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

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 2002

       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)


           N/A                                     England
(Translation of Registrant's              (Jurisdiction of incorporation
name into English)                            or organization)


                                 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

<page>


This amended annual report on Form 20-F/A dated July 3, 2003 is being filed
to:

(1)   add the financial statements incorporated by reference and attached
      hereto on pages F-1 through F-46 which were inadvertently omitted from
      our Annual Report on Form 20-F filed on June 30, 2003; and

(2)   attach exhibits 4.2, 4.3, 4.4, 4.5 and 99.1 which were inadvertently
      omitted from our Annual Report on Form 20-F filed on June 30, 2003.

Other than the foregoing items, no part of our Annual Report on Form 20-F
filed on June 30, 2003 is being amended.

<PAGE>

<table>
<caption>

                                            TABLE OF CONTENTS

                                                                                                       Page

                                                                                                       <c>
Presentation of Information                                                                               3
Forward Looking Statements                                                                                4


PART I

Item 1          Identity of Directors, Senior Management, and Advisors                                    4
Item 2          Offer Statements and Expected Timetable                                                   4
Item 3          Key Information                                                                           4
Item 4          Information on the Company                                                               13
Item 5          Operating and Financial Review and Prospects                                             24
Item 6          Directors, Senior Management and Employees                                               34
Item 7          Major Shareholder and Related Party Transactions                                         38
Item 8          Financial Information                                                                    38
Item 9          The Offer and Listing                                                                    39
Item 10         Additional Information                                                                   39
Item 11         Quantitative and Qualitative Disclosures about Market Risk                               42
Item 12         Description of Securities Other than Equity Securities                                   43

PART II

Item 13        Defaults, Dividend Arrearages and Delinquencies                                           44
Item 14        Material Modification to the Rights of Security Holders and Use of Proceeds               44
Item 15        Controls and Procedures                                                                   44
Item 16        Reserved for Future Use                                                                   44

PART III

Item 17        Financial Statements                                                                      45
Item 18        Financial Statements                                                                      45
Item 19        Exhibits                                                                                  45

</table>

<page>

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 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, 2002, 2001 and
2000, but is derived from those accounts. Statutory accounts for 2002, 2001
and 2000 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.
<page>


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 historical combined (predecessor) and
consolidated financial data for the Company as of and for each of the periods
indicated. This selected combined (predecessor) and consolidated financial
data has been extracted, or derived from, and is qualified by reference to,
the Company's historical combined (predecessor) and consolidated financial
statements as of December 31, 2002, December 31, 2001, December 31, 2000,
December 31, 1999 and for the three-month period ended December 31, 1998,
which have been audited by PricewaterhouseCoopers LLP, our independent
auditors. The historical combined (predecessor) and 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 25 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.

In the current year the Company was required to adopt Financial Reporting
Standard 19 ` Deferred tax' such that 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 recognized 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.
Accordingly all UK GAAP numbers have been restated to reflect this change in
accounting policy. There is no impact on the reported US GAAP numbers as a
result of this change.

Dunlop Standard Aerospace Holdings

<table>
<caption>

                                                                                                                       Combined
                                                                                                                      Predecessor
                                                                                                       Three-Month     Nine-Month
                                               Year Ended     Year Ended    Year Ended    Year Ended   Period Ended   Period Ended
                                              December 31,   December 31,  December 31,  December 31,  December 31,  September 30,
               ((pound)in millions)                2002           2001          2000          1999          1998          1998

Profit and Loss Data:                                         (restated)    (restated)    (restated)    (restated)     (restated)

Amounts in accordance with U.K. GAAP

                                                 <c>           <c>           <c>           <c>           <c>            <c>
Revenues.................................... (pound)451.8  (pound)444.9  (pound)384.1  (pound)325.7  (pound)75.9    (pound)214.6
Cost of goods sold...........................       326.6         314.4         259.7         221.1          52.2          148.6
                                                    -----         -----         -----         -----          ----          -----
Gross margin.................................       125.2         130.5         124.4         104.6          23.7           66.0
Other operating expenses.....................        56.4          54.8          55.2          45.7          9.9            29.3
                                                     ----          ----          ----          ----          ---            ----
Operating profit pre-exceptional.............        68.9          75.7          69.2          58.9          13.8           36.7
Exceptional item1............................         3.8           -             -             -             -              -
Operating profit after-exceptional...........        65.1          75.7          69.2          58.9          13.8           36.7
Finance costs................................        43.2          41.9          40.7          39.5          10.4            3.9
                                                     ----          ----          ----          ----          ----            ---
Profit on ordinary activities before taxation..      21.9          33.7          28.5          19.4          3.4            32.8
Taxation ....................................        10.0          13.3          11.8           6.9           0.9            9.8
                                                     ----          ----          ----           ---           ---            ---
Profit for the financial period..............        11.9   (pound)20.5   (pound)16.8   (pound)12.6    (pound)2.5    (pound)23.0
                                                     ====          ====          ====          ====           ===           ====

Amounts in accordance with U.S. GAAP
Net income/(loss)2............................(pound)10.7    (pound)5.9    (pound)(4.5)  (pound)13.8  (pound)(16.0)   (pound)18.3
                                                     =====         ======         ====          ====         =====           ====

1.    The total exceptional item charge of(pound)3.8 million relates to costs incurred in relation to a proposed plan to seek
      a listing of the group's shares.

2.    Effective January 1, 2002, the company adopted SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 no
      longer permits the amortization of goodwill and indefinite-lived intangible assets. Had we adopted the non-amortization
      provisions of SFAS No. 142, beginning January 1, 2000.  It would have increased reported net income for 2002, 2001, 2000 by
      nil, (pound)6.4 million, and (pound)6.7 million, respectively, and consequently, net income would have been (pound)10.7
      million, (6.4 pound)12.3 million  and (pound)2.2 million, respectively, under U.S. GAAP.

</table>

<table>
<caption>

                                                                                                                    Combined
                                                                                                                    Predecessor
                                                                                                      Three-Month   Nine-Month
                                              Year Ended    Year Ended    Year Ended    Year Ended    Period Ended  Period Ended
                                             December 31,  December 31,  December 31,   December 31,  December 31,  September 30,
              ((pound)in millions)                2002        2001          2000           1999          1998          1998
                                                  ----        ----          ----           ----          ----          ----


                                                 <c>            <c>           <c>           <c>           <c>          <c>
Cash Flow Statement Data
Amounts in accordance with U.K.GAAP
Net cash inflow from operating activities..  (pound)62.7    (pound)80.6   (pound)81.3   (pound)80.7   (pound)13.0  (pound)24.2
Net cash (outflow) from returns on
investments and servicing of
finance...................................         (43.3)         (40.3)        (37.2)        (34.2)         (7.4)        (3.9)
Tax paid..................................          (7.7)          (8.9)        (11.2)         (1.8)         --          (16.7)
Net cash (outflow) from capital expenditure
and financial investment...................        (31.6)         (35.9)        (26.5)        (26.0)         (7.9)       (22.4)
Net cash (outflow) from acquisitions and
disposals..................................           --             --           --            --         (520.5)         --
Management of liquid resources - short term
deposits....................................          --          (11.4)          --            --            --           --
Net cash (outflow)/inflow from
financing...................................         8.3            8.4         (15.7)         (0.5)        547.3         56.6
                                                     ---            ---         -----          ----         -----         ----
Increase/(decrease) in cash.................(pound)(11.6)  (pound) (7.5) (pound) (9.3) (pound) 18.1  (pound) 24.5 (pound) 37.8
                                                   =====           ====          ====          ====          ====         ====

Amounts in accordance with U.S. GAAP
Net cash inflow/(outflow) from operating
activities.................................   (pound)9.4    (pound)22.1   (pound)28.3   (pound)38.5    (pound)4.6  (pound)(1.0)
Net cash used in investing activities......        (29.4)         (38.3)        (22.1)        (20.0)       (527.5)       (18.0)
Net cash (outflow)/inflow from
financing...................................        26.4            7.5         (20.3)          5.7         547.3         17.7
Net increase/(decrease) in cash under U.S.
GAAP......................................... (pound)4.5    ((pound)8.2) (pound)(12.5) (pound) 24.5   (pound) 25.2 (pound)(0.9)
                                                     ===            ===         =====          ====           ====        ====

</table>

<table>
<caption>

                                                    As of              As of             As of            As of         As of
                                                December 31,       December 31,       December 31,    December 31,    December 31,
               ((pound)in millions)                 2002               2001               2000            1999           1998
                                                    ----               ----               ----            ----           ----


                                                   <c>                <c>               <c>             <c>             <c>
Balance Sheet Data
Amounts in accordance with U.K. GAAP                                (restated)         (restated)      (restated)      (restated)
Fixed assets
   Intangible fixed assets...................  (pound)341.9       (pound)355.7      (pound)346.4    (pound)333.6    (pound)329.7
   Tangible fixed assets.....................         178.6              174.7             159.2           141.8           130.0
Current assets
   Inventories...............................          69.4               68.5              64.5            50.3            53.5
   Debtors (as restated).....................         130.3              125.3             132.2           100.3            98.5
   Cash at bank and in hand..................          33.6               40.6              37.2            49.7            25.2
Creditors--due within one year-borrowings.....        (67.9)             (54.4)            (21.0)          (20.2)           (6.4)
Creditors--due within one year-other creditors        (85.0)             (92.1)           (111.9)          (57.4)          (55.0)
                                                      -----              -----            ------           -----           -----
Net current assets...........................          80.3               87.9             101.0           122.8           115.8
                                                       ----               ----             -----           -----           -----
Total assets less current liabilities........         600.9              618.3             606.6           598.2           575.5
Creditors--due after more than one year.......       (352.5)            (384.1)           (392.4)         (397.5)         (392.2)
Provisions for liabilities and charges.......         (22.6)             (18.7)            (19.2)          (24.9)          (26.1)
                                                      -----              -----             -----           -----           -----
                                               (pound)225.7       (pound)215.5      (pound)195.0    (pound)175.8    (pound)157.2
                                                      =====              =====             =====           =====           =====

Called up share capital......................  (pound)160.0       (pound)160.0      (pound)160.0    (pound)160.0    (pound)155.0
                                                                            --                --             --              --
Profit and loss account......................          65.7               55.5              35.0            15.8             2.2
                                                       ----               ----              ----                             ---
Total shareholders' funds....................  (pound)225.7       (pound)215.5      (pound)195.0    (pound)175.8    (pound)157.2
                                                      =====              =====             =====           =====           =====
Amounts in accordance with U.S. GAAP
Total assets.................................  (pound)760.8       (pound)791.7      (pound)779.6    (pound)735.2    (pound)700.3
Long-term debt...............................         401.2              435.4             417.4           412.5           406.7
Shareholders' equity.........................  (pound)172.9       (pound)163.6      (pound)157.0    (pound)154.0    (pound)139.6

</table>

<table>
<caption>

                                                                                                                      Combined
                                                                                                                     Predecessor
                                                                                                      Three-Month    Nine-Month
                                            Year Ended     Year Ended    Year Ended    Year Ended    Period Ended   Period Ended
                                            December 31,   December 31,  December 31,  December 31,  December 31,   September 30,
               ((pound)in millions)             2002          2001          2000           1999          1998           1998
                                                ----          ----          ----           ----          ----           -----


                                                 <c>           <c>           <c>           <c>            <c>           <c>
Other Financial Data:
Amounts in accordance with U.K. GAAP
Depreciation and amortization................(pound)19.2   (pound)18.5   (pound)13.8   (pound)10.3    (pound)2.5    (pound)6.6
Capital expenditures.........................(pound)33.5   (pound)28.5   (pound)22.7   (pound)19.9    (pound)6.9   (pound)17.9

</table>





      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 4.2% against the U.S. dollar in 2002 but
depreciated 5.3 % against the U.S. dollar in 2001 (based on average exchange
rates for those years). These changes had a negative effect on our U.S.
dollar-denominated revenues and earnings in 2002 but a positive effect on our
U.S. dollar-denominated revenues and earnings in 2001 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 2002 and a negative
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.


<table>
<caption>

Year Ended December 31,                           High         Low         Average(a)        Period End
                                                               (US$ per (pound)1.00)


                                                <c>        <c>             <c>              <c>
1998...........................................    1.72       1.61            1.66             1.66
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

2002 December..................................    1.61       1.56
2003 January...................................    1.64       1.60
2003 February..................................    1.65       1.57
2003 March.....................................    1.61       1.56
2003 April....................................     1.60       1.55
2003 May.....................................      1.65       1.59

</table>

As of 27th June 2003, the exchange rate was 1.66

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

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 defence 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 are currently experiencing 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, the terrorist attacks
of September 11, 2001 adversely affected the U.S. and world economies. These
terrorist attacks, the coalition military response and 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 the terrorist attacks of September
11, 2001, 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. In addition, Boeing and Airbus have both announced that new
commercial aircraft deliveries for 2003 will be lower than 2002, as a result
of reduced demand. We expect that this reduction in the active fleet, coupled
with reduced commercial aircraft deliveries by Boeing and Airbus, could
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 in real terms 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 generated 27% of our 2002
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 defence 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 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 increased
significantly, our revenues, cash flow and profitability may be materially
adversely affected.

      We estimate that approximately 45% of our 2002 total revenues were
generated from servicing engine platforms manufactured by Rolls-Royce, and
approximately 18% of our 2002 total revenues were generated from servicing
engine platforms manufactured by Pratt & Whitney. Our Rolls-Royce
authorizations relating to the T56 and A250 engine platforms are scheduled to
expire on December 31, 2003. We estimate that repair and overhaul services on
the T56 and A250 engine platforms pursuant to those authorizations accounted
for approximately 20% and 8%, respectively, of our 2002 total revenues. Our
Pratt & Whitney authorizations relating to the PW100 and PT6 engine platforms
are scheduled to expire on November 1, 2003. We estimate that repair and
overhaul services on the PT6 and PW100 engine platforms pursuant to those
authorizations accounted for approximately 9% and 9%, respectively, of our
total 2002 revenues.

      A number of factors could cause us to lose existing or fail to obtain
new or renewed OEM 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 and
repair 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 2002, we
made 32% of our total material purchases from Rolls-Royce, 16% of our total
material purchases from Pratt & Whitney and 15% of our total material
purchases from Aviall Inc., a Rolls-Royce distributor. The loss of
Rolls-Royce, Pratt & Whitney 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 sales of parts and services to a few large
customers. We estimate that sales to our top 10 customers comprised
approximately 45% of our 2002 revenues. Our largest customer, Rolls-Royce,
accounted for about 18% of total revenues in 2002. We estimate that revenues
from Rolls-Royce include engine repair and overhaul services that accounted
for approximately 10% of our total 2002 revenues which we provided to five
end-users that maintain separate agreements with Rolls-Royce. In addition, we
estimate that sales to the U.S. military, including sales through the Lockheed
Martin/Kelly Air Force Base contract and sales to the U.S. Coast Guard, were
approximately 15% of our total revenues in 2002. 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
engines we service 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.

      The long-term prospects of our engine repair and overhaul service
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 service
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.

Our revenue mix may vary and may negatively affect our profit margins.

      For fiscal years 2002 and 2001, our engine repair and overhaul revenue
increased, while design and manufacturing revenue decreased, as a percentage
of total revenue. On average, our profit margins on engine repair and overhaul
revenue historically are less than our profit margin on design and
manufacturing revenue. Any decrease in the percentage of our total revenue
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 control all matters
requiring a shareholders' vote, including the election of a majority of DSAG's
board of directors. Doughty Hanson's concentrated share could also delay,
discourage or preclude a change of control or the removal of management. In
addition, if circumstances arise in which the interests of Doughty Hanson
conflict with your interests, you could be disadvantaged by the actions
Doughty Hanson takes.

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 pound 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 our credit facilities.
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 nine 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 Mexico and 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 instability or war;

o     cultural differences;

o     the impact of business cycles and economic instability; and

o     increased expenses as a result of inflation.

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

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. Following the September 11, 2001
terrorist attacks, aviation insurers significantly increased premiums.
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. At December 31, 2002, we had
(pound)393.3 million of long-term debt on a consolidated basis, and a
consolidated debt to equity ratio of 1.74 to 1. Our obligations to make
principal and interest payments in respect of our indebtedness could have
important consequences, including the following:

o     our debt repayment obligations reduce the money available for other
      purposes;

o     some of our debt bears interest at variable rates of interest, which
      could expose us to the risk of increased interest rates;

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

o     our indebtedness may make us more vulnerable to economic and industry
      downturns and reduce our flexibility in responding to changing business
      and economic conditions, including increased competition; and

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

If our businesses do not perform satisfactorily, we may be not be able to pay
principal and interest on or refinance our debt. Whether our businesses
perform satisfactorily will depend on financial, business, economic and other
factors affecting our engine repair and overhaul and design and manufacturing
operations. Some of these factors, such as economic conditions in the
different markets where we operate and pressure from existing and new
competitors, are beyond our control. If we do not earn enough money, we may
have to refinance all or some of our existing debt, sell assets or additional
equity securities or borrow more money. We may not be able to do any of these
things on acceptable terms.

