Final Results

Spirax-Sarco Engineering PLC 10 March 2003 SPIRAX-SARCO ENGINEERING PLC Monday 10th March 2003 2002 PRELIMINARY ANNOUNCEMENT HIGHLIGHTS Year to 31st December 2002 *2001 Change Turnover Â£296.4m Â£291.9m +2% Operating profit Â£42.7m Â£40.8m +5% Operating profit margin 14.4% 14.0% Profit before taxation Â£40.7m Â£38.0m +7% Operating cash inflow Â£58.6m Â£50.0m Earnings per share 35.3p 34.4p +3% Dividends per share 19.3p 18.6p +4% Net gearing 15% 29% * 2001 figures exclude profit on disposal of fixed assets and have been restated for FRS - 19 Deferred Tax â€¢ Organic sales growth 4% - broadly spread â€¢ Good progress with sales developments â€¢ Improved profit margin â€¢ Strong cash flow - Â£18m reduction in net debt â€¢ Dividend up 4% Tim Fortune, Chairman, commenting on prospects said:- 'Provided that there is no major disruption to the trading environment, we look forward to another year of progress for the Group.' Enquiries: Tim Fortune - Chairman Marcus Steel - Chief Executive David Meredith - Director Finance Tel: 020 7638 9571 at Citigate Dewe Rogerson until 6.00 p.m. SPIRAX-SARCO ENGINEERING plc PRELIMINARY RESULTS SUMMARY The Chairman, Tim Fortune, says: 'I am pleased to report a good set of results for 2002. Profit before tax increased by 7% (before the profit on disposal of fixed assets in 2001), a robust performance given the continuing difficult global trading environment. Following the solid sales performance in the first half, sales progressed in the second half which, together with efficiency improvements and cost controls, underpinned the profit margin increase and the strong cash flow.' The Chief Executive, Marcus Steel, reports: TRADING 'As anticipated, trading levels and profits in the second half of 2002 were ahead of the second half of 2001, which had been depressed particularly by reduced demand on our factories. The result is that the 2002 full year produced higher sales and profits, which is good given the trading conditions. The economies of the Americas and Europe, including the UK, were generally weak and there was low industrial investment arising from a lack of business confidence, which still persists. In Asia, Australasia and Africa, the position was more encouraging although could not be described as strong; in particular Japan remained very depressed, but, against that, the Chinese economy continued to grow well. The Argentinian economy collapsed at the end of 2001 and remained in a fragile state throughout 2002, but, by concentrating on particular market areas and seizing our opportunities, we protected our position well. Turnover grew by 2% in the year which included organic growth of 4% but with an adverse exchange effect of 2%. The exchange effect arose from weakness of the US dollar, South American currencies and most Asian currencies, partially offset by a stronger euro. The underlying sales growth of 4% was achieved against the tough trading environment mentioned above, and arose from the implementation of a number of sales development plans and continuing development of the product range, including the progressive release of a new generation of the core range of Watson-Marlow Bredel pumps that started in 2001. Operating profit grew by 5% from Â£40.8 million to Â£42.7 million and this includes a small negative exchange effect of about Â£1/2 million. The increase in profit arose chiefly from the organic growth in sales, efficiency improvements, resourcing of raw materials in Asia and cost controls, including reduced numbers employed as was outlined in the 2001 Annual Report. In Continental Europe, profits were marginally up, although the results were rather mixed. The UK profits were down because of some cost increases - notably pensions and insurances. In the Americas and in Asia, Australasia and Africa, profits increased as a result of a mixture of the sales growth and cost and efficiency improvements. The factors above enabled the operating profit margin to increase from 14.0% in 2001 to 14.4% in 2002 in spite of the difficult trading environment and the adverse exchange rate movements. The improvement of the margin in future years will also be based on both sales growth and control of costs; the fundamental benefits of offering technical support for, and selling direct to, end user customers remain and will continue to underwrite the profitability of the Group. Following the previously reported acquisition in January 2002 of Marford Engineering in Australia for Â£1 million, in December 2002 we completed the acquisition of Ampe, in Italy, for Â£1 million including assumed liabilities; this brings into the Group our supplier of pneumatic and electronic instrumentation and actuators. In February 2003 we announced our intention to close our small factory in Spain as part of our cost controls and efficiency improvements. The closure costs of about Â£11/2 million will be included