Parkwood Holdings plc

28 August 2008

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008

Parkwood Holdings plc, the support services group, is pleased to announce its interim results for the 6 months ended 30 June 2008.

Financial highlights:

* Revenues rose by 20.1% to £61.5m (2007: £51.2m) * Operating profit increased by 70.1% to £2.33m (2007: £1.37m) * Profits before tax rose by 15.2% to £1.21m (2007: £1.05m) * Earnings per share increased to 4.7p, up 30.6% from last year (2007: 3.6p) * Proposed dividend of 1.5p (2007: 1.3p) payable to shareholders on 3 October 2008 * Group order book increased by 24% to £531m (2007: £429m)

Operating highlights:

* New Leisure management contracts at Portsmouth and Cherwell under DBOM arrangements * Preferred bidder status on Bristol City Council Leisure PFI Project * LINk Contract awards for Parkwood Healthcare in Lewisham and Harrow

Tony Hewitt, Executive Chairman of Parkwood Holdings, commented:

"Our blue-chip order book and index-linked contracts, which account for in excess of 85% of revenue, provide a degree of certainty for the future performance of the Group".

For further information, please contact:

Tony Hewitt Executive Chairman 01772 627111

Terry Bowman Group Finance Director 07825 607358

Neil Baldwin Brewin Dolphin Securities Limited 0113 241 0126

Information on Parkwood Holdings plc can be accessed via the company's website at

www.parkwood-holdings.co.uk Notes for Editors:

Parkwood Holdings plc specialises in providing outsourced and support services, predominantly to the public sector across England and Wales under long term contracts. Its four main areas of operation are as follows:

Glendale. Provides amenity horticulture, grass cutting, arboriculture and care of sports pitches, parks and open spaces. The division also includes golf course management, green waste recycling, environmental consultancy and horticulture.

Parkwood Leisure. Manages a diverse range of leisure facilities, including swimming pools, sports halls, gyms, health suites and catering operations.

Parkwood Projects. Undertakes PFI, PPP and similar bids on behalf of joint ventures and the Group. Parkwood PFI is also responsible for project management of contracts and the management of other funds such as the lifecycle funds associated with the project agreement.

Healthcare. Operates a nursing agency and an ambulance and patient transport business. Parkwood Healthcare has recently been successful in winning NHS LINk contracts in London.

Parkwood Holdings Plc Interim Report 2008 Chairman's Statement

The six-month period to 30 June 2008 has seen continued growth in Parkwood's revenues and profits, particularly in its Leisure Division, where significant new contracts under design, build, operate and manage (DBOM) arrangements commenced in Portsmouth in January and with Cherwell District Council in North Oxfordshire in April. Glendale experienced difficult trading conditions especially in its golf management and horticultural businesses, whilst increases in fuel prices also impacted adversely on the costs of running the division's fleet of more than 500 vehicles. Significantly, Parkwood Healthcare's new medical service division was awarded their first new contracts with two London Boroughs for the provision of LINk hosting consultancy services. In July, Bristol City Council announced that Parkwood had gained preferred bidder status on a £24 million PFI project to design, finance, build and operate a new leisure centre in the south of the city, reaffirming the Group's leadership in this sector of the PFI market place.

Group Results

Revenues increased by 20.1% to £61.5 million (2007: £51.2 million) whilst profit before tax rose to £1.21 million (2007: £1.05 million), an increase of 15%. Operating profit rose significantly to £2.33 million from £1.37 million in the previous year as a result of increased profits in Parkwood Leisure and Parkwood Project Management, reduced losses in Parkwood Healthcare, as a result of the release of part of the onerous contract provision, and the benefit of the acquisition of the parent company of Realm Services (DAC) in May 2007 and increased revenue in the SPC Group as a result of the completion of the construction of the Solihull and Sidcup leisure centres.

The Group's forward order book at the period end was £531 million (2007: £429 million), an increase of 24%.

The Board is pleased to announce an increase in the dividend for the period to 1.5p per share (2007: 1.3p per share) payable on 3 October 2008 to all shareholders on the register on 12 September 2008.

Board and Management

Nick Temple-Heald, who has been the managing director of Glendale, the Group's green services division, for the last three years, was appointed to the Board as an executive director on 1 May 2008. Nick has been instrumental in diversifying the activities of Glendale and doubling the size of the business since he joined the Group in September 2004. The Board now consists of four executive and two independent non-executive directors.

Leisure

Parkwood Leisure had a successful first half with revenue increasing by 28% to £26.1 million (2007: £20.4 million) and profit before tax by 24% to £1.25 million (2007: £1.1 million).

