B R I N G I N G I D E A S T O L I F E A N N U A L R E P O R T

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					A N N U A L   R E P O R T   &   A C C O U N T S   2 0 0 6




B R I N G I N G         I D E A S       T O       L I F E
Our award winning watergarden scheme at 41 Millharbour that received both Best Urban
Landscaped Design and Best Overall Landscape Design at the New Homes Gardens Awards.


                              Financial Highlights                         1
                              Chairman’s Statement                         2
                              Operations Review                            4
                              Our Future                                   13
                              Weston Aviation                              22
                              Weston Business Centres                      24
                              Corporate & Social Responsibilities          25
                              Weston Group Directors                       32
                              Corporate Governance                         33
                              Group Structure                              34
                              Directors & Senior Managers                  35
                              Financial Review                             36
                              Directors’ Report                            38
                              Statement of Directors’ Responsibilities     39
                              Auditors’ Report                             40
                              Consolidated Profit and Loss Account         41
                              Consolidated Balance Sheet                   42
                              Company Balance Sheet                        43
                              Consolidated Cash Flow Statement             44
                              Notes to the Accounts                        45
                              Five Year Summary                            56
                              Officers and Advisors                        57
                                                                             Net Assets increased 17.6% to £25m

                                                                             Work in progress increased 39.6% to £101.2m

                                                                             Turnover £14.5m lower at £82.8m

                                                                             Operating profit reduced by £5.5m to £13.8m
FINANCIAL HIGHLIGHTS
                                                                             Earnings per share down 25.8% to 21.3p




                       TURNOVER                                                    OPERATING                                    PROFIT




                                                                                                                  £15,990,277



                                                                                                                                  £19,276,331



                                                                                                                                                    £13,825,171
       £45,969,687



                     £51,926,996



                                   £77,706,692



                                                 £97,359,817



                                                               £82,816,859




                                                                                    £8,608,859



                                                                                                   £9,212,068
                                                                                       6 8



                                                                                                      2 0



                                                                                                                         ,



                                                                                                                                         ,



                                                                                                                                                           ,
              ,



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                                                                                                                    5



                                                                                                                                    9



                                                                                                                                                      3
         5



                       1



                                     7



                                                   7



                                                                 2




       2002          2003          2004          2005          2006              2002            2003           2004            2005              2006



     EARNINGS PER ORDINARY SHARE                                                                 NET            ASSETS
                                                                                                                £15,368,859



                                                                                                                                £21,246,763



                                                                                                                                                  £24,992,743
                                                                                  £7,193,537



                                                                                                 £9,816,535
          12.3p



                        11.6p



                                      21.0p



                                                    28.7p



                                                                  21.3p
             3



                           6



                                         0



                                                       7



                                                                     3




       2002          2003          2004          2005          2006              2002            2003           2004            2005              2006




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                                                               PAGE 1
                                                 It has been another challenging year for
                                                 the Company but with our results in
                                                 line with projections. Against these
                                                 results we have made considerable
                                                 progress with major planning gains and
                                                 site acquisitions that put us in a
                                                 position of strength for the year ahead.




                                                             C H A I R M A N ' S S TAT E M E N T



The housing market in the UK has been             slow in coming leaving the industry
difficult throughout the year and the decline     constantly struggling with the supply of
in transactions is reflected in our results       much needed housing for the first time
which saw turnover at £82.8m down 15%             buyer market and no less so than in the area
against last year.                                much publicised by the Government, in the
                                                  Thames Gateway.
LAND
We have secured a wide range of sites during      Against this backdrop a major achievement
the year with a particular increase in larger     and milestone for the Company has been to
scale developments such as Basildon               achieve planning on our site in Battersea,
(425 units), Maidstone (190 units),               adjacent to The London Heliport, for 251
Canterbury (141 units), Colchester (155 units)    units and a 100 bed hotel with prime office
and another Essex based site due to               space and new facilities for the Heliport.
complete in 2008 for 700 units.                   Work has begun on site with a projected
                                                  completion date of 2009.
In addition we have acquired Mayfield
College in Sussex which will comprise the         SALES
refurbishment of the former Grade II listed       As indicated above there has been pressure
college into luxury apartments and new            on sales but more on a regionalised basis as
build houses and apartments.                      opposed to generally across all our
                                                  developments which have seen a mixed
PLANNING                                          response. The rise in interest rates and
The need for reforms to the current system        current uncertainty over further increases
are much acknowledged but continue to be          has had an obvious impact but the quality of



  PAGE 2        WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
C H A I R M A N ' S S TAT E M E N T



        our product range and reputation in the          conversion rates for bookings for the
        market is helping to sustain a reasonably        Conference Centre. A further unit is being
        steady interest and conversion rate with our     constructed at Colchester modelled on the
        new sites.                                       success of The Stansted Centre.


        AVIATION                                         STAFF
        It has been an exceptionally busy year for       The Board recognises the value, support and
        The London Heliport with activity levels at      loyalty of our employees in the development
        an all time high, since our ownership, with      of the business and on behalf of them I
        the number of events, sporting and               would like to take this opportunity of
        otherwise, that have taken place during the      thanking them for all they have achieved
        year. Having achieved planning for our site      over the last year.
        in Battersea we move closer to significantly
        improving the facilities and scope at the        PROSPECTS FOR THE
        Heliport to capitalise on this unique            YEAR AHEAD
        operation and service.                           The housing market is anticipated to remain
                                                         challenging but we remain confident that
        BUSINESS CENTRES                                 with the variety and quality of our product
        Our first unit, The Stansted Centre, has now     range and the developments in the pipeline
        firmly established itself as a recognised        we shall enjoy a successful year ahead.
        operation offering quality serviced office and
        conference facilities with occupancy rates
        averaging 80%. We have been particularly         Bob Weston
        pleased with the high level of enquiries and     Chairman and Managing Director



        WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                      PAGE 3
PAGE 4   WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
      4 1     M I L L H A R B O U R ,                  D O C K L A N D S ,             L O N D O N

    Work on 41 Millharbour has now ended with the
    recent completion of the super penthouse, a
    massive 3,700 sq footage, making it possibly the
    largest penthouse in Docklands and a suitable
    symbol of the quality, high standards and
    ambitions of the Company.


    Recognition of our achievements has been swift,
    with an assortment of awards ranging from the
    Design and Decoration Award of Showhome and
    Interior 2005 for the show penthouse through to
    our recent winning of the highly regarded New
    Homes Garden Awards for Best Urban Landscaped
    Design and Overall Landscape Design of the Year
    Award for our ground-breaking, stylish garden.




OPERATIONS               REVIEW




                                                         Opposite and featured on this page
                                                         the Super Penthouse at 41 Millharbour




    WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                            PAGE 5
T H E        B L O C K ,            C U B A          S T R E E T ,   L O N D O N   E 1 4

A contemporary and stylish approach to the
design and construction of this striking eight
storey development of 25 apartments and a
penthouse has made The Block a huge
commercial success. With its 100% sale off plan,
early on in its construction, this resulted in
major savings in advertising and marketing
initiatives.




                                                              OPERATIONS             REVIEW



R A I N E            G A R D E N S ,
W O O D F O R D                  G R E E N

Designed to appeal to the middle income bracket,
these fifteen apartments, complete with fully
integrated high specification kitchens, have been
finished to the high standards and level of
professionalism expected of the Company. As a
result sales have proved strong. The introduction
of a revolutionary purpose-built, electronically
operated, large sliding skylight in one of the
apartments has once again demonstrated Weston
Homes’ ability to provide innovative solutions for
the benefit of the purchaser.




   PAGE 6         WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
    A sizeable development of 151 apartments built
    over five phases, Chambers Place has proved to be
    one of the Company’s most popular and successful
    schemes to date. Appealing to a healthy mix of
    private purchasers and investors alike, most units
    have sold off plan, which in the face of strong
    competition in the area has demonstrated the
    ability of the Company to provide high quality
    affordable homes to a mixed market.


       C H A M B E R S                          P L A C E ,   P U R F L E E T




OPERATIONS                REVIEW




    WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                        PAGE 7
 B R U M M E L L                         P L A C E ,       O L D      H A R L O W

A striking building, Brummell Place was
sympathetically designed to blend comfortably
with the charms of Old Harlow, reflecting the
heritage of the area. The innate style of the
building, inside and out, has proved immensely
attractive to purchasers. The incorporation of
rounded bay windows, high ceilings and a
stunningly designed and presented show home
has led to a fast take-up of apartments.




                                                           OPERATIONS          REVIEW



C E N T U R I O N                      R O W ,        R O M F O R D

Perfectly placed for city workers, this development
of 19 one bedroom apartments, many with
studies, under a mile from Romford town centre
and the mainline station into London Liverpool
Street, provide an irresistable draw for both local
workers and commuters as well as a number of
investors.




   PAGE 8         WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
    A X I S ,         S O U T H C H U R C H         R O A D ,           S O U T H E N D

                                                    Comprising 24 one and two bedroom apartments,
                                                    this exciting scheme is located at the heart of
                                                    Southend close to the station and within easy
                                                    reach of the promenade. This location, allied to
                                                    the high quality of these apartments, resulted in
                                                    exceptional demand with all apartments sold
                                                    off plan.




OPERATIONS                 REVIEW



    A S P E N                  G R E E N ,
    A S H I N G D O N

    A 16 unit development of one and two bedroom
    apartments in a more traditional style, Aspen
    Green was sold out by the early part of this
    financial year.




    WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                          PAGE 9
L E G R A           G R A N G E ,          L E I G H - O N - S E A

A city-style development of two 3 storey blocks, these apartments appealed to
purchasers ranging from first time buyers through to retired couples.




                                                                     OPERATIONS                     REVIEW



N    U     C    L     E    U     S    ,      L    E    I    G    H      -   O   N   -   S   E   A

Developed on a site earmarked for urban
regeneration, Nucleus has through its inherent
style and quality, revitalised the area.


A collection of 24 luxury apartments, each with
2 bedrooms and second bathrooms, these homes
have proved extremely popular, building on our
reputation in the area.




 PAGE 10            WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
    L O N I C E R A                       P L A C E ,      R A Y L E I G H

    As a departure from Weston Homes’ customary
    developments in the area, Lonicera Place
    comprises an executive development of 3 and 4
    bedroom luxury houses built on the site of the
    former Wyburns Nursery.


    Six different types of house, built in a traditional
    style, have been carefully positioned to form a
    charming enclave, and the inclusion of good sized
    individual gardens for each property has helped to
    further increase desirability.


    Most of the properties were sold off plan, further
    testament to the Company’s reputation for quality
    and reliability.




OPERATIONS                 REVIEW




    WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                         PAGE 11
    R E F L E C T I O N S ,                                       C A M B R I D G E

A stunning development of truly unique deluxe apartments for the high end of the market. Most of these
apartments offer two floors of spacious luxury, featuring floor-to-ceiling glass frontages, mezzanine floors
and large terraces facing the River Cam. Built on the last available stretch of the river bank, within the
boundaries of Cambridge, Reflections again demonstrates the versatility of Weston Homes as well as
providing a stunning showcase for the Company with its first development in the city.




