Interim Results

8 December 2011

Cyril Sweett Group plc

("Cyril Sweett" or "the Group")

Interim results for the six months ended 30 September 2011

Cyril Sweett is a leading international construction and property consultancy offering expertise in cost management, project management and a comprehensive range of specialist services. The Group was founded in 1928 and employs over 1,200 staff across some 50 offices in Europe, the Middle East, North Africa, India, Sri Lanka, Asia Pacific and Australia.

The Group is pleased to announce its unaudited interim results for the six months ended 30 September 2011.

Financial highlights

♦ before the impact of exceptional administrative expenses of £0.9m and amortisation of acquired intangibles of £0.2m (2011 £0.1m).

Operational highlights

·; Investment in the Asia Pacific region continues with the opening of offices in mainland China, Thailand and Vietnam; 550 staff are now employed in the region, up from 350 18 months ago

·; Record order book of £91m, up 17% year-on-year

·; Restructuring actions to deliver £2m of annualised cost savings from 1 April 2012

·; Global reach continues to facilitate cross-selling opportunities amongst blue-chip client base

·; Kim Berry appointed Executive Director of the Board and Managing Director, Asia Pacific

·; Further investment in strength of PPP/PFI portfolio

Chief Executive Officer Dean Webster said:

"The first half of the year was characterised by difficult market conditions. This has not stopped us from investing in the further expansion of our business, in particular across the Asia Pacific region. In China, our presence has grown from 350 to over 550 staff, with the opening of new offices in mainland China, together with Thailand and Vietnam. In Europe, we have continued with our investment in the energy sector and made further PPP investments. Whilst our expansion has increased our debt levels, we expect these to reduce significantly in the second half of the year as our cash generation improves.

"Our restructuring actions will deliver £2m of annualised cost savings from 1 April 2012, mainly in the Europe region. We are also encouraged by an improved level of bidding activity across the Group, as evidenced by our growing order book. Whilst our markets remain fiercely competitive, improved trading in our core services, combined with opportunities to recycle some of our PPP investments, means we remain on track to deliver on our current expectations for the full year.

"Our order book currently stands at a record £91m, an increase of 17% year on year, and shows a healthy level of diversification, with £41m from our European operations (up £7m from £34m in November 2010) and £50m from our international operations (up £6m from £44m in November 2010). This is as a result of increased bidding activity in Europe and the success of our strategy to expand across the Asia Pacific region.

"Despite the challenging conditions, the dedication of our staff, both to the Group and to the clients we serve, has been unwavering. The Group enjoys a long standing reputation for providing clients with independent advice, a crucial differentiator as we continue to develop our presence and service offering across the world's trade and business hubs."

Enquiries

HALF YEAR MANAGEMENT REPORT

Review of Operations

During the period, the Group has continued to deliver on its strategy of consolidating its position where it already leads whilst diversifying across new regions and sectors further strengthening its blue-chip client base.

The Asia Pacific region continues to provide the Group with significant growth opportunities and we have used these to strategically expand our global footprint. During the period we opened our first offices in Vietnam and Thailand, further increasing our penetration within the Asia Pacific region, where we now have offices in every major business hub. The results for the region as a whole, driven largely by our successful expansion in China, were significantly impacted by our poor performance in Australia, where the Group is exposed to challenging public sector markets, and the investment costs associated with the start-ups in Thailand and Vietnam. The recently announced appointment of Kim Berry, Managing Director with responsibility for Asia Pacific, to the Board recognises the importance of this region and his role in its development.

In Europe we continue to experience a highly competitive market environment. Whilst there has been reduction in volumes in the public sector our health and education teams continue to perform well. The private sector continues to show a desire to invest, although the timing and size of projects is being frustrated by macro-economic uncertainty in the region.

In the Middle East, the difficult conditions brought about by the Arab Spring and economic environment have had a significant effect on our operations. Nevertheless, we are focusing on developing our presence outside the UAE and are securing new commissions as a result, in addition to being named Construction Week Consultant of the Year, Saudi Arabia.

In addition to its globally recognised expertise in the retail, transport, hospitality and leisure sectors, the Group has also reinforced its position as a market leader within the health sector during the period, culminating in Cyril Sweett winning Health Investor's coveted Property Consultant of the Year award. The Group has advised on over 500 separate healthcare projects over the past 12 months, with a construction value of some £4.5bn.

The Group has taken significant steps to reduce its administrative cost base during the period, resulting in over £2m in savings on an annualised basis from 1 April 2012. The costs associated with this restructuring have been recognised as exceptional administrative expenses during the period. The funding requirements of the Group's expansion in the Asia Pacific region, particularly China, and development of our Investment business are positive reasons for the increase in net debt from £5m to £10.8m.