The beginning of the year saw the start of the Portsmouth (DBOM) contract where the division took over nine leisure centres and other sites with operating revenues of £3.6 million per annum. Portsmouth City Council also invited Parkwood Leisure to run the Pyramids Centre, a seafront venue which had been scheduled to close. The new Tudor Grange leisure centre and pool in Solihull, built by Leadbitter Construction Ltd under a PFI contract managed by Parkwood Project Management (PPM), was handed over to Parkwood Leisure to operate on 28 January 2008 and proved popular immediately. Similarly, in March, a new leisure centre in Sidcup built by Gleeson Construction, again under the management of PPM, was handed over to Parkwood Leisure as operator. Then, in April, yet another DBOM contract commenced operations in North Oxfordshire involving three leisure centres in Banbury, Bicester and Kidlington. In total, at the end of the period, the Leisure divison operated 73 leisure centres.

New centres, as well as many of the older leisure centres, have health and fitness clubs within them which, along with the division's three private clubs, operate under the Expressions brand. Expressions' memberships at the period end totalled 41,600 providing £1.15 million of direct debt income per month with an average membership fee of £33.

Glendale

Glendale revenues in the period grew to £30.6 million (2007: £26.8 million), an increase of 14%, but trading conditions have been difficult, with golf income below expectation and the Euro affecting the cost of imported plants in horticulture. Poor weather in the spring impacted on operations, whilst fuel price increases cost the division in excess of £0.25 million in the period. Profits before tax consequently fell to £0.17 million (2007: £0.65 million). Nevertheless the core businesses of Glendale Grounds Management and Glendale Countryside both performed well. Notably, Glendale further strengthened its position in the South West with the award of a five year contract for grounds management by North Devon District Council, worth in excess of £1 million per annum. Glendale also sponsored and co-hosted the national Green Flag Awards ceremony on 31 July, where Glendale was responsible for 55 of the parks and open spaces that won awards this year.

The division has outgrown its current structure and from 1 September 2008, Glendale will become a holding company allowing its subsidiaries, Glendale Grounds Management, Glendale Countryside, Glendale Golf, Glendale Horticulture and Glendale Recycling to trade with greater autonomy. Nick Temple-Heald becomes the new Divisional Chief Executive Officer and new boards of directors comprising both executive and non-executive directors are being established. Mark Hawkesworth, who was the Chairman of Parkwood Holdings plc from 1992 to 1997, becomes Glendale's new divisional Chairman and Professor John Moverley, previously CEO of the Royal Agricultural Society of England and Myerscough College, also joins the Glendale holding company board.

Parkwood Project Management

Parkwood Project Management increased revenue to £1.4 million (2007: £1.1 million) in the period, and profits increased to £0.33 million (2007: £0.18 million). The year started well with the commencement of construction work at the Mountbatton Leisure Centre for Portsmouth City Council and the completion of Tudor Grange leisure centre and pool for the Metropolitan Borough of Solihull. In March construction work was also completed on a new leisure centre in Sidcup. April saw the signing of a DBOM contract with Cherwell District Council allowing construction to commence on a new leisure centre in Banbury along with refurbishment programmes on two other centres. A final bid submitted in June to Bristol City Council resulted in preferred bidder status being awarded to the Parkwood consortium to build a new leisure centre in the south of the city. On 31 July negotiations were completed with the Metropolitan Borough of Rotherham on behalf of Dignity, a bereavement services company, to refurbish a crematorium and manage cemeteries throughout the Borough. This contract also gives rise to a 25 year grounds management contract for Glendale.

PPM expanded on 1 July 2008 when the business of Glendale Environmental was incorporated into the practice; bringing with it landscape architect, ecology, environmental sustainability and arboricultural competencies. As a result the business has rebranded and now trades as `Parkwood Consultancy Services'.

Parkwood Healthcare

With the planned reduction in its patient transport business, Parkwood Healthcare's revenue fell to £2.3 million (2007: £3.1 million). Losses continue, and were reduced to £0.23 million (2007: £0.45 million).

Significant business development activity has taken place during the period to establish a new medical services business, with tenders being submitted for mental health programmes, clinical services, LINk hosting services and the Equitable Access Programme which will provide new GP-led health centres, known in the media as `polyclinics'. Two LINk contracts have been won, the London Borough of Lewisham which commenced in April and the London Borough of Harrow in July. The purpose of the LINk programme is to give a voice to local people to enable them to comment and make representations on the way health and social care services are commissioned and delivered in their community. The company has been invited to tender for three GP-led health centres to date and awaits the results of several more applications. These new health centres will open 12 hours per day, 7 days per week and are to be in existence by the spring of 2009 in all of the 152 primary care trust areas in England. Parkwood Healthcare hopes to be a successful participant in the provision of community based healthcare services for the future.

Funding and Cash Flow

The completion of the construction phases of the Tudor Grange and Sidcup leisure centres in the period has seen a significant reduction in capital expenditure compared to previous years. The new DBOM contracts at Portsmouth and Cherwell do not require capital funding by the Group.

Whilst total and recourse gearing have increased since December, in line with the Group's cashflow profile, they have both fallen when compared to the position at June 2007. Cashflow generated from operations before working capital movements increased by 65%, whilst the outflow of cash from working capital resulted from the timing of payments in respect of the PFI construction projects when compared to 2007.

