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GROUP PLC

Clear direction,

effective

management

and a highly

professional

workforce

HIGGINS GROUP PLC

ANNUAL REPORT

2008

IT PROJECT AT BACONS COLLEGE

THE ORCHARD, OLD CRAWLEY, SUSSEX

GROUP PLC

Higgins Group PLC Annual Report and Accounts 2008 1

DIRECTORS AND CORPORATE INfORmATION 2

CHAIRmAN’S STATEmENT 3

DIRECTORS' REPORT 4 - 5

DIRECTORS' RESPONSIBILITIES STATEmENT 6

INDEPENDENT AUDITOR’S REPORT 6 - 7

CONSOLIDATED PROfIT AND LOSS ACCOUNT 8

CONSOLIDATED BALANCE SHEET 9

COmPANY BALANCE SHEET 10

CONSOLIDATED CASH fLOW STATEmENT 11

STATEmENT Of TOTAL RECOGNISED GAINS AND LOSSES 11

NOTES TO THE ACCOUNTS 12 - 27

NOTICE Of mEETING 28

Awards

National Regeneration Awards Regeneration Contractor of the Year

National Regeneration Awards Best Community Regeneration Project

TPAS awards RLO of the Year for London and the South East

TPAS awardsNational RLO of the Year

The Daily Mail UK Property Awards Best Development in Sussex

The Daily Mail UK Property Awards Best Apartment in Essex

Daily Telegraph/Your New Homes AwardsBest Development for Family Living

HotProperty Awards Platinum Award for community (houses)

HotProperty Awards Peoples Choice Awards

HotProperty Awards Commutability Award

Daily Express New Homes Garden Awards Silver Award

GROUP PLC

Directors and Corporate Information

Directors

R G Higgins ACIOB (Chairman)S P Higgins BA

M J HigginsP H Lewellen BSc FCA

Secretary

P H Lewellen BSc FCA

Registered Office

One Langston RoadLoughtonEssex IG10 3SD

Registered no 2348986

Group Websites

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

Auditor

KPMG LLP8 Salisbury SquareLondonEC4Y 8BB

Bankers

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

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

2 Higgins Group PLC Annual Report and Accounts 2008

GROUP PLC

Whilst our private housebuilding activity has been significantly impacted by the restrictions on mortgage

availablility caused by the global market “credit crunch”, our contracting operation has increased sales by

15% due to the continued demand for affordable housing.

The overall Group result is a profit before taxation of £0.6 million from sales of £218 million. In current

market conditions this is a commendable achievement and evidences the benefit of having two strong

brands that are complementary at all stages of the economic cycle.

Higgins Construction PLC has a strong order book in terms of both new build and refurbishment contracts

with all areas providing a valuable contribution. The Group’s long standing relationships with its clients and

supply chain will provide many more opportunities in the social housing and education markets.

Higgins Homes PLC has maintained a healthy level of visitors and is well positioned when customer

confidence is restored. In the meantime the Group has taken steps to limit new production and is focused

on generating strong cashflow.

Higgins Group’s highly professional team remain fully focused on maintaining a sound financial base and

maximising all areas of its market activity.

R G Higgins AciOB

Chairman

28 October 2008

Chairman’s Statement


GROUP PLC

introduction

The Directors submit their Annual Report and Financial Statements for the year ended 31 July 2008.

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 can announce that, despite market conditions, the Group achieved a positive contribution for theyear ended 31 July 2008. Turnover decreased by 5.6% to £218 million for the year ended 31 July 2008 (2007:£231 million) and generated profit before taxation of £0.6 million (2007: £10.5 million). Net assets stand at £52 million (2007: £54 million).

The contracting arm of the Group, Higgins Construction PLC, has maintained its share of the new build socialhousing market despite increasing competition. In addition, occupied refurbishment under the Government’s“Decent Homes” initiative continues to provide a valuable contribution.

Higgins Homes PLC holds a modest land bank and production will be phased in response to sustained demand.The level of visitors since the year end is encouraging and indicates an appreciation of the Company’s productand pricing structure. Limited mortgage availability and a lack of confidence prevents many of those visitorsfrom committing to a purchase decision but, as and when these obstacles are removed, the Directors expect agood take-up of the Company’s product. In the meantime the Directors are focused on generating positivecashflow and are operating comfortably within existing banking facilities.

