FKI plc Annual report + financial statements
FKI plc 
15-19 New Fetter Lane
London EC4A 1LY
T +44 (0)20 7832 0000
F +44 (0)20 7832 0001
W fki.co.uk
FKI plc Annual report + financial statements 2003
2003 01 Financial highlights
02 Chairman’s statement
04 Chief Executive’s review
06 Group at a glance
08 FKI Logistex
10 Lifting Products and Services
12 Hardware
14 Energy Technology
16 Corporate social responsibility report
24 Finance Director’s review
28 Board of Directors
30 Corporate governance
32 Directors’ report
34 Remuneration report
44 Independent auditors’ report
45 Consolidated profit and loss account
46 Consolidated balance sheet
47 Company balance sheet
48 Consolidated cash flow statement
49 Consolidated statement of total recognised 
gains and losses
49 Consolidated reconciliation of movements in 
equity shareholders’ funds
50 Notes to the financial statements
74 Five year record
74 Key dates
75 Principal subsidiary undertakings
76 Shareholders’ information
76 Corporate information
Designed and produced by Radley Yeldar (London) FKI plc is a major international engineering
group quoted on the London Stock
Exchange. It commands world leading
positions in its specialised businesses: 
FKI Logistex, Lifting Products and
Services, Hardware and Energy
T echnology. It employs over 14,500 people,
operates principally from Europe and
North America and sells to customers 
in most countries of the world. 
The Group is focused upon understanding
the needs of customers and ensuring 
that it is an efficient supplier of the best
products and services. The Group’ s
fundamental objective is to deliver 
growth in shareholder value.
Financial highlights
£1 ,452.6m
Turnover  (2002: £1,610.0m)
£1 1 0.4m
Operating profit* (2002: £172.7m)
£79.2m 
Profit before tax* (2002: £135.0m)
£1 66.6m
Net operating cash flow (2002: £202.5m)
1 0.3
p
Adjusted earnings per share* (2002: 17.0p)
4.5
p
Dividend per share (2002: 10.0p)
*before reorganisation costs in acquired businesses, goodwill amortisation, profit or
loss on disposal and termination of discontinued operations and profit on sale of
tangible fixed assets.
01 FKI plc Annual report 2003 Chairman’ s statement
The economic environment in the US and
Europe, concerns about the spread of
terrorism and the uncertainty in the period
leading up to and during the Iraq war
affected business and consumer confidence
and combined to make this year a very
difficult one for FKI.
Last year, we reported that we expected 
a downturn in the first half but that we
anticipated an improvement in the Group’s
performance in the second half, based on
some recovery in demand together with the
benefits of various steps we had taken to
reduce costs. While the cost improvements
were realised, for reasons outlined above 
we suffered further reductions in demand
which continued through the second half.
Customers reduced their general levels of
spending and a significant number of large
capital projects were delayed or cancelled.
This particularly applied in the energy
generation market.
In these tough markets, turnover and 
profits declined. More detail is given in the
operating and financial reviews in this
Annual report, which show that operating
profits have reduced to around half the level
of two years ago. Consequently, in the
trading update on 1 April 2003, the Board
announced that it anticipated recommending
a final dividend reduced from last year’s
level. The dividend will be rebased to reflect
current levels of profitability and debt.
Maintenance of the previous level of
dividend would have significantly reduced
the Group’s headroom under its borrowing
covenants. Accordingly, in addition to the
interim dividend for the year ended 
31 March 2003 of 4.2p paid on 28 February
2003, it is proposed to pay a final dividend 
of 0.3p per share on 31 October 2003 
to shareholders on the register at 
3 October 2003. This proposed final
dividend brings the total dividends for the
year to 4.5p (2002: 10.0p) per share.
Having rebased the dividend, the Board
intends to adopt a progressive policy in
future within a guideline of dividends being
covered a minimum of two times. In future
years, dividends will be split between interim
and final more in line with market practice.
The results that we have achieved and the fact that we
have retained our market positions in a very competitive
environment are due to the commitment of all the
Group’ s employees and I would like to thank them for
their efforts throughout a difficult year .
02 FKI plc Annual report 2003 Regrettably, economic conditions have
necessitated a number of actions to reduce
costs which have affected many of our
employees. The results that we have
achieved and the fact that we have retained
our market positions in a very competitive
environment are due to the commitment 
of all the Group’s employees and I would
like to thank them for their efforts
throughout this difficult year.
Bob Beeston, who joined FKI as 
Chief Executive in January 1992, retired 
in February 2003. During his time as 
Chief Executive he pursued a balance
between growth companies and high
margin cash generative companies. 
As a result of these policies, FKI has been
well placed to cope with the downturns 
of the last two years. I would like to place
on record my thanks to him for all that 
he did for FKI and we all wish him a 
happy retirement.
In his place we welcome Paul Heiden who
was appointed Chief Executive in January
2003 and who joined us from Rolls-Royce.
Paul’s first task has been to familiarise
himself with the Group’s businesses and 
to take further action in the face of weak
demand. He is in the process of reviewing
the Group’s strategy, a task which we
expect to be completed towards the end 
of this calendar year.
Much attention has been given recently in
the business community to the question 
of the importance of good corporate
governance. These matters are regularly
reviewed by the Board and in the Directors’
report there is a statement on the procedures
for internal controls, audit and evaluation of
potential business risks. You will see that 
we have nine directors, five of whom are
non-executives. I chair the Nominations
committee, and the Remuneration and 
Audit committees are separately led by
other non-executive directors. I am pleased
to be able to say that the non-executive and
the executive directors work effectively
together as a team.
Finally, the actions we have taken during the
last two difficult years to cut costs will not
impair the Group’s ability to respond 
to improvements in demand when the
economic environment improves and we
remain confident about the long-term
prospects of the Group.
Keith Orrell-Jones
Chairman
03 FKI plc Annual report 2003 Chairman’s statement Chief Executive’ s review
As the new Chief Executive I have joined 
the Group at an extremely challenging time
as a consequence of a combination 
of factors:
• demand in most of the Group’s major
markets is depressed, significantly
impacting operating performance;
• acquisitions to build a world leading
materials handling business have put
pressure on the balance sheet; and
• declining operating and share price
performance have led to questions over
Group strategy.
Results
The results for the year reflect difficult
market conditions resulting in weak demand
for the Group’s products and services,
offset by significant managerial actions to
reduce costs, improve efficiencies and exit
poorly performing operations. 
Turnover decreased by 9.8% to 
£1,452.6 million generating an operating
profit of £110.4 million. After net interest
payable of £31.2 million, the profit before
tax was £79.2 million and after tax, the
adjusted earnings per share amounted to
10.3p. These figures are reported before
reorganisation costs in acquired businesses,
goodwill amortisation and exceptional items.
Although the Group’s profitability reduced
significantly compared with last year, 
there was excellent operating cash flow
amounting to £166.6 million, representing
151% of the operating profit. 
As a result of this and other actions 
taken, the Group’s net debt reduced to
£498.4 million at 31 March 2003.
Over a number of years the Group has
earned a reputation for tight financial
controls, clear and detailed operating 
focus and speed of decision making and
action. These strengths underpinned
performance last year and will continue 
to be core to the Group’s operations. 
They will be reinforced by increasing
attention to working capital management
and sharing of best practice across Group
companies. This concentration will
maximise profitability and cash flow.
Gearing
Despite the difficult markets, the Group
continues to generate free cash flow which,
together with the reduced level of 
dividend, should enable further significant
debt reduction. 
Strategy
In the short term the focus is on cash
generation, debt reduction and an
improvement in interest cover. I am
presently leading a detailed review of the
Group’s businesses, their strategies and
future plans, which is expected to be
completed by the end of the calendar year.
The principal criteria that are being used to
judge the potential of each business are
their sustainable return on invested capital
(ROIC) relative to the weighted average 
cost of capital and their expected growth 
in ROIC.
04 FKI plc Annual report 2003 Outlook
It is too early to tell how markets will develop
during the next year. The Group has a
robust core of excellent businesses with
strong market positions and opportunities
for development. These businesses have
maintained their competitive positions
during the current economic downturn 
and have been sized for current levels of
demand but remain capable of responding
rapidly when markets improve.
Most of the Group’s businesses are 
faced with significant increases in overhead
costs such as insurance, medical costs,
National Insurance in the UK and pensions,
the last of which is estimated to increase by
about £20 million. Management is focused 
on offsetting these increases with cost
reductions and improved efficiencies. 
However, these factors make 2003/04 
full year performance difficult to predict.
Current trading is in line with performance
levels in the second half of 2002/03. 
As regards exceptional costs, the only 
plan in existence is the exit from Retford 
but if other steps become necessary they
will be taken.
In the current year cash generation, debt
reduction and an improvement in interest
cover will be the main priorities. Although
market conditions are difficult, the Group
continues to generate free cash flow and
the reduced level of dividend payments
should enable a greater rate of debt
reduction in the future. The recently agreed
changes in banking covenants will provide
the Group with operating flexibility in
managing this position going forward. 
The net debt position will be further
improved by any business sales.
Paul Heiden
Chief Executive Officer
The Group has a robust core of excellent businesses
with strong market positions and opportunities for
development. They have maintained their competitive
positions during the current economic downturn 
and have been sized for current levels of demand 
but remain capable of responding rapidly when
markets improve.
05 FKI plc Annual report 2003 Chief Executive’s review
Paul Heiden
Chief Executive FKI Logistex:
Turnover
£439.3m
Group percentage
30.5%
A world leader in
automated logistics and
sortation products,
systems and solutions.
FKI Logistex is a leading supplier of
integrated automated material handling
systems to the global airport baggage
handling, freight and parcel,
warehouse/retail/distribution and
manufacturing sectors. Products 
and services provided include design,
simulation, software, high-speed 
sorters, conveyors, AS/RS, high-speed
palletisers, carousels, picking systems 
and after-sales service.
Lifting Products and Services:
Turnover
£408.7m
Group percentage
28.4%
World leader in lifting
products. World number
two in chains and lifting
gear . World number 
one in large shears.
Lifting Products and Services has a world-
class capability in design, manufacture,
distribution and servicing of lifting and 
other equipment for customers in the
industrial, mining, energy, construction,
marine, fishing, hardware, automotive,
warehousing/distribution, LPG and scrap
markets of the world.
Hardware:
Turnover
£258.5m
Group percentage
18.0%
US number one in window
hardware. US number one
in storm and screen door
hardware. US number 
one in mechanisms for
ergonomic solutions.
Hardware has extensive capability in design,
manufacture and distribution of window 
and door hardware, furniture hardware and
ergonomic equipment for original equipment
manufacturers, distributors and retailers. 
In addition, castors are sold to a wide
variety of other customers which supply
hospitals, industrial manufacturing, 
food manufacturing and retailing and 
cargo handlers.
Energy Technology:
Turnover
£332.9m
Group percentage
23.1%
World number one
independent supplier 
of turbogenerators and
leading supplier of other
electricity generating
machinery and power
infrastructure equipment.
Energy Technology is a leading supplier 
of turbogenerators; wind turbines;
switchgear; electric motors; measurement
and control products and is a significant
supplier of other electrical machinery and
equipment. Products and systems are sold
to manufacturers of turbines, pumps,
compressors, fans and other machines 
and to a wide variety of customers in
industry, power generation, oil and gas
supply, air separation, petrochemical 
and contracting.
06 FKI plc Annual report 2003 Operations Worldwide
Operations Worldwide Markets
Construction
Bridges
Stadiums
Harbours
Chains and hoists
Distribution
Oil and gas
Mining
Operations UK, North America, rest of Europe and Far East Markets
Window and door manufacturers
DIY stores
Office furniture
Operations UK, North America, rest of Europe and Far East Markets
Power generators
Oil and gas industry
Renewable energy
Rail industry
Markets
Airport baggage handling
Freight and parcel
Warehouse/retail/distribution
Manufacturing
07 FKI plc Annual report 2003 Group at a glance 08 FKI plc Annual report 2003
FKI Logistex
FKI Logistex is a major
global supplier of
automated material
handling systems with a
market leading range 
of products and services.
The turnover of FKI Logistex in the year was
£439.3 million (2002: £454.7 million) with
order intake of £435.8 million. The closing
order book of £231.7 million is similar to 
the opening order book of £233.9 million.
Operating profit for the year amounted 
to £15.7 million (2002: £29.5 million)
representing a margin of 3.6% compared
with 6.5% last year. The reduction in
reported turnover arose mainly because of 
a £15.9 million adverse currency translation
effect, partially offset by a £2.1 million
contribution from the acquisition of 
Dexion Materials Handling Limited in
December 2002. The operating profit
reduction included a £1.9 million adverse
currency translation effect and £1.1 million
of redundancy and reorganisation costs. 
At the trading level, profits were impacted
by £7.2 million as a result of lower margins
earned on contracts involving new product
introductions and an adverse general
contract mix, and, in addition, the
expensing of £3.6 million of Crisbag
TM
development costs in the second half 
of the year.
Throughout the last year and, with the
exception of the baggage handling market,
there have been weak conditions in most of
the markets served by Logistex. There was
a slowdown in the rate of orders received
during the second half of the year to a level
in line with the previous year. As a result,
management took a number of actions to
reduce overhead costs and during the year
the number of employees was reduced by
227 (6.5%). These redundancies and the
restructuring of the White Systems Inc.
operations in Kenilworth, New Jersey, where
one factory was closed, resulted in the 
£1.1 million of one-off costs which were
charged to operating profit.
In North America, Logistex faced
challenging market conditions in its 
retail and distribution, manufacturing and
freight and parcel markets. The recovery 
in orders and sales anticipated at the start
of the financial year failed to materialise.
However, it is important to note that the
market position of Logistex was maintained
with continuing success at customers such
as Target, Wal-Mart, Kohls, PepsiCo and
Marmaxx. Despite the downturn in the
economy, Alvey, which supplies market
leading high and low-speed palletisers to
the manufacturing sector, improved its
operating profit and margin. 
The North American airport baggage
handling market experienced a strong 
and growing level of demand, with orders
trebling, largely resulting from the US
Government legislation requiring all hold
baggage to be screened. Logistex’s
products and systems are combined with
other manufacturers’ screening equipment
to provide the necessary facilities and the
group benefited from this increase in
demand with significant orders being
received for Houston, Indianapolis, 
Boston Logan and Tampa airports. 
Further growth is anticipated from 
this sector. 
In Europe and the rest of the world, the
manufacturing and distribution and retail
sectors experienced difficult market
conditions. However, the businesses gained
some notable successes including a 
£15.6 million contract for an automated
distribution centre in Spain and significant
orders from, amongst others, Pearson,
Tibbett & Britten and Newell Rubbermaid.
Logistex also had success in the freight and
parcel market receiving a £12.3 million order
from Australia Post for three automated
high-speed sorters and additional business
from La Poste and Danish Post. In the
airport baggage handling sector, the 
01 02 09 FKI plc Annual report 2003 FKI Logistex
highlight of the year was the award of 
the baggage handling contract valued at
£49.3 million for Terminal 3 of Singapore’s
Changi International Airport. The contract 
is due to be completed in May 2006. 
Logistex continues to invest in 
product development, including further
enhancements to its market leading
software products for warehouse control
systems, Alvey’s new low-speed 780
palletiser product, the Crisbag
TM
airport
baggage handling system and a new linear
belt sorter which has generated much
interest since its launch at the February
ProMat show in Chicago.
Operating cash flow during the year was
good and exceeded operating profit 
as a result of a reduction in total 
working capital.
On 20 December 2002 Logistex acquired
Dexion Materials Handling Limited (DMH), 
a UK supplier of conveyor systems, for 
£0.2 million. DMH, renamed FKI Logistex
Conveyors Limited, provides the group with
a European based conveyor capability. 
It is difficult to predict the markets which
Logistex addresses but management is
confident that the investment in market
leading product solutions and customer
services leaves the group well placed to
benefit when market conditions improve.
01
High-speed parcel
sorting system
designed, manufactured
and installed by 
FKI Logistex.
02
A virtual view of a 
North American airport
security solution, 
as designed by 
FKI Logistex.
03
Steve Jones, Managing
Director, FKI Logistex.
04
An FKI Logistex
automated material
flow solution for
children’s clothing
manufacturer, VF
Playware, combines
high-speed tilt-tray
sortation, conveyors
and sophisticated
software controls.
03 04
Steve Jones
Managing Director 10 FKI plc Annual report 2003
Lifting Products 
and Services
The group’ s operations
continued to lead the way
in the development of
innovative products in
liaison with some of the
world’ s leading original
equipment manufacturers.
Turnover in Lifting Products and Services
was £408.7 million (2002: £435.2 million)
and operating profit amounted to £32.5
million (2002: £34.9 million). Turnover was
down 4.2% in volume terms and in addition
there was an adverse £8.3 million currency
translation impact. Underlying operating
profit declined by £1.1 million (3.2%) and
there was an adverse £1.3 million currency
translation impact. This profit is stated after
charging £2.7 million of redundancy and
reorganisation costs.
The results held up well despite the global
economic downturn which led to sharply
reduced industrial capital expenditure,
particularly in North America, impacting
many of the group’s markets. In the oil and
gas sector, despite relatively high oil prices,
there were weak sales of products used for
maintenance in mature markets, such 
as the North Sea and Gulf of Mexico. 
Many construction projects in the US were
deferred as a consequence of weak
economic conditions and lack of availability
of insurance cover for major projects. 
In Western Europe an increasingly
recessionary environment has developed
which has weakened the performance of
our European businesses. 
The wire and wire rope companies, with
manufacturing operations in the US, UK,
Germany, Indonesia and New Zealand 
and service led operations in many 
other countries, produced a creditable
performance following a difficult period 
last year.
Major contract successes for the wire and
wire rope companies included a further
order from BP under their long-term
agreement for the Thunder Horse project
worth £7.3 million for delivery in 2003/04.
Amongst other work, a notable win was a
contract for £1.5 million for supplying wire
ropes to the new Wembley Stadium project.
The group is also developing Equatorial
Guinea as a service centre for the rapidly
expanding offshore oil industry in West
Africa. Possibilities for further expansion
exist not only in Equatorial Guinea but the
adjacent countries and the centre will
provide opportunity for increased trading
with Angola and South Africa.
Despite the quality and reliability of the
products and the unrivalled breadth of the
product range, performance in the chain
and wire rope fittings businesses fell below
last year’s levels as a result of the economic
environment. However, these businesses
are constantly seeking out new markets and
opportunities and developing new products.
During the year, for example, a new range
of heavy duty hoists was launched in the
US, extending the product range from 
25 tonnes to 100 tonnes lifting capacity. 
The UK Parsons Chain operation continued
to lead the way in the development of
innovative mining conveyor chain. In liaison
with one of the world’s largest mining
equipment manufacturers they have
developed “Broadband Chain”. This new
concept enables coal mines to operate
longer conveyors and in some cases 
exploit thinner seams resulting in increased
production and improved productivity 
and profitability.
01 02 11 FKI plc Annual report 2003 Lifting Products and Services
Strengthening ferrous and non-ferrous
scrap prices helped performance to
improve at Harris Waste Management.
Ferrous scrap prices in the US are now over
$100 per tonne compared to $72 per tonne
one year ago as a result of US steel import
tariffs and a weakening in the US dollar,
which has led to an increase in the amount
of scrap steel exported. Harris sales
increased by 15% and order intake by 32%
as a consequence of these improved scrap
prices. The Kosan LPG business, which
makes products and systems for the filling,
maintenance and testing of liquefied
petroleum gas cylinders, had another good
year with increased sales and profit.
Lifting Products and Services produced
another year of outstandingly good
operating cash flow, which was greater 
than last year and amounted to 175% of
operating profit. This excellent performance
is a result of continuing management focus
on reducing working capital. 
Management continues to focus on cost
and inventory reduction. The group recently
announced that it is proposing to cease
making certain products at its Retford 
facility, which will be closed resulting in an
exceptional cost in 2003/04 of about 
£3.6 million.
01 
Structural roof supports
are to be supplied to
the new Wembley
Stadium, by Bridon
International Ltd, the
group’s UK wire and
rope manufacturing
company.
02 
“Broadband” mining
conveyor chain,
recently developed at
Parsons Chain, UK.
03 
Closing a large rope 
at Bridon-American
Corporation, the
group’s US wire and
rope manufacturing
company.
04 
Neil Bamford, Managing
Director, Lifting
Products and Services.
03 04
Neil Bamford
Managing Director 12 FKI plc Annual report 2003
Hardware
The Hardware group
maintains leading market
positions in many of the
markets that it serves.
Delivery, quality, and
customer service are core
values, supplemented by
engineering solutions that
respond to the voice of the
customer and provide a
distinct edge in the
marketplace. 
Turnover in Hardware during the year
amounted to £258.5 million (2002: 
£281.1 million) with operating profit
increasing to £42.0 million (2002: 
£40.7 million). Figures have been adjusted
to exclude the results of Chautauqua
Hardware Corporation, which was closed 
in October 2002 and is shown as a
discontinued business. Trading levels were
similar to last year with underlying turnover
down by £3.6 million (1.3%). Most of the
turnover drop was due to an adverse 
£19.0 million currency translation effect 
of the weaker dollar during the year. 
The operating profit of Hardware is stated
after charging £0.8 million of redundancy
and reorganisation costs. Operational
improvements, new products and efficiency
gains contributed £4.9 million (12%) to profit
but this excellent improvement was offset
by £3.6 million of adverse currency
translation effect. The overall operating
margin of Hardware improved to 16.2%
compared with 14.5% last year.
Approximately 95% of Hardware turnover 
is in the North American market so its
activity levels mirror the health of the US
economy. The housing markets in the US
and Canada were strong over the last year
with housing starts in the US market
growing over 5% and in Canada by over
10%. Truth Hardware and Wright Products
sell window and door hardware into these
markets and both businesses produced
strong performances, their combined sales
accounting for 52.4% (2002: 47.6%) of
Hardware turnover. 
Sales of Truth’s Maxim Window Operator,
which was launched only two years ago,
were exceptionally strong during the year,
particularly in the Canadian market, and
contributed greatly to the group’s success.
The Impressions line of prime door
hardware, which was introduced in the
previous year, had its first full year of sales
and continues to grow its market share.
This represents a significant future
opportunity for the group in the retail prime
door market. In addition, the introduction of
a new multipoint locking patio door product
by Truth represents a future opportunity in
another higher-end niche of the window
hardware market.
Retail sales were another strong point in 
the economy, particularly in the “Big Box”
stores. These “Do-it-Yourself” operations 
are a very significant and growing force in
the US retail hardware market and include
Home Depot, Lowes and Menards. 
Hardware is well positioned to service these
and other customers through its automated
retail distribution centre. Total retail sales
through the group’s primary retail distribution
unit were up considerably from the previous
year. As with housing, the Canadian retail
market was also robust, sales throughout
the group being up by over 10% compared
with the previous year.
The office furniture, home furniture, capital
goods, computer hardware and airline
industry markets in the US were extremely
weak, which was reflected in the
performances of the furniture and castor
companies. Year-on-year turnover was 
01 02 13 FKI plc Annual report 2003 Hardware
down 12.5% with the most significant
contributing factors in these markets 
being depressed US capital spending, the
migration overseas of furniture OEM
manufacturing and reduced consumer
confidence. To combat the overall lower
level of demand, the group’s companies
leveraged their engineering and
manufacturing expertise to provide
customer value in existing or new markets,
for example, the castor group introduced
more than 50 new products during the year.
The ergonomic business, Weber Knapp,
has introduced a “spoilboard racking and
transfer system” to the material handling
marketplace, previously an untapped
market for this business.
A cornerstone of Hardware’s performance
has been the reduction of fixed costs and
increased outsourcing of manufacturing
both domestically and internationally. 
