WYG Regulatory News (WYG)

3rd June 2014

WYG plc ("WYG" or the "Group")

Final Results

A year of strong momentum and increased profitability in an improving trading environment

WYG plc, the global programme, project management and technical consultancy, announces its audited final results for the year ended 31 March 2014, highlights of which are as follows:

Financial overview:

· Revenue of £126.9m (31 March 2013: £125.7m)

· Adjusted operating profit* of £4.8m (31 March 2013: £1.5m)

· Adjusted profit before tax* of £4.2m (31 March 2013: £0.7m)

o Strong momentum during the year; second half adjusted PBT (£2.8m) double first half (£1.4m)

· Earnings per share 3.2p (31 March 2013: loss of 5.2p)

· Adjusted earnings per share* of 7.0p (31 March 2013: 1.0p)

· Resumption of dividend payments with a proposed final dividend of 0.5p (2013: nil)

· Unrestricted cash as at 31 March 2014 £12.8m (31 March 2013: £14.8m) after £1.6m investment and acquisitions

* Before separately disclosed items

Operational overview:

· UK MOD rebasing programme generated increased work and pipeline

· Work in UK planning and development disciplines gathered momentum

· Strong momentum in good quality international contract wins including £28m of contracts in Southern Africa and €8m in Western Balkans

· Investment in Upper Quartile and acquisition of Delta Partnership Solutions extends international development relationships and programme management capability across Africa

· New £15m trade finance facility with Santander UK plc agreed and operational

Current Trading & Outlook:

· Order book up 12% to £86.8m at March 2014 (March 2013: £77.6m) prior to post year end wins

· Strong contract win momentum boosting order book since year end including:

o a new major three year programme worth up to £28m secured to support the Libyan security and justice sector announced separately today

o a €6m social integration programme for 12 municipalities in Turkey

o places secured on new frameworks with NHS, DE&S and Royal Mail underpin UK pipeline

· Strong opportunities in Europe following EU agreeing new €960bn budget for 2014 to 2020

· Expect accelerated growth following investments in fragile and developing states

· Recommended return to dividend list reflects confidence in the future

Paul Hamer, Chief Executive Officer of WYG plc, commented:

"We have made considerable progress during the year, with our focus on generating quality revenues delivering a strong increase in profits and a substantial uplift in our order book.

"WYG is now in better shape than it has been for several years, with a highly differentiated consultancy offering, a financial structure which fully supports its potential, and clear momentum in its order book.

"Our key strengths in advising clients on asset creation, managing socio-economic development programmes and facilitating the restructuring of fragile states place us well to continue to convert our strong pipeline of opportunities in these areas."

For further information, please contact:

WYG plc Tel: 0113 278 7111

Paul Hamer, Chief Executive Officer

Sean Cummins, Group Finance Director

MHP Communications Tel: 020 3128 8100

John Olsen / Katie Hunt / Vicky Watkins / Ollie Hoare

N+1 Singer Tel: 020 7496 3000

Sandy Fraser / Richard Lindley

WH Ireland Limited Tel: 0113 394 6600

Andrew Kitchingman / James Bavister

Chairman's letter

Summary

I am pleased to report another positive year for WYG. Our focus on quality revenues has helped us deliver a strong improvement in profitability and targeted improvements in working capital have contributed to improvements in operating cash flow. Against the backdrop of an improving trading environment, we have secured important new business, improved the scale and profile of our order book, and further strengthened our business through acquisition and other investments for future growth. With increasing confidence in our future prospects, we are delighted to recommend to shareholders that we should resume the payment of dividends.

We enjoyed a strong finish to the year and are seeing the continuing economic recovery in the UK presenting excellent opportunities for our core front end planning and consultancy businesses. In our international markets, the new EU seven year funding cycle began in December 2013 and, having established a robust and extensive platform in Central and Eastern Europe, we have seen the start of some major programmes of new work which should provide us with considerable opportunities through to 2020. Alongside these well-established businesses, we have a growing presence in Africa, strengthened by recent acquisitions and major, long term project wins for national governments, funded principally by the UK or other western governments or supranational aid agencies. This has encouraged us to accelerate the timing of a number of investments which we expect to deliver enhanced results in future years.

