clear direction, effective management and a highly

GROUP PLC

HIGGINS GROUP PLC

ANNUAL REPORT

2015

Clear direction,effective

management and a highly professional

workforce

The Bracken, Epping (top) - The Oak, Epping (bottom)

Higgins Group PLC Annual Report and Accounts 2015 1

Directors and Corporate Information

Chairman’s Statement

Group Strategic Report

Directors’ Report

Statement of Directors’ Responsibilities

Consolidated Profit and Loss Account

Consolidated Balance Sheet

Company Balance Sheet

Statement of Total Recognised Gains and Losses

Consolidated Cash Flow Statement

Reconciliation of Net Cash Flow

Notes to the Financial Statements

Independent Auditor’s Report

2

3

4

5-6

7

8

9

10

11

11

11

12-30

31

GROUP PLC

Maintaining a Focus on Housing, Care and Education

2 Higgins Group PLC Annual Report and Accounts 2015

GROUP PLC

DirectorsR G Higgins ACIOB (Chairman) S P Higgins BA M J Higgins P H Lewellen BSc FCA

SecretaryP H Lewellen BSc FCA

AuditorKPMG LLP15 Canada SquareLondon E14 5GL

BankersHSBC Bank PLCWest End Corporate Banking Centre2nd Floor, 70 Pall MallLondon SW1Y 5EZ

The Royal Bank of Scotland PLCCorporate Banking LondonProperty & Construction9th Floor, 280 BishopsgateLondon EC2M 4RB

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

Registered OfficeOne Langston RoadLoughtonEssex IG10 3SD

Registered Number2348986

Group Websiteswww.higgins-group.co.ukwww.higginshomes.co.ukwww.higginsconstruction.co.ukwww.bassettbusinessunits.co.uk

Directors and Corporate Information


GROUP PLC

Chairman’s Statement

The chairman presents his statement for the period.

I am pleased to report an 86% increase in the Higgins Group’s profit before tax for the year ended 31st July 2015– from £2.4 million to £4.5 million. Group turnover grew by 25% to £226 million.

All political and economic commentators agree that the rate of supply of new housing is inadequate and that high demand is sustainable for the foreseeable future - particularly in our key operating area of London and the Home Counties.

Both our operations, Higgins Homes and Higgins Construction, are therefore being positioned to deliver significant growth in turnover. This will be individually in their specialist areas of private and affordable housing – but also collaboratively in joint venture with key clients.

One such project – the five year regeneration of the Myatts Field North estate in London Borough of Lambeth is now entering its final phase and has been a significant success for all stakeholders involved. When complete we will have delivered a revitalised estate of over 800 mixed tenure properties – including over 350 for private sale in a 50:50 joint venture.

Other sites are either underway or in pipeline where the client will participate in the financial success of the project. We are keen to develop such partnerships as they demonstrate our ability to adapt our acquisition model to suit the aspirations and risk-attitude of the landowner.

I would like to take this opportunity to offer my thanks for the continuing hard work and commitment shown by all employees of the Higgins Group.

R G Higgins ACIOBChairman27th October 2015


GROUP PLC

Group Strategic Report

Principal ActivityThe principal activities of the Group during the financial year were that of building contracting and the acquisition and development of building land.

Review of the BusinessThe Directors can report 25% growth in consolidated turnover for the year to £226 million (2014: £181 million) with profit before tax growing by 86% to £4.53 million (2014: £2.44 million).

Net Assets for the Group at the year-end have increased only slightly to £49.5 million due to the planned repurchase and cancellation of its shares and an increase in the declared pension deficit of £0.7 million. Net Borrowing was negligible at the year end and the Group is operating well within its banking facilities. Both our principal bankers, HSBC and RBS, have expressed a willingness to increase facilities.

Higgins Construction, the contracting arm of the Group, increased turnover by 13% in the year reflecting their success in operating as a “community contractor” in the key sectors of social housing and education. The order book remains strong and significant growth in turnover is anticipated in the year ended July 2016.

The private development arm of the Group, Higgins Homes, has maximised on a period of significant sales price growth by continuing to design and present a very attractive range of product. The Company continues to develop its existing portfolio of schemes whilst looking to locate and secure new opportunities.

The Directors believe that Higgins Group can offer our Registered Social Landlord and Local Authority clients a proven model that combines finance solutions, design, construction, marketing and sales services. We are well- placed to engage in joint venture partnerships to maximise the cross-subsidy return available from private development.

Principal Risks and UncertaintiesThe Directors are aware of the inherent risks within the Construction and Housebuilding industries. These risks principally concern the availability of public funds, the contract tendering process and the general housing market and availability of mortgages. The Directors monitor and manage these risks through internal controls and maintaining awareness of the markets within which they operate. A careful and sensitive approach to pricing and tight cost management, together with the maintenance of strong relationships with clients and suppliers, will ensure that the Group can adapt to changing market conditions.

By Order of the BoardP H Lewellen BSc FCACompany Secretary 27th October 2015


GROUP PLC

Directors’ Report

IntroductionThe Directors present their Directors’ Report and Financial Statements for the year ended 31st July 2015.