This has helped the group to reduce 
total costs and has lowered the amount 
of capital investment required to move 
the business forward. In addition, the
furniture companies were consolidated 
into two facilities following the closure 
of the Chautauqua Hardware factory in
Jamestown, New York, in October 2002.
This also resulted in a lower fixed cost base
for the future and will improve delivery and
customer service levels.
Hardware has reduced its total headcount
by 483 (15.4%) and reduced the overhead
base which puts it in a stronger position for
the future.
01 
The new Faultless 800
series castor with
swivel, rigid and total
brake, which locks the
swivel and wheel
simultaneously.
02 
The “Wright Touch”
storm door latch
manufactured by Wright
Products has a
comfortable tactile grip
and button combined
with a durable zinc
body. This new product
is targeted as an
upgrade to the
traditional push button
storm door latch.
03 
Bob Sook, President,
Hardware.
04 
Truth’s Maxim Operator
with a folding handle
option, satisfying
customer demands 
for larger, more
aesthetically pleasing
windows.
03 04
Bob Sook
President 14 FKI plc Annual report 2003
Energy T echnology
Despite the downturn in
the US energy market, 
the outlook for global
electricity demand remains
strong. Our entry into the
wind turbine market
underpins our energy
technology strategy 
and long-term growth
objectives.
Turnover from continuing operations in
Energy Technology declined 17% to 
£332.9 million (2002: £400.0 million) with 
a 27% trading downturn being partially
offset by £41.0 million of turnover from
DeWind, the wind turbine business 
acquired on 28 June 2002. Order intake
was £335.8 million but during the second
half of the year £40.5 million of orders 
in the opening order book (£249.6 million) 
were cancelled, leaving, after exchange rate
adjustments, a closing order book of 
£222.4 million. Operating profit declined to 
£24.8 million (2002: £72.6 million), after
charging £3.0 million of redundancy and
reorganisation costs and a £4.2 million
trading loss at DeWind. The profit reduction
reflected the weaker marketplace for
turbogenerators, measurement systems
and transformers, particularly in the US,
following the collapse of Enron and the
difficulties this created for many customers
operating in the US energy market. 
In addition to the trading loss of DeWind
there was an exceptional redundancy 
and reorganisation cost of £2.4 million, 
which is additional to the £3.0 million
referred to above.
The acquisition of the DeWind wind turbine
business was a significant step in
addressing key energy technologies for 
the growing world demand for electricity 
in general and for distributed power
generation and renewable energies in
particular. The transfer of manufacturing
operations from third parties to the 
group’s extensive Brush turbogenerator
manufacturing facilities is ahead of schedule
and has been substantially completed. 
The first wind turbines manufactured by
Brush for DeWind were delivered in
December 2002.
Following the acquisition, DeWind has
secured business in new markets including
the UK, China, Japan, Belgium and Austria.
Performance since acquisition has been in 
line with the acquisition plan and, including
synergy benefits across the group, is on
course to be at break even by the end of
the year. The new D8, a 2MW turbine
launched during the year, is targeted at the
growing demand for multi megawatt
machines from the larger wind power
development projects across Europe, 
which currently account for more than 
80% of the global wind market.
During the year the closure of Hawker
Siddeley Power Transformer (HSPT) 
was announced and The Bedford Pump
Company was sold. The market for HSPT’s
specialist high voltage transformers has
changed considerably over recent years
and become increasingly unattractive. 
After detailed analysis, the business was
determined to be non-viable and its 
closure was announced in February 2003.
Closure costs are expected to amount 
to £9.3 million of which £3.4 million are
cash costs that will be spent in the first 
half of 2003/04. The payback period 
on the closure costs will be approximately
two years, excluding any potential 
benefit from the sale of property. 
These businesses contributed £10.2 million
(2002: £15.9 million) of sales and £3.5 million
of losses (2002: £2.4 million loss) and have
been classified as discontinued.
Before acquisitions, headcount in Energy
Technology reduced by 468 (9.0%) in the
year as a result of the disposal, closure and
other actions to consolidate and downsize
businesses to match market conditions. 
Brush turbogenerator operations were
particularly hard hit by the greater than
expected cascading impact of the Enron
collapse, which resulted in many US energy
companies cancelling or rescheduling
power generation projects. This, combined
with weaker than anticipated recovery in 
Far Eastern power markets, resulted in
turbogenerator sales for the year some 
60% lower than last year’s record levels. 
01 02
01 
Brush HMA DG185ZL 
4-pole turbogenerator
for GE Oil & Gas
supplied to
Petrovietnam.
02 
The DeWind D8, a 2MW
variable speed, variable
pitch wind turbine with
lightweight carbon 
fibre blades under
construction – raising
the rotor to new
heights.
03 
Reg Gott, Managing
Director, Energy
Technology.
04 
A packaged switchgear
and transformer set
used in a Cummins
portable containerised
power supply package
in Saudi Arabia. 15 FKI plc Annual report 2003 Energy Technology
However, management took swift action 
to realign capacity to load across the 
three turbogenerator operations, ensuring
that they remained profitable even after
incurring substantial restructuring and
redundancy costs. 
In December 2002 a co-operation
agreement was signed with Voith Siemens
Hydro, the global market leader in hydro
power, to supply them with hydro turbine
generators manufactured at the Brush 
SEM facility in the Czech Republic, further
extending the range and mix of the group’s
turbogenerator products.
The oil and gas market, particularly in the
Middle East, remained strong throughout
the year and provided good demand for
smaller turbogenerators manufactured at
Brush HMA in the Netherlands for oilfield
power generation applications, as well as an
increased demand for large high voltage
motors, manufactured by Laurence, 
Scott & Electromotors in the UK. The oil
and gas instrumentation, measurement 
and automation activities of Bristol Babcock
also benefited from increased exploration
and extraction investment, most notably in
Mexico, China, Russia and the Middle 
East which went some way to offset 
the reduction in demand from the US
energy market.
Although conditions in the general industrial
markets of Europe and North America have
been difficult, export sales of Marelli low
voltage motor and generator products have
increased with notable growth in South
Africa, Asia Pacific and Germany, where
activities have been expanded. In response
to increased price competition from the
suppliers of low voltage motors
manufactured in low-cost economies, the
group has increased the proportion of its
higher volume small frame size low voltage
motors manufactured in eastern Europe.
The rail transport industry is a significant
consumer of power and power technology
products. Brush Traction provides power
engineering products and services to the
industry and produced excellent results in
an environment of significant uncertainty
regarding ongoing rail infrastructure funding.
A £50 million order was received for the first
phase of repowering and upgrading the
existing fleet of Eurotunnel locomotives from
5.6 MW to 7.0 MW, which is deliverable
over the next six years. Further deliveries 
of new Eurotunnel locomotives, the
repowering of Virgin Trains passenger
locomotives and increased freight
locomotive overhaul activities, helped 
Brush Traction exceed expectations.
Switchgear activities benefited from
increased demand and the new Eclipse 
and Horizon ranges were deployed 
into utility, mobile power and building
services applications. New product
introductions are in place to meet the
increasing market demand for upgrading
trackside power systems.
The Froude power test equipment business
had mixed fortunes during the year. Sales to
the gas turbine testing sector held up well
as did the UK and US automotive power
test markets, but the German operation
suffered from a significant drop in
investment activity in the market.
Amid increasingly difficult market conditions,
operations have continued to focus upon
reducing the cost of purchased materials
and the strategic procurement team 
made good progress in expanding the
supplier base in eastern Europe and Asia. 
Capital expenditure and working capital
remained tightly controlled during the year,
although investment in plant and machinery
continued where it formed part of the 
core group strategy, where there was a
compelling economic justification or where
the expenditure was required to maintain
the group’s high standards of safety and
environmental protection.
Energy Technology continued to maintain a
full programme of product development
and, of particular note, new products were
delivered as a result of projects within 
wind power, turbogenerators, low voltage
generators, power converters, switchgear
and control systems. The group has 
strong technical positions and clear market
opportunities to develop its businesses.
The immediate general outlook for Energy
Technology markets continues to be
unsettled and short-term business plans
have been structured accordingly. 
Actions taken in recent years to reduce
fixed costs and reposition the business will
stand the group in good stead through the
short-term uncertainty.
Looking ahead, the growth in demand for
electricity over the next decade will be
characterised by the increasing importance
of distributed power generation. Small and
medium-sized gas turbine generators will
continue to enjoy a significant share of this
market but there is expected to be a 
rapid growth of power generation from
renewable sources, especially wind power.
Efficiency and environmental impacts will be
increasingly important considerations in the
provision of electrical power throughout the
world and will create significant
opportunities for new small scale
embedded power generation, networking
and management technologies.
03 04
Reg Gott
Managing Director This is the second year that FKI has reported on social and 
ethical responsibilities and the third year that it has reported on
environmental, health and safety matters. High standards of
Corporate Social Responsibility (CSR) are essential to our
continued business success, ability to add value in society, financial
performance and contribution within our local communities. 
In addition to this summary report, a full version of the CSR report
is available from the Company Secretary.
Overall management of corporate social responsibility
Identification of stakeholders – Business and private customers,
suppliers, employees, national and local governments and their
agencies, bankers, insurers, the media, the communities where 
the Group operates and sells its products and services, as well 
as investors and the financial markets, all take an interest in the
Group’s activities and may be considered as stakeholders.
Responsibility – Responsibility for the social and ethical,
environmental, and health and safety policies, their implementation
and monitoring rests with the Chief Executive. This responsibility is
delegated to the President or Managing Director of each operating
group, and in turn to the senior management team of each
operating unit. However, in practice, all of the Group’s employees
are responsible for complying with the Group’s policies in any area
within their control or influence.
Assurance – FKI has established, over three years, clear reporting
requirements for all business units to generate, maintain, and
regularly update precise data for all areas of CSR described in this
report. The system collates information from all reporting units into
an overall corporate data set, allowing easy comparison of results
from one year to the next. Once collected, the information in this
report is confirmed internally with management for accuracy and
relevance. This data is available to the Board and management
throughout the Group for use when making decisions.
Social and ethical
FKI believes that it has a responsibility to its employees, the
communities and the environment in which it operates.
Consequently it considers it important to take account of these
and all other stakeholders with whom it is in contact. To achieve
this, FKI’s social and ethical policy outlines how its employees, as
representatives of the company, should act when interacting with
these stakeholders. For the second consecutive year, FKI has
enhanced its reporting measures of ethical performance.
Social and ethical policy 
FKI aims to be the first choice in its chosen markets for customers,
business partners, investors and employees. Its reputation is
earned every day by the collective efforts of all members of the
team worldwide. FKI wants to be known as a Group that:
• has clear performance targets and takes pride in performing well;
• continually seeks out better ways of doing things; 
• strives to improve its service to customers and develop
innovative products, systems and solutions; and
• represents high standards of trust and integrity.
FKI’s values of performance, improvement, innovation, trust and
integrity provide a framework for the conduct of the Group’s 
business and form the basis of its relationships with all 
its stakeholders. 
Specifically, FKI has laid down the following social and ethical
policies to be implemented at all units.
1. Standard of conduct FKI will conduct its operations with
honesty, integrity and openness and with respect for the rights
and interests of its employees. It will similarly respect the
legitimate interests of those with whom it has relationships.
2. Compliance with the law FKI companies and their employees
are required to comply with the laws and regulations of the
countries in which they operate. 
3. Employees, labour rights and conventions FKI is committed 
to maintaining working environments where there is mutual trust
and respect and where everyone feels responsible for the
performance and reputation of the Group.
FKI companies will not use any form of child, forced or 
compulsory labour.
FKI companies will recruit, employ and promote employees on 
the sole basis of the qualifications and abilities needed to
perform the work. Discrimination is forbidden on the grounds of
gender, age, race, national origin, religion and disability.
FKI respects the dignity of individuals and the legal right of
employees to membership in trade unions.
FKI companies will implement remuneration practices in
compliance with legal requirements.
Employees will be encouraged to develop their job skills 
through specialist training and development programmes 
where appropriate. 
4. Customers and suppliers FKI is committed to providing
customers with products, services, systems and solutions that
offer good value in terms of price and quality.
FKI is committed to establishing mutually beneficial relations 
with its suppliers, customers and business partners. 
5. Shareholders FKI will conduct its operations in accordance 
with accepted principles of good corporate governance. 
It will provide timely, regular, reliable and accurate information 
on its activities, financial situation and performance to all
shareholders. FKI employees in possession of information 
which, if disclosed, could affect the market price of its shares 
are prohibited from trading in securities until after public
disclosure of such information.
6. Business integrity FKI companies and employees will act in
good faith in all business decisions. 
FKI policy is not to give or receive inducements for business or
financial gain. No employees may offer, give or receive any gift or
payment which is, or may be construed as being, an
inducement. Any demand for, or offer of, an inducement will be
rejected immediately and reported to management.
Corporate social responsibility report
16 FKI plc Annual report 2003 FKI accounting records and supporting documentation will
accurately describe and reflect the nature of the underlying
transactions. No undisclosed or unrecorded account, fund,
asset, or liability will be established or maintained. 
The parties with whom FKI does business are expected to
commit to corresponding levels of business integrity.
7. Conflicts of interest All FKI employees are required to avoid
personal activities and financial interests which could conflict with
their responsibilities to the Group. Where conflicts of interest
arise, they will be openly acknowledged and reported to head
office. FKI employees must not seek personal gain from third
parties nor should they abuse their power within the Group for
personal gain. 
8. Community involvement FKI tries to be a trusted corporate
citizen and to fulfil its responsibilities to the societies and
communities where it carries out its operations consistent with its
business objectives and legal obligations. Modest donations to
local charities are permitted in accordance with Group guidelines. 
9. Public activities FKI companies are encouraged to promote 
and defend their legitimate business interests. FKI will co-operate
with governments and other organisations, both directly and
indirectly, in the development of regulations which may affect
legitimate business interests. FKI neither supports political 
parties nor contributes to the funds of groups whose activities 
are calculated to promote party interests. Any political statements
made by employees are made in their personal capacity.
10. The environment FKI is committed to making continuous
improvements in the management of its environmental impact
and further details are given in the environmental policy.
11. Health and safety FKI is committed to full compliance with
health and safety regulations in the workplace for all employees
and further details are laid down in the health and safety policy.
12. Group property FKI employees are expected to properly
preserve Group property including inventories, fixed assets and
intellectual property and properly utilise employee time as far as 
is reasonable and practicable, only for the legitimate business
interests of FKI. Property will not be loaned or disposed of except
in accordance with established Group policy.
13. Confidentiality FKI employees have a duty to protect
confidential information and ensure that it is not communicated
to the public or external parties. Authority for disclosures of such
information will only be granted with the approval of appropriate
senior Group officials.
14. Competition FKI companies and their employees will comply
with all competition laws and promote the conduct of Group
operations in accordance with those laws and regulations.
15. Communication, compliance and reporting FKI has
communicated these social and ethical policies to all operating
units which, in turn, are required to communicate the content 
to employees.
Management of each operation will be required to confirm
compliance with the policies each year.
The Board of FKI instructs employees to bring to the attention of
appropriate senior officials of the Group, or the Company Secretary,
any breach or suspected breach of these policies. Employees are
allowed to communicate breaches anonymously in confidence and
no employee will suffer as a consequence of so doing.
Management systems and accountability 
There are currently no formal criteria against which to measure 
and assess ethical performance in business. Consequently setting
ethical standards is, in many respects, more difficult than setting
standards for health and safety or environmental matters.
The Group’s social and ethical reporting is based upon internal
reviews of the relevant issues and with reference to the guidelines
of organisations such as the Ethical Trading Initiative, ABI, and
AccountAbility. The results of these investigations provide a basis
from which to assess current ethical performance, to update the
policy and to set targets.
Social and ethical measurements
Of Group operations, 60% have their own locally tailored formal
policies, based on FKI social and ethical policy. The remaining 40%
generally comply with stated policies. These units are mostly small
with comparatively few employees. This provides reassurance that
the social and ethical policies of the Group are reaching a large
proportion of the workforce.
There has been an improvement on last year’s performance, 
with over 82% (2002: 66%) of FKI companies having reported 
that their existing policy on social and ethical matters affords 
the appropriate safeguards to employees. Approximately 
64% (2002: 40%) also provide appropriate safeguards for 
job applicants and 45% (2002: 33%) for sub-contractors 
and other business associates.
Training in ethical issues and social conduct has also been
improved from last year, with 63% (2002: 50%) of companies 
giving some form of training in these matters. Social and ethical
practice is also promoted through bulletins, posted on notice
boards, and discussed in employee handbooks. In addition 83%
(2002: 50%) of the Group companies have clear channels for
employee comment and contribution and for reporting unethical 
or anti-social acts that can result in formal grievance procedures.
17 FKI plc Annual report 2003 Corporate social responsibility report 18 FKI plc Annual report 2003 Corporate social responsibility report
Compliance
Any allegations of misconduct are treated seriously and are
promptly and fully investigated before any appropriate action is
taken. Where employees are dissatisfied with the outcome, formal
grievance procedures may allow further examination of the issues.
The existence of formal reporting channels throughout the Group
has helped ensure that allegations of misconduct have been 
kept to a minimum. During the year ended 31 March 2003, there
have been 13 allegations of antisocial or unethical actions across
the Group. Four of these have resulted in an employee being
dismissed, in two cases no evidence of wrongdoing was found 
and the cases rejected, one identified that the unit’s policy was at
fault, and six are still under active investigation. 
FKI aims to uphold high standards of business practice and to
eradicate misconduct. The prompt and full investigation of
allegations reflects the Group’s commitment to high standards.
Community support
Over 40% of our units have been involved in community work 
and a wide variety of charities have been supported during the
year, including:
American Cancer Association Medisch Centrum Rijnmond-Zuid
American Heart Association National Deaf Children’s Society
Aplastic Anaemia Trust Radar
Army Benevolent Fund Red Cross
Brainwave Right to Read
Children’s Hospice Salvation Army
Habitat for Humanity United Way
Juvenile Diabetes 
Research Foundation Variety Club of Great Britain
Médécins sans Frontières
In addition, several companies allow or encourage staff to support
and work with local schools, universities and community groups,
depending on the needs of the local community. 
Environmental responsibility
Managing FKI’s impact on the environment continues to be 
a main priority. As a major engineering company it is important 
to measure, monitor, and constantly improve the effect on the
environment. The Group identifies its main target areas as the
reduction in the use of energy and water, and the reduction 
of solid and liquid waste. This section outlines how FKI 
managed its relationship with the environment in the year 
ended 31 March 2003.
Environmental policy 
FKI is committed to the protection and conservation of the
environment wherever it operates. It recognises that all of its
businesses may have some impact on the environment and is
committed to giving due consideration to adverse impacts on the
environment and local communities. The Group is also committed
to the conservation of natural resources and raw materials.
The Group’s environmental policy, which is reviewed regularly,
involves the implementation of an Operational Management
System within each business unit, enforcing standards in line with
legal responsibilities and obligations, and includes a commitment to
environmental management systems and standards, such as ISO
14001. These standards will be achieved by increasing focus on
environmental stewardship leading to reduced environmental
impact of its products and industrial processes. 
To achieve these objectives, FKI targets the following.
1. Develop, install and maintain appropriate documented
Environmental Management Systems compliant with ISO 14001 
or equivalent standard to demonstrate the Group’s commitment 
to the improvement of its environmental performance through its
monitoring procedures. The systems will identify areas of
responsibility for which appropriate individuals will be appointed,
and will communicate those responsibilities to all employees to
encourage compliance and continual improvement.
2. Meet or exceed current environmental legal requirements 
in all countries of operation and use this as a basis for further
development of environmental programmes.
3. For all products, focus on product stewardship and identify
ways of improving efficiency throughout the supply chain and
manufacturing process to reduce consumption of materials,
energy and other resources and to minimise waste and harmful
emissions. Sensitivity to environmental issues should be
incorporated in the planning, design and operation of facilities
and services, including the recycling and re-use of materials 
and reduction in the use, or replacement where possible, of
substances which may be harmful to the environment.
4. Use environmentally responsible suppliers and
subcontractors.
5. Consider the use of alternatives to scarce and 
non-renewable resources and give them preference 
wherever economically viable.
6. Develop and market products and services to meet current
environmental legal requirements. Promote the environmental
credentials of the Group and its products to customers and the
public at large. Each successive product should be targeted to 
be produced more efficiently than its predecessors and, where
appropriate, should be capable of being re-used, recycled or
safely disposed of.
7. Maintain control on discharges and emissions to comply with
legal limits and endeavour to reduce the impact of discharges
and emissions by using less hazardous material.
8. Raise the level of employee awareness of environmental
issues and promote a responsible, accountable and
environmentally aware culture throughout the Group. Provide
training and instruction to help employees perform their work
efficiently so as to reduce detrimental impacts on the business 
or the environment. Train employees to manage the
environmental impacts of their work. Encourage employee
reporting of non-compliant practices to senior management
wherever they believe it is appropriate.
9. Communicate environmental ideas from each company in the
Group to all other companies.
10. Set and revise environmental targets and policies annually
incorporating continuous improvement. Measure performance
against these targets and report annually. 19 FKI plc Annual report 2003 Corporate social responsibility report
Energy usage Tonnes CO
2
/£m turnover
163
2000/01 2001/02 2002/03
170
178
Energy consumption Tonnes CO
2 
(’000s) 
284
2000/01 2001/02 2002/03
276
259
Equivalent usage of CO
2
for energy consumption
Total CO
2
Energy
Grid electricity Equivalent Other fuels produced consumption
consumption tonnes CO
2
tonnes CO
2
tonnes tonnes CO
2
/
GWh (’000s) (’000s) (’000s) £m turnover
2000/01 324 181 103 284 163
2001/02 330 179 97 276 170
2002/03 297 168 91 259 178
(Reduction)/increase (10.0%) (6.1%) (6.2%) (6.2%) 4.7%
Management systems
In order to promote good practice and to raise awareness and
understanding, the Group has identified senior managers
responsible for environmental issues at each of its operating units
and all have completed environmental questionnaires. The data
collected enables local and Group management to monitor 
aspects of performance at all major sites around the world and 
to set targets.
FKI’s proactive approach to environmental issues is reflected in the
fact that one-third of the reporting companies, which contribute
over 90% of total turnover, are either accredited to or are 
following the guidelines of ISO 14001 or an equivalent standard. 
An environmentally responsible culture is promoted throughout 
FKI and the formal environmental training received by 
approximately 1,500 FKI employees during the last year will 
ensure its continuance.
Energy usage
Greenhouse gases, so called as a result of their insulating
properties, reduce the rate of heat loss from the earth’s atmosphere
and contribute to global climate change. Out of six greenhouse
gases it is believed CO
2
accounts for over 80% of global warming
pollution and nearly all of it is produced by the combustion of coal,
oil and gas for energy. 
FKI continues to respond positively to the UK and global climate
change programme introduced following the Kyoto Protocol by
quantifying its environmental impact and investigating means of
reducing energy consumption. 
Information has been collected from all companies within the Group
concerning the use of grid electricity, natural gas, fuel oil, and LPG,
as well as other company specific fuels used to create power.
Calorific conversion factors have then been applied to translate the
amount of fuel used into the equivalent mass of CO
2
produced as
a measure of impact upon the environment.
The target for last year’s consumption of energy was to reduce
consumption by 1% in terms of mass of CO
2
produced per unit
turnover. As can be seen from the chart, energy usage has
increased when compared with last year per unit turnover. 
The reason for this is threefold. Firstly, many units are now including
more sources of energy consumption in their records than in the
past, such as those resulting from more accurate measurement,
particularly of motor vehicle fuel. 
Secondly, energy consumption consists of two elements, fixed and
variable. The same quantity of electricity and gas is required to 
heat and light an office, warehouse or facility within the standard
workday regardless of the level of production. Most vehicle fuel is
also independent of turnover. Remaining consumption is largely
proportional to operating levels but also varies due to climate factors
such as unusually cold winters or hotter and more humid summers. 
