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Annual Report & Accounts 2012

• ENGINEERING

• NUCLEAR

• MANUFACTURING

Redhall is a leading niche engineering support services group operating in the engineering, nuclear and manufacturing sectors.

Redhall supports its blue chip client base using its integrated offering of design, manufacture, installation, maintenance and decommissioning. Redhall aims to establish sustainable, profitable growth to create value and opportunity for all of its stakeholders.

Redhall continues to develop additional added value skills and products for its clients through focused investment in organic growth, innovation and, when appropriate, through selective acquisitions.

EngineeringEngineering comprises activities in industrial processes including oil and gas, petrochemical, chemical, pharmaceutical and food and includes design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities include mechanical design and construction, storage tank services, plant modifications and upgrades, repair and maintenance, shutdown services and offsite services.

Nuclear Nuclear comprises activities in both the civil and defence sectors and includes design, project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities in the civil sector include decommissioning and waste management, support to operating nuclear power stations, and nuclear new build. Activities in the defence sector encompass activities on behalf of the Ministry of Defence and include the marine outfitting of Astute class submarines at Barrow, West Cumbria, and the design and manufacture of specialist equipment and mechanical and electrical engineering activities for the AWE establishments at Aldermaston and Burghfield.

Manufacturing Manufacturing encompasses the design, manufacture and installation of bespoke specialist plant and equipment typically in the nuclear, defence, oil and gas, petrochemical, chemical, pharmaceutical and food sectors. The division has particular expertise in the design and manufacture of high integrity fire and blast resistant doors, window and wall systems.

| 01Annual Report & Accounts 2012

02 Chairman’s Statement

04 Chief Executive’s Review

07 Financial Review

09 Operating Environments, Risks and Uncertainties

10 Company Information

11 Report of the Directors

Group15 Corporate Governance

16 Corporate and Social Responsibility

17 Independent Auditor’s Report

18 Financial Statements

Company55 Financial Statements

63 Notice of Annual General Meeting

65 Form of Proxy

Financial highlights

Group revenue*

Adjusted operating profit*

Adjusted profit before tax*

Adjusted fully taxed basic earnings per share*

Adjusted fully taxed diluted earnings per share*

* Adjusted results are stated before exceptional items and amortisation of acquired intangible assets.

126,564

4,347

3,873

9.55p

9.49p

119,525

2,547

1,926

4.85p

4.84p

Year ended30 September 2011

£000

Year ended30 September 2012

£000

Contents

This has been another testing year for the Group, although I do now feel that the worst is behind us. We have recruited an excellent executive management team who have dealt expeditiously with the contract issues they inherited and have built a solid platform for the future. We have retained our reputation with our key clients, have a good order book and some highly attractive prospects. The Vivergo court case is behind us and we now await the verdict of the judge to enable us to move forward.

02 | www.redhallgroup.co.uk

ChAIRMAN’s sTATEMENT

David Jackson

Chairman and Chief Executive

We have been advised by our partner Hertel UK Limited that we

have been awarded the renewal of the Multi-Disciplinary Site

Works contract at Sellafield. This contract is estimated to be

worth approximately £26.0 million to the Group over four years.

TRAdING REsULTsUnderlying revenue for the year ended 30 September 2012 at

£119.5 million was 5.6% down on the prior year of £126.6 million.

Adjusted profit (before tax and amortisation) at £1.9 million was

down 50.3% from the prior year comparative of £3.9 million. The

adjusted fully taxed diluted earnings per share stood at 4.8p, down

49% on a comparative of 9.5p.

During the year under review the Engineering business performed

well but both the Nuclear business and the Manufacturing business

encountered difficulties and consequently performed below

expectations. The detail of individual business performance is dealt

with in the Chief Executive’s Review.

Photo courtesy of MOD, licensed under the Open Government Licence v1.0


David Jackson

Chairman

5 December 2012

ExCEpTIoNAL ITEMsWe have incurred exceptional items in the year of £5.9 million. The

majority of this charge relates to costs on the Vivergo legal dispute

of £2.5 million and provisions on legacy contracts of £2.6 million. It

is not anticipated that any further provisions will be required in future

for these legacy contracts.

FINANCIAL posITIoNNet assets at 30 September 2012 stood at £31.0 million. Our year

end net debt position was £10.6 million. Our bank borrowings

remain within our covenanted facilities and we are grateful to our

bankers HSBC for their strong support over the past 18 months

in view of the major dispute with Vivergo. It is the strength of this

relationship that enables us to pursue our entitlement in full. The

costs of the legal case have been a drain on our cash reserves but

these costs are hopefully now at an end and we look forward to

more normal cash generation during the next twelve months.

No tax is payable by the Group for the financial year under review and

we have £7.5 million of tax losses carried forward. We have recognised

£2.0 million of these losses in our deferred tax reserve.

VIVERGo The court case brought by Vivergo against us concluded on

9 November 2012. The case will determine two matters:-

1. Was the contract terminated unlawfully?

2. What extension of time was our subsidiary RESL entitled to on

the contract?

We now await the judge’s verdict which we understand may not be

decided for several months. The Board has discussed the case in

detail with its legal and professional advisers and we believe that the

position adopted in our balance sheet, which is a continuation of the

position adopted previously, remains reasonable in terms of the most

likely settlement.

A significant part of the dispute involves the re-measurement of work

done and the value of this item is not covered by the current legal case.

We are in discussion on this with Vivergo and our objective is for this

element to be agreed prior to the judgement being received. All other

heads of recovery can be dealt with once the judge’s verdict has been

received and we would anticipate a conclusion to this matter during the

first half of 2013.

dIVIdENdThe Board has taken the decision that no dividend will be paid. The

Board will review the dividend policy on an ongoing basis.

pEopLEThere have been major changes to our Executive during the year under

review at Board level and Leadership Team level. During this year we have

appointed Richard Shuttleworth as Group Chief Executive, Phil Brierley

as Group Commercial Director and Chris Lewis-Jones as interim Group

Finance Director. We now have a better balance on our Board between

commercial, accounting and engineering skills. I sincerely believe that this

balance will enable the Group to perform more effectively and consistently.

In the Manufacturing business we have a new managing director,

John Hynes who has extensive experience at Rolls Royce and Jaguar

Land Rover. This is an important appointment in an area of the

business where margin potential and prospects are at their highest.

Our staff have worked diligently during a challenging year and I

would like to take this opportunity to acknowledge their effort.

pRospECTs & sTRATEGyOur new Chief Executive has, since his arrival in early September,

conducted a thorough review of the business and has produced a

business plan endorsed by the Board which will be implemented

during the course of the current financial year. Three small

businesses within the Group have been identified as non-core and

we have begun discussions with Altium, our corporate finance

advisers, about their potential disposal during the course of the

next six months. In addition we are looking to address the balance

between contracting and manufacturing with more emphasis being

placed on the manufacturing side of the business. This should

enable the Group to improve its overall margin and reduce the risks

associated with site activity.

The prospects for the next 12 months look encouraging, even in

advance of the award of nuclear new build work, with strength in

the oil and gas market and opportunities afforded by the Crossrail

project in London where we are a specified supplier. The food

industry appears to be more active and several of our clients

have major work programmes during the course of the next year.

The timetable for the commencement of the nuclear new build

programme in the UK appears to have slipped by approximately

three months but we fully anticipate a decision to be made in

the spring of next year. The opportunities for our Manufacturing

business in particular look outstanding over the next three years.

Our order book today stands at around £119.0 million compared

with last year’s figure of £116.0 million. This was boosted by

the recent receipt by our partner Hertel UK Limited of the Multi-

Disciplinary Site Works renewal contract at Sellafield. In addition to

the current order book, prospects are at a record level which gives

us confidence over the medium term.


It is three months since I was appointed Chief Executive, during which time I have completed a strategic review of the business which has been considered by the Board. Fundamentally, the Redhall Group is a very sound business which has the potential to deliver excellent stakeholder returns. The business operates in attractive, if competitive, markets which are forecast to grow significantly in the short to medium term. The business has an extensive portfolio of blue chip customers with whom we have long term working relationships.

ChIEF ExECUTIVE’s REVIEW

Richard Shuttleworth

Chief Executive

The Group is structured into three divisions:

Engineering

Nuclear

Manufacturing

They deliver niche engineering services and products to

the nuclear, defence, oil and gas, petrochemical, chemical,

pharmaceutical and food markets.

Whilst the financial year 2011/2012 has been a challenging

one for the Group and against a backdrop of economic

and political uncertainty, Redhall has had some notable

achievements particularly within the Engineering division. The

markets within which we operate continue to be extremely

competitive but the pipeline of opportunities is encouraging

and we have maintained our market share. We continue to

work to develop the products delivered via our Manufacturing

division to preserve our much valued reputation with our

important customers.


hEALTh & sAFETyHealth and Safety continues to be as important to the Group as it is

to our customers and I am pleased to report that we had 18 fewer

accidents in the year and our all accident frequency rate was 14%

better than for the previous year ended 30 September 2011. Man hours

expended since our last Lost Time Accident are 4.9 million in Nuclear, in

excess of 1.0 million in Engineering and 0.5 million in Manufacturing.

ENGINEERING 2012 2011 £000 £000

Revenue* 54,199 51,698 **

Adjusted operating profit 2,121 1,264

Adjusted operating margin 3.9% 2.4%

* Pre-exceptional items

**Excluding Vivergo

The Engineering division comprises activities in industrial processes

including oil and gas, petrochemical, chemical, pharmaceutical,

telecoms and food and includes design, project management and

delivery of on-site works through qualified and experienced engineers

and trades personnel. Activities include mechanical design and

construction, storage tank services, plant modifications and upgrades,

repair and maintenance, shutdown services and off-site services.

Excluding the impact of the Vivergo contract the revenue for

Engineering at £54.2 million represented a 4.8% increase on 2011.

The operating profit margin for the division rose to 3.9% from

the 2.4% reported last year. This increase, and in particular the

improvement in the latter part of the year, reflect the positive effects

of the reorganisation of the food side of the business, together with

the seasonal shutdown activities.

This year has seen the business secure or renew a number of its

major long term contracts. A maintenance contract was secured

from Huntsman which runs until the end of 2016, we secured a two

year extension to our Vopak contract and a three year term contract

for Polimeri which runs until July 2015. In total these three contracts

alone make up in excess of 15% of the division’s annual turnover.

The market within the industrial side of the business continues to

be challenging. I am pleased to report that notwithstanding these

pressures our margins continue to hold up following the successful

completion of a number of major shutdowns during the year for

Valero, Polimeri, Dow Corning, Hexcel and Huntsman Tioxide. Our

key customers continue to value the safe, reliable service we offer

in what is becoming a resource constrained market place. The

tankage side of the business continues to develop both within the

UK and overseas where we work for the defence sector on the

Ascension and Falkland Islands.

The food and pharmaceutical side of the division has made significant

progress improving margins but there still remains opportunity for

further improvement. We have strengthened the management team

with the appointment of Martin Miller who brings with him extensive

knowledge of the industry and a network of important contacts.With

the improvements made within the business coupled with the capital

programmes of our major food clients we hope that 2013 will mark a

turning point for this part of the business.

NUCLEAR 2012 2011 £000 £000

Revenue* 36,750 32,966




Nuclear comprises activities in both the civil and defence sectors

and includes design, project management and execution of on-site

works through qualified and experienced engineers and trades

personnel. Activities in the civil sector include decommissioning and

waste management, support to operating nuclear power stations

and nuclear new build. Activities in the defence sector encompass

activities on behalf of the Ministry of Defence and include the

marine outfitting of the Astute Class submarines and the design and

manufacture of specialist equipment and mechanical and electrical

engineering activities for the AWE establishments.

Turnover for the division at £36.8 million represents an 11% increase on

2011. The performance of the division has been overshadowed by the

impact of resolving commercial disputes and outstanding contractual

matters which initially arose under the previous management. The

majority of these have been resolved and the Board believes that an

adequate position has been taken against those not yet finally agreed.

The relationship with BAE Systems continues to develop and the

marine operation delivered growth in sales of in excess of 37% in

the year. We continue to work with this valued customer to grow our

service offering at their facility in Barrow as work progresses on Boats

3, 4, 5 and 6. Our Defence business continued to support AWE and

this year’s performance was broadly in line with that for 2011.

The trading conditions within our decommissioning and waste

management activities continue to be challenging and performance

has been adversely affected by a number of issues on legacy

contracts. We continue to commit resources to resolving the

outstanding issues which we hope to fully close-out next year. We

have recently been notified that we are to continue to be a key delivery

partner to Hertel UK Limited under the new framework contract for

the Multi-Disciplinary Site Works which will run for three years with

options to extend for a further year. Based on historic performance

this contract is estimated to be worth £26.0 million over four years.

Work undertaken through this contract amounts to approximately 50%

of our operation at Sellafield. We are well positioned to secure other

project work at Sellafield from Tier 2 contractors with whom we have

developed good working relationships over many years.

During the year we have successfully completed the Activ pipebridge

at Sellafield and the Cross site transporter has been commissioned at

Hunterston. In addition the initial phase of work on Evaporator D has

been completed and the post module delivery works are scheduled

for completion in 2013. Each of those projects was awarded outside

the MDSW contract. Significantly we also secured the RCW project

last year which is contracted directly with Sellafield Limited and is

valued at £3.2 million.

The work on the Fellside boiler park completion contract has had a

material impact on the performance of the Nuclear business as this

difficult project has been the subject of significant delay and change.


We are continuing to work with our client and the ultimate customer

to ensure all outstanding issues are resolved by the earliest date.

On the power side of the business we continue to make slow but

purposeful progress in securing work on existing nuclear sites.

We have successfully secured and executed work at Dungeness,

Heysham 1 and Sizewell B this year and we have identified further

high quality opportunities for next year.

In the civil nuclear new build market we were delighted with the

appointment of BYLOR on Hinkley Point with whom we worked closely

during the bidding stage. We continue to work closely with our French

trade partners and remain positive that the exciting opportunities which

exist on this project can be converted into contracts for the Group.

MANUFACTURING 2012 2011 £000 £000

Revenue* 28,576 26,648




Manufacturing encompasses the design, manufacture and

installation of bespoke specialist plant and equipment typically

in the nuclear, defence, oil and gas, petrochemical, chemical,

pharmaceutical and food sectors. The division has particular

expertise in the design and manufacture of high integrity fire and

blast resistant doors, windows and wall systems.

The turnover for the division showed an increase compared with

2011 of 7.2% but the overall trading position was disappointing with

operating margins down nearly 10% on 2011.

The performance of our specialist door business based in Bolton

has been affected by two significant factors this year. First, the

difficulties which we reported earlier in the year with a major

contract to supply highly engineered door frames has badly affected

the earnings in this business. This project is largely behind us and

we are anticipating a prompt resolution of the remaining outstanding

issues. The second factor is the delay in the award of some projects

anticipated in the plan.

It was a disappointing year for our manufacturing operations in

Bristol and the North East which specialise largely in high quality,

high integrity products for the nuclear and oil and gas related

markets. One of our key customers went into receivership and the

nuclear related projected work volume failed to materialise. Whilst

the oil and gas related industries remain relatively buoyant, the

short term contracts and availability of quality operatives eroded the

margin in this business.

The outlook for the specialist door business is encouraging and we

have greater visibility of projects which will support the major base

workload for the business. There are significant opportunities in

defence, nuclear new build and major infrastructure projects over

the next four years and we are well placed to capitalise on them. We

continue to invest in our facilities at Bristol in readiness to capitalise

on the work which will materialise from the nuclear new build

programme. This facility is well positioned from both a geographical

Richard Shuttleworth

Chief Executive

5 December 2012

and resource perspective to secure significant contracts in the

nuclear sector over the foreseeable future. The business has suffered

from a shortage of opportunities over the last 12 months but the

prospects list looks a lot more encouraging for 2013 and beyond.

I am pleased to announce that Redhall has secured the services

of John Hynes who joined us at the beginning of November as

Managing Director of the Manufacturing division. John has extensive

experience in manufacturing having worked for Rolls Royce and

Jaguar/Land Rover and brings with him a wealth of experience

and contacts which will be key to integrating and developing this

important part of the Group.

oUTLookIn my initial review of the business, I identified a number of key

areas which needed to be addressed. The core business of Redhall

remains high quality and the problems we have suffered in the year

are restricted to a small number of projects and are not widespread.

I have worked with the Board to ensure we tighten our controls

and procedures and appoint the best people with the requisite

experience, knowledge and competence into the key roles to

ensure the mistakes of the past are not repeated.

I have made three key appointments. Chris Lewis-Jones was

appointed interim Finance Director, Phil Brierley, Commercial

Director, and most recently John Hynes has joined the business

as Managing Director for the Manufacturing division. These key

appointments strengthen the Board and Leadership Team of

Redhall and enable us to capitalise on the significant opportunities

for the business going forward. The team is better balanced

between the functions and operations and has a complementary

skill set to address the business issues we face going forward and

will ensure that risks are not only identified but actively managed.

The outlook for the Group is extremely encouraging. We now have

greater transparency of opportunities with our key customers

which will underpin the base workload for the business. In our

specialist Manufacturing businesses we are developing longer

term relationships with our key customers to establish Redhall

as their supplier of choice. The recent notification of key delivery

partner status with Hertel UK Limited on MDSW and our

relationship with AWE in the Nuclear division provide a solid base

load of work which the business can use as a springboard into

the nuclear new build arena. Our Engineering division continues

to deliver reliable results from its contracts with key customers as

we drive to deliver improved and enhanced services to our clients’

ageing infrastructure.

2013 will represent a year of consolidation to ensure the Group’s

business is positioned to capitalise on the growth opportunities in

2014 and beyond.


kEy FINANCIAL INdICAToRs 2012 2011 £000 £000

Revenue

before exceptional items 119,525 126,564

after exceptional items 116,771 117,759

Profit/(loss) before tax

before exceptional items and amortisation 1,926 3,873

after exceptional items and amortisation (4,653 ) (8,097 )

Operating cash flow 142 (13,964 )

Adjusted fully diluted EPS 4.84 p 9.49 p

Basic and diluted loss per share (14.46 )p (23.50 )p

Underlying revenue for the year fell by 5.6% to £119.5m

(2011: £126.6m). However, if revenue generated from the Vivergo

contract in 2011 were excluded, then 2011 adjusted revenue

FINANCIAL REVIEW

Chris Lewis-Jones

Interim Group Finance Director

stands at £111.3m and underlying Group revenue has grown by

7.4% in 2012. Underlying profit before amortisation and tax fell by

50.3% to £1.9m (2011: £3.9m) and underlying EPS fell by 49.0% to

4.84p (2011: 9.49p). These measures are stated before exceptional

items which amounted to £5.9m (2011: £11.3m). Net borrowings at

the end of the year were £10.6m (2011: £10.2m).

opERATING REsULTsThe trading performance of the Group is discussed in the Chief

Executive’s Review.

Underlying Group revenue excluding that attributed to Vivergo in

2011 grew by 7.4% to £119.5m (2011: £111.3m) and that growth

was experienced in all three business segments. However, the

adjusted operating profit overall has fallen by 41.4% to £2.5m. The

adjusted operating profit margin has increased in Engineering to

3.9% (2011: 2.4%) but has fallen in Nuclear to 3.1% (2011: 4.5%)

and in Manufacturing to 4.7% (2011: 14.3%) for the reasons set out

in the Chief Executive’s Review.