Directors and Directors’ InterestsThe names of the Directors, who held office throughout the year and at the date of this report and their interests in the shares of the Company at the end of the year, were as follows:

Beneficial Interests at 31st July2015

No.2014

No.R G Higgins ACIOB (Chairman) S P Higgins BA M J Higgins P H Lewellen BSc FCA

2,208,1351,619,5411,619,541

Nil

2,208,1351,619,5411,619,541

Nil

DividendsThe Directors have not paid an interim or final dividend in the year (2014: no interim or final dividend).

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 in contracts; andc) abide by the payment terms agreed whenever it is satisfied that the supplier has provided the goods or services in accordance with the contracts.

For the year to 31st July 2015 the Group’s average payment period from date of invoice or agreement of valuation was 32 days (2014: 32 days).

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

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

Post Balance Sheet EventOn 8th October 2015 the Company repurchased and cancelled 250,000 ordinary 10 pence shares for a total consideration of £1,650,000 from Higgins Group PLC Founder Directors Retirement benefits Scheme under an authorisation granted on 29th September 2015.


GROUP PLC

Directors’ Report

Disclosure of Information to AuditorEach of the persons who are directors at the time when this Directors’ report is approved has confirmed that:• so far as that director is aware, there is no relevant audit information of which the company and the group’s

auditor is unaware, and• that director has taken all the steps that ought to have been taken as a director in order to be aware of

any relevant audit information and to establish that the company and the group’s auditor is aware of that information.

AuditorThe auditor, KPMG LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.

By Order of the BoardP H Lewellen BSc FCACompany Secretary 27th October 2015


GROUP PLC

Statement of Directors’ Responsibilitiesin respect of the Directors’ Reports and Financial Statements 31st July 2015

The directors present their report and the financial statements for the year ended 31st July 2015.

Directors’ Responsibilities StatementThe directors are responsible for preparing the strategic report, the Directors’ 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 elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law ( UK Generally Accepted Accounting Practice)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 parent company and of the profit or loss of the group and parent company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgments and accounting estimates that are reasonable and prudent;• state whether applicable UK Accounting Standards have been followed, subject to any material departures

disclosed and explained in the financial statements;• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

group 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 corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.The directors who served during the year were:

DirectorsR G Higgins ACIOB S P Higgins BAM J HigginsP H Lewellen BSc FCA


GROUP PLC

Consolidated Profit and Loss AccountFor the year ended 31st July 2015

Note 2015 2014£000 £000

TurnoverGroup and share joint venture’s turnoverLess share of joint venture’s turnover

238,449(12,278)

197,660(16,161)

Group turnoverCost of sales

1,2

226,171(204,682)

181,499(167,667)

Gross profitAdministrative expenses

21,489(19,762)

13,832(15,982)

Operating (loss)/profitShare of operating profit in joint venture

3 1,7274,278

(2,150)6,077

Total operating profitInterest receivable and similar incomeInterest payable and similar chargesOther finance income – retirement benefits

67

6,005238

(2,114)399

3,927216

(2,190)485

Profit on ordinary activities before taxationTaxation on profit on ordinary activities 8

4,528(1,208)

2,438(672)

Profit for the financial year 18 3,320 1,766

All amounts relate to continuing operations.

There are no material differences between the profit on ordinary activities before taxation and the retained profit for the financial year stated above and their historical cost equivalents.

The notes on pages 12 to 30 form part of these financial statements.


GROUP PLC

Consolidated Balance Sheet31st July 2015

Note 2015 2014£000 £000 £000 £000

Fixed AssetsTangible assetsInvestment propertiesInvestments in joint venture - Share of gross assets - Share of gross liabilities

109

13,917(4,936)

21,01311,073

26,455(10,389)

20,81910,465

- Share of net assets 11 8,981 16,006

Total Fixed AssestsCurrent AssetsStocksDebtorsCash at bank and in hand

1213

55,40040,34627,625

41,067

64,02732,43818,372

47,350

Creditors: Amounts falling due within one year 14

123,371

(103,953)

114,837

(97,736)

Net Current Assets 19,418

17,101

Total Assets Less Current Liabilities

Creditors: Amounts falling due after more than one year 15

60,485

(4,179)

64,451

(9,199)

Net assets excluding pension scheme liabilities

Staff Pension SchemeFounder Directors Pension Scheme

44

56,306

(5,271)(1,532)

55,252

(5,202)(913)

Net assets including pension scheme liabilities 49,503 49,137

Capital and ReservesCalled up share capitalRevaluation reserveOther reservesProfit and loss account

6327,395

9341,383

6576,787 93

41,600

Shareholders’ Funds 49,503 49,137

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27th October 2015.

R G Higgins ACIOB Paul Lewellen BSc FCADirector Director

The notes on pages 12 to 30 form an integral part of these financial statements.