The Group also exercised the powers granted by the 2007 and 2008 Annual General Meetings to purchase its own shares where the directors considered it was in the interest of shareholders. In total 500,000 ordinary shares were acquired at a total cost of £589,000 in the half year.

Outlook

Parkwood is currently reviewing its strategy for the three-year period 2009-11, which will focus on consolidating its position in the markets it occupies and releasing value to shareholders. The Group's blue chip order book and index-linked contracts account for in excess of 85% of revenue and provide a degree of certainty for the future in deteriorating economic conditions. The Group also holds investments in PFI/PPP related special purpose companies (SPC's), the value of which are not fully recognised in the balance sheet. The Board is reviewing options for realising this value for shareholders.

Despite the difficult trading conditions faced by some Glendale activities, the directors remain of the opinion that the Group's results for the full year will be in line with market expectations.

A W Hewitt Executive Chairman 28 August 2008 Parkwood Holdings Plc Interim Report 2008 Financial Review

In the first half of 2008 the Group has seen profit before tax increase by 15% on Revenue growth of 20%. Adjusted operating profit increased by almost 70%, whilst finance costs rose to £1.21 million (2007: £0.41 million) as a result of a full six month charge for the cost of the purchase of the majority shareholding in the parent company of Realm Services (DAC), which was acquired in May 2007, and initial expensing of the debt funding of the Rivendell (Solihull) and Boxwood (Sidcup) PFI building contracts which had previously been capitalised until completion of construction.

In addition the charge for impairment and goodwill amortisation increased to £ 0.224 million (2007: £0.107 million) as a result of the Realm Services (DAC) transaction.

The Group's total interest charges were covered 1.9 times (2007: 3.3 times). Recourse interest charges were covered 13 times (2007: 6 times) as interest costs declined to £0.118 million (2007: £0.223 million).

Trading Performance

The following table continues the practice, commenced with the 2007 Report and Accounts, of separating the performance of the Trading Group from the non-recourse SPC Group.

Year ended 31 6 months to June 6 months to June December 2007 2008 2007 Revenue Adjusted Revenue Adjusted Revenue Adjusted operating operating operating profit profit profit £000 £000 £000 £000 £000 £000 Trading group Glendale 30,637 518 26,755 854 54,274 1,931 Leisure 26,117 1,311 20,368 1,071 42,549 2,423 Healthcare 2,287 (198) 3,085 (306) 6,002 (600) PPM 1,365 309 1,104 181 2,281 311 Central costs - (435) - (360) - (524)

Inter-segment elimination (2,983) - (1,700) - (4,141) -

Total trading group 57,423 1,505 49,612 1,440 100,965 3,541 SPC group Subsidiaries 4,067 1,070 1,594 114 4,843 885 Joint ventures and 1,184 (23) 1,137 (73) 2,288 (202) Associate Total SPC group 5,251 1,047 2,731 41 7,131 683 Total Group 62,674 2,552 52,343 1,481 108,096 4,224

Note - Adjusted operating profit is profit before interest, tax, amortisation and goodwill impairment.

Whilst the revenue of the Trading Group increased by 15.7%, the adjusted operating profit increased by only 4.5% as a result of the underperformance of Glendale, which is referred to in the Chairman's statement. Other members of the Trading Group increased their adjusted operating profit by over £0.43 million.

The SPC Group benefited from Realm Service (DAC) becoming a wholly owned subsidiary in May of 2007 (it was previously accounted for as an Associate). This increased revenue and adjusted operating profit by £1.29 million and £0.45 million respectively in comparison to 2007. In addition the completion of the Solihull and Sidcup leisure centres resulted in increased revenue and adjusted operating profit totalling £0.24 million and £0.39 million respectively.

Summary Group Balance Sheet

The following table shows a summary of the Group's balance sheet at 30 June 2008, analysed between the main trading assets and recourse liabilities and those of the consolidated SPC's, which hold the PFI/PPP investments. The assets and liabilities, including long-term debt, within the SPC's are non-recourse to the Group. Recourse Non-recourse Total Total 30 Jun 31 Dec 30 Jun 31 Dec 30 Jun 31 Dec 08 07 08 07 08 07 £000 £000 £000 £000 £000 £000 Non-current assets 26,309 22,135 25,723 29,842 52,032 51,977 Investments in Joint 1,031 826 (3,170) (3,147) (2,139) (2,321) Ventures Total non-current assets 27,340 22,961 22,553 26,695 49,893 49,656 Current assets Inventories and debtors 22,410 17,880 1,216 2,219 23,626 20,099 Cash at bank and in hand 635 1,239 1,988 3,861 2,623 5,100 23,045 19,119 3,204 6,080 26,249 25,199 Current liabilities (28,806) (24,122) (431) (3,881) (29,237) (28,003) Net current (liabilities)/ (5,761) (5,003) 2,773 2,199 (2,988) (2,804) assets Non current liabilities Bank loans (4,436) (4,459) (28,490) (28,947) (32,926) (33,406) Other long term (5,077) (5,550) (1,710) (1,186) (6,787) (6,736) liabilities Net assets 12,066 7,949 (4,874) (1,239) 7,192 6,710 Net debt 12,201 7,632 27,342 27,086 39,543 34,718 Gearing 101% 96% 553% 517%

