Interim Results

Dinkie Heel PLC
27 September 2002


                    2002 Interim Report to Shareholders
                         Profit and Loss Account

                                                                Unaudited                          Audited
                                                    6 months to         6 months to           12 months to
                                                   30 June 2002        30 June 2001       31 December 2001
                                                          £'000               £'000                  £'000
Turnover
     Continuing operations                                3,510               4,834                  9,341

Operating (loss)/profit before exceptional
 items                                                    (388)                   1                  (328)
Exceptional items
     Restructuring costs                                  (241)                (60)                  (352)
     Goodwill impairment provision                                                                   (403)
     Plant & Machinery impairment provision                                                          (300)
     Profit on sale of property held for resale             573
Operating loss from continuing operations                  (56)                (59)                (1,383)
Interest payable                                          (107)               (110)                  (178)

Loss on ordinary activities before taxation               (163)               (169)                (1,561)
Taxation                                                      -                   -                      -

Loss for the period                                       (163)               (169)                (1,561)
Dividends                                                     -                   -                      -

Loss set against reserves                                 (163)               (169)                (1,561)

Loss per share (basic and diluted)                      (1.10p)             (1.14p)               (10.57p)







                      2002 Interim Report to Shareholders
                                Balance Sheet

                                                                          Unaudited                 Audited
                                                                    As at          As at           As at 31
                                                                  30 June        30 June           December
                                                                     2002           2001               2001
                                                                    £'000          £'000              £'000
Net assets employed
Fixed Assets                                                        2,356          3,333              2,425

Current assets:
Stocks                                                              1,187          1,521              1,218
Debtors                                                             1,954          1,839              1,652
Property held for resale                                                -              -                100
Cash at bank and in hand                                               17             17                 17
                                                                    3,158          3,377              2,987

Creditors: amounts falling due within one year                    (3,417)        (2,938)            (3,059)
Net current (liabilities)/assets                                    (259)            439               (72)

Total assets less current liabilities                               2,097          3,772              2,353

Creditors: amounts falling due after more than one year             (689)          (809)              (782)

Provisions for liabilities and charges                                  -              -                  -
                                                                    1,408          2,963              1,571
Capital and reserves
Called up share capital                                               738            738                738
Share premium                                                         715            715                715
Revaluation reserve                                                   516            524                520
Profit and loss account                                             (561)            986              (402)

Total equity shareholders' funds                                    1,408          2,963              1,571




                      2002 Interim Report to Shareholders
                              Cash Flow Statement

                                                                   Unaudited                          Audited
                                                        6 months to        6 months to           12 months to
                                                            30 June            30 June            31 December
                                                               2002               2001                   2001
                                                              £'000              £'000                  £'000
Reconciliation of operating loss to net cash flow
 from operating activities   
Operating loss                                                 (56)               (59)                (1,383)

Depreciation charges                                            196                215                    418
Impairment provisions                                             -                  -                    703
Associate, establishment costs provision                          -                  -                     25
Decrease/(increase) in stocks                                    31               (75)                    228
(Increase)/decrease in debtors                                (202)               (88)                     99
Decrease in creditors                                           (9)              (225)                  (312)

Net cash outflow from operating activities                     (40)              (232)                  (222)

Cash Flow Statement
Net cash outflow from operating activities                     (40)              (232)                  (222)
Returns on investments and servicing of finance               (107)              (110)                  (178)
Capital expenditure                                           (105)               (63)                   (87)
Acquisitions                                                   (22)                  -                   (99)
                                                              (274)              (405)                  (586)

Financing                                                         -               (28)                   (23)
Decrease in cash                                              (274)              (433)                  (609)

Reconciliation of net cash flow to movement in net
 debt
Decrease in cash in the period                                (274)              (433)                  (609)
Cash reduction from change in debt                                -               (28)                     23
Change in net debt                                            (274)              (405)                  (586)

Net debt at 1 January                                       (2,764)            (2,178)                (2,178)

Net debt at period end                                      (3,038)            (2,583)                (2,764)




Notes

1. Segmental analysis

                                    Dinkie-Phillips             Davies Odell                  Company
Unaudited                         2002          2001          2002         2001           2002          2001
6 months to 30 June              £'000         £'000         £'000        £'000          £'000         £'000

Turnover                         1,370         2,672         2,140        2,162          3,510         4,834

Operating (loss) /profit
 before exceptional items        (452)         (104)           159          202          (293)            98
Exceptional items                  332          (60)             -            -            332          (60)
Operating (loss)/profit
 before Group costs              (120)         (164)           159          202             39            38
Group costs                                                                               (95)          (97)
Operating loss                                                                            (56)          (59)
Interest payable                                                                         (107)         (110)
Company loss before
 taxation                                                                                (163)         (169)

Net assets                       2,779         4,220         1,097        1,326          3,876         5,546
Proceeds from exceptional items
 completed shortly after
 30 June                                                                                   570
Unallocated net liabilities                                                            (3,038)       (2,583)
Total net assets                                                                         1,408         2,963






Audited                                          Dinkie-Phillips          Davies Odell           Company
Year ended 31 December 2001                                £'000                 £'000             £'000

Turnover                                                   4,638                 4,703             9,341

Operating (loss)/profit before exceptional
 items                                                     (554)                   422             (132)
Exceptional items                                        (1,055)                     -           (1,055)
Operating (loss)/profit before Group costs               (1,609)                   422           (1,187)
Group costs                                                                                        (196)
Operating loss                                                                                   (1,383)
Interest payable                                                                                   (178)
Company loss before taxation                                                                     (1,561)

Net assets                                                 2,926                 1,409             4,335
Unallocated net liabilities                                                                      (2,764)
Total net assets                                                                                   1,571



2. Loss per share

The calculation of the loss per share for the six months is based on 14,770,000
(2001, 14,770,000) ordinary shares, being the weighted number in issue during
the period.

