SYLTONE PLC 
 
REPORT AND ACCOUNTS 2003  Contents
Page
Financial Highlights 1
Chairman’s statement 2
Chief executive’s statement 4
Financial review 9
Board of Directors 13
Officers and advisers 14
Group structure 15
Directors’ report 16
Remuneration report 18
Statement of corporate governance 22
Statement of directors’ responsibilities
in relation to the accounts 24
Report of the independent auditors to the members
of Syltone plc 24
Consolidated profit and loss account 25
Consolidated balance sheet 26
Consolidated cash flow statement 27
Statement of consolidated total recognised
gains and losses 28
Reconciliation of movements in consolidated
shareholders’ funds 28
Company balance sheet 29
Notes to the accounts 30
Historical summary 50
Group five year record 51
Notice of meeting 52
Financial calendar
Annual General Meeting 4th September 2003
Final dividend payable 3rd October 2003
Interim results announcement 20th November 2003
Interim dividend payable February 2004
End of financial year 31st March 2004 2003 2002
£’000 £’000 Increase
Turnover 78,798 75,464 +4.4%
Profit before tax and exceptional items 4,803 4,148 +15.8%
Profit before tax 4,803 3,508 +36.9%
Profit after tax 3,022 2,014 +50.0%
Net assets 20,510 19,985
Net borrowings 10,965 14,456
Profit before tax to turnover 6.1% 4.6%
Profit before tax to net assets employed 23.4% 17.6%
Gearing (net borrowings to net assets) 53.5% 72.3%
Interest cover (times) 5.7 4.0
Earnings per ordinary share 12.10p 7.99p
Diluted earnings per ordinary share 12.06p 7.96p
Dividends per ordinary share 7.35p 7.35p
Dividend cover (times) 1.65 1.09
Average number of people employed 840 875
Annual Report 2003 1
Financial Highlights At the interim stage, the Board expressed confidence that the second half of the year would be substantially
more profitable than the first and I am pleased to report that such a view was well founded.  Profit before tax for
the year has increased by 36.9% from the previous year to a total of £4,803,000 (2002: £3,508,000).  Earnings
per share have risen to 12.10 pence (2002: 7.99 pence), an increase of 51.4% over the prior year, with a much
reduced tax charge of 37.1% (2002: 42.6%).  Increased profitability, together with a continued focus on working
capital management, has generated improved operating cash flow of £3.26 million, up 52.4% compared to the
year before.  Reduced interest and tax payments, together with a lack of major capital expenditure
requirements following the completion of the new Group ERP system, have significantly improved the Group's
net free cash flow before disposal proceeds and financing by £5.21 million over the previous year.  As a
consequence, Group net borrowings have fallen appreciably to £10.97 million at 31 March 2003 (2002: £14.46
million) with year end gearing reduced to 53.5% (2002: 72.3%).
Dividend
The Board has decided that the final dividend should remain unchanged at 5.10 pence per ordinary share
(2002: 5.10 pence per ordinary share) giving a total payment for the year of 7.35 pence per ordinary share
(2002: 7.35 pence per ordinary share).  At this level the dividend is covered 1.65 times (2002: 1.09 times) which
is just below our target range of 1.8 to 2.2 times.
Operational Review
It is pleasing to be able to report an improved operating performance for Syltone during 2002-03 despite the
difficult market conditions which the main businesses of the Group have been experiencing.  On slightly
increased sales the company has again achieved a healthy improvement in operating margin up to 7.4%
(2002:6.2%) and reached its best ever profit per employee figure.  International sales of commercial vehicles
which is the key factor in demand for Syltone transportation equipment, have at best been flat during the year,
whilst some markets have shown a significant decline.  The final actions of the Group's reorganisation were
completed during the year and the results have benefited considerably this year from having a more stable,
committed management at all levels throughout the business.
Transportation Division
The General Purpose operation has shown improved results and has been buoyed, in particular, by the
increasing market acceptance of its new blower products, the XK range.  The Highways and Utilities business in
the UK has had a quieter year but Airdrive products have been introduced into Australia to positive effect.
Priestman Access Platforms has had an excellent year with order intake reaching higher levels than ever before
and Webster Drives has achieved great success in winning major orders, the fruits of which will be seen in the
years to come.  Oil has been somewhat subdued with better business flows from France offsetting a shortage
of major opportunities elsewhere.
Fluid Transfer Division
Our German manufacturing facility has been at full capacity this year as significant orders have been won in the
eastern parts of Europe and central Asia.  Operating performance has benefited accordingly and the division
has shown a much improved result compared to previous years.  The new distribution arrangements in North
America for chemical loading arms now have had a full year of trading and have enhanced operating
performance considerably, although less than anticipated at the start of the year because of slowness in US
markets.
Annual Report 2003 2
Chairman’s statement Europe
Despite the flat conditions in transportation markets across Europe, results have improved considerably as
General Purpose products have found increasing acceptability and access platforms have done well in a
buoyant UK market.  In addition to the excellent returns from the German fluid transfer operations, activity in
Syltone's French operations has been at an extremely high level with good performances from all business
segments.
Americas
Transportation businesses in the USA have continued to suffer from a declining market for new trucks, which
has shown a further reduction on the low levels of activity experienced in the previous year.    Sales of fluid
transfer equipment increased substantially over levels in prior years as a consequence of the new distributor
agreement for chemical loading arms but the market itself was subdued resulting in lower growth than planned.
Operations in Canada were at a slightly lower level than in the previous year primarily as a consequence of
softness in the market for bus fuelling systems throughout North America.
Rest of the World
Activity in Australia improved somewhat over the low levels of the previous year.  Encouragingly, the new XK
blower range was launched in Australia during the year with good market acceptance and new products and
systems to serve the vehicle on-board power market in Australia were demonstrated and initial orders were
won.  Syltone's company in Malaysia made a positive contribution to the group result in a quiet market, but the
small Brazilian business suffered with the erratic exchange rate and a generally difficult business environment.
Acquisitions
Since the end of the year, we have been pleased to announce three small additions to our business in the USA.
The first of these was the acquisition of the 5% of Syltone Industries LLC that Syltone plc did not previously own
for a consideration of $709,000 in cash.  The second and third were the acquisition of certain assets of CE-
Loading Systems Inc and Aarig Terminal Systems Inc for a combined net cash consideration of $1,110,000,
which is subject to adjustment depending on inventory levels at close.  Both are leading companies in the
provision of new loading arms and aftermarket services for the marine loading arm market in North America.
This step will considerably enhance the Group's presence in this niche market, in particular for the provision of
aftermarket services.
The search for selective opportunities to acquire businesses that will reinforce the Group's position within its
current market sectors will continue.
Prospects
Syltone has entered the new financial year with a stronger order book than that of twelve months ago.  This
should help in the achievement of a better balance between this year's six monthly trading periods, as a
stronger first half performance is expected over that of last year.  Even though it is unlikely that in the short term
there will be an upturn in market conditions, management is confident that there is still more potential to
enhance operating returns from the core business.  Efforts will be intensified in the building of profitable market
share and, when there is a stimulus to demand, the board is confident that Syltone is well positioned to take
advantage of it.
Peter Andrews
Chairman 24th June 2003
Annual Report 2003 3
Chairman’s statement 4 Annual Report 2003
Chief Executive’s statement
OPERATIONAL REVIEW
A large proportion of Syltone’s business depends on international commercial vehicle markets and, in most
major economies served by Syltone, purchases of these vehicles declined again last year.  Therefore it is most
encouraging to have achieved a significant improvement in the performance of the Group.   Group turnover
rose 4.4% to £78.8 million and operating margins to 7.4% from 6.2% the year before.  The value of orders won
during the year increased by 6.5% and the order book at 31 March 2003 was 19% higher than at the previous
year end.
Transportation Division
Our main transportation-related manufacturing businesses are located in the UK, France and the USA with
vehicle fitting operations and sales organisations in many other countries throughout Europe and the rest of the
World.  They are focused on the design and
manufacture of equipment for handling bulk
product on commercial vehicles in either dry or
liquid form, the provision of on-board power,
the design and manufacture of access
platforms and the design and manufacture of
power take-offs (“PTO’s”), axles and
gearboxes for demanding applications both
commercial and military.
In Europe, the Transportation Division has
shown an improved performance compared to
the recent past.  The management has now
settled down well after a period of
restructuring and has focused on building
upon the Group’s market-leading position.
Our sales operations in France have had an
outstanding year with activity in the Oil sector
in particular continuing to be very buoyant.  Since the restructuring carried out two years ago, many of the
Group-built products supplied into this market are manufactured in the Emco Wheaton factory in Margate and
the success of this operational change had a considerable impact on the performance of Syltone in the year.
Elsewhere in the Oil sector, activity was at a lower level than the year before. In particular, there was no benefit
from major international opportunities during the course of the year. The Margate factory is highly automated
and is able to respond rapidly to the re-equipping of major road tanker fleets when, for example, a major
national programme of conversion to bottom loading of petroleum tank trucks takes place. Our small
electronics business in Denmark, Sam System,
improved its throughput and profitability by a modest
amount in the year.
Operations in Northern Europe - the Netherlands,
Germany, Belgium and Poland - succeeded in
growing volume and market share in a flat or declining
market.  These businesses have benefited particularly
from the increased market acceptance of the new XK
range of blowers introduced shortly before the start of
the financial year.  This growth has in its turn had a
highly significant impact on our main manufacturing
operations in Bradford where activity levels rose 
D9000 Compressor and hydraulic drive system on DAF vehicle
API valves fitted, complete with guard bar and product return
system 5 Annual Report 2003
Chief Executive’s statement
sharply in the second half of the financial year and have remained at a high level since.
Activity levels in Southern Europe have shown an upturn.  The operation in Spain based in Madrid and with
fitting shops both in Madrid and in Tarragona near Barcelona has been revitalised during the course of the year
and has made excellent progress in addressing the market in Spain for blowers and hydraulic drives.  Our
business in Italy has also improved considerably following the introduction of new management and offers great
potential for the development of sales within a large market.
Unlike many of its competitors, the XK range was produced specifically for the dry bulk road tanker market and
was designed to show superior product delivery capability with high
reliability, low power consumption and low noise characteristics. This
development has proved to be most successful and its success has
made a major contribution to the encouraging results achieved by our
Springmill Street factory in Bradford.
Considerable effort has also been made by this sector of our business
to improve factory operating efficiencies, to lower cost and to reduce
inventory.  Consequently, focus has been given to the worldwide
search for more economical sources of supply.  Both improved
profitability and reduced capital employed in the business have been a
positive outcome of this approach.
Perolo, our French manufacturing business, had an eventful year
having experienced a disruptive fire at the end of September 2002.
It is pleasing to report that the employees at Perolo took this event in their stride and were quickly back in
production.  Perolo now has new senior management in place and continues to address the ISO-tank container
business, which remains depressed.
Our Highways and Utilities and Priestman
access platform businesses are centred
on the Cross Lane facility in Bradford in
the UK. Although the year saw the
substantial completion of the major
programmes for Transco and BT , it also saw
the launch of the first reliable system for the
provision of on-board power for front-wheel
drive vehicles and achieved major
successes for fleet deliveries for the AA.
The Priestman business has had an
extremely strong year and has provided
considerable encouragement both by its success in the market place and by the ability of our factory personnel
to find better and more efficient means of assembling the machine and sourcing the parts.  Output grew by over
50% compared to the previous year and significant cost reductions were achieved.  The most significant order
secured during the year was that from the Irish utility Eircom, whose order for 76 11.5 metre elevating platforms
was the largest order for access platforms ever won for Priestman products under Syltone’s ownership.
Webster Drives has had a good year, although with profitability just below the level of the year before.  Progress
has been made with market penetration of the company’s range of clutch PTO’s but the operating highlight of
the year has been the success of the company in winning an order for the manufacture of axles for a major
defence-related application which will commence in the second half of the 2003-04 financial year.  It is
expected that this new opportunity will have a considerable impact on the activity level and profitability of
Webster Drives in future years.
Last year’s annual report made mention of the increasing focus Syltone intended to give to its aftermarket
activities.  The operations are based at Cross Lane at Bradford and were carefully restructured a year ago to
XK 18 Compressor
XK 18 Application in Australia Annual Report 2003 6
Chief Executive’s statement
form teams dedicated to customer support and care. Customer service has improved dramatically and the
consequence to Syltone can clearly be seen in increased aftermarket activity, enhanced contribution and
significantly improved opportunities for the future.
In North America, Syltone’s transportation business is centred on the manufacturing plant in Louisville,
Kentucky where a range of blowers and hydraulic drive equipment is manufactured.  It is from the Louisville
offices that the Group’s North American distribution network is managed and through which the Group’s
products manufactured, both locally and in Europe, are distributed into North America.  Activity last year in the
North American transportation business was disappointing.  Commercial vehicle sales were at a significantly
lower level than even the depressed levels of the year before and Syltone’s sales were correspondingly reduced.
Intense competitive pressure continues and the decline in the value of the US Dollar relative to Sterling has
caused a squeeze on the margins of this business.
Fluid Transfer Division
The fluid transfer division is involved with the design and manufacture of equipment for loading and offloading
liquids from ships, railcars and road vehicles and the design and manufacture of dry-break couplings.  
Our European facilities for the manufacture of loading arms of all types are located at Kirchhain in Germany.  In
North America, loading arms for use with railcars and road vehicles are manufactured in Louisville, Kentucky
and, since our new acquisitions were announced in May 2003, we manufacture marine loading arms in
Houston, Texas.  In Canada, our company specialising in the manufacture of dry-break couplings is located in
Toronto.  Distribution of fluid transfer products is also carried out through major group operations in France and
Australia.
The performance of the division has been encouraging.  Volumes grew substantially throughout the year in each
of our major markets.  The focus by our German operation on developing markets in Russia and adjacent
countries both in Central Asia and in the Baltic States has proved to be most rewarding during the year with
major contracts having been won and delivered.  Projects still in the order book at the year end included the
prestigious Wysotsk project for Lukoil, the Russian oil major, which is the largest ever loading arm project won
by Syltone.
In the USA, activity level increased following the addition of a major new distributor for chemical loading arms
early in 2002.  This relationship has proved very fruitful, although tempered by the subdued US economy, but
Bottom loading arm rack Annual Report 2003 7
Chief Executive’s statement
we are confident now that our loading arm division is very well positioned for the future.
One of the most positive aspects of the fluid transfer operation was in our business based in France where
developments both in that country itself and in French influenced regions of North Africa provided strong growth
for our activities.
Emco Wheaton Corporation, our Canadian dry break coupling business, continued to grow its strong position
in the supply of devices to the bus and utility vehicle market throughout North America.  Business was quieter
during the year as spending by American public authorities remained at lacklustre levels.  Nevertheless, the
company achieved a creditable result albeit somewhat below the level of the previous year.
STRATEGIC REVIEW
Syltone’s strategy is to focus on products and services embraced within the two main business segments of
equipment for the transportation market and for loading and offloading liquids from one mode of transportation
onto another or into store.  The Group is constantly developing and researching additional products or services
which will add to its business portfolio or competence, or which will add geographical reach to the Group’s
product offerings.