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 within whichthey operate. A careful and sensitive approach to pricing and tight cost management, together with themaintenance of strong relationships with clients and suppliers, will ensure that the Group can adapt to changingmarket 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 July2008 2007

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 (2007: no interim and final dividend).

Directors’ Report


GROUP PLC

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 2008 the Group’s average payment period from date of invoice or agreement ofvaluation was 22 days (2007: 19 days).

Banking Facilities

Since the balance sheet date, the Group has routinely renewed all its banking arrangements and hassufficient facilities in place to meet its projected cash requirements until the next review at the end ofOctober 2009. Whilst the Group’s development loans are technically repayable on demand, the Directorsexpect the facilities to continue to be available and to be renewed at that date.

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 £5,000 (2007: £13,000). 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


Company Secretary28 October 2008

Directors’ Report


GROUP PLC

Directors’ Responsibilities Statement

The 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 Auditor

to 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 2008 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’s membersthose matters we are required to state to them in an auditor’s report and for no other purpose. To the fullestextent permissible by law, we do not accept or assume responsibility to anyone other than the Company andthe Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Directors’ Responsibilities Statement and Independent Auditor’s Report


GROUP PLC

Respective responsibilities of Directors and Auditor

The 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 on page 6.

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 are properlyprepared in accordance with the Companies Act 1985. We also report to you whether in our opinion theinformation 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 any apparentmisstatement within it.

Basis of audit opinion

We 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.

Opinion

In 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 2008 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 LLP

Chartered Accountants/Registered Auditor, London28 October 2008

Independent Auditor’s Report continued


GROUP PLC

Consolidated Profit and Loss AccountFor the year ended 31 July 2008

2008 2007Notes £’000 £’000

Turnover 2 217,752 231,048Cost of sales (198,406) (201,363)

Gross profit 19,346 29,685Administrative expenses (16,254) (16,774)

Operating profit 2/3 3,092 12,911Net interest payable 5 (2,683) (2,592)Net finance income – retirement benefits 4(j) 232 182

Profit on ordinary activities before taxation 641 10,501Taxation on profit on ordinary activities 6 (273) (3,025)

Profit on ordinary activities after taxation 15 368 7,476

Notes of Historical Cost profit

2008 2007£’000 £’000

Reported profit on ordinary activities before taxation 641

10,501Realisation of property revaluation gains of previous years 177 –

Historical cost profit on ordinary activities before taxation 818 10,501

Historical cost profit for the year retained after

taxation and dividends 545 7,476

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

No activities were acquired or discontinued during the year.

The notes on pages 12 to 27 form an integral part of these financial statements.


GROUP PLC

2008 2007Notes £’000 £’000 £’000 £’000

Fixed assets

Tangible assets 7 31,665 31,364

current assets

Stocks 9 98,437 76,608Debtors 10 24,019 23,744Cash at bank and in hand 21,570 26,286

144,026 126,638creditors: amounts falling due within one year 11 (114,728) (96,933)

Net current assets 29,298 29,705

Total assets less current liabilities 60,963 61,069

creditors: amounts falling due after more than one year 12 (5,936)(6,712)

Provision for liabilities and charges 13 (143) (113)

Net assets excluding pension assets and liabilities 54,884 54,244

Defined benefit pension scheme assets 4 (e) 472 2,360Defined benefit pension scheme liabilities 4 (e) (3,177) (2,685)

Net assets 52,179 53,919

capital and reserves

Called up share capital 14 708 708Revaluation reserve 15(a) 9,046 8,698Other reserves 15(a) 94 94Profit and loss account 15(a) 42,331 44,419

Equity shareholders’ funds 52,179 53,919

These financial statements were approved by the Board of Directors on 28 October 2008.

R G Higgins ACIOB P H Lewellen BSC FCA

Director Director

The notes on pages 12 to 27 form an integral part of these financial statements

Consolidated Balance SheetAt 31 July 2008


GROUP PLC

2008 2007Notes £’000 £’000 £’000 £’000

Fixed assets

Investment in subsidiaries 8 1,505 1,505

current assets

Debtors 10 28,617 23,181Cash at bank and in hand 10 –

28,627 23,181creditors: amounts falling due within one year 11 (19,490) (13,979)

Net current assets 9,137 9,202

Net assets 10,642 10,707

capital and reserves

Called up share capital 14 708 708Other reserves 15(b) 84 84Profit and loss account 15(b) 9,850 9,915

Equity shareholders’ funds 10,642 10,707

These financial statements were approved by the Board of Directors on 28 October 2008.

