WYG Regulatory News (WYG)

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

INTERIM RESULTS

WYG plc, the global consultancy to the built and natural environment, announces its interim results for the six months to 31 December 2010.

Business overview:

·; Re-organised the Group's operations into four global key market segments to deliver services more efficiently across our chosen countries

·; Restructuring programme substantially complete

·; Now exploring options available to address the longer term funding requirements of the Group

·; Prolonged but anticipated uncertainty in UK and Ireland relating to public sector cuts continued to impact domestic market and is expected to remain challenging in short to medium term

·; Focused domestic and overseas business development activity to maximise organic growth opportunities

·; New local entities opened in Syria, Croatia, Bosnia and South Africa. International order book increased to £89.2m (2009: £76.6m). Decrease in total net order book to £198m (2009: £290m)

·; Retained number one position as consultant to the European Commission for programme management and policy advisory services

Financial overview:

·; Revenue at £83.7m (2009: £115.2m)

·; Adjusted* loss before tax of £2.6m (2009: £1.6m profit)

·; Adjusted* loss per share of 3.7p (2009: restated earnings per share: 1.8p)

·; Operating profit before exceptional and other items of £0.1m (2009: £3.7m)

·; Net debt as at 31 December 2010 £38.5m** (30 June 2010: £36.6m)

*Before exceptionals and other items

**Net debt excludes restricted access amounts

Paul Hamer, Chief Executive Officer, said: "After nearly two years of major restructuring, we now have an appropriate operational and support structure. The latter stages of this restructuring have been undertaken against a backdrop of profoundly difficult and uncertain market conditions in the UK, particularly in the public sector, and significant volumes of work have been cancelled, reduced or deferred.

"The overseas markets in which we operate have remained relatively resilient. Following the restructuring, we have a more efficient globally organised business that is well placed to benefit from the opportunities in international markets. Our focus is now on growing our global revenues through key relationships and strategic partners. As part of this we are looking at options that may allow us to create a positive growth environment with focused investment in employee retention, key recruitment and non-organic expansion. Significant market challenges remain and we will continue to drive further efficiencies across the Group."

For further information, please contact:

WYG plc

Paul Hamer, Chief Executive Officer

David Wilton, Group Finance Director Tel: 0113 278 7111

Arbuthnot Securities (Nomad & Broker)

Nick Tulloch/Ed Gay Tel: 0207 012 2100

Chairman's Statement

Introduction

I am pleased to report that we have made further progress in our three-part strategy to make the Group fit for purpose and delivered a creditable performance in the six months to 31 December 2010, in spite of difficult domestic markets.

The UK marketplace was in a state of hiatus, both pending and following the Government's two major comprehensive spending reviews. Against this backdrop of unprecedented cuts, we focused on the development of our operations outside the UK and Ireland. We reorganised the Group into four key market segments, creating a more efficient global business that is better positioned to exploit the significant international opportunities. This facilitated a number of significant new international business wins in our traditional donor funded markets, as well as in the area of technical services where, prior to reshaping the business, the Group's offering was limited to the UK and Ireland.

We continue to implement our three-part strategy and the Directors are grateful for the support and commitment shown by all the Group's employees and stakeholders during these challenging times. The reshaping of WYG is now substantially complete but, in the period under review, we regrettably had to make further redundancies and office closures across the Group.

Emphasis has now moved to growing revenue in the Group's chosen markets, using a collaborative approach with our global clients and strategic partners to attain a pure focus on delivering technical excellence.

Results

Gross revenue reduced to £83.7m (2009: £115.2m). Net revenue attributable to in-house services, after deducting revenue attributable to third parties on which the Group does not make a margin, was £72.9m (2009: £100.2m).

International revenues increased in all the Group's key overseas markets apart from Turkey where, as expected, revenues fell as a result of the timing of the bidding cycle and the impact of winning our largest overseas project in the western Balkans during 2009.

Operating profit before exceptional and other items, which include amortisation of acquired intangibles and exceptional items, decreased to £0.1m (2009: £3.7m). Operating profit margin on net revenue fell to 0.1% (2009: 3.2%), as a result of the challenging market conditions and our restructuring process. Loss before tax and other items was £2.6m (2009: £1.6m profit). On a statutory basis, the Group made a loss before tax of £22.0m (2009: loss of £4.6m), reflecting the impact of the exceptional and other items in the period.