Key assets for Syltone are its well-known brands including Airdrive, Webster, Drum, Emco Wheaton, Perolo and
Priestman for transportation equipment and Emco Wheaton, and now augmented by Syltone Marine, Aarig and
CE-LSI for fluid transfer equipment.  These names are deemed to be critical to the continuing success of the
business.  In addition to the sale of products under the Group’s owned brand names, the sale of other,
complementary, high quality products also features prominently in the Group’s strategy to enable full benefit to
be taken from the Group’s well-developed international distribution network. Underpinned by the nine key
engineering and manufacturing centres the leveraging of this international distribution network provides the
platform for the furtherance of the Group’s objective of profitable growth.  
A brief overview of the strategic strengths and objectives of our two divisions is set out below.
Transportation Division
Our key operating strategy is to focus firmly on the needs of the
end user of our equipment and to develop our selling resource
accordingly.  Frequently, Syltone’s sales are actually made to a
tank builder or intermediary but despite this, it is to the end-
user that the benefits of the equipment and its support services
are primarily sold.  This enables us not only to differentiate
clearly our products’ unique capabilities in relation to those of
our competition but also to extend our sale to incorporate
where possible a complete system of products to meet the
customer’s requirements more exactly.  It also permits Syltone
to make use of another of its key competitive strengths, its
aftermarket support programme, which provides service
contracts and extended product support to users of Syltone
equipment.
To further Syltone’s close contact with end-users, company-
owned fitting shops are located in ten key sites throughout
western and central Europe to provide each customer with the
option to have equipment supplied by Syltone to be fitted exactly in accordance with the manufacturer’s best
practices.  Such close contact to the end-user provides operating experience to Syltone which is unique in the
industry.
DA 11.5 metres access platform Key action plans for the coming year are set out below.
• Increase the rate at which new products are released into the market by reducing the time between product
conception and launch.
• Develop the already successful aftermarket programme with new
product offerings and into new regions.
• Extend the range of offerings of Airdrive- and Priestman-branded
products into new geographical areas.
Fluid Transfer Division
Focus on the end-user is every bit as important to our Fluid Transfer
Division as it is to Transportation.  In this division, there is less likelihood
of there being an intermediary in the sale process but the paramount
importance of product excellence and product differentiation remains
the same.
The smaller, distribution loading arms for road vehicle and railcar
applications are manufactured in both Europe and North America since
reduced manufacturing lead times have become increasingly important and intercontinental transportation
would be prohibitively expensive.  The larger, marine loading arms have hitherto been manufactured only in
Germany leaving a strategic gap in serving key markets in North America for both new product and, importantly,
aftermarket services.
This strategic gap was filled in May 2003 by the establishment of our own company in North America founded
on the assets and brand names of an existing well-known competitor and the former Emco Wheaton licensee.
We believe this will enable Syltone to draw as close to its prospective customer base in the New World as it
currently does in the Old.
Key action plans for the coming year are set out below.
• Develop the new North American capability for manufacture and support of marine loading arms into a
major competitor throughout North America.
• Extend the existing European aftermarket programme into new regions.
• Continue the internationalisation of the division's product offerings to ensure that the division retains its
position as a leading supplier of marine and distribution loading arms worldwide.
Trevor Murch
Chief Executive 24th June 2003
Annual Report 2003 8
Chief Executive’s statement
Hydrapak – oil cooler
Marine loading arms Annual Report 2003 9
Financial Review
Operating Results
The highlights of the operating results for 2002/03 are shown on page 1.  The full profit and loss account,
balance sheet and cash flow statement and associated notes are shown on pages 25 to 49.
Turnover is 4.4% ahead of that reported last year.  In like for like currency terms, translating at the respective
31st March closing rates, which have seen the US Dollar depreciate 11% whilst the Euro has appreciated by
11% over the year, turnover is up 1.2% on the previous year.
Sales into Europe appreciated in real terms by 11.5%. France saw real terms growth of 15% on the back of a
strong demand for oil products and Germany a more modest rise of 4.5%.  The other European countries most
notably Netherlands, Spain and Italy improved by 12% over the previous year very much as a result of sales of
the new XK blowers.  UK sales fell £2.65m from last year's level, primarily due to the completion of the Highways
& Utilities division's major contracts for Transco and BT. This aggregate UK fall hides a 10% improvement in UK
sales at Webster Drives in Bolton.
Sales into North America improved 11% in real terms primarily as a result of increased Fluid Transfer sales
deriving from the addition of a major new chemical loading arm distributor.  This masked a disappointing year for
Transportation sales where market conditions remain depressed.
Turnover in the rest of the world was 8% down in real terms on last year as oil market sales from the UK and USA
were lower and currency devaluation in Brazil increased the cost of sales into that country.  Strong growth was
however recorded in Australia and sales of Perolo Fluid Transfer equipment into North Africa and Fluid Transfer
loading arms generally were both well ahead of last year.
The full translation impact of the movement on turnover by geographic destination is illustrated by the table
below.  The middle column shows this year's turnover at last year's exchange rates.
2003 2003 2002
At Actual At 2002 At Actual
Exchange Rate Exchange Rate Exchange Rate
£’000 £’000 £’000
UK 21,556 21,556 24,207
France 10,777 9,573 8,305
Germany 6,773 6,011 5,756
Other European 13,362 12,082 10,753
North America 15,340 16,579 14,952
Other 10,990 10,604 11,491
Total 78,798 76,405 75,464
Turnover for the second half was £41.7m (2002: £39.7m) which, as last year, represents close to 53% of the
turnover for the full year.  As in previous years, whilst turnover is apparently only marginally biased in favour of the
second half, the operational gearing of the business provides a much heavier bias on operating profit towards
the second half.  This year this effect was further enhanced by margin improvements achieved by the increasing
focus applied to aftermarket activities, particularly in the UK, and the success of a number of buying initiatives
and the consequent resourcing of the supply of certain raw materials and components.  The operating margin
for the second half was 9.5% (2002: 7.1%) leaving an operating margin for the full year of 7.4% (2002: 6.2%).
UK Pension Cost
As reported last year the employer's contribution on the larger of the Group's two UK defined benefit pension
schemes has increased to 20%.  Payments at this level, which are designed to recover the past service deficit
as well as fund current service, are significantly in excess of the UK pension cost charged to the profit and loss
account.  The charge to the profit and loss account in respect of the two UK defined benefit pension schemes
as calculated under SSAP24 was £854,000 (2002: £995,000) an amount which is £493,000 (2002: £835,000)
less than the employers' cash contributions paid into the schemes.  Had the profit and loss account charge
been calculated under the rules of the new accounting standard FRS17 it would have been £48,000 lower than
the calculation made under SSAP24.
The Group's pension commitments are fully disclosed in notes 26 and 27 and the funding position of the two
closed UK defined benefit schemes is further analysed later in this report.
Interest
Strong cash flow benefiting from increased operating cash flow and lower capital expenditure and tax payments
has reduced net borrowings through the year.  As a consequence, net interest payable has reduced by
£166,000 or 14%.  Interest payable was covered 5.7 times (2002: 4.0 times). Profit Before Tax
Profit before tax is £4,803,000 (2002: £3,508,000).  Last year's profit before tax before exceptional restructuring
costs was £4,148,000 and therefore this year's performance represents a 16% increase on that figure following
on from a 10% increase achieved in the previous year.
Taxation
The tax charge for the year is £1,781,000 (2002: £1,494,000); an effective rate of 37.1% (2002: 42.6%).  Last
year's tax charge included full provision for unrelieved ACT of £105,000, which if not made would have left a tax
charge of 39.5% for that year.  The reduced tax charge for this year is due in part to the Group's restructuring
and also to the improved profitability providing for the utilisation of tax losses being carried forward.
Earnings Per Share
Earnings per share have increased by 51% in the year to 12.10p per ordinary share (2002: 7.99p per ordinary
share).
Dividend
It has been Board policy to maintain the dividend during the Group restructuring that has been carried out over
the last two years.  The proposal is that the current dividend is maintained this year.  The improved profitability
achieved this year now has the dividend covered 1.65 times (2002: 1.09 times) but still a little short of the
Group's desired target range of 1.8 to 2.2 times.
Cash Flow
Cash flow from operating activities is £9,475,000 (2002: £6,217,000) an increase of 52%.  This has been
achieved not only by the improved profitability, but also by the major drive to reduce working capital particularly
stocks which have fallen during the year in like for like currency terms by £1,669,000.  One of the core objectives
of the simplification of the Group structure was to reduce stock holding.  The success of this action since the
reorganisation was announced in July 2000, whereby stock has reduced by nearly 1/5th, is shown below:-
Year Ended 31st March
2003 2002 2001 2000
£’m £’m £’m £’m
Turnover 78.8 75.5 75.7 77.4
Stocks 11.5 12.9 13.2 14.2
The operating cash flow includes payments into the main UK pension scheme that were £0.5m (2002: £0.8m)
greater than the profit and loss account charge.  These excess payments are being made to fund the past
service deficit and are considered in more detail later in this review.
Interest payments have reduced as borrowings have been repaid.  Taxation payments have fallen primarily due
to taxable profits being relieved against tax losses being carried forward in certain fiscal jurisdictions.
Capital expenditure in the year at £1,271,000 (2002: £2,329,000) was low by recent standards.  This however
reflects the completion of a number of major projects rather than any constraint of necessary spending.  Recent
years have included capital expenditure in relation to the merger of the USA operations, the new Drum
International factory, millennium IT expenditure and most recently the new Group ERP System.  As a
consequence of the high level of capital expenditure in previous years, the Group's core facilities and systems
are now of such quality that capital expenditure, looking forward over the medium term, should remain less than
depreciation.
The strong operating cash flow together with the reduced interest, taxation and capital expenditure payments
described above have produced a net cash inflow before financing and subsidiary disposal proceeds of
£4,374,000 (2002: £(837,000)); effectively, a free cash flow before financing and disposal proceeds £5,211,000
better than last year.
As a consequence, in aggregate the Group's net borrowings have reduced by £3,491,000 during the year to
stand at 31st March 2003 at £10,965,000 (2002: £14,456,000).  Gearing at 31st March 2003 was 53.5%
(2002: 72.3%).
Since the year end the Group has acquired for cash the minority interest in Syltone Industries LLC based in
Louisville, Kentucky for $709,000 and the business and assets of two leading manufacturers of marine loading
arms in Houston, Texas and Gulfport, Mississippi for a combined net cash consideration of $1,110,000.  Had
these acquisitions taken place at 31st March 2003 then Group net borrowings would have been £12,116,000
and gearing 59.1%.
Annual Report 2003 10
Financial review Annual Report 2003 11
Treasury
The Group is financed through a mixture of retained profits and medium term bank borrowings.  The Group's
treasury strategy is to reduce exposure to significant movements in foreign exchange and interest rates as far as
commercially possible and to ensure an appropriate age profile of borrowings.
The Group enters into derivative transactions to manage the interest rate and currency risks arising from the
Group operations and sources of finance.  The derivatives used throughout the period under review have been
exclusively interest rate swaps and forward foreign exchange contracts. It is Group policy only to use these
derivatives to cover underlying exposures that arise in the normal course of the Group's stated commercial
activities.  No purely speculative trading in these financial instruments is undertaken.
Interest Rate Risk
The Group borrows to finance its activities.  Bank loans are taken out at fixed and floating rates and bank
overdrafts are by their nature subject to floating rates.  The Group takes out interest rate swaps to provide the
desired interest rate profile.  It is Group policy to have approximately 50% of bank loans subject to fixed rate
cover.  Additional fixed rate cover above this level may be taken if the rates applicable to the relevant period and
currency interest rate swaps are considered to be commercially sound for the Group at that time.  As overdrafts
provide short term flexibility to the Group's liquidity, fixed rate cover is rarely taken out on overdraft balances.  At
the year end 60% of the Group's borrowings were at fixed rates of interest.
Liquidity Risk
The Group's principal borrowings were last renegotiated at 1st April 2002.  Broadly half the facility matures in
three years from that date with the other half being repaid in equal installments over the 5 years following that
date.  Other longer term borrowings have been taken typically to finance long term property assets.
Foreign Currency Risk
The Group faces currency exposure on:-
(i) translation of profits earned in overseas subsidiaries
(ii) translation of intra-group lending almost exclusively from the UK holding company to overseas
subsidiaries.
(iii) translation of net investments in overseas subsidiaries
(iv) trading transactions undertaken by subsidiaries in currencies foreign to their functional currency.
The Group does not normally hedge its exposure to the translation of overseas profits as these are an
accounting rather than a cash exposure.  However, in respect of intra-group dividends if there is a material time
lag between declaration and payment then cover by way of forward exchange contract may be taken.
The UK holding company aims to cover as close to 100% as possible of the exposure on intra-group lending to
overseas subsidiaries.  This cover is achieved by taking on borrowings in the exposed currency either in
overdraft or loan form depending on the period of the intra-group funding.  Achievement of the 100% cover
objective is denied only by no borrowing market being available in certain currencies.
The Group's policy is to arrange its borrowing currency profile as far as practical to hedge the translation
exposure on its net investments in overseas subsidiaries and also to hedge the majority of budgeted transaction
exchange risks forward with the use of forward exchange contracts.  Forward exchange contracts are only
taken out when the timing of the cash flows can be predicted with reasonable certainty and it is commercially
sensible to do so.  In addition, the Group's structure with principal manufacturing facilities in USA, France and
Germany as well as the UK allows an element of natural hedging of some cash flows.  At the year end the
principal transactional exposures covered by forward contracts were USA purchases from the UK, the net
transactional receipt of Euros into the UK and Australian purchases from the USA.  All principal transactional
exposures continue to be monitored and short term contracts are taken when exchange rates are perceived to
have moved in our favour.
Pensions
The Group's pension commitments are set out in notes 26 and 27.  The majority of the Group's pension
arrangements are defined contribution schemes, however, in the UK and Germany the Group operates defined
benefit schemes.  All these defined benefit schemes are closed to new members.
The German scheme is partially funded, the full net liability being held on the subsidiary company Emco
Wheaton GmbH's balance sheet.  The remaining active members are either under 30 years of age or over 55
years of age.  At 30 the younger members transfer to the new defined contribution scheme whilst the over 55's
continue until retirement.
The Group operates two UK defined benefit pension schemes, the larger Syltone scheme and the smaller
Emco Wheaton scheme.  The Syltone scheme is underfunded and the Emco Wheaton scheme is overfunded.
The exact level of under and over funding depends on which valuation basis is applied.  No single valuation
Financial review basis can adequately summarise the complexity of even a small pension scheme, however, those required to be
disclosed are fully described in notes 26 and 27.  The benefits provided by the two schemes are different and in
order to provide common benefits across the UK workforce the benefits provided under the Emco Wheaton
scheme are being upgraded to the Syltone scheme level as part of a merger of the two schemes.  Part of the
surplus on the Emco Wheaton scheme is being applied for this purpose.  The two schemes will merge with
effect at 30th June 2003 being the year end of the larger Syltone scheme.
