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Havelock Europa PLC (HVE)

  Print      Mail a friend       Annual reports

Tuesday 28 September, 2004

Havelock Europa PLC

Interim Results

Havelock Europa PLC
28 September 2004



                   HAVELOCK EUROPA PLC - INTERIM ANNOUNCEMENT

Havelock, the education furniture, point of sale display and retail interiors
group, announces a satisfactory first six months, with the Group's two most
profitable businesses - education furniture and point of sale display - both
performing well. The Group remains on track with its plan to develop higher
growth, more profitable businesses.

FINANCIAL HIGHLIGHTS


  * In what is traditionally much the weaker half of the year, operating
    profit increased by 12% to £1.02m.


  * Underlying pre-tax profit was up 18% at £0.67m. (Reported profit before
    tax was £0.52m, 2003: £1.36m).


  * Basic adjusted earnings per share rose by 21.4% to 1.7p. (Basic unadjusted
    earnings per share were 1.2p, 2003: 4.1p).


  * The interim dividend per share is raised by 14.3% to 0.8p.



COMMERCIAL HIGHLIGHTS

• ESA McIntosh, the UK market leader in science laboratories and fitted
furniture for schools, performed very much in line with budget, with turnover
stable at £9.2m. ESA McIntosh should record another good result for the full
year, despite expensing the costs currently being incurred to accommodate the
anticipated increased levels of PFI subcontractor business from 2005.

• The two new acquisitions in the education supply sector, TeacherBoards
and Clean Air, acquired at the end of June and in mid July respectively, have
made an excellent start in the Group in respect of both turnover and orders and
will make their first contribution in the second half of the year.

• The Point of Sale Display Division, comprising Showcard and
Hartcliffe, had a strong first half, with turnover at £12.3m (2003: £10.0m)
running well ahead of both last year and budget.

• In the Retail Interiors Division, as forecast, there has been a return
to the traditional refurbishment cycle, with much of the activity concentrated
in the months from July to November and with a reduced level of business
available in the department store sector. These factors were reflected in the
reduced turnover figure of £13.4m (2003: £22.4m). Nevertheless, an improved
contribution for the year is expected.

• Whilst the Retail Interiors Division is committed to remain a market
leader in its sector, it will, in the future, devote a proportion of its
resources to support the supply of equipment and services for other parts of the
Group, in particular ESA McIntosh, and will become responsible for developing
the Group's activities in the growing healthcare furniture market.

Malcolm Gourlay, Chairman, stated 'The Board remains confident that 2004 will be
a year of further overall progress and should provide a platform for continuing
profitable growth in the coming years as the full impact of the Group's
investments in the education supply sector is realised.'

Enquiries:

Havelock Europa PLC                                              01383-820 044

Hew Balfour (Chief Executive)                                    07801-683 851
Graham MacSporran (Finance Director)                             07801-683 803

Bankside Consultants Limited

Charles Ponsonby                                                 020-7444 4166


                              CHAIRMAN'S STATEMENT

As indicated in the Chairman's Statement to the AGM on 24 June 2004, with the
Group's two most profitable businesses - Education Furniture and Point of Sale
Display - both performing well, Havelock has had a satisfactory first six
months. The Group remains on track with its plan to develop higher growth, more
profitable businesses.

FINANCIAL REVIEW

Group turnover for the first six months was £34.9 million (2003 : £41.6 million)
reflecting the anticipated return to a seasonal bias in the Retail Interiors
Division. Operating profit at £1.02 million (2003 : £0.92 million) was 12% up.
Underlying pre-tax profit, disregarding goodwill amortisation and 2003's
exceptional gain, was up 18% at £0.67 million (2003 : £0.57 million). The
reported profit before tax was £0.52 million (2003: £1.36 million).

Basic adjusted earnings per share rose by 21.4% to 1.7 pence (2003 1.4 pence).
The unadjusted earnings per share were 1.2 pence, compared to 4.1 pence in 2003
which reflected 2003's exceptional tax-free gain on the sale of the Middle East
investment.

Net debt at the period end stood at £19.3 million (2003 : £16.6 million), of
which £2.5 million relates to the acquisition of TeacherBoards (1985) Limited on 
29 June 2004. Gearing at 150.7% (2003 : 159.6%) compared favourably with the 
prior year figure at the seasonal high point of the working capital cycle. 
Interest cover for the full year is expected to remain substantial.

DIVIDEND

The Board is pleased to declare an interim dividend per share of 0.8 pence, an
increase of 14.3%. The dividend will be paid on 29 December 2004 to shareholders
on the register at close of business on 12 November 2004.