R G Higgins ACIOB P H Lewellen BSC FCA

Director Director


Company Balance SheetAt 31 July 2008


GROUP PLC

2008 2007Notes £’000 £’000 £’000 £’000

Net cash outflow from operating activities 17(a) (10,450) (1,935)

Returns on investment and servicing of finance

Interest received 1,278 762Interest paid (3,908) (3,169)

(2,630) (2,407)Taxation

Corporation tax paid (1,958) (2,857)

Dividends paid – –

capital expenditure and financial investment 17(b) (652) (1,506)

cash outflow before financing (15,690) (8,705)

Financing 17(c) 10,974 12,462

(Decrease)/increase in cash in the period 17(d) (4,716) 3,757

Statement of Total Recognised Gains and LossesFor the year ended 31 July 2008

2008 2007£’000 £’000

Profit for the financial year 368 7,476Unrealised surplus on re-valuation of properties 525 –Actuarial (loss)/gain recognised in the pension schemes (3,761) 1,484Deferred tax thereon 1,128 (445)

Total gains and (losses) recognised since last financial statements(1,740) 8,515


Consolidated Cash Flow StatementFor the year ended 31 July 2008


GROUP PLC

1. Accounting policies

The following accounting policies have been applied consistently in dealing with items which areconsidered material in relation to the Group's financial statements.

(a) Basis of preparation

The 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 consolidation

These 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 depreciation

Freehold 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 freeholdand leasehold properties at least every five years. Provision for any impairment in the value of propertiesheld 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 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) Turnover

Turnover 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.

Notes to the AccountsFor the year ended 31 July 2008


GROUP PLC

(e) Long-term contract balances

Amounts recoverable on contracts are stated at surveyors' valuations, including attributable profit estimatedto be earned to date less provision for any known or anticipated losses and are shown net of payments onaccount received or receivable. Attributable profit is based upon an assessment of the final outturn oncontracts which includes forecast costs to complete and final anticipated valuations. Claims receivable arerecognised as income once received or certified for payment.

(f) Stock of development land and properties

Stock of land and part completed properties is included at cost incurred to date less provisions for foreseeablelosses. Where individual plots of an overall development have been finished and sold, costs have beenattributed to these plots based on a proportion of the expected overall development costs on completion.

(g) Taxation

Corporation 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 costs

The 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) Leases

Operating 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.



GROUP PLC

2. Analysis of turnover, operating profit and net assets2008 2007

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

£’000 £’000 £’000 £’000 £’000 £’000

By activity:

Contracting 163,577 7,027 11,784 142,164 4,995 9,563Homes 54,175 (461) 66,493 88,884 11,144 52,900Head office costs – (3,474) 11,946 – (3,228) 13,810

217,752 3,092 90,223 231,048 12,911 76,273

Net debt (note 17(d)) (38,044) (22,354)

Net assets 52,179 53,919

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

3. Operating profit

Operating profit is stated after charging:2008 2007£’000 £’000

Aggregate Directors' emoluments (Note 4) 4,909 5,584Hire of plant and machinery 1,778 1,361Depreciation of tangible fixed assets 968 772Auditor’s remuneration – for audit work 65 59

and after crediting:Rents receivable 710 810Profit on sale of tangible fixed assets 102 13

Auditor’s remuneration for the Parent Company was £10,000 (2007: £8,000).The loss of the Parent Company transferred from reserves in the year is £65,000 (2007: profit of £1,303,000)



GROUP PLC

4. Staff costs

(a) Staff numbers and costs

The average number of persons employed by the Group (including directors) during the year, analysed bycategory, was as follows:

Number of employees2008 2007

Office and management 198 184Contract staff 314 300

512 484

2008 2007£’000 £’000

Employee costs:

Wages and salaries 25,050 23,637Social security costs 2,634 2,501Other pension costs 1,403 1,442

29,087 27,580

The aggregate emoluments (excluding pension contributions) of the Chairman amounted to £1,303,182 (2007: £1,468,657). He has participated in a defined benefit pension scheme during the year and hisaccrued pensions at 31 July 2008 amounted to £314,583 per annum (2007: £286,276 per annum). For theyears ended 31 July 2008 and 2007 the highest paid Director was also Chairman.

