid to Health and Safety and Quality Assurance, accordingly industrialaccidents remain at a level well below the industry norm. The Group actively promotes trainingprogrammes, the employment of trade apprentices and the participation in other youth training schemes;particularly within the London Boroughs' neighbourhood centres.

Political and Charitable contributions

During the year the Group made charitable contributions of £13,000 (2006: £53,000). The Group made nopolitical contributions during the year.

Auditor

In accordance with Section 384 of the Companies Act 1985, a resolution to re-appoint KPMG LLP asauditor of the Company is to be proposed at a forthcoming General Meeting.

Disclosure to Auditor

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as theyare each aware, there is no relevant audit information of which the Company's auditor is unaware; andeach Director has taken all the steps that he ought to have taken as a Director to make himself aware ofany relevant audit information and to establish that the Company's auditor is aware of that information.

By Order of the Board

P H Lewellen BSc FCA

Company Secretary30 October 2007

Directors’ Report


Directors’ Responsibilities StatementThe Directors are responsible for preparing the Directors’ Report and the financial statements in accordancewith applicable law and regulations. Company law requires the Directors to prepare financial statementsfor each financial year. Under that law the Directors have elected to prepare the group and parent Companyfinancial statements in accordance with UK Accounting Standards and applicable law (UK Generally AcceptedAccounting Practice). The Group and parent Company financial statements are required by law to give a trueand fair view of the state of affairs of the group and the parent company and of the profit or loss for that year.

In preparing these financial statements, the Directors are required to: select suitable accounting policiesand then apply them consistently; make judgments and estimates that are reasonable and prudent; statewhether applicable accounting standards have been followed, subject to any material departures disclosedand explained in the financial statements; prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Group and the parent Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracyat any time the financial position of the parent Company and enable them to ensure that its financialstatements comply with the Companies Act 1985. They have general responsibility for taking such steps asare reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud andother irregularities.

Report of the Independent Auditorto the members of Higgins Group PLC

We have audited the Group and parent Company financial statements (the ‘‘financial statements’’) ofHiggins Group PLC for the year ended 31 July 2007 which comprise the Group Profit and Loss Account, theGroup and Company Balance Sheets, the Group Cash Flow Statement, the Group Statement of TotalRecognised Gains and Losses and the related notes. These financial statements have been prepared underthe accounting policies set out therein.

This report is made solely to the Company’s members, as a body, in accordance with section 235 of theCompanies Act 1985. Our audit work has been undertaken so that we might state to the Company’smembers those matters we are required to state to them in an auditor’s report and for no other purpose.To the fullest extent permissible by law, we do not accept or assume responsibility to anyone other thanthe Company and the Company’s members as a body, for our audit work, for this report, or for the opinionswe have formed.

Directors’ Responsibilities Statement and Auditor’s Report


Respective responsibilities of Directors and AuditorThe Directors’ responsibilities for preparing the Directors’ Report and the financial statements in accordancewith applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice) are set outin the Statement of Directors’ Responsibilities above.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatoryrequirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and areproperly prepared in accordance with the Companies Act 1985. We also report to you whether in ouropinion the information given in the Directors’ Report is consistent with the financial statements.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if wehave not received all the information and explanations we require for our audit, or if information specifiedby law regarding directors’ remuneration and other transactions is not disclosed.

We read the Directors’ Report and consider the implications for our report if we become aware of anyapparent misstatement within it.

Basis of audit opinionWe conducted our audit in accordance with International Standard on Auditing (UK and Ireland) issued bythe Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also includes an assessment of the significantestimates and judgements made by the directors in the preparation of the financial statements, and ofwhether the accounting policies are appropriate to the company's circumstances, consistently applied andadequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance that thefinancial statements are free from material misstatement, whether caused by fraud or other irregularity orerror. In forming our opinion we also evaluated the overall adequacy of the presentation of information inthe financial statements.