                                                                     OPERATIONS                              REVIEW



C    E    N     T     R    U     M      ,      I    P    S    W     I    C    H




Now completed, this eye-catching development
overlooking the River Orwell has proved
attractive to local people and commuters alike.
Highly commended by the Conservation Panel,
the stylish, hi-tech approach to the design,
inside and out, with a high specification
throughout, has raised the Company’s profile
significantly in this part of the country.




PAGE 12             WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
 B A R T O N    M I L L ,    C A N T E R B U R Y




OUR   FUTURE




                             Nestling on the banks of the Great Stour river,
                             Barton Mill is set to provide a residential
                             environment unequalled in the area. The site,
                             previously the home to a succession of mills
                             dating back to the middle ages, is set to provide
                             a stunning mix of 141 new-build houses and
                             apartments in a range of contemporary and
                             traditional styles to complement the restoration
                             and refurbishment of sections of the historic mill.
                             Development is to be undertaken in phases, with
                             completion anticipated in 2008.




 WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                     PAGE 13
                                                                            OUR           FUTURE




 B R I D G E S             W H A R F ,              B A T T E R S E A ,               L O N D O N
After several years of proposals, planning             As part of this scheme, major improvements will
applications and setbacks, we have finally             also be made to the adjacent London Heliport, a
commenced operations on this, our new                  business owned and operated by the Company’s
Thameside flagship scheme. As with all our sites,      subsidiary, Weston Aviation.
this involves the complete transformation and
regeneration of a run down area with 251 luxury        Interest in Bridges Wharf has been exceptional,
one and two bedroom apartments and                     with successful exhibition trips to Hong Kong and
penthouses, a five star hotel and prime                Russia resulting in the pre-launch sale of 50
commercial/office space.                               apartments.




PAGE 14          WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
OUR   FUTURE




 WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006   PAGE 15
M A Y F I E L D                 C O L L E G E ,                 K E N T

To accommodate the resolution of various ecological issues work has not yet
commenced on site, and an application has been made to vary planning
consent to enable us to start certain refurbishment works on the Grade II
listed building, in advance of the main programme, due to commence
mid 2007.


The refurbished building will be converted into 12 luxury apartments and
the remaining buildings will be demolished to make way for a total of 42
new houses and apartments.




                                                                              O U R   F U T U R E




PAGE 16          WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
                              T H E               P O I N T ,
                              M A I D S T O N E
                              Work has started on this riverside site close to
                              the centre of Maidstone, with a total of 190 one
                              and two bed apartments (58 allocated for social
                              housing) and is due to complete mid 2008.




O U R   F U T U R E




  WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                     PAGE 17
Q      V       ,            C       O       L      C       H       E       S     T        E      R

This development is for 155 one and two bed apartments (17 allocated for
                                                                                     Proposed Business Centre
social housing) within 14 blocks as well as 30,000 sq ft of commercial
space as a Business Centre. Located to the east of Colchester centre and
close to Hythe Station, work is underway with a scheduled completion
date in late 2007.




                                                                               O U R          F U T U R E




PAGE 18              WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
  V I S I O N ,                         S O U T H E N D

  With demolition works completed in September
  2006 work is now well under way on the
  construction of 126 apartments of which 25 are
  allocated for social housing. The development is
  scheduled to complete in late 2007.




O U R       F U T U R E




  N     E    W          M      E    R      C   I     A   ,        H     I    T    C    H   I   N
  Another scheme which has been designed along traditional lines to accommodate planning requirements,
  following previous negotiationns with planners, for 90 one and two bed apartments.




  WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                             PAGE 19
T    H       E        C   O    M     P A          S   S   ,   S   O   U   T   H     E     N    D

                                                                              High tech in appearance, The Compass
                                                                              is a fiercely contemporary building.
                                                                              Minutes from the seafront, and within
                                                                              walking distance of the station, these
                                                                              properties provide the perfect location
                                                                              for a convenient lifestyle.


                                                                              Comprising one block of 24 one and
                                                                              two bedroom apartments, these
                                                                              homes are already generating a great
                                                                              deal of interest, with sales proving
                                                                              encouraging.




                                                                      O U R          F U T U R E
B      A         S    I   L      D      O         N

This former commercial site has been acquired
with planning permission for 425 apartments, all
private, with no allocation required for social
housing. The development is programmed to
complete in 2011 following a start on site as soon
as the current owner transfers to new premises
next year.




PAGE 20              WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
                    L O N D O N   R O A D ,
                    S T  A L B A N S


                    Following a number of planning submissions
                    and appeals, our latest proposal which has
                    been produced to address issues raised at the
                    last planning appeal, is for a traditional
                    scheme comprising 20 one and two bed
                    apartments which goes before Committee
                    later this year.




Duplex apartment, 41 Millharbour, Docklands




                  WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006      PAGE 21
The increase in
movements which was
reported last year has
continued into this financial year.


In addition to the main sporting events,
The Cheltenham Festival, The British Grand Prix and Royal Ascot Week, the biennial Farnborough Air Show
has boosted numbers. On the first two days of
the Air Show, since our ownership began, there
were record numbers of 147 movements per day
with aircraft arriving every five minutes.


Environmental issues have come to the fore with
the Mayor of London conducting an enquiry
into helicopter noise over London during the
                                                                      WESTON (AVIATION) LTD
summer. This report was published on 16th
October 2006.


The Department for Transport has notified us that The London Heliport has been “designated” by the
Secretary of State under Section 25 of the Civil Aviation Act 1992. This makes The London Heliport the
52nd Aerodrome designated by statute in the UK.


As a requirement under the ‘designation’ the Heliport is working with Wandsworth Council to form a
Consultative Committee which will have representatives from Councils neighbouring the Heliport, users,
operators and local resident groups.


The Heliport will be establishing a noise monitoring system not only for its own purposes but also to ensure
that the Heliport users are adhering to the ‘fly neighbourly’ policy issued by the British Helicopter Advisory
Board and adopted by Weston (Aviation) Ltd. The Company has again completed very successful CAA audits
of the Heliport operations and air traffic control procedures and there have been no reportable incidents
throughout the year. The Heliport’s fully trained staff are recognised within the industry as some of the best
in the UK and this is testament to their professional skills, commitment and dedication.


The Company continues to explore sponsorship opportunities with prospective clients and continues to
consult with customers and users to explore ways of improving our service and facilities.




PAGE 22           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
     Construction has commenced at the Bridges
     Wharf site next to the Heliport and this will
     include new customer lounges, reception and
     other facilities together with a new air traffic
     control tower. When complete, and following
     demolition of existing facilities, the apron will
     be enlarged to provide more handling and
     parking areas for helicopters.




WESTON (AVIATION) LTD




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006        PAGE 23
T H E             S T A N S T E D                           C E N T R E

Now in its third year of operation the Stansted Centre has enjoyed well established occupancy rates for the
year which have averaged 80%. Competition in the locality has increased but with our location, quality and
range of facilities this has not had a major impact on the business. We have secured a firm customer base
with now 50 % of our clients, excluding those using our virtual office facilities, having been with us for
more than one year.


Activity levels in the use of the Conference
Centre have increased and advanced bookings
are now at a record level.


Sites for potential new business centres have
been located and construction is due to
commence on our next centre located in
Colchester as part of a scheme for both
residential and commercial use.




                                                                      WESTON
                                                              (BUSINESS CENTRES)                              LTD




PAGE 24           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
     O U R              P E O P L E

     Without doubt any organisation will acknowledge that its greatest asset is its employees and we are no
     exception.


     Following accreditation by Investors in People in the previous year, we achieved a placing in the Sunday
     Times Best 100 Companies To Work For in the Smaller Companies category (those with less than 250
     employees). We are working to implement positive changes in the areas where a need for improvement was
     indicated by the surveys carried out in this process.


     Our Management Trainee and CareerSTART programmes continue successfully. This year saw a substantial
     new intake for CareerSTART in advance of what will be an even busier year ahead with the range and scale
     of our forthcoming developments.


     The Company is well on track with its objective to ensure the availability of skilled labour in all disciplines
     with the development of “home grown” talent via training schemes. We aim to promote the variety of
     construction industry careers available to young school leavers with a hope that construction will, in future,
     appear within the top ten careers of choice to address the shortage of skills in the industry.


     Once again, we are extremely pleased that our commitment and investment in this area continues to be
                                                                 recognised this time with the Essex in Boom
                                                                 ‘Spirit of Enterprise’ Award.


                                                                 The investment in training is not confined to new
                                                                 employees but extends right across all areas of
                                                                 the Company and we have combined with
                                                                 Helmsman Training to put together training
CORPORATE & SOCIAL                                               programmes for needs identified by our
 RESPONSIBILITIES                                                appraisal system.




     This partnership also seeks to ensure that all training and development is focused on personal, team and
     Company objectives and meets our need, under Investors in People, to achieve business goals through
     employee training and development.


     We aim to provide our workforce, in recognition of their contribution to our success, with benefits which
     are competitive in the market place and match their contribution. In the Employee Benefits Awards 2006
     the Company’s Healthcare Strategy was judged as being Highly Commended.




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                      PAGE 25
T H E              E N V I R O N M E N T

As a responsible developer we have always been committed to meeting our obligations to ensure any
damage to the Environment is minimal and we have a programme to enhance this strategy through our
Environmental Policy which states that we will:


• Comply with all relevant environmental legislation and co-operate fully with regulatory agencies such as
employing best practical means to minimise
noise, dust and vibration during construction


• Assist in enabling the Company to carry out
its operations aimed at pollution prevention
and prevent environmental impact


• Provide training to employees to ensure
awareness of all environmental issues relevant
to their activities as well as their roles and
responsibilities


• Ensure contractors employed by the Company
apply the same standards of environmental
management as the Company itself.




                                                                CORPORATE & SOCIAL
                                                                 RESPONSIBILITIES


The Company has had a number of ecological
challenges during the year. To comply with our
obligations under the above Policy and that of
regulatory bodies, this has impacted on our
development programme including:


Canterbury – where it was necessary to transfer
slow worms and grass snakes that were known
to exist on site to new habitats.


Mayfield – where programmes involving the
relocation of bats and great crested newts will
be implemented in the coming months.




PAGE 26            WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
     S U S T A I N A B I L I T Y

     As a business we have focused from day one on the development of brownfield sites only and therefore
     automatically complied with the target the Government introduced for developers to maximise the
     redevelopment of brownfield sites.


     The Government’s second target, to build sustainable communities with an appropriate mix of social
     housing is, in part, determined and controlled, as far as the social housing element is concerned, by the
     planning process.