TRADING REVIEW

Educational Furniture and Supplies

ESA McIntosh, the UK market leader in science laboratories and fitted furniture
for schools, performed very much in line with budget. Turnover at £9.2 million
(2003 : £9.2 million) was stable, reflecting the expected change in the
seasonality of PFI subcontractor business in favour of the second half of 2004
offset by an increase in Local Authority business. As previously indicated,
significant investment, which is being expensed as it occurs, is taking place
during the course of this year, in terms of recruiting, training and
preparation, for the substantial uplift in PFI activity expected from 2005.

Point of Sale Display

The Point of Sale Display division had a strong first half, with turnover at
£12.3 million (2003 : £10.0 million) running well ahead of both last year and 
budget.

During July, a major expansion to Showcard Print's premises at Letchworth was
completed and a new 4 colour large format screen printing line has been
commissioned, along with new digital printing equipment and the latest
technology in direct imaging. The 2 colour print line, which the new printing
press replaced, has been transferred to Hartcliffe's premises at Bristol, which
will substantially enhance its capability for large format work. Recent
investment in printing machinery in both locations is already bearing fruit in
terms of enhancements to productivity.

Retail Interiors

In the Retail Interiors Division, as forecast, there has been a return to the
traditional refurbishment cycle, with much of the activity concentrated in the
months from July to November, and with a reduced level of business available in
the department store sector. These factors were reflected in the reduced
turnover figure of £13.4 million (2003 : £22.4 million).

ACQUISITION OF TEACHERBOARDS (1985) LIMITED

On 30 June 2004, the Group announced the acquisition of TeacherBoards , based in
Skipton, North Yorkshire. This company is involved in the manufacture, sale and
distribution of display boards, presentation systems and teaching equipment,
primarily for use in the education and corporate sectors in the UK. In the year
ended 31 December 2003, TeacherBoards reported a pre-tax profit of £0.71 million
on turnover of £4.8 million.

The consideration payable for the entire issued share capital of TeacherBoards
will be a sum of up to £6.135 million, comprising £4.135 million paid on
completion, with a further fixed sum of £0.60 million payable on 7 January 2005
and up to an additional £1.40 million of deferred consideration depending on
profits achieved in 2004 and 2005. No deferred consideration will be payable
unless the audited profits before tax exceed £0.8 million and £1.0 million in
2004 and 2005, respectively.

The consideration is payable in a mixture of cash and loan notes, save for the
payment of £0.75 million made on completion in the form of 786,988 ordinary
shares in Havelock Europa (2.5% of the enlarged share capital), which were
issued at a price of 95.30p, being the average of the mid-market price for the
five days preceding completion.

The business is operating as an autonomous subsidiary of Havelock Europa under
its existing management team, headed by Edmund Raczkowski, its Managing Director
and the principal vendor.


ACQUISITION OF CLEAN AIR LIMITED

On 15 July 2004, the Group announced its third purchase in the educational
supply sector with the acquisition of Clean Air, based in Bolton, Lancashire.
Clean Air designs and manufactures fume cupboards for use in science
laboratories, within the school, university and industrial sectors, both in the
UK and overseas. Fume cupboards provide a safe working environment for chemical
experiments and processes by removing harmful gases. In the year ended 31
December 2003, Clean Air made an audited pre-tax profit of £0.3 million, after
vendors' profit-related bonuses of £0.5 million, on turnover of £4.0 million.

The consideration payable for the entire issued share capital of Clean Air will
be a sum of up to £6.3 million, comprising £4.5 million paid on completion and 
up to an additional £1.8 million of deferred consideration depending on profits 
achieved in 2004 and 2005. No deferred consideration will be payable unless the 
audited profits before tax exceed £0.8 million and £1.0 million in 2004 and 
2005, respectively.

The consideration is payable in a mixture of cash and loan notes, save for the
payment of £1.0 million made on completion in the form 886,918 ordinary shares 
in Havelock (2.7% of the enlarged share capital), issued at a price of 112.75 
pence per share, being the average of the mid-market price for the five days 
preceding completion.

A further 1,553,450 shares were placed with institutional shareholders at a
price of 110 pence per share, a 1.8% discount to the opening mid-market price on
12 July, the day that the placing was arranged, to provide funding of £1.7
million towards the cash payment due on completion.

Clean Air is operating as an autonomous subsidiary of Havelock under its
existing management team, headed by Keith Collier, its Managing Director.