Results

Revenue for the year was £126.9m (2013: £125.7m) and the adjusted operating profit was £4.8m (2013: £1.5m). Adjusted profit before tax was £4.2m (2013: £0.7m), reflecting not only a considerable improvement in profitability year on year, but also a much improved performance in the second half with a £2.8m adjusted profit before tax compared with £1.4m adjusted profit in the first half. On a statutory basis, the Group made a profit before tax of £1.8m (2013: loss of £3.3m). Earnings per share adjusted to exclude separately disclosed items were 7.0p (2013: 1.0p). On a statutory basis, earnings per share was 3.2p (2013: loss of 5.2p).

As at 31 March 2014, the Group's order book stood at £86.8m (2013: £77.6m), excluding the Libyan project announced today, which is made up of UK orders of £45.0m (2013: £29.3m) and international orders of £41.8m (2013: £48.3m). The increase in the UK order book shows that our front-end focused business is well placed to benefit as the market picks up generally. The reduction in the international order book reflects the much publicised delay in agreeing the EU budget. Since the EU budget was agreed, our pipeline of international projects has improved significantly.

The Group closed the period with unrestricted cash at 31 March 2014 of £12.8m (31 March 2013: £14.8m). The Group continues to develop a culture which stresses the importance of cash generation and the effective management of working capital. Our rigorous focus on overhead and legacy costs has ensured that both measures continue to reduce ahead of our expectations.

Dividend and Management Share Incentives

In view of WYG's much improved trading performance, financial position and prospects, it is proposed that we resume dividend payments, last paid in December 2008. Subject to the approval of shareholders at the AGM, a dividend of 0.5p will be paid on 30 November 2014 to ordinary shareholders on the register on 26 September 2014.

Under the terms of the WYG Transformation Incentive Plan approved by shareholders in July 2011, nil cost options to acquire an aggregate of 5.8 million WYG shares vested conditionally during the current financial year following the achievement of the relevant share price triggers. 5.3 million of those options will vest unconditionally on 27 August 2014 and 0.5 million in November 2014. Following vesting, the beneficiaries have a period ending on the tenth anniversary of their respective awards during which to exercise their option to acquire the underlying shares to which they have become entitled. Neither I, nor any of the three Executive Directors, who will together become entitled to acquire 3.02 million WYG shares in aggregate, has any present intention to exercise such options.

Current trading and outlook

Group revenue and profitability since the year end has continued to be in line with expectations, against the backdrop of an improving trading environment.

In the UK, the government's investment in major infrastructure projects is creating buoyancy in the market which is spreading into the private sector. In particular, its support for the house building sector is having a positive effect on our core, front-end disciplines of planning and commercial development.

Overseas, we expect to benefit in Central & Eastern Europe (CEE) the Balkans region (SEE) and Turkey from the renewed confidence injected into the international financial markets by the approval of the EU's €960bn budget for 2014 to 2020, within which we have pre-qualified for a number of contracts. Our investments and partnerships in fragile and developing states are delivering results, as evidenced by today's announcement of a major project award in Libya, and we believe this will start to accelerate growth over the coming year.

We continue to look at a range of opportunities to invest organically and through selective, niche acquisitions made possible by the Group's improving profit and strong cash management. As a diverse Group with strong market positions in the geographies and sectors in which we operate, together with a robust financial position, we are confident of another year of positive progress.

Business Review

Strategy

Our strategy is to grow quality revenues in the UK and internationally, both organically and through partnerships and selective acquisitions which provide access to in-country experience, technical expertise or new framework opportunities.

To deliver that strategy we have put in place a sector-led operational structure, with strong leadership and management controls to ensure that we take advantage of the opportunities that we want to pursue.

As a Board, we keep this strategy under regular review to ensure that it remains appropriate and focused.

Progress against Strategy

The widely reported improving trading environment in the UK has driven increased activity in many of our sectors and we see the outlook for consultancy as encouraging, albeit with some variability regionally and with pricing remaining competitive. Major, long term framework agreements for key clients will underpin our future activities and wehave therefore focused our efforts on retaining existing agreements, winning new ones and maximising the opportunities that these provide. I am delighted to confirm that we have been re-appointed on key framework agreements with the Northern Ireland CPD and Sainsbury's, and won places on new frameworks with the NHS, Defence Equipment & Support Technical Services Team within the Ministry of Defence and Royal Mail.

The emphasis this year has been on improving the quality of the top line and therefore the overall profitability of the Group. Although we have seen only a modest increase in revenues, acute focus on project selection and delivery combined with a further reduction in overhead costs has enabled us to deliver on this challenge. Profit expectations have been upgraded twice during the year and net margins have continued to strengthen.