Restrictions in Debt--Our operations are restricted by the terms of our debt
instruments.

The indenture governing the senior notes and our credit agreement will limit
our flexibility in operating our businesses, including our ability to:

o     borrow more money;                   o      merge or consolidate with
                                                  other companies; and

o     pay dividends;                       o      make capital expenditures.

o     make certain investments;

      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 facility immediately due and payable which may also lead
to the senior notes becoming due and payable. If there is a default under the
credit agreement, the operating subsidiaries may not have sufficient assets to
repay the debt under that facility and the notes.

      If we or our subsidiaries fail to comply with the obligations in the
credit agreement or indenture, there could be an event of default under those
debt instruments which could have a material adverse effect on our results of
operations, liquidity and financial condition.

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 85% of our 2002 revenues were generated from
aftermarket sales, and that approximately 83% of our design and manufacturing
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 76% of our 2002 revenues as well as the
large commercial aviation and helicopter sectors, which we estimate accounted
for approximately 9% and 10% of our 2002 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 presence in 11 different
countries and facilities in nine of those countries, with our largest
facilities located in the United Kingdom, Canada and the United States. See
"Note 3 Segmental Analysis" in the F-pages for supplementary segment
disclosures in respect of sales. We also have operations in other markets,
including limited operations in Mexico and China. In 2002, we had revenues of
(pound)451.8 million and operating income of (pound)65.1 million. See
"Operating and Financial Review and Prospects" for additional information
about our operating results.

      Engine Repair and Overhaul (71% of 2002 revenues). 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 in 2002 we generated
approximately 84% of our repair and overhaul service revenues from servicing
engine platforms for 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.

      Design and Manufacturing (29% of 2002 revenues). 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 revenue
opportunities during the operational lives of the aircraft and engine
platforms using our products.

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:

<table>
<caption>

                           2002           Estimated       Date First          Estimated
                          Revenues        Number          Introduced/First    Product
                          (in millions)   Currently       Serviced by the     Life-Cycle
Engine and Engine Type    (and %) (1)     in Use (2)      Company             Stage (3)    Principal Applications
----------------------    -------------   ----------      ---------------     ----------   ---------------------

Rolls Royce

 <c>                      <c>            <c>           <c>  <c>             <c>         <c>
T56/501D (turboprop)  (pound)89.5           8,300         1955/1960           Declining(4) Used primarily in military
                            (19%)                                                          transport planes, including the
                                                                                           Lockheed C-130 Hercules; commercial
                                                                                           version is the 501D.

AE3007 (turbofan)     (pound)70.9           1,500         1996/1997           Growth       Used in the Cessna Citation X
                            (16%)                                                          business jet and the Embraer
                                                                                           135/140/145 regional jet.

A250  (turboshaft)    (pound)36.6          12,900         1967/1967           Mature       Helicopter engine used in many Bell
                            (8%)                                                           and McDonnell Douglas helicopters.

501K (industrial)     (pound)11.7           1,500         1954/1969           Mature       Developed from T56 for use in
                            (3%)                                                           marine and industrial applications,
                                                                                           generally power generation.

AE2100 (turboprop)    (pound)9.1              400         1991/1993           Growth       Used primarily in military
2100A                       (2%)                                                           transports, including the new
2100D3                                                                                     model C-130J Hercules, and also
                                                                                           in commercial aircraft.

Pratt & Whitney
PT6A (turboprop)      (pound)41.1          20,500         1964/1986           Mature       Used in several medium-sized
                            (9%)                                                           business and military aircraft such
                                                                                           as the Raytheon King Air Services
                                                                                           and JPATS.

PW100 (turboprop)     (pound)41.3 (9%)      3,600         1984/1995           Mature       Used in several medium-sized
                                                                                           regional aircraft including the ATR
                                                                                           and the Dash 8 Series.

Honeywell

APU (turboshaft)      (pound)5.5            6,000         1979/1997           Mature       Series of engines used in several
Includes series 36 &        (1%)                                                           business, regional, military
85 (5)                                                                                     commercial aircraft.

General Electric
LM1600 (industrial)   (pound)4.4              135         1991 (as            Growth       Used in marine and industrial
                            (1%)                          aircraft                         applications.
                                                          engine)/1994

CF34 (turbofan) (6)   (pound)4.2            2,500         1995/second         Growth       Used on Bombardier CRJ regional
                            (1%)                          half of 2002                     jets and Canadair Challenger
                                                                                           business jets.


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

(1)   Management's estimates. Percentages are based on our total revenues.

(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)   The T56/501D is in transition because, while the number of engines in service is declining, we believe that
      additional engines are likely to become available for servicing by independent service providers as the U.S.
      government outsources more of its maintenance operations.

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

(6)   Contract with a General Electric affiliate signed in September 2001. First revenue received in the second half of
      2002.

</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 eight business units,
each of which serves a component of our market and three 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
      labour 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)19 million at December 31, 2002. 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 11 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, Australia, and Mexico.
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.

      Design and Manufacturing

      Most of our parts sales are comprised of aftermarket sales, which
consist of replacement parts sales, 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 2002, we estimate that approximately 70% of our design and
manufacturing revenues were attributable to the aftermarket. We estimate that
we received 18% of our total 2002 revenues from sales of wheels, brakes and
braking systems, 3% from sales of heat exchangers, 5% from sales of polymer
and composite products and 2% from sales of bleed valves and actuation. The
magnitude of these sales 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 67% of our 2002 sales of bleed valves and
Solenoids were to Rolls-Royce, and approximately 12% of our 2002 sales of heat
exchangers were supplied to Pratt & Whitney. We believe that such a large
proportion of sales to one customer is typical among engine bleed valve
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 compete with another manufacturer in respect of the initial wheels and
brakes installed. 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
sales 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 2002 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 sales 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 sales. We expect that maintenance
revenue 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 sales 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>

                                                     Revenues          % of Design and
                                                      2002              Manufacturing          % of Total
Product                                       ((pound)in millions)(1)     Revenues             Revenues


                                                       <c>                    <c>                 <c>
Wheels, brakes and braking systems                        82.1                   63%                 18%
Polymer products                                          14.9                   11%                  3%
Heat exchangers                                           14.0                   11%                  3%
Bleed valves & actuation                                   9.1                    7%                  2%
Ice protection & composites                                5.6                    4%           Less than 2%
Other (including Combustion heaters)                       5.6                    4%           Less than 2%
                                                 --------------------- -------------------- --------------------
Total                                             (pound)131.3                  100%                 29%
                                                 ===================== ==================== ====================

(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 18 major programs
and will provide such systems for five 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 2002, is set out below.

<table>
<caption>

                                                         Estimated
                                                         Number of                     Date of Initial  Estimated
                                        2002             Systems                       Investment/      Product
Braking System            Brake       Revenues           Currently                     First Serviced   Life-Cycle
Program                   Type     ((pound)millions)(1)  in Use (2)  Classification    by us             Stage (3)      Source
--------------            -----    --------------------  ----------  --------------    --------------   ----------      ------


                      <c>           <c>              <c>           <c>                <c>            <c>             <c>
Avro RJ (BAe 146)         Carbon    (pound)13.1         380           Regional          1981/1983       Mature (4)       Sole
Boeing 757-200            Carbon    (pound)11.0         947           Large             1982/1984       Growth           Dual (5)
                          and                                         Commercial
                          Steel
BAe Hawk                  Steel      (pound)6.2         427           Military          1972/1974       Growth           Sole
ATR 72                    Carbon     (pound)5.8         280           Regional          1989/1989       Growth           Sole
Hawker Program            Steel      (pound)3.1         750           Business          1963/1964       Growth           Sole
AV8B/Harrier              Carbon     (pound)2.9         432           Military          1974/1978       Mature           Sole
Concorde(6)               Carbon     (pound)2.8           9           Large Commercial  1973/1976       Mature           Sole

Gulfstream GIV/SP         Carbon     (pound)2.4         400 (7)       Business          1990/1992       Growth           Sole
Fairchild Dornier 328     Carbon     (pound)2.3          89           Regional          1997/1999       Mature  (8)      Sole

Gulfstream GV             Carbon     (pound)1.2         170           Business          1995/1997       Growth           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 247 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)   British Airways has recently announced they will ground remaining aircraft in service effective October 2003.
      Concorde sales are less than 1% of our total revenues.

(7)   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 448 total fleet have not been retrofitted to our
      wheels and brakes.

(8)   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 late 2003

</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 expires in
February 2004, unless we have entered into a definitive agreement before then.

      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 North America and United Kingdom. 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 Carbon Vapour
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.

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,
sales personnel and independent representatives, distributors and various
agents. Actual sales 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 sales, where customers are contacted directly by our sales 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 sales, 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
      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 revenue 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 labour 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, 2002, we had unfilled but outstanding orders worth approximately
(pound)90 million for manufactured parts for 2003 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)145 million or 32% of our 2002
revenues were derived from long-term contracts, many of which are with
military and government counterparties. We estimate that approximately
(pound)10 million of those revenues was generated from contracts which will
end or be terminated under their terms before December 31, 2003, and
approximately (pound)8 million of those revenues was generated from contracts
which will end or be terminated under their terms before December 31, 2004.

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 and Environmental Regulation

      Regulation. The aerospace and defense industry is highly regulated to
ensure that products and services meet stringent safety and performance
standards. The repair and overhaul of aircraft engines and engine components
is regulated by governmental and intergovernmental agencies worldwide, such as
the FAA and equivalent government agencies in other countries, and by 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. 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.

      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.

      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 not
a significant part of our repair and overhaul activities and which we are
currently exiting. Authorization agreements are in place for all Rolls-Royce,
General Electric and Pratt & Whitney engine platforms we service. No
authorization expires prior to 31 December 2003. Our Rolls-Royce
authorizations relating to the T56 and A250 engine platforms currently expire
on 31 December 2003. At expiry, our agreements have generally been renewed or
extended.

      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 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.

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 sales 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 2002 Rolls-Royce and Pratt & Whitney were our
largest and second-largest suppliers, accounting for about (pound)67 million
and (pound)33 million, respectively, or approximately 32% and 16%,
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
2002 an additional (pound)30 million of Rolls-Royce parts, or approximately
15% 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 proved 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, dependent 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 in 2002 sales to our top 10 customers comprised
approximately 45% of our revenues. Our largest customer, Rolls-Royce,
accounted for approximately 18% of our 2002 revenues. These revenues from
Rolls-Royce include engine repair and overhaul services, that accounted for
approximately 10% of our 2002 revenues, which we provide to five end-users
that maintain separate servicing agreements with Rolls-Royce. In addition, we
estimate that sales to the U.S. military including sales through the Lockheed
Martin/Kelly U.S.A. contract and the U.S. Coast Guard, were approximately 16%
of our revenues in 2002.

Engine Repair and Overhaul

      Civil. During the year ended December 31, 2002, 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. We have also recently contracted with General Electric
to become the first authorized engine repair and overhaul service provider in
North America on the General Electric CF34 engine. 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 the year ended December 31, 2002, our repair and
overhaul operations served various customers in the military sector worldwide.
The U.S. Air Force through the Lockheed Martin/Kelly U.S.A. contract and the
Canadian Air Force are currently two of our largest repair and overhaul
customers. We estimate that in 2002 engine repair and overhaul sales to the
U.S. military, including sales through the Lockheed Martin/Kelly U.S.A.
contract and sales to the U.S. Coast Guard, accounted for approximately 15% of
our total revenues, and sales to the Canadian military accounted for
approximately 5% 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. 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 recently obtained contracts or have
been selected to supply brakes or braking systems to the Eurofighter Typhoon
program, the Nimrod 2000 program, and in partnership with Honeywell, we will
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
Airlines, British Airways and Air France, 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
                                     ----                              --------------            -------------


                                                                        <c>                       <c>
Intermediate Holding and Management Services Companies
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%

</table>

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



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


                                                <c>        <c>              <c>
Engine Repair and Overhaul
Winnipeg, Canada                               519,000    Owned/ Leased    Repair and overhaul

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
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
Manila, Philippines1                             3,000    Leased           Repair and field service
Minneapolis, MN                                  1,200    Leased           Administration
Mexico City, Mexico                              4,700    Leased           Sales and field service
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/ Leased    Manufacturing and sales

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

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

(1)  The Manila, Philippines lease was terminated on December 31, 2002.

</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. In January 2001, we commenced
work to expand our engine repair and overhaul facility in Tilburg, The
Netherlands. The expanded facility became fully operational during the summer
of 2002. The expansion in Maryville, Tennessee was completed in early 2002.


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 2002, we
generated total revenues of (pound)451.8 million. Approximately 71% of our
2002 revenues were derived from sales of engine repair and overhaul services,
while design and manufacturing sales accounted for approximately 29% of our
2002 revenues. Approximately 76% of our 2002 revenues were derived from the
regional, military and business aviation sectors. More than 85% of our 2002
revenues were derived from aftermarket customers.

New Business Initiatives

      Lockheed Martin/Kelly U.S.A. 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 have serviced
Rolls-Royce T56 engines for various military and commercial customers since
1960 and have been performing overflow work for U.S. Air Force with respect to
this engine platform since 1997. 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 15% of our total
revenues in 2002. 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 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.

      In September 2002, using lessons learned from the Kelly AFB cellular
production facility redesign, coupled with the experience gained in the
redesign of other Standard Aero facilities world wide, 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 remuneration through the sharing of benefits gained
from these redesign efforts. The first contract we signed was with Oklahoma
City - Air Logistics Center, or OC-ALC, to develop a Process Improvement
Master Plan for the comprehensive redesign of the entire Maintenance
Directorate of that facility. As this contract now nears completion, we await
the funding needed to comprehensively redesign OC-ALC and will compete for
that workload as it materializes. In addition, we have recently submitted a
competitive bid to provide similar services for Ogden - Air Logistics Center,
and will also provide unsolicited proposals for redesign services at other
military and commercial installations.

      General Electric CF34 Authorization : In September 2001, we entered into
an agreement with GE Engine Services Inc. to become an Authorized CF34 TM
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.

      Since the signing in September 2001, we have built a new 40,000
square-foot production facility in Winnipeg dedicated to the CF34 business
that houses five production and two support cells. In addition, a new 10,000
square-foot thrust test cell was erected and commissioned for operation in
September 2002 and the operation has been given full Transport Canada approval
for the CF34 Series 1 and 3 models. Through December 31, 2002, we have
invested a total of (pound)22.5 million in connection with the applicable OEM
authorization, facilities construction plus manufacture and implementation of
unique tooling and equipment. We expect to invest an additional (pound)6.5
million by the end of 2004 to complete the set-up for the Series 1 and 3
engines and to establish Series 8 capabilities. During 2002, (pound)4.2
million of revenue was recognized on production engines processed through the
facility.

      Brake Programs: We recently began supplying wheels, brakes and braking
systems for the Eurofighter Typhoon program. We expect to generate significant
revenues from the Eurofighter Typhoon in coming years as initial production
units continue 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 2008.

      Recent Developments: On 28 June 2002 a new company, Dunlop Standard
Limited, or DSL, filed a registration statement on Form F-1 with the
Securities and Exchange Commission, or SEC, relating to a proposed initial
public offering and listing, or IPO, on the New York Stock Exchange. The
prospectus proposed amongst other things, and subject to completion of the
IPO, that immediately prior to the closing of the proposed offering, DSL would
acquire all the outstanding shares of Dunlop Standard Aerospace Group Limited,
our parent. A portion of the funds received from this proposed transaction
would have been made available to repurchase the outstanding Senior Notes of
the company. On 1 July 2002 an offer was made to purchase up to $112,500,000
of the outstanding Senior Notes at a price between $1,055 to $1,100 per $1,000
principal plus accrued interest, subject to completion of the IPO. On 24 July
2002, DSL postponed the IPO due to market conditions and the company
terminated its tender offer for the Senior Notes. On April 29, 2003 the
company began to market its engine repair and overhaul capabilities in
industrial engines under the tradename Dunlop Standard Energy. In addition to
transactional engine repair and overhaul the company will also offer long term
maintenance agreements and cogeneration powerplant management services. These
services extend naturally from our operating and technical competencies.

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 2000, 2001 and
2002.