Upon the merger, the pension contribution holiday enjoyed by the Group on the Emco Wheaton scheme since
the acquisition in 1995 will end and employers' contributions will commence at the same rate as for the Syltone
scheme.  It is projected that this action will increase the cash amount paid into the UK pension schemes by the
Group by £250,000 on an annual basis.
The Group continues to account for defined benefit pension schemes in accordance with SSAP24 although full
disclosure is made in note 27 of the accounting entries that would be required by FRS17.  The profit and loss
account charge under both bases for the two UK schemes for the year to 31st March 2003 is not materially
different with SSAP24 giving a marginally higher cost:-
SSAP24 FRS17
Basis Basis
£’000 £’000
Service Cost 926 930
Interest/net return (72) (99)
P & L Charge for the year 854 831
FRS17 goes further than SSAP24 and attempts to quantify the actuarial surplus or deficit of a scheme.  This is
done by taking an actuarial calculation of scheme liabilities and discounting them to provide a present value and
then comparing this to a market value snapshot of the investments.  Both these numbers are potentially subject
to great volatility.  Assets values are subject to short term market movements whilst liabilities depend on the
choice of a discount factor.  The actuarial deficit reported by FRS17 on the Group's defined benefit pension
schemes has increased significantly from last year:-
31st March 2003 31st March 2002
£’000 £’000
Market value of scheme assets 24,976 28,321
Discounted value of scheme actuarial liabilities (39,595) (33,408)
Scheme deficit (14,619) (5,087)
Related deferred tax asset 4,451 1,591
Net pension liability (10,168) (3,496)
Liabilities have increased by £6,187,000 but of this increase only £937,000 relates to the current years' service
cost;  £4,274,000 relates to changes in assumptions, most notably the discount factor.  The Scheme actuary
has a range of "acceptable" discount factors for the Board to select from for the year ended 31st March 2003.
A 0.25% variance in the discount factor selected increases or decreases the reported liabilities of the Syltone
scheme by £1.3m.
The market value of the scheme assets has fallen by £3,345,000 despite the Group contributing £1,657,000
during the year.  Market movements can be extremely volatile and, by way of example, of the assets valued at
31st March 2003 at £24,976,000, £17,840,000 are under management by Schroders and in the thirty days
immediately after the year end the market value of these investments increased by £1,480,000.
Accordingly, had a discount factor 0.25% greater been selected and the market value of the investments been
as at 30th April 2003 rather than 31st March 2003 then the FRS17 reported scheme deficit would have been at
least £2,780,000 (19%) smaller.  In the context of this potential short term volatility it should always be
remembered that the pension scheme liabilities concerned crystallise in the course of the next 60 years or so.
Andrew Hartley
Finance Director 24th June 2003
Annual Report 2003 12
Financial review Annual Report 2003 13
Peter Andrews, aged
56, has been Chief
Executive of a number
of international
engineering companies
both in Europe and the
US. Most recently he
has been Chairman of
Sterling Fluid Systems,
a large multinational
engineering group.
*
Trevor Murch, aged 53,
was previously Chief
Executive of Hadleigh
plc and before that
Managing Director of
major subsidiaries of
Rolls Royce plc and
Howden Group plc.
Andrew Hartley, aged
47, qualified as a
chartered accountant
with KPMG. Prior to
joining Syltone as
Group Financial
Controller in 1992 he
was Finance Director
of Encon RGS
Insulation Ltd. He
joined the Board as
Finance Director in
1997.
*Member of the Nominations Committee
**Member of the Remuneration Committee
***Member of the Audit Committee
Richard Templeton,
aged 58, senior non-
executive director,
retired as a director of
Robert Fleming & Co
Ltd in April 2000 after
29 years’ service
primarily in corporate
finance. He is
Chairman of the West
of England Trust Ltd.
*
**
***
John Barnsley, aged
54, was UK Managing
Partner of
Pricewaterhouse
Coopers and until his
recent retirement,
Global Leader of
Business Process
Outsourcing. He is
currently also a director
of Grainger Trust plc
and Northern Investors
Company plc.
*
**
***
David Speirs, aged 58,
is an experienced
international executive
with a wealth of
relevant industrial
experience. Former
Automotive Group
Chief Executive of
BTR plc, Chairman
and Chief Executive of
Dynacast International
Ltd and Main Board
Director of Coats
Viyella plc.
*
**
***
Peter J Andrews M.A.
Chairman
Richard Templeton
John C Barnsley LLB, F .C.A.
David L Speirs B.Sc.(Hons.),
Ph.D., C.Eng, M.I.M.
Trevor J Murch M.A., M.B.A.,
A.C.M.A.
Chief Executive
Andrew Hartley B.A.(Hons.),
A.C.A.
Finance Director and  Secretary
Executive Directors Non-Executive Directors
Board of Directors Annual Report 2003 14
SECRETARY A Hartley B.A.(Hons.), A.C.A.
REGISTERED OFFICE Springmill Street
Bradford
West Yorkshire
BD5 7HW
REGISTERED  NUMBER 736644
AUDITORS KPMG Audit Plc
1 The Embankment
Neville Street
Leeds LS1 4DW
ADVISERS ING Barings Investment Bank
60 London Wall
London
EC2M 5TQ
BROKERS Williams de Broë Plc
6 Broadgate
London
EC2M 2RP
REGISTRARS Northern Registrars Ltd.
Northern House
Woodsome Park
Fenay Bridge
Huddersfield HD8 0LA
SOLICITORS Addleshaw Goddard
Sovereign House
Sovereign Street
Leeds LS1 1HQ
Gordon Cranswick
14 Piccadilly
Bradford
BD1 3LX
Officers and advisers Annual Report 2003 15
PARENT COMPANY
Syltone plc Co-ordinates and controls the activities of the Syltone Group.
Country of % of equity 
Incorporation owned by Group
INTERMEDIATE HOLDING COMPANIES
* Syltone Industries plc England 100.0
Syltone Industries GmbH Germany 100.0
Syltone Industries SA France 100.0
PRINCIPAL SUBSIDIARY COMPANIES
Manufacture of components and systems for truck loading and discharge
Drum International Ltd England 100.0
Emco Wheaton Corp Canada 100.0
Emco Wheaton GmbH Germany 100.0
Emco Wheaton UK Ltd England 100.0
Perolo SA France 100.0
Sam System A/S Denmark 100.0
Syltone Industries LLC USA 100.0
Syltone Marine Inc. USA 100.0
Webster Drives Ltd England 100.0
Sale and installation of systems for truck loading and discharge
Syltone Australia Pty Ltd Australia 100.0
Syltone Belgium NV Belgium 100.0
Syltone Deutschland GmbH Germany 100.0
Syltone do Brasil Ltda Brazil 100.0
Syltone France SA France 100.0
Syltone Industria Iberica SA Spain 100.0
Syltone Italia s.r.l Italy 100.0
Syltone (Malaysia) Sdn Bhd Malaysia 030.0
Syltone Nederland BV Netherlands 100.0
Syltone Polska Sp.z o.o. Poland 100.0
Syltone UK Ltd England 100.0
Although Syltone is not able to fully own Syltone (Malaysia) Sdn Bhd under Malaysian law, it controls the
management of the company and its results have therefore been wholly consolidated in accordance with the
requirements of Financial Reporting Standard No. 2.
A full list of the Group companies will be included in the Company’s annual return.
* denotes company held by parent company itself.
Group structure 16 Annual Report 2003
Directors’ report
The Directors have pleasure in submitting their report and the audited accounts for the year ended 31st March
2003.
Results and dividends
The Directors recommend a final dividend of 5.10p (2002: 5.10p) per share which, together with the interim
dividend of 2.25p (2002: 2.25p) per share, already declared, makes a total of 7.35p (2002: 7.35p) per share.
Subject to approval at the Annual General Meeting, the final dividend will be paid on 3rd October 2003 to
shareholders appearing on the Register of Members at the close of business on 5th September 2003.
The interim and final dividends for 2003 have been waived by the holders of 541,591 shares.
Principal activities of the Group
Syltone is a holding company whose subsidiaries concentrate on the design, manufacture, sales and service of
specialist equipment for the international transportation and fluid transfer industries.
Operating and financial review and developments
A review of the development of the business of the Group for the year, together with views as to likely future
developments, is contained in the Chairman’s Statement on pages 2 and 3, the Chief Executive’s Statement on
pages 4 to 8 and the Financial Review on pages 9 to 12.
Post Balance Sheet Events
The post balance sheet events are contained in the Chairman’ s Statement and Chief Executive’ s Statement.
Land and buildings
In the opinion of the Directors the aggregate market value of the Group’s land and buildings is not significantly
different from the book value.
Directors
The Directors who held office during the year are listed on page 13. 
In accordance with the Company’ s Articles of Association, Dr D L Speirs and Mr R T empleton retire by rotation
and, being eligible, offer themselves for re-election.
Directors’ interests
Details of the interests of Directors in the share capital of the Company are given in the Remuneration Report on
pages 18 to 21.
Share capital
There have been no changes in the authorised share capital. Note 20 on page 42 gives details of the authorised
and issued share capital in tabular form.
Resolutions authorising the Directors to allot share capital will be proposed at the forthcoming Annual General
Meeting. Details of these are set out in the notes to the notice of the Annual General Meeting.
Substantial shareholdings
At 8th June 2003 certain shareholders, other than the Directors, had notified an interest in the ordinary issued
share capital of the Company under section 198 Companies Act 1985, as follows:
Shares % Held
Mr J A Clegg 3,150,102 12.35
Eaglet Investment Trust plc 2,778,416 10.89
Rights and Issues Investment Trust PLC 1,650,000 6.47
J P Morgan Asset Management 1,373,543 5.38
Mrs S Clegg and others 1,351,755 5.30
Acorn Income Fund Limited 1,262,480 4.95
Mrs S Clegg 1,060,616 4.16
3I Group 1,001,000 3.92
Charles Stanley & Co 881,928 3.19 17 Annual Report 2003
Directors’ report
Creditor payments
Typically the terms of payment by Group operating companies, including Syltone plc, to their principal suppliers
are negotiated as part of the continuing trading relationships with those suppliers. Once negotiated it is Group
policy to follow those agreements. In the absence of specific agreement, the UK operating companies’ standard
policy is to settle undisputed amounts due on 60 day terms. Overseas operating companies’ policies generally
mirror this pattern, although, in certain countries, where business traditions embody longer payment periods,
the Group’s companies follow those traditions.
At 31st March 2003 the number of days’ purchases outstanding for the Group was 62 (2002: 61) and for
Syltone plc was 50 (2002: 50).
Research and development
Research and development continues to be directed towards the development of new and existing products.
Amounts expended are shown in note 6 and capitalised in note 11 to the accounts.
Charitable and political donations
During the year the Group made charitable donations of £219 (2002: £1,049). The Group did not make any
political donations (2002: £Nil).
Employee involvement
It has always been the Company’s aim to promote good relations with all employees and to keep them informed
of the progress of the business and of matters directly affecting them. Consultative meetings are held with the
management of each site allowing information to be passed to employees. Communication with employees
individually on specific issues is achieved through the periodic circulation of notices to individual employees. In
addition, employees are encouraged to become involved in their Company’s performance by participating in
profit related incentive bonus and share schemes.
The Group gives full and fair consideration to applications for employment made by disabled persons. The
disabled persons employed have all received the necessary job training and will undergo further training when
necessary to enable them to meet the needs of new technology. They are eligible to apply for promotion and
within the limits of their disabilities are given equal consideration with other applicants.
Special attention would be given to the needs of any employee who became temporarily or permanently
disabled whilst in employment.
Corporate governance and going concern
A report on the Directors’ review of corporate governance compliance, the going concern basis of accounting
and their statement concerning the financial aspects of corporate governance, is set out on pages 22 to 23.
Auditors
Pursuant to section 384 Companies Act 1985, a resolution for the re-appointment of KPMG Audit Plc as
auditors to the Company will be proposed at the forthcoming Annual General Meeting.
On behalf of the Board
Andrew Hartley
Company Secretary 24th June 2003 18 Annual Report 2003
Remuneration report
The Remuneration Committee is responsible for recommending the Company's framework of
executive remuneration packages, determining the remuneration and benefits of all executive
directors and for all executive share option and long term share incentive plan grants.  Mr J C
Barnsley, Dr D L Speirs and Mr R Templeton are the members of the Committee.
As stated in the statement on corporate governance, Dr D L Speirs is not considered to be independent.
Whilst neither the Company Chairman nor the Chief Executive are members of the Committee they both may
attend meetings by invitation, but are not allowed to be present when their personal remuneration is
discussed.
The remuneration policy is set by the Board and is described below.  Individual remuneration packages are
determined by the Remuneration Committee within the framework of the policy.
The Remuneration Committee has access to independent advice where it considers it appropriate.   In the
past year it has taken professional advice from remuneration consultants at Addleshaw Goddard, which also
acts as the Company's legal advisers. The Committee is also provided with data from national and, where
appropriate, international surveys on executive pay, bonuses and long-term incentives.
Remuneration policy
The Company's policy is that total remuneration packages should be competitive and at a sufficient level to attract,
retain and motivate management of the highest calibre.  In forming this policy the Committee has given full
consideration to the provisions of The Combined Code, which it has followed closely.
Remuneration packages for executives comprise:
(a) Basic salary and benefits
Basic salary is determined after taking account of a director's responsibilities and seniority, and of the market
salary levels for similar jobs in comparable companies based on independent surveys.  Basic salaries are
reviewed annually with effect from 1st April, taking account of both Group and individual performance.
Benefits in kind provided to executive directors and senior managers comprise company car benefits, or an
equivalent cash allowance, and private medical insurance for the employee and their immediate family.
(b) Annual bonus
The annual bonus is performance related and payments are determined in accordance with the rules of the
bonus scheme, which is open to all head office employees.  The scheme provides for the calculation of a profit
share based on the growth in profit before taxation.  Executives can be awarded an annual bonus of up to
50% of base salary. There is a threshold performance level below which no bonus is paid.
Bonuses and incentives are designed to align the interests of the executives and shareholders, and to reward
only when justified by performance.
(c) Longer Term Incentives
Longer term incentives include Share Options Schemes and LTIPs and are performance related.  Details of
performance requirements for these schemes are outline below;
Performance conditions
(i) Share options
The exercise of options under the 1994 Executive Scheme and Approved Share Option Plan and Unapproved
Option Plan (2002 Executive Scheme) are conditional upon the achievement of performance criteria.
Performance is measured by the growth in diluted earnings per share over any three year period commencing
no earlier than 1st April preceding the date of grant (‘ ‘DEPS growth’ ’) compared to the growth in the Retail
Price Index (‘ ‘the RPI growth’ ’) over the same period.