ExCEpTIoNAL ITEMsThe Group has reported a net exceptional charge in the year of

£5.9m before tax which comprises aggregate charges of £6.7m

offset by a credit of £756,000. The charges include a further

provision of £2.5m for legal and professional fees in connection with

the Vivergo matter which, as more fully explained in the Chairman’s

Statement, has proceeded to trial since the year end. This provision

for fees is an estimate of the total committed costs required

until the judgement is handed down. Other contract provisions

amount to £2.6m and are in connection with legacy contract

issues arising under previous management. A bad debt amounting

to £436,000 was incurred following the failure of a customer of

our Manufacturing business. Other charges relate to property

devaluation (£164,000), the costs of bidding for Nuclear New Build

opportunities (£225,000) and restructuring costs (£673,000). The

exceptional credit of £756,000 reflects the impact of the change

from the application of RPI inflation to CPI inflation for certain

classes of membership of our defined benefit pension scheme.

INTEREsTThe net financial expense incurred in the year comprises net interest

on bank borrowings of £348,000 (2011: £250,000) and the pension

scheme net finance charge of £273,000 (2011: £224,000).

TAxATIoNThe overall tax credit of £347,000 (2011: £1.1m) reflects the partial

recognition of the losses incurred in the year. In total the Group has

losses carried forward from 2012 and earlier years amounting to £7.5m

upon which deferred tax assets have not yet been recognised. These

unrecognised losses will be available for offset against future profits.

dIVIdENdsThe Board is not recommending a dividend.

CAshFLoW ANd NET BoRRoWINGsGroup net borrowings (net of cash balances) were £10.6m at the

year-end (2011: £10.2m). Net cash inflows from operating activities

were £142,000 (2011: Net cash outflow £14.0m) and reflects a

decrease in working capital investment of £3.7m (2011: Working

capital investment £6.6m).

Investment in property, plant and equipment continues to be

closely controlled.

At the year-end the Group’s bank facilities comprised a £5m working

capital facility and £18.9m of a £20m revolving credit facility which is

committed to January 2015 and which is being amortised down to

£16m on an agreed quarterly basis up to that date. At the year-end

£13m was drawn down against the revolving credit facility and the

overdraft was not utilised. (2011: Utilised £10m of revolving credit

facility and £168,000 of working capital facility).

GoodWILLAn impairment review of goodwill was carried out as at the year-end

which confirmed that a provision was not required. The carrying

amount remains unchanged from the prior year at £23.8m. Details of

the calculations and assumptions used for the impairment review are

shown in Note 9.

EqUITyShareholders’ equity reduced by £6.6 million during the year,

reflecting the net loss for the year of £4.3 million; the actuarial loss

on the pension scheme of £2.3m less associated deferred tax of

£564,000; and total deficit on the revaluation of property of £780,000

less associated deferred tax of £232,000.

pENsIoN sChEMEA formal valuation of the defined benefit pension scheme is currently

being carried out as at 6 April 2012. The calculation of the IAS19 pension

scheme benefit obligations has been calculated by rolling forward the

preliminary funding valuation liabilities as at 6 April 2012. The IAS19 net

deficit at the year-end has increased to £2.8m (2011: £1.5m). The main

factor contributing to the deterioration is the reduction in the discount rate

which has caused an increase in the value of the liabilities. This has been

offset in part by a higher than expected return on the scheme assets.

The pension scheme is of a long term nature and the portfolio of assets

underlying the investments has been selected to match the maturity profile

of the pension liabilities. Furthermore, actuarial advice is sought periodically

by the Group and the scheme trustees to review the asset portfolio and,

where appropriate, to reallocate it to better reflect any changes to the long

term view of market conditions or to the liability profile.

kEy pERFoRMANCE INdICAToRsThe Board monitors the activities and performance of our trading

subsidiaries through a system of internal control procedures which

are summarised in the statement on Corporate Governance. At the

Group level, key performance indicators are summarised below.

2012 2011

Adjusted operating profit margin 2.1% 3.4%

Leverage ratio 2.6 times 1.9 times

Work in hand and secured orders £119m £116m

Adjusted fully taxed

diluted earnings per share 4.84p 9.49p

All accident incident frequency rate 3.2 3.7

Christopher Lewis-Jones

Interim Group Finance Director

5 December 2012


pRINCIpAL opERATING RIsks ANd UNCERTAINTIEsThe Group has an established system of internal control which

includes financial, operational and risk management. The Board has

overall responsibility for such a system and its ongoing review and

the Board has a programme of continual improvement.

This system is openly communicated to ensure its effectiveness and it is

the role of management to implement the policies on risk and control.

Given the breadth and complexity of the Group’s changing activities

the list of principal risks below is not exhaustive, but such specific

risks are identified and managed on a business by business basis.

Major customers and contracts

The Group has delivered a strategy of focusing on blue chip major

clients such as the NDA, Sellafield, AWE and BAE Systems. As a

consequence, the Group could be affected by budgeting, regulatory

or political constraints on the clients’ business. This would have a

bearing on the size, duration and timing of major contract awards

which would in turn have an impact on the businesses of the Group.

During the year and as part of the Group’s ongoing strategy we

focus on longer-term partnership where future work visibility can be

assessed. The Group has also sought to achieve, both organically

and historically through acquisition, a more diverse portfolio of clients

across counter-cyclical markets, both private and public sector, and

the securing of longer term foundation work.

Bid success and contract performance

The Group is dependent on the success of its bid activity across

many of its sectors. Bidding by its nature can be long and

expensive and investment in such activity needs to be closely

monitored to ensure adequate return.

The success and performance of the Group also depends on

our businesses’ ability to successfully execute their contractual

obligations on terms that provide the expected returns. Any failure

could result in losses for the Group or irreparable reputational

damage with our existing and potential future customers.

The Group has developed and laid down its ‘gatekeeping’ process

to assess on a business by business basis, or if necessary at a

Group level, the risk and reward balance in deciding to bid for or

execute contracts whether on our own account or in partnership

with others.

The ongoing contractual performance is monitored within a Group

framework and discussed at both the divisional and Group level on

a monthly basis.

Health, safety and environment

The environments in which we work as a Group are inherently technically

challenging and provide a barrier to entry for new competition. If our

record in these areas were to fall short of both our clients’ and our own

expectations, it could cause the Group both reputational and financial

damage. It is critical that the Group complies with all applicable laws,

respects the rights of individuals to be protected from harm and to

safeguard the environment.

The Group’s improvement in performance, given the challenging

environments it works in, demonstrates our absolute commitment to the

safety of our people and the public at large and we continue to develop

our systems and approach to ensure improvement every year.

People and capability

Our key asset remains our technical know-how which is embedded

in our people. People are the key driver of our success through

their technical and management capabilities. We operate in markets

where resources can become constrained due to decades of under

investment in UK engineering. It is therefore key that we attract the

best people, and also retain and develop those who have grown

with the Group thus far.

The Group is focused on providing attractive competitive

remuneration structures that reward performance whilst introducing

greater flexibility and choice for our staff. We also run a number of

development and training programmes to ensure we maximise our

talent pool and grow it for the future.

Acquisitions

When appropriate, the Group will seek to develop and grow by

selective acquisition. All acquisitions entail risk and judgement and

no guarantees can be provided that future financial performance

will justify the acquisition consideration. The Group mitigates risk

through carrying out due diligence to ensure acquisitions are

made on the best available information and judgement. Integration

plans are developed in advance and are then executed, and the

acquired businesses continue to be monitored against targets set

out at acquisition.

All acquisitions are monitored and approved by the Board.

Pensions

The Group has one defined benefit pension scheme which was

closed to new entrants in 1997. Risk is inherent within the principal

assumptions used in determining the scheme liabilities, namely

mortality and discount rates, and the return on scheme assets.

Adverse movements in these underlying factors could result in an

increase in the deficit in the scheme which would require additional

funding. The Group, in conjunction with the scheme trustees, mitigates

risk through seeking professional advice on the most appropriate

assumptions to be applied to the valuation of liabilities to ensure

that the scheme is funded to a level which is adequate to meet its

obligations. We also take advice to ensure that the scheme assets

are invested in instruments which are most appropriate to meet the

maturity profile of the scheme liabilities whilst seeking to maximise the

return on those investments.

opERATING ENVIRoNMENTs, RIsks ANd UNCERTAINTIEs


CoMpANy INFoRMATIoNdIRECToRs

D J Jackson ACA

Chairman

R P Shuttleworth MRICS

Chief Executive

C Lewis-Jones BA, FCA

Interim Group Finance Director and

Company Secretary

P Brierley MRICS

Commercial Director

P R Kirk BSc, CEng, FIET

Non-Executive

P B Hilling, MA, FCA

Non-Executive

J P Carrick, BSc, PhD, FIChemE, CEng

Non-Executive

REGIsTEREd oFFICE ANd AdMINIsTRATIoN oFFICE1 Red Hall Court

Wakefield WF1 2UN

REGIsTEREd NUMBER263995

WEB sITEwww.redhallgroup.co.uk

BRokERsCanaccord Genuity Limited

8th Floor

88 Wood Street

London EC2V 7QR

NoMINATEd AdVIsERsAltium Capital Limited

5 Ralli Courts

West Riverside

Manchester M3 5FT

BANkERsHSBC Bank plc

4th Floor, City Point

29 King Street

Leeds LS1 4LT

soLICIToRsSquire Sanders

2 Park Lane

Leeds LS3 1ES

AUdIToRKPMG Audit Plc

1 The Embankment

Neville Street

Leeds LS1 4DW

REGIsTRARsCapita Registrars

Northern House

Woodsome Park

Fenay Bridge

Huddersfield HD8 0LA

Back row – left to right: P Brierley, P B Hilling, C Lewis-Jones, J P CarrickFront row – left to right: P R Kirk, D J Jackson, R P Shuttleworth


The Directors present their report and audited financial statements

of the Group and Company for the year ended 30 September 2012.

pRINCIpAL ACTIVITyThe principal activity of the Group during the year has been

engineering and related services.

REsULTs ANd dIVIdENdsThe loss of the Group after taxation is £4,306,000 (2011: loss £6,959,000).

The Directors do not recommend the payment of a dividend (2011: nil).

A general review of the business and activities of the Group and its

key operating and financial risks and key performance indicators are

given in the Chairman’s Statement, Business Review and Financial

Review which should be regarded as part of this report.

dIRECToRsThe names of the Directors who served during the year were:

D J Jackson

R P Shuttleworth Appointed 20 August 2012

C Lewis-Jones Appointed 13 September 2012

P Brierley Appointed 13 September 2012

P R Kirk

J P Carrick

P B Hilling Appointed 3 October 2011

I P Butcher Resigned 8 December 2011

J P O’Kane Resigned 13 September 2012

Profiles of each Director serving at the date of issue of this report

are set out below.

D J Jackson – Chairman

David Jackson, aged 65, was the Chairman and Chief Executive until

the appointment of Richard Shuttleworth as Chief Executive with

effect from 1 September 2012. David joined the Board in September

2005 in an executive capacity and became Non-Executive Chairman

with effect from 1 October 2012. Previously he was the executive

chairman of Peterhouse Group PLC, the quoted infrastructure

services business which he founded, until its sale to Babcock

International Group PLC in June 2004.

R P Shuttleworth – Chief Executive

Richard Shuttleworth, aged 51, is a qualified quantity surveyor and

was for many years employed by AMEC plc culminating in holding the

position of Group Commercial Director. Latterly, he has been managing

director of the UK businesses of Cape plc and Harsco Infrastructure.

C Lewis-Jones – Interim Group Finance Director and

Company Secretary

Chris Lewis-Jones, aged 53, was, until his recent appointment to

the Board in September 2012, the Group’s company secretary and

head of finance. He is a Chartered Accountant and originally joined

the Group in 2001 as group finance director, stepping down from

that role in August 2008. He previously worked within corporate

finance at Ernst & Young.

P Brierley – Commercial Director

Philip Brierley, aged 48, joined the Board in September 2012. He is

a member of the Royal Institution of Chartered Surveyors. He has

had a 30 year career in the construction industry during which the

roles he has held include the Managing Director of Construction for

Peterhouse Group PLC, the Chief Executive of Propencity Group

PLC and a Director of ISG PLC.

P R Kirk – Non-Executive Director

Paul Kirk, aged 60, joined the Board in January 2007. He currently

has a number of senior roles comprising chairman of the National

Rail Contractors Group, non-executive chairman of KeTech Group

Ltd and non-executive director posts at Develop Training Ltd, the

Rail Safety & Standards Board Ltd and the National Skills Academy

for Railway Engineers. His previous roles have included chairman of

the Railway Forum, member of the CBI’s Manufacturing Council and

Council Member of the Railway Industry Association and he has

held other senior director roles in both the motor and rail industries.

He is an engineering graduate.

P B Hilling – Non-Executive Director

Phillip Hilling, aged 62, joined the Board in October 2011. He is

a Chartered Accountant and qualified with Ernst & Young LLP

where he spent 25 years as an audit partner until his retirement

from the firm in 2010. He held a number of senior roles within

the firm and was Managing Partner of the Yorkshire Office for 14

years. He has been a director of Compass, a national charity,

since March 2010 and currently serves as the chairman of its

audit committee. He is also a member of the audit and risk

committee at the University of Leeds.

J P Carrick – Non-Executive Director

Jim Carrick, aged 64, joined the Board in October 2010.

Previously he spent seven years as the regional executive for

the UK and Europe for Washington Group International (latterly

URS Corporation) operating in the energy, defence, infrastructure

and nuclear waste management sectors. Prior to that, he had a

distinguished career of 24 years with ICI Plc, latterly as the VP for

manufacturing and engineering for ICI’s operations worldwide.

During 2012 he was appointed as Chairman of the Trustee Board of

Groundwork North East, a registered charity. He holds a doctorate

in engineering from the University of Glasgow and is a fellow of the

Institute of Chemical Engineers.

dIRECToRs’ REspoNsIBILITIEsThe Directors are responsible for preparing the Annual Report and

the Group and Parent Company financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent

Company financial statements for each financial year. As required by

the AIM Rules of the London Stock Exchange they are required to

prepare the Group financial statements in accordance with IFRSs as

adopted by the EU and applicable law and have elected to prepare

the Parent Company financial statements in accordance with UK

Accounting Standards and applicable law (UK Generally Accepted

Accounting Practice).

REpoRT oF ThE dIRECToRs


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

their profit or loss for that period. In preparing each of the Group and

Parent Company financial statements, the Directors are required to:

n select suitable accounting policies and then apply them consistently;

n make judgements and estimates that are reasonable and prudent;

n state whether they have been prepared in accordance with IFRSs as

adopted by the EU or UK Accounting Standards as appropriate; and

n prepare the financial statements on the going concern basis

unless it is inappropriate to presume that the Group and the

Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Parent

Company’s transactions and disclose with reasonable accuracy

at any time the financial position of the Parent Company and

enable them to ensure that its financial statements comply with

the Companies Act 2006. They have general responsibility for

taking such steps as are reasonably open to them to safeguard

the assets of the Group and to prevent and detect 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.

dIRECToRs ANd ThEIR INTEREsTsThe Directors at 30 September 2012 had beneficial interests in

shares and share options as set out below:

Shareholdings

D J Jackson

R P Shuttleworth

C Lewis-Jones

P Brierley

P R Kirk

P B Hilling

J P Carrick

Since the year end D J Jackson acquired 63,190 shares and P B

Hilling acquired 10,000 shares.

Share options

The Company has five share option schemes, two of which were

approved in 1999 and three of which were approved in 2007.

Options granted under the 1999 Executive Schemes may normally

be granted only within 42 days following the announcement of

either the interim or the final results of the Company.

Options under these schemes will normally be exercisable on

satisfaction of a three year performance target. For Directors this will

be based on a compound rate of increase in earnings per share of

15% above the Retail Price Index for the three year period, and for

other employees this will be based on both an increase of pre-tax

profit in their subsidiary and a compound increase in earnings per

share for the Group of 3% above the Retail Price Index for the three

year period.

The 1999 Executive Schemes became outdated due to changes

in legislation and shareholder expectations and accordingly three

new share incentive schemes were proposed and adopted at an

Extraordinary General Meeting of the Company on 3 October 2007.

The new share incentive schemes have, in effect, replaced the 1999

Executive Schemes in relation to the issue of awards from the date

they were approved.

The 2007 share incentive schemes can be summarised as follows:

n Redhall Group plc 2007 Performance Share Plan – A discretionary

long term incentive plan comprising two parts. Part 1 enables

options to be granted at no cost to participants, whilst Part 2

enables conditional shares to be awarded.

n Redhall Group plc 2007 Enterprise Management Incentive Plan –

A plan which allows for the grant, to selected employees of the

Group, of rights to acquire ordinary shares in the Company on a tax

favoured basis.

n Redhall Group plc 2007 Discretionary Share Option Plan - A plan

which allows for the grant, to selected employees of the Group,

of rights to acquire ordinary shares in the Company. These

options may be granted as tax favoured options under the HM

Revenue & Customs (“HMRC”) approved addendum to the plan,

or as non-HMRC approved share options.

n The exercise of awards under all three of the 2007 schemes will

be subject to the attainment of one or more objective conditions

set at the time the grant is made. The performance conditions will

reflect market practice at the time the grant is made.

n Generally, awards under the 2007 schemes will only be made

in the six-week period commencing with any of the following:

the dealing day following an announcement of the Company’s

results for any period; the day on which any change to relevant

legislation, regulations or government directive affecting

employees’ share schemes is proposed or made; or the day

on which a new employee first joins the Company or any of its

qualifying subsidiaries.

At 30

September

2012

1,216,940

30,000

47,764

30,000

37,595

15,250

10,000

At 30

September

2011

1,216,940

-

-

-

37,595

-

10,000


Salary Bonus Social Taxable Share-based 2012 Total 2011 Total 2012 2011 andfees securitycosts benefits payments (excl.pension) (excl. pension) Pension Pension £000 £000 £000 £000 £000 £000 £000 £000 £000

Executive Director

D J Jackson 256 15 38 14 11 334 264 31 25

R P Shuttleworth 30 - 4 1 1 36 - 4 -

C Lewis-Jones 7 - 1 - - 8 - 1 -

P Brierley 7 - 1 1 - 9 - 1 -

J P O’Kane - basic 177 10 27 13 28 255 252 11 21

J P O’Kane - compensation 123 - 19 8 - 150 - 15 -

Non-Executive Director

P R Kirk 47 - 6 2 - 55 42 - -

P B Hilling 40 - 4 1 - 45 - - -

J P Carrick 34 - 4 1 - 39 39 - -

I P Butcher 15 - 2 - - 17 57 - -

736 25 106 41 40 948 654 63 46

Director

D J Jackson

R P Shuttleworth

C Lewis-Jones

P Brierley

P R Kirk

P B Hilling

J P Carrick

Class

2007 DSOP Non-approved

2007 DSOP Approved

2007 DSOP Non-approved

1999 ‘A’ Executive scheme

-

-

-

-

Options at

30 September

2012

Number

100,000

47,200

452,800

50,000

-

-

-

-

Options at

30 September

2011

Number

100,000

-

-

-

-

-

-

-

Exercise

price

154.0p

63.5p

63.5p

40.5p

-

-

-

-

Earliest

exercise

date

7 December 2012

21 September 2015

21 September 2015

24 March 2009

-

-

-

-

Latest

exercise

date

7 December 2019

20 September 2022

20 September 2022

23 March 2016

-

-

-

-

Further details of the share option schemes under which options had been granted at 30 September 2012 are given in note 19.