                                                 % Revenues
                                           Years Ended December 31,
                                      -----------------------------------
          Currency                     2002          2001         2000
                                      -----------------------------------
U.S. dollars                           72%           72%           66%
Pounds sterling                        19%           20%           25%
Canadian dollars                        9%            8%            9%


      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.

      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 net income as reported in pounds sterling
in our financial statements. Conversely, depreciation of the pound against the
U.S. dollar shows a positive impact on our revenues and net income. For
example, the pound sterling appreciated 4.2% against the U.S. dollar in 2002
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. In 2001, the pound sterling depreciated 5.3% against the U.S.
dollar when compared to 2000 (based on average exchange rates for that year),
which had a positive effect on our U.S. dollar revenues when reported on a
pounds sterling basis. The appreciation of the pound against the U.S. dollar
in 2002, 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)1.4 million on
operating profit when reported on a pound sterling basis in 2002; and the net
effect of the depreciation of the pound sterling against the U.S. dollar was a
positive (pound)1.5 million on operating profit in 2001. 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)0.3 million for
2002 and a negative effect of (pound)1.0 million for 2001.

      Currency Transaction Risk. In addition to currency translation risk, we
incur currency transaction risk whenever one of our operating subsidiaries
enters into either a purchase or sales transaction using a currency other than
its functional currency. Currency transaction risk is reduced by matching
sales 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."

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,
                                                              2002           2001            2000
                                                              ----           ----            ----
                                                                        ((pound) in millions)
                                                                         (restated)      (restated)


                                                           <c>             <c>            <c>
Revenues
   Engine Repair and Overhaul...............           (pound)320.5    (pound)291.7   (pound)243.4
   Design and Manufacturing.................                  131.3           153.2          140.7
                                                              -----           -----          -----
   Total ...................................                  451.8           444.9          384.1

Gross Profit
   Engine Repair and Overhaul...............                   60.3            52.7           50.7
   Design and Manufacturing.................                   65.0            77.7           73.7
                                                               ----            ----           ----
   Total ...................................                  125.2           130.5          124.4

Selling, General & Administrative
   Engine Repair and Overhaul...............                   29.2            30.1           28.7
   Design and Manufacturing.................                   27.4            25.5           24.3
                                                               ----            ----           ----
   Total ...................................                   56.6            55.6           52.9

Research and Development
   Engine Repair and Overhaul...............                   (0.3)           (0.2)          (0.4)
   Design and Manufacturing.................                    0.2            (0.7)          (0.8)
                                                                ---            ----           ----
   Total ...................................                   (0.1)           (0.9)          (1.2)

Other Operating Items
   Engine Repair and Overhaul...............                   (0.1)           --              1.3
   Design and Manufacturing.................                    --              0.1            2.1
   Total ...................................                   (0.1)            0.1            3.4

Operating Income (pre-exceptional)
   Engine Repair and Overhaul...............                   31.5            22.8           21.1
   Design and Manufacturing.................                   37.4            52.9           48.1
                                                               ----            ----           ----
   Total ...................................                   68.9            75.7           69.2

Net Income..................................            (pound)11.9     (pound)20.5    (pound)16.8
                                                               ====            ====           ====
</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 judgement 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 income. 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 capitalised. Goodwill is amortised 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 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 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. Goodwill
that is amortised over a period exceeding 20 years, or where not amortised at
all (as is the case at 31 December 2002 and 31 December 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, net income recorded in any period will be higher
than might otherwise be the case in light of the elimination of periodic
goodwill amortization charges.

      Capitalization and Amortization of Deferred and Intangible Costs.
Deferred costs comprise of costs associated with OEMs including required OEM
licensing and authorization fees necessary 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 cost for `initial manufactured
parts provided' are included within debtors. Licensing and OEM authorization
fees are included with 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.

      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, 2002 Compared to Year Ended December 31, 2001

      The economic challenges experienced in the aerospace industry have
impacted our results in 2002. Low commercial aircraft production and lower
commercial aftermarket sales 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 sales 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 10% 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)12.7 million 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. SG&A expense increased 1.8%
to (pound)56.6 million in 2002 from (pound)55.6 million in 2001. SG&A expenses
as a percentage of revenues remained constant at 12.5% in 2002 and 2001.

      SG&A expense decreased in engine repair and overhaul to (pound)29.2
million in 2002 from (pound)30.1 million in 2001. Engine repair and overhaul
SG&A expenses benefited from occupancy efficiencies in San Antonio, reduced
reliance on third party sales agents and positive impact of US dollar to pound
sterling translation. SG&A expense increased in design and manufacturing to
(pound)27.4 million in 2002 from (pound)25.5 million in 2001. Design and
manufacturing SG&A expenses include costs related to a redundancy program
undertaken in 2002. SG&A expenses as a percentage of revenue decreased to 9.1%
in 2002 from 10.3% in 2001 in engine repair and overhaul and increased to
20.8% in 2002 from 16.6% in 2001 in design and manufacturing.

      Research and Development Expense. Net research and development expenses
decreased from (pound)0.9 million in 2001 to (pound)0.1 million 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. Reimbursements of research and development
expenses decreased in 2002 to (pound)1.6 million from (pound)2.6 million in
2001.

      Operating Income . Operating income in 2002 decreased 8.9% to
(pound)68.9 million from (pound)75.7 million in 2001. Engine repair and
overhaul income 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 income 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
income by approximately (pound)1.4 million. In constant currency terms,
operating income decreased by 7.1% in 2002 over 2001.

      The total exceptional item charge relates to costs incurred in relation
to a proposed plan to seek a listing by DSL on the New York Stock Exchange and
amend our credit facility. As these efforts are currently 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 capex 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.

      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 25 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.

      For a list of recently issued accounting standards refer to page F-45
elsewhere in this report.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

      Revenues. Our 2001 revenues increased 15.8% to (pound)444.9 million from
(pound)384.1 million in 2000. This increase was primarily attributable to a
19.9% increase in engine repair and overhaul revenues to (pound)291.7 million
in 2001 from (pound)243.4 million in 2000. As a percentage of total revenues,
engine repair and overhaul revenues increased to 65.6% in 2001 from 63.4% in
2000. Revenues from our design and manufacturing operations increased 8.9% to
(pound)153.2 million in 2001 from (pound)140.7 million in 2000.

      The (pound)48.3 million increase in engine repair and overhaul was
principally due to an increase in revenues generated from servicing regional
jet engines and military transport engines. The majority of this growth
related to regional jet engine servicing as more of these aircraft entered
service and more engines accumulated the number of flying hours at which an
overhaul or repair is required by regulatory authorities. The growth in
military transport service revenues was principally due to increased volumes
under our Lockheed Martin / Kelly U.S.A. contract. These increases were
partially offset by a revenue reduction in commercial turboprop servicing
resulting from the reduction in flying hours of turboprops, as a number of
U.S. based carriers switched to regional jets for many of their short-haul
routes.

      The (pound)12.5 million increase in our design and manufacturing
revenues was principally due to revenue increases from our wheel and brake
business. In particular, we experienced a (pound)5.5 million increase in wheel
and brake spares sales relating to the Avro RJ, Hawker 800 and Gulfstream
programs.

      Our engine repair and overhaul revenues and approximately 10% of our
design and manufacturing revenues are denominated in U.S. dollars. The 5.3%
average reduction in the value of the pound sterling against the U.S. dollar
during 2001 positively affected our revenues by (pound)17.2 million.

      Gross Profit. Gross profit for 2001 increased 4.9% to (pound)130.5
million from (pound)124.4 million in 2000. The increase of (pound)6.1 million
was primarily attributable to the increase in engine repair and overhaul
related revenues. Gross profit as a percentage of revenues decreased to 29.3%
for 2001 from 32.4% for 2000 as a result of the increase to 65.6% in 2001 from
63.4% in 2000 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 decreased
from 20.8% in 2000 to 18.1% in 2001 as a result of the rapid growth in lower
margin regional jet work. Design and manufacturing gross profit grew
(pound)4.0 million in 2001. Design and manufacturing gross profit as a
percentage decreased from 52.4% in 2000 to 50.7% in 2001 reflecting higher
pension costs included in costs of sales as a result of the reduced value of
our pension plan assets in the United Kingdom, changes in product mix, and
increased amortization associated with the supply of free-of-charge ship-sets.

      Selling, General and Administrative Expense. SG&A expense increased 5.0%
to (pound)55.6 million in 2001 from (pound)52.9 million in 2000. SG&A expenses
as a percentage of revenues decreased to 12.5% in 2001 from 13.8% in 2000.

      SG&A expense increased in engine repair and overhaul to (pound)30.1
million in 2001 from (pound)28.7 million in 2000. SG&A expense increased in
design and manufacturing to (pound)25.5 million in 2001 from (pound)24.3
million in 2000. The increases in SG&A expenses were primarily due to
increased employee costs associated with a restructuring of selling functions
to better serve specific market segments. SG&A expenses as a percentage of
revenue decreased to 10.3% in 2001 from 11.8% in 2000 in engine repair and
overhaul and to 16.6% in 2001 from 17.2% in 2000 in design and manufacturing.

      Research and Development Expense. Net research and development expenses
remained broadly the same in 2001 as 2000. Major program spending in 2001
related to Eurofighter Typhoon, Nimrod and rapid carbon brake programs. In
connection with certain new programs, customers reimburse us for all or a
portion of research and development expenses incurred in relation to such
programs. Reimbursements of research and development expenses decreased in
2001 to (pound)2.6 million from (pound)3.4 million in 2000.

      Operating Income. Operating income in 2001 increased 9.3% to (pound)75.7
million from (pound)69.2 million in 2000. This increase was a result of the
increase in 2001 revenues offset by the increase in SG&A expenses and the
reduction in the gross profit percentage.

      Total currency effects resulting from depreciation of the pound sterling
against the U.S. dollar in 2001 compared to 2000 increased 2001 operating
income by approximately (pound)1.5 million. In constant currency terms,
operating income increased by 7.0% in 2001 over 2000.

      Finance Costs. Finance costs in 2001 increased 3.1% to (pound)41.9
million from (pound)40.7 million in 2000. This increase was primarily due to a
(pound)2.5 million increase in interest charges on increased short-term bank
borrowings. This increase was partially offset by a (pound)0.2 million
decrease in amortization of finance costs.

      Income Taxes Income taxes increased 12.3% in 2001 to (pound)13.3 million
from (pound)11.8 million in 2000. The (pound)1.5 million increase reflects the
tax on the (pound)5.2 million increase in income before income taxes.

      Net Income. Net income increased to(pound)20.5 million in 2001
from(pound)16.8 million in 2000.


B. Liquidity and capital resources

      Net cash decreased (pound)11.6 million to (pound)15.4 million at
December 31, 2002 from (pound)29.1 million (excluding (pound)11.5 million of
restricted cash) million at December 31, 2001. Net cash decreased by
(pound)7.5 million to (pound)29.1million (excluding (pound)11.5 million of
restricted cash) million at December 31, 2001 from (pound)36.0 million at
December 31, 2000. These movements are stated before the impact of foreign
exchange adjustments.

      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. The 2001 cash flow from operating activities
decreased by (pound)0.6 million compared to 2000 driven by increased earnings
before interest, taxes, depreciation and amortization,. There were no cash
outflows related to acquisitions in 2000, 2001, or 2002.

      We made capital expenditures to acquire tangible fixed assets of
(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)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)7.9 million,
(pound)7.1 million, and (pound)9.8 million, respectively. 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.

      We currently anticipate that our capital expenditures for 2003 and 2004
will be approximately (pound)18 million and (pound)21 million, respectively,
primarily 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 also anticipate that expenditures on free-of-charge brake ship-sets
and other deferred development and OEM authorization costs will be
approximately (pound)8 million for 2003 and approximately (pound)7 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, 2002, we had
(pound)401.2 million in total debt outstanding and (pound)27.0 million
available in undrawn commitments under our credit agreement with The Mizuho
Corporate Bank, Limited.

      Total short-term borrowings amounted to (pound)51.6 million as of
December 31, 2002, which consisted of the current portion of bank loan
repayments scheduled under the credit agreement and (pound)28.1 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, 2002, in addition to the
(pound)28.1 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.

      Our long-term debt consists in part of senior term debt facilities
provided under our credit agreement. The facilities under this agreement
include three separate Tranches, Tranches A, B and C, which provide
approximately (pound)196.0 million in borrowings all of which were drawn at
December 31, 2002. These loans have maturities ranging from April 2006 to
October 2007 and bear interest rates based on the London Interbank Offered
Rate ("LIBOR"). 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. At December 31, 2002, we had (pound)37.3 million of borrowings
outstanding under the Tranche E facility and a further (pound)11.8 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.

      Our long-term debt also includes US $225 million aggregate principal
amount of 11?% Senior Notes due in 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.


      The following is a summary of our contractual cash obligations at
December 31, 2002.

<table>
<caption>

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

                  <c>                   <c>              <c>                 <c>              <c>                <c>
           Tranche A ((pound))      (pound)93,920    (pound)22,400       (pound)55,200           16,320              --
           Tranche B ($)                   51,017              531               1,063           49,423              --
           Tranche C ($)                   51,022              537               1,063           49,422              --
           Tranche D ((pound))             12,000           12,000               --                --                --
           Tranche D ($)                   16,149           16,149               --                --                --
           Tranche E ($)                   37,347              --                --              37,347              --
           Senior Notes ($)               139,752              --                --                --            139,752
                        --                -------          --------           --------          --------        --------
           Total                          401,207           51,617              57,326          152,512          139,752
Capital lease obligations                    --                --                --                --                --
Unconditional purchase obligations           --                --                --                --                --

Other long-term obligations         (pound)24,502     (pound)5,098        (pound)8,948     (pound)8,109     (pound)2,347
                                           ======            =====               =====            =====            =====

Total contractual cost obligations (pound)425,709    (pound)56,715       (pound)66,274     (pound)160,621 (pound)142,099
                                          =======           ======              ======            =======        =======

</table>

      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

      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 Design Approval Authority as authorized by Transport Canada and under
bilateral agreements, recognized by the FAA which simplifies the approvals of
our component repairs in the North American market and with several other
allied nations. We may choose to work 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 revenues of our work.

      We have developed patented coating technologies for gas turbine engine
components which further the life of repaired components. These repair
technologies are used in conjunction with specialized equipment such as our
patented sonic flow rig to enable improved performance for overhauled and
repaired gas turbine engines. We have utilized engine monitoring systems such
as our patented Engine Doctor(TM) to help diagnose engine condition and
Trendcheck(TM) to extend engine time between overhauls.

Design and Manufacturing

      Our design and manufacturing operations are engaged in research and
development programs aimed at developing new products and technologies that
improve performance through reduced weight, reduced component size, improved
quality assurance, and improved field reliability. Our focus in achieving
industry competitive advantage encompasses the advancement of materials
technology; product design and analytical methods development; integrated
systems and software development; and continuous improvement manufacturing
programs. While research and development programs are generally conducted at
the business unit level, management processes and tools are in place to
support the identification and group wide awareness of strategically important
technologies across Dunlop Standard Aerospace divisions.

      Our advancements in materials technology is currently an area of
industry competitive advantage. Our achievements in metal matrix composites
have resulted in our ability to potentially reduce aircraft wheel and brake
component weights by as much as 15 to 20%. Further advancements are also being
made in our carbon friction materials development programs in which high
density and low wear rates provide the ability for greater energy absorption
and improved aircraft stopping performance. These weight saving benefits are
currently being incorporated into a major wide-body aircraft program in which
our intention is to reduce the overall aircraft ship-set wheel and brake
weight.

      We are also well advanced in the development of electrically actuated
brakes and have achieved full rejected takeoff performance on test. Electric
brakes are viewed as the future of aircraft braking technology and offer
substantial system weight savings along with improved maintainability,
reliability, and safety. We are a lead participant in electric brake
development activity working in conjunction with two major aircraft OEMs,
defining the standards to be used in future aircraft electric brake
architectures and evaluating current product performance and endurance
capabilities. The combined wheel and brake package incorporating our electric
brake actuation capabilities and advancements in lightweight materials
technology is unequalled by any of our industry competitors.

      Underpinning our advancements in electric brake technology are further
developments in sensor technology and information management intended for use
with our wheels and brakes to provide total landing system performance
monitoring and prognostics. The objective of these development programs are to
enhance our customer support capabilities to the extent that we can more
actively conduct in-service repair and overhaul planning and provide tools to
support better operator spares inventory management.

      Our valve design capability has been extended to include flow management
and acoustic control techniques which have applications in both aerospace and
non-aerospace markets.

      As an OEM, we have a strong focus on capturing and retaining the
intellectual property resulting from our research and development investments.
To this end, we are active in protecting our inventions through patents,
trademarks, licensing, and retention of know-how. We are also active in
development programs with leading research organizations and universities and
exploit available technologies through license arrangements both in and out of
the company. Of similar importance to patents and trademarks in protecting our
intellectual property is our ability to retain design rights for our products
and hence retain exclusivity in manufacturing and supply.


