/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/030502.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, May 2, 2003, Vol. 4, No. 86 Headlines A U S T R I A PLAUT AG: Meets Revised Forecast For Fiscal Year 2002 PLAUT AG: Names New CEO And Chairman Of The Executive Board F I N L A N D BENEFON OYJ: Outlines Agenda for Upcoming Shareholders AGM F R A N C E ALSTOM: Completes Sale of Small Gas Turbines Business to Siemens SUEZ SA: Shortlists Bidder for British Water Unit, Sources Say VIVENDI UNIVERSAL: Finalizes Sale of Italian Pay-TV Platform VIVENDI UNIVERSAL: Old Issues Remain Over New Business Strategy G E R M A N Y ALLIANZ AG: To Distribute Profit Participation Certificates INFINEON TECHNOLOGIES: Launches Subordinated Convertible Bond KIRCHMEDIA GMBH: EM.TV Merchandising Acquires Plazamedia MUNICH RE: Reports Further Improvement in Operative Business I R E L A N D ELAN CORP.: Reports Financial Results and Recovery Plan Update I T A L Y CAPITALIA SPA: Investors Approve EUR161M Loss Carried Forward P O L A N D ELEKTRIM SA: Discloses Shareholders with Over 5% of Votes at EGA NETIA HOLDINGS: Commences Distribution Process for Warrants PHS STEEL: U.S. Steel Claims Rival Knows Confidential Details R U S S I A METROMEDIA INTERNATIONAL: Update on Asset Sale and Strategy WIMM-BILL-DANN: Assigned 'B+' Long-Term Ratings, Outlook Stable S W I T Z E R L A N D SWISS INTERNATIONAL: Government Appoints Monitoring Committee SWISS LIFE: Private Equity Partners to Refocus Activities VON ROLL: Works on Refinancing Plan, 2002 Accounts in the Making ZURICH FINANCIAL: Shareholders Approve Capital Reduction U N I T E D K I N G D O M ABERDEEN ASSET: Pre tax Profit Slides 75% to GBP5.6 Million AMP LTD: Announces Strategic Initiative Towards Long-term Value AMP LTD.: Standard & Poor's Places Ratings on CreditWatch Neg AQUILA INC.: Wants to Use State Utility Assets as Collateral AUSTIN REED: Grandson of Founder Issues Statement of Interest BRITISH AIRWAYS: Issues Statement on Future of Concorde CARLTON COMMUNICATIONS: Regulator Inquires into Proposed Merger DAWSON INTERNATIONAL: Chairman Issues Statement of Reassurance GLAXOSMITHKLINE PLC: Makes Strong Start to 2003 With Q1 Results INTERSHOP COMMUNICATIONS: Narrows Net Loss to EUR8.4 Million MORGAN CRUCIBLE: Sells Superconductor Business to Bruker Biospin SSL INTERNATIONAL: Expects Increased Sales for the Year to March STODDARD INTERNATIONAL: Reports GBP5M Loss on Results STODDARD INTERNATIONAL: Announce Major Plans to Restructure THISTLE HOTELS: BIL Increases Offer To 130 P Per Share in Cash THISTLE HOTELS: Considers Response to Increased Offer from BIL - - - - - - - - ============= A U S T R I A ============= PLAUT AG: Meets Revised Forecast For Fiscal Year 2002 ----------------------------------------------------- -- Revenues EUR 215.8 million, EBITDA margin 6.6% before e.o. one-time charges TargetTen* will lead to turnaround in 2003: EBITDA margin to treble Plaut AG (Securities Code Number 918 703) on Wednesday announced its final figures for the fiscal year 2002. The globally operating company achieved revenues of EUR 215.8 (2001: EUR 281.8 million), slightly exceeding its most recent guidance of EUR 215 million. The normalized EBITDA margin (earnings excluding interest, tax, depreciation and amortization, restructuring costs and extraordinary (e.o.) one-time charges) was 6.6%, representing an increase against the projected figure of 6.0%. After taking into account extraordinary one-time costs, EBITDA amounted to EUR 3.8 million (2002: EUR 9.9 million) while the respective margin was 1.8% (2001: 3.7%). Consolidated earnings (EUR -33.9 million) declined against the previous year (EUR -25.3 million) as a result of extraordinary restructuring costs worth EUR 7.1 million, extraordinary one-time charges of EUR 10.4 million, as well as reserves and provisions for discontinued operations of EUR 3.2 million. Earnings per share according to DVFA/SG were EUR -1.70, compared to EUR -1.27 in 2001. The decrease in revenues against the previous year is primarily attributable to the following factors: - The discontinuation of loss-making or no longer strategic business segments (outsourcing practice in Brazil, JJ Croney Hardware Reselling & Cabling Business in the USA) and companies (Plaut subsidiary in Romania, A Management Search in Germany), resulting in revenue shortfalls of approximately EUR 11 million, - headcount reduction by 281, including 176 consultants, resulting in revenue shortfalls of approximately EUR 20 million, - as well as negative exchange rate trends particularly in Brazil (the Brazilian Real lost 56% against the Euro) but also in the USA, resulting in revenue shortfalls of EUR 2.4 million. In the light of these trends, which were exacerbated by increasing price pressures due to continuously weak economic conditions in virtually all markets, Plaut focused in 2002 on the consistent implementation of critical restructuring measures, even beyond their originally planned scope according to TargetTen*. Such measures will be continued in the current fiscal year and should result in the achievement of the EBTA target of 10% by 2003 in every country* due to further reductions of receivables, adjustments of standards for expenses and material costs, reduced utilization of external consultants, as well as further personnel reductions by 100 employees. The impacts of these activities are already apparent in the preliminary figures for the first quarter 2003: Despite reduced revenues (EUR 46.4 million in Q1 2003, against EUR 53.8 million in the previous quarter), normalized EBIT rose from EUR -4.1 million to EUR 1.6 million. The EBITDA margin was 7.3%. Outlook With the consolidation of the portfolio into two lines of business - Management Consulting and IT & Hosting Solutions - Plaut will focus more strongly on its core competencies of business management consulting, in particular in controlling. In addition, the management will make both, enhanced customer satisfaction as well as an increase in the company's profitability, a special priority. The restructuring measures are intended to lead to the turnaround as early as 2003: Plaut expects a balanced cash flow and a trebling of the EBITDA margin. Personnel changes As of May 1, 2003 Toon Bouten (45) is taking over Erich Lebeiner's (61) offices as Chairman of the Executive Board and CEO. Due to the annual results being published later than planned, as well as the changes in the composition of the Executive Board of Plaut, the Annual General Meeting will be rescheduled from June 6 to July 4, 2003. As originally announced, the meeting will take place in the Sheraton Hotel, Salzburg. The invitations with complete agenda will be communicated in due time. *=TargetTen is Plaut's internal restructuring program aimed at an increase in productivity and profitability, as well as a reduction of costs. TargetTen measures earnings before taxes and goodwill amortisation, as well as holding and restructuring costs on a country level. Its target is the achievement of an EBTA margin of 10% - hence the program's name - in all those markets in which Plaut is operating. About Plaut AG Customers in over 16 countries benefit from Plaut's comprehensive portfolio in management consulting with business process focus and IT & hosting solutions, based on Plaut's industry knowledge in manufacturing and CPG/retail and services. On the basis of the Plaut Methodology in controlling and decades of success in systems integration, in particular in SAP, Plaut has provided tangible economic value since 1946. Plaut AG, Salzburg, has been listed in the General Standard segment of Frankfurt stock exchange since January 2, 2003 (PUT; SCN 918 703, ISIN AT0000954359). The company, trading on Frankfurt's "Neuer Markt" from 1999 to 2002, generated revenues of approximately EUR 216 million with 1,366 employees by the end of 2002. Please find further information about the Plaut group at http://www.plaut.com CONTACT: PLAUT AKTIENGESELLSCHAFT Moserstrasse 33a A-5020 Salzburg Phone: +43 (662) 4092-0 Fax: +43 (662) 4092-59 E-mail: Sven.Kielgas@Plaut.at Contact: Sven Kielgas, Chief Marketing & Investor Relations PLAUT AG: Names New CEO And Chairman Of The Executive Board ----------------------------------------------------------- - Toon Bouten (45) to succeed Erich Lebeiner (61) in office Salzburg Plaut AG (Securities Code Number 918 703) and its Supervisory Board announced changes in the composition of its Executive Board. Erich Lebeiner, acting Chairman of the Executive Board of Plaut AG and CEO of the company, will step back from the Board, effective April 30, 2003. His departure coincides with the successful completion of the first phases of Plaut's restructuring program TargetTen. As his successor, the Supervisory Board unanimously appointed Toon Bouten. Bouten began his career with Philips Electronics, where he held various consulting, sales, marketing and senior management positions in several countries. In 1994 he joined Compaq, where he founded the Consumer Division Europe, Middle East & Africa. On the strength of his performance, he was named Senior Vice President in the following year. In 2000 he was appointed CEO by Jobline. The company, a leading online professional search company with own HR software developments, established itself as a major player in the European market before being sold to TMP- Monster. Bouten brings those qualities to the job which are particularly crucial for Plaut in its current situation: extensive experience in the management of international organisations, coupled with in-depth know-how in the IT and consulting sectors. Above all, however, his proven turnaround competency will serve as a firm foundation for Plaut's profitable future. Erich Lebeiner has been active for Plaut for more than 30 years as Project Manager, Managing Director and Chairman of the Executive Board. While he served on the Board, the Plaut group has expanded from a regionally operating consulting partnership with revenues of EUR 30.0 million to an internationally renowned consulting company with a global presence in 16 countries, most recently generating revenues of EUR 215.8 million. Erich Lebeiner will remain available to the Plaut group in a consultative capacity. ***** Dr. Goetz Huttenlocher, Chairman of the Supervisory Board of Plaut AG, commented: "We would like to thank Erich Lebeiner for his tireless efforts for the Plaut group and its customers over the past decades. The restructuring activities launched under his leadership have laid a solid foundation for his successor, who has an outstanding track record of successfully completing such programs. Moreover, with Toon Bouten we have won a seasoned international top manager in the IT sector. We are confident that he will continue his impressive career at Plaut for the benefit of all stakeholders - customers, shareholders, employees and partners - and shall initiate a new phase in the development and profitability of the company." About Plaut AG Customers in over 16 countries benefit from Plaut's comprehensive portfolio in management consulting with business process focus and IT & hosting solutions, based on Plaut's industry knowledge in manufacturing and CPG/retail and services. On the basis of the Plaut Methodology in controlling and decades of success in systems integration, in particular in SAP, Plaut has provided tangible economic value since 1946. Plaut AG, Salzburg, has been listed in the General Standard segment of Frankfurt stock exchange since January 2, 2003 (PUT; SCN 918 703, ISIN AT0000954359). The company, trading on Frankfurt's "Neuer Markt" from 1999 to 2002, generated revenues of approximately EUR 216 million with 1,366 employees by the end of 2002. Please find further information about the Plaut group at http://www.plaut.com CONTACT: PLAUT AKTIENGESELLSCHAFT Sven Kielgas, Chief Marketing & Investor Relations Moserstrasse 33a A-5020 Salzburg Phone: +43 (662) 4092-0 Fax: +43 (662) 4092-59 E-mail: Sven.Kielgas@Plaut.at ============= F I N L A N D ============= BENEFON OYJ: Outlines Agenda for Upcoming Shareholders AGM ---------------------------------------------------------- The Board of Directors of Benefon Oyj has decided to convene the Annual General Meeting of the Shareholders on May 21, 2003 at 10.00. The General Meeting shall be held in Salo, in address Rummunlyojankatu 2, Sininen Talo. The following matters shall be handled in the meeting: (1) The proposal of the Board to change articles 8, 12 and 14 of the Articles of Association The proposal is, in essence, as follows: The Board proposes the articles 8, 12 and 14 of the Articles of Association to be changed. According to the proposal, the first chapter of article 8 is proposed to be changed to the effect that the Board would consist of a minimum of 3 actual members and of a maximum of 9 actual members. Further, according to the proposal, the first chapter of article 12 is proposed to be changed to the effect that there are either two actual auditors or one actual auditor and one deputy auditor. Further, according to the proposal, the third and fourth chapter of article 14 are proposed to be changed to the effect that the decision about the number of actual auditors would be made as part of the sequence listed in chapter three, and the election of the auditors would be made as part of the sequence listed in chapter four of the article 14. (2) The ordinary matters referred to in article 14 of the Articles of Association (3) Decision about continuing the application for corporate re- organization filed in by the Board on April 24, 2003, and about other related actions, and in addition about implementation of the dissolvency rules of Finnish Companies act in case that the annual accounts to be presented to the shareholders show that company's equity has decreased under the minimum share of 50% of the share capital as required by Chapter 13 section 2 of the Companies Act. (4) The proposal of the Board of Directors to grant authorization for the Board to decide on the increase of the share capital The proposal is, in essence, as follows: The Board of Directors proposes, that the Board of Directors shall be authorized, within the time limit of one year from the shareholders' meeting granting the authorization, to decide on the increase of share capital by rights issue, by issue of options or by issue of convertible bonds in one or more installments such that in the rights issue or in the issue of convertible bonds or options, in total a maximum of 2,010,760 new investment shares with a book parity value of 0,34 euros (not the exact value) per share, shall be entitled to be subscribed for. Therefore, the share capital may, based on the authorization, be increased by a maximum of 676,371.12 euros. The authorization includes the right to deviate from the pre- emptive right of the shareholders, referred to in Chapter 4, Section 2 of the Companies Act, to subscribe for new shares, convertible bonds or options and the right to decide on prices of the subscriptions, those entitled to subscription, the terms and conditions of the subscription and the terms and conditions of the convertible bonds and options. The authorizations may be used in deviation from the shareholders' pre-emptive right provided that there is a weighty financial reason from the company's point of view, such as financing of corporate acquisitions or other arrangements relating to the development of the company's business operations or strengthening the company's balance sheet, to do so. When the share capital is increased by a rights issue on other basis than convertible bonds or options, the Board of Directors is authorized to decide that the shares can be subscribed for in kind, using the right of set-off or on other