UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES
EXCHANGE ACT OF 1934

OR

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED 31 DECEMBER 2003

OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM            TO

                       COMMISSION FILE NUMBER: 333-10886

                     DUNLOP STANDARD AEROSPACE HOLDINGS PLC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                               <C>
                        N/A                                       ENGLAND
 (TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH) (JURISDICTION OF INCORPORATION OR ORGANIZATION)
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                                 HOLBROOK LANE
                                COVENTRY CV6 4AA
                                 UNITED KINGDOM
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                    NAME OF EACH EXCHANGE
TITLE OF EACH CLASS:                                ON WHICH REGISTERED
-------------------                                 ---------------------
NONE                                                NONE

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                      NONE

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(D)
OF THE ACT:

                         11 7/8% SENIOR NOTES DUE 2009

INDICATE THE NUMBER OF OUTSTANDING SHARES OF EACH OF THE ISSUER'S CLASSES OF
CAPITAL OR COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE ANNUAL
REPORT:

   ORDINARY SHARES, NOMINAL VALUE (POUND)1 PER SHARE     (POUND)160,000,000

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                    YES X                          NO

INDICATE BY CHECK MARK WHICH FINANCIAL STATEMENT ITEM THE REGISTRANT HAS
ELECTED TO FOLLOW:

                    ITEM 17                      ITEM 18 X
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                                          TABLE OF CONTENTS

                                                                                                           PAGE

PRESENTATION OF INFORMATION                                                                                   3
FORWARD LOOKING STATEMENTS                                                                                    4

<S>          <C>                                                                                           <C>
PART I

ITEM 1        Identity of Directors, Senior Management, and Advisors                                          5
ITEM 2        Offer Statements and Expected Timetable                                                         5
ITEM 3        Key Information                                                                                 5
ITEM 4        Information on the Company                                                                     17
ITEM 5        Operating and Financial Review and Prospects                                                   32
ITEM 6        Directors, Senior Management and Employees                                                     45
ITEM 7        Major Shareholder and Related Party Transactions                                               50
ITEM 8        Financial Information                                                                          51
ITEM 9        The Offer and Listing                                                                          52
ITEM 10       Additional Information                                                                         52
ITEM 11       Quantitative and Qualitative Disclosures about Market Risk                                     56
ITEM 12       Description of Securities Other than Equity Securities                                         58

PART II

ITEM 13       Defaults, Dividend Arrearages and Delinquencies                                               58
ITEM 14       Material Modification to the Rights of Security Holders and Use of Proceeds                   58
ITEM 15       Controls and Procedures                                                                       58
ITEM 16A      Audit Committee Financial Expert                                                              58
ITEM 16B      Code of Ethics                                                                                59
ITEM 16C      Principal Accountant Fees and Services                                                        59

PART III

ITEM 17      Financial Statements                                                                             60
ITEM 18      Financial Statements                                                                             60
ITEM 19      Exhibits                                                                                         60
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PRESENTATION OF INFORMATION

Dunlop Standard Aerospace Holdings plc (the "Company" or the "Group") conducts
its operations primarily through subsidiaries. As used herein, except as the
context otherwise requires, the term "Company" refers to the Company and its
consolidated subsidiaries.

The Company publishes its financial statements in Pounds Sterling ("pounds" or
"(pound)"). One pound consists of one hundred pence (100p). In this Report,
currency amounts are expressed in pounds or in United States dollars ("dollars"
or "$").

The term "subsidiary companies" as used herein refers to companies in which the
Company has a majority voting interest.

In this Report, the term "Ordinary Shares" refers to Ordinary Shares of
(pound)1 each in the Company.

The financial information set out in this Report does not constitute the
Company's statutory accounts for the years ended December 31, 2003, 2002 and
2001, but is derived from those accounts. The statutory accounts of the Company
for the year ended 31 December 2003 were approved by the Board of Directors on
17 March 2004, and will be delivered to the Registrar of Companies when due.
However, statutory accounts for 2002 and 2001 have been delivered to the
Registrar of Companies for England and Wales. The auditor,
PricewaterhouseCoopers LLP, has reported on those accounts; its reports were
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.

FORWARD-LOOKING STATEMENTS

We may from time to time make written or oral forward-looking statements,
including in this annual report, in other filings with the U.S. Securities and
Exchange Commission, in reports to security holders and in other
communications. Examples of such forward-looking statements include, but are
not limited to:

o    projections or expectations of revenues, income (or loss), earnings (or
     loss) per share, dividends, capital structure or other financial items or
     ratios;

o    statements of plans, our objectives or goals, including those related to
     products or services; or our management;

o    statements of future economic performance; and

o    statements of assumptions underlying such statements. Words such as
     "believes," "anticipates," "expects," "intends" and "plans" and similar
     expressions are intended to identify forward-looking statements but are
     not the exclusive means of identifying such statements.

By their very nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and risks exist that the predictions,
forecasts, projections and other forward-looking statements will not be
achieved. We caution readers that a number of important factors could cause
actual results to differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward-looking statements. The
factors include:

o    inflation, interest rates, exchange rates, market and monetary
     fluctuations;

o    the effect of, and changes in, regulation and government policy;

o    the effects of competition in the geographic and business areas in which
     we conduct operations;

o    changes in consumer preferences and spending in the countries in which we
     conduct operations;

o    the ability to increase market share and control expenses;

o    the timely development of and acceptance of our new products and services
     and the perceived overall value of these products and services by
     consumers;

o    technological changes and European Economic and Monetary Union;

o    the possibility of foreign exchange controls, expropriation,
     nationalization or confiscation of assets in countries in which we conduct
     operations; and

o    our success at managing the risks of the foregoing.

We caution that the foregoing lists of important factors is not exhaustive;
when relying on forward-looking statements to make decisions with respect to
the Company, investors and others should carefully consider the foregoing
factors and other uncertainties and events. Such forward-looking statements
speak only as of the date on which they are made, and we do not undertake any
obligation to update or revise any of them, whether as a result of new
information, future events or otherwise.

ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable

ITEM 2: OFFER STATEMENTS AND EXPECTED TIMETABLE

Not applicable

ITEM 3: KEY INFORMATION

A.  SELECTED FINANCIAL DATA
     The table below sets forth selected consolidated financial data for the
Company as of and for each of the periods indicated. This selected consolidated
financial data has been extracted, or derived from, and is qualified by
reference to, the Company's consolidated financial statements as of December
31, 2003, December 31, 2002, December 31, 2001, December 31, 2000 and December
31, 1999, which have been audited by PricewaterhouseCoopers LLP, our
independent auditors. The consolidated financial statements have been prepared
in accordance with U.K. GAAP, which differs in certain respects from U.S. GAAP.
The principal differences between U.K. GAAP and U.S. GAAP are summarized in
Note 27 to the Company's audited consolidated financial statements included
elsewhere in this annual report. The following information should be read in
conjunction with, and are qualified in their entirety by reference to our
consolidated financial statements included elsewhere in this annual report.



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                                      DUNLOP STANDARD AEROSPACE HOLDINGS


                                        YEAR ENDED        YEAR ENDED        YEAR ENDED        YEAR ENDED       YEAR ENDED
                                       DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
            ((POUND)IN MILLIONS)           2003              2002              2001              2000             1999

<S>                                       <C>               <C>               <C>               <C>            <C>
PROFIT AND LOSS DATA:
Amounts in accordance with U.K. GAAP
Revenues...............................(pound)456.6      (pound)451.8      (pound)444.9      (pound)384.1   (pound)325.7
Cost of goods sold.....................       339.3             326.6             314.4             259.7          221.1
Gross profit...........................       117.3             125.2             130.5             124.4          104.6
Other operating expenses...............        55.4              56.4              54.8              55.2           45.7
Operating profit pre-exceptional.......        61.8              68.9              75.7              69.2           58.9
Exceptional item1......................         3.7               3.8               -                 -              -
Operating profit after-exceptional.....        58.1              65.1              75.7              69.2           58.9
Finance costs..........................        32.0              43.2              41.9              40.7           39.5
Profit on ordinary activities before           26.2              21.9              33.7              28.5           19.4
taxation...............................
Taxation ..............................        13.1              10.0              13.3              11.8            6.9
Profit for the financial period........        13.0              11.9       (pound)20.5       (pound)16.8    (pound)12.6

Amounts in accordance with U.S. GAAP
Income from operations under U.S. GAAP  (pound)44.3       (pound)55.0       (pound)63.0       (pound)55.4    (pound)45.5
Net income/(loss)........................(pound)2.7       (pound)10.7        (pound)5.9       (pound)(4.5)   (pound)13.8

1.   The total exceptional item charge in 2003 of(pound)3.7 million relates to our efforts to acquire a business that
     was ultimately purchased by another company, and the total 2002 exception item charge of (pound)3.8 million related
     to costs incurred in relation to a proposed plan to seek a listing of the group's shares on the New York Stock
     Exchange.


                                        YEAR ENDED        YEAR ENDED        YEAR ENDED        YEAR ENDED       YEAR ENDED
                                       DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
            ((POUND)IN MILLIONS)           2003              2002              2001              2000             1999

CASH FLOW STATEMENT DATA
Amounts in accordance with U.K.GAAP
Net cash inflow from operating          (pound)85.5       (pound)62.7       (pound)80.6       (pound)81.3    (pound)80.7
activities..
Net cash (outflow) from returns on
investments and servicing of
finance................................       (31.0)            (43.3)            (40.3)            (37.2)         (34.2)
Tax paid...............................        (8.1)             (7.7)             (8.9)            (11.2)          (1.8)
Net cash (outflow) from capital
expenditure and financial                     (18.9)            (31.6)            (35.9)            (26.5)         (26.0)
investment.....................
Net cash (outflow) from acquisitions
and disposals..........................          --                --                --                --             --
Management of liquid resources -
short term deposits....................          --                --             (11.4)               --             --
Net cash (outflow)/inflow from
financing..............................       (23.9)              8.3               8.4             (15.7)          (0.5)
Increase/(decrease) in cash............  (pound)3.7      (pound)(11.6)      (pound)(7.5)      (pound)(9.3)   (pound)18.1


Amounts in accordance with U.S. GAAP
Net cash inflow/(outflow) from
operating activities................... (pound)37.4        (pound)9.4       (pound)22.1       (pound)28.3    (pound)38.5
Net cash used in investing                     (6.2)            (29.4)            (38.3)            (22.1)         (20.0)
activities......
Net cash (outflow)/inflow from
financing..............................       (45.7)             26.4               7.5             (20.3)           5.7
Net increase/(decrease) in cash under
U.S. GAAP..............................(pound)(16.0)       (pound)4.5       ((pound)8.2)     (pound)(12.5)   (pound)24.5


                                          AS OF             AS OF             AS OF             AS OF             AS OF
                                       DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
            ((POUND)IN MILLIONS)           2003              2002              2001              2000             1999
BALANCE SHEET DATA
Amounts in accordance with U.K. GAAP
Fixed assets
remove      s sold.....................       339.3             326.6             314.4             259.7          221.1
  Intangible fixed assets............. (pound)336.9      (pound)341.9      (pound)355.7      (pound)346.4   (pound)333.6

  Tangible fixed assets...............        160.9             178.6             174.7             159.2          141.8
Current assets
  Inventories.........................         67.2              69.4              68.5              64.5           50.3
  Investments.........................          0.1                 -                 -                 -              -
  Debtors (as restated)...............        132.3             130.3             125.3                            100.3
                                                                                                   132.2
  Cash at bank and in hand............         17.6              33.6              40.6              37.2           49.7
Creditors--due within one                     (50.3)            (67.9)            (54.4)            (21.0)         (20.2)
year-borrowings.......................
Creditors--due within one year-other          (98.3)            (85.0)            (92.1)           (111.9)         (57.4)
creditors.............................
Net current assets....................         68.5              80.3              87.9             101.0          122.8
Total assets less current liabilities.        566.3             600.9             618.3             606.6          598.2
Creditors--due after more than one year      (298.5)           (352.5)           (384.1)           (392.4)        (397.5)
Provisions for liabilities and charges        (31.7)            (22.6)            (18.7)            (19.2)         (24.9)
                                       (pound)236.2      (pound)225.7      (pound)215.5      (pound)195.0   (pound)175.8

Called up share capital............... (pound)160.0      (pound)160.0      (pound)160.0      (pound)160.0   (pound)160.0
                                                                                     --                --             --
Profit and loss account...............         76.2              65.7              55.5              35.0           15.8
Total shareholders' funds............. (pound)236.2      (pound)225.7      (pound)215.5      (pound)195.0   (pound)175.8
Amounts in accordance with U.S. GAAP
Total assets.......................... (pound)704.6      (pound)760.8      (pound)791.7      (pound)779.6   (pound)735.2
Long-term debt........................        346.8             401.2             435.4             417.4          412.5
Shareholders' equity..................        170.9      (pound)172.9      (pound)163.6      (pound)157.0   (pound)154.0



                                        YEAR ENDED        YEAR ENDED        YEAR ENDED        YEAR ENDED       YEAR ENDED
                                       DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
            ((POUND)IN MILLIONS)           2003              2002              2001              2000             1999

OTHER FINANCIAL DATA:
Amounts in accordance with U.K. GAAP
Depreciation and amortization.......... (pound)18.9       (pound)19.2       (pound)18.5       (pound)13.8    (pound)10.3
Capital expenditures................... (pound)10.3       (pound)33.5       (pound)28.5       (pound)22.7    (pound)19.9
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    EXCHANGE RATES

     Fluctuations in the exchange rate between the pound sterling and other
currencies may affect our business. Our revenues, costs, assets and liabilities
are denominated in multiple currencies, particularly the U.S. dollar, the pound
sterling, and the Canadian dollar. This exposes us to fluctuations in various
currencies, which may affect our financial condition and results of operations
as reported in pounds sterling. For example, the pound sterling appreciated
8.7% against the U.S. dollar in 2003 and appreciated 4.2% against the U.S.
dollar in 2002 (based on average exchange rates for those years). These changes
had a negative effect on our U.S. dollar-denominated revenues and earnings in
2003 and 2002 as reported on a pound sterling basis. In addition, these changes
had a positive effect on the sterling value of our U.S. dollar denominated debt
in 2003 and a positive effect on the sterling value of our U.S. dollar
denominated debt in 2002.

     Although our revenues and costs are generally matched in each geographic
region, changes in currency exchange rates could hurt our ability to make
planned capital expenditures as well as payments to you. We also use currency
hedging transactions to protect against transaction risk, including in respect
of amounts owed under our credit agreement. However, we may not in all cases be
able to manage our currency transaction risks through hedging, particularly
given current volatility of exchange rates.

     The following table sets forth, for the periods indicated, certain
information concerning the Noon Buying Rates for pounds sterling, expressed in
U.S. dollars per pound sterling. These rates may differ from the actual rates
used in the preparation of the financial statements and other financial
information of the Company appearing in this annual report. No representation
is made that the pound sterling or U.S. dollar amounts referred to herein could
have been or could be converted into U.S. dollars or pounds sterling, as the
case may be, at any particular rate or at all.

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YEAR ENDED DECEMBER 31,                          HIGH             LOW        AVERAGE(A)     PERIOD END
                                                              (US$ PER (POUND)1.00)

<C>                                               <C>              <C>          <C>           <C>
1999 ....................................         1.68             1.55         1.62          1.62
2000 ....................................         1.65             1.40         1.52          1.50
2001.....................................         1.50             1.37         1.44          1.45

2002.....................................         1.61             1.41         1.50          1.61
2003.....................................         1.78             1.55         1.63          1.78

2003 October.............................         1.70             1.66
2003 November............................         1.72             1.67
2003 December............................         1.78             1.72
2004 January.............................         1.85             1.78
2004 February..............................       1.90             1.82
2004 March....................................    1.87             1.79


As of 12th April 2004, the exchange rate was 1.84

(a) The average rate for each period is defined by using the average of the exchange rates of each day during the period.
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B. CAPITALIZATION AND INDEBTEDNESS

     Not applicable

C. REASON FOR THE OFFER AND USE OF PROCEEDS

     Not applicable


D. RISK FACTORS


              RISKS RELATING TO THE AEROSPACE AND DEFENSE INDUSTRY

RISKS RELATING TO CYCLICALITY--THE CYCLICALITY OF THE AEROSPACE AND DEFENSE
INDUSTRY MAY MATERIALLY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION IN FUTURE PERIODS.

         Downward trends in the aerospace and defense industry may reduce
demand for our products and services, which could materially adversely affect
our business, results of operations and financial condition in future periods.
Those trends could include the following:

o    any overall decrease in the growth of the aerospace and defense markets,
     whether resulting from any decrease in aircraft usage, aircraft production
     or otherwise; or

o    any decrease in outsourcing by military and civilian aircraft operators or
     engine manufacturers.

The U.S. and other world markets have recently experienced an economic
downturn, and some of the market segments that we serve have been affected by
this downturn. As a result, our business and financial results have been
adversely affected. If this economic downturn were to continue for an extended
period or if conditions were to worsen, there would be a further negative
impact on our business and financial results. Further, concerns about the
possibility of terrorist attacks and uncertainty relating to the ongoing
occupation of Iraq have adversely affected the U.S. and world economies.
Subsequent developments may lead to future acts of terrorism or additional
hostilities, as well as economic and political instability. While the precise
effects of such instability on our industry and our business is difficult to
determine, it may negatively impact our business, financial condition, results
of operations and cash flows.

COMMERCIAL AIRLINES - CURRENT CONDITIONS IN THE AIRLINE INDUSTRY COULD
ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.

         The economic downturn, together with terrorist attacks and conflicts
in the Middle East, has adversely affected the financial condition of many
commercial airlines. Additionally, commercial airline travel has been adversely
affected by health concerns related to Severe Acute Respiratory Syndrome, or
SARS. In response, some airlines have reduced their aircraft fleet sizes,
resulting in decreased aftermarket demand for some of our products. Several
airlines recently have declared bankruptcy or indicated that bankruptcy may be
imminent. Additionally, in 2003 both Boeing and Airbus delivered fewer aircraft
than in 2002, reducing deliveries from approximately 370 in 2002 to
approximately 280 in 2003, while Airbus deliveries were approximately the same
in 2002 and 2003. In the event that these trends should continue, they would
adversely affect our results of operations and cash flows.

DEFENSE SPENDING OR MILITARY OUTSOURCING REDUCTIONS--DECREASES IN SPENDING OR
OUTSOURCING BY MILITARY ORGANIZATIONS, WHICH ARE AMONG OUR MAJOR CUSTOMERS,
COULD MATERIALLY REDUCE OUR REVENUES AND ADVERSELY AFFECT OUR FINANCIAL
CONDITION.

         Defense spending by U.S., Canadian and European governments generally
declined throughout the 1990s and may decline again in the future. In addition,
the outsourcing by the U.S. military of certain repair and overhaul functions
that has occurred over the last decade may cease or decrease in the future.
U.S. federal law prevents the U.S. military from outsourcing more than 50% of
its spending, and we believe that the military is approaching this threshold.
We estimate that we generate approximately one-third of our revenues from
products and services provided directly or indirectly to military
organizations. If military spending declines in the future or is refocused away
from markets in which we operate or aircraft in which our products are used, or
if military outsourcing decreases or ceases, our business, results of
operations and financial condition could be materially adversely affected.

COMPETITION--COMPETITION IN OUR INDUSTRY COULD CONSTRAIN OUR GROWTH AND CAUSE
US TO LOSE MARKET SHARE.

         Our engine repair and overhaul operations currently compete against
the service divisions of the original equipment manufacturers, or OEMs, of the
engine platforms we service, other independent service organizations, the
maintenance departments or divisions of airlines, some of which also offer
services to others, and government and military maintenance facilities. Our
design and manufacturing operations currently compete against other aerospace
and defense systems and parts manufacturers and distributors. These competitors
offer many similar products and services to the same customers we serve. Some
of these competitors may have certain advantages over us, including:

o    the ability to devote more resources to developing, promoting and selling
     their products and services;

o    the ability to adapt more quickly to changing customer requirements;

o    stronger and longer-term customer relationships;

o    a more diverse product and/or service base, including products and/or
     services outside the aerospace and defense industry;

o    greater financial resources;

o    greater name recognition; and

o    better technical or marketing capabilities.

In addition, certain OEMs are attempting, or may in the future attempt, to
perform all or a greater portion of the repair and overhaul services related to
the engines they manufacture. Our business, results of operations and financial
condition may be materially adversely affected by changes in the competitive
environment, including any intensification of competition, which could lead to
a loss of business and a decline in our margins.

REGULATION--WE WILL NOT BE ABLE TO OPERATE OUR BUSINESS IF WE FAIL TO COMPLY
WITH OR OBTAIN AND MAINTAIN THE NECESSARY REGULATORY APPROVALS.

         We operate in a highly regulated industry and need a number of
regulatory approvals in connection with the products and services we provide.
In addition, a majority of our contracts with OEMs terminate at the option of
the OEM if we fail to obtain and maintain necessary approvals or fail to comply
with applicable regulations. Failure to obtain or comply with regulatory
approvals, or the costs associated with obtaining or complying with any such
regulatory approvals, could have a material adverse effect on our business,
results of operations and financial condition. Regulatory authorities
monitoring our performance and products include the U.S. Federal Aviation
Administration, or the FAA, a consortium of European regulatory authorities
called the Joint Aviation Authorities, the U.K. Civil Aviation Authority,
Transport Canada and others. These regulatory authorities require, among other
things, that we:

o    periodically undergo extensive inspections and audits of our facilities
     and practices;

o    obtain and maintain certifications from regulatory authorities for all
     parts installed on an aircraft;

o    obtain and maintain certifications from regulatory authorities to provide
     service for commercially operated aircraft engines; and

o    obtain and maintain recognized quality approvals, such as ISO-9000 and
     ISO-9001.

         The U.S. Department of Defense, the Canadian military and most other
military organizations to which we provide parts and services similarly require
us to comply with all applicable government regulations when providing parts or
servicing their equipment and may conduct reviews similar to those conducted by
civil regulatory authorities. We are also subject to U.S. Commerce, Treasury
and State Department regulations and other governmental trade regulations that
can increase costs and add to the complexity of doing business with aerospace
and defense products. In addition, we may become subject to new governmental
regulations if we expand our business into new countries or sell new products
or services. The imposition of new, different or more stringent regulations
could also materially adversely affect us because we might be unable to comply
with them or compliance may require significant additional expenditures.

                         RISKS RELATING TO OUR COMPANY

RELIANCE ON CERTAIN ENGINE MANUFACTURERS -- IF WE FAIL TO OBTAIN OR MAINTAIN
ENGINE SERVICE AUTHORIZATIONS FROM OEMS, OUR REVENUES, CASH FLOW AND
PROFITABILITY COULD BE MATERIALLY ADVERSELY AFFECTED.

         We depend on authorizations provided by, or purchased from, engine
manufacturers to service the engines made by them. These authorizations can
provide important competitive advantages, such as discounts on parts and
services purchased from the OEMs and access to OEM warranty programs and
campaigns. If engine manufacturers fail to renew or extend existing service
authorizations or if authorization fees or spare-part prices increase
significantly, our revenues, cash flow and profitability may be materially
adversely affected.

         We estimate that approximately 49% of our fiscal 2003 revenues were
generated from servicing engine platforms manufactured by Rolls-Royce, and
approximately 17% of our fiscal 2003 revenues were generated from servicing
engine platforms manufactured by Pratt & Whitney. Our Rolls-Royce
authorizations relating to the T56, 501K and A250 engine platforms were
successfully renewed in 2003 for further five to eight year periods. We
estimate that repair and overhaul services on the T56 and A250 engine platforms
pursuant to those authorizations accounted for approximately 8% and 7%,
respectively, of our fiscal 2003 revenues. Our Pratt & Whitney authorizations
relating to the PW100 and PT6 engine platforms were successfully renewed in
2003 for a further five-year period. We estimate that repair and overhaul
services on the PT6 and PW100 engine platforms pursuant to those authorizations
accounted for approximately 8% and 9%, respectively, of our fiscal 2003
revenues.

         A number of factors could cause us to lose existing authorizations,
including:

o    our failure to comply with applicable specifications provided to us by
     OEMs;

o    a material breach by us under our contracts with OEMs or termination or
     expiration of those contracts;

o    a change of control of our Company without consent or approval from OEMs
     where required;

o    our failure to obtain or comply with applicable governmental regulatory
     approvals;

o    a decision by OEMs to perform all or any part of the engine repair and
     overhaul services we provide in connection with their engine platforms; or

o    a significant product failure for which we are found to be responsible.

DEPENDENCE ON KEY SUPPLIERS-- IF WE ARE UNABLE TO PURCHASE COMPONENT PARTS OR
RAW MATERIALS FROM OUR KEY SUPPLIERS, OUR BUSINESS AND RESULTS OF OPERATIONS
MAY BE MATERIALLY ADVERSELY AFFECTED.

         We depend on certain component and raw material suppliers for our
engine repair and overhaul and design and manufacturing operations. In our
engine repair and overhaul business, our authorizations from OEMs generally
require that we purchase any component parts we need for the performance of our
services from the OEMs or their designated distributors. We estimate that in
fiscal 2003, we made 34% of our total material purchases from Rolls-Royce, 15%
of our total material purchases from Pratt & Whitney, 8% of our total material
purchases from General Electric and 6% of our total material purchases from
Aviall Inc., a Rolls-Royce distributor. The loss of Rolls-Royce, Pratt &
Whitney, General Electric or Aviall as a supplier could have a material adverse
effect on our business. In our design and manufacturing business, we tend to
use sole source suppliers. We have at times experienced delays in receiving
component parts and raw materials from our key suppliers, and any significant
future delays could have a material adverse effect on our business and results
of operations. If we had to develop alternative sources of supply, our ability
to supply parts to our customers when needed could be impaired, business could
be lost and margins could be reduced. We produce the carbon used in the
manufacture of our carbon brakes. If there were a significant disruption in our
carbon manufacturing process, it would be very difficult for us to secure an
alternative supply of carbon, which could lead to a prolonged disruption in our
manufacture of carbon brakes and have a material adverse effect on our
business, results of operations and financial condition.

DEPENDENCE ON KEY CUSTOMERS-- LOSS OF ANY OF OUR LARGE CUSTOMERS COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         Our business depends on revenues of parts and services to a few large
customers. We estimate that revenues to our top 10 customers comprised
approximately 48% of our fiscal 2003 revenues. Our largest customer, Lockheed
Martin, including revenues through the Lockheed Martin/Kelly USA contract,
accounted for approximately 19% of revenues in fiscal 2003. In addition, we
estimate that revenues to Rolls-Royce were approximately 18% of our revenues in
fiscal 2003. Revenues from Rolls-Royce include engine repair and overhaul
services, that accounted for approximately 11% of our fiscal 2003 revenues,
which we provide to six end-users that maintain separate agreements with
Rolls-Royce. If we lose a significant customer, or if a significant customer
decreases the amount of business it transacts with us, our revenues, profits
and financial condition could be materially adversely affected.

DEPENDENCE ON ENGINE AND AIRCRAFT USAGE--A DECLINE IN THE USAGE OF AIRCRAFT FOR
WHICH WE MANUFACTURE PARTS OR ENGINES WE SERVICE COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         A decline in the usage of aircraft for which we manufacture parts or
service engines could have a material adverse effect on our results of
operations and financial condition. Our results of operations and financial
condition may also be adversely affected by changes in maintenance cycles and
product life extensions. Both increases in the number of parked aircraft and
decreases in aircraft utilization adversely affected the operating results of
our design and manufacturing business in fiscal 2003.

         The long-term prospects of our engine repair and overhaul business
depend on the total number of engines in use among the engine platforms we
service and the amount of use such engines receive. Of the primary types of
engine platforms we service, the number of T56 engines and their usage is
declining. In addition, the number of A250, 501K, PT6, PW100 and APU engines
and their usage has matured, which means that production of those engine
platforms has ended or is about to end or aftermarket revenues are close to
peak levels.

         While service needs in relation to engine platforms characterized as
mature or declining continue for many years after engine production is
discontinued, the long-term prospects for our repair and overhaul business
depend on our becoming an authorized service provider on new or additional
engine platforms, and no assurance can be given that these new authorizations
will be obtained. Similarly, the long-term prospects for our design and
manufacturing business depend on our products being chosen for use on new or
additional aircraft platforms, and no assurance can be given that we will be
successful in obtaining this new business.

REVENUE MIX - OUR REVENUE MIX MAY VARY AND MAY NEGATIVELY AFFECT OUR PROFIT
MARGINS.

         For fiscal year 2003, our engine repair and overhaul revenues
increased, while design and manufacturing revenues decreased, as a percentage
of total revenues. On average, our profit margins on engine repair and overhaul
revenues historically are less than our profit margin on design and
manufacturing revenues. Any additional decreases in the percentage of our total
revenues derived from design and manufacturing could have a material adverse
effect on our business, financial position, results of operations or cash
flows.

CONTROL OF THE COMPANY--DOUGHTY HANSON CONTROLS ALL MATTERS REQUIRING A
SHAREHOLDERS VOTE AND CERTAIN OTHER MATTERS RELATING TO OUR DAY-TO-DAY
OPERATIONS, AND ITS INTERESTS MAY CONFLICT WITH YOUR INTERESTS.

         Nominees of limited partnerships for which Doughty Hanson & Co.
Limited acts as general partner, and certain employees and directors of Doughty
Hanson & Co. Limited, collectively referred to as Doughty Hanson, own
approximately 90% of the common stock of our parent, Dunlop Standard Aerospace
Group Limited, or DSAG. Accordingly, Doughty Hanson effectively controls all
matters requiring a shareholders' vote, including the election of a majority of
DSAG's board of directors. If circumstances arise in which the interests of
Doughty Hanson conflict with your interests, such as if we are unable to pay
our debts, you could be disadvantaged by the actions Doughty Hanson takes.
Doughty Hanson's concentrated share ownership could also delay, discourage or
preclude a change of control or the removal of management.

DEPENDENCE ON KEY PERSONNEL--FAILURE TO RETAIN CERTAIN OF OUR EXECUTIVE
OFFICERS OR ATTRACT AND RETAIN THE SERVICES OF CERTAIN QUALIFIED EMPLOYEES MAY
MATERIALLY ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS.

         Our continued success depends on the services of certain of our
executive officers and on our ability to attract and retain qualified
managerial and technical personnel experienced in the various operations of our
businesses. Loss of the services of these employees could materially adversely
affect our operations.

         Competition for qualified technical personnel is intense, and we have
at times found it difficult to attract and retain skilled personnel for our
repair, overhaul and manufacturing operations. Failure to attract or retain
highly qualified personnel could have a material adverse effect on our
business, results of operations and financial condition.

RISK OF FOREIGN EXCHANGE RATE FLUCTUATIONS--CHANGES IN FOREIGN EXCHANGE RATES
COULD HAVE ADVERSE EFFECTS ON OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.

         Our revenues, costs, assets and liabilities are denominated in a
variety of currencies, particularly the U.S. dollar, the pound sterling and the
Canadian dollar. Our results of operations and financial condition, as reported
in pounds sterling, will be affected by fluctuations in exchange rates.
Accordingly, our operating performance may not be fully or accurately reflected
in our financial results.

         We enter into hedging agreements to protect against currency
transaction risk, including in respect of amounts owed under the Credit
Agreement. However, we may not in all cases be able to manage our currency
transaction risks through hedging, particularly given the volatility of
exchange rates.

INTERNATIONAL OPERATIONS--OUR INTERNATIONAL OPERATIONS ARE EXPOSED TO VARIOUS
RISKS WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS
AND FINANCIAL CONDITION.

         We have a presence in 11 different countries with facilities in 7 of
those countries. Most of our operations are in the United Kingdom, the United
States and Canada, but we also have operations in other markets, including
limited operations in China, and may in the future expand into additional
markets. International operations are subject to many additional risks,
including:

o    the burden of complying with multiple and possibly conflicting laws and
     any unexpected changes in regulatory requirements;

o    import and export restrictions and tariffs;

o    additional expenses relating to the difficulties and costs of staffing and
     managing international operations;

o    potentially adverse tax consequences;

o    increased competition as a result of subsidies to local companies;

o    political risks, including risks of loss due to civil disturbances, acts
     of terrorism, acts of war, guerilla activities and insurrection;

o    unstable economic, financial and market conditions;

o    cultural differences; and

o    increased expenses as a result of inflation.

     Any one of these factors could materially adversely affect our revenues of
products or services to international customers, which could materially
adversely affect our business, results of operations and financial condition.

PRODUCT AND SERVICE LIABILITY RISKS--WE MAY IN THE FUTURE FACE LARGE LIABILITY
CLAIMS.

         A failure or malfunction of a part we designed or manufactured or an
engine we repaired or overhauled could result in claims for personal injury,
death or property damage. In addition, many factors beyond our control could
lead to liability claims, including:

o    the failure of an aircraft on which a part we manufactured or an engine we
     overhauled has been installed;

o    the reliability and skills of the operators of our customers' aircraft;
     and

o    the type and amount of maintenance on aircraft and component systems
     performed by our customers.

         We have obtained insurance coverage with respect to these types of
liabilities. We could, however, be required to pay a material amount if a claim
is made against us that is not fully covered by insurance, if no third party is
required to indemnify us or a third party fails to perform an indemnity. Some
of our engine repair and overhaul service contracts with OEMs do not limit our
liability or provide for indemnification by the OEMs against losses arising
from parts or work provided to us by the OEMs. Furthermore, we may incur
significant expenses in the course of defending against claims. In addition,
adequate insurance may not be available in the future or may be available only
on unacceptable terms. Liability claims could also cause damage to our
reputation which could have a material adverse effect on our business, results
of operations and financial condition.

ENVIRONMENTAL MATTERS--OUR OPERATIONS MAY PROVE HARMFUL TO THE ENVIRONMENT,
WHICH COULD EXPOSE US TO FINES AND DAMAGES AND COULD REQUIRE EXPENSIVE
REMEDIATION.

         Our operations are subject to various laws and regulations, including
those relating to:

o    the generation, storage, handling, use and transportation of hazardous
     materials;

o    emissions and discharges to air, soil and water;

o    the health and safety of our employees; and

o    other environmental matters.

         We are required to obtain environmental permits from governmental
authorities. These authorities can modify or revoke such permits and can
enforce compliance with laws, regulations and permits by issuing orders and
assessing fines. We incur capital and operating costs to comply with laws,
regulations and permits. We believe that we substantially comply with, and that
material expenditures are not required in connection with, the applicable
environmental and health and safety laws, regulations and permits, but we
cannot assure you that regulators will not successfully challenge such
compliance or require us to expend significant amounts.

         The requirements of environmental laws, regulations and permits
continue to become more stringent. In addition, some of our facilities are
located on land that has been used for industrial purposes for a long time.
Under some circumstances, we could be held responsible for cleaning up
contamination at our facilities, including facilities that we have sold or
transferred to other companies, or at waste disposal sites we use. We could
also be held liable for any damages from exposure to such contamination. For
these reasons, we do not know the ultimate environmental liabilities and costs
that we face. It is possible that such environmental liabilities and costs
could materially adversely affect our business, results of operations and
financial condition.

SUBSTANTIAL DEBT--OUR SUBSTANTIAL AMOUNT OF DEBT COULD MATERIALLY ADVERSELY
AFFECT OUR FINANCIAL HEALTH AND IMPOSES SIGNIFICANT RESTRICTIONS ON OUR
BUSINESS.

         We have a substantial amount of debt. As of December 31, 2003, we had
(pound)340 million of total indebtedness outstanding on a consolidated basis.

         Our obligation to make principal and interest payments could have
important consequences, including the following:

o    we will need to use a large portion of the money we earn to pay principal
     and interest on the Notes and other debt, which will reduce the funds
     available to us for other purposes;

o    some of our debt has and will continue to have a variable rate of
     interest, which could result in higher interest expense in the event of
     increased interest rates despite our efforts to remove some of that
     exposure through hedging contracts;

o    debt under the Credit Agreement will mature before the Notes do, even if
     the Notes have to be repaid in full for any reason; and

o    we may have relatively more debt than our competitors, which may put us at
     a competitive disadvantage.

Our large amount of debt and our costs may:

o    make us more vulnerable to economic and industry downturns;

o    reduce our flexibility in responding to changing business and economic
     conditions, including increasing competition in both the repair and
     overhaul and manufacturing businesses; and

o    limit our ability to pursue other business opportunities, borrow more
     money for operations or capital expenditures in the future, compete
     effectively and implement our business strategies.

         For example, we will need money to maintain and expand our repair and
overhaul and manufacturing businesses. Although we believe that the money we
earn, together with the proceeds from this offering and the money we can borrow
under the Credit Agreement, will be enough for these purposes, we may be wrong
or our plans may change in the future. In that case, we may need to find money
from other sources, which may not be available or may be available only on
onerous terms.