The third factor is that as a result of the economic downturn some
companies, particularly in Energy Technology, have been bringing
manufacturing work in house that was previously subcontracted. 
In absolute terms there was a reduction of 6.2% in total mass of
CO
2
produced by the Group.
Energy initiatives
Over 41% of the Group’s reporting companies have energy
efficiency programmes in place. The majority of programmes
undertaken involve:
• closer monitoring of usage and leak detection investigations;
• testing, mapping and certification of all electrical circuits;
• an increased use of natural light and heat through new
environmental management systems;
• the more efficient use of site space allowing relocation of staff 
to more focused areas; and 
• introduction of more efficient air compressors and boilers. 20 FKI plc Annual report 2003 Corporate social responsibility report
Water consumption 
Although water is often viewed as a renewable resource, the
availability of fresh water is limited and it is not possible to increase
supply levels indefinitely without degrading the environment. Water
costs can be significant and savings of 20% are regarded as
achievable with little extra cost.
Water consumption is another measure that FKI considers
important as an impact upon the environment. This year the strict
monitoring of water usage, and corresponding actions to reduce
the amount of water use has resulted in a reduction of 1.3% in
terms of volume of water used per unit turnover, ahead of the 1%
reduction target. In real terms this represents a reduction of 11.5%
in total volume of water used.
Volume of water consumption
Relative water
Absolute water consumption m
3
consumption m
3
per £000 turnover
2000/01 totals 2,917,310 1.67
2001/02 totals 2,431,005 1.50
2002/03 totals 2,152,499 1.48
Liquid waste management
FKI uses water mainly for cooling purposes, surface treatments,
washing down products during the production process and for
sanitary purposes. Some units which produce relatively large
quantities of waste water and liquid as a result of the manufacturing
processes have water treatment plants that are monitored regularly
by local water companies. Provided the water meets strict standards
stipulated by the water authorities or government agencies, some
operations are allowed to discharge wastewater into rivers.
Otherwise, where permitted, they are allowed to discharge into the
sewer system or are removed by registered disposal companies.
Waste results from the inefficient use of resources and the Group
constantly strives to minimise it. FKI measures its effectiveness 
in this area by reference to the cost of waste material disposal. 
The target was to reduce the cost of disposal by 1% but, in fact,
the cost of liquid waste disposal per unit turnover remained the
same, largely as a result of increased rates of charge by waste
removal contractors. The absolute cost of disposing of liquid 
waste dropped by 9.2%.
Cost of liquid waste disposal
Liquid
Absolute liquid waste disposal
waste disposal cost £ per
cost £000s £000 turnover
2000/01 totals 1,095 0.63
2001/02 totals 872 0.54
2002/03 totals 792 0.54
Solid waste management
The cost of disposal of industrial solid waste has risen due to
increased US state imposed fees for users and for waste disposal
permits, charges by registered removal companies, the reduction 
in available landfill sites, and also the increase in landfill tax by £1
per tonne each year until 2004 in the UK and similar increases in 
other countries.
All of FKI’s operating units segregate their solid waste and sell or
recycle scrap metals. The more waste that is segregated,
especially into individual metals or types of material, the more it can
be sold for and the easier the recycling. Many operations re-use
packaging, particularly that used for internal transportation, and 
re-cycle office paper where possible.
The solid waste disposal cost per unit turnover has increased and
the target of 1% reduction has not been achieved, mainly due to
more production being done in-house at the expense of
outsourcing. However, due to the reduction in turnover of the
Group there was an overall reduction of 3.4% in total waste
disposal costs.
Cost of solid waste disposal
Absolute solid Solid waste 
waste disposal disposal cost £ per
cost £000s £000 turnover
2000/01 totals 739 0.42
2001/02 totals 668 0.41
2002/03 totals 645 0.44
Liquid waste disposal cost £/£000 turnover
0.63
2000/01 2001/02 2002/03
0.54 0.54
Water usage m
3
/£000 turnover
1.67
2000/01 2001/02 2002/03
1.50 1.48 Other environmental initiatives
During the year a number of reporting units undertook a risk
assessment to identify major environmental threats posed by their
operations and a significant number carried out soil investigations
to determine whether any historical contamination on site had
occurred. No significant environmental threats were identified as a
result of these assessments. 
Reducing emissions to air – For most FKI companies, levels of
contaminated emissions into the air are minimal. For operating units
where this is not the case the onus is placed on local management
to make adequate provision to monitor levels to ensure legal
compliance and, where practical, work towards eliminating 
such emissions.
Compliance 
Over the last 12 months FKI units received two fines totalling
£17,565, for failure to file complete and correct environmental
information and for a small discharge into a river.
All permits required for Group operations have been received and
adhered to over the last year.
Health and safety
FKI considers the health and safety of its employees, customers,
contractors and other stakeholders that operate at or visit any FKI
site a key priority. It is with this priority in mind that FKI implements
Health and Safety management systems. 
Health and safety policy 
FKI is committed to full compliance with health and safety
regulations in the workplace for all of its employees worldwide 
and to continually keep the potential for workplace accidents to 
an absolute minimum. In order to provide fully compliant working
environments FKI is committed to do the following.
1. Meet or exceed current health and safety legislation in
countries where the Group operates.
2. Introduce and maintain good working practices.
3. Make health and safety a key consideration of all business
affairs across the Group.
4. Develop effective health and safety procedures, identifying
areas of responsibility and assigning these responsibilities to
appropriate individuals in each organisation.
5. Encourage Group employees to be aware of potential hazards
and safe systems of work and operating procedures on all sites 
in order to avoid unnecessary risks. Assist all employees to
understand their responsibilities and statutory obligations, in
particular to take reasonable care of themselves, those around
them and those affected by their actions.
6. Provide ongoing and up-to-date employee training reflecting
legislative changes and relevant health and safety developments
to enable all employees to do their work in compliance with
health and safety regulations.
7. Implement a system of recording, reporting and analysing
health and safety incidents in order to promote compliance with
local laws and prevailing regulations and to provide information
and accountability for the Group as a whole.
8. Set and publish Group health and safety objectives and
targets. Monitor and assess performance in order to assist 
in formulating appropriate actions in an effort to achieve
continuous improvement.
Management systems 
FKI seeks to promote the adoption of good practices and to raise
awareness and understanding of health and safety matters and, to
assist with this, the Group has identified senior managers
responsible for health and safety issues at each of its operating
units. All units worldwide completed a health and safety
questionnaire and data collected enables local and Group
management to monitor performance at all sites around the world
and to set targets.
21 FKI plc Annual report 2003 Corporate social responsibility report
Solid waste disposal cost £/£000 turnover
0.42
2000/01 2001/02 2002/03
0.41
0.44 22 FKI plc Annual report 2003 Corporate social responsibility report
Health and safety measurements 
Throughout the year, management is charged with reporting
incidents within a month of their occurrence, and at the year end
each operation reports all incidents for the previous 12 months. 
As there is currently no standard for reporting health and safety
matters, FKI has decided to follow the UK guidelines on the
classification of incidents in all operations worldwide, and has used
these classifications for the purposes of Group reporting.
FKI is pleased to report that for the third year of reporting there
have been no fatalities at any operation within the Group.
Regrettably, there were three amputations (2002: nine, 2001: four)
all involving the loss or partial loss of a finger. There were also 23
other major injuries (2002: 29, 2001: 38) including 17 fractures.
Other injuries with three or more days lost time totalled 326 
(2002: 324, 2001: 336). Records are kept of minor injuries, defined
as those needing attention beyond first aid, typically a visit to the
doctor. The majority of such injuries relate to cuts, bruises, minor
burns, lower back and other muscular strains.
This is the second year that data was collected for dangerous
occurrences during the year, which totalled 24 (2002: 26). In all
cases, full investigations were carried out which included checking
similar equipment located elsewhere and further training was
provided where necessary. In addition, there were 68 work-related
illnesses recorded (2002: 77), 34 of which were repetitive strain
injuries affecting factory and office workers.
The accident incidence frequency rate shows an increase over the
last year although there was a 5% fall in total reported injuries from
465 to 444. This is short of the 10% target set last year, and the
lessons learned will be used to help achieve next year’s reduction
target, shown below.
Intrinsic health and safety built into our products – The products
made by FKI, examples of which are given in the Operating review
on pages 6 to 15 of this Annual report, are designed with safety in
mind. Many of the Group’s products incorporate a range of safety
features and, in accordance with legislation, where appropriate,
details of safe working limits.
Compliance 
During the last 12 months there was one violation of health 
and safety regulations in New Zealand, two incidents under
investigation in the Netherlands, and one charge for £45,000 in
Canada for an accident that occurred in 2001 after the unit failed
to ensure a safety mechanism was maintained in good condition. 
Health and occupational health issues – Health and occupational
health issues vary according to the type of work carried out in each
operation. For example, all operations that have presses and other
noisy machinery provide hearing protection that all people entering
the premises are required to use. Regular hearing checks are
carried out on all high-risk employees.
Corporate social responsibility targets 
Through analysis of risk assessment of corporate social
responsibility issues, FKI has established next year’s targets for
environmental and health and safety actions. The targets are
outlined below. As it is an evolving process, however, these targets
will continue to change as business risk changes. 
FKI’s targets are as follows:
• 1% reduction in energy and water consumption per unit of 
turnover for 2003/04 compared with 2002/03;
• 1% reduction in liquid and solid waste disposal costs for
2003/04 compared with 2002/03;
• 5% decrease in reportable injuries for 2003/04 compared with
2002/03; and 
• to ensure that all operating units have developed a local policy on
social and ethical issues by the end of 2003/04.
There is also an increased commitment to achieving ISO 14001 
accreditation, or equivalent standard, by the end of 2005. 23 FKI plc Annual report 2003 Corporate social responsibility report
Number of incidents by type
Dangerous Dangerous Work related Work related
Major Major Other reportable Other reportable occurrences occurrences illnesses illnesses
Incidents by type 2002/03 2001/02 2002/03 2001/02 2002/03 2001/02 2002/03 2001/02
FKI Logistex 6 10 26 21 6 1 12 13
Lifting Products 
and Services 11 11 145 137 7 9 6 30
Hardware 4 4 26 47 7 1 31 33
Energy Technology 5 13 129 119 4 15 19 1
Group totals 26 38 326 324 24 26 68 77
Accident frequency rate
Total reportable Total reportable Accident Accident
incidents/ incidents/ frequency rate/ frequency rate/
Average hours accidents accidents 100,000 hours 100,000 hours
worked/month 2002/03 2001/02 2002/03 2001/02
FKI Logistex 554,000 50 45 0.75 0.64
Lifting Products and Services 644,000 169 187 2.19 2.20
Hardware 483,000 68 85 1.17 1.32
Energy Technology 653,000 157 148 2.01 1.66
Group totals 2,334,000 444 465 1.59 1.50 24 FKI plc Annual report 2003
Last year was obviously a difficult one
with turnover down 9.8% and adjusted
profit before tax down 41.3%. However,
cash flow was a healthy £166.6 million,
giving free cash flow of £103.4 million
and a reduction in net debt of £34.1
million. The focus for the current year
will be upon further debt reduction.
Finance Director’ s 
review
Results for the year
As a result of difficult trading conditions in most of the markets 
in which the Group operates, total turnover reduced by 9.8% 
to £1,452.6 million. Turnover of continuing operations was
£1,439.4 million and the reduction from last year’s level was 
made up of three factors:
• a £132.1 million (8.4%) trading reduction, mostly arising in 
Energy Technology; and
• an adverse currency translation impact of £42.6 million mostly
due to the weaker US dollar; offset by
• a £43.1 million first time contribution from acquisitions made
during the year.
The turnover from acquisitions consisted of £41.0 million from
DeWind and £2.1 million from Dexion Materials Handling Limited, 
a small Logistex acquisition in the UK.
Discontinued operations principally relate to the closure of
Chautauqua Hardware Corporation in the US and Hawker Siddeley
Power Transformers in the UK, both of which were announced
during the year.
The operating profit before reorganisation costs and goodwill
amortisation comprised £115.0 million from continuing operations
offset by losses of £4.6 million in discontinued operations giving a
total of £110.4 million. This total includes an adverse currency
translation effect of £6.6 million, £7.6 million of redundancy and
reorganisation costs, and £4.2 million of operating losses, before
reorganisation costs, at DeWind, in line with expectations at the
time of acquisition.
The second half of the year benefited from a lower pension charge
than indicated in the Interim report, which was offset by a more
prudent view of contract cost recoveries and the expensing of 
£3.6 million of previously capitalised development costs in
Logistex.
The performance of the Group’s businesses is described in more
detail in the Operating review on pages 6 to 15.
Geographical analysis by origin
Turnover originating in the UK declined by £104.6 million largely due
to the downturn in sales of turbogenerators in Energy Technology,
and sales in North America decreased by £110.0 million as a result
of the slowdown in the US economy. North America now accounts
for 51.8% of Group sales although it should be noted that it
accounts for 75.8% of operating profit.
Year ended Year ended
31 March 31 March
2003 2002
Turnover Turnover
£m % £m %
United Kingdom 292.4 20.1 397.0 24.7
Rest of Europe 349.8 24.1 276.9 17.2
North America 753.2 51.8 863.2 53.6
Rest of World 44.0 3.0 33.9 2.1
Continuing operations 1,439.4 99.0 1,571.0 97.6
Discontinued operations 13.2 1.0 39.0 2.4
Total 1,452.6 100.0 1,610.0 100.0
Year ended Year ended
31 March 31 March
2003 2002
Operating Operating
profit profit
£m % £m %
United Kingdom 26.0 23.5 40.4 23.4
Rest of Europe 2.1 1.9 32.8 19.0
North America 83.7 75.8 101.1 58.5
Rest of World 3.2 2.9 3.4 2.0
Continuing operations 115.0 104.1 177.7 102.9
Discontinued operations (4.6) (4.1) (5.0) (2.9)
Total 110.4 100.0 172.7 100.0 25 FKI plc Annual report 2003 Finance Director’s review
Impact of exchange rates
With 79.9% of the Group’s turnover and 76.5% of its operating
profit originating from outside the UK, the Group’s results are
sensitive to changes in exchange rates. Trading results and cash
flow of overseas operations have been converted into sterling at
average rates of exchange, whilst balance sheets are converted 
at year end rates.
The most significant rates for the Group were as follows:
2003 2002
At Average At Average
31 March rates of 31 March rates of
2003 exchange 2002 exchange
to £1 to £1 to £1 to £1
US dollar 1.58 1.55 1.42 1.44
Canadian dollar 2.33 2.40 2.27 2.25
Euro 1.45 1.54 1.63 1.63
Danish krone 10.76 11.48 12.13 12.09
The weakness of the North American average exchange rates 
to sterling compared with last year accounted for the adverse
currency translation impacts on turnover and operating profit 
which are analysed between operating groups below.
Operating
Turnover profit
£m £m
Currency impact on results
FKI Logistex (15.9) (1.9)
Lifting Products and Services (8.3) (1.3)
Hardware (19.0) (3.6)
Energy Technology 0.6 (0.1)
Discontinued operations (0.3) (0.1)
(42.9) (6.6)
Reorganisation costs in acquired businesses
The reorganisation costs of £2.4 million relate to the integration of
DeWind AG into the Energy Technology group. 
Interest
The Group’s net interest expense reduced to £31.2 million 
(2002: £37.7 million) due primarily to the impact of reduced
average net debt and lower interest rates on the floating rate
portion of the Group’s debt. The net interest expense was 
3.5 times covered (2002: 4.6 times) by profit before interest,
reorganisation costs, goodwill amortisation and exceptional 
items and represented a rate of 5.5% (2002: 6.2%) on the 
average weekly net debt of £570 million (2002: £611 million) 
during the year.
Profit before tax
Profit before tax was £28.2 million compared to £106.7 million last
year. The underlying profit, being profit before tax, reorganisation
costs, goodwill amortisation and exceptional items, reduced by
41.3% to £79.2 million (2002: £135.0 million).
Taxation
The Group’s effective tax charge on profits, before goodwill
amortisation, reorganisation costs in acquired businesses and 
exceptional items, was 25% (2002: 27%). A reconciliation of the
actual current tax charge to the standard rate of corporation tax 
in the UK of 30% is set out in note 9 to the financial statements.
Returns on equity and capital employed
The return on equity including goodwill, calculated as profit after
tax (before goodwill amortisation, acquisition reorganisation costs
and exceptional items) divided by the average of opening and
closing shareholders’ equity plus goodwill previously written off 
was 8.1% (2002: 13.4%).
The post tax return on capital employed, calculated as profit after
tax before goodwill amortisation, acquisition reorganisation costs,
exceptional items and interest, divided by the average of opening
and closing shareholders’ equity plus goodwill previously written 
off plus net debt, was 6.6% (2002: 10.1%).
Earnings per share and dividends
Profit after tax amounted to £12.6 million (2002: £70.8 million), 
and basic earnings per share were 2.2p (2002: 12.2p). Adjusted
earnings per share, calculated by excluding reorganisation costs 
in acquired businesses, goodwill amortisation and the exceptional
items, reduced by 39.4% to 10.3p (2002: 17.0p).
The Board announced in the trading update on 1 April 2003 that 
it anticipated recommending a final dividend reduced from last
year’s. The dividend has been rebased to reflect current levels of
profitability and debt. If the previous level of dividend had been
maintained the cash payout would have significantly reduced the
Group’s headroom under its borrowing convenants. As a result, 
it is proposed to pay a final dividend of 0.3p per share on 
31 October 2003 to shareholders on the register at 3 October,
bringing the total dividends for the year to 4.5p compared with
10.0p last year.
Having rebased the dividend the Board intends to adopt a
progressive policy in future within a guideline of dividends being
covered a minimum of two times. The interim dividend for the year
ending 31 March 2004 will be announced at the time of the interim
announcement in November 2003 and will be paid in February
2004. Future dividends will be split between interim and final more
in line with normal market practice. 26 FKI plc Annual report 2003 Finance Director’s review
Cash flow
Operating cash flow during the year of £166.6 million was a healthy
151% of total operating profit. During the year there has been less
requirement for investment in fixed assets for capacity increases
and the Group has also delayed buying non-essential items
resulting in the current low level of expenditure on fixed assets.
Before dividends, the Group’s free cash flow was £103.4 million
and after dividends, £46.1 million. The reduction in dividends in
future will significantly improve free cash flow. 
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Free cash flow
Cash flow from operations 166.6 202.5
Purchase of fixed assets (19.9) (35.4)
Purchase of own shares (0.6) (1.9)
Sale of fixed assets 3.6 8.9
Interest (30.8) (40.4)
Tax (15.5) (29.8)
Dividends (57.3) (108.9)
Free cash flow 46.1 (5.0)
Acquisitions
The Group made two acquisitions during the year for a total
consideration of £12.7 million. Further details are in the purchase 
of businesses note on page 73.
Financing
The Group is financed by a mix of equity, retained earnings, a
eurobond, private placement loan notes and a syndicated credit
facility. Funding for operating subsidiaries, apart from small local
overdraft facilities, is raised centrally and lent internally on
commercial terms.
Gross debt at the year end amounted to £611.8 million, equivalent
to a 78% utilisation of the Group’s committed borrowing facilities 
at 31 March 2003 of £783.5 million. These committed borrowing
facilities are available for 5.5 years on average. On 26 July 2002 
the Group’s £248 million revolving credit facility was refinanced with
a new five-year £175 million facility using a syndicate of 12 core
relationship banks. The new facility contained financial convenants
that were substantially similar to those under the maturing facility.
On 2 June 2003, the Group agreed with its banking syndicate 
to amend two financial convenants at 30 September 2003 and 
31 March 2004 in order to provide additional headroom against
unforeseen circumstances including some deterioration in business
conditions. At the same time the £175 million facility was reduced
to £150 million, and the maturity remained as July 2007.
The gross debt drawn at the year end consists principally of 
E600 million (£385.1 million) under a ten year eurobond maturing 
in February 2010 and US$350.0 million (£221.2 million) under a
series of US private placements issued in 1994, 1996 and 1997
with maturities ranging between 2003 and 2016. There was no
drawdown at the year end under the syndicated committed credit
facility which is primarily used to fund working capital requirements.
The fixed rate eurobond and US private placements are
substantially swapped into floating rate obligations and other
currencies. These swaps maintain approximately two-thirds of
gross borrowings at floating rates and one-third at fixed rates. 
The cross currency swaps provide a partial hedge of the foreign
exchange translation exposures as described below under foreign
exchange management. The weighted average interest rate at 
31 March 2003 for fixed interest rate borrowings, which are
principally the eurobond and US private placements, was 7.1% 
and the weighted average time period for which the rate is fixed
was 5.5 years.
Floating rate borrowings are principally linked to LIBOR for periods
of between one and six months. Further details of interest rates,
currency profile and maturity of borrowings are contained in 
note 21 and 22 of the financial statements.
Year end cash and deposits totalled £113.4 million 
(2002: £113.0 million) resulting in net debt of £498.4 million 
(2002: £532.5 million). The Group adopts a conservative
investment policy for its surplus funds, most of which are pooled
and managed centrally with deposits limited by amount and
maturity across highly rated banks. Counterparty risk limits are
established for all banks used by the Group, taking account of 
the credit standing of each bank.
Foreign exchange management
The treasury function provides the Group with cash and risk
management services by investing surplus funds and managing
and reducing financial risks purely in relation to underlying trading
transactions. It does not operate as a profit centre and no
speculative transactions are permitted. The Group does not hold 
or issue derivative financial instruments for trading purposes.
A large proportion of the Group’s trading is carried out within the
domestic territory of each business unit. Consequently, foreign
exchange transaction exposures, which arise when sales and
purchases are made by a business unit in a currency other than its
own functional currency, are generally not significant. The Group’s
policy is to hedge forward foreign exchange contracts as soon as
the underlying transaction is committed to.
The results of foreign subsidiaries are translated into sterling at the
average rates of exchange for the period concerned. As this
conversion has no impact on the cash flow of the Group, the
Group chooses not to hedge its foreign subsidiaries’ earnings,
other than any dividends, which are dealt with as transaction
exposures.
The balance sheets of foreign subsidiaries are translated into
sterling at the closing exchange rates. Any gains or losses on the
translation of these balance sheets into sterling are recorded in
reserves against the gains and losses arising on foreign currency
borrowings held for the purposes of hedging the net assets of
subsidiaries. The Group aims to hedge over half of its non-sterling
assets in this way. 27 FKI plc Annual report 2003 Finance Director’s review
John A Biles 
Finance Director
The Group’s net assets and net debt by currency at 31 March
2003 are shown in the table below:
Net assets Net
before deposits/ Net
financing (debt) assets
£m £m £m
Currency
Sterling 89.9 19.4 109.3
US dollar 577.2 (326.5) 250.7
Euro 108.8 (89.6) 19.2
Danish krone 130.8 (116.8) 14.0
Other currencies 45.1 15.1 60.2
Total 951.8 (498.4) 453.4
Balance sheet and equity shareholders’ funds
Consolidated equity shareholders’ funds at 31 March 2003 were 
£453.2 million (2002: £475.9 million).
Goodwill arising on acquisitions after 1 April 1998 has been
capitalised in the balance sheet and is being amortised over 
20 years. Goodwill arising on acquisitions before 1 April 1998,
amounting to £268.4 million (2002: £274.9 million) in respect of
businesses which are still in the Group, has been written off 
to reserves.
Basis of preparation
Prior year amounts have been restated for the reclassification of
certain litigation and insurance liabilities from creditors to provisions
for liabilities and charges. This change has been made to more
appropriately reflect the uncertainty surrounding the potential timing
and amount of the liabilities concerned.
With the exception of this restatement, the financial statements
have been prepared using the same accounting policies as 
last year.