The rules of the scheme allow for the following possibilities for an option granted under the schemes to be
exercisable:
If DEPS growth is: Then of the shares covered by the Option:
Equal to RPI growth plus 2% p.a. but less than one-third can be exercised and the other
RPI growth plus 4% p.a. two-thirds lapse
Equal to RPI growth plus 4% p.a. but less than two-thirds can be exercised and the other
RPI growth plus 6% p.a. one-third lapse
Equal to or more than RPI growth plus 6% p.a. all can be exercised
(i) Long Term Share Incentive Plan (LTIP)
The key performance criteria for the LTIP are an overall requirement that there has been an improvement in the
underlying financial performance of the Company and significant real growth in the return to shareholders
relative to other industrial companies over the three year period. The growth in return to shareholders will be
measured by reference to the change in total shareholder return (TSR) of the Company relative to the change in
the Financial Times' TSR Index of industrial companies over the same period. 19 Annual Report 2003
Remuneration report
If the percentage growth in the Company's TSR over the period is less than or equal to that of other industrial
companies, no Matching Shares will be awarded.  If the percentage growth in the Company's TSR over the
period exceeds that of industrial companies by 100% or more the maximum of five times the relevant
Contributory Shares will be awarded.
At intermediate levels of performance a pro rata number of Matching Shares will be awarded on the straight
line basis.
These performance conditions were considered appropriate, and were chosen, because they directly align the
interests of senior executives with those of shareholders, and are entirely objective in assessing whether the
performance conditions have been met 
Service contracts
The Company has Service Contracts with its executive directors.  It is Company policy that such contracts
should contain notice periods of not more than 12 months.  Provisions for compensation for loss of office are
not included in the contracts.  The Company's policy on compensation for loss of office is that such
compensation would be subject to the maximum terms of the contract, which is 12 months.
Mr P J Andrews, Mr A Hartley and Mr T J Murch have service contracts, which are terminable on 12 months
notice from the Company or the Director.
Total Shareholder Return
The following graph charts the total cumulative shareholder return of the Company since 30th June 1998.
The total cumulative shareholder return has been compared to the total cumulative return on the Financial
Times' TSR Index of Industrial Companies as it was considered to represent the benchmark performance
against which Syltone plc would be seeking to compare itself.  The index is also the performance comparitor
in the LTIP as outlined above. 20 Annual Report 2003
The auditors are required to report on the information contained in this section of the report.
Remuneration of Directors
The remuneration of directors who have served during the year is set out below:
Performance Compensation
Salary Related for loss 2003 2002
and Fees Bonus of office Benefits Total Total
££££ £ £
P J Andrews 105,000 105,000 100,000
T J Murch 114,330 32,590 7,019 153,939 —
A Hartley 97,022 29,361 10,993 137,376 98,642
D L Speirs 62,500 9,079 71,579 102,903
R Templeton 21,166 21,166 15,000
J C Barnsley 20,415 20,415
420,433 71,030 18,012 509,475 316,545
Benefits comprise car and health care.
Pensions
Mr T J Murch is a member of the Defined Contribution Scheme which he joined on 24 December 2002.  The
Company contributes a total of 15% of gross salary per annum to the scheme on his behalf.  Contributions of
£5,600 were made during the year.  The Company also provides a lump sum death in service benefit of four
times salary.
Mr A Hartley is a member of the Syltone Defined Benefit Scheme.  Pension rights for Mr A Hartley a full time
executive director during the year include a pension of up to two thirds of final pensionable earnings at age 63,
plus dependents' pension and a lump sum payment equivalent to four times pensionable earnings in the event
of death in service.  Under the rules of the pension scheme from 30th June 2002 performance related bonuses
will not be pensionable.
The total pension accruing to Mr A Hartley at 31st March 2003 is given below.
Increase Increase Transfer Transfer Transfer
in accrued in accrued value of value of value of Increase in
Accrued benefits benefits (A) less accrued accrued transfer value
benefit at excluding including directors’ benefits at benefits at less directors’
31st March inflation (A) inflation contributions 31st March 31st March contributions
2003 2002 2003
£’000 £’000 £’000 £’000 £’000 £’000 £’000
A Hartley (age 47) 15 1 1.23 2 93 118 20
The increase in transfer value represents a liability to the pension scheme, not a sum paid to Mr Hartley.
The total accrued pension is the amount that would be paid annually on retirement based on service to 31st
March 2003.
Under the rules of the scheme each director has a normal retirement age of 63 years but may retire on or after
the age of 60 years with the Board's permission with no reduction to accrued pension.  On leaving service, the
majority of the accrued pension is revalued to age 63 years at 5% per annum or the annual increase in the
retail price index if less.
Pensions in payment increase at the rate of 5% per annum.  The increase is applied to the pension before
being reduced for cash commutation.  On death before retirement after leaving service, the spouse's pension
is 50% of the member's pension and for dependent children 25% of the member's pension.  Such pensions
are revalued at the lower of 5% per annum or the annual increase in the retail price index up to the date of
death.  In addition, a return of the member's contributions is payable.  On death in the first five years of
retirement, the value of the balance of the first five years' pension payments is also payable.  No allowance is
made for any discretionary benefits in the calculation of transfer values.
Directors’ interests
The directors' interests in the ordinary share capital of the Company at 31st March 2003 and at the beginning
of the financial year or later date of appointment, were:
31st March 2003 31st March 2002
or later date of appointment
Beneficially As Beneficially As
Owned Trustee Options Owned Trustee Options
P J Andrews 17,928 462,427 12,928 462,427
T J Murch 10,000 291,667
A Hartley 32,690* 170,000 32,690* 25,000
J C Barnsley 164,820
D L Speirs 20,254 12,254
R Templeton 10,428 6,000
*These holdings include shares held under the Long T erm Share Incentive Plan, details of which are given below.
There have been no changes in directors' interests between the balance sheet and date of approval of the
accounts.
Remuneration report Share options
The executive directors have been granted options under the 1994 Executive Share Option Scheme. 
Options have also been granted under an Approved Share Option Plan and an Unapproved Share Option Plan
which were adopted on 5th September 2002 to replace the 1994 Executive Share Option Plan.
The performance criteria of these options are detailed above in the Remuneration Policy.
Directors’ share options
Number of
Balance at Options Balance at Exercise Cost of Date
1st April granted in 31st March Option Options first Expiry
2002 year 2003 price £k exercisable date
P J Andrews
Executive 1994 462,427 462,427 86.50p 400 01.04.03 31.03.10
T J Murch
Executive 1994 291,667 291,667 96.00p 280 10.07.05 09.07.12
A Hartley
Executive 1994 25,000 25,000 167.00p 42 18.01.99 17.01.06
Executive 2002 145,000 145,000 94.50p 137 27.09.05 26.09.12
Options held by Mr P J Andrews were granted under an Option Agreement dated 8th September 1999.  An
extraordinary general meeting held on 7th July 2000 varied the option price on Mr P J Andrews options to
86.5p and increased the number of shares under the option to 462,427 shares.  The conditions for exercise of
the options are referred to earlier in the Remuneration Policy
During the year no directors made any gains on the exercise of options (2002:None).
At 31st March 2003, the Company's shares were quoted on the London Stock Exchange at 96p per share and
during the year had been quoted in the range of 73.5p to 124.5p per share.
LTIP
A Long Term Incentive Share Plan (LTIP) was introduced in 1998 following approval by shareholders, whereby
directors and senior executives are able to invest a proportion of the post-tax annual cash bonus awarded to
them in respect of the previous financial year, or other of their financial assets if they so wish, in shares
(Contributory Shares) of the Company, up to a maximum amount in any one year of the greater of the annual
bonus net of tax or 20% of salary. 
The Trustees of the LTIP hold 21,886 Contributory Shares for the benefit of Mr A Hartley.
Shares are normally held in trust for three years after which they will be registered in the name of the beneficiary.
At that time, dependent on the performance of the Company compared to the performance criteria set out in
the rules of the Plan, the beneficiary will receive additional, free shares (Matching Shares), up to a maximum of
five times the number of Contributory Shares.
Details of the performance criteria of these options are given above in the Remuneration Policy.
The performance conditions described in this report were subject to review during the year and are considered
to be appropriate.
The LTIP was originally adopted by shareholders in 1998 for a period of five years. This period expires in
September 2003. The Committee has reviewed the requirements of the remuneration package to reward
executives over the medium- to long-term, and it is of the opinion that the LTIP has provided a useful element in
your Company's senior executive remuneration strategy. It therefore wishes to renew shareholder approval to
the LTIP for a period of a further ten years. A resolution to renew the LTIP for this period, and to make minor
amendments to its rules to bring it into line with changes in legislation and good practice is to be put at the
annual general meeting. Further details are to found in the separate letter from your Chairman.
No Matching Shares have been awarded in respect of Contributory Shares purchased in 1998 and 1999. An
award of five times the number of Contributory Shares is expected to be made to participants who purchased
Contributory Shares in 2000 as (we are pleased to report) the TSR of your Company was more than twice as
great as that of the Financial Times' TSR index of industrial companies over the three years to March 2003.
The Remuneration Report has been prepared by the Board and is signed on its behalf by:
Richard Templeton
Chairman of Remuneration Committee 24th June 2003
21
Remuneration report
Annual Report 2003 22 Annual Report 2003
Board Structure
The Company’s Board is made up of a balance of executive and non-executive directors. It currently comprises
a part-time executive Chairman, two other executive directors and three non-executive directors, who have the
responsibility for ensuring that the affairs of the Company and its subsidiaries are managed competently and
with integrity. The Chairman is Mr P J Andrews, the Chief Executive is Mr T J Murch and the senior non-
executive director is Mr R Templeton.
The non-executive directors provide a diversity of business perspective and objectivity that complements the
expertise of the executive directors. All the non-executive directors, with the exception of Dr D L Speirs, are
regarded as independent of management and free from business or other relationships that could interfere with
the exercise of their independent judgement. Dr D L Speirs is not regarded as independent as he undertook a
temporary executive role as Chief Executive, following the retirement of Mr M Clewes on 19th July 2001 until the
appointment of Mr T J Murch on 24th June 2002. All the non-executive directors play a full part as members of
the Board and share responsibility for Board decisions.
The composition of the Board is kept under review with the aim of ensuring that the Board collectively
possesses the necessary skill and experience for the proper direction of the Group’s business activities. New
directors are appointed at general meeting or submit themselves for election by shareholders at the first
opportunity and at three-yearly intervals thereafter.
The Board meets at least eight times a year and directors are supplied with all relevant information to assist them
in the discharge of their duties. The Board focuses on considering longer-term strategic issues as well as
reviewing and monitoring the management and financial performance of the Company.
The Board has established three committees with specified terms of reference, which assist the full Board in the
exercise of its responsibilities. These are: 
Nomination Committee This Committee recommends new appointments to the Board and reviews re-
appointments when they become due. It has formal terms of reference and its current membership comprises
Mr J C Barnsley, Mr P J Andrews, Dr D L Speirs and Mr R Templeton.
Remuneration Committee The Remuneration Committee determines the remuneration and contractual
arrangements of individual executive directors of Syltone plc and their direct reports. The aim of the Committee
is to ensure that executive directors receive a competitive remuneration package that both attracts and retains
management of a high quality and provides motivation for those executives to perform in the best interests of
the Company, its shareholders, employees and customers.
The members of the Committee are Mr R Templeton (Chairman), Dr D L Speirs and Mr J C Barnsley.
The Board’s Report on Remuneration appears on pages 18 to 21.
Audit Committee The Audit Committee comprises Mr J C Barnsley (Chairman), Dr D L Speirs and Mr R
T empleton. Its duties cover the areas of internal control, liaison with external auditors and formulating and
implementing policy on granting of non-audit services. Meetings of the Committee are normally attended by the
external auditors. The Finance Director and Chief Executive also attend when requested to do so.
The Committee is responsible for reviewing the effectiveness of the Group’s systems of internal control and the
monitoring of compliance with regulatory requirements. The Committee approves the internal audit plan, which
is based on risk assessment, and reviews all internal audit reports.
On behalf of the Board the Committee reviews the annual report and accounts and the interim report. In
undertaking this work the Committee considers the accounting policies of the Group, major areas of judgement
and estimates and compliance with accounting principles and regulatory requirements.
Relations with shareholders
The Company seeks to maintain good communications with shareholders and welcomes communication with its
institutional shareholders through meetings and results briefings. The Company also appreciates that the Annual
General Meeting and the Annual Report sent to the shareholders before the meeting provide an opportunity to
communicate with private investors. The Chairman of the Audit Committee and of the Remuneration Committee
will be available at the Annual General Meeting to answer any questions from the shareholders.
Information about the Company is available on the Company’s website and all announcements made to the
London Stock Exchange are now posted to it. The website address is www.syltone.co.uk.
Internal control
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can provide only reasonable and not absolute assurance against material
misstatement or loss.
Following publication of guidance for directors on internal control; Internal Control: Guidance for Directors on
the Combined Code (the Turnbull guidance), the Board confirm that there is a continuing process for
identifying, evaluating and managing the significant risks faced by the Group, that has been in place for the
year under review and up to the date of approval of the annual report and accounts, and that this process is
regularly reviewed by the Board and accords with the guidance.
The Board have reviewed the effectiveness of the system of internal control. In particular, it has reviewed and
updated the process for identifying and evaluating the significant risks affecting the business and the policies
and procedures by which these risks are managed.
Statement on corporate governance 23 Annual Report 2003
The key elements of the Group’s system of internal controls are as follows:
Control Environment The Group is committed to the highest standards of business conduct and seeks to
maintain these standards across all of its operations throughout the world. The Group has adopted a written
code of business ethics and practices including supporting group policies and procedures which provides
practical guidance for all staff. 
The Board is supported by two divisional Executive Committees which consist of full-time senior managers of
Syltone who each have a functional responsibility.The Executive Committees operate a system of review of
divisional, regional and individual subsidiaries’ performance against budget and report appropriately to the
Board.
The Group has an appropriate organisational structure for planning, executing, controlling and monitoring
business operations in order to achieve Group objectives. 
Risk Identification A Risk Committee exists with the remit to ensure that key risks applicable to the business
are identified by Group management and that such risks are properly evaluated. The Board considers significant
risk areas, including those arising from the development of new activities or changes in external risk factors.
The key risks affecting the business have been identified. The Risk Committee is responsible for the regular
reassessment of these risks and reports directly to the Audit Committee.
The risks considered are associated with both internal and external sources including control breakdown,
disruption in information systems, competition, natural catastrophe and regulatory requirements.
Information and communication Group divisions and regions prepare five-year strategic plans which are
revised annually and include consideration of long term financial projections and the evaluation of strengths,
weaknesses, opportunities and threats in relation to the business. Annual budgets are also prepared and
performance against plans and budgets is actively monitored. Results against budgets are consolidated and
presented to the Board at routine board meetings. The Board reports to shareholders half yearly (the interim
results) and announces other major events as they occur.
Through these mechanisms, Group performance is continually monitored, risks identified in a timely manner,
their financial implications assessed, control procedures re-evaluated and corrective actions agreed and
implemented.