RISK OF INSUFFICIENT CASH FLOW--WE MAY NOT BE ABLE TO GENERATE SUFFICIENT CASH
FLOW TO MEET OUR DEBT SERVICE OBLIGATIONS, INCLUDING PAYMENTS ON THE NOTES.

         Our ability to generate sufficient cash flow from operations to make
scheduled payments on our debt obligations will depend on our future financial
performance, which will be affected by a range of economic, competitive,
regulatory, legislative and business factors, many of which are beyond our
control, affecting our engine repair and overhaul and design and manufacturing
operations. If we do not generate sufficient cash flow from operations to
satisfy our debt obligations, including payments on the Notes, we may have to
undertake alternative financing plans, such as refinancing or restructuring our
debt, selling assets, reducing or delaying capital investments or seeking to
raise additional capital. We cannot assure you that any refinancing would be
possible, that any assets could be sold, or, if sold, of the timing of the
revenues and the amount of proceeds realized from those revenues, or that
additional financing could be obtained on acceptable terms, if at all. Our
inability to generate sufficient cash flow to satisfy our debt obligations, or
to refinance our obligations on commercially reasonable terms, would have an
adverse effect on our business, financial condition and results of operations,
as well as on our ability to satisfy our obligations in respect of the Notes.

RESTRICTIONS IN DEBT--OUR CURRENT AND FUTURE OPERATIONS PARTICULARLY OUR
ABILITY TO RESPOND TO CHANGES IN OUR BUSINESS OR TO TAKE CERTAIN ACTIONS ARE
RESTRICTED BY THE TERMS OF THE DEBT WE HAVE INCURRED.

         The terms of the indenture governing the Notes and the Credit
Agreement contain, and future indebtedness of ours would likely contain, a
number of restrictive covenants that will significantly limit our flexibility
in operating our businesses. In particular, these agreements limit our ability
to:

o    incur additional debt;

o    pay dividends and make other restricted payments;

o    make certain investments or buy assets;

o    use assets as security for borrowing money or in other transactions;

o    sell our assets;

o    enter into certain transactions with affiliates;

o    transfer all or substantially all of our assets or merge or consolidate
     with other companies;

o    sell or issue preferred stock of certain of our subsidiaries;

o    enter into sale and leaseback transactions;

o    make capital expenditures;

o    prepay junior debt; and

o    repay other debt.

         The Credit Agreement also requires our operating subsidiaries to meet
certain financial ratios and tests. They may not be able to meet these tests
for reasons beyond their control. If they fail to comply with the obligations
in the Credit Agreement, there could be an event of default under that
agreement. In addition, the lenders under the Credit Agreement might declare
the debt under that agreement immediately due and payable and seek to foreclose
on our assets which secure that debt. If there is a default under the Credit
Agreement, the operating subsidiaries may not have sufficient assets to repay
the debt under that agreement and other debt, including the Notes.

RISKS RELATING TO GROWTH STRATEGY--ANY EXPANSION BY ACQUISITION MAY PROVE RISKY
FOR US.

         Our ability to implement our expansion strategy will depend in part on
whether any suitable businesses are available at acceptable valuations and our
ability to finance the purchase price of any acquisitions. Any acquisition that
we make could present a variety of risks, including:

o    our failing to discover liabilities of the acquired company for which we
     may be responsible as a successor owner or operator despite any
     investigation we make before the acquisition;

o    our inability to integrate the operations and personnel of the acquired
     company;

o    our loss of key personnel of the acquired company; and

o    our becoming subject to material liabilities as a result of failure to
     negotiate adequate indemnification rights.

ITEM 4: INFORMATION ON THE COMPANY

DESCRIPTION OF THE BUSINESS

A.       HISTORY AND DEVELOPMENT OF THE COMPANY

         We trace our origins back to 1911. We were owned by BTR plc, now known
as Invensys plc, from 1991 until 1998, when our business was acquired by
certain partnerships, of which Doughty Hanson & Co. Limited is the sole general
partner, and certain management shareholders. We have two primary businesses:
we repair and overhaul small and mid-sized aircraft engines and we design and
manufacture specialized aviation parts, including wheels, brakes, engine parts
and rubber and polymer products. Our customers are primarily in the aviation
aftermarket, including airlines, military organizations, and other aircraft
operators, and also include original equipment manufacturers referred to as
OEMs. See "Liquidity and Capital Resources" for a discussion of our capital
expenditures.

         We are Dunlop Standard Aerospace Holdings plc, incorporated under the
laws of England and Wales on July 16, 1998 as a holding company for the purpose
of acquiring substantially all of the aerospace businesses of BTR in the
acquisition. Our registered executive office is located at Holbrook Lane,
Coventry CV6 4AA, England (telephone number +44-2476-668-707).


B.       BUSINESS OVERVIEW

         We are a leading integrated supplier of aftermarket parts and services
to the global aerospace and defense industry. We operate a diversified business
portfolio through two divisions:

o    Our engine repair and overhaul business services a wide range of small-
     and medium-sized gas turbine engines and provides our customers with
     comprehensive, value-added maintenance solutions.

o    Our design and manufacturing business produces aviation parts, sub-systems
     and systems that are precision-engineered and specialized, including
     wheels, brakes and braking systems, heat exchangers, engine parts and
     rubber and polymer products.


         We estimate that more than 90% of our fiscal 2003 revenues were
generated from aftermarket revenues, and that approximately 80% of our design
and manufacturing fiscal 2003 revenues related to aircraft or engines where we
were the sole designated provider of the relevant parts. We believe we have a
diverse customer base encompassing a variety of sectors of the aerospace and
defense industry, including the regional, military and business sectors, which
we estimate together accounted for approximately 82% of our fiscal 2003
revenues as well as the large commercial aviation and helicopter sectors, which
we estimate accounted for approximately 7% and 8% of our fiscal 2003 revenues,
respectively. We have become a leader in many of our products and services by
investing in advanced technologies and by successfully applying those
technologies to provide high quality parts and services at lower costs. We have
a presence in 11 different countries and facilities in seven of those
countries, with our largest facilities located in the United Kingdom, Canada
and the United States. For the year ended December 31, 2003, we had revenues of
(pound)456.6 million and operating profit before exceptional item of
(pound)61.8 million.

         Engine Repair and Overhaul. We provide comprehensive repair and
overhaul services on a wide range of small to medium-sized gas turbine engines
to more than 1,400 customers worldwide. In addition, we offer our customers
value-added maintenance solutions, including cost-saving component restoration
services, logistic services, spare engine planning and proprietary diagnostic
tools. Most of the engine platforms we repair and overhaul are used on
regional, military and business aircraft, and helicopters rather than on large
commercial aircraft. We also repair and overhaul engines in industrial
operations related to pipelines, cogeneration and marine technologies and
operations. We estimate that we generated approximately 74% of our repair and
overhaul service revenues in fiscal 2003 from servicing engine platforms with
respect to which we believe we had the largest or second-largest market share
among all service providers. We believe that the combination of our rapid
turnaround times, proprietary engine rebuild and parts restoration capabilities
and comprehensive service offerings enables our customers to reduce their
inventory requirements and help lower their total operating costs. The engine
repair and overhaul division accounted for approximately 73% of our revenues
for the year ended December 31, 2003.

         Design and Manufacturing. We design and manufacture a wide variety of
precision-engineered and specialized parts sub-systems and systems for use
primarily in the aerospace and defense industry, including:

o    aircraft wheels, brakes and braking systems;

o    engine heat exchangers and bleed valves;

o    air/oil separators and actuators;

o    specialized aircraft seals; and

o    ice protection systems.

         We market and sell our manufactured products to approximately 1,200
customers worldwide, including regional, business and commercial aircraft and
helicopter manufacturers and operators, military organizations and engine
manufacturers. We believe that we are well-known within our industry for
technologically sophisticated products, such as our advanced carbon braking
systems and our precision-engineered heat exchangers.

         We use our technological strengths to offer our customers better
quality products which can help lower our customers' operating costs. We
believe that these practices enhance customer loyalty and, together with the
sole-source nature of many of our products, provide us with recurring revenues
opportunities during the operational lives of the aircraft and engine platforms
using our products. We estimate that approximately 80% of our design and
manufacturing revenues for fiscal 2003 related to aircraft or engines where we
were the sole designated provider of the relevant parts. The design and
manufacturing division accounted for approximately 27% of our revenues for the
year ended December 31, 2003.

PRODUCTS AND SERVICES

Engine Repair and Overhaul

         The primary reasons to remove an engine from an aircraft for servicing
are that the number of engine hours since an engine's last overhaul has reached
the engine's life limit or that the engine has been damaged or is not otherwise
performing optimally. The cost of servicing an engine and the time required to
complete such servicing varies with the age, size and model of engine, the
extent of the repairs being performed and the parts being replaced.

         An overhaul of an engine can involve thousands of parts and numerous
separate work orders. Each work order represents a specific step or process
that must be completed during the course of the overhaul. For example, an
overhaul of a Rolls-Royce T56 engine typically involves the inspection,
replacement or refurbishment of 5,500 or more parts and approximately 170
separate work orders. We typically average between 30 and 60 days for a full
overhaul on the majority of our engine programs. In order to overhaul engines
quickly, we must perform many parallel processes and integrate numerous
components just before final assembly.

         Engine Platforms Serviced. The following table sets forth key
information with respect to the primary types of engine platforms that we
service:

<PAGE>

<TABLE>
<CAPTION>
                              FISCAL
                               2003       ESTIMATED     DATE FIRST     ESTIMATED
                             REVENUES      NUMBER     INTRODUCED/FIRST  PRODUCT
                                (IN       CURRENTLY    SERVICED BY    LIFE-CYCLE
 ENGINE AND ENGINE TYPE     MILLIONS)(1)  IN USE(2)    THE COMPANY      STAGE(3)   PRINCIPAL APPLICATIONS
ROLLS-ROYCE
<S>                     <C>                <C>         <C>            <C>          <C>
T56/501D (turboprop)    (pound)105.2        8,300       1954/1960      Declining   Used primarily in milItary transport
                               (23%)                                               planes, including the Lockheed C-130
                                                                                   Hercules; commercial version is the
                                                                                   501D.

AE3007 (turbofan)        (pound)67.4        1,500       1996/1997       Growth     Used in the Cessna Citation X
                               (15%)                                               business jet and the Embraer
                                                                                   135/140/145 regional jet.

A250  (turboshaft)       (pound)29.9       12,900       1967/1967       Mature     Helicopter engine used in many
                               (7%)                                                Bell and McDonnell Douglas
                                                                                   helicopters.

AE2100 (turboprop) 2100A (pound)12.5         460        1991/1993       Growth     Used primarily in military
--------------------------     (3%)                                                transports, including the new
2100D3                                                                             model C-130J Hercules, and also
                                                                                   in commercial aircraft.

501K (industrial)        (pound)9.0         1,500       1963/1969       Mature     Developed from T56 for use in
                               (2%)                                                marine and industrial
                                                                                   applications, generally power
                                                                                   generation.
PRATT & WHITNEY

PW100 (turboprop)        (pound)38.6        3,500       1984/1995       Mature     Used in several medium-sized
                               (8%)                                                regional aircraft including the
                                                                                   ATR and the Dash 8 Series.

PT6A (turboprop)         (pound)36.7       19,590       1964/1986       Mature     Used in several medium-sized
                               (8%)                                                business and military aircraft
                                                                                   such as the Raytheon King Air
                                                                                   Services and JPATS.
HONEYWELL

APU (turboshaft)         (pound)8.3         6,500       1979/1997       Mature     Series of engines used in several
Includes series 36 and         (2%)                                                business, regional, military
85(4) commercial aircraft.

GENERAL ELECTRIC

CF34 (turbofan)          (pound)14.4        2,900      1995/second      Growth     Used on Bombardier CRJ regional
                               (3%)                    half of 2002                jets and Canadian Challenger
                                                                                   business jets.

LM1600 (industrial)      (pound)5.4          135         1991 (as       Growth     Used in marine and industrial
                               (1%)                      aircraft                  applications.
                                                       engine)/1994
_______________

(1)     Management's estimates. Percentages are based on our revenues for fiscal 2003.

(2)     Management's approximate worldwide estimates.

(3)      By life-cycle stage, we mean whether the worldwide number of those engines is growing, has matured or is
declining. We define growth programs as those where fleet expansion is ongoing as aircraft continue to be produced;
mature programs as those where production has ended or is about to end or where aftermarket revenues are close to peak
levels; and declining programs as those where aircraft are being retired or the rate of utilization is decreasing.

(4)     Includes only auxiliary power units (APUs) currently installed on aircraft for which we have capabilities. Does
not include spares or ground support units.
</TABLE>

         We believe that the customers and demand for each engine platform that
we repair and overhaul are distinct. We have divided our engine repair and
overhaul operations into three divisions which include nine business units,
each of which serves a component of our market and four of which service a
single engine platform. These repair and overhaul business units operate from
various service centers and overhaul facilities based primarily in Canada, the
United States, the Netherlands, Singapore and Australia.

         Repair and Overhaul Process.  The stages of the overhaul process
include the following:

o    Disassembly, Cleaning and Inspection. After we receive an engine for
     overhaul, our technicians disassemble the unit into its parts, a process
     that requires special tooling and expertise. In the case of a complete
     flight engine, the unit is initially broken down into its three major
     modules: the turbine, the compressor and the gearbox. The modules are then
     disassembled further into their component parts. Each part is completely
     cleaned and permanently identified to allow for comprehensive inspection,
     testing and evaluation of part size, structural integrity and material
     tolerances. Each of the thousands of individual engine parts is subject to
     inspection. Our personnel use a detailed checklist and reporting procedure
     to create a report documenting the state of each part inspected and
     indicating the extent of repair or overhaul of the engine to be performed.
     Technicians tag all parts which need to be replaced or remanufactured and
     prepare work orders and bills of material and requisitions to be submitted
     to the repair and overhaul division's parts and production and
     re-manufacturing departments for inventory and scheduling purposes. We use
     our management information system throughout this process to reduce the
     amount of detailed inspection time required.

o    The work completed in the disassembly and inspection process enables us to
     obtain detailed information concerning which parts can be reused or
     remanufactured and which must be replaced, as well as the approximate
     labor needed to complete the job. Our computer system identifies and
     tracks the parts and associated work orders from each engine in order to
     maintain the integrity of the engine throughout the overhaul process. Our
     personnel provide complete and detailed listings of all repair and
     overhaul work steps and processes to be completed. If additional work is
     deemed necessary, we negotiate resulting price and scheduling issues with
     the customer.

o    Parts Remanufacturing and Replacement.. The next phase of an overhaul
     involves remanufacturing existing parts to specifications set by our
     customers. This entails a combination of machining, parts coating,
     welding, heat treatment, metalizing, metal reshaping, surface finishing
     and restoration of its original finish. During this phase, we use
     procedures designed to ensure that parts are prioritized and tracked
     through the remanufacturing phase. Tight control is maintained over
     scheduling for each part, in order to enable us to remain within our
     required turnaround time. Although we subcontract a limited number of
     processes to third parties, the majority of the work is done in our
     facilities using proprietary or specialized manufacturing techniques. If a
     part cannot be remanufactured, we may install either a new part or a
     previously remanufactured part from inventory. We maintain an inventory of
     serviceable parts that have been remanufactured for this purpose.
     Overhauling parts or using serviceable parts from inventory in lieu of new
     parts generally lowers customer costs and increases our margins when
     compared to an engine overhaul that consists of exclusively new parts. In
     addition, these manufacturing and service capabilities are integral to our
     competitive position because they enable us to maintain or increase the
     quality of work we perform and significantly reduce costs and turnaround
     times relative to those of our competitors.

o    Reassembly, Engine Testing and Shipping. The engine is then reassembled
     and submitted to an engine test unit. At the test unit, the engine is
     mounted on a stand and tested in accordance with OEM-defined
     specifications checking for oil or air leakage, fuel efficiency, operating
     temperature ranges and maximum output. At this stage, the engine must meet
     the OEM's original performance and safety specifications; if it does so,
     it is classified as a zero time engine, meaning that it has the same
     number of engine hours before the next overhaul as a new engine. Upon
     successfully completing these tests, the engine is rated for horsepower
     and fuel consumption and is then packaged and prepared for shipment or
     pickup. Engines are generally shipped via third party carriers.

         Engine Leasing Program. When a customer transfers an engine to us for
repair and overhaul work, we may lease or rent an engine of the same type to
the customer so that the customer can continue to operate their aircraft. We
own engines for most of the engine platforms on which we perform repair and
overhaul work. The net book value of our engines available for lease was
approximately (pound)16.5 million at December 31, 2003. The cost of this lease
or rental is generally included in the total overhaul costs charged to the
customer.

         Repair and Overhaul Facilities. Our repair and overhaul facilities are
located primarily in Canada and the United States, as well as the Netherlands.
In Canada, we have 10 facilities in Winnipeg and facilities in Vancouver and
Montreal. In the United States, our largest facilities are located in San
Antonio and Knoxville, and we have numerous sales facilities throughout the
country. We also have service facilities in Singapore and Australia. Each
repair and overhaul facility generally focuses on a specific type of engine
platform, although our Winnipeg facilities service a number of platforms. We
believe that the equipment in use in our various facilities is of high quality,
in part a result of capital expenditures in the past few years and the redesign
of our facilities.

o        Design and Manufacturing

         Most of our parts revenues are comprised of aftermarket revenues,
which consist of replacement parts revenues, installation and technical
services to customers worldwide. Some initial products are, however, provided
to the OEM free of charge in exchange for securing sole- or dual-source orders
for spare parts, as is generally done in the industry. Aftermarket customers
generally purchase replacement parts from the original manufacturer, as the
expense of recertification and the high costs in terms of time and capital for
a competitor to develop and produce equivalent parts reduce the amount of
potential suppliers.

         In fiscal 2003, we estimate that approximately 69% of our design and
manufacturing revenues were attributable to the aftermarket. We estimate that
we received 16% of our fiscal 2003 revenues from revenues of wheels, brakes and
braking systems, 6% from revenues of engine components such as heat exchangers,
coolers, bleed valves and actuation, and 4% from revenues of polymer and
composite products. The magnitude of these revenues is determined by aircraft
usage. The demand for our aftermarket parts and services is directly related to
our extensive installed base. Generally, parts are replaced after a certain
number of landings, at regular intervals based on aircraft flight hours or, in
the case of engine or other parts, when the aircraft or engine is undergoing
service and repair.

         Our products are used on a wide variety of aircraft worldwide. Our
engine parts are generally sold to U.S. and European engine OEMs; for example,
we estimate that approximately 26% of our fiscal 2003 revenues of engine
components were to Rolls-Royce, and approximately 9% of our fiscal 2003
revenues of engine components were supplied to Pratt & Whitney. We believe that
such a large proportion of revenues to one customer is typical among engine
component manufacturers.

         We are generally a sole-source manufacturer for the products we
manufacture, although we compete with respect to certain standardized parts.
One notable exception is our participation on the Boeing 757 programs, where we
were competing with another manufacturer in respect of the initial wheels and
brakes installed. This competition will be now be confined to the aftermarket
with the announcement from Boeing in 2003 that they would no longer produce the
B757 aircraft commencing in 2004. Once an operator selects us as a source,
however, our systems cannot be readily replaced as our parts are
custom-designed and are generally not replaceable with another vendor's
product. Even in the case of parts where another manufacturer might be
available, we typically maintain revenues of that product over the entire
useful life of the platform on which the product is being used.

         We estimate that approximately 90% of our fiscal 2003 design and
manufacturing revenues were derived from long-term programs. These include
long-term supply contracts with the various OEMs, as well as long-term
relationships and agreements with military organizations and certain major
aircraft operators who have entered into contracts for the life of their fleet.
The sole-source nature of many of our aviation parts results in more stable
part revenues for as long as they are operating aircraft fitted with equipment
using those parts. Our contracts with OEMs are generally long-term arrangements
containing pricing terms with built-in escalation formulae.

         Revenues for any particular one of our products over the useful life
of an aircraft or engine will vary, but will generally be several times the
value of the initially provided parts. For wheels and brakes we generally
provide the initially installed products to the OEM free of charge, in order to
secure a sole-source position in aftermarket parts revenues. We expect that
aftermarket revenues to significantly exceed the cost of the initial system
provided to the OEM. Although we estimate a typical useful life for an aircraft
is approximately 25 years, this varies from aircraft to aircraft. Some
aircraft, such as the Hawker 800, have useful lives exceeding 25 years, and
other aircraft are continually refurbished or retrofitted with new equipment in
order to extend their useful lives. Where we have provided our parts when an
aircraft is first built, we expect revenues relating to those parts to provide
significant revenues in future years.

         The estimated percentage of our design and manufacturing division's
revenues derived from each of its main product groups is set forth below.

<TABLE>
<CAPTION>
                                                                   % OF DESIGN AND
                                                  FISCAL            MANUFACTURING
PRODUCT                                       2003 REVENUES (1)        REVENUES       % OF TOTAL REVENUES
-----------------                             -----------------    ---------------    -------------------
                                              ((POUND) IN MILLIONS)
<S>                                               <C>                 <C>                  <C>
Wheels, brakes and braking systems             (pound)73.3                60%                 16%
Engine components                                     28.5                23%                  6%
Ice protection, composites and seals                  19.6                16%                  4%

Total                                         (pound)121.4               100%                 27%

 (1) Management estimates of revenues by product.
</TABLE>

         Wheels, Brakes and Braking Systems. We design, manufacture and service
wheels, brakes and brake management systems for the regional, military,
business and large commercial aircraft markets. Wheels and brakes include the
brake, main wheel and nose wheel assemblies. Brake management systems consist
of digital and analog anti-skid systems, automatic braking systems, electronic
brake-by-wire systems and brake temperature monitoring systems. A braking
system consists of a combination of brakes and brake management systems.
Generally, brakes are replaced after a certain number of landings., We
manufacture wheels, brakes or brake management systems for 22 major programs
and will provide such systems for two additional aircraft programs that are
about to enter either production or service. Information relating to the ten
largest programs, in terms of revenues we generated in 2003, is set out below.

<TABLE>
<CAPTION>
                                                                               DATE OF
                                                 ESTIMATED                     INITIAL
                                    2003         NUMBER OF                     INVESTMENT/   ESTIMATED
                                    REVENUES     SYSTEMS                       FIRST         PRODUCT
                          BRAKE    ((POUND)      CURRENTLY                     SERVICED      LIFE-CYCLE
BRAKING SYSTEM PROGRAM    TYPE     MILLIONS)1    IN USE (2)    CLASSIFICATION  BY US         STAGE (3)     SOURCE
----------------------    ------   -----------   ------------  --------------  ----------    ----------    ------
<S>                       <C>     <C>            <C>          <C>             <C>           <C>           <C>
Avro RJ (BAe 146)         Carbon  (pound)10.4      380         Regional        1981/1983     Mature (4)    Sole
Boeing 757-200            Carbon  (pound)9.3       980         Large           1982/1984     Mature        Dual (5)
                          and                                  Commercial
                          Steel
ATR 72                    Carbon  (pound)6.3       280         Regional        1989/1989     Growth        Sole
Eurofighter               Carbon  (pound)5.5        35         Military        1989/2003     Growth        Sole
Bae Hawk                  Steel   (pound)4.6       430         Military        1972/1974     Growth        Sole
Hawker 800 Program        Steel   (pound)4.1       800         Business        1963/1964     Growth        Sole
AV8B/Harrier              Carbon  (pound)3.4       430         Military        1974/1978     Mature        Sole
Gulfstream GIV/SP(6)      Carbon  (pound)2.9       400         Business        1990/1992     Growth        Sole
Fairchild Dornier 328     Carbon  (pound)2.0        90         Regional        1997/1999     Mature6)      Sole
Tornado                   Steel   (pound)1.3       500         Military        1970/1975     Mature        Sole
_____________

(1)  Management estimates of revenues per program.

(2)  Management's approximate estimate of the number of such systems that are currently in use worldwide.

(3)  Management's estimate as to whether the worldwide use of such systems is growing has matured or is declining. Some
     aircraft, such as the Hawker 800 and the BAe Hawk, are still being produced although they were initially introduced
     more than two decades ago.

(4)  Production of the Avro RJ (Bae 146) and development of the RJX ceased in 2001.

(5)  Approximately 250 of the Boeing 757-200 aircraft in service are fitted with our wheels and carbon brakes which
     represents 87% of those fitted with carbon brakes, and the remainder are fitted with BF Goodrich wheels and steel
     or carbon brakes.

(6)  The Gulfstream GIV/SP aircraft is fitted with our equipment for current production but the original Gulfstream GIV
     was fitted with ABSC equipment and approximately 100 of the 450 total fleet have not been retrofitted to our wheels
     and brakes.

(7)  In April 2002, Fairchild Dornier filed for bankruptcy. In March 2003 it was formally announced that Fairchild
     Dornier had been acquired by Avcraft and management believes that production will recommence in early 2005.
</TABLE>


         Other major aircraft platforms to which we provide brake-related parts
include Panavia Tornado, Jetstream 31, 41 and 61, CASA 295 and Fokker F27. In
addition, our wheel and braking systems are being installed on the Nimrod 2000,
and we have been selected as part of a team with Honeywell to provide wheels
and carbon brakes for the Joint Strike Fighter and the Airbus A380. The first
planes under the Joint Strike Fighter Program are expected to be delivered in
2008 and the first aircraft under the Airbus A380 program are scheduled to be
delivered in 2006. With respect to the Joint Strike Fighter, we have entered
into a binding memorandum of agreement which ultimately will be replaced by a
sub contract between Honeywell Inc. and Dunlop Aerospace Limited.

         Engine-related Aerospace and Defense Products and Related
Applications. We design and manufacture engine heat exchangers, bleed valves,
air/oil separators, actuators and related niche products for a broad range of
engines, including those on a wide range of different large and medium-sized
aircraft. Engine heat exchangers and bleed valves are precision mechanical
components used for aerospace and defense engine applications. Engine heat
exchangers control the temperature and pressure of fluids flowing in an engine,
while bleed valves transfer surplus air out of the engine compressor to
optimize engine stability and performance. We believe we are a leading supplier
of large-and medium-sized aircraft engine heat exchangers. We make two types of
aircraft heat exchangers: a tubular model and a plate and fin model. We also
manufacture other niche products with engine and non engine related aerospace
and defense applications, including air/oil separators and actuators. Our parts
can be found on a wide variety of regional, business, military and commercial
aircraft. In addition, we manufacture combustion heaters for armored and
off-road military vehicles.

         Rubber and Polymer Products. We design and manufacture customized,
complex, natural and synthetic rubber and polymer products for a wide range of
aviation, engineering and other specific applications. These products are used
for aircraft access points, wheel bays and aerodynamic seals on the wing,
fairings, slats, flaps and other flight surfaces. Our primary rubber and
polymer products include:

o    aircraft seals, which are designed to maintain the differential pressure
     inside and outside the aircraft in the differing conditions created by
     velocity, altitude and weather;

o    fire seals, which are designed to prevent fires spreading between aircraft
     compartments;

o    polymer products, which include various valves, rings and seals for use in
     missiles and weapons, airframes and engines;

o    specialist hoses; and

o    silicone products.

         Our products are used by a broad range of customers, primarily in the
aerospace and defense industry but also in various other industries, including
automobile, pharmaceutical, medical, food, water, hydraulics, electronics,
power and transportation. Rubber and polymer products are almost exclusively
made to the design and specification of our customers.

         Ice Protection Systems and Other Composite Products. We manufacture
electrothermal anti-icing and de-icing systems, which are designed to prevent
ice buildup in locations such as engine air intakes. These systems consist of
foil heater mats, which are set into the composite materials used to make
airframe parts. Many of the systems which we manufacture are used on military
aircraft and helicopters. We also manufacture certain niche components, such as
composite materials and specialized flexible hoses.

         Manufacturing Facilities. Our manufacturing facilities are located
primarily in the United Kingdom and North America. In the United Kingdom, we
have two facilities in each of Coventry and Leicestershire and a facility in
Birmingham. We also have service facilities in Liege, Belgium and Singapore. In
the United States, our largest facility is located in Troy, Indiana, and we
also have a facility in Atlanta. We believe that the equipment in use in our
various facilities is of high quality, in part a result of capital expenditures
in the past few years, including a significant upgrade of our main wheel and
brake test facility in Birmingham.

         Manufacturing Processes. Our manufacturing processes differ for each
product we manufacture. We produce carbon brakes using Chemical Vapor
Deposition, or CVD furnaces. CVD furnaces are large devices, costing
approximately (pound)4 million to (pound)6 million each, and are used to
produce carbon brake discs by impregnating carbon fibers with carbon-rich
natural gas at extremely high temperatures. The process requires carbon fibers
to be woven into sheets from which cut-outs are produced. These pieces are then
bonded together in the carbon furnace. The rough product is then machined into
the required shape and dimension. We also produce steel brakes, for example,
using copper- or iron-based compounds that are sintered and riveted onto a
plate. Our machining facilities are used to produce the mechanical components
of wheels and brakes, which are specific to each model of aircraft. Our other
manufacturing operations use similar machining techniques. Engine bleed valve
and heat exchanger manufacturing, generally involves precision turning and
machining of stainless steel alloys and aluminum-based alloys and assembly and
testing of the manufactured product. A new manufacturing facility was
commissioned in 2003 to produce Aluminum MMC material for the A380 wheels and
brakes program. This light weight material offers significant weight savings
over more traditional metal alloys currently employed in the Aerospace
industry.

SALES AND MARKETING

         We market and sell our aerospace and defense products and services to
more than 1,400 engine repair and overhaul customers and approximately 1,200
aviation parts customers worldwide, including OEMs; civilian, military,
government and industrial end-users; commercial, regional, commuter and charter
airlines; corporate fleets; helicopter operators; and third-party overhaul
shops. Sales are made through a combination of direct marketing, revenues
personnel and independent representatives, distributors and various agents.
Actual revenues methods vary depending on the product or service we are
offering, the customer and the market for that product or service. Sales
methods include:

o    competitive bids, where we will submit a bid in response to a tender
     solicitation and the customer will award the contract based on a
     competitive evaluation;

o    direct revenues, where customers are contacted directly by our revenues
     and support network when engine service work is coming due or when we have
     developed new parts or repairs which we believe the customer may want;

o    indirect revenues, where we contract with a local aircraft service
     provider or with an agent or agency to represent us to a group of
     customers or in a geographic region on a commission basis; and

o    contracts that incorporate customer amounts payable based on hourly or
     usage rates and expected repair times, which generally cover larger
     numbers of engines or brakes and are of longer duration.

         We focus on meeting customer needs and building long-term
relationships, which allow us to develop both products and processes to meet
the specific requirements of those customers.

         We have entered into several long-term agreements which are expected
to give us an ongoing sales stream. Some of these contracts contain estimates
of the services or the number of parts a customer will require over the term of
the agreement and define the various responsibilities of the parties. These
agreements are often terminable at will by the customer with respect to
uncompleted portions of the contract or purchase order. However, we are often
the sole source supplier, particularly with respect to parts we manufacture. In
such cases, any new aircraft or engines manufactured must incorporate our parts
unless the manufacturer is willing to go through the time and expense of
obtaining certification for a different supplier.

         Prices for engine repair and overhaul services and for aviation parts
are set in a number of different ways, generally depending on the service or
product offered and the market. Types of contracts that we enter into include:

o    time and material contracts, where labor and materials costs are marked up
     and, in the case of repair and overhaul contracts, parts are provided at a
     discount from the OEM new list price;

o    market price contracts, generally used with respect to parts and services
     which the market believes are in the nature of a commodity;

o    competitive bids, where pricing is determined based on the nature and risk
     of the contract which is being bid for; and

o    flat rate contracts, where a single price is quoted for services or parts
     to be provided, varying on the amount of repair and overhaul work required
     or the number and type of parts to be delivered.

BACKLOG AND LONG-TERM CONTRACTS

         The backlog for repair and overhaul services and manufactured parts
consists of a combination of our customers' projected requirements and unfilled
orders to be completed per year. It is represented largely by contracts and
orders that may be canceled by customers. We estimate that as of December 31,
2003, we had unfilled but outstanding orders worth approximately (pound)60
million for manufactured parts for 2004 and beyond. Our engine repair and
overhaul group generally does not have significant amounts of unfilled but
outstanding orders, except under certain military contracts.

         We estimate that approximately (pound)184 million or 40% of our fiscal
2003 revenues were derived from long-term contracts, many of which are with
military and government counterparties. We estimate that approximately
(pound)13 million of those revenues was generated from contracts which will end
or be terminated under their terms before December 31, 2004, and approximately
(pound)15 million of those revenues were generated from contracts which will
end or be terminated under their terms before December 31, 2005.

SEASONALITY

         Although we have secured several long-term agreements, we record
revenues under these agreements as we actually perform a repair or overhaul or
deliver a manufactured part or component. The work orders that we receive, the
number of repairs or overhauls that we perform and the number of parts that we
deliver in particular periods may vary significantly, causing our quarterly
revenues and results of operations to fluctuate. In our design and
manufacturing division, we receive orders regularly from our major customers
and track our order backlog. In our engine repair and overhaul division, we are
often unable to predict the precise timing of the actual receipt of such
orders. Historically, the revenues of our engine repair and overhaul business
tend to be lower in the first and fourth quarters of each year. For these
reasons, results of operations for interim periods are not necessarily
indicative of results for the full year.

GOVERNMENTAL REGULATION

         The aerospace and defense industry is highly regulated to ensure that
products and services meet stringent safety and performance standards. Both of
our divisions are regulated by governmental and intergovernmental agencies
worldwide, such as the FAA and equivalent government agencies in other
countries, and by both aircraft and engine manufacturers' guidelines, both of
which generally require that engines be overhauled and that identified engine
components be replaced after a certain number of flight hours and/or takeoffs
and landings. All aircraft, engines and associated components are subject to
stipulated maintenance, repair, overhaul and replacement criteria based on
certain numbers of flight hours and/or takeoffs and landings. Inspection,
maintenance and repair procedures for the various types of aircraft engines and
components are prescribed by regulatory authorities and can be performed only
by certified repair facilities and/or by certified technicians. Aircraft
component manufacturers are also highly regulated, and must have all of the
components they produce certified by the relevant civil airworthiness
authority. In some cases, we must obtain certifications from individual OEMs as
well, in order to engineer, sell and service parts and components used in
specific aircraft platforms.

         We currently have all the material certifications we believe we need
to conduct our operations. Our repair and overhaul operations have been
certified by each relevant authority to service each engine that we currently
repair and overhaul. Our manufacturing operations have also been approved by
the FAA and other regulatory authorities. We believe that we already have all
material licenses and certifications that are required by countries where we
operate and that we comply with any required procedures in all material
respects. However, we may cease to comply with applicable certification
requirements or fail to obtain additional certifications we need.

OEM AUTHORIZATIONS

         Authorizations by OEMs to perform repair and overhaul services on the
engines they manufacture constitute a competitive advantage because of higher
discounts on parts and access to technical information provided by the OEM. The
OEMs tend to maintain a tight control on authorizations. In certain cases, very
few authorizations have been granted; for example, we are currently one of only
two independent service providers authorized to service the AE2100 and the only
independent service provider in North America authorized to service the AE3007
and CF34 engines.

         We are currently authorized by the OEMs to service all the engine
platforms we service other than those manufactured by Honeywell, which are
confined to APUs which are generally not considered flight critical elements of
aircraft operation. Authorization agreements are in place for all Rolls-Royce,
General Electric and Pratt & Whitney engine platforms we service. No material
authorization expires prior to November 1, 2008. In the past, our agreements
have generally been renewed or extended at their expiration.

         Generally, we have paid an authorization fee to each OEM that has
currently authorized us, and in each case we have binding legal contracts. In
certain cases, we also pay authorization fees and royalties, or fulfill other
conditions set by the OEM in order to renew our authorizations. Our
authorizations may not be extended in the future, however, and we may not be
able to obtain authorizations for different engine platforms.

ENVIRONMENTAL REGULATION

         We are also regulated under various international, national and local
environmental, occupational health and safety and other governmental laws and
regulations. Our operations are subject to comprehensive and frequently
changing laws and regulations relating to the generation, storage, handling,
use and transportation of hazardous materials, to the emission and discharge of
such materials into the environment, to the health and safety of our employees
and to other environmental matters. Under environmental laws, permits are
required for some of our operations, and the issuing authorities could modify,
refuse to renew or revoke our permits. Although we have, from time to time,
been required to pay fines in connection with violations of certain
environmental requirements, we believe that we are currently in substantial
compliance with environmental laws. We incur capital and operating costs
relating to environmental compliance on an ongoing basis. We do not, however,
believe that we will be required under existing environmental laws to expend
amounts that would have a material adverse effect on our financial condition or
results of operations as a whole.