specific terms. (5) The expiration of the option loan and change in the terms and conditions of the option rights The Board makes a note that of the option loan issued by the shareholders' meeting of April 18, 1997, no shares have been subscribed by the end of the subscription period of the loan that, according to the terms of the loan, ended on April 1, 2003, and that, consequently, this option loan has expired unused. The Board has decided to propose to the shareholders' meeting, that the decision on option rights issued by the shareholders' meeting of April 27, 2001, and later amended by the shareholders' meeting of May 17, 2002, would be further amended so that clause II.3 of the terms of the option rights would be changed to read in its entirety as follows: "3. The share subscription price The share subscription price is 0.34 euros for all option rights A, B, C and D." The purpose of the change proposed herein is to strengthen the incentive effect of the issued option rights. (6) Distribution of dividend The Board proposes to the shareholders' meeting that no dividend shall be paid for the financial year that ended on December 31, 2002. Documents on view Copies of the documents concerning the financial statements and the proposals of the Board of Directors with their appendices are available for shareholders to view from May 14, 2003, at the company headquarters in Salo, address Meriniitynkatu 11, 24100 Salo. The company will send copies of the said documents to shareholders upon request. Right to participate Shareholder, who has been registered in the company's shareholder register, maintained by the Finnish Central Securities Depository Ltd, by May 11, 2003, as latest has the right to participate in the General Meeting. In addition, shareholder, whose shares have not been transferred to the book-entry system, has the right to participate in the General Meeting provided that the shareholder had been registered in the company share register before October 7, 1994. In this case the shareholder must present at the General Meeting his/her share certificate or other documentation indicating that title to the shares has not been transferred to the book-entry securities account. Notice of intention to participate Shareholder, who wishes to participate in the General Meeting must notify his/her participation by May 16, 2002, at latest to the company's head office by telephone +358-2-77400 (Tuija Svahnback or Minna Suokas), by telefax at +358-2-7332633, in writing to Benefon Oyj, PL 84, 24101 Salo or by email to tuija.svahnback@benefon.fi or minna.suokas@benefon.fi. Shareholders are requested to deliver any proxies into the said address within the notice period. BENEFON OYJ Jorma Nieminen Chairman =========== F R A N C E =========== ALSTOM: Completes Sale of Small Gas Turbines Business to Siemens ---------------------------------------------------------------- ALSTOM announces that, further to the announcement of April 28, 2003, it has completed the first of two transactions with Siemens AG, being the disposal of the small gas turbines business. The enterprise value of this transaction is EUR575 million, with net proceeds to ALSTOM of approximately EUR525 million. Completion of this transaction follows receipt of a formal derogation from the European Commission under the EC merger regulation, allowing ownership of the business to be transferred to Siemens AG with immediate effect. Siemens AG has committed not to integrate the small gas turbine business with its own businesses until formal merger clearance has been obtained from the European Commission in relation to all the industrial turbines businesses. Pending merger clearance, the medium gas turbines and industrial steam turbines businesses to be acquired by Siemens AG will continue to be owned and managed by ALSTOM. CONTACT: ALSTOM Investor relations E. Rocolle-Teyssier Phone: +33 1 47 55 25 78 E-mail: investor.relations@chq.alstom.com SUEZ SA: Shortlists Bidder for British Water Unit, Sources Say -------------------------------------------------------------- French utility Suez has narrowed down bidders for its UK unit Northumbrian Water to only two, sources say, according to Reuters. The company has chosen London-based private equity firm CVC and the private equity arm of investment bank Morgan Stanley MWD.N, Morgan Stanley Capital Partners to proceed to the final stages of the negotiation. Industry sources say Morgan Stanley Capital Partners is being advised by Rotschild, and backed by Royal Bank of Scotland. Suez could name the emerging bidder for the GBP2 billion (US$3.18 billion) transaction in early May, one source familiar with the situation disclosed. Suez is selling assets as part of a debt- and cost-reduction plan started last September. The aim is to cut costs by EUR500 million this year, with a view to further reducing its EUR28.2 billion debt to EUR100 million in 2004. Morgan Stanley was also reportedly running the sale for Suez. Both Morgay Stanley and Suez declined to comment, according to the report. CONTACT: SUEZ SA Home Page: http://www.suez.com Financial analysts, Frederic Michelland Phone: +331-40-06-66-35 in Belgium: Guy Dellicour Phone: +322-507-02-77 VIVENDI UNIVERSAL: Finalizes Sale of Italian Pay-TV Platform ------------------------------------------------------------ Vivendi Universal, Canal+ Group, News Corporation and Telecom Italia announced the closing of the sale of Telepiu, the Italian pay-TV platform. The transaction amounted to EUR871million, comprising debt assumption of E414 million and EUR457 million in cash. The cash payment includes a EUR13 million adjustment corresponding to the reimbursement of the accounts payable net of debt adjustment. The acquisition of Telepiu by News Corporation and Telecom Italia was approved by the European Commission on April 2, 2003. It will result in the creation of Sky Italia, held 80.1% by News Corporation and 19.9% by Telecom Italia. In addition, as covered by the acquisition agreement, the disputes between Stream and Telepiu, and between Canal+ and NDS, will be dropped. CONTACT: VIVENDI UNIVERSAL Investor Relations Paris Daniel Scolan Phone: +33 (1).71.71.3291 Laurence Daniel Phone: +33 (1).71.71.1233 or New York Eileen McLaughlin Phone: +(1) 212.572.8961 VIVENDI UNIVERSAL: Old Issues Remain Over New Business Strategy --------------------------------------------------------------- Analysts are concerned about some issues that remain over Vivendi Universal's new asset disposal program despite its seemingly promising makeover. Vivendi chief executive Jean-Rene Fourtou, in an overhaul of his predecessor's strategy, recently announced at a shareholder's meeting plans to sell the company's U.S. film, television, theme parks and games business to focus on telecoms and French TV. Mr. Fourtou said Vivendi would reduce its debt to almost negligible by autumn 2004 after selling assets such as the U.S. entertainment empire for either cash or cash and shares. "We welcome the fact that the group has at least outlined what its strategy is ... Nevertheless, this strategy raises some questions," said BNP Paribas in a research note, according to Reuters. Included in the concerns are the question on how Vivendi will settle tax liabilities arising from the sale of the U.S. entertainment assets, and the rationale of keeping the telecoms, French television and music assets together. While Vivendi could sell the assets as one-piece to avoid the possible liability, it is still a consideration that most possible buyers are only interested in parts of the business. Merril Lynch in a research note said, "While (the) disposals should allow some focus, Vivendi still looks like a relatively loose conglomerate in our view." The sell-off is expected to result to Vivendi's stock trading at a 20% discount, the analyst added. Lehman Brothers, who also pegged the discount at 20% said in a research note, "While we acknowledge the solid work done by the new management led by Jean-Rene Fourtou, breaking up Vivendi will take time and will be fraught with risks." ============= G E R M A N Y ============= ALLIANZ AG: To Distribute Profit Participation Certificates ----------------------------------------------------------- On April 29, 2003, the Annual General Meeting of Allianz Aktiengesellschaft resolved to make a dividend payment of Euro 1.50 on each of its no-par shares entitled to dividends. Capital yields tax of 20% and a solidarity supplement of 5.5 % on the capital yields tax (total 21.1%) will be withheld. For the business year 2002, holders of profit participation certificates will receive, pursuant to ss. 2 of the certificates' conditions, a distribution of Euro 3.60 per certificate with a nominal value of Euro 5.12. Capital yields tax of 25% and a solidarity supplement of 5.5% on the capital yields tax (total 26.375%) will be withheld. Beginning on April 30, 2003, dividends on shares and distributions on profit participation certificates will be paid at all branches of the banks listed below upon the submission of share dividend coupon No. 9 or distribution coupon No. 25 of the profit participation certificates, respectively. Banks in Germany: Dresdner Bank AG Deutsche Bank AG Bayerische Hypo- und Vereinsbank AG Commerzbank AG DekaBank Deutsche Girozentrale Hauck & Aufhauser Privatbankiers KGaA HSBC Trinkhaus & Burkhardt KgaA ING BHF-Bank AG MERCK FINCK & CO PRIVATBANKIERS B. Metzler seel. Sohn & Co. KGaA Sal. Oppenheim jr. & Cie. KGaA M.M. Warburg & CO KGaA Marcard, Stein & Co. Banks in Switzerland: UBS AG Credit Suisse First Boston Dresdner Bank (Schweiz) AG Deutsche Bank (Schweiz) AG In France, Credit Lyonnais is responsible for payment of the dividends to the custodian banks. The dividends on shares and the distribution on profit participation certificates held in collective custody will be paid directly into the accounts of the shareholders or of the holders of the profit participation certificates at their custodian banks. Note for German taxpayers who are shareholders or holders of profit participation certificates. Within the framework of German income and corporation tax laws, resident shareholders and holders of profit participation certificates may deduct the withheld capital yields tax when filing their tax returns from the respective tax. The withheld solidarity supplement may be deducted from the fixed solidarity supplement. The capital yields tax and solidarity supplement will not be deducted in the case of those shareholders or holders of profit participation certificates who submit to their custodian bank a non-assessment certificate ('Nicht-Veranlagungsbescheinigung'). The same applies in case of the submission of an application for the exemption from taxation of specified income up to a prescribed limit ('Freistellungsauftrag') with a sufficient residual amount for tax exemption. Munich, April 2003 Allianz Aktiengesellschaft The Board of Management Short Name: Allianz AG Category Code: DIV Sequence Number: 00004412 Time of Receipt (offset from UTC): 20030430T102014+0100 INFINEON TECHNOLOGIES: Launches Subordinated Convertible Bond ------------------------------------------------------------- Infineon Technologies AG is launching a subordinated convertible bond issue through its Dutch subsidiary Infineon Technologies Holding B.V. Wednesday. The transaction size will be approximately Euro 700 - 725 million and is convertible into up to 69 million shares of Infineon Technologies AG, the equivalent cash amount at the company's discretion or an equivalent cash/share combination. The convertible bond has a maturity of 7 years and cannot be called for the first three years of the life of the security, callable thereafter subject to a 125 per cent provisional call. Coupon and conversion premium will be set at pricing, which is expected to occur Wednesday. The bond will be placed with institutional investors outside the US in reliance on Regulation S. Goldman Sachs International and Morgan Stanley & Co. International Limited are the bookrunners on the transaction. Morgan Stanley & Co. International Limited will be Stabilisation Manager for the offering. Infineon is issuing the convertible bond to benefit from the attractive financing opportunity available in the current convertible market given the low interest rate and high volatility environment. The proceeds of the issue will serve to further strengthen Infineon's financial position and support the long-term strategy of Infineon Technologies AG. About Infineon Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for the automotive and industrial sectors, for applications in the wired communications markets, secure mobile solutions as well as memory products. With a global presence, Infineon operates in the US from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In the fiscal year 2002 (ending September), the company achieved sales of Euro 5.21 billion with about 30,400 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Further information is available at http://www.infineon.com CONTACT: INFINEON TECHNOLOGIES Worldwide Headquarters P.O. Box 80 09 49 D-81609 Muenchen Germany Contact: Matthias Poth, Corporate Investor Relations Phone: +49-89 234-26655 Fax: +49-89 234-26155 E-mail: investor.relations@infineon.com KIRCHMEDIA GMBH: EM.TV Merchandising Acquires Plazamedia -------------------------------------------------------- EM.TV & Merchandising AG and Taurus TV GmbH, a subsidiary of the insolvent KirchMedia GmbH & Co. KGaA, on Tuesday reached an agreement about the purchase of 100 percent of the production company PLAZAMEDIA. The parties have agreed to keep the contractual details confidential. The acquisition by an EM.TV subsidiary is still subject to the effectiveness of the acquisition of the TV channel DSF and the on-line platform Sport1 through the consortium of KarstadtQuelle New Media AG and Dr. h.c. Hans-Dieter Cleven, which EM.TV & Merchandising AG is to join within a short time. Both agreements are still subject to the approval of the Bundeskartellamt, the preliminary insolvency administrator as well as the preliminary creditor committee of Taurus TV GmbH. PLAZAMEDIA is Germany's largest TV production company in the sports segment. Its major customers, aside from Premiere, also include Infront BuLi GmbH and DSF. The company, which has over 200 employees, anticipates sales of more than EUR 70 million in 2003. The purchase of PLAZAMEDIA in addition to the planned participation in DSF and Sport1 enables EM.TV to offer the entire value chain in sports from the license right through production to multimedia presentation and marketing. CONTACT: Frank Elsner Kommunikation fur Unternehmen GmbH Phone: +49 5404 91 92 0 Fax: +49 5404 91 92 29 E-mail: info@elsner-kommunikation.de MUNICH RE: Reports Further Improvement in Operative Business ------------------------------------------------------------ Munich Re Group 2002: Operative business further improved / Figures affected by writedowns, despite high realized capital gains on investments / "Clear precedence of profitability over growth" The Munich Re Group benefited in 2002 from the marked upswing in the reinsurance market and from stable earnings in the operative business of its subsidiaries in property-casualty insurance; these positive trends intensified in the first quarter of 2003. On the other hand, high writedowns triggered by the bear market caused a slump in the investment result, even though the Group recorded significant capital gains on the sale of investments. Dr. Hans-J�rgen Schinzler, Chairman of Munich Re's Board of Management, commented on the end-result as follows: "The substantially increased profit for the year of ?1.1bn (previous year: ?0.25bn) cannot mask the fact that Munich Re still has to work hard to return to its