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Havelock Europa PLC (HVE)

  Print      Mail a friend       Annual reports

Tuesday 01 April, 2003

Havelock Europa PLC

Final Results

Havelock Europa PLC
01 April 2003


1 April 2003


                 HAVELOCK EUROPA PLC - PRELIMINARY ANNOUNCEMENT



•         Havelock, the educational and retail interiors and point of sale
display business, announces that its results for 2002 mark a major step forward
for the Group and that 2003 has started well, with further progress expected.



•         Assisted by the inclusion for the full year of  ESA McIntosh, the UK
market leader in educational science laboratories, Havelock's turnover increased
to £87.4m (2001: £63.1m), producing a profit before tax of £3.9m (2001: loss
£2.6m) and basic earnings per share of 9.8p (2001: loss 7.3p).



•         Underlying pre-tax profit, before goodwill amortisation and
exceptionals, was £3.8m (2001: £1.2m) and earnings per share were 9.4p (2001:
3.3p).



•         The reduction in the Group's exposure to the Middle East, following
the sale of the Middle East Joint Venture in February 2003, has reduced
borrowings and lowered the Group's risk profile.



•         Net debt at the year end reduced to £11.3m from £15.7m in 2001,
bringing down gearing from 209% at 31 December 2001 to 117% at 31 December 2002.
  It declined further to a pro forma 88% when the proceeds of sale of the Middle
East Joint Venture in February 2003 are included.



•         Dividends per share total 2.4p (2001: 2.0p), up 20%, covered 3.9
times.



Michael Kennedy, Chairman, stated 'The Group's trading results for 2002,
combined with the reorganisation of the Retail Interiors Division and a
significant strengthening of the balance sheet, have created a strong base for
further progress in 2003.  Whilst the outcome for the year for the Point of Sale
Division is more difficult to predict, prospects in the other two divisions are
encouraging: ESA McIntosh is experiencing record levels of enquiries from Local
Authorities and can expect a further useful advance in the volume of PFI work
and the reshaped Retail Interiors Division entered the New Year with its best
order book and business outlook for some years.'




Enquiries:

Havelock Europa PLC                                   01383 820044
  Hew Balfour (Chief Executive)                       07801 683851
  Graham MacSporran (Finance Director)                07801 683803

Bankside Consultants Limited
  Charles Ponsonby                                    020-7444 4166



                            PRELIMINARY ANNOUNCEMENT



As predicted in the preliminary announcement a year ago, Havelock Europa's
results for 2002 mark a major step forward for the Group. 2003 has started well
and further progress is expected.



FINANCIAL REVIEW



Assisted by the inclusion for a full year of ESA McIntosh, which was acquired in
September 2001, Havelock's turnover increased to £87.4 million (2001: £63.1
million), producing a profit before tax of £3.9 million (2001: loss £2.6
million) and basic earnings per share of 9.8p (2001: loss 7.3p).



Underlying pre-tax profit was £3.8 million (2001 : £1.2 million) and earnings
per share were 9.4p (2001 : 3.3p), excluding the exceptional profit of £0.4
million on the sale, in June 2002, of the Retail Interiors Division factory in
Nottingham (2001: an exceptional charge of 3.7 million in connection with its
closure) and the goodwill amortisation charge of
£0.3 million (2001 : £0.1 million). 



Of Havelock's four businesses, the educational interiors subsidiary, ESA
McIntosh, performed particularly well;  the Point of Sale Division performed
well; whilst the Retail Interiors Division achieved a small positive
contribution, notwithstanding that for the first six months of the year it
carried the full costs of an empty factory and much of the associated workforce.
  The Middle East Joint Venture performed creditably, although, as expected, at
a considerably lower level than the outstanding performance of 2001.



Net debt at the year end reduced to £11.3 million (2001 : £15.7 million).  This
was an excellent achievement given that the net proceeds of £3.15m from the sale
of the Nottingham factory were more than offset by the cash outflow arising from
its closure and by the payment of the first earn-out consideration for ESA
McIntosh of £2.5 million.