The market price of the Company’s ordinary shares on 28 September 2012 was 55.0p and the high and low prices during the year were

112.5p (13 and 14 March 2012) and 55.0p (on 28 September 2012 ) respectively. The share price on 4 December 2012 was 64.0p.

dIRECToRs’ EMoLUMENTsDetails of the emoluments of Directors who served during the year are set out below. J P O’Kane resigned as a director with effect from

13 September 2012 and an amount of £165,000 due to him in connection with the termination of his employment is included within the

amount for salaries and fees, but is disclosed in exceptional items (note 1).

The beneficial interests in share options of those Directors in office at 30 September 2012 are as follows:

Executive remuneration is determined by the Remuneration Committee, details of which are set out in the report on Corporate Governance.

The amounts described as ‘share-based payments’ are those charged to the Income Statement in accordance with IFRS2.

Pension contributions represent payments made to either defined contribution plans or personal pension arrangements. None of the

Directors participate in the Group’s defined benefit scheme.

sUBsTANTIAL shAREhoLdINGsThe Company has been notified that on 28 November 2012 the

following shareholders had interests of 3% or more in the issued

ordinary shares of the Company:

Number Percentage

Groupe Gorgé 5,519,194 18.49%

M&G Investments 4,421,122 14.81%

Octopus Investments 3,242,606 10.86%

Collins Stewart 1,107,096 3.71%

Charles Stanley & Co Ltd 963,445 3.23%

TD Direct Investing 940,119 3.15%

Universities Superannuation Scheme 895,380 3.00%

FINANCIAL INsTRUMENTsThe Group’s principal financial instruments are cash, an overdraft,

revolving loan and banking facility provided by HSBC, trade

receivables and trade payables. An analysis of the maturity of the

Group’s borrowings is given in note 14 and the maturity of financial

instruments is given in notes 12 and 21.

The main sensitivities arising from the financial instruments are

liquidity sensitivity, interest rate sensitivity, foreign exchange

sensitivity, and credit risk sensitivity. The policies for managing

these sensitivities are set out in note 21 and exposures are

contained in note 20.

EMpLoyMENT poLICIEsThe Group places great importance on the involvement of its

employees, the majority of whom are able to work closely with their

managers on a daily basis. Certain key employees are encouraged

to be involved in the Group’s performance through the use of share

options. Employees have frequent opportunities to meet and have

discussions with management. The Group aims to keep employees

regularly informed of the financial and economic factors affecting

the performance of the Group and its objectives in part through

quarterly staff briefings, the publication of a bi-annual newsletter

and through the Group website.

The Group’s policy is that, where it is reasonable and practicable

within existing legislation, all employees, including disabled persons,

are treated in the same way in matters relating to employment,

training and career development.

REsEARCh ANd dEVELopMENTThe Group conducts research and development activities to the

extent that management considers that it is required to maintain its

competitive position in the markets in which it operates.

pAyMENT oF sUppLIERsThe Group’s policy on payment practice is to endeavour to ensure

that all suppliers are paid in accordance with such agreed or

customary payment terms as are in place. At 30 September 2012

the Company, which is a holding company, had trade creditors

amounting to 26 days (2011: 35 days).


poLITICAL ANd ChARITABLE doNATIoNsThe Group made no political donations during the year (2011: nil).

Charitable donations amounted to £6,414 (2011: £25,406).

ANNUAL GENERAL MEETINGAt the Annual General Meeting to be held on 6 February 2013,

notice of which is set out within this Annual Report, four items of

special business are to be considered:

n Resolution 7 is to grant authority to the Directors to issue

shares up to a limit of £2,538,325, which authority will

terminate at the earlier of the subsequent Annual General

Meeting and 15 months from the date of this year’s Annual

General Meeting. This represents the renewal of the Directors’

existing authority.

n Resolution 8 is to revoke the limitation on the authorised

share capital of the company contained in paragraph 5 of

the memorandum of the company. The background to this

resolution is included in the notes to the notice of the Annual

General Meeting.

n Resolution 9 is to grant authority to the Directors to issue

shares wholly for cash and on a non pre-emptive basis,

otherwise than in connection with a rights issue, up to a

maximum nominal amount of £373,084, which authority will

terminate at the earlier of the subsequent Annual General

Meeting and 15 months from the date of this year’s Annual

General Meeting. This represents the renewal of the Directors’

existing authority.

n Resolution 10 is to grant authority to the Directors to make market

purchases of Ordinary Shares up to a maximum number of

2,984,670 at minimum and maximum prices as set out in the Notice

of Annual General Meeting. This authority will terminate at the earlier

of the subsequent Annual General Meeting and 12 months from

the passing of this resolution. This represents the renewal of the

Directors’ existing authority.

dIsCLosURE oF INFoRMATIoN To AUdIToRThe Directors who held office at the date of approval of the Report

of the Directors confirm that, so far as they are each aware, there

is no relevant audit information of which the Company’s auditor

is unaware; and each Director has taken all the steps that they

ought to have taken as a director to make themselves aware of

any relevant audit information and to establish that the Company’s

auditor is aware of that information.

AUdIToRIn accordance with section 489(4) of the Companies Act 2006 a

resolution to reappoint KPMG Audit Plc will be proposed at the

Annual General Meeting.

AppRoVALThe Report of the Directors was approved by the Board on

5 December 2012 and signed on its behalf by:

C Lewis-Jones

Secretary

| 15

The Board supports the principles of good corporate governance

although as an AiM listed company it is not required to apply the UK

Corporate Governance Code (“the Code”). However, the Board believes

that the application of the Code is in the best interests of the Company

and its stakeholders and has sought to apply the spirit of the Code in a

manner which is appropriate for the size of the Group. This report sets

out the way in which the principles are currently being applied.

ThE BoARdAt 30 September 2012 the Board was comprised of three Executive

and four Non-Executive Directors and is chaired by David Jackson.

The Board is responsible for the long term success of the Group.

The Executive Directors meet on a regular and frequent basis and

are in continual discussion with the operational management to

ensure that the business objectives of the Group are achieved. Non-

Executive Directors have a particular responsibility to ensure that the

strategies proposed by the Executive Directors are fully challenged.

To enable the Board to discharge its duties, all Directors receive

appropriate information and are allowed sufficient time to discharge

their responsibilities effectively. Briefing papers are distributed by the

Company Secretary to all Directors in advance of Board meetings. The

Chairman ensures that the Directors take independent professional

advice as required.

The Company’s Non-Executive Directors are considered by the

Board to be independent of management and they bring a breadth

of experience which is welcomed by the Executive Directors.

shAREhoLdER RELATIoNshIpsThe Directors seek to build on a mutual understanding of objectives

shared between the Group and its principal shareholders. The

Board welcomes the attendance of private shareholders at the

Annual General Meeting and the opportunity to address any

questions that they may have.

INTERNAL CoNTRoLThe Board is ultimately responsible for the Group’s systems of

internal control for safeguarding shareholders’ investment and the

Group’s assets. Such systems are designed to manage, rather than

eliminate, the risks of failing to achieve business objectives and

can provide only reasonable, and not absolute, assurance against

material misstatement or loss.

The current procedures in place are summarised as follows:

n Organisational structures established with clearly defined

lines of responsibility, delegation of authority and reporting

requirements to the Group Board.

n Management of operating companies are charged with the ongoing

responsibility for identifying risks facing each of the businesses and

for putting in place procedures to mitigate and monitor risks.

n Regular discussions between management of the subsidiaries

and the Group Executive Directors. Each operating company has

at least one of the Group Executive Directors on its own board.

n An annual budget for each operating company is prepared in

detail, reviewed by executive management and formally adopted

by the Board. The Board also formally adopts the Group’s overall

budget and plans.

n Quarterly forecasts are prepared for each operating company,

reviewed by executive management and reported to the Board.

n Monthly actual results of sales, profitability and cash are reported

against budget, quarterly forecast and prior year and significant

variances are investigated and explained.

n Daily cash monitoring and monthly cash forecasting and treasury

reporting to the Group finance function and periodic reporting to

the Board.

n Internal financial control is exercised within a clearly defined

organisational structure which operates a system of financial

management controls, including financial reporting procedures and

levels of authority for commitment to contracts and expenditure.

AUdIT CoMMITTEEThe Audit Committee currently comprises Phillip Hilling (Chairman),

David Jackson, Paul Kirk and Jim Carrick.

The committee, and other Board members by invitation, meets

with the independent external auditor to review the Group’s annual

accounts and at other times, as appropriate, during the year. The

committee keeps under review the nature and extent of non-audit

work carried out by the external auditor with a view to maintaining

the auditor’s objectivity and independence.

REMUNERATIoN CoMMITTEEThe Remuneration Committee currently comprises Paul Kirk

(Chairman), David Jackson, Phillip Hilling and Jim Carrick.

The committee determines the remuneration and terms of service

of the Executive Directors including incentive arrangements and

duration of notice periods.

NoMINATIoNs CoMMITTEEThe Nominations Committee comprises David Jackson (Chairman),

Paul Kirk, Phillip Hilling and Jim Carrick. The committee is responsible

for proposing candidates for appointment to the Board, having regard

to the balance of skills, experience, independence and knowledge

of the Group. It also considers the benefits of diversity, including

gender diversity, when making appointments. In appropriate cases,

recruitment consultants are used to assist the process. All Directors

are subject to re-election at least every three years.

CoRpoRATE GoVERNANCE


CoRpoRATE ANd soCIAL REspoNsIBILITyWe believe it is the Group’s responsibility to behave in a manner

which is both responsible and ethical and which has due regard

for all its stakeholders whether that is shareholders, employees

or the communities that are impacted by us or benefit from the

Group’s activities. In order to ensure the longer term success of

the Group we have and will continue to develop areas that are key

to achieving our aims.

Health and safety

Health and Safety in Redhall remains of paramount importance. The

protection of both our employees and those who may be affected

by our business remains our principal priority. The Redhall Group

subsidiaries have management systems to control health and safety

risks, a number of which are certified to OHSAS 18001. A key

feature of these systems is the annual preparation of Health, Safety

and Environmental improvement plans which drive us in striving for

continual improvement. These have been set for the forthcoming

financial year and incorporate targets and improvements including

integration of management systems in line with the structure of the

Group and a focus on improving behavioural safety.

The safety, health, environmental and quality performance of the Group

is reviewed on a monthly basis both at subsidiary and Group level.

The bonus structure for Senior Management is partially measured on

health and safety performance. Group health, safety and environmental

forums and subsidiary meetings are chaired by our Group Health,

Safety and Environmental Manager. These focus on reviewing

performance, issues pertinent to business operations and the sharing

of best practice to support continual improvement. Through our

systems and monitoring of performance we expect to not only achieve

legal compliance but take our performance to best practice levels.

During the year, the Group’s subsidiaries have attained awards from

The Royal Society for the Prevention of Accidents (RoSPA), which

recognises high or very high levels of performance and developed

occupational health and safety systems. One of our businesses

maintained performance to the extent that it achieved the prestigious

Order of Distinction for the second year in a row. This is bestowed

on organisations that have achieved 15 or more consecutive Gold

Awards. Two of our businesses achieved the President’s Award for

the achievement of 11 and 12 consecutive Gold Awards respectively.

Two businesses achieved gold awards whilst three others achieved

silver awards. In addition, the safety performance of a number of our

businesses was recognised through awards from The British Safety

Council and other organisations.

Our people

We believe our employees are our assets. They are the key drivers

of profitability and growth within our business and we believe that

if they are well motivated we will be successful in retaining a high

quality workforce and they will continue to deliver the service that

our clients expect and deserve.

We continue to be committed to the development of our people

at all levels. In support of our firm belief that the flexibility of our

craft skills is a key competitive differentiator our apprentice intake


numbers have increased this year, ensuring that we have the

capabilities to meet the future needs of our chosen industry sectors.

Our Employee of the Year Initiative also now includes a specific

category for learner of the year. In addition we recognise the

importance of the technical and management capabilities of all of

our people to the success of the Group and as a result we continue

to invest in ongoing training and development. During the year a

number of our craftsmen have undergone a training programme

leading to qualifications validating their work experience and which

will ensure that their high level of skills and competency can be

readily recognised. We have also progressed our professional

development programme through a formal assessment of the

current capability of some 80 project engineers. The next step in the

programme will commence in 2013 with targeted learning to further

enhance the quality of our service offering to our clients, whilst

developing them as individuals.

Our culture is that of being truly committed to ensuring that we do

not discriminate against our employees either directly or indirectly

on grounds of race, colour, ethnic or national origin, religion or

belief, sex, sexual orientation, marital status, disability, age or trade

union membership and activity, and we will work hard to support

and accommodate our employees and their reasonable needs

throughout their employment with us.

Local communities

We operate throughout the UK and selectively overseas but always

have due regard for our local communities on which our businesses

are founded. We are often an important local employer and make

a valuable contribution to the local economy. Our businesses are

proactive in engaging with the local communities.

Customers

The Group’s philosophy is to provide services of the highest quality

to long term blue chip clients. We play an active role with clients in

providing solutions and cost benefits that are of mutual benefit to

the Group and our clients. We regularly request client feedback and

conduct formal and informal feedback sessions with our customer

base to ensure we improve our service levels. Our record of years

of service with clients such as AWE, Sellafield, BAE Systems,

Cadbury’s and Valero evidence our focus on this area.

Environment

Redhall Group is committed to ensuring our environmental impacts

are managed. As a Group, we operate in technically challenging

environments such as nuclear, oil and gas, and food where

environmental performance is critical. Each subsidiary is aware of

the legal requirements for environmental management and has

policies in place to control our environmental aspects and impacts.

A number of environmental management systems operated within

the Group are certified to BS EN ISO 14001.

We continue to review our performance as environmental

considerations increasingly form part of good business practice

and are instrumental in securing work. Continual improvement

is integrated into the annual Health, Safety and Environmental

improvement plans prepared by each subsidiary.

CoRpoRATE ANd soCIAL REspoNsIBILITy


We have audited the financial statements of Redhall Group plc for the

year ended 30 September 2012 set out on pages 18 to 62.

The financial reporting framework that has been applied in the

preparation of the Group financial statements is applicable law and

International Financial Reporting Standards (IFRSs) as adopted by the

EU. The financial reporting framework that has been applied in the

preparation of the Parent Company financial statements is applicable

law and UK Accounting Standards (UK 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 11, 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 (APB’s) Ethical

Standards for Auditors.

sCopE oF ThE AUdIT oF ThE FINANCIAL sTATEMENTsA description of the scope of an audit of financial statements is

provided on the APB’s website at:

www.frc.org.uk/apb/scope/private.cfm

opINIoN oN FINANCIAL sTATEMENTs

In our opinion:

n 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 30 September

2012 and of the Group’s loss for the year then ended;

n the Group financial statements have been properly prepared in

accordance with IFRSs as adopted by the EU;

n the Parent Company financial statements have been properly

prepared in accordance with UK Generally Accepted

Accounting Practice;

n the financial statements 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 Report of the Directors for

the financial year for which the financial statements are prepared is

consistent with the financial statements.

MATTERs oN WhICh WE ARE REqUIREd To REpoRT By 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:

n 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

n the Parent Company financial statements are not in agreement

with the accounting records and returns; or

n certain disclosures of Directors’ remuneration specified by law are

not made; or

n we have not received all the information and explanations we

require for our audit.

David Morritt (Senior Statutory Auditor)

For and on behalf of KPMG Audit Plc,

Statutory Auditor and Chartered Accountants

1 The Embankment, Neville Street, Leeds, LS1 4DW

5 December 2012

INdEpENdENT AUdIToR’s REpoRT To ThE MEMBERs oF REdhALL GRoUp pLC

The principal accounting policies applied in the preparation of these

consolidated financial statements are set out below.

BAsIs oF pREpARATIoNThe consolidated financial statements have been prepared in

accordance with International Financial Reporting Standards

(“IFRS”) as adopted by the European Union (“EU”) and are effective

at 30 September 2012.

The consolidated financial statements have been prepared under

the historical cost convention except that they have been modified

to include the revaluation of certain non-current assets. The

measurement bases and principal accounting policies of the Group

are set out below.

GoING CoNCERNThe consolidated financial statements have been prepared on a

going concern basis. The Directors have taken note of the guidance

issued by the Financial Reporting Council on Going Concern

Assessments in determining that this is the appropriate basis of

preparation of the financial statements and have considered a

number of factors. The Group’s business activities and markets in

which it operates are set out in the Business Review and illustrate

the diversity of our operations and the strength of our client base.

The financial position of the Group, its trading performance and

cash flows are also set out earlier and they explain the overall

net borrowings of the Group and demonstrate the strength of its

underlying trading performance. The exceptional items charged

in the consolidated income statement relate largely to the Vivergo

contract reported earlier in this review and the Chairman’s

Statement and legacy contract provisions. Notwithstanding these

matters, the Group generated operating cash inflows in the year

through active management of its investment in working capital. The

Group’s bank borrowing facilities as set out in note 21 are available

to fund our ongoing working capital requirements. Note 21 also

sets out our risk management objectives and policies. Taking each

of these factors into account the Directors believe that the Parent

Company and Group are well placed to manage their business risks

successfully despite the continuing uncertainties surrounding the

current general economic outlook.

The Directors have a reasonable expectation that the Parent

Company and the Group have adequate resources to continue in

operational existence for the foreseeable future. Accordingly, they

continue to adopt the going concern basis in preparing the annual

report and accounts.

CRITICAL ACCoUNTING EsTIMATEs ANd jUdGEMENTsThe preparation of financial statements in accordance with

generally accepted accounting principles under IFRS requires

the Group to make estimates, judgements and assumptions that

may affect the reported amounts of assets, liabilities, revenue and


expenses and the disclosure of contingent assets and liabilities in

the financial statements.

On an ongoing basis estimates are evaluated using historical

experience, consultation with experts and other methods that are

considered reasonable in the particular circumstances to comply

with IFRS. Actual results may differ from these estimates, the

effect of which is recognised in the period in which the facts that

give rise to the revision become known.

An analysis of the key judgements and sources of estimation

uncertainty is provided in the following paragraphs:

Revenue and profit recognition on fixed price contracts

A significant proportion of the Group’s activities are undertaken

via long-term contracts. The accounting policy for these contracts

is set out later and is in accordance with IAS11 which requires

estimates to be made for contract costs and revenues.

Contract costs and revenues are affected by a variety of

uncertainties that depend on the outcome of future events and

often need to be revised as events unfold and uncertainties are

resolved. Furthermore, in many cases, the obligations under such

contracts span more than one reporting period.

Management bases its judgements of costs and revenues and

its assessment of the outcome of each long-term contract on

the latest available information which includes detailed contract

valuations and contract forecasts. The estimates of the contract

position and the profit earned to date, or forecast loss, are

updated regularly and significant changes are highlighted through

established internal review procedures. The impact of any changes

in accounting estimates is then reflected in the ongoing results.

Disputed contract

The carrying amount of the Vivergo contract, which is subject

to recovery through a legal process, has been estimated by the

Directors after taking appropriate independent professional advice.

Identification and valuation of intangible assets arising on

business acquisitions

IAS38 sets out the criteria under which intangible assets acquired

in business combinations accounted for under IFRS3 should

be recognised and valued (see note 9). Such criteria have been

applied by management with, where appropriate, the assistance of

independent experts. IAS38 also requires that intangible assets with

a finite life should be amortised over that life. The finite lives of such

intangible assets have also been determined by management with

the assistance of independent experts.