OpinionIn our opinion:• the financial statements give a true and fair view, in accordance with UK Generally Accepted AccountingPractice, of the state of the company’s affairs as at 31 July 2007 and of its profit for the year then ended;• the financial statements have been properly prepared in accordance with the Companies Act 1985; and• the information given in the Directors’ Report is consistent with the financial statements.

KPMG LLPChartered Accountants/Registered Auditor, London30 October 2007

Auditor’s Report


Consolidated Profit and Loss AccountFor the year ended 31 July 2007

2007 2006Notes £’000 £’000

Turnover 2 231,048 205,750Cost of sales (201,363) (177,732)

Gross profit 29,685 28,018Administrative expenses (16,774) (16,192)

Operating profit 2/3 12,911 11,826Net interest payable 5 (2,592) (1,798)Net finance income – retirement benefits 4(g) 182 120

Profit on ordinary activities before taxation 10,501 10,148Taxation on profit on ordinary activities 6 (3,025) (3,065)

Profit on ordinary activities after taxation 15 7,476 7,083

All gains and losses arising in the year have been recognised in the profit and loss account shown above.

There is no material difference between the result in the profit and loss account shown above and the resulton an unmodified historical cost basis.

No activities were acquired or discontinued during the year.

The notes on pages 14 to 27 form an integral part of these financial statements.


2007 2006as restated

Notes £’000 £’000 £’000 £’000

Fixed assetsTangible assets 7 31,364 30,617

Current assetsStocks 9 76,608 60,640Debtors 10 23,744 18,099Cash at bank and in hand 26,286 22,529

126,638 101,268Creditors: amounts falling due within one year 11 (96,933) (77,285)

Net current assets 29,705 23,983

Total assets less current liabilities 61,069 54,600

Creditors: amounts falling due after more than one year 12 (6,712) (7,586)

Provision for liabilities and charges 13 (113) (89)

Net assets excluding pension assets and liabilities 54,244 46,925

Defined benefit pension scheme assets 4 (e) 2,360 2,034Defined benefit pension scheme liabilities 4 (e) (2,685) (3,555)

Net assets 53,919 45,404

Capital and reservesCalled up share capital 14 708 708Revaluation reserve 15(a) 8,698 8,698Other reserves 15(a) 94 94Profit and loss account 15(a) 44,419 35,904

Equity shareholders’ funds 53,919 45,404

These financial statements were approved by the Board of Directors on 30 October 2007.

R G Higgins ACIOB P H Lewellen BSC FCA

Director Director


Consolidated Balance SheetAt 31 July 2007


2007 2006Notes £’000 £’000 £’000 £’000

Fixed assetsInvestment in subsidiaries 8 1,505 1,505

Current assetsDebtors 10 23,181 11,161Cash at bank and in hand – 8

23,181 11,169Creditors: amounts falling due within one year 11 (13,979) (3,270)

Net current assets 9,202 7,899

Net assets 10,707 9,404

Capital and reservesCalled up share capital 14 708 708Other reserves 15(b) 84 84Profit and loss account 15(b) 9,915 8,612

Equity shareholders’ funds 10,707 9,404

These financial statements were approved by the Board of Directors on 30 October 2007.

R G Higgins ACIOB P H Lewellen BSC FCA

Director Director


Company Balance SheetAt 31 July 2007


2007 2006Notes £’000 £’000 £’000 £’000

Net cash (outflow)/inflow from operating activities 18(a) (1,935) 16,949

Returns on investment and servicing of financeInterest received 762 770Interest paid (3,169) (2,646)

(2,407) (1,876)TaxationCorporation tax paid (2,857) (2,560)

Dividends paid – (262)

Capital expenditure and financial investment 18(b) (1,506) (885)

Cash (outflow)/inflow before financing (8,705) 11,366

Financing 18(c) 12,462 (5,572)

Increase in cash in the period 18(d) 3,757 5,794

Statement of Total Recognised Gains and LossesFor the year ended 31 July 2007

2007 2006£’000 £’000

Profit for the financial year 7,476 7,083Actuarial gain recognised in the pension schemes 1,484 532Deferred tax thereon (445) (159)

Total gains and losses recognised since last financial statements 8,515 7,456


Consolidated Cash Flow StatementFor the year ended 31 July 2007


1.Accounting policiesThe following accounting policies have been applied consistently in dealing with items which are consideredmaterial in relation to the Group's financial statements.