     To meet this target and the expectations and demands of our customers to live in modern and energy
     efficient environments, we have introduced a range of initiatives including:-


     • The introduction of the Project Genesis Programme which sees a shift away from traditional on-site
     construction to fabricating components off site in factories ready for installation once the main
     construction process has been completed. The benefits include: reduced wastage thereby reducing
     depletion of natural resources; improved quality of finish and using wood or wood based products from
     certified and well managed sustainable forests.


     • At our site in Battersea, as part of a water conservation scheme, we are including a wetland area and
     introducing the installation of a biomass boiler as a source of renewable energy.




CORPORATE & SOCIAL
 RESPONSIBILITIES


     • The re-cycling of on-site waste following demolition, which involves the segregation of waste by
     competent contractors. The use of such waste includes the base upon which Piling Rigs sit, which are made
     of bricks and other waste saved.


     • A new “turn it off” campaign has been introduced at Head Office, with all electrical equipment being
     turned off at the end of each day.


     • An audit of paper usage is being conducted with the key objective of a reduction in paper used thereby
     reducing waste and contributing towards a more environmentally friendly system.


     The Company is committed to its environmental responsibilities through the continued application of its
     Internal Controls and Procedures which are subject to regular review by the Board.




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                   PAGE 27
C U S T O M E R                           S E R V I C E

The Company is committed to providing customer service to the highest standards. To this end we do not
operate a call centre but a personal service with the name and contact details of the dedicated customer
care assistant identified in the “Welcome to your New Home” letter which is sent to each new customer
upon legal completion of the purchase of their new home.


A key to the success of our team is the thorough knowledge of the products incorporated within their
specific development, a result of on-site training with our Quality Control Team and the manufacturers.
All calls received are monitored on a system called Coins (Construction Industry Solutions) by way of a Key
Performance Indicator displayed on a plasma screen within the department. This identifies the number of
customers waiting; issues outstanding and time they have been outstanding. It also tells the team how
many units are in warranty.


Issues arising are dealt with by our team of in-house multi skilled technicians, who regularly undertake
training to keep them familiar with all new products and changes in regulatory requirements.


The Board monitors the performance of the team via a quarterly report, produced externally and based on
customer feedback, to ensure standards and quality of service are maintained.


The Company’s service was recognised recently by its award at the Essex Business Awards for best Customer
Care and Service.




                                                                 CORPORATE & SOCIAL
                                                                  RESPONSIBILITIES




PAGE 28             WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
     O U R              B U S I N E S S                         P A R T N E R S

     We have long since understood the contribution our suppliers, contractors and professional advisors
     continue to make to our success. In recognition this year saw the 13th Annual Awards Luncheon which has
     increased in size each year since its launch and is unique within the industry. A total of eleven awards were
     made during the ceremony and entertainment was provided by Steve Davis.


     The introduction of our Project Genesis programme has, in part, necessitated an even closer forging of
     relationships with a number of our key partners with a reliance on the part they play in a departure from
     traditional construction and where certain products are produced in factories and delivered to site ready
     for installation. An example of this are the door sets we have developed with a supplier and which are now
     a market leader in style, finish and performance.




CORPORATE & SOCIAL
 RESPONSIBILITIES


     B U I L D I N G  D E S I G N                                             &
     C O N S T R U C T I O N
     With the demands from customers for modern and energy-efficient homes as well as those from planning
     and regulatory bodies environmental impact is now an established consideration in the design and
     implementation of our developments. As well as those associated with our Project Genesis programme we
     are working with all our business partners, wherever appropriate, in the employment of designs and use of
     materials that are environmentally friendly.




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                   PAGE 29
H E A L T H                       &            S A F E T Y

Health and Safety remains paramount in all our operations and the Board’s commitment to maintaining
the highest standards has enabled us, during our rapid expansion, to achieve a record to be proud of and
borne out in the statistics below.


There were no major accidents on any of our sites during the year and out of the forty minor accidents only
one operative needed to be off work for more than three days. This is despite the construction industry
having the worst record nationally for fatalities and serious injuries.


Our Health and Safety team maintain this commitment which has also led to:


• Receiving a Silver Medal Award from the Royal Society for the Prevention of Accidents


• A third place award from the East of England Construction Industry Training Board – Health and Safety
  Best Practice Award


• Three awards for sites registered under the Considerate Constructors’ Scheme


• Generally accident rates for the year are at an all time low


• A clean bill of health from the Health and
  Safety Executive on all their site visits
  throughout the year


The Company’s policy of investment in its people
has assisted in ensuring that employees from all
sides of the business are competent in their
particular area of health and safety. This year has
                                                                   CORPORATE & SOCIAL
seen a focus on making sure that all staff, within
the Company, have gained competence in health
                                                                    RESPONSIBILITIES
and safety at various levels through the
Construction Skills Certification Scheme.


Our close working relationships with key subcontractors has seen a continued improvement in health and
safety standards particularly at site level.


The team is currently preparing for the next raft of legislation in the pipeline such as Control of Noise at
Work Act , Corporate Manslaughter and Fire Safety Regulations.




PAGE 30            WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
     I N         T H E             C O M M U N I T Y

     Notwithstanding any obligations the Company may have due to planning conditions it recognises the
     importance of making its own contributions towards the communities in which it operates.

     Firstly we are committed to ensuring all our development schemes sign up to The Considerate Constructors
     Scheme for which a number of our sites have received awards, most recently at 41 Millharbour.

     The Company has had links with the St Clare Hospice since 2001 when it became the Company’s nominated
     charity. Our Golf Day this year in aid of St Clare raised a record £56,000 for the Charity.

     As the Company has evolved and expanded operationally into a wider range of locations our corporate
     bondholder relationship with The Variety Club has enabled us to direct contributions, whether the
     purchase of mini buses or otherwise, to specialist schools and organisations local to our developments.
     We recently purchased a minibus for the Lancaster School in Westcliff on Sea which caters for 96 children
     with profound and multiple learning difficulties, autism and severe and challenging behaviour.

     Additionally the Company also supports The Willow Foundation founded by Bob and Meg Wilson, a
     national charity dedicated to providing special days for seriously ill young adults.

     Our employees continue their own links with various charities, notably the most demanding being the
     Coins Three Peaks Challenge, now in its third year. This year two teams entered and raised £14,000 for
     Care International.




CORPORATE & SOCIAL
 RESPONSIBILITIES




     WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                 PAGE 31
 B O B W E S T O N (51)
 Chairman and Managing Director

 Appointed a Director in 1987, and a member
 of the Remuneration Committee. Before
 forming the Company he had previously
 worked for Fairview New Homes and prior to
 that a number of other companies within the
 industry.



 R A Y W E L L S ACA (48)
 Deputy Chairman and Group Finance Director

 Appointed a Director in 1997 and a member
 of the Audit and Remuneration Committees.
 Prior to joining the Company he spent 7 years
 in a large provincial accounting practice             WESTON GROUP
 before leaving to set up a consultancy
                                                         DIRECTORS
 business in 1989.




 S T E V E B I C K E L BSc Hons (38)
 Administration Director

 Appointed a Director in 1990 prior to which
 he worked for Fairview New Homes and
 Abbey Plc. He gained his degree in Quantity
 Surveying in 1996.




 D I C K T A Y L O R (62)
 Non-Executive Director

 Appointed a Director in 1987 having
 co-founded the Company with Bob Weston
 and is a member of the Remuneration
 Committee. He is also a Director of R G Taylor
 Engineering Limited.




 R I C H A R D D O W N I N G (64)
 Non-Executive Director

 Appointed a Director in 2000 and a member
 of the Audit and Remuneration Committees.
 Formerly a senior partner at Nockolds
 Solicitors, he is also Chairman of Blueprint
 Collections Limited.
                                                  The above are also Directors of
                                                  Weston Homes Plc




PAGE 32          WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
         Companies listed on the London Stock Exchange are required to adhere to the guidelines set out in the Combined Code on
         Corporate Governance which are regularly reviewed. It was revised in 2003 following consideration of the Higgs Report. This
         report followed a review of the role and effectiveness of non-executive directors.

         Whilst the Company is privately owned and therefore is not under any similar obligation to follow such guidelines the Board
         has decided to implement and comply with the Code wherever it is practical and appropriate for a privately run company.

         The principal structure of the Group consists of the Holding Company, Weston Group Plc, and ten operating subsidiaries.
         Weston Homes Plc acts as a management services and supply company and is also the holding company for the majority of the
         operating subsidiaries.

         Key strategic decisions are considered and taken by the Weston Group Board and then directed through the organisation, as
         appropriate, via the Board of Weston Homes Plc which deals largely with the day-to-day operational issues specifically relating
         to the Company’s development activities.




C O R P O R P O R AT E G OV E R NA N C E


         WORKINGS OF DIRECTORS                                                KEY FEATURES OF THE CONTROL
         The Board comprises five directors, two of whom are non              ENVIRONMENT INCLUDE:-
         executive directors which is comparable to the 50/50 ratio           Management Structure
         for much larger companies as recommended by the                      The Group’s control environment is the responsibility of the
         Combined Code.                                                       Directors and individual managers at all levels. The Board is
                                                                              satisfied that the Group has a clear organisational structure
         The Board of Directors meets monthly and receives a full             with clearly defined and understood responsibilities and
         pack of information to enable it to review trading                   lines of accountability.
         performance and to discuss and review strategic and specific
         issues. Minutes of the meetings are circulated to the Board.         Information Systems and Financial Reporting
         It closely monitors the progress of the Group towards                The Group prepares detailed budgets annually together with
         achieving its budgets and targets for which their packs of           working capital and cash flow forecasts. These are based on
         information include monthly management accounts.                     the Group’s strategy and are formally approved by the
                                                                              Board. Performance against plans is actively monitored on a
         All Directors have access to the Company Secretary and,              monthly basis and supported by regular forecasts. Forecasts
         where appropriate, the services of the Company’s                     and actual results are consolidated and presented to the
         professional advisers.                                               Board on a regular basis.

         Apart from matters reserved for the Board it has delegated a         Expenditure Control
         number of its responsibilities to certain Board Committees           Both capital and operational expenditure have a systematic
         as follows:-                                                         control structure largely centred on the budgetary process
                                                                              together with a defined delegation of authority. Review of
         Audit                                                                such expenditure is carried out to confirm financial targets
         The meetings of the Audit Committee are chaired by                   have been met and that expenditure controls have been
         Mr Downing and also consist of Mr Wells and is attended by           diligently applied.
         Mr Thomas (Finance Director of Weston Homes Plc) and the
         auditors and meets normally at least three times a year. Its         The Group’s control systems are designed to manage rather
         key function is to monitor the financial control environment         than eliminate risk and therefore the Board can only provide
         and determine what action and/or recommendations are                 reasonable and not absolute assurance against material loss
         necessary as part of its reporting mechanism to the Board.           or mis-statement.