within operating profits for the first half of 2003 but will be mitigated by cost savings in the second half. United Kingdom Sales in the UK domestic market were flat. The economy was anaemic, particularly the industrial sector which makes up a significant part of the customer base for the steam and peristaltic pumping businesses. Industrial production was down and investment was weak, but we protected our sales through taking the opportunities provided by new products and winning a number of the few projects being undertaken. Demand on the UK factories, which supply our worldwide markets, was firm and stock reductions were achieved. Total UK operating profits fell from Â£8.6 million to Â£8.0 million due to substantially higher pension (an extra Â£1.7 million per annum), insurance and some central costs, the effects of which were mitigated by the cost saving programmes and raw material resourcing. Continental Europe There was a mixture of performances in Continental Europe; third party sales increased by 5% to Â£106.5 million, of which 2% results from favourable exchange movements. The performance of our French sales company was again poor, sales were lower and profits were well down; remedial actions have been taken and some reorganisation costs were incurred. In Poland and Switzerland conditions were difficult and sales and profits were down. However good sales increases were achieved in Czech, Denmark, Italy, Norway, Portugal, Spain and Sweden and profits were up. In Germany, sales were flat and profits were marginally ahead in spite of tough market conditions and Hygromatik did well. The factories in France and Holland experienced steady demand in 2002 and stocks were reduced as part of the working capital control programme. The operating profit in Continental Europe was Â£13.6 million and was adversely affected by the results in France but benefited by about Â£1/2 million from the stronger euro. This compares with an operating profit of Â£13.4 million in 2001. International (markets outside Americas and Europe) Third party sales grew during 2002 by 6% at constant exchange rates but suffered an adverse exchange translation effect of 3%, resulting in an increase in sterling of 3% to Â£65.6 million. Trading conditions in Japan were very depressed and sales were down, with the resultant effect on profitability. By contrast, our business in China produced a good result and again grew sales and profits; we have a relatively small share of this market, offering good opportunities for the future. There was a reduction in project work in Korea which held back business at below 2001 levels but active cost controls allowed us to increase our margin so profits were only marginally down. In Malaysia and Singapore, the industrial sector was weak with inward investment being diverted to China and sales and profits were down. Australia, India, New Zealand, South Africa, Taiwan and Thailand all grew sales and profits. The overall result was an operating profit increase of 5% to Â£9.8 million despite an adverse exchange movement of Â£1/2 million and the operating profit margin increased. In January 2002, we announced the acquisition of Marford Engineering in Australia for Â£1 million. Marford is a water treatment chemicals specialist and has already contributed to the development of our boiler water treatment business in Australia. Americas Our Americas operations produced good results in 2002 despite significant adverse exchange rate movements. Sales were down 3% but, excluding the adverse effect of exchange, organic sales were up 5%. Operating profits increased 23% at constant exchange rates; the profit growth was spread broadly across the region. In the USA, the Watson-Marlow Bredel business produced an excellent year for sales and profits, winning some good projects. The Spirax Sarco company in the USA saw sales fall as the industrial sector of the economy cut back; we implemented sales initiatives to mitigate the effects of the depressed market. Despite the lower sales, the operating profit grew in 2002 through improved efficiency and reduced costs; here too stocks were reduced through improved controls. Our Canadian company produced another good performance. In Argentina, the collapse of the currency and economy was counteracted by our careful sales and cash conservation strategy, which, with our exports in US dollars, meant that profits increased in 2002 - a good achievement under the prevailing conditions. In Brazil, the company increased local currency sales and profit, but devaluation of the Real reduced the sterling result. The Mexican market is still in recession; we increased sales and profits in local currency but not in sterling. The overall result for the region was a 19% increase in operating profit to Â£11.3 million and a profit margin increase to 12.6% from 10.3% in 2001. Interest, tax and dividends The net interest charge of