STRATEGY

The strategy set out at the time of the acquisition of ESA McIntosh in September
2001, to concentrate on UK markets offering significant opportunities for
profitable growth, continues to progress.

As a result of reviewing this strategy, the Group plans to shift the focus of
its activities, including those carried out by the Retail Interiors Division.
While the Division is committed to remain a market leader in its sector, the
Company intends to concentrate on UK retailers, banks and hotels which require
and value a consistency of quality in manufacturing and service delivery. The
Division has purchased a small number of new high technology wood working
machines for Dalgety Bay with the aim of sharply reducing manufacturing costs,
rather than adding capacity to an industry which already has a surplus in its
supply base and, henceforth, will focus management on ensuring operational
excellence, with strong project management controls and efficient manufacturing
as its top priorities.

In addition to its work in the retail, banking and hotel sectors, the Retail
Interiors Division will devote a proportion of its resources to support the
supply of equipment and services for other parts of the Group, most notably to
contribute to the growth in education furniture, which has been pioneered by ESA
McIntosh, and the more structural elements of display equipment required by the
Point of Sale Display Division. With effect from the last quarter of the year,
it is intended that the Retail Interiors Division will assume responsibility for
the Group's future activities in the healthcare furniture market, into which an
encouraging entry has already been made by ESA McIntosh. These actions should
eliminate wasteful seasonality, increase the Division's profitability, and
deliver long-term job security for employees.


BOARD

At the conclusion of the AGM on 24 June 2004, Michael Kennedy retired from the
Board, having served six years as Chairman. He leaves the Company transformed
for the better, in particular by the building of its education supply business.

In anticipation of Michael Kennedy's retirement, Robbie Duncan CA, aged 54, an
executive Director of FirstGroup plc from 1986 until his retirement in 2003,
joined the Board as a non-executive Director in February 2004.

INTERNATIONAL ACCOUNTING STANDARDS

The Group is currently reviewing the impact on its published financial
statements of the introduction of International Accounting Standards, which are
effective from 1 January 2005.

CURRENT TRADING AND PROSPECTS

Since the half year end, ESA McIntosh's order intake from Local Authorities has
continued at a high level. With an expectation that PFI subcontractor business
will be broadly on the same level as last year, ESA McIntosh should record
another good result, despite expensing the costs currently being incurred to
accommodate the anticipated increased levels of PFI business from 2005. The two
new acquisitions, TeacherBoards and Clean Air, have made an excellent start in
the Group in respect of both turnover and orders and will make their first
contribution in the second half of the year.

Although July and early August were quiet within the Point of Sale Display
Division, reflecting the dismal summer weather and the consequential effect on
retailers' marketing expenditure, business picked up in the second half of
August and September and a good result for the year is expected in this
Division.

The Retail Interiors Division is performing in line with budget and a small but
improved profit for the year is expected.

Profits from the Middle East joint venture are expected to remain modest, albeit
somewhat above that of last year, reflecting the strong economic conditions
being experienced throughout the Gulf.

The Board remains confident that 2004 will be a year of further overall progress
and should provide a platform for continuing profitable growth in the coming
years as the full impact of the Group's investments in the education supply
sector is realised.


Malcolm Gourlay
Chairman 28 September 2004



                       UNAUDITED PROFIT AND LOSS ACCOUNT
                      for the half year ended 30 June 2004

                                                Half        Half       Audited
                                                Year        Year          Year
                                               Ended       Ended         Ended
                                             30 June     30 June   31 December
                                                2004        2003          2003
                                     Notes      £000        £000          £000
Turnover

Group and share of Joint Venture              34,924      42,168        97,742

Less: share of Joint Venture's                     -        (553)         (502)
turnover
                                                ______    _________     ______
        
Group turnover                                34,924      41,615        97,240

Operating profit before exceptional            1,002         944         4,979
items

Exceptional costs                                  -           -          (226)
                                                 ______    _________   ______
        
Operating profit after exceptional             1,002         944         4,753
items

Share of Associated Company's
operating                                         22          (4)           47
profit/(loss)

Share of Joint Venture's operating                 -         (24)          (24)
loss
                                                 ______    _________   ______

Total operating profit                         1,024         916         4,776

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

Profit on ordinary activities before
interest                                       1,024       1,851         5,711


Net interest payable and other
similar items

Group                                           (491)       (489)         (981)

Associated Company                                (9)          -           (19)

Joint Venture                                      -          (2)           (2)
                                                 ______    _________   ______