         Remuneration                                                         Going Concern
         The Committee, chaired by Mr Weston, also consists of Mr Wells       The Combined Code requires the Directors to make a
         and the two non - executive directors for the purpose of reviewing   statement on the Company as a going concern.
         executive remuneration. It meets normally once a year.               Accordingly, after making due enquiries, the Directors have a
                                                                              reasonable expectation that the Company has adequate
         Internal Controls                                                    resources.
         Having established a control environment appropriate for
         the operation of the Group through the definition of the
         organisational structure and levels of authority it is the
         responsibility of the Board to ensure that such controls are
         regularly reviewed and revised to reflect the changing nature
         of the organisation and business.


         WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                                      PAGE 33
WESTON HOMES PLC
As the management services and supply
company to the Group it will buy
products, engage subcontractors, employ
staff and provide administrative support.

WESTON HOMES (REFURBISHMENT) LTD
The conversion and refurbishment of         GROUP STRUCTURE
property for residential use.

WESTON HOMES (HOUSING) LTD
The development of traditional
suburban residential accommodation.

WESTON HOMES (CITY) LTD
The development of prestigious, high
quality residential accommodation with
a focus on city centre sites.

WESTON HOMES (COMMERCIAL) LTD
The development of non-residential
property.




PAGE 34          WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
                                             GARETH JACOB
MICHAEL ALDEN           BARRY CHEEK                                  SCOTT RAINGER         STUART THOMAS
                                             Sales & Marketing
Commercial Director Construction Director                            Technical Director     Finance Director
                                                  Director




                                             JOHN CARPENTER            JANE FALZON            ALLAN GRAY
KEVIN O’CONNELL         TONY BIRCHALL       Head of Health, Safety                           Senior Manager
Company Secretary       Building Manager                                HR Manager               Finance
                                               & Environment




 WESTON HOMES PLC
DIRECTORS & SENIOR
                                                                     GRAHAM HUNTLEY          GRAHAM KING
   MANAGEMENT                                                         Customer Services    Commercial Manager
                                                                          Manager




   PETER LUDER        RODNEY NORTHWOOD STEPHEN PALLETT                DAVID PALMIERI        GRAHAM SCOTT-
  Head of Strategic     Quality Assurance Building Manager             Senior Contracts       ROBERTSON
     Planning               Manager                                       Manager            Head of Design




 WENDY SHIPLEY                                                         KEVIN DUFFY          BILL KENNEALLY
                         JOHN SIBLEY           ROBIN STOCK           Technical Manager     Commercial Manager
  Sales Manager           IT Manager          Building Manager       Weston Homes (City)   Weston Homes (City)




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                     PAGE 35
                                                                                                COMPOUND GROWTH 2002 - 2006




The Group has continued to focus this year on ensuring that it is well placed to deliver its
plans for future growth. This has included the successful negotiation of planning permission
at some major schemes, the purchase of a number of significant development sites and
enhanced long-term funding facilities.

The financial performance was in line with expectations. I am pleased with the results that
we have achieved in the tough environment in which we operate. Turnover of £82.8m for the
twelve months was £14.5m or 15% lower than last year; gross profits fell by £5.0m to £25.6m




                                                                                                   19%



                                                                                                              25%



                                                                                                                           15%



                                                                                                                                    22%



                                                                                                                                              42%
and pre-tax profits fell from £13.0m to £8.3m.

                                                                                                Turnover    Gross        Pre-tax    EPS       Net
Within our core residential property development business a stronger performance in the
                                                                                                            profit        profit             assets
second half was insufficient to compensate for the slow start to the year. Our inability to
finance land, at a time when our 41 Millharbour scheme was at its funding peak, coupled
with the delayed timing of the Club Deal financing arrangements completed in August 2005,
resulted in reduced performance in the first six months.

It is important that we do not lose sight of the historical growth of the business. As the
compound growth chart highlights, profit before tax has increased at a rate of 15% per
annum on the back of a 19% increase in turnover and net assets have benefited from a
42% year on year increase.

Over the past few years the Group has invested significantly in the expansion of the business
resulting in a large year on year increase in the overhead base. With this investment
continuing, combined with the effect of inflation, overheads have risen again his year.
However, through careful control and monitoring this increase has been contained at £0.5m
resulting in a cost for the year of £11.9m.

To support our future expansion we have continued to invest in
our workforce, the average number of employees during the year
increased from 197 to 203. The actual number of individuals
employed by the Group at the time of writing this review
totalled 220.

Despite an increase in average net debt levels this year, net
expenditure on interest and similar charges has fallen from
                                                                                     FINANCIAL                               REVIEW
£6.2m to £5.5m largely due to benefits gained from the £105m
syndicated revolving credit facility secured in August 2005.

The effective tax rate has fallen from 31.6% to 26.3% which
resulted in a charge for the year of £2.2m and post-tax profits of £6.1m compared to £8.9m last year.
Equity dividends for the year of £1.5m amount to 24% of post-tax profits. Retained profits amounted to
£4.6m for the year, 76% of post-tax profits.                                                                           NET DEBT

Work in progress, measured by stock of development land and buildings and amounts
recoverable on long-term contracts, increased by £28.8m over 2005 to £101.2m at 31st July
2006, at which point we had approximately 2,500 units in various stages of the development
cycle. During the same period total net debt has increased by £45.3m to £83.0m with land
creditors reduced by £12.2m to £7.3m. Net assets have increased from £21.2m to £25.0m.

In contrast to last year where we benefited from £45.5m of operating cash inflows, our
expenditure on new development sites has been the largest contributing factor behind the
£31.2m operating cash outflow over the twelve months. This, coupled with finance costs of
£8.2m, £3.5m of corporation tax payments and the payment of equity dividends and capital
                                                                                                              £53.2m



                                                                                                                           £71.5m



                                                                                                                                    £37.7m



                                                                                                                                              £83.0m
                                                                                                   £19.7m




purchases, resulted in a net outflow before financing of £43.5m. This was more than covered
                                                                                                                3



                                                                                                                             1



                                                                                                                                      7



                                                                                                                                                3
                                                                                                     9




by draw downs under our financing arrangements resulting in a net cash inflow for the
year of £0.8m.                                                                                    2002      2003          2004      2005     2006




               PAGE 36           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
    The Group’s funding arrangements have been reviewed and very much overhauled during the year and I
    am delighted with the confidence and longer-term commitment that our bankers and other investors have
    shown in the business. We have sufficient facilities in place now to cover our funding projections for several
    years to come and sufficient headroom to allow further additional projects to be considered.

    For the first time this year the Group has been required to adopt the presentation requirements of
    Accounting Standard FRS25 “Financial Instruments: Disclosure and Presentation”. This requires redeemable
    preference share capital and dividends to be treated as debt and interest
    payable in the financial statements. The impact has been that interest                NET ASSETS PER
    payable and similar charges is £218,000 higher than it would have been                ORDINARY SHARE
    with an identical reduction in dividends payable. Shareholders’ funds
    are £6,025,000 lower than they would have been with creditors –
    amounts falling due within one year and creditors – amounts falling due
    after one year £500,000 and £5,525,000 higher respectively.

    PROPERTY DEVELOPMENT
    As previously stated the core property development business benefited
    from a strong performance in the second half of the year, however it
    was not sufficient to compensate for the slower first half, and turnover
    for the year of £79.8m was £15.1m down on last year and operating
    profits fell by £6.0m to £13.2m. Net assets increased by £3.9m to




                                                                                     22.0p



                                                                                             30.4p



                                                                                                     48.2p



                                                                                                             73.7p



                                                                                                                     86.7p
                                                                                        0



                                                                                                4



                                                                                                        2



                                                                                                                7



                                                                                                                        7
    £25.2m. During the year 335 sales completions were achieved.

    Investment has been made in a number of new sites in the year which        2002  2003    2004    2005            2006

    have a combined future GDV in excess of £400m. Construction has already commenced at several of these
                                                          key sites.

                                                             AIRCRAFT HANDLING
                                                             The London Heliport continued to perform well.
                                                             Turnover increased by 33% to £2.6m and operating
                                                             profits were 132% higher at £0.9m. In addition to
                                                             the traditional landing, parking and fuelling
                                                             services at Battersea, chartering services have
                                                             continued to contribute to these results.
FINANCIAL              REVIEW
                                                             I am confident that this business will continue to
                                                             grow and will be greatly enhanced by the new
                                                             heliport facilities which have been previously
                                                             announced for the adjacent Bridges Wharf site.

    CONFERENCES AND SERVICED OFFICES
    The performance of The Stansted Centre this year has been satisfactory. Despite a 10% reduction in
    turnover, operating losses reduced. The base running costs of the operation have been greatly reduced and
    improved financial results are expected next year.

    OUTLOOK
    I believe that we have in place the financial strength, the funding support and the development
    opportunities needed to meet our growth plans. We are embarking on an increasing number of larger and
    more sophisticated developments in new geographical locations where we are competing with national
    players in the industry. I expect to report a much improved financial performance this time next year as the
    Group is in the strongest forward land position in its history.




    Ray Wells
    Deputy Chairman and Group Finance Director




   WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                      PAGE 37
                   DIRECTORS, OFFICERS AND ADVISORS

W E S TO N G RO U P P LC                BANKERS                             The Royal Bank of Scotland plc
D I R E C TO R S                        HSBC Bank plc                       Corporate Banking London
R P Weston                              West End Corporate Banking Centre   8th Floor
R P Wells                               70 Pall Mall                        280 Bishopsgate
S P Bickel                              London                              London
R J Downing                             SW1Y 5EZ                            EC2M 4RB
R G Taylor
                                        Bank of Ireland Corporate Banking   S O L I C I TO R S
S E C R E TA R Y                        Lower Baggot Street                 Eversheds
R P Weston                              Dublin 2                            Kett House
                                        Ireland                             Station Road Cambridge
REGISTERED OFFICE                                                           CB1 2JY
The Weston Group Business Centre        Bank of Scotland
Parsonage Road                          Corporate Banking East Anglia       Macfarlanes
Takeley                                 3rd Floor                           10 Norwich Street
Essex CM22 6PU                          24 Hills Road                       London
                                        Cambridge                           EC4A 1BB
AU D I TO R S                           CB2 1JW
Ernst & Young LLP                                                           Nockolds
Compass House                                                               6 Market Square
80 Newmarket Road                                                           Bishops Stortford
Cambridge                                                                   Hertfordshire
CB5 8DZ                                                                     CM23 3UZ


Our award winning watergarden scheme at 41 Millharbour, Docklands, London
THE WESTON GROUP BUSINESS CENTRE,

         PA R S O NA G E R O A D, TA K E L E Y,

                        ESSEX CM22 6PU

          TELEPHONE: 01279 873333

                    FAX: 01279 873378

   E-MAIL: info@weston-group.co.uk

             www.weston-g roup.co.uk
D I R E C TO R S ’ R E P O RT
The Directors present their report and the Group financial statements for the year ended 31 July 2006.