Despite the increase in Group turnover, the strong cash generative nature of the
Group's businesses combined with tight working capital controls resulted in
gearing at 31 December 2002 of  117% (2001 : 209%).  Interest cover before
exceptionals increased to a healthy 4.1 times (2001 : 2.2 times).



DIVIDENDS



The Board is proposing a 20% increase in the final dividend  to 1.8p per share
(2001 : 1.5p). If approved at the Annual General Meeting on 18 June 2003,  the
dividend will be paid on 1 July 2003 to shareholders on the Register at the
close of business on 6 June 2003.  Including the interim dividend per share of
0.6p (2001 : 0.5p) paid on 27 December 2002,  the proposed dividends for the
year total 2.4p per share (2001 : 2.0p), up 20% and covered 3.9 times.



TRADING REVIEW



ESA McIntosh



ESA McIntosh is the UK market leader in the design, manufacture and installation
of educational science laboratories, with 205,000 square feet of facilities in
Kirkcaldy, Fife.



In its first full year of ownership, ESA McIntosh fulfilled expectations,
recording turnover of £18.1 million and reaching its second earn-out target,
triggering the final consideration payment of £2.5 million, which is payable in
the current year.



Significant advances were made in the supply of educational furniture to
construction consortia involved in the building of new schools and the refit of
existing ones through the mechanism of PFI. Turnover in this area doubled from
£4 million to just over £8 million. Work was done the length and breadth of
Britain, from Cornwall in the south to Aberdeen in the north.  The two single
largest contracts were for Glasgow and Edinburgh Schools.



Point of Sale Display



The Point of Sale Display Division prints promotional graphics and manufactures
display equipment in Letchworth and Bristol for use in retail and branded goods
businesses, typically as part of marketing rather than capital expenditure
budgets.



Turnover in the Division increased by 14.5% to £25.7 million (2001 : £22.5
million), reflecting expansion of the Division's exposure to the supermarket
sector and further penetration of the point of sale display market for
internationally branded, fast moving consumer goods.  New investment took place
at both Letchworth and Bristol in the form of additional warehousing and
collation facilities, as well as in state-of-the-art direct projection
technology and extra printing capacity.



Retail Interiors



The Retail Interiors Division designs, manufactures and installs furniture and
fittings for retailers, banks and hotels.  In April, its Nottingham factory was
closed resulting in a significant cut-back in the Division's manufacturing
capacity which is now located wholly at Dalgety Bay, Fife.  A new office has
been established at Alfreton, Derbyshire to accommodate the relocated project
management, sales and design staff from Nottingham who service many of the
Division's traditional customers. The office also provides support for the
Division's growing hotels and project management business.



The Division's turnover rose by 32.2% to £39.0 million (2001: £29.5 million),
reflecting the return of House of Fraser as a major customer as well as
increased activity with Lloyds TSB and Boots The Chemists.



As a result of this improvement in turnover together with annualised cost
savings of £2 million following the sale of the Nottingham factory, the Division
was able to make a small positive contribution for the year as a whole despite a
significant loss in the first half.



Middle East Joint Venture



Havelock AHI, which for the whole of 2002 was 49% owned by Havelock, is a
manufacturer and installer of retail and hotel interiors, with facilities
totalling 150,000 square feet in Bahrain.



As expected, after the outstanding result of 2001, the Group's share of turnover
at £4.6 million (2001 : £6.2 million) was down, by 25.8%, reflecting a slow down
in the retail market and a significant depreciation of the Bahraini dinar against
the pound sterling.  The Group's share of profit was similarly affected at £0.58
million (2001 : £1.08 million).



STRATEGY



The strategy, set out at the time of the acquisition of ESA McIntosh in
September 2001, to concentrate on UK markets offering substantial opportunities
for profitable growth, is now starting to show early success.



The acquisition of ESA McIntosh has secured for Havelock a market leading
position in educational furniture.  The scale of this market, supported by the
increased volumes of Government expenditure already announced, suggest that this
field offers the potential for strong growth over a number of years.



