Final Results

Inspace Plc
04 April 2006


Press Release                                                       4 April 2006
                                  Inspace plc

                           ('Inspace' or 'the Group')

                                 Final Results


Inspace plc (AIM:INSP), the property based support services business that has
established itself as one of the UK's leading social housing repair and
maintenance providers, announces its Final Results for the year ended 31
December 2005.


Financial Highlights

•   Turnover up 45% to £147.5m (2004: £101.7m)
•   Operating profit up 24% to £7.9m* (2004: £6.36m)
•   Diluted earnings per share up 16.0% to 8.49p* (2004: 7.32p)
•   Order book up 61% to £450.0m (2004: £280m)
•   Operating cash conversion up to 85% from 59%
•   Net cash of £6.1m (2004: £0.04m)
•   All debt settled on flotation
•   Shareholders' funds up from £5.5m** to £16.0m


* After adjustment for exceptional items
** After restatement for dividends


Commenting on the results, Colin Enticknap, Executive Chairman, said:  '2005 was
a good year for Inspace.  The de-merger and flotation brought unique challenges
and potential distractions, but our people took them all in their stride,
delivering well against both financial and operational targets.
Organisationally, we remain very focused upon meeting customer, employee and
ultimately shareholder expectation, and armed with a clear strategy, visible
order book and enthusiastic team of people, we should be well placed to continue
our success into 2006 and beyond.'


For further information:
 Inspace plc
 Colin Enticknap, Executive Chairman                   Tel: [phone]
 [e-mail]                                 www.inspace.co.uk

 Seymour Pierce
 Mark Percy, Corporate Finance                         Tel: [phone]
 [e-mail]                               www.seymourpierce.com

Media enquiries:
 Abchurch
 Henry Harrison-Topham                                 Tel: [phone]
 [e-mail]                              www.abchurch-group.com



Executive Chairman's Statement


Overview

In my half year statement, I reported that we had made good progress during our
first six months as a stand alone business.  We had successfully completed the
de-merger and flotation process and our entry onto AiM had been well received;
we had delivered encouraging first half results that promised to provide the
platform for continued full year growth; and we had increased the size of our
order book by 61% on the position just twelve months earlier.  I also
highlighted clear challenges for the remainder of 2005.  In social housing
terms, we needed to mobilise the four new contracts just secured, nurturing in
the meantime the tracking list required to feed our new workload demands for
2006 and beyond.  In non-housing terms, our challenge was change related, the
aim being to complete the development phase of our software system replacement
programme, which would provide the catalyst for more fundamental efficiency and
service realignment changes scheduled for 2006.

I am now pleased to report that our second half year has been equally
successful.  Full year results demonstrate significant growth in all key areas;
turnover, which grew by 45% when compared to equivalent operations in 2004 to
reach £147.5 million; operating profit, which grew by 24% in comparable terms to
reach £7.86 million; and cash conversion, which improved significantly to 85%.

The surge of new social housing contracts has been properly digested, creating
the capacity once more for further mobilisations.  Equally importantly, we now
have agreed plans in place which should see each of the four contracts convert
to 'cost plus' invoicing arrangements, the optimum framework to foster long term
partnering relationships.  Our social housing sales pipeline has grown to exceed
£2 billion, with a healthy level of opportunities at the tracking,
prequalification and tender stages.    Notably, we now see a number of
significant opportunities with registered social landlords (housing
associations) alongside our traditional local authority targets.

The change programme affecting our non-housing operations is well ahead of
programme.  Whilst the software replacement programme remains on track with
rollout scheduled to start in the summer, we have accelerated the more
fundamental structural changes to allow expected efficiency improvements to be
reflected in 2006 budgets.  All non-housing maintenance has now been streamlined
within one operating business offering an integrated one-stop-shop property
maintenance service, a simpler and more easily understood structure, and a
leaner cost base.  Customer feedback has been positive.

The third strand of this programme, aimed at reducing dependence upon private
sector customers who typically offer lower levels of order book visibility, is
similarly ahead of plan.  For the first time, the majority of our non-housing
sales pipeline, which has grown strongly, now reflects public sector
opportunities.  Also for the first time, one of those opportunities for the
London Borough of Sutton, has been secured on a 'cost plus' invoicing
arrangement, mirroring what has proved to be such a successful model for our
social housing business.