(b) Pensions

The Group operates two Pension Schemes. The Higgins Group PLC Pension & Life Assurance Scheme (“Staff Scheme”) was a defined benefit only scheme until February 2002 from which date that part of thescheme was closed to new entrants who were invited to join a money purchase section. With effect from 1 September 2008 the money purchase section ceased to receive contributions which are now paid to theHiggins Group Personal Pension Scheme which is provided by Scottish Widows and whose assets aremanaged independently from the Group and the Staff Scheme Trustees. The Staff Scheme therefore hasboth defined benefit and money purchase sections. The Higgins Group PLC Founders Directors RetirementBenefit Scheme (“Founders Scheme”) is a defined benefit scheme.

(c) Money purchase contributions

Contributions amounting to £330,000 (2007: £241,000) were paid into the money purchase section of theStaff Scheme during the year. In addition the Group covers the cost of insured benefits.



GROUP PLC

4. Staff costs continued

(d) Defined benefit contributions

A 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 2007. TheScheme Actuary has recommended that future “ordinary” contributions be made into the defined benefit sectionof the Staff Scheme at the rate of 17.5% of pensionable salaries as well as £47,000 per month for a period ofnine years with effect from 1st June 2008 to make good the funding shortfall arising from the latest actuarialvaluation. 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£1,300,000 for the financial period ended 31 July 2009.

(e) Defined benefit assets and liabilities

The market value of the defined benefit section of the Staff Scheme and the Founders Scheme assets at 31 July 2008 were sufficient to cover 79% (2007: 82%) and 106% (2007: 133%) 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

2008 2007 2006

Inflation 3.90% 3.35% 3.00%Discount rate 6.70% 5.90% 5.25%Salary increase – Staff Scheme 4.90% 4.35% 4.00%Salary increase – Founders Scheme 5.40% 4.85% 4.50%Pension in payment increase (1997-2006 accrual) 3.90% 3.35% 3.00%Pension in payment increase (post 2006 accrual) 3.00% 3.00% –

The adopted set of demographic assumptions are consistent with those used for the FRS17 disclosures as at31 July 2007 and for the formal funding valuations of the Schemes as at 30 April 2007.

Life expectancy is assumed to be in line with the PNXL00 life tables based on year of birth with a 120%scaling factor. The Medium Cohort improvements were adopted for future improvements until 2020.

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



GROUP PLC

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

Expected long term rate of return Staff Scheme value2008 2007 2006 2005 2004 2008 2007 2006 2005 2004

% % % % % £’000 £’000 £’000 £’000 £’000

Other Equities 7.90 7.90 7.55 7.40 8.00 12,212 14,185 11,655 9,777 7,598Corporate Bonds 6.70 5.90 5.35 5.20 5.30 1,716 401 805 719 948Government Bonds 4.90 4.90 4.55 4.40 5.00 1,746 1,220 674 610 –Cash and other 5.00 5.50 4.50 4.50 4.50 1,896 1,931 1,904 1,500 858

Fair value of defined benefit assets 17,570 17,737 15,038 12,606 9,404Present value of defined benefit obligations (22,109) (21,572) (20,117) (16,290) (12,345)

Deficit (4,539) (3,835) (5,079) (3,684) (2,941)Related deferred tax asset 1,362 1,150 1,524 1,105 882

Pension liability (3,177) (2,685) (3,555) (2,579) (2,059)

Expected long term rate of return Founders Scheme value2008 2007 2006 2005 2004 2008 2007 2006 2005 2004

% % % % % £’000 £’000 £’000 £’000 £’000

Investment in HigginsGroup PLC 5.00 5.00 5.00 4.50 4.50 5,800 7,300 7,300 527 –Other Equities 7.90 7.90 7.55 7.40 8.00 3,896 3,553 3,093 4,569 3,828Corporate Bonds 6.70 5.90 5.35 5.20 5.30 – 100 214 202 2,397Government Bonds 4.90 4.90 4.55 4.40 5.00 1,898 2,118 2,020 1,933 –Cash and other 5.00 5.50 4.50 4.50 4.50 66 607 701 513 181

Fair value of defined benefit assets 11,660 13,678 13,328 7,744 6,406Present value of defined benefit obligations (10,986) (10,307) (10,422) (7,011) (6,015)

