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Havelock Europa PLC (HVE)

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Monday 05 April, 2004

Havelock Europa PLC

Final Results

Havelock Europa PLC
05 April 2004





                  HAVELOCK EUROPA PLC - PRELIMINARY ANNOUNCEMENT

Havelock, the education furniture, point of sale display and retail interiors
group, announces results for 2003 which reflect further progress and provide a
platform for continuing growth in the coming years, particularly beyond 2004, as
the full impact of Government expenditure in the education sector is realised.

Financial Highlights

  * Turnover increased by 12% to £97.7m.


  * Pre-tax profit increased by 20% to £4.7m (reported) and by 13% to £4.3m
    (underlying).


  * Basic EPS increased by 19% to 11.7p (reported) and by 6% to 10.0p
    (underlying).


  * Reflecting these creditable results and Havelock's prospects, dividends
    per share are increased by 17% to 2.8p, in line with our progressive
    dividend policy.


  * Year end gearing reduced to 86% (2002: 117%) whilst interest cover before
    exceptionals increased further to 5.0 times (2002: 4.1 times).


Commercial Highlights


  * ESA McIntosh, the UK market leader in science laboratories and fitted
    furniture for schools, in its second full year of ownership, increased its
    turnover as a PFI sub-contractor by 22% and order intake reached record
    levels with Local Education Authorities.


  * McIntosh's growth is expected to be more limited in 2004 but substantial
    in 2005. In addition, it has become clear in the last six months that the
    scale of the market for education furniture is much larger than originally
    thought and will endure for some years to come.


  * After a slow start in the Point of Sale Division, the second half proved
    robust and a satisfactory result was obtained. The Division has had a strong
    start to 2004.


  * The Retail Interiors Division increased turnover by 34% to £52.3m but its
    contribution to profit was modest.


Chairmanship


  * Michael Kennedy, the Chairman, will retire at the AGM in June and be
    succeeded by Malcolm Gourlay, a non-executive Director since 1999.

Michael Kennedy, Chairman, stated 'The Group's results for 2004 will be affected
by the return of a pronounced seasonal bias in the Retail Interiors Division in
favour of the second half and significant extra expenditure this year to secure
the major opportunities which exist in the education and healthcare fields in
2005 and beyond. Nevertheless, the Board believes that, overall, further
progress will be made in the current year.'

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





                        CHAIRMAN'S PRELIMINARY STATEMENT

Havelock Europa, the education furniture, point of sale display and retail
interiors group, announces results for 2003 which reflect further progress and
provide a platform for continuing growth in the coming years, particularly
beyond 2004, as the full impact of Government expenditure in the education
sector is realised.

FINANCIAL REVIEW

Turnover increased to £97.7 million (2002: £87.4 million), producing a profit
before tax of £4.7 million (2002: £3.9 million) and basic earnings per share of
11.7 p (2002: 9.8p). Underlying pre-tax profit was £4.3 million (2002 £3.8
million) and underlying earnings per share were 10.0p (2002: 9.4p). The
underlying 2003 figures exclude the exceptional profit of £0.9 million arising
from the partial disposal of the Group's share of its Middle East joint venture,
Havelock AHI, in February 2003, exceptional re-organisation costs of £0.2
million and a goodwill amortisation charge of £0.3 million.

Once again, the education interiors subsidiary, ESA McIntosh, performed
strongly. After a slow start in the Point of Sale Display Division, the second
half proved robust and a satisfactory result was obtained. The Retail Interiors
Division exhibited some recovery, particularly in respect of the volume of
business transacted, but, with continuing pressure on margins and a mix of
business skewed towards contracting rather than manufacturing, the contribution
to profit was modest. Following the disposal of the majority of the Group's
share in its Middle East Joint Venture and the difficult trading conditions that
existed during and in the aftermath of the Gulf War, the contribution from
Havelock's holding in the new venture formed with HSBC Private Equity Middle
East was, unsurprisingly, small.

Net debt at the end of the year reduced further to £10.5 million (2002: £11.3
million) after benefiting by £2.0 million from the sale of the Joint Venture and
allowing for the final £2.5 million payment of the earn-out consideration in
respect of ESA McIntosh. Despite a significant increase in Group turnover, tight
working capital controls helped to reduce gearing at 31 December 2003 to 86%
(2002: 117%) whilst interest cover before exceptionals increased further to 5.0
times (2002: 4.1 times).