former earnings level." "Clear precedence of profitability over growth - this is the strategy behind the improvements to date and also signals the way forward", said Schinzler at the balance sheet conference. In view of the difficult situation on the stock markets and low interest rates, the Group does not expect investments to contribute as much to the overall result in the coming period as in the last few years; therefore the result for the year will have to be earned mainly from the Group's underwriting business. In reinsurance, Munich Re has geared its prices and conditions for the current year to achieving a combined ratio of under 100%. In primary insurance, the Group's focus remains on insurances of the person and personal lines business in Europe, which offer stable earnings; it also intends to continually reduce costs. Total bond volume of EUR3.4bn as an expression of confidence The euro and pound-sterling bonds placed in mid-April, with a total volume of EUR 3.4bn, met with a very favorable response from the market and had significantly strengthened Munich Re's capital base, said Schinzler. The high demand among investors for both bonds, where total subscription orders had exceeded ?6bn, was a clear expression of the capital market's confidence in the Munich Re Group. Progress in reinsurance and primary insurance despite major burdens from investments The provisional figures for the business year 2002 were announced on March 27. Dr. Jorg Schneider, Munich Re Board member responsible for Accounting and Controlling, focused on segment reporting in his presentation of the detailed figures. In reinsurance, property-casualty business was again the main growth driver: EUR 18.9bn (16.3bn) of total premium income came from this segment, whilst life and health reinsurance contributed EUR 6.5bn (5.9bn). The improvement in the result, which was also due to capital gains, was most marked in property-casualty reinsurance: here there was a swing from a ?1.2bn loss in the previous year to a EUR 1.4bn profit in the year under review. Life and health reinsurance increased their profit for the year from EUR 1.2bn to EUR 1.7bn. In primary insurance, where growth was fuelled by the successful partnership between ERGO and HypoVereinsbank, the Munich Re Group's premium income rose from EUR 4.6bn to EUR 4.8bn in property-casualty insurance and from EUR 11.1bn to EUR 11.8bn in life and health insurance. However, these two segments recorded negative results for the year of EUR 341m and EUR 681m respectively, since otherwise good business experience was overshadowed by high writedowns on security portfolios. Further improvement in operative business in the first quarter of 2003 Munich Re will report on its results for the first quarter 2003 on June 2. Writedowns in the triple-digit million euro range have already been announced in this connection. On the other hand, Schinzler and Schneider are convinced that substantial improvements in operative business will make themselves felt. For the rest of the business year 2003, Munich Re expects continuing improvement in its underwriting results in both reinsurance and primary insurance. If, in contrast to last year, Munich Re is not hit by heavy costs for major natural catastrophe losses in 2003, the Group says it will be able to counter the after-effects of the stock market crash with a convincing and profitable performance in its underwriting business. ============= I R E L A N D ============= ELAN CORP.: Reports Financial Results and Recovery Plan Update -------------------------------------------------------------- Elan Corporation, plc announced Wednesday its first quarter 2003 results and provided an update on its recovery plan. Commenting on the results and recovery plan Kelly Martin, Elan's president and chief executive officer, said, "Elan remains on course with its 18-month recovery plan. We further reduced costs during the quarter, which has put us closer toward our goal of operating Elan on a break-even basis prior to the launch of our new products." Martin continued, "Since announcing our recovery plan in July 2002, we continue to make progress in simplifying our balance sheet and increasing transparency. We enter the second quarter of 2003 with sales growth in our retained product portfolio and continued focus on executing our pipeline of products in the areas of neurology, autoimmune diseases and pain." Martin concluded, "While there is much to be done, we remain focused on executing our goals of simplifying Elan's balance sheet, streamlining our operational model and advancing our science and product development." First Quarter 2003 Financial Highlights -- Total revenue of $260.0 million compared to $446.6 million in the first quarter of 2002, a decrease of 42%. -- Revenue from retained products (excluding Zanaflex(TM) revenue of $0.8 million in the first quarter of 2003 and $53.7 million in the first quarter of 2002) of $148.8 million compared to $104.1 million in the first quarter of 2002, an increase of 43%. -- Net loss of $130.2 million ($0.37 loss per diluted share) compared to net income of $50.0 million ($0.14 earnings per diluted share) in the first quarter of 2002. -- Cash balances at March 31, 2003 of $983.6 million compared to $1,005.0 million at December 31, 2002. -- Negative EBITDA of $67.1 million for the first quarter of 2003 compared to positive EBITDA of $47.2 million in the first quarter of 2002 (See "Non-GAAP Financial Information" on Appendix 2) Recovery Plan - Implementation Update -- As at March 31, 2003, cash received from asset divestitures was in excess of $825.0 million. The principal elements are as follows: $ million Abelcet(TM) 360.0 Avinza(TM) 100.0 Athena Diagnostics 82.0 Actiq(TM) 50.0 Adalat(TM) CC 45.0 Investments 146.0 -- Agreement to sell primary care franchise to King Pharmaceuticals, Inc. ("King") for gross consideration of approximately $850 million subject to previously announced litigation. -- Additional asset divestitures and balance sheet simplification proceeding according to plan. -- Headcount reduced to less than 3,150 employees from approximately 4,700 employees in July 2002, a decrease of approximately 1,550 (approximately 450) of which were related to asset divestitures). -- Significant reduction of 29% in selling, general and administrative expenses in the first quarter of 2003 to $127.7 million from $178.7 million in the first quarter of 2002 (approximately $15.0 million of this reduction relates to asset divestitures). Recovery Plan - R&D Update -- Antegren(TM) (natalizumab) Phase III trials for Crohn's disease and multiple sclerosis ("MS") progressing on target. -- Expect to announce Phase III results for Antegren in Crohn's disease during the summer. -- New Drug Application ("NDA") for Antegren in Crohn's disease expected to be filed around year-end. -- Expect to file an NDA for Prialt(TM) around year-end. -- Alzheimer's immunotherapeutic pre-clinical studies on track for two Investigational New Drug ("IND") filings this year. -- With respect to Frova(TM), Dr Stephen Silberstein, Professor of Neurology at the Thomas Jefferson Hospital in Philadelphia, presented data from a double-blind, placebo-controlled, clinical trial of 545 women that showed Frova prevented menstrually- associated migraines in up to 50% of women in the trial. -- One new trial with Zonegran(TM), which was undertaken by scientists at Duke University and published in the Journal of the American Medical Association on April 9, 2003, reported on the use of Zonegran in potentially inducing weight loss in obese adults. -- Announced strategic research alliance with Ingenium Pharmaceuticals AG ("Ingenium") for the identification and development of novel therapeutics for pain management. -- Merck & Co., Inc. announced the approval of Emend(R), a new medicine to prevent nausea and vomiting in chemotherapy. Emend is Elan's second drug delivery product approved by the U.S. Food and Drug Administration ("FDA") in the past two years, which utilizes Elan's proprietary NanoCrystal(R) technology. Three Months Unaudited Consolidated US GAAP Income Statement Data Ended March 31 2002 2003 US$m US$m ------------------------------------------------------------- Revenue (see page 7) Product revenue 332.9 217.2 Contract revenue 113.7 42.8 ------- -------- Total revenue 446.6 260.0 ------- -------- Operating Expenses (see page 11) Research & development 90.9 87.3 Cost of goods sold 99.9 92.9 Selling, general & administrative 178.7 127.7 Gain on disposal of businesses (net) - (5.7) Recovery plan and other significant charges 8.0 29.5 ------- -------- Total operating expenses 377.5 331.7 ------- -------- Operating income/(loss) 69.1 (71.7) ------- -------- Net Interest and Investment Losses (see page 11) Net interest expense (5.0) (16.8) Business venture funding (7.9) (1.4) Investment gains 13.6 - Investment losses and other (17.7) (47.3) ------- -------- Net interest and investment losses (17.0) (65.5) ------- -------- Net income/(loss) from continuing operations before tax 52.1 (137.2) Taxation (1.0) (3.5) ------- -------- Net income/(loss) before discontinued operations 51.1 (140.7) (Loss) / income from discontinued operations (see page 11) (1.1) 10.5 ------- -------- Net income/(loss) 50.0 (130.2) ======= ======== Basic earnings/(loss) per ordinary share - continuing operations $0.14 ($0.40) Diluted earnings/(loss) per ordinary share - continuing operations $0.14 ($0.40) Basic earnings per ordinary share - discontinued operations - $0.03 Diluted earnings per ordinary share - discontinued operations - $0.03 Basic earnings/(loss) per ordinary share - net income / (loss) $0.14 ($0.37) Diluted earnings/(loss) per ordinary share - net income / (loss $0.14 ($0.37) Non-GAAP Financial Information EBITDA Operating income/(loss) 69.1 (71.7) Depreciation and amortisation included in operating income/(loss) 45.5 45.3 Amortised revenue included in total revenue (67.4) (40.7) ------- -------- EBITDA (see Appendix 2) 47.2 (67.1) ======= ======== Unaudited Balance Sheet Data December March 31 31 2002 2003 Assets US$m US$m ---------------------------------------------------------------- Current Assets Cash and cash equivalents 1,005.0 983.6 Marketable investment securities 370.4 305.1 Other current assets 314.1 281.9 --------- --------- 1,689.5 1,570.6 Intangible assets 1,434.5 1,506.4 Property, plant and equipment 442.2 435.8 Investments and marketable investment securities 273.6 219.2 --------- --------- Total Assets 3,839.8 3,732.0 --------- --------- Liabilities and Shareholders' Equity Shareholders' equity 874.8 764.0 Accounts payable and accrued liabilities 494.2 466.1 Deferred income 258.2 203.9 Investment provision - EPIL II and III 543.1 572.7 Product acquisition payments 227.2 277.8 7.25% senior notes due 2008 650.0 650.0 3.25% zero coupon subordinated exchangeable notes due 2018 792.3 797.5 --------- --------- Total Liabilities and Shareholders' Equity 3,839.8 3,732.0 --------- --------- Reconciliation of Movement in Shareholders' Equity US$m At December 31, 2002 874.8 Net loss for the three months ended March 31, 2003 (130.2) Movement on unrealised gains on securities 20.0 Translation adjustment (0.6) -------- At March 31, 2003 764.0 -------- Q1 2002 Q1 2003 Unaudited Cash Flow Data US$m US$m ---------------------------------------------------------------- Cashflows from operating activities 55.9 (66.5) Movement on debt interest and tax (23.6) (24.0) Working capital movement (7.2) (2.1) Net purchase of tangible assets (54.6) (8.5) Net (purchase) / sale of investments and marketable investment securities (70.0) 139.8 Purchase of intangible assets (127.4) (64.6) Proceeds of business disposals - 6.2 Cash flows from financing activities 1.3 (1.7) ---------------------------------------------------------------- Net Cash Movement (225.6) (21.4) Cash and cash equivalents at beginning of period 1,662.7 1,005.0 ---------------------------------------------------------------- Cash and cash equivalents at end of period 1,437.1 983.6 ---------------------------------------------------------------- Unaudited Financial Information Relating to Qualifying Special Purpose Entities (QSPEs) Set out below is an analysis of the impact on the March 31, 2003 results, assets and liabilities of consolidating the QSPEs. QSPEs Three months ended March 31, 2003 As reported Consolidated US$m US$m ---------------------------------------------------------------- Net loss after other charges (130.2) (131.5) Diluted loss per ordinary share after other charges ($0.37) ($0.37) Total assets 3,732.0 3,945.9 Total indebtedness 2,968.0 3,235.3 Shareholders' equity 764.0 710.6 Revenue Total revenue decreased 42% to $260.0 million in the first quarter of 2003 from $446.6 million in the first quarter of 2002. An historical analysis of total revenue is set out on Appendix 1. Following the announcement by Elan on January 30, 2003, of its agreement to sell its primary care franchise to King (which is the subject of litigation with King) and the completion of the sale of a number of other products and businesses, Elan's product revenue is analysed between those from currently retained products and those arising from products that have been divested or are subject to divestment agreements (including the products contained in the primary care transaction agreement with King). Total revenue can be further analysed as follows: 3 months ended 3 months ended March 31, 2002 March 31, 2003 (a) Product Revenue U.S.$m U.S.