3. Status of the financial information

The financial information contained in the accounts does not constitute full
accounts within the meaning of the Companies Act 1985. The results for the half
year to 30 June 2002 are unaudited. The abridged profit and loss account,
balance sheet and cash flow statement for the year ended 31 December 2001 were
extracted from the published accounts which received an unqualified audit report
and which have been delivered to the Registrar of Companies.

4. Distribution of the interim report

A copy of the interim report is being sent to shareholders. Further copies will
be available to the public from the Company Secretary at the company's
registered address, St Ivel Way, Warmley, Bristol BS30 8TY

Chairman's Statement

Strategic progress at Dinkie-Phillips

In my Statement in the 2001 Report and Accounts I said that the orderly run down
of toe cap production in Bristol and the rapid build up of capacity in Botswana
are key to the creation of a profitable business in the future.

The essential but painful closure of safety steel toe cap production in Bristol
is now well underway. At the end of July two thirds of production ceased in
Bristol. Production with the remaining facilities is exceeding expectations and
is an important factor in being able to achieve the next stage of transfer in
due course.

Production of safety toe caps in our associated company in Botswana progressed
slowly during the first part of the year and, now that more plant has been able
to be released from the UK, the rate of progress is accelerating. The transfer
is being overseen and thoroughly supported by skilled UK personnel.

During 2001 the company developed what it believes is the first toe cap made of
composite, non steel, materials and capable of passing the 200 joule safety test
for toe caps. Sales are developing steadily and the product is proving of
interest to old and new customers alike.



Initial supply problems of Phillips Rubber products from South Africa have been
slowly resolved with substantial help from the former UK production manager.
Maintaining continuity of supplies meant having to incur a heavy burden of air
freight in the first half of the year.

I am pleased to report that the sale of the Phillips Rubber premises in
Manchester was completed on 3 July 2002, realising a profit for the company of
£573,000.

Prospects

Global demand for toe caps remains subdued. Our share of those markets can be
steadily rebuilt once the key task of building our low cost Botswana capacity
has been completed. Monthly operating losses in the Dinkie business will reduce
with the part-closure of Bristol but there remains a great deal to do. In the
Phillips business supplies are now adequate, air freighting has ceased and the
operation can look forward to growing profitably once more in line with our
strategy.

Davies Odell is building a strong pipeline of new products. 'Softer' cow mats
are being developed and the protective clothing business is about to launch a
new range of protective undergarments under the Forcefield brand incorporating
its 'Tpro' body armour. The development costs of these products are likely to
produce a pause in the growth performance of the division in 2002 but will
provide a vital and solid base from which to expand into next year.

Financial results of the period

Sales for the first six months were £3,510,000 (2001, £4,834,000) and the
operating loss before exceptional items was £388,000 (2001, profit £1,000).
Exceptional items in the six months all relate to the reorganisation of the
Dinkie-Phillips business. Set against the profit from the sale of the Manchester
premises were further redundancy costs of £118,000, removal costs of production
facilities overseas of £100,000 and related professional fees of £23,000. In
total exceptional items realised a profit of £332,000 in the six months to 30
June 2002 (2001, costs of £60,000). The operating loss from continuing
operations was £56,000 (2001, £59,000). After interest payable of £107,000
(2001, £110,000) the loss on ordinary activities before taxation for the first
six months was £163,000 (2001, £169,000). The basic loss per share was 1.10p
(2001, 1.14p).

The net cash outflow from operating activities in the period was £40,000 (2001,
£232,000) and net debt at the period end was £3,038,000 (2001, £2,583,000).
Exceptional items include two items producing together a net cash inflow of
£570,000 for which the cash transactions were completed after 30 June and are
therefore not included in the above figures.

Operational review

Davies Odell sales were £2,140,000 (2001, £2,162,000). Sales of body armour
products increased by 15% but matting product sales fell by 10% as the division
streamlined its sales procedure in an important export market by selling on a
commission only basis. Without this change matting sales would have shown an
increase of over 40% although margins on this increased business were
restricted. Sales of products to the footwear trade were unchanged from those of
2001. Overall the division recorded an operating profit for the first half year
of £159,000 (2001, £202,000) on net assets of £1,097,000 (2001, £1,326,000).

Dinkie-Phillips results suffered from the consequences of the reorganisation.
Phillips sales were 37% of those achieved in the first six months of 2001 and
toe cap sales were 45% down over the same period. Sales of the division were
£1,370,000 compared with £2,672,000 in the first six months of 2001. The costs
of airfreight of products from overseas for Phillips was £120,000 and this
charge directly affected margin on sales. Overheads were dramatically reduced
and labour costs in particular were 43% lower than in the same period of 2001.
Overall the division recorded an operating loss of £452,000 (2001, £104,000)
before exceptional items.

In June 2002 the company's bank overdraft facilities were due for renewal. I am
pleased to report that the company retains the support of its bankers and that
renewal of the facilities until November 2002, subject to a reduction to allow
for the sale of the Manchester premises, was offered and has been accepted by
the board. The ability of the company to manage within its bank facilities is
dependent on generating sufficient profits and cash flows from its future
operations. The directors believe that they are taking the appropriate steps to
do this but the financial statements do not include the adjustments that might
prove necessary should the forecasts not be achieved.

Dividend

To achieve a successful reorganisation and return the company to healthy profit
requires the conservation of cash. In these circumstances the board is unable to
recommend the payment of an interim dividend for this year (2001, nil).



Richard Organ
Chairman
27 September 2002



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