Financial Highlights

Turnover growth was principally driven by our social housing operations, which
provided the largest individual contribution to Group turnover at £61.2 million,
marginally ahead of non-housing maintenance operations which accounted for £60.8
million.  Interior design, installation and furnishing operations have now moved
beyond the initial 'incubation' stage of their business development.  With
turnover having reached £25.5 million, they now have sufficient critical mass to
be seen as a credible contender in their market place and to operate at an
efficient level.

Operating profit, which represented a return of 5.3% on turnover, remains at a
satisfactory and, we believe, sustainable level.  Unsurprisingly, the largest
individual contribution came, once again, from social housing operations, where
the operating margin reached 7.4%, demonstrating a consistent ability to extract
margin from performance based incentive mechanisms.  Comparable margin within
non-housing maintenance operations fell back to 3.6%, partly due to accelerated
investment in the change programme and partly because of tightening margins
across corporate accounts during the third and fourth quarters.  Interior
design, installation and furnishing operations also performed strongly,
delivering an operating margin of 4.6%.

Interest payable during the pre-flotation period, when we were reliant upon a
fixed interest loan from our previous parent, was essentially balanced by
interest received post flotation.  As a result, profit on ordinary activities
before exceptional items and taxation mirrored operating profit at £7.87
million.

The exceptional charges, which amount to £0.29 million after tax, relate
entirely to the effects of an EMI share incentive scheme introduced in April
2005 in order to compensate participants in an earlier share incentive plan for
the withdrawal of that scheme.  The earlier plan, previously introduced in 2002,
established two classes of shares.  As a prerequisite to flotation, the two
classes of shares needed to be consolidated into one class of ordinary share,
which was achieved with the welcome support of participants who sacrificed
existing benefits and accumulated taper relief.

Earnings per share, which we view as our most important measure, increased by
16.0% to 8.49p per share on a fully diluted basis after adjustment for
exceptional items.

Effective cash management controls led to both a strong year end cash and bank
balance of £6.1 million with no borrowings, and to a significant and necessary
improvement to our cash conversion rate.  Whilst this latter measure now sits at
85%, we are confident that there is still scope for further improvement.

Having ended 2004 with net current assets of £0.7 million and a net worth of
£1.3 million (before accounting rules required restatement for the dividend
proposed in 2004 but paid in 2005), a balance sheet transformation was an
absolute prerequisite.  It is here that we have achieved the most dramatic
improvement; with net current assets increased to £14.9 million and net worth at
a creditable £16.0 million, our underlying covenant strength now properly
reflects the scale of our business.

Andrew Telfer has naturally expanded upon the financial position within his
Chief Financial Officer's Report.


Dividend

The board is recommending the payment of a final dividend of 1.85p per share
which, subject to approval at the Annual General Meeting on 18 May 2006, will be
paid on 24 May 2006.


People

We have achieved a great deal during the last twelve months, and this has only
been possible through the immense effort demonstrated by so many of our people,
for which we are extremely grateful.  Their energy, enthusiasm and willingness
to go that extra mile has become inherent in everything we do, and it is that
above all else that makes Inspace what it is.

Mick Williamson, Karim Khan and Gerry Graville, our three business stream
managing directors, deserve particular mention.  Mick has fostered a unique
culture in Inspace Partnerships, characterised by a blend of passion,
professionalism, openness and healthy self criticism, attributes regularly cited
by customers as our main distinguishing features.  Karim has taken a leading
role in developing the realignment plan for Inspace Maintain, and has made
encouraging progress during the early implementation phase.  Gerry has
successfully overseen a period of intense growth at Inspace Complete, which has
seen the business rapidly develop from concept stage to become widely respected
as a leading provider in its market.

Each has, of course, been well supported by his business stream board, and it is
therefore very fitting that participation in the next generation of our share
option scheme will be widened in 2006 to include both business stream directors
and also key functional heads.

Thanks also go to my main board colleagues for their invaluable judgement,
guidance and support during what has naturally been a critical period in the
Group's development.  Andrew Telfer took the lead role during the de-merger and
flotation process, and warrants considerable credit for its ultimate success.
Duncan Forbes took the lion's share of operational responsibility, maintaining
focus and delivering against targets despite potential distractions.
Christopher Sheridan and David Batchelor undoubtedly brought breadth, balance
and objectivity to our discussions, so critical in the context of our evolving
roles and responsibilities.

At every level, our people have risen well to the unique challenges of 2005,
which gives us real encouragement as we turn our minds to the future.