The next seven year EU budget - the Multiannual Financial Framework or MFF 2014-2020 -now signed off - authorises spending of up to €960bn, with a strong emphasis on budgetary discipline, boosting growth and creating jobs which resonates well with our core areas of technical expertise in public financial management and the delivery of economic, social and technical assistance programmes. The delay in agreeing MFF 2014 -2020 had a significant effect on the pipeline of new work for our Polish and SEE businesses in the reporting year. However, we are now seeing many projects for which we have pre-qualified or have been tracking for some time being tendered, supporting and accelerating further disbursement of funds under MFF 2014-202 which we expect to form the backbone of future work in the region. Outside the MFF, but linked to EU harmonisation, we have also been awarded a new €6m appointment by the Union of Municipalities of Turkey to provide a two year programme assisting with social integration.

Further afield, Africa continues to present significant opportunities for the Group, specifically in support of the UK government and other international funding bodies whose ambition is to create stability and essential infrastructure across the continent.

During the year we announced two strategically important developments: our investment in May 2013 in the specialist consultancy, Upper Quartile, which supports our focus on fragile states and stabilisation; and the more recent acquisition, in March, of Delta Partnership Solutions.

Upper Quartile has an excellent track record with UK government agencies and, in partnership with WYG, has been successful in winning significant amounts of new business. I am pleased to announce today that, in consortium with a number of international partners, we have been awarded a significant new project to deliver a programme to support the Libyan authorities in providing more effective, accountable and sustainable security, justice and defence for its citizens, over a period of up to three years. The project, which has a potential value to WYG of approximately £28m, will involve overseeing the training of police officers and judicial police. Other components include improving court administration and security, securing munitions, and weapons stockpiling and decommissioning.

Delta Partnership Solutions is an established business with a small but experienced team of permanent consultants and a large network of associates dedicated to improving the lives of people living in poverty. They have an excellent track record of working around the world on programmes to deliver better public services, helping the governments of Kenya, Uganda and Rwanda, the bi-lateral aid agencies of Norway, Canada, Belgium, the UK and Sweden, as well as a broad range of non-government organisations and foundations. Delta is headquartered in the UK and has offices in Nairobi, Kenya and Kampala, Uganda.

As announced on 27th March 2014, we have agreed a new £15m trade finance facility with Santander UK plc. We intend to use the facility both to support our existing activities in CEE and Turkey and to re-enter certain markets where our new financing arrangements will support the pursuit of international development contracts with an attractive working capital profile.

We have focused on developing improved employee performance and reward programmes in the business, implementing a fair and transparent policy that aligns everyone to our business objectives and ensures that our pay arrangements are correctly positioned in the context of the business strategy, with the aim of supporting the development of a high-performance culture.

Having had such a strong year of momentum in the business, not least in growing our order book, we are focussed on continuing to build upon this momentum by investing in the Group for the benefit of future years. As such, we are now considering bringing forward some investment opportunities, which we had anticipated making in the next financial year, into the current year.

Operationally, the Group was structured throughout the financial year, and reported, on a regional basis with the three regions being:

· UK

· Europe (which includes CIS and Western Balkans), Africa & Asia (EAA)

· MENA (Middle East & North Africa including Turkey)

UK (57% of Group revenue) - significantly improved profitability and order book

The UK region generated revenue of £72.9m (2013: £74.9m) with an operating profit before separately disclosed items of £1.9m (2013: loss of £0.2m).

Within the UK we continue to work across the public and private sectors. Over the course of this year, we have seen growing optimism and activity across all sectors and in most of our markets. In particular, we have noted a commitment to longer term infrastructure projects. Whilst we have seen a slowing in retail-led development, this has been more than countered by a significant increase in activity within the residential sector. All our core services have benefitted from this upturn, particularly our management services, transport, town planning, urban design and environmental planning teams.

Within the Defence sector we continue to support Defence Infrastructure Organisation (DIO) and the Army in our lead programme management and design role for the £1.6bn Army Basing Programme to return troops from Germany and restructure the Army in the UK. Our multi-disciplinary team of more than 60 project managers, cost managers, engineers and designers has developed a series of projects in Catterick Garrison, Preston, Oxford and Salisbury Plain from concept design to business case approval for contract tender and delivery. The programme of works will move into Develop Preferred Option stage and procurement in the coming months with construction phases commencing in 2015.