         The requirements of environmental laws, however, continue to become
more stringent. In addition, many of our manufacturing facilities are located
on properties with a long history of industrial use, including the use, storage
and disposal of hazardous materials. Historical practices may have resulted in
contamination at these or other facilities which has not yet been detected.
Under certain environmental laws, we could be held responsible for some or all
of the costs of cleaning up contamination at our facilities, including
facilities that we have sold or transferred to other companies, or at waste
disposal sites that we use regardless of whether we know of or were responsible
for such contamination. We could also be held liable for any personal injury or
property damage resulting from such contamination or, more generally, from any
releases of hazardous materials resulting from our activities. Although we have
not incurred and currently do not anticipate any material liabilities in
connection with environmental or occupational safety and health matters, there
can be no assurance that future costs relating to these matters will not have a
material adverse effect on our financial condition or results of operations as
a whole.

RAW MATERIALS

Engine Repair and Overhaul

         The primary sources of parts and components for our overhaul
operations are the engine OEMs, who largely control the supply of new parts.
Other suppliers include parts brokers, airlines and aircraft leasing companies.
The supply of parts and components for our aftermarket revenues is affected by
the availability of excess inventories that typically become available for
purchase as a result of new aircraft purchases by commercial airlines, which
reduce the airlines' need for spares supporting the replaced aircraft.
Aftermarket supply is also affected by the availability of older, surplus
engines that can be purchased for the value of the major parts and components.

         Generally, supply needs are determined by the management of each local
repair facility. Because of long supplier lead times and the lack of a
contracted backlog of orders, local management estimates likely activity to
determine the necessary level of inventory. Each major supplier has a price
list, which is updated periodically, usually annually, from which we make our
purchases. We estimate that in 2003 Rolls-Royce and Pratt & Whitney were our
largest and second-largest suppliers, accounting for about (pound)75 million
and (pound)32 million, respectively, or approximately 34% and 15%,
respectively, of our total material purchases. We have signed supply agreements
with all our major OEMs, including Rolls-Royce, which is one of the three
largest aircraft engine manufacturers worldwide. We estimate that in 2003 an
additional (pound)13 million of Rolls-Royce parts, or approximately 6% of our
total material purchases, were purchased from Aviall Inc. of Dallas, Texas
which has contracted with Rolls-Royce to distribute T56/501D and A250 spare
parts. Rolls-Royce parts are generally not available other than from
Rolls-Royce, Aviall Inc. or the surplus parts market. We have no reason to
believe that such parts will not continue to be available from Rolls-Royce or
Aviall Inc. We have a similar supply agreement with Pratt & Whitney. Our CF34
contract with General Electric is different from these arrangements as we
purchase our parts on consignment from General Electric allowing us to reduce
our inventory costs.

         We have developed procurement practices to ensure that all supplies we
receive conform to contract specifications and are maintained on a qualified
vendor list. For cost, quality control and efficiency reasons, we generally
purchase supplies only from vendors with whom we have on-going relationships
and/or whom our customers have previously approved. We have qualified second
sources or have identified alternate sources for many of our engine repair and
overhaul-related supplies. However, any inability or delay in obtaining needed
parts on a timely basis could have a material adverse effect on us, and we have
in the past experienced such delays. We choose our suppliers primarily based on
the quality of the parts supplied, the record for on-time performance and OEM
requirements.

Design and Manufacturing

         In selecting suppliers for our manufacturing operations, we consider
the conformance of the materials to the required specifications, supplier
quality approvals status, delivery lead times, price and supply logistics and
performance. Each business unit follows a defined quality system procedure to
assess the ability of suppliers to fulfill all certification requirements
relating to the aviation parts we produce. Each of our business units is
responsible for ordering and purchasing its own materials and has developed
certain quality system procedures to control the procurement process and ensure
it obtains the best possible material solutions.

         Our manufacturing operations, particularly those related to wheels,
brakes and braking systems, generally have a mix of long-term supply contracts
(with various commitment periods) for raw materials and individual purchase
orders. These operations tend to use only single sources to supply raw
materials, and we believe that those suppliers have proven reliable in terms of
both quality and timeliness of deliveries. We also believe that alternative
sources of supply could be developed if necessary, however this may involve
initial production set-up costs and qualification costs which may be
significant, depending upon the component.

         We produce the carbon discs used in the manufacture of our carbon
brakes. The raw materials used in this process include specially processed
fibers. We do not foresee any reason why we would be unable to continue using
our own proprietary process. If we were unable to continue producing carbon
discs in sufficient quantity or at all, we believe it would be difficult to
secure an alternative supply, due to the proprietary nature of our process.

         We have selectively entered into some longer term supply agreements
with metal raw material and component parts suppliers for our manufacturing
operations. A large proportion of these supply agreements are typically of
three years duration and guarantee a fixed price committing to a rolling three
month volume. Since we can use a number of raw material suppliers, and because
suppliers are sometimes mandated by end customers, we typically do not enter
into significant long-term purchase contracts with these suppliers. We do,
however, plan for lead times and ensure forward order cover for major raw
materials that we use.

CUSTOMERS

General
          We estimate that revenues to our top 10 customers comprised
approximately 48% of our fiscal 2003 revenues. Our largest customer, Lockheed
Martin, accounted for 19% of revenues in fiscal 2003, including revenues
through the Lockheed Martin/Kelly USA contract. In addition, we estimate that
revenues to Rolls-Royce were approximately 18% of our fiscal 2003 revenues.
Revenues from Rolls-Royce include engine repair and overhaul services, that
accounted for approximately 11% of our fiscal 2003 revenues, which we provide
to six end-users that maintain separate agreements with Rolls-Royce.

Engine Repair and Overhaul

          Civil. During fiscal 2003, we served a broad base of approximately
1,400 repair and overhaul customers in the civil aviation industry worldwide.
The largest of those customers are Rolls-Royce, for whom we provide
subcontracting services on a warranty, program or campaign basis, and Skywest
Airlines. Corporate customers include both private individuals and company
business aircraft and certain helicopter operators in the oil, timber and
mining industries. Airline customers tend to be concentrated in North America
and range from large regional fleets owned by or servicing major carriers to
smaller regional commuter airlines, charter companies and freight and cargo
operators.

         Military. During fiscal 2003, our repair and overhaul operations
served various customers in the military sector worldwide. The U.S. Air Force,
including revenues through the Lockheed Martin/Kelly USA contract and the
Canadian Air Force are currently two of our largest repair and overhaul
military customers. We estimate that in fiscal 2003, engine repair and overhaul
revenues to the U.S. military, including revenues through the Lockheed
Martin/Kelly USA contract and revenues to the U.S. Coast Guard, accounted for
approximately 19% of our total revenues, and revenues to the Canadian military
accounted for approximately 3% of our total revenues. Much of the work done for
these two customers consists of repair and overhaul work on the Rolls-Royce T56
engine used on the C-130 military transport and P-3 maritime surveillance
aircraft. We have exclusively performed all this work for the Canadian Air
Force since the 1960s and have won a bid that will allow us to provide these
services for a new five-year term with options to extend for a further five
years. We signed a five year contract with the U.S. Air Force for overflow work
in 1997, prior to winning the actual subcontract work at the former Kelly Air
Force Base in February 1999. In December of 2003, we were awarded the U.S. Navy
T56 contract, which is for one year, with four optional renewal years. The U.S.
Navy is the single largest operator of T56 powered aircraft. Other military
customers for our products include the Royal Thai Air Force, Columbian Air
Force, U.K. Ministry of Defense, and the Royal Dutch Navy. In addition, we have
recently been awarded work from the Royal Saudi Air force and the Algerian
Ministry of Defense.

Design and Manufacturing

         OEMs. OEM customers for our aerospace and defense products include
some of the world's major aircraft and aircraft engine manufacturers, as well
as the companies that supply those companies. Our products are installed on a
variety of aircraft and engine platforms. OEM customers include Rolls-Royce,
Pratt & Whitney, Snecma, BAe Systems, Airbus, Panavia, Gulfstream Aerospace,
GKN Westland, Boeing, Dornier and Embraer.

         Military. We also supply components used on U.S. and
European-designed military aircraft. Our products are used on a variety of
fighter, training, transport and cargo aircraft, bombers and helicopters.
Military aircraft using our products include the Hawk, the Goshawk, the
Panavia Tornado, the AV8B Harrier and the Jaguar. In addition, we also supply
brakes or braking systems to the Eurofighter Typhoon program, the Nimrod 2000
program, and in partnership with Honeywell, we provide carbon brakes for the
Joint Strike Fighter program. Our military products are sold to the U.S.
military, the U.K. Ministry of Defense, the Defence Logistics Agency, certain
other military organizations and airframe OEMs, such as BAe Systems and GKN
Westland.

         Aftermarket. Our aftermarket customers include all major aircraft and
engine repair facilities and some major airlines worldwide, including Delta
Air Lines, British Airways and China Southern Airlines, as well as certain
military organizations.


C.   Organization structure

The following table sets forth selected subsidiaries, including significant
subsidiaries, owned, directly or indirectly, by us. We are a wholly owned
subsidiary of Dunlop Standard Aerospace Group Limited, which is the ultimate
parent company of the Group.

<TABLE>
<CAPTION>

                                                                           Country of           Percentage of
                               Name                                       Incorporation           Ownership
                               ----                                       --------------          ---------
Intermediate Holding and Management Services Companies

<S>                                                                         <C>                      <C>
Dunlop Standard Aerospace (UK) Limited*                                        United Kingdom        100%
Dunlop Standard Aerospace Overseas Investments Limited*                        United Kingdom        100%
Dunlop Limited*                                                                United Kingdom        100%
Dunlop Holdings Limited*                                                       United Kingdom        100%
Dunlop Standard Aerospace Overseas Limited*                                    United Kingdom        100%
Dunlop Standard Aerospace (US) Inc.*                                 United States of America        100%
Dunlop Standard Aerospace (Nederland) BV*                                         Netherlands        100%

Design and Manufacturing
Dunlop Aerospace Limited*                                                      United Kingdom        100%
Dunlop Aviation North America Inc.                                   United States of America        100%
Stewart Warner South Wind Corporation                                United States of America        100%
Dunlop Aviation (SE Asia) Pte Limited                                               Singapore        100%
Dunlop Aviation Canada Inc                                                             Canada        100%
Dunlop Aviation Services SA                                                           Belgium        100%

Engine Repair and Overhaul
Standard Aero Inc.*                                                  United States of America        100%
Standard Aero (San Antonio) Inc. *                                   United States of America        100%
Standard Aero (Alliance) Inc.*                                       United States of America        100%
Standard Aero Limited*                                                                 Canada        100%
Standard Aero (Australia) Pty Limited                                               Australia        100%
Standard Aerospace BV*                                                            Netherlands        100%
Standard Aero BV*                                                                 Netherlands        100%
Standard Aero (Asia) Pte Limited                                                    Singapore        100%
Standard Aero de Mexico S.A. de C.V.                                                   Mexico        100%
Dunlop Aerospace Parts Inc.                                          United States of America        100%
Standard Aero vof*                                                                Netherlands        100%

* Denotes "significant subsidiary," within the meaning of Regulation S-X,
promulgated under the Securities Act of 1933, as amended.

</TABLE>

         All the share capital of the Company is legally and beneficially
owned by Dunlop Standard Aerospace Group Limited except for one ordinary share
which is held by Dunlop Holdings Limited in trust for Dunlop Standard
Aerospace Group Limited.

         Dunlop Standard Aerospace Group Limited's authorized share capital
comprises ordinary and preference shares being: 617,986 ordinary shares, par
value 50 pence per share ("Regular Ordinary Shares"), 882,014 "A" ordinary
shares, par value 50 pence per share ("A Ordinary Shares"), and 15,545,455 "B"
ordinary shares, par value 50 pence per share ("B Ordinary Shares"),
155,862,000 10% cumulative redeemable preference shares, par value 50 pence
per share ("Preference Shares"), and 10,000,000 10% cumulative redeemable
preference shares, par value (pound)1 per share (the "Preference Shares").
Together the Regular Ordinary Shares, the A Ordinary Shares and the B Ordinary
Shares are collectively the "Ordinary Shares." In respect of issued share
capital at December 31, 2003, Doughty Hanson owned 13,500,000 B Ordinary
Shares, 50,000 A Ordinary Shares, and 155,862,000 Preference Share, and
management shareholders owned 607,054 Regular Ordinary Shares and 489,091 A
Ordinary Shares and have options to acquire a further 10,932 Regular Ordinary
Shares and 342,923 A Ordinary Shares. As a result, and assuming the management
shareholders exercise such options, Doughty Hanson and management shareholders
hold approximately 90% and 10%, respectively, of the total voting rights of
Dunlop Standard Aerospace Group Limited, which in turn holds 100% of the
voting rights in the Company. Prior to the exercise of such remaining options,
Doughty Hanson owns approximately 93% of the voting rights. These options
expire on September 29, 2008.

D.  Properties

         The following table sets forth certain information with respect to
certain facilities. We have multiple facilities in certain of these locations.

<TABLE>
<CAPTION>

                                    Approximate       Type of
                                    Area              Ownership
Location                            (square feet)     Interest      Products / Function
--------                            -------------     ----------    -------------------

Engine Repair and Overhaul

<S>                                         <C>                     <C>
Winnipeg, Canada                            519,000   Owned/        Repair and overhaul
                                                      Leased
San Antonio, TX                            358,000    Leased        Repair and overhaul
Maryville, TN                              117,000    Owned         Repair and overhaul
Tilburg, the Netherlands                    77,000    Owned         Repair and overhaul

Singapore                                   23,000    Leased        Repair and overhaul
Sydney, Australia                           32,000    Leased        Repair and overhaul
Salisbury, NC                               15,000    Leased        Sales, repair and field service
Southlake, TX                                7,000    Leased        Sales, repair and field service
Concord, NC                                  7,000    Leased        Sales, repair and field service
Vancouver, Canada                            7,000    Leased        Sales, repair and field service
Montreal, Canada                             4,000    Leased        Sales, repair and field service
Oklahoma City, OK                            2,500    Leased        ART
Godstone, UK                                 1,800    Leased        Sales
Black Diamond, WA                            1,000    Leased        Sales and field service
Van Nuys, CA                                   700    Leased        Sales and field service
Allentown, PA                                  300    Leased        Sales and field service
Lafayette, LA                                  300    Leased        Sales


Design and Manufacturing
Coventry, U.K.                             824,000    Owned         Manufacturing and sales
Shepshed, U.K.                             101,000    Owned         Manufacturing and sales
Bagworth, U.K.                              78,000    Owned         Manufacturing and sales
Birmingham, U.K.                            70,000    Owned/        Manufacturing and sales
                                                      Leased
London (Heathrow), U.K.                     15,000    Leased        Sales
Troy, IN                                   130,000    Owned         Manufacturing
Indianapolis, IN                            20,000    Leased        Engineering and sales
Atlanta, GA                                  5,000    Leased        Sales
Singapore                                   10,000    Leased        Sales
Liege, Belgium                               4,000    Owned         Repairs

</TABLE>

________________

         We believe that our facilities meet our present needs and that our
properties are generally well-maintained and suitable for their intended use.
We believe that we generally have sufficient capacity to satisfy the demand
for our products and services in the foreseeable future. In 2001, we commenced
the building of a purpose-built 40,000 square foot facility in Winnipeg,
Canada to house the new CF34 program. The facility was occupied in March 2002
and became operational in the summer of 2002, along with the correlation of
the engine test facility with General Electric. Facility expansion in Tilburg,
the Netherlands and Maryville, TN were completed in 2002. We are currently
constructing a metal matrix composite facility within our Coventry owned
facilities which will allow us to produce new technology lightweight
components, and expect to complete this facility in 2004 at an estimated cost
of (pound)5.6 million including (pound)2.6 million that has already been
invested.

Environmental Expenditures

         Our operations are subject to various environmental laws and
regulations, and we are required to obtain environmental permits from
governmental authorities to engage in certain of our operations. We believe
that we substantially comply with, and that material expenditures are not
required in connection with, the applicable environmental and health and
safety laws, regulations and permits. No material expenditures in connection
with applicable environmental laws or regulations have been made within the
past three years.


ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.       OPERATING RESULTS

The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with "Item 8: Financial
Information," and the Financial Statements included elsewhere in this Annual
Report.

GENERAL

         We are a leading integrated supplier of aftermarket parts and
services to the global aerospace and defense industry. We operate a
diversified business portfolio through two divisions:

o    Our engine repair and overhaul business services a wide range of small-
     and medium-sized aircraft engine platforms and provides our customers with
     comprehensive, value-added maintenance solutions.

o    Our design and manufacturing business produces aviation parts, sub-systems
     and systems that are precision-engineered and specialized, including wheel
     and braking systems, heat exchangers, engine parts and rubber and polymer
     products.

         We operate principally in North America and Western Europe. In fiscal
2003, we generated total revenues of (pound)456.6 million. Approximately 73%
of our fiscal 2003 revenues were derived from revenues of engine repair and
overhaul services, while design and manufacturing revenues accounted for
approximately 27% of our fiscal 2003 revenues. Approximately 82% of our fiscal
2003 revenues were derived from the regional, military and business aviation
sectors. More than 90% of our fiscal 2003 revenues were derived from
aftermarket customers.

         Unless otherwise indicated, financial information in this annual
report has been prepared in accordance with U.K. GAAP, which differs in
certain respects from U.S. GAAP. The principal differences between U.K. GAAP
and U.S. GAAP are summarized in Note 27 to the Company's audited consolidated
financial statements included elsewhere in this Annual Report. The following
information should be read in conjunction with, and are qualified in their
entirety by reference to our consolidated financial statements included
elsewhere in this annual report.

NEW BUSINESS INITIATIVES

         Lockheed Martin/Kelly USA Contract: In February 1999, the U.S.
Department of Defense announced that a combined Oklahoma Air Logistic Center
and Lockheed Martin Kelly Aircraft Center team won a competitive tender for
the outsourcing of engine repair and overhaul operations at the former Kelly
Air Force Base in San Antonio, Texas. Kelly USA, formerly Kelly Air Force
Base, is one of the U.S. Air Force's largest aircraft repair and overhaul
centers, and the contract was the largest single engine repair and overhaul
contract ever awarded by the U.S. Air Force. Under the terms of the winning
proposal, we are the sole subcontractor to Lockheed Martin for the servicing
of the Rolls-Royce T56 engines repaired at the facility.

         We effectively manage what we believe is the largest servicing
facility for the Rolls-Royce T56 engine, and services provided under this
contract represented approximately 19% of our total revenues in fiscal 2003.
We believe our contract with Lockheed Martin mirrors the contract between
Lockheed Martin and the U.S. Air Force and has a seven-year initial term with
eight one-year options to extend, exercisable by the U.S. Air Force. The price
terms in our contract with Lockheed Martin are based on fixed rates per engine
component subject to an inflation-adjusted formula. In addition, we have
entered into a contract with Rolls-Royce to supply us with component parts in
connection with our services under our contract with Lockheed Martin. The
Rolls-Royce contract has the same duration as the contract with Lockheed
Martin.

         Upon initiation of the U.S. Air Force contract, we comprehensively
redesigned the former Kelly Air Force Base operations into a cellular
production facility. In doing so, we believe we have significantly improved
the efficiency and turnaround times of repair and overhaul servicing of the
U.S. Air Force's T56 engines. For example, we have reduced the number of
engines in production by substantially decreasing the engine turnaround time
from 90 days to 35 days, improving component material management and
consequently increasing monthly capacity output from nine units to sixteen
units. As a result, we have successfully met the delivery requirements set by
the U.S. Air Force. With our service program now in place, we have now met the
Department of Defense's War Readiness Engine, or WRE, requirements, which is a
measure of the minimum number of operation-ready spare engines needed in the
event of a wartime operation.

         Affordable Readiness and Transformation: In September 2002, using
lessons learned from the Kelly USA cellular production facility redesign,
coupled with the experience gained in the redesign of our facilities
worldwide, we launched a new business venture named Affordable Readiness and
Transformation, or ART. This new business venture was designed to sell these
redesign services to other military and commercial aerospace Maintenance
Repair/Overhaul, or MRO, installations and derive revenues through the sharing
of benefits gained from these redesign efforts, In 2003, we provided services
to Oklahoma City - Air Logistics Center, or OC-ALC, and Ogden-Air Logistics
Center, or OO-ALC, that amounted to approximately $3 million in revenues. In
2004, we will continue to provide service to OC-ALC and OO-ALC and will
provide unsolicited proposals for redesign services to other military and
commercial installation.

         Kelly USA CFM: On October 1, 2003, the U.S. Air Force, through the
Lockheed Martin/Kelly USA contract, awarded us a contract to supply materials
for the Kelly USA contract which, assuming all options are exercised, expires
in 2014. We estimate that the annual revenues related to this contract will
exceed $125 million annually through 2007, the initial term of the contract.
This contract is renewable annually at the U.S. Government's option through
2014.

         U.S. Navy Contract: On December 22, 2003, we were awarded a five year
contract (one year firm with four renewal years) to support the U.S. Navy's
fleet of T56 engines from both our San Antonio and Winnipeg facilities. We
estimate the revenues from this new service work will exceed $250 million
during the life of the contract, assuming all renewal options are exercised by
the U.S. Navy. We are the prime contractor on the U.S. Navy contract.

         General Electric CF34 Authorization: In September 2001, we entered
into an agreement with GE Engine Services Inc. to become an Authorized CF34TM
Service Provider. The agreement allowed us to become the first GE authorized
independent MRO company in North America to provide service to the CF34 engine
market. In the year ended December 31, 2002, we recognized $6.24 million of
revenues relating to our provision of maintenance services for the CF34 Series
1 and 3 engines and we recognized a further (pound)14 million in the year
ended December 31, 2003. Through the end of 2003, we have invested a total of
$38 million in connection with the completion of the CF34 Series 1 and 3
engine maintenance capability and the required license payments. In June 2003,
we obtained Transport Canada limited authorization for Model CF34-8 Series
modules. We expect to invest an additional $5.4 million by the end of 2004
with respect to CF34 Series 8 engine maintenance capability.

         Brake Programs: We began supplying wheels, brakes and braking systems
for the Eurofighter Typhoon program in 2001. We expect to generate significant
revenues from the Eurofighter Typhoon in coming years as the number of
Typhoons manufactured continues to increase over each of the next several
years. In addition, in partnership with Honeywell, we have been selected to
provide carbon brakes for the Airbus A380 program and the Joint Strike Fighter
program. We expect to generate significant revenues from these programs in
coming years. We currently expect initial revenues from the Airbus A380
program in 2006 and from the Joint Strike Fighter program in 2006.

EFFECT OF CURRENCY MOVEMENTS ON RESULTS OF OPERATIONS

         We conduct business in the United States, the United Kingdom, Canada
and in various other countries around the world. Accordingly, our results of
operations are subject to currency translation and transaction risks. Our
revenues and costs are primarily denominated in three currencies: U.S.
dollars, pounds sterling and Canadian dollars. The table below shows the
percentage of our revenues that each currency accounted for in 2001, 2002 and
2003.

                                        % Revenues
                                  Years Ended December 31,
                            -------------------------------------------------
          Currency            2003                2002              2001
                            ---------          ----------         -----------
U.S. dollars                  75%                 72%                72%
Pounds sterling               17%                 19%                20%
Canadian dollars               8%                  9%                 8%


         Currency Translation Risk. With respect to currency translation risk,
our financial condition and results of operations are measured and recorded in
the relevant payment currency and then translated into pounds sterling for
inclusion in our financial statements. We translate profits and losses from
overseas businesses into pounds sterling at average rates of exchange during
the relevant financial period. Any difference arising from their retranslation
at exchange rates at the end of the relevant period is treated as a movement
in reserves and is included in the statement of total recognized gains and
losses.

         Currency differences arising from the translation at period end rates
of the net investment in overseas businesses are also taken to reserves,
together with related exchange gains and losses arising on foreign currency
borrowings which finance a proportion of foreign currency investments (the
latter, however, cannot exceed the former under U.K. GAAP). These exchange
differences are also included in the statement of total recognized gains and
losses.

         Assets and liabilities in foreign currencies which are to be settled
at a contracted rate are translated at the appropriate contract rate. All
other assets and liabilities in foreign currencies are translated at the
period end rate. Exchange differences arising from this translation are
recorded in the profit and loss account. All other exchange differences are
also included in the profit and loss account for the relevant periods.

         We generally attempt to hedge our currency translation risk by
financing our investments in overseas operations through borrowings
denominated in local currencies. We have several forward foreign exchange
contracts held for hedging operating cash flows in U.S. dollars.

         The effect of currency translation on our financial statements
arising from the appreciation of the pound sterling against the U.S. dollar
shows a negative impact on our revenues and profit as reported in pounds
sterling in our financial statements. Conversely, depreciation of the pound
sterling against the U.S. dollar shows a positive impact on our revenues and
profit. For example, the pound sterling appreciated 8.7% against the U.S.
dollar in fiscal 2003 when compared to 2002 (based on average exchange rates
for that year), which had a negative effect on our U.S. dollar revenues when
reported on a pounds sterling basis. In fiscal 2002, the pound sterling
appreciated 4.2% against the U.S. dollar when compared to 2001 (based on
average exchange rates for that year), which had a negative effect on our U.S.
dollar revenues when reported on a pounds sterling basis. The appreciation of
the sterling pound against the U.S. dollar in fiscal 2003, however, has
decreased our costs denominated in U.S. dollars when reported on a pound
sterling basis. The net effect of the appreciation of the pound sterling
against the U.S. dollar was a negative (pound)2.7 million on operating profit
when reported on a pound sterling basis in fiscal 2003; and the net effect of
the appreciation of the pound sterling against the U.S. dollar was a negative
(pound)1.4 million on operating profit in fiscal 2002. However, there was a
positive impact on our financing costs for our U.S. dollar denominated debt as
a result of the appreciation of the pound sterling of (pound)1.3 million for
fiscal 2003 and (pound)0.3 million for fiscal 2002.

         Currency Transaction Risk. In addition to currency translation risk,
we are exposed to currency transaction risk whenever one of our operating
subsidiaries enters into either a purchase or revenues transaction using a
currency other than its functional currency. Currency transaction risk is
reduced by matching revenues and costs in the same currency, which is
generally the practice in our industry given the percentage of contracts that
are denominated in either U.S. dollars or pounds sterling. Currency hedging is
generally used by businesses to protect against transaction risk. We currently
have a series of outside currency hedging contracts, as the surplus U.S.
dollar funds generated by our manufacturing operations in the United Kingdom
are hedged and used to fund our U.S. dollar interest and debt repayment
requirements. In the past we have also hedged our exposure to revenues in U.S.
dollars when we did not have U.S. dollar-denominated interest and debt
repayment requirements to fund. See "Risk Factors--Risks Relating to the
Company--Risk of Foreign Exchange Rate Fluctuations."

         In fiscal 2003, approximately 75% (2002: 72%) of our revenues were
transacted in U.S. dollars, with another 17% (2002: 19%) transacted in pounds
sterling, and approximately 8% (2002: 9%) in Canadian dollars.

RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with our
historical consolidated financial statements. The following table sets forth
selected financial data for the last three years.

         These historical financial statements were prepared in accordance
with U.K. GAAP.

<TABLE>
<CAPTION>

                                               Consolidated  Consolidated   Consolidated
                                               ------------  ------------   ------------

                                               Year Ended     Year Ended     Year Ended
                                              December 31,    December 31,  December 31,
                                                 2003            2002          2001
                                                 ----            ----          ----
                                                         ((Pound) in millions)

Revenues
<S>                                                  <C>          <C>           <C>
   Engine Repair and Overhaul.........        (pound)335.2 (pound)320.5  (pound)291.7
   Design and Manufacturing...........               121.4        131.3         153.2
                                                     -----        -----         -----
   Total..............................               456.6        451.8         444.9

Gross Profit
   Engine Repair and Overhaul.........                60.6         60.3          52.7
   Design and Manufacturing...........                56.7         65.0          77.7
                                                     -----        -----         -----
   Total..............................               117.3        125.2         130.5

Selling, General & Administrative and Other
Expenses
   Engine Repair and Overhaul.........                31.0         28.8          29.9
   Design and Manufacturing...........                24.4         27.6          24.9
                                                     -----        -----         -----
   Total..............................                55.4         56.4          54.8

Operating Profit (pre-exceptional)
   Engine Repair and Overhaul.........                29.6         31.5          22.8
   Design and Manufacturing...........                32.2         37.4          52.9
                                                     -----        -----         -----
   Total..............................                61.8         68.9          75.7

Profit for the Financial Period.......         (pound)13.0  (pound)11.9   (pound)20.5
                                                      ====         ====          ====

</TABLE>


Critical Accounting Policies

         The accounting policies discussed below are important to the
presentation of our results of operations and financial condition and require
the application of judgment by our management in determining the appropriate
assumptions to be used in the preparation of our financial statements. These
assumptions are based on our previous experience, trends in the industry, the
terms of existing contracts and information available from other outside
sources and factors. Adjustments are recorded when our actual experience
differs from the expected experience underlying these assumptions. These
adjustments could be material if our experience is significantly different
from that assumed.

         Revenue Recognition. Within our engine repair and overhaul division,
we use the percentage of completion method to recognize revenues and costs.
Under this method of accounting, we expense all costs as they are incurred and
simultaneously recognize estimated revenues based upon revenues which we
typically achieve from similar service work. Costs include direct labor,
direct materials and subcontract costs, as well as an allocated share of our
overhead and general and administrative costs. Assumptions used for recording
revenues and costs may be adjusted over the course of the work period to
reflect revisions in estimated revenues and estimated costs. In the period in
which we determine that a loss would be incurred on a particular work order,
we apply the entire amount of the estimated loss to profit. Revenues within
our design and manufacturing division are generally recognized when the
finished goods are shipped.

         Amortization of Goodwill and Related Impairment Testing. Goodwill,
representing the excess of the purchase consideration over the fair value of
the net separable assets acquired, is capitalized. Goodwill is amortized over
an appropriate period, unless there is clear evidence of the durability of
goodwill when an indefinite life is appropriate. The directors have considered
the durability of goodwill arising on the acquisition of the group's
businesses on October 1, 1998. Taking into account the significant investment
costs of entering these businesses; the regulatory barriers imposed; the
stability and long term prospects of the aerospace industry; the long life
span of individual models of aircraft for which the business has exclusive
licenses to repair and overhaul or for which it manufactures certain parts as
sole or principal supplier; and the group's strong reputation and
technological leadership, the directors believe that this goodwill has an
indefinite life and consequently amortization is not being provided. Goodwill
that is amortized over a period exceeding 20 years, or where not amortized at
all (as is the case at December 31, 2003, December 31, 2002 and December 31,
2001), is reviewed annually for impairment by discounting estimated future
cash flows of the individual businesses at an appropriate discount rate. The
discount rate used is typically the group's weighted average cost of capital.
Goodwill is denominated in the functional currency of the acquired company. In
the absence of any charge for impairment, profit for the financial period
recorded in any period will be higher than might otherwise be the case in
light of the elimination of periodic goodwill amortization charges. At
December 31, 2003 the Company had goodwill balances that were not amortized of
(pound)304.1 million (2002:(pound)313.9 million).

         Capitalization and Amortization of Deferred and Intangible Costs.
Deferred costs are comprised of costs associated with OEMs, including required
OEM licensing and authorization fees incurred in obtaining principal supplier
status and the provision of initial manufactured parts onto new aircraft.
Deferred costs are amortized over the periods expected to benefit from
receiving the status of "principal supplier," generally over terms ranging
from three to 10 years, except OEM licensing fees which are amortized over the
license periods ranging from five to 25 years. Deferred costs are reviewed
annually for impairment. Deferred costs for `initial manufactured parts
provided' are included within debtors. Licensing and OEM authorization fees
are included within intangible fixed assets. Research and development
expenditure is expensed as incurred, with the exception of development
expenditure on major projects that are undertaken where the related
expenditure is separately identifiable and management are satisfied as to the
ultimate commercial viability of the project based on all relevant available
information. In such cases, the expenditure is included in development costs
within intangible fixed assets and written off over the periods expected to
benefit commencing with the launch of the product. Research and development
expenditure recovered from customers is accounted for on a receivable basis
where contractually committed otherwise on a receipts basis. At December 31,
2003 the Company had deferred costs of (pound)12.4 million (2002: (pound)5.8
million).

         Accounting Estimates. The preparation of financial statements in
conformity with U.K. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates. In particular, estimates are used
when determining appropriate amounts for certain items such as allowance for
doubtful accounts, inventory provisions, depreciation of fixed assets,
employee benefit plans, taxes and other contingencies.


Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

         Revenues. Our 2003 revenues increased 1.1% to (pound)456.6 million
from (pound)451.8 million in 2002. This increase was primarily attributable to
a 4.6% increase in engine repair and overhaul revenues to (pound)335.3 million
in 2003 from (pound)320.5 million in 2002. As a percentage of total revenues,
engine repair and overhaul revenues increased to 73.4% in 2003 from 70.9% in
2002. Revenues from our design and manufacturing operations decreased 7.6% to
(pound)121.4 million in 2003 from (pound)131.3 million in 2002.

         Engine repair and overhaul revenues increased by 13.7% in terms of
their U.S. dollar functional currency. Military volumes, including work at
Kelly USA, grew 15.2% compared to the same period of 2002. AE3007 regional jet
engine inputs remained strong although revenues were essentially flat due to
the effects of lower revenues per unit as the breadth of event work scopes
declined. Turboprop and industrial revenues declined reflecting difficult
market conditions in 2003. Our T56 engine repair and overhaul revenues were
affected by some large long term contracts signings being delayed well into
2003 despite being awarded in late 2002. The Canadian Air Force also extended
its T56 TBO (time between overhaul) which reduced our 2003 revenues. Our new
CF34 operations generated approximately $23 million in revenues 2003.

         The (pound)10 million decrease in our design and manufacturing
revenues was principally due to reduced OEM part revenues and a reduction of
our wheel and brake business, reflecting reduced flying hours by many of our
customers. In addition, the cancellation of the RJ146 and Dornier 328 programs
caused the revenues from OEM brakes to decrease further. The cancellation of
the Concorde program in 2003 also reduced our spares revenues. Market
pressures continued in certain design and manufacturing and engine repair and
overhaul sectors again in 2003. In particular, our design and manufacturing
OEM build activities (Fluid Dynamics and Polymers and Composite units) were
negatively affected by civil aircraft production remaining suppressed. Our
design and manufacturing wheel and brake operation Boeing 757 and RJ146 spares
revenues have been reduced due to lower flying rates, with approximately 300
RJ146 currently parked.

         Our engine repair and overhaul revenues and approximately 15% of our
design and manufacturing revenues are denominated in U.S. dollars. The 8.7%
average increase in the value of the pound sterling against the U.S. dollar
during the year ended December 31, 2003 negatively affected our revenues by
(pound)31.3 million.

         Gross Profit. Gross profit for 2003 decreased 6.4% to (pound)117.3
million from (pound)125.2 million in 2002. The decrease of (pound)8.0 million
was attributable to the decrease in our design and manufacturing revenues.
Gross profit as a percentage of revenues decreased to 25.7% for 2003 from
27.7% for 2002, as a result of the increase to 73.4% in the percentage of our
revenues derived from our lower margin engine repair and overhaul business for
2003 from 70.9% in 2002.

         Gross profit as a percentage of revenues in engine repair and
overhaul decreased from 18.8% in 2002 to 18.1% in 2003. Efficiency gains in
several product units were offset by challenges experienced in our turbo prop
gross margins reflecting continued difficult conditions in these markets.
Design and manufacturing gross profit as a percentage of revenues decreased
from 49.5% in 2002 to 46.7% in 2003 reflecting changes in product mix,
composite production challenges and reduced revenues.

         Selling, General and Administrative Expense and Other Expenses. SG&A
and other expenses decreased 1.6% to (pound)55.4 million in 2003 from
(pound)56.4 million in 2002. SG&A and other expenses as a percentage of
revenues decreased from 12.5% in 2002 to 12.1% in 2003.

         SG&A and other expenses increased 7.7% in engine repair and overhaul
to (pound)31.0 million in 2003 from (pound)28.8 million in 2002. This rise
reflects insurance premiums, increased depreciation and amortization related
to the recent plant expansion of the new CF34 program and the negative impact
of the strengthening Canadian dollar. SG&A and other expenses decreased in
design and manufacturing 11.4% to (pound)24.4 million in 2003 from (pound)27.5
million in 2002 as a result of reduced revenues resulting in payroll savings
and reduced overheads. Design and manufacturing SG&A and other expenses in
2002 included costs related to a redundancy program completed in 2003. Major
program spending for the year ended December 31, 2003 related to Airbus A380,
metal matrix composites, the Joint Strike Fighter and electric brake programs.
SG&A and other expenses as a percentage of revenues increased to 9.3% in 2003
from 9.0% in 2002 in engine repair and overhaul and decreased to 20.1% in 2003
from 21.0% in 2002 in design and manufacturing.