Loss per share adjusted to exclude other items fell to 3.7p (2009 restated earnings per share: 1.8p).

Cash generated from operations was £2.8m (2009: £0.4m used in operations) which represents another strong cash performance across the Group.

Net debt at 31 December 2010 increased from £33.9m at 30 June 2010 to £35.3m (31 December 2009: £90.9m before completion of the refinancing in January 2010). These net debt figures include both cash balances held within the captive insurance company and restricted cash balances. The net debt at 31 December 2010, excluding these two categories, was £38.5m up from £36.6m at 30 June 2010 (2009: £93.7m before completion of the refinancing). The movement in net debt is affected by the cash payment of exceptional costs incurred in the ongoing restructuring of the Group. It is worth noting that the net debt position at 31 December 2010 was lower than both the latest budget and the expectations at the time of the refinancing. The Group continues to be acutely focused on cash generation and the effective management of working capital.

Capital structure

The Board of WYG has, together with its advisers, been reviewing the Group's capital structure. Following the refinancing in January 2010, WYG's lenders own 60.5% of the Company's issued ordinary share capital and own preference shares with a nominal value of £27.6m. In the 15 months since the refinancing, WYG has undergone extensive further restructuring and this process is now substantially complete. The Board of WYG is keen that the Group has access to sufficient capital to take advantage of the opportunities that now exist to grow in the Group's chosen markets. Furthermore, the Board recognises the importance of attracting and retaining talented employees and, accordingly, is looking to implement an effective and meaningful employee incentivisation structure.

As disclosed in the 2010 Annual Report and Accounts, the Board anticipated that performance within the agreed covenant structure under the terms of the restructured banking facilities would tighten from June 2011. At the time those financial covenants were set, it was inherently difficult to predict the state of the Group's markets and hence its financial results. The impact of those uncertainties, alongside the proposed sale of the Adams Kara Taylor business which is referred to below, means that there will be a need to address covenants going forward. WYG has entered into a collaborative process with its lenders to explore the options available to address the funding requirements of the Group and it is expected that this process will be finalised before 30 June 2011. The Group remains in compliance with its existing covenants and continues to forecast that its future borrowing requirements will be within the level of its overall banking facilities.

Exceptional and other items

The Group incurred significant exceptional costs during the period, which arose from the impairment of goodwill and from the ongoing restructuring programme. The Group reviewed the value of goodwill arising upon past acquisitions carried on its balance sheets. Following this review, the value of goodwill carried on the balance sheet has been reduced by a total of £12.1m. This impairment charge does not represent a cash cost. In addition the Group incurred exceptional costs in respect of redundancies (£2.7m) and office closures (£3.1m). WYG expects to incur further exceptional costs in the remaining part of the financial period to 31 March 2011.

Dividend

As previously reported, no dividend will be paid while the Group's current banking facilities remain outstanding and until the preference shares are redeemed in full.

Change of year end

As previously announced, the Group will be changing its financial year end from 30 June to 31 March. Hence, the current financial period will end on 31 March 2011.

The Board and employees

There were no changes to the Board of Directors during the period.

Total Group headcount was reduced by 400 between 1 July 2010 and 31 December 2010 and, as at 31 December 2010, Group headcount was 1,748. Overall headcount has reduced by a significant number over the previous two years and it is hoped that, as the business reshaping nears completion, any further reductions will be on a very limited scale. Once again, throughout another difficult period for the business and our people, the commitment and enthusiasm of all employees has been evident and the Board takes this opportunity to thank them for their continued support. We continue to recruit selectively and to invest in the development of our employees, who remain, as ever, the Group's most important asset.

Risk Management

We operate a risk management process to identify, evaluate and manage risk, to formulate and implement mitigation activities and to increase confidence in the Group's performance.

Steps have been taken throughout 2010 and will continue to be taken to enhance the risk management process. Specific risk areas, which may have an impact on the business, include the volatility of key markets, fluctuations in foreign currency, competition, key personnel and litigation. The assessment of these risk areas has not altered materially since 30 June 2010 and more details can be found on pages 22 to 23 of the WYG plc 2010 Annual Report.