Our Justice team has also continued to provide close support for the Ministry of Justice and was recently appointed as Technical Adviser, overseeing the construction of HMP Wrexham, a £250m flagship project of national importance which will provide extra prison capacity as well as employment opportunities for the local area.

Our Engineering discipline has helped to deliver a number of education schemes including colleges of further education and university-based projects across the country. We are particularly proud that Manchester Metropolitan University's Business School and Student Hub received the Prime Minister's Award for The Best Public Building. Healthcare also continues to be a strong sector for our UK business.

Our UK based professionals continue to support UK government and key clients on their international projects and, over the last 12 months, we have visited more than 40 global locations on behalf of the Foreign and Commonwealth office alone, most notably acting as Lead Designer supporting the ongoing refurbishment of the British Embassy in Washington DC.

Europe, Africa & Asia (30% of Group revenue) - strong revenue growth and margin improvement

WYG operates through a wide network of subsidiaries and offices in selected local markets in Europe, Africa & Asia, in parallel with our traditional focus on international development opportunities. In this period the region generated revenue of £38.2m (2013: £33.7m), with an operating profit before separately disclosed items of £2.4m (2013: £1.6m).

In Europe we exemplify the WYG model of being a management, technical and professional services consultancy with global reach and local delivery. In our Central and Eastern European locations the period saw the start of a significant market shift, with the closure of 2007-2013 Multiannual Financial Framework (MFF) projects, and the start-up of new actions financed from the new MFF 2014-2020.

We responded with a strong focus on defence, private sector, rail transport, and "off-the-shelf" recruitment/HR products, so as to minimise the impact of this cycle on current operations, and also to take advantage of the emerging new opportunities. In a similar context our large scale involvement in the WBIF Infrastructure Project Facility in SEE countries was reaching peak levels of activity, with significant projects implemented, especially in the energy, water and wastewater, and transport sectors. At the same time we continued to develop local market opportunities throughout the region, notably in Croatia and Serbia, in both the public and private sectors.

During the year we strengthened our footprint in Africa, positioning ourselves as a leader to deliver international development programmes, often in difficult environments, for the UK government, other national governments, and International Finance Institutions (IFIs). Our service offering has been developed around a powerful linking of our public sector expertise (infrastructure, governance, monitoring and evaluation, public financial management, and training) with experience in private sector development, bridging the world of development with finance and investment. The results achieved to date in the region will allow us to continue this market expansion with confidence, further diversify our client base and leverage our expertise in fragile and conflict affected states.

MENA (13% of Group revenue) - increased profits despite delays tendering major projects

In the MENA region we generated revenue of £15.8m (31 March 2013: £17.1m) with an operating profit before separately disclosed items of £0.5m (31 March 2013: £0.1m). The diversification of our portfolio of work generated in Turkey over the past two years, to reduce our dependence on IFIs, together with improvements in project and financial controls, have enabled us to increase margins despite a reduction in revenue - and we continue to be the market leader in Turkey in socio-economic consultancy for the EU.

Although we were affected by delays in the tendering of a number of expected projects, we are now seeing major new projects being unlocked. These include further work to support the national strategy for harmonisation with the EU, the €2.4m Bulancak Water and Wastewater Project in Turkey (our third major project under the EuropeAid Environment Operational Programme pipeline, making us one of the major players in this sector) a role in the multinational environment project, Environment and Climate Regional Accession Network (ECRAN), three new project wins for the Turkish ministries of Health, Justice and Environment and another project win for the Ministry of International Cooperation of Egypt.

We have also delivered framework contracts providing assistance to governmental authorities in Azerbaijan, Croatia, Macedonia, Lesotho, Nigeria, and Pakistan and have been shortlisted in five lots under the EU Beneficiaries 2013 Programme which we would expect will start delivering significant volumes of work in the second half of the new financial year.

Our work has continued in Camp Bastion, where we are supporting the UK Works Group Royal Engineers in the maintenance of military and civilian infrastructure throughout Afghanistan.

From our regional business platforms formed with local partners in the Gulf area, we are building relationships with major clients in the public and private sector to access projects in our key sectors. This includes opportunities across the globe where Middle East-based investors are stakeholders in current and future projects. With a clear strategy and strong partners the business is increasingly well positioned to capture major opportunities in the coming period.

Financial review

Revenue was £126.9m (31 March 2013: £125.7m), with international revenues now accounting for 43% of Group revenue. The Group made an operating profit before separately disclosed items of £4.8m (31 March 2013: £1.5m) representing a very significant improvement in profitability.