         Operating Profit (before exceptional items). Operating profit in 2003
decreased 10.2% to (pound)61.8 million from (pound)68.9 million in 2002.
Engine repair and overhaul operating profit decreased 5.9% from (pound)31.5
million in 2002 to (pound)29.6 million in 2003, reflecting the impact of the
appreciation of the pound sterling. Design and manufacturing operating profit
decreased 13.9% from (pound)37.4 million in 2002 to (pound)32.2 million in
2003, primarily attributable to lost variable margin on declining volumes.

         Total currency effects resulting from appreciation of the pound
sterling against the U.S. dollar in 2003 compared to 2002 decreased 2003
operating profit by approximately (pound)2.6 million. In constant currency
terms, operating profit decreased by 6.5% in 2003 over 2002.

         The current year exceptional item charge of (pound)3.7 million
relates to our efforts to acquire a business that was ultimately purchased by
another company. These costs have been expensed as an exceptional item.

         Finance Costs. Finance costs in 2003 decreased 26.1% to (pound)32.0
million from (pound)43.2 million in 2002. This decrease was caused by reduced
borrowing rates as a result of the expiration in November 2002 of the interest
rate derivatives we previously had in place and reduced interest rates in
2003. Accordingly, the interest rates on our senior bank debt for 2003 were
substantially lower than in 2002.

         Income Taxes. Income taxes increased 31.0% in 2003 to (pound)13.1
million from (pound)10.0 million in 2002. The (pound)3.1 million increase
reflects the tax on the (pound)4.3 million increase in profit before income
taxes, and the impact of changes in foreign exchange rates.

         Net Income. Net income increased 10.0% to (pound)13.0 million in 2003
from (pound)11.9 million in 2002, reflecting the reduction in finance costs
which more than offset the reduction in operating profit for 2003.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

         The economic challenges experienced in the aerospace industry
impacted our results in 2002. Low commercial aircraft production and lower
commercial aftermarket revenues affected our products linked to these market
segments. Military volumes increased in 2002 as activity in this segment was
not affected by the economic challenges faced by the commercial aerospace
segment.

         Revenues. Our 2002 revenues increased 1.6% to (pound)451.8 million
from (pound)444.9 million in 2001. This increase was primarily attributable to
a 9.9% increase in engine repair and overhaul revenues to (pound)320.5 million
in 2002 from (pound)291.7 million in 2001. As a percentage of our total
revenues, engine repair and overhaul revenues increased to 70.9% in 2002 from
65.6% in 2001. Revenues from our design and manufacturing operations decreased
14.3% to (pound)131.3 million in 2002 from (pound)153.2 million in 2001.

         The (pound)28.8 million revenue increase in engine repair and
overhaul reflected growth across our base engine platforms. Military volumes,
including work at Kelly U.S.A., showed strong growth during 2002. Regional jet
engine inputs remained strong although revenue has been affected by lower
revenue per unit as the breadth of event work scopes declined. Turboprop,
helicopter and industrial revenues also increased.

         The (pound)21.9 million decrease in our design and manufacturing
revenues was principally due to reduced OEM part revenues and a reduction of
our wheel and brake business, reflecting reduced stock and build levels at
most of our customers. In addition, the cancellation of the RJ70 and Dornier
328 programs caused the revenues from OEM brakes to decrease further. Orders
for large commercial aircraft engine and airframe parts have fallen as build
rates are significantly down from 2001.

         Our engine repair and overhaul revenues and approximately 15% of our
design and manufacturing revenues are denominated in U.S. dollars. The 4.2%
average increase in the value of the pound sterling against the U.S. dollar
during 2002 negatively affected our revenues by (pound)14.6 million.

         Gross Profit. Gross profit for 2002 decreased 4.1% to (pound)125.2
million from (pound)130.5 million in 2001. The decrease of (pound)5.2 million
was primarily attributable to the decrease in our design and manufacturing
revenues. Gross profit as a percentage of revenues decreased to 27.7% for 2002
from 29.3% for 2001, as a result of the increase to 70.9% in 2002 from 65.6%
in 2001 in the percentage of our revenues derived from our lower margin engine
repair and overhaul business.

         Gross profit as a percentage in engine repair and overhaul increased
from 18.1% in 2001 to 18.8% in 2002 reflecting improved operating efficiency.
Facility expansions and redesigns in Knoxville, Tilburg and San Antonio were
completed and contributed to operating efficiency gains. These gains were
offset, somewhat, by decreased turbo prop gross margins. Design and
manufacturing gross profit fell (pound)12.7million in 2002. Design and
manufacturing gross profit as a percentage of revenues decreased from 50.7% in
2001 to 49.5% in 2002 reflecting changes in product mix, composite production
challenges and reduced revenues.

         Selling, General and Administrative Expense and Other Expenses. SG&A
and other expenses increased 2.8% to (pound)56.4 million in 2002 from
(pound)54.8 million in 2001. SG&A and other expenses as a percentage of
revenues increased slightly to 12.5% in 2002 from 12.3% in 2001.

         SG&A and other expenses decreased in engine repair and overhaul to
(pound)28.8 million in 2002 from (pound)29.9 million in 2001. Engine repair
and overhaul SG&A expenses benefited from occupancy efficiencies in San
Antonio, reduced reliance on third party revenues agents and positive impact
of US dollar to pound sterling translation. SG&A and other expenses increased
in design and manufacturing to (pound)27.6 million in 2002 from (pound)24.9
million in 2001. Design and manufacturing SG&A and other expenses include
costs related to a redundancy program undertaken in 2002. Major program
spending in 2002 related to the Airbus A380, metal matrix composites and
electric brake programs. In connection with certain new programs, we are
reimbursed for all or a portion of research and development expenses incurred
in relation to such programs. SG&A and other expenses as a percentage of
revenue decreased to 9.0% in 2002 from 10.3% in 2001 in engine repair and
overhaul and increased to 21.0% in 2002 from 16.2% in 2001 in design and
manufacturing.

         Operating Profit (before exceptional items). Operating profit in 2002
decreased 8.9% to (pound)68.9 million from (pound)75.7 million in 2001. Engine
repair and overhaul profit increased 38.1% from (pound)22.8 million in 2001 to
(pound)31.5 million in 2002, reflecting the strong revenue growth and improved
operating efficiency. Design and manufacturing profit decreased 29.2% from
(pound)52.9 million in 2001 to (pound)37.4 million in 2002, primarily
attributable to lost variable margin on declining volumes.

         Total currency effects resulting from appreciation of the pound
sterling against the U.S. dollar in 2002 compared to 2001 decreased 2002
operating profit by approximately (pound)1.4 million. In constant currency
terms, operating profit decreased by 7.1% in 2002 over 2001.

         The total exceptional item charge relates to costs incurred in
relation to a proposed initial public offering of Dunlop Standard Limited, a
Bermuda company incorporated to acquire the assets of our parent, Dunlop
Standard Aerospace Group Limited and a proposed amendment to our credit
facility. As these efforts were placed on hold, the costs have been expensed
as an exceptional item.

         Finance Costs. Finance costs in 2002 increased 3.1% to (pound)43.2
million from (pound)41.9 million in 2001. This increase is the result of
increased borrowing rates. In connection with our obtaining the CF34 engine
service authorization, we renegotiated our Credit Agreement to provide that
the capital expenditure facility would be available exclusively to finance a
new facility dedicated to the CF34 service program. As a result, our credit
agreement was also amended to increase the interest margins applicable to
loans under our credit agreement by 25 basis points in February 2002.

         Income Taxes. Income taxes decreased 24.4% in 2002 to (pound)10.0
million from (pound)13.3 million in 2001. The (pound)3.2 million decrease
reflects the tax on the (pound)11.8 million decrease in income before income
taxes.

         Net Income. Net income decreased to(pound)11.9 million in 2002
from(pound)20.5 million in 2001.

         For a list of recently issued accounting standards refer to page F-46
elsewhere in this report.


B. LIQUIDITY AND CAPITAL RESOURCES

         Gross cash decreased (pound)16.0 million to (pound)17.6 million at
December 31, 2003 from (pound)33.6 million at December 31, 2002. Gross cash
increased by (pound)4.5 million to (pound)33.6 million at December 31, 2002
from (pound)29.1 million at December 31, 2001 (excluding (pound)11.5 million
of restricted cash). Cash overdrafts were (pound)nil in 2003, (pound)18.1 in
2002 and (pound)nil in 2001. Our cash flow from operating activities in the
2003 increased by (pound)22.8 million over 2002. This reflects an improvement
in the use of cash for working capital in 2003, compared to 2002. This
improvement offset a (pound)7.3 million reduction in earnings before interest,
taxes, depreciation and amortization for 2003 compared to the same period in
2002. Our interest and finance charges for 2003 were reduced by (pound)11.3
million as the derivatives we previously had in place until November 4, 2002
expired and we financed our bank debt on the basis of much lower current
interest rates in 2003. We also reduced our capital expenditures for tangible
fixed assets and development expenditure, licensing and OEM fees by
(pound)12.8 million during 2003 compared to the same period in 2002.

         The 2002 cash flow from operating activities decreased by (pound)17.9
million compared to 2001. This reflects a decrease in earnings before
interest, taxes, depreciation and amortization and an increase in the use of
cash for working capital needs to fund growth in engine repair and overhaul.
This was offset by a (pound)9.6 million decrease in expenditures on
free-of-charge brake ship sets and OEM authorization costs. The (pound)11.5
million of restricted cash was applied against the outstanding indebtedness
under the credit facility on January 31, 2002 after we entered into the fourth
credit facility amendment There were no cash outflows related to acquisitions
in 2001, 2002 or 2003.

         We believe the funds available from these and other sources will be
sufficient to satisfy our debt in the foreseeable future.

         We made capital expenditures to acquire tangible fixed assets of
(pound)10.3 million in 2003, (pound)33.5 million in 2002, (pound)28.5 million
in 2001 and (pound)22.7 million in 2000. Of these amounts, capital
expenditures in respect of the engine repair and overhaul business were
(pound)5.2 million, (pound)25.6 million, (pound)21.4 million, and (pound)12.9
million respectively, and capital expenditures in respect of the design and
manufacturing business were (pound)5.1 million, (pound)7.9 million, (pound)7.1
million, and (pound)9.8 million, respectively. The increased capital
expenditures in 2002 reflect expenditures in connection with building the CF34
building, the expansion and redesign of our facilities in Knoxville, San
Antonio, and Tilburg, the Netherlands, as well as the completion of the
dynamometer and purchase of a Mark II Furnace at our Coventry, England
facility. Capital expenditures in fiscal 2003 predominately reflect
expenditures on establishing metal matrix composite manufacturing and
equipment for our CF34 and military engine repair and overhaul operations.

         We currently anticipate that our capital expenditures for fiscal year
2004 will be approximately (pound)26 million. The 2004 expenses will primarily
be for the maintenance of our facilities, further expansion of our production
facilities, the purchase of additional equipment and various cost reduction
projects. We currently expect to fund our projected future capital expenditure
needs from our existing bank credit commitments and cash from operations.

         We made expenditures on free-of-charge brake ship-sets and other
deferred development and OEM authorization costs of approximately (pound)12
million for 2003 and anticipate that expenditures will be approximately
(pound)12 million for 2004, which compares to equivalent expenditure of
(pound)6 million for 2002 and (pound)15 million for 2001. We expect to fund
these and our other future cash requirements from operating cash flow and
existing borrowing facilities. We will also evaluate opportunities to expand
our production facilities in order to meet anticipated growth in demand. If
our capital investment needs exceed expected levels, we may seek additional
financing to fund longer-term growth. Our ability to obtain any such
additional financing may be restricted by the credit agreement and the
indenture governing the senior notes.

         In recent years, our primary sources of short-term and long-term
funding have been our operating cash flows, borrowings under our Credit
Agreement, proceeds from the issuance of Senior Notes and proceeds from the
issuance of preference shares by our parent company. As of December 31, 2003,
we had (pound)346.8 million in total debt outstanding and (pound)25.3 million
available in undrawn commitments under our credit agreement with The Mizuho
Corporate Bank, Limited.

         Total short-term borrowings amounted to (pound)50.3 million as of
December 31, 2003, which consisted of the current portion of bank loan
repayments scheduled under the Credit Agreement and (pound)23.0 million
outstanding under our Tranche D revolving credit facility, discussed below.
The Credit Agreement contains a (pound)50 million revolving credit facility,
designated as the Tranche D facility. At December 31, 2003, in addition to the
(pound)23.0 million outstanding borrowing discussed above, approximately
(pound)11.4 million of our Tranche D commitments were unavailable as a result
of offsets required by the Credit Agreement for any outstanding bank overdraft
lines established for our local operating units. The Tranche D Facility does
not have any scheduled reductions in availability prior to maturity in 2006

         Our long-term debt consists in part of senior term debt facilities
provided under the Credit Agreement. The facilities under this agreement
include three separate Tranches, Tranches A, B and C, which bear interest
rates based on the London Interbank Offered Rate ("LIBOR") and provide
approximately (pound)162.9 million in borrowings all of which were fully drawn
at December 31, 2003. The Tranche A Facility provides for repayments beginning
in 1999 and generally increasing until the loan is fully repaid in 2006. The
Tranche B and C Facilities provide for annual repayments equal to 1% of the
amount outstanding under the facility, beginning in 1999, and a final balloon
payment of principal when the facilities are repaid in 2006 and 2007,
respectively. These bank loans, along with the Tranche D revolving credit
facility described above and the capital expenditure facility described below
are secured by substantially all the shares of our direct and indirect
subsidiaries, as well as security interests in certain assets of these
subsidiaries except for our subsidiaries located in the Netherlands, Singapore
and Australia.

         The Tranche E facility provides funding for our CF34 capital
expenditure requirements and is scheduled to be repaid in 2006 and 2007, based
on the dates the initial funds were drawn. At December 31, 2003, we had
(pound)34.6 million of borrowings outstanding under the Tranche E facility and
a further (pound)14.5 million committed but undrawn at that date. In
connection with our obtaining the CF34 engine service authorization, we
renegotiated our credit agreement to provide that the Tranche E facility would
be available exclusively to finance the CF34 service program. The total
facility was reduced from (pound)75.0 million to (pound)49.1 million as a
result. Our credit agreement was also amended to increase the interest margins
applicable to loans under our credit agreement by 25 basis points. We also
paid the banks a one-time fee of (pound)0.35 million in connection with the
amendment.

         Under the Credit Agreement, we must make mandatory prepayments in
certain circumstances from the proceeds of certain material asset disposals
and insurance claims or any adjustments on the purchase price or any other
claims recovered or received from BTR plc (now Invensys plc). We are also
permitted to make voluntary prepayments on the loans under the Credit
Agreement. We must also comply with certain financial covenants, including
minimum debt-service and interest-coverage ratios and a minimum net worth
test.

         Our long-term debt at December 31, 2003 also includes $225 million
aggregate principal amount of 11?% Senior Notes due 2009.

         Our liquidity requirements arise primarily from the need to:

o    fund capital expenditures for the maintenance of our facilities;

o    purchase testing equipment, repair equipment, replacement parts and whole
     replacement engines in order to support expected growth in the repair and
     overhaul market;

o    expand our business, including the construction of the facility to
     service the General Electric CF34 engine;

o    fund debt service requirements;

o    fund research and development;

o    fund new program bids;

o    fund working capital requirements;

o    fund expenditures on free-of-charge brake ship-sets;

o    fund costs of obtaining OEM authorizations; and

o    fund potential acquisitions consistent with our business strategy.


         On February 10, 2004, we incurred $120.0 million of additional
indebtedness with the issuance of the New Senior Notes with the same terms as
the current notes hereby and have paid (pound)23 million of outstanding
indebtedness under our Tranche D revolving credit facility with a portion of
the proceeds therefrom.

         The Notes are scheduled to be repaid in one installment in 2009.
However, noteholders may require us to repurchase the Notes in the event of a
change of control. We may not be able to do so without the consent of our
lenders under the Credit Agreement. At our discretion, the Notes may be
redeemed on or after May 15, 2004 at specified redemption prices. The Credit
Agreement was amended on January 29, 2004 to, among other things, enable us to
complete a potential acquisition currently under negotiation. Pursuant to that
amendment, $25.0 million of the proceeds from the New Senior Notes will be
placed into an account secured in favour of the lenders to be used as partial
payment for the potential acquisition. If we do not close the acquisition by
May 31, 2004, we have agreed with the lenders under the Credit Agreement to
use the proceeds in the escrow account to redeem $25.0 million of the Notes
(which includes both the Initial Notes and the New Notes) pursuant to the
optional redemption provision of the indenture.

Commitments and contingencies

         The following is a summary of our contractual cash obligations at
December 31, 2003.

<TABLE>
<CAPTION>

                                                   Less than
Contractual Obligations               Total         1 Year         1-3 Years       4-5 Years     After 5 Yrs
-----------------------               -----        ----------     ----------       ---------     -----------
                                                                 (in thousands)

Long-term debt
<S>                <C>                   <C>            <C>             <C>          <C>            <C>
         Tranche A ((pound))      (pound)71,520  (pound)28,000   (pound)43,520          --             --

         Tranche B ($)                   45,664            481          45,183          --             --

         Tranche C ($)                   45,672            488             962        44,222           --

         Tranche D ((pound))             23,000         23,000           --             --             --

         Tranche D ($)                     --             --             --             --             --

         Tranche E ($)                   33,780           --            16,890        16,890           --

         Tranche E ((pound))                800           --               400           400

         Senior Notes ($)               126,404           --                                        126,404
                                        -------         ------                                      -------

         Total                          346,840         51,969         106,955        61,512        126,404

Other long-term obligations       (pound)17,867   (pound)4,768    (pound)8,166  (pound)4,051

Finance lease obligations                 3,823            997           2,826          --       (pound)882
                                                                                                       --

Total contractual cost
obligations                      (pound)368,530  (pound)57,734  (pound)117,947 (pound)65,563 (pound)127,286
                                 ==============  =============  ============== ============= ==============

</TABLE>

         On 10 February, 2004, we issued $120.0 million ((pound)64.5 million)
of additional indebtedness with the issuance of New Senior Notes that have the
same terms as the current Senior Notes (repayable in one installment 2009),
and repaid (pound)23 million of outstanding indebtedness under our Tranche D
revolving credit facility (which is reflected as due in less than one year in
the above table) with a portion of the proceeds.

         Financing Activities Relating to the Acquisition

         We incurred substantial indebtedness in connection with our
acquisition from BTR and, as a result, we are highly leveraged. Our ability to
incur additional indebtedness in the future is restricted by the credit
agreement and is further restricted by the Indenture.

         Scheduled payments under the credit agreement will significantly
impact liquidity. Loans under the Credit Agreement were issued under five
Tranches, designated Tranche A through Tranche E. Repayment on these
facilities is provided for as follows:

o        The Tranche A Facility provides for repayments beginning in 1999 and
         generally increasing until the loan is fully repaid in 2006;

o        The Tranche B Facility and the Tranche C Facility provide for annual
         repayments equal to 1% of the amount outstanding under the facility,
         beginning in 1999, and a final balloon payment of principal when the
         loans are repaid in 2006 and 2007, respectively;

o        The Tranche D Facility, a (pound)50 million revolving line of credit,
         does not have any scheduled reductions in availability prior to
         maturity in 2006; and

o        The Tranche E Facility for capital expenditures related to our CF34
         program provides for repayments in 2006 and 2007, based on the dates
         the initial funds were drawn.

         Under the Credit Agreement, we must make mandatory prepayments in
certain circumstances from the proceeds of certain material asset disposals
and insurance claims or any adjustments on the purchase price or any other
claims recovered or received from BTR (now Invensys plc). We are also
permitted to make voluntary prepayments on the loans under the credit
agreement. Borrowings under the credit agreement bear interest at LIBOR-based
floating rates for varying interest periods. The Credit Agreement and the
Indenture restrict us in various ways described elsewhere in this annual
report. We must also comply with certain financial covenants, including
minimum debt-service and interest-coverage ratios and a minimum net worth
test. As of the date on the cover of this annual report, we believe we are in
compliance with the covenants in the Indenture and the Credit Agreement.

         The Senior Notes are scheduled to be repaid in one installment in
2009. However, noteholders may require us to repurchase the Senior Notes in
the event of a change of control. We may not be able to do so without the
consent of our lenders under our credit agreement. At the Company's
discretion, the Senior Notes may be redeemed on or after May 15, 2004 at
specified redemption prices.


C. Research and development, patents, licenses, etc.

Engine Repair and Overhaul

         We have invested (pound)0.5 million, (pound)0.5 million and
(pound)0.1 million in 2001, 2002 and 2003 on research and development
activities related to our engine repair and overhaul division. Most of our
research and development relating to repair and overhaul focuses on developing
new and innovative component repairs for the engines that we service. In
particular, we have invested significant resources in developing internal
remanufacturing technologies which can deliver more efficient production
processes at lower costs and high quality. We have established dedicated
facilities with specialized equipment and highly trained engineers to achieve
these objectives. An important element of this capability is our designation
as a Design Approval Organization as authorized by Transport Canada. This
status, which is recognized by the FAA under bilateral agreements, simplifies
the approvals of our component repairs in the North American market and with
several other allied nations. We work closely with engine OEMs on selected
component repairs to gain official recognition, commercial support and wider
market access. The primary objectives of our component repair development are
to provide market differentiation, by means of lower cost part replacement
options, and to increase the value-added content of our engine repair and
overhaul projects. Our ability to remanufacture components has also enabled us
to minimize the use of subcontractors, which we believe has helped us to
enhance delivery, quality control and sales of our work.

Design and Manufacturing

         We have invested (pound)10.2 million, (pound)11.7 million and
(pound)10.3 million in 2001,2002 and 2003 on research and development
activities related to our design and manufacturing division. Our design and
manufacturing operations are engaged in research and development aimed to
develop new products and technologies which improve product performance across
a wide range of parameters including operating conditions, weight, size,
quality and reliability. Our design and manufacturing operations focus on
advanced materials, product design, manufacturing processes, systems and
software development and include use of advanced analysis techniques. Research
is conducted at the business unit level enabling rapid response to customer
and market demands.

         We are well advanced in the development of electrically actuated
brakes and have achieved full compliance with one of the most stringent of the
required tests. Electric brakes are expected to yield substantial system
weight savings, improved maintainability and safety with greatly enhanced
battlefield survivability. We are a lead participant in electric brake
development activity working in conjunction with a major aircraft OEM,
defining the standards to be used by that OEM for electric brake architecture
and are also researching carbon disc wear phenomena to improve brake life.
Sensor technology has been developed for use with our wheels and brakes to
include total landing system performance monitoring and diagnostics, where the
object is to reduce customer operating costs and spares inventory. Metal
matrix composites have been developed for use in new aircraft programs. Our
valve capability has been extended to include flow management and acoustic
control techniques which we believe have applications in both aerospace and
non-aerospace markets.

         We have a strong focus on capturing and retaining the intellectual
property resulting from our research and development investment. To that end,
we are active in protecting our inventions through patents, trademarks,
licensing and retention of our know-how. Where we do not own the intellectual
property, we may seek to license the technology. Of similar importance to
patents and trademarks in protecting our intellectual property is our ability
to retain design rights for our products through ownership and control of
higher assembly drawings.

D.    Trend Information

         A number of trends in the commercial aviation industry affect our
operating results. Prior to 2001, for example, increased air travel had driven
the demand for new aircraft and engines and had also increased rates of
aircraft utilization. Overall, the increase in the size of the commercial
aircraft fleet has increased the size of our installed base and has positively
impacted both our engine repair and overhaul business and our design and
manufacturing business. In particular, the increase in deliveries of regional
jet aircraft is a positive trend, as we service certain of the engines used on
such aircraft and also provide brake parts to some of these aircraft.
Conversely, due to economic downturn, terrorist threats, recent military
actions, and health concerns demand for air travel has declined. This has
resulted in airline bankruptcies and restructuring, reduced build rates for
certain aircraft and engines and increases in aircraft placed out of service.
This trend has negatively affected our design and manufacturing business and
engine repair and overhaul business on aircraft and engine models that have
been impacted by the negative trend and for which we provide service or parts.

         In addition, airlines, governments, particularly military
organizations, and some OEMs are increasingly outsourcing repair and overhaul
and some manufacturing work. This has enabled us to obtain more engine repair
and overhaul work and may in the future provide additional opportunities. For
example, in October 2003 we were awarded a contract to supply materials for
our T56 service contract at Kelly USA. The contract expires in 2007, after
which it is renewable through 2014.

         Our manufacturing operations are also well positioned to take
advantage of expected changes in the aircraft market. For example, our
expertise relating to carbon braking systems should permit us to grow our
revenues as carbon brakes continue to supersede steel brakes. We currently
provide such systems for 15 existing aircraft platforms. Of those platforms,
six are in the regional aircraft market. We have also entered into agreements
to provide carbon brakes for other aircraft programs and, in partnership with
Honeywell, we will provide carbon brakes for the Joint Strike Fighter and the
Airbus A380.

E.    Off Balance Sheet Arrangements

Not applicable

F.    Contractual Obligations

See Section 5.B, "Liquidity and Capital Resources - Commitments and
Contingencies."


ITEM 6: DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

DIRECTORS
---------

         Dunlop Standard Aerospace Group Limited and the Company have related
but independent management structures. Dunlop Standard Aerospace Group Limited
beneficially owns 100% of our shares and has appointed each of the members of
our board of directors. Pursuant to the memorandum and articles of association
of Dunlop Standard Aerospace Group Limited, Doughty Hanson has the right to
appoint an unlimited number of non-executive directors to that company's board
of directors. See "Risk Factors--Risks Relating to the Company--Control of the
Company".

         Dunlop Standard Aerospace Group Limited currently has five directors,
three of whom are with Doughty Hanson (Nigel Doughty, Ken Terry and Harry
Green) and two of whom are with Dunlop Standard Aerospace Group Limited (David
Shaw and David Unruh). Kevin Luzak was replaced on 12 March 2003 by Harry
Green, of Doughty Hanson.

         DIRECTORS OF THE COMPANY

         As of the date of this report, we have five directors. B. Piet
Walton-Knight retired from the company effective July 1, 2003. All directors
have the same responsibilities, which include certain executive duties. Set
forth below is certain information with respect to our directors.

 NAME                      AGE          POSITION
 ------------------------------------------------------------------------------
 David Shaw                46           Director (appointed December 31, 2001)
 David Unruh               51           Director (appointed July 27, 1998)
 David Johnson             42           Director (appointed October 1, 1998)
 Steven Walker             41           Director and Secretary (appointed
                                        October 1, 1998)
 John Whelan               54           Director (appointed October 1, 1998)


     EXECUTIVE OFFICERS

         Our key executives (who are the same as the key executives of Dunlop
Standard Aerospace Group Limited) are:

  NAME                     AGE          POSITION
  David Shaw               46           Chief Executive Officer and Director
  David Unruh              51           Chief Financial Officer and Director
  David G. Johnson         42           Managing Director, Dunlop Aerospace
  Paul Soubry, Jr.         41           President, Standard Aero Commercial
                                        Services
  Lee G. Beaumont          46           President, Standard Aero Government
                                        Services
  Rene M. van Doorn        49           President, Dunlop Standard Energy
  Bruce Clarke             55           Senior Vice-President, Human Resources
  Bradley Bertouille       41           Senior Vice-President, Finance and
                                        Administration
  Edward S. Richmond       48           Senior Vice-President, Strategy and
                                        Business Development
  Brian Lanoway            52           Senior Vice-President, Strategic
                                        Projects
  Verna Taylor             39           Senior Vice-President, Operations
  Chris Allen              38           Senior Vice-President, Technology


Our directors and executive officers are briefly described below:

DAVID SHAW. Mr. Shaw joined Standard Aero Limited in 1989 as Director of
Engineering and Quality Assurance. After a series of promotions, he became the
President of Standard Aero Limited in 1994. In March 2001, Mr. Shaw was
appointed our Chief Operating Officer, and in December 2001, Mr. Shaw became
our Chief Executive Officer. Before joining us, Mr. Shaw worked with Pratt &
Whitney Canada and Garrett Canada, now part of Honeywell International Inc.
Mr. Shaw is a professional engineer with a Bachelor of Science degree in
Engineering and a Diploma in Management.

DAVID UNRUH. Mr. Unruh began his career with us in 1986 as Director of Finance
of Standard Aero Limited. He was promoted to Vice-President of Finance of
Standard Aero Limited in 1987, and to Chief Financial Officer of BTR Aerospace
Group in 1995. Mr. Unruh became our Chief Financial Officer in 1998, when our
business was acquired by Doughty Hanson and certain management shareholders.
He is a Chartered Accountant with a Bachelor of Commerce (Honors) degree and
worked for thirteen years with international accounting firms in the United
Kingdom, United States and Canada prior to working at Standard Aero Limited.

DAVID G. JOHNSON. Mr. Johnson joined BTR in 1995 as the General Manager of BTR
Insumat Ltd. He was promoted to Managing Director of the Aero Equipment
division of BTR Aerospace Group in 1996 and became our Managing Director,
Dunlop Aerospace in March 2002. Prior to joining BTR, Mr. Johnson was a
consultant with Lucas Engineering and Systems, and a cell process engineer
with Jaguar Cars Ltd. Mr. Johnson holds a Bachelor of Science degree with
honors in production engineering and business studies, and a Marketing
Diploma. He is a Chartered Engineer and a member of the Institute of
Mechanical Engineers.

STEVEN WALKER. Mr. Walker joined Dunlop Aviation as Financial Director in 1993
after serving as an accountant with Mirrlees Blackstone Limited and as the
Financial Director of Pilkington's Tiles Limited. He holds a BA degree in
Business Studies and is a member of the Chartered Institute of Management
Accountants.

JOHN WHELAN. Mr. Whelan has spent all of his working career with BTR/Dunlop,
joining as a Commercial Apprentice in the U.K. Tyre Division in 1968 and
working with Dunlop Group Purchasing before joining Dunlop Aviation in 1985.
He has been Director and General Manager of our Wheel and Brake Programs since
1991 and was appointed the Director of Marketing and Business Development for
our Manufacturing Division in March 2002. Mr. Whelan holds a Masters of
Business Administration degree.

PAUL SOUBRY, JR. Mr. Soubry joined Standard Aero Limited in 1985 as manager.
In 1989 Mr. Soubry was appointed Vice-President Sales and Marketing of
Standard Aero Limited. Mr. Soubry became our President, Standard Aero Canadian
Operations in March 2001 and was appointed President, Standard Aero Commercial
Services in January 2004. He has a Bachelor of Commerce (Honors) degree from
the University of Manitoba, and has attended the Executive program at Harvard
School of Business.

LEE G. BEAUMONT. Mr. Beaumont joined Standard Aero Limited in 1987 as Director
of Special Projects. He was promoted to Director, T56 Engine Program in 1989
and transferred to San Antonio to oversee the new Kelly Air Force Base
contract in 1999. Mr. Beaumont became our President, Standard Aero U.S.
Operations in March 2001 and was appointed President, Standard Aero Government
Services in January 2004. He has a Bachelor of Science and Bachelor of
Commerce (Honors) degree from the University of Manitoba and has attended the
Executive program at Stanford School of Business.

RENE M. VAN DOORN. Mr. van Doorn joined Standard Aero vof based in Tilburg,
the Netherlands in 1997 as Executive Director of PW100 Operations. He became
our President, Standard Aero International Operations in March 2001 and was
appointed President, Dunlop Standard Energy in January 2004. Mr. van Doorn has
a Bachelor degree in Electronic and Electrical Engineering and a Master of
Business Administration degree from Brunel University in the United Kingdom.
He has worked in the aerospace industry for over 20 years, including tenures
with Fokker Aircraft and United Technologies (Hamilton Standard, Pratt &
Whitney) from 1983 to 1997.

BRUCE CLARKE. Mr. Clarke commenced employment with Standard Aero Limited in
June 1984. Hired initially as Standard Aero Limited's Training and Development
Coordinator, he was promoted to Manager of Employee Relations in 1985, Manager
of Human Resources in 1987, and Director of Human Resources in 1989. He was
appointed Vice-President, Human Resources in 1990 and became our Senior
Vice-President, Human Resources in March 2001. Mr. Clarke is a graduate of the
University of Manitoba Master of Business Administration program majoring in
Human Resources and Marketing with an undergraduate degree in Arts and
Education. Prior to joining Standard Aero Limited, he worked for 10 years in
public education in Manitoba.

BRADLEY BERTOUILLE. Mr. Bertouille commenced employment with Standard Aero
Limited in October 1985. Mr. Bertouille was promoted to Assistant Controller
in 1988 and Corporate Controller in 1990. In 1995, he was appointed Executive
Vice-President, Finance and Administration of Standard Aero Limited and became
our Senior Vice-President, Finance and Administration in 2001. Mr. Bertouille
is a Certified Management Accountant with a Diploma in Business Administration
from Red River College. Prior to joining Standard Aero Limited, Mr. Bertouille
worked in retail accounting.

EDWARD S. RICHMOND. Mr. Richmond commenced employment with Standard Aero
Limited in January 1993 as Director of the PT6A Business Unit. He was
subsequently promoted to Executive Vice-President responsible for two major
Strategic Business Units, one in Canada and one in the United States, prior to
assuming his current role as our Senior Vice-President, Strategy and Business
Development in March 2001. Prior to joining us, Mr. Richmond held management
positions with UTL Corporation, European Helicopters and General Electric
Aerospace. Mr. Richmond is a graduate of the Royal Military College of Canada
with a Bachelor of Engineering degree. He is also a graduate of the General
Electric Management Institute (Crotonville) and the Wharton Advanced
Management Program.

BRIAN LANOWAY. Mr. Lanoway commenced employment with Standard Aero Limited in
April 1983 as Staff Engineer. He was appointed as Director of the Accessories
Product Line in 1986 and Director of Information Systems in 1987. In 1990, he
was appointed Director of The Change Program at Standard Aero Limited where he
was responsible for managing the operational redesign projects throughout
Standard Aero Limited. In 1993, he accepted a position with Motor Coach
Industries responsible for managing their business process redesign and
returned to Standard Aero Limited in 1997 as Executive Vice-President,
Strategic Projects. Mr. Lanoway became our Senior Vice-President, Strategic
Projects in March 2001. Mr. Lanoway is a Professional Engineer with a Master
of Science degree in Mechanical Engineering from the University of Manitoba.
After graduation, he worked as a Project Engineer in the automotive industry
and ultimately was Chief Engineer for K-Cycle Engines.

VERNA TAYLOR. Ms. Taylor commenced employment with Standard Aero Limited in
June 1987. She began her career at Standard Aero Limited as Staff Engineer. In
1990, she was involved in the redesign of the existing rework facility. Upon
completion of the redesign in 1992, Ms. Taylor assumed the role of Operations
Engineer and later was promoted to Director of Reworks of Standard Aero
Limited in 1993. In 1997, she was promoted to Executive Vice-President,
Operations. Ms. Taylor became Senior Vice-President, Operations in March 2002.
Ms. Taylor is a Professional Engineer with a Bachelor of Science degree in
Industrial Engineering from the University of Manitoba and a graduate of the
Master of Business Administration program from the University of Manitoba.

CHRIS ALLEN. Mr. Allen commenced employment with Standard Aero Limited in
November 1991. Mr. Allen is a Professional Engineer with a Bachelor of Science
degree in Engineering from the University of Manitoba. After five years in
mechanical systems design, he began his career at Standard Aero as a Repair
Engineer. He was promoted to Operations Engineer and then Manager of
Engineering, before relocating to the United States in 1994 as Director of
Regional Operations. In 1997, Mr. Allen started up the Marine & Industrial
strategic business unit in Canada until it was restructured into Dunlop
Standard Energy in 2003. Mr. Allen became our Senior Vice-President,
Technology in July 2003.

B.    COMPENSATION

         Total salaries, bonuses, pension payments and other amounts paid by
Dunlop Standard Aerospace Group Limited, us and our subsidiaries or their
predecessor operations to the current members of our board of directors and
the key executives who were employed by us as key executives in 2003 were
approximately (pound)1.93 million (2002: (pound)1.92 million). We expect to
compensate our directors and executive officers in accordance with their
respective positions with us, and their performance against agreed business
objectives.

         At December 31, 2003 our board of directors and key executives held
options available to be exercised of 320,846 Ordinary Shares (2002: 320,846).
The total number of all classes of Ordinary Shares held by our board of
directors and key executives was 559,672 (2002: 692,754).

         Management Incentive Compensation Scheme. A group of management
employees, selected each year by our chief executive officer on the basis of
their significant contributions to our performance, participate in a
management incentive compensation scheme. Pursuant to this scheme, these
management employees may receive payments generally equal to up to 30% of
their annual base salary if we, as a whole, reach, or the individual
management employee's relevant division reaches, certain financial targets
measured against our business plan for that year.