(a) Basis of preparationThe financial statements have been prepared under the historical cost convention, modified to include therevaluation of certain freehold and leasehold properties, and in accordance with applicable accounting standards.

(b) Basis of consolidationThese consolidated accounts incorporate the accounts of the Company and all of its subsidiary undertakings.

As permitted by and in accordance with Section 230 of the Companies Act 1985, a separate profit and lossaccount of Higgins Group PLC, is not presented.

(c)Tangible fixed assets and depreciationFreehold land and buildings and leasehold propertiesFreehold land and buildings and leasehold properties occupied by the Group and held as investments areincluded in fixed assets at their latest valuation plus subsequent additions at cost and surpluses or deficitson revaluations are included in the revaluation reserve. It is the policy of the Group to revalue freehold andleasehold properties at least every five years. Provision for any impairment in the value of properties heldas fixed assets is made in the profit and loss account.

Depreciation is not provided in respect of freehold properties occupied or investment properties held by theGroup. Investment properties do not require depreciation in accordance with SSAP 19, Investment properties.Depreciation of occupied properties is not considered material. In accordance with FRS 11, Impairment offixed assets and goodwill, the assets are reviewed for impairment at the end of each reporting period.

Other tangible fixed assetsDepreciation is provided by the Group, on a reducing balance basis, to write off the cost, less the estimatedresidual value, of tangible fixed assets over their estimated useful economic lives as follows:

Leasehold properties – Period of the leasePlant and equipment – 25% per annumMotor vehicles – 25% per annumOffice equipment – 15% per annum

(d)TurnoverTurnover represents:(i) the invoiced value of certified construction and sub-contract work carried out;(ii) sales of the Group's development projects where the contract for sale has been completed.

(e) Long-term contract balancesAmounts recoverable on contracts are stated at surveyors' valuations, including attributable profitestimated to be earned to date less provision for any known or anticipated losses and are shown net ofpayments on account received or receivable. Attributable profit is based upon an assessment of the finaloutturn on contracts which includes forecast costs to complete and final anticipated valuations. Claimsreceivable are recognised as income once received or certified for payment.

(f) Stock of development land and propertiesStock of land and part completed properties is included at cost incurred to date less provisions forforeseeable losses. Where individual plots of an overall development have been finished and sold, costshave been attributed to these plots based on a proportion of the expected overall development costson completion.

Notes to the AccountsFor the year ended 31 July 2007


(g)TaxationCorporation tax payable is provided on taxable profits at the current rate.Deferred taxation is provided on all timing differences that have originated but not reversed by the balancesheet date, except that:i) deferred tax is not recognised on the revaluation of land and buildings unless there is a binding agreementto sell the revalued property and it is probable that any taxable gain arising on the sale will not be rolledover into the purchase of another asset;ii) deferred tax assets are recognised only to the extent that they are considered recoverable.

(h) Pension costsThe Group operates two pension schemes. One provides benefits based on length of service and finalpensionable pay. The other has both defined contribution and defined benefit sections.

Contributions in respect of defined contribution pension schemes are charged to the profit and lossaccount when they are payable.

The expected cost to the Group of pensions in respect of the defined benefits pension schemes are chargedto the profit and loss account so as to spread the cost of pensions over the service lives of employees inthe scheme.

The obligations of the Group in respect of the schemes are calculated by estimating the amount of futurebenefit employees have earned in respect for their service. This is then discounted to present value anddeducted from the fair value of the scheme’s assets.

(i) LeasesOperating lease costs are charged to the profit and loss account on a straight line basis. Fixed assets heldunder finance leases are capitalised and depreciated over their expected useful lives. The finance chargesare allocated over the primary period of the lease in proportion to the capital outstanding.