Future Prospects

As we closed our accounts for 2005, our workload platform for 2006 was almost
exactly in line with expectation.  In social housing terms, our order book
accounted for about 80% of budgeted sales; in non-housing terms, where empirical
evidence suggests that we will secure high levels of additional discretionary
spend alongside secured routine maintenance orders, and where the incubation
period for new project works is measured in weeks not months, our order book
accounted for about 50%.  Looking further forward, our total order book,
assuming projects run for their full terms, was approximately £450 million.

When sourcing the balance of our workload needs, we will remain focused upon
quality rather than quantity. Our success has been built upon developing long
term, sustainable relationships with customers able to offer consistent revenues
across a wide property portfolio, and who recognise that greatest value is not
always synonymous with lowest tender cost.  By prioritising these customers and
being able to deliver high levels of service, we have demonstrated a consistent
ability to not only achieve realistic levels of performance based profit, but
also to grow organically across each account through the expansion of our
service offering.  We do not expect this strategy to change, and the
opportunities that feed into our growing sales pipeline are continually assessed
against this customer profile.

Against this backcloth, the workload challenge for our social housing business
will be to secure the balance of our 2006 requirement, about half of which is
expected to come organically from existing accounts, and to build a robust
platform for 2007, when existing Decent Homes contracts at Barnsley and
Colchester start to wind down.  The operational challenge will be to continue
delivering year on year service level improvements, whilst at the same time
refining our service offering, particularly in relation to our call centre
support and asset management tools.

For our non-housing maintenance business, the workload challenge will be to
secure an increasing share of work from the public sector, offering greater
order book visibility.  Ideally, at least half of our order book will relate to
public real estate by the end of 2006, although this realignment will not dilute
our commitment towards those corporate customers who also meet our profile.
Whitbread is an ideal example, not just because it represents an important and
long standing customer, but also because it illustrates one with an appetite for
our new one-stop-shop service.  At an operational level, rolling out the new
software platform will naturally be a critical challenge, and will need careful
management to avoid undue disturbance to normal operations.

Having grown so quickly over recent years, our interior design, install and
furnish business sees 2006 as a year for consolidation.  Further growth,
scheduled for 2007 and beyond, is expected to come from public sector framework
contracts, where much sales team effort is now being invested.


Summary

Looking back over 2005, I believe the whole Inspace team can be justifiably
pleased with what it has achieved.  It has been a good year for the Group, not
always an easy one, but one in which we have remained focused upon meeting
customer, employee and ultimately shareholder expectation.  We have delivered
well against our own financial and operational targets and, equally importantly,
the business is now well placed to meet the challenges of 2006.

Having said that, we fully recognise the dangers of complacency.  Our markets
remain as competitive as ever, our performance based margins demand continually
improving service levels, and high quality recruits essential to resource our
growth plans are increasingly difficult to find.  But armed with a clear
strategy, a strong team of people and a track record of successfully confronting
such issues, I am confident that we have a very bright future ahead.


Colin Enticknap
Executive Chairman
3 April 2006



Chief Financial Officer's Report

The Group has met its financial performance targets during 2005. It closes with
a strong balance sheet and cash position.


De-merger and Flotation

The Group was de-merged from Willmott Dixon on 1 January 2005, with the
exception of a discontinued fitting-out business.  Until that time Inspace had
relied upon financing of its working capital needs by way of an inter-company
arrangement.  On de-merger, the amount due to Willmott Dixon of £7.4m (including
outstanding dividends of £4.3m in relation to 2004 earnings), was exchanged for
a £10.0m loan with interest payable at 0.5% above the Royal Bank of Scotland's
base rate.  The net £2.6m cash introduced to the business provided the headroom
necessary to meet ongoing working capital needs.

On 26 May 2005, Inspace plc was admitted to the AiM of the London Stock
Exchange.  The flotation introduced net proceeds of £9.4m, through the issue of
9.3m ordinary 2p shares, enabling full repayment of the Willmott Dixon loan and
establishing the Group as an independent entity with a revised dividend policy.
Accordingly, the Group balance sheet had no financial gearing and a
significantly improved and more appropriate financial covenant.


Principal Accounting Policies

The issue of revised accounting standards has given rise to changes in our
principal accounting policies.  Firstly, the application of FRS 21 requires
dividends to now be recognised in the year in which they are paid rather than
being accrued as a liability when the directors have resolved to recommend them.
  Secondly, UITF 40 requires the recognition of turnover and profit attributable
to short term contracts whereas in previous years such work was only recognised
when the jobs were completed.  A further consequence of this change is that
amounts previously shown as work in progress or accrued income have now been
re-categorised as amounts recoverable on contracts.  Where necessary the
comparative figures for 2004 have been restated in respect of these changes.