Control procedures The Group and its operating units have implemented control procedures designed to
ensure complete and accurate accounting for financial transactions and to limit the potential exposure to loss of
assets or fraud. Measures taken include physical controls, segregation of duties, and reviews by management.
There is a programme of internal audits carried out by the Group internal audit personnel with the objective of
auditing each trading subsidiary at least once every eighteen months. In addition reviews are carried out by
external auditors covering financial matters, ISO 9000 certification, health and safety and various insured risks to
the extent necessary to arrive at their audit opinion.
Monitoring and corrective action There are clear and consistent procedures in place for monitoring the
system of internal controls. The Audit Committee, which meets at least twice a year, receives reports from the
internal audit function, the risk committee and management. Within its remit the Audit Committee reviews the
effectiveness of the Group’s system of internal controls. Any corrective action which may be necessary is agreed
and implemented.
Compliance statement
The Board of Directors has complied throughout the year with the Combined Code provisions apart from the
matters noted below.
a) S22 of the Combined Code requires the Remuneration Committee to consist exclusively of independent
non-executive directors. Following the retirement of Mr M Clewes as Director and Chief Executive of the
Company on 19th July 2001, he was replaced on a temporary basis as Chief Executive by Dr D L Speirs.
Despite his executive role Dr D L Speirs continued as a member of the Audit Committee. Dr D L Speirs also
continued to be a member of the Remuneration Committee, but played no role in deciding his own
remuneration for the period in which he was Chief Executive. Mr T J Murch was appointed as the new Chief
Executive on 24th June 2002 following which, Dr D L Speirs reverted to being a non-executive director.
b) The Board has reviewed its policy of not providing fixed term contracts for non-executive directors and
considers that this is still appropriate for the Company under its present circumstances. The appointment of
non-executive directors is supervised by the Nomination Committee.
c) All directors have independent access to the Company’s professional advisers at the Company’s expense,
but this is not the subject of a written practice statement.
The Board is responsible for the Group’s system of internal controls and for reviewing the effectiveness of that
control, and has done so for the year ended 31st March 2003.
Going concern
The Directors confirm that they are satisfied that the Group has adequate resources to continue in business
for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the
accounts.
Statement on corporate governance 24 Annual Report 2003
We have audited the accounts on pages 25 to 49. We have also audited the information in the directors'
remuneration report that is described as having been audited.
This report is made solely to the company's members, as a body, in accordance with section 235 of the Companies
Act 1985.  Our audit work has been undertaken so that we might state to the company's members those matters
we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the directors' report and, as described above, the accounts in
accordance with applicable United Kingdom law and accounting standards.  Our responsibilities, as independent
auditors, are established in the United Kingdom by statute, the Auditing Practices Board and by our profession's
ethical guidance.
We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in
accordance with the Companies Act 1985.  We also report to you if, in our opinion, the directors' report is not
consistent with the accounts, if the company has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if information specified by law regarding directors'
remuneration and transactions with the company is not disclosed.
We review whether the statement on page 22 and 23 reflects the company's compliance with the seven provisions
of the Combined Code specified for our review by the Listing Rules, and we report if it does not.  We are not required
to consider whether the board's statements on internal control cover all risks and controls, or form an opinion on the
effectiveness of the group's corporate governance procedures or its risk and control procedures.
We read the other information contained in the Annual Report, including the corporate governance statement and
the unaudited part of the directors' remuneration report, and consider whether it is consistent with the audited
accounts.  We consider the implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the accounts.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board.  An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts.  It also
includes an assessment of the significant estimates and judgements made by the directors in the preparation of the
accounts, and of whether the accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free
from material misstatement, whether caused by fraud or other irregularity or error.  In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the accounts.
Opinion
In our opinion:
• the accounts give a true and fair view of the state of affairs of the company and the group as at 31 March 2003
and of the profit of the group for the year then ended; and
• the accounts and the part of the directors' remuneration report to be audited have been properly prepared in
accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants 24th June 2003
Registered Auditor
The Directors are required by Company law to prepare accounts that give a true and fair view of the state of
affairs of the Company and the Group and of the profit or loss for the period. In preparing these accounts the
Directors are required to:
a) select and consistently apply appropriate accounting policies;
b) make reasonable and prudent estimates and judgements;
c) state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the accounts;
d) prepare the accounts on a going concern basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and to enable them to ensure that the accounts comply with
the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Statement of directors’ responsibilities in relation to the accounts
Report of the independent auditors' to the members of Syltone plc 25
for the year ended 31st March 2003
2003 2002
Note £’000 £’000 £’000
Turnover 2 78,798 75,464
Operating costs 3 (72,982) (70,777)
Operating profit Before exceptional items 6 5,816 5,327
Reorganisation costs — (640)
Profit on ordinary activities before interest
and taxation 5,816 4,687
Net interest payable and other similar charges 7 (1,013) (1,179)
Profit on ordinary activities before taxation 4,803 3,508
Taxation 8 (1,781) (1,494)
Profit on ordinary activities after taxation 3,022 2,014
Minority interests – equity — (19)
Profit attributable to ordinary shareholders 3,022 1,995
Ordinary dividends 9 (1,835) (1,835)
Retained profit for the year 23 1,187 160
Earnings per share 10 12.10p 7.99p
Diluted earnings per share 10 12.06p 7.96p
Dividends per share 9 7.35p 7.35p
The accounts are prepared on an unmodified historic cost basis.
The notes referred to form part of these accounts and appear on pages 30 to 49.
Consolidated profit and loss account
Annual Report 2003 26
as at 31st March 2003
Consolidated balance sheet
2003 2002
Note £’000 £’000
Fixed assets
Intangible assets 11 2,587 2,753
Tangible assets 12 17,259 18,080
Investments 13 604 606
20,450 21,439
Current assets
Stocks 14 11,509 12,851
Debtors 15 19,281 18,698
Cash at bank and in hand 4,434 2,487
35,224 34,036
Creditors
Amounts falling due within one year:
Borrowings 16 (2,409) (3,027)
Other creditors 18 (17,921) (16,975)
(20,330) (20,002)
Net current assets 14,894 14,034
Total assets less current liabilities 35,344 35,473
Creditors
Amounts falling due after more than one year:
Borrowings 16 (12,990) (13,916)
Other creditors 18 (321) (541)
(13,311) (14,457)
Provisions for liabilities and charges 19 (1,522) (1,015)
Deferred income: capital expenditure grants (1) (16)
Net assets 20,510 19,985
Capital and reserves
Called up equity share capital 20 6,378 6,378
Share premium account 21 9,275 9,275
Merger reserve 22 1,197 1,197
Profit and loss account 23 3,374 2,817
Shareholders’ funds – equity 20,224 19,667
Minority interests – equity 286 318
20,510 19,985
The notes referred to form part of these accounts and appear on pages 30 to 49.
These accounts were approved by the board of Directors on 24th June 2003, and signed on its behalf by:
P J Andrews
A Hartley
Directors
}
Annual Report 2003 27 Annual Report 2003
for the year ended 31st March 2003
Consolidated cash flow statement
2003 2002
Note £’000 £’000 £’000 £’000
Cash inflow from operating activities 24 9,475 6,217
Returns on investments and servicing of
finance:
Bank interest paid (1,069) (1,564)
Bank interest received 193 406
Finance lease interest paid (27) (25)
(903) (1,183)
Taxation:
United Kingdom corporation tax paid (391) (478)
Overseas taxes paid (791) (1,100)
(1,182) (1,578)
Capital expenditure and financial investments:
Purchase of tangible assets (1,271) (2,329)
Purchase of intangible assets (117) (336)
Sale of fixed asset investment 2 —
Sale of tangible assets 205 207
(1,181) (2,458)
Acquisitions and disposals:
Sale of subsidiary undertakings 24 115 2,886
Acquisition of minority holdings in subsidiaries — (7)
115 2,879
Equity dividends paid:
Dividends paid to shareholders (1,835) (1,835)
Cash inflow before financing 4,489 2,042
Financing:
Repayments of medium and long term loans (1,405) (1,583)
Finance lease capital repayments (228) (222)
(1,633) (1,805)
Increase in cash in the year 2,856 237
Additional cash flow information is given in note 24.
The notes referred to form part of these accounts and appear on pages 30 to 49. 28 Annual Report 2003
2003 2002
£’000 £’000
Profit attributable to ordinary shareholders 3,022 1,995
Currency translation differences on foreign currency net investments (630) 84
Total recognised gains and losses relating to the year 2,392 2,079
for the year ended 31st March 2003
2003 2002
£’000 £’000
Profit attributable to ordinary shareholders 3,022 1,995
Dividends (1,835) (1,835)
Retained profit for the year 1,187 160
Other recognised gains and losses as shown above (630) 84
Net addition to shareholders’ funds 557 244
Opening shareholders’ funds 19,667 19,423
Closing shareholders’ funds 20,224 19,667
for the year ended 31st March 2003
Consolidated statement of total recognised gains and losses
Reconciliation of movements in consolidated shareholders’ funds 29
as at 31st March 2003
2003 2002
Note £’000 £’000
Fixed assets
Tangible assets 12 1,808 1,845
Investments 13 9,895 9,897
11,703 11,742
Current assets
Debtors 15 28,435 28,835
Cash at bank and in hand 3,314 4,203
31,749 33,038
Creditors
Amounts falling due within one year:
Borrowings 16 (5,195) (6,370)
Other creditors 18 (2,651) (1,409)
(7,846) (7,779)
Net current assets 23,903 25,259
Total assets less current liabilities 35,606 37,001
Creditors
Amounts falling due after more than one year:
Borrowings 16 (12,572) (13,473)
Other creditors 18 — (270)
(12,572) (13,743)
Provisions for liabilities and charges 19 (569) (373)
Deferred income: capital expenditure grants — (11)
Net assets 22,465 22,874
Capital and reserves
Called up equity share capital 20 6,378 6,378
Share premium account 21 9,275 9,275
Merger reserve 22 1,197 1,197
Profit and loss account 23 5,615 6,024
Shareholders’ funds – equity 22,465 22,874
The notes referred to form part of these accounts and appear on pages 30 to 49.
These accounts were approved by the board of Directors on 24th June 2003, and signed on its
behalf by:
P J Andrews
A Hartley
Directors
}
Company balance sheet
Annual Report 2003 Notes to the accounts
30 Annual Report 2003
1 Accounting policies
Basis of accounts
The accounts are prepared under the historical cost convention, in accordance with applicable accounting
standards. The following principal accounting policies have been applied consistently in dealing with items
which are considered material in relation to the Group’s accounts. The Group has adopted FRS 18 ‘Accounting
policies’ in these accounts.
Basis of consolidation
The consolidated profit and loss account includes the results of undertakings acquired or disposed of during the
year from the date of their acquisition or up to the date of their disposal. The consolidated balance sheet
includes the assets and liabilities of the Company and its subsidiaries at the end of the financial year.
In accordance with the requirements of Financial Reporting Standard No. 2: Accounting for Subsidiary
Undertakings, the accounts of companies, which due to local restrictions, cannot be owned by Syltone, but are
nevertheless subject entirely to Syltone’s control, are consolidated as if those companies are legally owned by
Syltone.
Under section 230(4) of the Companies Act 1985 the company is exempt from the requirement to present its
own profit and loss account
Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or, if
hedged forward, at the rate of exchange under the related forward currency contract.
Assets, liabilities and trading results of overseas operations are translated into sterling at the rates of exchange
ruling at the balance sheet date. Differences arising on the translation of the Group’s net investment in overseas
operations are dealt with as movements in reserves net of differences on related currency borrowings. All other
differences are taken to the profit and loss account.
Financial instruments
The Group uses derivative financial instruments to manage its exposures to fluctuations in interest and foreign
currency exchange rates. Receipts and payments on interest rate instruments are recognised on an accruals
basis over the life of the instrument. Gains and losses on transactional foreign currency hedges are recognised
in the profit and loss account on the maturity of the underlying transaction. Gains and losses on translational
hedges of foreign currency denominated net investments are taken to reserves. Gains and losses on hedging
instruments that are cancelled due to the termination of the underlying exposure are recognised in the profit and
loss account at the time of termination.
Goodwill and intangible fixed assets
Purchased goodwill (representing the excess of the fair value of the consideration given and associated costs
over the fair value of the separable net assets acquired) arising on consolidation in respect of acquisitions before
1st April 1998, when Financial Reporting Standard No. 10 was adopted, was written off to reserves in the year
of acquisition. When a subsequent disposal occurs any related goodwill previously written off or credited to
reserves is written back through the profit and loss account as part of the profit or loss on disposal.
Purchased goodwill arising on consolidation in respect of acquisitions since 1st April 1998 is capitalised in the
year of acquisition and amortised on a systematic basis over its estimated useful economic life up to a maximum
of 20 years. The carrying value of goodwill is reviewed as necessary for impairment and written down if
impairment is identified.
On the subsequent disposal of a business acquired since 1st April 1998, the profit or loss on disposal is
calculated after charging the unamortised amount of any related goodwill.
Intellectual property rights and patents are valued at cost on acquisition and are amortised in equal annual
amounts over their estimated useful economic lives.
The accounting policy for research and development is set out on the opposite page. 31
Notes to the accounts
Annual Report 2003
1 Accounting policies continued
Depreciation
Except for freehold land, depreciation is provided on a straight line basis at rates which are calculated to write off
the cost of each asset over its useful life in equal annual instalments.
The useful lives of assets are:
Freehold and long leasehold buildings up to 50 years
Short leasehold buildings over the residue of the lease
Plant and equipment 4 to 10 years
Computers 3 to 7 years
Motor vehicles 4 years
Leased assets
Rentals payable under operating leases are charged to the profit and loss account as incurred. Assets obtained
under finance leases are included in fixed assets and the related obligations to pay future rentals are included in
creditors. Interest on finance leases is charged to the profit and loss account over the period of the lease.
Stocks
Stocks are valued at the lower of cost and net realisable value. Cost includes an appropriate allocation of
production overheads.
Long term contracts
The amount of profit attributable to the stage of completion of a long term contract is recognised when the
outcome of the contract can be foreseen with reasonable certainty. Turnover for such contracts is stated at the
cost appropriate to their stage of completion plus attributable profits, less amounts recognised in previous
years. Provision is made for any losses as soon as they are foreseen.
Contract work in progress is stated at costs incurred, less those transferred to the profit and loss account, after
deducting foreseeable losses and payments on account not matched with turnover.
Amounts recoverable on contracts are included in debtors and represent turnover recognised in excess of
payments on account.
Development grants
Grants relating to fixed assets are treated as deferred credits and are transferred to revenue in equal amounts
over the useful life of the asset. Grants relating to revenue costs are credited to the profit and loss account in the
period in which costs are incurred.
Research and development
Development costs are capitalised when a clear, commercially viable future for that development is confirmed
and are amortised over the first three years following their commercial launch.
All other expenditure on research and development is written off as incurred.