Â£2.0 million decreased from Â£2.8 million in 2001 mainly due to the good cash generation during the year. The net interest expense was covered twenty-one times by operating profit. Profit before tax for the year was Â£40.7 million compared with Â£38.0 million last year before the non-operating item, an increase of 7%. The non-operating item in 2001 was a profit of Â£0.6 million on the disposal of fixed assets. Amortisation of goodwill was Â£0.6 million (2001: Â£0.5 million). The tax charge increased to 34.1%, closer to the underlying rate, compared with 31.6% in 2001 before the non-operating item. We have adopted FRS19 - Deferred Tax and the comparative tax charge and earnings per share figures have been restated accordingly; the effect of this change is minimal. Minority interests were higher at Â£0.7 million due to increased profits in India. Earnings per share rose by 3% to 35.3p from 34.4p before the non-operating item (2001: 35.3p including the non-operating item). The Board is recommending a final dividend of 13.5p per share which, with the interim dividend of 5.8p per share, gives a total for the year of 19.3p, an increase of 4%. The cost of the interim and final dividends is Â£14.4 million, which is covered 1.8 times by earnings. No scrip alternative to the cash dividend is being offered. BALANCE SHEET AND CASH FLOW Capital employed (net assets excluding goodwill and net debt) decreased to Â£161.6 million at 31st December 2002 from Â£176.6 million at the start of the year, in spite of the increase in business during the year. There was a reduction in working capital; in particular stock reductions were achieved, most notably in our manufacturing units. Exchange rate movements reduced capital employed by Â£7.4 million versus 2001. Additions to fixed assets were Â£11.5 million and were marginally below the depreciation charge for the year. The return on capital employed improved from 24% to 26%. Cash flow for the year was unusually strong with an inflow from operating activities of Â£58.6 million (2001: Â£50.0 million), benefiting from the improved profit and success in reducing working capital. Acquisitions absorbed Â£1.4 million. For the year, there was a Â£17.8 million reduction in net debt resulting from cash flows, including an adverse exchange impact of Â£1.2 million. At 31st December 2002, net debt was therefore Â£22.7 million compared with Â£40.5 million a year earlier. Net gearing reduced to 15% (2001: 29%). On an actuarial basis, the main UK pension funds were broadly in balance at the last triennial valuation at 31st December 2001, resulting in the annualised rate of cash contribution increasing by approximately Â£1.0 million, as recommended by the actuary. The FRS17 disclosures (see notes to the accounts) in respect of all the Group's defined benefit pension schemes show that, on this basis, there is a net deficit of Â£35 million at the balance sheet date. LOOKING FORWARD As already discussed, the Spirax-Sarco Engineering Group is focused on its markets where it has a world leading position - specifically in the industrial steam using market and the peristaltic pumping market. These are niche markets where we offer specialist knowledge, service and products to the end-user, OEMs, contractors and through distributors. Even as market leader, we have a small share of the steam market, which is fragmented, and the peristaltic pumping market is growing steadily. So, we have the opportunity to continue to grow the business in the future. This will be done by developing and improving the products that we offer, for instance through the new initiatives in steam system management and prefabricated engineered systems which are based on our technical strengths and development of our own in-house tubing in Watson-Marlow Bredel. We will increase our sales coverage in order to push up our market share. There are opportunities for geographical growth, with the world's biggest economies offering good potential as well as the less developed countries. We will also continue to improve our efficiency through systems improvements and capital investments to improve our competitiveness. Our growth plans continue to include a proactive acquisitions policy. However, our insistence on remaining focused on our area of expertise means that we are only prepared to consider specific companies which are in the markets that interest us. This limits the opportunities but helps to ensure that those which are considered are more likely to be integrated successfully. It is clear, therefore, that there is ample scope for us to continue to grow in the long term.' The Chairman comments as follows: 'The good result for 2002 springs from the resilience of the Group, the determination of our employees and our continuing focus on our niche Spirax Sarco and Watson-Marlow Bredel businesses. Both businesses provide high quality products and significant