The Point of Sale Display companies have increased their exposure to food
retailers and, during 2002, made useful further inroads into the market for
internationally branded fast moving consumer goods.



The Retail Interiors Division has been successfully realigned to market
conditions. Its manufacturing capacity has been reduced through the closure of
the Nottingham factory, which will produce savings of some £2 million per annum,
enabling the Division to trade profitably at much lower levels of turnover.
Opportunities are being sought to use the skills base for more profitable work,
particularly in department stores and in the hotel sector, a new market for
Havelock, where early results have been encouraging.



CURRENT TRADING AND PROSPECTS



The Group's trading result for 2002, combined with the reorganisation of the
Retail Interiors Division, has created a strong base for further progress in
2003.



The sale of the Group's share in its Middle East Joint Venture, announced in
January 2003, will generate an exceptional profit of approximately £0.9 million
in the first half of the year.  After allowing for costs and the reinvestment in
a 17% stake in the private equity-backed purchaser, some £2 million of cash
resulting from the sale has been applied in further strengthening of the Group's
balance sheet, reducing gearing to 88 per cent on a pro forma basis at 31
December 2002.



Within ESA McIntosh's educational sector, enquiries from Local Authorities are
running at record levels.  A further useful advance in the volume of PFI work
across the UK is also expected.



The combination of a traditionally shorter order book than the other Divisions,
current corporate activity in the supermarket sector, and uncertainty in
consumer spending patterns make it more difficult to predict the outcome for the
year for the Point of Sale Display Division.  However, Hartcliffe has negotiated
a three year extension to its five year contract for the provision of printing
services to Somerfield and Kwiksave.



The reshaped Retail Interiors Division entered the new year with its best order
book and business outlook for some years.  A new store for Fenwick was opened in
Canterbury in February and work is in hand  for a new store in the City of
London for House of Fraser, which will open later this year. The Division will
benefit from the availability of savings from the closure of the Nottingham
factory for a whole year, as against just the second half in 2002.

The Directors look forward to a year of further progress.


Michael Kennedy
Chairman
                                  1 April 2003




                      CONSOLIDATED PROFIT AND LOSS ACCOUNT
                      for the year ended 31 December 2002


                                                                            2002               2001
                                                                                         (Restated)
                                                        Notes               £000               £000
Turnover
Group and share of Joint Venture                                          87,442             63,072
Less:  share of Joint Venture's turnover                                 (4,601)            (6,206)
                                                                         _______             ______

Group turnover                                                            82,841             56,866

Operating profit before exceptional items
Group                                                                      4,066                931

Exceptional reorganisation credit/(costs)                                    399            (3,750)
                                                                           _____             ______

Operating profit/(loss) after exceptional items                            4,465            (2,819)

Share of Joint Venture's operating profit                                    586              1,095
                                                                          ______              _____

Total operating profit/(loss):Group & share of                             5,051            (1,724)
Joint Venture

Net interest payable and other similar items

Group                                                                    (1,115)              (904)

Joint Venture                                                               (10)               (15)
                                                                          ______             ______

Profit/(loss) on ordinary activities before taxation                       3,926            (2,643)

Tax (charge)/credit on profit on ordinary                   3              (995)                571
activities
                                                                          ______             ______

Profit/(loss) for the financial year                                       2,931            (2,072)

Dividend                                                                   (743)              (617)
                                                                          ______             ______

Retained profit/(loss) for the year                                        2,188            (2,689)
                                                                          ______             ______


Basic earnings/(loss) per share                             4               9.8p             (7.3p)
Basic adjusted earnings per share                           4               9.4p               3.3p
Diluted earnings/(loss) per share                           4               9.6p             (7.3p)
Dividends per share                                                         2.4p               2.0p

All operations are continuing.