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 recent 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, as a result of the current economic downturn, the
terrorist attacks of September 11, 2001, recent military actions, and SARS
health concerns demand for air travel has declined. This has resulted in
airline bankruptcies, 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 February 1999, we were awarded the subcontract to provide engine
repair and overhaul services for Rolls Royce T56 engines at Kelly U.S.A., and
we are currently managing T56 MRO operations at that facility. The contract
expires in 2006, after which it is renewable through 2013.

      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 12 existing aircraft platforms. Of those platforms, seven 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.

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. 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 Kevin
Luzak- resigned 4 February 2003) 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 six 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               45         Director
      David Unruh              50         Director
      Piet Walton-Knight       61         Director (retired March 31, 2003)
      David Johnson            41         Director
      Steven Walker            40         Director and Secretary
      John Whelan              53         Director


      Executive Officers

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

<table>
<caption>

Name                                Age         Position
--------------------------------  ---------     ----------------------------------------------


                                  <c>        <c>
David Shaw                           45         Chief Executive Officer and Director
David Unruh                          50         Chief Financial Officer and Director
B. Piet Walton-Knight                61         Senior Vice-President, Strategic Growth Projects
                                                (retired March 31, 2003)
David G. Johnson                     41         Managing Director, Design and Manufacturing
Paul Soubry, Jr.                     40         President, Standard Aero Canadian Operations
Lee G. Beaumont                      45         President, Standard Aero U.S. Operations
Rene M. van Doorn                    48         President, Standard Aero International Operations
Bruce Clarke                         55         Senior Vice-President, Human Resources
Bradley Bertouille                   40         Senior Vice-President, Finance and Administration
Edward S. Richmond                   47         Senior Vice-President, Strategy and Business
                                                Development
Brian Lanoway                        52         Senior Vice-President, Strategic Projects
Verna Taylor                         38         Senior Vice-President, Operations
John W. Wright                       40         Senior Vice-President, Technology

</table>

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,
Design and Manufacturing 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.

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. 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. 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. 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 18 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 of Human Resources in 1990 and became our Senior
Vice-President of 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 of Finance and Administration of Standard Aero Limited and
became our Senior Vice-President of Finance and Administration in 2001. Mr.
Bertouille is a Certified Management Accountant with a Diploma in Business
Administration from Red River Community 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 of the PT6A Business Unit
in 1997, and assumed his current role as our Senior Vice- President of
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 of 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 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.

John Wright. Mr. Wright commenced employment with Standard Aero Limited in May
1993. Mr. Wright is a Professional Engineer with a Bachelor of Science degree
in Mechanical Engineering and Master of Business Administration, both from the
University of Manitoba. After five years in the precision manufacturing
industry, he began his career at Standard Aero Limited as an Operations
Engineer. Mr. Wright was appointed Director of Reworks in 1995 and Executive
Vice-President, Engineering and Quality of Standard Aero Limited in 1997. Mr.
Wright became our Senior Vice-President, Technology, in March 2002.

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 life 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 degree of
Business Administration.


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 2002 were
approximately (pound)1.92 million (2001: (pound)3.08 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, 2002 our board of directors and key executives held
options available to be exercised of 320,846 Ordinary Shares (2001: 421,846).
The total number of all classes of Ordinary Shares held by our board of
directors and key executives was 692,754 (2001: 591,754).

      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 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 to eighteen months with automatic renewal in absence of notice of
termination. Each of the employment agreements contains 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.
We do not have any contracts with our directors, other than the aforementioned
employment agreements of Messrs. Shaw and Unruh, whose agreements provide for
the payment of one year's salary upon termination without cause.

C. Board practices

The Board

      As at December 31, 2002, the Board was comprised of six directors. In
addition to the Chairman, David Shaw, there were five other Executive
Directors. The Board meets when required. The Board does not have an audit or
compensation committee.

Internal Controls

      The Executive Directors acknowledge that they have overall
responsibility for the Group's systems of internal control. The systems are
designed to manage rather than eliminate the risk of failure to achieve the
Group's objectives, safeguard the Group's assets against loss, fairly report
the Group's 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 to deal with changing
circumstances. For a summary of key financial risks inherent in the Group's
business, see "Key Information - Risk Factors".

D. Employees

      As of December 31, 2002 we had approximately 4,000 employees worldwide.
Of our employees, approximately 34% work in the United Kingdom, 33% in Canada,
27% in the United States, 4% in The Netherlands and 2% in other offices around
the world, including Belgium, Australia, Mexico, France and China.
Approximately 61% of our employees are involved in engine repair and overhaul,
and approximately 38% of our employees are involved in design and
manufacturing. Approximately 7% of our employees are involved in the marketing
and distribution of our products and services. Approximately 20% of our
employees are members of labour 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 for the last five years.

Average Employee Numbers                 2000           2001          2002
Sales & Administration                   1,071         1,109         1,124
Manufacturing                            2,609         2,668         2,572
Research & Development                     214           242           268
                                         -----         -----         -----
Total Average Employees                  3,894         4,019         3,964
                                         =====         =====         =====


E. Share ownership

      Our board of directors and executive officers at December 31, 2002 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 67.6% of the total Ordinary and "A" Ordinary shares. The
Management Shareholders currently own 607,054 Regular Ordinary Shares and
524,014 "A" Ordinary Shares and have options to acquire 10,932 Regular
Ordinary Shares and 358,000 "A" Ordinary Shares.

      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.

      On March 8, 2002 a further 101,000 "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. As a result, effective March 8, 2002, Management
Shareholders own 607,054 Regular Ordinary Shares and 524,014 "A" Ordinary
Shares and have options to acquire 10,932 Regular Ordinary Shares and 358,000
"A" Ordinary Shares.


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 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 ("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, 2002, Doughty Hanson owned 13,500,000 B Ordinary
Shares and 150,862,000 Preference Shares, and Management Shareholders owned
607,054 Regular Ordinary Shares and 524,014 A Ordinary Shares and have options
to acquire a further 10,932 Regular Ordinary Shares and 358,000 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 92% 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 such compensation is not material to our business.


B. Interest of Experts/ Council

      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

Fourth Quarter 2001 .......................          $102.0        $ 93.0
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        $ 98.00

December 2002 .............................          $102.5        $102.00
January 2003 ..............................          $104.5        $102.00
February 2003 .............................          $102.75       $ 98.50
March 2003 ................................          $100.5        $ 98.0
April 2003 ................................          $104.0        $100.0
May 2003 ..................................          $106.0        $104.0
June 2003 (to 25th June) ..................          $108.0        $106.0

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 will be subscribed for 30
June, 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 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 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 124 of the Income and Corporation Taxes Act 1998 ("ICTA") provided
they continue to be in bearer form and are listed on a "recognized stock
exchange" within the meaning of section 841 ICTA. The Luxembourg Stock
Exchange is currently recognized for these purposes. Accordingly, once the
notes were listed on the Luxembourg Stock Exchange, payments of interest on
the Global Notes are being made without withholding any tax on account of
United Kingdom income tax as long as a non-U.K. paying agent is appointed for
such payments and the other requirements of section 124 ICTA are complied
with.

      In other cases, 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.

      Where a United Kingdom collecting agent either (a) acts as custodian of
the Global Notes and receives interest on those Global Notes or directs that
interest on the Global Notes be paid to another person or consents to such
payment; or (b) collects or secures payment of or receives interest on the
Global Notes for a noteholder (except by means solely of clearing a check or
arranging for a clearing of a check); or (c) otherwise acts in the course of a
trade or profession for another person in arranging to collect or secure
payment of interest on the Global Notes, the collecting agent will be liable
to account for a sum representing income tax at the lower rate on payments of
interest on the Global Notes and will deduct such a sum unless an exemption is
available including, for example, where the person beneficially entitled to
the interest and who beneficially owns the relevant Global Notes is not
resident in the United Kingdom and applicable administrative and procedural
requirements are satisfied including the making of declarations as to status
and eligibility.

      In the case of each of the above exceptions, further administrative
conditions imposed by the regulations referred to above may have to be
satisfied for the relevant exception to be available.

      Interest on the Notes constitutes United Kingdom source income for
United Kingdom tax purposes and, as such, may be subject to income tax by
direct assessment even where paid without withholding any tax except in the
hands of a noteholder who is exempt from United Kingdom income tax under the
terms of an applicable double taxation treaty or otherwise. However, interest
with a United Kingdom source received without deduction or withholding on
account of United Kingdom tax will not be chargeable to United Kingdom tax in
the hands of a noteholder who is not resident for tax purposes in the United
Kingdom unless that noteholder carries on a trade, profession or vocation in
the United Kingdom branch or agency in connection with which the interest is
received or to which the notes are attributable. There are exemptions for
interest received by certain categories of agent (such as brokers and
investment managers).

      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 tax on returns on and fluctuations in
value of the Notes as income broadly in accordance with their statutory
accounting treatment. Such noteholders will generally be charged tax in each
accounting period by reference to interest accrued in that period and any
profit or loss which, in accordance with such noteholders' authorized
accounting method, is applicable to that period.

      Other United Kingdom Tax Payers

      Taxation of Chargeable Gains. A disposal by, or redemption of a Note
held by, a noteholder who is resident or ordinarily resident in the United
Kingdom, or who carries on a trade, profession or vocation in the United
Kingdom through a branch or agency and has used, held or acquired the Notes
for the purposes of such trade, profession or vocation, or such branch or
agency, may give rise to a chargeable gain or an allowable loss for the
purposes of United Kingdom taxation of chargeable gains (Capital Gains Tax).
To the extent it is subject to United Kingdom income tax, a gain will not be
subject to taxation on chargeable gains.

      Accrued Income Scheme. Under rules known as the Accrued Income Scheme, 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 branch or agency
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

      The European Union is currently considering proposals for a new
directive regarding the taxation of savings income. Subject to a number of
important considerations being met, it proposed that member states of the
European Union will be required to provide to the tax authorities of another
member state details of payments of interest or other similar income paid by a
person within its jurisdiction to an individual resident in that other member
state, subject to the right of other member states to opt instead for a
withholding system for a transitional period in relation to such payments.
Holders of notes should consult their own tax advisers regarding the potential
adoption and application of this directive or any similar directive.

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. Since this requirement expired in November 2002, we have not yet
fixed our future interest rate requirements. We monitor interest rate trends
and will likely fix future interest rates during 2003.

      At 31 December, 2002 we did not have any fixed rate liabilities
denominated in pound 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)3.1 million change in our
income from operations offset by a (pound)2.9 million change in our interest
expense based on operations comparable to the year ended December 31, 2002.

Debt instruments

The following table details the gross debt owed by the Company at December 31,
2002, by maturity date.

<table>
<caption>

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

              <c>           <c>        <c>       <c>         <c>          <c>        <c>                 <c>
2003      (pound)22.4   (pound).5  (pound).5 (pound)28.1          -   (pound)51.5              -        (pound)51.5
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2004             28.0          .5         .5           -          -          29.0              -               29.0
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2005             27.2          .5         .5           -          -          28.2              -               28.2
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2006             16.3        49.5         .5            (pound)18.7          85.0              -               85.0
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2007                -           -       49.0                   18.7          67.7              -               67.7
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2008                -           -          -           -          -             -              -                  -
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
2009                -           -          -           -          -             -   (pound)139.8              139.8
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------

---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------
Total     (pound)93.9 (pound)51.0(pound)51.0 (pound)28.1(pound)37.4  (pound)261.4   (pound)139.8       (pound)401.2
---------- ----------- ----------- ---------- ----------- ---------- ------------- -------------- ------------------

</table>

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

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 72% (2001-72%) of the Company's sales are denominated in
United States dollars, with another 19% (2001-20%) denominated in pounds
sterling, and approximately 9% (2001-8%) 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.

<page>


                                    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 not 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 16: Reserved for Future Use by SEC

<page>


                                   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-46, incorporated herein by reference.


Item 19: Exhibits

Documents filed as exhibits to this registration statement:

1.1*     Articles of Association of the Company.

2.1*     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.

2.2*     Notes Depositary Agreement, dated as of May 13, 2000, 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.

8.1      Included in Item 4.C of this Annual Report

99.1     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)


                                   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:  July 3, 2003                       Dated:  July 3, 2003

<page>




CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David Unruh, certify that:

1.    I have reviewed this annual report on Form 20-F of Dunlop Standard
      Aerospace Holding plc;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary
      to make the statements made, in light of the circumstances under which
      such statements were made, not misleading with respect to the period
      covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all
      material respects the financial condition, results of operations and
      cash flows of the registrant as of, and for, the periods presented in
      this annual report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

         a)    designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by other within
               those entities, particularly during the period in which this
               annual report is being prepared;

         b)    evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to
               the filing date of this annual report (the "Evaluation Date");
               and

         c)    presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based
               on our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the
      audit committee of registrant's board of directors (or persons
      performing the equivalent function):

         a)    all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

         b)    any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.


Date:   July 3, 2003                       By:  /s/ DAVID E. UNRUH
                                                -----------------------------
                                                     David E. Unruh
                                                Chief Financial Officer

<page>


CERTIFICATION PURSUANT TO SECTIO 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David Shaw, certify that:

1.    I have reviewed this annual report on Form 20-F of Dunlop Standard
      Aerospace Holding plc;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary
      to make the statements made, in light of the circumstances under which
      such statements were made, not misleading with respect to the period
      covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all
      material respects the financial condition, results of operations and
      cash flows of the registrant as of, and for, the periods presented in
      this annual report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

         a)    designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by other within
               those entities, particularly during the period in which this
               annual report is being prepared;

         b)    evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to
               the filing date of this annual report (the "Evaluation Date");
               and

         c)    presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based
               on our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based
      on our most recent evaluation, to the registrant's auditors and the
      audit committee of registrant's board of directors (or persons
      performing the equivalent function):

         a)    all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

         b)    any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.



Date:   July 3, 2003                       By:  /s/ DAVID W. SHAW
                                                ------------------------------
                                                        David W. Shaw
                                                  Chief Executive Officer





                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                              <C>
Report of Independent  Auditors..............................................................................    F-2
Consolidated Profit and Loss Accounts for the years ended 31 December 2000, 2001 and 2002 ...................    F-3
Consolidated Statements of Total Recognized Gains and Losses for the years ended 31 December 2000, 2001 and
   2002......................................................................................................    F-4
Reconciliations of Movements in Shareholders' Funds for the years ended 31 December 2000, 2001 and 2002......    F-4
Consolidated Balance Sheets as at 31 December 2001 and 2002..................................................    F-5
Consolidated Cash Flow Statements for the years ended 31 December 2000, 2001 and 2002 .......................    F-5
Notes to the Consolidated Financial Statements...............................................................    F-6
</TABLE>
<PAGE>


                         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, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002, 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. The application of the latter would have
affected the determination of consolidated net profit expressed in pounds
sterling for each of the three years in the period ended December 31, 2002,
and the determination of consolidated shareholders' funds and consolidated
financial position, also expressed in pounds sterling, at December 31, 2002
and 2001 to the extent summarized in Note 25 to these financial statements.


         As discussed in Note 2 to the consolidated financial statements, the
Group changed its method of accounting for deferred taxes in 2002 in accordance
with accounting principles generally accepted in the United Kingdom. The change
has been accounted for by restating comparative information at and for the years
ended December 31, 2001 and 2000.