RESULTS AND DIVIDENDS
The profit for the financial year amounted to £6.1m (2005: £8.9m as restated). Dividends of £0.2m (2005: £Nil) were paid during
the year. The Directors have approved the payment of a further dividend of £1.3m (2005: £Nil).

PRINCIPAL ACTIVITY
The Company is the holding company of the Group. The Group’s principal activity is that of residential property development.

REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
The financial performance was in line with expectations. Turnover of £82.8m for the 12 months was £14.5m or 15.0% lower than
last year. At the same time gross profits fell by £5.0m to £25.6m.

Within the core residential property development business a stronger performance in the second half was not sufficient to
compensate for the slow start to the year. Overall, a number of development sites were completed, contributing to this year’s
results and work has commenced on a number of key schemes which will lead to an improved performance in future years.
Operating profit fell by £6.0m to £13.2m on the back of a reduction of turnover from £94.9m to £79.8m.

The aircraft handling business continued to perform well. Turnover increased by £0.6m to £2.6m and operating profits were £0.5m
higher at £0.9m. In addition to the traditional landing, parking and fuelling services at Battersea, chartering services have
continued to contribute to these results.

The performance of the conferences and serviced offices operation this year has been satisfactory. Despite a 9.7% reduction in
turnover, operating losses decreased by 7.9%. The base running costs of the operation have been reduced and improved financial
results are expected next year.

As a Group, overheads increased by £0.5m resulting in a cost for the year of £11.9m. Operating profits fell from £19.3m to £13.8m
a reduction of £5.5m.

To support expansion the Group has continued to invest in its workforce. The average number of employees during the year
increased from 197 to 203.

Net expenditure on interest and similar charges has fallen this year from £6.2m to £5.5m largely due to benefits gained from the
£105m Club Deal secured in August 2005. Pre-tax profits fell from £13.0m to £8.3m.

The effective tax rate has fallen from 31.6% to 26.3% resulting in a charge for the year of £2.2m and post-tax profits of £6.1m
compared to £8.9m generated last year. Equity dividends for the year of £1.5m amount to 24.4% of post-tax profits. Retained
profits amounted to £4.6m for the year, 75.6% of post-tax profits.

FINANCIAL RISK MANAGEMENT
The Group closely monitors interest rate movements and regularly assesses the impact on the business and the need for the use of
suitable hedging instruments. No such instruments are in place at this time.

Detailed cash flow forecasts are prepared and reviewed by the Group on a regular basis. Actual cash balances are confirmed daily
and surplus funds invested to ensure maximum interest returns. The Group utilises pre-agreed funding facilities against cash
deficits.

Suitable credit control procedures are in place within each business and receivable balances are closely monitored on an ongoing basis.

IMPORTANT EVENTS
During the year a restructuring of a stakeholder's investment in the Group took place (see note 23).

POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year the Group made charitable contributions of £146,378 (2005: £164,210).




                        PAGE 38           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
D I R E C TO R S ’ R E P O RT (continued)

DIRECTORS AND THEIR INTERESTS
The Directors who served during the year and their interests in the issued share capital were as follows:
                                                                                                         Ordinary       Ordinary
                                                                                                        1p shares      1p shares
                                                                                                            2006           2005
R P Weston                                                                                             10,088,623    10,088,623
R P Wells                                                                                               4,323,696     4,323,696
S P Bickel                                                                                              4,323,696     4,323,696
R J Downing                                                                                                     -             -
R G Taylor                                                                                             10,088,623    10,088,623

DIRECTORS' AND OFFICERS' INDEMNITY INSURANCE
The Group has taken out insurance to indemnify, against third party proceedings, the Directors of the Group whilst serving on the
Board of the Company and of any subsidiary. This cover, where relevant, indemnifies all employees of the Group who serve on the
Board of all subsidiaries. This indemnity policy existed throughout the year and remains in place at the date of this report.
CREDITOR PAYMENT POLICY AND PRACTICE
It is the Group’s policy that payments to suppliers are made in accordance with those terms and conditions agreed with its
suppliers, provided that all trading terms and conditions have been complied with.
At 31 July 2006, the Group had an average of 10 days (2005: 10 days) purchases outstanding in trade creditors.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who were members of the Board at the time of approving this report are listed above. Having made enquiries of
fellow Directors and of the Company's auditors, each of these Directors confirms that:

•   to the best of his knowledge and belief, there is no information relevant to the preparation of this report of which the
    Company's auditors are unaware; and
•   he has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information
    and to establish that the Company's auditors are aware of that information.

AUDITORS
A resolution to reappoint Ernst & Young LLP as auditors will be put to the members at the Annual General Meeting.

By Order of the Board




R P Weston
Secretary
16 October 2006



STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing this report and the financial statements in accordance with applicable laws and
Generally Accepted Accounting Practice.

Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the
state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. In preparing those
financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;
•   make judgements and estimates that are reasonable and prudent;
•   prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
    continue in business; and
•   state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained
    in the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act
1985. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps in the prevention
and detection of fraud and other irregularities.




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                   PAGE 39
I N D E P E N D E N T AU D I TO R S ’ R E P O RT TO T H E M E M B E R S O F W E S TO N G RO U P P LC

We have audited the Group and parent Company financial statements for the year ended 31 July 2006 which comprise the
Consolidated Profit and Loss Account, Consolidated Statement of Total Recognised Gains and Losses, Consolidated Balance Sheet,
Company Balance Sheet, Consolidated Statement of Cash Flows and the related notes 1 to 27. These financial statements have
been prepared under the accounting policies set out therein.

This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable United
Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) as set out in the Statement of
Directors' Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view, are properly prepared in accordance
with the Companies Act 1985 and whether the information given in the Directors' report is consistent with the financial
statements.

We also report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information specified by law regarding Directors' remuneration and
transactions is not disclosed.

We read other information contained in the annual report, and consider whether it is consistent with the audited financial
statements. This other information comprises only the Chairman's Statement, the Financial Review, Financial Highlights,
Operations Review, Our Future, Weston Aviation and Weston Business Centres. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not
extend to any other information.

BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation
of the financial statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances,
consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION
In our opinion:

•   The financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice,
    of the state of the Group's and the parent Company's affairs as at 31 July 2006 and of the Group's profit for the year then ended;
•   The financial statements have been properly prepared in accordance with the Companies Act 1985; and
•   The information given in the Directors' report is consistent with the financial statements.




Ernst & Young LLP
Registered Auditor
Cambridge
16 October 2006




                        PAGE 40 WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
C O N S O L I DAT E D P RO F I T A N D LO S S A C C O U N T
Y E A R E N D E D 3 1 J U LY 2 0 0 6



                                                             Notes               2006                     2005
                                                                                 £’000                   £’000
                                                                                                  (As restated)

Turnover                                                          2             82,817                 97,360

Cost of sales                                                                   (57,182)              (66,742)

Gross profit                                                                    25,635                 30,618

Administrative expenses                                                         (11,916)              (11,389)
Other operating income                                                              106                    47

Operating profit                                                  3             13,825                 19,276

Interest receivable                                               4                 118                    214
Interest payable and similar charges                              5              (5,604)                (6,451)

Profit on ordinary activities before taxation                                    8,339                 13,039

Tax on profit on ordinary activities                              8              (2,193)               (4,126)

Profit for the financial year                                    19              6,146                  8,913

Earnings per share - basic                                       10               21.3p                  28.7p

All amounts relate to continuing activities.




C O N S O L I DAT E D S TAT E M E N T O F TOTA L R E C O G N I S E D G A I N S A N D LO S S E S
Y E A R E N D E D 3 1 J U LY 2 0 0 6
                                                                                   2006                   2005
                                                                                   £’000                 £’000
                                                                                                  (As restated)

Profit for the financial year                                                     6,146                 8,913

Total recognised gains and losses in the year                                      6,146                8,913
Prior year adjustment (note 26)                                                   (1,717)                   -

Total recognised gains and losses since the last annual report                    4,429                 8,913




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                PAGE 41
C O N S O L I DAT E D B A L A N C E S H E E T
AT 3 1 J U LY 2 0 0 6



                                                            Notes        2006            2005
                                                                         £’000           £’000
                                                                                  (As restated)
Fixed assets
Intangible assets                                            11          4,549          4,813
Tangible assets                                              12         13,519         13,311

                                                                        18,068         18,124

Current assets
Stocks                                                       14         59,786         44,077
Debtors                                                      15         45,753         29,771
Cash at bank and in hand                                    25(b)        5,561          4,810

                                                                       111,100         78,658

Creditors - amounts falling due within one year              16        (34,914)       (69,814)

Net current assets                                                      76,186          8,844

Total assets less current liabilities                                   94,254         26,968

Creditors - amounts falling due after more than one year     17        (69,209)        (5,678)

Provisions for liabilities and charges                       8(c)          (53)           (44)

                                                                        24,992         21,246

Capital and reserves
Called up share capital                                      18            288            288
Capital redemption reserve                                   19          4,137          2,537
Profit and loss account                                      19         20,567         18,421

Shareholders’ funds                                          19         24,992         21,246




R P Weston                                                 R P Wells
Director                                                   Director

16 October 2006




                        PAGE 42          WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
C O M PA N Y B A L A N C E S H E E T
AT 3 1 J U LY 2 0 0 6



                                                            Notes        2006             2005
                                                                         £’000            £’000
                                                                                   (As restated)
Fixed assets
Investments                                                  13          4,940           4,940

Current assets
Debtors                                                      15          5,766           4,733

Creditors - amounts falling due within one year              16          (1,571)          (162)

Net current assets                                                       4,195           4,571

Total assets less current liabilities                                    9,135           9,511

Creditors - amounts falling due after more than one year     17           (625)         (2,500)

                                                                         8,510           7,011

Capital and reserves
Called up share capital                                      18            288             288
Capital redemption reserve                                   20          2,837             337
Profit and loss account                                      20          1,072           2,073
Merger reserve                                               20          4,313           4,313

Shareholders' funds                                          20          8,510           7,011




R P Weston                                                 R P Wells
Director                                                   Director

16 October 2006




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                           PAGE 43
C O N S O L I DAT E D S TAT E M E N T O F C A S H F LO W S
Y E A R E N D E D 3 1 J U LY 2 0 0 6

                                                              Notes     2006           2005
                                                                        £’000          £’000

Net cash (outflow)/inflow from operating activities           25(a)   (31,228)       45,479


Returns on investments and servicing of finance
Interest received                                                         118            214
Interest paid                                                          (8,135)        (5,166)
Non-equity dividends paid                                                (218)          (200)

                                                                       (8,235)        (5,152)

Corporation tax paid                                                   (3,549)        (2,471)
Capital expenditure
Payments to acquire tangible fixed assets                                (567)          (649)
Receipts from sales of tangible fixed assets                              248            145

                                                                         (319)          (504)

Equity dividends paid                                                    (200)              -

Net cash (outflow)/inflow before management of
liquid resources and financing                                        (43,531)       37,352

Management of liquid resources
Decrease in short-term deposits                                             -          3,368

Financing
Decrease in short-term loans                                          (18,431)       (34,824)
Increase/(decrease) in long-term loans                                 62,658           (288)
Capital element of finance lease rental payments                         (570)          (499)
Repurchase of own shares (including expenses)                               -         (3,035)
Issue of preference shares                                                625              -

                                                                      44,282         (38,646)

Increase in cash in the year                                             751           2,074


Reconciliation of net cash flow to the movement in net debt             2006            2005
                                                                        £’000           £’000
                                                                                 (As restated)

Increase in cash in the year                                             751           2,074

Cash (inflow)/outflow from change in financing                        (44,282)       35,611
Cash inflow from short-term deposits                                        -         (3,368)

Change in net debt resulting from cash flows                  25(b)   (43,531)       34,317
Bonus issue of preference shares                                         (900)            -
New finance leases                                            25(b)      (935)         (469)

Movement in net debt in the year                                      (45,366)        33,848
Net debt at 1 August 2005                                     25(b)   (37,654)       (71,502)

Net debt at 31 July 2006                                      25(b)   (83,020)       (37,654)




                        PAGE 44           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
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1.         ACCOUNTING POLICIES

BASIS OF PREPARING THE FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost convention and in accordance with applicable accounting
standards.
No profit or loss account is presented for Weston Group Plc as permitted by Section 230 of the Companies Act 1985.