Pensions
Although full implementation of the new pensions accounting
standard, FRS 17, has been delayed pending the introduction of
International Accounting Standards, additional disclosures are
required in this year’s Report and accounts to illustrate the effect
that FRS 17 would have had on the Group’s reported profits,
recognised gains and losses and net assets. Full FRS 17
disclosures form part of the pensions and other post-retirement
benefits note on page 67.
At 31 March 2003 on an FRS 17 basis, there was a net pension
liability across all of the Group’s defined benefit pension schemes,
net of deferred tax, of £126.1 million (2002: £12.3 million). 
This liability was measured at a point in time when equity markets
were severely depressed (the FTSE 100 index was at 3,613) and
discount rates were low. Both of these factors adversely affect 
the valuations of the schemes.
The Group’s Interim report indicated that the total pension cost for
the year would be around £22 million. This assumed that the basic
level of SSAP 24 charge would remain at the prior year level of
£14.6 million but be increased by £7.1 million as it would be
imprudent to take account of the net £7.1 million credit resulting
from the spreading of the historical surplus, which no longer exists,
in the main UK defined benefit pension schemes. 
However, at the year end, the Group’s auditors confirmed that 
most companies were continuing to take account of such credits 
in accordance with SSAP 24. Consequently, the expected charge
of £22 million was reduced by the net £7.1 million referred to
above. The charge was also reduced by a £3.1 million credit
resulting from amortisation of the surplus in the main US defined
benefit pension plans, which also affected the disclosure of the
prior year amount. In addition, costs of other schemes were 
slightly less than expected.
In the year ending 31 March 2004, updated actuarial valuations 
will be available and preliminary indications are that, under 
SSAP 24, pension costs will increase by around £20 million and
cash contributions will increase by approximately £6 million.  Board of Directors
28 FKI plc Annual report 2003 Keith Orrell-Jones M.A.
Non-executive Chairman (aged 65)
Joined FKI in July 1999 as Chairman. 
He is also Chairman of Smiths Group plc
and was previously Chief Executive of Blue
Circle Industries plc from 1992 until 1999.
Paul Heiden B.Sc., A.R.C.S., A.C.A.
Chief Executive (aged 46)
Appointed to the Board on 2 January 2003
when he joined FKI as Chief Executive.
Previously he was at Rolls-Royce where 
he was appointed Director of Industrial
Businesses in 1997 and Finance Director in
1999, a position he held until 2002. He is a
non-executive director of Bunzl plc.
John Biles T.D., B.Sc., F .C.A.
Finance Director (aged 55)
Appointed to the Board in January 1998 
as Finance Director. Previously he was
Financial Director of Chubb Security plc 
and prior to that was Financial Director 
of a number of Racal Electronics Plc
companies. He was a non-executive
director of Amey plc until the end of 
May 2003.
Steve Jones F .C.M.A.
Managing Director, FKI Logistex 
(aged 50)
Appointed to the Board in 1998. He joined
FKI as a Divisional Finance Director in 1988
from BICC plc where he held a number of
senior financial positions. He became
Managing Director of the Engineering
Products division in 1990 and Director of
Corporate Planning in 1993. He was
appointed Managing Director, FKI Logistex
on 8 April 2002.
Reg Gott M.Sc.
Managing Director, Energy 
Technology (aged 45)
Appointed to the Board on 8 April 2002. 
He joined FKI in 1994 as Managing Director
of Froude Consine Test Equipment. He has
since managed several operations and in
1998 became Managing Director of the
Rotating Machines Division. He was
appointed Managing Director of Energy
Technology in April 2002.
John Rodewig B.S.
Non-executive (aged 69)
Appointed to the Board as a non-executive
director in 1993. He is an American and
was President and Chief Operating Officer
of Eaton Corporation until retirement in
1996. Prior to that he was President, 
Eaton Truck Components Group –
Worldwide and Vice President, Eaton Truck
Components – Europe. He is a director of
Hayes Lemmerz International.
Russell Edey F .C.A.
Non-executive (aged 60)
Appointed to the Board as a non-executive
director in 1996. He is non-executive
Deputy Chairman of N M Rothschild
Corporate Finance Limited and Chairman of
Anglogold Limited of South Africa.
Chris Clark MIM
Non-executive (aged 61)
Appointed to the Board as a non-executive
director in January 2000. He is Chief
Executive of Johnson Matthey PLC, which
he joined in 1962 and was appointed to the
Board in 1990. He was appointed Chief
Operating Officer in 1996 and Chief
Executive in 1998. He is the Senior 
Non-Executive Director of Rexam plc.
Mike Hodgkinson B.A., A.C.M.A.
Non-executive (aged 59)
Appointed to the Board as a non-executive
director in April 2000. Appointed Chairman
of Post Office Ltd in May 2003 and retired
as Chief Executive of BAA plc in June 2003.
1 Keith Orrell-Jones
2 Paul Heiden
3 John Biles
4 Steve Jones
5 Reg Gott
6 John Rodewig
7 Russell Edey
8 Chris Clark
9 Mike Hodgkinson
1 3
5
7
6 2
4
8
9
29 FKI plc Annual report 2003 Board of Directors Corporate governance
The directors are committed to achieving and maintaining 
the highest possible standards of corporate governance. 
Good corporate governance requires effective control through a
balanced Board, with clearly delineated responsibility and adequate
control mechanisms providing appropriate checks and balances.
Such disciplines must be clearly understood and subject to an
effective regime of accountability.
This statement on corporate governance, together with the
Remuneration report, describes the manner in which the principles
and practices, as detailed in the Combined Code, are applied
within the Group.
The Board
The directors supervise the management of the business and the
affairs of the Group and see their prime responsibility as being 
to determine the broad strategy of the Group and to ensure its
implementation with a view to enhancing the prosperity of the
Group and its shareholders over time.
The Board currently comprises four executive and five 
non-executive directors. All the non-executive directors are
considered to be independent as they have no business or 
other relationship that could materially influence the exercise of
independent judgement. Mr R P Edey has been the senior
independent director throughout the year.
The Board meets at least six times each year with additional
meetings as required. All directors receive regular information on
the Group’s operational and financial performance and the Board
has reserved certain items for its review and approval, including 
the annual and interim results, the annual profit plan, significant
acquisitions and divestments, management resources and risk
management. Information of an appropriate quality is made
available to the Board in a timely manner to assist it in the
performance of its duties. There is an agreed procedure for
directors to take independent legal advice. Other matters are
delegated to Board Committees including those detailed below.
The company has a Chairman and a Chief Executive, each having
their own separate responsibilities. Essentially, the Chairman is
responsible for the effective working of the Board and the 
Chief Executive is responsible for all operational matters.
The directors may at any time appoint an additional director. 
Any directors so appointed shall hold office until the next annual
general meeting and shall be eligible for reappointment at that
meeting. Following such appointment, the Articles of Association
require each director to retire by rotation and seek re-election at
least every three years.
Board Committees
The Board has appointed the following principal Committees:
Audit Committee – The Audit Committee is chaired by 
Mr R P Edey and its membership comprises all the non-executive
directors. It meets at least twice a year and is responsible for
reviewing the results of the audit work undertaken by the Group’s
external auditors and the internal audit function, review of the
Group’s financial statements prior to submission to the Board, 
and the appointment of the auditors and approval of their fees.
Remuneration Committee – This Committee meets at least 
twice a year, and consists of all the non-executive directors 
with Mr C R N Clark as Chairman. Its key role is to make
recommendations to the Board on the company’s framework 
of executive remuneration and its cost, and to determine 
specific remuneration packages for each of the executive 
directors, including pension rights and compensation payments. 
The objective of the Remuneration Committee is to ensure that the
executive directors are both highly motivated and fairly rewarded 
for their contributions to the Group’s overall performance. 
Further details of the Committee’s work and of the directors’
emoluments and interests are set out in the report of the
Remuneration Committee on pages 34 to 43.
Nominations Committee – The Nominations Committee consists
of the Chairman of the Board and all the remaining non-executive
directors, and is responsible for nominating, for the Board’s
consideration, suitable individuals for appointment to the Board.
Communications with shareholders
In addition to ensuring that sufficient information is disseminated in
order to maintain an orderly market in the ordinary shares of the
company, the company maintains a regular dialogue with major
institutional shareholders.
The Board members attend the annual general meeting and, 
in particular, the Chairmen of the Audit, Remuneration and
Nominations Committees are available to answer questions.
The company’s website at www.fki.co.uk provides additional
company information and is regularly updated.
Internal controls
Under the terms of the Combined Code, the Board is responsible
for the Group’s system of internal control and for reviewing its
effectiveness. Such a system is designed to manage rather than
eliminate the risk of failure to achieve the Group’s strategic
objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss.
Implementation of an ongoing process for identifying, evaluating
and managing the Group’s significant risks was in place throughout
the financial year. 
These procedures have been in place up to the date of approval of
the Annual report and financial statements. The processes are
regularly reviewed by the Board in accordance with Internal Control
Guidance for Directors in the Combined Code.
30 FKI plc Annual report 2003
Corporate governance 31 FKI plc Annual report 2003 Corporate governance
Principal elements of the Group’s system of internal controls are:
Internal control environment
The Board sets the overall policy for the Group which includes 
a well defined organisational structure with clear operating
procedures, lines of responsibility and delegated authority. 
Control procedures exist to identify and control business risks,
safeguard the Group’s assets and to ensure that financial
transactions are properly recorded.
Assessment of business risk
The Group has reporting systems that identify the major financial
and other business risks within the Group. Policies and procedures
have been laid down for the regular review and management of
these risks, underpinned where appropriate by insurance. 
Monitoring process
During the year, management has continued to conduct ongoing
regular reviews of the business risks within all operating units and 
at a Group level, focusing on the prioritisation of individual risks 
and the identification of responses for their mitigation.
The output of the individual assessments is reviewed at both the
operating group and Board level, and updates to the risk
assessments and progress with respect to the individual action
plans are monitored on a regular basis by senior management 
and the Board.
The agenda for Board meetings includes a regular item for
consideration of business risks and controls and the Board receives
regular reports from Group management. The Board uses these
reports as a basis to assess risks material to the achievement of
the Group’s strategic objectives.
The Board confirms that the application of the Group’s system of
internal control is and has been ongoing to identify, evaluate and
manage the significant risks faced by the Group and that it has
been in place for the year under review up to the date of approval
of the Annual report and financial statements, and that it accords
with “Internal control: Guidance for directors on the combined
code”, published in September 1999.
The key features of the internal financial control systems are
described under the following headings.
Financial control environment – There is a clearly defined
organisational structure within which individual responsibilities are
identified in relation to internal financial controls. The structure is
complemented by policies laid down by Group manuals and
management is expected to confirm that it operates the business 
in compliance with these policies. The policies include strict 
rules for the authorisation and approval of both revenue and 
capital expenditure.
Information systems – The Group operates a rigorous and
comprehensive annual planning system which is fundamental to the
strategic direction and control of Group performance. All annual
plans are reviewed by the senior executives with local management
to ensure that every plan prepared is not only achievable but also
presents a challenge to its management. The culmination of the
operating units’ plans is the annual Group Plan which is approved
by the Board in March each year. Policies and procedures have
been laid down for the regular review and management of risks
identified in the plans. There is a comprehensive financial reporting
system in place which compares results with plans and the
previous year to identify, analyse and explain any significant
deviations from approved plans.
In addition, more routine information in respect of orders, turnover
and cash flow is collected and reported to senior executives weekly
to aid the identification of possible areas of business risk.
Main control procedures – The Group has defined procedures and
financial controls, including information system controls, to ensure
the reporting of complete and accurate accounting information and
consideration of business and financial risks. These cover systems
for obtaining authority for major transactions and for ensuring
compliance with laws and regulations that have significant financial
implications. Procedures are also in place to ensure that assets are
subject to proper physical controls and that the organisation
remains structured to ensure appropriate segregation of duties.
Monitoring – The monitoring of financial control procedures is
achieved through management review by both the directly
responsible senior executive and head office personnel. In addition,
the Group employs an external firm of professional accountants,
independent of its auditors, to carry out internal audit work and
monitor certain internal controls. Following review, reports are
produced and addressed to the executive directors which assess
the impact of control issues and, where appropriate, detail local
management actions required. Significant matters arising are
summarised and presented to the Audit Committee at least twice
each year. This independent firm of accountants who conduct
internal audit work are managed by head office personnel but
report to the Audit Committee. All key business units are 
reviewed over a rolling three-year cycle and acquisitions are
reviewed within 12 months of acquisition to verify compliance 
with the company’s procedures.
Review of effectiveness of internal control – The directors confirm
that they have reviewed the effectiveness of the internal control
system of the Group in respect of the year ended 31 March 2003.
Compliance with Code of Best Practice
As described in the Remuneration report on page 37 the service
contracts of two executive directors contain notice periods of 
two years in the event of a change of control, and Mr Heiden’s
period is initially two years from 2 January 2003 reducing to one
year after the first year. Although it is now the Board’s policy that all
new service agreements for executive directors should, after an
initial period of service, have notice periods of one year or less, the
Board believes that it would not be in the company’s best interests
to amend such notice periods in service agreements which were
entered into prior to the adoption of the current policy.
Subject to the above exception, the directors confirm that in
applying the Principles of Good Governance, the Group has
complied throughout the accounting period with the Code of Best
Practice as set out in Part 2, Section 1 of the Combined Code. The directors submit their report and the audited financial
statements of FKI plc for the year ended 31 March 2003.
Principal activities
The principal activities and the development of the Group are given
in the Chairman’s statement, the Chief Executive’s review and the
Operating review on pages 6 to 15. The financial statements for the
year ended 31 March 2003, including other information about the
Group’s financial position, are set out on pages 45 to 73.
Dividends
The directors recommend a final dividend on ordinary shares in
respect of the year ended 31 March 2003 of 0.3p per share,
payable on 31 October 2003 to shareholders on the register 
on 3 October 2003, which, with the interim dividend paid on 
28 February 2003, absorbs a total of £26.1 million. 
Directors
The names of the directors as at the date of this report are listed 
on page 29, together with brief biographical notes. Mr R L Gott
was appointed to the Board on 8 April 2002, Mr P Heiden was
appointed to the Board on 2 January 2003, and Mr R G Beeston
retired from the Board on 5 February 2003.
At the forthcoming annual general meeting and in accordance 
with the company’s Articles of Association, Mr P Heiden, having
been appointed since the last annual general meeting, and being
eligible, offers himself for re-election. Messrs K Orrell-Jones, 
C R N Clark, R P Edey, M S Hodgkinson and J S Rodewig retire 
by rotation, and being eligible, offer themselves for re-election. 
No contract or arrangement has been entered into at any time
during the year in which any director had a material interest, which
was significant in relation to the Group’s business.
Directors’ interests
The interests of the directors (including their family interests), all 
of which are beneficial, in the share capital, share options and 
the Long-Term Incentive Plan of the company appear in the
Remuneration report on pages 41 to 43.
Political and charitable donations
During the year ended 31 March 2003 the Group contributed 
£0.1 million (2002: £0.1 million) in the UK for charitable purposes.
There were no political donations during the year (2002: £nil).
Research and development
Product development and innovation is a continuing process. 
The Group’s businesses commit resources to research and
development to assist them in securing their competitive positions 
in their chosen markets.
Employment policies
Companies within the Group have developed a wide range of
voluntary practices and procedures for employee involvement
appropriate to their own circumstances and needs. The Group
encourages this approach to providing information and consultation
and believes that this promotes a better understanding of the
issues facing the individual business in which the employee works.
It is the policy of the Group to give full and fair consideration to
applications made by disabled persons for job vacancies, where
particular job requirements are within their ability and, where
possible, arrangements are made for the continuing employment 
of employees who have become disabled.
Further details of employment and health and safety policies 
are included in the Corporate social responsibility report on 
pages 16 to 23.
Environmental policy
The Group is committed to adopting a responsible approach to
environmental matters. The Group’s overall policy forms the basis of
detailed guidelines that are appropriate to the individual businesses.
Management seeks to minimise any adverse impact on the
environment of all aspects of the Group’s operations by means 
of environmentally sound disciplines, which take practical steps 
to control effectively or eliminate any known pollution risks.
Specifically, capital expenditure is directed towards the replacement
of hazardous materials with environmentally friendly alternatives and
methods of minimising the costs of disposal of toxic waste, the
recycling of wood, the reuse of cardboard and paper products, and
the reduction of energy consumption. 
Further details of the Group’s environmental policies are included
in the Corporate social responsibility report on pages 16 to 23.
Payments to suppliers
Operating businesses are responsible for agreeing the terms and
conditions of their transactions with suppliers. 
Payment is made on those terms subject to the terms and
conditions being met by the supplier. FKI plc, as a holding
company, did not have any amounts owing to trade creditors at 
31 March 2003.
Share capital
The movement in the share capital during the year is detailed in
note 26 to the financial statements.
Significant shareholdings
As at 11 June 2003, the following major interests of 3% or more in
the ordinary shares in issue had been notified to the company by:
Number of Holding 
ordinary shares %
Barclays PLC 23,294,173 4.00
Janus Capital Management LLC 34,988,957 6.02
Legal & General Investment 
Management Limited 17,463,341 3.00
32 FKI plc Annual report 2003
Directors’ report 33 FKI plc Annual report 2003 Directors’ report
Corporate governance
A review of the company’s application of the principles and
provisions of The Combined Code appears on pages 30 and 31.
Auditors
Ernst & Young LLP were appointed as the Group’s auditors at the
annual general meeting on 24 July 2002. A resolution to reappoint
Ernst & Young LLP as the Group’s auditors will be proposed at the
annual general meeting.
Annual general meeting
The annual general meeting of the company will be held at 
12 noon on 23 July 2003 at Savoy Place, London WC2R 0BL. 
A notice of meeting appears in the enclosed circular and for 
those members wishing to attend, a location map has been
included within the circular.
The Special Business to be considered at the meeting relates to
the following matters:
Description Resolution number
General authority to allot equity securities 12
Limited authority to allot equity securities 
for cash excluding pre-emption rights 13
Authority to purchase shares 14
Directors’ responsibilities
Company law requires the directors to prepare financial statements
for each financial year which give a true and fair view of the state 
of affairs of the company and the Group and of the profit or loss of
the Group for that period. In preparing those financial statements,
the directors are required to:
– select suitable accounting policies and then apply 
them consistently;
– make judgements and estimates that are reasonable 
and prudent;
– state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
– prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are also responsible for maintaining proper
accounting records which disclose with reasonable accuracy at any
time the financial position of the company and Group, and enable
them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding
the assets of the company and Group and for taking reasonable
steps to prevent and detect fraud and other irregularities.
Going concern
After making appropriate enquiries, the directors are confident that
the company has adequate resources to continue in operational
existence for the foreseeable future. For this reason, the directors
adopt the going concern basis in the preparation of the Group’s
financial statements.
By order of the Board
Michael Porter Secretary
11 June 2003 Information not subject to audit
Composition and role of the Remuneration Committee
The Remuneration Committee is responsible for formulating executive remuneration policy and for determining the remuneration of the
executive directors and certain senior executives.
Its members are the non-executive directors as follows:
Mr C R N Clark (Chairman) 
Mr K Orrell-Jones
Mr R P Edey
Mr M S Hodgkinson
Mr J S Rodewig
All the above served on the Remuneration Committee throughout the year. All the non-executive directors are considered by the
company to be independent. Although Mr Rodewig has been a director for ten years, he is considered by the company to be
independent and his US experience is of particular value. Mr Rodewig is due to retire in November 2003.
The Committee is advised internally by the Group Chief Executive, Mr Heiden, who succeeded Mr Beeston on 2 January 2003. 
During the year the Committee received information from Towers Perrin, New Bridge Street Consultants and Mercer Human Resource
Consulting. None of these organisations provide any other services to the company.
In accordance with the requirements of the revised Companies Act, an ordinary resolution seeking shareholders’ approval for the
Remuneration report will be proposed at the Annual General Meeting.
Remuneration policy
The Remuneration Committee’s objectives are to ensure that the company is able to:
– attract, retain and motivate high calibre staff; and
– align the interests of the executive directors and senior executives with those of shareholders by rewarding executive directors and
certain senior executives according to the overall performance of the Group.
The company believes strongly in pay for performance. Variable pay under the annual bonus and long-term incentive schemes can form a
higher proportion of total pay than is typical in the UK market. Incentive opportunities are designed to deliver above median total rewards
in the event of superior performance. Any payments made to executive directors other than basic salary are not pensionable. 
The fees paid to non-executive directors and the Chairman are determined by the Board after reviewing fee payments for comparable
positions within similar organisations, and are normally reviewed every three years. The last review was in 2000 so fees would normally be
reviewed in 2003. However, the Chairman and the non-executive directors have unanimously decided not to accept an increase in fees
for at least 12 months.
Basic salary and benefits
Basic salary is reviewed annually having regard to market practices for similar executive positions in a comparator group of companies in
the engineering sector and supported by advice from external independent consultants. They are generally benchmarked at the lower
quartile positioning against the comparator group. Any increases reflect both individual and business performance.
Executive directors also receive additional taxable benefits, namely the provision of a fully expensed company car (or an allowance in lieu
thereof), medical insurance and disability insurance.
34 FKI plc Annual report 2003
Remuneration report 35 FKI plc Annual report 2003 Remuneration report
Performance related bonus scheme
The company operates an annual performance related bonus scheme for certain executive directors and senior executives based on the
budgeted pre-tax profits of the Group, and also an annual performance related bonus scheme for the remaining executive directors and
certain senior executives with operating group responsibilities, based partly on the performance of the respective operating group for
which they are responsible, and partly on the budgeted pre-tax profits of the Group as a whole.
Both bonus schemes have the potential to lift total remuneration above the median for the comparator group of companies in the event
of superior performance. A performance related bonus of 25% of salary is payable for achieving 90% of the applicable pre-tax budgets.
The bonus increases on a straight line pro rata basis from 25% to 50% of salary for achieving between 90% and 100% of the budgeted
pre-tax profits. The bonus increases on a straight line pro rata basis from 50% to 100% of salary for achieving between 100% and 110%
of the budgeted pre-tax profits. The Remuneration Committee has the right to exercise its discretion regarding the level of awards in
exceptional circumstances.
None of the executive directors serving during the two years ended 31 March 2003 earned a bonus under the performance related
bonus scheme. 
Non performance related bonus
The company agreed, at the time Mr Heiden joined, to compensate him for the £60,000 value of shares issued as part of a bonus
scheme of Mr Heiden’s former employer which were due to vest in March 2003 but were forfeited as a result of his leaving to join FKI.
Long Term Incentives
The company operates two forms of share based incentive schemes for executive directors and senior executives. Participants in the
Long Term Incentives are encouraged to retain part of their vested awards, such that they will be expected to accumulate a minimum
shareholding in the company of one times basic salary over five years. 
Executive Share Option Scheme
The company operates an Executive Share Option Scheme, approved by shareholders in 2001, designed to encourage long-term
retention of key staff. Executive directors are eligible to receive options on an annual basis. In normal circumstances, the maximum level of
grant each year to executive directors is limited to options over shares with a value of one times basic salary. 
On appointment, Mr Heiden was granted options over shares with a value of twice his annual salary for each of the first two years of his
employment. The Board considered this was appropriate in order to assist in the recruitment of a Chief Executive.
The normal practice is to grant options within a period of six weeks following the announcement of the company’s preliminary and interim
results. Options are granted at the mid-market price of FKI plc ordinary shares on the third dealing day before the grant date and normally
are required to be held for a minimum of three years before they are capable of exercise. They expire after ten years.