2.Analysis of turnover, operating profit and net assets2007 2006

Operating Net assets/ Operating Net assets/Turnover profit/(loss) (liabilities) Turnover profit/(loss) (liabilities)

as restated as restated£’000 £’000 £’000 £’000 £’000 £’000

By activity:Contracting 142,164 4,995 9,563 127,478 4,826 7,960Homes 88,884 11,144 52,900 78,272 9,840 39,704Head office costs – (3,228) 13,810 – (2,840) 11,389

231,048 12,911 76,273 205,750 11,826 59,053

Net debt (note 18(d)) (22,354) (13,649)

Net assets 53,919 45,404

All the Group’s activities are carried out in the United Kingdom.



3. Operating profitOperating profit is stated after charging:

2007 2006£’000 £’000

Aggregate Directors' emoluments (Note 4) 5,584 5,524Hire of plant and machinery 1,361 1,415Depreciation of tangible fixed assets 772 740Auditor’s remuneration – for audit work 59 60Loss on sale of tangible fixed assets – 22

and after crediting:Rents receivable 810 698Profit on sale of tangible fixed assets 13 –Profit on sale of short term investments – 4

Auditor’s remuneration for the Parent Company was £8,000 (2006: £8,000).The profit of the Parent Company transferred to reserves in the year is £1,303,000 (2006: £1,975,000)

4. Staff costs

(a) Staff numbers and costsThe average number of persons employed by the Group (including directors) during the year, analysed bycategory, was as follows:

Number of employees2007 2006

Office and management 184 198Contract staff 300 318

484 516

2007 2006£’000 £’000

Employee costs:Wages and salaries 23,637 23,221Social security costs 2,501 2,443Other pension costs 1,442 1,793

27,580 27,457

The aggregate emoluments (excluding pension contributions) of the Chairman amounted to £1,468,657(2006: £1,380,742). He has participated in a defined benefit pension scheme during the year and his accruedpensions at 31 July 2007 amounted to £288,276 per annum (2006: £271,834 per annum). For the yearsended 31 July 2007 and 2006 the highest paid Director was also Chairman.

(b) PensionsThe Group operates two Pension Schemes. The Higgins Group PLC Pension & Life Assurance Scheme (“StaffScheme”) was a defined benefit scheme until February 2002 from which date that part of the scheme wasclosed to new entrants who are invited to join a new money purchase section. The Higgins Group PLCFounders Directors Retirement Benefit Scheme (“Founders Scheme”) has the intention of operating as adefined benefit scheme and is reported as such within these financial statements.



(c) Money purchase contributionsContributions amounting to £241,000 (2006: £189,000) were paid into the money purchase section of theStaff Scheme during the year. In addition the Group covers the cost of insured benefits.

(d) Defined benefit contributionsA schedule of minimum contributions for the Group’s defined benefit schemes is determined by an independentqualified actuary on the basis of triennial valuations – the most recent of which was at 30 April 2004. TheScheme Actuary has recommended that future contributions be made into the defined benefit section of theStaff Scheme at the rate of 15% per annum and into the Founders Scheme at the rate of 23.6%. In additionthe Group covers the cost of insured benefits and other expenses of both schemes.

(e) Defined benefit assets and liabilitiesThe market value of the defined benefit section of the Staff Scheme and the Founders Scheme assets at31 July 2007 were sufficient to cover 82% (2006: 76%) and 133% (2006: 128%) of the respective Schemedefined benefit obligations at that date.