Operational Performance

Group turnover from continuing operations grew by 45% to reach £147.5m (2004:
£101.7m).  Whilst all parts of the business contributed, Inspace Partnerships
(Partnerships) proved the main growth engine delivering more than half of the
overall increase and reaching revenues of £61.2m (2004: £35.2m).  Delayed
contract mobilisations prevented growth in the year exceeding the 74% achieved.
Partnerships now represents 42% of total turnover (2004: 35%, 2003: 24%, 2002:
17%) and for the first time represents the largest of our business streams.
Inspace Maintain (Maintain) experienced more modest growth at 7%, increasing
turnover to £60.8m (2004: £56.9m) and now accounts for 41% of overall turnover
(2004: 56%).  Inspace Complete (Complete) achieved a more than doubling of its
turnover to £25.5m (2004: £9.7m) representing 17% of Group turnover.  I would
not expect Complete to repeat this level of growth or indeed exceed 15% of Group
turnover now that it has surpassed its critical turnover mass of around £20.0m.

Operating profit before exceptional items increased 24% to £7.86m (2004: £6.36m)
from continuing operations.  Whilst Group operating profit met our expectations
and all parts of the business remained profitable, Group operating margin
reduced to 5.3% (2004: 6.3%).  The fall was primarily due to Maintain whose
profits for the year fell back by 32% to £2.17m (2004: £3.20m) and margins to
3.6% (2004: 5.6%) due in the main to further investment in the strategic change
programme and a worsening of trading conditions led by tightening margins on
certain consultant led corporate accounts.

Our Partnerships business model centres on the need to deliver high operational
performance year-on-year, ultimately to ensure social housing tenants receive
continually improving service levels.  Consequently, our Partnerships profits
are largely driven through performance related profits derived from delivery
against key performance indicators and shared savings on agreed budgeted spends.
  These factors have enabled us to share in our customers' success and led to a
7.4% operating margin in the year (2004: 7.3%).  The business stream's operating
profits increased by 77% to reach £4.53m (2004: £2.55m).

Complete also delivered excellent results achieving 89% growth in operating
profits to £1.16m (2004: £0.62m) representing a 4.6% return (2004: 6.3%).
Complete's growth was driven by increased public sector work with the
Government's Job Centre refurbishment programme.  Whilst public sector work in
the design led interiors market typically attracts slightly lower margins, our
focus is on the long term and to continue to drive resilience into the business
to ensure an appropriate workload balance with the corporate market.

The board and central team was largely in place at the point of the de-merger on
1 January 2005.  Accordingly, the 2005 results reflect the first full year of
costs as a stand alone business, including all relevant incentive payments for
the period.  Naturally, incremental ongoing costs were incurred in relation to
our plc status.


Exceptional Items

The Executive Chairman's Statement describes the circumstances that gave rise to
the exceptional items of £0.29m after tax.  The exceptional charges arose solely
as a result of the flotation due to the replacement of a previous incentive
scheme by the EMI scheme.

The first of the exceptional charges comprises a share based payment provision
of £0.24m, in accordance with UITF 17 'Employee Share Schemes', representing the
net deemed value of the unquoted minority holdings.  UITF 17 requires the
establishment of a share based payment reserve and as such no further adjustment
to the provision will arise for this item.  The balance of the exceptional
charge is a provision to reimburse individuals for the surrender of taxation
relief of £0.18m.

The post tax effect of the exceptional items is £0.29m; the pre-tax exceptional
item of £0.42m is offset by corporation tax relief of £0.13m.  Further relief,
in respect of options exercised in 2006, is expected to benefit the 2006 tax
charge.


Taxation

Tax on profit on ordinary activities increased to £2.30m (2004: £1.97m).  The
effective tax rate improved to 31.0% (2004: 31.4%) primarily due to the tax
effect of disallowed items.


Earnings Per Share

Earnings per share figures have been appropriately adjusted to remove the impact
of the exceptional items. Basic earnings per share decreased to 8.64p (2004:
8.82p) due to the shares issued on flotation.  More importantly, diluted
earnings per share, which better reflect the underlying performance of the
business, increased by 16.0% to 8.49p (2004: 7.32p).