Continued investment in PFI/PPP projects and deferred consideration payments for the acquisition of DPL Holdings in November 2007 have seen total gearing increase to 553% from 517% at December 2007. However, repayment of non-recourse borrowings totalling £1.57 million in this half year, when added to repayments of £0.36 million in the second half of 2007, has resulted in a reduction in gearing from 656% at June 2007. Recourse gearing was 101% at the end of June. This is a reduction from 147% a year earlier and up on the December 2007 figure of 96%.

Summary Cash Flow Statement 6 months to 6 months to Year ended June 2008 June 2007 December 2007 £000 £000 £000 Operating cash inflow before movement in working capital 4,968 3,016 7,852 Movement in working capital (5,645) (3,534) (2,050) Income tax as refunded/(paid) 293 (2) - Cash used in investing activities (1,657) (7,543) (9,258)

Cash flow from financing activities (4,416) 4,249 4,930

(Decrease)/Increase in cash and cash (6,457) (3,814) (1,474) equivalents

Overall the Group experienced an outflow of funds in the period of £6.1 million in respect of investing and financing activities. This was £2.6 million greater than in the same period of 2007 despite an increase of £1.9 million in cash generated from operating activities before movements in working capital. Working capital outflow increased by £2.0 million principally as a result of a decrease in the level of accounts payable of £1.5 million compared to a marginal increase in 2007. The reduction reflects timing of payments relating to PFI projects between the two half years.

The completion of all current PFI building projects saw a fall in property, plant and equipment expenditure in the period to £1.1 million from £6.3 million in the same period of 2007. This change was reflected in the absence of new recourse and non-recourse loans in the half year compared to a total of £5.9 million of new borrowings in 2007. Cash outflow in respect of acquisitions fell to £0.5 million in the half year (2007: £1.7 million). The 2007 figure included the purchase of the majority shareholder in Realm Services (DAC), whilst this half year saw additional deferred consideration payments relating to the DPL Holdings acquisition, which completed in November 2007. Scheduled repayment of non-recourse loans amounted to £1.6 million (2007: £0.2 million). The Group's purchases of its own ordinary shares resulted in an outflow of £589,000 (2007: £nil) in the first six months as 500,000 shares were acquired. A total of 375,000 shares were cancelled and 75,000 transferred to the Employee Benefit Trust at cost. The balance of 50,000 ordinary shares are held in Treasury. Interest payments increased to £0.8 million (2007: £0.26 million) as a result of the expensing of interest on previously capitalised non-recourse loans following completion of the construction phase of these PFI contracts.

Principal Risks and Uncertainties

The Group's report and accounts for the year ended 31 December 2007 set out the principal risks and uncertainties affecting the Group and its separate businesses. The Directors consider that these risks and uncertainties remained valid throughout the six months to 30 June 2008 and will remain valid for the second half of the year.

T P Bowman Group Finance Director 28 August 2008 Parkwood Holdings Plc

Unaudited Consolidated Income Statement

Six months ended 30 June 2008

Year ended Six months ended 30 31 December June (audited) 2007 Note (unaudited) (unaudited) £000 2008 2007 £000 £000 Continuing operations Revenue 62,674 52,343 108,096 Less: share of joint ventures' (1,184) (1,137) (2,288) revenue Group revenue - continuing 3 61,490 51,206 105,808 operations Cost of sales (44,072) (37,266) (75,715) Gross profit 17,418 13,940 30,093 Administrative expenses (15,067) (12,493) (26,565) 2,351 1,447 3,528 Share of results after tax of - (16) (16) associate Share of results after tax of joint (23) (57) 116 ventures Operating profit 2,328 1,374 3,628 EBITDA 5,078 3,203 8,277 Depreciation (2,526) (1,722) (4,053) Amortisation (224) (43) (174) Exceptional item - - (358) Impairment of goodwill - (64) (64) Operating profit 2,328 1,374 3,628 Investment income 94 93 341 Finance costs 4 (1,211) (414) (1,470) Profit before income tax 1,211 1,053 2,499 Income tax expense 5 (346) (372) (822) Profit for the period attributable 865 681 1,677 to equity shareholders Earnings per share Pence per Pence per Pence per share share share Basic 7 4.7p 3.6p 8.9p Diluted 7 4.7p 3.6p 8.8p

There were no discontinued operations in the period.