Goodwill impairment testing

Capitalised goodwill arises on the acquisition of businesses in

which the total purchase consideration exceeds the fair value of net

assets acquired including identified intangible assets. Such goodwill

is tested annually for impairment (see note 9). Should the carrying

sTATEMENT oF GRoUp ACCoUNTING poLICIEs


value of the goodwill exceed its recoverable amount an impairment

loss is recognised. The recoverable amounts are calculated based

on an internal discounted cash flow evaluation.

Retirement benefits

Provisions for defined benefit post employment obligations are calculated

by independent actuaries. The principal actuarial assumptions and

estimates are based on independent actuarial advice and include the

discount rate and estimates of life expectancy (see note 17).

sTANdARds, AMENdMENTs ANd INTERpRETATIoNs To ExIsTING sTANdARds ThAT ARE NoT yET EFFECTIVE

At the date of authorisation of these consolidated financial

statements, certain new Standards, amendments and Interpretations

to existing Standards have been published but are not yet effective.

The Group has not early-adopted any of these pronouncements.

The new standards that are expected to be relevant to the Group’s

consolidated financial statements are as follows:

n IAS19 (Revised 2011) Employee Benefits (which is applicable

for financial years beginning on or after 1 January 2013 and

therefore will be effective for the Group in the financial year ending

30 September 2014). The Directors are considering the impact

that the changes will have on the financial position and results of

the Group and will report on this in the 2013 financial statements.

n IAS1 (Revised 2012) Presentation of Financial Statements (which

is applicable for financial years beginning on or after 1 July 2012

and therefore will be effective for the Group in the financial year

ending 30 September 2013). This amendment will not affect

the financial position or the results of the Group but may require

additional disclosures.

Other new Standards and Interpretations have been issued and are

effective this year but are not expected to have any impact on the

Group’s consolidated financial statements.

BAsIs oF CoNsoLIdATIoN The Group consolidated financial statements consolidate those of

the Parent Company and all of its subsidiary undertakings drawn

up to the period end. Subsidiaries are entities over which the Group

has the power to control the financial and operating policies so

as to obtain benefits from its activities. The Group obtains and

exercises control through voting rights.

Unrealised gains on transactions between the Group and its

subsidiaries are eliminated. Unrealised losses are also eliminated

unless the transaction provides evidence of an impairment of the

asset transferred. Amounts reported in the financial statements

of subsidiaries have been adjusted where necessary to ensure

consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the purchase

method. The purchase method involves the recognition at fair

value of all identifiable assets and liabilities, including contingent

liabilities of the subsidiary, at the acquisition date, regardless of

whether or not they were recorded in the financial statements of

the subsidiary prior to acquisition. On initial recognition, the assets

and liabilities of the subsidiary are included in the consolidated

balance sheet at their fair values, which are also used as the

bases for subsequent measurement in accordance with the

Group accounting policies. Goodwill is stated after separating out

identifiable intangible assets. Goodwill represents the excess of

purchase consideration over the fair value of the Group’s share

of the identifiable net assets of the acquired subsidiary at the

date of acquisition. In accordance with IFRS3 (Revised) Business

Combinations, the associated costs of an acquisition incurred

since adoption of the standard on 1 October 2009 are expensed

in the period in which they are incurred.

BUsINEss CoMBINATIoNs CoMpLETEd pRIoR To ThE dATE oF TRANsITIoN To IFRsThe Group has elected not to apply IFRS3 Business Combinations

retrospectively to business combinations prior to the date of transition

being 1 October 2006.

Accordingly the classification of the combination (acquisition)

remains unchanged from that used under UK GAAP. Assets and

liabilities are recognised at the date of transition if they would be

recognised under IFRS, and are measured using their UK GAAP

carrying amount immediately post-acquisition as deemed cost

under IFRS, unless IFRS requires fair value measurement. Deferred

tax is adjusted for the impact of any consequential adjustments

after taking advantage of the transitional provisions.

GoodWILLGoodwill, representing the excess of the cost of each acquisition

over the fair value of the identifiable net assets acquired, is

capitalised and reviewed annually for impairment. Goodwill is

carried at cost less accumulated impairment losses. Any excess

of identifiable net assets over the cost of acquisition is recognised

immediately after acquisition in the income statement.

Goodwill written off to reserves prior to the date of transition to IFRS

remains in reserves. There is no reinstatement of goodwill that was

amortised prior to the transition to IFRS. Goodwill previously written

off to reserves is not written back to the income statement on

subsequent disposal.

REVENUE

Revenue is measured by reference to the fair value of

consideration received or receivable by the Group for goods

supplied and services provided, excluding trade discounts and

VAT. Revenue is recognised upon the performance of services or

transfer of risk to the customer.

Revenue from contracts is recognised in accordance with the

Group’s accounting policy on contracts (see below).

CoNTRACTsRevenue from fixed-price contracts represents the sales value of

work done in the period. Profit is recognised when both contract

costs to complete and the stage of contract completion can be

measured reliably. Profit is calculated by reference to the degree

of completion of the contract expressed as the percentage of

costs incurred to total anticipated costs. Full provision is made for

known or anticipated losses at the time they are forecast.

Revenue from cost-plus contracts represents the sales value of

work done calculated as the direct costs incurred in the period

plus the agreed mark-up for overhead and profit. Any irrecoverable

costs are written off as incurred.

Variations in contract work and claims are only included to the

extent that they are agreed with the client or there is reasonable

assurance of their recovery (i.e. when negotiation is at an

advanced stage and it is probable that it will be accepted).

The gross amounts due from customers for contract work

are stated at cost plus recognised profits, less provision for

recognised losses and progress billings. The balance is shown

as amounts recoverable on contracts within trade and other

receivables. However, if progress billings exceed cost plus profits,

less provision for recognised losses, the balance is shown as

payments on account within trade and other payables.

Pre-contract costs are generally expensed as incurred. However,

when it is probable that a contract will be obtained which is

expected to generate future net cash inflows then identifiable

and measurable pre-contract costs will be included in the cost

of that contract. Previously expensed pre-contract costs are not

reinstated if a contract is subsequently awarded.

ExCEpTIoNAL ITEMsExceptional items are those significant items which are separately

disclosed by virtue of their size or incidence to enable a full

understanding of the Group’s financial performance.

INTEREsTInterest receivable or payable is credited or charged to the income

statement using the effective interest method.

INTANGIBLE AssETsResearch and development

Expenditure on research (or the research phase of an internal project)

is recognised as an expense in the period in which it is incurred.

Development costs incurred are capitalised when all the following

conditions are satisfied:

n completion of the intangible asset is technically feasible so that it

will be available for use or sale

n the Group intends to complete the intangible asset and use or

sell it


n the Group has the ability to use or sell the intangible asset

n the intangible asset will generate probable future economic

benefits. Among other things, this requires that there is a market

for the output from the intangible asset or for the intangible asset

itself, or, if it is to be used internally, the asset will be used in

generating such benefits

n there are adequate technical, financial and other resources to

complete the development and to use or sell the intangible

asset, and

n the expenditure attributable to the intangible asset during its

development can be measured reliably.

Development costs not meeting the criteria for capitalisation are

expensed as incurred.

The cost of an internally generated intangible asset comprises all

directly attributable costs necessary to create, produce and prepare

the asset to be capable of operating in the manner intended by

management. Directly attributable costs include costs of materials

and employee costs incurred on product development along with

an appropriate portion of relevant overheads.

Amortisation commences upon completion of the asset, and

is included in administrative expenses. Careful judgement by

the Directors is applied when deciding whether the recognition

requirements for development costs have been met. This is

necessary as the economic success of any product development

is uncertain and may be subject to future technical problems at

the time of recognition. Judgements are based on the information

available at each balance sheet date. In addition, all internal

activities related to the research and development of new products

are continuously monitored by the Directors.

Assets acquired as part of a business combination

In accordance with IFRS3 Business Combinations, an intangible

asset acquired in a business combination is deemed to have

a cost to the Group comprising its fair value at the acquisition

date. The fair value of the intangible asset reflects market

expectations about the probability that the future economic

benefits embodied in the asset will flow to the Group.

Where an intangible asset might be separable, but only together

with a related tangible or intangible asset, the group of assets

is recognised as a single asset separately from goodwill where

the individual fair values of the assets in the Group are not

reliably measurable. Where the individual fair value of the

complementary assets are reliably measurable, the Group

recognises them as a single asset provided the individual assets

have similar useful lives.

Amortisation commences when the intangible asset is first

available for use and is provided at rates calculated to write off

the cost of each intangible asset over its expected useful life.

Amortisation charges are included in administrative expenses.

sTATEMENT oF GRoUp ACCoUNTING poLICIEs (CoNTINUEd)


pRopERTy, pLANT ANd EqUIpMENTProperty, plant and equipment is stated at cost or valuation, net

of depreciation and any provision for impairment. No depreciation

is charged during the period of construction. Leasehold property

is included in property, plant and equipment only where it is held

under a finance lease.

Disposal of assets

The gain or loss arising on the disposal of an asset is determined

as the difference between the disposal proceeds and the

carrying amount of the asset and is recognised in the income

statement. The gain or loss arising from the sale or revaluation

of held for sale assets is included in “other income” or “other

expense” in the income statement. Any revaluation surplus

remaining in equity on disposal of the asset is transferred to

retained earnings.

Assets carried at valuation

The only classes of asset that are carried at valuation are

freehold and long leasehold property. Revaluation is to fair

value. Fair value is determined in appraisals by external

professional valuers periodically. Any revaluation surplus

is credited to the revaluation reserve in equity, unless the

carrying amount has previously suffered a revaluation

decrease or impairment loss. To the extent that any decrease

has previously been recognised in the income statement, a

revaluation increase is recognised in the income statement,

with the remaining part of the increase credited to equity.

Downward revaluations are recognised upon appraisal or

impairment testing, with the decrease being charged against

any revaluation surplus in equity relating to this asset and any

remaining decrease recognised in the income statement.

Depreciation

Depreciation is calculated to write down the cost or valuation

less estimated residual value of all property, plant and equipment

other than freehold land by equal annual instalments over their

estimated useful economic lives. The rates or periods generally

applicable are:

Freehold properties 2%

Leasehold properties Period of lease

Machinery, equipment and vehicles:

Plant, machinery and equipment 10% to 33.3%

Furniture, fixtures and fittings 10% to 20%

Computers and electronic equipment 10% to 33.3%

Motor vehicles 25%

Material residual value estimates are updated as required, but at

least annually, whether or not the asset is revalued.

IMpAIRMENT TEsTING oF GoodWILL, oThER INTANGIBLE AssETs ANd pRopERTy, pLANT ANd EqUIpMENT

For the purposes of assessing impairment, assets are grouped

at the lowest levels for which there are separately identifiable

cash flows (cash-generating units). As a result, some assets

are tested individually for impairment and some are tested at

cash-generating unit level. Goodwill is allocated to those cash-

generating units that are expected to benefit from synergies of

the related business combination and represent the lowest level

within the Group at which management monitors the related

cash flows.

Goodwill, other individual assets or cash-generating units that

include goodwill, other intangible assets with an indefinite useful

life, and those intangible assets not yet available for use are

tested for impairment at least annually. All other individual assets

or cash-generating units are tested for impairment whenever

events or changes in circumstances indicate that the carrying

amount may not be recoverable.

An impairment loss is recognised for the amount by which the

asset’s or cash-generating unit’s carrying amount exceeds its

recoverable amount. The recoverable amount is the higher of fair

value, reflecting market conditions less costs to sell, and value

in use based on an internal discounted cash flow evaluation.

Impairment losses recognised for cash-generating units, to which

goodwill has been allocated, are credited initially to the carrying

amount of goodwill. Any remaining impairment loss is charged

pro rata to the other assets in the cash-generating unit.

With the exception of goodwill, all assets are subsequently

reassessed for indications that an impairment loss previously

recognised may no longer exist.

NoN-CURRENT AssETs CLAssIFIEd As hELd FoR sALEAssets held for sale comprise assets that are available for sale

in their present condition; that the Group intends and expects to

sell within one year from the date of classification as held for sale;

and for which it is unlikely that significant changes will be made

to the plan to sell the assets. Assets classified as held for sale

are measured at the lower of their carrying amounts immediately

prior to their classification as held for sale and their fair value less

costs to sell. Assets classified as held for sale are not subject to

depreciation or amortisation.

LEAsEd AssETsFinance leases which transfer substantially all the risks and rewards

related to the ownership of the leased asset to the Group are

capitalised at the time of inception of the lease at the fair value

of the leased asset or, if lower, the present value of the minimum

lease payments plus incidental payments, if any, to be borne by the

Group. A corresponding amount is recognised as a finance leasing

liability. Leases of land and buildings are split into land and buildings

elements according to the relative fair values of the leasehold

interests at the date of entering into the lease agreement.

The interest element of leasing payments represents a constant

proportion of the capital balance outstanding and is charged to the

income statement over the period of the lease.

All other leases are regarded as operating leases and the payments

made under them are charged to the income statement on a

straight line basis over the lease term. Lease incentives are spread

over the term of the lease.

INVENToRIEsInventories are stated at the lower of cost and net realisable value.

The cost of inventories is calculated using the first in first out method.

Provision is made for obsolescence or other losses where necessary.

TAxATIoNTax comprises current tax which is the tax currently payable based

on taxable profit for the period; and deferred tax which is provided

on temporary differences between the carrying amount of assets

and liabilities in the financial statements and the amounts used for

taxation purposes.

Deferred taxes are calculated using the liability method on

temporary differences. Deferred tax is not provided on the initial

recognition of goodwill, nor on the initial recognition of an asset or

liability unless the related transaction is a business combination or

affects tax or accounting profit. Tax losses available to be carried

forward as well as other tax credits to the Group are assessed for

recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting.

Deferred tax assets are recognised to the extent that it is probable

that the underlying deductible temporary differences will be able to

be offset against future taxable income.

Current and deferred tax assets and liabilities are calculated at

tax rates that are expected to apply to their respective period of

realisation, provided they are enacted or substantively enacted at

the balance sheet date.

Changes in deferred tax assets or liabilities are recognised as a

component of tax expense in the income statement, except where

they relate to items of other comprehensive income in which case

they are taken to the Consolidated Statement of Comprehensive

Income; or transactions with owners in which case the related

deferred tax is charged or credited directly to equity.

FINANCIAL INsTRUMENTsFinancial instruments are classified into different categories by

management on initial recognition. Financial instruments are

recognised when the Group becomes a party to the contractual


provisions of the instrument. The principal financial assets and

liabilities of the Group and their accounting treatment are as follows:

Trade receivables are measured initially at fair value and

subsequently measured at amortised cost using the effective

interest rate. Irrecoverable amounts are charged to the income

statement when there is objective evidence that the Group will

not be able to collect all amounts due to it in accordance with the

original terms of those receivables.

The quantum of the irrecoverable amount is determined as the

difference between the asset’s carrying amount and the present

value of estimated cash flows.

Cash and cash equivalents comprise cash in hand, on demand

deposits and other short term highly liquid investments that are

readily convertible to a known amount of cash and are subject to an

insignificant risk of changes in value.

Interest bearing bank loans and overdrafts are initially carried at fair

value, being the amounts received after deduction of issue costs,

and thereafter at amortised cost under the effective interest method.

Finance charges, including premiums payable on settlement

or redemption and direct issue costs, are accounted for on the

effective interest rate method in the income statement and are

added to the carrying amount of the instrument to the extent that

they are not settled in the period in which they arise.

Trade payables are measured initially at fair value and subsequently

measured at amortised cost using the effective interest rate.

A financial asset is derecognised only where the contractual

rights to cash flows from the asset expire, or the financial asset is

transferred and that transfer qualifies for derecognition. A transfer

qualifies for derecognition if the Group transfers substantially all the

risks and rewards of ownership of the asset, or if the Group neither

retains or transfers substantially all of the risks and rewards of

ownership but does transfer control of that asset.

A financial liability is derecognised only when the obligation is

extinguished, that is, when the obligation is discharged, cancelled

or expires.

FINANCIAL INsTRUMENTs - hEdGING ACTIVITIEsDerivative financial instruments are used by the Group mainly for the

management of its foreign currency exposure.

The Group enters into forward foreign exchange instruments as

required on a contract-by-contract basis to reduce its exposure

to movements in the future value of foreign currency receipts and

payments. Hedge accounting is not applied and movements in

the fair value of such derivative instruments, when material, are

recognised within the income statement.

dIVIdENdsDividends are recorded in the Group’s consolidated financial statements

in the period in which they are approved by the Company’s shareholders.

sTATEMENT oF GRoUp ACCoUNTING poLICIEs (CoNTINUEd)


EqUITyEquity comprises the following:

n “Share capital” representing the nominal value of equity shares.

n “Share premium” representing the excess over nominal value of

the fair value of consideration received for equity shares, net of

expenses of the share issue.

n “Merger reserve” representing the excess over nominal value of

the fair value of consideration received for equity shares allotted

in connection with the acquisition of subsidiary undertakings, net

of expenses of the share allotment.

n “Revaluation reserve” representing gains and losses due to the

revaluation of property.

n “Other reserve” representing equity-settled share-based

employee remuneration until such share options are exercised.

n “Retained earnings” representing retained profits.

FoREIGN CURRENCIEsTransactions in foreign currencies are translated at the exchange

rate ruling at the date of the transaction. Monetary assets and

liabilities in foreign currencies are translated at the rates of exchange

ruling at the balance sheet date.

Any exchange differences arising on the settlement of monetary

items or on translating monetary items at rates different from those

at which they were initially recorded are recognised in the income

statement in the period in which they arise.

EMpLoyEE BENEFITsDefined contribution pension schemes

The Group operates a small number of defined contribution pension

schemes. Contributions to these schemes are charged to the

income statement as incurred.

Defined benefit pension scheme

The Group operates one defined benefit pension scheme, the

Booth Industries Group PLC Staff Pension and Life Assurance

Scheme, which was closed to new entrants in 1997. The

Scheme’s assets are measured at fair values. The Scheme’s

liabilities are measured on an actuarial basis using the projected

unit method and are discounted at appropriate high quality

corporate bond rates that have terms to maturity approximating to

the terms of the related liability. Past service cost is recognised as

an expense on a straight-line basis over the average period until

the benefits become vested. To the extent that benefits are already

vested the Group recognises past service cost immediately.

Actuarial gains and losses are recognised immediately through

the consolidated statement of comprehensive income. The net

surplus or deficit is presented with other net assets on the balance

sheet. The related deferred tax is shown with other deferred tax

balances. A surplus is recognised only to the extent that it is

recoverable by the Group.

The current service cost, past service cost and costs from

settlements and curtailments are charged against administrative

expenses. Interest on the scheme liabilities and the expected return

on scheme assets are included in financial income and expenses.

shARE-BAsEd pAyMENTEquity settled share-based payment

All share-based payment arrangements granted after 7 November

2002 that had not vested prior to 1 October 2006 are recognised in

the financial statements.

All goods and services received in exchange for the grant of any

share-based payment are measured at their fair values. Where

employees are rewarded using share-based payments, the fair

values of employees’ services are determined indirectly by reference

to the fair value of the instrument granted to the employee. This

fair value is appraised at the grant date and excludes the impact of

non-market vesting conditions (for example, profitability and sales

growth targets).

All equity-settled share-based payments are ultimately recognised

as an expense in the income statement with a corresponding credit

to “other reserve”.

If vesting periods or other non-market vesting conditions apply, the

expense is allocated over the vesting period, based on the best

available estimate of the number of share options expected to vest.