Turnover
Turnover represents the amounts (excluding value added tax) derived from the provision of goods and services
to customers. Turnover is recognised at the point of despatch of goods. The only exception is Emco Wheaton
GmbH where, on certain major contracts, turnover is recognised at the point of signing off completion
certificates. This company also has long term contracts, which follow the accounting policy outlined above.
Revenue from service contracts is recognised on an accruals basis.
Rental income
Rental income receivable is recognised on an accruals basis.
Deferred taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of
timing differences between the treatment of certain items for taxation and accounting purposes. In accordance
with Financial Reporting Standard No19, deferred tax is provided, without discounting, in full. Full recognition is
made of the deferred tax arising on any pension cost provision and asset made in accordance with Statement of
Standard Accounting Practice No. 24. 1 Accounting policies continued
Pension costs
The expected cost of pensions in respect of the Group’s defined benefit pension schemes is charged to the
profit and loss account so as to spread the cost of pensions over the service lives of employees. Variations from
the regular cost are spread over the expected service lives of current employees in the schemes. Differences
between the amounts charged in the profit and loss account and payments made to the schemes are carried
forward as assets or liabilities in the balance sheet. Pension costs are assessed in accordance with the advice of
independent and qualified actuaries.
Regarding the Group’s UK defined contribution pension scheme the amount charged to the profit and loss
account represents the contributions payable to the scheme in respect of the accounting period. The assets of
the scheme are held separately from those of the Group in an independently administered fund.
2 Turnover and trading profit
Turnover arises wholly from the principal activities of the Group and is analysed by geographical destination as:
2003 2002
£’000 £’000
United Kingdom 21,556 24,207
France 10,777 8,305
Germany 6,773 5,756
Other European countries 13,362 10,753
North America 15,340 14,952
Other 10,990 11,491
78,798 75,464
The profit of the Group arises wholly from the principal activities of the constituent companies.
In the opinion of the Directors disclosure in further detail of the analysis of turnover, profit and net assets would
be seriously prejudicial to the interests of the Group.
3 Operating costs
2003 2002
Note £’000 £’000
Raw materials and consumables 31,829 32,242
Change in stocks of finished
goods and work in progress 1,476 (9)
Other external charges 10,923 10,965
Staff costs 4 & 5 26,201 24,946
Depreciation and other amounts written off
tangible and intangible fixed assets 11 & 12 2,605 2,710
Trading costs 73,034 70,854
Other operating income (52) (77)
Operating costs 6 72,982 70,777
4 Directors’ remuneration
Full details of the emoluments of the Directors, including those of the Chairman and highest paid Director are
given in the Remuneration Report on pages 18 to 21.
Notes to the accounts
32 Annual Report 2003 33
Notes to the accounts
Annual Report 2003
5 Staff costs 2003 2002
£’000 £’000
Aggregate employment costs:
Wages and salaries 21,630 20,594
Social security costs 3,206 2,927
Other pension costs (see also note 26) 1,365 1,425
26,201 24,946
Average numbers employed geographically: Number Number
United Kingdom 377 392
France 102 124
Germany 160 149
Other European countries 72 78
North America 97 99
Other 32 33
840 875
6 Operating profit 2003 2002
£’000 £’000
Operating profit is stated after charging/(crediting):
Research and development expenditure 1,786 1,565
Payments under operating leases:
Plant and equipment 349 136
Other leases 746 882
Auditors’ and their associates’ remuneration – audit services 203 204
– further assurance services 35 86
– tax advisory services 109 95
Property rentals receivable (52) (66)
Asset disposal gains (55) (66)
Reorganisation costs — 640
The reorganisation costs incurred in the comparative period relate to the exceptional costs incurred in
restructuring the Group following the July 2000 strategic review and primarily comprise redundancy and early
retirement costs.
7 Net interest payable and other similar charges 2003 2002
£’000 £’000
On bank loans and overdrafts 1,164 1,567
On finance leases 27 25
1,191 1,592
Interest receivable (178) (413)
1,013 1,179 Notes to the accounts
34 Annual Report 2003
8 Taxation on profit on ordinary activities 2003 2002
£’000 £’000
Current tax:
Corporation tax on profits of the period:
UK 403 509
Overseas 737 587
Adjustments in respect of previous periods:
UK 33 (37)
Overseas (29) (99)
Unrelieved ACT — 105
Double tax relief — (134)
Total current tax 1,144 931
Deferred tax:
Origination and reversal of timing differences
Prior year 53 (24)
Current year 584 587
Total deferred tax 637 563
Tax on profit on ordinary activities 1,781 1,494
Factors affecting the current tax charge for the period 2003 2002
£’000 £’000
Profit on ordinary activities before tax 4,803 3,508
Profit on ordinary activities multiplied by
standard rate of corporation tax (30%) 1,441 1,052
Effects of:
Expenses not deductible for tax purposes 47 95
Losses not recognised 72 204
Deferred tax movement (584) (587)
Adjustment to tax charge in respect of previous periods 16 (136)
Overseas tax rates in excess of UK 152 198
Unrelieved ACT — 105
Current tax charge for the period 1,144 931
A narrative in respect of the effective rate of tax is included within the Financial Review on pages 9 to 12. 35
Notes to the accounts
Annual Report 2003
9 Ordinary dividends 2003 2002
£’000 £’000
Interim paid for 2003 – 2.25p per share 562 562
Final proposed for 2003 – 5.10p per share 1,273 1,273
1,835 1,835
10 Earnings per share
The calculation of earnings per share is based on the profit attributable to ordinary shareholders of £3,022,000
(2002: £1,995,000) and on 24,969,464 (2002: 24,969,464) shares of 25p each, being the weighted average
number of ordinary shares in issue during the year ended 31st March 2003, excluding those shares held in the
Employee Benefit Trust upon which all dividend rights have been waived (see note 28).
The diluted earnings per share is based on the same profit attributable to ordinary shareholders and on
25,065,343 (2002: 25,068,140) shares of 25p each. Of the 1,332,250 (2002: 1,056,642) weighted average
number of options outstanding under the various option schemes 669,138 (2002: 229,783) are dilutive,
resulting in 95,879 (2002: 98,676) shares of 25p each deemed issued for nil consideration.
11 Intangible fixed assets
Goodwill on Intellectual Development
acquisition property rights Patents costs Total
Group £’000 £’000 £’000 £’000 £’000
Cost
At start of year 2,554 338 44 336 3,272
Additions — — — 117 117
Exchange adjustments — — (1) 4 3
At end of year 2,554 338 43 457 3,392
Amortisation
At start of year 330 138 3 48 519
Charge for year 128 15 2 140 285
Exchange adjustments — — — 1 1
At end of year 458 153 5 189 805
Net book value
At 31st March 2003 2,096 185 38 268 2,587
At 31st March 2002 2,224 200 41 288 2,753 Notes to the accounts
36 Annual Report 2003
12 Tangible fixed assets Short
Long leasehold Plant,
Freehold leasehold property equipment
property property alterations & vehicles Total
Group £’000 £’000 £’000 £’000 £’000
Cost
At start of year 11,285 339 1,376 26,964 39,964
Additions 44 50 6 1,270 1,370
Disposals (5) — (4) (1,792) (1,801)
Exchange adjustments 399 — 3 398 800
At end of year 11,723 389 1,381 26,840 40,333
Depreciation
At start of year 1,867 120 235 19,662 21,884
Charge for year 211 9 62 2,038 2,320
Disposals — — (4) (1,635) (1,639)
Exchange adjustments 157 — 3 349 509
At end of year 2,235 129 296 20,414 23,074
Net book value
At 31st March 2003 9,488 260 1,085 6,426 17,259
At 31st March 2002 9,418 219 1,141 7,302 18,080
Company
Cost
At start of year 87 140 — 2,115 2,342
Additions — 50 — 284 334
Disposals — — — (110) (110)
At end of year 87 190 — 2,289 2,566
Depreciation
At start of year — 69 — 428 497
Charge for year — 5 — 329 334
Disposals — — — (73) (73)
At end of year — 74 — 684 758
Net book value
At 31st March 2003 87 116 — 1,605 1,808
At 31st March 2002 87 71 — 1,687 1,845 37
Notes to the accounts
Annual Report 2003
12 Tangible fixed assets continued
At 31st March 2003 and 2002 no Group freehold property was rented to third parties.
Plant, equipment and vehicles include assets which are the subject of finance leases and are analysed as:
Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Cost 510 487 453 453
Accumulated depreciation (33) (26) (29) (5)
Net book value 477 461 424 448
Depreciation in year 27 14 24 5
Capital expenditure commitments at the year end were:
Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Contracted for but not provided 242 24 — —
13 Investments Own shares
Investments in held in
subsidiary Employee Other
undertakings Benefit Trust investments Total
£’000 £’000 £’000 £’000
Group
At start of year — 604 2 606
Disposals — — (2) (2)
At end of year — 604 — 604
Company
At start of year 9,291 604 2 9,897
Disposals — — (2) (2)
At end of year 9,291 604 — 9,895
Investments are stated at cost. Investments in subsidiary undertakings are shown after deduction of provisions
amounting to £68,000 (2002: £68,000).
Details of shareholdings in subsidiary undertakings are shown on page 15.
Ordinary shares in Syltone plc held in the Employee Benefit Trust have been included in the Group consolidated
balance sheet as investments as required by Urgent Issues Task Force No. 13 (see note 28). Notes to the accounts
38 Annual Report 2003
14 Stocks Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Raw materials and consumables 3,205 3,398 — —
Work in progress 1,415 1,742 — —
Finished goods for resale 6,889 7,711 — —
11,509 12,851 — —
15 Debtors
Amounts falling due within one year:
Trade debtors 15,905 15,871 69 88
Other debtors 308 446 67 145
Taxation recoverable 430 405 4 272
Prepayments and accrued income 1,260 1,063 334 406
Amounts owed by subsidiary undertakings — — 26,399 26,840
17,903 17,785 26,873 27,751
Amounts falling due after one year:
Other debtors 35 56 34 49
Deferred tax asset (note 19) — 7 — —
Pension prepayment (note 19) 1,343 850 1,528 1,035
1,378 913 1,562 1,084
19,281 18,698 28,435 28,835
16 Borrowings
The maturity profiles of the Group’s financial liabilities are detailed below.
Due on demand or within one year:
Bank overdrafts and loans – secured 2,165 2,796 4,970 6,145
Finance leases – secured 244 231 225 225
2,409 3,027 5,195 6,370
Due after one year:
Bank overdrafts and loans – secured 12,957 13,691 12,572 13,248
Finance leases – secured 33 225 — 225
12,990 13,916 12,572 13,473
Amounts due after one year are repayable:
Between one and two years 1,710 1,811 1,593 1,720
Between two and five years 11,163 11,950 10,979 11,753
More than five years 117 155 — —
12,990 13,916 12,572 13,473 39
Notes to the accounts
Annual Report 2003
16 Borrowings continued Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
The principal bank loans included above are:
Currency Amount Note
US Dollar 118,556 (i) 75 126 — —
2,919,000 (ii) 1,847 2,050 1,847 2,050
2,481,830 (iii) 1,570 2,050 1,564 2,050
5,519,386 3,492 4,226 3,411 4,100
Euro — 78 — —
340,335 (iv) 235 229 — —
234,060 (v) 162 169 — —
— 22 — —
4,099,125 (vi) 2,830 2,954 2,830 2,954
3,432,938 (vi) 2,370 2,474 2,370 2,474
4,018,750 (vii) 2,774 2,462 2,774 2,462
1,615,500 (vii) 1,115 991 1,115 991
2,412,000 (vii) 1,665 1,477 1,665 1,477
16,152,708 (viii) 11,151 10,856 10,754 10,358
Total 14,643 15,082 14,165 14,458
Note:
(i) Repayable in equal monthly instalments to 2005. Interest is fixed at 2.00%.
(ii) Repayable 31.03.05 with a fixed interest rate of 3.18% plus margin.
(iii) Repayable in equal quarterly instalments to 31.03.07 with a fixed interest rate of 3.48% plus margin.
(iv) Repayable in equal quarterly instalments to 2013. Interest is fixed at 6.25% to 01.01.06.
(v) Repayable in equal monthly instalments to February 2008. Interest is fixed at 4.27%.
(vi) Repayable in equal quarterly instalments to 31.03.07.
(vii) Repayable 31.03.05.
(viii) Included within the Euro loan total is €7,089,000 amortising quarterly with a fixed interest rate at 4.075% plus
margin to 31.03.07, with the balance at Euro LIBOR.
Securities comprise a pledge over the Company’s shareholding in Syltone Industries plc and fixed and floating
charges over certain of the Group’s overseas assets together with certain intra-group guarantees.
The undrawn committed borrowing facilities available to the Group in respect of which all conditions precedent
had been met, were:
2003 2002
£’000 £’000
Expiring in one year or less 7,260 5,965
Expiring in more than one year but not more than five years 500 500
7,760 6,465 Notes to the accounts
40 Annual Report 2003
17 Interest rate risk profile
The following interest rate and currency profiles of the Group’s financial (liabilities)/assets are after taking into
account interest rate swaps entered into by the Group.
Weighted
average
Weighted period for
Floating Fixed average which the
Total rate rate interest rate rate is fixed
£’000 £’000 £’000 % Years
2003
Financial liabilities:
Sterling (225) — (225) 4.12 1.00
US Dollar (3,492) (6) (3,486) 3.35 2.89
Euro currencies (11,547) (6,031) (5,516) 4.17 3.78
Japanese Yen —————
Other (135) (135) — — —
(15,399) (6,172) (9,227) 3.86 3.38
Financial assets:
Sterling 3,726 3,726———
US Dollar (1,470) (1,470) — — —
Euro currencies 1,243 1,243———
Japanese Yen (371) (371) — — —
Other 1,306 1,306———
4,434 4,434———
Net financial liabilities (10,965) (1,738) (9,227) 3.86 3.38
2002
Financial liabilities:
Sterling 2,549 2,999 (450) 4.12 2.00
US Dollar (4,730) (2,557) (2,173) 5.19 0.82
Euro currencies (14,979) (10,538) (4,441) 4.85 0.92
Japanese Yen 375 817 (442) 1.70 0.56
Other (158) (158) — — —
(16,943) (9,437) (7,506) 4.72 0.94
Financial assets:
Sterling 11 11———
US Dollar 291 291———
Euro currencies 1,554 1,554———
Japanese Yen 65 65———
Other 566 566———
2,487 2,487———
Net financial liabilities (14,456) (6,950) (7,506) 4.72 0.94
The floating rate financial liabilities include bank loans typically based on the relevant currency 3 month LIBOR
and overdrafts typically based on the relevant currency central bank base rates. A full table and narrative of the
Group’s bank borrowing terms is given in note 16.
The financial assets disclosure includes overdrafts which are part of a Group cash offset facility. 41
Notes to the accounts
Annual Report 2003
17 Interest rate risk profile continued
A narrative description of the Group’s treasury risk management policy is given in the Financial Review on pages
9 to 12 and details of currency exposure and financial instruments in note 25.