All executive options granted from July 1996 onwards may only be exercised subject to a performance condition that the Group’s 
growth in earnings per share, as defined below, must exceed the UK retail price index by 9% or more over a three year period, subject to
re-testing in subsequent years from a rolling base. Earnings per share growth is considered to be the most appropriate measure of the
company’s underlying performance, as it requires that there should be a demanding improvement in the company’s performance before
scheme participants can benefit from an increase in the share price. The assessment as to whether performance conditions have been
met is calculated by the Secretary to the Remuneration Committee and independently verified by the Remuneration Committee and an
external independent firm of Chartered Accountants.
Earnings per share are defined as the company’s headline earnings per share, as calculated in accordance with the principles set out in
Statement of Investment Practice No.1 “The Definition of IIMR Headline Earnings” issued by the Institute of Investment Management and
Research. IIMR Headline earnings are calculated by excluding from the reported FRS 3 results any profit or loss items of a non-trading or
capital nature.
A table giving full details of the directors’ options granted and exercised during the year under review is shown on page 41. Long Term Incentive Plan (LTIP)
The company operates a LTIP which was approved by shareholders in 2001 and under which participants receive annual conditional
awards of shares in the company of a value equal to up to 70% of basic salary per annum, which may vest only after the achievement of
certain long-term performance conditions. Participants may receive up to the maximum number of shares, three years after the award,
provided the performance conditions are met. Until then, the shares are held in a trust which is administered by a trustee company.
The level of vesting of awards under the LTIP is determined by the performance of the company’s total shareholder return against a
comparator group of all companies which on the date of grant are constituent companies of the Engineering and Machinery Index as
determined by the FTSE Actuaries Industry Classification Committee, excluding those not listed at the end of a three year performance
period. No awards vest for below median performance and 50% of an award will vest for median performance. Full vesting occurs only 
at upper quartile performance, and 75% of an award will vest for performance above the median but below upper quartile. Accrued
dividends on vested awards are paid to the executives pending transfer of the shares into the name of the respective participant.
The performance condition is based upon total shareholder return as this is considered to be the best means of aligning the interests 
of directors with shareholders by requiring superior total shareholder return performance compared to competitor companies. 
The assessment as to whether the performance conditions have been met is independently calculated by Mercer Human Resource
Consulting in conjunction with Datastream and is ratified by the Remuneration Committee.
During the year ended 31 March 2003, the performance period relating to the 1999 award expired. The Remuneration Committee
exercised its discretion, in accordance with the rules of the scheme, to include in the final peer group two companies which had been
previously omitted, both having been put into receivership during the three year performance period. The Remuneration Committee
considered the change to be fair and reasonable such that, were an adjustment not made, the terms of the scheme would cease to be a
fair measure of performance. As a consequence of this adjustment, 30% of the award became exercisable. As required under the rules of
the Scheme, Ernst & Young LLP confirmed that the adjustment was considered fair and reasonable.
A table giving full details of the Directors’ LTIP awards that were granted vested and exercised during the year under review is shown 
on page 42.
(a) The graph illustrates the company’s total shareholder return performance since 1 April 1998 relative to the FTSE Engineering 
& Machinery Sector Index.
(b) The company is a member of the FTSE Engineering & Machinery Sector and, as such, this sector is considered to be the most
appropriate comparator group upon which a broad equity market index is calculated.
36 FKI plc Annual report 2003 Remuneration report
0
20
40
60
80
100
120
140
31 Mar 98 31 Mar 99 31 Mar 00 31 Mar 01 31 Mar 02 31 Mar 03
Total shareholder return
 FKI plc  FTSE Engineering & Machinery Sector Index Source: Datastream
The graph shows the value, by 31 March 2003, of £100 invested in FKI plc on 31 March 1998 compared with £100 invested in the FTSE Engineering & Machinery Sector Index.  37 FKI plc Annual report 2003 Remuneration report
Inland Revenue Approved Save-As-You-Earn share option scheme 
This scheme was approved by shareholders in 1997 and is open to all UK employees who have completed six months’ service and who
enter into an approved savings contract for a term of three or five years. The maximum amount which can be saved is £250 per month,
and the total savings (including interest) at the end of the term are available to purchase shares at 80% of their market value shortly before
the start of the savings contract. Executive directors may participate in this scheme on the same terms as all other employees.
Service contracts
It is the company’s policy that all executive directors have one year rolling service contracts with a one year notice period. However, in
order to attract high calibre recruits, the Remuneration Committee may exercise its discretion to offer newly recruited executive directors
an initial two year notice period which reduces to one year. Save as listed below, there are no express provisions for compensation
payable upon early termination of the executive directors’ contracts and at the date of termination, other than payments due during the
notice period. 
In the event of termination of a service contract by the acquiring company after a change of control of the company, there is a provision in
the service contracts of Messrs Biles and Jones for a payment of liquidated damages equivalent to two years’ salary, bonus and
contractual benefits including contributions to the executive directors’ pension arrangements, without deduction for mitigation and/or
accelerated receipt. An identical provision exists in the service contract of Mr Gott except that the payment relates to one year instead 
of two.
In the case of Mr Heiden, in the event of termination of a service contract by the acquiring company after a change of control of the
company, there is a provision in his service contract for a payment of liquidated damages equivalent to one year’s pay and contractual
benefits without deduction for mitigation and/or accelerated receipt. If a change of control occurs prior to the expiry of the second
anniversary of 2 January 2003, a sum would be payable equivalent to the greater of that payable as above and 90% of the salary, 
bonus and contractual benefits which would have been paid between the date of termination and the expiry of the third anniversary of
2 January 2003. 
The contract dates and notice periods for the executive directors during the year were as follows:
Name of director Date of contract Notice period
P Heiden 16 December 2002 Initially two years from 2 January 2003, 
reducing to one year after the first year
J A Biles 14 January 1998 One year
S D Jones 6 July 1998 One year
R L Gott 8 April 2002 One year
R G Beeston 21 November 2001 One year
Mr Beeston retired as a director on 5 February 2003. The non-executive directors do not have service contracts. The dates of the current non-executive directors’ appointments are as follows;
Appointment Date of last Date of 
Non-executive director date re-election next re-election
K Orrell-Jones 29 July 1999 27 July 2000 23 July 2003
C R N Clark 1 January 2000 27 July 2000 23 July 2003
R P Edey 6 November 1996 27 July 2000 23 July 2003
M S Hodgkinson 1 April 2000 27 July 2000 23 July 2003
J S Rodewig 20 April 1993 24 July 2002 23 July 2003
Pensions
With the exception of Mr Heiden, executive directors are members of the FKI Group Pension Scheme, a defined benefit scheme with a
normal retirement date for directors of 60.
Its main features, in respect of executive directors, are:
(a) A cash benefit on death in service of four times annual rate of the highest average basic salary (restricted to the earnings cap where it
applies) during any three consecutive years within the ten years before the member’s date of death.
(b) Pensions payable in the event of ill health.
(c) Pensions for dependants on a member’s death generally equal to half the member’s prospective retirement pension at 60 on death in
service, or half the member’s pension entitlement on death in retirement.
(d) Member contributions are 5% of basic salary (restricted to the earnings cap where it applies). Mr Biles pays no contributions to the 
FKI Group Pension Scheme.
There are funded and unfunded unapproved pension arrangements to increase the pension benefits where because of Inland Revenue
limitations (including those resulting from the earnings cap) these cannot be paid in total from the Scheme. Such arrangements apply to
Messrs Biles and Gott.
In lieu of participation in the FKI Group Pension Scheme, Mr Heiden receives contributions into a funded unapproved retirement benefit
scheme equivalent to 50% of his basic salary.
Details of the directors’ pension benefits during the year under review are shown on page 40.
External appointments
The company believes that there are significant benefits to the individual and the company from executive directors accepting 
non-executive directorships in other organisations.
Each executive director may accept one non-executive directorship provided that it does not conflict with the company’s interests and is
approved by the Board. Fees from an external directorship may be retained by the director concerned.
38 FKI plc Annual report 2003 Remuneration report 39 FKI plc Annual report 2003 Remuneration report
Information subject to audit
Directors’ emoluments
Pension Pension
Taxable contributions contributions
Basic salary/ benefits Other Total Total 2003 2002
fees (d) Bonus (e) 2003 2002 (f) (f)
Name of director £000 £000 £000 £000 £000 £000 £000 £000
Executive directors
Mr P Heiden (a) 112 56 60 56 284 – – –
Mr J A Biles 238 22 – – 260 238 49 31
Mr S D Jones 226 31 – – 257 288 – –
Mr R L Gott (b) 172 14 – – 186 – – –
Non-executive 
directors
Mr K Orrell-Jones 125––– 125 125 – –
Mr C R N Clark 35––– 35 35 – –
Mr R P Edey 35––– 35 35 – –
Mr M S Hodgkinson 32––– 32 32 – –
Mr J S Rodewig 32––– 32 32 – –
Director who retired 
during the year
Mr R G Beeston (c) 409 96 – – 505 506 221 245
Aggregate 
emoluments 1,416 219 60 56 1,751 1,291 270 276
(a) Mr Heiden was appointed on 2 January 2003.
(b) Mr Gott was appointed on 8 April 2002.
(c) Mr Beeston retired on 5 February 2003. Upon retirement, he retained his company car with an estimated value of £16,400 and which is included in his taxable benefits for 
the year.
(d) Taxable benefits consist of health insurance, company car allowances, life assurance, a relocation package, and temporary accommodation costs following the relocation of
the company’s head office to London in April 2000 and which have now ceased.
(e) Other represents payments to a director in lieu of payments into a pension fund.
(f) Contributions paid in respect of funded unapproved retirement benefit schemes. Directors’ pension benefits
The undernoted directors were members of a defined benefit scheme provided by the Group during the year. Pension entitlements and
corresponding transfer values were as follows:
Transfer value
of increase/ Increase/
Increase/ (decrease) (decrease) in
(decrease) in in accrued Transfer Transfer transfer
accrued benefit less Accrued Accrued value of value of value less
pension contributions pension at pension at pension at pension at contributions
(excluding made by 31 March 31 March 31 March 31 March made by
inflation) directors 2003 2002 2003 2002 directors
Name of director £000 £000 £000 £000 £000 £000 £000
Mr J A Biles 1.6 24.8 8.4 6.6 125.1 91.4 33.7
Mr R L Gott 1.6 1.9 14.9 13.0 128.6 108.9 12.6
Mr S D Jones 10.2 88.9 62.7 51.6 543.4 418.6 113.9
Mr R G Beeston (1.0) (18.0) 23.4 24.0 435.6 436.3 (0.7)
1. The pension entitlement shown is that which would be paid annually on retirement, based on service to the end of the year or date of
leaving the pension scheme or ceasing to accrue further benefit if earlier.
2. The increase in accrued pension during the year excludes any increase for inflation.
3. The transfer values have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11. 
The calculation of each transfer value includes an allowance for the cost of death before retirement benefits.
4. The change in the amount of the transfer value over the year is impacted by the following elements:
(a) the transfer value of the increase in accrued pension (net of inflation);
(b) the transfer value of the increase in accrued pension (due to inflation);
(c) the increase in the transfer value of accrued pension at the beginning of the year due to ageing;
(d) the impact of any change in the economic or mortality assumptions underlying the transfer value basis;
(e) the effect of (a) to (d) less the director’s own contributions over the year.
The change in the amount of the transfer value over the year includes the effect of fluctuations in the transfer value due to factors beyond
the control of the company and directors, such as stockmarket movements, which are reflected in (d) above.
5. Directors have the option to pay additional voluntary contributions. However, neither the contributions nor the resulting benefits are
included in the table.
6. Mr R G Beeston retired on 5 February 2003 and commenced drawing his pension. His pension from the FKI Group Pension Scheme
at the end of the year was £20,056 per annum. His pension ceased to accrue on 5 April 2001. The accrued pension at 31 March 2003
shown in the table above does not reflect the lump sum withdrawal of £33,716 made at retirement.
7. The figures for Mr J A Biles and Mr R L Gott allow for the impact of the earnings cap. This includes the period of service prior to 
Mr Gott becoming a director.
During the year, the company decided to increase contributions to a funded unapproved retirement benefits scheme to 30% of 
Mr Biles’s basic annual salary in excess of the earnings cap. The total contributions were £49,451 in the year to 31 March 2003 
(£30,877 to 31 March 2002).
The company has established for Mr Gott an unfunded unapproved retirement benefit scheme which together with the Inland Revenue
capped benefits from Mr Gott’s membership of the FKI Group Pension Scheme are designed to provide him with total benefits, at his
normal retirement age of 60, equal to fifty per cent of his final pensionable salary.
40 FKI plc Annual report 2003 Remuneration report 41 FKI plc Annual report 2003 Remuneration report
Directors’ share options
At Granted Exercised Lapsed At Exercise
1 April during the during the during the 31 March price per Date
Date of 2002 year year year 2003 share exercisable Expiry
grant Number Number Number Number Number Pence from date
P Heiden (Note 1)
Executive share option 06/01/03 – 1,022,727 – – 1,022,727 88.00 06/01/06 06/01/13
J A Biles
Executive share option 04/12/01 120,480––– 120,480 186.75 04/12/04 04/12/11
Executive share option 08/07/02 – 170,000 – – 170,000 140.00 08/07/05 08/07/12
Savings related share option 20/08/98 13,529––– 13,529 127.50 01/11/03 31/05/04
R L Gott (Note 1)
Executive share option 21/12/93 20,000––– 20,000 179.50 21/12/96 21/12/03
Executive share option 22/07/94 15,000––– 15,000 172.00 22/07/97 22/07/04
Executive share option 08/12/95 40,000––– 40,000 162.00 08/12/98 08/12/05
Executive share option 22/07/97 50,000––– 50,000 166.00 22/07/00 22/07/07
Executive share option 09/12/97 50,000––– 50,000 182.50 09/12/00 09/12/07
Executive share option 09/08/99 30,000––– 30,000 218.00 09/08/02 09/08/09
Executive share option 04/12/01 35,340––– 35,340 186.75 04/12/04 04/12/11
Executive share option 08/07/02 – 125,000 – – 125,000 140.00 08/07/05 08/07/12
Savings related share option 23/07/02 – 13,134 – – 13,134 126.00 01/11/07 31/05/08
S D Jones
Executive share option 04/12/01 114,590––– 114,590 186.75 04/12/04 04/12/11
Executive share option 08/07/02 – 161,429 – – 161,429 140.00 08/07/05 08/07/12
Savings related share option 29/08/97 12,147 – – 12,147 – 142.00 – –
R G Beeston (Notes 1, 5)
Executive share option 04/12/01 225,970––– 225,970 186.75 05/02/03 04/06/05
Savings related share option 07/08/00 5,152––– 5,152 188.00 05/02/03 05/08/03
1. Mr Gott and Mr Heiden were appointed directors on 8 April 2002 and 2 January 2003, respectively. Mr Beeston retired from the Board on 5 February 2003.
2. All executive share options were granted at nil cost to the director concerned.
3. The market price of an ordinary share on 31 March 2003 was 64p (2002: 192.5p) and the range during the year was 57p to 192.5p.
4. Executive share options granted prior to 1996 are not subject to a performance condition. All executive share options granted in 1999 and subsequent years are exercisable
from the dates stated above, subject to them satisfying the performance condition stated in the policy section.
5. The closing number of share options held by Mr Beeston as at his retirement date on 5 February 2003. Directors’ LTIPs
Shares Value Shares
allocated Shares of award allocated Value Cash
at Shares Shares lapsed Shares at date of at of shares Market awarded
1 April allocated vested during year transferred grant 31 March Performance Earliest vested value in lieu of 
Date of 2002 during year during year (Note 2) during year (Note 3) 2003 period end date for (Note 4) (Note 5) dividends
Awards award Number Number Number Number Number £ Number date transfer £ £ £
P Heiden
(Note 1) 06/01/03 – 357,955––– 316,790 357,955 06/01/06 06/01/06 – 229,091 –
J A Biles
26/02/98 112,094––– 112,094 190,000 – n/a n/a – n/a –
28/07/98 118,011 – 118,011 – 118,011 189,998 – n/a n/a 116,831 n/a –
12/08/99 102,193 – – 71,535 – 195,700 30,658 12/08/02 12/08/03 – 19,621 11,456
13/06/00 86,777–––– 210,000 86,777 13/06/03 13/06/04 – 55,537 –
04/12/01 84,330–––– 157,486 84,330 04/12/04 04/12/04 – 53,971 –
08/07/02 – 119,000––– 170,170 119,000 08/07/05 08/07/05 – 76,160 –
R L Gott
(Note 1) 13/06/00 21,074–––– 50,999 21,074 13/06/03 13/06/04 – 13,487 –
04/12/01 24,730–––– 46,183 24,730 04/12/04 04/12/04 – 15,827 –
08/07/02 – 87,500––– 125,125 87,500 08/07/05 08/07/05 – 56,000 –
S D Jones
28/07/98 90,061 – 90,061 – 90,061 144,998 – n/a n/a 89,160 n/a –
12/08/99 79,504 – – 55,653 – 152,250 23,851 12/08/02 12/08/03 – 15,265 8,912
13/06/00 82,645–––– 200,000 82,645 13/06/03 13/06/04 – 52,893 –
04/12/01 80,210–––– 149,792 80,210 04/12/04 04/12/04 – 51,334 –
08/07/02 – 113,000––– 161,590 113,000 08/07/05 08/07/05 – 72,320 –
R G Beeston
(Note 1) 28/07/98 222,047 – 222,047 – – 357,496 222,047 28/07/01 28/07/02 219,826 n/a 10,362
12/08/99 192,285 – – 134,599 – 368,226 57,686 12/08/02 05/02/03 – 36,919 21,825
13/06/00 162,810–––– 394,000 162,810 13/06/03 05/02/04 – 104,198 –
04/12/01 158,170–––– 295,382 158,170 05/02/04 05/02/04 – 101,229 –
08/07/02 – 222,500––– 318,175 222,500 05/02/04 05/02/04 – 142,400 –
1. Messrs Gott and Heiden were appointed directors on 8 April 2002 and 2 January 2003, respectively, and Mr Beeston retired from the Board on 5 February 2003. The extent
to which Mr Beeston’s awards may be exercisable within 12 months of his retirement date will be assessed in accordance with the scheme rules.
2. The company’s total shareholder return performance for the three year performance period that ended in 2002–2003 ranked in the second quartile against its comparator
group and under the terms of the rules applicable to the 1999 awards, 70% of the awards lapsed.
3. The price of an ordinary share on the date that the awards were made was 88.5p on 6 January 2003 and 143p on 8 July 2002. The awards are subject to the performance
conditions for LTIP awards, as outlined in the policy section.
4. The value of the shares that vested during the year is calculated at 99p per share, being the market value on the vestment date on which the shares were first transferable to
the directors.
5. The market value of shares as yet unvested is stated at 64p per share, being the closing mid–market price on 31 March 2003. As at 31 March 2003, the company was
ranked below median in its comparator group for each of the awards granted in 2000 to 2003, inclusive. If these ranking positions were to be maintained until the end of the
respective performance periods, none of the awards would vest.
42 FKI plc Annual report 2003 Remuneration report 43 FKI plc Annual report 2003 Remuneration report
Directors’ beneficial interests in ordinary shares of FKI plc
As at As at
31 March 1 April  
2003 2002 or
subsequent date
of appointment
Ordinary shares Ordinary shares
Name of director Number Number
K Orrell-Jones 20,000 10,000
J A Biles 240,701 10,596
C R N Clark 6,174 1,118
R P Edey 6,250 6,250
R L Gott 23,098 23,098
P Heiden 30,000 30,000
M S Hodgkinson 5,370 5,370
S D Jones 178,258 88,197
J S Rodewig 4,000 4,000
Any ordinary shares required to fulfil entitlements under the current LTIP are provided by the FKI Employee Benefit Trusts. As beneficiaries
under the Employee Benefit Trusts, the directors are deemed to be interested in the shares held by the Employee Benefit Trusts which, 
at 31 March 2003, amounted to 2,415,151 FKI plc ordinary shares.
On 4 June 2003 Mr P Heiden acquired a beneficial interest in an additional 100,000 ordinary shares of the company. No further changes
took place in the interests of directors between 31 March 2003 and 11 June 2003.
Auditable information
The information in the Remuneration report subject to audit is that included in the tables and related notes in the section on directors’
emoluments, directors’ LTIPs, directors’ share options and directors’ pension benefits.
By order of the Board
C R N Clark 
Chairman of the Remuneration Committee
11 June 2003  We have audited the Group’s financial statements for the year
ended 31 March 2003 which comprise the Consolidated profit 
and loss account, Consolidated balance sheet, Company balance
sheet, Consolidated cash flow statement, Consolidated statement
of total recognised gains and losses, Consolidated reconciliation of
movements in equity shareholders’ funds and the related notes 1 to
34. These financial statements have been prepared on the basis of
the accounting policies set out therein. We have also audited the
information in the 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 auditors’ 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 Annual Report,
including the financial statements which are required to be
prepared in accordance with applicable United Kingdom law 
and accounting standards as set out in the directors’
responsibilities section of the Directors’ report in relation to 
the financial statements.
Our responsibility is to audit the financial statements and the part 
of the Remuneration report to be audited in accordance with
relevant legal and regulatory requirements, United Kingdom
Auditing Standards and the Listing Rules of the Financial 
Services Authority.
We report to you our opinion as to whether the financial statements
give a true and fair view and whether the financial statements and
the part of the Remuneration report to be audited have been
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 financial statements, 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 or the Listing Rules regarding directors’
remuneration and transactions with the Group is not disclosed.
We review whether the Corporate governance statement 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 other information contained in the Annual report 
and consider whether it is consistent with the audited financial
statements. This other information comprises the Directors’ 
report, unaudited part of the Remuneration report, Chairman’s
statement, operating and financial review, Finance Director’s 
review and Corporate governance statement. We consider the
implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any other
information.
Basis of audit opinion 
We conducted our audit in accordance with United Kingdom
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 financial statements
and the part of the Remuneration report to be audited. It also
includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the 
financial statements, and of whether the accounting policies are
appropriate to the Group’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 financial statements and the part of the
Remuneration report to be audited 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 financial statements and the
part of the Remuneration report to be audited.
Opinion
In our opinion:
– the financial statements give a true and fair view of the state of
affairs of the company and of the Group as at 31 March 2003
and of the profit of the Group for the year then ended; and
– the financial statements and the part of the Remuneration report 
to be audited have been properly prepared in accordance with
the Companies Act 1985.