         Retirement Plans. Our executive officers in Canada and the United
States participate in tax-advantaged defined contribution pension plans in
which we match the individual employee's contributions up to 5% of that
employee's salary, subject to government-mandated limits on employee
contributions. Our executive officers in the United Kingdom participate in a
defined benefit pension plan, which we believe has terms consistent with those
offered by comparable employers in the United Kingdom.

         Employment Agreements. We have entered into employment agreements
with all of our directors and executive officers, including Messrs. Shaw and
Unruh, who serve as members of the board of directors. These agreements are
generally for a period of twelve months to thirty six months with automatic
renewal in the absence of notice of termination. Each of the employment
agreements contains a notice period of twelve to thirty six months and a
non-competition provision which prevents the executive officer from working
for one of our competitors for at least one year after a voluntary termination
of employment.

C.  BOARD PRACTICES

THE BOARD

         The Board. At December 31, 2003, the board of directors was comprised
of five directors. In addition to the Chairman, David Shaw, there were four
other executive directors. The board of directors meets when required. The
board of directors does not have an audit or compensation committee. Our
parent, Dunlop Standard Aerospace Group Limited, appointed our directors to
serve on our board and may remove a director at any time.

         Internal Controls. The executive directors acknowledge that they have
overall responsibility for our systems of internal control. The systems are
designed to manage rather than eliminate the risk of failure to achieve our
objectives, safeguard our assets against loss, fairly report our financial
performance and position and to ensure compliance with relevant legislation,
regulation and best practice. The systems provide reasonable, not absolute,
assurance against material misstatement or loss. Such systems are regularly
reviewed by the board of directors to deal with changing circumstances. For a
summary of key financial risks inherent in our business, see "Risk Factors."


D.  EMPLOYEES

         As of December 31, 2003, we had approximately 4,000 employees
worldwide. Of our employees, approximately 34% work in the United Kingdom, 32%
in Canada, 28% in the United States, 5% in the Netherlands and 1% in other
offices around the world, including Belgium, Australia, France and China.
Approximately 63% of our employees are involved in engine repair and overhaul,
and approximately 37% of our employees are involved in design and
manufacturing. Approximately 4% of our employees are involved in the marketing
of our products and services. Approximately 20% of our employees are members
of labor unions. We negotiate contracts with our employee unions generally at
a business unit level, and most contracts are reviewed annually. We believe
that our relations with employees and unions are good. None of our operating
divisions has suffered a material work stoppage or strike in the last five
years.

AVERAGE EMPLOYEE NUMBERS           2003        2002        2001

Sales & Administration            1,120       1,124        1,109
Manufacturing                     2,565       2,572        2,668
Research & Development              277         268          242
                                  -----       -----        -----
Total Average Employees           3,962       3,964        4,019
                                  =====       =====        =====

E. SHARE OWNERSHIP

         Our board of directors and executive officers at December 31, 2003
owned shares in Dunlop Standard Aerospace Group Limited, the Parent Company,
and had options to acquire shares which in aggregate would mean they would
have approximately 63.6% of the total Ordinary and "A" Ordinary shares. The
Management Shareholders currently own 607,054 Regular Ordinary Shares and
489,091 "A" Ordinary Shares and have options to acquire 10,932 Regular
Ordinary Shares at an average exercise price of (pound)1 per share and 342,923
"A" Ordinary Shares at an average exercise price of (pound)1 per share.

         The options lapse on September 29, 2008. On September 28, 2000 the
terms of the share option agreement were modified to permit share options to
be exercised at any time. Prior to that date, the options could only be
exercised upon the earlier of the date of either a listing or admission to
trading of the Regular Ordinary Shares or a sale which results in a transfer
of the voting control of Dunlop Standard Aerospace Group Limited. As a result,
366,561 Regular Ordinary Share options and 25,507 "A" Ordinary Share options
were exercised. The remaining outstanding options expire on September 29,
2008. The directors and executive officers do not hold any "B" Ordinary Shares
or 10% Cumulative redeemable preference shares of our parent company.

         During 2003 15,077 "A" Ordinary Shares were issued at (pound)1.00
each pursuant to the exercise of share options under the Company's existing
share option scheme.


ITEM 7: MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS

A.       MAJOR SHAREHOLDERS

SHARE STRUCTURE AND PRINCIPAL SHAREHOLDERS--THE COMPANY

         All the share capital of Dunlop Standard Aerospace Holdings plc is
legally and beneficially owned by Dunlop Standard Aerospace Group Limited
except for one ordinary share which is held by Dunlop Holdings Limited in
trust for Dunlop Standard Aerospace Group Limited.


SHARE STRUCTURE AND PRINCIPAL SHAREHOLDERS--THE PARENT COMPANY

         Dunlop Standard Aerospace Group Limited's authorized share capital
comprises ordinary and preference shares as follows: 617,986 ordinary shares,
par value 50 pence per share ("Regular Ordinary Shares"), 882,014 "A" ordinary
shares, par value 50 pence per share ("A Ordinary Shares"), and 15,545,455 "B"
ordinary shares, par value 50 pence per share ("B Ordinary Shares"),
155,862,000 10% cumulative redeemable preference shares, par value 50 pence
per share ("Preference Shares"), and 10,000,000 10% cumulative redeemable
preference shares, par value (pound)1 per share ("Preference Shares").
Together the Regular Ordinary Shares, the A Ordinary Shares and the B Ordinary
Shares are collectively the "Ordinary Shares". In respect of issued share
capital at December 31, 2003, Doughty Hanson owned 13,500,000 B Ordinary
Shares, 50,000 A Ordinary Shares, and 155,862,000 Preference Shares, and
Management Shareholders owned 607,054 Regular Ordinary Shares and 489,091 A
Ordinary Shares and have options to acquire a further 10,932 Regular Ordinary
Shares and 342,923 A Ordinary Shares. As a result, and assuming the Management
Shareholders exercise such options, Doughty Hanson and Management Shareholders
hold approximately 90% and 10%, respectively, of the total voting rights of
Dunlop Standard Aerospace Group Limited, which in turn holds 100% of the
voting rights in the Company. Prior to the exercise of such remaining options,
Doughty Hanson owns approximately 93% of the voting rights. These options
expire on September 29, 2008.


B. RELATED PARTY TRANSACTIONS

         The shareholders of Dunlop Standard Aerospace Group Limited have
entered into the Investment Agreement, which governs certain rights of, and
voting restrictions among, the parties. The Investment Agreement gives Doughty
Hanson enhanced rights over our operations and control of both us and our
parent company. In particular, Doughty Hanson will be able to prevent us or
our parent company from engaging in certain transactions outside the ordinary
course of business. In addition, although the members of our board of
directors and the boards of directors of our subsidiaries control the
operations of those entities, Doughty Hanson has the right to appoint (1) a
special director (the "Special Director") with additional powers and (2) an
unlimited number of non-executive directors to the board of Dunlop Standard
Aerospace Group Limited (of which three have been so appointed) regardless of
the number of directors on that board. Doughty Hanson is entitled to appoint
an unlimited number of non-executive directors so long as it continues to hold
75% of the B Ordinary Shares. The Management Shareholders are entitled to
appoint one director, who is expected to be the chief executive officer. The
Special Director and the non-executive directors will be appointed or removed
by Doughty Hanson following written notice to us and subject to the prior
written consent of the Special Director.

         Doughty Hanson may receive fees should any public offering of our
equity or the equity of Dunlop Standard Aerospace Group Limited occur or if
Doughty Hanson provides advice to us in connection with another transaction,
such as an acquisition. In addition, we may provide compensation to certain
employees of Doughty Hanson in their individual capacities as our employees or
directors or as employees or directors of Dunlop Standard Aerospace Group
Limited, the amount of which is not material to our business.


C.    INTEREST OF EXPERTS AND COUNSEL

         Not applicable


ITEM 8: FINANCIAL INFORMATION

See item 18 and pages F-1 through F-45.


LEGAL PROCEEDINGS

We are involved in certain legal proceedings arising in the normal course of
our business. We believe that none of the proceedings, either individually or
in the aggregate, is likely to have a material adverse effect on the business
or our consolidated financial position.

SIGNIFICANT CHANGES

No significant changes have occurred since the dates of the annual financial
statements included in this annual report on Form 20-F.


ITEM 9: THE OFFER AND LISTING

A. Price History                                         High             Low

1999................................................    $103.0        $100.5
2000................................................    $102.875      $97.5
2001................................................    $107.0        $93.0
2002................................................    $106.5        $98.0
2003................................................    $109.0        $98.0

First Quarter 2002...................................   $102.0        $100.0
Second Quarter 2002..................................   $106.5        $102.0
Third Quarter 2002...................................   $105.5        $101.5
Fourth Quarter 2002..................................   $102.5        $98.0
First Quarter 2003....................................  $104.5        $98.0
Second Quarter 2003...................................  $108.0        $100.0
Third Quarter 2003....................................  $108.5        $107.0
Fourth Quarter 2003..................................   $109.0        $106.38
First Quarter 2004....................................  $107.5        $105.13

October 2003........................................... $109.0        $108.00
November 2003.......................................... $108.5        $106.50
December 2003.......................................... $107.0        $106.38
January 2004........................................... $107.25       $106.5
February 2004.......................................... $107.0        $105.13
March 2004............................................. $107.5        $106.5
April 2004 (to April 7th).............................. $106.5        $106.5
Data according to the Financial Times Business Research Center.

B.   PLAN OF DISTRIBUTION

     Not applicable

C.   MARKETS

         The Notes are listed on the Luxembourg Stock Exchange. The Notes are
also listed on an automated inter-dealer quotation system in the United
States. Certain of the Notes are held by brokers and other nominees. The Group
is not an active participant in the market for the Notes.


ITEM 10:  ADDITIONAL INFORMATION

A.   SHARE CAPITAL

     Not applicable

B.   MEMORANDUM AND ARTICLES OF ASSOCIATION

         Dunlop Standard Aerospace Holdings plc is a public limited company
registered in the Register of Companies in England and Wales with registered
number 3599235. Our memorandum of association states that the objects of the
Company are, among other things, to carry on the business of a property and
investment holding company in all its branches and for that purpose, in
particular to acquire by purchase, lease, exchange or otherwise and hold by
way of investment, land, buildings or other structures and shares, stock,
securities or obligations issued or guaranteed by any person, firm, company or
trust. Our articles authorize us to take all actions that serve the attainment
of our business purposes.

All of our shares are owned by our parent, Dunlop Standard Aerospace Group
Limited.

     ORDINARY SHARES

         Each of the Management Shareholders holds either A Ordinary Shares or
Regular Ordinary Shares. Regular Ordinary Shares were issued to U.K.-resident
Management Shareholders, while the A Ordinary Shares were issued to all other
Management Shareholders. All of the B Ordinary Shares were issued to Doughty
Hanson.

         The Regular Ordinary Shares, the A Ordinary Shares and the B Ordinary
Shares in aggregate carry the right to vote as a single class (except with
regard to matters that would vary the rights of holders of that class) and
have pari passu rights to receive dividends once dividends have been paid on
the Preference Shares. Each class of Ordinary Shares also carries the right to
vote as a class with respect to certain matters that would vary the rights of
holders of that class of shares, and the B Ordinary Shares have certain
additional class rights relating to Doughty Hanson's control of Dunlop
Standard Aerospace Group Limited. See "Risk Factors--Risks Relating to the
Company--Control of the Company." Upon dissolution or liquidation of Dunlop
Standard Aerospace Group Limited, any assets remaining following payment of
amounts owed to creditors and to the holders of the Preference Shares are
distributable among the holders of Ordinary Shares pro rata by the par value
of Ordinary Shares held.

         The A Ordinary Shares and the B Ordinary Shares are convertible into
Regular Ordinary Shares on the business day immediately prior to a sale or
listing of Dunlop Standard Aerospace Group Limited. Each A Ordinary Share or B
Ordinary Share so converted into a Regular Ordinary Share will rank pari passu
with the existing Regular Ordinary Shares, and all of such shares together
will constitute a single class of shares.

     PREFERENCE SHARES

         The Preference Shares do not carry voting rights other than with
regard to resolutions to wind up Dunlop Standard Aerospace Group Limited, to
reduce its share capital or which otherwise adversely affect the rights of
holders of Preference Shares, unless no dividend payment has been made on the
Preference Shares and they have not been redeemed within six months from the
date fixed for their redemption as described below. The Preference Shares
shall remain outstanding until such redemption payment has been made. Holders
of the Preference Shares are entitled to receive a cumulative preferred
dividend of 10% of the nominal value of the Preference Shares and premium
paid-up thereon. Dunlop Standard Aerospace Group Limited is not required to
make payments on the Preference Shares until they are redeemed, but dividends
will accrue until that time. The Preference Shares must be redeemed at a
redemption price equal to the total subscription price paid to Dunlop Standard
Aerospace Group Limited plus any unpaid amounts thereon, subject to certain
restrictions under the Credit Agreement and the Indenture, upon the occurrence
of a listing or sale of Dunlop Standard Aerospace Group Limited or, if no such
listing or sale has taken place, by December 31, 2008. There are no conversion
rights attaching to the Preference Shares.

         On 5 June 2002, the company passed a special resolution under which
its issued share capital was reduced from (pound)164,384,727.50 to
(pound)91,453,727.50. This reduction was confirmed by court order on 26 June
2002 pursuant to section 138 of the Companies Act 1985. As a result the
nominal value of each of the issued 10% cumulative redeemable preference
shares was reduced form (pound)1 to 50 pence, thus creating a distributable
reserve of (pound)72,931,000. There was no change to the (pound)1 nominal
value of each of the remaining authorised but unissued 10% cumulative
redeemable preference shares.

         On 30 September 2002, the company passed an ordinary resolution under
which its share capital was increased from (pound)91,453,727.50 to
(pound)96,453,727.50 by the creation of 10,000,000 cumulative preference
shares of 50 pence each.

         At the time of our acquisition from BTR, Doughty Hanson undertook to
subscribe for an aggregate additional 15,000,000 Preference Shares at (pound)1
per Preference Share, of which 5,000,000 were subscribed for in January 1999.
In accordance with the amended credit agreement, 5,000,000 preference shares
were subscribed on 30 September, 2002 and 5,000,000 were subscribed June 30,
2003. Once these Preference Shares have been issued and paid up, the total
equity investment of Doughty Hanson and the Management Shareholders in the
Company's parent, Dunlop Standard Aerospace Group Limited (assuming no further
exercise of share options) will be (pound)170.5 million.

C.   MATERIAL CONTRACTS

         None.

D.   EXCHANGE CONTROLS

         There are currently no decrees or regulations in the United Kingdom
restraining the import or export of capital or affecting the remittance of
interest or other payments to holders of the Senior Notes who are not
residents of the United Kingdom.

         There are no limitations relating only to non-residents of the United
Kingdom under law in the United Kingdom or the Articles of Incorporation of
the Company on the right to be a holder of the Group's Notes.

E.   TAXATION

UNITED STATES TAX CONSIDERATIONS

         A holder that is generally subject to U.S. federal income taxation by
reason of its residence, place of organization or similar factors will be
required to take account of income and gain realized in respect of the Notes
to the same extent, and subject to the same rules, as would apply to income
derived from other debt obligations with comparable terms.

         A holder that is, with respect to the United States, a foreign
corporation or a nonresident alien individual (a "non-U.S. holder") generally
will not be subject to U.S. federal income or withholding taxes on income
received in respect of the Notes or gain realized on the sale, exchange or
other disposition of the Notes, unless (1) the income or gain is effectively
connected with the conduct by the holder of a trade or business in the United
States or (2) in the case of gain realized by an individual holder, the holder
is present in the United States for 183 days or more in the taxable year of
the sale and certain other conditions are met. A non-U.S. holder that receives
payments within the United States or through certain U.S.-related financial
intermediaries may be required to provide a certification as to its non-U.S.
status in order to avoid the application of information reporting and backup
withholding rules.

UNITED KINGDOM TAXATION

         The following summary describes certain United Kingdom tax
consequences of the ownership of the notes but does not purport to be
comprehensive. Except where expressly stated, the summary relates only to the
position of those persons who are the absolute beneficial owners of their
Notes and who hold those Notes as an investment. It may not apply to special
situations, such as those of dealers in securities. Furthermore, the
discussion below is generally based upon the provisions of United Kingdom tax
law in force and Inland Revenue published practice as of the date hereof, and
such provisions may be repealed, revoked or modified (possibly with
retrospective effect) so as to result in United Kingdom tax consequences
different from those discussed below. Persons considering the purchase,
ownership or disposition of the notes should consult their own tax advisers
concerning United Kingdom tax consequences in the light of their particular
situations as well as any consequences arising under the law of any other
relevant tax jurisdiction. No representations with respect to the tax
consequences to any particular holder of the notes are made hereby.


     INTEREST ON THE GLOBAL NOTES

         The Global Notes will constitute "quoted Eurobonds" within the
meaning of section 349 of the Income and Corporation Taxes Act 1988 ("ICTA")
provided they are listed on a "recognised stock exchange" within the meaning
of section 841 ICTA. The Luxembourg Stock Exchange is currently recognised for
these purposes. Accordingly, once the notes are listed on the Luxembourg Stock
Exchange (as is intended), payments of interest on the Global Notes may be
made without withholding on account of United Kingdom income tax. No assurance
can be given that such listing will be approved or maintained.

         In other cases (including if the listing is not approved or
maintained), there will be an amount withheld from interest on account of
income tax at the lower rate (currently 20%), subject to a direction to the
contrary by the Inland Revenue in accordance with an applicable double
taxation treaty or when the beneficial owner of the interest has satisfied the
payor that it is subject to UK corporation tax in respect of that interest.

         United Kingdom paying and collecting agents can be obliged to provide
the United Kingdom Inland Revenue with details of interest payments including
the amount of the interest and the name and address of the person entitled to
it. The Inland Revenue may, in certain cases, pass such information on to the
tax authorities in which such person is resident for tax purposes.

     INTEREST ON THE DEFINITIVE REGISTERED NOTES

         Payments of interest on the Definitive Registered Notes will be made
under deduction of United Kingdom income tax at the lower rate by us unless we
have previously been directed by the Inland Revenue, in relation to a
particular holding of Definitive Registered Notes, to make payment free of
deduction or subject to a reduced deduction by virtue of relief available to
the holder of such Definitive Registered Notes under an applicable double
taxation treaty. Such directions will be issued only on prior application to
the relevant tax authorities by the noteholder in question.

         Notwithstanding that interest is received subject to deduction of
income tax, holders of Definitive Registered Notes who are resident in the
United Kingdom for tax purposes or holders who are non-resident and carrying
on a trade, profession or vocation in the United Kingdom through a branch or
agency, may be liable to pay further United Kingdom tax on the interest
received. Certain holders may be entitled to a refund of all or part of the
tax deducted depending on their individual circumstances.

     UNITED KINGDOM CORPORATION TAX PAYERS

         In general, holders of Notes that are within the charge to United
Kingdom corporation tax will be charged to tax on returns on and fluctuations
in value of the Notes as income broadly in accordance with their statutory
accounting treatment so long as an authorised method is used. Such noteholders
will generally be charged to tax in each accounting period by reference to
interest accrued in that period and any profit or loss which, in accordance
with such noteholders' authorised accounting method, is applicable to that
period.

     OTHER UNITED KINGDOM TAX PAYERS

         As the notes are denominated in U.S. dollars they would not generally
be treated as qualifying corporate bonds ("QCBs") within the meaning of
section 117 of the Taxation of Chargeable Gains Act 1992. Accordingly, the
disposal of the Notes, including their redemption, by a person subject to
United Kingdom capital gains tax, may give rise to a chargeable gain or
allowable loss for the purposes of United Kingdom capital gains tax, depending
upon the individual circumstances of the noteholder. Any gain or loss arising
as a result of the exchange offer may result in a taxable gain or loss arising
to a noteholder depending on the holder's particular circumstances and such
noteholders should consult their own tax advisor.

         Accrued Income Scheme. Under the rules known as the Accrued Income
Scheme, which will not apply to relevant discounted securities, a disposal by
a noteholder who is resident or ordinarily resident in the United Kingdom or
carries on a trade in the United Kingdom through a permanent establishment to
which the notes are attributable, may result in any interest which has accrued
since the last interest payment date (or where no interest payment date has
occurred, the issue of the Notes) being chargeable to tax as income.

     STAMP DUTY AND SDRT

         No United Kingdom stamp duty or stamp duty reserve tax is payable on
the issue or transfer by delivery of the Global Notes. Transfers of book-Entry
Interests and interests therein should not attract United Kingdom stamp duty
or stamp duty reserve tax.

     PROPOSED EUROPEAN UNION WITHHOLDING TAX DIRECTIVE

         On June 3, 2003, the EU adopted the Council Directive 2003/48/EC
regarding the taxation of savings income. Under the directive, Member States
will be required from January 1, 2005 to provide to the tax authorities of
other Member States and certain non-Member States details of payment of
interest, or other similar income, paid by a person within its jurisdiction to
an individual resident in that other Member State or relevant non-Member
State, except that Belgium, Luxembourg and Austria may instead operate a
withholding system for a transitional period in relation to such payments by
paying agents established in those countries. There will be a paying agent in
Luxembourg and the United States.


NOTEHOLDERS WHO ARE IN ANY DOUBT AS TO THEIR TAX POSITION OR WHO MAY BE SUBJECT
TO TAX IN OTHER JURISDICTIONS SHOULD SEEK INDEPENDENT ADVICE.

F.   DIVIDENDS AND PAYING AGENTS

     Not applicable

G.   STATEMENT BY EXPERTS

     Not applicable

H.   DOCUMENTS ON DISPLAY

         We are subject to the information requirements of the U.S. Securities
Exchange Act of 1934, as amended, and are therefore required to file reports,
including annual reports on Form 20-F, and other information with the U.S.
Securities and Exchange Commission. These materials, including this annual
report and the exhibits thereto, may be inspected and copied at the
Commission's public reference rooms in Washington, DC, New York, NY and
Chicago, IL. Please call the Commission at 1-800-732-0330 for further
information on the public reference rooms. In addition, certain filings have
been made through the SEC's EDGAR system electronically, and are available to
the public over the Internet at the Commission's web site at
http://www.sec.gov.


ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Interest Rate Risks. Interest rate management is performed by our
central treasury function which manages cash and reduces risk through the use
of financial instruments. We borrow in U.S. dollars and pounds sterling at
variable rates and are subject to fluctuations in interest rates on our
borrowings and surplus cash. Our banking agreement required us to hedge at
least 75% of borrowings against future movements in interest rates until
November 2002, which we effected by using derivatives, such as interest rate
swaps and collars where appropriate. We do not use derivatives for speculative
purposes. We fixed our future interest rate requirements in November 2003 such
that the majority of our U.S. dollar denominated debt is fixed until July 31,
2006 at a LIBOR interest rate of 2.69% which will result in actual interest
rates of 5.19% to 5.44% and the majority of our pounds sterling denominated
debt is fixed until January 31, 2006 at a LIBOR interest rate of 4.59%
resulting in actual interest rates of 6.60% to 7.35%. As a result of the
majority of our debt being fixed, management does not believe that a 100%
basis point movement in interest rates would have a material impact on our
operating profit.

         At December 31, 2002 we did not have any fixed rate liabilities
denominated in pounds sterling. Our U.S. dollar-denominated fixed rate
liability was 11.875% with a weighted average life for which the rate is fixed
at 6.4 years. Effective February 28, 2002 we agreed to an increase in the
margin above LIBOR by 0.25% for each of our tranches of bank debt under our
credit agreement.

         Currency Risks. We use derivative instruments in the form of foreign
currency forward exchange contracts to manage foreign currency risks. Foreign
currency forward exchange contracts are used to offset changes in the fair
value of certain assets and liabilities resulting from intercompany loans and
transactions with third parties denominated in foreign currencies. It is our
policy to execute such instruments with creditworthy banks and not to enter
into derivative financial instruments for speculative purposes. All foreign
currency forward exchange contracts are denominated in currencies of major
industrial countries. All of the foreign currency forward exchange contracts
entered into by us, although effective hedges from an economic perspective,
have not been designated as hedges for accounting purposes.

SENSITIVITY ANALYSIS

         Management estimates that a 10% change in the value of the U.S.
dollar against the pound sterling would cause a (pound)2.6 million change in
our operating profit offset by a (pound)2.0 million change in our interest
expense based on operations comparable to the year ended December 31, 2003.

DEBT INSTRUMENTS

The following table details the gross debt owed by the Company at December 31,
2003, by maturity date.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
                           TOTAL GROSS BORROWINGS BY MATURITY DATE
--------------------------------------------------------------------------------------------------------------------
                                             (pound) M
--------------------------------------------------------------------------------------------------------------------
          Tranche      Tranche     Tranche       Tranche        Tranche       Total       Senior       Total
Year         A            B           C             D             E         Bank Loans     Notes     Borrowings
--------------------------------------------------------------------------------------------------------------------

<S>            <C>           <C>          <C>         <C>      <C>          <C>             <C>          <C>
2004    (pound)28.0   (pound).5      (pound).5   (pound)23.0           -    (pound)52.0           -    (pound)52.0
--------------------------------------------------------------------------------------------------------------------
2005           27.2          .5             .5            -            -           28.2           -           28.2
--------------------------------------------------------------------------------------------------------------------
2006           16.3          .5             .5            -   (pound)17.3          78.7           -           78.7
--------------------------------------------------------------------------------------------------------------------
2007             -         44.6           44.2            -          17.3          61.5           -           61.5
--------------------------------------------------------------------------------------------------------------------
2008             -           -              -             -            -             -            -             -
--------------------------------------------------------------------------------------------------------------------
2009             -           -              -             -            -             -  (pound)126.4         126.4
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Total   (pound)71.5 (pound)45.6    (pound)45.7   (pound)23.0  (pound)34.6  (pound)220.4 (pound)126.4  (pound)346.8
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Interest rates are disclosed in `Note 14 Borrowings' on page F22.

         On 10 February, 2004, we incurred $120.0 million of additional
indebtedness with the issuance of New Senior Notes that have the same terms as
the current Senior Notes, and repaid (pound)23 million of outstanding
indebtedness under our Tranche D revolving credit facility with a portion of
the proceeds


FOREIGN CURRENCY HEDGING ARRANGEMENTS

         The operations of the Company are conducted by entities in many
countries, and accordingly, the results of operations of the Company are
subject to currency translation risk and currency transaction risk. With
respect to currency translation risk, the financial condition and results of
operations of each of these entities is measured and recorded in the relevant
local currency and then translated into pounds sterling for inclusion in the
consolidated financial statements. The entities translate the balance sheets
of the respective non-pound sterling denominated operations into pound
sterling at the prevailing exchange rates on the balance sheet date. Income
and cash flow statements are translated at the average exchange rate for the
period.

         Approximately 75% (2002-72%) of the Company's revenues are
denominated in United States dollars, with another 17% (2002-19%) denominated
in pounds sterling, and approximately 8% (2002-9%) in Canadian dollars.

         The Company generally attempts to hedge its currency translation risk
by financing its investments in overseas operations through borrowings
denominated in local currencies.

         The Company has several forward foreign exchange contracts held for
hedging operating cash flows in U.S. dollars.


ITEM 12:  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.


                                    PART II

ITEM 13:  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None


ITEM 14:  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

None


ITEM 15:  CONTROLS AND PROCEDURES

         David W. Shaw, our chief executive officer and David E. Unruh, our
chief financial officer, with the assistance of other members of management,
performed an evaluation of our disclosure controls and procedures, as that
term is defined in Rule 13a-14(c) of the Securities Exchange Act of 1934, as
amended, within 90 days of the date of this report. Based on that evaluation,
they concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed in this report is recorded,
processed, summarized and reported on a timely basis.

         There were no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of the evaluation. No significant deficiencies and material
weaknesses were identified that required corrective actions.


ITEM 16A:  AUDIT COMMITTEE FINANCIAL EXPERT

         At December 31, 2003, the board of directors was comprised of five
directors. In addition to the Chairman, there were four other executive
directors. The board of directors does not have an audit committee.


ITEM 16B:  CODE OF ETHICS

         We are committed to conducting our business in accordance with
applicable laws, rules and regulations and the highest standards of business
conduct, and to full and accurate financial disclosure in compliance with
applicable law. Our Financial Code of Ethics applies to our Chief Executive
Office, Chief Financial Officer, and all senior finance managers involved in
completion of financial accounting and disclosures , and sets forth specific
policies to guide them in the performance of their duties. The Financial Code
of Ethics is not intended to replace other more general Codes of Ethics for
employees generally but is intended to reinforce expectations for all finance
team members to ensure complete and accurate financial records and reporting.
Our Financial Code of Ethics has been filed as an exhibit to this annual
report.


ITEM 16C:  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The aggregate fees billed for professional services by
PricewaterhouseCoopers ("PwC") in respect of the years ended December 31, 2003
and 2002 were:


         Type of Fees               2003             2002
         ------------               ----             ----
         (in thousands)

         Audit Fees                 (pound)  436    (pound)   362
         Audit Related Fees         (pound)2,200    (pound) 1,508
         Tax Fees                   (pound)  193    (pound)   253
         All Other Fees             (pound)   46    (pound)   123


         In the above table, audit fees are fees the Company paid to PwC for
professional services for the audit of the Company's consolidated financial
statements included in Form 20-F and for services that are normally provided
in connection with statutory and regulatory filings or engagements. Audit
related fees includes amounts related to aborted acquisitions and capital
raising activities included as exceptional costs. Tax fees generally represent
fees for tax compliance and advisory services. All other fees are fees billed
by PwC to the Company for any services not included in the first three
categories such as consultancy costs.

         The board has the responsibility for appointing, setting compensation
and overseeing the work of the independent auditor. The board has established
a policy to pre-approve all audit and certain permissible non-audit serviced
provided by the independent auditor. All other non-audit services mut be
approved by the board before such services can be provided. As well, the board
details a list of services that can be pre-approved at the start of the year.
Our board of directors approved the engagement of PwC in connection with the
audit of our financial statements. In each of 2002 and 2003, the board of
directors approved the above fees.


                                   PART III

ITEM 17:  FINANCIAL STATEMENTS

The registrant has responded to Item 18 in lieu of responding to this Item.


ITEM 18:  FINANCIAL STATEMENTS

See pages F-1 though F-48, incorporated herein by reference.

ITEM 19:  EXHIBITS

Documents filed as exhibits to this report or incorporated herein by reference:

1.1*     Articles of Association of the Company.

2.1*     Indenture, dated as of May 13, 1999, between the Company and The Bank
         of New York, as trustee, in respect of the 11-7/8% Senior Notes due
         2009.

2.2*     Notes Depositary Agreement, dated as of May 13, 1999, between the
         Company and The Bank of New York Trust Company (Cayman) Limited.

2.3      First Supplemental Indenture, dated as of February 10, 2004 to
         Indenture dated as of May 13, 2000, between the Company and The Bank
         of New York, as trustee, in respect of the 11-7/8% Senior Notes due
         2009.

2.4      Amended and Restated Notes Depositary Agreement, dated as of May 13,
         1999, as amended and restated as of February 10, 2004, between the
         Company and The Bank of New York Trust Company (Cayman) Limited.

3.1*     Investment Agreement relating to Dunlop Standard Aerospace Group
         Limited, dated July 31, 1998, between The Managers, the Investors,
         Dunlop Standard Aerospace Group Limited and Doughty Hanson & Co.
         Managers Limited.

4.1*     Credit Agreement, dated July 31, 1998, between Dunlop Standard
         Aerospace Group Limited and others as Borrowers and / or Guarantors,
         the Lenders, and The Fuji Bank, Limited.

4.2+     Supplemental Credit Agreement, dated September 28, 1998, between
         Dunlop Standard Aerospace Group Limited and other as Borrowers and /
         or Guarantors, the Lenders, and The Fuji Bank, Limited.

4.3+     Supplemental Credit Agreement, dated May 7, 1999, between Dunlop
         Standard Aerospace Group Limited and other as Borrowers and / or
         Guarantors, the Lenders, and The Fuji Bank, Limited.

4.4+     Supplemental Credit Agreement, dated February 15, 2002, between
         Dunlop Standard Aerospace Group Limited and other as Borrowers and /
         or Guarantors, the Lenders, and The Fuji Bank, Limited.

4.5+     Supplemental Credit Agreement, dated January 17, 2003, between Dunlop
         Standard Aerospace Group Limited and other as Borrowers and / or
         Guarantors, the Lenders, and Mizuho Corporate Bank, Limited.

4.6      Supplemental Credit Agreement, dated January 29, 2004, between Dunlop
         Standard Aerospace Group Limited and other as Borrowers and / or
         Guarantors, the Lenders, and Mizuho Corporate Bank, Limited.

8.1      Included in Item 4.C of this Annual Report

11.1     Code of Ethics

12.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 302 of the Sarbanes-Oxley Act of 200212.2

12.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002


* - Incorporated by reference from our Registration Statement on Form F-4 (File
    No. 333-10886)

+ - Incorporated by reference from our annual report on Form 20-F
    for the year ended December 31, 2002.

<PAGE>


                                   SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all the requirements for filing on
Form 20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.

DUNLOP STANDARD AEROSPACE HOLDINGS PLC.

By:  /s/ DAVID E. UNRUH                        By:  /s/ DAVID W. SHAW
     ------------------------                       ------------------------
     Name:   D. E. Unruh                            Name:   D. W. Shaw
     Title:  Director                               Title:  Director
Dated:   April 12, 2004                        Dated:  April 12, 2004


<PAGE>


<TABLE>
<CAPTION>


                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                         INDEX TO FINANCIAL STATEMENTS


<S>                                                                                                                <C>
Report of Independent Auditors...............................................................................    F-2

Consolidated Profit and Loss Accounts for the years ended 31 December 2001, 2002 and 2003 ...................    F-3

Consolidated Statements of Total Recognized Gains and Losses for the years ended 31 December 2001, 2002 and
   2003......................................................................................................    F-4

Reconciliations of Movements in Shareholders' Funds for the years ended 31 December 2001, 2002 and 2003          F-4

Consolidated Balance Sheets as at 31 December 2002 and 2003..................................................    F-5

Consolidated Cash Flow Statements for the years ended 31 December 2001, 2002 and 2003 .......................    F-6

Notes to the Consolidated Financial Statements...............................................................    F-7
</TABLE>




                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors of Dunlop Standard Aerospace Holdings plc.

     In our opinion, the accompanying consolidated balance sheets and the
related profit and loss accounts, statements of total recognized gains and
losses, reconciliations of movements in shareholders' funds, and cash flow
statements present fairly, in all materials respects, the financial position of
Dunlop Standard Aerospace Holdings plc (the "Group") and its subsidiaries at
December 31, 2003 and 2002, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United Kingdom.
These financial statements are the responsibility of the Group's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

     Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted in
the United States of America. Information relating to the nature and effect of
such differences is presented in Note 27 to the consolidated financial
statements.





PricewaterhouseCoopers LLP
Castle Donington, East Midlands
England
March 17, 2004

<PAGE>





                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                     CONSOLIDATED PROFIT AND LOSS ACCOUNTS

<TABLE>
<CAPTION>

                                      Year ended
                                         31
                                      December                    Year ended                                  Year ended
                                        2001                   31 December 2002                            31 December 2003
                                      ----------------------------------------------------------------------------------------------
                                                      Before       Exceptional      Total         Before     Exceptional     Total
                                                   Exceptional        Item                     Exceptional      Item
                                                       Item                                       Item
                                      (pound)'000    (pound)'000   (pound)'000   (pound)'000  (pound)'000   (pound)'000  (pound)'000
<S>                                      <C>           <C>             <C>          <C>         <C>            <C>         <C>
Revenues (note 3).....................   444,904       451,848             -        451,848     456,614             -      456,614
Operating costs less other
operating income  (notes 3 and 4)       (369,248)     (382,957)       (3,778)      (386,735)   (394,780)       (3,688)    (398,468)

Operating profit                          75,656        68,891        (3,778)        65,113      61,834        (3,688)      58,146
                                          ------        ------        ------         ------      ------        ------       ------


Finance costs (note 5)................  (41,930)                                   (43,235)                               (31,962)
                                        -------                                    -------                                -------

Profit on ordinary activities before
taxation (note 4).....................    33,726                                     21,878                                 26,184

Taxation (note 6).....................   (13,252)                                   (10,018)                               (13,137)
                                         -------                                    -------                                -------

Profit for the financial period
(note 17).............................    20,474                                     11,860                                 13,047
                                          ======                                     ======                                 ======
</TABLE>







The accompanying notes are an integral part of these consolidated financial
statements.