Surplus 674 3,371 2,906 733 391Related deferred tax liability (202) (1,011) (872) (220) (117)

Pension asset 472 2,360 2,034 513 274



GROUP PLC


(f) changes in the fair value of scheme assetsStaff Scheme Founders Scheme

2008 2007 2008 2007£’000 £’000 £’000 £’000

Opening fair value of scheme assets 17,737 15,038 13,678 13,328Expected return on assets 1,339 1,075 785 730Contributions by scheme participants 239 259 – –Contributions by the employer 1,097 1,050 – –Actuarial gains/(losses) (2,239) 672 (2,649) (234)Benefits paid (603) (357) (154) (146)

closing fair value of scheme assets 17,570 17,737 11,660 13,678

(g) Actual return of scheme assetsStaff Scheme Founders Scheme

2008 2007 2008 2007£’000 £’000 £’000 £’000

Expected return of scheme assets 1,339 1,075 785 730Actuarial gains/(losses) (2,239) 672 (2,649) (234)

Actual return of scheme assets (900) 1,747 (1,864) 496

(h) changes in the present value of scheme liabilitiesStaff Scheme Founders Scheme

2008 2007 2008 2007£’000 £’000 £’000 £’000

Opening present value of scheme liabilities 21,572 20,117 10,307 10,422Current service cost 879 1,006 – –Interest cost 1,288 1,080 604 543Contributions by plan participants 239 259 – –Actuarial losses/(gains) (1,266) (533) 139 (512)Past service cost – – 90 –Benefits paid (603) (357) (154) (146)

closing present value of scheme liabilities 22,109 21,572 10,986 10,307



GROUP PLC

(i) changes in the fair value of defined benefit (liabilities)/assetsStaff Scheme Founders Scheme

2008 2007 2008 2007£’000 £’000 £’000 £’000

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

2,034Movement in year:Past service cost – – (90) –Current service cost (879) (1,006) – –Contributions 1,097 1,050 – –Net finance income surplus/(deficit) 51 (5) 181 187Actuarial (loss)/gain (973) 1,206 (2,788) 278Deferred tax 212 (375) 809 (139)

Pension (liabilities)/assets at end of year (3,177) (2,685) 472

2,360

(j) Amounts recognised in profit and loss account

The amounts charged to profit and loss account in respect of defined benefit obligations are as follows:

Staff Scheme Founders Scheme 2008 2007 2008 2007£’000 £’000 £’000 £’000

Past service cost – – 90 –Current service cost 879 1,006 – –

Total operating charge 879 1,006 90 –

Expected return on pension scheme assets 1,339 1,075 785 730Interest on pension scheme liabilities (1,288) (1,080) (604) (543)

Net finance income/(cost) 51 (5) 181 187

As the defined benefit section of the Staff Scheme is closed to new entrants, 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 equity

The amounts that have been included within the statement of total recognised gains and losses are as follows:

Staff Scheme Founders Scheme 2008 2007 2008 2007£’000 £’000 £’000 £’000

Difference between expected and actual returns on assets (2,239) 673 (2,649) (234)Experience losses arising in the scheme liabilities (461) (343) (690) (201)Effects of changes in assumptions underlying the present value of scheme liabilities 1,727 876 551 713

Actuarial (loss)/gain (973) 1,206 (2,788) 278



GROUP PLC


(l) History of experience gains and losses2008 2007 2006 2005 2004

Staff Scheme £’000 £’000 £’000 £’000 £’000

Difference between expected and actual returns on scheme assets (2,239) 673 608 1,379 (150)Percentage of assets at year end 13% 4% 4% 11% 2%

Experience (losses)/gains on scheme liabilities (461) (343) (191) 78 (545)Percentage of liabilities at year end 2% 2% 1% 0% 4%

Total actuarial (losses)/gains (973) 1,206 (1,427) (739) (1,616)Percentage of liabilities at year end 4% 6% 7% 5% 13%

2008 2007 2006 2005 2004Founders Scheme £’000 £’000 £’000 £’000 £’000

Difference between expected and actual returns on scheme assets (2,649) (234) 5,564 910 806Percentage of assets at year end 23% 2% 42% 12% 13%

Experience (losses)/gains on scheme liabilities (690) (201) (3,235) 260 68Percentage of liabilities at year end 6% 2% 31% 4% 1%