$m Revenue from retained products 157.8 149.6 Revenue from divested products 127.3 67.6 Revenue from Pharma Marketing/Autoimmune 47.8 - -------------------------- Total product revenue 332.9 217.2 -------------------------- (b) Contract Revenue Amortisation of fees 67.4 32.2 Research revenue and milestones 23.6 10.6 Pharma Marketing/Autoimmune 22.7 - ------------------------------ Total contract revenue 113.7 42.8 ------------------------------ Total Revenue 446.6 260.0 ------------------------------ (a) Product Revenue Total product revenue from all sources for the first quarter of 2003 was $217.2 million compared to $332.9 million in the first quarter of 2002, a decline of 35%. The decline in product revenue is due to a number of factors more fully explained below. Revenue from retained products Revenue from retained products (excluding Zanaflex revenue of $0.8 million in the first quarter of 2003 and $53.7 million in the first quarter of 2002) was $148.8 million in the first quarter of 2003 compared to $104.1 million in the first quarter of 2002, an increase of 43%, reflecting the growth in prescriptions and demand sales for those retained products and the launch of Frova in the second quarter of 2002. Aggregate sales of Maxipime(TM) and Azactam(TM) in the first quarter of 2003 were $34.0 million, an increase of 40% over the comparable period in 2002. Maxipime audited sales volumes for the two months ending February 2003 increased by 21% compared to the same period in 2002. Azactam audited sales volumes for the two months ending February 2003 increased by 23% compared to the same period in 2002. Zonegran prescription demand remained strong for the first quarter of 2003 and increased by 40% over the first quarter of 2002. Product revenue of $12.4 million increased at a lower rate of 19% due to the change in Elan's discounting strategy initiated in the third quarter of 2002 and the resulting continued reduction in wholesaler inventories. Product revenue for the pain portfolio increased by 19% to $16.6 million in the first quarter of 2003 from $13.9 million in the first quarter of 2002. Historical supply issues that had hindered growth have mostly been resolved and a more favourable supply situation is expected for the remainder of 2003. Myobloc(TM) / Neurobloc(TM) sales were $3.5 million in the first quarter of 2003 compared to $3.2 million in the first quarter of 2002. Frova, which was launched in the second quarter of 2002 by the combined Elan and UCB Pharma, Inc. ("UCB") sales forces, generated revenue of $8.7 million in the first quarter of 2003 following revenue of $4.0 million in the fourth quarter of 2002. Frova prescription demand continues to grow strongly with a 12% increase in the first quarter of 2003 over the fourth quarter of 2002. Elan and UCB continue to grow Frova in terms of prescription volume, market share and revenue. Non-U.S. product revenue increased to $35.8 million in the first quarter of 2003 from $24.6 million in the first quarter of 2002. Revenue from divested products During the fourth quarter of 2002, Elan agreed to divest its dermatology and diagnostic businesses and certain rights to Abelcet, which accounted in aggregate for revenue of $57.2 million in the first quarter of 2002. Elan recorded revenue of $7.0 million from the Elan Diagnostic business in the first quarter of 2003 but does not expect to record any significant revenue from this business through the balance of 2003. On January 30, 2003, Elan announced an agreement to sell its primary care franchise (primarily consisting of its U.S. and Puerto Rican rights to Skelaxin(TM) and Sonata(TM)) to King. During the first quarter of 2003, aggregate product revenue from Skelaxin and Sonata was $48.5 million compared to $57.0 million in the first quarter of 2002. Skelaxin prescription demand remained strong during the first quarter of 2003 with a 13% increase over the first quarter of 2002. Skelaxin is benefiting from the November 2002 launch of The remaining unamortised revenue on these products of $128.7 million will be recognised as revenue over the next five years reflecting Elan's ongoing involvement in the manufacture of these products. Pharma Marketing Limited/Autoimmune During the third quarter of 2002, Elan acquired all royalty rights held by Autoimmune Research and Development Corp. Ltd. ("Autoimmune") and the arrangement was terminated. Consequently, no co-promotion revenue was received from Autoimmune during the first quarter of 2003 compared to $23.8 million in the first quarter of 2002. There was no revenue from Pharma Marketing Ltd. ("Pharma Marketing") in the first quarter of 2003 compared to $24.0 million in the first quarter of 2002 and no further revenue will be received from Pharma Marketing. During the first quarter of 2003, royalties relating to Pharma Marketing in respect of sales of Sonata, Zanaflex, Frova and Zonegran of $11.9 million were included in cost of sales compared to $6.8 million in the first quarter of 2002. (b) Contract Revenue Contract revenue in the first quarter of 2003 was $42.8 million compared to $113.7 million in the same period of 2002, a decrease of 62%. The amortisation of fees amounted to $32.2 million in the first quarter of 2003 compared to $67.4 million in the first quarter of 2002. Of the $32.2 million in amortised fees in the first quarter of 2003, $25.6 million related to business ventures. As part of the recovery plan outlined on July 31, 2002, Elan completed a review of its business venture program and, as a result, Elan is terminating and restructuring most of its business ventures. Of a total of 55 active business ventures in July 2002, 22 have been terminated to date. The reduction in amortised fees during the first quarter of 2003 arose primarily from the restructuring and termination of business ventures, which started in 2002. Research revenue and milestones amounted to $10.6 million in the first quarter of 2003 compared to $23.6 million in the first quarter of 2002 reflecting a reduction in milestones earned by Elan's drug delivery business. No revenue was received under the arrangements with Pharma Marketing and Autoimmune during the first quarter of 2003. Research revenue of $7.3 million and $15.4 million was received from Pharma Marketing and Autoimmune, respectively, in the first quarter of 2002. No further research revenue will be received from Pharma Marketing or Autoimmune. Gross Profit The gross profit margin on product revenue was 57% in the first quarter of 2003 compared to 70% in the first quarter of 2002 reflecting changes in the mix of product revenue. In particular, there was no revenue from Pharma Marketing and Autoimmune in the first quarter of 2003 and revenue from Zanaflex was only $0.8 million compared to $53.7 million in the comparable period of 2002. Operating Expenses Research and development expenses were $87.3 million in the first quarter of 2003 compared to $90.9 million in the first quarter of 2002. This reduction reflects the refocusing of research and development efforts on key programs, which attracted increased investment, compensated for by reduced investment in non-core programs. Selling, general and administrative expenses decreased by 29% to $127.7 million in the first quarter of 2003 from $178.7 million in the first quarter of 2002 (approximately $15.0 million of the reduction relates to asset divestitures). This decline is expected to continue in 2003 following the ongoing implementation of the recovery plan, associated headcount reductions and business simplification. Included in recovery plan and other significant charges of $29.5 million for the first quarter of 2003 are net costs associated with the implementation of the recovery plan of $13.0 million, and $16.5 million in connection with the restructuring of arrangements with Wyeth in relation to Sonata prior to Elan's agreement to sell the primary care franchise to King and the purchase of the Canadian rights to certain of Elan's products. Elan may in the future incur recovery plan related charges relating to severance, retention and similar restructuring costs. Elan may also incur impairment charges related to investments and intangible assets if their fair value falls below their carrying value as a result of adverse changes in circumstances or market conditions. Net Interest and Investment Losses Net interest and investment losses amounted to a loss of $65.5 million in the first quarter of 2003 compared to a loss of $17.0 million in the first quarter of 2002. This reflects lower investment income and the inclusion of a $39.8 million non-cash charge in relation to an increase in provisions associated with two QSPEs, EPIL II and EPIL III, and the write down of certain other investments. Discontinued Operations In accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," Elan has recorded the results of operations of Actiq within discontinued operations. Included in discontinued operations are revenue and operating expenses related to Actiq for the first quarter of 2003 of $10.5 million and $nil, respectively, compared to $0.3 million and $1.4 million, respectively, for the first quarter of 2002. Liquidity At March 31, 2003, Elan had $983.6 million in cash and cash equivalents, compared with $1,005.0 million at December 31, 2002. The following table sets out at March 31, 2003, the major contracted and potential non-operating cash payments relating to Elan's business. In addition, Elan expects capital expenditures, future investments and restructuring costs, to amount to no more than $120.0 million through December 31, 2003. --------------------------------------------------------------- 2003 2004 Thereafter Total US$m US$m US$m US$m ---------------------------------------------------------------- Contracted ---------- 7.25% Senior Notes (2008) - - 650.0 650.0 Fixed Product Payments 159.6 77.8 40.4 277.8 Contingent Product Payments (1) 59.0 29.3 14.0 102.3 EPIL II & III (2) - 450.0 390.0 840.0 3.25% LYONs (3) 816.9 - - 816.9 Other debt - - - - ------------------------------------ Total Contracted & LYONs 1,035.5 557.1 1,094.4 2,687.0 Potential --------- Pharma Marketing/Autoimmune (1) 225.0 - 110.0 335.0 Product Acquisitions (1) - - 48.4 48.4 ------------------------------------ Total Potential 225.0 - 158.4 383.4 ------------------------------------ Total Contracted, Potential & LYONs 1,260.5 557.1 1,252.8 3,070.4 ---------------------------------------------------------------- (1) In order to comply with US GAAP, these amounts are not included on the balance sheet (2) In order to comply with US GAAP, $572.7 million of this amount is provided on the balance sheet (3) If the LYONs are put to the company, Elan has the option to repay the LYONs for cash or shares or any combination thereof. Included in fixed, contingent and potential product payments at March 31, 2003, is approximately $222.0 million in respect of Sonata, which represents the present value of the estimated gross payments due in connection with Sonata of approximately $248.6 million. On January 30, 2003, Elan announced its agreement with Pharma Marketing that, contingent on closing of any sale of Sonata, Elan will, on the closing date, pay Pharma Operating Ltd. ("Pharma Operating"), a wholly-owned subsidiary of Pharma Marketing, $225.0 million (less royalty payments on all related products paid or due to Pharma Operating from January 1, 2003 to the closing of the sale) to acquire the Pharma Operating royalty rights with respect to Sonata and Prialt. If a sale of Sonata occurs after June 30, 2003, the option price of $225.0 million will increase with interest at a rate of 15% per annum (less royalty payments on all related products paid or due from January 1, 2003) to the closing date. In addition, Elan has the option to purchase Pharma Operating's royalty rights on the Zonegran, Frova and Zanaflex products until January 3, 2005, an extension from the previously agreed date of June 30, 2003. The current purchase option price has been reduced to $110.0 million plus 15% per annum from the earlier date of the Sonata sale closing or July 1, 2003, less royalty payments (which are secured) made for periods after the Sonata sale closing. Under the previous arrangements the option price at March 31, 2003, would have been approximately $423.0 million for all the royalty rights held by Pharma Marketing. If Elan does not dispose of Sonata on or before January 1, 2004, then, with the exception of the extension of the option exercise termination date to January 3, 2005, the terms of the original Pharma Operating agreement will apply to the arrangement. Based on its recovery plan, Elan believes it has sufficient cash, liquid resources, investments and other assets that are capable of being monetised to meet its current liquidity requirements. The timely completion of the primary care franchise divestment, which is currently the subject of litigation between Elan and King, is an important component of the recovery plan. Elan cannot predict or determine the final outcome of the litigation. The focus of the recovery plan is on maintaining financial flexibility through cash generation. Elan's cash position will in future periods be dependent on a number of factors, including its asset divestiture program, its balance sheet restructuring, its debt service requirements and its future operating cash flow. In addition to the actions and objectives outlined with respect to Elan's recovery plan, Elan may in the future seek to raise additional capital, restructure or refinance its outstanding indebtedness, repurchase its equity securities or its outstanding debt, including the LYONs, in the open market or pursuant to privately negotiated transactions, or take a combination of such steps or other steps to increase or manage its liquidity and capital resources. Any such refinancings or repurchases may be material. Qualifying Special Purpose Entities Elan has guaranteed loan notes issued by two QSPEs, EPIL II and EPIL III, which are not consolidated, to the extent that the investments held by them are insufficient to repay the loan notes and accrued interest when they fall due. The aggregate principal amount outstanding under the loan notes issued by EPIL II and EPIL III was $840.0 million at March 31, 2003 and is repayable in June 2004 and March 2005, respectively. During the first quarter of 2003 Elan increased its provision for its guarantee by $29.7 million to $572.7 million to cover interest of $18.1 million and a reduction in the value of certain investments of $11.6 million during this period. After providing for the estimated investment shortfalls, the carrying values and cash positions of EPIL II and EPIL III at March 31, 2003, were as follows: EPIL EPIL II III TOTAL US$m US$m US$m Investments in public companies 65.4 112.5 177.9 Investments in private companies 28.2 7.5 35.7 Cash 49.9 22.7 72.6 Accrued interest and expenses (11.2) (7.7) (18.9) ------- ------- ------- Total assets 132.3 135.0 267.3 Provisions for guarantees 317.7 255.0 572.7 ------- ------- ------- Total guaranteed indebtedness 450.0 390.0 840.0 Included on page 6 is an analysis of the impact on the quarter ended March 31, 2003 results, assets and liabilities of consolidating the QSPEs. If the QSPEs were consolidated, there would be no significant impact on the net loss for the quarter ended March 31, 2003. R&D Update The most advanced products in Elan's pipeline are Antegren and Prialt. In addition, Elan has one of the world's largest research efforts in Alzheimer's disease ("AD"). Antegren Elan and Biogen are collaborating on the development, manufacturing and commercialisation of Antegren (natalizumab), a humanized monoclonal antibody, and the first in a new class of compounds known as selective adhesion molecule inhibitors (SAM inhibitors). Antegren Phase III trials for Crohn's disease and MS are fully enrolled with over 3,000 patients and are progressing on target. The program is on track for U.S. and European regulatory approval filings for Crohn's disease around year-end. Later this summer, we, along with our partner, Biogen, expect to announce Phase III results for Antegren in Crohn's disease. Prialt Efforts are progressing towards making a second quarter 2003 Marketing Authorisation Application ("MAA") for Prialt in Europe. The final Phase III trial for Prialt required for U.S. submission is currently recruiting patients and we expect to file the NDA around year-end. The FDA has granted approval for a treatment IND program, which will follow the completion of enrollment for the current Phase III trial. Frova With respect to Frova(TM), Dr Stephen Silberstein, Professor of Neurology at the Thomas Jefferson Hospital in Philadelphia, presented data from a double-blind, placebo-controlled, clinical trial at the American Academy of Neurology Annual Meeting on April 1, 2003. More than 500 women participated in the trial across 36 specialist centres in the United States and it showed Frova prevented menstrually-associated migraines in up to 50% of women in the trial. Zonegran A European MAA filing for Zonegran for use as adjunctive therapy in partial seizures is anticipated prior to the end of 2003. One new trial with Zonegran, which was undertaken by scientists at Duke University and published in the Journal of the American Medical Association on April 9, 2003, reported on the use of Zonegran in potentially inducing weight loss in obese adults. Alzheimer's Immunotherapy Program Elan and Wyeth are making significant progress in the Alzheimer's immunotherapy program and have targeted two IND submissions from this program during 2003. These INDs include the previously announced monoclonal antibody program, as well as a novel immunotherapeutic Abeta peptide conjugate. Elan and Wyeth are leveraging the innovative conjugate technology that Wyeth uses in some of its other products. This conjugate is engineered to provide a strongly immunogenic non-self T-cell epitope in concert with the critical N-terminus of the Abeta peptide. A report published recently