DIVIDENDS

Reflecting both these creditable results and Havelock's prospects, particularly
beyond 2004, the Board is proposing a 17% increase in the final dividend to 2.1
p per share (2002: 1.8p), in line with the Group's progressive dividend policy.
If approved at the Annual General Meeting on 24 June 2004, the dividend will be
paid on 2 July 2004 to shareholders on the register at the close of business on
4 June 2004. Including the interim dividend of 0.7p per share (2002: 0.6p) paid
on 29 December 2003, the proposed dividends for the year total 2.8p per share
(2002: 2.4p), up 17% and covered 3.1 times, before exceptional items.


TRADING REVIEW

ESA McIntosh
ESA McIntosh is the UK market leader in the design, manufacture and installation
of science laboratories and fitted furniture for schools, with facilities in
Kirkcaldy, Fife.

In its second full year of ownership, ESA McIntosh's turnover increased to
£20.9 million (2002: £18.1 million). Further progress was made in sub-contractor
relationships with major construction consortia involved in the building of new
schools and the refitting of existing ones through the mechanism of the PFI.
Turnover in this sector increased by 22% to £9.9 million (2002: £8.1 million).
Work was done throughout Britain, with a particularly strong contribution in
Scotland. In the principal area of business with individual Local Education
Authorities, the order intake reached record levels.

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

Whilst turnover dropped to £24.1 million (2002: £25.7 million), this disguised a
second half which exhibited an increased level of activity after the difficult
trading conditions experienced in early 2003, as a result of the protracted
corporate activity in the supermarket sector and some consumer uncertainty at
the time of the outbreak of hostilities in the Gulf. Significant productivity
benefits resulted from a further programme of investment in the print facilities
at Hartcliffe in Bristol, where Somerfield/ Kwik Save remains the Division's
principal customer.

Retail Interiors
The Retail Interiors Division designs, manufactures and installs interiors for
retailers, banks and hotels. It has facilities in Dalgety Bay, Fife, 11 miles
from Kirkcaldy, and at Alfreton in Derbyshire.

The Division entered 2003 with the best order book for many years and the level
of activity continued to improve throughout the year, aided by the completion of
new department stores for Fenwick in Canterbury and House of Fraser in the City
of London along with the handover of the first stage of a major refurbishment
project for House of Fraser in Manchester. Boots The Chemists remained a
substantial customer. There was also a strong contribution from activity in the
banking sector. Further progress was made in the Division's penetration of the
hotel bedroom furniture market following the initiatives started in 2002.

Divisional turnover rose by 34% to £52.3 million (2002: £39.0 million).
Nevertheless, much of the activity centred on contracting rather than
manufacturing and this mix of business has meant that, whilst the performance of
the Division was significantly better than for some time, the contribution to
profit was modest.

STRATEGY

The Group is continuing to pursue the strategy set out at the time of the
acquisition of ESA McIntosh some 2 1/2 years ago, with an increasing
concentration on UK markets offering substantial opportunities for profitable
growth.

It has become clear in the last six months that the scale of the market in
educational furniture is much larger than originally thought and will endure for
several years to come. The announcement by the Prime Minister in February 2004
of the Government's programme, entitled Building Schools for the Future, coupled
with the Chancellor of the Exchequer's Budget statement suggests that the level
of Government expenditure in this sector will continue to rise for the
foreseeable future, with an annual average real terms increase of 4.4% for the
next three years. This is already being evidenced by a step change in 2005 in
the amount of work available in the PFI sector, both in Scotland and in England
and Wales, for projects that are now reaching financial closure.

Additionally, the emergence of a programme for the improvement of facilities in
the Primary Healthcare sector, supported by the announcement of some 42 schemes
within the mechanism of Local Initiative Finance Trust, (LIFT) represents a
further opportunity for the Group's skill base, products and experience.

As a result, the Group has committed itself to creating an increased degree of
flexibility within its manufacturing operations to take advantage of the rising
levels of Government expenditure in these and other sectors.