Outlook

Overseas business continues to grow and the pipeline of opportunities in our key regions remains substantial. There are major opportunities in our global markets both in the donor funded socio-economic sector, in which we have a strong and established track record, and also in local public and private sector markets. We remain on track to achieve our target of securing 50% of the Group revenue in international markets by 2013.

By contrast, domestic business conditions remain very challenging and there is limited visibility of future work, as the impact of the Government's two comprehensive spending reviews is yet to become clear. Public sector work is continuing, albeit at modest levels, and there are relatively few new significant projects being commissioned due to uncertainty within Government departments. There remains a lack of confidence and liquidity in the UK private sector. Although there are some early encouraging domestic indications, we have not yet seen any sustained evidence of increased activity levels in the UK.

Like all prudent and responsible businesses, we continue to monitor all our markets and react to the challenges and opportunities as appropriate.

BUSINESS REVIEW

With effect from 1 July 2010, we reorganised the Group globally into four key market segments:

1. Buildings & Critical Infrastructure

2. Transport Solutions

3. Energy, Sustainability & Environment and

4. Risk & Assurance Services

This structure replaced the Group's five historic Business Units - WYG Engineering; WYG Management Services; WYG Environment Planning Transport; WYG Ireland and WYG International.

In parallel with this reshaping of the Group, measures were taken to improve efficiency, strengthen governance and to enhance support services. These measures included a more rigorous focus on fee earning efficiencies, optimising staffing structures and the ratio of direct to indirect employees. We also implemented a new property strategy, based on a small number of "hub" offices with smaller operational satellites in appropriate locations, and a new IT strategy, focusing on more selective and justified investment. Following the half year end, we successfully upgraded our core UK and Ireland Financial Management Information System and are now planning to implement further specific enhancements to this upgraded system. Our support functions have also been reorganised into centrally managed Group Business Services.

During the period, we continued to implement the three-part strategy, which the Board adopted in January 2009. This focuses on:

1. creating a more efficient and resilient business that is fit for purpose and delivers shareholder value

2. developing the Group's international business

3. creating a business that is totally focused on delivering technical excellence for clients across chosen key sectors.

Like other companies in the sector, the global economic recession, combined with the prolonged and unprecedented period of uncertainty in the UK, has adversely impacted a number of the Group's domestic markets. Some projects have been cancelled or postponed in both the public and private sectors and we expect this pattern to continue for the foreseeable future. We are confident that activity levels in the UK will ultimately improve but the timing of any such improvement remains unclear. Hence, we expect our domestic markets to remain very challenging for the foreseeable future.

Internationally, however, the Group continues to make measurable progress. We are improving the business in the core operating regions of Central and Eastern Europe, the Balkans and the Commonwealth of Independent States by offering a wider range of services to both existing and new clients. Our investment in the acceleration of growth in the Middle East, Africa and the Gulf continues and this approach has yielded tangible results. In the six month period under review, the Group's international order book increased and a number of significant projects were secured.

Buildings & Critical Infrastructure

Buildings & Critical Infrastructure achieved revenue of £32.5m (2009: £53.2m) with an operating loss before exceptional and other items of £1.2m (2009: £0.5m profit).

In the UK, the effect of the Government's spending review in the period, particularly on the Building Schools for the Future ("BSF") programme, immediately impacted on planned projects. However, we were successful in winning further appointments on the Blackburn with Darwen and Hertfordshire BSF projects.

We delivered a number of major projects in the healthcare, education, energy and defence sectors during the period and there was more consistent throughput of leisure projects than previously experienced. Our team was also part of the supply chains that secured framework contracts to deliver expertise in the NHS's new £3 billion healthcare programme, ProCure21+.

Whilst management takes a prudent view on any recovery in the domestic markets, our Buildings & Critical Infrastructure team is looking to benefit from our new structure, which allows it to offer technical expertise across the Group's chosen global markets.

We are currently at an advanced stage in negotiations to sell the business of Adams Kara Taylor to a management team backed by Tyréns AB, a Swedish consultancy firm.

Transport Solutions

Transport Solutions generated revenue of £8.0m (2009: £8.5m) with an operating profit before exceptional and other items of £0.9m (2009: £0.8m).