GROUP PLC

Company Balance Sheet31st July 2015

Note 2015 2014£000 £000 £000 £000

Fixed AssetsInvestments 11 1,505

1,505

Current AssetsDebtorsCash at bank

16,785-

54,509 6

Creditors: Amounts falling due within one year

13

14

16,785

(10,348)

54,515

(48,032)

Net Current Assets 6,437 6,483

Total Assets Less Current Liabilities

Creditors: Amounts falling due after more than one year 15

7,942

(1,000)

7,988

(1,000)

Net Assets 6,942 6,988

Capital and ReservesCalled up share capitalOther reservesProfit and loss account

171818

63284

6,226

657 84 6,247

Shareholders’ Funds 19 6,942

6,988

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27th October 2015.

R G Higgins ACIOB Paul Lewellen BSc FCADirector Director

The notes on pages 12 to 30 form an integral part of these financial statements.


GROUP PLC

Consolidated Cash Flow Statement For the year ended 31st July 2015

Statement of Total Recognised Gains and LossesFor the year ended 31st July 2015

Note 2015 2014£000 £000

Profit for the financial yearUnrealised surplus on revaluation of tangible fixed assestsUnrealised surplus/(deficit) on revaluation of investment propertiesActuarial loss related to pension schemesDeferred tax attributable to actural gain

3,320

-608

(2,538)551

1,76640

(537)(2,732)

472

Total recognised gains and losses relating to the year 1,941 (991)

Note 2015 2014£000 £000

Net cashflow from operating activitiesReturns on investment and servicing of financeTaxationCapital expenditure and financial investmentAcquisitions and disposals

2021

2121

14,946(1,940)

(4)(2,339)10,660

(8,010)(1,836)

915(1,852)

-

Cash inflow/(outflow) before financing

Financing 21

21,323

(10,956)

(10,783)

10,106

Increase/(decrease) in cash in the year 10,367 (677)

2015 2014£000 £000

Increase/(Decrease) in cash in the yearCash inflow/(outflow) from increase/(decrease) in debt and lease financing

10,36710,956

(677)(10,106)

Movement in net debt in the yearNet debt at 1st August 2014

21,323(22,306)

(10,783)(11,523)

Net debt at 31st July 2015 (983) (22,306)

The notes on pages 12 to 30 form part of these financial statements.

Reconciliation of Net Cash Flow to Movement in Net Funds/DebtsFor the year ended 31st July 2015


GROUP PLC

Notes to the Financial Statements31st July 2015

1. Accounting PoliciesThe following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements.

(a) Basis of PreparationThe financial statements have been prepared under the historical cost convention as modified by the revaluation of Investment properties and in accordance with applicable accounting standards.

The Directors have prepared a consolidated cashflow forecast for a period of 12 and 24 months. The projections incorporate current market trends and incorporate reasonable judgements and estimates of future market conditions. The Directors continue to use bank finance for many of the development projects of Higgins Homes and maintain a strong cash balance enabling the Group to be reactive and well positioned for new opportunities. The Group has the full support of its bankers and sufficient facilities are available to meet the Company’s predicted requirement. The Directors, therefore, consider it appropriate to produce these financial statements on a going concern basis.

(b) Basis of ConsolidationThe financial statements consolidate the accounts of Higgins Group PLC and all of its subsidiary undertakings (‘subsidiaries’).

(c) Tangible Fixed Assets and Depreciation

Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following bases: Long-term leasehold properties - Period of the lease Plant and machinery - 25% Motor vehicles - 25% Office equipment - 15%

Freehold land and buildings and leasehold propertiesFreehold land and buildings and leasehold properties occupied by the Group and held as investments are included in fixed assets at their latest valuation plus subsequent additions at cost and surpluses or deficits on revaluations are included in the revaluation reserve. It is the policy of the Group to revalue freehold and leasehold properties at least every three years. Provision for any impairment in the value of properties held as 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 the Group. 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 of fixed assets and goodwill, the assets are reviewed for impairment at the end of each reporting period.

(d) Revaluation of Tangible Fixed AssetsAs permitted by the transitional provisions of FRS 15, the company has elected not to adopt a policy of revaluation of tangible fixed assets. The company will retain the book value of land and buildings, previously revalued at 31st July 2015 and will not update that valuation.


GROUP PLC

1. Accounting Policies (continued)(e) Investment Properties

Investment properties are included in the Balance sheet at their open market value in accordance with Statement of Standard Accounting Practice No.19 and are not depreciated. This treatment is contrary to the Companies Act 2006 which states that fixed assets should be depreciated but is, in the opinion of the directors, necessary in order to give a true and fair view of the financial position of the company and the group.

(f) TurnoverTurnover comprises revenue recognised by the company in respect of goods and services supplied during the year, exclusive of Value Added Tax and trade discounts.

(g) Long-term Contract BalancesProfit on long-term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty. The profit included is calculated on a prudent basis to reflect the proportion of the work carried out at the year end, by recording turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which costs incurred to date bear to total expected costs for that contract. Revenues derived from variations on contracts are recognised only when they have been accepted by the customer. Full provision is made for losses on all contracts in the year in which they are first foreseen.

