FOR RELEASE

7.00 AM

23 MARCH 2009

BAQUS GROUP PLC

("Baqus" or "the Group")

(the building consultancy and quantity surveying group)

Interim results for the 6 months ended 31 December 2008

Key Points

• Strong cash balance of £1.55 million at 28 February 2009

• Board recommends dividend of £56,625, equivalent to 0.05p per share

• Implemented cost cutting measures to mitigate effects of the Global downturn

• Advanced stage of acquisition negotiations

• Sworn King successfully integrated into the Group

• Cautiously optimistic about the future

Contact:

Baqus Group plc

Clive Sayer (Chief Executive)                                               07967 132 221

Patrick Lineen (Finance Director)                                         07818 034 452

Seymour Pierce (Nominated Adviser and Broker)

Mark Percy                                                                            020 7107 8000

Cubitt Consulting (Financial Public Relations Advisers)

Brian Coleman-Smith / James Verstringhe                           020 7367 5100

Background Note:

Baqus was admitted to trading on AIM on the 14 December 2007, having raised £1.75 million through a placing of 17,500,000 Ordinary Shares.

Baqus is a national building consultancy and quantity surveying group offering construction cost consultancy, project management and building surveying services to clients in the UK. The Group works across a number of business sectors including: health, education, leisure, hospitality, affordable housing, residential, commercial and conservation. Clients include local authorities, central government, NHS, residential Housing Associations, commercial companies and developers.

The Quantity Surveying Market in the UK, estimated to be worth in excess of £1 billion, is highly fragmented and dominated by a small number of major players, which the Baqus Group Directors believe make it ripe for consolidation. Since the Group's admission to AIM, they have been pursuing a strategy of acquiring small to medium sized Quantity Surveying practices across the country, having so far successfully boosted Baqus's share of the education and public sector market through the acquisition of Sworn King and Partners and also signed a share option agreement with Liverpool based transport and infrastructure specialist, Brian Hannaby & Associates. Once acquired, the practices are incorporated into the wider Group with a particular emphasis on exploiting opportunities for operational synergies with existing business units.

BAQUS GROUP plc

Interim Report 2009

CHAIRMAN'S STATEMENT

I am pleased to report Baqus Group's interim results for the six months ended 31 December 2008.

We are now well into our second year's trading following a successful flotation in December 2007 and have made steady progress against a background of growing global economic uncertainty. Very few companies have avoided the effects of the global downturn, although some have been more affected than others. 

At Baqus, due to our range of work sectors we are still enjoying a flow of new projects, and are weathering the storm reasonably well. However, we remain cautious in our outlook and are cognisant of the downturn's effect on our forward order book of £8.2m, which remains healthy, but is down on last year's total of £10.1m at 31st December 2007. We have taken direct action to mitigate this by strengthening our business development team and have allocated one of our main board directors to a full-time sales role.

Results

The unaudited accounts show the profit before taxation of  £365,000 for the half year ended 31st December 2008 (£472,000 pro-forma 31st December 2007) on turnover of £3,980,000 (£3,681,000 pro-forma 31st December 2007). Earnings per share are 0.23p (0.22p pro-forma 31st December 2007).

We finished the half year with a reasonable cash position. The cash position has been affected by the redemption of £602,000 of loan notes that were due for repayment on 14th December 2008. This resulted in the Group having cash of £1.55 million at the 28th February 2009.

Dividend

The board is recommending an interim dividend of £56,625 being 0.05p per share which will be paid out on 27th April 2009 to those shareholders on the register at 3rd April 2009.

This dividend reflects the confidence the board has in the ongoing performance of the Group.

Operating Review

The four companies which comprise Baqus namely: Boxall Sayer, Fletcher McNeill, Denley King and Sworn King are all currently trading well. We are still enjoying a good level of enquiries but competition for work is fierce and it has been necessary to reduce margins to secure work. This has meant that cost-cutting measures have been introduced and cost control has been more vigorous to ensure that the work remains profitable.

Acquisitions

We expect that the integration of the four companies will be completed within the next few months so that the accounting processes, IT and marketing will all benefit.

Sworn King, which was acquired in August of last year, has been successfully integrated into the Group and is trading profitably. Our policy is to continue to grow by acquisition and we are at an advanced stage of negotiations to acquire another company. 

Staff

I would like to take the opportunity of thanking my fellow Directors and the staff throughout the Group for their commitment and hard work. We are particularly pleased with the way in which the staff of the individual companies have responded to being part of a larger Group, many of whom see it as an opportunity to enhance their careers.