The diverse nature of the Group's operations continues to facilitate cross selling opportunities across disciplines and geographies both with existing offices and alliance and joint venture partners. As a result we are now seeing an improved level of bidding activity and the Group order book has increased by £7m to stand at £91m, with 55% coming from outside Europe.

We are an independent, integrated global consultancy that remains focused on delivering on our strategy of developing across growth regions and sectors.

Proportion of Group revenue

Order book

Note: Order book figures do not include non-awarded work under framework appointments

Europe

Revenue from Europe, which comprises our operations in the UK, Ireland, France and Spain was £20.4m (H1 2011: £22.6m), accounting for 57% of the Group's revenues. Segment profits before exceptional expenses and amortisation of acquired intangibles were £1.7m (H1 2011: £1.4m) and the order book is £41m (H1 2011: £34m).

As was highlighted at the Group's AGM, we have taken steps to re-align our European business to the current prevailing market conditions and ensure we are able to service customers with a more appropriate cost base. This process has been successfully completed and we have begun to see improved trading within the UK market during the period.

In particular, the Group has made progress within the health sector, securing commissions with both public and private sector clients including a range of NHS Trusts and the London Clinic. The Group has also cemented its leading position within the sector's PFI market by securing four of the five acute PFI schemes that have come to market in the last two years.

We have a long history of delivering high profile projects in the retail sector and we are currently engaged on a number of projects across Europe, including new build developments such as Trinity Leeds, extensions to existing developments such as Arndale and West Quay and redevelopments of existing retail parks such as Meteor Park and Forester Park.

In the Hotel and Leisure sector our progress has been encouraging, as we have continued with the London Eye refurbishment project and secured commissions with luxury hotel brands such as Shangri-La at The Shard.

The Group has also secured a number of high-profile projects from existing clients in the Transport sector during the period, including Transport for London and Network Rail, adding to existing commissions with BAA at Heathrow Airport.

The Group has made further progress in developing its presence across Southern Europe where we are capitalising on cross selling opportunities from across the Group as well as securing commissions with locally based clients. We continue to leverage our relationships with existing international clients such as Hilton and Primark to undertake work across a number of geographies including Spain, Portugal and Italy.

In terms of our PPP Investment activities the Group has continued to develop its portfolio, which now stands at £5.6m. During the period construction commenced on the Sedbergh Medical Centre in Cumbria, the first of a series of Express LIFT schemes that the Group's consortium is delivering.

In October 2011, the Group was selected as preferred bidder on a £180m Social Housing project in Leeds as part of the Sustainable Communities 4 Leeds consortium. Following financial close, we will lead the design, build, finance and maintain 388 new-build dwellings and refurbish in excess of 1,200 existing properties.

Our appointment on hub North, which reached financial close in March 2011, is now generating revenue for the Group's consulting activities in the region.

Our investment in the South Ayrshire Schools project, the first that we have divested, was sold in June 2011. The profit on disposal was £420,000. Given the resilient nature of this part of the business, we will continue to develop our PPP portfolio, including exploring potential value realisation opportunities as and when they arise.

Middle East, Africa and India (MEAI)

Revenue from Middle East, Africa and India was £4.7m (H1 2011: £5.2m), accounting for 13% of the Group's revenues. Segment losses before exceptional expenses and amortisation of acquired intangibles were £0.5m (H1 2011: profit of £0.1m) and the order book is £5m (H1 2011: £10m).

The Group has been operating in the Middle East since 2001 and has built an exceptional reputation which has enabled it to be engaged on some of the highest profile projects in the region, including the CMA Tower in the Kingdom of Saudi Arabia, one of the region's largest infrastructure projects.

Overall, market conditions in the Middle East remain challenging but, following the Arab Spring earlier in the year, we are beginning to see the early stages of increased investment activity in the UAE and are spreading our workload across a wider geographical base.

The Group has continued to expand and develop its sector offerings across the region. In particular, the hospitality service offering within the Middle East has been strengthened through commissions for Grand Hyatt and Le Meridien, as well as other regional hotel developers and operators. We also continue to develop our dispute resolution service offering in the region, with commissions on a number of high profile projects.

The Kingdom of Saudi Arabia remains one of the Group's target growth markets in the Middle East and a new office was opened in October 2011 in Riyadh, the Kingdom's capital city. We also continue to evaluate opportunities in Qatar and Kuwait and are engaged on Muscat Airport in Oman.

The Group's presence in India also dates back to 2001 and we service clients from the major trade and business hubs in Chennai, Bangalore, Delhi and Mumbai. During the period we have secured a number of high profile appointments in the Mixed use, Hospitality, Commercial and Residential sectors, including the 600 key, ITC Grand Chola Hotel and the 1.5 million square feet Eden Park residential development, both in Chennai.