(h) Stock of Development Land and Properties

Stocks and work in progress are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

(i) Shared Equity AssetsThese are granted as part of sales transactions where the group retains an equity interest and are secured by way of a legal charge on the respective property. On initial recognition these are held at fair value being the present value of expected future cash flows taking into account the estimated market value of the property at the time of repayment. Thereafter, these are held at fair value less impairment.

(j) Deferred TaxationFull provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.

Deferred tax is not provided on timing differences arising from the revaluation of fixed assets in the financial statements.

A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.

Deferred tax assets and liabilities are discounted.



GROUP PLC


1. Accounting Policies (continued)(k) Investments

i) Subsidiary undertakings Investments in subsidiaries are valued at cost less provision for impairment.ii) Joint venture undertakings Investments in joint ventures are stated at the company’s share of net assets. The company’s share of the profits or losses of the joint ventures is included in the Profit and loss account using the equity accounting basis.

(l) PensionsThe company operates a defined contribution pension scheme and the pension charge represents the amounts payable by the company to the fund in respect of the year.

The company operates a defined benefits pension scheme and the pension charge is based on a full actuarial valuation dated 31st July 2013.

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

(n) Preference SharesIn accordance with FRS 25 the Preference Shares issued by the Company do not meet the definition of equity, they are therefore recorded as a liability in the balance sheet. The shares carry entitlement to a cumulative dividend and are redeemable by the Company at any point between 5 and 35 years after the date of issue.

2. TurnoverThe whole of the turnover is attributable to:

i) the gross value of work carried out for the period to the balance sheet date and is normally determined by external certification;ii) sales of the Groups’ development projects where the contract for sale has been completed.

All turnover arose within the United Kingdom.


GROUP PLC


3. Operating Profit/(Loss)Operating profit/(loss) is stated after charging/(crediting):

2015£’000

2014£’000

Depreciation of tangible fixed assets: - owned by the group

Auditor’s remunerationAggregate Directors’ emolumentsHire of plant and machineryRents ReceivableLoss/(profit) on sale of tangible fixed assets

56065

5,7521,215

985(3)

55165

4,50088599812

4. Staff Costs(a) Staff Costs

Staff costs, including directors’ remuneration, were as follows:

2015 2014£’000 £’000

Wages and salariesSocial security costsOther pension costs

24,8652,9751,557

20,1112,3621,346

29,397 23,819

The average monthly number of employees, including the directors, during the year was as follows:

2015 2014No. No.

Office and managementContract staff

158218

152207

376 359

(b) PensionsThe Group operates two Pension Schemes.

The Higgins Group PLC Pension & Life Assurance Scheme (“Staff Scheme”) has defined contribution and defined benefit sections. The former was closed to new contributions on 1st September 2008: the latter was closed to future accrual on 30th April 2010.

The Higgins Group PLC Founders Directors Retirement Benefit Scheme (“Founders Scheme”) has the intention of operating as a defined benefit scheme and is reported as such within these financial statements.

The Group also sponsors the Higgins Group Personal Pension Scheme which is provided by Scottish Widows and whose assets are managed independently from the group and the Staff Scheme Trustees.


GROUP PLC

4. Staff Costs (continued)(c) Money Purchase Contributions

Contributions amounting to £1,335,000 (2014 - £1,158,000) were paid into the money purchase section of the Staff Scheme and the company sponsored Personal Pension plan 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 independent qualified actuary on the basis of triennial valuations – the most recent of which was at 30th April 2013. The Scheme Actuary has recommended that contributions be made into the defined benefit section of the Staff Scheme at the rate of £100,000 per month with effect from 1st August 2013, increasing by 3% per annum to make good the funding shortfall arising from the latest actuarial valuation by 2020. The Actuary has recommended that no contributions are necessary into the Founders Scheme. In addition the group covers the cost of insured benefits and other expenses of both schemes.

Based on the current remuneration levels the directors would expect the total employers’ contributions to be £1,282,628 for the financial period ended 31st July 2016.

(e) Defined Benefit Assets and LiabilitiesThe market value of the defined benefit section of the Staff Scheme and the Founders Scheme assets at 31st July 2015 were sufficient to cover 83% (2014 - 82%) and 86% (2014 - 91%) of the respective Scheme defined benefit obligations at that date.

The principal actuarial assumptions are as follows:

At 31st July 2015

At 31st July2014

At 31st July2013

InflationDiscount rateSalary increase Pension in payment increase (1997-2006 accrual)Pension in payment increase (post 2006 accrual)

3.20%3.70%3.20%3.10%2.40%

3.25%4.20%3.25%3.15%2.45%

3.20%4.50%3.20%3.10%2.40%

The adopted set of demographic assumptions are consistent with those used for the FRS17 disclosures as at 31st July 2014 and for the formal funding valuations of the Schemes as at 30th April 2013.

Life expectancy within the Founders Scheme is assumed to be in line with the PNXL00 life tables based on year of birth with a 90% scaling factor. The Medium Cohort improvements were adopted for future improvements until 2020.

Life expectancy within the Staff Scheme is assumed to be in line with the S1PXA life tables based on year of birth with a 100% scaling factor.