Havelock will continue to invest in the Point of Sale Display Division, where
there is a growing customer base and where recent investment in plant and
equipment is beginning to pay significant dividends in terms of service and
quality.

CURRENT TRADING AND PROSPECTS

Within the education sector, ESA McIntosh's orders and enquiries from Local
Education Authorities are strong. The level of PFI-related business is expected
to be broadly comparable to last year despite the fact that, during the current
year, there will be a pause in the volume of work available in the PFI arena in
Scotland, before a surge occurs in 2005 as a large number of bids under
consideration move to financial close. As a result, ESA McIntosh's activity in
the PFI field will be largely concentrated in England in 2004. An increasing
proportion of the company's sales, design, estimating and project management
staff are now being devoted to major projects that come on stream early in 2005.
The cost of this investment for the future will be borne in the current year.

The Point of Sale Display Division has had a strong start to the year. A new
four colour printing press, along with updated direct projection and digital
imaging equipment, will be installed at Showcard in Letchworth during the summer
to cope with increasing customer demand.

The Retail Interiors Division has had a slow start to the year as the level of
activity resumes a pattern familiar in recent years, with much of the work being
concentrated on refurbishment in the second half, which will result in a
significant reduction in Group turnover in the first half of the year.

The Group's results for 2004 will be affected by the return of this pronounced
seasonal bias in the Retail Interiors Division in favour of the second half and
significant extra expenditure this year to secure the major opportunities which
exist in the education and healthcare fields in 2005 and beyond. Nevertheless,
the Board believes that, overall, further progress will be made in the current
year.

COMPOSITION OF THE BOARD

Since the year end, the Board of Directors has been strengthened by the
appointment of an additional non-executive director, Robbie Duncan. At the AGM
on 24 June 2004, being aged 68 and having been a member of the Board for seven
years, I propose to retire, handing over the Chairmanship to Malcolm Gourlay,
who has been a non-executive Director since 1999. Malcolm is also the Chairman
of Paladin Resources plc and Deputy Chairman of The Bibby Line Group Limited. I
have no doubt that his wide financial and industrial experience will be of
considerable benefit to the Company in his role as Chairman.


Michael Kennedy
Chairman                                                           5 April 2004

                      CONSOLIDATED PROFIT AND LOSS ACCOUNT
                       for the year ended 31 December 2003

                                                              2003       2002
                                                 Notes        £000       £000
Turnover

Group and share of Joint Venture                            97,742     87,442

Less: share of Joint Venture's turnover                       (502)    (4,601)
                                                            _______    ______

Group turnover                                              97,240     82,841

                                                                         
Operating profit before exceptional items

Group                                                        4,979      4,066


Exceptional (costs)/credit                                    (226)       399
                                                            _____      ______

Operating profit after exceptional items                     4,753      4,465


Share of Joint Venture's operating (loss)/profit               (24)       586

Share of Associated Company's operating profit                  47          -
                                                             ______     _____

Total operating profit                                       4,776      5,051

Gain on sale of interest in Joint Venture                      935          -
                                                           ______     _______

Profit on ordinary activities before interest                5,711      5,051


Net interest payable and other similar items

Group                                                         (981)    (1,115)

Joint Venture                                                   (2)       (10)

Associated Company                                             (19)         -
                                                            ______     ______


Profit on ordinary activities before taxation                4,709      3,926


Tax charge on profit on ordinary activities           3     (1,249)      (995)
                                                            ______     ______

Profit for the financial year                                3,460      2,931


Dividend - equity                                             (871)      (743)
                                                            ______     ______
                                                            
Retained profit for the year                                 2,589      2,188
                                                          
                                                           ========   ========

Basic earnings per share                              4       11.7p       9.8p


Basic adjusted earnings per share                     4       10.0p       9.4p


Diluted earnings per share                            4       11.3p       9.6p


Dividends per share                                            2.8p       2.4p



All operations are continuing.