The Group also has operations in Sri Lanka and is encouraged by the market opportunity developing there in the Hotel and Leisure sector.

Asia Pacific

Revenue from Asia Pacific was £11.0m (H1 2011: £7.2m), accounting for 30% of the Group's revenues. The Widnell Sweett revenue was £6.8m in the period and £2.7m for the 3 months post-acquisition in 2010. After significant investment in the region, as described earlier in this statement, segment profits before exceptional expenses and amortisation of acquired intangibles were £0.8m (H1 2011: £0.9m) and the order book is £45m (H1 2011: £34m).

Markets in the Asia Pacific region have again generally proved to be resilient against the backdrop of the global downturn. The Group now employs over 550 staff in China and Hong Kong, compared with 350 in July 2010 when the Group acquired Widnell Sweett. We continue to improve our depth of service offering in the area having been appointed to provide project management services for the flagship store in Hong Kong of Shanghai Tang, the region's most exclusive independent retailer. We have also secured a number of large scale projects across mainland China during the period, including a two-year framework appointment with New World Developments in Wuhan, and a range of commercial and retail developments for Merck Pharmaceutical, Hutchison Whampoa, Tesco, Huawei Technologies and Tencent Holdings.

We have continued to develop our presence across Southeast Asia, including securing commissions in Thailand, where we are currently engaged on two luxury residential developments. In Singapore, where we have been operating since 1989, we enjoy a diverse client base, including Barclays Capital, Blackrock, Pepsi and Nike. Further opportunities in the region are being generated by Meiho Sweett, the Group's joint venture in Japan, and the Group's alliance in Malaysia with Perunding C&T Management.

In Australia, the Group operates from offices in Melbourne, Sydney and Brisbane. A recognised market leader in the Health and Aged care sector, we have secured new commissions in both the public and private sectors during the period, including the Healthscope John Fawkner Private Hospital, Victoria Department of Health and Uniting Care Queensland, the biggest provider of aged care and retirement living accommodation in Australia. As described earlier, the profit performance in Australia has been disappointing. However, additional marketing resource is now in place aimed at widening our sector exposure and improving revenue levels.

Results

Revenue for the period was £36.1m (H1 2011: £35.0m). Operating loss was £0.1m (H1 2011: profit of £1.5m) and operating profit margin was (0.2)% (H1 2011: 4.2%). Loss before tax was £0.2m (H1 2011: profit of £1.3m) and basic earnings per share were (0.5p) (H1 2011: 1.6p). At the period end the Group had net borrowings of £10.8m (H1 2011: £5.0m). Exceptional administrative expenses of £0.9m comprised restructuring initiatives to reduce the ongoing cost base.

Exchange rate movements in the Group's major trading currencies had a minimal impact on both revenue and results.

Consolidated Statement of Cash Flows

Net debt increased in the period from £5m to £10.8m predominantly as a result of a £4.4m increase in receivables, much of which relates to increases in work in progress values in the UK and in Widnell Sweett, and £1.3m applied to financial assets.

The Group's lock-up (the number of days' trading represented by debtors and work in progress) was 90 days at 31 March 2011 and 109 days at 30 September 2011. Since then additional effort has been employed to effect a reduction, particularly in the UK and Widnell Sweett.

Principal risks and uncertainties

The principal risks and uncertainties that existed on publication of the Group's audited annual report and accounts in July 2011 and which were itemised in the risk management review are unchanged and comprise market conditions, contract management, professional negligence, pricing, growth and integration, systems and IT, financial reputation and health, safety and environmental risks.

A number of specific risks attach to the Group's potential profit performance in the second half-year:

·; overall macro economic situation in global markets

·; the value of work in progress on the Leeds Social Housing project on the books at 30 September 2011 is dependent on the project achieving financial close

·; the profit projection is materially dependent on certain asset sales being concluded in the period

·; there is a possibility of non-collection of debtors in Dubai where court judgements have been granted in favour of the Group but appeals have been lodged

Dividend

The Board has declared an interim dividend of 0.2 pence per share (H1 2011: 0.5 pence per share) payable on 16 January 2012 to shareholders on the register at 16 December 2011. This reduction is in recognition of the trading result in the period and also the risks and uncertainties faced by the Group in the second half-year.

Outlook

We have aligned the business to the current market conditions and we are anticipating an improved performance in the second half of the year. The order book has continued to grow since the period end and we are encouraged by the level of recent bidding activity across the Group. We also expect improved cash generation in the second half of the year to significantly reduce our net debt level.