Dividends

The board has recommended a final dividend of 1.85p per share to the
shareholders on the register at 18 April 2006.  Subject to approval at the AGM
on 18 May 2006 this will be paid to shareholders on 24 May 2006.

During the year, the board recommended two interim dividends based on the policy
set out in the AiM admission document.  The first of 0.933p per ordinary share
was paid to the shareholders on the register at 24 May 2005, representing 5/6ths
of the total interim dividend, and a second interim dividend of 0.161p per
ordinary share was paid to the shareholders on the register at 16 September
2005, representing 1/6th of the total interim dividend.  Both interim dividends
were paid on 14 October 2005.

The total dividend for the year of £1.90m (2004: £4.28m) equates to a pro forma
2.82p per share based on annualised dividends paid to post flotation
shareholders.  Dividend cover is 2.7x on a post tax profit basis and 2.2x based
on cash generated in the year ignoring dividend payments.

The Directors' intention is that the Company will pay dividends whilst
continuing to retain a significant proportion of the Group's earnings.


Cash Flow

The enforcement of strict cash management controls is firmly embedded and
remains a priority for all parts of the business.  These principles helped the
Group to generate cash from operating activities of £6.7m (2004: £3.7m)
representing an improved conversion rate of operating profit excluding
exceptional items of 85.3% (2004: 58.5%).  The conversion of operating cash is a
key measure and enables the business to continue its technology investment
programme. It is worth noting that trade debtor days fell to 33 days (2004: 36
days) whilst creditor days fell to 40 days (2004: 53 days) reflecting, in part,
the increasing proportion of social housing business. The closing net cash
position was £6.1m at 31 December 2005 (2004: £0.04m).

Treasury functions are administered centrally through a cash pooling
arrangement, to enable appropriate control and ensure the best short term
deposit rates are achieved.  Interest generated from deposits of £0.2m (2004:
nil) was offset by the interest due on the Willmott Dixon loan of £0.2m (2004:
nil) during the first part of the year.

Whilst the Group generates cash overall and during the year the Group remained
cash positive, it is subject to short term volatility.  A Royal Bank of Scotland
overdraft facility of £5.0m was arranged to provide additional headroom.


Pensions

For the duration of its contractual relationships with various local authorities
the Group contributes to a number of local authority pension schemes in respect
of those employees working for the Group under  Transfer of Undertakings
Protection of Employment (TUPE) arrangements.  The relevant accounting standard
FRS 17 'Retirement Benefits' requires, if necessary, the Group's share of any
deficit to be recognised as a liability on the balance sheet but offset by a
corresponding goodwill asset.  As this liability was immaterial, no such
recognition was required and the scheme contributions have been duly expensed as
they fall due.


International Financial Reporting Standards (IFRS)

As a company listed on AiM, Inspace will be required to adopt IFRS from 1
January 2007. The board's decision not to adopt these standards earlier than
2007 is based upon the continuing uncertainty surrounding certain IFRS. The
Group is exploring the effects of the transition to IFRS in conjunction with its
financial advisers.  Initial indications are that there is unlikely to be a
material impact on the Group of adopting IFRS.


Andrew Telfer
Chief Financial Officer
3 April 2006


Group Profit and Loss Account
Year ended 31 December 2005

                                                                         Year ended            Year ended
                                                                   31 December 2005      31 December 2004
                                                                                                Re-stated
                                                     Notes                     £000                  £000

Turnover
Continuing operations                                  1                    147,527               101,731
Discontinued operations                                1                          -                 5,541

                                                                            147,527               107,272
Cost of sales                                                             (113,802)              (79,615)

Gross profit                                                                 33,725                27,657
Administrative expenses
  Excluding exceptional items                                              (25,865)              (21,407)
  Exceptional items                                    2                      (418)                     -
                                                                           (26,283)              (21,407)

Operating profit
Continuing operations
  Excluding exceptional items                          1                      7,860                 6,362
  Exceptional items                                    2                      (418)                     -
                                                                              7,442                 6,362
Discontinued operations                                1                          -                 (112)

                                                                              7,442                 6,250
Interest receivable                                    3                        223                     -
Interest payable and similar charges                   4                      (218)                     -

                                                                                                        -
Profit on ordinary activities before taxation                                 7,447                 6,250
Tax on profit on ordinary activities                   5                    (2,310)               (1,965)
Profit for the financial year                                                 5,137                 4,285

Unadjusted earnings per ordinary share: (pence)
Basic                                                  7                       8.17                  8.82
Diluted                                                7                       8.03                  7.32
Adjusted earnings per ordinary share: (pence)
Basic                                                  7                       8.64                  8.82
Diluted                                                7                       8.49                  7.32


There were no recognised gains or losses other than the above profit for either
financial year.