In the second half of the year, an operating profit before separately disclosed items of £3.1m was achieved which compares with £1.7m in the first half. We have seen improving levels of staff utilisation and continued to deliver reductions in all overhead costs, but particularly in professional indemnity insurance, property and information technology.

Profit before tax before separately disclosed items was £4.2m (31 March 2013: £0.7m), generating £2.8m adjusted profit before tax in the second half of the financial year compared with £1.4m in the first half.

On a statutory basis, the Group made a profit before tax of £1.8m (31 March 2013: loss of £3.3m).

The Group has significant losses brought forward in the UK and is unlikely to pay UK tax for the foreseeable future. However, we do generate profit in many of our overseas activities, upon which we pay local corporation tax.

The primary component of finance costs is the charge relating to the ongoing bond facility. Our success in reducing the number and quantum of bonds outstanding ahead of plan means that finance costs have been reduced to £0.6m (2013: £0.8m). Under the new trade finance facility with Santander, we expect these costs to reduce further in the coming year. More importantly, with the costs of bonds at a more commercially viable level, we can re-establish a lead role on carefully selected bonded work.Profit per share adjusted to exclude separately disclosed items increased to 7.0p (2013: 1.0p).

The Group closed the year with cash balances at 31 March 2014 of £15.2m (31 March 2013: £18.6m). Within the reported balance, we have an element of restricted cash, primarily associated with specific commitments and cash held by joint operations. At the year end the restricted balance was £2.4m (2013: £3.8m), leaving our key performance indicator, the unrestricted balance of £12.8m (31 March 2013: £14.8m.) The reduction in the unrestricted cash value during the year reflects not only the planned application of £4.7m towards legacy issues including ongoing commitments on unoccupied offices but also cash spent on investments and acquisitions of £1.6m. The cash cost of legacy issues continues to reduce ahead of target and, going forward, we expect our insurance costs to reduce reflecting the changing mix and volumes of our work as we increase our client side advisory services. Throughout the Group we continue to emphasize the importance of cash generation and the effective management of working capital. The initiatives we introduced in 2012 directed at improving the working capital cycle, whilst reducing our use of advance payment bonds, were reflected in the further reduction of working capital days to fewer than 90 (2013: 100 days; 2012 110 days). We continue to aim for improvements in this area albeit our new target of 85 days reflects the fact that the scale of our successes to date cannot be replicated every year.

As at 31 March 2014, the Group's order book stood at £86.8m (2013: £77.6m), excluding the Libyan project announced today, which is made up of UK orders of £45.0m (2013: £29.3m) and international orders of £41.8m (2013: £48.3m).

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2014

Operating profit/(loss) for the year includes net costs of £2.5m (2013: £4m) that are separately disclosed in Note 3.

The prior period has been restated for the adoption of the amended IAS19 Pensions and Employee Benefits.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2014

The prior period has been restated for the adoption of the amended IAS19 Pensions and Employee Benefits.

* These items will not be reclassified subsequently to the Income Statement.

BALANCE SHEETS

As at 31 March 2014

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 March 2014

The prior period has been restated for the adoption of the amended IAS19 Pensions and Employee Benefits.

CASH FLOW STATEMENTS

For the year ended 31 March 2014

NOTES TO THE ACCOUNTS

1. GENERAL INFORMATION

WYG plc is incorporated and domiciled in England. The address of its registered office is Arndale Court, Otley Road, Headingley, Leeds, LS6 2UJ. The company's shares are traded on AIM, a market operated by the London Stock Exchange plc.

The principal activity of the Group during the period ended 31 March 2014 was that of programme, project management and technical consultancy. The Group's revenue derives from activities in the UK and the Group's International division.

The results for the year ended 31 March 2014 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies. The Financial Statements set out in this announcement do not constitute statutory accounts for the year ended 31 March 2014 or the year ended 31 March 2013. The financial information for the period ended 31 March 2013 is derived from the statutory accounts for that year. The report of the auditor on the statutory accounts for the year ended 31 March 2014 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.

2. BASIS OF PREPARATION

Of the new standards, amendments and interpretations that are in issue and mandatory for the financial year end to 31 March 2014, there is no financial impact on this condensed consolidated financial report.

Items that are material and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are included within separately disclosed items.

The Group has adopted the amended IAS19 Pension and Employee Benefits standard in the year. Prior year comparatives have been restated accordingly.