Parkwood Holdings Plc

Consolidated balance sheet as at 30 June 2008

30 June 30 June 31 December Note 2008 2007 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Non-current assets Goodwill 2,681 651 2,521 Intangible Assets 4,716 2,795 4,941 Property, plant and equipment 8 43,471 40,729 43,750 Investments in joint ventures 5 - 12 Derivative financial instrument 844 1,032 303 Trade and other receivables - - 142 Deferred tax asset 320 305 320 52,037 45,512 51,989 Current assets Inventories 3,537 2,945 3,624 Trade and other receivables 20,089 17,119 16,475 Cash 2,623 1,260 5,100 26,249 21,324 25,199 Total assets 78,286 66,836 77,188 Current liabilities Trade and other payables 21,996 19,967 23,270 Tax liabilities 500 453 371 Obligations under finance leases 1,601 1,482 1,982 Bank overdrafts 3,980 1,448 - Bank loans 1,160 598 2,380 29,237 23,948 28,003 Non-current liabilities Bank loans 32,926 31,943 33,406 Retirement benefit obligations 788 1,435 788 Long-term provisions and deferred 780 1,012 1,105 income Obligations under finance leases 2,501 2,641 2,050 Derivative financial instrument - - 230 Interests in joint ventures 2,144 - 2,333 Deferred tax liability 2,718 236 2,563 Total non-current liabilities 41,857 37,267 42,475 Net assets 7,192 5,621 6,710 Equity Share capital 189 196 193 Share premium account 2,227 2,227 2,227 Retained Earnings 4,366 2,795 3,884 Capital redemption reserve 408 401 404 Equity attributable to equity holders of 7,190 5,619 6,708 the parent Minority interest in equity 2 2 2 Total equity 7,192 5,621 6,710 Parkwood Holdings Plc

Consolidated statement of recognised income and expense

For the six months ended 30 June 2008

6 months ended Year ended 30 June 30 June 31 2008 2007 December 2007 £000 £000 £000 Profit for the period 865 681 1,677 Net actuarial gains on defined benefit pension - - 326 schemes Cash flow hedges (net of tax) 555 608 (82) Total recognised income for the period 1,420 1,289 1,921

All recognised income and expense is attributable to the equity holders of the parent.

Parkwood Holdings Plc Interim Report 2008 Group cash flow statement

For the six months end 30 June 2008

Six months ended 30 Year ended June 31 December Note 2008 2007 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Net cash (used in)/ generated from 9 (384) (520) 5,802 operating activities Investing activities Interest received 130 277 522 Dividends received from associate - 111 482 Proceeds on disposal of property, plant 7 70 60 and equipment Purchases of property, plant and (1,119) (6,299) (10,375) equipment Subordinated debt (invested in)/repaid (204) 2 351 by joint ventures Subordinated debt invested in - - (661) subsidiary on acquisition Proceeds from refinancing - - 1,773 Sales of own shares by employee benefit 4 12 90 trust Acquisition of subsidiaries (net of (475) (1,716) (1,500) cash acquired) Net cash used in investing activities (1,657) (7,543) (9,258) Cash flows from financing activities Interest paid (831) (258) (1,409) Acquisition of treasury shares (589) - (326) Acquisition of shares by employee - (127) (128) benefit trust Dividends paid (408) (358) (605) Repayments of obligations under finance (971) (691) (1,718) leases New recourse bank loans raised - 2,550 2,400 New non-recourse bank loans raised - 3,342 7,362 Repayment of recourse bank loans (45) (45) (287) Repayment of non-recourse bank loans (1,572) (164) (359) Net cash (used in)/generated from (4,416) 4,249 4,930 financing activities Net (decrease)/increase in cash and (6,457) (3,814) 1,474 cash equivalents Cash and cash equivalents at beginning 5,100 3,626 3,626 of period Cash and cash equivalents at end of (1,357) (188) 5,100 period Comprising: Cash 2,623 1,260 5,100 Bank overdraft and loans (3,980) (1,448) - (1,357) (188) 5,100 Parkwood Holdings Plc

Notes to the interim financial report

Six months ended 30 June 2008

General information

The financial information for the six months ended 30 June 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 and has not been audited. No statutory accounts for the period have been delivered to the Registrar of Companies.

The financial information in respect of the year ended 31 December 2007 has been produced using extracts from the statutory accounts prepared under IFRS for this period. The statutory accounts for this period have been filed with the Registrar of Companies. The auditors' report on these accounts was unqualified and did not contain a statement under Sections 237 (2) or (3) of the Companies Act 1985 which deal respectively with the maintaining of proper accounting books and records and the availability of information to the auditors.

The financial information presented on pages 6 to 17 has been prepared in accordance the Listing Rules of the Financial Services Authority and with the principles of IFRS, including International Accounting Standards (IAS) and interpretations issued by the International Accounting Standards Board (IASB) and its committees.

Accounting policies and basis of preparation

The interim financial statements have been approved by the Board and have not been audited by the auditors.