benefits to customers, which are delivered by our dedicated workforce who make, sell and deliver the products and services to the customer, and, on behalf of the Board, I thank all of them for their contribution to the 2002 performance. PROSPECTS We have made a firm start to 2003 although currency movements continue to affect Group profits over three-quarters of which are earned outside the UK. We are investing to grow our market leading positions and expect that we will see the benefits continue to come through in the future. It seems likely that 2003 will be another difficult year for large parts of the world economy; however, provided that there is no major disruption to the trading environment, we look forward to another year of progress for the Group.' The audited trading results for the Group for the year ended 31st December 2002 (together with the comparative figures for 2001 as restated for FRS19 - Deferred Tax) are set out below:- SPIRAX-SARCO ENGINEERING PLC Group Profit and Loss Account for the year ended 31st December 2002 2002 2001 (Restated) Â£'000 Â£'000 Turnover 296,363 291,942 Operating costs (253,689) (251,139) Operating profit 42,674 40,803 Profit on disposal of fixed assets - 616 Profit before interest 42,674 41,419 Net interest payable (1,981) (2,778) Profit on ordinary activities before taxation 40,693 38,641 Taxation on profit on ordinary activities (13,887) (12,016) Profit on ordinary activities after taxation 26,806 26,625 Minority interests - equity (681) (585) Profit for the financial year 26,125 26,040 Dividends (14,350) (13,752) Retained profit for the financial year 11,775 12,288 Earnings per share (basic) - before the disposal of fixed assets 35.3p 34.4p - after the disposal of fixed assets 35.3p 35.3p Dividends per share - Interim 5.8p 5.6p - Final 13.5p 13.0p - Total 19.3p 18.6p SPIRAX-SARCO ENGINEERING plc Group Balance Sheet at 31st December 2002 2002 2001 (Restated) Â£'000 Â£'000 Fixed assets Intangible assets 10,384 8,958 Tangible assets 88,593 91,906 98,977 100,864 Current assets Stocks 57,588 62,840 Debtors 87,130 88,385 Cash deposits and short term investments 31,796 16,147 Cash at bank and in hand 4,882 4,312 181,396 171,684 Creditors Amounts falling due within one year (73,859) (72,013) Net current assets 107,537 99,671 Total assets less current liabilities 206,514 200,535 Creditors Amounts falling due after more than one year (41,035) (40,084) Provisions for liabilities and charges (16,186) (15,336) Net assets 149,293 145,115 Capital and reserves Called up share capital 18,575 18,484 Share premium account 34,380 33,327 Revaluation reserve 4,216 4,618 Capital redemption reserve 1,832 1,832 Profit and loss account 87,328 83,626 Shareholders' funds - equity 146,331 141,887 Minority interests - equity 2,962 3,228 149,293 145,115 SPIRAX-SARCO ENGINEERING plc Group Cash Flow Statement for the year ended 31st December 2002 2002 2001 Â£'000 Â£'000 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOW Operating profit 42,674 40,803 Depreciation and amortisation charges 12,492 12,303 Decrease in stocks 3,858 (435) Increase in debtors (2,241) 873 Increase in creditors and provisions 1,779 (3,573) Cash inflow from operating activities 58,562 49,971 GROUP CASH FLOW STATEMENT Cash inflow from operating activities 58,562 49,971 Returns on investments and servicing of finance (2,441) (3,254) Taxation (11,605) (12,429) Capital expenditure (11,339) (16,834) Acquisitions and disposals (1,386) (404) Equity dividends paid (13,930) (13,412) Cash inflow before use of liquid resources & financing 17,861 3,638 Management of liquid resources (15,918) 1,735 1,943 5,373 Financing - Issue of ordinary share capital 1,144 1,316 - Decrease in debt (4,492) (5,477) (3,348) (4,161) Decrease in cash in the period (1,405) 1,212 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Decrease in cash in the period (1,405) 1,212 Cash outflow from decrease in debt 4,492 5,477 Cash outflow from increase in liquid resources 15,918 (1,735) Change in net debt resulting from cash flows 19,005 4,954 Amortisation of loan expenses (21) (25) Translation difference (1,177) 206 Movement in net debt in the period 17,807 5,135 Net debt at 1st January (40,473) (45,608) Net debt at 31st December (22,666) (40,473) SPIRAX-SARCO ENGINEERING plc Group Statement of Total Recognised Gains and Losses for the year ended 31st December 2002 2002 2001 (Restated) Â£'000 Â£'000 Profit for the financial year 26,125 26,040 Currency translation differences on foreign currency net investments (8,475) (5,772) Total recognised gains and losses relating to the year 17,650 20,268 Prior year adjustment in respect of the adoption of FRS19 - Deferred Tax (959) 16,691 SPIRAX-SARCO ENGINEERING plc Group Reconciliation of Movement in Shareholders' Funds for the year ended 31st December 2002 2002 2001 (Restated) Â£'000 Â£'000 Shareholders' funds at 1st January (as previously