The audited accounts for the year ended 31 March 2014, from which these results have been extracted, have been prepared on a going concern basis.

3. DETAILED CONSOLIDATED INCOME STATEMENT

Details of separately disclosed items

The Group has incurred a number of material items in the year, whose significance is sufficient to warrant separate disclosure. The key elements included within separately disclosed items are:

· Items included in other credits/(costs) relate to the release of unutilised restructuring and vacant leasehold provisions net of costs in relation to the bank refinancing and acquisition related costs. In the comparative period, the other costs relate to the net gain arising from the liquidation and re-acquisition of the Irish business, employee termination and additional legacy restructuring costs.

· Annual charge in relation to share option costs.

· Annual charge for the amortisation of acquired intangibles.

4. SEGMENTAL INFORMATION

Business segments

IFRS 8 requires segment reporting to be based on the internal financial information reported to the chief operating decision maker. The Group's chief operating decision maker is deemed to be the senior management team comprising Paul Hamer (Chief Executive Officer), Sean Cummins (Group Finance Director) and Graham Olver (Chief Operating Officer). Its primary responsibility is to manage the Group's day to day operations and analyse trading performance. The Group's segments are detailed below and are those segments reported in the Group's management accounts used by the senior management team as the primary means for analysing trading performance and allocating resources. The Executive Committee assesses profit performance using operating profit measured on a basis consistent with the disclosure in the Group accounts.

The Group's operations are managed and reported by key market segments:

· UK;

· EAA (Europe, Africa and Asia);

· MENA (Middle East & North Africa including Turkey).

In prior year, Africa and Asia were reported in Rest of World. Comparative figures have been restated accordingly.

The segment results for the year ended 31 March 2014 are as follows:

4. SEGMENTAL INFORMATION CONTINUED

The segment results for the year ended 31 March 2013 are as follows:

5. EARNINGS/(LOSS) PER SHARE

The calculation of basic and diluted earnings per share is based on the following data:

In the prior year, the number of shares used for the calculation of diluted adjusted earnings per share has been increased by 500,000 to reflect the impact of dilutive share options. For periods where the Group was loss making, dilution has no effect on loss per share.

6. DIVIDENDS

The directors propose a final dividend of 0.5p per share (2013: 0p).

The proposed final dividend of £323,000 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

7. BUSINESS COMBINATIONS

In April 2013, Arndale 22 Limited, a 75% owned subsidiary of the Group, acquired the trade and certain of the assets of Upper Quartile LLP, a specialist consultancy practice based in Scotland for a consideration of £1m. Under the terms of the agreement, Upper Quartile LLP continue to be primarily responsible for the performance of its contracts with DFID. The fair value of net assets acquired was £0.6m, goodwill of £0.4m arose on the acquisition.

In October 2013, the Group acquired the trade and certain of the assets of Higham & Co., a team of chartered planning and property advisers based in Manchester for a consideration of £0.2m. The fair value of the assets acquired was £0.2m

In March 2014 the Group acquired the entire share capital of Delta UK Ltd, an international consultancy for a consideration of £1m. The fair value of assets acquired was £0.3m, goodwill of £0.7m arose on the acquisition.

The following table sets out the fair value of the net assets acquired and the resulting goodwill:

8. PROVISIONS, LIABILITIES AND OTHER CHARGES

Claims

Provisions are made for current and estimated obligations in respect of claims made by contractors and the general public relating to accident and other insurable risks arising as a result of the business activities of the Group.

Redundancy

Provision is made for current estimated future costs of redundancy and ex gratia payments to be made where this has been communicated to those employees concerned.

Vacant leasehold properties

The Group has a number of vacant leasehold properties, the majority of which are held under head leases expiring within the next five years. Provision has been made for the residual lease commitments together with other outgoings, after taking into account assumptions relating to later periods of sub-lease. The release of the provision in the year is due to the reassignment of the vacant leasehold liability following the signing of sub-lease agreements on certain of the Group's properties in the year.

9. CASH GENERATED FROM OPERATIONS

The prior period has been restated for the adoption of the amended IAS19 Pensions and Employee Benefits.

10. ANALYSIS OF CHANGES IN NET CASH

Cash and cash equivalents includes £15,857,000 cash (2013: £19,597,000) and £662,000 overdrafts (2013: £953,000).

Restricted cash relates to restricted access accounts in WYG International Limited and cash held in joint operations.

Other non-cash movements represent currency exchange differences.

ENDS