Ernst & Young LLP
Registered Auditor
London
11 June 2003
44 FKI plc Annual report 2003
Independent auditors’ report to the shareholders of FKI plc 45 FKI plc Annual report 2003
Year ended Year ended Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 31 March 31 March
2003 2003 2003 2002 2002 2002
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note £m £m £m £m £m £m
Turnover
Existing operations 1,396.3 – 1,396.3 1,571.0 – 1,571.0
Acquisitions 43.1 – 43.1 –––
Discontinued operations – 13.2 13.2 – 39.0 39.0
2 1,439.4 13.2 1,452.6 1,571.0 39.0 1,610.0
Cost of sales 3 (1,088.4) (12.4) (1,100.8) (1,146.3) (35.7) (1,182.0)
Gross profit 351.0 0.8 351.8 424.7 3.3 428.0
Net operating expenses 3 (268.1) (5.4) (273.5) (278.3) (8.3) (286.6)
Operating profit/(loss) before 
reorganisation costs and 
goodwill amortisation 2 115.0 (4.6) 110.4 177.7 (5.0) 172.7
Reorganisation costs in 
acquired businesses 7 (2.4) – (2.4) (2.0) – (2.0)
Goodwill amortisation 13 (29.7) – (29.7) (29.3) – (29.3)
Existing operations 89.5 – 89.5 146.4 – 146.4
Acquisitions (6.6) – (6.6) –––
Discontinued operations – (4.6) (4.6) – (5.0) (5.0)
Operating profit/(loss) 82.9 (4.6) 78.3 146.4 (5.0) 141.4
(Loss)/profit on sale and termination
of discontinued operations 7 – (20.4) (20.4) – 3.0 3.0
Profit on sale of tangible fixed assets 7 1.5 – 1.5 –––
Profit/(loss) on ordinary activities 
before interest 84.4 (25.0) 59.4 146.4 (2.0) 144.4
Net interest payable 8 (31.2) (37.7)
Profit on ordinary activities 
before taxation 28.2 106.7
Taxation 9 (15.6) (35.9)
Profit on ordinary activities 
after taxation 12.6 70.8
Equity dividends 11 (26.1) (57.9)
Retained (loss)/profit for the 
financial year 27 (13.5) 12.9
Earnings per share 12 2.2p 12.2p
Adjusted earnings per share 12 10.3p 17.0p
Diluted earnings per share 12 2.2p 12.1p
Consolidated profit and loss account 31 March 31 March 31 March 31 March
2003 2003 2002 2002
restated restated
Note £m £m £m £m
Fixed assets
Goodwill 13 507.5 530.6 
Other intangible assets 13 0.1 0.1 
Tangible assets 14 357.2 399.4 
Investments 15 2.0 4.5 
866.8 934.6 
Current assets
Stocks 16 239.2 237.9 
Debtors – falling due within one year 17 368.3 365.5 
– falling due after more than one year 17 62.8 51.6 
Short-term deposits 50.3 43.8 
Cash 63.1 69.2 
783.7 768.0 
Creditors: amounts falling due within one year
Bank and other borrowings 18 (50.8) (19.8)
Other creditors 18 (458.1) (456.1)
(508.9) (475.9)
Net current assets 274.8 292.1 
Total assets less current liabilities 1,141.6 1,226.7 
Creditors: amounts falling due after more than one year
Bank and other borrowings 19 (561.0) (625.7)
Other creditors 19 (9.5) (13.9)
Provisions for liabilities and charges 23 (117.7) (110.9)
(688.2) (750.5)
Net assets 453.4 476.2 
Capital and reserves
Called up share capital 26 58.2 58.1 
Share premium account 27 155.6 154.5 
Capital redemption reserve 27 2.0 2.0 
Profit and loss account 27 237.4 261.3 
Equity shareholders’ funds 453.2 475.9 
Equity minority shareholders’ interests 0.2 0.3 
Total capital employed 453.4 476.2
These financial statements were approved by the Board of Directors on 11 June 2003 and signed on its behalf by:
P Heiden Director
J A Biles Director
46 FKI plc Annual report 2003
Consolidated balance sheet 47 FKI plc Annual report 2003
31 March 31 March 31 March 31 March
2003 2003 2002 2002
restated restated
Note £m £m £m £m
Fixed assets
Tangible assets 14 11.3 10.9
Investments 15 2,619.3 2,590.6
2,630.6 2,601.5
Current assets
Debtors – falling due within one year 17 876.9 718.5
– falling due after more than one year 17 106.8 216.2
Short-term deposits 9.3 0.8
Cash 9.8 16.6
1,002.8 952.1
Creditors: amounts falling due within one year
Bank and other borrowings 18 (23.5) (48.0)
Other creditors 18 (2,283.7) (1,927.7)
(2,307.2) (1,975.7)
Net current liabilities (1,304.4) (1,023.6)
Total assets less current liabilities 1,326.2 1,577.9
Creditors: amounts falling due after more than one year
Bank and other borrowings 19 (385.1) (377.8)
Other creditors 19 (543.9) (735.2)
(929.0) (1,113.0)
Net assets 397.2 464.9
Capital and reserves
Called up share capital 26 58.2 58.1
Share premium account 27 155.6 154.5
Capital redemption reserve 27 2.0 2.0
Profit and loss account 27 181.4 250.3
Equity shareholders’ funds 397.2 464.9
These financial statements were approved by the Board of Directors on 11 June 2003 and signed on its behalf by:
P Heiden Director
J A Biles Director
Company balance sheet Year ended Year ended
31 March 31 March
2003 2002
Note £m £m
Net cash inflow from operating activities 30 166.6 202.5 
Returns on investments and servicing of finance
Interest received 2.6 3.4 
Interest paid (33.4) (43.8)
Net cash outflow from returns on investments and servicing of finance (30.8) (40.4)
Tax paid (15.5) (29.8)
Capital expenditure and financial investment
Purchase of tangible fixed assets (19.9) (35.4)
Purchase of own shares (0.6) (1.9)
Sale of tangible fixed assets 3.6 8.9 
Net cash outflow from capital expenditure and financial investment (16.9) (28.4)
Acquisitions and disposals
Purchase of businesses 33 (12.7) (32.0)
Net overdrafts acquired with businesses (0.3) (3.0)
Payment of deferred purchase consideration (3.2) (5.8)
Sale and termination of businesses 34 (1.7) 3.6 
Net cash disposed with businesses – (0.6)
Net cash outflow from acquisitions and disposals (17.9) (37.8)
Equity dividends paid (57.3) (108.9)
Cash inflow/(outflow) before management of liquid resources and financing 28.2 (42.8)
Management of liquid resources
(Increase)/decrease in short-term deposits (2.1) 17.2
Financing
Issue of ordinary share capital 0.1 4.9 
New loans 0.1 20.5 
Repayments of loans and finance leases (28.0) (36.6)
Net cash outflow from financing (27.8) (11.2)
Decrease in cash in the year 31, 32 (1.7) (36.8)
48 FKI plc Annual report 2003
Consolidated cash flow statement 49 FKI plc Annual report 2003
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Profit after taxation attributable to shareholders 12.6 70.8 
Net currency translation differences on foreign currency net investments and loans (net of tax) (note 27) (16.9) (0.1)
Total recognised gains and losses relating to the year (4.3) 70.7 
Consolidated reconciliation of movements in equity shareholders’ funds
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Profit after taxation attributable to shareholders 12.6 70.8 
Dividends (26.1) (57.9)
(13.5) 12.9 
Net currency translation differences on foreign currency net investments and loans (net of tax) (note 27) (16.9) (0.1)
Share capital issued 1.2 8.1 
Goodwill/(net negative goodwill) transferred to profit and loss account in respect of disposals 6.5 (15.9)
Net (deduction from)/addition to shareholders’ funds (22.7) 5.0
Opening equity shareholders’ funds 475.9 470.9 
Closing equity shareholders’ funds 453.2 475.9 
Consolidated statement of total recognised gains and losses 1) Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards using the historical cost convention.
Basis of consolidation
The Group financial statements are made up to 31 March and comprise the financial statements of the company and all of its subsidiary
undertakings, together with the Group’s share of the results of associated undertakings.
The results of companies acquired or disposed of during the year are included from or up to the effective date of acquisition or disposal
respectively.
Acquisitions
The net assets of companies or businesses acquired are incorporated into the Group financial statements at their fair value to the 
Group at the date of acquisition. Where the fair value of the purchase consideration exceeds the fair value of the net assets acquired, 
the difference is treated as goodwill arising on acquisition.
Goodwill
Goodwill arising on acquisitions prior to 1 April 1998 was written off to reserves. From 1 April 1998, goodwill arising on acquisitions is
capitalised in the balance sheet and amortised over periods not exceeding 20 years, in line with the directors’ view of its useful economic
life. On disposal of a previously acquired business, any attributable goodwill that was previously written off to reserves or that has not
been amortised through the profit and loss account is included in determining the profit or loss on disposal.
Investments
Acquisitions for which the consideration includes an issue of shares which is eligible for relief under Sections 131 to 134 of the
Companies Act 1985 are stated in the company balance sheet at the nominal value of the shares issued, together with the fair value of
any other consideration given plus the costs of acquisition. 
All other fixed asset investments are stated at cost, less provision for any impairment in value. Current asset investments are held at the
lower of cost and net realisable value.
Associated undertakings
Associated undertakings are those in which the Group has a participating interest and over which it exerts significant influence.
The Group’s share of the results of associated undertakings is included in the consolidated profit and loss account and its interest in their
net assets is included in investments in the consolidated balance sheet under the equity method of accounting.
Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost, less depreciation and provision for any impairment in value. Depreciation is provided on tangible
fixed assets, other than freehold land, at rates calculated to write off the cost, less estimated residual value, of each asset on a straight
line basis over their expected useful lives as follows:
Freehold buildings 50 years
Long leasehold property 50 years
Short leasehold property over the lease term
Plant and machinery
– heavy production 15 years
– other 10 years
Office equipment 5 to 10 years
Motor vehicles 3 to 5 years
Leasing and hire purchase commitments
Assets obtained under hire purchase contracts and leases which result in the transfer to the Group of substantially all the risks and
rewards of ownership (finance leases) are capitalised as tangible fixed assets at the estimated present value of underlying lease payments
and are depreciated over their expected useful lives or over the primary lease period, whichever is the shorter. The capital elements of
future lease obligations are recorded as liabilities whilst the finance elements of the rental payments are charged to the profit and loss
account over the period of the lease or hire purchase contract so as to produce a constant rate of charge on the outstanding balance of
the net obligation in each period.
Rentals paid under other leases (operating leases) are charged to the profit and loss account on a straight line basis over the lease term.
50 FKI plc Annual report 2003
Notes to the financial statements 51 FKI plc Annual report 2003 Notes to the financial statements
1) Accounting policies continued
Stocks and work in progress
Stocks are stated at the lower of cost, on a first-in first-out basis, and net realisable value after making due allowance for any obsolete or
slow moving items. In the case of finished goods and work in progress, cost comprises direct materials, direct labour and an appropriate
proportion of manufacturing overheads, based on normal levels of activity.
Long-term contracts are stated at costs incurred, which comprise cost of direct materials and labour plus appropriate overhead
expenses, net of amounts transferred to cost of sales and after deducting foreseeable losses and payments on account not matched
with turnover. To the extent that payments on account exceed the value at which long-term contracts are stated, they are included as
“payments received on account” within creditors. 
Research and development
Development expenditure on clearly defined projects whose outcome can be assessed with reasonable certainty is capitalised and
amortisation is commenced in the year the expenditure is incurred by reference to the lesser of the life of the project or three years. 
All other research and development expenditure is written off in the year in which it is incurred.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid, or recovered, using the tax rates
and laws that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences, subject to the exceptions noted below, that have originated but not reversed
at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in
the future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in
which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences
can be deducted.
Deferred tax is not recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being
charged to tax only if and when the replacement assets are sold.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected
to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is
measured on a non-discounted basis.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at the contracted rate if the transaction is
covered by a forward foreign currency contract. Monetary assets and liabilities denominated in foreign currencies are re-translated at the
rate of exchange ruling at the balance sheet date.
Exchange gains and losses arising on foreign currency borrowings used to finance the Group’s foreign currency equity investments are
taken to reserves to the extent that they can be offset against the exchange differences arising on the equity investments.
On consolidation, the balance sheets of non-United Kingdom subsidiary and associated undertakings and assets and liabilities
denominated in foreign currencies held by United Kingdom companies are translated into sterling at the rates of exchange ruling at the
balance sheet date. Profit and loss accounts and cash flows of overseas subsidiary and associated undertakings are translated into
sterling at average rates of exchange prevailing during the year, with the year end adjustment to closing rates being taken to reserves.
Differences on exchange arising from the re-translation at year end rates of the net investment in overseas subsidiary and associated
undertakings at the beginning of the year are taken to reserves. All other exchange differences are dealt with in the determination of profit
for the financial year.
Turnover
Turnover comprises the invoiced value of goods and services supplied by the Group exclusive of value added taxes, sales taxes and
intra-group transactions. 
In respect of long-term contracts, turnover is calculated on a percentage completion basis, as the cost incurred up to the accounting 
date plus a proportion of the profit appropriate to the percentage completion of each contract. The amount by which recorded turnover
on contracts is in excess of payments on account is recorded in debtors as “amounts recoverable on contracts”. Attributable profit is
recognised on long-term contracts only when the profitable outcome of the contract can be reasonably foreseen and is calculated 
so as to reflect the proportion of the work carried out at the year end. Full provision is made in respect of foreseeable losses on
uncompleted contracts. 1) Accounting policies continued
Pensions and other post-retirement benefits
The regular cost of providing pensions under defined benefit schemes and other post-retirement benefits is charged to the profit and loss
account over the employees’ service lives on the basis of a constant percentage of earnings. Variations from regular cost, arising from
periodic actuarial valuations, are allocated over the expected remaining service lives of current employees on the basis of a constant
percentage of current and expected future earnings. The difference between the charge to the profit and loss account and the
contributions paid to the schemes is shown as an asset or a liability in the balance sheet. Pension costs for the Group’s defined
contribution pension schemes are charged to the profit and loss account in the years in which they are payable.
Derivatives
Derivatives for hedging purposes are held off balance sheet with the exception of cross currency swaps. The net exchange gain/loss as a
result of exchange rate movements is recorded on the balance sheet to reflect the substance of the transaction. The movements in the
balance sheet value are recorded in reserves since the borrowing is a hedge of the associated currency net assets.
The net interest cost/income arising on interest rate swaps is charged/credited to the interest line in the profit and loss account on an 
accruals basis.
Finance costs
Finance costs are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount.
Debt
Debt is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying amount is increased by the finance
cost in respect of the accounting period and reduced by the payments made in the period.
2) Segmental information
An analysis of turnover, operating profit and net operating assets by operating group and by geographical location is given below:
Year ended Year ended Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 31 March 31 March
2003 2003 2003 2002 2002 2002
Operating Net operating Operating Net operating
Turnover profit assets Turnover profit assets
£m £m £m £m £m £m
Analysis by operating group
FKI Logistex 439.3 15.7 58.8 454.7 29.5 70.4 
Lifting Products and Services 408.7 32.5 190.1 435.2 34.9 215.7 
Hardware 258.5 42.0 100.8 281.1 40.7 112.1 
Energy Technology 332.9 24.8 163.5 400.0 72.6 162.2 
Continuing operations 1,439.4 115.0 513.2 1,571.0 177.7 560.4 
Discontinued operations 13.2 (4.6) (1.2) 39.0 (5.0) 16.4 
1,452.6 110.4 512.0 1,610.0 172.7 576.8 
Operating profit has been shown before reorganisation costs and goodwill amortisation to facilitate the comparison of the underlying
performance. Reorganisation costs in acquired undertakings were incurred in Energy Technology amounting to £2.4 million, £0.5 million 
in Germany and £1.9 million in the UK (2002: Energy Technology in The Czech Republic £2.0 million). Goodwill amortisation was 
incurred in FKI Logistex amounting to £26.2 million (2002: £26.9 million), Lifting Products and Services amounting to £0.5 million 
(2002: £0.5 million), Hardware amounting to £1.7 million (2002: £1.8 million) and Energy Technology amounting to £1.3 million 
(2002: £0.1 million).
Acquisitions in the year contributed turnover of £43.1 million (FKI Logistex in the UK £2.1 million, Energy Technology in Germany 
£41.0 million) and operating loss before reorganisation costs and goodwill amortisation of £4.2 million in Energy Technology, £3.7 million
in Germany and £0.5 million in the UK.
52 FKI plc Annual report 2003 Notes to the financial statements 53 FKI plc Annual report 2003 Notes to the financial statements
2) Segmental information continued
Year ended Year ended Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 31 March 31 March
2003 2003 2003 2002 2002 2002
Operating Net operating Operating Net operating
Turnover profit assets Turnover profit assets
£m £m £m £m £m £m
Analysis by geographical origin
United Kingdom 292.4 26.0 136.9 397.0 40.4 114.0
Rest of Europe 349.8 2.1 114.3 276.9 32.8 137.7
North America 753.2 83.7 246.8 863.2 101.1 293.2
Rest of the World 44.0 3.2 15.2 33.9 3.4 15.5
Continuing operations 1,439.4 115.0 513.2 1,571.0 177.7 560.4
Discontinued operations 13.2 (4.6) (1.2) 39.0 (5.0) 16.4
1,452.6 110.4 512.0 1,610.0 172.7 576.8
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Analysis of turnover by geographical destination
United Kingdom 166.6 147.8
Rest of Europe 329.7 265.9
United States of America 713.3 940.2
Canada 71.2 70.4 
Africa 17.9 13.5 
Asia 52.9 54.0 
Australasia 28.6 21.9 
Middle East 27.9 24.9 
Rest of the World 31.3 32.4 
Continuing operations 1,439.4 1,571.0 
Discontinued operations 13.2 39.0 
1,452.6 1,610.0 
Inter-segmental turnover is not a material part of the turnover of the operating groups, whether analysed by operating group or by
geographical location.
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Reconciliation of net operating assets to total net assets
Net operating assets as above 512.0 576.8 
Goodwill 507.5 530.6 
Investments 2.0 4.5 
Corporation tax and overseas tax (36.2) (37.5)
Deferred tax (31.6) (31.4)
Net debt (498.4) (532.5)
Dividends payable (1.9) (34.3)
Total net assets 453.4 476.2  3) Cost of sales and net operating expenses
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Cost of sales 1,100.8 1,182.0 
Net operating expenses
Distribution costs 124.3 130.5 
Administrative expenses 149.2 156.1 
273.5 286.6 
Included in the figures above are the following amounts in respect of acquisitions during the year: cost of sales £39.7 million, distribution
costs £2.4 million and administrative costs £5.2 million.
4) Operating profit
Operating profit is stated after charging/(crediting) the following:
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Depreciation – owned tangible fixed assets 48.8 52.0 
– leased tangible fixed assets 0.7 0.4 
Loss/(profit) on sale of tangible fixed assets 0.4 (0.4)
Goodwill amortisation 29.7 29.3 
Auditors’ remuneration – Ernst & Young LLP 1.6 – 
– Andersen – 1.5 
Operating lease rentals – in respect of hire of plant and machinery 4.8 3.5 
– in respect of other operating leases 9.7 11.5
Research and development costs 7.8 7.2 
Fees paid to Andersen in the UK for services other than audit amounted to £nil (2002: £0.4 million). Fees paid to Ernst & Young LLP 
in the UK for services other than audit amounted to £nil (2002: £nil).
5) Employees
The average number of persons (including executive directors) employed by the Group in each of the following categories during the 
year was:
Year ended Year ended
31 March 31 March
2003 2002
Number Number
Production 11,511 12,932 
Administration and management 1,698 1,716
Distribution and sales 2,046 2,037
15,255 16,685
Year ended Year ended
31 March 31 March
2003 2002
restated
£m £m
Wages and salaries 365.6 386.1 
Social security and other allied costs 48.5 71.7 
Pension and other post-retirement benefits 16.2 15.8 
430.3 473.6 
The pension and other post-retirement benefits cost disclosure for the year ended 31 March 2002 has been restated from £19.1 million
to £15.8 million to correctly reflect the amortisation of the surplus in the US defined benefit pension plans. This restatement has no impact
on the profit reported for the year ended 31 March 2002.
54 FKI plc Annual report 2003 Notes to the financial statements 55 FKI plc Annual report 2003 Notes to the financial statements
6) Directors’ emoluments
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Emoluments 1.7 1.3
Payments to unapproved pension schemes 0.3 0.3
2.0 1.6 
Further details of directors’ emoluments are disclosed in the Remuneration report on pages 34 to 43.
7) Exceptional items
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Charged within operating profit:
costs incurred in the reorganisation of acquired businesses (2.4) (2.0)
(Charged)/credited after operating profit:
(loss)/profit on sale and termination of discontinued operations (20.4) 3.0
profit on sale of tangible fixed assets 1.5 – 
(18.9) 3.0 
The loss on sale and termination of discontinued operations relates to the closure of the Chautauqua Hardware Corporation and the
Hawker Siddeley Power Transformer business and the sale of The Bedford Pump Company. The loss is stated after charging £6.5 million
of goodwill previously written off against reserves (note 27) and £2.8 million losses on disposal of tangible fixed assets. The tax charge for
the year includes a credit of £3.5 million (2002: £nil) relating to exceptional items charged or credited after operating profit.
8) Net interest payable
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Interest payable on:
bank loans and overdrafts 2.7 2.9 
other loans 31.5 37.5 
finance leases and other indebtedness 0.1 0.9
34.3 41.3 
Interest receivable (3.1) (3.6)
31.2 37.7
9) Taxation
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Current tax:
UK corporation tax at 30% (0.6) 10.3
Foreign tax 16.0 14.6
Adjustments in respect of prior years
UK corporation tax (0.1) (0.9)
foreign tax (0.8) –
Total current tax 14.5 24.0 
Deferred tax 1.1 11.9 
Tax on profit on ordinary activities 15.6 35.9
Translation differences on long-term foreign currency loans used to finance the Group’s foreign currency equity investments have been
taken to reserves, together with a tax charge thereon of £0.5 million (2002: £nil). 9) Taxation continued
The current tax assessed for the year is higher than the standard rate of corporation tax in the UK as explained below.
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Profit on ordinary activities before tax 28.2 106.7
Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2002: 30%) 8.5 32.0
Effects of:
non-deductible expenses (primarily goodwill amortisation) 10.4 9.5
non-deductible/(taxable) exceptional items 2.3 (0.9)
accelerated capital allowances 2.1 (4.0) 
short-term timing differences (0.4) –
utilisation of losses (1.1) (6.4)
timing difference on goodwill eligible for tax relief (1.5) (1.6)
adjustment to tax charge in respect of prior years (0.9) (0.9)
lower rates of tax on overseas earnings (4.9) (3.7)
Current tax charge for the year 14.5 24.0
The tax charge in future years may be affected by the utilisation of trading and capital losses, which in the current year amount to an
unrecognised deferred tax asset of £23.3 million (2002: £20.2 million), as based on currently available evidence it is considered unlikely
that suitable taxable profits or gains will be generated. 
10) Company profit for the year
The company has taken advantage of the exemption granted by Section 230 of the Companies Act 1985 whereby no individual profit
and loss account of the company is disclosed. The company’s loss for the financial year was £42.8 million (2002: £79.6 million).
11) Equity dividends
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Ordinary shares
Interim dividend of 4.2p per share paid on 28 February 2003 (2002: 4.2p) 24.3 24.3
Final dividend proposed of 0.3p per share (2002: 5.8p) 1.8 33.6
Total equity dividends 26.1 57.9
The proposed final dividend will be paid on 31 October 2003 to ordinary shareholders on the register at 3 October 2003.
12) Earnings per share
Earnings per ordinary share has been calculated by dividing the profit for the financial year amounting to £12.6 million (2002: £70.8 million)
by 579,004,074 (2002: 576,852,235) ordinary shares, being the weighted average number in issue during the year. Adjusted earnings per
share, which gives a useful indication of underlying performance, is calculated by dividing the profit for the financial year, before exceptional
items and goodwill amortisation, amounting to £59.5 million (2002: £98.5 million) by 579,004,074 (2002: 576,852,235) ordinary shares,
being the weighted average number in issue during the year.
Diluted earnings per share has been calculated on profits of £12.6 million (2002: £70.8 million) and a weighted average number of shares
of 579,142,718 (2002: 579,382,530). The diluted number of shares takes account of outstanding share options and the fair value of
those shares over the year.
56 FKI plc Annual report 2003 Notes to the financial statements 57 FKI plc Annual report 2003 Notes to the financial statements
12) Earnings per share continued
The number of shares used in the calculations of earnings per share for the year ended 31 March 2002 have been restated to exclude
those shares held by the employee share ownership trust that had not vested unconditionally to the employees. This restatement has had
no impact on the reported earnings per share numbers for the year ended 31 March 2002.