BASIS OF CONSOLIDATION
The Group financial statements consolidate the accounts of Weston Group Plc and its subsidiary undertakings drawn up to 31 July 2006.

FIXED ASSETS
All fixed assets are recorded at cost.

DEPRECIATION
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value based on
prices prevailing at the date of acquisition, of each asset over its expected useful life as follows:

Leasehold improvements         -         25% reducing balance
Office equipment               -         25% reducing balance
Plant and machinery            -         25% reducing balance
Motor vehicles                 -         25% reducing balance
Land                           -         not depreciated
Buildings                      -         25% reducing balance

The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate
the carrying value may not be recoverable.

STOCKS
Development land and buildings are valued at the lower of cost and net realisable value and includes the cost of land and direct
construction costs.

LONG-TERM CONTRACTS
Profit on long-term contracts is taken as the work is carried out if the final outcome can be assessed with reasonable certainty.
The profit included is calculated on a prudent basis to reflect the proportion of the work carried out at the year end, by recording
turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which
costs incurred to date bear to total expected costs for that contract. Full provision is made for losses on all contracts in the year in
which they are first foreseen.

For shorter duration construction contracts profit is taken on the basis of the value of completions in the year over total value of
contract income.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to
receive more tax, with the following exception:
•    deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be
     suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing
differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
INTEREST PAYABLE AND SIMILAR CHARGES
Interest payable and similar charges are charged to the profit and loss account as incurred.
GOODWILL
Goodwill arising on acquisitions is the difference between the fair value of the consideration paid and the fair value of the assets
and liabilities acquired. It is capitalised and amortised on a straight line basis through the profit and loss account over the
Directors’ estimate of its useful economic life of 20 years. Impairment tests on the carrying value of goodwill are undertaken:
•    at the end of the first full financial year following acquisition.
•    in other periods if events or changes in circumstances indicate that the carrying value may or may not be recoverable.




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                      PAGE 45
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AT 3 1 J U LY 2 0 0 6

1.        A C C O U N T I N G P O L I C I E S (continued)

LEASING AND HIRE PURCHASE COMMITMENTS
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed
to the Group, and hire purchase contracts are capitalised in the balance sheet and are depreciated over their useful lives. The capital
elements of future obligations under the leases and hire purchase contracts are included as liabilities in the balance sheet.

The interest elements of the rental obligations are charged to the profit and loss account over the periods of the leases and hire
purchase contracts and represent a constant proportion of the balance of capital repayments outstanding.

Rentals payable under operating leases are charged to the profit and loss account on a straight line basis over the lease term.

PENSIONS
The Group operates defined contribution pension schemes. Contributions are charged to the profit and loss account as they
become payable in accordance with the rules of the schemes.

ADOPTION OF FINANCIAL REPORTING STANDARD 25
In preparing the financial statements for the current year, the Group has for the first time adopted Financial Reporting Standard
FRS 25: "Financial Instruments: Disclosure and Presentation." Prior to 1 August 2005 redeemable 8% preference shares of £1 each
were included within shareholders' funds. FRS 25 now requires instruments such as these, which are redeemable for cash at a
future date, to be disclosed as a liability due to the substance of their nature being a debt instrument. In the consolidated
accounts this has resulted in a re-classification of 5,525,000 of these shares to liabilities under creditors - amounts falling due after
more than one year (2005: 2,500,000) and creditors - amounts falling due within one year of 500,000 (2005: Nil). In the Company
accounts this has resulted in a re-classification of 625,000 of the same shares to creditors - amounts falling due after more than
one year (2005: 2,500,000).

Prior to implementation of FRS 25 the dividends associated with these shares were recognised within shareholders' funds as an
additional finance cost of non-equity shares. Under FRS 25 these charges are shown within interest payable and similar charges.
In the current year the associated charge to the profit and loss account amounted to £218,000 (2005: £200,000).

2.        TURNOVER, PROFIT AND NET ASSETS

All Group turnover is stated net of value added tax and excludes transactions between Group companies.

Property development turnover compromises the value of property completions except in respect of long-term contracts where the
turnover represents the sales value of work done, including estimates in respect of amounts not invoiced.

Aircraft handling, conferences and serviced offices turnover comprises the invoice value of services to customers.

Analysis by class of business
                                                                                                        2006                       2005
                                                                                                        £’000                     £’000
                                                                                                                           (As restated)
Turnover
Property development                                                                                   79,750                  94,884
Aircraft handling                                                                                       2,593                   1,951
Conferences and serviced offices                                                                          474                     525
                                                                                                      82,817                   97,360

Operating profit/(loss)
Property development                                                                                   13,232                  19,203
Aircraft handling                                                                                         871                     375
Conferences and serviced offices                                                                         (278)                   (302)
                                                                                                      13,825                   19,276

Net assets/(liabilities)
Property development                                                                                   25,224                  21,286
Aircraft handling                                                                                        (531)                   (337)
Conferences and serviced offices                                                                          299                     297
                                                                                                      24,992                   21,246




                        PAGE 46           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
N OT E S TO T H E A C C O U N T S
AT 3 1 J U LY 2 0 0 6

3.         O P E R AT I N G P RO F I T                                                             2006                      2005
                                                                                                   £’000                     £’000
The operating profit is stated after charging/(crediting):

Depreciation on tangible fixed assets                                                                997                      934
Amortisation of goodwill                                                                             264                      263
Loss on sale of tangible fixed assets                                                                 25                       29
Auditors’ remuneration - audit work                                                                   63                       63
                          - non-audit work                                                            27                       13
Operating lease rentals - land and buildings                                                         760                      760
                          - other                                                                      -                       23
Rents receivable                                                                                    (106)                     (47)


During the previous year the Group sold its 31 Millharbour site. This transaction, contributed £41,000,000 to turnover and
£12,210,000 to gross profit. The net cash inflow during the previous year in connection with this transaction amounted to
£13,310,000.

4.        I N T E R E S T R E C E I VA B L E                                                       2006                      2005
                                                                                                   £’000                     £’000
Bank interest                                                                                         71                       179
Other interest                                                                                        47                        35
                                                                                                     118                      214

5.        I N T E R E S T PAYA B L E A N D S I M I L A R C H A R G E S                             2006                      2005
                                                                                                   £’000                    £’000
                                                                                                                     (As restated)
Bank loan interest                                                                                 4,184                    4,449
Other finance charges                                                                              1,055                    1,659
Dividends on redeemable 8% preference shares of £1 each                                              218                      200
Hire purchase contract and finance lease interest                                                     80                       74
Other interest                                                                                        67                       69
                                                                                                   5,604                     6,451

6.        S TA F F C O S T S                                                                        2006                      2005
                                                                                                   £’000                     £’000
Wages and salaries                                                                                 7,364                     7,271
Social security costs                                                                                812                       811
Other pension costs                                                                                  683                       602
                                                                                                   8,859                     8,684

The average monthly number of employees during the year was as follows:                             2006                     2005
                                                                                                     No.                      No.
Directors - Company                                                                                    5                        5
Directors - Subsidiaries                                                                               6                        7
Office                                                                                               119                      103
Site                                                                                                  43                       51
Aircraft handling                                                                                     15                       16
Conferences and serviced offices                                                                      15                       15
                                                                                                     203                      197




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                 PAGE 47
N OT E S TO T H E A C C O U N T S
AT 3 1 J U LY 2 0 0 6


7.        DIRECTORS’ EMOLUMENTS                                                                 2006             2005
                                                                                                £’000            £’000
Emoluments                                                                                        756              845

Company contributions paid to money purchase pension schemes                                        81              85

The amount in respect of the highest paid Director was as follows:
Emoluments                                                                                        282              327

Company contributions paid to money purchase pension schemes                                        40              41

                                                                                                2006             2005
                                                                                                  No.              No.
Members of money purchase pension schemes                                                          4                4


8.        TA X

(a)       TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge is made up as follows:                                                           2006             2005
                                                                                                £’000            £’000
Current tax:
UK corporation tax                                                                              2,186            4,187
Tax over-provided in previous year                                                                  (2)             (56)

Total current tax (note 8(b))                                                                   2,184            4,131

Deferred tax:
Origination and reversal of timing differences                                                      35             (23)
Adjustment in respect of prior periods                                                             (26)             18

Tax on profit on ordinary activities                                                            2,193            4,126

(b)        FACTORS AFFECTING CURRENT TAX CHARGE
The tax assessed on the profit on ordinary activities for the year is lower than the standard
rate of corporation tax in the UK of 30% (2005: 30%). The differences are reconciled below:
                                                                                                2006              2005
                                                                                                £’000            £’000
                                                                                                           (As restated)
Profit on ordinary activities before tax                                                        8,339          13,039

Profit on ordinary activities multiplied by the standard rate of corporation tax
in the UK of 30% (2005: 30%)                                                                    2,502            3,912
Expenses not deductible for tax purposes                                                          161              192
Accelerated capital allowances                                                                       (4)             23
Tax over-provided in prior year                                                                      (2)            (56)
Tax effect of eliminated intra Group transactions                                                (527)                -
Dividends not subject to tax                                                                        65               60
Other                                                                                              (11)               -

Total current tax (note 8(a))                                                                   2,184            4,131

(c)       DEFERRED TAX
The deferred tax included in the balance sheet is as follows:                                   2006             2005
                                                                                                £’000            £’000
Accelerated capital allowances                                                                     53               44

Provision for deferred tax                                                                         53               44

At 1 August 2005                                                                                    44              49
Deferred tax charged/(credited) to the profit and loss account                                       9               (5)

At 31 July 2006                                                                                    53               44




                        PAGE 48            WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
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9.        DIVIDENDS                                                                                       2006                      2005
                                                                                                          £’000                     £’000
Equity dividends
Ordinary 1p Shares – paid                                                                                   200                          -
Ordinary 1p Shares – accrued                                                                              1,300                          -

                                                                                                          1,500                          -

10.       EARNINGS PER ORDINARY SHARE

The calculation of basic earnings per Ordinary Share is based on earnings of £6,146,000 (2005: £8,913,000 as restated), being the profit for
the year and on 28,824,638 (2005: 31,047,887) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during
the year.