As permitted by Financial Reporting Standard No. 13 short term debtors and creditors have been excluded from
the disclosures other than the currency exposure given in note 25.
18 Other creditors Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Trade creditors 7,974 8,260 267 443
Taxation 351 297 35 —
Social security 646 556 236 233
Accruals 3,520 3,083 648 566
Other creditors 3,582 3,506 656 73
Payments on account 575 — — —
Proposed dividend 1,273 1,273 809 94
17,921 16,975 2,651 1,409
Amounts falling due after one year:
Accruals 53 301 — 247
Other creditors 268 240 — 23
321 541 — 270
19 Provisions for liabilities and charges
Group Company
Deferred Deferred
Pension tax Total Pension tax Total
£’000 £’000 £’000 £’000 £’000 £’000
At start of year 165 (7) 158 (1,035) 373 (662)
Payments (500) — (500) (189) — (189)
Exchange adjustments 129 (62) 67———
Charged/(credited) in year (183) 637 454 (304) 196 (108)
At end of year (389) 568 179 (1,528) 569 (959)
Analysed as:
Debtors falling due after one year
(note 15) (1,343) — (1,343) (1,528) — (1,528)
Provisions for liabilities and charges 954 568 1,522 — 569 569
(389) 568 179 (1,528) 569 (959)
The pension asset of £389,000 relates primarily to the prepayment on the two UK defined benefit pension
schemes less the fully provided cost, as calculated under Statement of Standard Accounting Practice No. 24, of
the unfunded element of the Emco Wheaton GmbH scheme (see also note 26).
The deferred tax liability/(asset) comprises:
Group Company
2003 2002 2003 2002
£’000 £’000 £’000 £’000
Accelerated capital allowances 794 757 96 40
Pension costs 368 219 473 333
Other timing differences (594) (983) — —
568 (7) 569 373 Notes to the accounts
42 Annual Report 2003
20 Equity share capital
2002 2003 2003 2002
Number Number Ordinary shares of 25p each £’000 £’000
32,000,000 32,000,000 Authorised 8,000 8,000
Allotted, called up and fully paid
25,511,055 25,511,055 At start of year and end of year 6,378 6,378
Share options 2003 2002
Executive share option and employee SAYE schemes Number Number
At start of year 515,051 606,430
Adjustment to opening balance (23,072) 63,921
New uncovered options granted in year 806,667 —
Uncovered options lapsed in year (175,517) (155,300)
At end of year 1,123,129 515,051
Options granted under these schemes are exercisable at various dates up to 26th September 2012 at prices
ranging from 86.50p to 167.00p per share.
Options granted under the Employee SAYE Scheme are included in the above figures where not covered by
shares held in the Employee Benefit Trust (see note 28).
21 Share premium account Group Company
2003 2003
£’000 £’000
At start and end of year 9,275 9,275
22 Merger reserve Group Company
2003 2003
£’000 £’000
At start and end of year 1,197 1,197
The merger reserve arose as a result of the issue of shares to fund the 100% acquisition of equity in Priestman
Equipment Limited, at 31st July 1999.
23 Profit and loss account Group Company
2003 2003
£’000 £’000
At start of year 2,817 6,024
Retained profit/(loss) for the year 1,187 (409)
Exchange movements (630) —
At end of year 3,374 5,615
Included in Group reserves are non-distributable legal and capital reserves in certain overseas subsidiaries
amounting to £172,000 (2002: £153,000).
As permitted by section 230 Companies Act 1985, the profit and loss account of the Company is not produced
herein. Of the consolidated profit attributable to ordinary shareholders for the financial year £1,422,000
(2002: £605,000) has been dealt with in the accounts of the parent company.
At 31st March 2003 the cumulative goodwill written off to reserves on acquisitions made prior to 1st April 1998
amounted to £12,248,000 (2002: £12,248,000). 43
Notes to the accounts
Annual Report 2003
24 Consolidated cash flow statement
Reconciliation of operating profit to cash flow 2003 2002
from operating activities £’000 £’000
Operating profit 5,816 4,687
Depreciation and amortisation charges 2,605 2,710
Provisions (decrease)/increase (183) 158
Stock decrease 1,589 131
Debtors decrease 560 991
Creditors decrease (165) (1,331)
Capital grants amortised (16) (9)
Exchange (gains)/losses (176) 31
Asset disposal (gains) (55) (66)
Pension payments (500) (1,085)
Net cash inflow from operating activities 9,475 6,217
Acquisitions and disposals
The proceeds on the sale of subsidiary undertakings relate to the sale of subsidiary undertakings which were
completed in the year ended 31st March 2001.
Reconciliation of net cash flow to movement in net borrowings
Increase in cash in year 2,856 237
Cash outflow from net decrease in borrowings
and repayment of finance leases 1,633 1,805
Change in net borrowings resulting from cash flows 4,489 2,042
New finance leases (56) (656)
Termination of finance leases 9 —
Exchange adjustments (951) 150
Movement in net borrowings in year 3,491 1,536
Net borrowings at start of year (14,456) (15,992)
Net borrowings at end of year (10,965) (14,456)
Analysis of net borrowings
Balance at Other Balance
start Exchange Cash non-cash at end
of year movement flow changes of year
£’000 £’000 £’000 £’000 £’000
Cash at bank and in hand 2,487 146 1,801 — 4,434
Overdrafts (1,484) (51) 1,055 — (480)
Borrowings due within one year (1,311) (1,009) 1,405 (770) (1,685)
Borrowings due after one year (13,691) (36) — 770 (12,957)
Finance leases due within one year (232) (1) 228 (239) (244)
Finance leases due after one year (225) — — 192 (33)
(14,456) (951) 4,489 (47) (10,965) Notes to the accounts
44 Annual Report 2003
25 Financial instruments
Currency exposure
Shown below are the Group’s currency exposures. These exposures comprise the monetary assets and
monetary liabilities of the Group that are not denominated in the functional currency of the subsidiary company
or operating unit concerned. It is these exposures, which fluctuate throughout the year, that give rise to the net
currency gains and losses recognised in the profit and loss account. The amounts shown take into account the
effect of hedging instruments used to manage these exposures.
Net foreign currency monetary assets/(liabilities)
Euro
Functional currency of subsidiary or Sterling US Dollar currencies Other Total
operating unit £’000 £’000 £’000 £’000 £’000
2003
Sterling — (139) 397 (152) 106
US Dollar — — (162) — (162)
Euro currencies (474) (27) — — (501)
Other (204) 94 113 (25) (22)
Total (678) (72) 348 (177) (579)
2002
Sterling — (4,103) (3,414) 1,756 (5,761)
US Dollar — — (245) — (245)
Euro currencies (777) 83 — 37 (657)
Other (581) (298) 34 (6) (851)
Total (1,358) (4,318) (3,625) 1,787 (7,514)
Fair values of financial assets and financial liabilities
Set out below is a comparison by category of book and fair values of the Group’s financial assets and liabilities
as at the year end.
2003 2002
Book value Fair value Book value Fair value
£’000 £’000 £’000 £’000
Primary financial instruments held or issued 
to finance the Group’s operations:
Short term financial liabilities and current
portion of medium term borrowings (2,409) (2,409) (3,027) (3,027)
Medium term borrowings (12,990) (12,990) (13,916) (13,916)
Financial assets 4,434 4,434 2,487 2,487
Derivative financial instruments held to manage
the interest rate and currency profile:
Interest rate swaps — (294) — (157)
Forward foreign currency contracts — (210) —12
The fair values of the primary financial instruments have been taken as the book values.
The fair values of the interest rate swaps have been determined by discounting the forecast future cash flows to
net present values.
The fair values of the forward foreign currency contracts have been taken from the spot rate of exchange at the year end.
It should be remembered in the context of the above disclosures and calculations of “fair value” that, as stated in
the Financial Review, it is Group policy only to use derivative financial instruments to cover underlying exposures
that arise in the normal course of the Group’s stated commercial activities. Accordingly, such instruments are
held to maturity and no purely speculative trading is undertaken.
A narrative description of the Group’s treasury risk management policy is given in the Financial Review on pages
9 to 12 and details of the interest rate risk profile of financial liabilities in note 17. 45
Notes to the accounts
Annual Report 2003
25 Financial instruments continued
Gains and losses on hedges
Unrecognised gains/(losses) on instruments used for hedging, and the movements therein, are as follows:
Total net
Gains Losses gains/(losses)
£’000 £’000 £’000
Unrecognised gains and losses on hedges
at 1st April 2002 12 — 12
Gains and losses arising in previous years that
were recognised in the year (12) — (12)
Gains and losses arising before 1st April 2002
that were not recognised in the year — — —
Gains and losses arising in the year that
were not recognised in the year 6 (216) (210)
Unrecognised gains and losses on hedges
at 31st March 2003 6 (216) (210)
Of which:
Gains and losses expected to be recognised
in the next financial year 6 (216) (210)
Gains and losses expected to be recognised
after the next financial year — — —
As permitted by Financial Reporting Standard No. 13 short term debtors and creditors have been excluded from
the disclosures other than the currency exposure given above.
26 Commitments
Pensions
The Group operates a number of pension plans throughout the world devised in accordance with local
conditions and practices. Materially, however, the Group operates three principal defined benefit schemes; two
funded pension schemes in the UK provide benefits based on final pensionable earnings with the assets of the
schemes held in separate trustee administered funds and a further partially funded pension scheme in Germany,
the full SSAP24 liability for which is held on the balance sheet of the subsidiary company Emco Wheaton GmbH.
Over recent years separate payments have been made, as described below, to fully fund part of this scheme
with the consequent reduction in the provision on the balance sheet to the level required to cover the remaining
unfunded element.
Contributions to the schemes are charged to the profit and loss account so as to spread the cost of pensions
over employees’ working lives with the Group. The contributions are determined by independent qualified
actuaries on the basis of triennial valuations for the two UK schemes and of an annual valuation for the German
scheme.
The two UK defined benefit schemes were both closed to new members with effect from 1st January 2002.
After this date new UK employees become eligible to join a new defined contribution pension scheme, the
Group’s contributions to which are charged to the profit and loss account as they are incurred. 26 Commitments continued
Pensions continued
The Syltone Group Retirement Benefits Scheme
The latest actuarial valuation of the scheme took place as at 30th June 2001. The projected unit method of
funding was adopted. For the purposes of these accounts, the funding position was assessed as at 31st March
2001, the start of the financial year preceding the valuation. The main assumptions adopted in this assessment
were that long-term investment returns would exceed pensionable earnings increases by 3.35% per annum
compound. It was assumed that pensions in payment would increase at a rate of 2.4% per annum compound.
As at 31st March 2001, the market value of the assets of the scheme was £21,328,000 which was sufficient to
cover approximately 81% of the benefits that have accrued to members; after allowing for expected future
increases in pensionable earnings.
As at 30th June 2001, there was a deficiency of £1,354,000 relative to accrued benefits with statutory
revaluation when measured using the prescribed method and assumptions under the Minimum Funding
Requirement (MFR). Part of this deficiency (£139,400) was made good on 9th April 2002 under the Debt on
Employer legislation. The remainder will be made good by 5th June 2013 as part of the continuing contribution
rate reflected by the Schedule of Contributions; certified by the Scheme Actuary on 6th June 2003.
During the financial year, contributions made by the Group to this Scheme amounted to £1,347,000
(2002: £1,830,000).
Emco Wheaton UK Limited 1976 Pension Scheme
The latest actuarial assessment of the scheme took place as at 1st October 2000. The method of valuation and
actuarial basis were broadly as for the Syltone scheme described above. At 1st October 2000 the value of the
assets of the scheme was sufficient to cover approximately 175% of the benefits that had accrued to members,
after allowing for expected future increases in pensionable earnings. The Emco Wheaton UK Limited 1976
Pension Scheme has enjoyed a contribution holiday throughout the financial year.
Emco Wheaton GmbH Pension Scheme
An actuarial valuation of the scheme took place as at 31st March 2003 using the same method of valuation as
for the Syltone and Emco Wheaton UK schemes above. The main assumptions adopted differed slightly being,
in the actuary’s opinion, more in line with the German economic environment. Assumptions used were interest
returns of 5.5% per annum, pensionable earnings to increase by 2.5% per annum and pensions in payment to
increase at 1.5% per annum compound. On this basis the full SSAP24 liability for this scheme was provided in
the accounts of Emco Wheaton GmbH.
A new pension scheme has been agreed with the Works Council at Emco Wheaton GmbH. This scheme, like
the UK schemes, will be fully funded with the assets held in a separate fund. By 31st March 2002 payments had
been made into the new scheme to transfer all pensioners and active members between the ages of 30 and 55.
It is planned that the remaining active members under 30 will be transferred once they reach 30 and are elegible
for the new scheme.  As a consequence of German pension legislation active members over 55 years of age and
deferred members must remain in the old scheme until retirement. When the last of the personnel satisfying this
criterion retires the old unfunded scheme will be extinguished. It is planned that this gradual shift of the members
from the old to the new scheme will enable Emco Wheaton GmbH’s pension costs to remain constant.
The Group pensions charge for the period in respect of these schemes and retirement indemnities in France
was £975,000 (2002: £1,064,000). This is inclusive of £141,000 (2002: £136,000) in respect of the amortisation
of experience surpluses that are being recognised over 15 years, the average expected remaining service
lifetime of the active members. A prepayment of £1,343,000 (2002: £850,000) is included in the consolidated
balance sheet; this being the excess of the actual contributions paid over the accumulated pension cost of the
two UK defined benefit pension schemes. In respect of Group pension commitments outside the UK a provision
of £954,471 (2002: £1,015,198) is included in the consolidated balance sheet, this being the excess of the
accumulated pension cost over the actual contributions paid. Of this amount €1,288,607 (£889,553)
(2002:€1,570,232 (£961,975)) relates to the remaining unfunded element of the Emco Wheaton GmbH
Pension scheme.
Notes to the accounts
46 Annual Report 2003 47
Notes to the accounts
Annual Report 2003
26 Commitments continued
In respect of the Group’s defined contribution pension scheme the pension cost charge for the period
represents contributions payable by the Group to the scheme and amounted to £8,000 (2002: £Nil). There were
no outstanding or prepaid contributions at either the beginning or end of the financial year.
Group Company
2003 2002 2003 2002
Other commitments £’000 £’000 £’000 £’000
Operating lease payments for the year
ending 31st March 2003
Property leases terminating:
Within one year 219 159 42 22
In two to five years 210 319 — 49
In more than five years 297 273 — —
726 751 42 71
Equipment rentals on leases terminating:
Within one year 54 39 — —
In two to five years 353 157 81 65
In more than five years 14 12 — —
421 208 81 65
Guarantees and contingent liabilities
The Company guarantees certain subsidiary company borrowings, which at 31st March 2003 amounted to
£167,000 (2002: £357,000).
Certain subsidiary companies have entered into various contractual performance bonds and associated
guarantees which at 31st March 2003 amounted to £1,120,000 (2002: £1,012,000).