in Nature Medicine summarizes the neuropathology of a patient with Alzheimer's disease that participated in the Phase 1 study using AN1792. The paper provides the first evidence that the immune response generated against the Abeta peptide can elicit clearance of Abeta plaques in humans. Three distinct Nature Medicine publications, over the past six months, describe data obtained in man supporting the immunotherapeutic approach in Alzheimer's disease. Ingenium On March 24, 2003 Elan announced an important strategic research alliance with Ingenium in the field of the development of novel therapeutics for pain management. Ingenium is a world leader in the field of functional genomics, with its novel Deductive Genomics(TM) approach that allows for the rapid identification and cloning of novel molecular targets implicated in molecular mechanisms underlying the control of pain. Elan will screen against the newly discovered and biologically validated drug targets in order to identify and develop novel therapeutics for the treatment of pain. The alliance illustrates Elan's commitment to building its long-term product pipeline in the pain area. Elan is focused on the discovery, development, manufacturing, selling and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. Appendix 1 Historic Revenue Analysis - (Unaudited) Total revenue analysis (US$m) Q1 2002 Q1 2003 Revenue from Retained Products U.S. Promoted Products Maxipime 17.2 18.4 Azactam 7.1 15.6 Zonegran 10.4 12.4 Pain portfolio 13.9 16.6 Myobloc 2.8 2.9 Frova - 8.7 ------- ------- 51.4 74.6 U.S. Non-promoted Products Zanaflex 53.7 0.8 Other 3.9 2.9 ------- ------- 57.6 3.7 Non-U.S. Product Revenue Abelcet 5.8 8.1 Dilzem 3.0 3.9 Other 15.8 23.8 ------- ------- Total Non-U.S. Product Revenue 24.6 35.8 Contract manufacturing and royalties 24.2 35.5 Total Revenue from Retained Products 157.8 149.6 Revenue from Divested Products (1) Skelaxin 33.5 27.2 Sonata 23.5 21.3 Abelcet 22.3 - Dermatology 18.1 - Diagnostics 16.8 7.0 Adalat/Avinza - 8.5 Rationalisation program 13.1 3.6 ------- ------- 127.3 67.6 Co-promotion Fees Autoimmune 23.8 - Pharma Marketing 24.0 - ------- ------- 47.8 - Total Product Revenue 332.9 217.2 Contract Revenue Amortisation of fees 67.4 32.2 Research revenue and milestones 23.6 10.6 Pharma Marketing/Autoimmune 22.7 - ------- ------- Total Contract Revenue 113.7 42.8 ------- ------- Total Revenue 446.6 260.0 ------- ------- (1) Products that have been divested or are subject to divestment agreements (including the products contained in the primary care transaction agreement with King) Appendix 2 Three Months Ended March 31 2002 2003 US $m US $m Non-GAAP Financial Information Reconciliation Schedule EBITDA Operating income / (loss) 69.1 (71.7) Depreciation and amortisation included in operating income/(loss) 45.5 45.3 Amortised revenue included in total revenue (67.4) (40.7) ------- ------- EBITDA 47.2 (67.1) ======= ======= To supplement our consolidated financial statements presented on a US GAAP basis, Elan provides readers with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation), a non- GAAP measure of operating results. EBITDA is defined as operating income/loss plus/minus depreciation and amortisation of costs and revenues. EBITDA is not presented as an alternative measure of operating results or cash flow from operations, as determined in accordance with US GAAP. Elan's management uses EBITDA to evaluate the operating performance of Elan and its business and is among the factors considered as a basis for Elan's planning and forecasting for future periods. Elan believes EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is used as an analytical indicator of income generated to service debt and to fund capital expenditures. EBITDA does not give effect to cash used for interest payments related to debt service requirements and does not reflect funds available for investment in the business of Elan or for other discretionary purposes. EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to operating income/loss is set out in the schedule above titled "Non-GAAP Financial Information Reconciliation Schedule". CONTACT: ELAN CORP. Investors: (U.S.) Jack Howarth Phone: 212/407-5740 800-252-3526 or Investors: (Europe) Emer Reynolds Phone: 353-1-709-4000 00800 28352600 ========= I T A L Y ========= CAPITALIA SPA: Investors Approve EUR161M Loss Carried Forward ------------------------------------------------------------- The Ordinary Shareholders' Meeting of CAPITALIA S.p.A., held on Wednesday under the chairmanship of Cesare Geronzi, approved the Financial Statements as at December 31, 2002, in the terms proposed by the Board of Directors and rendered public last March 28. The Meeting further approved the loss carried forward for the fiscal year of EUR160,734,831, reserving the right to convene a specific Extraordinary Shareholders' Meeting to approve the coverage of the loss carry forward through the reduction, for an equal amount, of the Reserve ex Law 413/91. The Shareholders' Meeting also approved the nomination of Societa Reconta Ernst & Young S.p.A. to be the external auditor for the fiscal years 2003/2004/2005, as well as the renewal of the authorization, already existing, to repurchase own shares with the same modalities as in the prior years, with the exception of an increase in the maximum rotational amount from 22 million to 50 million shares. The Shareholders' Meeting, in addition, authorized the Board of Directors, as per Art. 121, second comma, of the Decree Law 58/1998, to stipulate agreements with Fiat S.p.A. to raise up to a maximum of 5%, the limit of direct and/or indirect cross- shareholdings between CAPITALIA and Fiat. Finally, the Shareholders' Meeting increased the number of members of the Board of Directors from 15 to 16, confirmed as Directors Francesco Arietti, Franco Carraro and Coenraad Hendrik Adolph Collee, and named Stefano de Luca as a new Board member. * * * The Board of Directors, meeting after the close of the Shareholders' Meeting, confirmed as Vice Chairman Coenraad Hendrik Adolph Collee. =========== P O L A N D =========== ELEKTRIM SA: Discloses Shareholders with Over 5% of Votes at EGA ---------------------------------------------------------------- The Management Board of Elektrim SA announces that at EGA of Elektrim SA convened for April 4, 2003 a total of 72,29% of the Company's share capital was represented by the shareholders present. Shareholders who held over 5% of the total number of votes at the Assembly were as follows: (1) BRE Bank SA (Poland) - 17 012 186 shares and 17 012 186 votes, which represents 28,09% of the total number of votes at EGA, (2) Polsat Media SA (Poland) - 7 998 466 shares and 7 998 466 votes, which represents 13,21% of the total number of votes at EGA, (3) TCF Sp. z o.o. (Poland) - 6 770 000 shares and 6 770 000 votes, which represents 11,18% of the total number of votes at EGA, (4) Merging Markets Development SA (Luxemburg)- 4 179 933 shares and 4 179 933 votes, which represents 6,9% of the total number of votes at EGA, (5) Vivendi Universal SA (France) - 4 079 683 shares and 4 079 683 votes, which represents 6,74% of the total number of votes at EGA, (6) Polska Grupa Zarzadzania Funduszami Sp. z o.o. (Poland) - 3 430 000 shares and 3 430 000 votes, which represents 5,66% of the total number of votes at EGA, (7) Multico Press Sp. z o.o. (Poland) - 3 091 240 shares and 3 091 240 votes, which represents 5,1% of the total number of votes at EGA. NETIA HOLDINGS: Commences Distribution Process for Warrants ----------------------------------------------------------- Netia Holdings S.A., Poland's largest alternative provider of fixed-line telecommunications services, announced that, as contemplated by the Restructuring Agreement entered into on March 5, 2002, among it, an ad hoc committee of its noteholders, certain financial creditors, Telia AB and certain entities controlled by Warburg, Pincus & Co., it issued, as part of the final stages of the company's financial restructuring, notes, each with the right to subscribe for its series J shares, which rights will be detached from the notes in the form of warrants. Up to an aggregate amount of 64,848,652 warrants detached from the issued notes are to be distributed by May 20, 2003 to Netia's shareholders as of December 22, 2002, each one of which will entitle the holder thereof to exercise such warrant for one series J share of Netia. Half of these warrants will entitle their holders to subscribe for such shares by April 30, 2005 and the remaining half will entitle their holders to subscribe for such shares by April 30, 2006. The exercise price for each Warrant will be PLN 2.53. The notes will not give rise to substantial long- or medium-term indebtedness of Netia and have been issued solely in order to provide a means of distributing the Warrants. U.S. persons will be restricted both as to transfers of the Warrants and as to exercising the Warrants for Netia shares. Under the terms of the Deposit Agreement governing Netia's American Depositary Receipt facility, we expect that persons holding ADSs under that facility will not receive Warrants. It is expected that cash proceeds from sales, if any, of Warrants would be distributed by the depositary to holders of ADSs in accordance with the terms of the deposit agreement. It is also expected that the depositary will set a record date for holders of ADSs who will be entitled to receive proceeds from the sales, if any, of the Warrants. In addition, as contemplated by the Restructuring Agreement, Netia issued 18,373,785 notes entitling their holders to subscribe for the company's series K shares under its incentive stock option plan. Subscriptions for the series K shares will be possible following the distribution of the Warrants and until December 31, 2007. Under the stock option plan, options may only be granted until December 31, 2004 and all options expire on December 20, 2007. It is currently intended that persons receiving options may only exercise one-third of the amount received in the first year after receipt, one-third in the second year after receipt and one-third in the third year after receipt but the supervisory board may decide to change this. Currently, options granted under the stock option plan represent 3.09% of Netia's share capital and may be exercised at PLN 2.53. The total number of series K shares that may be issued under the stock option plan will not exceed 5% of Netia's post-restructuring share capital. Netia's supervisory board has been vested with the right to take individual decisions regarding the participation in the stock option plan, the granting of stock options, terms of the exercise, exercise periods, the conditions or circumstances of the termination of stock options, the method of calculation and the form of receipt of gains accrued on the stock options. The stock option plan was adopted in June 2002 and supplemented in April, 2003. CONTACT: NETIA HOLDINGS Anna Kuchnio (IR) Phone: +48-22-330-2061 PHS STEEL: U.S. Steel Claims Rival Knows Confidential Details ------------------------------------------------------------- U.S. Steel claims that Arcelor, its European rival in the bidding for Polish state-owned steel group Polskie Huty Stali (PHS), was privy to information on the company while conducting its due diligence, hence its decision to withdraw from the process. The American company also alleged that Luxembourg-based Arcelor will be in a privileged position due to the analyses, and will have easier access to the market. "It might use the privatization process for other purposes, as the company received detailed information about the market, clients, prices and costs. It plans to enter Poland by using the geographical proximity of its plants to the market. We were afraid of that," said deputy president of U.S. Steel, John H. Goodish. Warsaw Business Journal noted that representatives of the Polish steel sector have since then predicted that Arcelor was bent on seizing the domestic market than expanding its activities in Poland. PHS includes four steel mills that account for 70% of Poland's steel market. Arcelor declined to comment, according to the report. The Polish government wants the buyer of PHS to convert some PLN1.6 billion ($1PLZ3.8850) of company debt into shares, and then raise the company's capital by about US$100 million. The government intends to keep a 25% stake in PHS. =========== R U S S I A =========== METROMEDIA INTERNATIONAL: Update on Asset Sale and Strategy ----------------------------------------------------------- Announces Update on Timing of Filing of its Form 10-K Metromedia International Group, Inc., the owner of interests in various communications and media businesses in Eastern Europe, the Commonwealth of Independent States and other emerging markets, on Wednesday announced a substantial revision to the program of asset sales it initiated last year. First, the Company has stopped efforts to sell its core telephony assets in favor of pursuing further development of these businesses. Accordingly, the following properties are being withdrawn from the market: PeterStar, a competitive local exchange carrier in St. Petersburg, Russia, in which the Company has a 71% equity interest; BCL, a competitive local exchange carrier in St. Petersburg, Russia, in which the Company has a 100% equity interest; and Magticom, a GSM mobile telephony operator in Tbilisi, Georgia, in which the Company has a 34% equity interest. Second, while the Company will continue marketing of its cable TV and remaining radio station properties, the pace of that marketing effort will be moderated, allowing sufficient time for the Company to realize higher sale proceeds. As disclosed in the Company's February 3, 2003 press release, Communications Equity Associates (CEA) has been engaged to assist the Company in this marketing effort. CEA contact information is provided below. The Company announced that yesterday [Tuesday] it had remitted $8.05 million to U.S. Bank Corporate Trust Services, the trustee of its $152.0 million 10 1/2 % Senior Discount Notes due 2007 (the "Senior Notes"), thereby effecting the required interest payment within the 30-day grace period provided under the Senior Notes. This amount reflects the $7.98 million coupon payment that was due on the Senior Notes as of March 30, 2003, plus interest accrued since that date. Management anticipates that its annual audited financial statements, for the fiscal year ended December 31, 2002, will be completed by mid June 2003 and that the Company will file with the SEC its Annual Report on Form 10-K by the end of June 2003. Management also anticipates that it will be able to file its Quarterly Report on Form 10-Q, for the fiscal quarter ended March 31, 2003, by the end of June 2003 with the SEC. In making these announcements, Mark Hauf, Chairman, President and Chief Executive Officer of the Company commented: "The actions we are announcing reflect the considerable progress we've made in the past two months to address financial pressures the Company has been facing. Debt has been reduced by nearly one-third as a result of the transaction concluded with Adamant and announced last week, which also generated $5 million in cash. Liquidity pressures have been further relieved through a program of overhead reductions that will cut annual overhead run-rate to $3 million to $5 million by year end. Additional liquidity will be realized from near-term dividend and asset sale proceeds. These measures provide a realistic basis for pursuing development rather than sale of our core businesses, creating opportunity for our financial stakeholders to participate in future value generation within these businesses. Reduced liquidity pressures also afford