The discontinued operations for 2004 have no material impact on the earnings per
share.


Group Balance Sheet
As at 31 December 2005
                                                                         Year ended            Year ended
                                                                   31 December 2005      31 December 2004
                                                                                                Re-stated
                                                                               £000                  £000
Fixed assets
Tangible assets                                                               1,058                   579

Current assets
Stocks                                                                          335                   265
Debtors                                                                      30,350                24,770
Cash at bank and in hand                                                      6,084                    37

                                                                             36,769                25,072

Creditors: amounts falling due within one year                             (21,873)              (20,123)

Net current assets                                                           14,896                 4,949

                                                                             15,954                 5,528

Capital and reserves
Called up share capital                                                       1,343                 1,125
Share premium                                                                10,107                   113
Capital redemption reserve                                                        3                     -
Profit and loss account                                                       4,501                 4,290

                                                                             15,954                 5,528


Group Cash Flow Statement
Year ended 31 December 2005
                                                                         Year ended            Year ended
                                                                   31 December 2005      31 December 2004
                                                                                                Re-stated
                                                     Notes                     £000                  £000

Cash flow from operating activities                    8                      6,707                 3,657
Returns on investments and servicing of finance                                   5                     -
Taxation paid                                                               (1,706)               (1,742)
Capital expenditure and financial investment           8                      (861)                 (312)
Equity dividends paid                                  6                    (4,923)               (1,900)

Cash flow before use of liquid resources and
financing                                                                     (778)                 (297)
Financing                                              8                      6,825                   311

Increase in cash                                                              6,047                    14

Reconciliation of net cash flow to movement in net
funds
Increase in cash in the year                                                  6,047                    14
Consolidation of balances due to Willmott Dixon
Limited                                                                       3,143                     -
Change in net funds resulting from cash flows                                 9,190                    14
Repayment of Willmott Dixon Limited loan                                    (3,143)                     -

Movement in net funds                                                         6,047                    14
Net funds as at 1 January 2005                                                   37                    23

Net funds as at 31 December 2005                                              6,084                    37


The amounts due to Willmott Dixon Limited were consolidated into a loan facility
on 1 January 2005 which was subsequently repaid on flotation.



Reconciliation of Movement in Shareholders' Funds
Year ended 31 December 2005
                                                                         Year ended            Year ended
                                                                   31 December 2005      31 December 2004
                                                                                                Re-stated
                                                     Notes                     £000                  £000

Profit for the year                                                           5,137                 4,285
Dividends paid                                         6                    (4,923)               (1,900)

                                                                                214                 2,385
Call on share capital                                                           530                   311
Purchase of own shares                                                          (3)                     -
Issue of shares under option                                                    244                     -
Issue of shares                                                              10,054                     -
Costs associated with issue of shares                                         (613)                     -

Net proceeds from issue of shares                                            10,212                   311

Movement in shareholders' funds                                              10,426                 2,696
Opening shareholders' funds - as restated                                     5,528                 2,832

Closing shareholders' funds                                                  15,954                 5,528



Restatement of opening position

As detailed in the Chief Financial Officer's Report, the Company has adopted the
requirements of FRS 21 and has restated the opening shareholders funds as a
consequence. The proposed dividend as at 31 December 2004 of £4.28 million
(2003: £1.90m) has been derecognised increasing the shareholders funds by that
amount. The dividend was paid in 2005 and there is no impact on shareholders
funds as at 31 December 2005 as a result of this change,


Notes to the Financial Statements
Year Ended 31 December 2005


BASIS OF PREPARATION AND ACCOUNTING POLICIES

The above results for the year ended 31 December 2005 are an abridged version of
the Company's audited statutory financial statements for the year ended 31
December 2005; both the financial statements and the above results were approved
by the Board on 3 April 2006. The financial statements will be delivered to the
Registrar of Companies shortly; the auditor's report thereon was unqualified,
and nor did it include an 'emphasis of matter' paragraph.

The profit and loss account and balance sheet do not constitute statutory
financial statements within the meaning of Section 240 of the Companies Act
1985.