11.       I N TA N G I B L E F I X E D A S S E T S                                                                            Goodwill
                                                                                                                                 £’000
Group
Cost
At 1 August 2005                                                                                                                 5,264
At 31 July 2006                                                                                                                  5,264
Amortisation
At 1 August 2005                                                                                                                   451
Provided during the year                                                                                                           264
At 31 July 2006                                                                                                                    715
Net book value
At 31 July 2006                                                                                                                  4,549
At 31 July 2005                                                                                                                  4,813


12.       TA N G I B L E F I X E D A S S E T S
Group                             Land and               Leasehold          Motor         Plant and                Office           Total
                                  buildings          improvements         vehicles        machinery           equipment
                                      £’000                  £’000          £’000             £’000                £’000            £’000
Cost
At 1 August 2005                     10,012                    768          2,057               1,561               1,434          15,832
Additions                                 -                     16          1,004                 330                 128           1,478
Re-classification                         -                      -           (104)                104                    -              -
Disposals                                 -                      -           (655)                  (2)                (18)          (675)

At 31 July 2006                     10,012                    784           2,302               1,993               1,544         16,635

Depreciation
At 1 August 2005                           2                   306             725                778                 710           2,521
Provided during the year                   2                   117             437                247                 194             997
Re-classification                          -                     -              (56)               56                    -              -
Disposals                                  -                     -            (387)                 -                  (15)          (402)
At 31 July 2006                            4                  423             719               1,081                 889          3,116

Net book value

At 31 July 2006                     10,008                    361           1,583                 912                 655         13,519

At 31 July 2005                      10,010                    462          1,332                 783                 724          13,311

The net book value of motor vehicles includes £1,099,000 (2005: £636,000) in respect of assets held under finance leases and hire
purchase agreements. Depreciation charged on the assets during the year amounted to £259,000 (2005: £137,000).
The net book value of plant and machinery includes £346,000 (2005: £376,000) in respect of assets held under finance leases and
hire purchase agreements. Depreciation charged on the assets during the year amounted to £100,000 (2005: £97,000).



WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                        PAGE 49
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13.         INVESTMENTS
Company
                                                                                                               Subsidiary undertakings
Cost                                                                                                                             £’000
At 31 July 2006                                                                                                                 4,940
At 31 July 2005                                                                                                                 4,940
Net book value
At 31 July 2006                                                                                                                 4,940
At 31 July 2005                                                                                                                 4,940

Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are as follows:

Name of company                                Holding                Proportion of voting             Nature of
                                                                      rights and shares held           business
Weston Homes Plc                               Ordinary Shares        100%                             Property development
Weston Homes (41 Millharbour) Limited*         Ordinary Shares        100%                             Property development
Weston Homes (31 Millharbour) Limited*         Ordinary Shares        100%                             Property development
Weston Homes (City) Limited*                   Ordinary Shares        100%                             Property development
Weston Homes (Housing) Limited*                Ordinary Shares        100%                             Property development
Weston Homes (Refurbishment) Limited*          Ordinary Shares        100%                             Property development
Weston Homes (Ipswich) Limited*                Ordinary Shares        100%                             Property development
Weston Homes (Battersea) Limited*              Ordinary Shares        100%                             Property development
Weston Homes (Commercial) Limited*             Ordinary Shares        100%                             Property development
Stansted Environmental Services Limited        Ordinary Shares        100%                             Environmental consultancy
Weston (Business Centres) Limited              Ordinary Shares        100%                             Conferences and serviced offices
Weston (Aviation) Limited                      Ordinary Shares        100%                             Aircraft handling
The London Heliport Limited*                   Ordinary Shares        100%                             Dormant
Weston (Logistics) Limited                     Ordinary Shares        100%                             Dormant
Weston (Plant Hire) Limited*                   Ordinary Shares        100%                             Dormant
Weston UK Limited                              Ordinary Shares        100%                             Dormant
Weston Homes Group Limited                     Ordinary Shares        100%                             Dormant
Weston Corporation Limited                     Ordinary Shares        100%                             Dormant
* held indirectly


14.       STOCKS
Group                                                                                                  2006                      2005
                                                                                                       £’000                     £’000

Stock of development land and buildings                                                            59,358                       43,714
Residual freeholds                                                                                    281                          246
Consumables                                                                                           147                          117

                                                                                                   59,786                       44,077



15.       DEBTORS
                                                                             Group             Group           Company      Company
                                                                              2006              2005              2006         2005
                                                                             £’000             £’000              £’000        £’000
Trade debtors                                                                 726              670                     -            -
Amounts recoverable on long-term contracts                                 41,933           28,803                     -            -
Amounts owed by Group undertakings                                              -                -                 5,766        4,733
Other debtors                                                               2,677               15                     -            -
Prepayments and accrued income                                                417              283                     -            -

                                                                           45,753           29,771                 5,766        4,733




                        PAGE 50           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
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16.       C R E D I T O R S - amounts falling due within one year
                                                                             Group           Group         Company          Company
                                                                              2006            2005            2006             2005
                                                                             £’000           £’000            £’000            £’000

Bank loans (net of £459,946 prepaid finance costs (2005: £21,875))           17,482         36,351                  -              -
Net obligations under finance leases and
  hire purchase contracts                                                       508            413                 -              -
Trade creditors                                                                 974            516                 -              -
Amounts owed by Group undertakings                                                -              -                84              2
Corporation tax                                                               2,006          3,371                 5             47
Other taxes and social security costs                                           238            241                 -              -
Dividends payable on equity shares                                            1,300              -             1,300              -
Redeemable 8% preference shares of £1 each                                      500              -                 -              -
Other creditors                                                              11,906         28,922               182            113

                                                                           34,914           69,814             1,571            162

The bank loans are secured by guarantees and debentures over the Group’s assets and fixed charges over specific tangible fixed
assets and development sites dated August 2005 and November 2003.
Finance lease and hire purchase creditors are secured by a fixed charge over specific tangible fixed assets of the Group.


17.       C R E D I T O R S - amounts falling due after more than one year

                                                                             Group            Group        Company        Company
                                                                              2006             2005           2006             2005
                                                                             £’000             £’000          £’000           £’000
                                                                                        (As restated)                   (As restated)

Bank loans (net of £422,217 prepaid finance costs (2005: £Nil))              62,487             251                -               -
Net obligations under finance leases and hire purchase contracts                697             427                -               -
Redeemable 8% Preference Shares of £1 each                                    5,525           2,500              625           2,500
Other creditors                                                                 500           2,500                -               -

                                                                           69,209             5,678              625           2,500

The above creditors are due between two and five years with the exception of the Redeemable 8% Preference Shares. In the Group
figures, £2,000,000 is repayable between two and five years and £3,525,000 after five years. In the Company figures £625,000 is
repayable after five years.

The bank loans are secured by guarantees and debentures over the Group’s assets and fixed charges over development sites dated
August 2005.

Finance lease and hire purchase creditors are secured by a fixed charge over specific tangible fixed assets of the Group.

Net obligations under finance leases and hire purchases contracts were:
                                                                                                               2006            2005
                                                                                                               £’000           £’000
Within one year                                                                                                  508             413
Between one and two years                                                                                        378             250
Between two and five years                                                                                       319             177

                                                                                                               1,205            840




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                   PAGE 51
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18.       S H A R E C A P I TA L
                                                                                                            2006                    2005
Authorised                                                                                                  £’000                  £’000
                                                                                                                            (As restated)
500,000,000 Ordinary Shares of 1p each                                                                       5,000                 5,000
5,000,000 Redeemable 8% Preference Shares of £1 each                                                         5,000                 5,000
FRS 25 re-classification of Redeemable 8% Preference Shares of £1 each (note 1)                             (5,000)               (5,000)

                                                                                                            5,000                 5,000

Allotted, called up and fully paid
28,824,638 Ordinary Shares of 1p each                                                                          288                  288
625,000 Redeemable 8% Preference Shares of £1 each                                                             625                2,500
FRS 25 re-classification of Redeemable 8% Preference Shares of £1 each (note 1)                               (625)              (2,500)

                                                                                                              288                   288

On 31 July 2006 2,500,000 Redeemable Preference Shares of £1 each were redeemed at par. In addition on 21 March 2006,
625,000 of the same class of share were issued at par for cash.

The Preference Shares become redeemable by the Company on 21 March 2016. No premium is payable upon redemption.
The preference shareholders are entitled to dividends of 8% on each share held in respect of every year in which the Company has
sufficient realised profits to be able to pay a dividend. The preference shareholders have the right on a winding-up to repayment
in priority to any payment to the holders of any other shares in the capital of the Company, of the amount paid for the Preference
Shares and any arrears or accruals of the fixed dividends on the Preference Shares. The preference shareholders do not have voting
rights except in specific circumstances as specified in the Company’s Articles of Association.