us time to pursue the sale of remaining non-core businesses at a pace more likely to yield best returns for our stakeholders. While we have not yet fully resolved all financial difficulties the Company has been facing, we believe pre- conditions for a successful restructuring of the Company are now in place. Our actions are consistent with preparation for the realization of that strategic view." About Metromedia International Group Metromedia International Group, Inc. is a global communications and media company. Through its wholly owned subsidiaries and its business ventures, the Company owns and operates communications and media businesses in Eastern Europe, the Commonwealth of Independent States and other emerging markets. These include a variety of telephony businesses including cellular operators, providers of local, long distance and international services over fiber-optic and satellite-based networks, international toll calling, fixed wireless local loop, wireless and wired cable television networks and broadband networks and FM radio stations. CONTACT: METROMEDIA INTERNATIONAL GROUP, INC. New York Ernie Pyle Phone: 212-527-3800, Ext. 112 Home Page: http://www.metromedia-group.com. CEA BERATUNGS- UND BETEILIGUNGSGESELLSCHAFT MBH Christian von Drathen Phone: +49 (89) 290725-120 E-mail: drathen@cea-europe.com WIMM-BILL-DANN: Assigned 'B+' Long-Term Ratings, Outlook Stable --------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B+' long-term corporate credit rating to Russia-based dairy and juice producer Wimm-Bill-Dann Foods OJSC (WBD). Standard & Poor's also assigned its 'B+' senior unsecured debt rating to the company's proposed $150 million bond issue. The outlook is stable. At the same time, Standard & Poor's affirmed its 'ruA+' Russia national scale ratings on WBD and the company's Russian ruble (RUR) 1.5 billion ($48 million) senior unsecured bond issue. "The ratings on WBD are constrained by the company's need for substantial investment in plant and working capital over the next several years to support its growth strategy and maintain its leading position in the steadily growing Russian packaged food market," said Standard & Poor's credit analyst Tatiana Kordyukova. "WBD's need to substantially invest to support its growth is expected to result in increased borrowing and requires sound management in order to sustain growth, boost profitability, and control working capital in the difficult Russian and Commonwealth of Independent States operating environment." An increase in personal incomes is driving the Russian food industry, spurring the steady consumption of staple foods, and raising consumption of enriched products. Meanwhile, consumer preferences are inclining toward brand products. Intensifying competition, however, forces market participants to invest considerable funds into extending operations, or, as seen in 2002 in the juice segment, to compete in pricing, with the ensuing deterioration of margins as a result. "Given WBD's rapid growth, generating enough cash flow to support its working capital and capital expenditure needs is a key challenge for the company," added Ms. Kordyukova. Working capital turnover declined as the company established its national distribution capability. National distribution is a potential competitive advantage, but only if costs and capital requirements can be managed effectively. WBD's ambitious growth strategy involves substantial debt funding, which will increase its relatively conservative leverage. The ratings on WBD are supported by the management's track record in positioning the company as one of the leading consumer- oriented businesses in Russia, with more than one-third of the market shares in both the dairy and juices segments of the food industry. The ratings are also supported by the company's well- established market position, high brand profile, diversified product portfolio, and countrywide production and distribution coverage. Market conditions and prudent management are expected to ensure that WBD will improve its profitability in the long term, control working capital levels, strengthen cash flow from operations, and maintain a manageable level of borrowings. ===================== S W I T Z E R L A N D ===================== SWISS INTERNATIONAL: Government Appoints Monitoring Committee ------------------------------------------------------------- The Swiss government, Swiss International Air Line's largest single shareholder, appointed a committee to monitor the carrier's performance, highlighting increasing concern about the airline's prospects. The committee is composed of Transport Minister Moritz Leunberger, Finance Minister Kaspar Villiger and Joseph Deiss, head of the Ministry of Economic Affairs. The overseeing body confirmed they could help change the legal environment to help Swiss, but ruled out the possibility of cash injection from the government. Some CHF4 billion in government and business money had already been pumped into the airline during its creation last year. According to Dow Jones, Transport minister Leuenberger said he might consider cutting fuel tax for domestic flights but said the government wouldn't accede to the airline management's demands to cut taxes paid for air traffic control. He pointed out that the government had helped strengthen the airline's position by increasing landing fees at Zurich airport. This is despite criticism from the International Air Transport Association. Swiss declined to comment on the government's decision to set up the committee. The airline, which has been loss-making since last year, is further made to suffer by the slump in demand due to the war in Iraq and the outbreak of SARS this year. Critics considered the airline's operation too big for Switzerland's relatively small market, and are recommending a cut of 110 planes to its fleet and 9000 staff from its workforce. The Swiss government holds a 20% stake in the carrier; regional governments, UBS AG (UBS) and Credit Suisse Group (CSR), each hold around 10%. Swiss was created last year out of the remains of former flag carrier Swissair and regional airline Crossair. SWISS LIFE: Private Equity Partners to Refocus Activities --------------------------------------------------------- In the context of the Swiss Life Group's strategic realignment, the adjustment of its investment strategy and the forthcoming changes at Private Equity Holding, Swiss Life Private Equity Partners will also be refocusing its activities. This new orientation was the subject of insurmountable differences of opinion between Swiss Life and part of the Swiss Life Private Equity Partners management. Swiss Life is therefore severing its ties with David Salim, Chief Executive Officer of Swiss Life Private Equity Partners, and Thomas Grotzer, Chief Operating Officer of Swiss Life Private Equity Partners, with immediate effect. Peter Derendinger, designated member of the Swiss Life Private Equity Board of Directors, is assuming responsibility for the unit's operations. Swiss Life Private Equity Partners is a wholly owned Swiss Life subsidiary specialising in asset management and investment consulting in the private equity sector. Its mandates include managing the portfolio of Private Equity Holding, a company traded on the stock exchange. Swiss Life The Swiss Life Group is one of Europe's leading providers of long-term savings and protection and life insurance. The Swiss Life Group offers individuals and companies comprehensive advice and a broad range of products via agents, brokers and banks in its domestic market, Switzerland, where it is market leader, and selected European markets. Multinational companies are serviced with tailor-made solutions by a network of partners in over fifty countries. The Swiss Life Group, registered in Zurich, was founded in 1857 as the Swiss Life Insurance and Pension Company. Shares of Swiss Life Holding are listed on the SWX Swiss Exchange (SLHN). The company employs around 12 000 persons. CONTACT: SWISS LIFE General-Guisan-Quai 40 P.O. Box, 8022 Zurich Home Page: http://www.swisslife.com Investor Relations Phone: +41 1 284 52 76 E-mail: investor.relations@swisslife.ch VON ROLL: Works on Refinancing Plan, 2002 Accounts in the Making ---------------------------------------------------------------- As the Von Roll Group announced on November 5, 2002, at its 2003 General Meeting of Shareholders it will be unveiling a refinancing plan to its shareholders and bondholders. Work on the accounts for 2002 has not yet been concluded, so the Group's final results are not yet available. Nonetheless, it is clear that the Group's assets after the close of the 2002 financial year will cover less than 50% of its share capital and legal reserves. This balance-sheet structure makes the Group's financial restructuring indispensable and means that in line with Article 725, paragraph 1 of the Swiss Code of Obligations the Board of Directors must submit measures to the General Meeting of Shareholders that are designed to improve the Group's balance sheet. The Von Roll Group has duly submitted proposals regarding a comprehensive concept for reorganizing its balance sheet to its banks. That concept, based on equal treatment, also includes bondholders. The Von Roll Group is currently engaged in constructive talks about this concept with its banks. Once those talks draw to a close, probably by April 10, 2003, the Von Roll Group will release information about its definitive restructuring plan and its 2002 annual accounts before proceeding to publish the motions that the Board of Directors will submit to the General Meeting of Shareholders and bondholders. ZURICH FINANCIAL: Shareholders Approve Capital Reduction -------------------------------------------------------- Zurich, April 30, 2003 -The General Meeting of Zurich Financial Services took place in the Hallenstadion in Zurich on Wednesday. The meeting was presided by Lodewijk C. van Wachem, Chairman of the Board of Directors. 1,604 shareholders attended, representing 20,468,503 registered shares or 14.21 percent of the share capital. Shareholders approved all agenda items proposed by the Board of Directors. This includes a share capital reduction in form of a nominal value reduction of each registered share from CHF 10 to CHF 9. The difference of CHF 1 per registered share will be paid to shareholders. In his address to shareholders James J. Schiro, Chief Executive Officer of Zurich Financial Services, discussed the market environment, which is challenging the whole industry. He said that Zurich was working hard to deliver on its promises in spite of headwinds. Schiro added, "While we can neither predict nor control the vagaries of financial markets, our action plan is designed to insulate our core business from them as much as possible." Share capital reduction, nominal value reduction and changes to the Articles of Incorporation: The share capital is reduced by CHF 144,006,955 from CHF 1,440,069,550 to a new total of CHF 1,296,062,595 by reducing the nominal value of each registered share from CHF 10 to CHF 9. Subject to the fulfillment of the necessary requirements and the entry of the share capital reduction in the Commercial Register of the Canton of Zurich, the shareholders will receive CHF 1 per registered share free of charge. The payment is expected by July 15, 2003. The respective amendments of the Articles of Incorporation have been approved by shareholders. Authorized Share Capital The Board of Directors is authorized to increase the share capital by no later than June 1, 2005. The amount approved shall not exceed CHF 54 million by issuing up to 6 million fully paid registered shares with a nominal value of CHF 9 each. The respective amendment of the Articles of Incorporation has been approved. Release and Re-election to the Board of Directors All members of the Board of Directors were released with respect to the 2002 financial year in individual votes. The Group Executive Committee was released jointly. In addition, Vernon L. Sankey (53) was re-elected to the Board of Directors for a further three-year term of office. Zurich Financial Services is an insurance-based financial services provider with an international network that focuses its activities on its key markets of North America, the United Kingdom and Continental Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. It has offices in approximately 60 countries and employs about 68,000 people. CONTACT: Zurich Financial Services Media and Public Relations 8022 Zurich, Switzerland Phone: +41 (0)1 625 21 00 Fax: +41 (0)1 625 26 41 Home Page: http://www.zurich.com =========================== U N I T E D K I N G D O M =========================== ABERDEEN ASSET: Pre tax Profit Slides 75% to GBP5.6 Million ----------------------------------------------------------- HIGHLIGHTS March 2003 March 2002 Turnover GBP74.9m GBP94.3m Pre-tax profit GBP41.9m GBP10.8m Pre-tax profit (exc goodwill amortization and exceptional items) GBP 5.6m GBP22.2m Earnings per share 17.29p 2.71p Earnings per share (exc goodwill amortization and exceptional items) 2.01p 8.87p Dividend per share 2.0p 3.85p Net gearing 76.4% 118.6% * Despite continued volatility in global markets, significant performance achieved from Asian equity funds, bonds and property asset classes. * Balance sheet strengthened following the GBP86.8 million disposal of selected retail funds to New Star Asset Management. * Negotiations for the sale of Aberdeen Property Investors well advanced. Exclusive negotiations expected to begin shortly. * Annualized costs savings of GBP40 million already achieved, close to target of GBP45 million. * Group's open-ended funds returned to net investment inflows at period end. Commenting on the interim results, Chief Executive Martin Gilbert said: "The last six months were another testing period, in what has been the longest bear market for 65 years. We have taken significant steps to strengthen the balance sheet, keep costs down and position the Group for the eventual upturn in markets. We are on target to achieve our goal of reducing costs by GBP45 million compared to their peak and have already made annualised cost savings of GBP40 million. Given time lags, the cost savings are not as yet fully reflected in the earnings figures for this half and these reductions will be better reflected in the full year results. During this half, we successfully transferred GBP1.73 billion of retail open-ended funds to New Star Asset Management, raising proceeds of GBP86.8 million. I am also pleased to report progress with the sale of Aberdeen Property Investors. We received a significant number of high quality expressions of interest. These approaches have been refined through a structured process comprising several stages, with a view to identifying the best outcome for Aberdeen and API. We are now in advanced negotiations with a limited number of interested parties and expect to enter into exclusive negotiations with one potential buyer shortly. In line with our original expectations, we expect a sale to be completed before the end of June 2003. Despite the difficult investment conditions, we have seen strong relative performance from our conventional closed end fund ranges both in the UK and the US. In the UK in February, the Group won the top position from S&P in the larger investment trust companies category for the performance of our conventional trusts over one, three and five years. In the United States, our two largest closed end funds were awarded by Lipper first and second places for performance achievement, in the closed end bond fund sector, for the year to December 2002. We are also encouraged, in these circumstances, to report a return to net inflows into our UK open-ended funds in March, demonstrating