These accounts have been prepared on the basis of the same accounting policies
as set out in the statutory accounts for the year ended 31 December 2004, except
as follows:

 a. The Company has adopted FRS 21 which requires that dividends are recognised
    in the year in which they are paid rather than accrued as a liability when
    the Directors have resolved to recommend them. The impact of this is
    disclosed in the Reconciliation of Movement in Shareholders' Funds.

 b. The Company has adopted UITF 40 which has resulted in the recognition of
    turnover and profit attributable to work in progress under short term
    contracts together with the re-categorisation of work in progress and
    accrued income as amounts recoverable on contracts in the balance sheet.
    This change has no material effect on the results for the year.


Various presentational changes have also been adopted, consequent on the
de-merger of the Company from Willmott Dixon.


1. Segmental analysis

                                                                     Year ended                Year ended

                                                               31 December 2005          31 December 2004

                                                                           £000                      £000
Turnover
Social housing maintenance                                               61,201                    35,154
Corporate and public sector maintenance                                  60,821                    56,885
Interior design, installation and furnishing                             25,505                     9,692
Discontinued activities                                                       -                     5,541

                                                                        147,527                   107,272

Operating profit
Social housing maintenance                                                4,529                     2,552
Corporate and public sector maintenance                                   2,167                     3,195
Interior design, installation and furnishing                              1,164                       615
Discontinued activities                                                       -                     (112)

                                                                          7,860                     6,250

Net assets
Social housing maintenance                                                2,329                     2,638
Corporate and public sector maintenance                                   1,267                     3,165
Interior design, installation and furnishing                              1,069                       931
Parent Company less items eliminated on consolidation                    11,289                   (1,206)

                                                                         15,954                     5,528


The segmental analysis excludes the exceptional items outlined in note 2.


The Group was de-merged from Willmott Dixon Limited on 1 January 2005, with the
exception of a discontinued fitting-out business. Accordingly, the results of
this business have been re-classified as discontinued in 2004.

The Group's turnover, profit on ordinary activities and net assets are all
derived in the United Kingdom.


2. Exceptional items


The exceptional items comprise:
                                                                     Year ended                Year ended
                                                               31 December 2005          31 December 2004
                                                                           £000                      £000

Share based payments                                                        244                         -
Compensation payments                                                       174                         -

                                                                            418                         -
Corporation tax relief                                                    (125)                         -

                                                                            293                         -

3. Interest receivable
                                                                     Year ended                Year ended
                                                               31 December 2005          31 December 2004
                                                                           £000                      £000

Income from short term deposits                                             223                         -


4. Interest payable and similar charges

                                                                     Year ended                Year ended
                                                               31 December 2005          31 December 2004
                                                                           £000                      £000

Interest on loan from Willmott Dixon Limited                                218                         -


On 1 January 2005, the amounts due to Willmott Dixon Limited were consolidated
into a £10.0 million loan from Willmott Dixon. The loan was repaid on the
flotation of Inspace plc on 26 May 2005 with interest at 0.5% above the Royal
Bank of Scotland's base rate.


5. Taxation

                                                                     Year ended                Year ended
                                                               31 December 2005          31 December 2004
                                                                           £000                      £000

a) Analysis of charge
Current tax
UK Corporation tax on profit for the year before
exceptional items
                                                                          2,411                     1,935
UK Corporation tax relief on exceptional items                            (125)                         -
Adjustment in respect of previous years                                       -                        26

                                                                          2,286                     1,961
Deferred tax
Origination and reversal of timing differences                               24                         4

                                                                          2,310                     1,965


b) Factors affecting tax charge for the year
The tax assessed for the year is higher than the
standard rate of corporation tax in the UK (30%). The
differences are explained below:
Profit on ordinary activities before tax                                  7,447                     6,250

Profit on ordinary activities multiplied by standard
rate of corporation tax in the UK (30%)                                   2,235                     1,875
Effects of:
Expenses not deductible for tax purposes                                     75                        66
Capital allowances in excess of depreciation                               (24)                       (4)
Lower rates on earnings                                                       -                       (2)
Adjustment in respect of previous years                                       -                        26

                                                                          2,286                     1,961


c) Factors that may affect future tax charges

The Company expects to gain future tax relief in respect of shares to be issued
under employee share incentive schemes on the difference between the market
value of shares on exercise and the option price. In January 2006 653,282 share
options were exercised which will result in tax relief during 2006 of £226,459.
An additional outstanding 98,820 share options have yet to be exercised.