This condensed consolidated interim financial information for the six months ended 30 June 2008 has been prepared in accordance with IAS 34, `Interim financial reporting'. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2007, which have been prepared in accordance with IFRSs.

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those annual financial statements.

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

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2008:

* IFRIC 11, `IFRS 2 - Group and treasury share transactions'; the effects of this IFRIC are not material to the Group. * IFRIC 12, `Service concession arrangements'; the IFRIC is not yet endorsed by the EU and management continue to assess the impacts on the Group. * IFRIC 14, `IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction'; this IFRIC is not currently relevant to the Group.

The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2008 and have not been early adopted:

* IFRS 8, `Operating segments', effective for annual periods beginning on or after 1 January 2009. IFRS 8 replaces IAS 14, `Segment reporting', and requires a `management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. The Group's presentation in Note 3 accords with the requirements of IFRS8. * IAS 23 (revised), `Borrowing costs', effective for annual periods beginning on or after 1 January 2009. This amendment will have no impact on the Group, as the Group currently applies a policy of capitalising borrowing costs. * IFRS 2 (amendment) `Share-based payment', effective for annual periods beginning on or after 1 January 2009. Management is assessing the impact of changes to vesting conditions and cancellations on the Group's option schemes.

Parkwood Holdings Plc

Notes to the interim financial report

Six months ended 30 June 2008

* IFRS 3 (revised), `Business combinations' and consequential amendments to

IAS 27, `Consolidated and separate financial statements', IAS 28,

`Investments in associates' and IAS 31, `Interests in joint ventures',

effective prospectively to business combinations for which the acquisition

date is on or after the beginning of the first annual reporting period

beginning on or after 1 July 2009. Management is assessing the impact of

the new requirements regarding acquisition accounting, consolidation and

joint ventures on the group.

* IAS 1 (revised), `Presentation of financial statements', effective for

annual periods beginning on or after 1 January 2009. Management is in the

process of developing proforma accounts under the revised disclosure

requirements of this standard.

* IAS 32 (revised), `Financial instruments: presentation', and consequential

amendments to IAS 1, `Presentation of financial statements', effective for

annual periods beginning on or after 1 January 2009. This is not currently

relevant to the Group as the Group, does not have any puttable instruments.

* IFRIC 13, `Customer loyalty programmes', effective for annual periods

beginning on or after 1 July 2008. The IFRIC is not expected to have a

material impact on the Group Financial Statements.

* IFRIC 15, `Agreements for the construction of real estate', effective for

annual periods beginning on or after 1 January 2009. The IFRIC is not

expected to have a material impact on the Group Financial Statements.

* IFRIC 16, `Hedges of a net investment in a foreign operation', effective

for annual periods beginning on or after 1 October 2008. This is not

currently relevant to the Group as the Group, does not hedge any foreign

currency risk.

3. Business segments

For management purposes, the Group is organised into four Trading divisions - Glendale, Parkwood Leisure, Parkwood Healthcare and Project Management (the Trading Group) incorporating a group of non-recourse SPCs (the SPC Group). These form the basis on which the Group reports its primary segment information for statutory and management purposes:

The principal activities, which the directors consider to be the segments of the business for the purpose of analysis are as follows:

Glendale Provides amenity horticulture, grass cutting, arboriculture and care of sports pitches, parks and open spaces. The division also includes golf course management, waste recycling, environmental consultancy, tree moving and horticulture.

Parkwood Leisure Manages a diverse range of public and private leisure facilities, including swimming pools, sports halls, gyms, health suites and catering operations.

Project Management Undertakes PFI, PPP and similar bids on behalf of joint ventures and the Group. Parkwood Project Management is also responsible for project management of contracts and the management of other funds such as the lifecycle funds associated with the project agreements.

Healthcare A nursing agency, and an ambulance and patient transport business, and a medical services business dealing both with the NHS and the private sector.

Parkwood Holdings Plc

Notes to the interim financial report

Six months ended 30 June 2008

3. Business Segments (Continued)

An analysis of the Group's revenue is as follows:

6 months ended Year ended Continuing operations 2008 2007 2007 £000 £000 £000

Provision of services to Local Authorities 19,754 19,313 40,643

Provision of services to the private sector 6,516 3,069 5,185

Horticultural revenue 2,113 2,190 3,740 Golf Course management, including retail 2,254 2,183 4,706 sales Total Glendale 30,637 26,755 54,274

Provision of leisure management services to 25,008 19,573 40,834 Local Authorities

Provision of private leisure facilities 1,109 795 1,714 Total Leisure 26,117 20,368 42,548 Provision of patient transport services 1,331 2,377 4,393 Nursing agency sales 912 708 1,609 Medical Services revenue 44 - - Total Healthcare 2,287 3,085 6,002

Bid and project management fees ("Project 1,365 1,104 2,282 Management")

Service charges made by PFI companies 4,067 1,594 4,843 Other (Including inter-segment revenue (2,983) (1,700) (4,141) elimination) Total revenue 61,490 51,206 105,808

A geographical segmental analysis of the results is not presented as the Group operates only in the UK. Inter-segment sales are charged a prevailing market prices.