Total actuarial gains/(losses) (139) 278 1,959 343 292Percentage of liabilities at year end 1% 3% 19% 5% 5%

5. Net interest payable

2008 2007£’000 £’000

Interest payable on bank loans and overdrafts 3,961 3,354Interest income (1,278) (762)

2,683 2,592



GROUP PLC

6. Taxation on profit on ordinary activities

2008 2007£’000 £’000

Analysis of charge in year

UK corporation tax charge at 29% (2007: 30%) based on the profit for the year 108 2,980Under/(over) provision in respect of prior years 27 (47)

135 2,933Deferred taxation (see note 13) 30 24Deferred taxation – relating to retirement benefits 108 68

273 3,025

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 period

The current tax charge for the period is lower (2007: lower) than the standard rate of corporation tax in the UKof 29% (2007: 30%). The differences are explained below:

2008 2007£’000 £’000

current Tax Reconciliation

Profit on ordinary activities before tax 641 10,501

Current tax at 29% (2007: 30%) 188 3,150Effects of:

Expenses not deductible for tax purposes 154 117Capital allowances for period in excess of depreciation (126) (221)Utilisation of tax losses – 2Tax relief on pension contributions in excess of amounts expensed (108) (68)Adjustments to tax charge in respect of previous periods 27 (47)

Total current tax charge 135 2,933



GROUP PLC

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

£’000 £’000 £’000 £’000 £’000

cost or valuation

At beginning of year 25,669 1,815 6,852 1,333 35,669Additions – 23 842 315 1,180Disposals (380) – (102) (130) (612)Revaluation 257 88 – – 345

At end of year 25,546 1,926 7,592 1,518 36,582

Depreciation

At beginning of year 68 94 3,418 725 4,305Charge for year – 8 739 221 968Revaluation (68) (102) – – (170)On disposals – – (96) (90) (186)

At end of year – – 4,061 856 4,917

Net Book Amount

At 31 July 2008 25,546 1,926 3,531 662 31,665

At 31 July 2007 25,601 1,721 3,434 608 31,364

The following freehold properties were professionally valued by Chartered Surveyors as at 31 July 2008 on anopen market basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes:

ValuationName of Property £ Name of ValuerConnaught House, High Road, Loughton 3,270,000 Glenny LLPCharter House, High Street, Great Dunmow 530,000 Kemsley, Whiteley & FerrisConnaught Mews, Loughton 345,000 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 £17,119,000 (2007: £17,321,000).

The following investment leasehold properties were professionally valued by Chartered Surveyors as at 31 July 2008on an open market basis in compliance with RICS Statement of Asset Valuation Practice and Guidance Notes:

ValuationName of Property £ Name of ValuerBassett Business Units, North Weald 1,500,000 Glenny LLPUnits 2-3, Lockside Marina, Chelmsford 255,000 Kemsley, Whiteley & Ferris

The historical cost of leasehold properties is £1,437,000 (2007: £1,414,000).



GROUP PLC

8. Fixed assets - investments

company – investments2008 2007£’000 £’000

Shares in Group Undertakings:Net book amount at beginning of year and 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 building Higgins Construction PLC ContractingHiggins Investments PLC Property investmentsBassett Business Units Limited Managing business units†

Higgins City Limited DormantD 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 PLCAll other companies are 100% subsidiary undertakings of the Company.

9. Stocks2008 2007£’000 £’000

Residential development land and buildings 96,809 75,933Contracting stock and work in progress 1,628 675

98,437 76,608

10. Debtors2008 2007

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

Trade debtors 19,694 – 20,578 –Amounts recoverable on contracts 3,077 – 1,732 –Amounts owed by subsidiaries – 28,480 – 22,935Other debtors 789 1 559 1Prepayments and accrued income 459 136 875 245

24,019 28,617 23,744 23,181

Included in trade debtors are amounts falling due after more than one year of £2,653,000 (2007: £2,053,000).



GROUP PLC

11. creditors: amounts falling due within one year2008 2007

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

Bank loans and overdrafts 53,678 – 41,928 36Trade creditors 19,432 – 8,623 –Payments on account 14,553 – 15,323 –Amounts owed to subsidiaries – 18,715 – 13,788Corporation tax payable – – 1,781 –Other taxation and social security 1,677 – 1,225 13Other creditors 567 – 584 –Accruals and deferred income 24,821 775 27,469 142

114,728 19,490 96,933 13,979

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.