Profit on ordinary activities before
taxation                                         524       1,360         4,709

Tax charge on profit on ordinary
activities                               3      (168)       (143)       (1,249)
                                                 ______    _________   ______

Profit for the period                            356       1,217         3,460


Dividend-equity                                 (255)       (217)         (871)
                                                 ______    _________   ______

Retained profit for the period                   101       1,000         2,589
                                                 ______    ______      ______
                                             
Basic earnings per share                 4       1.2p        4.1p         11.7p


Basic adjusted earnings per share        4       1.7p        1.4p         10.0p


Diluted earnings per share               4       1.1p        3.9p         11.3p


Dividend per share                               0.8p        0.7p          2.8p






              GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

                      for the half year ended 30 June 2004

                               Half         Half      Audited
                               Year         Year         Year
                              Ended        Ended       Ended
                            30 June      30 June 31 December
                               2004         2003       2003
                               £000         £000       £000

Profit for the                  356        1,217      3,460
period

Exchange loss on                (11)         (21)       (56)
overseas investment
                             ______       ______       ______

Total gains                     345        1,196      3,404
recognised for the
period
                                          ========     ========
Prior year                     (228)
adjustment - see                                      
note 1
                              ______
                                               
Total recognised
gains for the period                           
since last annual report        117
                               ______
                         


There are no material differences between the profit as reported and the historical 
ost profit for the period.


                           UNAUDITED BALANCE SHEET
                                at 30 June 2004

                                                                    Audited
                                          30 June       30 June   31 December
                                             2004          2003           2003
                                                    (restated -   (restated -
                                                    see note 1)   see note 1)
                                  Notes      £000          £000           £000

Fixed assets

Intangible asset - goodwill                 8,657         3,952      3,825

Tangible assets                            12,934        13,222     12,786

Investment in Associated Company              534           541        533
                                          ______       ________   ________
                                                       
                                           22,125        17,715     17,144
                                          ______       ________   ________

Current assets

Stocks                                5     9,270         7,454      5,616

Debtors                               6    19,838        18,830     17,951

Cash at bank and in hand                        -             1      1,348
                                          ______        _______   ________

                                           29,108        26,285     24,915

Creditors - Amounts falling due
within one                            7   (24,539)      (24,804)   (18,768)
year
                                          ______        _______    ________

Net current assets                          4,569         1,481      6,147
                                          ______        _______    ________

Total assets less current                  26,694        19,196     23,291
liabilities


Creditors - Amounts falling due
after more                            8   (13,099)       (8,745)   (10,505)
than one year

Provision for liabilities and                (791)          (79)      (791)
charges
                                          _______       _______   ________
                                                     
Net assets                                 12,804        10,372     11,995
                                          ========      =======   ========

Capital and reserves

Share capital                               3,186         3,101      3,107

Share premium account                 9     1,581           891        909

Revaluation reserve                   9     1,318         1,318      1,318

Profit and loss account               9     6,719         5,062      6,661
                                          _______       _______    ________

Equity shareholders' funds                 12,804        10,372     11,995
                                          ========     ========   ========





                         UNAUDITED CASH FLOW STATEMENT
                      for the half year ended 30 June 2004

                                                   Half      Half   Audited
                                                   Year      Year   Year
                                                  Ended     Ended   Ended
                                                30 June   30 June   31
                                                                    December
                                                   2004      2003         2003
                                        Notes      £000      £000         £000

Cash (outflow)/inflow from operating
activities                              10(a)    (4,742)   (2,348)       5,399
                                                _______   _______   _______

Returns on investments and servicing of
finance
Interest received                                     -        37            1
Interest paid                                      (475)     (516)        (958)
                                                _______   _______   _______
Net cash outflow from investments and
servicing of finance                               (475)     (479)        (957)
                                                _______   _______   _______
Taxation                                              -      (102)        (107)
                                                _______   _______   _______

Capital expenditure and financial investments
Purchases of tangible fixed assets               (1,060)   (1,585)      (2,052)

Proceeds from sale of tangible fixed                  6         -            6
assets

Loan to ESOP trust to purchase own                    -      (250)        (250)
shares
                                                _______   _______   _______

Net cash outflow from capital
expenditure                                      (1,054)   (1,835)      (2,296)
and financial investments
                                                _______   _______   _______


Acquisitions and disposals

Purchase of subsidiary undertaking               (3,385)        -            -

Cash acquired with subsidiary                       859         -            -
undertaking

Deferred consideration and fees                       -       (45)         (45)