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2003 2003 2002 2002
Pence per Pence per
£m share £m share
Earnings/earnings per share 12.6 2.2 70.8 12.2 
Add back goodwill amortisation 29.7 5.1 29.3 5.1 
Add back exceptional items:
reorganisation costs in acquired businesses 2.4 0.4 2.0 0.3
loss/(profit) on sale and termination of discontinued operations 20.4 3.5 (3.0) (0.5)
profit on sale of tangible fixed assets (1.5) (0.2) ––
tax credit on exceptional items (4.1) (0.7) (0.6) (0.1)
Adjusted earnings/earnings per share 59.5 10.3 98.5 17.0
13) Intangible fixed assets
Development
Goodwill costs
£m £m
Cost:
1 April 2002 603.2 2.4
Exchange adjustments (30.7) –
Additions 34.6 –
Disposals (0.9) (2.2)
31 March 2003 606.2 0.2
Amortisation:
1 April 2002 72.6 2.3
Exchange adjustments (3.6) –
Provided during the year 29.7 –
Disposals – (2.2)
31 March 2003 98.7 0.1
Net book value 31 March 2003 507.5 0.1
Net book value 31 March 2002 530.6 0.1 
Included in the additions to goodwill of £34.6 million, is £34.1 million that arose on the purchase of businesses in the year (note 33) and
£0.5 million that arose from adjustments to the fair value of assets in businesses purchased in the year ended 31 March 2002. 14) Tangible fixed assets
Long Short Plant,
Freehold leasehold leasehold equipment
property property property and vehicles Total
£m £m £m £m £m
Group
Cost:
1 April 2002 250.7 4.9 7.4 661.5 924.5
Exchange (6.2) (0.3) (0.4) (25.7) (32.6)
Acquisition of businesses – – – 2.6 2.6
Additions 2.2 0.4 – 18.0 20.6
Disposals (6.5) – (0.1) (28.5) (35.1)
Reclassifications (1.4) – – 1.4 –
31 March 2003 238.8 5.0 6.9 629.3 880.0
Depreciation:
1 April 2002 59.8 1.9 5.1 458.3 525.1
Exchange (2.9) (0.3) (0.3) (20.3) (23.8)
Charge for the period 5.2 0.3 0.3 43.7 49.5
Disposals (2.1) – – (25.9) (28.0)
Reclassifications 0.3 – – (0.3) –
31 March 2003 60.3 1.9 5.1 455.5 522.8
Net book value 31 March 2003 178.5 3.1 1.8 173.8 357.2
Net book value 31 March 2002 190.9 3.0 2.3 203.2 399.4 
The net book value of tangible fixed assets for the Group includes £1.0 million (2002: £0.5 million) in respect of assets held under finance
leases and hire purchase contracts.
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
£m £m £m £m
Land 40.2 41.7 – – 
Buildings 198.6 209.0 11.6 11.1 
Cost 238.8 250.7 11.6 11.1 
Plant,
Freehold equipment
property and vehicles Total
£m £m £m
Company
Cost:
1 April 2002 11.1 1.3 12.4
Additions 0.8 0.3 1.1
Disposals (0.3) (0.2) (0.5)
31 March 2003 11.6 1.4 13.0
Depreciation:
1 April 2002 0.6 0.9 1.5
Charge for the period 0.2 0.2 0.4
Disposals – (0.2) (0.2)
31 March 2003 0.8 0.9 1.7
Net book value 31 March 2003 10.8 0.5 11.3
Net book value 31 March 2002 10.5 0.4 10.9
58 FKI plc Annual report 2003 Notes to the financial statements 59 FKI plc Annual report 2003 Notes to the financial statements
15) Investments
Own Associated 
shares undertakings Total
£m £m £m
Group
Cost:
1 April 2002 4.1 0.4 4.5
Exchange – 0.1 0.1
Additions 0.6 – 0.6
Disposals (0.9) – (0.9)
31 March 2003 3.8 0.5 4.3
Provisions:
1 April 2002 –––
Impairment 2.3 – 2.3
31 March 2003 2.3 – 2.3
Net book value 31 March 2003 1.5 0.5 2.0
Net book value 31 March 2002 4.1 0.4 4.5
The total number of FKI shares held under the LTIP at 31 March 2003 was 2,415,151 (2002: 2,353,728) and their market value was 
£1.5 million (2002: £4.5 million). Rights to dividends on shares held by the LTIP have been waived. 
Further details of the LTIP are disclosed in the Remuneration report on pages 34 to 43.
Own Subsidiary
shares undertakings Total
£m £m £m
Company
Cost:
1 April 2002 restated 4.1 2,586.5 2,590.6 
Additions 0.6 31.3 31.9
Disposals (0.9) – (0.9)
31 March 2003 3.8 2,617.8 2,621.6
Provisions:
1 April 2002 –––
Impairment 2.3 – 2.3
31 March 2003 2.3 – 2.3
Net book value 31 March 2003 1.5 2,617.8 2,619.3
Net book value 31 March 2002 4.1 2,586.5 2,590.6
The company acts as sponsor for the Group’s employee share ownership trust. The trust holds shares in the company for the purpose 
of satisfying awards under the long-term incentive plan. The shares are held by the trust for the continuing benefit of the company’s
business and the company has therefore recognised the shares held by the trust as fixed asset investments in its own balance sheet and
restated its investments at 1 April 2002 accordingly. 
A list of principal subsidiary undertakings is given on page 75. 16) Stocks
31 March 31 March 31 March 31 March
2003 2003 2002 2002
£m £m £m £m
Long-term contract work in progress: net costs 7.2 44.4
Less: applicable payments on account (3.4) (43.5)
3.8 0.9
Other stocks and work in progress:
Raw materials and consumables 75.7 81.2
Work in progress 74.3 75.3
Finished goods for resale 90.6 91.3
240.6 247.8
Less: applicable payments on account (5.2) (10.8)
235.4 237.0
239.2 237.9
17) Debtors
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
restated
£m £m £m £m
Amounts falling due within one year
Trade debtors 247.8 286.4 – – 
Amounts recoverable on contracts 67.0 45.5 – – 
Amounts owed by subsidiary undertakings – – 863.9 712.0 
Other debtors 27.6 18.6 8.7 3.2 
Pension fund prepayments – 0.2 – –
Other prepayments and accrued income 21.4 11.4 0.1 –
Corporate tax recoverable 4.5 3.4 4.2 3.3 
368.3 365.5 876.9 718.5 
Amounts falling due after more than one year
Trade debtors 0.1 0.1 – –
Accounts recoverable on contracts 2.4 – – –
Amounts owed by subsidiary undertakings – – 97.2 216.2
Other debtors – – 0.5 –
Pension fund prepayments 58.1 48.1 9.1 –
Other prepayments and accrued income 2.2 3.4 – –
62.8 51.6 106.8 216.2
60 FKI plc Annual report 2003 Notes to the financial statements 61 FKI plc Annual report 2003 Notes to the financial statements
18) Creditors: amounts falling due within one year
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
restated restated
£m £m £m £m
Bank loans and overdrafts (note 21) – 4.4 21.3 39.8 
Other loans (note 21) 50.5 15.3 2.2 8.2 
Obligations under finance leases (note 21) 0.3 0.1 – – 
50.8 19.8 23.5 48.0 
Payments received on account 46.8 33.5 – – 
Trade creditors 192.5 182.6 – – 
Amounts owed to subsidiary undertakings – – 2,241.3 1,857.8
Other creditors 79.4 59.2 8.3 1.6
Corporation tax and overseas tax 40.7 38.6 – – 
Other taxes and social security 9.3 7.6 – – 
Accruals and deferred income 87.5 100.3 32.2 34.0 
Dividends payable 1.9 34.3 1.9 34.3 
458.1 456.1 2,283.7 1,927.7
Total creditors falling due within one year 508.9 475.9 2,307.2 1,975.7
Prior year amounts have been restated for the reclassification of certain liabilities to provisions for liabilities and charges (note 23).
19) Creditors: amounts falling due after more than one year
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
restated restated
£m £m £m £m
Bank loans (note 21) 0.5 – – – 
Other loans (note 21) 560.0 625.4 385.1 377.8 
Obligations under finance leases (note 21) 0.5 0.3 – – 
561.0 625.7 385.1 377.8 
Amounts owed to subsidiary undertakings – – 543.9 735.2 
Other creditors 1.0 0.8 – – 
Corporation tax and overseas tax – 2.0 – – 
Accruals and deferred income 8.5 11.1 – – 
9.5 13.9 543.9 735.2 
Total creditors falling due after more than one year 570.5 639.6 929.0 1,113.0 
Prior year amounts have been restated for the reclassification of certain insurance liabilities to provisions for liabilities and charges (note 23). 20) Loans and overdrafts
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
£m £m £m £m
Bank loans and overdrafts – wholly repayable within five years 0.5 4.4 – –
Other loans
US dollar fixed rate guaranteed loan notes 91.6 84.3 – –
Other 2.2 8.5 2.2 8.2
Wholly repayable within five years by instalments 93.8 92.8 2.2 8.2
US dollar fixed rate guaranteed loan notes 129.6 163.4 – –
Euro fixed rate guaranteed bond 385.1 383.0 385.1 383.0
Other 2.0 1.5 – –
Wholly or partly repayable after five years by instalments 516.7 547.9 385.1 383.0
Instalments falling due within five years 79.1 97.6 – –
Instalments falling due after five years 437.6 450.3 385.1 383.0
Repayable by instalments wholly or partly after five years 516.7 547.9 385.1 383.0
Total other loans 610.5 640.7 387.3 391.2
Other loans wholly repayable within five years are redeemable at par and bear interest at rates between 2.4% pa and 7.2% pa. Loans not
wholly repayable within five years are redeemable at par at varying dates up to 2016 and bear interest at rates between 2.3% pa and
8.5% pa.
Bank loans, overdrafts and other loans amounting to £0.8 million (2002: £1.9 million) are secured by fixed and floating charges on
subsidiary undertakings’ assets.
Certain of the company’s bank overdrafts are netted off against cash for Group purposes in accordance with the right of set-off contained
in the banking agreements.
Other loans to the company are repayable within one year and the eurobond is repayable after more than five years.
21) Repayment detail 
The total borrowings of the Group are repayable as follows:
Bank loans and overdrafts Other loans Finance lease obligations
31 March 31 March 31 March 31 March 31 March 31 March
2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m
Within one year or on demand – 4.4 50.5 15.3 0.3 0.1 
Between one and two years – – 57.0 48.6 0.2 0.1 
Between two and five years 0.5 – 65.4 123.8 0.3 0.2 
In five years or more – – 437.6 453.0 – –
0.5 4.4 610.5 640.7 0.8 0.4 
22) Derivatives and other financial instruments
Page 26 of the Finance Director’s review provides an explanation of the role that financial instruments have played during the year in
managing the risks the Group faces in its financial activities. The explanation summarises the objectives and policies for holding or issuing
financial instruments and similar contracts, and the strategies for achieving those objectives that have been followed during the year.
The numerical disclosures in this note deal with financial assets and financial liabilities as defined in Financial Reporting Standard 13
“Derivatives and other financial instruments: Disclosures” (FRS 13). Certain financial assets such as investments in subsidiary and
associated companies are excluded from the scope of these disclosures.
As permitted by FRS 13, short-term debtors and creditors have also been excluded from the disclosures, other than the 
currency disclosures.
62 FKI plc Annual report 2003 Notes to the financial statements 63 FKI plc Annual report 2003 Notes to the financial statements
22) Derivatives and other financial instruments continued
Interest rate and currency profile disclosures – borrowings
The interest rate and currency profile of the Group’s borrowings was:
31 March 2003 31 March 2003 Fixed rate
Weighted
Weighted average
average time for which 
Total Floating rate Fixed rate interest rate rate is fixed
£m £m £m % pa Years
US dollar 384.9 237.1 147.8 7.3 5.6
Euro 104.6 62.8 41.8 6.6 4.2
Danish krone 122.1 90.4 31.7 6.9 6.6
Other currencies 0.2 – 0.2 6.0 1.7
Gross borrowings 611.8 390.3 221.5 7.1 5.5
31 March 2002 31 March 2002 Fixed rate
Weighted
Weighted average
average time for which 
Total Floating rate Fixed rate interest rate rate is fixed
£m £m £m % pa Years
US dollar 435.9 271.9 164.0 7.3 6.6 
Euro 99.5 65.4 34.1 6.9 5.4 
Danish krone 108.9 80.7 28.2 7.1 7.8 
Other currencies 1.2 1.2 – – – 
Gross borrowings 645.5 419.2 226.3 7.2 6.6 
The interest rate on floating rate liabilities is principally linked to LIBOR for periods of between one and six months.
Currency of net cash/(debt)
In 2003 and 2002 all cash and deposits were held at floating rates of interest. The net cash/(debt) of the Group analysed by currency was:
31 March 31 March 31 March 31 March 31 March 31 March
2003 2003 2003 2002 2002 2002
Cash and Net Cash and Net
deposits Debtcash/(debt) deposits Debt cash/(debt) 
£m £m £m £m £m £m 
US dollar 58.4 (384.9) (326.5) 46.9 (435.9) (389.0)
Sterling 19.5 (0.1) 19.4 24.2 (0.7) 23.5 
Euro 15.0 (104.6) (89.6) 18.5 (99.5) (81.0)
Danish krone 5.3 (122.1) (116.8) – (108.9) (108.9)
Other currencies 15.2 (0.1) 15.1 23.4 (0.5) 22.9 
113.4 (611.8) (498.4) 113.0 (645.5) (532.5)
Borrowing facilities
The Group has undrawn committed borrowing facilities, in respect of which all conditions precedent had been met, as follows:
31 March 31 March
2003 2002
£m £m
Expiring in one to two years – 248.0 
Expiring in more than two years 175.0 – 
Total 175.0 248.0 
The £175.0 million facility was reduced to £150.0 million on 2 June 2003. 22) Derivatives and other financial instruments continued
Fair values
Set out below is a comparison by category of book values and fair values of the Group’s financial assets and liabilities.
Where available, market values have been used to determine fair values. Where market values are not available, fair values have been
calculated by discounting cash flows at prevailing interest and exchange rates.
31 March 31 March 31 March 31 March
2003 2003 2002 2002
Book value Fair value Book value Fair value
£m £m £m £m
Primary financial instruments held or issued to finance the 
Group’s operations 
Short-term financial liabilities and current portion of long-term borrowings (50.9) (50.8) (19.8) (19.6)
Long-term borrowings (587.0) (573.6) (612.4) (605.1)
Cash and short-term deposits 113.4 113.4 113.0 113.0 
Net financial liabilities (524.5) (511.0) (519.2) (511.7)
Derivative financial instruments held to manage the interest rate 
and currency profile
Currency and interest rate swaps 26.1 83.5 (13.5) 12.9 
Forward hedging contracts – 0.7 – 1.9
Hedging contracts
The Group enters into forward foreign currency contracts to reduce the currency exposures that arise on sales and purchases
denominated in foreign currencies. It also enters into interest rate swaps to manage its interest rate profile and forward commodity
contracts to reduce the exposure to fluctuating metal prices where these are significant to the businesses concerned. Changes in the fair
value of instruments used as hedges are not recognised in the financial statements until the hedged position matures. An analysis of
these unrecognised gains and losses is as follows:
Net 
Gains Losses gains/(losses)
£m £m £m
Unrecognised at 1 April 2001 24.0 (17.1) 6.9
Recognised in 2002 4.4 (5.3) (0.9)
Arising before 1 April 2001 unrecognised in 2002 19.6 (11.8) 7.8
Unrecognised movement in 2002 21.0 (0.5) 20.5
Unrecognised 1 April 2002 40.6 (12.3) 28.3
Recognised in 2003 13.1 (1.0) 12.1
Arising before 1 April 2002 unrecognised in 2003 27.5 (11.3) 16.2
Unrecognised movement in 2003 34.1 7.8 41.9
Unrecognised at 31 March 2003 61.6 (3.5) 58.1
Of which:
Expected to be recognised in 2004 17.2 (2.0) 15.2
Expected to be recognised in 2005 or later 44.4 (1.5) 42.9
64 FKI plc Annual report 2003 Notes to the financial statements 65 FKI plc Annual report 2003 Notes to the financial statements
22) Derivatives and other financial instruments continued
Currency exposures
The Group’s objectives in managing the currency exposures arising from its net investment overseas (in other words, its structural
currency exposures) are to maintain a low cost of borrowings and to retain some potential for currency-related appreciation while partially
hedging against currency depreciation. Gains and losses arising from these structural currency exposures are recognised in the statement
of total recognised gains and losses.
The table below shows the Group’s currency exposures; in other words, those transactional (or non-structural) exposures that give rise 
to the net currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and
monetary liabilities of the Group that are not denominated in the operating (or “functional”) currency of the operating unit involved, other
than certain non-sterling borrowings treated as hedges of net investments in overseas operations. These exposures were as follows:
Net foreign currency monetary assets/(liabilities) 
31 March 2003
Sterling US dollar Euro Other Total
Functional currency of Group operations £m £m £m £m £m
Sterling – (8.0) 5.5 0.7 (1.8)
US dollar –––––
Euro – 1.1 – 0.2 1.3
Other – 1.7 – 0.1 1.8
Total – (5.2) 5.5 1.0 1.3
Net foreign currency monetary assets/(liabilities)
31 March 2002
Sterling US dollar Euro Other Total
Functional currency of Group operations £m £m £m £m £m
Sterling – 2.8 – 0.2 3.0
US dollar – ––––
Euro (0.2) 0.3 – – 0.1
Other – 0.3 0.1 0.4 0.8
Total (0.2) 3.4 0.1 0.6 3.9
The amounts shown in the tables above take into account the effect of any currency swaps, forward contracts and other derivatives
entered into to manage these currency exposures.
23) Provisions for liabilities and charges
Post-
Deferred retirement Business Insurance and
taxation benefits restructuring litigation Total
£m £m £m £m £m
Group
1 April 2002 restated 31.4 52.3 – 27.2 110.9 
Exchange adjustments (0.9) (3.9) – (0.2) (5.0)
Increase in the year 1.1 3.5 7.4 2.8 14.8
Utilised in the year – (2.6) (0.4) – (3.0)
31 March 2003 31.6 49.3 7.0 29.8 117.7
The Group has changed its accounting policy for liabilities to present certain liabilities as provisions rather than creditors. Accordingly, the
opening balances on provisions have been restated for the reclassification of £27.2 million of insurance and litigation liabilities, £4.6 million
of which were previously reported within creditors falling due within one year and £22.6 million of which were previously reported within
creditors falling due after more than one year. At 31 March 2003, £24.7 million (2002: £22.6 million) of the insurance and litigation
provision related to provisions for insurance losses incurred but not reported. This change has been made to more appropriately reflect
the uncertainty surrounding the potential timing and amount of the liabilities concerned and had no impact on the reported profit and net
assets of the Group.
The business restructuring provision relates to the closure of the Hawker Siddeley Power Transformer business and is expected to be
utilised in the next financial year. 24) Deferred taxation
The major components of the provision for deferred taxation are as follows:
31 March 31 March
2003 2002 
£m £m 
Group
Accelerated capital allowances 16.7 18.9 
Short-term timing differences 3.5 3.2
Losses (1.6) (3.5)
Other 13.0 12.8 
Deferred tax liability 31.6 31.4
Deferred taxation is not provided in respect of liabilities which might arise on the distribution of available overseas reserves of subsidiary
undertakings except to the extent that the decision to remit such profits has been taken.
25) Pensions and other post-retirement benefits
a) SSAP 24 disclosures
Pensions
The main pension schemes operated by the Group are in the United Kingdom and the United States and are defined benefit in type.
These are funded schemes, where the future liabilities for benefits are provided for by the accumulation of assets held externally to the
Group in separate trustee administered funds.
Pension costs for these schemes are determined with the advice of independent professionally qualified actuaries on the basis of formal
actuarial valuations using the projected unit method. In line with normal business practice these valuations are undertaken triennially in the
United Kingdom and annually in the United States.
For the Group’s main defined benefit pension schemes the results of the most recent valuations (carried out as at 31 December 1999 for
the FKI Group Pension Scheme, 6 April 2000 for the Bridon Group Senior Executive Pension Scheme and 31 December 2001 for the FKI
Industries Inc. Group Pension Plans) and the principal funding assumptions used are summarised below:
Bridon Group FKI Industries
FKI Group Senior Executive Inc. Group
Pension scheme Pension scheme Pension Plans
Principal funding assumptions:
Return on assets 6.4% pa 5.8% pa 8.8% pa
Rate of salary increases 3.9% pa 4.3% pa 4.5% pa
Rate of inflation 2.9% pa 2.8% pa –
Market value of assets (MVA) £407.2m £15.3m £250.6m
MVA as % of actuarial value of liabilities 119.1% 101.0% 132.3%
MVA as % of actuarial value of liabilities – minimum funding requirement valuation 111.0% 101.0% –
This is the third FKI plc Annual report and financial statements to make use of the 31 December 1999 valuation for determining the
pension cost for the FKI Group Pension Scheme. The results of the 31 December 2002 valuation will be available for determining the
pension cost in next year’s Annual report and financial statements.
The Group operates a number of other defined benefit schemes that are accounted for under local rules and also sponsors a number of
defined contribution schemes, the assets of which are held externally to the Group in separate trustee administered funds. Contributions
to these defined contribution schemes in the year, which were the same as the amount charged to the profit and loss account, amounted
to £8.7 million (2002: £9.7 million). Contributions to the Group’s main UK and US defined benefit pension schemes amounted to 
£13.6 million and £0.3 million respectively and £0.7 million was contributed to the Group’s other defined benefit schemes.
The total pension cost to the Group under all schemes was £10.2 million (2002: £11.3 million, after restatement to correctly reflect the
disclosure of the amortisation of the surplus in the US defined benefit pension plans) and an amount of £58.1 million (2002: £48.3 million)
is included in prepayments, representing the excess of contributions paid for all schemes over the total pension cost. The increase in the
pension prepayment during the year principally reflects the resumption of regular contributions into the main UK defined benefit schemes,
in November 2001.
66 FKI plc Annual report 2003 Notes to the financial statements 67 FKI plc Annual report 2003 Notes to the financial statements
25) Pensions and other post-retirement benefits continued
Other post-retirement benefits
The Group also operates a number of unfunded post-retirement medical and welfare benefit schemes, principally in the United States.
The cost of these schemes is determined with the advice of independent professionally qualified actuaries. The principal actuarial
assumptions used for the main US scheme were that the long-term increase in health costs would be 8.5% per annum (reducing to 5%
per annum after the year 2006) at a discount rate of 7.25%. The total cost of these benefits charged to the consolidated profit and loss
account is £6.0 million (2002: £4.5 million) and the accrued liability of £42.8 million (2002: £46.5 million) is included in provisions for
liabilities and charges. In addition, the Group has other unfunded post-retirement benefit obligations of £6.5 million (2002: £5.8 million).
b) FRS 17 disclosures
Pensions
The information below comprises the additional disclosures required by accounting standard FRS 17 for the Group’s principal defined
benefit pension schemes and shows, inter alia, what the effect on the financial statements would have been if FRS 17 had been adopted.