19.          R E C O N C I L I AT I O N O F S H A R E H O L D E R S ’ F U N D S A N D M OV E M E N T S I N R E S E RV E S

Group
                                                                            Share         Capital       Profit and            Total
                                                                           capital    redemption      loss account    shareholders’
                                                                                          reserve                            funds
                                                                             £’000          £’000           £’000            £’000
At 1 August 2004 - as previously reported                                    3,125           2,200         12,543            17,868
FRS 25 re-classification (note 26):
 - Redeemable 8% Preference Shares of £1 each                               (2,500)               -              -            (2,500)
 - Redeemable 8% Preference Shares appropriations now recorded
   as interest payable and similar charges                                        -               -         1,717              1,717
 - Reversal of previous appropriations                                            -               -        (1,717)            (1,717)

At 1 August 2004 - as restated                                                 625           2,200         12,543            15,368
Profit for the year                                                              -               -          8,913              8,913
Own shares repurchased (including expenses)                                   (337)            337         (3,035)            (3,035)

At 1 August 2005 - as restated                                                 288           2,537         18,421            21,246

Profit for the year                                                               -               -         6,146              6,146
Dividends on ordinary shares                                                      -               -        (1,500)            (1,500)
Bonus issue of Redeemable 8% Preference Shares of £1 each                         -           (900)             -               (900)
Redemption of Redeemable 8% Preference Shares of £1 each                          -          2,500         (2,500)                 -

At 31 July 2006                                                                288          4,137         20,567             24,992




                        PAGE 52           WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
N OT E S TO T H E A C C O U N T S
AT 3 1 J U LY 2 0 0 6

20.          R E C O N C I L I AT I O N O F S H A R E H O L D E R S ’ F U N D S A N D M OV E M E N T S I N R E S E RV E S

Company
                                                             Share          Capital       Merger        Profit and             Total
                                                            capital     redemption        reserve     loss account     shareholders’
                                                                            reserve                                           funds
                                                             £’000            £’000         £’000            £’000            £’000

At 1 August 2004 - as previously reported                    3,125                 -       4,313                   -           7,438
FRS 25 re-classification (note 26):
 - Redeemable 8% Preference Shares of £1 each                (2,500)               -            -                  -           (2,500)
 - Redeemable 8% Preference Shares appropriations
   now recorded as interest payable and similar charges           -                -            -               601              601
 - Reversal of previous appropriations                            -                -            -              (601)            (601)
At 1 August 2004 - as restated                                  625               -        4,313                  -             4,938
Profit for the year                                               -               -            -              5,108             5,108
Own shares repurchased (including expenses)                    (337)            337            -             (3,035)           (3,035)
At 1 August 2005 - as restated                                 288              337        4,313             2,073             7,011
Profit for the year                                               -               -             -             2,999             2,999
Dividends on ordinary shares                                      -               -             -            (1,500)           (1,500)
Redemption of Redeemable 8% Preference Shares of £1 each          -           2,500             -            (2,500)                -

At 31 July 2006                                                288            2,837        4,313             1,072             8,510

The profit for the financial year dealt with in the financial statements of Weston Group Plc is £2,998,723 (2005: £5,108,682
as restated).

21.          LEASING COMMITMENTS
At the year end the Group had annual commitments under non-cancellable operating leases as set out below:
                                                                                                              Land and buildings
                                                                                                           2006               2005
                                                                                                           £’000             £’000
Leases which expire between two and five years                                                                60                  60
Leases which expire after five years                                                                         700                 700
                                                                                                             760                 760


22.          PENSION COSTS
The Group operates defined contribution pension schemes in respect of the Directors and employees. The assets of the schemes
are held separately from those of the Company in an independently administered fund.
The pension cost for the year is disclosed in note 6 and there were no unpaid contributions at the year end (2005: £Nil).

23.          R E L AT E D PA RT Y T R A N S A C T I O N S
Other creditors include the following amounts which are owed to individuals who are Directors of the Company:
                                                                                                           2006                2005
                                                                                                           £’000               £’000
R P Weston                                                                                                    83                  13
R G Taylor                                                                                                   331                 331
S P Bickel                                                                                                    34                  34
R P Wells                                                                                                      1                   -
During the year, goods and services to the value of £984,000 (2005: £542,000), were acquired from R G Taylor Engineering Limited,
a Company controlled by R G Taylor. These transactions were at normal price and on normal business terms.
An interest-free loan of £265,000 (2005: £265,000) from R G Taylor Engineering Limited to Weston Homes Plc existed
throughout the accounting period.




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                    PAGE 53
N OT E S TO T H E A C C O U N T S
AT 3 1 J U LY 2 0 0 6


23.          R E L AT E D PA RT Y T R A N S A C T I O N S ( c o n t i n u e d )

Included in other creditors due after more than one year and other creditors due within one year are loan balances of £500,000
(2005: £2,500,000) and 5,400,000 Redeemable 8% Preference Shares of £1 each (2005: 2,500,000) owed to Mrs A E Bickel, who is
the mother of S P Bickel, a Director of the Company. During the year £50,000 (2005: £Nil) was paid for the provision of the loan
facility and £200,000 (2005: £200,000) in dividends on the Redeemable 8% Preference Shares of £1 each. On 31 July 2006 as part
of a review of Mrs Bickel's investment in the Group, £2,000,000 of the loan balances were repaid and 2,500,000 Redeemable 8%
Preference Shares of £1 each were redeemed. Contemporaneously these funds were re-invested in the preference share capital of
Weston Homes Plc. At the same time a bonus issue of 900,000 Redeemable 8% Preference Shares of £1 each was also made.
During the year a Weston Group Company paid interest of £9,998 (2005: £2,255) on a loan previously entered into with the Weston
Homes Plc Pension Scheme. The balance outstanding at 31 July 2006 was £Nil (2005: £180,000). A Weston Group Company also
issued to the same pension scheme 625,000 Redeemable 8% Preference Shares of £1 each at par, in exchange for cash during the
year. Dividends of £18,220 (2005: £Nil) were paid on these shares and are shown under interest payable and similar charges.

During the year two Directors of the Company, R P Wells and S P Bickel purchased properties from a Group Company. Mr R P Wells
acquired a 20% interest in six properties totalling £192,990, the gross value of which amounted to £964,950. All of these were
assigned to the R P Wells Funded Unapproved Retirement Benefits Scheme. Mr S P Bickel purchased a property for £250,000. Both
of these transactions were at normal price and on normal business terms.

24.        CONTINGENT LIABILITIES

The Group has contingent liabilities in respect of bonds and other agreements entered into in the normal course of business.
The Company has given an unlimited cross guarantee in respect of the bank borrowings of its subsidiary undertakings. At 31 July
2006 the bank borrowings amounted to £80,851,121 (2005: £36,444,222).
The Company has given a guarantee in respect of an operating lease entered into by a subsidiary undertaking of an amount of
£700,000 (2005: £700,000).

25.        GROSS CASH FLOWS

(a)        Reconciliation of operating profit to net cash (outflow)/inflow
           from operating activities
                                                                                                 2006                      2005
                                                                                                 £’000                     £’000

Operating profit                                                                                13,825                    19,276
Depreciation and loss on sale of assets                                                          1,022                       963
Amortisation of goodwill                                                                           264                       263
(Increase)/decrease in stocks                                                                  (15,709)                    1,308
(Increase)/decrease in debtors                                                                 (15,982)                   37,790
Decrease in creditors                                                                          (14,648)                  (14,121)

Net cash (outflow)/inflow                                                                      (31,228)                  45,479

(b)        Analysis of changes in net debt

                                             Opening                         Cash               Other                    Closing
                                              balance                       flows             changes                   balance
                                                 £’000                      £’000               £’000                      £’000
                                          (As restated)
Cash at bank and in hand                        4,810                         751                     -                   5,561

Debt due within one year                      (36,373)                     18,431                 (500)                  (18,442)
Debt due after one year                         (5,251)                   (63,283)                (400)                  (68,934)
Finance leases                                    (840)                       570                 (935)                    (1,205)

                                              (42,464)                    (44,282)              (1,835)                 (88,581)

Net debt                                      (37,654)                    (43,531)              (1,835)                 (83,020)




                        PAGE 54             WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006
N OT E S TO T H E A C C O U N T S
AT 3 1 J U LY 2 0 0 6

26.       PRIOR YEAR ADJUSTMENT
With effect from 1 August 2005 the Group has adopted the presentational requirements of Financial Reporting Standard FRS 25
"Financial Instruments: Disclosure and Presentation" which as described in note 1 requires that Redeemable Preference Shares be
disclosed as a liability by virtue of their nature being a debt instrument.

The effect of this change in policy is as follows:
                                                                                                  Group              Company
                                                                                                   2005                 2005
Balance sheet                                                                                     £’000                 £’000
 Creditors - amounts falling due after more than one year
 As previously stated                                                                             3,178                      -
 Effect of restatement
 - re-classification of Redeemable 8% Preference Shares of £1 each                                2,500                  2,500

As restated                                                                                       5,678                  2,500

Decrease in net assets                                                                            2,500                  2,500

Represented by:
Decrease in share capital                                                                          2,500                 2,500
Preference share appropriations now recorded as interest payable and similar charges              (1,717)                 (601)
Reversal of previous appropriations                                                                1,717                   601
                                                                                                  2,500                  2,500

                                                                                                  Group
                                                                                                   2005
Profit and loss account                                                                           £’000
 Interest payable and similar charges
 As previously stated                                                                             6,251
 Effect of restatement
 - re-classification of finance costs on Redeemable 8% Preference Shares of £1 each                 200

As restated                                                                                       6,451

Decrease in profit for the year                                                                     200


27.       C O N T RO L L I N G PA RT Y
In the opinion of the Directors the Company is jointly controlled by R P Weston and R G Taylor.




WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006                                                 PAGE 55
FIVE YEAR SUMMARY



PROFIT & LOSS ACCOUNT                      31.07.06        31.07.05        31.07.04       31.07.03         31.07.02
                                            £’000            £’000           £’000           £’000           £’000
                                                      (As restated)   (As restated)   (As restated)   (As restated)

Turnover                                   82,817          97,360          77,707          51,927          45,969
Gross profit                               25,635          30,618          26,172          15,586          13,523
Administrative expenses                    (11,916)       (11,389)        (10,221)         (6,412)         (4,961)
Other operating income                        106               47              39              38              47
Operating profit                           13,825          19,276          15,990           9,212           8,609
Interest receivable                           118             214             124             126             104
Interest payable                            (5,386)        (6,251)         (6,087)         (3,220)         (1,408)
Dividends on preference shares                (218)           (200)           (200)           (200)           (200)
Profit before tax                           8,339          13,039           9,827           5,918           7,105
Taxation                                    (2,193)        (4,126)         (3,075)         (2,095)         (3,064)
Dividends on ordinary shares                (1,500)               -        (1,200)         (1,200)         (1,200)
Retained profit                             4,646           8,913           5,552           2,623           2,841
Earnings per share - basic                   21.3p            28.7p           21.0p           11.6p          12.3p




BALANCE SHEET                             31.07.06       31.07.05        31.07.04        31.07.03        31.07.02
                                             £’000           £’000           £’000           £’000           £’000
                                                      (As restated)   (As restated)   (As restated)   (As restated)

Intangible assets                           4,549           4,813           5,076                 -               -
Tangible assets                            13,519          13,311          13,337           3,084           1,750
Stocks                                     59,786          44,077          45,385          31,086          25,470
Debtors                                    45,753          29,771          67,561          51,398          18,196
Cash at bank and in hand                    5,561           4,810           6,104           4,806           3,830
Creditors due within one year              (34,914)       (69,814)        (81,292)        (28,837)        (20,233)
Creditors due after more than one year     (69,209)        (5,678)        (40,754)        (51,632)        (21,793)
Provisions for liabilities and charges         (53)            (44)            (49)            (89)            (27)
                                           24,992          21,246          15,368           9,816           7,193


Called up share capital                       288             288             625             625             625
Capital redemption reserve                  4,137           2,537           2,200           2,200           2,200
Profit and loss account                    20,567          18,421          12,543           6,991           4,368
Shareholders’ funds - equity               24,992          21,246          15,368           9,816           7,193

Net assets per ordinary share                86.7p            73.7p          48.2p           30.4p           22.0p




                          PAGE 56        WESTON GROUP ANNUAL REPORT AND ACCOUNTS 2006

				
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