The principal actuarial assumptions are as follows:At 31 July At 31 July At 31 July

2007 2006 2005

Inflation 3.35% 3.00% 2.80%Discount rate 5.90% 5.25% 5.25%Salary increase – Staff Scheme 4.35% 4.00% 3.90%Salary increase – Founders Scheme 4.85% 4.50% 4.40%Pension in payment increase (1997-2006 accrual) 3.35% 3.00% 2.40%Pension in payment increase (post 2006 accrual) 3.00% – –

On the basis of these assumptions the pension assets or liabilities and the expected long-term rates ofreturns were:

Expected long term Staff Scheme Founders Schemerate of return value value

2007 2006 2005 2007 2006 2005 2007 2006 2005% % % £’000 £’000 £’000 £’000 £’000 £’000

Investment in HigginsGroup PLC 5.00 5.00 4.50 – – – 7,300 7,300 527Other Equities 7.90 7.55 7.40 14,185 11,655 9,777 3,553 3,093 4,569Corporate Bonds 5.90 5.35 5.20 401 805 719 100 214 202Government Bonds 4.90 4.55 4.40 1,220 674 610 2,118 2,020 1,933Cash and other 5.50 4.50 4.50 1,931 1,904 1,500 607 701 513

Fair value of defined benefit assets 17,737 15,038 12,606 13,678 13,328 7,744Present value of defined benefit obligations (21,572) (20,117) (16,290) (10,307) (10,422) (7,011)

(Deficit)/surplus (3,835) (5,079) (3,684) 3,371 2,906 733Related deferred tax asset/(liability) 1,150 1,524 1,105 (1,011) (872) (220)

Pension (liability)/asset (2,685) (3,555) (2,579) 2,360 2,034 513



4. Staff costs continued

(f) Changes in the fair value of defined benefit (liabilities)/assetsStaff Scheme Founders Scheme

2007 2006 2007 2006£’000 £’000 £’000 £’000

Pension (liabilities)/assets at beginning of year (3,555) (2,579) 2,034 513Movement in year:Current service cost (1,006) (870) – (197)Contributions 1,050 893 – 300Net finance income (deficit)/surplus (5) 9 187 111Actuarial gain/(loss) 1,206 (1,427) 278 1,959Deferred tax (375) 419 (139) (652)

Pension (liabilities)/assets at end of year (2,685) (3,555) 2,360 2,034

(g) Amounts recognised in profit and loss accountThe amounts that been charged to profit and loss account in respect of defined benefit obligations are asfollows:

Staff Scheme Founders Scheme2007 2006 2007 2006£’000 £’000 £’000 £’000

Current service cost and total operating charge 1,006 870 – 197

Expected return on pension scheme assets 1,075 888 730 450Interest on pension scheme liabilities (1,080) (879) (543) (339)

Net finance (cost)/income (5) 9 187 111

As the defined benefit section of the Staff Scheme is closed to new entrants, the current service cost, underthe projected unit method, will increase as the members of the scheme approach retirement.

(h) Actuarial gains and losses recognised in equityThe amounts that have been included within the statement of total recognised gains and losses are as follows:

Staff Scheme Founders Scheme2007 2006 2007 2006£’000 £’000 £’000 £’000

Difference between expected and actual returns on assets 673 608 (234) 5,564Experience losses arising in the scheme liabilities (343) (191) (201) (3,235)Effects of changes in assumptions underlying the presentvalue of scheme liabilities 876 (1,844) 713 (370)

Actuarial gain/(loss) 1,206 (1,427) 278 1,959



(i) History of experience gains and lossesStaff Scheme

2007 2006 2005 2004 2003£’000 £’000 £’000 £’000 £’000

Difference between expected and actual returnson scheme assets 673 608 1,379 (150) 15Percentage of assets at year end 4% 4% 11% 2% 0%

Experience (losses)/gains on scheme liabilities (343) (191) 78 (545) (67)Percentage of liabilities at year end 2% 1% 0% 4% 1%

Total actuarial gains/(losses) 1,206 (1,427) (739) (1,616) (383)Percentage of liabilities at year end 6% 7% 5% 13% 4%

Founders Scheme2007 2006 2005 2004 2003£’000 £’000 £’000 £’000 £’000

Difference between expected and actual returnson scheme assets (234) 5,564 910 806 (69)Percentage of assets at year end 2% 42% 12% 13% 2%

Experience (losses)/gains on scheme liabilities (201) (3,235) 260 68 (933)Percentage of liabilities at year end 2% 31% 4% 1% 18%