In the UK, full actuarial valuations of the FKI Group Pension Scheme and the Bridon Group Senior Executive Pension Scheme were
carried out as at 31 December 1999 and 6 April 2000 respectively. These valuations were updated at 31 March 2003 by an independent
professionally qualified actuary using revised assumptions consistent with the requirements of FRS 17. In the US, a full actuarial valuation
of the FKI Industries Inc. Group Pension Plan was carried out as at 31 December 2001. This valuation was updated at 31 March 2003 by
an independent qualified actuary using revised assumptions consistent with the requirements of FRS 17. The major assumptions used by
the actuaries were:
31 March 2003 31 March 2002
UK schemes US schemes UK schemes US schemes
% pa % pa % pa % pa
Rate of increase in salaries 3.6 3.5 3.8 4.5
Rate of increase in pensions in payment:
Members with limited price indexation minimum 3% 3.5 Nil 3.6 Nil
Other members 2.5 Nil 2.7 Nil
Discount rate 5.6 6.3 6.1 7.3
Rate of price inflation 2.6 2.5 2.8 3.0
The fair value of the assets, the present value of the liabilities and the expected rates of return at the balance sheet date were:
UK schemes US schemes UK schemes US schemes
Long–term Long–term Long–term Long–term
expected rate expected rate expected rate expected rate
of return at Value at of return at Value at of return at Value at of return at Value at
31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March 
2003 2003 2003 2003 2002 2002 2002 2002
% pa £m % pa £m % pa £m % pa £m
Equities 8.1 199.4 9.0 102.4 8.7 287.5 10.0 162.6
Bonds 4.8 76.1 5.4 79.4 5.4 65.5 6.5 83.7
Other 3.8 6.8 3.5 4.1 4.0 11.3 4.8 5.1
Total fair value of schemes’ assets 282.3 185.9 364.3 251.4
Present value of schemes’ liabilities (449.2) (188.8) (411.7) (196.2)
(Deficit)/surplus in the schemes (166.9) (2.9) (47.4) 55.2
Limit on recognition of surplus – (1.5) – (22.8)
Recognised (deficit)/surplus in the scheme (166.9) (4.4) (47.4) 32.4
Related deferred tax asset/(liability) 50.1 1.8 14.2 (13.0)
Net pension (liability)/asset (116.8) (2.6) (33.2) 19.4
The net deficit in the US schemes at 31 March 2003 of £2.9 million comprised a deficit of £5.8 million and a surplus of £2.9 million.
For the Group’s other defined benefit schemes the net pension liability at 31 March 2003 was £6.7 million (2002: £1.5 million asset).
The FKI Group Pension Scheme is a closed scheme and therefore under the projected unit method the current service cost would be
expected to increase as the members of the scheme approach retirement. 25) Pensions and other post-retirement benefits continued
The amounts that would have been charged/(credited) to the consolidated profit and loss account and recognised within the consolidated
statement of total recognised gains and losses under FRS 17 are as follows:
Year ended
31 March 2003
UK schemes US schemes
£m £m
Charged within operating profit:
current service cost 7.6 4.3
past service cost – 0.9
unrecognised surplus used to offset past service cost – (0.9)
gain on settlements – (0.1)
7.6 4.2 
Charged/(credited) within other finance income:
interest cost 24.8 12.1 
expected return on assets (28.8) (16.0)
(4.0) (3.9)
Recognised within the statement of total recognised gains and losses:
difference between actual and expected return on assets 106.5 43.5 
experience gains on the schemes’ liabilities (6.0) (6.9)
effect of change in assumptions on schemes’ liabilities 29.0 16.1 
Net loss recognised within the statement of total recognised gains and losses 129.5 52.7 
An analysis of the amounts that would have been recognised within the consolidated statement of total recognised gains and losses
under FRS 17 is set out below:
Year ended
31 March 2003
UK schemes US schemes
Difference between actual and expected return on the schemes’ assets £106.5m £43.5m
Expressed as percentage of the schemes’ assets 37.7% 23.4%
Experience gains on the schemes’ liabilities £6.0m £6.9m
Expressed as percentage of the present value of the schemes’ liabilities 1.3% 3.7%
Net loss recognised within the statement of total recognised gains and losses £129.5m £52.7m
Expressed as percentage of the present value of the schemes’ liabilities 28.8% 27.9%
The movement in the surplus/(deficit) in the schemes during the year was as follows:
UK schemes US schemes
£m £m
1 April 2002 (47.4) 55.2 
Exchange – (4.5)
Current service cost (7.6) (4.3)
Past service cost – (0.9)
Gain on settlements – 0.1 
Other finance income 4.0 3.9 
Actuarial loss (129.5) (52.7)
Contributions 13.6 0.3 
31 March 2003 (166.9) (2.9)
68 FKI plc Annual report 2003 Notes to the financial statements 69 FKI plc Annual report 2003 Notes to the financial statements
25) Pension and other post-retirement benefits continued
Other post-retirement benefits
The principal actuarial assumptions under FRS 17 for the valuation of the liability for post-retirement benefits other than pensions are the
same as under SSAP24 disclosed above. The total cost charged to the profit and loss account would have been £3.6 million, of which
£0.5 million related to service cost, £0.1 million to gains on settlements and £3.2 million to interest on liabilities. A net loss of £2.8 million
would have been recognised within the statement of total recognised gains and losses, of which £2.1 million related to experience gains
and £4.9 million to losses from changes in assumptions. The present value of the plan liabilities measured under FRS 17 at 31 March
2003 would have been £50.7 million (2002: £53.9 million) with a related deferred tax asset of £20.3 million (2002: £21.6 million).
The effect of FRS 17 on the Group’s net assets and reserves is set out below:
31 March 2003 31 March 2002
£m £m
Net assets:
Net assets as stated in the balance sheet 453.4 476.2
Pension assets recognised under SSAP 24 (note 17) (58.1) (48.3)
Pension and other post-retirement liabilities recognised under SSAP 24 (note 23) 49.3 52.3 
Related deferred tax 0.2 (0.9)
Net assets excluding SSAP 24 defined benefit assets and liabilities 444.8 479.3 
Net FRS 17 pension liabilities (net of deferred tax) (126.1) (12.3)
FRS 17 other post-retirement liabilities (net of deferred tax) (30.4) (32.3)
Net assets including FRS 17 defined benefit assets and liabilities 288.3 434.7 
31 March 2003 31 March 2002
£m £m
Reserves:
Profit and loss account as stated in the balance sheet 237.4 261.3 
Pension assets recognised under SSAP 24 (note 17) (58.1) (48.3)
Pension and other post-retirement liabilities recognised under SSAP 24 (note 23) 49.3 52.3 
Related deferred tax 0.2 (0.9)
Profit and loss account excluding SSAP 24 defined benefit assets and liabilities 228.8 264.4 
FRS 17 pension liabilities (net of deferred tax) (126.1) (12.3)
FRS 17 other post-retirement liabilities (net of deferred tax) (30.4) (32.3)
Profit and loss account including FRS 17 defined benefit assets and liabilities 72.3 219.8 
26) Called up share capital
Ordinary shares of 10p each
Number Amount
m £m
Authorised – 1 April 2002 and 31 March 2003 745.0 74.5
Allotted, called up and fully paid
1 April 2002 581.0 58.1
Issued under share option schemes 0.1 –
Issued in lieu of dividends 0.6 0.1
31 March 2003 581.7 58.2 26) Called up share capital continued
Executive Share Option Scheme
At 31 March 2003, the total number of options outstanding was 14,734,335 exercisable between 2003 and 2013 at subscription prices
between 87p and 233p. No options were exercised during the year and options over 1,794,500 shares lapsed. Options over 4,139,310
shares were granted during the year as shown below.
Granted Exercise
during the year price per share Date
Date of grant Number pence exercisable from Expiry date
26/06/02 648,000 153.5 26/06/05 26/06/12
08/07/02 930,396 140.0 08/07/05 08/07/12
01/08/02 175,000 105.0 01/08/05 01/08/12
26/11/02 1,277,960 87.0 26/11/05 26/11/12
06/01/03 1,107,954 88.0 06/01/06 06/01/13
FKI Sharesave Scheme
At 31 March 2003, the total number of options outstanding was 6,299,818 exercisable between 2003 and 2008 at subscription prices
between 126p and 223.5p. Options over 3,888,195 shares were granted during the year at a subscription price of 126p exercisable
between 2007 and 2008. Options over 56,217 shares were exercised during the year and 3,182,374 lapsed. The total consideration
received by the company during the year on exercise of options was £0.1 million.
27) Reserves
Share Capital 
premium redemption Profit and
account reserve loss account Total
£m £m £m £m
Group
1 April 2002 154.5 2.0 261.3 417.8
Exchange differences on retranslation of net assets of subsidiaries – – (16.5) (16.5)
Exchange differences on loans – – 0.1 0.1
Tax on exchange differences on loans – – (0.5) (0.5) 
Premium on shares issued 1.1 – – 1.1 
Goodwill transferred to profit and loss account in respect of disposals (note 7) – – 6.5 6.5 
Retained loss for the financial year – – (13.5) (13.5)
31 March 2003 155.6 2.0 237.4 395.0 
The cumulative amount of goodwill written off against the Group’s reserves, net of goodwill relating to undertakings disposed of, is
£268.4 million (2002: £274.9 million). This amount is net of negative goodwill added to reserves of £13.7 million (2002: £13.7 million).
Share Capital 
premium redemption Profit and
account reserve loss account Total
£m £m £m £m
Company
1 April 2002 restated 154.5 2.0 250.3 406.8 
Premium on shares issued 1.1 – – 1.1 
Retained loss for the financial year – – (68.9) (68.9)
31 March 2003 155.6 2.0 181.4 339.0 
The company acts as sponsor for the Group’s employee share ownership trust. Accordingly, its reserves at 1 April 2002 have been
restated to include the reserves of the trust at that date.
70 FKI plc Annual report 2003 Notes to the financial statements 71 FKI plc Annual report 2003 Notes to the financial statements
28) Financial commitments
Authorised future capital expenditure was as follows:
Group Group Company Company
31 March 31 March 31 March 31 March
2003 2002 2003 2002
£m £m £m £m
Contracted but not provided for in the financial statements 5.6 2.9 – – 
The annual commitments under non-cancellable operating leases for the Group were:
Land and buildings Other
31 March 31 March 31 March 31 March
2003 2002 2003 2002
£m £m £m £m
Leases expiring:
within one year 3.5 1.7 1.0 1.0 
in two to five years 9.5 9.4 2.5 3.6 
thereafter 4.5 3.9 – – 
17.5 15.0 3.5 4.6 
29) Contingent liabilities
The Group has contingent liabilities amounting to £129.6 million (2002: £103.8 million), principally representing the guarantees given in the
ordinary course of business on behalf of trading subsidiaries on which no losses are anticipated. The company has contingent liabilities of
£37.1 million (2002: £29.9 million).
In addition, there are contingent liabilities in the ordinary course of business in connection with the completion of contracts within
specification, including responsibilities for maintenance.
The company and some of its subsidiaries are also the subject of various pending legal proceedings, incidental to present and former
operations, which have arisen in the normal course of business including claims on contracts, product liability, environmental claims and
others. The claims giving rise to such proceedings are likely to be mitigated by legal defences, insurance, provisions and third party
indemnities. The company does not believe that the outcome of these proceedings will have a material adverse effect upon the
company’s consolidated financial condition, results of operations or cash flow.
30) Reconciliation of operating profit to net cash inflow from operating activities
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Operating profit 78.3 141.4 
Depreciation 49.5 52.4 
Amortisation of intangible assets 29.7 29.3 
Loss/(profit) on sale of tangible fixed assets 0.4 (0.4)
Impairment of investments 2.3 –
Increase in post-retirement provisions 0.9 0.6 
Decrease in stocks 2.1 32.8
(Increase)/decrease in debtors (1.2) 21.6
Increase/(decrease) in creditors 4.6 (75.2)
Net cash inflow from operating activities 166.6 202.5  31) Analysis of changes in net debt
1 April Acquisitions/ Other 31 March 
2002 Cash flow Exchange disposals non-cash items 2003
£m £m £m £m £m £m
Cash 69.2 (6.1) – – – 63.1
Bank overdrafts (4.4) 4.4––– –
64.8 (1.7) – – – 63.1
Loans and finance leases (641.1) 27.9 16.8 (15.3) (0.1) (611.8)
Short-term deposits 43.8 2.1 1.1 3.3 – 50.3
Total (532.5) 28.3 17.9 (12.0) (0.1) (498.4)
Cash and bank overdrafts acquired with acquisitions (note 33) are included as part of the cash flow and therefore are not reported in the
acquisitions/disposals column of the change of net debt table above.
32) Reconciliation of net cash flow to movement in net debt
Year ended Year ended
31 March 31 March
2003 2002
£m £m
Decrease in cash in the year (1.7) (36.8)
Cash outflow from decrease in loans and finance leases 27.9 16.1 
Cash outflow/(inflow) from increase/(decrease) in short-term deposits 2.1 (17.2)
Change in net debt resulting from cash flows 28.3 (37.9)
Loans and finance leases in businesses acquired and sold (15.3) (0.4)
Loan notes issued on acquisition of businesses – (8.3)
Short-term deposits in businesses acquired/(sold) 3.3 (0.3)
New finance leases (0.1) –
Effect of foreign exchange rate changes 17.9 (0.8)
Decrease/(increase) in net debt in the year 34.1 (47.7)
Opening net debt (532.5) (484.8)
Closing net debt (498.4) (532.5)
72 FKI plc Annual report 2003 Notes to the financial statements 73 FKI plc Annual report 2003 Notes to the financial statements
33) Purchase of businesses
During the year, the Group made the following acquisitions, all of which were accounted for using the acquisition method:
DeWind AG on 28 June 2002
Dexion Materials Handling Limited (now FKI Logistex Conveyors Limited) on 20 December 2002.
The following table sets out the book value of the identifiable assets and liabilities acquired and their fair value to the Group.
Book value Accounting Fair value
prior to policy to Group on
acquisition Revaluations alignment acquisition  
£m £m £m £m
Fixed assets
Tangible fixed assets 1.9 – 0.7 2.6 
Intangible fixed assets 0.4 (0.1) (0.3) –
Current assets
Stocks 11.7 (0.4) (0.7) 10.6 
Debtors 14.5 (4.3) – 10.2 
Cash and short-term deposits 3.6 – – 3.6 
Total assets 32.1 (4.8) (0.3) 27.0 
Bank loans and overdrafts (14.8) (0.4) (0.7) (15.9)
Other creditors (27.1) (5.4) – (32.5)
Net liabilities acquired (9.8) (10.6) (1.0) (21.4)
Goodwill arising on consolidation 34.1 
Consideration 12.7 
The consideration was satisfied by cash paid.
Net cash outflows in respect of the purchase of businesses comprised:
£m
Cash paid 12.7 
Cash acquired (0.3)
Bank overdrafts acquired 0.6 
13.0 
34) Sale and termination of businesses
Losses on sale and termination of discontinued operations relate to the closure of the Chautauqua Hardware Corporation and the
Hawker Siddeley Power Transformer business and the sale of The Bedford Pump Company. The loss on sale and termination has been
dealt with as an exceptional item (note 7) and the net assets disposed of are summarised below.
Year ended
31 March
2003
£m
Fixed assets 2.8
Stocks 2.0
Debtors 0.4
Net assets disposed of 5.2
Goodwill previously written off against reserves 6.5
Provision for closure costs (note 23) 7.0
18.7
Loss on disposal (20.4)
Cash outflow from sale and termination of businesses (1.7) 2003 2002 2001 2000 1999
Year ended 31 March £m £m £m £m £m
Turnover 1,452.6 1,610.0 1,741.8 1,332.7 1,197.2
Results (before exceptional items and goodwill amortisation)
Profit before interest 110.4 172.7 238.7 196.6 179.4
Interest (31.2) (37.7) (44.6) (24.0) (16.9)
Profit before taxation 79.2 135.0 194.1 172.6 162.5
Taxation (19.7) (36.5) (60.0) (51.5) (51.7)
Profit after taxation 59.5 98.5 134.1 121.1 110.8
Exceptional items (net of tax)* (14.8) 1.6 (4.9) (3.7) (2.9)
Goodwill amortisation 29.7 29.3 28.4 11.6 1.6
Adjusted earnings per share 10.3p 17.0p 23.4p 21.3p 19.5p
Earnings per share* 2.2p 12.2p 17.6p 18.6p 18.7p
Dividends per share 4.5p 10.0p 10.0p 9.4p 8.5p
Net debt 498.4 532.5 484.8 540.7 133.2
Total funds employed* 453.4 476.2 471.1 395.8 335.9
Gearing* 110% 112% 103% 137% 40%
Capital expenditure 20.6 35.3 57.9 58.0 55.8
Depreciation 49.5 52.4 50.3 44.2 42.0
Ordinary shares in issue (million)
Year end 581.7 581.0 575.8 574.0 570.1
Weighted average* 579.0 576.9 572.2 569.6 567.8
Average number of employees 15,255 16,685 17,195 15,895 15,147
*Appropriate adjustments have been made to previous years to be consistent with the accounting policies used in the 2003 financial statements.
74 FKI plc Annual report 2003
Five year record
Key dates
Financial calendar
Dividends on ordinary shares: Date paid/payable
Interim (4.2p) 28 February 2003
Final (0.3p) 31 October 2003
Annual general meeting 23 July 2003
Announcement of Group results:
Half year results November 2003
Annual results May/June 2004 FKI Logistex group
Alvey Systems Inc (USA)
Cleco Systems BV (Netherlands)
Cleco Systems Inc (USA)
CMP Corporation (USA)
Crisplant Inc (USA)
Crisplant Industries A/S (Denmark)
Crisplant PTE Limited (Singapore)
Dator A/S (Denmark)
FKI Logistex Conveyors Limited
FKI Logistex Group Limited*
FKI Logistex Integration Inc (USA)
FKI Logistex Limited
Industry General Corporation (USA)
IO Systems Limited
Mathews Conveyor Inc (USA)
Real Time Solutions Inc (USA)
S.N.E.Systems Inc (USA)
Stearns Airport Equipment Company (USA)†
The Buschman Company (USA)
White Systems Inc (USA)
Lifting Products and Services group
A Kwint Holding BV (Netherlands) (87.5%)
Acco Chain & Lifting Products (USA)†
Bridon Hong Kong Limited (Hong Kong)
Bridon International Limited
Bridon New Zealand Limited (New Zealand)
Bridon Singapore (Pte) Limited (Singapore)
Bridon-American Corporation (USA)
BTS Drahtseile GmbH (Germany)
CERTEX Denmark A/S (Denmark)
CERTEX Finland Oy (Finland)
CERTEX France SA (France)
CERTEX Inc (USA) (CERTEX US operations are conducted in a
number of different names trading as subsidiaries or divisions 
of other companies)
CERTEX Lifting & Service GmbH & Co KG (Germany)
CERTEX Norge A/S (Norway)
CERTEX SpA (Italy)
CERTEX Svenska AB (Sweden)
CERTEX UK†
Crosby Canada (Canada)†
Forge France SA (France)
Guangzhou Bridon Ropes & Lifting Limited (China) (60%)
Kosan Crisplant A/S (Denmark)
N.V . Crosby Europe (Belgium)
P.T. Bridon (Indonesia)
Parsons Chain Company†
Premier Stampings†
The Crosby Group Inc (USA)
The Harris Waste Management Group Inc (USA)
Welland Forge (Canada)†
Hardware group
Belwith International Limited (USA)
Faultless Caster (USA)†
Keeler Brass Company (USA)
Madico Inc (Canada)
Rhombus Casters Malaysia Bhd (Malaysia)
Rhombus Rollen Holding GmbH (Germany)
Truth Hardware Corporation (USA)
Weber-Knapp Company (USA)
Wright Products (USA)†
Energy Technology group
Bristol Babcock Inc (USA)
Bristol Babcock Limited
Brush Electrical Machines Limited*
Brush HMA B.V . (Netherlands)
Brush SEM s.r.o. (Czech Republic)
Brush Traction†
Brush Transformers Limited
DeWind GmbH (Germany)*
FKI Industrial Drives Limited
Froude Consine†
Froude Hoffman Pruftechnik GmbH (Germany)
Hawker Siddeley Switchgear Limited
Laurence, Scott & Electromotors Limited
Marelli Motori SpA (Italy)
South Wales Transformers†
Whipp & Bourne†
Other
Bridon Inc.
Bridon Overseas Holdings Limited
Bridon plc*
FKI Engineering Limited*
FKI Industries Canada Limited (Canada)
FKI Industries Inc (USA)
FKI USA Holdings Limited*
West House Insurance Limited (Guernsey)*
All companies are wholly-owned unless otherwise stated. 
Shares of companies marked * are held directly by FKI plc.
†For statutory purposes, these businesses operate as divisions of other FKI Group
companies.
All companies are incorporated and operate in Great Britain and
are registered in England and Wales unless otherwise stated.
Companies located overseas operate principally in the country 
of incorporation.
A full list of subsidiary undertakings incorporated in Great Britain
and registered in England and Wales will be lodged with the
Registrar of Companies.
As permitted by Section 231(5) of the Companies Act 1985, 
only principal operating and associated undertakings have been
shown above.
75 FKI plc Annual report 2003
Principal subsidiary undertakings Analysis of shareholdings at 31 March 2003
Number of % of Number of % of
shareholders total shares share capital
Size of holding
Ordinary shareholdings
1-500 2,217 18.03 516,934 0.09
501-2,500 5,465 44.45 7,424,405 1.28
2,501-5,000 2,188 17.80 7,950,191 1.37
5,001-10,000 1,171 9.53 8,581,467 1.48
10,001-25,000 543 4.42 8,385,553 1.44
25,001-50,000 187 1.52 6,773,650 1.16
50,001-75,000 66 0.54 3,953,200 0.68
75,001-100,000 51 0.41 4,376,852 0.75
100,001-250,000 131 1.07 20,948,132 3.60
250,001-500,000 91 0.74 32,690,169 5.62
500,001 or more 183 1.49 480,067,443 82.53
12,293 100.00 581,667,996 100.00
Holders
Individuals 9,576 77.90 44,342,862 7.62
Nominees and others* 2,075 16.88 36,015,985 6.19
Banks, investment trusts, pension funds and other institutions 606 4.93 438,689,985 75.42
Insurance companies 36 0.29 62,619,164 10.77
12,293 100.00 581,667,996 100.00
*Nominees’ holdings of 50,000 ordinary shares or more have, wherever practicable, been identified and ascribed to the appropriate category of shareholder.
76 FKI plc Annual report 2003
Shareholders’ information
Corporate information
Company Secretary
M J R Porter, F .C.A.
Registered office
15-19 New Fetter Lane, London EC4A 1LY
Telephone +44 (0)20 7832 0000
Fax +44 (0)20 7832 0001
Registered number
164945
Principal bankers
Barclays Bank PLC
Wachovia Bank, NA
Dresdner Bank AG
HSBC Bank plc
Fleet National Bank
Nordea
Société Générale
ABN AMRO Bank NV
Australia and New Zealand Banking Group Limited
Bank of America, NA
Deutsche Bank AG
Mellon Bank, NA
Auditors
Ernst & Young LLP
Becket House, 1 Lambeth Palace Road
London SE1 7EU
Stockbrokers
Dresdner Kleinwort Wasserstein Securities Limited
20 Fenchurch Street, London EC3P 3DB
Registrars and transfer office
Northern Registrars Limited 
Northern House, Woodsome Park, Fenay Bridge
Huddersfield HD8 0LA
Telephone +44 (0)1484 600900
Fax +44 (0)1484 600911
www.northernregistrars.co.uk
Company website
www.fki.co.uk 01 Financial highlights
02 Chairman’s statement
04 Chief Executive’s review
06 Group at a glance
08 FKI Logistex
10 Lifting Products and Services
12 Hardware
14 Energy Technology
16 Corporate social responsibility report
24 Finance Director’s review
28 Board of Directors
30 Corporate governance
32 Directors’ report
34 Remuneration report
44 Independent auditors’ report
45 Consolidated profit and loss account
46 Consolidated balance sheet
47 Company balance sheet
48 Consolidated cash flow statement
49 Consolidated statement of total recognised 
gains and losses
49 Consolidated reconciliation of movements in 
equity shareholders’ funds
50 Notes to the financial statements
74 Five year record
74 Key dates
75 Principal subsidiary undertakings
76 Shareholders’ information
76 Corporate information
Designed and produced by Radley Yeldar (London) FKI plc Annual report + financial statements
FKI plc 
15-19 New Fetter Lane
London EC4A 1LY
T +44 (0)20 7832 0000
F +44 (0)20 7832 0001
W fki.co.uk
FKI plc Annual report + financial statements 2003
2003