Cost of investment in Associated                      -      (568)        (567)
Company

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

Net cash (outflow)/inflow from
acquisitions                                     (2,526)    1,954        1,955
and disposals


Equity dividends paid                                 -         -         (775)
                                                _______   _______   _______

Cash (outflow)/inflow before financing           (8,797)   (2,810)       3,219
                                                _______   _______   _______

Financing

Bank loan and other advances                      2,750         -        2,455

Repayment of long term loan                        (624)     (624)      (1,250)

Capital element of finance lease rental
payments                                            (61)     (152)        (253)

Exercise of share options                            12        16           40

Repayment of loan notes issued on
acquisition of subsidiaries                           -    (1,310)      (3,765)
                                                _______   _______   _______

Net cash inflow/(outflow) from                    2,077    (2,070)      (2,773)
financing
                                                _______   _______   _______

(Decrease)/increase in cash for the     10(b)    (6,720)   (4,880)         446
period
                                                ========  ========  ========


                             NOTES TO THE STATEMENT

1.        The financial information contained in this interim report for the
half year ended 30 June 2004 has been prepared on a basis consistent with the
accounting policies set out in the audited accounts for the year ended 31
December 2003, except for the adoption of UITF 38 - Accounting for ESOP Trusts,
which is applicable to accounting periods ending on or after 23 June 2004. In
line with UITF 38, distributable reserves have been reduced by the cost of
shares held by the Havelock Europa Employee Share Trust ('the Trust') less any
provision. Previously, shares held by the Trust were included in fixed assets
and any provision was included in creditors. Comparative figures have been
restated accordingly.

The figures for the year ended 31 December 2003 are extracted from the statutory
accounts for that year, on which an unqualified report was made by the Auditors
and which have been delivered to the Registrar of Companies. The summarised
results for the half year to 30 June 2004 and the comparative results for the
half year to 30 June 2003 are non-statutory accounts within the meaning of
section 240 of the Companies Act 1985.

2.        All operations are continuing. No adjustment has been made in relation
to the post-acquisition trading of TeacherBoards as the effect would be
immaterial.

3.        A charge for taxation has been included at 33% (2003:31%), being the
effective rate likely to be applied to the UK result for the full year to 31
December 2004. The results of the Middle East associated undertaking are not
subject to taxation.

4.        Basic and adjusted earnings per share are calculated by dividing the
profit after tax by 30,041,093 (2003: 29,969,760), being the weighted average
number of shares in issue during the period, excluding those held by the
employee share scheme in accordance with FRS 14. Diluted earnings per share are
calculated by dividing the profit after tax by 31,311,083 shares (2003:
31,082,760 shares), which includes the dilutive effect of all share options with
an option price less than the average market price for the period.

Adjusted earnings attributable to
shareholders
                                            Half Year   Half Year   Audited
                                                Ended       Ended   Year Ended
                                              30 June     30 June   31
                                                                    December
                                                 2004        2003         2003
                                                 £000        £000         £000

Basic                                             356       1,217        3,460
Adjusted for:
Gain on sale of investments                         -        (935)        (935)
Exceptional items                                   -           -          226
Tax relief on exceptional costs                     -           -          (68)
Goodwill amortisation                             147         144          290
                                              _______     _______      _______
Adjusted basic                                    503         426        2,973
                                             ========    ========     ========

Basic weighted average shares                  30,041      29,970       29,612

Diluted weighted average shares                31,311      31,083       30,635

Basic EPS                                         1.2p        4.1p        11.7p
Adjusted EPS                                      1.7p        1.4p        10.0p
Diluted EPS                                       1.1p        3.9p        11.3p



5.        Stocks                    30 June         30 June        31 December
                                       2004           2003                2003
                                       £000           £000                £000

Raw materials and consumables         3,300          2,144               2,380
Work in progress                      2,504          2,964               1,439
Less: Payments to account              (611)        (1,102)               (677)
Finished goods                        4,077          3,448               2,474
                                    _______        _______             _______
                                      9,270          7,454               5,616
                                     ______         ______              ______

6.        Debtors                  30 June         30 June         31 December
                                       2004           2003                2003
                                       £000           £000                £000

Trade debtors                        17,216         17,042              15,702
Other debtors                           410            347                 333
Prepayments                           2,212          1,441               1,916
                                    _______        _______             _______
                                     19,838         18,830              17,951
                                     ______         ______              ______