PricewaterhouseCoopers LLP
Castle Donington, East Midlands
June 27, 2003

<PAGE>


                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                      CONSOLIDATED PROFIT AND LOSS ACCOUNTS


<TABLE>
<CAPTION>
                                                                  Year ended       Year ended       Year ended
                                                                  31 December      31 December      31 December
                                                                     2000             2001             2002
                                                                ---------------  ---------------  ---------------
                                                                 (pound)'000      (pound)'000      (pound)'000
                                                                 (restated)       (restated)

<S>                                                              <C>               <C>               <C>
Sales (note 3) ..........................................         384,114           444,904           451,848
Operating costs less other operating income
        -normal (notes 3 and 4) .........................        (314,880)         (369,248)         (382,957)
        -exceptional (notes 3 and 4) ....................            --                --              (3,778)
                                                                 --------          --------          --------

Operating profit ........................................          69,234            75,656            65,113

Finance costs (note 5) ..................................         (40,685)          (41,930)          (43,235)
                                                                 --------          --------          --------

Profit on ordinary activities before taxation
   (note 4) .............................................          28,549            33,726            21,878

Taxation (note 6) .......................................         (10,018)          (11,797)          (13,252)
                                                                 --------          --------          --------



Profit for the financial period (note 16) ...............          16,752            20,474            11,860
                                                                 ========          ========          ========
</TABLE>
<PAGE>











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 31      Year ended          Year ended
                                                       December 2000    31 December 2001   31 December 2002
                                                       -------------    ----------------   ----------------
                                                        (pound)'000       (pound)'000        (pound)'000
                                                         (restated)       (restated)

<S>                                                    <C>                    <C>                <C>
Profit for the financial period ...................    16,752                 20,474             11,860

Foreign exchange adjustments ......................     2,424                     62             (1,629)
                                                      -------                -------            -------
Total recognized gains and losses .................    19,176                 20,536             10,231

Prior year adjustment .............................    (1,242)

Total recognized gains and losses since last annual
report ............................................                                               8,989
                                                                                                =======
</TABLE>




               RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS


<TABLE>
<CAPTION>
                                                           Year ended    Year ended        Year Ended-
                                                           31 December   31 December       31 December
                                                              2000          2001              2002
                                                          -------------  --------------  -------------
                                                          (pound)'000     (pound)'000     (pound)'000
                                                           (restated)      (restated)
<S>                                                         <C>             <C>             <C>
Profit for the financial period ........................     16,752          20,474          11,860
Foreign exchange adjustments ...........................      2,424              62          (1,629)
                                                           --------        --------        --------
Net change in shareholders' funds ......................     19,176          20,536          10,231
                                                           --------        --------        --------
Equity Shareholders' funds-beginning of period .........    175,776         194,952         215,488
                                                           --------        --------        --------
Equity Shareholders' funds-end of period ...............    194,952         215,488         225,719
                                                           ========        ========        ========
</TABLE>






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













                     DUNLOP STANDARD AEROSPACE HOLDINGS plc

                           CONSOLIDATED BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                              At 31 December        At 31 December
                                                                                   2001                  2002
                                                                             -----------------     -----------------
                                                                               (pound)'000           (pound)'000
                                                                                (restated)
<S>                                                                                 <C>                  <C>
Fixed assets
Intangible fixed assets (note 8) ...........................................        355,706              341,945
Tangible fixed assets (note 9) .............................................        174,697              178,643
                                                                                   --------             --------
                                                                                    530,403              520,588
Current assets
Inventories (note 10) ......................................................         68,496               69,352
Debtors (note 11) ..........................................................        125,273              130,279
Cash at bank and in hand (note 23) .........................................         40,598               33,585
                                                                                   --------             --------
                                                                                    234,367              233,216
Creditors-- Amounts falling due within one year (note 12) ..................       (146,447)            (152,948)


Net current assets .........................................................         87,920               80,268

Total assets less current liabilities ......................................        618,323              600,856

Creditors-- Amounts falling due after more than one year (note 13) .........       (384,087)            (352,522)

Provisions for liabilities and charges (note 15) ...........................        (18,748)             (22,615)

                                                                                    215,488              225,719
                                                                                   --------             --------

Share capital and reserves
Called up share capital (note 16) ..........................................        160,000              160,000
Profit and loss account (note 16) ..........................................         55,488               65,719


Total equity shareholders' funds ...........................................        215,488              225,719
                                                                                   ========             ========
</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                 31
                                                                     2000             December           December
                                                                                        2001               2002
                                                                 -------------      ------------       ------------
                                                                 (pound)'000       (pound)'000          (pound)'000
<S>                                                                 <C>                <C>                <C>
Net cash inflow from operating activities
   (note 22) ................................................        81,268             80,632             62,723
                                                                    -------            -------            -------
Returns on investments and servicing of finance
Interest paid (net of received) .............................       (37,138)           (40,265)           (43,282)
Finance lease interest paid .................................           (39)               (12)              --
                                                                    -------            -------            -------
Net cash (outflow) from returns on investments and
   servicing of finance .....................................       (37,177)           (40,277)           (43,282)
                                                                    -------            -------            -------
Taxation
Tax paid ....................................................       (11,225)            (8,927)            (7,724)
                                                                    -------            -------            -------
                                                                    (11,225)            (8,927)            (7,724)

Capital expenditure
(Payments) to acquire tangible fixed assets .................       (22,738)           (28,513)           (33,537)
Proceeds from sale of tangible fixed assets .................           835              1,909              4,183
Development costs and licensing and OEM authorization
   fees .....................................................        (4,575)            (9,319)            (2,268)
                                                                    -------            -------            -------
Net cash (outflow) from capital expenditure .................       (26,478)           (35,923)           (31,622)
                                                                    -------            -------            -------

Net cash (Inflow/outflow) before use of liquid resources and
   financing ................................................         6,388             (4,495)           (19,905)
                                                                    -------            -------            -------


Management of liquid resources
Short term bank deposits ....................................          --              (11,381)              --
                                                                    -------            -------            -------
                                                                       --              (11,381)              --


Financing
Issue of equity shares ......................................          --                 --                 --
Bank loans (repaid)/drawn (note 23) .........................       (15,525)             8,760              8,294
Capital element of finance lease repayments (note 23) .......          --                 --                 --
                                                                       (209)              (352)              --
                                                                    -------            -------            -------
Net cash (outflow)/inflow from financing ....................       (15,734)             8,408              8,294
                                                                    -------            -------            -------
 (Decrease) in cash (note 23) ...............................        (9,346)            (7,468)           (11,611)
                                                                    =======            =======            =======
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.
                     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 2002 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. FRS 19 `Deferred Tax' has been adopted in the
current year as set out below in notes 6 and 15. 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 2002 and 31 December 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.


     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 authorization 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:

<TABLE>

<S>                                                 <C>
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
</TABLE>


      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
unamortized 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

      Previously deferred taxation was provided on the liability method on all
timing differences to the extent that it was probable that a liability would
crystallise, calculated at the rate at which it was estimated that tax would be
payable. Deferred tax assets were not recognised.

The company has now adopted Financial Reporting Standard 19 `Deferred tax' such
that 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.

The effect of the change in accounting policy to adopt FRS 19 was to increase
tax on profit on ordinary activities by (pound)1,404,000 (2001: (pound)247,000,
2000: (pound)564,000) and to decrease profit for the financial year by
(pound)1,404,000 (2001: (pound)280,000, 2000: (pound)593,000). The adjustments
to opening reserves are shown in note 19.


     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

     Derivative instruments are taken out to hedge against interest rate
exposure. The cash flows arising from payments or receipts relating to such
instruments are accounted for as incurred. Derivative instruments are marked to
market for disclosure purposes only; such amounts are not reflected in the
balance sheet.


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.


     Sales

<TABLE>
<CAPTION>
                                               Year ended        Year ended         Year ended
                                              31 December        31 December       31 December
                                                  2000              2001               2002
                                              -----------        -----------       -----------
<S>                                           <C>                <C>               <C>
                                              (pound)'000        (pound)'000       (pound)'000
Design and Manufacturing.................       140,709            153,177           131,314
Engine Repair & Overhaul.................       243,405            291,727           320,534
                                              -----------          ---------        ----------
                                                384,114            444,904           451,848
</TABLE>



     Operating Costs Less Other Operating Income

<TABLE>
<CAPTION>
                                               Year ended        Year ended        Year ended
                                              31 December       31 December        31 December
                                                  2000              2001              2002
                                              -----------        -----------       -----------
                                              (pound)'000        (pound)'000       (pound)'000
<S>                                             <C>              <C>                <C>
Design and Manufacturing.................       (92,573)         (100,305)          (93,878)
Engine Repair & Overhaul.................      (222,307)         (268,943)          (289,079)
                                              -----------        ---------        ----------
                                               (314,880)          (369,248)          (382,957)
                                              ===========         =========          =========
</TABLE>



     Operating Profit (pre-exceptional item)

<TABLE>
<CAPTION>
                                               Year ended        Year ended        Year ended
                                              31 December       31 December        31 December
                                                  2000              2001              2002
                                              -----------        -----------       -----------
                                              (pound)'000       (pound)'000        (pound)'000
                                               (restated)        (restated)
<S>                                             <C>              <C>                <C>
Design and Manufacturing...............          48,136            52,872            37,436
Engine Repair & Overhaul...............          21,098            22,784            31,455
                                              -----------          ---------        ----------
                                                 69,234            75,656            68,891
                                              ===========          =========         =========
</TABLE>


     Supplementary segment disclosures in respect of sales:

<TABLE>
<CAPTION>
                                                               Sales by Origin
                                               Year ended        Year ended        Year ended
                                              31 December       31 December        31 December
                                                  2000              2001              2002
                                              -----------        -----------       -----------
                                              (pound)'000       (pound)'000        (pound)'000
                                               (restated)        (restated)

<S>                                                   <C>             <C>                <C>
United Kingdom.........................               112,896         115,554            97,748
Other Europe...........................                41,343          44,823            47,586
USA....................................                99,491         165,760           170,326
Canada.................................               116,543         102,597           116,709
Rest of the World......................                13,841          16,170            19,479
                                                     --------         -------           -------
                                                      384,114         444,904           451,848
                                                     ========         =======           =======
</TABLE>


<TABLE>
                                               Year ended        Year ended        Year ended
                                              31 December       31 December        31 December
                                                  2000              2001              2002
                                              -----------        -----------       -----------
                                              (pound)'000       (pound)'000       (pound)'000
<S>                                                <C>             <C>               <C>
United Kingdom.........................            58,265          58,411            55,225
Other Europe...........................            54,426          55,949            54,315
USA....................................           184,605         248,299           250,595
Canada.................................            46,347          45,309            45,884
Rest of the World......................            40,471          36,936            45,829
                                                  -------         -------           -------
                                                  384,114         444,904           451,848
                                                  =======         =======           =======
</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 sales. Sales
made to Rolls Royce plc group of companies were as follows: year ended 31
December 2000:(pound)49.8 million; year ended 31 December 2001:(pound)80.2
million and year ended 31 December 2002:(pound)81.8 million. Sales made to
Lockheed Martin/Kelly USA were as follows: year ended 31 December
2000:(pound)61.8 million; year ended 31 December 2001:(pound)55.7 million and
year ended 31 December 2002: (pound)66.6 million. In the year ended 31
December 2002, sales made to the United States Government of(pound)71.8
million also exceeded 15% of total sales (31 December 2001:(pound)62.2). This
includes sales to the U.S. military and other non-military organizations such
as the U.S. Coast Guard and sales 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
                                                    2000              2001             2002
                                                 -----------       -----------     ------------
                                               (pound)'000       (pound)'000      (pound)'000
                                               (restated)        (restated)
<S>                                             <C>                 <C>              <C>
Cost of goods sold .......................      66,970               75,447           66,332
Selling general and administrative .......      24,255               25,495           27,369
 expenses
Provision for doubtful debts .............          62                   94               58
Research and development expenditure .....        (752)                (748)             173
Other operating items, net ...............       2,038                   17              (54)
                                              --------             --------         --------
                                                92,573              100,305           93,878
                                              ========             ========         ========
</TABLE>


<TABLE>
<CAPTION>
                                                           Engine Repair & Overhaul
                                                 Year ended        Year ended       Year ended
                                                 31 December       31 December     31 December
                                                    2000              2001             2002
                                               (pound)'000       (pound)'000      (pound)'000
                                              -----------------  ---------------  --------------
                                               (restated)         (restated)
<S>                                                   <C>            <C>                <C>
Cost of goods sold..........................          192,730        238,986            260,267
Selling general and administrative                     28,685         30,112             29,218
 expenses...................................
Provision for doubtful debts................              (34)          --                  11
Research and development expenditure........             (409)          (171)              (320)
Other operating items, net..................            1,335             16              (97)
                                                      -------        -------            -------
                                                      222,307        268,943            289,079
                                                      =======        =======            =======
</TABLE>



     Supplementary segment disclosures in respect of the balance sheet
information:

<TABLE>
<CAPTION>
                                                                                        Operating Net Assets
                                                                                    31 December      31 December
                                                                                       2001              2002
                                                                                  ---------------  ----------------
                                                                                   (pound)'000       (pound)'000
                                                                                    (restated)
<S>                                                                                    <C>              <C>
Design and Manufacturing......................................................         134,638          137,129
Engine Repair & Overhaul......................................................         173,302          189,979
                                                                                       307,940          327,108
Unallocated net liabilities...................................................          (6,569)          (9,307)
Goodwill......................................................................         325,097          313,856
Taxation......................................................................         (26,083)         (28,042)
Net debt......................................................................        (384,897)        (377,896)
                                                                                      --------         --------
Net assets....................................................................         215,488          225,719
                                                                                       =======          =======
</TABLE>


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

<TABLE>
<CAPTION>
                                                        Engine Repair & Overhaul       Design and Manufacturing
                                                        ------------------------       ------------------------
                                                      31 December     31 December     31 December     31 December
                                                         2001            2002             2001            2002
                                                     --------------  --------------  --------------  --------------
                                                      (pound)'000     (pound)'000     (pound)'000     (pound)'000
Long-lived assets by location
<S>                                                   <C>                <C>             <C>              <C>
     United Kingdom ........................            --                 --            73,826           75,185
     Other Europe ..........................          15,710             14,043            --               --
     USA ...................................          27,477             23,708           4,573            4,389
     Canada ................................          50,003             58,761            --               --
     Rest of the World .....................           2,960              2,416             148              139
                                                      ------             ------          ------           ------
                                                      96,150             98,928          78,547           79,713
                                                      ======             ======          ======           ======
</TABLE>

Capital expenditure in the year ended 31 December 2002 was (pound)25.6 million
in Engine Repair & Overhaul (year ended 31 December 2001: (pound)21.4 million)
and (pound)7.9 million in Design and Manufacturing (year ended 31 December 2001:
(pound)7.1 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
                                                          2000           2001              2002
                                                        ----------     -----------     ------------
                                                      (pound)'000     (pound)'000     (pound)'000
                                                      (restated)       (restated)

<S>                                                         <C>             <C>             <C>
Changes in inventories of finished goods
and work in progress............................              4,305           2,817         (1,895)
Raw materials and consumables...................            162,501         195,626         212,721
Employee costs..................................             96,994         109,058         115,245
Depreciation and amortization...................             13,757          18,486          19,241
Other operating charges less other operating income         37,323           43,261          37,645
                                                            ------           ------          ------
                                                            314,880         369,248         382,957
                                                            =======         =======         =======
</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
                                                          2000           2001              2002
                                                        ----------     -----------     ------------
                                                      (pound)'000     (pound)'000     (pound)'000
                                                      (restated)       (restated)

<S>                                                       <C>             <C>              <C>
Depreciation ...................................          9,842           12,875           14,540
Amortization of development costs ..............          1,364            2,223            2,018
Amortization of deferred costs .................          2,075            2,643            1,622
Amortization of license and OEM fees ...........            476              745            1,061
Loss on sale of fixed assets ...................            179               79              469
Operating lease rentals - land and buildings ...          2,496            4,682            4,409
                        - plant and equipment ..            403              529            1,820
Capital grant release ..........................           --
                                                                            (264)            (290)
Foreign exchange differences ...................         (1,423)            (909)            (358)
Goodwill impairment charge .....................           --                199             --
Exceptional item - aborted IPO costs ...........           --               --              3,778
</TABLE>


The total 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
                                                          2000           2001              2002
                                                        ----------     -----------     ------------
                                                      (pound)'000     (pound)'000     (pound)'000
                                                      (restated)       (restated)

<S>                                                      <C>               <C>               <C>
Interest payable on bank loans and
overdrafts net of interest received ...............      19,933            21,979            23,486
Interest payable on Senior Notes ..................      18,404            17,813            17,699
Finance lease interest ............................          39                12              --
Amortization of finance costs .....................       2,309             2,126             2,050
                                                         ------            ------            ------
                                                         40,685            41,930            43,235
                                                         ======            ======            ======
</TABLE>



6.    Taxation
<TABLE>
<CAPTION>

                                                        Year ended      Year ended      Year ended
                                                     ----------------  -------------  --------------
                                                       31 December      31 December    31 December
                                                           2000            2001            2002
                                                       (pound)'000     (pound)'000     (pound)'000
Analysis of the tax charge for the year:

<S>                                                          <C>            <C>          <C>
United Kingdom:
Corporation tax at 30% (2001:30%, 2000:30%)                 (485)          5,036         (1,001)
Adjustments in respect of prior periods............         1,154            509              -
Double tax relief..................................            -              -               -
----------------------------------------------------------------------------------------------------
                                                              669          5,545         (1,001)
Foreign Tax:
Corporation taxes - current period.................        10,277          8,319           8,222
Adjustment in respect of prior periods.............         4,927          (467)           (662)
----------------------------------------------------------------------------------------------------
                                                           15,204          7,852           7,560

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

Total current tax...................................       15,873         13,397           6,559
----------------------------------------------------------------------------------------------------


Deferred taxation (note 15)
Origination and reversal of timing differences             (4,076)          (145)           3,459
----------------------------------------------------------------------------------------------------
Representing:
    United Kingdom..................................          640            946            (89)
    Foreign tax.....................................       (4,716)        (1,091)           3,548
----------------------------------------------------------------------------------------------------



Total deferred tax.................................        (4,076)          (145)           3,459

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

Tax on profit on ordinary activities...............        11,797         13,252          10,018
====================================================================================================
</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
                                                            2000              2001            2002
                                                      -----------------  --------------  ---------------
                                                         (pound)'000      (pound)'000      (pound)'000

<S>                                                       <C>                 <C>               <C>
UK Corporation tax at 30% (2001:30%)...............
Current tax charge/(credit) on exchange movements
offset in reserves.................................         (2,321)           (127)              684
--------------------------------------------------------------------------------------------------------

                                                            (2,321)           (127)              684
========================================================================================================
</TABLE>




     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
                                                            2000              2001            2002
                                                      -----------------  --------------  ---------------
                                                         (pound)'000      (pound)'000      (pound)'000

<S>                                                            <C>           <C>            <C>
Profit on ordinary activities before tax...........            28,549        33,726         21,878
Profit on ordinary activities multiplied by
standard rate of corporation tax in the UK of 30%
(2001:30%,2000:30%)................................            10,118         6,563          8,565
Effects of:

Adjustment to tax in respect of prior period.......             6,081            42          (662)
Adjustment in respect of foreign tax rates.........             1,610         2,536          2,691
Expenses not deductible for tax purposes...........               652           671          1,192
Capital allowances in excess of depreciation.......                99        (1,526)          (572)
Other timing differences...........................              (340)        1,811         (2,874)
Losses.............................................              (794)         (255)           221
                                                      ---------------   --------------  ---------------
                                                               15,873         13,397          6,559
                                                      ===============   ==============  ===============
</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 2001 and 31 December 2002 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. As a result, 366,561 Ordinary
share options and 25,507 'A' Ordinary share options were exercised.