The expected return on assets is based on the long term expectancies for each asset class at the beginning of the period. The expected return on assets is set by the company having taken actuarial advice.



GROUP PLC

4. Staff Costs (continued)On the basis of these assumptions the pension assets or liabilities and the expected long-term rates of returns were:

Expected Long Term Rate of Return Staff Scheme Value

2015%

2014%

2013%

2012%

2011%

2015£’000

2014£’000

2013£’000

2012£’000

2011£’000

EquitiesCorporate BondsGovernment BondsCash

6.203.602.802.90

6.904.203.403.60

7.404.503.400.50

6.804.202.800.50

7.005.304.000.50

23,2064,1076,245

623

20,3243,7285,7211,062

22,0123,4653,362

233

16,7003,4013,220

175

16,4522,8962,967

331

Fair value of defined benefit assetsPresent value of defined benefit obligations

34,181(41,027)

30,835(37,591)

29,072(35,131)

23,496(31,570)

22,646(26,773)

Deficit Related deferred tax asset

(6,846)1,575

(6,756)1,554

(6,059)1,575

(8,074)2,100

(4,127)1,156

Pension liability (5,271) (5,202) (4,484) (5,974) (2,971)

Expected Long Term Rate of Return Founder Scheme Value

2015%

2014%

2013%

2012%

2011%

2015£’000

2014£’000

2013£’000

2012£’000

2011£’000

Investment in Higgins Group PLCOther EquitiesCorporate BondsGovernment BondsCash

5.006.203.602.802.90

5.007.404.503.400.50

5.007.404.503.400.50

5.006.804.202.800.50

5.007.005.304.000.50

1,6507,810

-1,4891,537

3,1507,226

-1,269

262

4,5005,874

-1,189

123

4,3004,493

-1,654

48

5,8004,486

-1,848

86

Fair value of defined benefit assetsPresent value of defined benefit obligations

12,486(14,475)

11,907(13,093)

11,686(12,523)

10,495(12,096)

12,220(13,554)

Deficit Related deferred tax asset

(1,989)457

(1,186)273

(837)218

(1,601)416

(1,334)374

Pension liability (1,532) (913) (619) (1,185) (960)



GROUP PLC


4. Staff Costs (continued)(f) Changes in the Fair Value of Scheme Assets

Staff Scheme Founders Scheme

2015£’000

2014£’000

2015£’000

2014£’000

Opening fair value of scheme assetsExpected return from assetsContributions by the employerActuarial gains/(losses)Benefits paid

30,8361,8051,2451,091(796)

29,073 1,913 1,200

(550) (800)

11,907700

-169

(290)

11,685 693 -

(186) (285)

Closing fair value of scheme assets 34,181 30,836 12,486 11,907

(g) Actual Return of Scheme Assets


2015£’000

2014£’000

2015£’000

2014£’000

Expected return from assetsActuarial gains/(losses)

1,8051,091

1,913(550)

700169

693(186)

Actual return of scheme assets 2,896 1,363 869 507

(h) Changes in the Present Value of Scheme Liabilities


2014£’000

2013£’000

2014£’000

2013£’000

Opening present value of scheme liabilitiesInterest costActuarial lossesBenefits paid

37,5911,5622,670(796)

35,131 1,563 1,697 (800)

13,093544

1,128(290)

12,523 557

298 (285)

Closing present value of scheme liabilities 41,027 37,591 14,475 13,093


GROUP PLC


4. Staff Costs (continued)(i) Changes in the Fair Value of Net Pension Liability


2014£’000

2013£’000

2014£’000

2013£’000

Net pension liability at beginning of yearMovement in year:Contributions Net finance incomeActuarial lossesDeferred Tax

(5,202)

1,245243

(1,579)22

(4,484)

1,200 350(2,247) (21)

(913)

-156

(959)184

(619)

-135

(484) 55

Net pension liability at end of year (5,271) (5,202) (1,532) (913)

(j) Amounts Recognised in Profit and Loss AccountThe amounts charged to profit and loss account in respect of defined benefit obligations are as follows: -


2015£’000

2014£’000

2015£’000

2014£’000

Expected return on pension scheme assetsInterest on pension scheme liabilities

1,805(1,562)

1,913(1,563)

700(544)

693 (557)

Net finance income 243 350 156 136

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

(k) Actuarial Gains and Losses Recognised in EquityThe amounts that have been included within the statement of total recognised gains and losses are as follows:


2015£’000

2014£’000

2015£’000

2014£’000

Difference between expected and actual returns on assets

Experience (losses)/gains arising in the scheme liabilities

1,091

(2,670)

(550)

(1,697)

169

(1,128)

(186)

(298)

Actual losses (1,579) (2,247) (959) (484)


GROUP PLC


4. Staff Costs (continued)(l) History of Experience Gains and Losses

Staff Scheme2015£’000

2014£’000

2013£’000

2012£’000

2011£’000

Difference between expected and actual returns on assetsPercentage of assets at year end

1,0913%

(550)2%

4,11214%

(502)2%

(1,524) 7%

Experience losses arising in scheme the liabilities Percentage of liabilities at year end