reported) 142,846 134,924 Adjustment in respect of FRS 19 - Deferred Tax (959) (869) Shareholders' funds at 1st January - restated 141,887 134,055 Profit for the financial year 26,125 26,040 Dividends (14,350) (13,752) Net proceeds of issue of shares 1,144 1,316 Currency translation differences (8,475) (5,772) Shareholders' funds at 31st December 146,331 141,887 Notes: 1. Foreign currency assets and liabilities are translated into sterling at rates of exchange ruling at 31st December. Trading results of overseas subsidiary undertakings have been translated into sterling at average rates of exchange ruling during the year. 2. The analysis of turnover by reference to the geographical location of customers is as follows:- 2002 2001 Â£'000 Â£'000 United Kingdom 38,928 38,869 Continental Europe 106,490 101,406 The Americas 85,385 87,770 Asia, Australasia and Africa 65,560 63,897 296,363 291,942 and by reference to the geographical location of the Group's operations is as follows:- 2002 2001 Â£'000 Â£'000 United Kingdom 89,435 85,733 Continental Europe 127,403 125,589 The Americas 89,768 92,267 Asia, Australasia and Africa 58,843 57,137 365,449 360,726 Intra-group sales (69,086) (68,784) Sales to third parties 296,363 291,942 3. Operating profit, analysed by reference to the geographical location of the Group's operations, is as follows:- 2002 2001 Â£'000 Â£'000 United Kingdom 8,014 8,603 Continental Europe 13,561 13,414 The Americas 11,336 9,498 Asia, Australasia and Africa 9,763 9,288 42,674 40,803 4. Net interest payable:- 2002 2001 Â£'000 Â£'000 Interest payable: Bank loans and overdrafts 1,823 2,478 Other loans 906 1,310 2,729 3,788 Interest receivable (748) (1,010) 1,981 2,778 5. Taxation:- 2002 2001 (Restated) Â£'000 Â£'000 Analysis of charge in period UK corporation tax Current tax on income for the period 8,059 6,069 Adjustments in respect of prior periods 60 122 8,119 6,191 Double taxation relief (5,244) (4,174) 2,875 2,017 Foreign tax Current tax on income for the period 11,357 9,639 Adjustments in respect of prior periods (243) (227) 11,114 9,412 Total current tax charge 13,989 11,429 Deferred tax (102) 587 Tax on profit on ordinary activities 13,887 12,016 No tax was payable on the non-operating item in 2001. For 2002 the Group adopted FRS19 - Deferred Tax and 2001 comparatives have been restated accordingly. The 2001 taxation charge increased by Â£90,000 and 2001 net assets were reduced by Â£959,000. 6. The calculation of basic earnings per share before the disposal of fixed assets is based on earnings of Â£26,125,000 (2001: Â£25,424,000) and the calculation of basic earnings per share after the disposal of fixed assets is based on earnings of Â£26,125,000 (2001: Â£26,040,000), as shown in the Group profit and loss account, divided by the weighted average number of shares in issue during the year of 74,072,923 (2001: 73,808,317). 7. If approved at the annual general meeting on 8th May 2003, the final dividend will be paid on 20th May 2003 to shareholders on the register at 22nd April 2003. 8. The analysis of net assets by reference to the geographical location of the Group's operations is as follows:- 2002 2001 (Restated) Â£'000 Â£'000 United Kingdom 47,178 46,937 Continental Europe 61,271 59,660 The Americas 33,909 47,162 Asia, Australasia and Africa 34,483 35,141 176,841 189,900 Cash at bank and in hand (4,882) (4,312) Capital employed 171,959 185,588 Net debt (22,666) (40,473) Net assets 149,293 145,115 Return on capital employed is based on operating profit of Â£42,674,000 (2001: Â£40,803,000) before deducting goodwill amortisation of Â£557,000 (2001: Â£507,000), and average net assets as shown above excluding net goodwill of Â£10,384,000 (2001: Â£8,958,000) and net debt as shown above. 9. Analysis of changes in net debt. 1st Jan Cash Other Exchange 31st Dec 2002 Flow Non-cash movement 2002 changes Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Cash in hand and at bank 4,312 1,009 - (439) 4,882 Overdrafts (4,099) (2,414) - (281) (6,794) (1,405) Debt due within a year (17,823) 5,581 - (300) (12,542) Debt due beyond a year (37,275) (1,342) (21) 147 (38,491) Finance leases (1,735) 253 - (35) (1,517) 4,492 Current asset investments 16,147 15,918 - (269) 31,796 Total (40,473) 19,005 (21) (1,177) (22,666) 10. Pensions The total pension charge for the Group this year was Â£6,838,000 (2001: Â£5,046,000) of which Â£2,782,000 (2001: Â£2,651,000) relates to the overseas schemes. The Group operates three defined benefit schemes in the UK and one defined contribution scheme. Two of the defined benefit schemes were closed to new entrants during 2001. The defined contribution scheme was established in 2001 to provide pension benefits to new employees. The cost of the UK defined benefit pension schemes was determined using the projected unit and attained age methods following the advice of a qualified actuary. The cost of the