Since the balance sheet date, the Group has routinely renewed all its banking arrangements and hassufficient facilities in place to meet its projected cash requirements until the next review at the end ofOctober 2009. Whilst the Group’s development loans are technically repayable on demand, the Directorsexpect the facilities to continue to be available and to be renewed at that date.

12. creditors: amounts falling due after more than one year2008 2007£’000 £’000

Bank Loan 5,936 6,712

5,936 6,712

The bank loan is repayable by instalments as follows:2008 2007£’000 £’000

Bank loan

Amounts due:Between 1 and 2 years 1,251 1,186Between 2 and 5 years 3,753 3,556After 5 years 932 1,970

5,936 6,712

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



GROUP PLC

13. Provision for liabilities and charges

Deferred Tax – Group2008 2007£’000 £’000

Balance at beginning of year 113 89Profit and loss account (see note 6) 30 24

Balance at end of year 143 113

Deferred taxation provided in the accounts is as follows:2008 2007£’000 £’000

Accelerated capital allowances 257 231Short-term timing differences (114) (118)

143 113

The Group has trading losses carried forward of £32,000 (2007: £32,000) which have not been reflected in other timing differences.

In addition, a deferred tax asset of £1,021,000 arose in the year (2007: liability of £513,000) 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 capital2008 2007£’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



GROUP PLC

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 44,419 53,211Profit for financial year – – 368 368Revaluation in the period 525 – – 525Realisation of revaluation reserve on sale of property (177) – 177 –Actuarial loss arising in the year – – (3,761) (3,761)Deferred tax arising thereon – – 1,128 1,128

At end of year 9,046 94 42,331 51,471

(b) CompanyAt beginning of year – 84 9,915 9,999Loss for financial year – – (65) (65)

At end of year – 84 9,850 9,934

16. Guarantees and commitments

(a) The Company has entered into guarantee arrangements on behalf of certain subsidiary undertakings inthe normal course of business.

(b) Capital commitments of the Group at 31July 2008 for which no provision has been made in thesefinancial statements, were as follows:

2008 2007£’000 £’000

Contracted 13 327Authorised but not contracted – 86

13 413

(c) At 31 July 2008 the Group had annual commitments (Company: £nil) under non-cancellable operatingleases and contract hire agreements as follows:

Contract ContractProperty hire Total Property hire Total

2008 2008 2008 2007 2007 2007£’000 £’000 £’000 £’000 £’000 £’000

Leases which expire:Within 1 year – 242 242 – 116 116In 2 to 5 years – 729 729 – 787 787Over 5 years 41 – 41 28 – 28

41 971 1,012 28 903 931



GROUP PLC

17. Notes to the cash flow statement

(a) Reconciliation of operating profit to operating cash flows2008 2007£’000 £’000

Operating profit 3,092 12,911Depreciation charges 968 772Reduction in valuation 10 –Profit on sale of tangible fixed assets (102) (13)Defined benefit pension scheme contributions paid (1,097) (1,050)Defined benefit pension scheme service cost accrued 968 1,006(Increase) in stocks (21,829) (15,968)(Increase) in debtors (233) (5,645)Increase in creditors 7,773 6,052

Net cash outflow from operating activities (10,450) (1,935)

(b) Analysis of capital expenditure and financial investment2008 2007£’000 £’000

Purchase of tangible fixed assets (1,180) (1,598)Sale of tangible fixed assets 528 92

Net cash outflow for capital expenditure and financial investment (652) (1,506)

(c) Financing2008 2007£’000 £’000

Drawdown of loans 10,974 12,462

(d) Analysis of net debtAt At

1 August Cash 31 July2007 flow 2008£’000 £’000 £’000

Cash at bank and in hand 26,286 (4,716) 21,570Bank loans due within 1 year (41,928) (11,750) (53,678)Bank loans due after 1 year (6,712) 776 (5,936)

(22,354) (15,690) (38,044)


GROUP PLC


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 25 November 2008 at 11.00am to transact thefollowing business:

1. To receive and approve the consolidated Annual Report and Accounts for the year ended 31 July 2008 and 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


Company Secretary

28 October 2008

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

Notice of Meeting

GROUP PLC

Des

igne

d an

d Pr

oduc

ed by B

UCKLEY

DEAN

EW

AKEFIE

LD

020 7

454 1

919


GROUP PLC

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

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