                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

          CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES






<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                            31 December       31 December      31 December
                                                               2001              2002             2003
                                                         --------------------------------------------------
                                                         (pound)'000       (pound)'000      (pound)'000

<S>                                                             <C>               <C>              <C>
Profit for the financial period......................           20,474            11,860           13,047
Foreign exchange adjustments.........................               62            (1,629)          (2,540)
                                                         --------------------------------------------------

Total recognized gains and losses....................           20,536            10,231           10,507

Prior year adjustment................................                -            (1,242)               -
Total recognized gains and losses since last
annual report........................................           20,536             8,989           10,507
                                                         ==================================================
</TABLE>


              RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS



<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                            31 December       31 December      31 December
                                                               2001              2002             2003
                                                         --------------------------------------------------
                                                         (pound)'000       (pound)'000      (pound)'000

<S>                                                             <C>               <C>              <C>
Profit for the financial period......................           20,474            11,860           13,047
Foreign exchange adjustments.........................               62            (1,629)          (2,540)


                                                         --------------------------------------------------
Net change in shareholders' funds....................           20,536            10,231           10,507
Equity Shareholders' funds-beginning of period.......          194,952           215,488          225,719
                                                         --------------------------------------------------
Equity Shareholders' funds-end of period.............          215,488           225,719          236,226
                                                         ==================================================
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>

                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                           Year ended           Year ended
                                                                           31 December         31 December
                                                                              2002                 2003
                                                                           -----------         -----------
                                                                           (pound)'000         (pound)'000

<S>                                                                            <C>                 <C>
Fixed Assets
Intangible fixed assets (note 8)............................................   341,945             336,914
Tangible fixed assets (note 9)..............................................   178,643             160,875
                                                                           -----------         -----------
                                                                               520,588             497,789
                                                                           -----------         -----------
Current assets
Inventories (note 10).......................................................    69,352              67,203
Investments (note 11) ......................................................         -                 183
Debtors (note 12)...........................................................   130,279             132,309
Cash at bank and in hand (note 23)..........................................    33,585              17,635
                                                                           -----------         -----------
                                                                               233,216             217,330
                                                                           -----------         -----------

Creditors - Amounts falling due within one year (note 13)...................  (152,948)           (148,646)
                                                                           -----------         -----------

Net current assets..........................................................    80,268              68,684

Total assets less current liabilities.......................................   600,856             566,473

Creditors -Amounts falling due after more than one year (note 14)...........  (352,522)           (298,526)

Provisions for liabilities and charges (note 16)............................
                                                                               (22,615)            (31,721)
                                                                           -----------         -----------
                                                                               225,719             236,226
                                                                           ===========         ===========
Share capital and reserves
Called up share capital (note 17)...........................................   160,000             160,000
Profit and loss account (note 17)...........................................    65,719              76,226
                                                                           -----------         -----------

Total equity shareholders' funds............................................   225,719             236,226
                                                                           ===========         ===========
</TABLE>











The accompanying notes are an integral part of these consolidated financial
statements.

                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                       CONSOLIDATED CASH FLOW STATEMENTS



<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                             <C>             <C>               <C>              <C>
Net cash inflow from operating activities (note 23)             80,632            62,723           85,542


Returns on investments and servicing of finance
Interest paid (net of received)......................          (40,265)          (43,282)         (30,993)
Finance lease interest paid..........................              (12)                -              (31)
Net cash (outflow) from returns on investments and
servicing of finance.................................          (40,277)          (43,282)         (31,024)
                                                            --------------  --------------  --------------
Taxation

Tax paid.............................................           (8,927)           (7,724)          (8,058)
                                                            --------------  --------------  --------------
                                                                (8,927)           (7,724)          (8,058)
                                                            --------------  --------------  --------------

Capital expenditure
(Payments) to acquire tangible fixed assets..........          (28,513)          (33,537)         (10,306)
Proceeds from sale of tangible fixed assets..........            1,909             4,183              467
Development costs and licensing and OEM authorization
fees.................................................           (9,319)           (2,268)          (9,029)
                                                            --------------  --------------  --------------
Net cash (outflow) from capital expenditure..........          (35,923)          (31,622)         (18,868)
                                                            --------------  --------------  --------------


Net  cash inflow/(outflow) before use of liquid
resources and financing..............................           (4,495)          (19,905)          27,592
                                                            --------------  --------------  --------------
Management of liquid resources.......................          (11,381)                -                -
                                                            --------------  --------------  --------------
Short term bank deposits.............................          (11,381)                -                -

Financing
Issue of equity shares...............................                -                 -                -
Bank loans (repaid)/drawn (note 24)..................            8,760             8,294          (27,601)
Capital element of finance lease repayments
 (note 24)...........................................             (352)                -            3,672
                                                            --------------  --------------  --------------
Net cash (outflow)/inflow from financing                         8,408             8,294          (23,929)
                                                            --------------  --------------  --------------
(Decrease) in cash (note 24).........................           (7,468)          (11,611)           3,663
                                                            ==============  ==============  ==============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>


                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1    Nature of Operations

     Dunlop Standard Aerospace Holdings plc (the ``Group'') is primarily
involved in the design and manufacture of component parts for the aerospace and
defense industry together with the service and accessory maintenance of gas
turbine engines. Prior to 30 September 1998 the Group represented a combination
of several subsidiaries and divisions of BTR plc and was not a separate legal
entity. On 1 October 1998, these subsidiaries and divisions were acquired by
the Group, a newly formed holding company owned 100% by Dunlop Standard
Aerospace Group Limited. The acquisition was effected through an intermediate
holding company Dunlop Standard Aerospace (UK) Limited, a private limited
company incorporated in England and Wales.

     As at 31 December 2003 the subsidiaries of Dunlop Standard Aerospace
Holdings plc were as follows:

<TABLE>
<CAPTION>
Name                                                                       Country of           Percentage of
                                                                         Incorporation/           Ownership
                                                                          Registration
<S>                                                                  <C>                             <C>
Intermediate Holding and Management Services Companies
Dunlop Standard Aerospace (UK) Limited                                        England & Wales        100%
Dunlop Standard Aerospace Overseas Investments Limited                        England & Wales        100%
Dunlop Limited                                                                England & Wales        100%
Dunlop Holdings Limited                                                       England & Wales        100%
Dunlop Standard Aerospace Overseas Limited                                    England & Wales        100%
Dunlop Standard Aerospace (US) Inc.                                  United States of America        100%
Dunlop Standard Aerospace (US) Legal, Inc.                           United States of America        100%
Dunlop Standard Aerospace (Nederland) BV                                          Netherlands        100%
Dunlop Standard Aerospace Trustee Limited                                     England & Wales        100%

Design and Manufacturing
Dunlop Aerospace Limited                                                      England & Wales        100%
Dunlop Aviation North America Inc.                                   United States of America        100%
Stewart Warner South Wind Corporation                                United States of America        100%
Dunlop Aviation Canada Inc.                                                            Canada        100%
Dunlop Aviation (SE Asia) Pte Limited                                               Singapore        100%
Dunlop Aviation Services S.A.                                                         Belgium        100%

Engine Repair and Overhaul
Standard Aero, Inc.                                                  United States of America        100%
Standard Aero (San Antonio) Inc.                                     United States of America        100%
Standard Aero (Alliance) Inc.                                        United States of America        100%
Standard Aero de Mexico S.A. de C.V.                                                   Mexico        100%
Standard Aero Limited                                                                  Canada        100%
Standard Aero (Australia) Pty Limited                                               Australia        100%
Standard Aerospace BV                                                             Netherlands        100%
Standard Aero BV                                                                  Netherlands        100%
Standard Aero (Asia) Pte Limited                                                    Singapore        100%
Dunlop Aerospace Parts Inc.                                          United States of America        100%

Dormant
Serck Aviation Limited                                                        England & Wales        100%
Standard Aero International Pty Limited                                             Australia        100%
Not FM Canada Inc                                                                      Canada        100%
</TABLE>

2    Accounting Policies

     The financial statements of the Group are prepared under the historical
cost convention, and have been prepared in accordance with applicable United
Kingdom generally accepted accounting principles ("U.K." GAAP). The directors
consider that the accounting policies set out below are the most appropriate
and have been consistently applied. The transitional arrangements of FRS 17
`Retirement Benefits' have been adopted which require additional disclosures in
respect of retirement benefits, as set out in note 18. Where changes in
presentation have been made, comparisons are adjusted accordingly.


     Basis of preparation

     The consolidated financial statements comprise the financial statements of
the Company and all its subsidiary undertakings. The financial statements of
all subsidiaries are made up to the same date as those of the Company and are
prepared in accordance with group accounting policies. All material intra-group
balances and transactions have been eliminated in the consolidation. These
financial statements do not represent the statutory accounts of the Group
within the meaning of the Companies Act 1985 but have been prepared in
accordance with U.K. GAAP.


     Accounting estimates

     The preparation of financial statements in conformity with U.K. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. In particular, estimates are used when determining
appropriate amounts for certain items such as long-term contracts, allowance
for obsolete and slow moving inventories, allowance for doubtful accounts,
depreciation, amortization, employee benefit plans, taxes, reorganization
charges and contingencies.


     Goodwill arising on acquisitions

     Goodwill, representing the excess of the purchase consideration over the
fair value of the net separable assets acquired, is capitalized. Goodwill is
amortized over an appropriate period, unless there is clear evidence of the
durability of goodwill when an indefinite life is appropriate. Goodwill being
amortized over a period exceeding 20 years, or where not amortized at all as is
the case at 31 December 2003 and 31 December 2002, is reviewed annually for
impairment by discounting estimated future cash flows of the individual
businesses at an appropriate discount rate. The discount rate used is typically
the Group's weighted average cost of capital. Goodwill is denominated in the
functional currency of the acquired company.


     Revenue recognition policies

         Revenues in the design and manufacturing segment represent the
invoiced value of goods supplied to external customers. Revenue is recognised
when the earnings process is complete which occurs when the products are
shipped to the customer, title and risk of loss have been transferred,
collection is probable, and pricing is fixed and determinable.

     Revenues in the engine repair and overhaul segment are recorded on a
percentage of completion basis of accounting by relating costs incurred to date
with total estimated costs of the maintenance work order at completion. Costs
incurred include both direct and indirect costs. Contract losses are recognised
in their entirety in the period the loss becomes known, without regard to the
percentage of completion.

On contracts with customers where maintenance income is earned on the basis of
time incurred (i.e., on the number of hours flown), income is recognised only
when the maintenance event takes place. Amounts received from customers in
excess of maintenance work completed are included as a liability within our
balance sheet.

Typically on each contract's expiration the difference between revenue recorded
and amounts received from the customer is remitted or invoiced as part of the
final invoice.

     Warranty provisions

      Warranty provisions are made on the basis of anticipated costs in respect
of warranty claims received and/or known of at the balance sheet date. The
amounts provided are calculated using a best estimate, based on past
experience, of the cost of making good products sold under warranty, which are
subject to a claim or a known problem.


     Inventories

      Inventories and work in progress are valued using the first-in first-out
("FIFO") principle at the lower of cost or net realizable value. Cost comprises
the actual cost of raw materials and an appropriate proportion of labour and
overheads in the case of work in progress and finished goods. Provision is made
for obsolete and slow moving items (principally formulae driven based on usage
or activity levels) and for unrealized profits on items of intra-group
manufacture.


     Deferred costs, licences and OEM authorisation fees


      Deferred costs comprise costs associated with Original Equipment
Manufacturers ("OEM"), including OEM licensing and authorization fees
necessarily incurred in obtaining principal supplier status and the provision
of initial manufactured parts onto new aircraft. Deferred costs are amortized
over the periods expected to benefit from receiving the status of "principal
supplier", generally over terms ranging from 3 to 10 years, except OEM
licensing fees which are amortized over the license periods ranging from 5 to
25 years.


      Deferred costs are reviewed annually for impairment.


      Deferred costs for 'initial manufactured parts provided' are included
within debtors. Deferred licensing and OEM authorization fees are included
within intangible fixed assets.



      Tangible fixed assets and depreciation


      Capital additions are recorded at their purchased cost and do not include
the capitalization of any purchase related interest expense. Capital assets,
other than freehold land, are depreciated on a straight-line basis over the
following estimated useful lives:


      Buildings                        20-50 years
      Leasehold improvements           Over shorter of the remaining useful life
                                       or unexpired term of the lease
      Within plant and machinery:
      Plant and machinery              13 years
      Fork lift trucks                 3 - 7 years
      Moulds and tools                 3 - 20 years
      Rental engines                   Based on hours of use
      Office equipment                 5 years
      Furniture and fixtures           5 years
      Computer hardware and software   3 - 5 years
      Motor vehicles                   4 years


      Research and development


      Research and development expenditure is expensed as incurred, with the
exception of development expenditure on major projects that are undertaken
where the related expenditure is separately identifiable and management are
satisfied as to the ultimate commercial viability of the project based on all
relevant available information. In such cases, the expenditure is included in
development costs within intangible fixed assets and written off over the
periods expected to benefit commencing with the launch of the product. Research
and development expenditure recovered from customers is accounted for on a
receivable basis where contractually committed otherwise on a receipts basis.



      Pension costs

      The Group contributes to a number of defined benefit and defined
contribution pension schemes including, in the United States, 401k plans. The
most significant pension arrangement is the Dunlop Aerospace Limited U.K.
Pension Scheme in the UK, which is a funded and defined benefit in nature
providing benefits based on final pensionable pay. The assets of the scheme are
held separately from those of the Group, in an independently administered fund.

      The contributions related to the expected costs of providing pensions
under the defined benefit schemes are charged to the profit and loss account so
as to spread the costs of pensions over the service lives of the participating
employees with the Group. The regular cost is attributed to individual years
using the projected unit method. Variations in pension cost, which are
identified as a result of actuarial valuations, are amortized over the average
expected working lives of employees in proportion to their expected payroll
costs. Differences between the amounts funded and the amounts charged to the
profit and loss account are treated as either provisions or prepayments in the
balance sheet. The defined benefit pension charge is determined by a qualified
actuary.

      Pension contributions to the defined contribution pension schemes are
charged to the profit and loss account as incurred.



      Foreign currency translation

      Profits and losses from overseas businesses are translated into pounds
sterling at average rates of exchange during the period. The re-translation of
the retained earnings of overseas operations to period end rates is dealt with
as a movement in reserves and is included in the Statement of Total Recognized
Gains and Losses.


      Currency differences arising from the translation at period end rates of
the net investment in overseas businesses are taken to reserves, together with
exchange gains and losses arising on foreign currency borrowings which finance
a proportion of foreign currency investments. These gains and losses are also
included in the Statement of Total Recognized Gains and Losses.

      Assets and liabilities in foreign currency, which are to be settled at a
contracted rate, are translated at the appropriate contract rate. All other
assets and liabilities in foreign currency are translated at the period end
rate. Exchange differences arising are taken to the profit and loss account.

      All other exchange differences are included in the profit and loss
account for the period.

Liquid resources

      Liquid resources comprise short-term deposits of less than one year and
investments which are readily realizable and held on a short-term basis.

For the purposes of the cash flow statement cash includes cash in hand and
deposits repayable on demand (defined as those which can be withdrawn at any
time without notice and without penalty or of a maturity or period of notice of
not more than 24 hours).

     Grants

     Capital grants are treated as deferred income and released to the profit
and loss account over the life of the asset to which they relate. The
unamortised portions of such grants are included within accruals and deferred
income. Revenue grants are credited to operating profit in the same period in
which the expenditure to which they relate is charged.

     Leases

     Assets held under finance leases are capitalized as tangible fixed assets
and depreciated over the shorter of the lease term or the appropriate useful
economic life if owned outright. Interest is charged to the profit and loss
account over the primary period of the lease using a constant rate of charge.
Operating lease rentals are charged to the profit and loss account as incurred.

     Deferred taxation

         Deferred taxation is accounted for on an undiscounted basis at
expected tax rates on all differences arising from the inclusion of items of
income and expenditure in taxation computations in periods different from those
in which they are included in the accounts. A deferred tax asset is only
recognised when it is more likely than not that the asset will be recoverable
in the foreseeable future out of suitable taxable profits from which the
underlying timing differences can be deducted.


     Share option awards

     Share options have been awarded to employees of the Group. The difference
between the market value of the option on the date of the grant of rights to
shares and the cost to the employee is charged to the profit and loss account
over the period from the date of award to the date at which the employee
becomes unconditionally entitled to the shares.

     Capital instruments

     Shares are included in shareholders' funds. Other instruments are
classified as liabilities if they contain an obligation to transfer economic
benefits and otherwise are included in shareholders' funds. The finance cost
recognized in the profit and loss account in respect of capital instruments
other than equity shares is allocated to periods over the term of the
instrument at a constant rate of charge based on the carrying amount.

     The Group participates in offset arrangements with certain banks whereby
cash and overdraft amounts are offset against each other.

     Derivative instruments

     Financial instruments are utilized to support and raise finances for the
Group's trading operations. Interest is charged or taken to profit as incurred
or earned, except that finance costs, including issue costs, of debt
instruments are charged to the profit and loss account over the term of the
debt at a constant rate on the carrying amount of debt.

     The Group is party to derivative financial instruments (derivatives)
primarily to manage exposure to fluctuations in foreign currency exchange rates
and interest rates. Derivatives are designated as hedges and treated as such
from the inception of the relevant contracts. Gains or losses on hedging
instruments are recognized when the hedged transaction occurs. Gains or losses
arising from cancellation of hedging instruments due to the termination of the
underlying transaction are taken to the profit and loss account immediately.
Amounts payable or receivable in respect of interest rate swap agreements are
recognized as adjustments to the interest expense over the period of the
contracts.


3    Segmental Analysis

     The Group reports the results of its business divisions in two segments,
Engine Repair & Overhaul and Design and Manufacturing. The Engine Repair &
Overhaul segment primarily provides services for gas-turbine engine and
accessory repair and overhaul. The Design and Manufacturing segment designs and
manufactures wheels, brakes and brake management systems, heat exchangers and
bleed valves, combustion heaters, air/oil separators, actuators and customised
high technology rubber and polymer products. Transactions between reportable
segments are not material.

     Revenues


<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>               <C>              <C>
Design and Manufacturing...........................          153,177           131,314           121,359
Engine Repair & Overhaul...........................          291,727           320,534           335,255
                                                            --------------  --------------  --------------
                                                             444,904           451,848           456,614
                                                            ==============  ==============  ==============
</TABLE>


     Operating Costs Less Other Operating Income (pre-exceptional item)

<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>               <C>              <C>
Design and Manufacturing...........................         (100,305)          (93,878)          (89,114)
Engine Repair & Overhaul...........................         (268,943)         (289,079)         (305,666)
                                                            --------------  --------------  --------------
                                                            (369,248)         (382,957)         (394,780)
                                                            ==============  ==============  ==============
</TABLE>

     Operating Profit (pre-exceptional item)


<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>               <C>              <C>
Design and Manufacturing...........................            52,872         37,436           32,245
Engine Repair & Overhaul...........................            22,784         31,455           29,589
                                                            --------------  --------------  --------------
                                                               75,656         68,891           61,834
                                                            ==============  ==============  ==============
</TABLE>



Supplementary segment disclosures in respect of revenues:

<TABLE>
<CAPTION>
                                                                          Revenues by Origin
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>               <C>              <C>
United Kingdom......................................          115,554            97,748           91,189
Other Europe........................................          .44,823            47,586           44,917
USA.................................................          165,760           170,326          191,968
Canada..............................................          102,597           116,709          114,344
Rest of the World...................................           16,170            19,479           14,196
                                                            --------------  --------------  --------------
                                                              444,904           451,848          456,614
                                                            ==============  ==============  ===============
</TABLE>


<TABLE>
<CAPTION>
                                                                          Revenues by Destination
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>                <C>              <C>
United Kingdom.....................................           58,411            55,225           46,005
Other Europe.......................................           55,949            54,315           57,852
USA................................................          248,299           250,595          264,906
Canada.............................................           45,309            45,884           44,152
Rest of the World..................................           36,936            45,829           43,699
                                                            --------------  --------------  --------------
                                                             444,904           451,848          456,614
                                                            ==============  ==============  ===============
</TABLE>


         The Company has two customers, Rolls Royce plc, and Lockheed
Martin/Kelly USA that, individually are more than 10% but less than 20% of
revenues. Revenues made to Rolls Royce plc group of companies were as follows:
year ended 31 December 2001:(pound)80.2 million; year ended 31 December
2002:(pound)81.8 million and year ended 31 December 2003:(pound)83.9 million.
Revenues made to Lockheed Martin/Kelly USA were as follows: year ended 31
December 2001:(pound)55.7 million; year ended 31 December 2002:(pound)66.6
million and year ended 31 December 2003: (pound)85.8 million. In the year ended
31 December 2003, revenues made to the United States Government of(pound)92.0
million also exceeded 20% of total revenues (31 December 2002:(pound)71.8
million). This includes revenues to the U.S. military and other non-military
organizations such as the U.S. Coast Guard and revenues through the Lockheed
Martin/Kelly USA contract.

         Supplementary segment disclosures in respect of other operating costs
less other operating income:


<TABLE>
<CAPTION>
                                                                        Design and Manufacturing
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                           (pound)'000       (pound)'000      (pound)'000
<S>                                                         <C>                <C>              <C>
Cost of goods sold.................................           75,447           66,332           64,715
Selling general and administrative  expenses
and other expenses.................................           24,858           27,546           24,399
                                                            --------------  --------------  --------------
                                                             100,305           93,878           89,114
                                                            ==============  ==============  ===============
</TABLE>

<TABLE>
<CAPTION>
                                                                         Engine Repair & Overhaul
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                             (pound)'000      (pound)'000     (pound)'000
<S>                                                             <C>               <C>              <C>
Cost of goods sold.................................             238,986           260,267          274,635
Selling general and  administrative  expenses
and other expenses                                               29,957            28,812           31,031
                                                            --------------  --------------  --------------
                                                                268,943           289,079          305,666
                                                            ==============  ==============  ===============
</TABLE>



         Supplementary segment disclosures in respect of the balance sheet
information:

<TABLE>
<CAPTION>
                                                                               Operating Net Assets
                                                                          31 December         31 December
                                                                             2002                2003
                                                                          (pound)'000         (pound)'000
                                                                          ------------       -------------
<S>                                                                         <C>                 <C>
Design and Manufacturing...............................................     137,129             147,267
Engine Repair & Overhaul...............................................     189,979             160,341

                                                                            327,108             307,608
Unallocated net liabilities............................................      (9,307)            (16,721)
Goodwill...............................................................     313,856             304,129
Taxation...............................................................     (28,042)            (32,240)
Net debt...............................................................    (377,896)           (326,550)
                                                                          ------------       -------------
Net assets.............................................................     225,719             236,226
                                                                          ============       =============
</TABLE>


         Unallocated net liabilities principally relate to accrued interest and
accrued head office expense.





<TABLE>
<CAPTION>

                                                    Engine Repair andOverhaul             Design and Manufacturing
                                                 31 December         31 December         31 December       31 December
                                                     2002               2003                2002               2003
                                                  (pound)'000        (pound)'000         (pound)'000        (pound)'000
                                               ------------------------------------ ------------------------------------
<S>                                             <C>                <C>               <C>                 <C>
Long-lived assets by location
    United Kingdom...........................                               -              75,185              75,073
    Other Europe.............................        14,043            11,279                   -                   -
    USA......................................        23,708            16,914               4,389               3,779
    Canada...................................        58,761            52,314                   -                   -
    Rest of the World........................         2,416             1,415                 139                 101
                                                ---------------   -----------------  ----------------   -----------------
                                                     98,928            81,922              79,713              78,953
                                                ===============   =================  ================   ==================
</TABLE>


Capital expenditure in the year ended 31 December 2003 was (pound)5.2 million
in Engine Repair & Overhaul (year ended 31 December 2002: (pound)25.6 million)
and (pound)5.1 million in Design and Manufacturing (year ended 31 December
2002: (pound)7.9 million).

4        Operating Costs Less Other Operating Income

     Operating costs less other operating income may be analyzed as follows:

<TABLE>
<CAPTION>
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                            (pound)'000        (pound)'000    (pound)'000
<S>                                                          <C>                <C>            <C>
Changes in  inventories of finished goods and
work in progress.............................                   2,817            (1,895)            1,340
Raw materials and consumables................                 195,626           212,721           222,119
Employee costs                                                109,058           115,245           121,070
Depreciation and amortization                                  18,486            19,241            18,904
Other operating  charges less other operating
income.........................................                43,261            37,645            31,347
                                                            --------------  --------------  --------------
Total before exceptional items                                369,248           382,957           394,780
Other operating  charges less other operating
income - exceptional                                                -             3,788             3,688
                                                            --------------  --------------  --------------
                                                              369,248           386,735           398,468
                                                            ==============  ==============  ==============
</TABLE>

     Profit on ordinary activities before taxation is stated after
charging/(crediting):


<TABLE>
<CAPTION>
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                            (pound)'000        (pound)'000    (pound)'000
<S>                                                          <C>                <C>            <C>

Depreciation.......................................              12,875            14,540         14,667
Amortisation of development costs..................               2,223             2,018          1,611
Amortisation of deferred costs.....................               2,643             1,622          1,438
Amortisation of license and OEM fees                                745             1,061          1,188
Loss on revenues of fixed assets                                     79               469             74
Operating lease rentals - land and buildings.......               4,682             4,409          3,562
                        - plant and equipment......                 529             1,820          1,369
Capital grant release..............................                (264)             (290)          (296)
Foreign exchange differences.......................                (909)             (358)        (1,168)
Goodwill impairment charge.........................                 199                 -              -
Exceptional Item -1................................                   -             3,778              -
Exceptional Item -2................................                   -                 -          3,688
                                                             =============  ===============  =============
</TABLE>


     1. The current year exceptional item charge of (pound)3,688,000 related to
     our efforts to acquire a business that was ultimately purchased by another
     company.

     2. The prior year exceptional item charge of (pound)3,778,000 relates to
     costs incurred in relation to a proposed plan to seek a listing of the
     group's shares on the New York Stock Exchange.

5        Finance Costs

<TABLE>
<CAPTION>
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                            (pound)'000        (pound)'000    (pound)'000
<S>                                                          <C>                <C>            <C>
Interest payable on bank loans and
Overdrafts net of interest received................            21,979            23,486          12,946
Interest payable on Senior Notes...................            17,813            17,699          17,130
Finance lease interest.............................                12                 -              31
Amortisation of finance costs......................             2,126             2,050           1,855
                                                            --------------  --------------  --------------
                                                               41,930            43,235          31,962
                                                            ==============  ==============  ===============
</TABLE>



6        Taxation

<TABLE>
<CAPTION>
                                                             Year ended       Year ended       Year ended
                                                             31 December      31 December      31 December
                                                                2001              2002             2003
                                                            --------------  --------------  --------------
                                                            (pound)'000        (pound)'000    (pound)'000
<S>                                                          <C>                <C>            <C>
Analysis of the tax charge for the year:

United Kingdom:
Corporation tax at 30% (2001: 30%, 2000:30%)                  5,036              (1,001)           (715)
Adjustments in respect of prior periods...                      509                   -            (601)
Double tax relief.........................                        -                   -               -
------------------------------------------------------ ------------------- --------------- ----------------
                                                              5,545              (1,001)         (1,316)
Foreign Tax:
Corporation taxes - current period........                    8,319               8,222           4,015
Adjustment in respect of prior periods....                     (467)               (662)             (9)
Foreign Exchange Movement.................                        -                   -           1,786
------------------------------------------------------ ------------------- --------------- ----------------
                                                              7,852               7,560           5,792

------------------------------------------------------ ------------------- --------------- ----------------

Total current tax.........................                   13,397               6,559           4,476
------------------------------------------------------ ------------------- --------------- ----------------


Deferred taxation (note 15)
Origination and reversal of timing differences                 (145)              3,459           8,661
------------------------------------------------------ ------------------- --------------- ----------------
Representing:
  United Kingdom..........................                      946                 (89)            252
  Foreign tax.............................                   (1,091)              3,548           8,409
------------------------------------------------------ ------------------- --------------- ----------------

Total deferred tax........................                     (145)              3,459           6,996
Adjustment in respect of prior
year......................................                        -                   -           1,665
------------------------------------------------------ ------------------- --------------- ----------------
                                                               (145)              3,459           8,661
------------------------------------------------------ ------------------- --------------- ----------------

Tax on profit on ordinary activities......                   13,252              10,018          13,137
====================================================== =================== =============== ================
</TABLE>


     Tax on recognised gains and losses not included in the profit and loss
account:

<TABLE>
<CAPTION>
                                                                      Year ended       Year ended       Year ended
                                                                      31 December      31 December      31 December
                                                                         2001              2002             2003
                                                                     --------------  --------------  --------------
                                                                     (pound)'000        (pound)'000    (pound)'000
<S>                                                                   <C>                <C>            <C>
UK Corporation tax at 30% (2002:30%)
Current tax  charges/(credit)  on exchange  movements offset in
reserves...............................................................  (127)              684             715
---------------------------------------------------------------- ----------------- --------------- ----------------
</TABLE>


6    Taxation (con't)

     The tax for the period is higher than the standard rate of corporation tax
in the UK (30%). The differences are explained below:

<TABLE>
<CAPTION>
                                                                      Year ended       Year ended       Year ended
                                                                      31 December      31 December      31 December
                                                                         2001              2002             2003
                                                                     --------------  --------------  --------------
                                                                     (pound)'000        (pound)'000    (pound)'000
<S>                                                                   <C>                <C>            <C>

Profit on ordinary activities before tax.........................      33,726           21,878          26,184
                                                                 ---------------- --------------- ----------------
Profit on ordinary  activities  multiplied  by standard rate of
corporation tax in the UK of 30% (2002:30%, 2001:30%)............      10,118            6,563           7,855
Effects of:

Adjustment to tax in respect of prior period.....................          42             (662)           (610)
Adjustment in respect of foreign tax rates.......................       2,536            2,691           1,731
Expenses not deductible for tax purposes.........................         671            1,192             588
Capital allowances in excess of depreciation.....................      (1,526)            (572)            676
Other timing differences.........................................       1,811           (2,874)         (7,672)
Losses...........................................................        (255)             221             122
Foreign Exchange Movement........................................           -                -           1,786
                                                                 ---------------- --------------- ----------------
                                                                       13,397            6,559           4,476
                                                                 ================ =============== ================
</TABLE>

     The foreign tax rate adjustments reflect the fact that the majority of our
     taxable profits arise in North America where tax rates are significantly
     higher.

7        Employee Share Option Plans and Share Incentive Schemes

         At 31 December 2002 and 31 December 2003 share options had been
     granted to employees (including directors) of the Group to subscribe for
     shares in the ultimate parent undertaking, Dunlop Standard Aerospace Group
     Limited, as detailed in the table below. In all cases the subscription
     price is (pound)1 per share. All of the options were granted on 1 October
     1998 and no options have expired. The market value of the options at the
     date of grant was (pound)1, which was equivalent to the exercise price at
     that date. There was consequently no cost to the Group arising from the
     issue of the share options.

         On 28 September 2000 the share option agreements were modified to
permit share options to be exercised at any time.

<TABLE>
<CAPTION>
                                                                      Options           Options          Options
                                                                   outstanding at      Exercised     outstanding at
                                                                     1 January         During the      31 December
                                                                       2003               Year            2003
                                                                   --------------  ----------------  ---------------
<S>                                                                <C>             <C>                <C>
                                                                       Number            Number          Number
Ordinary shares of 50 pence each                                       10,932                   -          10,932
`A' Ordinary shares of 50 pence each                                  358,000             (15,077)        342,923
                                                                   --------------  ----------------  ---------------
                                                                      368,932             (15,077)        353,855
                                                                   ==============  ================= ===============
</TABLE>











8        Intangible Fixed Assets

<TABLE>
<CAPTION>

                                                                  Licenses and
                                                                      OEM
                                                Development      authorisation
                                                   Costs              Fees           Goodwill            Total
                                             ---------------- ------------------ --------------- ----------------
                                             (pound)'000       (pound)'000       (pound)'000       (pound)'000
<S>            <C>                                  <C>               <C>              <C>              <C>
Cost
At 31 December 2001.......................          20,188            18,874           325,296          364,358
Exchange adjustments......................            (421)           (1,885)          (11,241)         (13,547)
Additions.................................           2,135               133                 -            2,268
Reclassifications and other adjustments...             (15)                -                 -              (15)
                                             ---------------- ------------------ --------------- ----------------
At 31 December 2002.......................          21,887            17,122           314,055          353,064
                                             ================ ================== =============== ================

Exchange adjustments......................            (431)           (1,814)           (9,727)         (11,972)
Additions.................................           6,912             2,117                 -            9,029
Reclassifications and other adjustments...               -                 -                 -                -
                                             ---------------- ------------------ --------------- ----------------
At 31 December 2003.......................          28,368            17,425           304,328          350,121
                                             ================ ================== =============== ================

Amortisation
At 31 December 2001.......................           5,586             2,867               199            8,652
Exchange adjustments......................            (239)             (357)                -             (596)
Charge for period.........................           2,018             1,061                 -            3,079
Provision for impairment..................               -                 -                 -                -
Reclassifications and other adjustments...             (16)                -                 -              (16)
                                             ---------------- ------------------ --------------- ----------------
At 31 December 2002.......................           7,349             3,571               199           11,119
                                             ================ ================== =============== ================

Exchange adjustments......................            (270)             (441)                -             (711)
Charge for period.........................           1,611             1,188                 -            2,799
Provision for impairment..................               -                 -                 -                -
Reclassifications and other adjustments...                                 -                 -                -
                                             ---------------- ------------------ --------------- ----------------
At 31 December 2003.......................           8,690             4,318               199           13,207
                                             ================ ================== =============== ================

Net Book Amount
At 31 December 2001                                 14,602            16,007           325,097          355,706
                                             ================ ================== =============== ================
At 31 December 2002                                 14,538            13,551           313,856          341,945
                                             ================ ================== =============== ================
At 31 December 2003                                 19,678            13,107           304,129          336,914
                                             ================ ================== =============== ================
</TABLE>

The directors have considered the durability of goodwill arising on acquisition
of the Group's businesses on 1 October 1998. Taking into account the
significant investment costs of entering these businesses; the regulatory
barriers imposed; the stability and long term prospects of the aerospace and
defence industry; the long life span of individual models of aircraft for which
the business has exclusive licences to repair and overhaul or for which it
manufactures certain parts as sole or principal supplier; and the Group's
strong reputation and technological leadership, the directors believe that this
goodwill has an indefinite life and consequently amortisation is not being
provided.

The non-amortisation of goodwill represents a departure from the Companies Act
1985, Paragraph 21 of Schedule 4, for the over-riding purpose of giving a true
and fair view of the Group's results, for the reasons outlined above. If the
goodwill arising on the acquisition of the Group's businesses had been
amortized over a period of 20 years, operating profit would have decreased by
approximately (pound)15.6 million in 2003 (year ended 31 December 2002:
(pound)16.1 million and year ended 31 December 2001: (pound)16.3 million).

9  Tangible Fixed Assets

<TABLE>
<CAPTION>
                                                                      Short
                                                     Freehold       leasehold
                                                     land and        land and       Plant and
                                                     buildings      buildings       machinery         Total
                                                --------------- --------------- --------------- -------------
                                                 (pound)'000    (pound)'000     (pound)'000     (pound)'000
<S>                                               <C>             <C>           <C>             <C>
Cost
At 31 December 2001.......................            52,456          2,915         146,675         202,046
                                                =============== =============== =============== =============
Exchange adjustments......................            (2,503)          (269)        (10,306)        (13,078)
Transfers.................................               443            136             860           1,439
Additions.................................             6,844             56          27,177          34,077
Disposals.................................                 -           (217)         (5,669)         (5,886)
                                                --------------- --------------- --------------- -------------
At 31 December 2002.......................            57,240          2,621         158,737         218,598
                                                =============== =============== =============== =============

Exchange adjustments......................            (2,506)          (229)         (9,503)        (12,238)
Transfers                                                  -              -          (5,003)         (5,003)
Additions.................................             1,821       .    100           9,066          10,987
Disposals.................................                 -           (141)           (928)         (1,069)
                                                --------------- --------------- --------------- -------------
At 31 December 2003.......................            56,555          2,351         152,369         211,275
                                                =============== =============== =============== =============

Depreciation
At 31 December 2001.......................             1,759            801          24,789          27,349
Exchange adjustments......................              (123)           (86)         (1,930)         (2,139)
Transfers                                                (11)            17           1,433           1,439
Charge for period.........................               880            167          13,493          14,540
Disposals.................................                 -            (98)         (1,136)         (1,234)
                                                --------------- --------------- --------------- -------------
At 31 December 2002.......................             2,505            801          36,649          39,955
                                                =============== =============== =============== =============

Exchange adjustments......................              (221)           (80)         (2,828)         (3,129)
Transfers.................................                 -              -            (565)           (565)
Charge for the period.....................               972            142          13,553          14,667
Disposals.................................                 -            (95)           (433)           (528)
                                                --------------- --------------- --------------- -------------
At 31 December 2003.......................             3,256            768          46,376          50,400
                                                =============== =============== =============== =============

Net Book Amount
At 31 December 2001                                   50,697          2,114         121,886         174,697
                                                =============== =============== =============== =============
At 31 December 2002                                   54,735          1,820         122,088         178,643
                                                =============== =============== =============== =============
At 31 December 2003                                   53,299          1,583         105,993         160,875
                                                =============== =============== =============== =============
</TABLE>


         Plant and machinery at 31 December 2003 includes assets held under
finance leases in North America and Holland with a cost of (pound)3,865,000 and
accumulated depreciation of (pound)10,000. At 31 December 2002 and 31 December
2001, includes no assets held under finance leases.