Estimates are revised subsequently if there is any indication that

the number of share options expected to vest differs from previous

estimates. Any cumulative adjustment prior to vesting is recognised

in the current period. No adjustment is made to any expense

recognised in prior periods if share options ultimately exercised are

different to that estimated on vesting.

Upon exercise of share options the proceeds received net of

attributable transaction costs are credited to share capital, and

where appropriate share premium.

Provision is made for employer National Insurance contributions on

options granted under unapproved share option schemes over the

period from the date of grant to the first date upon which the option

could be exercised.

Year to 30 September 2012 Year to 30 September 2011

Before Before exceptional Exceptional exceptional Exceptional Note items items Total items items Total £000 £000 £000 £000 £000 £000

Revenue 1 119,525 (2,754 ) 116,771 126,564 (8,805 ) 117,759

Cost of sales (98,244 ) (368 ) (98,612 ) (105,664 ) - (105,664 )

Gross profit 21,281 (3,122 ) 18,159 20,900 (8,805 ) 12,095

Administrative expenses (19,385 ) (2,806 ) (22,191 ) (17,269 ) (2,449 ) (19,718 )

Operating(loss)/profit 1 1,896 (5,928 ) (4,032 ) 3,631 (11,254 ) (7,623 )

Financial income 4 3 - 3 61 - 61

Financial expenses 4 (624 ) - (624 ) (535 ) - (535 )

(Loss)/profitbeforetax 3 1,275 (5,928 ) (4,653 ) 3,157 (11,254 ) (8,097 )

Adjusted (loss)/profit before tax* 1,926 (5,928 ) (4,002 ) 3,873 (11,254 ) (7,381 )

Amortisation of acquired intangible assets 9 (651 ) - (651 ) (716 ) - (716 )

(Loss)/profit before tax 1,275 (5,928 ) (4,653 ) 3,157 (11,254 ) (8,097 )

Tax credit/(expense) 5 (1,135 ) 1,482 347 (1,900 ) 3,038 1,138

(Loss)/profit attributable to equity holders of the Parent Company 140 (4,446 ) (4,306 ) 1,257 (8,216 ) (6,959 )

Loss per share 7

Basic (14.46 )p (23.50 ) p

Diluted (14.46 )p (23.50 ) p

* Adjusted profit before tax is profit before tax and amortisation of intangible assets acquired with business combinations


CoNsoLIdATEd INCoME sTATEMENT

Year to Year to Note 30 September 2012 30 September 2011 £000 £000

Loss for the year (4,306 ) (6,959 )

Other comprehensive income

Actuarial (loss)/gain on pension scheme 17 (2,258 ) 483

Tax on actuarial (loss)/gain 5 564 (130 )

Effect of tax rate change on actuarial loss 5 (28 ) (15 )

Deficit on revaluation of property 8 (780 ) (107 )

Tax on revaluation of property and amortisation of property revaluation transferred between reserves 5 232 37

Effect of tax rate change on revaluation of property and amortisation of property revaluation 5 12 31

Other comprehensive income for the year net of tax (2,258 ) 299

Total comprehensive income attributable to equity holders of the Parent Company (6,564 ) (6,660 )

CoNsoLIdATEd sTATEMENT oF CoMpREhENsIVE INCoME

As at As at Note 30 September 2012 30 September 2011 £000 £000

Assets

Non-current assets

Property, plant and equipment 8 5,304 6,220

Intangible assets 9 5,799 6,343

Purchased goodwill 9 23,785 23,785

34,888 36,348

Current assets

Inventories 11 586 539

Trade and other receivables 12 37,725 40,857

Cash and cash equivalents 2,407 -

Current tax asset 12 - 523

40,718 41,919

Assets held for sale - 138

Liabilities

Current liabilities

Trade and other payables 13 (28,372 ) (27,696 )

Borrowings 14 - (168 )

Current tax payable 13 (120 ) -

(28,492 ) (27,864 )

Non-current liabilities

Borrowings 14 (13,000 ) (10,000 )

Deferred tax liabilities 10 (344 ) (1,627 )

Retirement benefit obligations 17 (2,807 ) (1,480 )

(16,151 ) (13,107 )

Net assets 30,963 37,434

Shareholders’ equity

Share capital 15 7,462 7,404

Share premium account 19,127 19,095

Merger reserve 12,679 12,679

Revaluation reserve 129 665

Other reserve 306 303

Retained earnings (8,740 ) (2,712 )

Total equity 30,963 37,434

The financial statements were approved by the Board on 5 December 2012 and signed on its behalf by:

R P Shuttleworth C Lewis-Jones

Chief Executive Interim Group Finance Director


CoNsoLIdATEd BALANCE shEET


CoNsoLIdATEd sTATEMENT oF ChANGEs IN EqUITy

Share Share Merger Revaluation Other Retained capital premium reserve reserve reserve earnings Total £000 £000 £000 £000 £000 £000 £000

At 1 October 2010 7,404 19,095 12,679 756 341 4,739 45,014

Employee share-based compensation - - - - (38 ) - (38 )

Tax in connection with employee share-based compensation - - - - - 7 7

Dividends - - - - - (889 ) (889 )

Transactions with owners - - - - (38 ) (882 ) (920 )

Profit for the year - - - - - (6,959 ) (6,959 )

Transfer between reserves in respect of depreciation on property revaluations - - - (21 ) - 21 -

Other comprehensive income for the year - - - (70 ) - 369 299

Total comprehensive income for the year - - - (91 ) - (6,569 ) (6,660 )

At 30 September 2011 7,404 19,095 12,679 665 303 (2,712 ) 37,434

Shares allotted under share option schemes 58 32 - - - - 90

Employee share-based compensation - - - - 3 - 3

Tax in connection with employee share-based compensation - - - - - - -

Dividends - - - - - - -

Transactions with owners 58 32 - - 3 - 93

Loss for the year - - - - - (4,306 ) (4,306 )

Transfer between reserves in respect of depreciation on property revaluations - - - - - - -

Other comprehensive income for the year - - - (536 ) - (1,722 ) (2,258 )

Total comprehensive income for the year - - - (536 ) - (6,028 ) (6,564 )

At 30 September 2012 7,462 19,127 12,679 129 306 (8,740 ) 30,963


Year to Year to 30 September 2012 30 September 2011 £000 £000

Cash flows from operating activities

Loss after taxation (4,306 ) (6,959 )

Adjustments for:

Depreciation 631 850

Amortisation of intangible assets 686 743

Pension scheme actuarial gain on switch from RPI to CPI (756 ) -

Difference between pension charge and cash contributions (337 ) (321 )

Profit on disposal of property, plant and equipment (3 ) (2 )

Revaluation of property 164 -

Share-based payments charge/(credit) 3 (38 )

Financial income (3 ) (61 )

Financial expenses 624 535

Tax credit recognised in the income statement (347 ) (1,138 )

Decrease/(increase) in trade and other receivables 3,132 (2,556 )

(Increase)/decrease in inventories (47 ) 13

Increase/(decrease) in trade and other payables 650 (4,039 )

Cash generated from/(absorbed by) operations 91 (12,973 )

Interest paid (436 ) (398 )

Income taxes received/(paid) 487 (593 )

Net cash generated/(absorbed) from operating activities 142 (13,964 )

Cash flows from investing activities

Purchase of property, plant and equipment (669 ) (730 )

Purchase of intangible assets (142 ) (41 )

Proceeds from disposal of plant and equipment 151 15

Interest received 3 33

Net cash used in investing activities (657 ) (723 )

Cash flows from financing activities

Proceeds from issue of share capital 90 -

Proceeds from borrowings 3,000 10,000

Repayment of long-term borrowing - (3,875 )

Dividends paid - (889 )

Net cash generated by financing activities 3,090 5,236

Net increase/(decrease) in cash and cash equivalents 2,575 (9,451 )

Cash and cash equivalents at beginning of year (168 ) 9,283

Cash and cash equivalents at end of year 2,407 (168 )

CoNsoLIdATEd CAsh FLoW sTATEMENT


1. sEGMENT ANALysIs Following the restructuring of the Group and of its operational management team as reported by the Chairman in the 2011 Annual Report

and Accounts, the segmental reporting has been changed to reflect the new structure.

The revised reporting represents how the Group operates now and in the future. The 2011 comparitives have been restated. The activities in

each segment are as follows:

Engineering

Engineering comprises activities in industrial processes including oil and gas, petrochemical, chemical, pharmaceutical and food and includes design,

project management and execution of on-site works through qualified and experienced engineers and trades personnel. Activities include mechanical

design and construction, storage tank services, plant modifications and upgrades, repair and maintenance, shutdown services and offsite services.

Nuclear

Nuclear comprises activities in both the civil and defence sectors and includes design, project management and execution of on-site works through

qualified and experienced engineers and trades personnel. Activities in the civil sector include decommissioning and waste management, support to

operating nuclear power stations, and nuclear new build. Activities in the defence sector encompass activities on behalf of the Ministry of Defence

and include the marine outfitting of Astute class submarines at Barrow, West Cumbria, and the design and manufacture of specialist equipment and

mechanical and electrical engineering activities for the AWE establishments at Aldermaston and Burghfield.

Manufacturing

Manufacturing encompasses the design, manufacture and installation of bespoke specialist plant and equipment typically in the nuclear,

defence, oil and gas, petrochemical, chemical, pharmaceutical and food sectors. The division has particular expertise in the design and

manufacture of high integrity fire and blast resistant doors, window and wall systems.

opERATING sEGMENTsYear to 30 September 2012

Acquired Group Adjusted intangible asset operating Revenue operatingprofit amortisation profit £000 £000 £000 £000

Engineering 54,199 2,121 (331 ) 1,790

Exceptional items (118 ) (2,839 ) - (2,839 )

Total Engineering 54,081 (718 ) (331 ) (1,049 )

Nuclear 36,750 1,153 (164 ) 989

Exceptional items (2,200 ) (2,714 ) - (2,714 )

Total Nuclear 34,550 (1,561 ) (164 ) (1,725 )

Manufacturing 28,576 1,341 (156 ) 1,185

Exceptional items (436 ) (821 ) - (821 )

Total Manufacturing 28,140 520 (156 ) 364

Central costs - (2,068 ) - (2,068 )

Exceptional items - 446 - 446

Total Central costs - (1,622 ) - (1,622 )

Total operations before exceptional items 119,525 2,547 (651 ) 1,896


Total operations 116,771 (3,381 ) (651 ) (4,032 )

Financial income 3 - 3

Financial expenses (624 ) - (624 )

Group loss before tax (4,002 ) (651 ) (4,653 )

Tax 184 163 347

Group loss for the year (3,818 ) (488 ) (4,306 )

Adjusted operating profit is stated before exceptional items and amortisation of intangible assets acquired with business combinations.

NoTEs To ThE CoNsoLIdATEd FINANCIAL sTATEMENTs


1. sEGMENT ANALysIs (CoNTINUEd)Exceptional items totalled £5,928,000 of which £2,500,000 related to a further provision against the previously reported Vivergo contract

being an estimate of additional legal and professional fees to secure recovery of the remaining contract balance. This matter is more fully

explained in the Chairman’s Statement. Provisions against other contracts amounted to £2,568,000 and related to legacy contract issues

arising under previous management. The costs of bidding for Nuclear New Build opportunities amounts to £225,000. Our Manufacturing

business suffered a bad debt of £436,000 following the failure of a major customer. The regular review of property values has resulted in a

charge against income of £164,000. The impact on our final salary pension scheme (see note 17) of pension increases being linked to CPI

inflation rather than RPI inflation for certain classes of membership has resulted in a credit to exceptional items of £756,000. The balance

of exceptional items amounting to £791,000 related largely to the restructuring of the Group and of its senior management and includes

the costs payable in connection with the resignation of the former Finance Director (see note 2). A tax credit of £1,482,000 has arisen in

connection with these items resulting in a net, post tax charge of £4,446,000.

Share-based payment charges amounting to £3,000 (2011: credits £38,000) have been charged to central costs.

Year to 30 September 2011

Acquired Group Adjusted intangible asset operating Revenue operating profit amortisation profit £000 £000 £000 £000

Engineering 51,698 1,264 (394 ) 870

Vivergo contract 15,252 - - -


Total Engineering 59,412 (7,774 ) (394 ) (8,168 )

Nuclear 32,966 1,493 (164 ) 1,329


Total Nuclear 31,784 (189 ) (164 ) (353 )

Manufacturing 26,648 3,798 (158 ) 3,640

Exceptional items (85 ) (85 ) - (85 )

Total Manufacturing 26,563 3,713 (158 ) 3,555

Central costs - (2,208 ) - (2,208 )

Exceptional items - (449 ) - (449 )

Total Central costs - (2,657 ) - (2,657 )

Total operations before Vivergo and exceptional items 111,312 4,347 (716 ) 3,631

Vivergo contract 15,252 - - -


Total operations 117,759 (6,907 ) (716 ) (7,623 )

Financial income 61 - 61

Financial expenses (535 ) - (535 )

Group loss before tax (7,381 ) (716 ) (8,097 )

Tax 945 193 1,138

Group loss for the year (6,436 ) (523 ) (6,959 )

Adjusted operating profit is stated before exceptional items and amortisation of intangible assets acquired with business combinations.

Exceptional items in the year ended 30 September 2011 were fully explained in the Annual Report and Accounts for that year and comprised

Vivergo contract provision of £8,345,000, other contract provisions of £1,960,000, integration and restructuring costs of £500,000 and head

office restructuring costs of £449,000.


1. sEGMENT ANALysIs (CoNTINUEd)

2012 2011 £000 £000Operating segment assets

Engineering 39,336 43,039

Nuclear 14,251 14,820

Manufacturing 21,157 18,605

Head office and Central 862 1,418

Unallocated:

- Current tax - 523

Total assets 75,606 78,405

Operating segment liabilities


Nuclear 6,805 6,914

Manufacturing 6,248 7,457

Head office and Central 1,307 1,231

Unallocated:

- Current borrowings - 168

- Non-current borrowings 13,000 10,000

- Retirement benefit obligations 2,807 1,480

- Current tax 120 -

- Deferred tax 344 1,627

Total liabilities 44,643 40,971

Net assets 30,963 37,434

Capital expenditure

Engineering 117 222

Nuclear 266 195

Manufacturing 404 335

Head office and Central 24 19

811 771

Depreciation

Engineering 267 409

Nuclear 173 131



631 850

Amortisation of acquired intangible assets and goodwill impairment

Engineering 331 394

Nuclear 164 164


686 743

NoTEs To ThE CoNsoLIdATEd FINANCIAL sTATEMENTs (CoNTINUEd)

| 31

1. sEGMENT ANALysIs (CoNTINUEd)Geographical segments

2012 2011 £000 £000Revenue by destination

United Kingdom 108,005 111,690

Other European Union countries 5,162 1,619

Other overseas locations 3,604 4,450

116,771 117,759

All of the Group’s assets and capital expenditure originate in the United Kingdom.

Analysis of revenue by category

2012 2011 £000 £000

Sales of goods 28,140 26,429

Sales of services 88,631 91,330

116,771 117,759

Practically all of the Group’s revenue is considered to be contract revenue as defined by IAS11.

Customers accounting for more than 10% of revenue

Two customers accounted for more than 10% of revenue in the year. One of those customers is a customer of both the Nuclear and

Manufacturing segments and accounted for revenue of £19.0 million and the other which is a customer of the Nuclear segment alone accounted

for revenue of £12.1 million (2011: one customer accounting for £17.3 million of revenue in the Nuclear and Manufacturing segments).

2. sTAFF NUMBERs ANd CosTs

2012 2011 Number Number

Average numbers employed, including Directors

Engineering 639 877

Nuclear 359 358



1,282 1,475

£000 £000

Aggregate payroll costs

Wages and salaries 50,232 54,992

Social security costs 5,246 5,650

Other pension costs 717 747

Share-based payments charge/(credit) 3 (38 )

56,198 61,351



2012 2011 £000 £000Key management compensation

Emoluments for services as Directors 802 825

Social security costs 106 102

Pension contributions 63 77

Share-based payments 40 67

1,011 1,071

The emoluments of the highest paid Director were £359,000 (2011: £337,000) and contributions to his pension arrangement were £26,000

(2011: £31,000). On 13 September 2012, J P O’Kane resigned as a director and an amount of £165,000 due to him in connection with the

termination of his employment has been included in ‘Emoluments for services as Directors’ and disclosed as an exceptional item. Further

details of Directors’ emoluments as required by AiM Rule 19 are set out in the Report of the Directors.

dIRECToRs’ pENsIoN BENEFITsDuring the year two Directors were members of a Company sponsored money purchase pension arrangement. The Company made

contributions of £5,000 for the year ended 30 September 2012 (2011: one Director and contribution of £31,000).

The Company paid contributions of £58,000 in total into the personal pension plans of three other Directors for the year ended 30 September

2012 (2011: £46,000 in respect of two other Directors).

3. Loss BEFoRE TAxLoss before tax is stated after charging/(crediting) the following:

2012 2011 £000 £000

Depreciation of owned property, plant and equipment 631 850

Amortisation of intangible assets 686 743

Profit on disposal of property, plant and equipment (3 ) (2 )

Audit and non-audit services:

Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 25 25

Fees payable to the Company’s auditor and its associates for other services:

The audit of the Company’s subsidiaries pursuant to legislation 132 95

Audit related assurance services 16 15

Tax compliance services - -

Tax advisory services - -

Other assurance services - -

Corporate finance services - -

All other services 3 7

Hire of plant 3,064 4,198

Plant operating lease rentals 464 500

Other operating lease rentals 1,005 934

Foreign exchange losses/(gains) 9 (4 )

Exceptional items (note 1) 5,928 11,254


2. sTAFF NUMBERs ANd CosTs (CoNTINUEd)


4. FINANCIAL INCoME ANd ExpENsEs 2012 2011 £000 £000Financial income

Interest income 3 61

Financial expenses

Interest on bank loans and overdrafts (351 ) (311 )

Net finance expense on pension scheme* (273 ) (224 )

(624 ) (535 )

* Includes £110,000 of pension administration expenses paid for by the Company (2011: £150,000).

5. TAx ExpENsE 2012 2011 £000 £000(a) Recognised in the income statement

Current tax expense/(credit):

Current year - -

Charge for/(recovery of) tax that relates to prior year 156 (566 )

Current tax expense/(credit) 156 (566 )

Deferred tax credit (319 ) (435 )

Effect of change of tax rate (48 ) (115 )

Prior years (136 ) (22 )

Deferred tax credit (503 ) (572 )

Tax credit in the income statement (347 ) (1,138 )

2012 2011 £000 £000(b) Reconciliation of the effective tax rate

Loss before tax (4,653 ) (8,097 )

Tax at standard rate of UK corporation tax of 25% (2011: 27%) (1,163 ) (2,186 )

Expenses not deductible for tax purposes 135 67

Effect of tax losses 709 1,189

Carry back of losses to prior year - 497

Adjustments in relation to prior periods 20 (588 )

Change in tax rate (48 ) (117 )

Tax credit in the income statement (347 ) (1,138 )


2012 2011 £000 £000

(c) Deferred tax (credit)/charge recognised in other comprehensive income

Actuarial losses (564 ) 130

Effect of tax rate change on actuarial loss 28 15

Revaluation of property (232 ) (37 )

Effect of tax rate change on revaluation of property (12 ) (31 )

(780 ) 77

(d) Deferred tax credit recognised directly in equity

Share options - (7 )

6. dIVIdENds oN EqUITy shAREsAmounts recognised as distributions to equity holders in the period:

2012 2011 £000 £000

Final dividend for the year ended 30 September 2010 (3.00p per share) - 889

Amount recognised as distributions to equity holders in the year - 889

The Directors do not propose that a dividend be declared for the year.