(2,670)7%

(1,697)5%

(908)3%

(1,171)4%

(257) 1%

Total actuarial (losses)/gains Percentage of liabilities at year end

(1,579)4%

(2,247)6%

3,0519%

(4,339)14%

(529) 2%

Founders SchemeDifference between expected and actual returns on scheme assetsPercentage of assets at year end

1691%

(186)2%

9168%

1371%

43 0%

Experience (losses)/gains arising in the scheme liabilities Percentage of liabilities at year end

(1,128)8%

(298)2%

2122%

6345%

(330) 2%

Total actuarial lossesPercentage of liabilities at year end

(959)7%

(484)4%

(210)2%

(361)

3%

(692)

5%

5. Directors RemunerationThe highest paid director received remuneration of £1,505,807 (2014 - £1,201,497). He did not participate in a defined benefit pension scheme during the year and has not accrued any further pension at 31st July 2015 (2014: Nil)

6. Interest Receivable

2015£’000

2014£’000

Share of joint ventures’ interest receivableOther interest receivable

20137

13482

238 216


GROUP PLC


7. Interest Payable

2015£’000

2014£’000

On bank loans and overdraftsShare of joint ventures’ interest payable

1,977137

2,043147

2,114 2,190

8. Taxation

2015£’000

2014£’000

Analysis of charge in the yearCurrent tax (see note below)UK Corporation tax charge/(credit) on profit for the year - (914)

Share of joint ventures’ current tax-

712(914)

1,397

Total Current Tax 712 483Deferred taxOrigination and reversal of timing differencesRelating to retirement benefits

151345

(249)438

Total deferred tax (see note 16) 496 189

Tax on profit on ordinary activities 1,208 672

Factors affecting tax charge for the yearThe tax assessed for the year is lower than (2014 - lower than) the standard rate of corporation tax in the UK of 20.67% (2014 - 22.33%). The differences are explained below:

2015£’000

2014£’000

Profit on ordinary activities before tax 4,528 2,438Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20.67% (2014 - 22.33%)

Effects of:Expenses not deductible for tax purposes, other than goodwill amortisation and impairmentCapital allowances for period in excess of depreciationIncrease or decrease in pension fund prepayment leading to an increase/(decrease) in taxOther differences leading to an increase/(decrease) in the tax charge

936

4985

(345)

(13)

544

431(54)

(438)

-

Current tax charge for the year 712 483


GROUP PLC


8. Taxation (continued)Factors affecting tax charge for the yearReductions in the UK corporation tax rate from 26% to 24% (effective 1st April 2012) and to 23% (effective 1st April 2013) were substantively enacted on 26th March 2012 and 3rd July 2012 respectively. Further reductions to 21% (effective from 1st April 2014) and 20% (effective from 1st April 2015) were substantively enacted on 2nd July 2013. This will reduce the Company’s future current tax charge accordingly.

9. Investment PropertiesFreehold

Investment Property

£’000

Long TermLeasehold Properties

£’000Total£’000

Group ValuationAt 1st August 2014Surplus on revaluation

8,920514

1,54594

10,465608

At 31st July 2015 9,434 1,639 11,073

The 2015 valuations were made by the Director, on an open market value for existing use basis.

10. Tangible Fixed Assets

FreeholdProperty

£’000

Long TermLeaseholdProperties

£’000

Plant & Machinery

£’000

MotorVehicles

£’000

Office Equipment

£’000Total

£’000

Cost or ValuationAt 1st August 2014AdditionsDisposals

18,401--

171--

7,206411(93)

1,518510

(450)

38--

27,334921

(543)

At 31st July 2015 18,401 171 7,524 1,578 38 27,712

DepreciationAt 1 Ausgut 2014 Charge for yearOn disposals

---

6110

-

5,374380(72)

1,056168

(304)

242-

6,515650

(376)

At 31st July 2015 - 71 5,682 920 26 6,699

Net Book AmountAt 31st July 2015 18,401 100 1,842 658 12 21,013

At 31st July 2014 18,401 110 1,832 462 14 20,819


GROUP PLC


10. Tangible Fixed Assets (continued)The freehold property is located at One Langston Road, Loughton, Essex and is the Company’s Head Office. This property was professionally valued at £18,400,000 by Glennys LLP, Chartered Surveyors, as at 31st July 2014 on an existing value basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes.The historical cost of the freehold property is £13,370,669 (2014: £13,370,669).The leasehold property comprises:-• Leasehold improvements undertaken at the Company’s Business Continuity Offices. The property is held

on a 10 year lease commencing 30th May 2008.• Leasehold improvements undertaken at the Company’s Plant Yard Offices. The property is held on a 25

year lease commencing 1st October 1991.

11. Fixed Asset InvestmentsAs at 31st July 2015 the Group holds a 50% share in Myatts Field Development LLP through its subsidiary Higgins Homes PLC. The remaining shares are held by My8 Development LLP. Myatts Field Development LLP is engaged in the regeneration of land at Myatts Field North, Lambeth to provide 357 new homes for private sale, 146 homes for shared ownership and a retail store.