We maintained a steady workload during the period with signs of increased developer activity beginning to emerge. The loss of some public sector work was partially offset with private sector and overseas projects, including a new settlement near Jeddah, in Saudi Arabia, which will house over 100,000 people. Our Transport Solutions team also increased its bidding and business development activity elsewhere in the Middle East.

Within Europe, we were successful in winning work from the European Commission to provide strategic transport advice. We also won work from EDF Energy to advise on, potentially, the first of the UK's new generation of new nuclear power stations at Hinkley Point in England.

Looking ahead, we expect the domestic market to remain steady for the next 12 months as any loss of public sector work due to the Government's comprehensive spending review has been absorbed. Overseas, opportunities for growth will continue to present themselves.

Energy, Sustainability & Environment

Energy, Sustainability & Environment contributed revenue of £12.1m (2009: £15.2m) with an operating loss before exceptional and other items of £1.4m (2009: £1.0m loss).

Trading conditions across the UK and Ireland remained challenging, particularly in disciplines that were reliant on the domestic construction sector. However, parts of the business, including waste management, habitat protection and specialised technical services performed strongly within sectors where demand for these compliance oriented services has remained. Our geo-environmental services also managed to prevail in a highly competitive market by maintaining projects in the energy sector, primarily driven by the need for energy companies to keep up with the drivers and developments in the renewables sector.

For our planning and design services, the food retail sector continued to produce projects as a result of fierce competition between the major companies for new floor space. If successful, the UK Government's proposed changes to the planning system, set out in the 'Localism Bill', will create a need for greater engagement with the UK public, which will provide additional opportunities in the medium term.

The demand for our services overseas was strong with several large Government funded opportunities emerging in developing countries. We were appointed by the Ministry of Finance & Economy of Adjara, an Autonomous Republic of Georgia, to provide assistance with environmental improvements, under EBRD (European Bank for Reconstruction and Development) funding.

The global outlook across this critical sector remains positive due to the increasing emphasis around the world on climate change, alternative energy, greenhouse gas emissions, waste management, clean water supply and the requirement for businesses to implement new environmental legislation.

Risk & Assurance Services

Risk & Assurance Services achieved revenue of £31.1m (2009: £38.3m) with an operating profit before exceptional and other items of £1.7m (2009: £3.3m).

Our programme management and policy advice services secured a number of overseas contracts in Central and Eastern Europe, Middle East and Africa, and the Balkan states. We have strengthened our footprint in a number of countries, including opening offices in Croatia and Bosnia. We also formally established a subsidiary company in Pretoria to manage our contracts in South Africa and the surrounding region.

Whilst international market conditions remained steady, with the benefit of stable international donor funding opportunities available from existing funding budgets, competition has increased as a result of shrinking domestic and private sector markets.

The outlook for programme management and policy advice services remains strong with donor funding programmes committed for the period to 2013. However, we expect to face rising competitive pressures from new market entrants and re-entrants. In the Commonwealth of Independent States, the private sector remains strong, which will provide opportunities to offer technical services in infrastructure projects.

Market conditions for our project management services remained challenging, particularly across the UK public sector where the impact of the Government's Strategic Defence and Security Review (SDSR) resulted in reduced revenues during the period.

We secured a new four-year framework agreement with the Ministry of Justice ("MoJ") for the delivery of co-ordinated estate and property consultancy support, which gives all MoJ clients access to a range of our professional services for projects including repairs, refurbishment, relocation, extension, regeneration and new build projects.

Overseas, we were appointed by the Ministry of Defence to undertake an assessment study of utilities and infrastructure at Camp Bastion in Afghanistan, which is the main operating base for British forces in Afghanistan. Private and commercial development markets were subdued throughout the period as corporate clients, investors and developers remained cautious as the economy recovers from recession.

Unaudited consolidated income statement

For the six months ended 31 December 2010

Prior year results have been restated for the reclassification of interest on bonds. Details are given in note 5.

Details of exceptional and other items are given in note 6.

The accompanying notes to the interim results are an integral part of this consolidated income statement.