         Details of changes in the number of share options for ordinary shares
in the ultimate parent undertaking, Dunlop Standard Aerospace Group Limited, are
as follows:

<TABLE>
<CAPTION>

                                                       Options          Options          Options
                                                    outstanding at     Exercised      outstanding at
                                                      1 January       During the       31 December
                                                        2002             year             2002
                                                    --------------    -----------    ---------------
                                                       Number           Number           Number
<S>                                                  <C>                <C>                 <C>
Ordinary shares of 50 pence each .ce each.........      10,932            --              10,932
'A' Ordinary shares of 50 pence each pence each...     459,000        (101,000)          358,000
                                                    --------------    -----------    ---------------
                                                       469,932        (101,000)          368,932
                                                    ==============    ===========    ===============
</TABLE>



8    Intangible Fixed Assets

<TABLE>
<CAPTION>


                                                                           Licenses
                                                                           and OEM
                                                        Development      authorization
                                                           costs             fees           Goodwill         Total
                                                        -----------      -------------    -----------    ------------
Cost                                                    (pound)'000       (pound)'000     (pound)'000     (pound)'000
<S>                                                        <C>              <C>             <C>             <C>
At 31 December 2000.................................       19,259           10,978          321,510         351,747
Exchange adjustments................................          102              326            3,786           4,214
Additions...........................................        1,749            7,570               --           9,319
Reclassifications and other adjustments.............         (922)                                             (922)
                                                        -----------      -------------    -----------    ------------
                                                                                --               --
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
                                                        ===========      =============    ===========    ============
Amortization
At 31 December 2000 ................................        3,304            2,058               --           5,362
Exchange adjustments................................           30               64               --              94
Charge for period...................................        2,223              745               --           2,968
Provision for impairment............................           --               --              199             199
Reclassifications and other adjustments.............           29               --               --              29
                                                        -----------      -------------    -----------    ------------
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
                                                        ===========      =============    ===========    ============


Net Book Amount

At 31 December 2000 ................................       15,955            8,920          321,510         346,385
                                                        ===========      =============    ===========    ============
At 31 December 2001...........................             14,602           16,007          325,097         355,706
                                                        ===========      =============    ===========    ============
At 31 December 2002.................................       14,538           13,551          313,856         341,945
                                                        ===========      =============    ===========    ============
</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)16.1 million in 2002 (year ended 31 December 2001:
(pound)16.3 million and year ended 31 December 2000: (pound)16.0 million).



9.    Tangible Fixed Assets
<TABLE>
<CAPTION>


                                                   Freehold     Short leasehold
                                                   land and         land and         Plant and
                                                  buildings        buildings         machinery          Total
                                                 -----------    ---------------     -----------      -----------
                                                 (pound)'000      (pound)'000       (pound)'000      (pound)'000
Cost
<S>                                                  <C>               <C>             <C>              <C>
At 31 December 2000....................              50,130            2,359           121,121          173,610
Exchange adjustments...................                 611               72             2,416            3,099
Transfers..............................                (367)             367               526              526
Additions..............................               2,082              117            24,930           27,129
                                                 -----------    ---------------     -----------      -----------
Disposals..............................                 --               --             (2,318)          (2,318)
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
                                                 ===========    ===============     ===========      ===========

Depreciation
At 31 December 2000....................               1,049              476            12,925           14,450
Exchange adjustments...................                  20               16               201              237
Transfers..............................                (121)             149               498              526
Charge for the period..................                 811              160            11,904           12,875
Disposals..............................                 --               --               (739)            (739)
                                                 -----------    ---------------     -----------      -----------
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 the period..................                 880              167            13,493           14,540
Disposals..............................                 --               (98)           (1,136)         (1,234)
                                                 -----------    ---------------     -----------      -----------
At 31 December 2002....................               2,505              801            36,649           39,955
                                                 ===========    ===============     ===========      ===========
Net Book Amount

At 31 December 2000....................              49,081            1,883           108,196          159,160
                                                 ===========    ===============     ===========      ===========
At 31 December 2001....................              50,697            2,114           121,886          174,697
                                                 ===========    ===============     ===========      ===========
At 31 December 2002....................              54,735            1,820           122,088          178,643
                                                 ===========    ===============     ===========      ===========

</TABLE>

     Plant and machinery at 31 December 2002 and 31 December 2001 includes no
assets held under finance leases. At 31 December 2000, plant and machinery
included leased assets that had a cost of (pound)786,000, and accumulated
depreciation of (pound)281,000.

10   Inventories
<TABLE>
<CAPTION>

                                                                               31 December         31 December
                                                                                   2001                2002
                                                                               -----------        ------------
                                                                               (pound)'000        (pound)'000
<S>                                                                                <C>               <C>
Raw materials and consumables...........................................           36,225            37,204
Work in progress........................................................           22,252            19,631
Finished goods..........................................................           10,019            12,517
                                                                               -----------        ------------
                                                                                   68,496            69,352
                                                                               ===========        ============
</TABLE>


     Inventories are stated after provisions of(pound)8,457,000 (31 December
2001:(pound)8,591,000).

11.    Debtors

<TABLE>
<CAPTION>

                                                                               31 December         31 December
                                                                                   2001                2002
                                                                               -----------         -----------
                                                                               (pound)'000         (pound)'000
Amounts due within one year
<S>                                                                                 <C>                 <C>
Trade debtors..........................................................             90,634              95,809
Other debtors..........................................................              9,681               5,612
Prepayments and accrued income.........................................              1,848               3,282
Deferred costs  - Initial manufactured parts provided..................              1,935               2,796
                                                                               -----------         -----------
                                                                                   104,098             107,499

Amounts due after more than one year
Other debtors..........................................................               --                   574
Deferred costs - initial manufactured parts provided...................             21,175              22,206
                                                                               -----------         -----------
                                                                                   125,273             130,279
                                                                               ===========         ===========
</TABLE>


     Trade debtors at 31 December 2002 are stated after allowances for
doubtful accounts of(pound)2,595,000 (31 December 2001: (pound)1,795,000).

     Trade debtors at 31 December 2002 includes unbilled revenue of
(pound)41,395,000 (31 December 2001: (pound)32,964,000), which represents
amounts earned and recognized in the period for which billings are issued in
the following period.



12.   Creditors--Amounts falling due within one year

<TABLE>
<CAPTION>
                                                                               31 December         31 December
                                                                                   2001                2002
                                                                               -----------         -----------
                                                                               (pound)'000         (pound)'000
<S>                                                                                 <C>                 <C>
Bank overdraft.........................................................               --                18,148
Bank loans (note 14)...................................................             54,394              49,762
Trade creditors........................................................             59,253              46,935
Other creditors........................................................              4,252               7,673
Amounts owed to parent undertaking ....................................                392               5,493
Taxation and social security...........................................              1,324               1,652
Corporation tax........................................................              8,871               7,837
Accruals and deferred income...........................................             17,823              15,389
Payments on account....................................................                138                  59
                                                                               -----------         -----------
                                                                                   146,447             152,948
                                                                               ===========         ===========
</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 2002
were (pound)5 million, and Cdn$14.1 million.


13.   Creditors--Amounts falling due after more than one year

<TABLE>
<CAPTION>
                                                                               31 December         31 December
                                                                                   2001                2002
                                                                               -----------         -----------
                                                                               (pound)'000         (pound)'000
<S>                                                                                 <C>                  <C>
Accruals and deferred income...........................................             12,986               8,951
Senior Notes (note 14).................................................            151,290             136,479
Bank loans (note 14)...................................................            219,811             207,092
                                                                               -----------         -----------
                                                                                   384,087             352,522
                                                                               ===========         ===========
</TABLE>


14.   Borrowings

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

                                                                                           Finance
                                                        Bank Loans      Senior Notes        Leases           Total
                                                       -----------      ------------     -----------      -----------
                                                       (pound)'000      (pound)'000      (pound)'000      (pound)'000

<S>                                                       <C>             <C>                 <C>          <C>
At 31 December 2000                                       267,084         150,000             338          417,422
Principal repayments - scheduled................          (10,240)            --             (352)         (10,592)
New loans drawn.................................           19,000             --              --            19,000
Exchange adjustments............................            4,403           5,172              14            9,589
                                                       -----------      ------------     -----------      -----------
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
                                                       ===========      ============     ===========      ===========
</TABLE>



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

<TABLE>
<CAPTION>
                                                                     31 December 2002

                                                     Bank Loans       Senior Notes          Total
                                                    -----------       ------------       -----------
                                                    (pound)'000        (pound)'000       (pound)'000

<S>                                                    <C>                <C>                 <C>
Year one........................................       51,617               --               51,617
Year two........................................       29,063               --               29,063
Year three......................................       28,262               --               28,262
Year four.......................................       84,948               --               84,948
Year five.......................................       67,565               --               67,565
After five years................................         --               139,752           139,752
                                                    -----------       ------------       -----------
                                                      261,455             139,752           401,207
                                                    ===========       ============       ===========
</TABLE>


<TABLE>
<CAPTION>

Borrowings include the following variable                                           31 December        31 December
rate 31 December 31 December collateralized                                             2001               2002
bank loans repayable by:                                                            -----------        -----------
                                                   Currency     Interest rate       (pound)'000        (pound)'000
<C>                                                  <C>                 <C>             <C>                 <C>
2006 (Tranche A)..............................        Sterling  LIBOR + 2.00%           128,960             93,920
2006 (Tranche B)..............................    U.S. dollars  LIBOR + 2.50%            57,827             51,017
2007 (Tranche C)..............................    U.S. dollars  LIBOR + 2.75%            57,820             51,022
2006 (Tranche D)..............................        Sterling  LIBOR + 2.00%            19,000             12,000
2006 (Tranche D)..............................    U.S. dollars  LIBOR + 2.00%              --               16,149
2007 (Tranche E)..............................    U.S. dollars  LIBOR + 2.75%            16,640             37,347
2009 (Senior Notes) ..........................    U.S. dollars        11.875%           155,172            139,752
                                                                                    -----------        -----------
Gross borrowings payable......................                                          435,419            401,207
Less debt issue costs to be amortized.........                                           (9,924)            (7,874)
                                                                                    -----------        -----------
Borrowings payable net of debt issue costs ...                                          425,495            393,333
                                                                                    ===========        ===========

Repayable within one year.....................                                           54,394             49,762
Repayable after more than one year............                                          371,101            343,571
                                                                                    -----------        -----------
                                                                                        425,495            393,333
                                                                                    ===========        ===========
</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 2002 (pound)28.149 million had been drawn down under
this facility (31 December 2001: (pound)19.0 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 2002, (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
2002 was (pound)10.462 million (31 December 2001: (pound)19.611 million).

     The Tranche E facility is a term loan facility. The aggregate amount to
be repaid, on each of 1 October 2006 and 1 October 2007, shall be 50% of the
aggregate borrowings under the Tranche E facility outstanding on the seventh
anniversary of the first date on which a draw down under Tranche E was made.
During the period ended 31 December 1998, $24.128 million ((pound)14.1 million
sterling equivalent) was drawn down under this facility.

     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
2002, 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
                                                                                 2001                    2002
                                                                             -----------             -----------
                                                                             (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.......................................          80,511                  27,021
                                                                             -----------             -----------
                                                                                80,511                  27,021
                                                                             ===========             ===========
</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 2002, after taking into
account the various interest rate swaps and collars as described in note 17,
was 9.8% (31 December 2001: 9.4%).

15.  Provisions for Liabilities and Charges

<TABLE>
<CAPTION>
                                              Deferred tax         Warranty           Total
                                              ------------       -----------      -----------
                                              (pound)'000        (pound)'000      (pound)'000
<S>                                              <C>                 <C>              <C>
At 31 December 2000....................          16,324              1,908            18,232
Prior year adjustment.....................          964                 --               964
                                              ------------       -----------      -----------
At 31 December 2000 as restated........          17,288              1,908            19,196

Exchange adjustments...................              69                 35               104
Charged / (credited) ..................            (145)             4,000             3,855
Utilized...............................              --             (4,407)           (4,407)
                                              ------------       -----------      -----------
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
                                              ============       ===========      ===========
</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>

                                                                                   31 December        31 December
                                                                                      2001               2002
                                                                                   -----------        -----------
                                                                                   (pound)'000        (pound)'000
Deferred taxation provided                                                         (restated)
<S>                                                                                   <C>               <C>
Accelerated capital allowances and other timing differences relating to
tangible fixed assets ...................................................             15,398             15,518

Deferred taxation on other short term timing differences:
   Deferred costs and other intangible assets............................              7,358              7,704
   Other short term timing differences...................................             (5,544)            (3,017)
Losses  .................................................................                 --                 --
                                                                                ------------------    ------------
                                                                                      17,212             20,205
                                                                                ==================    ============
At 1 January 2001 as previously reported                                              16,324
Prior year adjustment - FRS 19                                                           964
                                                                                ------------------
At 1 January 2001 as restated                                                         17,288

Amount charged to the profit and loss account                                           (145)
Exchange adjustments                                                                      69
                                                                                ------------------
                                                                                      17,212
                                                                                ==================
</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 provision 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)3.0 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.


16.   Share Capital and Reserves

<TABLE>
<CAPTION>
                                                                                                   Profit and Loss
                                                                               Share Capital          Account
                                                                               -------------       ---------------
                                                                                (pound)'000           (pound)'000
<S>                                                                                 <C>                   <C>
At 31 December 2000.....................................................            160,000               35,916
Retained profit for the year ended 31 December 2001.....................                 --               20,754
Exchange adjustments - retained earnings................................                 --                  (67)
                                     - net assets.......................                 --                5,979
                                     - borrowings.......................                 --               (5,979)
                                     - tax effect of above..............                 --                  127
                                                                               -------------       ---------------
At 31 December 2001.....................................................            160,000               56,730

Prior year adjustment - FRS 19..........................................                 --               (1,242)
                                                                               -------------       ---------------
At 31 December 2001 as restated.........................................            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
                                                                               =============       ===============
</TABLE>

     The share capital of the Company comprised:


<TABLE>
<CAPTION>

Ordinary shares of(pound)1 each                                Authorized                  Allotted and Fully Paid
                                                      Number          (pound)'000           Number       (pound)'000
<S>                                                 <C>                  <C>           <C>                  <C>
At 31 December 2001                                  160,000,000          160,000       160,000,000          160,000
                                                    ============       ==========       ===========      ============
At 31 December 2002                                  160,000,000          160,000       160,000,000          160,000
                                                    ============       ==========       ===========      ============
</TABLE>

            The Company's authorized 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.