5. TAx ExpENsE (CoNTINUEd)


7. EARNINGs pER shARE

Basic and diluted loss per share

The calculation of the basic loss per share of (14.46)p (30 September 2011: loss per share 23.50p) is based on 29,788,367 shares (30 September

2011: 29,616,700) being the weighted average number of shares in issue throughout the period and on a loss of £4,306,000 (30 September 2011:

loss of £6,959,000).

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per

share for both the year ended 30 September 2012 and 30 September 2011 are identical to those used for the basic loss per share. This is because

the exercise of share options would have the effect of reducing the loss per share and is, therefore, not a dilution under the terms of IAS33.

Adjusted earnings per share

The Directors believe that helpful additional earnings per share calculations are earnings per share on adjusted bases (i.e. based on profit

before exceptional items and amortisation of acquired intangible assets and on a fully taxed basis). The basic and adjusted weighted average

numbers of shares and the adjusted earnings have been calculated as follows:

2012 2011 Number Number

Basic weighted average number of shares 29,788,367 29,616,700

Dilutive potential ordinary shares arising from share options 56,068 174,285

Adjusted weighted average number of shares 29,844,435 29,790,985

£000 £000Earnings:

Loss before tax (4,653 ) (8,097 )

Exceptional items 5,928 11,254

Amortisation of acquired intangible assets 651 716

Adjusted profit before tax 1,926 3,873

Tax at 25% (2011: 27%) (482 ) (1,046 )

Adjusted profit after tax 1,444 2,827

Adjusted, fully taxed basic earnings per share 4.85 p 9.55p

Adjusted, fully taxed diluted earnings per share 4.84 p 9.49p

8. pRopERTy, pLANT ANd EqUIpMENT Long leasehold Freehold Machinery, land, buildings land and equipment and improvements buildings and vehicles Total £000 £000 £000 £000

Cost or Valuation

At 1 October 2010 2,900 1,745 8,034 12,679

Additions 187 79 464 730

Disposals - - (557 ) (557 )

At 1 October 2011 3,087 1,824 7,941 12,852

Additions 100 92 477 669

Re-classifications 204 - (204 ) -

Revaluations (672 ) (519 ) - (1,191 )

Disposals (12 ) - (32 ) (44 )

At 30 September 2012 2,707 1,397 8,182 12,286

Depreciation

At 1 October 2010 (251 ) (60 ) (6,015 ) (6,326 )

Charge for the year (75 ) (15 ) (760 ) (850 )

Disposals - - 544 544

At 1 October 2011 (326 ) (75 ) (6,231 ) (6,632 )

Re-classifications (25 ) - 25 -

Revaluations 172 75 - 247

Charge for the year (28 ) - (603 ) (631 )

Disposals 12 - 22 34

At 30 September 2012 (195 ) - (6,787 ) (6,982 )

Net book value

At 30 September 2012 2,512 1,397 1,395 5,304

At 30 September 2011 2,761 1,749 1,710 6,220

At 30 September 2010 2,649 1,685 2,019 6,353

The long leasehold and freehold land and buildings were revalued to market value as at 30 September 2012. The valuations were conducted by Knight

Frank LLP, Humberts, Chartered Surveyors, Joseph Jackson & Sons, Chartered Surveyors and PPH Commercial, Chartered Surveyors. These valuations

were undertaken in accordance with the Appraisal and Valuation Manual of The Royal Institution of Chartered Surveyors in the United Kingdom.

Freehold land with a book amount of £675,000 is not being depreciated. Depreciation amounting to £24,000 (2011: £20,000) has been charged

to cost of sales and that amounting to £607,000 (2011: £830,000) has been charged to administrative expenses.

If freehold land and buildings had not been re-valued, they would have been included at the following historical cost amounts:

Long leasehold Freehold land, buildings land and and improvements buildings £000 £000

Cost 1,740 986

Accumulated depreciation (280 ) (256 )

Net book value at 30 September 2012 1,460 730

Net book value at 30 September 2011 1,504 751

There are no assets currently funded by finance lease or hire purchase agreements.

The Group’s property, plant and equipment is pledged as security to the Group’s bankers under the terms of a debenture.



9. INTANGIBLE AssETs ANd pURChAsEd GoodWILL Acquired Intangible intangible Development assets assets costs sub-total Goodwill £000 £000 £000 £000

Cost

At 1 October 2010 8,658 200 8,858 27,013

Internally generated development costs - 41 41 -

At 1 October 2011 8,658 241 8,899 27,013

Internally generated development costs - 142 142 -

At 30 September 2012 8,658 383 9,041 27,013

Amortisation

At 1 October 2010 (1,762 ) (51 ) (1,813 ) (3,228 )

Charge for the year (716 ) (27 ) (743 ) -

At 1 October 2011 (2,478 ) (78 ) (2,556 ) (3,228 )

Charge for the year (651 ) (35 ) (686 ) -

At 30 September 2012 (3,129 ) (113 ) (3,242 ) (3,228 )

Net book value

At 30 September 2012 5,529 270 5,799 23,785

At 30 September 2011 6,180 163 6,343 23,785

At 30 September 2010 6,896 149 7,045 23,785

All amortisation has been charged to administrative expenses for each of the years ended 30 September 2012 and 2011.

Acquired intangible assets comprise customer contracts and customer relationships in connection with acquired businesses and were separately

identified and valued at acquisition. They are being amortised over their useful economic lives which range between 5 years and 20 years.

Development costs are being amortised over their useful economic lives which do not exceed 8 years.



9. INTANGIBLE AssETs ANd pURChAsEd GoodWILL (CoNTINUEd)Goodwill

The carrying amount of goodwill at 30 September 2012 relates to the acquisitions of businesses by the Group in each of the two years

ended 30 September 2007 and 2009 and is attributable to cash-generating units (“CGUs”) identified according to the operating segments

set out below. The goodwill arising from those acquisitions is attributable to the workforce of those businesses and the significant synergies

expected to arise after their acquisition.

In line with the change of segmental analysis as explained in Note 1, management has reconsidered the CGUs and reallocated the goodwill

and intangible assets to the CGUs in the new operating segments. The prior year comparative numbers have also been restated for

consistency. This has not led to an impairment of goodwill or intangible assets.

2012 2011 £000 £000


Nuclear 5,137 5,137

Defence 4,795 4,795

23,785 23,785

Impairment reviews of goodwill are undertaken annually and are based on value in use calculations of the CGU’s using cash flow projections

prepared by management and which reflect their views of the future and past experience. The main assumptions relate to revenue and margins

derived from detailed internal budgets for the year ending 30 September 2013, strategic plans approved by management going forward three

years and extrapolated into perpetuity based on long term growth rates.

The forecast period growth rates are based on identified and estimated market opportunities and market conditions in respect of each

CGU. The growth rates for one CGU within Engineering ranges from 3% to 70%. The rate of 70% reflects the immediate short-term benefits

anticipated from the strengthening of management within this CGU. The growth rates for all other CGUs within Engineering, Nuclear and

Manufacturing are at 3%. The long term growth rate into perpetuity for all business segments is 3% which management believes does not

exceed the long term average growth rate of these markets.

The projected cash flows arising from this exercise are discounted back to present values at calculated market participants discount rates

ranging between 12% and 14% (2011: 12%). The value in use calculations indicate that no impairment provisions are required for any CGU.

The CGU which is the most sensitive in respect to any reasonably possible change in assumptions which could lead to the carrying amount

being equal to the recoverable amount, operates within the Nuclear segment. The total goodwill allocated to the CGU is £3,425,000. The

discount rate would need to increase by 3% to 15%, or the projected third year profits alone would need to fall by 14% to result in an

impairment to the carrying amount of the goodwill.



10. dEFERREd TAx AssETs ANd LIABILITIEs

Recognised deferred tax assets and liabilities

The net deferred tax liability at the year-end and movement during the year is analysed as follows:

(Charge)/credit to Balance as at Consolidated (Charge)/credit Balance as at 1 October 2011 Income Statement directly to equity 30 September 2012 £000 £000 £000 £000

Accelerated capital allowances (257 ) 297 - 40

Short term timing differences 54 35 - 89

Losses 250 210 - 460

Buildings (519 ) (47 ) 244 (322 )

Intangible assets (1,525 ) 269 - (1,256 )

Retirement benefits 370 (261 ) 536 645

(1,627 ) 503 780 (344 )

(Charge)/credit to Balance as at Consolidated (Charge)/credit Balance as at 1 October 2010 Income Statement directly to equity 30 September 2011 £000 £000 £000 £000

Accelerated capital allowances (355 ) 98 - (257 )

Short term timing differences 77 (23 ) - 54

Losses - 250 - 250

Buildings (602 ) 15 68 (519 )

Intangible assets (1,839 ) 314 - (1,525 )

Share options (7 ) - 7 -

Retirement benefits 597 (82 ) (145 ) 370

(2,129 ) 572 (70 ) (1,627 )

Unrecognised deferred tax assets

Deferred tax assets have not been recognised on tax losses of £7,483,000 (2011: £4,779,000) as their recovery is insufficiently certain in the

longer term.

Effect of reduction in the main rate of Corporation tax

The reduction in the main rate of corporation tax from 24% to 23% effective from 1 April 2013, was substantively enacted on 3 July 2012.

Accordingly, deferred tax balances which are expected to reverse after March 2013 have been recognised at the reduced rate of 23% in these

financial statements.

Further reductions to the main rate of corporation tax are proposed, which are expected to reduce the rate by 1% per annum to 22% by 1 April 2014.

However, these changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

The proposed reductions to the main rate of corporation tax by 1% per annum to 22% by 1 April 2014 are expected to be enacted separately

each year. If the deferred tax assets and liabilities of the Group were to reverse after 2014, the effect of the changes from 23% to 22% would be

to further reduce the net deferred tax liability by £14,000. To the extent that the deferred tax reverses more quickly than this the impact on the net

deferred tax liability will be reduced.

11. INVENToRIEs

2012 2011 £000 £000

Raw materials 586 539

The cost of sales charge in the income statement includes £1,514,000 (2011: £1,121,000) in respect of inventory costs. No reversals

of previous write-downs have been recognised as a reduction of expense in either 2012 or 2011. Inventories comprise products which

are not generally subject to rapid obsolescence on account of technological advancement, deterioration in condition or market trends.

Consequently, the Directors consider that there is little risk of significant adjustments to the Group’s inventory assets during the next financial

year. The Group’s inventories are pledged as security to the Group’s bankers under the terms of a debenture.

12. TRAdE ANd oThER RECEIVABLEs

2012 2011 £000 £000

Amounts falling due within one year:

Trade receivables 18,944 19,650

Amounts recoverable on contracts 17,375 20,127

Other receivables 554 262

Prepayments and accrued income 852 818

37,725 40,857

Current tax - 523

37,725 41,380

The carrying amount of all trade and other receivables is considered to be a reasonable reflection of their fair value. Trade receivables

includes retentions amounting to £1,897,000 (2011: £2,560,000), of which £1,004,000 (2011: £1,719,000) was due within 12 months of

the year end. All trade and other receivables have been reviewed for indications of impairment. Certain trade receivables were found to be

impaired and the movement in the provisions during the year were as follows:

2012 2011 £000 £000

At start of the year 165 117

Provisions released (80 ) (28 )

Provisions made 563 76

At end of the year 648 165

The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of receivables noted above. The Group

does not hold any collateral as security. The Group’s trade receivables and amounts recoverable on contracts are pledged as security to the

Group’s bankers under the terms of a debenture.



12. TRAdE ANd oThER RECEIVABLEs - CoNTINUEd

Some unimpaired trade receivables are past their due date for payment as at 30 September 2012. The ageing of financial assets past their

due date but not impaired is as follows:

2012 2011 £000 £000

Not more than 3 months 2,743 1,405

More than 3 months but not more than 6 months 444 172

More than 6 months but not more than 1 year 113 237

More than 1 year 75 109

Total past due trade receivables 3,375 1,923

Trade receivables not yet past due 15,569 17,727

Total trade receivables 18,944 19,650

The aggregate amount of costs incurred plus recognised profits (less recognised losses) for all long-term contracts in progress at the balance

sheet date was £167,998,000 (2011: £158,570,000). Work in progress comprises these aggregate costs less amounts billed on account of

£152,370,000 (2011: £142,879,000). The net balance is analysed as follows:

2012 2011 £000 £000

Amounts recoverable on contracts (above) 17,375 20,127

Payments on account (Note 13) (1,747 ) (4,436 )

15,628 15,691

13. TRAdE ANd oThER pAyABLEs

2012 2011 £000 £000

Trade payables 14,554 11,781

Payments on account 1,747 4,436

Other tax and social security 2,326 1,696

Other payables 5,994 5,460

Accruals and deferred income 3,751 4,323

Total trade and other payables 28,372 27,696

Current tax payable 120 -

28,492 27,696

The carrying amounts are considered not to be materially different from fair value.


14. BoRRoWINGs

2012 2011 £000 £000Current:

Bank overdraft - 168

Revolving bank loan - -

- 168

Non-current:

Revolving bank loan 13,000 10,000

The bank loan is denominated in sterling and is secured by way of a debenture and a composite guarantee from each Group company. The

interest rate is based on LIBOR and has averaged 2.21% (2011: 2.60%). The bank loan is repayable as follows:

2012 2011 £000 £000

Less than one year - 168

Between one and two years - -

Between two and five years 13,000 10,000

More than five years - -

13,000 10,168

The Group has exposure to interest rate changes in line with the table above when the bank facilities are re-priced.

The Group has not entered into any interest rate hedges during the course of the year and did not have any interest rate hedges in place at

the year-end (2011: None).

15. shARE CApITAL

Ordinary shares of 25 pence

2012 2011 Number £000 Number £000

Authorised 40,000,000 10,000 40,000,000 10,000

Allotted, called up and fully paid:

At start of year 29,616,700 7,404 29,616,700 7,404

Issued pursuant to exercise of share options 230,000 58 - -

At end of year 29,846,700 7,462 29,616,700 7,404

There were no changes to the authorised share capital of the Company during the year.



15. shARE CApITAL (CoNTINUEd)

Share options

Share option scheme Date of grant Shares under option Exercise price Exercise dates:

2012 2011 Earliest Latest

1999 “A” Executive 15/2/2002 - 30,000 26.5p 15/2/2005 14/2/2012

24/3/2006 50,000 250,000 40.5p 24/3/2009 23/3/2016

18/6/2007 43,600 43,600 254.0p 18/6/2010 17/6/2017

1999 “B” Executive 18/6/2007 46,400 46,400 254.0p 18/6/2010 17/6/2017

2007 DSOP Approved 7/12/2009 19,400 19,400 154.0p 7/12/2012 7/12/2019

25/1/2010 - 19,200 156.0p 25/1/2013 25/1/2020

7/9/2011 77,800 77,800 77.0p 7/9/2014 7/9/2021

21/9/2012 47,200 - 63.5p 21/9/2015 21/9/2022

2007 DSOP Un-approved 7/12/2009 280,600 280,600 154.0p 7/12/2012 7/12/2019

25/1/2010 - 180,800 156.0p 25/1/2013 25/1/2020

7/9/2011 122,200 122,200 77.0p 7/9/2014 7/9/2021

21/9/2012 452,800 - 63.5p 21/9/2015 21/9/2022


16. CoMMITMENTs

2012 2011Capital commitments £000 £000

Contracted 3 60

No provision has been made in the financial statements for these commitments.

Operating lease commitments

Total future minimum lease payments under non-cancellable operating leases are payable as follows:

2012 2011 Land and buildings Other assets Land and buildings Other assets £000 £000 £000 £000

Within one year 675 323 574 452

Between two and five years 2,158 199 1,844 558

After more than five years 4,150 - 2,669 81

6,983 522 5,087 1,091

Amounts due after more than five years includes leasehold ground rent on properties with an unexpired lease term currently of 86 years.

Lease payments recognised as an expense in the year amount to £1,469,000 (2011: £1,434,000). There was no sublease income during the

year (2011: £nil). Operating lease agreements do not contain any contingent rent or other onerous clauses or financial restrictions.


17. RETIREMENT BENEFIT oBLIGATIoN

The Group sponsors a defined benefit pension scheme in the United Kingdom, the Booth Industries Group PLC Staff Pension and Life

Assurance Scheme (“the Booth Scheme”) and operates a small number of defined contribution pension schemes and makes contributions to

personal pension plans.

a) Defined benefit scheme

Pension benefits are linked to the members’ final pensionable salaries and service at their retirement date (or date of leaving if earlier). The

scheme is closed to new entrants. The Group has opted to recognise all actuarial gains and losses immediately through the Consolidated

Statement of Comprehensive Income.

A formal actuarial valuation is currently being carried out as at 6 April 2012. The preliminary results of this valuation have been updated to 30 September

2012 by an independent qualified actuary. The assumptions used were as follows:

Assumptions

2012 2011

Discount rate 4.40% 5.40%

Retail Prices Index (RPI) inflation 2.50% 3.10%

Consumer Prices Index (CPI) inflation 1.50% 2.10%

Salary increases 2.50% 3.60%

Rate of increases to pensions in payment subject to inflationary increases:

- RPI capped at 5% pa 2.40% 3.00%

- RPI capped at 2.5% pa 2.00% 2.30%

- CPI capped at 3% pa 1.40% 1.90%

- CPI capped at 5% with minimum 3% pa 3.10% 3.10%

Rate of increase for deferred pensioners 1.50% 2.10%

Mortality basis:

Before retirement S1 PA CMI 2011 S1PAmc (year of birth) (year of birth)

+ 2 year + 1 year

After retirement S1 PA CMI 2011 S1PAmc (year of birth) (year of birth) + 2 year + 1 year

Expected return on scheme assets at the year end 5.30% 4.80%



17. RETIREMENT BENEFIT oBLIGATIoN (CoNTINUEd)

Assets

The assets of the scheme and the long term expected rates of return (as estimated by the independent qualified actuary) are as follows:

Asset class 2012 2011

% of total Long term expected % of total Long term expected Market value scheme assets rate of return Market value scheme assets rate of return

£000 £000

Equities 8,882 52% 7.20% 7,721 50% 5.80%

Bonds 3,658 21% 3.40% 3,256 21% 4.50%

Gilts 3,205 19% 1.60% 3,241 21% 2.30%

Property 1,251 8% 7.20% 1,206 8% 5.80%

Cash 74 - 0.50% 71 - 0.50%

Total 17,070 100% 5.34% 15,495 100% 4.80%

The overall expected return on assets of 5.3% as at 30 September 2012 has been derived by calculating the weighted average of the

expected rate of return for each asset class. The expected rate of return for each asset class has been estimated as follows: The return on

fixed interest securities is based on current market yields. The return on equities and property reflect net dividend yield plus RPI inflation plus

an allowance for real dividend growth. The return on cash is the current Bank of England base rate. The expected return assumptions are

stated net of a 0.6% annual management charge on the Scheme’s non-cash assets.

The actual return on the scheme assets for the year ended 30 September 2012 was £1,925,000 (2011: £47,000).