         The net transfer of (pound)4,438,000 related to Engine Repair and
Overhaul component cores which management believe are more fairly represented
in stocks.

10  Inventories

<TABLE>
<CAPTION>

                                                                          31 December         31 December
                                                                              2002                2003
                                                                      -----------------   ----------------
                                                                       (pound)'000         (pound)'000
<S>                                                                          <C>                 <C>
Raw materials and consumables..........................................      37,204              37,802
Work in progress.......................................................      19,631              18,308
Finished goods.........................................................      12,517              11,093
                                                                      -----------------   ----------------
                                                                             69,352              67,203
                                                                      =================   ================
</TABLE>

<TABLE>
<CAPTION>

     Inventories are stated after provisions of(pound)8,735,000 (31 December 2002:(pound)8,457,000).

11  Investments

                                                                          31 December         31 December
                                                                              2002                2003
                                                                      -----------------   ----------------
                                                                       (pound)'000         (pound)'000
<S>                                                                            <C>                  <C>
Trade Investments......................................................           -                 183
                                                                      -----------------   ----------------
                                                                                  -                 183
                                                                      =================   ================
</TABLE>


12  Debtors

<TABLE>
<CAPTION>

                                                                          31 December         31 December
                                                                              2002                2003
                                                                      -----------------   ----------------
                                                                       (pound)'000         (pound)'000
<S>                                                                        <C>                <C>
Amounts due within one year
Trade debtors..........................................................      95,809              92,823
Other debtors..........................................................       5,612               7,568
Prepayments and accrued income.........................................       3,282               3,038
Deferred costs - Initial manufactured parts provided...................       2,796               2,687
                                                                            107,499             106,116
Amounts due after more than one year
Other debtors..........................................................         574               1,936
Deferred costs - Initial manufactured parts provided...................      22,206              24,257
                                                                      -----------------   ----------------
                                                                            130,279             132,309
                                                                      =================   ================
</TABLE>


     Trade debtors at 31 December 2003 are stated after allowances for
doubtful accounts of(pound)2,865,000 (31 December 2002: (pound)2,595,000).

     Trade debtors at 31 December 2003 includes unbilled revenue of
(pound)35,864,000 (31 December 2002: (pound)41,395,000), which represents
amounts earned and recognized in the period for which billings are issued in
the following period.


13  Creditors - Amounts falling due within one year

<TABLE>
<CAPTION>

                                                                          31 December         31 December
                                                                              2002                2003
                                                                      -----------------   ----------------
                                                                       (pound)'000         (pound)'000
<S>                                                                          <C>               <C>
Bank overdraft.........................................................      18,148                   -
Bank loans (note 15)...................................................      49,762              50,278
Trade creditors........................................................      46,935              61,700
Other creditors........................................................       7,673               5,504
Amounts owed to parent undertaking.....................................       5,493              10,508
Taxation and social security...........................................       1,652               1,419
Corporation tax........................................................       7,837               3,286
Accruals and deferred income...........................................      15,448              15,190
Obligation under finance lease.........................................           -                 761
                                                                      -----------------   ----------------
                                                                            152,948             148,646
                                                                      =================   ================
</TABLE>

     The bank overdraft facilities are repayable on demand and are secured as
part of the Ancilliary Facilities Agreement to the main banking facilities
described in note 14. The available overdraft facilities at 31 December 2003
were (pound)5 million, and Cdn$14.1 million.


14  Creditors - Amounts falling due after more than one year

<TABLE>
<CAPTION>

                                                                          31 December         31 December
                                                                              2002                2003
                                                                      -----------------   ----------------
                                                                       (pound)'000         (pound)'000
<S>                                                                           <C>                 <C>
Accruals and deferred income...........................................       8,951               5,380
Senior Notes (note 15).................................................     136,479             123,740
Bank loans (note 15)...................................................     207,092             166,804
Obligation under Finance lease.........................................           -               2,602
                                                                      -----------------   ----------------
                                                                            352,522             298,526
                                                                      =================   ================
</TABLE>


15  Borrowings

<TABLE>
<CAPTION>

The movement in gross borrowing obligations (ie-before deduction of deferred
debt issue costs) is as follows:

                                                                                 Finance
                                                 Bank Loans     Senior Notes      Leases           Total
                                               -------------  ----------------  ----------      -------------
                                             (pound)'000      (pound)'000      (pound)'000       (pound)'000
<S>                                           <C>             <C>              <C>             <C>
At 31 December 2001                                 280,247         155,172              -           435,419
Principal repayments - scheduled.............       (15,615)              -              -           (15,615)
New loans drawn..............................        23,909               -              -            23,909
Exchange adjustments.........................       (27,086)        (15,420)             -           (42,506)
                                               -------------  ----------------  ----------      -------------
At 31 December 2002..........................       261,455         139,752              -           401,207
                                               =============  ================  ==========      =============
Principal repayments - scheduled                    (28,401)              -              -           (28,401)
New loans drawn..............................           800               -          3,672             4,472
Exchange adjustments.........................       (13,418)        (13,348)          (309)          (27,075)
                                               -------------  ----------------  ----------      -------------
At 31 December 2003..........................       220,436         126,404          3,363           350,203
                                               =============  ================  ==========      =============
</TABLE>


Total gross borrowings, excluding unsecured bank overdrafts, are repayable from
the balance sheet date as follows:

<TABLE>
<CAPTION>

                                                                             Finance
                                                Bank Loans   Senior Notes     Leases             Total
                                              -------------  -------------- -------------    -------------
                                             (pound)'000    (pound)'000    (pound)'000     (pound)'000
<S>                                                  <C>      <C>              <C>            <C>
Year one                                             51,969              -            761          52,730
Year two                                             28,162              -          1,331          29,493
Year three                                           78,793              -          1,271          80,065
Year four                                            61,512              -              -          61,511
Year five                                                 -              -              -               -
After five years                                          -        126,404              -         126,404
                                              -------------  -------------- -------------    -------------
                                                    220,436        126,404          3,363         350,203
                                              =============  ============== =============    =============
</TABLE>


<TABLE>
<CAPTION>

Borrowings include the following variable rate                                        31 December       31 December
collateralised bank loans repayable by:                                                   2002              2003
                                                                                   ----------------  ---------------
                                                   Currency        Interest rate    (pound)'000       (pound)'000
<S>                                              <C>           <C>                 <C>                <C>
2006 (Tranche A)..............................   Sterling       LIBOR + 2.00%              93,920           71,520
2006 (Tranche B)..............................   U.S. dollars   LIBOR + 2.50%              51,017           45,664
2007 (Tranche C)..............................   U.S. dollars   LIBOR + 2.75%              51,022           45,672
2006 (Tranche D)..............................   Sterling       LIBOR + 2.00%              12,000           23,000
2006 (Tranche D)..............................   U.S. dollars   LIBOR + 2.00%              16,149                -
2007 (Tranche E)..............................   U.S. dollars   LIBOR + 2.75%              37,347           33,780
2007 (Tranche E)..............................   Sterling       LIBOR + 2.75%                   -              800
2009 (Senior Notes) ..........................   U.S. dollars         11.875%             139,752          126,404
                                                                                   ----------------  ---------------
Gross borrowings payable......................                                            401,207          346,840
Less debt issue costs to be amortized.........                                             (7,874)          (6,018)
                                                                                   ----------------  ---------------
Borrowings payable net of debt issue costs ...                                            393,333          340,822
                                                                                   ================  ===============
                                                                                           49,762           50,278
Repayable within one year.....................
Repayable after more than one year............                                            343,571          290,544
                                                                                   ----------------  ---------------
                                                                                          393,333          340,822
                                                                                   ================  ===============
</TABLE>


     The above bank loans bear interest rates based on the London Interbank
Offered Rate ("LIBOR"). These rates are fixed in advance normally for periods
ranging from one to six months. The bank loans are secured by substantially all
of the shares of the direct and indirect subsidiary undertakings and a security
interest in certain assets of these subsidiaries excluding those in The
Netherlands, Singapore and Australia.

     The Company and certain of its subsidiaries entered into credit agreements
with the Company's principal banks. The facilities provided under the credit
agreements are described below.

     The senior term debt facilities consist of a (pound)160 million 7 1/2 year
amortising loan facility (the `Tranche A' facility), two (pound)50 million term
loan facilities (the `Tranche B' and `Tranche C' facilities), a (pound)49.1
million term loan facility (the `Tranche E' facility) and a revolving credit
facility (the `Tranche D' facility) for (pound)50 million. At the option of the
Group, borrowings under Tranches B, C and E were drawn down in U.S. dollars.

     The Tranche A facility was fully drawn by the Group in five separate
advances during 1998 and is repayable by instalment, with final maturity on 1
April 2006.

     The Tranche B facility was fully drawn by the Group in two separate
advances during 1998 and is repayable by instalment, with final maturity on 1
October 2006.

     The Tranche C facility was fully drawn by the Group in two separate
advances during 1998 and is payable by instalment, with final maturity on 1
October 2007.

     The Tranche D facility of (pound)50 million is a revolving credit
facility. At 31 December 2003 (pound)23.0 million had been drawn down under
this facility (31 December 2002: (pound)28.149 million). The Group's ability to
draw down this facility is restricted by the level of any bank overdrafts or
available credit facilities existing in the UK and North America at any point
in time. At 31 December 2003, (pound)11.389 million of this facility had been
committed in respect of overdraft facilities in the UK ((pound)5 million) and
Canada (Cdn$14.1 million). Accordingly, the available facility at 31 December
2003 was (pound)15.611 million (31 December 2002: (pound)10.462 million).


     The Tranche E facility is a term loan facility. The aggregate amount to be
repaid shall be fifty percent of the total amount outstanding on 1 October 2006
with the balance on 1 October 2007.

     Final repayment is due on all amounts under these facilities in 2007.

         The Senior Notes ("the Notes") are unsecured and mature on 15 May
2009. Interest at 11.875% is paid semi-annually. At the Company's discretion,
the Notes may be redeemed on or after 15 May 2004. In addition, prior to 15 May
2003, the Company may redeem up to 35% of the Notes with the net proceeds of an
equity sale and may also redeem all, but not fewer than all, of the Notes if
certain additional taxes become payable.

     Certain of these facilities contain covenants that limit the Group's
ability to raise additional finance in the future.

         The undrawn committed facilities available in respect of which all
conditions precedent had been met at the balance sheet date were as follows:
<TABLE>
<CAPTION>

                                                                            31 December       31 December
                                                                               2002              2003
                                                                         -----------------  ---------------
                                                                        (pound)'000        (pound)'000
<S>                                                                      <C>               <C>
Expiring in one year or less...........................................             -                  -
Expiring in more than one year but not more than two years.............             -                  -
Expiring in more than two years........................................        27,021             25,292
                                                                         -----------------  ---------------
                                                                               27,021             25,292
                                                                         =================  ===============
</TABLE>

     All of the above committed borrowing facilities incur commitment fees at
market rates.



The weighted average interest rate of borrowings (excluding the amortization of
debt issue costs) at 31 December 2003, after taking into account the various
interest rate swaps as described in note 17, was 7.5% (31 December 2002: 7.2%).








16  Provisions for Liabilities and Charges

<TABLE>
<CAPTION>

                                                     Deferred tax         Warranty          Pension            Total
                                                   ---------------    -------------     -------------     ------------
                                                   (pound)'000       (pound)'000       (pound)'000       (pound)'000
<S>                                                <C>               <C>                 <C>            <C>
At 31 December 2001.............................         17,212              1,536                 -            18,748

Exchange adjustments............................           (466)              (111)                -              (577)
Charged / (credited)............................          3,459              5,861                 -             9,320
Utilized........................................              -             (4,876)                -            (4,876)
                                                   ---------------    -------------     -------------     ------------
At 31 December 2002.............................         20,205              2,410                 -            22,615

Exchange adjustments............................             88               (175)                -               (87)
Charged / (credited)............................          8,661              3,645               389            12,695
Utilized........................................              -             (3,502)                -            (3,502)
                                                   ---------------    -------------     -------------     ------------
At 31 December 2003.............................         28,954              2,378               389            31,721
                                                   ===============    =============     =============     ============
</TABLE>


         Warranty provisions are made on the basis of anticipated costs in
respect of warranty claims received and/or known of at the balance sheet date,
with the amounts provided expected to be utilized within eighteen months of the
balance sheet date.

         The net deferred tax provision included within the financial
statements is analyzed as follows:

<TABLE>
<CAPTION>

                                                                            Year ended        Year ended
                                                                            31 December       31 December
                                                                               2002              2003
                                                                         --------------     -------------
                                                                         (pound)'000       (pound)'000
<S>                                                                      <C>               <C>
Deferred taxation provided
Accelerated capital allowances and other timing differences relating
to tangible fixed assets............................................           15,518             15,736
Deferred taxation on other short term timing differences:
   Deferred costs and other intangible assets                                   7,704              9,134
   Other short term timing differences.............................            (3,017)             4,084
                                                                         --------------     -------------
                                                                               20,205             28,954
                                                                         ==============     =============
</TABLE>


Factors that may affect future tax charges

         Based on current capital investment plans, the group expects to
continue to be able to claim capital allowances in excess of depreciation in
future years at a similar level to the current year.

         No provisions has been made for deferred tax on gains recognized on
revaluing property to its market value or on the sale of properties where
potentially taxable gains have been rolled over into replacement assets. Such
tax would become payable only if the property were sold without it being
possible to claim rollover relief. The total amount unprovided for is
(pound)0.9 million. At present it is not envisaged that any such tax will
become payable in the foreseeable future.

         Deferred tax (net of any double taxation relief) is not provided in
respect of liabilities, which might arise on the distribution of unappropriated
profits of overseas subsidiary undertakings where there is no intention to
remit such profits. As the earnings are continually reinvested by the group, no
tax is expected to be payable on them in the foreseeable future.

         Deferred tax is measured on a non-discounted basis at the tax rates
that are expected to apply in the periods in which timing differences reverse,
based on the tax rates and laws substantively enacted at the balance sheet
date.

17  Share Capital and Reserves
<TABLE>
<CAPTION>

                                                                                             Profit and
                                                                           Share Capital    Loss Account
                                                                         --------------     -------------
                                                                         (pound)'000       (pound)'000
<S>                                                                        <C>                 <C>
At 31 December 2001                                                           160,000             55,488
Retained profit for the year ended 31 December 2002................                 -             11,860
Exchange adjustments - retained earnings...........................                 -               (945)
                                     - net assets                                   -            (18,693)
                                     - borrowings                                   -             18,693
                                     - tax effect of above                          -               (684)
At 31 December 2002................................................           160,000             65,719


Retained profit for the year ended 31 December 2003................                 -             13,047
Exchange adjustments - retained earnings...........................                 -             (1,005)
                                     - net assets..................                 -            (17,415)
                                     - borrowings..................                 -             16,595
                                     - tax effect of above.........                 -               (715)
                                                                         --------------     -------------
At 31 December 2003................................................           160,000             76,226
</TABLE>

<TABLE>
<CAPTION>

         The share capital of the Company comprised:

Ordinary shares of(pound)1 each                       Authorised                Allotted and Fully Paid
                                               Number     (pound)'000           Number     (pound)'000
<S>                                      <C>                  <C>         <C>              <C>
At 31 December 2002                         160,000,000          160,000     160,000,000      160,000,000
                                           -------------    -------------   -------------    -------------
At 31 December 2003                         160,000,000          160,000     160,000,000      160,000,000
                                           =============    =============   =============    =============
</TABLE>


         The Company's authorised share capital on incorporation was 100
ordinary shares of (pound)1 each. This was subsequently increased to
155,000,000 ordinary shares of (pound)1 each on 30 September 1998, and to
160,000,000 ordinary shares of (pound)1 each on 30 March 1999. The Company
issued 2 ordinary shares at par on incorporation. A further 154,999,998
ordinary shares were issued at par on 1 October 1998, and a further 5,000,000
ordinary shares were issued at par on 30 March 1999.

18  Foreign Exchange and Interest Rate Disclosures

     The Group holds and issues financial instruments in order to finance its
operations and to manage interest and foreign currency risks arising from its
operations. The Group does not hold financial instruments for trading purposes.
The Group's major financial risks relate to movements in exchange rates and
interest rates. The Group's treasury policies are reviewed on a regular basis
and approved by the Board.

         The Group borrows principally in U.S. dollars and pound sterling (with
the credit agreement also making available overdraft facilities in Canadian
dollars) at variable rates, and is subject to fluctuations in interest rates on
its borrowings and surplus cash. The Group was required, until November 2002,
under the terms of the credit agreement, to hedge as a minimum approximately
75% of borrowings against future movements in interest rates, which is effected
by using derivatives, such as interest rate swaps and collars where
appropriate. Following the issue of the Senior Notes the level of fixed
interest liabilities rose significantly.

     The following summarizes the Group's outstanding swap contracts at 31
December 2003 which, represent agreements to swap out of floating rates and
into fixed rate payments:

<TABLE>
<CAPTION>

Notional amount (000's)         Term                       Floating LIBOR rate          Fixed LIBOR rate

<S>                            <C>                         <C>                         <C>
(pound)71,520                   Nov 03 - Jan 04            (pound) LIBOR                  4.60%
(pound)41,628                   Jan 04 - Jul 04            (pound) LIBOR                  4.60%
(pound)27,628                   Jul 04 - Jan 05            (pound) LIBOR                  4.60%
(pound)14,028                   Jan 05 - Jul 05            (pound) LIBOR                  4.60%
(pound)428                      Jul 05 - Jan 06            (pound) LIBOR                  4.60%
US $222,692                     Nov 03 - Jan 04              US$ LIBOR                    2.69%
US $173,209                     Jan 04 - Jul 04              US$ LIBOR                    2.69%
US $171,497                     Jul 04 - Jul 05              US$ LIBOR                    2.69%
US $169,786                     Jul 05 - Jul 06              US$ LIBOR                    2.69%
</TABLE>


     Surplus cash is deposited with highly rated banks on maturities ranging
from overnight up to three months. It is the Group's objective to maintain
undrawn committed borrowing facilities of at least 5% of borrowings in order to
provide flexibility in managing the Group's liquidity.

     The Group has significant operations in the United States and Canada, as
well as other countries outside of the United Kingdom and consequently the
balance sheet can be significantly affected by movements in Sterling exchange
rates. In addition, currency exposures can arise from revenues and purchases
transactions denominated in foreign currencies. The Group's policy is to use
foreign currency loans to hedge foreign currency assets and liabilities.
Transactional currency exposures are in the main naturally hedged, but where
appropriate, are covered using forward exchange contracts.

     Analyses of the currency exposures of assets and liabilities, and interest
rate exposure, showing the effects of the financial instruments are detailed
below. For the purposes of the following disclosure, short term debtors and
creditors have been excluded.



Currency and interest rate risk profile of financial liabilities

         After taking into account the Group's floating into fixed interest
rate swaps and forward foreign currency contracts (but before consideration of
interest rate collars) the interest rate profile of the financial liabilities
of the Group as at 31 December 2002 and 31 December 2001 was:
<TABLE>
<CAPTION>

                                                                               Year ended 31 December 2002

                                                                                        Floating rate               Fixed rate
                                                                  Total         Financial liabilities    Financial liabilities
Currency                                                    (pound)'000                   (pound)'000              (pound)'000
<S>                                                             <C>                          <C>                    <C>
Sterling ................................................        105,920                     105,920                     -
U.S. dollar..............................................        295,287                     155,535                139,752
                                                             -------------               -------------          --------------
Total....................................................        401,207                     261,455                139,752
                                                             =============               =============          ==============
</TABLE>

<TABLE>
<CAPTION>

                                                                               Year ended 31 December 2002
                                                                            Fixed Rate Financial Liabilities
                                                            ------------------------------------------------------------------
                                                                               Weighted average   Weighted average period for
                                                                                  Interest rate           which rate is fixed
<S>                                                                         <C>                        <C>
Currency                                                                                      %                         Years
Sterling ..............................................................                    -                            -
U.S. dollar............................................................                 11.875                          6.4
                                                                             -------------------          --------------------
Total..................................................................                 11.875                          6.4
                                                                             ===================          ====================
</TABLE>

<TABLE>
<CAPTION>

                                                                              Year ended 31 December 2003
                                                                                        Floating rate              Fixed rate
                                                                                Financial liabilities   Financial liabilities
Currency                                                     (pound)'000                  (pound)'000             (pound)'000
<S>                                                               <C>                         <C>                    <C>
Sterling .................................................        95,320                      23,800                 71,520
U.S. dollar...............................................       251,520                           -                251,520
                                                             -------------               -------------          --------------
Total.....................................................       346,840                      23,800                323,040
                                                             =============               =============          ==============
</TABLE>



<TABLE>
<CAPTION>

                                                                              Year ended 31 December 2003
                                                                            Fixed Rate Financial Liabilities
                                                                               Weighted average       Weighted average period
                                                                                  Interest rate       for which rate is fixed
Currency                                                                                      %                         Years
<S>                                                                              <C>                          <C>
Sterling .................................................                                 6.6                          2.2
U.S. dollar...............................................                                 9.2                          4.8
                                                                             -------------------          --------------------
Total.....................................................                                 9.0                          4.6
                                                                             ===================          ====================



         With the exception of excluded items there are no financial liabilities on which no interest is paid.
</TABLE>



Fair values of financial assets and financial liabilities
         Set out below is a comparison, by category, of book values (before
debt issue costs) and fair values of all the Group's financial instruments.
There is no difference between the book values and fair values of any other
financial assets or financial liabilities as at 31 December 2003:

<TABLE>
<CAPTION>

                                                       31 December 2002              31 December 2003
                                                -----------------------------  ---------------------------
                                                  Book value      Fair value     Book value    Fair value
                                                (pound)'000     (pound)'000    (pound)'000    (pound)'000
                                                --------------  -------------  ------------  -------------
<S>                                             <C>              <C>           <C>            <C>
Primary financial instruments held or issued
to finance the Group's operations:
Cash at bank and on  hand.......................       33,585         33,585          17,635        17,635
Short-term borrowings and current portion of
long-term borrowings (incl. leases).............       69,765         69,765          52,730        52,730
Long-term borrowings (incl. Leases).............      349,590        352,385         297,473       305,537
Preference shares...............................            -              -               -             -

Derivative financial instruments held to
manage the interest rate profile:
Interest rate swaps - unrealized gain/(loss)                -              -               -          (919)
                                                ==============  =============  =============  =============
</TABLE>

         For cash at bank and in hand, short-term deposits and short-term
borrowings, the fair value approximates to the carrying valued due to the short
maturity periods of these financial instruments. For medium and long-term
borrowings, the fair value is based on market values (eg. for the Senior Notes)
or, where not available, on the quoted market prices of comparable debt issued
by other companies. Market rates have been used to determine the fair values of
the interest rate collar and interest rate swap derivatives.


Hedges

         Unrecognized gains and losses on instruments used for hedging (all
interest rate hedges), and the movements therein, are as follows:

<TABLE>
<CAPTION>

                                                                                                           Total net
                                                                          Gains             Losses       Gains/(losses)
                                                                    (pound)'000      (pound)'000       (pound)'000

<S>                                                                   <C>             <C>               <C>
Unrecognized gains and losses on hedges at 31 December 2001........                            (8,970)        (8,970)
                                                                      =============   ===============   ==============
Gains and losses arising in previous  period that were recognised in
the year ended 31 December 2002....................................         -                   8,970          8,970
                                                                      -------------   ---------------   --------------
Gains  and  losses  arising  before 1  January  2002  that  were not
recognized in the year ended 31 December 2002..........................     -                       -              -
Gains and  losses  arising in 2002 that were not  recognised  in the
year ended 31 December 2002...........................................      -                       -              -
                                                                      -------------   ---------------   --------------
Unrecognised gains and losses on hedges at 31 December 2003                 -                       -              -
                                                                      =============   ===============   ==============
Gains and  losses  arising in 2003 that were not  recognised  in the
year ended 31 December 2003...........................................      -                    (919)          (919)
                                                                      -------------   ---------------   --------------
Unrecognised gains and losses on hedges at 31 December 2003                 -                    (919)          (919)
                                                                      =============   ===============   ==============
</TABLE>





<TABLE>
<CAPTION>

         Currency exposures

         The table below shows the extent to which Group companies have
monetary assets and liabilities in currencies other than their local currency.

                                                                 31 December 2002
                                                     Net foreign monetary assets/(liabilities)
                                           Sterling        U.S. Dollar            Other             Total
                                        --------------  -----------------  -------------     ---------------
Functional currency of entity:         (pound)'000       (pound)'000      (pound)'000       (pound)'000
<S>                                       <C>                  <C>           <C>                <C>
Sterling ...........................               -            18,800               88            18,888
U.S. dollar.........................          (1,373)                -           (4,922)           (6,295)
Other...............................               -               (19)             598               579
                                        --------------  -----------------  -------------     ---------------
                                              (1,373)           18,781           (4,236)           13,172
                                        ==============  =================  =============     ===============
</TABLE>

<TABLE>
<CAPTION>

                                                                 31 December 2003
                                                     Net foreign monetary assets/(liabilities)
                                           Sterling        U.S. Dollar            Other             Total
                                        --------------  -----------------  -------------     ---------------
Functional currency of entity:         (pound)'000       (pound)'000      (pound)'000       (pound)'000
<S>                                       <C>               <C>              <C>                 <C>
Sterling ...........................               -             8,326             (109)            8,217
U.S. dollar.........................             320                 -             (719)             (399)
Other...............................               -              (131)             869               738
                                        --------------  -----------------  -------------     ---------------
                                                 320             8,195               41             8,556
                                        ==============  =================  =============     ===============
</TABLE>


19  Pensions

     The principal pension arrangements are provided for UK employees through
the Dunlop Aerospace Limited UK Pension Scheme ("the Scheme"), which is a
defined benefit scheme providing benefits based on final pensionable pay, and
was opened in July 1999. The assets of the Scheme are held separately from
those of the Company, in an independently administered fund. Effective 31 July
2002, the Scheme was closed to new members.


     Contributions to the Scheme are charged to the profit and loss account so
as to spread the cost of defined benefit pensions over employees' working lives
with the Group. The pension charge is determined by a qualified actuary using
the projected unit method. The assumptions, which have the most significant
effect on the results of the valuation, are those relating to the rate of
return on investments and the rates of increase in salaries and pensions. It
was assumed that the investment returns would be 7.5% per annum pre-retirement
and 5.5% per annum post-retirement, that salary increases would average 3.25%
per annum and that pensions accrued since the scheme commenced would increase
at the rate of 2.5% per annum.

The most recent actuarial valuation was undertaken as at 5 April 2003 and
assumed the investment returns would be 6.25% per annum pre-retirement and
5.25% per annum post-retirement, that salary increases would average 3.5% per
annum and that pensions accrued since the scheme commenced would increase at
the rate of 2.5% per annum. It showed that the market value of the Scheme's
assets was (pound)53,841,000. The assets represented 82% of the benefits that
had accrued to members, after allowing for expected future increases in
earnings

The pension charge for the Scheme for the current year was (pound)2,989,000
(year ended 31 December 2002: (pound)2,595,000). Contributions paid by the
company totalled (pound)2,600,000 and there was therefore a provision at 31
December 2003 of (pound)389,000 (year ended 31 December 2002: Nil) (This charge
included the benefit of a reduction of (pound)342,000 (year ended 31 December
2002: (pound)1,752,000) due to the amortisation of experience surpluses that
are being recognised over 12 years, the average remaining service lifetime of
the employees.
     Scheme contributions were payable at the rate of 10% for the employer and
5% for employees. An actuarial valuation of this scheme was completed during
2003, which resulted in a change in the contribution rates payable to 17.5% for
the employer and 7% for employees, beginning in 2004.

Details of the current year SSAP24 charge is as follows:
<TABLE>
<CAPTION>

                                                                           Year ended        Year ended
                                                                           31 December       31 December
                                                                              2002              2003
                                                                         ---------------   ---------------
                                                                        (pound)'000       (pound)'000
<S>                                                                             <C>               <C>
Regular service cost...................................................         4,347             3,331
Variation credit.......................................................        (1,752)             (342)
                                                                         ---------------   ---------------
Total charge in respect of UK defined benefit pension scheme...........         2,595             2,989
                                                                         ===============   ================
</TABLE>

      A new defined contribution scheme (the Dunlop Aerospace Group Personal
Pension Plan) has been established for new employees who joined the group after
1 August 2002. The assets of this scheme are held separately from those of the
group, in independently administered funds. The minimum level of employee
contributions is 3% with matching contributions from the employer up to a
maximum of 7%.

     In addition to the principal U.K. defined benefit plan, defined
contribution schemes (401k or equivalent in the United States) have been
established for the Group's U.S. and Canadian employees.

     Certain employees in the Netherlands participate in a
collectively-bargained multi-employer plan. In addition to the
collectively-bargained plan, employees in the Netherlands also participate in a
supplementary defined contribution scheme.

     Employees in Singapore participate in a state sponsored multi-employer
plan.

     The total pension charge in the profit and loss account may be summarised
as follows:

<TABLE>
<CAPTION>

                                                                           Year ended        Year ended
                                                                           31 December       31 December
                                                                              2002              2003
                                                                         ---------------   ---------------
                                                                        (pound)'000       (pound)'000
Defined benefit schemes:
<S>                                                                             <C>               <C>
U.K. only..............................................................         2,595             2,989
Defined contribution schemes:
U.K., U.S., Canada, Singapore and the Netherlands                               2,556             3,045
                                                                         ---------------   ---------------
                                                                                5,151             6,034
                                                                         ===============   ===============
</TABLE>

     Additional disclosures required under the transitional arrangements of FRS
17 in respect of the U.K. defined benefit plan are set out below.

Financial assumptions

<TABLE>
<CAPTION>

                                                                           Year ended        Year ended
                                                                           31 December       31 December
                                                                              2002              2003
                                                                         ---------------   ---------------
                                                                        (pound)'000       (pound)'000
<S>                                                                              <C>               <C>
Salary increases.......................................................          3.25%             3.25%
Pension increases (on pensions now being accrued)......................          2.25%             2.50%
Discount rate..........................................................          5.75%             5.60%
RPI....................................................................          2.25%             2.50%
Expected return on equities............................................          7.50%             7.50%
Expected return on bonds...............................................          5.50%             5.25%
</TABLE>

     The market value of the assets of the Scheme and the long-term expected
rates of return on those assets are as follows:

<TABLE>
<CAPTION>

                                        31 December       31 December       31 December      31 December
                                            2002             2002              2003              2003
                                              %        (pound)'000               %         (pound)'000
<S>                                           <C>             <C>                <C>              <C>
Equities ...........................          7.5             31,966             7.5              39,490
Bonds...............................          5.5             22,397            5.25             25,408
Others..............................          4.0                361            3.75                123
                                                       ---------------                     --------------
                                                              54,724                              65,021
Present value of scheme liabilities.                         (61,916)                            (72,098)
                                                       ---------------                     --------------
(Deficit)/surplus in the scheme.....                          (7,192)                             (7,077)
Related deferred tax asset                                     2,158                               2,123
                                                       ---------------                     --------------
Net pension liability...............                          (5,034)                             (4,954)
                                                       ===============                     ==============
</TABLE>


     If the above amounts had been recognised in the financial statements, the
Group's net assets and profit and loss reserve at 31 December 2003 would be as
follows:
<TABLE>
<CAPTION>

                                                                           31 December       31 December
                                                                              2002              2003
                                                                        (pound)'000       (pound)'000
<S>                                                                           <C>               <C>
Net assets excluding pension (liability)/asset                                225,719           236,615
Pension (liability)/asset..............................................        (5,034)           (4,954)
                                                                         --------------   ---------------
Net assets including pension (liability)/asset                                220,685           231,661
                                                                         ==============   ===============
Profit and loss account excluding pension (liability)/asset                    65,719            76,615
Pension (liability)/asset                                                      (5,034)           (4,954)
                                                                         --------------   ---------------
Profit and loss account................................................        60,685            71,661
                                                                         ==============   ===============
</TABLE>


<TABLE>
<CAPTION>

                                                                                          31 December        31 December
                                                                                              2002               2003
                                                                                       (pound)'000        (pound)'000
Analysis of amount charged to operating profit
In respect of defined benefit schemes

<S>                                                                                            <C>                <C>
Current service.......................................................................         3,866              3,869
Past service cost.....................................................................             -                  -
--------------------------------------------------------------------------------------- ------------------ ------------------

Total operating charge                                                                         3,866              3,869
======================================================================================= ================== ==================
Movement in surplus/(deficit) during the year

Surplus in the scheme at the beginning of the year....................................         3,319             (7,192)
Movement:
Current service cost (from above).....................................................        (3,866)            (3,869)
Contributions.........................................................................         2,595              2,600
Past service cost (from above)........................................................             -                  -
Other finance income (from below).....................................................           842                 40
Actuarial (loss) (from below).........................................................       (10,082)             1,344

--------------------------------------------------------------------------------------- ------------------ ------------------
(Deficit) in the scheme at the end of the year                                                (7,192)            (7,077)
======================================================================================= ================== ==================

Analysis of the amount credited to other finance income

Expected return on pension scheme assets.............................................          4,190              3,737
Interest on pension scheme liabilities...............................................         (3,348)            (3,697)
--------------------------------------------------------------------------------------- ------------------ ------------------
Net return                                                                                       842                 40
======================================================================================= ================== ==================
                                                                                          31 December        31 December
                                                                                              2002               2003
                                                                                       (pound)'000        (pound)'000
Analysis of amount recognised in STRGL

Actual return less expected return on pension scheme assets..........................        (12,261)             3,700
Experience gains and losses arising on the scheme liabilities........................             15                900
Changes in the assumptions underlying the present value of the scheme liabilties.....          2,164             (3,256)
--------------------------------------------------------------------------------------- ------------------ ------------------
Actuarial (loss) recognised in STRGL                                                         (10,082)             1,344
======================================================================================= ================== ==================

                                                                                          31 December        31 December
                                                                                              2002               2003
History of experience gains and losses

Differences between the actual and expected return on scheme assets:
Amount ((pound)'000)                                                                           (12,261)             3,700
Percentage of scheme assets                                                                      (22.4%)              5.7%

Experience gains and losses on scheme liabilities
Amount ((pound)'000)                                                                              15                900
Percentage of the present value of the scheme liabilities                                          0%                 1.2%

Total amount recognised in statement of total recognised gains and losses:
Amount ((pound)'000)                                                                           (10,082)           1,344
Percentage of the present value of the scheme liabilities                                        (16.3%)              1.9%
</TABLE>


20  Commitments
<TABLE>
<CAPTION>

     Capital commitments
                                                                           31 December       31 December
                                                                              2002              2003
                                                                         -------------     --------------
                                                                          (pound)'000       (pound)'000
<S>                                                                             <C>               <C>
Authorised and contracted..............................................         2,253             1,613
                                                                         =============     ==============
</TABLE>


     Lease commitments

     The Group had the following annual commitments under non-cancelable
operating leases as follows:

<TABLE>
<CAPTION>

                                                 31 December 2002                          31 December 2003
                                    ---------------------------------------   -----------------------------------
                                          Land and              Other              Land and              Other
                                          Buildings                                Buildings
                                       (pound)'000             (pound)'000       (pound)'000        (pound)'000
<S>                                            <C>                <C>                    <C>                 <C>
Within one year...................             137                363                    397                 161
Between two and five years........           4,167                386                  3,530                 525
After five years..................             585                  4                    476                   -
                                    -------------------     ---------------   ------------------    -------------
                                             4,889                753                  4,403                 686
                                    ===================     ===============   ==================    =============
</TABLE>

     The company had no commitments under non-cancelable operating leases
existing at either balance sheet date.

     The future minimum lease payments under non-cancelable operating leases at
31 December 2003 were as follows:

<TABLE>
<CAPTION>

                                                                                     Operating Leases
                                                                      -----------------------------------------
                                                                       Land and Buildings               Other
                                                                      (pound)'000                 (pound)'000

<C>                                                                         <C>                          <C>
2004...................................................................     4,082                        686
2005...................................................................     3,801                        412
2006...................................................................     3,697                        256
2007...................................................................     3,583                         78
Thereafter.............................................................       384                          5
</TABLE>


21  Contingent Liabilities

     Litigation
     The Group is involved, from time to time, in legal actions and claims
arising in the ordinary course of business. While the ultimate result of these
claims cannot presently be determined, the directors do not expect that these
matters will have a material adverse effect on the financial position, profits
and losses or cash flows of the Group.