Investment in joint venturesTotal£’000

Group Cost or ValuationAt 1st August 2014Repayment of Capital Share of profit

16,066(10,660)

3,575

At 31st July 2015 8,981

Net Book ValueAt 31st July 2015 8,981

At 31st July 2014 16,066

During the period the initial equity invested in Myatts Field Developments LLP was repaid to the Company. The Company retains 50% control in the LLP.

Investment in subsidiary companies£’000

Company Cost or ValuationAt 1st August 2014 and 31st July 2015 1,505

Net Book ValueAt 31st July 2015 1,505

At 31st July 2014 1,505


GROUP PLC

11. Fixed Asset Investments (continued)

Subsidiary Undertakings Principal ActivityHiggins Homes PLCHiggins Construction PLCHiggins Investments PLCBassett Business Units LimitedHiggins City LimitedD J Higgins Investments LimitedHiggins Group Services LimitedD J Higgins Construction LimitedD J Higgins Building Works LimitedHiggins Homes Estate LimitedStation Garage (Loughton) Limited

House buildingContractingProperty investmentsManaging business units #DormantDormantDormantDormant*Dormant*Dormant**Dormant*

*All these companies are 100% subsidiary undertakings of Higgins Construction PLC. # This Company is a 100% subsidiary of Higgins Investments PLC.**This Company is a 100% subsidiary of Higgins Homes PLC.

All other companies are 100% subsidiary undertakings of the Company.

12. Stocks2015£’000

2014£’000

Residential development and buildingsContracting stock and Work In Progress

49,8085,592

63,656371

55,400 64,027

13. DebtorsGroup Company

2015£’000

2014£’000

2015£’000

2014£’000

Trade debtorsAmounts owed by group undertakingsOther debtorsPrepayments and accrued incomeAmounts Recoverable on long term contractsDeferred tax asset (see note 16)

26,275-

6,3211,0386,668

44

18,605-

6,985664

5,989195

-16,522

1262

--

-54,283

1225

--

40,346 32,438 16,785 54,509

Included in trade debtors are amounts falling due after more than one year of £4,450,000 (2014: £3,240,000).

Other debtors includes: £3,483,000 (2014: £4,080,000) shared equity values. These are granted as part of sales transactions where the Group retains an equity interest and are secured by way of a legal charge on the respective property. On initial recognition these are held at fair value being the present value of expected future cash flows taking into account the estimated market value of the property at the time of repayment. Thereafter, these are held at cost less impairment.



GROUP PLC

14. Creditors: Amounts Falling Due Within One Year

Group Company2015£’000

2014£’000

2015£’000

2014£’000

Bank loans and overdraftsPayments received on accountTrade creditorsAmounts owed to group undertakingsOther taxation and social securityOther creditorsAccruals and deferred income

24,42915,49820,507

-1,1901,888

40,441

31,47912,45316,257

-1,1042,300

34,143

1--

7,933--

2,414

---

47,028--

1,004103,953 97,736 10,348 48,032

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.

15. Creditors: Amounts Falling Due After More Than One Year


2014£’000

2015£’000

2014£’000

Bank loanShare capital treated as debt (note 17)

3,1791,000

8,1991,000

-1,000

-1,000

1,000 1,000 1,000 1,000

Disclosure of the terms and conditions attached to the non-equity shares is made in note 17.

Creditors include amounts not wholly repayable within 5 years as follows:


2014£’000

2015£’000

2014£’000

Repayable other than by instalments 1,000 1,000 1,000 1,000

The bank loan is secured on certain properties within the stock of development land. The bank loan is repayable upon the sale of the completed housing unit.

The preference shares carry an entitlement to a fixed cumulative dividend at a rate of 1.5% above the bank base lending rate. The preference shares can be redeemed by the Company at any point between 5 and 35 years after issue.



GROUP PLC


16. Deferred Taxation

Group2015£’000

2014£’000

At beginning of year(Charge for)/released during the year (P&L)

195(151)

(54)249

At end of year 44 195

The deferred taxation balance is made up as follows:

Group2015£’000

2014£’000

Accelerated capital allowancesShort-term timing differences

359(403)

359(554)

(44) (195)

17. Share Capital

2015£’000

2014£’000

Shares classified as capital

Allotted, called up and fully paid6,321,402 (2014 - 6,571,402) Share Capital allotted, and fully paid shares of £0.10 each 632 657Shares classified as debt

Allotted, called up and fully paid1,000,000 Preference shares shares of £1 each 1,000 1,000

On 8th October 2015 the Company repurchased and cancelled 250,000 ordinary 10 pence shares for a total consideration of £1,650,000 under an authority granted on 29th September 2015.

The preference shares are classified as liabilities and ordinary shares are classified in shareholders’ funds.

The preference shares are redeemable between 5 and 35 years after the date of issue at the option of the Company.