                              GROUP BALANCE SHEET
                              as at 31 December 2003

                                                               2003       2002
                                                   Notes       £000       £000

Fixed assets

Intangible assets - goodwill                                  3,825      4,077

Tangible assets                                              12,786     12,649


Investment in own shares                                        618        368

Investment in Associated Company                                533          -


Investment in Joint Venture

- goodwill                                                        -        112

- share of assets                                                 -      2,551

- share of liabilities                                            -     (1,005)
                                                             ______     ______

                                                                  -      1,658
                                                             ______     ______

                                                             17,762     18,752
                                                             ______     ______


Current assets

Stocks                                                 5      5,616      7,317

Debtors                                                6     17,951     16,725

Cash at bank and in hand                                      1,348        902
                                                             ______     ______

                                                             24,915     24,944

Creditors: Amounts falling due within one year         7    (19,158)   (24,568)
                                                             ______     ______

Net current assets                                            5,757        376
                                                             ______     ______


Total assets less current liabilities                        23,519     19,128


Creditors: amounts falling due after more than one
year                                                   8    (10,505)    (9,399)


Provision for liabilities and charges                          (791)       (79)
                                                             ______     ______

Net assets                                                   12,223      9,650
                                                               
                                                           ========   ========
                                                                          
Capital and reserves

Called up share capital                                       3,107      3,097

Share premium account                                  9        909        879

Revaluation reserve                                    9      1,318      1,318

Profit and loss account                                9      6,889      4,356
                                                             ______     ______

Equity shareholders' funds                                   12,223      9,650
                                                                
                                                           ========   ========
                                                                          

                 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
                      for the year ended 31 December 2003
                                        
                                                              2003        2002
                                                              £000        £000


Profit for the financial year                                3,460       2,931

Exchange loss on overseas investments                          (56)       (107)


                                                            ______      ______

Total recognised gains relating to the year                  3,404       2,824
                                                                          
Prior year adjustment - FRS 19                                   -        (732)
                                                             _____       _____
                                                         
Total gains recognised since last annual report              3,404       2,092
                                                           =======     =======


                                        
               RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
                                        
                       for the year ended 31 December 2003

                                                             2003        2002
                                                             £000        £000


Profit for the financial year                               3,460       2,931

Dividends                                                    (871)       (743)
                                                           ______      ______


Retained profit for the financial year                      2,589       2,188

Other recognised losses relating to the year                  (56)       (107)

New share capital issued                                       40          49
                                                           ______      ______


Net increase in shareholders' funds                         2,573       2,130

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

Closing shareholders' funds                                12,223       9,650
                                                        
                                                         ========    ========
                                                                         

                STATEMENT OF HISTORICAL COST PROFITS AND LOSSES
                       for the year ended 31 December 2003

                                                                2003      2002
                                                                £000      £000

Reported profit on ordinary activities before taxation         4,709     3,926
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         4
                                                               _____     _____
Historical cost profit on ordinary activities before           4,713     4,374
taxation
                                                              ______    ______
Historical cost profit for the year retained after taxation
and dividends                                                  2,593     2,636
                                                              ______    ______

                        CONSOLIDATED CASH FLOW STATEMENT
                       for the year ended 31 December 2003

                                                      Notes     2003      2002
                                                                £000      £000


Cash inflow from operating activities                 10(a)    5,399     7,047



Return on investments and servicing of finance

Interest received                                                  1         5

Interest paid                                                   (958)   (1,114)
                                                               ______   _______

Net outflow from investments and servicing of finance           (957)   (1,109)
                                                               ______   ______

Taxation                                                        (107)      498
                                                               ______   ______

Capital expenditure and financial investments

Purchases of tangible fixed assets                            (2,052)   (1,807)

Proceeds from sale of tangible fixed assets                        6     3,324

Loan to ESOP trust                                              (250)     (118)
                                                               ______   ______

Net cash (outflow)/inflow from capital expenditure
and                                                           (2,296)    1,399
financial investments
                                                               ______   ______

Acquisitions and disposals

Deferred consideration and fees                                  (45)     (238)

Cost of investment in Associated Company                        (567)        -

Proceeds from disposal of interest in Joint Venture            2,567         -
                                                               ______   ______

Net cash inflow/(outflow) from acquisitions and disposals      1,955      (238)

Equity dividends paid                                           (775)     (682)
                                                               ______   ______


Cash inflow before financing                                   3,219     6,915
                                                               ______   ______