Pension expense

Amounts recognised within administrative expenses within the income statement are:

2012 2011 £000 £000

Charge for current service cost 70 81

Credit in connection with switch from RPI to CPI (756 ) -

(686 ) 81

An estimated amount of £740,000 was recognised last year in connection with the change from the application of RPI inflation to CPI

inflation for certain classes of membership. The estimated amount was recognised as an actuarial gain and taken through the Statement

of Comprehensive Income. During 2012 the membership of the scheme was advised of the change of inflation factor and accordingly the

estimated amount has been reversed out of the Statement of Comprehensive Income and the actual amount of £756,000 credited though

the Income Statement.

The formal actuarial valuation of the scheme is currently being carried out by the Scheme Actuary for the Trustees as at 6 April 2012. The

resulting contribution requirements from this valuation are not yet available. Following the 5 April 2009 valuation the Company agreed to pay

annual contributions of 13.4% (2011: 13.4%) of members’ pensionable salaries each year plus deficit repair contributions of £315,000 pa

increasing at 3% pa for 15 years from 6 April 2010. Total employer contributions in 2012 were £407,000 (2011: £402,000). Based on the

current schedule of contributions the Group expects to pay £410,000 to the scheme in the year ending 30 September 2013.

The amounts credited/(charged) to financial income and expense are:

2012 2011 £000 £000

Expected return on pension scheme assets* 625 671

Interest on pension scheme liabilities (898 ) (895 )

Net financial expense (273 ) (224 )

* Includes £110,000 of pension administration expenses paid for by the Company (2011: £150,000).



Total actuarial gains and losses recognised in the consolidated statement of comprehensive income

The history of experience gains and (losses) is:

2012 2011 2010 2009 2008 £000 £000 £000 £000 £000

Difference between expected and actual return on scheme assets 1,190 (774 ) 872 (216 ) (2,900 )

Percentage of scheme assets 7 % (5 )% 6 % (2 )% (21 )%

Experience gains and losses arising on the scheme liabilities (293 ) - (108 ) (458 ) (73 )

Percentage of scheme liabilities (1 )% - (1 )% (3 )% -

Effects of changes in the demographic and financial assumptions underlying the present value of the scheme liabilities (2,415 ) 1,257 (848 ) (463 ) 2,758

Percentage of scheme liabilities (12 )% 7 % (5 )% (3 )% 19 %

Due to reversal of previous year’s gains/(losses) (740 ) - - - -

Percentage of scheme liabilities (4 )% - - - -

Total amount recognised in the consolidated statement of comprehensive income (2,258 ) 483 (84 ) (1,137 ) (215 )

Percentage of scheme liabilities (11 )% 3 % - (7 )% (1 )%

The cumulative actuarial loss recognised in the consolidated statement of comprehensive income from 1 October 2006 (being the transition

date to the adoption of International Financial Reporting Standards) is £2,871,000 (2011: loss £614,000).

Analysisofmovementinretirementbenefitobligation

2012 2011 £000 £000

Retirement benefit obligation at start of the year 16,975 17,758

Current service cost 70 81

Interest cost on retirement benefit obligation 898 895

Contributions by employees 32 36

Benefits paid and transfers out (790 ) (538 )

Past service credit (756 ) -

Actuarial losses/(gains) 3,448 (1,257 )

Retirement benefit obligation at end of year 19,877 16,975

The actuarial loss of £3,448,000 includes the reversal of £740,000 recognised in the year ended 30 September 2011 through the Statement of

Comprehensive Income in connection with the estimated impact of pension increases linked to CPI inflation rather than RPI inflation. This has

been replaced by the past service credit of £756,000 which has been credited to the Income Statement and disclosed within exceptional items.

Change in fair value of scheme assets during the year

2012 2011 £000 £000

Fair value at start of the year 15,495 15,548

Expected return on scheme assets 735 821

Contribution from employer 407 402

Contribution from scheme members 32 36

Benefits paid and transfers out (789 ) (538 )

Actuarial gains/(losses) 1,190 (774 )

Fair value at end of the year 17,070 15,495




Amounts included in the balance sheet

The market value of the assets in the scheme and the present value of the liabilities in the scheme are:

2012 2011 2010 2009 2008 £000 £000 £000 £000 £000

Market value of scheme assets 17,070 15,495 15,548 14,023 13,678

Present value of retirement benefit obligation (19,877 ) (16,975 ) (17,758 ) (16,202 ) (14,564 )

Net deficit in scheme (2,807 ) (1,480 ) (2,210 ) (2,179 ) (886 )

Related deferred tax asset (note 10) 645 370 597 610 248

b) Defined contribution schemes and personal pension plans

The Group operates a small number of defined contribution pension schemes and contributes to a number of personal pension plans. The

total expense for these schemes during the year was £647,000 (2011: £666,000).

18. CoNTINGENT LIABILITIEs

The contingent liability of the Group for bank guarantees at 30 September 2012 amounted to £572,280 (2011: £488,000).



19. shARE-BAsEd pAyMENTs

The Group has five share-based payment schemes for employee remuneration, although two of the schemes, the 1999 “A” and “B”

Executive Share Option Schemes, are no longer used to grant options. Details of the schemes are set out below.

a) 1999 “A” Executive Share Option Scheme

Options are exercisable at a price equal to the greater of the middle market value of a share on the dealing day immediately preceding

the date on which an offer of an option is made and the nominal value of a share. The vesting period is three years. If the options remain

unexercised after a period of ten years from the date of grant, the options expire. Options are generally forfeited if the employee leaves the

Redhall Group before the options vest. However in certain circumstances the option holder is entitled to exercise their options within six

months of cessation of employment.

Details of the share options outstanding during the year are:

2012 2011

Weighted average Weighted average Number exercise price - Pence Number exercise price - Pence

Outstanding at 1 October 323,600 68.0 323,600 68.0

Exercised (230,000 ) 38.7 - -

Outstanding at 30 September 93,600 140.0 323,600 68.0

Exercisable at 30 September 93,600 140.0 323,600 68.0

230,000 options were exercised during the year (2011: no options were exercised). The options outstanding at 30 September 2012 were

exercisable at prices between 40.5p and 254.0p and had a weighted average remaining contractual life of 4.05 years.

19. shARE-BAsEd pAyMENTs (CoNTINUEd)b) 1999 “B” Executive Share Option Scheme

Options are exercisable at a price equal to the greater of the middle market value of a share on the dealing day immediately preceding the date on

which an offer of an option is made and the nominal value of a share. The vesting period is three years. If the options remain unexercised after a

period of ten years from the date of grant, the options expire. Options are generally forfeited if the employee leaves the Redhall Group before the

options vest. However in certain circumstances the option holder is entitled to exercise their options within six months of cessation of employment.


2012 2011


Outstanding at 1 October and 30 September 46,400 254.0 46,400 254.0

Exercisable at 30 September 46,400 254.0 46,400 254.0

No options were exercised during the period (2011: None). The options outstanding at 30 September 2012 were exercisable at a price of

254.0p and had a weighted average remaining contractual life of 4.7 years.

c) Redhall Group plc 2007 Performance Share Plan

A discretionary long term incentive plan comprising two parts. Part 1 enables options to be granted at no cost to participants, whilst Part 2

enables conditional shares to be awarded. No options have yet been awarded under this plan.

d) Redhall Group plc 2007 Enterprise Management Incentive Plan

A plan which allows for the grant, to selected employees of the Group, of rights to acquire ordinary shares in the Company on a tax favoured

basis. The vesting period is three years.


2012 2011


Outstanding at 1 October and 30 September - - 29,200 242.5

Lapsed - - (29,200 ) 242.5

Outstanding at 30 September - - - -

Exercisable at 30 September - - - -




19. shARE-BAsEd pAyMENTs (CoNTINUEd)e) Redhall Group plc 2007 Discretionary Share Option Plan

A plan which allows for the grant, to selected employees of the Group, of rights to acquire ordinary shares in the Company. These options

may be granted as tax favoured options under the HM Revenue & Customs (“HMRC”) approved addendum to the plan, or as non-HMRC

approved share options. The vesting period is three years.


Approved share options

2012 2011



Granted 47,200 63.5 77,800 77.0

Lapsed (19,200 ) 156.0 (94,500 ) 167.0



No options were exercised during the period (2011: None). The options outstanding at 30 September 2012 were exercisable at prices

between 63.5p and 154.0p and had a weighted average remaining contractual life of 9.0 years.

Non-approved share options

2012 2011



Granted 452,800 63.5 122,200 77.0

Lapsed (180,800 ) 156.0 (101,300 ) 206.2



No options were exercised during the period (2011: None). The options outstanding at 30 September 2012 were exercisable at prices

between 77.0p and 154.0p and had a weighted average remaining contractual life of 8.9 years.

19. shARE-BAsEd pAyMENTs (CoNTINUEd)f) Fair value of share-based payments

The fair values of services received in return for share options granted in the year are measured by reference to the fair value of options granted.

The estimate of the fair value received is calculated using a Black-Scholes model, adopting the following weighted average assumptions.

2012 2011

2007 DSO Plan 2007 DSO Plan Pence Pence

Fair value at measurement date 12.8 17.0

Share price at grant date 63.5 77.0

Exercise price 63.5 77.0

Expected volatility (based on historic volatility) 25.7 % 25.8 %

Risk-free interest rate 1.7 % 2.5 %

Dividend yield 3.0 % 3.0 %

Option life (years) 10.0 10.0

The underlying expected share price volatility was determined by reference to historical data. The Company expects the volatility of its share price

to reduce as it matures. The risk-free interest rate was determined by the implied yield available on a zero-coupon government bond at the date of

grant. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions.

In total, a charge of £3,000 has been taken to employee remuneration expense in the consolidated income statement for 2012 which has

been credited to other reserves (2011: credit of £38,000 debited to other reserves). No liabilities were recognised in connection with share-

based payment transactions.




20. FINANCIAL INsTRUMENTs

The financial assets of the Group are categorised as follows:

As at 30 September 2012 Loans and receivables Non-financial assets Balance sheet total £000 £000 £000

Trade and other receivables 36,319 1,406 37,725

Other current assets - 586 586

Cash and cash equivalents 2,407 - 2,407

Other non-financial assets - 34,888 34,888

38,726 36,880 75,606

As at 30 September 2011 Loans and receivables Non-financial assets Balance sheet total £000 £000 £000

Trade and other receivables 40,300 1,080 41,380

Other current assets - 539 539

Cash and cash equivalents - - -

Other non-financial assets - 36,348 36,348

40,300 37,967 78,267

The financial liabilities of the Group are categorised as follows:

As at 30 September 2012 Other financial liabilities Liabilities not within at amortised cost scope of IAS39 Balance sheet total £000 £000 £000

Trade and other payables 26,046 2,326 28,372

Bank overdraft – current - - -

Revolving bank loan – non-current 13,000 - 13,000

Other non-financial liabilities - 2,807 2,807

39,046 5,133 44,179

As at 30 September 2011 Other financial liabilities Liabilities not within at amortised cost scope of IAS39 Balance sheet total £000 £000 £000

Trade and other payables 26,000 1,696 27,696

Term bank loan – current 168 - 168

Term bank loan – non-current 10,000 - 10,000

Other non-financial liabilities - 1,480 1,480

36,168 3,176 39,344

21. RIsk MANAGEMENT oBjECTIVEs ANd poLICIEs

The Group has some exposure to market risk, and in particular to currency risk and interest rate risk, through its use of financial instruments

which result from its operating and investing activities. The Group’s risk management is coordinated centrally following guidelines laid down

by the Board and is focused on controlling costs and securing cash flows in the short to medium term by minimising the exposure to adverse

movements in the financial markets. All non-routine transactions require Board approval. The Group does not engage in speculative transactions

on financial markets.

The most significant financial risks to which the Group is exposed and the manner in which they are managed are described below.

Capital risk management

The Group manages its capital to ensure that entities of the Group will be able to continue as a going concern, whilst maximising the return to

stakeholders through optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents,

bank borrowings and equity attributable to holders of the parent, comprising issued share capital and reserves as disclosed in the Consolidated

Statement of Changes in Equity. The Group is not subject to external imposed capital requirements, other than the minimum capital

requirements and duties regarding reduction of capital, as imposed by the Companies Act 2006 for all public limited companies. The Board’s

dividend policy is to seek a minimum of three times cover on taxed earnings.

Liquidity sensitivity

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of

maturities. Generally, management believes it is appropriate to have facilities and borrowings on a floating interest rate basis, although this is

kept under review.

The objective is to maintain sufficient resource to meet the funding needs for the foreseeable future. At 30 September 2012 there was a revolving

bank loan facility of £18,937,500 of which £13,000,000 was drawn and an overdraft facility of £5.0 million none of which was utilised.

The Group’s financial liabilities have contractual maturities (including interest payments where applicable) which are summarised below:

As at 30 September 2012 Greater 61 days 7 months 13 months than 2 years More than 0 – 60 days to 6 months to 12 months to 2 years up to 5 years 5 years Total £000 £000 £000 £000 £000 £000 £000

Trade and other payables 25,975 14 18 30 9 - 26,046

Bank loan 43 86 129 259 13,065 - 13,582

26,018 100 147 289 13,074 - 39,628

As at 30 September 2011 Greater 61 days 7 months 13 months than 2 years More than 0 – 60 days to 6 months to 12 months to 2 years up to 5 years 5 years Total £000 £000 £000 £000 £000 £000 £000

Trade and other payables 25,764 18 39 140 39 - 26,000

Bank loan 45 91 136 271 10,339 - 10,882

25,809 109 175 411 10,378 - 36,882

Interest rate sensitivity

Cash is held on treasury deposit and earns interest at variable rates. The revolving loan and overdraft facility bear interest that is variable and

linked to LIBOR. No instruments have been entered into to mitigate interest rate risk, although this is kept under review. The interest rate is

based on LIBOR and has averaged 2.21% (2011: 2.60%). If interest rates had differed by +/-1% from that actually experienced the impact on

the interest charge and profit before tax for the year would have been +/-£157,000 (2011: +/-£96,000). Similarly, the impact on equity would

have been +/-£118,000 (2010: +/-£70,000).



21. RIsk MANAGEMENT oBjECTIVEs ANd poLICIEs (CoNTINUEd)

Foreign currency sensitivity

Currency options are used to provide protection against foreign exchange exposures, typically in relation to contract amounts receivable that

are significant. Net monetary assets and liabilities of the Group that are not denominated in Sterling are as follows:

As at 30 September 2012

US Dollar Euro Norwegian Krone Total £000 £000 £000 £000

Financial assets 184 419 89 692

Financial liabilities (18 ) (43 ) - (61 )

166 376 89 631

As at 30 September 2011 US Dollar Euro Norwegian Krone Total £000 £000 £000 £000

Financial assets - 691 71 762

Financial liabilities (12 ) (200 ) - (212 )

(12 ) 491 71 550

There were no currency options or forward contracts in place at 30 September 2012 (2011: None). Such financial derivatives are used only to

manage risk and speculation is not permitted. The impact of movements in the Sterling exchange rate at the year end is not material because

the exposure to foreign currency is not significant.

Credit risk analysis

The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised in the balance sheet and summarised below:

2012 2011 £000 £000

Cash and cash equivalents 2,407 -

Trade receivables 18,944 19,650

Amounts recoverable on contracts 17,375 20,127

Payments on account (1,747 ) (4,436 )

36,979 35,341

The Group monitors the credit risk of material customers and other counterparties and incorporates this information into its credit risk controls.

Not withstanding these controls the Group did experience a bad debt due to the failure of Southboats Special Projects Limited for which

administrators were appointed on 25 October 2012. The total amount due was £436,000 and has been fully provided for in the year ended

30 September 2012 with the expense disclosed within exceptional items (note 1). Management considers that all of the financial assets noted

above are of good credit quality, including those that are past their due date for payment (see note 12).

In respect of trade and other receivables and amounts recoverable on contracts less payments on account, the Group is not exposed to

any significant credit risk with any group of counterparties with similar characteristics. The Group does perform significant amounts of work

for individual clients and does have significant amounts due to it in connection with those activities although these represent normal levels

given the nature of work being performed. These balances individually represent less than 12% (excluding Vivergo) of the total amounts due,

which is consistent with the previous year. The amounts due are spread across a number of contracts and operating segments, and are with

predominantly UK based clients that are all blue-chip companies with substantial resource or UK Government backed organisations. As such

the Directors do not believe that they represent a significant credit risk to the Group, and based on historical information about customer

default rates they consider the credit quality of trade receivables that are not past due or impaired to be good. The credit risk for liquid funds is

considered to be negligible because the counterparty, HSBC Bank plc, is of good standing.

None of the Group’s financial assets are secured by collateral or other credit enhancements.

22. RELATEd pARTy TRANsACTIoNs

Other than remuneration paid to key management (note 2), there are no transactions or balances that fall due for disclosure under IAS24.



parent Company Financial statements

sTATEMENT oF CoMpANy ACCoUNTING poLICIEs

BAsIs oF pREpARATIoN

The Company’s financial statements have been prepared in accordance

with applicable Accounting Standards in the United Kingdom (United

Kingdom Generally Accepted Accounting Practice) under the historical

cost convention, except for the revaluation of freehold land and buildings.

The Company has availed itself of the exemption available under

S408 of the Companies Act 2006 not to publish a profit and loss

account. In addition the Company has not prepared a cash flow

statement under FRS1.

A summary of the material Company accounting policies, which have

remained unchanged, are set out below.

TANGIBLE FIxEd AssETs

Tangible fixed assets are stated at cost, with the exception of

freehold land and buildings which are stated at valuation, less

accumulated depreciation.

Depreciation of tangible fixed assets is provided so as to write off

the cost or valuation less estimated residual value of each asset

over its expected useful life at the following annual rates:

Freehold buildings 2%

Machinery, equipment and vehicles:

Furniture, fixtures and fittings 10% to 20%

Computers, and electronic equipment 10% to 20%

Motor vehicles 25%

No depreciation is provided in respect of freehold land.

INVEsTMENTs

Investments held as fixed assets are stated at cost less provision for

any impairment in value.

dEFERREd TAxATIoN

Deferred taxation is recognised in respect of all timing differences that

have originated but not reversed at the balance sheet date where

transactions or events have occurred at that date that will result in an

obligation to pay more, or a right to pay less or to receive more, tax

with the following exceptions:

n Provision is made for tax on gains arising from the revaluation

(and similar fair value adjustments) of fixed assets and gains on

disposal of fixed assets that have been rolled over into replacement

assets, only to the extent that, at the balance sheet date, there is a

binding agreement to dispose of the assets concerned. However,

no provision is made where, on the basis of all available evidence

at the balance sheet date, it is more likely than not that the taxable

gain will be rolled over into replacement assets and charged to tax

only where the replacement assets are sold.

n Deferred tax assets are recognised only to the extent that the

Directors consider that it is 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 is measured on an undiscounted basis at the tax

rates that are expected to apply in the periods in which the timing

differences reverse, based on tax rates and laws enacted or

substantively enacted at the balance sheet date.

LEAsEs

Operating lease rentals are charged to the profit and loss account

on a straight line basis over the lease term.

pENsIoNs

Defined benefit scheme

Pension costs are recognised in the financial statements in

accordance with the requirements of FRS17. The Company

participates in a defined benefit pension scheme, the Booth

Industries Group PLC Staff Pension and Life Assurance Scheme.