GROUP PLC


18. Reserves

Revaluationreserve

£’000

Other reserves

£’000

Profit and loss account

£’000GroupAt 1st August 2014Profit for the financial yearPurchase of own sharesPension reserve movementSurplus on revaluation of freehold property

6,787---

608

93----

41,6003,320

(1,550)(1,987)

-

At 31st July 2015 7,395 93 41,383

The closing balance on the Profit and loss account includes a £6,803,000 (2014 - £6,115,000) debit, stated after deferred taxation of £2,032,000 (2014 - £1,827,000), in respect of pension scheme liabilities of the Group and Company pension scheme.

Other reserves

£’000

Profit and loss account

£’000CompanyAt 1st August 2014Loss for the financial yearDividends: Equity capitalPurchase of own shares

84---

6,247(8,471)10,000(1,550)

At 31st July 2015 84 6,226


GROUP PLC


19. Reconciliation of Movement in Shareholders’ Funds

2015£’000

2014£’000

GroupOpening shareholders’ fundsProfit for the financial yearShares redeemed/cancelled during the yearOther recognised gains and losses during the year

49,1373,320

(1,575)(1,379)

51,6281,766

(1,500)(2,757)

Closing shareholders’ funds 49,503 49,137

2015£’000

2014£’000

CompanyOpening shareholders’ fundsLoss for the financial yearDividendsShares redeemed/cancelled during the year

6,988(8,471)10,000(1,575)

7,253(3,765)5,000

(1,500)

Closing shareholders’ funds 6,942 6,988

The company has taken advantage of the exemption contained within section 408 of the Companies Act 2006 not to present its own Profit and loss account.

The loss for the year dealt with in the accounts of the company was £8,471,000 (2014 - £3,765,000).

20. Net Cash Flow From Operating Activities

2015£’000

2014£’000

Operating profit/(loss)Depreciation of tangible fixed assestsLoss on disposal of tangible fixed assetsDecrease/(increase) in stocks Increase in debtorsIncrease in creditorsDecrease in net pension assets/liabilitiesOther

1,72756036

8,627(8,056)13,265(1,245)

32

(2,150)55112

(13,084)(4,582)12,398(1,200)

45

Net cash inflow/(outflow) from operating activities 14,946 (8,010)


GROUP PLC


21. Analysis of Cash Flows For Headings Netted in Cash Flow Statement

2015£’000

2014£’000

Returns on investments and servicing of financeInterest receivedInterest paid

37(1,977)

100(1,936)

Net cash outflow from returns on investments and servicing of finance (1,940) (1,836)

2015£’000

2014£’000

Capital expenditure and financial investmentPurchase of tangible fixed assetsSale of tangible assetsShare buyback

(921)132

(1,550)

(428)76

(1,500)

Net cash outflow from capital expenditure (2,339) (1,852)

2015£’000

2014£’000

Aquisitions and disposalsRepayment of Capital by joint ventures 10,660 -

2015£’000

2014£’000

FinancingPurchase of ordinary sharesRepayment of loansOther

(25)(10,956)

25

-10,106

-

Net cash (outflow)/inflow from financing (10,956) 10,106

During the period the initial equity invested in Myatts Field Developments LLP was repaid to the Company. The Company retain 50% control in the LLP.


GROUP PLC

22.Analysis of Changes in Net Debt

1st August 2014£’000

Cashflow

£’000

Other non-cash changes

£’000

31st July 2015£’000

Cash at bank and in handBank overdraft

18,372(1,192)

9,2531,114

--

27,625(78)

Debt:Debts due within one yearDebts falling due after more than one year

17,180

(30,287)(9,199)

10,367

10,956-

-

(5,020)5,020

27,547

(24,351)(4,179)

Net debt (22,306) 21,323 - (983)

23.Capital CommitmentsAt 31st July 2015 the Group had capital commitments as follows:

Group2015£’000

2014£’000

Contracted for but not provided in these financial statements 80 153

24. Operating Lease CommitmentsAt 31st July 2015 the Group had annual commitments under non-cancellable operating leases as follows:

Land and buildings Other

2015£’000

2014£’000

2015£’000

2014£’000

Group Expiry date:Within 1 yearBetween 2 and 5 years

62-

-112

56555

137398

25. Related Party TransactionsDuring the year the Group generated turnover of £9,800,000 from construction work carried out for the joint venture partnership in Myatt’s Field Development LLP.


GROUP PLC

Independent Auditor’s Report

We have audited the financial statements of Higgins Group PLC for the year ended 31st July 2015, set out on pages 8 to 30. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and AuditorAs explained more fully in the Directors’ responsibilities statement set out on page 5, 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.

Scope of the Audit of the Financial StatementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Group strategic report and the Directors’ report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on Financial StatementsIn 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 31st July 2015

and of the group’s profit for the year then ended • have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on Other Matter Prescribed by the Companies Act 2006In our opinion the information given in the Group strategic report and the Directors’ report 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 ExceptionWe 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.

Shaun Kirby (Senior Statutory Auditor)For and on behalf of KPMG LLP Statutory Auditor, Chartered Accountants15 Canada Square, London E14 5GL 27th October 2015

To the Members of Higgins Group PLC


GROUP PLC

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Mill Farm Close, Pinner

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