Parkwood Holdings Plc

Notes to the interim financial report (continued)

Six months ended 30 June 2008

3. Business Segments (continued)

Six months Glendale Leisure Healthcare PPM Non-recourse Consolidated ended 2008 2008 2008 2008 Other 2008 2008 £000 £000 £000 £000 2008 £000 £000 30 June 2008 £000 External 29,410 25,347 2,287 379 - 4,067 61,490 revenue Inter-segment 1,227 770 - 986 (2,983) - - revenue Revenue 30,637 26,117 2,287 1,365 (2,983) 4,067 61,490 Segment 518 1,311 (198) 309 (435) 1,070 2,575 result Share of - - - - - (23) (23) results of joint ventures Operating 518 1,311 (198) 309 (435) 1,047 2,552 profit/(loss) before amortisation and goodwill impairment Amortisation (18) - - - - (206) (224) and goodwill impairment Operating 500 1,311 (198) 309 (435) 841 2,328 profit/(loss) Investment - 32 - 282 (59) (161) 94 income Interest (335) (92) (34) (262) 605 (1,093) (1,211) expense Profit/(loss) 165 1,251 (232) 329 (111) (413) 1,211 before tax Glendale Leisure Healthcare PPM Non-recourse Consolidated Six months 2007 2007 2007 2007 Other 2007 2007 ended £000 £000 £000 £000 2007 £000 £000 30 June 2007 £000 External 26,449 19,410 3,085 668 - 1,594 51,206 revenue Inter-segment 306 958 - 436 (1,700) - - revenue Revenue 26,755 20,368 3,085 1,104 (1,700) 1,594 51,206 Segment 854 1,071 (306) 181 (360) 114 1,554 result Share of - - - - - (16) (16) results of associate Share of - - - - - (57) (57) results of joint ventures Operating 854 1,071 (306) 181 (360) 41 1,481 profit/(loss) before amortisation and goodwill impairment Amortisation (18) - (64) - - (25) (107) and goodwill impairment Operating 836 1,071 (370) 181 (360) 16 1,374 profit/(loss) Investment - - - 86 - 7 93 income Interest (187) (65) (83) (91) 203 (191) (414) expense Profit/(loss) 649 1,006 (453) 176 (157) (168) 1,053 before tax Parkwood Holdings Plc

Notes to the interim financial report (continued)

Six months ended 30 June 2008

4. Finance costs Six Six Year months months ended 31 ended 30 ended 30 December June June 2008 2007 2007 £000 £000 £000 Recourse loan interest 179 88 309 Non-recourse loan interest 880 191 795 Finance and HP lease interest 141 97 211 Other finance costs 11 38 155 1,211 414 1,470 5. Tax Corporation tax for the interim period to 30 June 2008 is charged at 33% (2007: 33%) of profit excluding joint ventures and associates representing the best estimate of the effective rate of annual corporation tax expected for the full financial year. 6. Dividends Six Six Year months months ended 31 ended 30 ended 30 December June June 2008 2007 2007 £000 £000 £000 Final 2007 paid May 2008 2.2p per share 424 - - Final 2006 paid May 2007 1.9p per share - 359 359 Interim 2007 paid October 2007 1.3p per share - - 246 424 359 605

Following the balance sheet date, the Board of Directors has approved a dividend of 1.5p per share (2007: 1.3p) payable on 3 October 2008 to all shareholders on the register on 12 September 2008.

7. Earnings per share

Earnings per share relate to continuing operations and have been calculated on earnings for the period divided by the weighted average number of ordinary shares in issue of 18.54 million (December 2007: 18.86 million; June 2007: 18.84 million).

Parkwood Holdings Plc

Notes to the interim financial report (continued)

Six months ended 30 June 2008

8. Property, plant and equipment

Six months ended 30 Land and Assets under Plant and Fixtures June 2007 buildings construction Vehicles equipment and Total £000 £000 £000 £000 fittings £000 £000 Opening net book amount at 1 January 3,910 15,136 603 4,646 2,117 26,412 2007 Additions 502 4,522 77 2,349 395 7,845 Acquired with 7,715 - 57 66 405 8,243 subsidiaries Transfers 12,182 (13,074) - 20 873 - Disposals - - (5) (17) (27) (49) Depreciation (180) (17) (107) (1,030) (388) (1,722) Closing net book amount at 30 June 23,129 6,567 625 6,034 3,374 40,729 2007 Six months ended 30 June 2008 Opening net book 24,160 9,629 848 5,806 3,307 43,750 amount at 1 January 2008 Additions 98 1,116 7 775 256 2,253 Transfers 8,503 (9,501) - - 998 - Disposals - - - - (5) (5) Depreciation (619) (24) (162) (1,206) (515) (2,526) Closing net book amount at 30 June 32,142 1,220 693 5,375 4,038 43,471 2008 Parkwood Holdings Plc