Since the Company is unable to identify its share of the scheme

assets and liabilities on a consistent and reasonable basis, the

scheme is accounted for by the Company as if it was a defined

contribution scheme. Details of the Group’s pension schemes are

disclosed in note 17 of the consolidated financial statements.

shARE-BAsEd pAyMENT

Equity-settled share-based payment

All share-based payment arrangements granted after

7 November 2002 that had not vested prior to 1 October 2006

are recognised in the financial statements. All goods and services

received in exchange for the grant of any share-based payment

are measured at their fair values. Where employees are rewarded

using share-based payments, the fair values of employees’

services are determined indirectly by reference to the fair value

of the instrument granted to the employee. This fair value is

appraised at the grant date and excludes the impact of non-

market vesting conditions (for example, profitability and sales

growth targets).

All equity-settled share-based payments are ultimately

recognised as an expense in the profit and loss account with a

corresponding credit to “other reserve”.

If vesting periods or other non-market vesting conditions apply,

the expense is allocated over the vesting period, based on the

best available estimate of the number of share options expected

to vest. Estimates are revised subsequently if there is any

indication that the number of share options expected to vest

differs from previous estimates. Any cumulative adjustment prior

to vesting is recognised in the current period. No adjustment is

made to any expense recognised in prior periods if share options

that have vested are not exercised.

Upon exercise of share options the proceeds received, net of

attributable transaction costs, are credited to share capital and,

where appropriate, share premium.

Provision is made for employer National Insurance contributions

on options granted under unapproved share option schemes

over the period from the date of grant to the first date upon

which the option could be exercised.

dIVIdENds

Dividends are recorded in the Company’s financial statements in the

period in which they are approved by the Company’s shareholders.



CoMpANy BALANCE shEET

2012 2011 Note £000 £000

Fixed assets

Tangible assets 2 626 1,041

Investments in subsidiary undertakings 3 37,938 37,938

38,564 38,979

Current assets

Debtors – amounts due within one year 4 941 2,583

Debtors – amounts due after more than one year 4 48,569 32,381

Cash at bank 280 232

49,790 35,196

Creditors – amounts falling due within one year 5 (1,206 ) (1,101 )

Net current assets 48,584 34,095

Total assets less current liabilities 87,148 73,074

Creditors – amounts falling due after more than one year 5 (36,567 ) (21,695 )

Net assets 50,581 51,379

Capital and reserves

Called-up share capital 7 7,462 7,404

Share premium account 8 19,127 19,095

Merger reserve 8 12,679 12,679

Other reserve 8 306 303

Revaluation reserve 8 252 650

Profit and loss account 8 10,755 11,248

Shareholders’ funds 9 50,581 51,379

The financial statements were approved by the Board on 5 December 2012 and signed on its behalf by:

R P Shuttleworth C Lewis-Jones

Chief Executive Interim Group Finance Director


NoTEs To ThE CoMpANy FINANCIAL sTATEMENTs

1. dIRECToRs’ EMoLUMENTs

2012 2011 £000 £000

Emoluments for services as Directors 802 825

Social security costs 106 102

Pension contributions 63 77

Share-based payments 40 67

1,011 1,071

The emoluments of the highest paid Director were £359,000 (2011: £337,000) and contributions to his pension arrangement were £26,000

(2011: £31,000). Further details of Directors’ emoluments as required by AiM Rule 19 are set out in the Report of the Directors.

Directors’ pension benefits

During the year two Directors were members of a Company sponsored money purchase pension arrangement. The Company made

contributions of £5,000 for the year ended 30 September 2012 (2011: one Director and contribution of £31,000).

The Company paid contributions of £58,000 in total into the personal pension plans of three other Directors for the year ended 30 September

2012 (2011: £46,000 in respect of two other Directors).


2. FIxEd AssETs

Machinery, Freehold land equipment and buildings and vehicles Total £000 £000 £000

(a)Tangiblefixedassets

Cost or Valuation

At 1 October 2011 1,042 314 1,356

Revaluations (439 ) - (439 )

Additions - 7 7

At 30 September 2012 603 321 924

Depreciation

At 1 October 2011 41 274 315

Revaluations (41 ) - (41 )

Charge for the year - 24 24

At 30 September 2012 - 298 298

Net book value

At 30 September 2012 603 23 626

Net book value

At 30 September 2011 1,001 40 1,041

The freehold land and buildings were revalued on a formal basis as at 30 September 2012 on an existing use basis. The valuation was

conducted by Joseph Jackson & Sons, Chartered Surveyors. The valuation was undertaken in accordance with the Appraisal and Valuation

Manual of The Royal Institution of Chartered Surveyors in the United Kingdom.

Freehold land with a book amount of £301,500 is not being depreciated.

The Company’s fixed assets are pledged as security to the Group’s bankers under the terms of a debenture.

(b) Historical cost amounts

If freehold land and buildings had not been re-valued, they would have been included at the following historical cost amounts:

Freehold land and buildings £000

Cost 570

Accumulated depreciation (141 )

Net book value at 30 September 2012 429

Net book value at 30 September 2011 435

There is no material difference between the results reported in these financial statements and those calculated on an historical cost basis.


NoTEs To ThE CoMpANy FINANCIAL sTATEMENTs (CoNTINUEd)

3. INVEsTMENTs IN GRoUp UNdERTAkINGs

Ordinary shares held by the Company in wholly owned unlisted subsidiaries:

At cost Provision Net book value £000 £000 £000

At 1 October 2011 and 30 September 2012 37,938 - 37,938

The results of all subsidiaries are included in the consolidated results for the year. The wholly owned subsidiary companies which, in the

opinion of the Directors, principally affected the amount of the results or net assets of the Group were:

Redhall Nuclear Limited Engineering and other services to the nuclear industry

Jordan Nuclear Limited Engineering and other services to the nuclear industry

Steels Engineering Services Limited Mechanical and electrical engineering design and installation

Redhall Marine Limited Provision of products and services principally to the marine industry

Redhall Engineering Solutions Limited Engineering fabrication and maintenance services

Jordan Engineering Services Limited Engineering fabrication and maintenance services

Jex Engineering Company Limited Engineering design, fabrication, installation, relocation and maintenance of process plant

CHB-Jordan Limited Engineering fabrication and maintenance services

Booth Industries Limited Specialist door manufacture

Jordan Manufacturing Limited Specialist engineering fabrication

R. Blackett Charlton Limited Fabrication and erection of specialist pipework and the provision of engineering services

Those subsidiaries are registered in England and operate principally within the United Kingdom.

4. dEBToRs

2012 2011 £000 £000

Amounts owed by subsidiary undertakings 676 1,519

Other debtors 1 638

Deferred tax (note 6) 63 32

Prepayments and accrued income 201 394

Debtors – amounts due within one year 941 2,583

Amounts owed by subsidiary undertakings falling due after more than one year 48,569 32,381

49,510 34,964


5. CREdIToRs

2012 2011 £000 £000

(a) Amounts falling due within one year:

Trade creditors 112 89

Amounts owed to subsidiary undertakings 1 -

Other creditors including taxation and social security 495 410

Accruals and deferred income 598 602

1,206 1,101

(b) Amounts falling due after more than one year:

Amounts owed to subsidiary undertakings 23,567 11,695

Bank loan 13,000 10,000

36,567 21,695

The bank loan is denominated in sterling and is secured by way of a debenture and a composite guarantee from each Group company.

6. dEFERREd TAxThe deferred tax asset included in the balance sheet is as follows:

2012 2011 £000 £000

Accelerated capital allowances 39 30

Short term timing differences 24 2

Deferred tax asset (note 4) 63 32

7. CALLEd-Up shARE CApITAL

Ordinary shares of 25 pence

2012 2011 Number £000 Number £000

Authorised 40,000,000 10,000 40,000,000 10,000

Allotted, called up and fully paid:

At start of year 29,616,700 7,404 29,616,700 7,404

Issued pursuant to exercise of share options 230,000 58 - -

At end of year 29,846,700 7,462 29,616,700 7,404

There were no changes to the authorised share capital of the Company during the year.


NoTEs To ThE CoMpANy FINANCIAL sTATEMENTs (CoNTINUEd)

8. REsERVEs

Share Merger Other Revaluation Profitand premium reserve reserve reserve loss account £000 £000 £000 £000 £000

At 1 October 2011 19,095 12,679 303 650 11,248

Loss for the year - - - - (493 )

Shares allotted under share option schemes 32 - - - -

Revaluation of property - - - (398 ) -

Share-based payments - - 3 - -

At 30 September 2012 19,127 12,679 306 252 10,755

9. RECoNCILIATIoN oF MoVEMENT IN shAREhoLdERs’ FUNds

2012 2011 £000 £000

New shares allotted 90 -

Loss for the year (493 ) (573 )

Revaluation of property (398 ) -

Dividends paid - (889 )

Share-based payments 3 (38 )

Net movement in shareholders’ funds (798 ) (1,500 )

Opening shareholders’ funds 51,379 52,879

Closing shareholders’ funds 50,581 51,379

10 . FINANCIAL CoMMITMENTs

At 30 September 2012 the Company was committed to making the following annual payments under non-cancellable operating leases in

the year to 30 September 2013:

Land and buildings Other

30 September 2012 30 September 2011 30 September 2012 30 September 2011 £000 £000 £000 £000

Operating leases which expire:

Within one year - - 14 1

Between two and five years 199 199 29 42

Over five years - - - -

199 199 43 43

11. CoNTINGENT LIABILITIEsThe Company and certain subsidiaries have given parental and subsidiary guarantees in support of the banking facility (see note 21 to the

consolidated financial statements) of which £13.6 million was utilised as at 30 September 2012. The maximum amount which can be utilised on

the facility is £23.9 million.

12. shARE-BAsEd pAyMENTsThe Company has established share option schemes which entitle employees, including Directors, to purchase shares in the Company.

Details of these schemes are set out in note 19 to the consolidated financial statements.

13. RELATEd pARTy TRANsACTIoNsThere are no transactions or balances which fall due for disclosure under FRS8 (Revised). Under the terms of FRS8 (Revised) the Company

is exempt from disclosing details of transactions and balances with wholly owned subsidiary undertakings.


Notice is hereby given that the 81st Annual General Meeting of

Redhall Group plc will be held at the offices of Squire Sanders,

solicitors, 2 Park Lane, Leeds on 6 February 2013 at 12.00 noon for

the following purposes:

Resolution 1:

To receive and adopt the financial statements for the year

ended 30 September 2012 and the reports of the Directors and

auditor thereon.

Resolution 2:

To re-elect R P Shuttleworth as a Director.

Resolution 3:

To re-elect C Lewis-Jones as a Director.

Resolution 4:

To re-elect P Brierley as a Director.

Resolution 5:

To re-elect J Carrick as a Director.

Resolution 6:

To reappoint the auditor, KPMG Audit Plc, and to authorise the

Directors to fix their remuneration.

Special Business

To consider as special business and, if thought fit, to pass the

following resolutions of which numbers 7 and 8 will be proposed as

Ordinary Resolutions and numbers 9 and 10 as Special Resolutions.

Resolution 7:

That, in substitution for any such existing authority, the Directors of the

Company be and they are hereby authorised pursuant to section 551

of the Companies Act 2006 (“the Act”) generally and unconditionally to

exercise each and every power of the Company to allot shares in the

Company up to a maximum amount in nominal value of £2,538,325,

such authority to expire on 6 May 2014 or on the conclusion of the next

Annual General Meeting of the Company after the meeting at which this

resolution is passed, whichever is the earlier, and that the Company be

and is hereby authorised to make before the authority conferred by this

resolution has expired one or more offers or agreements which would

or might require shares in the Company to be allotted after this authority

has expired and the Directors be and they are hereby permitted to allot

shares in the Company after the authority conferred by this resolution

has expired in pursuance of each and every such offer or agreement

made by the Company.

Resolution 8:

That the limitation on the authorised share capital of the Company

contained in paragraph 5 of the memorandum of the Company be and

is hereby revoked.

Resolution 9:

That the Directors of the Company be and they are hereby empowered

pursuant to section 571 of the Act to allot equity securities (as defined

in section 560 of the Act) for cash pursuant to the authority conferred

by Resolution 7 above as if section 561 (1) of the Act did not apply to

any such allotments, provided that such power shall be limited to:

(a) the allotment of equity securities in connection with any rights

issue in favour of the holders of any equity securities where the

equity securities respectively attributable to the interest of all the

holders of equity securities are proportionate (as nearly as may

be) to the respective numbers of equity securities held by them

subject to such exclusions or arrangements as the Directors may

deem necessary or expedient to deal with fractional entitlements

otherwise arising or legal or practical problems under the laws or

regulations of any territory regulatory body or stock exchange; and

(b) the allotment of equity securities which are or are to be wholly paid

up in cash (otherwise than as mentioned in sub-paragraph (a) of this

Resolution 9), provided that the maximum nominal value of equity

securities so allotted does not exceed in aggregate £373,084;

and so that such power shall expire on 6 May 2014 or on the

conclusion of the next Annual General Meeting of the Company after

the meeting at which this resolution is passed, whichever is the earlier,

save that the Company may make any offer or agreement before the

expiry of this power which would or might require equity securities to

be allotted pursuant thereto after the expiry date and the Directors

may allot equity securities in pursuance of any such offer or agreement

notwithstanding that the power conferred hereby has expired.

Resolution 10:

That the Company is hereby generally and unconditionally

authorised to make market purchases (within the meaning of section

693 of the Act) of Ordinary Shares provided that:

(a) the maximum number of Ordinary Shares to be purchased is

2,984,670 being 10% of the issued share capital of the Company;

(b) the minimum price which may be paid for Ordinary Shares is

25 pence per Ordinary Share exclusive of expenses;

(c) the maximum price (excluding expenses) which may be paid for

each Ordinary Share is the higher of:

(i) 105 per cent of the average market value of an Ordinary

Share as derived from the London Stock Exchange Daily

Official List for the five business days prior to the day the

purchase is made; and

(ii) the value of an Ordinary Share calculated on the basis of the

higher of the price quoted for:

a. the last independent trade of; and

b. the highest current independent bid for;

any number of the Company’s Ordinary Shares on the

trading venue where the purchase is carried out;

(d) the authority hereby conferred shall expire at the conclusion of

the next Annual General Meeting of the Company or 12 months

from the passing of this resolution if earlier; and

(e) the Company may make a contract to purchase Ordinary

Shares under the authority which will or may be executed wholly

or partly after the expiry of such authority, and may make a

purchase of Ordinary Shares in pursuance of any such contract.

By Order of the Board

C Lewis-Jones

Secretary

1 Red Hall Court

Wakefield

WF1 2UN

5 December 2012

NoTICE oF ANNUAL GENERAL MEETING


NoTICE oF ANNUAL GENERAL MEETING (CoNTINUEd)

NoTEs To ThE NoTICE oF ANNUAL GENERAL MEETING

1. Entitlement to attend and vote

Only those members registered on the Company’s register at:

n 6:00pm on 4 February 2013; or

n if this meeting is adjourned, at 6:00pm two days before the

adjourned meeting,

shall be entitled to attend and vote at the meeting.

2. Issued Shares and Voting Rights

As at close of business on 5 December 2012, the Company’s

issued share capital comprised 29,846,700 ordinary shares of

25 pence each. Each ordinary share carries the right to one vote

at a general meeting of the Company and, therefore, the total

number of voting rights of the Company as at close of business

on 5 December 2012 is 29,846,700.

3. Proxies

You may appoint more than one proxy provided each proxy is

appointed to exercise rights attached to different shares.

To appoint more than one proxy you may photocopy the form or

contact the Company’s Registrars, Capita Registrars, The Registry,

34 Beckenham Road, Beckenham, Kent BR3 4TU. Multiple proxies

must be returned together in the same envelope.

4. Communication

Members who wish to communicate with the Company in relation

to the meeting should contact the Company Secretary by writing

at the registered office of the Company. No other methods of

communication will be accepted.

5. Background to Resolution 8

The Companies Act 2006 abolished the requirement for a Company

to have an authorised share capital and permitted Companies

incorporated prior to 1 October 2009 (when the relevant provisions

of the Companies Act 2006 came into force) to revoke the

restriction on the amount of authorised share capital set out in the

memorandum by the passing of an ordinary resolution. The issue of

shares by the directors will continue to require shareholder approval.

| 65

REdhALL GRoUp pLC - FoRM oF pRoxy

I/We, the undersigned, being (a) Member(s) of Redhall Group plc, hereby appoint Mr David Jackson or failing him, Mr Christopher Lewis-Jones,

both Directors of the Company (See note 1)

or ....................................................................................................................................................................................................................

as my/our proxy to vote in my/our names and on my/our behalf at the Annual General Meeting of the Company to be held on 6 February 2013

and at any adjournment thereof.

Name (block capitals) ......................................................................................................................................................................................

Signature .........................................................................................................................................................................................................

Date ................................................................................................................................................................................................................

Address ...........................................................................................................................................................................................................

........................................................................................................................................................................................................................

........................................................................................................................................................................................................................

Please tick here if you are appointing more than one proxy

Multiple proxies should be returned in the same envelope

Enter number of shares in relation to which your proxy is authorised or leave blank to authorise your proxy to act in relation to your full

voting entitlement

Please indicate with an ‘X’ in the appropriate spaces below how you wish your proxy to vote. If the Form is returned duly signed but with no

direction as to the manner in which your proxy is to vote, he will vote or abstain at his discretion.

RESOLUTION

(See note 2) 1 2 3 4 5 6 7 8 9 10

FOR

DISCRETIONARY

(See note 3)

AGAINST

VOTE WITHHELD

(See note 4)

Notes

1. If you desire someone else to act as your proxy to exercise all or any of your rights to attend, speak and vote at the meeting, delete these names

and insert the name and address of the person desired. A proxy does not need to be a member of the Company but must attend the meeting to

represent you. To be valid, this form of proxy must reach the Company’s Registrars, Capita Registrars, PXS, 34 Beckenham Road, Beckenham,

BR3 4TU not later than 48 hours before the time appointed for the meeting or any adjournment thereof together, if appropriate, with the power of

attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or, where the form has been signed by an

officer on behalf of a corporation, a notarially certified copy of the authority under which it is signed. A corporation which is a member can appoint

one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate

representative exercises power over the same share. When this proxy is executed by a corporation it must be either under its Common Seal or

under the hand of an officer or attorney duly authorised. In the case of joint holders the signature of any joint holder is sufficient; if more than one

joint holder tenders a vote, the vote of the first named in the Register of Members will be accepted to the exclusion of the others.

To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system,

CREST messages must be received by the issuer’s agent (ID number RA10) not later than 48 hours before the time appointed for holding

the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST

system) from which the issuer’s agent is able to retrieve the message. The Company may treat as invalid a proxy appointment sent by

CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertified Securities Regulations 2001.

2. Please indicate how you wish your votes to be cast by inserting a cross in the relevant box.

3. If you select “discretionary” or fail to select any of the given options, the proxy can vote as he chooses or can decide not to vote at all.

The proxy will act at his own discretion in relation to any other business arising at the meeting, including any resolution to adjourn the

meeting. This proxy will only be used in the event of a poll being directed or demanded.

4. The “vote withheld” option is provided to enable you to abstain on any particular resolution. However, it should be noted that a vote

withheld is not a vote in law and will not be counted in the calculation of the proportion of votes “for” and “against” a resolution.

&

Hello Silk is produced in a mill that is certified to ISO14001 environmental management standard. It is a mixed sourced product made with pulp derived from well managed forests and other controlled sources. It is bleached using a combination of Elemental Chlorine Free (ECF) and Totally Chlorine Free (TCF) processes and is fully recyclable.

1 Red hall Court, WakefieldWF1 2UN, England, Uk

Tel: 44 (0)1924 385386Fax: 44 (0)1924 374548

Email: [email protected]

www.redhallgroup.co.uk

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