Total actuarial gains/(losses) 278 1,959 343 292 (1,159)Percentage of liabilities at year end 3% 19% 5% 5% 22%

5. Net interest payable2007 2006£’000 £’000

Interest payable on bank loans and overdrafts 3,354 2,567Interest income (762) (769)

2,592 1,798



6.Taxation on profit on ordinary activities2007 2006£’000 £’000

Analysis of charge in yearUK corporation tax charge at 30% (2006: 30%) based on the profit for the year 2,980 2,904(Over)/under provision in respect of prior years (47) 78

2,933 2,982Deferred taxation (see note 13) 24 9Deferred taxation – relating to retirement benefits 68 74

3,025 3,065

The Group is not aware of any factors that materially affect the tax charge for the year or future tax charges.

Factors affecting the tax charge for the current periodThe current tax charge for the period is lower (2006: lower) than the standard rate of corporation tax in the UKof 30% (2006: 30%). The differences are explained below:

2007 2006£’000 £’000

CurrentTax ReconciliationProfit on ordinary activities before tax 10,501 10,148

Current tax at 30% (2006: 30%) 3,150 3,044Effects of:Expenses not deductible for tax purposes 117 166Capital allowances for period in excess of depreciation (221) (210)Utilisation of tax losses 2 (22)Tax relief on pension contributions in excess of amounts expensed (68) (74)Adjustments to tax charge in respect of previous periods (47) 78

Total current tax charge 2,933 2,982



7.Tangible fixed assetsFreeholdland and Leasehold Plant & Motorbuildings properties equipment vehicles Total

£’000 £’000 £’000 £’000 £’000

Cost or valuationAt beginning of year 25,669 1,765 5,589 1,383 34,406Additions – 50 1,387 161 1,598Disposals – – (124) (211) (335)

At end of year 25,669 1,815 6,852 1,333 35,669

DepreciationAt beginning of year 68 81 2,949 691 3,789Charge for year – 13 560 199 772On disposals – – (91) (165) (256)

At end of year 68 94 3,418 725 4,305

Net Book AmountAt 31 July 2007 25,601 1,721 3,434 608 31,364

At 31 July 2006 25,601 1,684 2,640 692 30,617

The following freehold properties were professionally valued by Chartered Surveyors as at 31 July 2005 on anopen market basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes:

ValuationName of Property £ Name of Valuer1-3 Bower Hill, Epping 380,000 Glenny LLPConnaught House, High Road, Loughton 3,000,000 Glenny LLPCharter House, High Street, Great Dunmow 495,000 Kemsley, Whiteley & FerrisConnaught Mews, Loughton 325,000 Glenny LLPLa Tasca, High Street, Brentwood 1,400,000 Savills (L&P) LimitedOne Langston Road, Loughton 20,000,000 Savills (L&P) Limited

The historical cost of freehold properties is £17,321,000 (2006: £17,321,000).

The following leasehold properties were professionally valued by Chartered Surveyors as at 31 July 2005 on anopen market basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes:

ValuationName of Property £ Name of ValuerBassett Business Units, North Weald 1,300,000 Glenny LLPUnits 2-3, Lockside Marina, Chelmsford 265,000 Kemsley, Whiteley & Ferris

The historical cost of leasehold properties is £1,414,000 (2006: £1,414,000).



8. Fixed assets - investmentsCompany – Investments

2007 2006£’000 £’000

Shares in Group Undertakings:Net book amount at beginning of year 1,505 1,745Impairment – (240)

Net book amount at end of year 1,505 1,505

The list of companies in which the Company has a participating interest, all of which are 100% subsidiaryundertakings registered in England and Wales, is as follows:Subsidiary Undertakings Principal Activity

Higgins Homes PLC House buildingHiggins Construction PLC ContractingHiggins Investments PLC Property investmentsBassett Business Units Limited Managing business units†

Higgins City Limited ContractingD J Higgins Investments Limited DormantHiggins Group Services Limited DormantD J Higgins Construction Limited Dormant*D J Higgins Building Works Limited Dormant*D J Higgins Plant Limited Dormant*Station Garage (Loughton) Limited Dormant*

* All these companies are 100% subsidiary undertakings of Higgins Construction PLC.†This company is a 100% subsidiary of Higgins Investments PLCIn all other cases shares are held entirely by the Company.