                               GROUP BALANCE SHEET
                              as at 31 December 2002


                                                                                      2002           2001
                                                                                               (Restated)
                                                                    Notes             £000           £000
Fixed assets
Intangible assets - goodwill                                                         4,077          4,332
Tangible assets                                                                     12,649         16,088

Investment in own shares                                                               368            250

Investment in Joint Venture
- goodwill                                                                             112            136
- share of assets                                                                    2,551          2,569
- share of liabilities                                                             (1,005)        (1,492)
                                                                                    ______         ______

                                                                                     1,658          1,213
                                                                                    ______         ______

                                                                                    18,752         21,883

                                                                                    ______         ______

Current assets
Stocks                                                                  5            7,317          5,793
Debtors                                                                 6           16,725         17,531
Cash at bank and in hand                                                               902              -
                                                                                    ______         ______

                                                                                    24,944         23,324
Creditors:  Amounts falling due within one year                         7         (24,568)       (26,315)
                                                                                    ______         ______

Net current assets/(liabilities)                                                       376        (2,991)
                                                                                    ______         ______

Total assets less current liabilities                                               19,128         18,892

Creditors: amounts falling due after more than one year                 8          (9,399)       (11,372)

Provision for liabilities and charges                                                 (79)              -
                                                                                    ______         ______

Net assets                                                                           9,650          7,520
                                                                                    ______         ______

Capital and reserves
Called up share capital                                                              3,097          3,083
Share premium account                                                   9              879            844
Revaluation reserve                                                     9            1,318          1,762
Profit and loss account                                                 9            4,356          1,831
                                                                                    ______         ______

Equity shareholders' funds                                                           9,650          7,520
                                                                                    ______         ______





                 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                      for the year ended 31 December 2002

                                                           Notes               2002               2001
                                                                                            (Restated)
                                                                               £000               £000

Profit/(loss) for the financial year                                          2,931            (2,072)
Exchange (loss)/gain on investment in Joint Venture                           (107)                 13
                                                                             ______             ______
Total recognised gains/(losses) relating to the year
                                                                              2,824            (2,059)
                                                                                                ______

Prior year adjustment                                          9              (732)
                                                                              _____

Total gains recognised                                                        2,092
                                                                             ______



                RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
                      for the year ended 31 December 2002


                                                              Notes               2002               2001
                                                                                               (Restated)
                                                                                  £000               £000

Profit/(loss) for the financial year                                             2,931            (2,072)
Dividend                                                                         (743)              (617)
                                                                                ______             ______

Retained profit/(loss) for the financial year                                    2,188            (2,689)
Other recognised gains and losses relating to the year                           (107)                 13
New share capital issued                                                            49                882
                                                                                ______             ______

Net increase/(decrease) in shareholders' funds                                   2,130            (1,794)

Opening shareholders' funds                                                      8,252              9,592
Prior year adjustment                                             9              (732)              (278)
                                                                                ______             ______

Opening shareholders' funds - as restated                                        7,520              9,314
                                                                                ______             ______

Closing shareholders' funds                                                      9,650              7,520
                                                                                ______             ______



                STATEMENT OF HISTORICAL COST PROFITS AND LOSSES


                                                                               2002               2001
                                                                                            (Restated)
                                                                               £000               £000

Reported profit/(loss) on ordinary activities before taxation                 3,926            (2,643)
Realisation of property revaluation gains of previous years                     444                  -
Difference between a historical cost depreciation charge and the
actual depreciation charge of the year calculated on the
revalued amount                                                                 (4)               (10)
                                                                              _____              _____
Historical cost profit/(loss) on ordinary activities before
taxation                                                                      4,366            (2,653)
                                                                              _____              _____
Historical cost profit/(loss) for the year retained after
taxation and dividends                                                        2,628            (2,699)
                                                                              _____              _____


                          CONSOLIDATED CASH FLOW STATEMENT
                         for the year ended 31 December 2002


                                                                                2002            2001
                                                                                £000            £000

Cash inflow from operating activities                          10              7,047           2,801

Dividends from Joint Venture                                                       -             456

Return on investments and servicing of finance
Interest received                                                                  5              36
Interest paid                                                                (1,114)         (1,016)
                                                                              ______         _______

                                                                             (1,109)           (980)
                                                                              ______          ______

Taxation                                                                         498           (322)
                                                                              ______          ______