     Environmental
     The Group has facilities which are located on land that has been used for
industrial purposes for an extended period of time. The Group has not been
named as a potentially responsible party to any environmental sites. While it
is not presently possible for the directors to determine the extent, if any, of
the Group's exposure to this matter or the impact on the financial position or
profits and losses and cash flows of the Group, the directors do not believe
potential liabilities for such sites are material.

     Purchase Commitments
     The Company enters into supply contracts in the ordinary course of
business. These contracts typically do not include incentives or unconditional
purchase commitments. Where inventory is purchased at a discount to the
published list price, the related inventory is recorded in the Group's
financial statements at the discounted price paid.

     Other matters
     The Group's bankers have provided guarantees in the ordinary course of
business amounting to (pound)344,000 at 31 December 2003 (31 December 2002;
(pound)420,500).


22       Related Party Transactions

        The Company and Group have taken advantage of the exemption provided by
FRS 8 (Related Party Disclosures) in not disclosing transactions with other
group companies where there is a common ownership interest in excess of 90% and
where such transactions are fully eliminated on consolidation.

      Amounts outstanding with the Dunlop Aerospace Limited UK Pension Scheme at
31 December 2003 totaled(pound)224,000 (2002:(pound)Nil).

23  Reconciliation of Operating Profit to Net Cash Inflow from Operating
    Activities

<TABLE>
<CAPTION>

                                                     Year ended            Year ended            Year ended
                                                   31 December           31 December           31 December
                                                       2001                  2002                  2003
                                                 ---------------        --------------        --------------
                                                    (pound)'000          (pound)'000           (pound)'000
<S>                                                     <C>                     <C>                  <C>
Operating profit..............................           75,656                65,113               58,146
Depreciation..................................           12,875                14,540               14,667
Amortisation of intangibles...................            2,968                 3,079                2,799
Amortisation of deferred costs................            2,643                 1,622                1,438
Loss on disposal of fixed assets..............               79                   469                   74
Goodwill impairment charge....................              199                     -                    -
Capital grant release.........................             (264)                 (290)                (296)
Change in stocks..............................           (2,327)               (6,071)               1,710
Change in debtors.............................            8,541               (15,701)             (12,436)
Change in creditors and provisions............          (19,738)                  (38)              19,440
                                                 ---------------        --------------        --------------
Net cash inflow from operating activities.....           80,632                62,723               85,542
                                                 ===============        ==============        ==============
</TABLE>


24  Analysis of Changes in Net Debt
<TABLE>
<CAPTION>

                                                                                                               At
                                       At 1 January        Cash          Exchange                         31 December
                                           2001            Flow         Adjustments          Other           2001
                                     ---------------  ------------    ---------------     -----------    --------------
                                      (pound)'000      (pound)'000      (pound)'000      (pound)'000     (pound)'000
<S>                                        <C>               <C>               <C>          <C>             <C>
Cash at bank and in hand..........         (37,219)          8,768             (612)             -          (29,063)
Overdrafts........................           1,248          (1,300)              52              -                -
                                     ---------------  ------------    ---------------     -----------    --------------
                                           (35,971)          7,468             (560)             -          (29,063)
Short-term deposits...............               -         (11,381)             (39)          (115)         (11,535)
Debt due within one year..........          19,395           8,760               32         26,207           54,394
Debt due after one year...........         385,639               -            9,543        (24,081)         371,101
Finance leases....................             338            (352)              14              -                -
                                     ---------------  ------------    ---------------     -----------    --------------
Total.............................         369,401           4,495            8,990          2,011          384,897
                                     ===============  ============    ===============     ===========    ==============
</TABLE>


<TABLE>
<CAPTION>
                                                                                                                At
                                        At 1 January        Cash          Exchange                         31 December
                                            2002            Flow         Adjustments          Other           2002
                                      ---------------  ------------    ---------------     -----------    --------------
                                       (pound)'000      (pound)'000      (pound)'000      (pound)'000     (pound)'000
<S>                                        <C>              <C>               <C>            <C>            <C>
Cash at bank and in hand..........         (29,063)         (6,537)           2,015              -          (33,585)

Overdrafts........................               -          18,148                -              -           18,148
                                     ---------------  ------------    ---------------     -----------    --------------
                                           (29,063)         11,611            2,015              -          (15,437)
Short-term deposits...............         (11,535)              -               39         11,496                -
Debt due within one year..........          54,394          15,615)          (1,112)        12,095           49,762
Debt due after one year...........         371,101          23,909          (30,013)       (21,426)         343,571
                                     ---------------  ------------    ---------------     -----------    --------------
Total.............................         384,897          19,905          (29,071)         2,165          377,896
                                     ===============  ============    ===============     ===========    ==============
</TABLE>


<TABLE>
<CAPTION>

                                                                                                               At
                                       At 1 January        Cash          Exchange                         31 December
                                           2003            Flow         Adjustments          Other           2003
                                     ---------------  ------------    ---------------     -----------    --------------
                                      (pound)'000      (pound)'000      (pound)'000      (pound)'000     (pound)'000
<S>                                        <C>              <C>               <C>           <C>             <C>
Cash at bank and in hand..........         (33,585)         14,485            1,465              -          (17,635)
Overdrafts........................          18,148         (18,148)               -              -                -
                                     ---------------  ------------    ---------------     -----------    --------------
                                           (15,437)         (3,663)           1,465              -          (17,635)
Short-term deposits...............               -               -                -              -                -
Debt due within one year..........          49,762         (28,401)            (208)        29,125           50,278
Debt due after one year...........         343,571             800          (26,557)       (27,270)         290,544
Finance leases....................               0           3,672             (309)             -            3,363
                                     ---------------  ------------    ---------------     -----------    --------------
Total.............................         377,896         (27,592)         (25,609)         1,855          326,550
                                     ===============  ============    ===============     ===========    ==============
</TABLE>

Other includes the net change in deferred finance costs, accrued interest on
bank deposits and reclassifications for debt that now falls due for repayment
within one year of the balance sheet date.


25  Reconciliation of Net Cash Flow to Movement in Net Debt
<TABLE>
<CAPTION>

                                                        Year ended          Year ended           Year ended
                                                       31 December         31 December          31 December
                                                           2001                2002                 2003
                                                     --------------       -------------        -------------
                                                     (pound)'000         (pound)'000          (pound)'000
<S>                                                        <C>                 <C>                 <C>
Decrease/(increase) in cash for the period.......          7,468               11,611              (3,663)
Exchange adjustments.............................          8,990              (29,071)            (25,609)
Repayment of bank loans..........................        (10,240)             (15,615)            (28,401)
Decrease in net debt from management of liquid
resources........................................        (11,381)                   -                   -
Repayment of finance lease obligations...........           (352)                   -               3,672
Movement in debt issue costs.....................          2,126                2,050               1,855
New bank loans...................................         19,000               23,909                 800
Other non cash flow..............................           (115)                 115                   -
Issue of Senior Notes............................              -                    -                   -
Movement in net debt during the period...........         15,496               (7,001)            (51,346)
                                                     --------------       -------------        -------------
Net debt at beginning of period..................        369,401              384,897             377,896
                                                     --------------       -------------        -------------
Net debt at end of period........................        384,897              377,896             326,550
                                                     ==============       =============        =============
</TABLE>



26  Subsequent Event


     In 10 February 2004, the Company, issued $120,000,000 of 11.875% Senior
Notes due 2009 as additional debt securities under an indenture pursuant to
which, on May 13, 1999, $225,000,000 of 11.875% Senior Notes due 2009 were
issued.


27  Summary of Differences Between U.K. and U.S. Generally Accepted Accounting
    Principles (GAAP)


     The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United Kingdom
(`U.K. GAAP'), which differ in certain material respects from generally
accepted accounting principles in the United States (`U.S. GAAP').

     The following is a summary of the material adjustments to profit for the
financial year and shareholders' funds, which would have been required, if U.S.
GAAP had been applied instead of U.K. GAAP.

     Effect on net profit of differences between U.K. GAAP and U.S. GAAP:

<TABLE>
<CAPTION>

                                                        Year ended          Year ended           Year ended
                                                       31 December         31 December          31 December
                                                           2001                2002                 2003
                                                      -------------       -------------        -------------
                                                     (pound)'000         (pound)'000          (pound)'000

<S>                                                       <C>                  <C>                 <C>
Profit of the Group under U.K. GAAP                       20,474               11,860              13,047
Adjustments:
Deferred charges and development costs.............       (1,789)              (3,062)             (8,432)
Goodwill amortization..............................       (5,350)                   -                   -
Amortization  and  impairment of other  intangible
assets.............................................       (4,925)              (5,616)             (3,217)
Pensions...........................................         (621)              (1,449)             (2,174)
Interest rate swap contracts.......................       (7,494)               8,970                (919)
Deferred taxes.....................................        5,556                  (37)              4,423
                                                      -------------       -------------        -------------
Net income under U.S. GAAP.........................        5,851               10,666               2,728
                                                      =============       =============        =============
</TABLE>


     Effect on equity shareholders' funds of difference between U.K. GAAP and
U.S. GAAP:
<TABLE>
<CAPTION>

                                                                            31 December         31 December
                                                                                2002                2003
                                                                         ---------------      --------------
                                                                         (pound)'000          (pound)'000
<S>                                                                           <C>                 <C>
Equity shareholders' funds under U.K. GAAP.............................       225,719             236,226
Adjustments:
Deferred charges and development costs.................................       (41,985)            (49,584)
Goodwill ..............................................................      (127,659)           (122,366)
Other intangible assets................................................       165,797             155,393
Pensions...............................................................        (1,797)             (3,971)
Interest rate swap contracts...........................................             -                (919)
Deferred taxes.........................................................       (47,223)            (43,832)
                                                                         ---------------      --------------
Equity shareholders' funds under U.S. GAAP.............................       172,852             170,947
                                                                         ===============      ==============
</TABLE>

A summary of the principal differences applicable to the Group is set out
below:

Deferred Costs and Development Costs

     Under U.K. GAAP, the Group capitalises certain up-front costs related to
service contracts (e.g. initial wheel and ship-sets that are provided to OEMs
free of charge or at a significant price discount) and the purchase of certain
distributor authorisation licenses. For U.K. GAAP purposes, these costs are
typically amortised over two life cycles (with each life cycle ranging from 2
to 5 years) for the costs associated with service contracts or over the life of
the specific program for the distributor authorisation licenses (which are
typically 5 to 25 years in duration).

     Also under U.K. GAAP, certain development costs can be capitalized
provided they meet stringent criteria, and subsequently amortized over the
expected economic useful life of the related product. The Group capitalizes
certain research and development costs related to certain major projects and
also capitalizes certain regulatory certification charges for its parts
development.


     Under U.S. GAAP, costs associated with the installation of initial braking
and wheel systems are amortized over the shorter of the initial braking and
wheel life cycle or three years, and distributor authorization licenses are
amortized over 5 to 10 years, the original legal life of the licenses or
related authorization agreements. Furthermore, under U.S. GAAP, all research
and development costs are expensed as incurred.


     Acquisition Accounting

     Under U.K. GAAP, the purchase price of a business is assigned first to the
separable tangible assets acquired and liabilities assumed on the basis of
their fair values at the date of acquisition. Any excess of cost over the fair
value of net tangible assets acquired is then allocated to identifiable
intangible assets to the extent that their value can be measured reliably on
initial recognition, the asset can be separately disposed of, and the asset is
controlled through custody or legal rights; otherwise the values associated
therewith should be included within the purchase price attributable to
goodwill. Any remaining excess should then be recorded as acquisition goodwill
and amortized over a period not to exceed 20 years unless (as the group has
considered) such goodwill is regarded as having an indefinite useful life,
whereupon it is not amortized and then subject to an annual impairment review.
Additionally, under U.K. GAAP, certain deferred costs of the acquired business
are carried forward on acquisition at their net book amount. Finally, under
U.K. GAAP, the recording of the net assets acquired and the acquisition
goodwill may be done at the holding company level without any `push down'
accounting being applied.

     Under U.S. GAAP, for acquisitions prior to June 30, 2001, APB No. 16
`Business Combinations' required the application of the purchase method of
accounting to the company's acquisition transactions, in which the cost of an
investment is assigned to the tangible and identifiable intangible assets
acquired and liabilities (representing principally fixed assets, inventories or
stock, pensions and intangible assets) assumed on the basis of their fair
values at the date of acquisition. Any excess of cost over fair value of net
assets acquired is recorded as goodwill, which is then amortized over the
expected useful economic life, not to exceed 40 years. Additionally, deferred
costs of an acquired business are set to zero at the opening balance sheet
date. Finally, the results of the acquisition accounting (i.e. the step-up or
step-down to fair market value and the recording of goodwill) must be allocated
(i.e. pushed down) to the respective business units to which it relates.


     In June 2001, the Financial Accounting Standards Board issued SFAS No.
141,"Business Combinations," effective for business combinations initiated
after 30 June 2001, and SFAS No. 142, "Goodwill and Other Intangible Assets,"
effective for fiscal years beginning after 15 December 2001. SFAS 141 requires
that the purchase method of accounting be used for all business combinations
initiated after 30 June 2001. SFAS 142 requires that goodwill and certain other
intangible assets acquired after 30 June 2001 and having indefinite lives no
longer be amortized, but rather tested for impairment at least annually.
Intangible assets determined to have definite lives will continue to be
amortized over their useful lives. During the transition period from 1 July
2001 through 31 December 2001, the Group continued to amortize goodwill
associated with business combinations completed prior to 1 July 2001 over their
useful lives. At 31 December 2001, the Group's unamortized goodwill balance
under U.S.GAAP was (pound)191.3 million. Effective 1 January 2002, all
amortization of goodwill was discontinued under U.S. GAAP. Upon adoption of
SFAS 142, the Group completed its transitional impairment testing, effective 1
January 2002 and determined there was no impairment. After completing the
annual impairment test, calculated as at 31 December 2003, the Group determined
that the carrying value of certain trademarks were not impaired (31 December
2002: (pound)2.8 million). With the adoption of SFAS No. 142, management of the
Group also reassessed the remaining useful lives of all depreciable intangible
assets and determined certain trademarks to be indefinite-life intangible
assets.

The following table reflects net income/(loss) for the comparative periods
prior to adoption of SFAS 142 as if the standard's non-amortization provisions
had been adopted as of the beginning of the respective periods:

<TABLE>
<CAPTION>

                                                        Year ended          Year ended           Year ended
SFAS 142                                               31 December         31 December         31 December
                                                           2001                2002                 2003
                                                     --------------      --------------       --------------
                                                     (pound)'000         (pound)'000          (pound)'000
<S>                                                        <C>                 <C>                   <C>
Reported net income/(loss)                                 5,851               10,666                2728
Add back goodwill amortization                             5,350                    -                   -
Add back indefinite life trademark  amortization
- net of tax                                               1,069                    -                   -
                                                     --------------      --------------       --------------
Adjusted income/(loss)                                    12,270               10,666                2728
                                                     ==============      ==============       ==============
</TABLE>

         Intangible Assets
<TABLE>
<CAPTION>

                                                   As of 31 December 2003
                                             Gross Carrying        Accumulated           Weighted-Average
                                                 Amount            Amortisation             Amortisation
                                              (pound)'000          (pound)'000                   Period
                                           -----------------     ---------------        -------------------
<S>                                       <C>                   <C>                    <C>
Amortised intangible assets

Trademarks                                      124,067              (19,123)                 40 years

                                           -----------------     ---------------
Total                                           124,067              (19,123)
                                           =================     ===============


Unamortized intangible assets

Goodwill                                        181,762
Trademarks                                       50,388
                                           -----------------
Total                                           232,150
                                           =================
</TABLE>








Aggregate Amortisation Expense:                           (pound)'000
For year ended 31 December 2003                                 3,217

Estimated Amortisation Expense:                           (pound)'000
For year ended 31 December 2004                                 3,217
For year ended 31 December 2005                                 3,217
For year ended 31 December 2006                                 3,217
For year ended 31 December 2007                                 3,217
For year ended 31 December 2008                                 3,217



     Goodwill

     The changes in the carrying amount of goodwill for the year ended
31December 2003 are as follows:

<TABLE>
<CAPTION>

                                                         Engine Repair &
                                         Manufacturing       Overhaul          Total
                                       (pound)'000      (pound)'000      (pound)'000
                                       ----------------------------------------------------
<S>                                         <C>               <C>             <C>
Balance as of 1 January 2003                139,769           46,428          186,197
Goodwill acquired during year                  -                -                -
Impairment losses                              -                -                -
Foreign exchange                               -             (4,435)          (4,435)
                                       ----------------------------------------------------
Balance as of 31 December 2003              139,769           41,993          181,762
                                       ====================================================
</TABLE>


     Pension and Post-retirement Benefits

     Under U.K. GAAP, the cost of providing pension benefits is expensed over
the average expected service lives of eligible employees in accordance with the
provisions of SSAP 24. SSAP 24 aimed to produce an estimate of cost based on
long-term actuarial assumptions. Variations from the regular pension cost
arising from, for example, funding deficiencies or surpluses, are charged or
credited to the profit and loss account over the expected average remaining
service lives of current employees in the schemes.

     Under U.K. GAAP, it is a requirement to disclose balance sheet and revenue
account figures in accordance with the provisions of FRS 17. Over time FRS 17
will fully replace SSAP 24. FRS 17 works from the premise that a surplus or
deficit in a pension arrangement (measured with reference to the fair values of
the pension assets and liabilities) should be shown on the employer's balance
sheet. The overall figures in the performance statements reflect the changes in
those fair values year on year.

     Under U.S. GAAP, employee pension costs are recognized in accordance with
SFAS No. 87 `Employers' Accounting for Pensions.' SFAS 87 requires the use of
an actuarial method for determining defined benefit pension costs and provides
for the deferral of actuarial gains and losses (in excess of a specified
corridor) that result from changes in assumptions or actual experience
differing from that assumed. SFAS 87 also provides for the prospective
amortization of costs related to changes in the benefit plan, as well as the
obligation resulting from the transition and requires disclosure of the
components of period pension cost and the funded status of the pension plans.

     By far the largest pension plan in the Group is the U.K. plan, which is
funded and defined benefit in nature. The company also sponsors a funded
defined benefit arrangement for employees in Canada and small defined
contribution arrangements in other countries.

     As at 1 April 2000, the accrued benefits for all members of the UK plan
were increased by 5%. This gave rise to a prior service cost of
(pound)2,148,000, which is being amortised under US GAAP over the average
future working lifetimes of employees.

     The measurement date for both the UK and Canadian plans is December 31

     The change in benefit obligation during the year is as follows:
<TABLE>
<CAPTION>

                                                                           31 December          31 December
                                                                              2002                 2003
                                                                       ------------------   ------------------
                                                                        (pound)'000          (pound)'000
<S>                                                                         <C>                   <C>
Benefit obligation at beginning of year.............................         59,133               65,453
Service cost........................................................          4,350                4,018
Interest cost.......................................................          3,567                3,899
Plan participants' contributions....................................          1,292                1,305
Other actuarial (gains)/losses......................................         (2,712)               2,696
Benefits paid.......................................................           (169)              (1,078)
Plan amendment......................................................              0                    0
Exchange rate adjustment............................................             (8)                  18
                                                                       ------------------   ------------------
Benefit obligation at 31 December...................................         65,453               76,311
                                                                       ==================   ==================
</TABLE>

         The change in plan assets during the year is as follows:
<TABLE>
<CAPTION>

                                                                          31 December          31 December
                                                                             2002                 2003
                                                                      ------------------   ------------------
                                                                        (pound)'000          (pound)'000
<S>                                                                          <C>                  <C>
Fair value of plan assets at beginning of year......................         59,675               55,368
Estimated actual return on plan assets..............................         (8,127)               7,543
Employer contribution...............................................          2,706                2,815
Plan participants' contributions....................................          1,292                1,305
Benefits paid.......................................................           (169)              (1,078)
Exchange rate adjustment............................................             (9)                  17
                                                                      ------------------   ------------------
Fair value of plan assets at end of year............................         55,368               65,970
                                                                      ==================   ==================

Funded  status......................................................        (10,085)             (10,340)
Unrecognized prior service cost.....................................          1,754                1,611
Unrecognized net actuarial (gain)/loss..............................          6,980                5,034
                                                                      ------------------   ------------------
Net amount recognized...............................................         (1,351)              (3,695)
                                                                      ==================   ==================
</TABLE>

         Assumptions used to determine the pension cost for the defined benefit
plans were:
<TABLE>
<CAPTION>

                                                                            Average               Average
                                                                          Weighted by           Weighted by
                                                                              PBO                   PBO
                                                                          31 December           31 December
                                                                              2002                 2003
                                                                      ------------------   ------------------
                                                                               (%)                  (%)
<S>                                                                           <C>                  <C>
Discount rate.......................................................          5.75                 5.6
Rate of return on assets............................................          6.75                 6.6
Salary growth.......................................................          3.25                 3.25
Pension increases...................................................          2.25                 2.5
</TABLE>



The expected rate of return on plan assets, based on actuarial advice, reflects
the average rate of return expected from the plan's assets over the long term
and should not change significantly from year to year unless justified by
significant changes to the plan's asset distribution or general economic
outlook.

The net periodic pension cost, in accordance with SFAS No. 87, for the Group's
estimated portion of the defined benefit pension plan is summarized as follows:

<TABLE>
<CAPTION>

                                                                           Year ended           Year ended
                                                                          31 December          31 December
                                                                              2002                 2003
                                                                      ------------------   ------------------
                                                                        (pound)'000          (pound)'000
<S>                                                                   <C>                  <C>
Components of pension expense:
  Service costs (net of employee contributions).....................          4,350                4,018
  Interest cost.....................................................          3,567                3,899
  Expected return on plan assets....................................         (4,243)              (3,794)
  Amortization of unrecognized prior service cost...................            143                  143
  Amortization of unrecognized net gain/(loss)......................            227                  897
                                                                      ------------------   ------------------
Net periodic pension cost...........................................          4,044                5,163
                                                                      ==================   ==================
Exchange rate adjustment                                                          -                   (1)
</TABLE>


     The plan asset allocations as at December 31, 2003 and 2002, by asset
category, are as follows:

<TABLE>
<CAPTION>

                                                                           Year ended           Year ended
                                                                          31 December          31 December
                                                                              2002                 2003
                                                                      ------------------   ------------------
<S>                                                                      <C>                    <C>
Asset category
      Equities......................................................             58%                  61%
      Bonds.........................................................             41%                  39%
      Other.........................................................              1%                   0%
                                                                      ------------------   ------------------
                                                                                100%                 100%
                                                                      ==================   ==================
</TABLE>


     The expected rate of return of the assets, split by asset category, as at
December 31, 2003 and December 31, 2002 are as follows:

<TABLE>
<CAPTION>

                                                                       Long term rate of return expected at
                                                                           Year ended           Year ended
                                                                          31 December          31 December
                                                                              2002                 2003
                                                                      ------------------   ------------------
<S>                                                                   <C>                   <C>
Asset category
      Equities......................................................              9.5%                 8.75%
      Bonds.........................................................              5.51%                5.0%
      Other.........................................................              2.0%                 3.3%
</TABLE>





     In order to arrange for the plan funds to be invested, the Trustee will
select fund manager(s) from time to time based on appropriate external advice
and assistance without any predetermined view as to whether there should be one
fund manager or more and whether the fund manager(s) should be specialists or
generalists.

     The fund managers can invest in any investment permitted by the Trust
Deed, however, the Trustee will give instructions on the specific funds to
invest in having consulted the actuary. The Trustee receives external advice on
the benchmark asset allocation. The Trustee objective is to have bond exposure
of around 40% and equities exposure of 60%.

     Dunlop Aerospace Limited expects to contribute approximately
(pound)4,321,000 to its pension plan in the year beginning January 1, 2004.

     The accumulated benefit obligation for the UK plan was (pound)55,154,00 as
at December 31, 2003.

     In addition to the defined benefit plan, the U.S. and Canadian companies
sponsor defined contribution plans. Employer contributions to the Canadian
defined contribution arrangements in the year ended 31 December 2003 amounted
to (pound)1,367,700 (2002: (pound)1,048,000; 2001: (pound)977,000). Employer
contributions paid to the US plans in 2003 amounted to (pound)1,172,000 (2002:
(pound)1,173,000; 2001: (pound)1,317,000).

     Certain employees in the Netherlands participate in a
collectively-bargained multi-employer plan. In addition to the
collectively-bargained plan, employees in the Netherlands also participated in
a defined contribution plan. Employer contributions to these plans for 2003
were (pound)389,000 (2002: (pound)324,000; 2001: (pound)272,000).

     In Australia, employees participate in an arrangement which is essentially
a defined contribution plan. Employer contributions in 2003 were (pound)61,000
(2002: (pound)35,000; 2001: (pound)235,000).

     In Singapore a national defined contribution plan is operated. Employer
contributions for 2003 were (pound)4,000 (2002:(pound)nil; 2001:
(pound)23,000).

Interest Rate Swap Contracts

     Under U.K. GAAP, interest rate swap contracts undertaken for the purpose
of hedging outstanding or potential borrowings are accounted for on an
off-balance sheet accruals basis with net payments or receipts recorded as a
component of interest expense.

     The requirements for hedge accounting under U.S. GAAP are more
prescriptive than those under U.K. GAAP. Under U.S. GAAP, to qualify for hedge
accounting, interest rate swaps must not only be designated as hedges, but at
inception and throughout the term of the swap there must be a high correlation
between the market values of the swap contract and the outstanding balance of
the underlying debt being hedged. The principle amounts and maturities of the
Group's outstanding debt balances do not correlate sufficiently with the
notional amounts and maturities of the outstanding swap contracts to qualify
for hedge accounting under U.S. GAAP. Accordingly, these contracts are
reflected on a mark-to-market basis with changes in fair value being reflected
in net income currently.



Income and Deferred Taxes

      Under U.K. GAAP tax deferred or accelerated by the effect of timing
differences is accounted for to the extent that a transaction or event that has
occurred at the balance sheet date gives rise to an obligation to pay more tax
or a right to pay less tax in the future.

      Under U.S. GAAP, deferred taxes are accounted for on all temporary
differences, including those resulting from other U.S. GAAP adjustments, and a
valuation allowance is established to reduce deferred tax assets to the amount
which `more likely than not' will be realised in future periods based on
current estimates of future taxable income, along with proper tax planning
strategies.

      The components of the net deferred tax assets and liabilities as of 31
December 2002 and 2003 per U.K. GAAP are as follows:
<TABLE>
<CAPTION>

                                                                           2002                2003
                                                                         (pound)'000       (pound)'000
                                                                   ------------------   ------------------
<S>                                                                <C>                  <C>
Current deferred tax assets consist of the following:
  Operating losses..............................................                985               1,095
  Advance tax paid on cash accounting basis.....................              3,458               1,919
  Debtors.......................................................                 44                  31
  Inventory.....................................................                439                 546
  Other provisions..............................................              1,571                 675
                                                                   ------------------   ------------------
  Total deferred tax assets.....................................              6,497               4,266
  Less: valuation allowance.....................................               (985)             (1,095)
                                                                   ------------------   ------------------
Current deferred tax assets.....................................              5,512               3,171
                                                                   ==================   ==================


Current deferred tax liabilities consist of the following:
  Gain on plant deferred through reinvestment...................                961                 379
  Cost per brake landing program deferrals......................                366                 331
  Percentage of completion contract accounting                                  -                 1,262
                                                                   ------------------   ------------------
Current deferred tax liabilities................................              1,327               1,972
                                                                   ==================   ==================

Non-current deferred tax liabilities consist of the following:
  Fixed assets..................................................             16,379              16,979
  Deferred charges and development costs........................              8,011              10,179
  Unrealized foreign exchange on debt...........................                  -               2,995
                                                                   ------------------   ------------------
Non-current deferred tax liabilities............................             24,390              30,153
                                                                   ==================   ==================
</TABLE>


     The Group operates in a number of countries and in most of those
jurisdictions profits are taxed at rates exceeding those of the UK. Deferred
tax liabilities have not been recognized for these undistributed earnings as it
is management's intention to indefinitely reinvest such earnings in the country
of origin, while it is anticipated that Double Tax Relief would substantially
eliminate any UK tax liability on such dividends.



     Cash Flow Statements


     The financial statements include Statements of Cash Flows presented in
accordance with UK Financial Reporting Standard 1, `Cash Flow Statements' (`FRS
1 (Revised 1996)'). The statements prepared under FRS 1 present substantially
the same information as that required under U.S. Statement of Financial
Accounting Standard No. 95 (SFAS 95), except that FRS 1 reflects changes in
cash (which is defined as cash in hand and deposits repayable on demand less
any bank loans or bank overdrafts repayable on demand), whereas SFAS 95
reflects changes in the total of cash and cash equivalents.

     Under FRS 1 cash flows are presented separately for (i) operating
activities; (ii) returns on investments and servicing of finance; (iii)
taxation; (iv) capital expenditure and financial investment; (v) acquisitions
and disposals; and (vi) financing activities. SFAS 95 only requires
presentation of cash flows from (i) operating, (ii) investing and (iii)
financing activities.

     Cash flows under FRS 1 in respect of interest received, interest paid (net
of that capitalized), interest on finance leases and taxation would be included
within operating activities under SFAS 95. Capitalized interest would be
included in investing activities under U.S. GAAP. Under SFAS 95 all short-term
borrowings and bank overdrafts are included in financing activities.

     Cash flows under FRS 1 in respect of expenditure on intangible assets
would be included within operating activities under U.S. GAAP.

     The following statements summarize the statement of cash flows for the
Group as if they had been presented in accordance with U.S. GAAP and include
the adjustments which reconcile cash and cash equivalents under U.S. GAAP to
cash and cash equivalents reported under U.K. GAAP.

<TABLE>
<CAPTION>

                                                               Year ended       Year ended        Year ended
                                                              31 December      31 December       31 December
                                                                   2001            2002              2003
                                                             -------------    -------------     -------------
<S>                                                               <C>                <C>              <C>
Net cash inflow from operating activities.................         22,109            9,449            37,431
Net cash used in investing activities.....................        (38,337)         (29,354)           (6,167)
Net cash (outflow)/inflow from financing activities.......          7,512           26,442           (45,749)
Effect of exchange rates on cash and cash equivalents.....            560           (2,015)           (1,465)
                                                             -------------    -------------     -------------
Net (decrease)/increase in cash and cash equivalents
under U.S. GAAP...........................................         (8,156)           4,522           (15,950)

Cash and cash equivalents under U.S. GAAP at beginning of
year......................................................         37,219           29,063            33,585
                                                             -------------    -------------     -------------
Cash and cash equivalents under U.S. GAAP at end of year..         29,063           33,585            17,635
                                                             -------------    -------------     -------------
Bank (overdrafts) under U.K. GAAP at end of year..........        (18,148)               -                 -
                                                             -------------    -------------     -------------
Cash and bank balances, net of overdrafts, under U.K. GAAP
at end of year............................................         29,063           15,437            17,635
                                                             =============    =============     =============

</TABLE>


     Other Differences

     Other minor differences exist between U.K. GAAP and U.S. GAAP in respect
of certain items reflected in the consolidated financial statements, such as:

     Under U.K. GAAP, interest expense incurred during the construction of
     productive assets is not capitalized. However, under U.S. GAAP, SFAS No.
     34, requires the capitalization of the interest related to the
     construction of long lived assets. The Company has determined that the
     application of this statement would not have a material effect on the
     Company's reported net income or reported net assets.

     Such differences are immaterial to the reconciliation of net income/(loss)
and equity shareholders' funds and have been excluded accordingly.


     Recently Issued Accounting Standards


     In May 2003, the FASB issued SFAS No. 150, Accounting For Certain
Financial Instruments with Characteristics of both Liabilities and Equity. The
Statement improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity and requires that these
instruments be classified as liabilities in statements of financial position.
This Statement is effective prospectively for financial instruments entered
into or modified after May 31, 2003 and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003. This statement shall
be implemented by reporting the cumulative effect of a change in an accounting
principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim period of
adoption. We do not expect the adoption of SFAS 150 will have a significant
impact on our financial position and results of operations.

     In January 2003, the Emerging Issues Task Force (EITF) issued EITF 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables". EITF 00-21
addresses the issues of (1) how to determine whether an arrangement involving
multiple deliverables contains more than one unit of accounting; and (2) how
arrangement consideration should be measured and allocated to the separate
units of accounting in the arrangement. EITF 00-21 does not change otherwise
applicable revenue recognition criteria. EITF 00-21 is effective for revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. We
do not expect the adoption of EITF 00-21 will have a significant impact on our
financial position and results of operations.


     In January 2003, the FASB issued FASB Interpretation No. 46 Consolidation
of Variable Interest Entities. In general, a variable interest entity is a
corporation, partnership, trust, or any other legal structure used for business
purposes that either (a) does not have equity investors with voting rights or
(b) has equity investors that do not provide sufficient financial resources for
the entity to support its activities. Interpretation 46 requires a variable
interest entity to be combined by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns or both. In
December 2003, the FASB issued FASB Interpretation 46, Consolidation of
Variable Interest Entities. FIN 46 replace FIN 46 and clarifies the accounting
for interests in variable interest entities. FIN 46 should be applied to
entities considered to be Special Purpose Entities (SPE's) no later than the
end of the first reporting period after December 15, 2003 and by the end of the
first reporting period that ends after march 15, 2004 to entities other than
SPE's. Certain of the disclosure requirements apply in all financial statements
issued after January 31, 2003, regardless of when the variable interest entity
was established. The Company is still in the process of determining the impact,
if any, of adoption of FIN 46.

     The disclosure provisions of FIN 46 are effective in all financial
statements initially issued after January 31, 2003. FIN 46 is required to be
immediately applied by all entities with a variable interest in a VIE created
after January 31, 2003. A public entity with a variable interest in a VIE
created before February 1, 2003 is required to apply FIN 46 to that entity no
later than the beginning of the first interim or annual reporting period
beginning after June 15, 2003.


     Concentrations of Credit Risk

     Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable and
cash and cash equivalents. Management believes the concentration of credit risk
associated with accounts receivable is minimal because it has only two
customers that accounted for more than ten % but less than twenty % of the
Company's total revenues in years ended 31 December 2001, 2002, and 2003. Cash
and liquid resources are invested in bank deposit accounts callable on no more
than one months notice. The risk associated with the Company's cash and liquid
resources is mitigated by the fact that these amounts are placed in what it
believes to be high quality financial institutions.


     Presentation Differences

     Under U.K. GAAP, assets in the balance sheet are presented in ascending
order of liquidity in accordance with the requirements of the Companies Act
1985, whereas under U.S. GAAP assets are presented in descending order of
liquidity. Under U.S. GAAP, the analysis is between total assets and
liabilities and shareholders' funds and certain items which are disclosed in
the notes; under U.K. GAAP, this would be disclosed on the face of the balance
sheet.

     Under SFAS No. 131, the Company is required to present segment information
based upon the `management approach'. U.K. GAAP is less prescriptive than U.S.
GAAP in determining the segments of a business. Company segmental information
disclosed in Note 3 has been prepared according to SFAS No. 131.

     The company presents its consolidated profit and loss accounts in
accordance with U.K. GAAP and the Companies Act of 1985. This presentation
differs in certain respects with that which is required under U.S. GAAP. The
following income statement presents the Company's results of operation prepared
in accordance with U.K. GAAP, but in a format that is required under U.S. GAAP.

<TABLE>
<CAPTION>

                                                             Year ended       Year ended       Year ended
                                                            31 December      31 December      31 December
                                                                2001             2002             2003
                                                          ----------------- ---------------- ----------------
                                                         (pound)'000       (pound)'000      (pound)'000
<S>                                                            <C>               <C>              <C>
Revenues.............................................          444,904           451,848          456,614
Cost of goods sold...................................         (314,433)         (326,599)        (339,350)
                                                          ----------------- ---------------- ----------------
Gross profit.........................................          130,471           125,249          117,264

Selling general and administrative expenses and other
expenses.............................................          (54,815)          (56,358)         (55,430)
Aborted IPO costs ...................................                -            (3,778)               -
Aborted acquisition costs ...........................                -                 -           (3,688)
                                                          ----------------- ---------------- ----------------
Income from operations...............................           75,656            65,113           58,146
Finance costs........................................          (41,930)          (43,235)         (31,962)
                                                          ----------------- ---------------- ----------------
Income before income taxes...........................           33,726            21,878           26,184
Income taxes.........................................          (13,252)          (10,018)         (13,137)
                                                          ----------------- ---------------- ----------------
Net Income...........................................           20,474            11,860           13,047
                                                          ================= ================ ================
</TABLE>