9. Stocks2007 2006£’000 £’000

Residential development land and buildings 75,933 59,715Contracting stock and work in progress 675 925

76,608 60,640

The Directors have reviewed the presentation of contract related balances and have adjusted the prior yearpresentation accordingly. The overall impact was to introduce stocks and works in progress for 2006 by£925,000 and to increase accruals and deferred income by £925,000. This reclassification therefore did notimpact the previously reported net assets at 31 July 2006.



10. Debtors2007 2006

Group Company Group Company£’000 £’000 £’000 £’000

Trade debtors 20,578 – 12,477 –Amounts recoverable on contracts 1,732 – 4,368 –Amounts owed by subsidiaries – 22,935 – 11,008Other debtors 559 1 585 8Prepayments and accrued income 875 245 669 145

23,744 23,181 18,099 11,161

Included in trade debtors are amounts falling due after more than one year of £2,053,000 (2006: £1,164,000).

The Directors have reviewed the presentation of contract related balances and have adjusted the prior yearpresentation accordingly. The overall impact was to increase 2006 trade debtors by £876,000; to increase2006 amounts recoverable on contracts by £1,094,000 and to increase 2006 payments on account (see note 11)by £1,970,000. This reclassification therefore did not impact the previously reported net assets at 31 July 2006.

11. Creditors: amounts falling due within one year2007 2006


Bank loans and overdrafts 41,928 36 28,592 –Trade creditors 8,623 – 8,238 –Payments on account 15,323 – 7,533 –Amounts owed to subsidiaries – 13,788 – 3,000Corporation tax payable 1,781 – 1,705 –Other taxation and social security 1,225 13 1,126 –Other creditors 584 – 7,042 –Accruals and deferred income 27,469 142 23,049 270

96,933 13,979 77,285 3,270

The bank loans and overdrafts are secured on:(i) certain freehold and leasehold properties retained as tangible fixed assets and(ii) certain properties within the stock of development land.The Directors have reviewed the presentation of contract related balances and have adjusted the prior yearpresentation accordingly. The impact is detailed in notes 9 and 10.



12. Creditors: amounts falling due after more than one year2007 2006


Bank Loans 6,712 – 7,586 –

6,712 – 7,586 –

The bank loans are repayable by instalments as follows:2007 2006£’000 £’000

Bank loansAmounts due:Between 1 and 2 years 1,186 1,210Between 2 and 5 years 3,556 3,656After 5 years 1,970 2,720

6,712 7,586

The bank loans are secured on:(i) certain freehold and leasehold properties retained as tangible fixed assets and(ii) certain properties within the stock of development land.The bank loans are repayable by monthly installments. Interest is charged at rates linked to bank base lending rate.

13. Provision for liabilities and chargesDeferred Tax – Group

2007 2006£’000 £’000

Balance at beginning of year 89 80Profit and loss account (see note 6) 24 9

Balance at end of year 113 89

Deferred taxation provided in the accounts is as follows:2007 2006£’000 £’000

Accelerated capital allowances 231 126Short-term timing differences (118) (37)

113 89

The Group has trading losses carried forward of £32,000 (2006: £32,000) which have not been reflected inother timing differences.

In addition, a deferred tax liability of £513,000 arose in the year (2006: asset of £233,000) in relation to theGroup’s defined benefit schemes. In accordance with FRS17, pension assets and liabilities arising are net ofattributable deferred tax (note 4 (e)).