Capital expenditure and financial investment
Purchases of tangible fixed assets                                           (1,807)         (1,187)
Proceeds from sale of tangible fixed assets                                    3,324              40
Loan to ESOP trust                                                             (118)            (28)
                                                                              ______          ______

                                                                               1,399         (1,175)
                                                                              ______          ______

Acquisitions
Purchase of subsidiary undertaking                                             (238)           (476)
     Net overdraft acquired with subsidiary undertaking                            -         (3,449)
                                                                              ______          ______

                                                                               (238)         (3,925)
                                                                              ______          ______

Equity dividends paid                                                          (682)           (471)
                                                                              ______          ______

Cash inflow/(outflow) before use of liquid
resources and financing                                                        6,915         (3,616)
                                                                              ______          ______


Financing and management of liquid resources

Repayment of loan by Joint Venture                                                 -             186
Repayment of loan notes issued on acquisition of subsidiaries                (4,344)           (181)
Capital element of finance lease rental payments                               (516)           (455)
Repayment of long term loan                                                  (1,251)           (312)
Bank loan and other advances                                                   2,000               -

Issue of new shares                                                               49               -
                                                                              ______          ______

                                                                             (4,052)           (762)
                                                                              ______          ______

Increase/(decrease) in cash for the year                                       2,863         (4,378)
                                                                              ______          ______






NOTES TO THE STATEMENT



1.      The profit and loss account, balance sheet and abridged cash flow
statement do not constitute the Company's statutory accounts for 2002 or 2001
but are derived from those accounts.  The statutory accounts for 2001, on which
the auditors have given an unqualified report, have been delivered to the
Registrar of Companies.  Those for 2002 will be delivered following the Annual
General Meeting.  The auditors have reported on those accounts which were
unqualified and did not contain a statement under Section 237(2) of the
Companies Act 1985.



2.   Basis of consolidation




The consolidated profit and loss account and balance sheet include the financial
statements of the Company, its subsidiaries and its interests in a joint venture
made up to 31 December 2002. The group's share of profits, and profits of the
joint venture, is included in the consolidated profit and loss account, and its
interests in their net assets, is included in the balance sheet.



3.  Tax (charge)/credit on profit/(loss) on ordinary activities


                                                                                   2002            2001
                                                                                             (Restated)
                                                                                  £ 000           £ 000
UK corporation tax
- current year at 30 %                                                                -             432
- prior year                                                                       (44)              29
Deferred tax
- current year                                                                  (1,031)             137
- prior year                                                                         80            (27)
                                                                                 ______          ______

                                                                                  (995)             571
                                                                                 ______          ______






     The tax charge for the year differs from 30% of the pre-tax profit because
the Joint Venture profit of £576,000 (2001:£1,080,000) is not subject to
taxation, there is no tax charge on the sale of the Nottingham property, and the
utilisation of unrelieved tax losses. The tax charge for the year is principally
deferred tax representing timing differences.

4.  Earnings per share



Based on a profit after tax of £2,931,000 (2001: loss: £2,072,000) and
29,940,303 shares (2001: 28,192,578) the basic profit per share was 9.8p (2001:
loss: 7.3p). Based on a profit of £2,809,000 (2001: £935,000) before exceptional
costs, goodwill amortisation and after tax and 29,940,303 shares (2001:
28,192,578), being the weighted average number of shares in issue during the
year, the basic adjusted profit per share was 9.4p (2001: 3.3p).


                                                                        2002                       2001
                                                                    Earnings               Earnings per
                                                      Earnings     per share      Earnings        share
                                                          £000                        £000

Basic                                                    2,931          9.8p       (2,072)       (7.3p)
Exceptional (credit)/costs                               (399)        (1.3p)         3,750        13.3p
Tax relief on exceptional costs                              -             -         (879)       (3.1p)
Goodwill amortisation                                      277         0.9p            136         0.4p
                                                       _______        ______        ______       ______

Adjusted basic                                           2,809          9.4p           935         3.3p
                                                       _______        ______        ______       ______

Diluted                                                  2,931          9.6p       (2,072)       (7.3)p
                                                        ______        ______        ______       ______



                                                          2002                        2001
                                                        Number                      Number
                                                     of shares                   of shares
                                                         000's                       000's

For basic and adjusted earnings per share               29,940                      28,193
Effect of exercise of share options                        650                           -
                                                       _______                     _______

For diluted earnings per share                          30,590                      28,193
                                                      ________                   _________



Earnings per share are calculated for the issued shares excluding those held by
the ESOP Trust in accordance with UITF 13.