Notes to the interim financial report (continued)

Six months ended 30 June 2008

9. Net cash from operating activities

Six months Six months Year ended ended ended 30 June 30 June 31 December 2008 2007 2007 £000 £000 £000 Operating profit 2,328 1,374 3,628 Cost charged in respect of share 15 - 7 remuneration Share of results of joint ventures after 23 57 (116) taxation Share of results of associate after - 16 16 taxation Depreciation of property, plant and 2,526 1,722 4,053 equipment (Gain)/loss on disposal of property, plant - (22) 75 and equipment Net impairment of goodwill - 64 64 Amortisation of intangible assets 224 43 174 Decrease in provisions (148) (238) (49)

Operating cash flows before movements in 4,968 3,016 7,852 working capital

Increase in inventories (recourse) (204) (155) (749) Decrease/(increase) in receivables (3,968) (3,842) (2,318) (recourse)

(Decrease)/increase in payables (recourse) (381) 2,366 2,856

Decrease/(increase) in receivables 79 434 (175) (non-recourse) Decrease in payables (non-recourse) (1,171) (2,337) (1,664) Cash (used in)/generated by operations (677) (518) 5,802 Income taxes refunded/(paid) 293 (2) - Net cash (used in)/generated from operating (384) (520) 5,802 activities Parkwood Holdings Plc

Notes to the interim financial report (continued)

Six months ended 30 June 2008

10. Acquisition of subsidiary

DPL Holdings Limited

On 2 November 2007, the Group completed the acquisition of the entire issued share capital of DPL Holdings Limited ("DPL") and its subsidiaries, Silvanus Services Limited ("Silvanus") and Landscapes Southwest Limited ("LSW"), which are companies involved in term grounds maintenance contracts, arboriculture, woodland and landscaping services

The acquisition has been accounted for by the purchase method of accounting. During the hindsight period management have reviewed and amended the fair value of assets acquired. This review is still on-going and will be complete by 1 November 2008. The following table sets out a summary of assets and liabilities acquired and the fair value adjustments required to reflect their provisional fair value to the Group. Group Book Value Fair value Provisional adjustments fair value to the Group £000 £000 £000 Property, plant and equipment 688 (107) 581 Inventories 176 - 176 Trade and other receivables 1,153 (19) 1,134 Cash and cash equivalents 50 - 50 Trade and other payables (1,462) - (1,462) Obligations under finance leases (582) - (582) Current tax liability (59) - (59) Long term provisions (79) - (79) Borrowings (138) - (138) Deferred tax (58) - (58) Net liabilities acquired (311) (126) (437) Provisional goodwill arising on the 1,640 acquisition Total cost of investment 1,203 Satisfied by: Cash consideration on acquisition 400 Deferred consideration 740 Costs of acquisition 63 1,203

The goodwill arising on the acquisition of DPL Holdings Limited is attributable to synergies expected to arise after the acquisition when the operations of the company are integrated into the Glendale division.

Notes to the interim financial report (continued)

Six months ended 30 June 2008

Landscape Construction (Scotland) Limited

On 29 June 2007, the Group completed the acquisition of the entire issued share capital of Landscape Construction (Scotland) Limited, which is a company involved in soft landscaping for construction industry customers.

The acquisition has been accounted for by the purchase method of accounting. The following table sets out a summary of assets and liabilities acquired and the fair value adjustments required to reflect their provisional fair value to the Group.

During the hindsight period management have reviewed and amended the fair value of assets acquired. Book Fair value Provisional Value adjustments fair value to the Group £000 £000 £000 Property, plant and equipment 125 (35) 90 Inventories 1 - 1 Trade and other receivables 176 - 176 Cash and cash equivalents (116) - (116) Obligations under finance leases (47) - (47) Trade and other payables (77) - (77) Deferred tax (6) (8) (14) Net assets acquired 56 (43) 13 Provisional goodwill arising on the 50 acquisition Total cost of investment 63 Satisfied by: Cash consideration on acquisition 40 Deferred consideration paid on 31 8 July 2007 Costs of acquisition 15 63 Net cash outflow arising on acquisition Cash consideration 63 Cash and cash equivalents acquired 116 Net cash outflow arising on acquisition 179

During the hindsight period management have reviewed and amended the fair value of assets acquired.

12. Related Parties

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

There has been no change to the nature of related party transactions in the first six months of the financial year that has materially affected the financial position or performance of the Group.

Cautionary Statement

This interim management report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The interim management report should not be relied on by any other party or for any other purpose.

Responsibility Statement

We confirm that to the best of our knowledge:

* The condensed set of financial statements has been prepared in accordance with IAS 34 `Interim Financial Reporting'; * The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and * The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). By the order of the Board T P Bowman ENDS

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