17.   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 Group had a number of swap contracts to hedge its interest
rate risk which all expired in November 2002 (details below). As DSL was to
acquire, indirectly, all the Company's shares, the Group planned to seek a
listing of the shares of a new company, Dunlop Standard Limited, or DSL, on
the New York Stock Exchange the directors considered it inappropriate to
commit to new derivative contracts pending the outcome of these plans. Given
the significant fall in LIBOR rates since the original swaps were taken out,
the directors intend to further consider their hedging strategy during 2003.

            The following summarizes the Group's outstanding swap contracts at
31 December 2001 and substantially all of December 2002, representing
agreements to swap out of floating rates and into fixed rate payments:

<TABLE>
<CAPTION>
                                                                                Fixed
           Notional                                        Floating             LIBOR
            Amount                     Term               LIBOR Rate            Rate
<S>                                <C>                    <C>                  <C>
     (pound)55 million            Nov 98-Nov 02          (pound) LIBOR         6.19%
     (pound)55 million            Nov 98-Nov 02          (pound) LIBOR         6.19%
         US$20 million            Nov 00-Nov 02              US$ LIBOR         5.28%
        US$225 million            Nov 00-Nov 02              US$ LIBOR         5.32%
</TABLE>

     Additionally, the Group was committed under a U.S.dollar LIBOR interest
rate contract on notional amounts of $161 million maturing November 2002. The
contract specified a cap rate of 7.00% and a floor of 3.81%.

     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 sales 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
                                                                  Interest rate        for which rate is fixed
Currency                                                                %                       Years
<S>                                                                    <C>                  <C>
Sterling..........................................                      -                         -
U.S. dollar.......................................                    11.875                     6.4
                                                                 ---------------            ---------------
Total.............................................                    11.875                     6.4
                                                                 ===============            ===============
</TABLE>


<TABLE>
<CAPTION>

                                                                    Year ended 31 December 2001
                                                                         Floating rate           Fixed rate
                                                           Total      Financial liabilities  Financial liabilities
Currency                                               (pound)'000          (pound)'000            (pound)'000
<S>                                                       <C>                  <C>                   <C>
Sterling.........................................         147,960              37,960                110,000
U.S. dollar......................................         287,459                  --                287,459
                                                        ----------          ----------             -----------
Total............................................         435,419              37,960                397,459
                                                        ==========          ==========             ===========
</TABLE>


<TABLE>
<CAPTION>

                                                                          Year ended 31 December 2001
                                                                        Fixed Rate Financial Liabilities
                                                                 ----------------------------------------------
                                                                 Weighted average      Weighted average period
                                                                  Interest rate        for which rate is fixed
Currency                                                                %                       Years
<S>                                                                    <C>                       <C>
Sterling..........................................                     8.1                       0.9
U.S. dollar.......................................                    11.5                       6.7
                                                                   -----------               ------------
Total.............................................                    11.2                       6.3
                                                                   ===========               ============
</TABLE>




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


       Currency and interest rate risk profile of financial assets

      The Group held the following financial assets at 31 December 2002 and 31
December 2001:
<TABLE>
<CAPTION>

                                                                               Year ended 31 December 2002
                                                                               Fixed rate Financial assets
                                                                          -------------------------------------
                                                                                            Fixed interest rate
Assets held as part of the financing arrangements of the Group:           (pound)'000                 %
<S>                                                                           <C>                   <C>
Sterling cash deposits...........................                                  -                4.0
U.S. dollar cash deposits........................                                  -                1.6
                                                                         -------------       ----------------
Total ...........................................                                  -                 -
                                                                         =============       ================
</TABLE>


<TABLE>
<CAPTION>

                                                                               Year ended 31 December 2001
                                                                               Fixed rate Financial assets
                                                                          -------------------------------------
                                                                                            Fixed interest rate
<S>                                                                       <C>                       <C>
Assets held as part of the financing arrangements of the Group:           (pound)'000                %
Sterling cash deposits............................                            10,388                4.0
U.S. dollar cash deposits........................                              1,147                1.6
                                                                          -------------        --------------
Total ............................................                            11,535                 -
                                                                          =============        ==============
</TABLE>

      The cash deposits comprised of deposits placed on money markets at
monthly rates.


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 2002:


<TABLE>
<CAPTION>

                                                                  31 December 2001                31 December 2002
                                                             Book value      Fair value      Book value      Fair value
                                                           --------------  ---------------  -------------  --------------
                                                            (pound)'000     (pound)'000      (pound)'000    (pound)'000
Primary financial instruments held or issued to finance
the Group's operations:

<S>                                                              <C>              <C>            <C>             <C>
Cash at bank and on hand.................................        29,063           29,063         33,585          33,585
Short-term deposits......................................        11,535           11,535              -               -
Short-term borrowings and current portion of long-term
borrowings...............................................        56,393           56,393         69,765          69,765
Long-term borrowings.....................................       379,026          380,578        349,590         352,385
Preference shares........................................            --               --             --              --
Derivative financial instruments held to manage the
interest rate profile:
Interest rate collar--unrealized gain/(loss).............             --         (1,666)             --              --
Interest rate swaps--unrealized gain/(loss)..............             --         (7,304)             --              --
</TABLE>

         For cash at bank and in hand, short-term deposits and short-term
borrowings, the fair value approximates to the carrying value 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 2000.............           --        (1,476)         (1,476)
Gains and losses arising in previous period that were recognized in the
year ended 31 December 2001.............................................           --          (802)           (802)
                                                                          ------------  ------------   ------------
Gains and losses arising before 1 January 2001 that were not recognized
in the year ended 31 December 2001......................................           --          (674)           (674)
Gains and losses arising in 2001 that were not recognized in the year
ended 31 December 2001..................................................           --        (8,296)         (8,296)
                                                                          ------------  ------------   ------------
Unrecognized gains and losses on hedges at 31 December 2001.............           --        (8,970)         (8,970)
                                                                          ============  ============   ============
Gains and losses arising in previous period that were recognized 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 recognized in the year
ended 31 December 2002..................................................           --             --             --
                                                                          ------------  ------------   ------------
 Unrecognized gains and losses on hedges at 31 December 2002............           --             --             --
                                                                          ============  ============   ============
</TABLE>


      Currency exposures


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

<TABLE>
<CAPTION>
                                                                             31 December 2002
                                                                  Net foreign monetary assets/(liabilities)
                                                             Sterling      U.S. Dollar        Other          Total
                                                           -----------    ------------    -----------     -----------
                                                           (pound)'000     (pound)'000    (pound)'000     (pound)'000
Functional currency of entity:
<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 2002
                                                                  Net foreign monetary assets/(liabilities)
                                                             Sterling      U.S. Dollar        Other          Total
                                                           -----------    ------------    -----------     -----------
                                                           (pound)'000     (pound)'000    (pound)'000     (pound)'000
Functional currency of entity:
<S>                                                           <C>               <C>                  <C>        <C>
Sterling..................................................       --          19,306            (153)        19,153
U.S. Dollar...............................................    2,076              --          (2,073)             3
Other.....................................................   (1,008)             77             147           (784)
                                                           -----------    ------------    -----------     -----------
                                                              1,068          19,383          (2,079)        18,372
                                                           ===========    ============    ===========     ===========
</TABLE>

18.   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% per annum
pre-retirement and 5.5% per annum post-retirement, that salary increases would
average 4.5% per annum and that pensions accrued since the scheme commenced
would increase at the rate of 3% per annum.

      The most recent actuarial valuation was undertaken as at 5 April 2000.
It showed that the market value of the Scheme's assets, excluding the bulk
transfer payment (from the previous pension arrangements) of (pound)58,757,000
subsequently received in September 2000, was (pound)3,177,000. Allowing for
the bulk transfer payment, the assets represented 132% of the benefits that
had accrued to members, (including liabilities represented by the bulk
transfer amount) after allowing for expected future increases in earnings.
After the valuation, benefits accrued up to April 2000 were increased by 5%.
This reduced the surplus in the Scheme.

      The pension charge for the Scheme for the current year was
(pound)2,595,000 (year ended 31 December 2001: (pound)2,503,000). This charge
included the benefit of a reduction of (pound)1,752,000 (year ended 31
December 2001: (pound)1,408,000) due to the amortisation of experience
surpluses that are being recognised over 12 years, the average remaining
service lifetime of the employees.

      Following the introduction of the Scheme, contributions were payable at
the rate of 15% for the employer and 5% for employees. This was also the rate
at which the Scheme was initially being funded. An actuarial valuation of this
scheme was completed during 2000, which resulted in a change in the
contribution rates payable to 10% for the employer and 4% for employees. These
are now the rates at which the Scheme is being funded. As a result of this
change in funding rate, there was a small prepayment included in the balance
sheet at 31 December 2000 of (pound)411,000. There is no such balance at 31
December 2001 and 31 December 2002.

Details of the current year SSAP24 charge is as follows:

<TABLE>
<CAPTION>
                                                                        Year ended         Year ended
                                                                     ----------------- ----------------
                                                                       31 December         31 December
                                                                           2001               2002
                                                                       (pound)'000         (pound)'000
<S>                                                                       <C>                 <C>
Regular service cost ................................................     3,916               4,347
Variation credit.....................................................    (1,408)             (1,752)
Interest credit......................................................        (5)                 --
                                                                     ----------------- ----------------
Total charge in respect of UK defined benefit pension scheme.........     2,503               2,595
                                                                     ================= ================
</TABLE>


     A full actuarial valuation of the Scheme is due in 2003.

      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
                                                                                  2001                2002
                                                                               (pound)'000         (pound)'000
Defined benefit schemes:
<S>                                                                                <C>                 <C>
U.K. only..............................................................            2,503               2,595
Defined contribution schemes:
U.K., U.S., Canada, Singapore and the Netherlands......................            2,747               2,556
                                                                           ------------------- ------------------
                                                                                   5,250               5,151
</TABLE>



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

Financial assumptions                                                           Year ended          Year ended
                                                                            ------------------  ----------------
                                                                               31 December         31 December
                                                                                   2001                2002
                                                                            ------------------  ----------------
                                                                                  (pound)'000    (pound)'000
<S>                                                                                   <C>            <C>
Salary increases.......................................................               3.50%          3.25%
Pension increases (on pensions now being accrued)......................               2.50%          2.25%
Discount rate..........................................................               5.75%          5.75%
RPI....................................................................               2.50%          2.25%
Expected return on equities ...........................................               7.50%          7.50%
Expected return on bonds...............................................               5.75%          5.50%
</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
                                                               2001               2001             2002              2002
                                                                %             (pound)'000             %          (pound)'000
<S>                                                            <C>                    <C>           <C>                  <C>
Equities..............................................          7.5                   40,683        7.5                  31,966
Bonds.................................................         5.75                   18,324        5.5                  22,397
Others................................................          -                          -        4.0                     361
                                                                            -----------------                  -----------------
                                                                                      59,007                             54,724
Present value of scheme liabilities...................                               (55,688)                           (61,916)
                                                                            -----------------                  -----------------

(Deficit)/surplus in the scheme.......................                                 3,319                             (7,192)

Related deferred tax asset /(liability)...............
                                                                                        (996)                             2,158
                                                                            -----------------                  -----------------

Net pension asset.....................................                                 2,323                             (5,034)
                                                                            -----------------                  -----------------
</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 2002 would
be as follows:
<TABLE>
<CAPTION>

                                                                               31 December         31 December
                                                                                   2001                2002
                                                                               (pound)'000         (pound)'000
                                                                                (Restated)          (Restated)
<S>                                                                                <C>                 <C>
Net assets excluding pension (liability)/ asset........................            215,488             225,719
Pension (liability) /asset.............................................              2,323              (5,034)
                                                                               -----------          -----------
Net assets including pension (liability) / asset.......................            217,811             220,685
                                                                               ===========          ===========
Profit and loss account excluding pension (liability) /asset...........             55,488              65,719
Pension (liability)/asset..............................................              2,323             (5,034)
                                                                               -----------          -----------
Profit and loss account................................................             57,811              60,685
                                                                               ===========          ===========
</TABLE>

<TABLE>
<CAPTION>

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

<S>                                                                                   <C>
Current service...........................................                            3,866
Past service cost.........................................                               -
--------------------------------------------------------------------------------------------
Total operating charge                                                                3,866
============================================================================================



Movement in surplus/(deficit) during the year

Surplus in the scheme at the beginning of the
year....................................................                                     3,319
Movement:
Current service cost (from above).......................                                    (3,866)
Contributions...........................................                                     2,595
Past service cost (from above)..........................                                        -
Other finance income (from below).......................                                      (842)
Actuarial (loss) (from below)...........................                                    (8,398)
Other...................................................                                        -
---------------------------------------------------------------------------------------------------
(Deficit) in the scheme at the end of the year                                              (7,192)
===================================================================================================

Analysis of the amount credited to other finance
income

Expected return on pension scheme assets...............                                      4,190
Interest on pension scheme liabilities.................                                     (3,348)
---------------------------------------------------------------------------------------------------

Net return                                                                                     842
===================================================================================================

                                                                                        31 December
                                                                                              2002
                                                                                       (pound)'000
Analysis of amount recognised in STRGL

Actual return less expected return on pension
scheme assets.......................................                                        (8,474)
Experience gains and losses arising on the scheme
liabilities...................................                                              (2,088)
Changes in the assumptions underlying the present
value of the scheme liabilities...........                                                   2,164
---------------------------------------------------------------------------------------------------

Actuarial (loss) recognised in STRGL                                                        (8,398)
===================================================================================================


                                                                                        31 December
                                                                                               2002

History of experience gains and losses

Differences between the actual and expected return on scheme assets:
Amount ((pound)'000).....................................                                   (8,474)
Percentage of scheme assets..............................                                       15.5%

Experience gains and losses on scheme liabilities:
Amount ((pound)'000).....................................                                   (2,088)
Percentage of the present value of the scheme                                                    3.4%
liabilities.............................................


Total amount recognised in statement of total recognised gains and losses:
Amount ((pound)'000).....................................                                   (8,398)
Percentage of the present value of the scheme                                                   13.6%
liabilities.............................................


</TABLE>

19.    Commitments

     Capital commitments
<TABLE>
<CAPTION>

                                                                    31 December        31 December
                                                                       2001               2002
                                                                    -----------        -----------
                                                                    (pound)'000        (pound)'000
<S>                                                                    <C>                 <C>
Authorized and contracted.......................................       8,621               2,253
                                                                    ===========        ===========
</TABLE>


     Lease commitments

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

<TABLE>
<CAPTION>

                                                31 December 2001                  31 December 2002
                                       --------------------------------    --------------------------------
                                       Land and Buildings       Other      Land and Buildings      Other
                                           (pound)'000      (pound)'000       (pound)'000       (pound)'000
<S>                                             <C>              <C>                <C>               <C>
Within one year.......................          92               293                137               363
Between two and five years............        4,350              677              4,167               386
After five years......................          286               --                585                 4
                                           ------------     -----------       -----------       -----------
                                              4,728              970              4,889               753
                                           ============     ===========       ===========       ===========
</TABLE>



     The future minimum lease payments under non-cancelable operating leases at
31 December 2002 were as follows:


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

2003......................................       4,342                     756
2004......................................       4,320                     327
2005......................................       4,112                     189
2006......................................       4,039                      94
Thereafter................................       3,948                     28



20   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)420,500 at 31 December 2002 (31 December 2001;
(pound)172,000).


21   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.

      There were no amounts outstanding with the Dunlop Aerospace Limited UK
Pension Scheme at 31 December 2002.