5.  Stocks
                                                                                   2002            2001
                                                                                   £000            £000
Raw materials and consumables                                                     2,027           1,861
Work in progress                                                                  3,514           1,455
Less: Payments to account                                                         (787)               -
Finished goods                                                                    2,563           2,477
                                                                                  _____           _____

                                                                                  7,317           5,793
                                                                                  _____          ______







6.  Debtors


                                                                                   2002            2001
                                                                                             (Restated)
                                                                                   £000            £000
Trade debtors                                                                    15,029          15,149
Other debtors                                                                       351             566
Deferred tax asset                                                                    -             872
Prepayments                                                                       1,345             944
                                                                                 ______          ______

                                                                                 16,725          17,531
                                                                                 ______          ______






7.   Creditors: amounts falling due within one year


                                                                                   2002            2001
                                                                                   £000            £000

Bank overdraft (secured)                                                          1,250           3,211
Loan notes                                                                        1,310           3,144
Trade creditors                                                                  12,610           8,192
Corporation tax                                                                      80               -
Other taxes and social security                                                   2,258           2,112
Accruals                                                                          3,750           2,657
Provision for Nottingham closure                                                      -           3,500
Dividend proposed                                                                   557             496
Obligations under hire purchase contracts & finance                                 253             503
leases
Provision for deferred consideration                                              2,500           2,500
                                                                                 ______          ______

                                                                                 24,568          26,315
                                                                                 ______          ______






     The loan notes are repayable at par on the holder giving one month's
notice.  The Company's obligations under these notes are guaranteed by Bank of
Scotland. The notes relating to the acquisition of Hartcliffe were redeemed in
full by the Company on 5 January 2003 at par. In so far as the notes relating to
the acquisition of ESA McIntosh have not already been redeemed, they will be
redeemed in full by the Company on 31 December 2004 at par. The Company has made
full provision for deferred consideration in relation to ESA McIntosh.  It is
expected that this will be satisfied by the issue of loan notes in 2003 and
these will be redeemable six months and one day after issue.



8.  Creditors: amounts falling due after more than one year


                                                                                   2002            2001
                                                                                   £000            £000

Bank loans (secured)                                                              9,187           8,438
Obligations under finance leases                                                    212             434
Provision for deferred consideration                                                  -           2,500
                                                                                 ______          ______

                                                                                  9,399          11,372
                                                                                 ______          ______
    



9.   Reserves


                                                         Share        Revaluation         Profit and
                                                       premium            reserve       loss account
                                                          £000               £000               £000
At 1 January 2002 (as previously reported)
                                                             -                  -              2,563
Prior year adjustment (see below)                            -                  -              (732)
                                                        ______             ______             ______
At 1 January 2002 (restated)                               844              1,762              1,831
Retained profit for the year                                 -                  -              2,188
Exchange loss on investments                                 -                  -              (107)
New shares issued under SAYE share scheme
                                                            35                  -                  -
Revalued asset sold                                          -              (444)                444
                                                        ______             ______             ______
At 31 December 2002                                        879              1,318              4,356
                                                        ______             ______             ______

As a result of the adoption of FRS19: Deferred Tax, a prior year adjustment has been made in respect
of the recognition of a deferred tax asset (£732,000).  This has resulted in a reduction in goodwill
on the acquisition of ESA McIntosh (£1,604,000).  The net effect of this adjustment is to decrease
net assets by £1,603,000 (2001: £732,000), reduce the goodwill amortisation by £80,000 (2001: nil)
and increase the tax charge by £951,000 (2001: £454,000).