The Company has a contingent liability under a Value Added Tax Group Election for the Value Added Tax
liabilities of certain UK subsidiary companies which at 31st March 2003 amounted to £268,000
(2002: £514,000).
27 Pension cost FRS 17 disclosure note
Whilst the Group continues to account for pension costs in accordance with SSAP 24, under the new pension
accounting standard FRS 17 the following second year transitional disclosures are required.
As detailed in note 26 above the Group operates three principal defined benefit schemes. The valuation of
liabilities for the two UK schemes included below have been derived by projecting forward the position from the
latest valuation to 31st March 2003. The latest valuation of the German Scheme is at 31st March 2003. The
assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial
assumptions which, due to the timescales covered, may not necessarily be borne out in practice. The major
assumptions used by the actuaries were:
2003 2002
Rate of increase in pensionable earnings 3.50% 3.75%
Rate of increase of pensions in payment 2.50% 2.75%
Rate of increase in deferred pensions 2.50% 2.75%
Discount rate 5.40% 6.25%
Inflation assumption 2.50% 2.75% 27 Pension cost FRS 17 disclosure note continued
The FRS 17 fair value of the schemes’ assets is their market value at 31st March 2003. As the assets are not
intended to be realised in the short term this fair value may be subject to significant change before they are
realised. The FRS 17 present value of the schemes’ actuarial liabilities is derived from discounting cash flow
projections over very long periods and is thus inherently uncertain.
The assets in the scheme and the expected rate of return and the actuarial valuation of the schemes’ liabilities
were:
At 31st March 2003 At 31st March 2002
£’000 £’000
Equities 7.60% 13,121 8.25% 17,447
Gilts and Bonds 4.70% 4,754 5.50% 5,129
With profits and insurance policies — 7,101 — 5,745
Fair value of the schemes’ assets 24,976 28,321
Present value of the schemes’ actuarial liabilities (39,595) (33,408)
Net deficit in the schemes (14,619) (5,087)
Related deferred tax asset 4,451 1,591
Net pension liability (10,168) (3,496)
If FRS17 had been fully adopted in the financial statements the pension costs for the defined benefit schemes
would have been:
Analysis of the amount charged to operating profit
2003
£’000
Service cost 937
Total operating charge 937
Analysis of net return on pension scheme
2003
£’000
Expected return on pension scheme assets 2,104
Interest on pension liabilities (2,093)
Net return 11
Analysis of amount recognised in statement of total recognised gains and losses (STRGL)
2003
£’000
Actual return less expected return on assets (5,960)
Experience gains and losses on liabilities 136
Changes in assumptions (4,274)
Net loss recognised (10,098)
Notes to the accounts
48 Annual Report 2003 27 Pension cost FRS 17 disclosure note continued
Movement in deficit during the year
2003
£’000
Deficit in scheme at beginning of year 5,087
Movement in year:
Exchange adjustments 165
Current service cost 937
Contributions (1,657)
Net interest cost (11)
Actuarial loss 10,098
Deficit in scheme at end of year 14,619
History of experience gains and losses
2003
£’000
Difference between expected and actual return on scheme assets:
amount (5,960)
percentage of scheme assets (24%)
Experience gains and losses on scheme liabilities:
amount 136
percentage of scheme liabilities 0%
Total amount recognised in statement of total recognised gains and losses:
amount (10,098)
percentage of scheme liabilities (26%)
28 Employee Benefit Trust and Long Term Share Incentive Plan Trust
During the year the Company contributed £8,100 (2002: £8,100) towards the operating costs of the Employee
Benefit Trust. The Trust has waived all rights to participate by way of its holding in the ordinary shares of Syltone
plc, in any dividend that may be declared by the Company. The dividend waived in the current year amounts to
£40,000 (2002: £40,000).
During 1999 and 2000 shares in respect of the Long Term Share Incentive Plan (LTIP) were transferred to the
Trustees of the Plan. Dividends are paid to the beneficial owners of those shares.
The outstanding options to purchase shares from the Trustees of the Employee Benefit Trust and the maximum
number of shares which can be awarded under the LTIP are:
2003 2002
Maximum Maximum
Number of Number of Number of Number of
employees shares employees shares
Fourth grant – February 1997 at
159.17p per share —— 55 62,440
Fifth grant – February 1998 at
125.50p per share 56 73,915 58 75,453
1999 LTIP —— 3 151,650
2000 LTIP 5 232,550 7 413,610
Total outstanding at 31st March 2003 306,465 703,153
At 31st March 2003 the Trustees of the Employee Benefit Trust held 541,591 (2002: 541,591) ordinary shares in
Syltone plc. As required by Urgent Issue T ask Force No. 13 these shares are included as investments in the Group
consolidated balance sheet as at 31st March 2003 at a cost of £604,000 (2002: 604,000) and the Trust’ s
borrowings, which are guaranteed by the Company, of £Nil (2002: £Nil) and cash in hand £Nil (2002: £Nil) have
been included in the Group’ s borrowings due within one year and cash at bank and in hand respectively.
49
Notes to the accounts
Annual Report 2003 50 Annual Report 2003
Historical summary 51 Annual Report 2003
Group five year record
1999 2000 2001 2002 2003
£’000 £’000 £’000 £’000 £’000
Summarised trading results
Turnover 93,750 85,687 82,594 75,464 78,798
Operating profit before
exceptional items 8,011 6,725 5,126 5,327 5,816
Profit on ordinary activities
before taxation 6,159 4,521 1,751 3,508 4,803
Profit after taxation 3,636 2,756 707 2,014 3,022
Dividends 1,750 1,840 1,831 1,835 1,835
Retained profit/(loss) for the year 1,851 975 (1,203) 160 1,187
Summarised balance sheet
Fixed assets 21,657 22,730 20,910 21,439 20,450
Current assets excluding cash 35,514 35,515 35,416 31,549 30,790
Creditors (21,010) (19,254) (19,477) (17,516) (18,242)
Net borrowings (16,387) (16,804) (15,992) (14,456) (10,965)
Provisions and deferred income (1,514) (1,660) (1,135) (1,031) (1,523)
Net assets 18,260 20,527 19,722 19,985 20,510
Other information
Earnings per share 15.10p 11.41p 2.51p 7.99p 12.10p
Diluted earnings per share
(see note 10) 15.06p 11.38p 2.50p 7.96p 12.06p
Dividend per ordinary share 7.35p 7.35p 7.35p 7.35p 7.35p
Dividend cover (times) 2.06 1.53 0.34 1.09 1.65
Gearing 89.7% 81.9% 81.1% 72.3% 53.5%
Interest cover (times) 5.56 4.54 2.28 3.97 5.74
Pre-tax profit to turnover 6.6% 5.3% 2.1% 4.6% 6.1%
Pre-tax profit to net assets
employed 33.7% 22.0% 8.9% 17.6% 23.4%
Average number employed 1,136 1,098 1,037 875 840 52 Annual Report 2003
Notice of meeting
NOTICE IS HEREBY GIVEN that the forty-first Annual General Meeting of Syltone plc will be held at the premises
of The Brewery, Chiswell Street, London EC1Y 4DD on 4th September 2003 at 11.30 a.m. for the following
purposes:
1 To receive and adopt the audited accounts for the year ended 31st March 2003 together with the Directors’
Report thereon.
2 To declare a final dividend of 5.10p per share for the year ended 31st March 2003.
3 To re-elect Dr D L Speirs as a Director of the Company.
4 To re-elect Mr R Templeton as a Director of the Company.
5 To consider and if thought fit, pass the following ordinary resolution.
THAT:
the Directors remuneration report contained within the 2003 Annual Report and Accounts be approved.
6 To re-appoint KPMG Audit Plc as auditors of the Company and authorise the Directors to determine their
remuneration.
7 To consider and if thought fit, pass the following ordinary resolution.
THAT the Directors be and they are hereby generally and unconditionally authorised in accordance with
section 80 Companies Act 1985 to exercise all the powers of the Company to allot relevant securities (within
the meaning of said Section 80) up to an aggregate nominal amount of £1,622,236 during the period
commencing on the date of the passing of this Resolution and expiring at the end of the Annual General
Meeting of the Company to be held in 2004, but so that this authority shall allow the Company to make
before the expiry of this authority offers or agreements which would or might require relevant securities to be
allotted after such expiry and notwithstanding such expiry the Directors may allot relevant securities in
pursuance of such offers or agreements.
8 To consider and, if thought fit, pass the following ordinary resolution:
That:
the amended version of the Syltone plc Share Incentive Plan (“the Plan”), described in the circular to
shareholders dated 24th June 2003 and constituted by a deed entered into by the Company (the “Trust
Deed”) and a set of rules, both the Trust Deed and the amended rules being substantially in the form
produced in draft to this meeting and, for the purpose of identification, initialled by the Chairman of the
meeting, be adopted, subject to such further amendments thereto as the directors of the Company
consider necessary or desirable to obtain or maintain the approval of the Inland Revenue thereto, and the
directors be and are hereby authorised to make such amendments and do all such things as are necessary
or desirable to obtain or maintain the approval of the Inland Revenue thereto and to carry the Plan into
effect.
9 To consider and if thought fit, pass the following ordinary resolution.
That:
the amendments to the Syltone plc Long-Term Share Incentive Plan (“the LTIP”) which are described in the
circular to shareholders dated 24th June 2003 and to be constituted by the amended rules substantially in the
form produced in draft to this meeting and, for the purpose of identification, initialled by the Chairman of the
meeting, be adopted and the directors be and are hereby authorised to do all such things as are necessary or
desirable to carry the LTIP as so amended into effect.
10 To consider and, if thought fit, to pass the following special resolution
THAT:
(a) the Directors be and they are hereby empowered, pursuant to section 95 Companies Act 1985
(“CA 1985”), to allot any equity securities (within the meaning of section 94 CA 1985) as if section 89(1)
CA 1985 did not apply to any such allotment, provided that this power shall be limited to the allotment
of equity securities: 53 Annual Report 2003
Notice of meeting
(i) in connection with or the subject of an offer or invitation, open for acceptance for a period fixed
by the Directors, to holders of ordinary shares and such other equity securities of the Company
as the Directors may determine on the register on a fixed record date in proportion (as nearly as
may be) to their respective holdings of such securities or in accordance with the rights attached
thereto (including equity securities) which, in connection with such offer or invitation, are the
subject of such exclusions or other arrangements as the Directors may deem necessary or
expedient to deal with fractional entitlements that would otherwise arise or with legal or practical
problems under the laws of, or the requirements of any recognised regulatory body or any stock
exchange in any territory; and
(ii) (otherwise than pursuant to sub-paragraph (i) above) up to an aggregate nominal amount of
£318,888 and shall expire on 4th December 2004 or, if earlier, at the conclusion of the Annual
General Meeting of the Company in 2004, except that the Company may before such expiry
make offers or agreements which would or might require equity securities to be allotted after
such expiry and notwithstanding such expiry the Directors may allot equity securities in
pursuance of such offers or agreements; and
(b) all authorities previously conferred under section 95 CA 1985 be and they are hereby revoked,
provided that such revocation shall not have retrospective effect.
9 To consider and, if thought fit, to pass the following special resolution
THAT:
the Directors of the Company be and they are hereby empowered to exercise all powers of the Company to
make market purchases (as defined in Section 163(3) of the Companies Act 1985) of its ordinary shares of
25p each provided that:
(i) the maximum number of ordinary shares which may be acquired is 1,275,552;
(ii) the minimum price which may be paid for any such ordinary shares is 25p; and
(iii) the maximum price which may be paid for any such ordinary shares is an amount equal to 105% of the
average of the middle market quotation for an ordinary shares according to the London Stock
Exchange Daily Official List for the five business days immediately preceding the day on which the
purchase is contracted to take place;
and shall expire at the conclusion of the Annual General Meeting of the Company in 2004 after the passing of
this resolution (or, if earlier, 12 months from the date of passing this resolution) but a contract of purchase
may be made before such expiry which will or may the executed wholly or partly thereafter and a purchase of
shares may be made in pursuance of any such contract.
10 To transact any other business of an Annual General Meeting.
By order of the Board
Andrew Hartley
Company Secretary 24th June 2003
Registered Office:
Springmill Street
Bradford
West Yorkshire
BD5 7HW Notes:
1 The directors are seeking authority under section 80 Companies Act 1985 to allot relevant securities up to an aggregate
nominal amount of £1,622,236 in the terms set out in resolution 7. This represented 25.44% of the existing issued share
capital of the Company on 24th June 2003.
2 The directors are seeking authority under section 95 Companies Act 1985 to disapply the pre-emption rights under
section 89 Companies Act 1985 in respect of equity securities by way of rights and otherwise up to an aggregate nominal
amount of £318,888 in the terms set out in resolution 10. This represented 5% of the existing issued share capital of the
Company on 24th June 2003.
3 The following documents will be available for inspection at the Registered Office from the date of this notice until the day
of the meeting:
a) Copies of any relevant contracts of service or memoranda of terms of appointment of the Directors of the
Company.
b) Register of directors’ share interests.
These documents will also be available for inspection for at least fifteen minutes before the meeting and during the
meeting.
4 A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his or
her stead. A proxy need not be a member of the Company.
5 In accordance with Regulation 34 of the Uncertificated Securities Regulations 1995, the Company specifies that only
those shareholders registered in the register of members of the Company as at 11.30 a.m. on 4th September 2003 (or in
case of an adjournment as at 48 hours before the time of the adjourned meeting) shall be entitled to attend or vote at the
above general meeting and that the number of votes which any shareholder may cast, on a poll, will be determined by
reference to the number of shares registered in such shareholders’ name at that time. Changes to entries on the register
after that time will be disregarded in determining the rights of any person to attend or vote at the meeting.
6 A form of proxy for the use of shareholders is enclosed with the report. Forms of proxy must reach the office of the
Registrars not less than 48 hours before the time appointed for holding the meeting.
Coffee and biscuits will be served from 11.00 am. The location of the Brewery is given on page 55.
Notice of meeting
54 Annual Report 2003 Printed by Polestar Corporate Print Limited, Bradford and London
Notice of meeting
The Brewery is in the City, next to the Barbican Centre and within half a 
mile from St Paul’ s Cathedral, the Lloyd’ s Building, and the Bank of
England. It is easy to reach by road, underground or rail.
Road – There is a space immediately outside the gates for cars, taxis and
coaches to drop off passengers. Several buses also run nearby.
Parking – Convenient multi-storey NCP car parks located at:
Beech Street (8am-Midnight everyday), Finsbury Square (24hrs, Mon-Sat),
London Wall (24hrs, Mon-Sat), Aldersgate Street (24hrs, open everyday)
Underground and Rail –
Moorgate (5 minutes walk) Circle, Metropolitan, Hammersmith &
City, Northern, British Rail and
Thameslink.
Barbican (5 minutes walk) Circle, Metropolitan, Hammersmith &
City and Thameslink.
Bank station (15 minutes walk) Circle, Northern and Waterloo & City
Liverpool Street Station Circle, Metropolitan, Hammersmith &
(20 minutes walk) City, Central and British Rail.
Annual Report 2003