defined contribution scheme is equal to the contributions paid. The most recent actuarial valuations in the UK schemes were carried out at either 31st December 2001 or 5th April 2002. The valuations show that the market value of the assets was Â£109,700,000 and was sufficient to cover 98 per cent of the benefits that had accrued to members, after allowing for expected future increases in earnings. This shortfall should be eliminated within the average working lifetime of the employees in the UK. The most important assumption used in the valuations for accounting purposes concern the rate of return on investments and the rates of increases in salary and pensions. It was assumed that investment returns would exceed salary increases by an average of 2.9 per cent per annum and pension increases by an average of 3.9 per cent per annum. Included in other debtors in the Group balance sheet are prepaid pension costs of Â£5,942,000 (2001: Â£5,481,000). In respect of certain overseas schemes the excess of Â£9,323,000 (2001: Â£8,474,000) of the accumulated pension cost over the amount funded is provided in the accounts. Part of this provision relates to the unfunded German defined benefit scheme. The charge for post-retirement benefits other than pensions for the Group in 2002 was Â£107,000 (2001: Â£51,000) and related to health care. Provisions for the benefit obligations at 31st December 2002 amounted to Â£602,000 (2001:Â£610,000) and are included in provisions for post retirement benefits. The future costs of benefits are assessed in accordance with the advice of independent qualified actuaries and are based on assumed discount rates of 6.75%. FRS17 disclosures Whilst the Group continues to account for pension costs in accordance with Statement of Standard Accounting Practice 24 'Accounting for Pension costs', under FRS17 'Retirement benefits' the following transitional disclosures are required: The actuarial valuations of the Group's defined benefit schemes were carried out at various dates between 1st January 2000 and 31st December 2002. The results produced at earlier valuation dates were updated to the 31st December 2002 by independent qualified actuaries. The financial assumptions used at 31st December were: Assumptions weighted by value of liabilities % per annum UK pensions Overseas pensions and medical 2002 2001 2002 2001 Rate of increase in salaries 3.3 3.5 3.4 4.2 Rate of increase in pensions 2.3 2.5 1.8 2.0 Discount rate 5.6 5.8 6.2 6.5 Rate of price inflation 2.3 2.5 N/A N/A Medical trend rate 5.0 6.0 The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice. Assumptions weighted by market value of assets % per annum UK pensions Overseas pensions and medical 2002 2001 2002 2001 Expected rate of return on assets (aggregate) 7.5 7.0 7.6 8.2 Bonds 5.0 5.1 6.0 6.8 Equities 8.2 7.8 9.0 8.5 Other 5.9 5.3 2.7 3.8 The market value of the schemes' assets, which are not intended to be realised in the short term and may be subject to significant change before they are realised, and the present value of the schemes' liabilities, which are derived from cash flow projections over long periods and thus inherently uncertain, at 31st December 2002 were: UK pensions Overseas pensions & Total medical 2002 2001 2002 2001 2002 2001 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Total market value in aggregate 91,100 109,600 11,900 16,700 103,000 126,300 Bonds 15,900 22,900 3,800 500 19,700 23,400 Equities 70,100 77,800 7,300 14,400 77,400 92,200 Other 5,100 8,900 800 1,800 5,900 10,700 Overseas UK pensions Total Pensions & medical Â£'000 Â£'000 Â£'000 Total market value of schemes' assets 91,100 11,900 103,000 Present value of the schemes' liabilities (124,400) 27,300 (151,700) Deficit in the schemes (33,300) (15,400) (48,700) Related deferred tax asset 10,000 3,300 13,300 Net pension liability (23,300) (12,100) (35,400) If the above amounts had been recognised in the accounts, the Group's net assets and profit and loss account reserve at 31st December 2002 would be as follows:- Total Â£'000 Net assets 149,293 Unprovided pension liability (33,700) Adjusted net assets 115,593 Profit and loss account reserve 87,328 Unprovided pension liability (33,700) Adjusted profit and loss account reserve 53,628 The net pension liability of Â£35,400,000 calculated in accordance with FRS17 compares with the pension provision currently recorded of Â£1,700,000. 11. The financial information set out above does not constitute the company's statutory accounts for the years ended 31st December 2002 or 2001 but is derived from those accounts. Statutory accounts for 2001 have been delivered to the registrar of companies, and those for 2002 will be delivered following the company's annual general meeting. The auditors have reported on those accounts, their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange

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