10.   Cash Flow Statement
                                                                             2002               2001
                                                                             £000               £000
(a)    Reconciliation of operating profit/(loss) to net cash inflow
       from operating activities
      Operating profit/(loss) after exceptional items                       4,465            (2,819)
      Depreciation                                                          2,165              2,116
      Amortisation of goodwill                                                277                136
      Gain on disposal of fixed tangible assets                             (145)                (8)
      (Increase)/decrease in stocks                                       (1,524)                126
      (Increase)/ decrease in debtors                                       (528)              3,440
      Increase/(decrease) in creditors                                      2,337              (190)
                                                                           ______             ______
      Net cash inflow from operating activities                             7,047              2,801
                                                                           ______             ______
(b) Reconciliation of net cash flow to movement in net debt

      Increase/(decrease) in cash for the year                              2,863            (4,378)
      Finance lease creditor acquired with acquisition                          -              (318)
      Finance lease payments                                                  516                455
      Inception of new finance leases                                        (44)              (293)
      Loan notes issued in the year                                       (2,500)            (2,080)
      Loan notes repaid                                                     4,334                181
      Bank loan repaid                                                      1,251                312
      New bank loan                                                       (2,000)                  -
                                                                           ______             ______
      Movement in net debt in the year                                      4,420            (6,121)
      Opening net debt                                                   (15,730)            (9,609)
                                                                           ______             ______
      Closing net debt                                                   (11,310)           (15,730)
                                                                           ______             ______
(c)  Analysis of net debt
                                               At 1                         Other              At 31
                                            January             Cash     Non-cash           December
                                               2002             flow      changes               2002
                                               £000             £000         £000               £000
                                                                
      Cash at bank and in hand                    -              902            -                902
      Overdraft                             (1,961)            1,961                               -
                                             ______           ______       ______             ______
      Total                                 (1,961)            2,863            -                902
                                             ______           ______       ______             ______
      Debt due within one year
      Bank loans                            (1,250)            1,250      (1,250)            (1,250)
      Loan notes                            (3,144)            4,334      (2,500)            (1,310)
      Finance lease creditor                  (503)              516        (266)              (253)
                                             ______           ______       ______             ______
                                            (4,897)            6,100      (4,016)            (2,813)
                                             ______           ______       ______             ______
      Debt due after one year
      Finance lease creditor                  (434)                -          222              (212)
      Bank loans                            (8,438)          (1,999)        1,250            (9,187)
                                             ______           ______       ______             ______
                                            (8,872)          (1,999)        1,472            (9,399)
                                             ______           ______       ______             ______
      Total net debt                       (15,730)            6,964      (2,544)           (11,310)
                                             ______           ______       ______             ______



11.       Pension Costs



            Pension costs SSAP24 basis

            The most recent actuarial valuation of the defined benefit section
was at 31 October 2000.  At the valuation date the defined benefit section had
assets with a total market value of £15.9m, which represented approximately 101%
of the value of the benefits that had accrued to members, after allowing for
expected future increases in pensionable pay for defined benefit members.



            Pension costs FRS17 basis

            The last full valuation of 31 October 2000 has been updated to 31
December 2002 by qualified independent actuaries, using revised assumptions that
are consistent with the requirements of the new accounting standard, FRS17.  The
new standard requires certain disclosures this year under the transitional
arrangements.  In summary, the UK defined benefits pension scheme has assets at
a current market value of £12.8m (2001:£14.7m) and liabilities, discounted at
the AA bond yield, of £19.5m (2001:£19.2m). Using this valuation method, there
is a deficit of £6.7m (2001:£4.5m) which is partially offset by deferred tax of
£2.0m (2001:£1.3m) giving a net deficit of £4.7m (2001:£3.2m).



            The defined benefit section has been closed to new entrants. The
contribution rates for members have been increased from 5% to 9% of pensionable
salary and that for the Company increased from 12% to 20% of pensionable salary.



12. The accounts for the year ended 31 December 2002 were approved by the
Directors on 1 April 2003.


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