Unaudited consolidated statement of comprehensive income

For the six months ended 31 December 2010

Unaudited consolidated balance sheet

As at 31 December 2010

Consolidated statement of changes in shareholders' equity

For the six months ended 31 December 2010

Unaudited consolidated cash flow statement

For the six months ended 31 December 2010

1. Company details

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 is listed on AIM, a market operated by the London Stock Exchange plc

The principal activity of the Group in the period under review was that of international multi-skilled consultant. The Group's revenue derives from activities in the UK, Ireland and International.

2. Basis of preparation

This condensed consolidated interim financial information for the six months ended 31 December 2010 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2010, which are available on the Company's website at www.wyg.com, and have been prepared in accordance with IFRSs as adopted by the European Union.

The Board of WYG has, together with its advisers, been reviewing the Group's capital structure. Following the refinancing in January 2010, WYG's lenders own 60.5% of the Company's issued ordinary share capital and own preference shares with a nominal value of £27.6m. In the 15 months since the refinancing, WYG has undergone extensive further restructuring and this process is now substantially complete. The Board of WYG is keen that the Group has access to sufficient capital to take advantage of the opportunities that now exist to grow in the Group's chosen markets. Furthermore, the Board recognises the importance of attracting and retaining talented employees and, accordingly, is looking to implement an effective and meaningful employee incentivisation structure.

As disclosed in the 2010 Annual Report and Accounts, the Board anticipated that performance within the agreed covenant structure under the terms of the restructured banking facilities would tighten from June 2011. At the time those financial covenants were set, it was inherently difficult to predict the state of the Group's markets and hence its financial results. The impact of those uncertainties, alongside the proposed sale of the Adams Kara Taylor business which is referred to below, means that there will be a need to address covenants going forward. WYG has entered into a collaborative process with its lenders to explore the options available to address the funding requirements of the Group and it is expected that this process will be finalised before 30 June 2011. The Group remains in compliance with its existing covenants and continues to forecast that its future borrowing requirements will be within the level of its overall banking facilities.

The business is not materially impacted by seasonal variations.

This condensed consolidated interim financial information was approved for issue on 31 March 2011.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2010 were approved by the Board of Directors on 1 November 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.

The condensed consolidated interim financial information has neither been reviewed nor audited.

3. Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2010, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings.

Bond interest in the six months to 31 December 2010 has been classified as finance costs. In prior periods it was reported in operating costs. The prior year comparatives have been restated to reflect this change.

The following significant new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010:

·; IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The adoption of this standard has not had a significant impact for the Group.

·; IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. The interpretation is effective for annual periods beginning on or after 1 July 2010 but has been early adopted by the Group.

·; IAS 1 (amendment), 'Presentation of financial statements'. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the end of the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. The amendment to IAS 1 has not had a significant impact for the Group.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 July 2010, but are not relevant to the Group:

·; IFRIC 13, 'Customer loyalty programmes'.

·; IFRIC 15, 'Agreements for the construction of real estate'.

·; IFRIC 16, 'Hedges of a net investment in a foreign operation'.

·; IFRIC 17, 'Distributions of non-cash assets to owners'.

·; IFRIC 18, 'Transfers of assets from customers'.

·; IAS 39 (amendment), 'Financial instruments: recognition and measurement'.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 July 2010 and have not been early adopted by the Group:

·; IFRS 9, 'Financial instruments', issued in December 2009. This addresses the classification and measurement of financial assets and is likely to affect the Group's accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The Group is yet to assess IFRS 9's full impact.

·; Revised IAS 24, 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1 January 2011. Earlier application, in whole or in part, is permitted.

·; 'Classification of rights issues' (Amendment to IAS 32), issued in October 2009. The amendment should be applied for annual periods beginning on or after 1 February 2010. Earlier application is permitted.

·; 'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14), issued in November 2009. The amendments are effective for annual periods beginning 1 January 2011. Earlier application is permitted. The amendments should be applied retrospectively to the earliest comparative period presented.

The various other minor amendments to existing standards have no impact on the Group results at 31 December 2010.

4. Segmental information

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), David Wilton (Group Finance Director) and Graham Olver (Group Commercial Director and Company Secretary). Its primary responsibility is to manage the Group's day to day operations and analyse trading performance.