Financing

Repayment of loan notes issued on acquisition of
subsidiaries                                                  (3,765)   (4,334)
Capital element of finance lease rental payments                (253)     (516)
Repayment of long term loan                                   (1,250)   (1,251)
Bank loan and other advances                                   2,455     2,000

Issue of new shares                                               40        49
                                                               ______   ______

Net cash outflow from financing                               (2,773)   (4,052)
                                                               ______   ______

Increase in cash for the year                         10(b)      446     2,863
                                                              
                                                              ======== ========



                             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 2003 or 2002
but are derived from those accounts. The statutory accounts for 2002, on which
the auditors have given an unqualified report, have been delivered to the
Registrar of Companies. Those for 2003 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 interest in an associated
company made up to 31 December 2003. The Group's share of the profits of the
associated company is included in the consolidated profit and loss account and
its interest in its net assets is included in the balance sheet.

3. Tax charge on profit on ordinary activities

                                                       2003              2002
                                                      £ 000             £ 000

UK corporation tax

- current year at 30 %                                 (510)                -

- prior year                                            (27)              (44)

Deferred tax

- current year                                         (749)           (1,031)

- prior year                                             37                80
                                                     ______            ______

                                                     (1,249)             (995)
                                            
                                                   ========          ========
                                                                         

The current charge for the year differs from 30% of the pre-tax profit because
the gain on the sale of the Joint Venture of £935,000 is not subject to taxation
and certain expenses are not deductible for tax.

4. Earnings per share

Based on a profit after adjusting for exceptional costs, goodwill amortisation
and tax of £2,973,000 (2002:£2,809,000) and 29,612,442 (2002: 29,940,303)
shares, being the weighted average number of shares in issue during the year,
the adjusted basic earnings per share were 10.0p (2002: 9.4p). The weighted
average number of shares excludes the shares held by the ESOP Trust, which
increased during the year. Based on a profit after tax of £3,460,000 (2002:
£2,931,000) and 29,612,442 shares (2002: 29,940,303), the basic earnings per
share were 11.7p (2002: 9.8p).

                                     2003       2002         2003         2002

                                 Earnings   Earnings     Earnings     Earnings
                                     £000       £000    pence per    pence per
                                                            share        share

Basic                               3,460      2,931         11.7          9.8
Adjusted for:
Gain on sale of investments          (935)         -         (3.2)           -
Exceptional costs/(credit)            226       (399)         0.8         (1.3)
Tax relief on exceptional costs       (68)         -         (0.3)           -
Goodwill amortisation                 290        277          1.0          0.9
                                  _______     ______       ______       ______

Adjusted basic                      2,973      2,809         10.0          9.4
                                   ______     ______       ______       ______

                                                                   
Diluted                             3,460      2,931         11.3          9.6
                                   ______     ______       ______       ______

                                                                    
The weighted average number of shares used in each calculation is as follows:

                                                             2003         2002
                                                           Number       Number   
                                                        of shares    of shares 
                                                                    
                                                           000s         000s's
                                                   
For basic and adjusted earnings
per share                                                  29,612       29,940
Effect of exercise of share
options                                                     1,023          650
                                                      
                                                          _______      _______
                                                
For diluted earnings per share                             30,635       30,590
                                                
                                                       ==========   ==========

Earnings per share are calculated for the issued shares excluding those held by
the Employee Share Scheme in accordance with UITF 13.

5. Stocks
                                                          2003            2002
                                                          £000            £000

Raw materials and consumables                            2,380           2,027

Work in progress                                         1,439           3,514
Less: Payments to account                                 (677)           (787)

Finished goods                                           2,474           2,563
                                                         _____          _____

                                                         5,616           7,317
                                                 
                                                       =======        ========


6. Debtors

                                                    2003                  2002
                                                    £000                  £000


Trade debtors                                     15,702                15,029

Other debtors                                        333                   351

Prepayments                                        1,916                 1,345
                                                  ______                ______

                                                  17,951                16,725
                                                  
                                                ========              ========


7. Creditors: amounts falling due within one year

                                                                2003      2002
                                                                £000      £000


Bank loans (secured)                                           1,250     1,250

Loan notes                                                         -     1,310

Trade creditors                                               11,731    12,610

Corporation tax                                                  510        80

Other taxes and social security                                2,370     2,258

Accruals                                                       2,545     3,750
Dividend proposed                                                653       557