The Group is not aware of any other significant factors that may affect future
tax charges.


6. Dividends

                                                                     Year ended                Year ended
                                                               31 December 2005          31 December 2004
On ordinary shares of 2p each:                                             £000                      £000


Final 2003 paid of 4.22p per share                                            -                     1,900
Interim 2004 paid of 7.634p per share                                     4,275                         -
Interim 2005 paid of 0.933p (2004: nil)                                     540                         -
Interim 2005 paid of 0.161p (2004: nil)                                     108                         -

                                                                          4,923                     1,900


The dividend per share in respect of the final 2003 dividend has been adjusted
to take account of the division of ordinary shares of 10p into ordinary shares
of 2p on 16 November 2004.

An interim dividend of 0.933p per ordinary share was paid to the shareholders on
the register at 24 May 2005, representing 5/6ths of the total interim dividend,
and an interim dividend of 0.161p per ordinary share was paid to the
shareholders on the register at 16 September 2005, representing 1/6th of the
total interim dividend.  Both payments were made on 14 October 2005.

A proposed final dividend of 1.85p per ordinary share is proposed for payment on
24 May 2006.


7. Earnings per share

Earnings per share are based upon the average number of ordinary shares in issue
during the year of 62,872,928 (2004: 48,584,462). The diluted earnings per share
are based upon the weighted average number of 63,975,884 (2004: 58,549,950)
ordinary shares having taken into account the dilutive effect of shares which
have been made available to employees under existing incentive schemes.

The weighted average number of shares for 2004 has been adjusted to take account
of the division of ordinary shares of 10p into ordinary shares of 2p on 16
November 2004.

The earnings for the periods are set out in the table below. An adjusted
earnings measure has been included to highlight the impact of the exceptional
items during 2005.

                                                        Earnings               Earnings per share

                                                        2005          2004          2005          2004
                                                        £000          £000         pence         pence

Unadjusted earnings                                    5,137         4,285
Basic earnings per share                                                            8.17          8.82
Diluted earnings per share                                                          8.03          7.32

Exceptional items                                        418             -
Tax relief on exceptional items                        (125)             -

Adjusted earnings                                      5,430         4,285
Basic earnings per share                                                            8.64          8.82
Diluted earnings per share                                                          8.49          7.32


8. Cash flows

                                                                   Year ended                 Year ended
                                                             31 December 2005           31 December 2004
Reconciliation of operating profit to net cash                           £000                  Re-stated
inflow from operating activities                                                                    £000

Operating profit on ordinary activities before
interest and taxation                                                   7,442                      6,250
Depreciation                                                              383                        305
Loss on sale of fixed assets                                                -                         34
Increase in stock and amounts recoverable on
contracts                                                             (1,674)                    (5,379)
(Increase)/decrease in debtors                                        (3,988)                        376
Increase in payments on account                                           323                        502
Increase in trade and other creditors                                   3,977                      1,569
Non-cash cost of share based payments                                     244                          -

Net cash inflow from operating activities                               6,707                      3,657


Analysis of change in net                 As at                                               As at
funds                                 1 January       Cash flows          Non-cash 31 December 2005
                                                                         movements
                                           2005      in the year
                                           £000             £000              £000             £000

Cash at bank and in hand                     37            6,047                 -            6,084

Loans                                         -          (3,143)             3,143                -

                                             37            2,904             3,143            6,084


The non-cash movement shown above represents the consolidation of amounts due to
Willmott Dixon Limited into a loan facility on 1 January 2005 which was
subsequently repaid on flotation.

                                                                          Year ended           Year ended
                                                                    31 December 2005     31 December 2004
                                                                                £000            Re-stated
                                                                                                     £000
Returns on investments and servicing of finance
Interest receivable                                                              223                    -
Interest payable                                                               (218)                    -

                                                                                   5                    -

Taxation paid                                                                (1,706)              (1,742)

Capital expenditure and financial investment
Purchase of tangible fixed assets                                              (868)                (411)
Sale of tangible fixed assets                                                      7                   99

                                                                               (861)                (312)

Financing
Call on share capital                                                            530                  311
Issue of shares                                                               10,054                    -
Repayment of Willmott Dixon loan                                             (3,143)                    -
Costs associated with issue of shares                                          (613)                    -
Purchase of own shares                                                           (3)                    -

                                                                               6,825                  311



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