We are a diverse business both in terms of the sectors and regions we operate in. We also benefit from highly dedicated staff and a client base that values our independence and exceptional levels of service delivery. Whilst we expect market conditions to remain challenging in Europe and the Middle East, our investment in expansion across Asia Pacific will continue to benefit the Group as a whole and we remain on track to deliver on our current expectations for the full year.

The financial information contained in this announcement has not been audited. Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward-looking statements.

Cyril Sweett Group plc

Consolidated Income Statement (unaudited)

for the six months ended 30 September 2011

Cyril Sweett Group plc

Consolidated Statement of Comprehensive Income (unaudited)

for the six months ended 30 September 2011

Cyril Sweett Group plc

Consolidated balance sheet (unaudited)

Cyril Sweett Group plc

Consolidated Statement of Changes in Equity (unaudited)

Cyril Sweett Group plc

Consolidated Statement of Changes in Equity (unaudited)

Cyril Sweett Group plc

Consolidated Statement of Cash Flows (unaudited)

Cyril Sweett Group plc

Notes to the Financial Information

1. Basis of preparation

General information

Cyril Sweett Group plc is a company incorporated and domiciled in the United Kingdom. The address of the registered office is 60 Gray's Inn Road, London, WC1X 8AQ. The principal activities of the Group include the provision of construction cost consultancy, project management and other specialised consultancy services, including building surveying.

This financial information is presented in pounds sterling, the currency of the primary economic environment in which the group operates. The group comprises the company and entities controlled by the company (its subsidiaries).

Basis of preparation

The condensed consolidated financial information presented is for the six month periods to 30 September 2011 and 2010 and the full year to 31 March 2011.

The most recent statutory accounts of the Group, prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, are for the year ended 31 March 2011, which have been delivered to the Registrar of Companies and on which the auditors gave an unqualified opinion.

This condensed interim consolidated financial information has been prepared in accordance with the requirements of the AIM Rules and in accordance with IFRSs as adopted by the European Union and is presented on a basis consistent with the accounting policies adopted in the consolidated financial information of Cyril Sweett Group plc for the year ending on 31 March 2011. It does not constitute accounts as defined by section 434 of the Companies Act 2006. This condensed interim consolidated financial information has not been reviewed or audited.

Estimates and judgements

The preparation of accounts in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting period. These estimates are based on historical experience and various other assumptions that management and directors believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources.

Areas comprising critical judgements that may significantly affect the Group's earnings and financial position are revenue recognition, valuation of intangibles including goodwill, restructuring activities, provisions for bad debts, provisions for pensions, income taxes, and share-based payments.

After making enquiries, the directors have a reasonable expectation that the 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 Interim results and financial statements.

Accounting policies

The accounting policies and methods of calculation adopted are consistent with those of the annual financial statements for the year ended 31 March 2011, as described in those annual financial statements. The Annual Report and Accounts for the year ended 31 March 2011 contain details of new standards, amendments and interpretations which have been adopted, none of which have had a significant effect on the reported results or financial position of the Group for the six months ended 30 September 2011.

2. Segmental analysis

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as being the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on the reports used by the Board. The Board considers Cyril Sweett's business by geography, being Europe, the Middle East North Africa & India and Asia Pacific. All three categories generate revenues from the provision of quantity surveying, project management and specialist services / management consultancy.

Widnell Sweett is included within Asia Pacific for the whole of the 6 months to 30 September 2011, for 3 months in the 6 months to 30 September 2010 and for 9 months in the year to 31 March 2011.

The segment results have been significantly impacted by the performance of the Group in Australia and by investment costs associated with the start-ups in Thailand and Vietnam.

2. Segmental results (continued)

2. Segmental analysis (continued)

The assets of the segments include intangible assets, property, plant and equipment, assets from finance leases, financial assets, trade receivables and other receivables and cash and cash equivalents. The liabilities comprise trade and other payables and retirement benefit obligations.

3. Income taxes

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. This is expected to be 29% for the full year on continuing operations (30 September 2010 26% and 31 March 2011: 29.0%) representing the reduced proportion of the Group's profits earned in lower tax jurisdictions.

4. Dividends

The board has declared an interim dividend in respect of the half year of 0.2p per share (2011: 0.5p), which is not reflected in this financial information. The interim dividend is payable on 16 January 2012 to ordinary shareholders on the register at the close of business on 16 December 2011 and will be recorded in the financial statements for the year ending 31 March 2012. During the period the final dividend of 0.80p per share (2010: 0.80p per share) in respect of the year ended 31 March 2011 was paid. This amounted to £530,256 (2011: £516,268). Dividends in respect of shares held in treasury amounted to £nil (2011 £nil).

5. Earnings per share