7.        Creditors: amounts falling due   30 June       30 June   31 December
within one year
                                              2004          2003          2003
                                              £000          £000          £000
                                                     (restated -   (restated -
                                                     see note 1)   see note 1)

Bank overdraft (secured)                     5,372         3,979             -
Bank loans (secured)                         1,250         1,250         1,250
Loan notes                                       -         2,455             -
Trade creditors                             10,705        11,276        11,731
Corporation tax                              1,001           121           510
Other taxes and social security              1,329         2,054         2,370
Accruals                                     2,404         2,764         2,155
Dividends - Final                              653           557           653
- Interim                                      255           217             -
Obligations under finance leases                70           131            99
Provision for deferred consideration         1,500             -             -
                                           _______       _______       _______
                                            24,539        24,804        18,768
                                           _______        ______       _______





8.        Creditors: amounts falling due
after more than one year
                                         30 June       30 June     31 December
                                            2004          2003            2003
                                            £000          £000            £000

Bank loans (secured)                      12,518         8,563          10,392
Provision for deferred consideration         500             -               -
Obligations under finance leases              81           182             113
                                         _______       _______         _______
                                          13,099         8,745          10,505
                                         ______         ______         ______

9.        Reserves
                                           Share   Revaluation   Profit & Loss
                                         Premium       Reserve         Account
                                            £000          £000            £000
At 1 January 2004 as previously stated       909         1,318           6,889
Prior year adjustment -reclassification
of                                             -             -            (228)
investment in own shares
                                          ______        ______          ______
At 1 January 2004 as restated                909         1,318           6,661

Issue of new shares                          672             -               -
Retained profit for the period                 -             -             101
Exchange loss on overseas investment           -             -             (11)
Movement in Long Term Incentive Plan
shares held                                    -             -             (32)
                                         _______       _______         _______
At 30 June 2004                            1,581         1,318           6,719
                                         ______         ______          ______


10.     Cash Flow Statement                Half Year   Half Year       Audited
                                               Ended       Ended    Year Ended
                                             30 June     30 June   31 December
                                                2004        2003          2003
                                                £000        £000          £000

a) Reconciliation of operating profit to
net cash flow from operating activities

Operating profit after exceptional items       1,002         944         4,753
Depreciation                                     932         959         1,918
Goodwill amortisation                            147         131           290
Gain on disposal of tangible fixed assets        (17)          -            (6)
(Increase)/decrease in stocks                 (2,974)       (137)        1,701
Increase in debtors                           (1,002)     (2,105)       (1,226)
Decrease in creditors                         (2,830)     (2,140)       (2,031)
                                             _______     _______       _______
Net cash (outflow)/inflow from operating                              
activities                                    (4,742)     (2,348)        5,399
                                              ______     _______        ______



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

(Decrease)/increase in cash for the period          (6,720)   (4,880)      446
Finance lease payments                                  61       152       253
Loan notes issued in the period                          -    (2,455)   (2,455)
Loan notes repaid                                        -     1,310     3,765
Bank loan repaid                                       624       624     1,250
New bank loan                                       (2,750)        -    (2,455)
                                                   _______   _______   _______
Movement in net debt in the period                  (8,785)   (5,249)      804

Opening net debt                                   (10,506)  (11,310)  (11,310)
                                                   _______   _______   _______
Closing net debt                                   (19,291)  (16,559)  (10,506)
                                                   ========  ========  ========



c) Analysis of net debt
                                   At                      Other            At
                            1 January        Cash       Non-Cash       30 June
                                 2004        Flow        Changes          2004
                                 £000        £000           £000          £000

Overdraft                           -      (5,372)             -        (5,372)
Cash at bank and in hand        1,348      (1,348)             -             -
                               ______      ______         ______         ______
                                1,348      (6,720)             -        (5,372)
                               ______      ______         ______         ______
Debt due within one year

Bank loans                     (1,250)        624           (624)       (1,250)
Finance lease creditor            (99)         61            (32)          (70)
                               ______      ______         ______         ______
                               (1,349)        685           (656)       (1,320)
                               ______      ______         ______         ______

Debt due after one year

Finance lease creditor           (113)          -             32           (81)
Bank loans                    (10,392)     (2,750)           624       (12,518)
                               ______      ______         ______         ______
                              (10,505)     (2,750)           656       (12,599)
                               ______      ______         ______         ______
Total net debt                (10,506)     (8,785)             -       (19,291)
                             ========    ========       ========       ========


11.   The interim statement for the half year ended 30 June 2004 was approved by
the Directors on 28 September 2004.



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