Current Outlook and Trading

Although the intake of orders has slowed, we are seeing a good flow of enquiries from our clients and I am confident that we will be successful in converting a number of these leads into firm orders at sensible margins. Against this background, we remain cautiously optimistic that we will achieve our objectives for this year and beyond.

Roger Knowles

23 March 2009

Note 1.    Accounting Policies

Basis of preparation

The results for the period ended 31 December 2008, which are neither audited not reviewed, have been prepared on the basis of accounting policies consistent with those set out in the Annual Report to shareholders of Baqus Group plc for the year ended 30 June 2008.

The condensed consolidated interim financial statements do not include all of the information and disclosures required for full annual financial statements, do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006, and should be read in conjunction with the 2008 Annual Report of Baqus Group plc.

Statutory accounts for the year ended 30 June 2008 were approved by the Board of Directors on 27 October 2008 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not included a reference to any matters to which the auditors drew attention by way of emphasis with qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The unaudited results for the six months ended 31 December 2007 reflect a trading period of only 17 days from the date Baqus Group plc acquired Boxall Sayer, Denley King and Fletcher McNeill. Proforma comparative information for the six months ended 31December 2007 has been included representing the underlying trading performance. The pro-forma comparative information is unaudited.

The interim financial statements have been prepared on the historical cost basis and the principal accounting policies adopted are set out below.

Basis of consolidation

The Group's interim financial statements consolidate the interim financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating polices of an investee entity so as to obtain benefits from its activities. The acquisitions of subsidiaries are accounted using the purchase method.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Any deficiency of the cost of acquisition below the fair value of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.

The results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the interim financial statements of subsidiaries to bring accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Revenue

Revenue represents the invoiced value of services provided net of value added tax. It comprises the amounts billed to clients in respect of the provision of quantity surveying services together with the movement in revenue recognised but not invoiced.  

Revenue recognition

Revenue is recognised as contract activity progresses to reflect the Group's performance of its contractual obligations. The right to consideration, by reference to the value of the work performed, is included in the accounts as accrued income under receivables. Where the amount which the client will accept or be able to pay is uncertain, provision has been made to reduce the accrued income to its net realisable value. Where the substance of a contract is that a right to consideration does not arise until the occurrence of a critical event, revenue is not recognised until that event occurs.

Retirement benefit costs

Retirement benefits to employees are provided by defined contribution schemes that are funded by the Group and employees. Payments are made to pension trusts that are financially separate from the Group. 

Goodwill

Goodwill arising from the purchase of subsidiary undertakings, represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable asset, liabilities and contingent liabilities of the subsidiary acquired, and is capitalised as an intangible asset in accordance with the requirements of IFRS 3. 

Goodwill is measured at cost less any accumulated impairment losses and is reviewed annually for any impairment losses. Any impairment losses are recognised through the income statement.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less estimated residual value of each asset evenly over its expected useful economic life, as follows:

Motor vehicles    25%-33.33% per annum

Fixtures, fittings and equipment    10-20% per annum

Computer     33-50% per annum

Financial Instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. Issue costs are offset against the proceeds of such instruments. 

Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances with banks.

Trade payables

Trade payables are initially measured at fair value and subsequently at amortised cost.

Borrowings

Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. After initial recognition borrowings are measured at amortised cost. Borrowing costs are recognised in profit and loss in the period in which they are incurred.

Equity

Equity instruments issued by the Group are recorded at the proceeds received net of direct costs.

Leasing

Rentals paid under operating leases are charged against profits on a straight line basis over the period of the lease.

Deferred taxation

Deferred tax is recognised in respect of all temporary differences which have originated but not reversed at the balance sheet date. Temporary differences are differences between taxable profits and the results as stated in the interim financial statements which arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the interim financial statements. 

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The Group has only one class of share in existence.

Finance costs

Finance costs are recognised in the interim income statement in the year in which they are incurred.

Accounting estimates and judgements

The Group makes estimates and judgements concerning the future and the resulting estimates may, by definition, vary from the actual results. The Directors considered the critical accounting estimates and judgements used in the interim financial statements and concluded that the main areas of judgement are:

• Revenue recognition policies in respect of contracts which straddle the year end;

• Valuation of intangible assets.

These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances and discussed, to the extent necessary, in more detail in their respective notes.

RNS news service provided by Hemscott Group Limited.