A comprehensive strategic review was conducted and this highlighted a number of areas where the Group could build on its strong market position and some new areas where it has the skills and resources to attain a substantial place in the market. To do this the Group has reshaped its operations away from a geographic business unit structure to one based on capability such that each area of activity is managed on a global basis. This process is now complete and is providing a catalyst across the Group to stimulate increased international collaboration. The ambition is that the Group operates in a seamless and "boundary-less" manner on a global platform across all its operations to meet the needs and ambitions of its clients.

The business is now focused on and reports in four key market segments, namely:

·; Buildings & Critical Infrastructure;

·; Transport Solutions;

·; Energy, Sustainability & Environment; and

·; Risk & Assurance Services.

The segmental results for the six months ended 31 December 2010 are as follows:

The segmental results for the six months ended 31 December 2009 are as follows:

Reportable segment assets are reconciled to total assets as follows:

5. Finance costs

Included in interest on bank loans, guarantees and overdrafts in the six months to 31 December 2009 is £3.9m of exceptional transaction costs (year ended 30 June 2010: £6.5m). See note 6.

Bond interest is now classified in finance costs. Prior periods have been restated to reflect the reclassification from operating expenses.

6. Exceptional and other items

The Group has incurred exceptional items in the period. These arose from the impairment of goodwill (note 10) and the ongoing restructure of the Group. A significant element of the exceptional and other items do not represent a cash cost in the period.

7. Tax

The tax charge for the period has been calculated by applying the Directors' best estimate of the effective tax rate for the year with consideration to the geographic location of the profits, to the loss before tax for the period.

8. (Loss)/Earnings per share

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

The 2009 figures have been restated to reflect the impact of the share restructuring in January 2010.

9. Dividends

No dividend was proposed or paid in the six months to 31 December 2010 (2009: £Nil).

10. Goodwill

Goodwill is tested for impairment at the interim and financial year end reporting dates and whenever there are indications that it may have suffered an impairment. Goodwill is considered impaired to the extent that its carrying amount exceeds its recoverable amount, which is the higher of the value in use and the fair value less costs to sell of the cash generating unit to which it is allocated. In the impairment tests of goodwill performed in 2009 and 2010, the recoverable amount was determined based on the value in use calculations.

Management based the value in use calculations on cash flow forecasts derived from the most recent financial forecasts approved by the Board including certain sensitivities, in which the principal assumptions were those regarding sales growth and changes in direct costs.

Following the review at 31 December 2010, management decided that a further impairment of £12,143,000 was necessary.

£1,950,000 of goodwill impairment relating to Republic of Ireland acquisitions was reclassified to acquired intangibles.

11. Property, plant and equipment and intangible assets

12. Work-in-progress

The value of work in progress comprises the costs incurred on a contract plus an appropriate proportion of overheads and attributable profit. Profit is recognised on a percentage completion basis when the outcome of a contract or project can be reasonably foreseen. Provision is made in full for estimated losses.

13. Trade and other receivables

14. Provisions, liabilities and other charges

Professional indemnity claims

Provisions are made for current and estimated obligations in respect of claims made by contractors and the general public relating to accident or other insurable risks as a result of the business activities of the Group. These include claims held by the Group's captive insurance company, Oakdale Insurance Company Limited.

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 properties

The Group has a number of vacant leasehold properties, with the majority of the 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 potential sub-tenant arrangements and assumptions relating to later periods of vacancy.

15. Financial liabilities

16. Cash generated from operations

17. Analysis of net debt

Other non-cash movements represent currency exchange differences.

18. Related party transactions

There have been no changes in the nature of related party transactions as described in the 2010 Annual Report and Accounts and there have been no new related party transactions which have had a material effect on the financial position or performance of the Group in the period to 31 December 2010.

19. Contingent liabilities and guarantees

The Company and its subsidiary undertakings cross guarantee to the Group's principal bankers the overdrafts, if any, of each Company covered by the guarantee. At 31 December 2010, the Group's overdrafts amounted to £7,634,000 (2009: £5,460,000).

20. Availability of interim report

The interim report will be posted to shareholders in due course and copies will be available at the Company's registered office at Arndale Court, Otley Road, Headingley, Leeds LS6 2UJ, and on the Company's website: www.wyg.com.