Obligations under hire purchase contracts and finance leases      99       253

Provision for deferred consideration                               -     2,500
                                                              ______   ______

                                                              19,158    24,568
                                                            ========  ========



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

                                                               2003       2002
                                                               £000       £000


Bank loans (secured)                                         10,392      9,187

Obligations under hire purchase contracts and finance
leases                                                          113        212
                                                             ______     ______

                                                             10,505      9,399
                                                             
                                                            ========  ========

9.    Reserves

                                Group and Company          Group        Company
                                          
                              Share   Revaluation     Profit and     Profit and
                            premium       reserve   loss account   loss account
                               £000          £000           £000           £000

At 1 January 2003               879         1,318          4,356          4,708
Retained profit for the           -             -          2,589          4,447
year
Exchange loss on                  -             -            (56)             -
investments
New shares issued                30             -              -              -
                             ______        ______         ______         ______
At 31 December 2003             909         1,318          6,889          9,155
                             ______        ______         ______         ______

Total goodwill written off directly to reserves in previous years in respect of
subsidiary undertakings at 31 December 2003 amounts to £16,234,000 (2002:
£16,234,000).
The profit after tax for the financial year attributable to the Company was
£5,318,000 (2002: profit:£4,441,000)



10. Cash Flow Statement

                                                             2003         2002
                                                             £000         £000

(a) Reconciliation of operating profit to net cash inflow from operating
activities

Operating profit after exceptional items                    4,753        4,465
Depreciation                                                1,918        2,165
Amortisation of goodwill                                      290          277
Gain on disposal of tangible fixed assets                      (6)        (145)
Decrease/(increase) in stocks                               1,701       (1,524)
Increase in debtors                                        (1,226)        (528)
(Decrease)/increase in creditors                           (2,031)       2,337
                                                           ______       ______
Net cash inflow from operating activities                   5,399        7,047
                                                     
                                                         ========     ========

(b) Reconciliation of net cash flow to movement in net debt

Increase in cash for the year                                 446        2,863
Finance lease payments                                        253          516
Inception of new finance leases                                 -          (44)
Loan notes issued in the year                              (2,455)      (2,500)
Loan notes repaid                                           3,765        4,334
Bank loan repaid                                            1,250        1,251
New bank loan                                              (2,455)      (2,000)
                                                           ______       ______
Movement in net debt in the year                              804        4,420
Opening net debt                                          (11,310)     (15,730)
                                                           ______       ______
Closing net debt                                          (10,506)     (11,310)
                                                     
                                                         ========     ========



(c) Analysis of net debt
                                  At 1      
                               January        Cash         Other       At 31
                                  2003        flow      non-cash    December
                                  £000        £000       changes        2003
                                                            £000        £000

Cash at bank and in hand           902         446             -       1,348
                                ______      ______        ______      ______
Debt due within one year
Bank loans                      (1,250)      1,250        (1,250)     (1,250)
Loan notes                      (1,310)      3,765        (2,455)          -
Finance lease creditor            (253)        253           (99)        (99)
                                ______      ______        ______      ______
                                (2,813)      5,268        (3,804)     (1,349)
                                ______      ______        ______      ______

Debt due after one year
Finance lease creditor            (212)          -            99        (113)
Bank loans                      (9,187)     (2,455)        1,250     (10,392)
                                ______      ______        ______      ______
                                (9,399)     (2,455)        1,349     (10,505)
                                ______      ______        ______      ______
Total net debt                 (11,310)      3,259        (2,455)    (10,506)
                                ______      ______        ______      ______

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 2003
by qualified independent actuaries, using revised assumptions that are
consistent with the requirements of the accounting standard, FRS17. The 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 £16.4m (2002: £12.9m) and liabilities, discounted at the AA bond yield,
of £24.3m (2002: £19.5m). Using this valuation method, there is a deficit of
£8.0m (2002: £6.7m) which is partially offset by deferred tax of £2.4m (2002:
£2.0m) giving a net deficit of £5.6m (2002: £4.7m).

The defined benefit section has been closed to new entrants.


12. The accounts for the year ended 31 December 2003 were approved by the
Directors on 5 April 2004.




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