22   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
                                                        2000            2001          2002
                                                     -----------    -----------   -----------
                                                     (pound)'000    (pound)'000   (pound)'000
                                                                     (Restated)
<S>                                                     <C>              <C>           <C>
Operating profit..................................      69,263           75,656        65,113
Depreciation......................................       9,842           12,875        14,540
Amortization of intangibles.......................       1,840            2,968         3,079
Amortization of deferred costs....................       2,075            2,643         1,622
Loss on disposal of fixed assets..................         179               79           469
Goodwill impairment charge........................          --              199            --
Capital grant release.............................          --             (264)         (290)
Exchange differences..............................          --              (47)         (338)
Change in stocks..................................     (11,561)          (2,327)       (6,071)
Change in debtors.................................     (28,705)           8,541       (15,701)
Change in creditors and provisions................      38,335          (19,691)          300
                                                     -----------    -----------   -----------
Net cash inflow from operating
   activities.....................................      81,268           80,632        62,723
                                                     ===========    ===========   ===========
</TABLE>


23   Analysis of Changes in Net Debt

<TABLE>
<CAPTION>

                                                                                                         At
                                       At 1 January        Cash        Exchange                      31 December
                                           2000            Flow       Adjustments       Other            2000
                                       ------------    -----------    -----------    -----------     -----------
                                        (pound)'000    (pound)'000    (pound)'000    (pound)'000     (pound)'000
<S>                                        <C>            <C>           <C>             <C>              <C>
Cash at bank and in hand............       (49,705)       14,532        (2,046)              --        (37,219)
Overdrafts..........................         6,021        (5,186)          413               --           1,248
                                       ------------    -----------    -----------    -----------     -----------
                                           (43,684)        9,346        (1,633)             --         (35,971)
Debt due within one year............        13,972       (15,525)           69          20,879          19,395
Debt due after one year.............       384,942            --        20,584         (19,887)        385,639

Finance leases......................           509          (209)           38               --            338
                                       ------------    -----------    -----------    -----------     -----------
Total...............................       355,739        (6,388)       19,058             992         369,401
                                       ============    ===========    ===========    ===========     ===========

                                                                                                         At
                                       At 1 January        Cash        Exchange                      31 December
                                           2001            Flow       Adjustments       Other            2001
                                       ------------    -----------    -----------    -----------     -----------
                                        (pound)'000    (pound)'000    (pound)'000    (pound)'000     (pound)'000
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
                                       ============    ===========    ===========    ===========     ===========



                                                                                                         At
                                       At 1 January        Cash        Exchange                      31 December
                                           2002            Flow       Adjustments       Other            2002
                                       ------------    -----------    -----------    -----------     -----------
                                        (pound)'000    (pound)'000    (pound)'000    (pound)'000     (pound)'000
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>




Total cash at bank and in hand included in the balance sheet at 31 December 2002
is (pound)15,437,000, being overdraft of (pound)18,148,000 and the operational
cash at bank and in hand balances of (pound)33,585,000.


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. Additionally included within other is
the application of the short-term bank deposit to set off against existing loan
liabilities by the company's bankers during January 2002. The value of this
non-cash transfer was (pound)11,381,000.



24   Reconciliation of Net Cash Flow to Movement in Net Debt

<TABLE>
<CAPTION>

                                                   -------------------  ------------------  ------------------
                                                       Year ended           Year ended           Year ended
                                                       31 December         31 December          31 December
                                                   -------------------  ------------------  ------------------
                                                          2000                 2001                 2002
                                                       (pound)'000         (pound)'000          (pound)'000
<S>                                                        <C>                 <C>                <C>
Decrease/(increase) in cash for the period.......          9,346               7,468              11,611
Exchange adjustments.............................         19,058               8,990             (29,071)
Repayment of bank loans..........................        (15,525)            (10,240)            (15,615)
Decrease in net debt from management of liquid
resources........................................             --             (11,381)                 --
Repayment of finance lease obligations...........           (209)               (352)                 --
Movement in debt issue costs.....................            992               2,126               2,050
New bank loans...................................             --              19,000              23,909
Other non cash items.............................             --                (115)                115
Issue of Senior Notes............................             --                  --                  --
                                                   -------------------  ------------------  ------------------
Movement in net debt during the period...........         13,662              15,496              (7,001)
Net debt at beginning of period..................        355,739             369,401             384,897
                                                   -------------------  ------------------  ------------------
Net debt at end of period........................        369,401             384,897             377,896
                                                   ===================  ==================  ==================
</TABLE>




25   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
                                                       2000            2001           2002
                                                    -----------   ------------    -----------
                                                    (pound)'000   (pound)'000     (pound)'000
                                                     (restated)    (restated)
<S>                                                     <C>            <C>             <C>
Profit of the Group under U.K. GAAP                     16,752         20,474          11,860
Adjustments:
Deferred charges and development costs...........       (3,917)        (1,789)         (3,062)
Goodwill amortization............................       (5,672)        (5,350)             --
Amortization  and impairment of other  intangible
assets...........................................       (4,912)        (4,925)         (5,616)

Pensions.........................................          716           (621)         (1,449)
Interest rate swap contracts.....................      (11,041)        (7,494)          8,970
Deferred taxes...................................        3,595          5,556             (37)
                                                    -----------   ------------    -----------
Net income under U.S. GAAP.......................       (4,479)         5,851          10,666
                                                    ===========   ============    ===========
</TABLE>


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

<TABLE>
<CAPTION>
                                                              31 December         31 December
                                                                  2001                2002
                                                           ----------------    ---------------
                                                              (pound)'000         (pound)'000
                                                               (restated)
<S>                                                             <C>                 <C>
Equity shareholders' funds under U.K. GAAP...............       215,488             225,719
Adjustments:
Deferred charges and development costs...................       (38,923)            (41,985)
Goodwill.................................................      (134,324)           (127,659)
Other intangible assets..................................       180,421             165,797
Pensions.................................................          (348)             (1,797)
Interest rate swap contracts.............................        (8,970)                 --
Deferred taxes...........................................       (49,723)            (47,223)
                                                           ----------------    ---------------
Equity shareholders' funds under U.S. GAAP...............       163,621             172,852
                                                           ================    ===============
</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 capitalizes 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 authorization licenses. For U.K. GAAP
purposes, these costs are typically amortized 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
authorization 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. However, after completing
the annual impairment test, calculated as at 31 December 2002, the Group
determined that the carrying value of certain trademarks were impaired and
recorded a related charge of (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 2000      31 December 2001     31 December 2002
                                                     ----------------      ----------------     ----------------
                                                        (pound)000's         (pound)000's         (pound)000's
                                                        ------------         ------------         ------------
<S>                                                      <C>                    <C>                  <C>
Reported net income /(loss)                              (4,479)                5,851                11,214
add back goodwill amortization                            5,672                 5,350                 --
add back indefinite life trademark amortization
- net of tax                                               981                   981                  --
                                                     ----------------      ----------------     ----------------
Adjusted income/(loss)                                    2,174                 12,182               11,214
                                                     ================      ================     ================
</TABLE>



     Intangible Assets

<TABLE>
<CAPTION>

                                               As of 31 December 2002
                                         Gross Carrying        Accumulated
                                             Amount            Amortization       Weighted-Average
                                          (pound)000's         (pound)000's      Amortization Period
                                         ------------------------------------------------------------
Amortized intangible assets

<S>                                         <C>                  <C>                  <C>
Trademarks                                  129,414              (16,578)             40 years
                                         ----------------------------------
Total                                       129,414              (16,578)
                                         ==================================

Unamortized intangible assets
Goodwill                                    186,197
Trademarks                                   52,961
                                      ---------------------
Total                                       239,158
                                      =====================

Aggregate Amortization Expense:                       (pound)000's
For year ended 31 December 2002                             3,336

Estimated Amortization Expense:                       (pound)000's
For year ending 31 December 2003                            3,336
For year ending 31 December 2004                            3,336
For year ending 31 December 2005                            3,336
For year ending 31 December 2006                            3,336
For year ending 31 December 2007                            3,336

</TABLE>



     Goodwill

     The changes in the carrying amount of goodwill for the year ended
31December 2002 are as follows:

<TABLE>
<CAPTION>

                                                          Engine Repair &
                                         Manufacturing       Overhaul          Total
                                          (pound)000's     (pound)000's     (pound)000's
                                       ----------------------------------------------------
<S>                                         <C>               <C>             <C>
Balance as of 1 January 2002                146,991           44,328          191,319
Goodwill acquired during year                  -                -                -
Impairment losses                              -                -                -
Foreign exchange                               -             (5,122)          (5,122)
                                       ----------------------------------------------------
Balance as of 31 December 2002              146,991           39,206          186,197
                                       ====================================================
</TABLE>


     Pension and Post-retirement Benefits

            Under U.K. GAAP, the cost of providing pension benefits is
currently 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.

            This year 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 change in benefit obligation during the year is as follows:

<TABLE>
<CAPTION>
                                                                                        31 December     31 December
                                                                                            2001           2002
                                                                                        -----------     -----------
                                                                                        (pound)'000     (pound)'000
<S>                                                                                       <C>             <C>
   Benefit obligation at beginning of year.....................................           55,302          59,133
   Service cost................................................................            4,654           4,350
   Interest cost...............................................................            3,483           3,567
   Plan participants' contributions............................................            1,131           1,292
   Other actuarial (losses)....................................................           (5,052)         (2,712)
   Benefits paid...............................................................             (360)           (169)
   Exchange rate adjustment....................................................              (25)             (8)
                                                                                        -----------     -----------
   Benefit obligation at 31 December...........................................           59,133          65,453
                                                                                        ===========     ===========


     The change in plan assets during the year is as follows:

                                                                                        31 December     31 December
                                                                                            2001           2002
                                                                                        -----------     -----------
                                                                                        (pound)'000     (pound)'000
    Fair value of plan assets at beginning of year..............................          61,734          59,675
   Estimated actual return on plan assets ......................................          (5,039)         (8,127)
   Employer contribution........................................................           2,233           2,706
   Plan participants' contributions.............................................           1,131           1,292
   Benefits paid................................................................            (360)           (169)
   Exchange rate adjustment....................................................              (24)             (9)
                                                                                        -----------     -----------
   Fair value of plan assets at end of year......................................         59,675          55,368
                                                                                        ===========     ===========


   Funded /(unfunded) status....................................................             541         (10,085)
   Unrecognized prior service cost..............................................           1,897           1,754
   Unrecognized net gain/(loss) ................................................          (2,450)          6,980
                                                                                        -----------     -----------
    Net amount recognized ......................................................             (12)         (1,351)
                                                                                        ===========     ===========


     Assumptions used to determine the pension cost for the defined benefit
plans were:



                                                                                          Average         Average
                                                                                        weighted by     weighted by
                                                                                            PBO             PBO
                                                                                       --------------  -------------
                                                                                        31 December     31 December
                                                                                       --------------  -------------
                                                                                            2001           2002
                                                                                            (%)             (%)
   Discount rate..........................................................                  5.75            5.75
   Rate of return on assets...............................................                  6.75            6.75
   Salary growth..........................................................                  3.5             3.25
   Pension increases......................................................                  2.5             2.25
                                                                                        ===========     ===========


     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:

                                                                                        Year ended      Year ended
                                                                                        31 December     31 December
                                                                                           2001             2002
                                                                                        -----------     -----------
                                                                                        (pound)'000     (pound)'000
Components of pension expense:
   Service costs (net of employee                                                            4,654          4,350
    contributions)........................................
   Interest cost..........................................                                   3,483          3,567
   Expected return on plan assets.........................                                  (5,059)        (4,243)
   Amortization of unrecognized prior service
       cost...............................................                                     143            143
   Amortization of unrecognized net gain/(loss)...........                                     (97)           227
                                                                                        -----------     -----------
Net periodic pension cost.................................                                   3,124          4,044
                                                                                        ===========     ===========
Exchange rate adjustment                                                                         1             --
</TABLE>


            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 2002
amounted to(pound)1,048,000 (2001: (pound)977,000; 2000:(pound)755,000).
Employer contributions paid to the US plans in 2002 amounted
to(pound)1,173,000 (2001:(pound)1,317,000; 2000: (pound)804,000).

            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 2002
were(pound)324,000 (2001:(pound)272,000; 2000:(pound)104,000).

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

            In Singapore a national defined contribution plan is operated.
Employer contributions for 2002 were(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 realized 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 2001 and 2002 are as follows:

<TABLE>
<CAPTION>

                                                                                  2001         2002
                                                                              -----------   -----------
                                                                              (pound)'000   (pound)'000
Current deferred tax assets consist of the following:
<S>                                                                                 <C>          <C>
   Operating losses.........................................................        497          985
   Advance tax paid on cash accounting basis................................      6,044        3,458
   Debtors..................................................................        131           44
   Inventory................................................................        410          439
                                                                                     --            --
   Other provisions.........................................................      2,339        1,571
                                                                              -----------   -----------
   Total deferred tax assets................................................      9,421        6,497
   Less: Valuation allowance................................................       (497)        (985)
                                                                              -----------   -----------
Current deferred tax assets.................................................      8,924        5,512
                                                                              ===========   ===========

Current deferred tax liabilities consist of the following:
    Gain on plant deferred through reinvestment.............................        961          961
    Cost per brake landing program deferrals................................        407          366
    Warranty differences....................................................         --           --
                                                                              -----------   -----------
Current deferred tax liabilities............................................      1,368        1,327
                                                                              ===========   ===========

Non-current deferred tax liabilities consist of the following:
   Fixed assets.............................................................     21,046       19,375
   Deferred charges and development costs...................................      6,718        8,011
                                                                              -----------   -----------
Non-current deferred tax liabilities........................................     27,764       27,386
                                                                              ===========   ===========
</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
                                                          2000           2001          2002
                                                      -------------  ------------  ------------
                                                       (pound)'000   (pound)'000   (pound)'000

<S>                                                      <C>            <C>            <C>
Net cash inflow from operating activities ..........     28,291         22,109         9,449
Net cash used in investing activities...............    (22,112)       (38,337)      (29,354)
Net cash outflow/inflow from financing activities ..    (20,298)         7,512        26,442
Effect of exchange rates on cash and cash
   equivalents......................................      1,633            560        (2,015)
                                                      -------------  ------------  ------------
Net (decrease)/increase in cash and cash
   equivalents under U.S. GAAP......................    (12,486)        (8,156)        4,522
                                                      -------------  ------------  ------------
Cash and cash equivalents under U.S. GAAP at
   beginning of year................................     49,705         37,219        29,063
                                                      -------------  ------------  ------------
Cash and cash equivalents under U.S. GAAP at end of
   year.............................................     37,219         29,063        33,585
Bank (overdrafts) under U.K. GAAP at end of year....     (1,248)           --        (18,148)
                                                      -------------  ------------  ------------
Cash and bank balances, net of overdrafts, under
   U.K. GAAP at end of year.........................     35,971         29,063        15,437
                                                      =============  ============  ============
</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 April 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 145 (SFAS 145), "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections". This standard rescinds SFAS 4, "Reporting Gains and
Losses from Extinguishment of Debt, an amendment of APB Opinion No. 30", which
required all gains and losses from the extinguishment of debt to be aggregated
and, if material, classified as an extraordinary item, net of related income
tax effects. As a result, the criteria set forth by APB Opinion 30 will now be
used to classify those gains and losses. SFAS 145 also amends SFAS 13 to
require that certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. In addition, SFAS 145 amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. The
standard is generally effective for transactions occurring after May 15, 2002.
We do not expect the adoption of SFAS 145 will have a significant impact on
our financial position and results of operations.

      In June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated
with Exit or Disposal Activities". This standard addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)". SFAS 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized when the
liability is incurred rather than at the date of an entity's commitment to an
exit plan. Costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity.
SFAS 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. We do not expect the adoption of SFAS 146
will have a significant impact on our financial position and results of
operations.

      In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." This standard amends SFAS 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based
method of accounting for stock-based employee compensation. It also amends the
disclosure provisions of SFAS 123 to require prominent disclosure about the
effects on reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. Finally, SFAS 148 amends APB
Opinion No. 28, "Interim Financial Reporting," to require disclosure about
those effects in interim financial information. SFAS 148 is effective for
fiscal years beginning after December 15, 2002. We do not expect the adoption
of SFAS 148 will have a significant impact on our financial position and
results of operations.

      In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities. This Statement is effective prospectively for contracts entered
into or modified after June 30, 2003 and prospectively for hedging
relationships designated after June 30, 2003. We do not expect the adoption of
SFAS 149 will have a significant impact on our financial position and results
of operations.

      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. The Company is in the process of assessing the
impact of adopting SFAS 150.

      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. The Company is in the process of assessing the impact of adopting EITF
00-21.

      In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires a liability to
be recognized at the time a company issues a guarantee for the fair value of
the obligations assumed under certain guarantee agreements. The provisions for
initial recognition and measurement of guarantee agreements are effective on a
prospective basis for guarantees that are issued or modified after December
31, 2002. We do not expect the adoption of FIN 45 will have a significant
impact on our financial position and results of operations.

     In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46 or "the
Interpretation"), "Consolidation of Variable Interest Entities, an
interpretation of ARB 51". FIN 46 addresses the consolidation of entities for
which control is achieved through means other than through voting rights
("variable interest entities" or "VIE") by clarifying the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements" to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 provides guidance on how to determine when
and which business enterprise (the "primary beneficiary") should consolidate the
VIE. In addition, FIN 46 requires that both the primary beneficiary and all
other enterprises with a significant variable interest in a VIE make additional
disclosures.

     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 sales in years ended 31 December 2000, 2001, and 2002. 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. 130 the Company is required to present a statement of
Comprehensive Income. The Company has determined that this statement would not
have a significant impact on its results or disclosures.

      Under SFAS No. 131, the Company is required to present segment
information based upon the `management approach' which is different than the
previous U.S. GAAP guidance regarding segments, SFAS No.14, which used the
`industry segment' approach. U.K. GAAP is less prescriptive than U.S. GAAP in
determining the segments of a business.