14. Called up share capital2007 2006£’000 £’000

Authorised:50,000,000 Ordinary Shares of 10 pence each 5,000 5,000

Share Capital allotted, and fully paid:7,083,902 Ordinary Shares of 10 pence each 708 708

15. Statement of movements on reservesProfit

Revaluation Other and lossreserve reserves account Total£’000 £’000 £’000 £’000

(a) GroupAt beginning of year 8,698 94 35,904 44,696Profit for financial year – – 7,476 7,476Dividends paid in the year (note 16) – – – –Actuarial gain arising in the year – – 1,484 1,484Deferred tax arising thereon – – (445) (445)

At end of year 8,698 94 44,419 53,211

(b) CompanyAt beginning of year – 84 8,612 8,696Profit for financial year – – 1,303 1,303Dividends paid in the year (note 16) – – – –

At end of year – 84 9,915 9,999



16. Dividends2007 2006£’000 £’000

2005 Final dividend paid of 14p per share less dividends waived – 882006 Interim dividend paid of 14p per share less dividends waived – 872006 Final dividend paid of 14p per share less dividends waived – 87

– 262

17. Guarantees and commitments(a) The Company has entered into cross guarantee arrangements with certain subsidiary undertakings.

(b) Capital commitments of the Group at 31 July 2007 for which no provision has been made in thesefinancial statements, were as follows:

2007 2006£’000 £’000

Contracted 327 135Authorised but not contracted 86 45

413 180

(c) At 31 July 2007 the Group had annual commitments (Company: £nil) under non-cancellable operatingleases and contract hire agreements as follows:

ContractProperty hire Total

£’000 £’000 £’000

Leases which expire:Within 1 year – 116 116In 2 to 5 years – 787 787Over 5 years 28 – 28

28 903 931



18. Notes to the cash flow statement(a) Reconciliation of operating profit to operating cash flows:

2007 2006£’000 £’000

Operating profit 12,911 11,826Depreciation charges 772 740(Profit)/Loss on sale of tangible fixed assets (13) 22(Profit) on sale of investment – (4)Defined benefit pension scheme contributions paid (1,050) (1,193)Defined benefit pension scheme service cost accrued 1,006 1,067(Increase) in stocks (15,968) (8,104)(Increase) in debtors (5,645) (2,706)Increase in creditors 6,052 15,301

Net cash (outflow)/inflow from operating activities (1,935) 16,949

(b) Analysis of capital expenditure and financial investment2007 2006£’000 £’000

Purchase of tangible fixed assets (1,598) (1,054)Sale of tangible fixed assets 92 164Sale of short term investments – 5

Net cash outflow for capital expenditure and financial investment (1,506) (885)

(c) Financing2007 2006£’000 £’000

Drawdown/(Repayment) of loans 12,462 (5,572)

(d) Analysis of net debtAt At

1 August Cash 31 July2006 flow 2007£’000 £’000 £’000

Cash at bank and in hand 22,529 3,757 26,286Bank loans due within 1 year (28,592) (13,336) (41,928)Bank loans due after 1 year (7,586) 874 (6,712)

(13,649) (8,705) (22,354)



Short notice, having been approved is hereby given that the Annual General Meeting of Higgins Group PLCwill be held at One Langston Road, Loughton, Essex on 27 November 2007 at 11.00am to transact thefollowing business:

1. To receive and approve the consolidated Annual Report and Accounts for the year ended 31 July 2007and the reports of Directors and Auditor thereon.

2. To appoint KPMG LLP as auditor of the Company and to authorise the Directors to fix their remuneration.

3. To transact any other business which may be transacted at an Annual General Meeting.

By Order of the Board

P H Lewellen BSc FCA

Company Secretary

30 October 2007

The Register of Directors and interests in the Company’s shares are available for inspection at the RegisteredOffice of the Company during usual business hours (weekends and public holidays excepted) and at themeeting from 15 minutes prior to and during the meeting.

Notice of Meeting

28 Higgins Group PLC Annual Report and Accounts 2007 Des

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THE HUB, CHELMSFORD, ESSEX

HIGGINS GROUP PLCOne Langston RoadLoughtonEssexIG10 3SD Telephone 020 8508 5555Fax 020 8508 7078E-mail [email protected]

Documents

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