the resilience of our underlying business." To See Complete Financial Results: http://bankrupt.com/misc/Aberdeen_Asset_Management.htm CONTACT: ABERDEEN ASSET MANAGEMENT PLC Martin Gilbert, Chief Executive Phone: 020 7463 6000 / 01224 631 999 GAVIN ANDERSON & COMPANY Neil Bennett/ Lindsey Harrison Phone: 020 7554 1400 AMP LTD: Announces Strategic Initiative Towards Long-term Value --------------------------------------------------------------- AMP Limited has announced a major strategic initiative to set the company on a new path to long-term shareholder value through the creation of two separate, regionally-focused listed entities. The strategic initiative has three elements: -- A demerger of AMP's businesses along geographic lines -- Australasia and the United Kingdom; -- Reducing the equity market risks in the UK Life Services (UKLS) business through the sale of equities, protecting policyholder benefits and shareholder equity in the UK; and -- An equity raising to facilitate the demerger combining a A$1 billion institutional placement and a A$500 million share purchase plan for Australian and New Zealand retail shareholders. As part of the demerger process, and particularly the reduction of risks in UKLS, book writedowns of approximately GBP1 billion (A$2.6 billion) are expected. These writedowns have no regulatory solvency imopct on cashflow (other than GBP100 million of expenses). AMP Chairman Peter Wilcox said the sweeping changes being announced were the culmination of the strategic review commenced six months ago by Chief Executive Officer Andrew Mohl. "These changes address the outstanding issues facing the company and are in the best interests for shareholders, customers, planners and employees," Mr Wilcox said. "These issues were four-fold: -- Establishing solid platforms for growth for Australian Financial Services and Henderson; -- Providing a permanent solution to the equity market risks in our UK life and pensions business; -- Protecting and enhancing our quality businesses in the Australian and UK markets; and -- Optimising the value from AMP's existing portfolio of assets and providing investors with a clear choice about investing in those businesses. "One of the key findings of the strategic review was that there was no longer a compelling reason to keep AMP's current mix of businesses together, but powerful reasons to separate them. "While this represents a major shift in strategic direction, this is the right step at the right time for AMP. The proposal has followed an exhaustive review by management and advisors and has the full support of the Board." The demerger proposal The proposed demerger will create two new regionally-focused listed companies. The Australian-based company will be named AMP and: -- Comprises Australian Financial Services (which includes New Zealand), Henderson's Australian and New Zealand operations and Gordian/Cobalt; -- Will be a regionally focused wealth management company. It will be well capitalized, targeting a strong 'A' financial strength rating, have strong market positions and robust growth potential focused on Australasian markets; and -- The Chairman will be Peter Wilcox with Andrew Mohl as CEO. The UK-based business will be named Henderson and: -- Comprises Henderson's northern hemisphere asset management operations, UK Life Services, UK Contemporary Financial Services, and AMP's 50% stake in Virgin Money; -- It will be a wealth management business, with a disciplined run-off life business focused on cost management and future capital releases. Henderson is a highly regarded brand in the UK, well positioned to participate in the benefits of future industry consolidation. It will have a conservative capital structure and target a 'BBB' financial strength rating, consistent with its run-off business; and -- The Chairman will be current AMP Director Pat Handley and the CEO will be current AMP Director and Henderson Managing Director Roger Yates. Following the demerger, shareholders will hold shares in both companies. both companies will be listed on the Australian Stock Exchange, with the possibility of a future listing of Henderson on the London Stock Exchange to broaden its investor base. The demerger will most likely be effected by the way of a distribution of shares to AMP shareholders. Full details of the demerger proposal will be provided to shareholders for their approval in the fourth quarter of 2003. The transaction is also subject to regulatory approval. "The two companies will have simply, more transparent corporate structures, with different business strategies, risk profiles, customer bases and growth prospects," AMP CEO Andrew Mohl said. AMP is being advised on the demerger by Caliburn Partnership and UBS Warburg. Capital raising To facilitate the demerger, AMP is undertaking a A$1.5 billion capital raising, comprising a A$1 billion institutional placement and a A$500 million Share Purchase Plan for Australian and New Zealand retail investors. The capital raising has been fully underwritten by UBS Warburg. The capital raised will be used to: -- Repay internal debt between the de-merged entities and reduce the level of external debt. This will eliminate the financial inter-dependencies between the Australian and UK businesses; -- Establish the UK-based business on a standalone basis, consistent with a BBB rating; and -- Establish the Australian-based business on a standalone basis, consistent with a strong A rating. No further equity capital raising is required to facilitate the demerger. AMP has requested a trading halt in its shares, Reset Preferred Securities and Income Securities to enable the capital raising to take place. All securities are expected to re-commence trading on Monday, May 5, 2003, following the announcement of the outcome of the institutional capital raising. A Share Purchase Plan (SPP) will allow AMP's Australian and New Zealand retail shareholders to participate in the capital raising, providing them the opportunity to subscribe for up to A$5,000 of shares in AMP. The SPP will be priced at the lower of: -- the institutional placement price; or -- a 5% discount to the average market price during a 15 day period after the close of the offer. The offer period is expected to commence May 21, 2003 and will close June 13, 2003. The record date will be Monday May 5, 2003. Further details on the SPP will be sent to shareholders. In addition, the Board has resolved that shares that were allocated to participants and institutional sub-underwriters under the Dividend Reinvestment Plan (DRP) on April 28, 2003 will be repriced at the lower of the DRP pricing and the institutional bookbuild price. Any adjustment will be made through the issue of additional DRP shares to participating shareholders. Operational update On February 26, 2003 AMP said that if global markets, particularly in the UK, weakened further or remained at current levels, the group's profitability would be adversely affected. While markets have recovered in recent weeks, equity markets ended the first quarter of 2003 at lower levels than the final quarter of 2002. Market volatility also continues to impact investor sentiment. These two factors, combined with traditional first quarter seasonal weakness in Australia, have contributed to lower year- to-date results for all business units. Business Unit operating margins in the 2003 first quarter totaled A$109 million. Results for UK Life Services and UK Contemporary Financial Services were particularly hard hit in the quarter by a combination of factors, including the loss of Service Company fee from with-profits funds (A$147 million in 2002 year), temporary cost overhang from the closure of the Direct Sales Force, lower equity markets and actions to reduce equity exposure. While tough markets are impacting AMP, both the Australian Financial Services and Henderson businesses remain strong, resilient businesses that will benefit from an improvement in market conditions. AMP continues to manage its business closely to reflect difficult market conditions. Reducing the equity risk in UK Life Services Another outcome of the strategic review was to seek a solution to the protection of long-term policyholder benefits and shareholder capital in the UK by reducing the equity market risks in the UK Life Services (UKLS) businesses. While the derivative strategy put in place continues to provide protection from market volatility, this does not provide a long-term solution. There was a clear decision to be made -- either improve the ability of UKLS to manage the equity market risks of its business by increasing its capital base, or reduce the market risk itself by minimizing its exposure to equities and more closely matching asset and liability profiles. A key driver of this decision was the obligation to ensure that the financial health of the life funds and the associated policyholder benefits are protected. Another driver of the decision was the fact that the risk shareholders of providing capital so the with-profits fund can stay in equities is unacceptably weighted to the downside. In the absence of a significant policyholder surplus, if equity markets fall, shareholders bear a high proportion of the fall (up to 100%). If equity markets rise, shareholders receive a return that is disproportionately small compared with the risk they are bearing, because a large proportion of the rise goes to policyholders. This makes further investment a high risk, low return use of shareholder capital. AMP has been progressively selling equities for some time. A strategic decision has now been made to permanently reduce the size of the equity component of the UK investment portfolios supporting with-profits funds. Funds will be reinvested in lower risk portfolios, with corresponding lower volatility and more security for policyholders and shareholders. "Overall, this is a prudent move to protect the long-term interests of both policyholders and shareholders. It creates a more stable asset for the new UK-based company, which will release significant amounts of capital over the medium to long term," Mr Mohl said. Writedowns As a result of the strategic initiatives and reduction of risk in UKLS, writedowns of approximately GBP1 billion (A$2.6 billion) are expected, subject to audit and actuarial review. Mr Mohl said the writedowns were a result of: -- Risk reduction initiatives: -- reducing equity exposure in with-profits funds, leading to writeoff of contingent loans to London Life and National Provident Life (GBP300 million/A$800 million); and -- provisioning for potential future losses arising from a range of operating risks within UKLS (GBP200 million/A$520 million). -- Strategic initiatives: -- writing off most of Towry Law and NPI/Service Company goodwill in response to AMP's new strategy (GBP400 million/A$1,050 million); and -- provisioning for UK demerger and transaction costs (GBP100 million/A$260 million). These writedowns eliminate essentially all of the goodwill/intangibles relating to the UK Life business and provide a robust balance sheet going forward. The embedded value of the UK Life and Contemporary Financial Services business has been revalued post the strategic initiatives and writedowns at around GBP1.54 billion. The corresponding figure at the end of 2002was GBP1.98 billion. "While the embedded value of the UK business has been reduced, this is a direct result of the significant reduction in portfolio risk," Mr Mohl siad. "In terms of the writedowns, they will reduce uncertainty and volatility in the future earnings capacity of the UK business." Shareholder information The AMP Board will ensure that shareholders are kept fully informed about the proposed demerger as further information is available. All shareholders will receive a letter from the Chairman outlining the announcements, and advertisements will run in Australian and New Zealand daily newspapers over the next few days to explain the changes. In the interim, shareholders with questions can contact: Shareholder information line: Australia: 1300 135 859 New Zealand: 0800 448 062 United Kingdom: 0800 783 3315 Shareholders can also access information about this initiative via AMP's website http://www.ampgroup.com Conclusion Mr Mohl said that until the proposal is put to shareholders and the demerger complete, AMP would continue to be managed as one company. It will be business as usual, with a small, dedicated team working on the demerger proposal and transition issues. "While the proposed changes are complex, our strategic review has culminated in an initiative that will return AMP in Australasia to its roots, and provide the UK-based company with a more logical set of assets and the ability to focus on its already strong asset management business," Mr Mohl said. "The last year has been an extremely difficult one but this solution represents a turning point in the fortunes of AMP. "It is a fresh start for AMP and will create a new, more certain path to delivering better returns. "The new strategy for AMP will unlock the real value of the company and is the best outcome for our shareholders, our customers, our planners and our employees." CONTACT: AMP LIMITED Level 24, 33 Alfred Street Sydney NSW 2000 Australia ABN 49 079 354 519 Contact: Mark O'Brien, Investor relations Phone: 9257 7053 AMP LTD.: Standard & Poor's Places Ratings on CreditWatch Neg ------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed on CreditWatch Negative the 'AA-' insurer financial strength and counterparty credit ratings on AMP Life Ltd., the Australian operating subsidiary of AMP Ltd. AMP Ltd. is a Sydney-based life insurance and funds management group, with operations in Australia and the U.K. At the same time, the 'A-' counterparty credit ratings, and related debt ratings, on AMP Group Holdings Ltd. and AMP Bank Ltd. were also placed on CreditWatch Negative. The CreditWatch ratings action follows AMP Ltd.'s announcement on Thursday that the group will sell its equity investments held in its U.K. operations, and that the group expects a substantial write-down in asset values, a capital raising of A$1.5 billion, and the legal separation of the U.K. and Australian businesses. "Standard & Poor's will assess the extent to which write-downs will weaken the financial strength of the AMP Ltd. group, and signal lower group earnings going forward," said Kate Thomson, credit analyst, Financial Services Ratings. "Positive features of the restructuring plan include the influx of fresh capital of up to A$1.5 billion, a reduction in debt improving leverage and interest cover, and reduced equity exposures in the U.K. However, these positive factors are balanced by a reduction in capital resources under the substantial write-downs announced, and some diminution in U.K. operations in a difficult market environment," said Ms. Thomson. Standard & Poor's believes that should the ratings on AMP Life Ltd., AMP Group Holdings Ltd. and AMP Bank Ltd. be lowered, they would unlikely be lowered below 'A+' for AMP Life and 'BBB+' for AMP Group Holdings Ltd. and AMP Bank Ltd. The ratings for Pearl Assurance PLC (rated 'BBB+'), NPI Ltd. (rated 'A'), and National Provident Life Ltd. (rated 'BBB+') will likely be in the 'BBB' range. Standard & Poor's expects to resolve the CreditWatch shortly as more detailed information becomes available. AQUILA INC.: Wants to Use State Utility Assets as Collateral ------------------------------------------------------------ Aquila, Inc. filed applications with five state regulatory commissions requesting approval to use state utility assets as collateral for the working capital requirements of its utility operations. The company is requesting permission to add these assets initially to an existing pool of regulated and non-regulated assets currently securing a $430 million three-year term loan, the majority of which is supporting Aquila's utility working capital requirements. However, Aquila has stated in its application that regulated assets only will be used to secure debt necessary to support the regulated utility operations. Formal regulatory approval for Aquila's request is required in Colorado, Iowa, Minnesota, Kansas and Missouri. Prior to the filings, Aquila officials conducted meetings in all of the company's jurisdictions to ensure state officials were fully informed of the plans and gain an understanding of potential concerns that Aquila could address in the applications. "We have moved cautiously to ensure that we could respond to the questions raised by the Commissions," said Jon Empson, Aquila's senior vice president of Regulatory, Legislative and Gas Supply Services. "Our objective is to provide the states with a full explanation of our plans to restore financial stability. Aquila is committed to maintaining our focus on excellent service to our utility customers and ensuring that steps to restore Aquila's financial stability will not have any adverse impact on the utility business or its customers." Securing debt with utility assets was a common practice in the late 1980s and early 1990s. During the economic boom of the mid to late 1990s the practice faded when the cost differential between secured and non-secured debt was insignificant. Aquila has stated in its applications that both investment and non- investment grade utilities have issued and continue to issue secured debt. Until the latter part of the 1980s, Aquila primarily issued secured debt to support its utility operations. The debt secured by Aquila's utility assets will be used to meet traditional working capital needs of a utility, including the purchase of natural gas and electricity supplies, upgrade of its distribution systems and maintenance of power plants, and other activities that enhance Aquila's ability to provide safe, reliable energy service. Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving customers in seven states and in Canada, the United Kingdom and Australia. The company also owns and operates power generation assets. More information is available at www.aquila.com. CONTACT: AQUILA, INC. Investor Contact: Neala Clark Phone: 816/467-3562 AUSTIN REED: Grandson of Founder Issues Statement of Interest ------------------------------------------------------------- Nigel Robertson, grandson of the founder of Austin Reed, ignored the deadline for bids set by the company's financial advisor by issuing a statement of interest in the auction five days after the said date. In a statement to the Stock Exchange, Mr. Robertson said he had a potential interest in acquiring the entire issued share capital of Austin Reed, which may or may not lead to an offer being made for the company. Close Bros, Reed's financial adviser intended to distribute financial information to any short listed bidders so that they could refine their plans prior to a formal bid, after the deadline expired. Previously, Mr. Robertson said: "It may be a deadline for Close Bros, but it is not a deadline for us. Austin Reed is a public company and should be looking to maximize shareholder value. If the bid comes next week they will still have to look at it." Austin Reed has enjoyed popularity among 20th century celebrities until business began to slow down, leading to full-year pre-tax profits that were down from GB8.95 million to a lowly GBP7.52 million in line with forecasts. BRITISH AIRWAYS: Issues Statement on Future of Concorde ------------------------------------------------------- Lord Marshall, chairman, British Airways, issued Tuesday a response to the chairman of Virgin Atlantic, Sir Richard Branson's letter on the future of Concorde operations. Lord Marshall said: "British Airways carried out an in-depth review of Concorde operations with the manufacturers. Regrettably this clearly established that there was no realistic prospect for the operation of Concorde services beyond October 2003 whether by us or any other operator. He also said: " It is clear that the fleet cost British Airways considerably more than the sum of one pound which has appeared in the press recently. "In fact the British Airways Board paid the manufacturers over GBP155 million for the aircraft. Over the course of the succeeding 27 years, British Airways has invested in excess of GBP1 billion into the Concorde operation. Making reference to an arrangement between the British Airways Board and the Government dated 17 January 1980 in which the airline provided an audited detailed statement of Concorde's operations, Lord Marshall said: "This arrangement with Government was terminated in March 1984 with the payment by British Airways of a further sum of GBP16.5 million for the remaining spares inventories. "Since then there has been no current statement on the results of the Concorde operation to which Sir Richard refers. "Everyone at British Airways is sad that Concorde will no longer be in the air beyond October 2003." ***** British Airways announced last month the retirement of its Concorde fleet of seven aircraft with effect from the end of October 2003. The airline said that its decision had been made for commercial reasons with passenger revenue falling steadily against a backdrop of rising maintenance costs for the aircraft. CONTACT: BRITISH AIRWAYS Phone: +44 (0)208 738 5100 (office hours) +44 (0)845 77 999 77(out of office hours) CARLTON COMMUNICATIONS: Regulator Inquires into Proposed Merger --------------------------------------------------------------- Statement of Issues and Hypothetical Remedies The Competition Commission has sent issues letters, to Granada and Carlton, as part of its inquiry into their proposed merger. The letters also list some hypothetical remedies. Such letters are always sent before the Commission has reached any conclusions and are designed to highlight matters that have been identified for further consideration. This statement is being made public to give interested parties the opportunity to bring to the Commission's attention, in the next two weeks, any further points that they wish to raise. The Commission has reached no conclusions about whether any matters operate or may be expected to operate against the public interest and will not do so until after it has discussed these issues with the parties concerned. The issues that the Commission intends to consider are: a) The appropriate definition of the economic markets affected by the proposed merger, in particular: -- whether television advertising - as opposed to ITV advertising, or all display advertising - is the relevant market, and whether its geographic extent is the UK or England and Wales; -- whether the geographic market for program production is the UK or whether it is part of a wider market; -- whether the geographic market for studio facilities is regional or whether it is part of a wider market. b) Whether the proposed merger is likely to affect competition in any of the markets identified, and, in particular: -- whether Carlton and Granada currently compete for advertising revenue or share in London and in the regions; and, if so whether the proposed merger can be expected substantially to lessen that competition; -- whether, as a consequence, it is likely to lead ultimately to a significant rise in prices, or reduction in quality, or levels of service, for all - or at least some - advertisers and/or media buying agencies; -- whether any practices - such as price discrimination, bundling airtime sold to media buying agencies and/or advertisers, or predatory pricing - may be expected to come into existence or be exacerbated as a result of the proposed merger; including whether the merged entity will be able to manipulate station average prices - and/or the discounts offered from them - to its own advantage; or -- whether the merged entity will end the station average price system and impose new arrangements for selling airtime that disadvantage media buying agencies and/or advertisers; -- whether there are significant barriers to entry or expansion in the relevant markets; -- whether there are identifiable trends in the development of the relevant markets that might affect competition in the future; -- whether the increased influence that the merged company would have within the ITV network - as the owner of 11 of the 15 regional licenses - might be expected to restrict competition between in-house and independent production companies, or whether the other ITV licensees will be adversely affected; -- whether, as a result of the market conditions created by the proposed merger - taken together with existing sales practices, such as TV advertising share deals - the competitive position of other broadcasters, other ITV licensees and/or independent production companies, would be seriously weakened; -- whether future competition for ITV licenses is likely to be constrained; -- whether the proposed merger could be expected to operate to the detriment of advertisers, media buying agencies, viewers, users of studio facilities, competitors and/or other participants in the broadcasting and advertising sectors, in any other way. c) Whether any potentially unwelcome consequences of the proposed merger might be constrained sufficiently to avoid detriment to the public interest: -- by advertisers or media buying agencies having or acquiring sufficient countervailing buyer power; -- by their being able to use alternative TV channels to substitute for what the merging parties currently offer to advertisers; or -- by any other developments that are likely to occur; -- whether the merged group would be constrained from increasing prices by the limits imposed on ITV advertising airtime, and/or the current mechanism for pricing TV advertising. d) Whether there are expected to be benefits from the proposed merger and, if so: -- what are they likely to be; -- to whom will they accrue; and -- whether they can be achieved only as a result of the merger. In the event of the Commission finding that the proposed acquisition was expected to operate against the public interest, amongst the remedies that might be considered to deal with the adverse effects identified are: -- a complete ban on the proposed merger taking place; -- or, as an alternative a divestment of both of the advertising sales houses that the merging parties currently operate, to be run, in future, as independent entities, and/or adherence to a code of conduct designed to protect the position of the smaller ITV licensees and the independent production companies; together with any other remedies - structural or behavioral - that might be advanced by the parties to the proposed merger, or by others, which might address possible adverse effects of the proposed merger on advertisers, media buying agencies, other ITV licensees, other broadcasters and independent program producers. DAWSON INTERNATIONAL: Chairman Issues Statement of Reassurance -------------------------------------------------------------- Dawson International PLC's chairman, Ian Irvine, made the following statement at this year's Annual General Meeting: "The losses incurred during 2002 were very disappointing. The reasons for this are well documented in the annual report. The important point to make is that they must be balanced against the significant strategic achievements made during the year, which have moved the business forward and laid strong foundations to generate the growth that will create long-term shareholder value. "In summary these comprise: the commercial and creative transformation at Ballantyne and the appointment of a new Italian based design, commercial and marketing team; investment in the new sourced knitwear collection DCC (Dawson Cashmere Collection) aimed at growing market share in Europe; the completion of a two year integration plan in the fibres and yarn operation involving investment in a custom-built cashmere dehairing factory, new yarn spinning equipment, the implementation of a new IT system and an extension to the cashmere fibres product range. "These foundations are delivering positive results in 2003 with Ballantyne winning new customers and increased orders. Similarly, volumes and margins at Todd & Duncan are ahead of last year and the acquisition of the D B Holdsworth cashmere operation is generating incremental business in our fibre sales. The financial improvement from these will be impaired by escalating pension charges which are forecast to be approximately GBP2 million higher than in 2002. Despite the net impact of these factors it is not expected that the business will return to profit in the current year." CONTACT: DAWSON INTERNATIONAL PLC Lochleven Mills KINROSS KY13 8GL Scotland Phone : +44 (0) 1577 867000 Fax: +44 (0) 1577 867010 E--mail: enquiries@dawson-international.co.uk GLAXOSMITHKLINE PLC: Makes Strong Start to 2003 With Q1 Results --------------------------------------------------------------- -- Business Performance* EPS of 21.8 Pence - Growth Of 26% CER GlaxoSmithKline plc announces its results for the first quarter ended 31st March 2003. The full UK GAAP results (statutory results) are presented under 'Profit and loss account' on page 6. The business performance and statutory results are summarised below and the commentary which follows is on a business performance basis unless otherwise stated. FINANCIAL RESULTS Q1 2003 Q1 2002 Increase GBPm GBPm CER% GBP% ------ ------ ------ ------ Turnover 5,222 5,110 8 2 Business performance Trading profit 1,807 1,615 23 12 Profit before tax 1,774 1,593 22 11 Earnings per share 21.8p 19.0p 26 15 Statutory results Trading profit 1,702 1,440 30 18 Profit before tax 1,669 1,430 29 17 Earnings per share 20.5p 17.1p 32 20 Q1 2003 HIGHLIGHTS -- Strong start to the year with pharmaceutical turnover up 9% to nearly GBP4.5 billion. Consumer Healthcare sales up 6% to GBP756 million. -- Broad pharmaceutical portfolio enabled GSK to deliver strong growth despite generic competition to Augmentin. Seretide/Advair is now GSK's number one product with sales of GBP514 million (up 48%). -- Effective cost control resulted in trading profit growth of 23% on sales growth of 8%. -- Weak US dollar significantly impacted performance in the quarter in sterling terms. -- R&D day date set for 3rd December in the UK and 4th December in the USA. * Business performance, which is the primary performance measure used by management, is presented after excluding merger items, integration and restructuring costs and disposals of businesses. Management believes that exclusion of these items provides a better comparison of business performance for the periods presented. Statutory results include these items. In order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth. This represents growth calculated as if the exchange rates used to determine the results of overseas companies in sterling had remained unchanged from those used in the previous year. All commentaries are on a business performance basis and in terms of CER unless otherwise stated. FIRST QUARTER PERFORMANCE 2003 Commenting on the performance for the quarter, JP Garnier, Chief Executive Officer, said: 'I am delighted with the very strong start that GSK has made to the year. GSK continues to deliver extremely solid financial performance based on a strong and broad portfolio of products. At the same time, effective cost control is continuing to improve profitability. We remain focused on maturing our promising early stage R&D pipeline and we look forward to giving more details of our progress in this area at our R&D day in December. GSK has also just announced yet another reduction in the not-for- profit prices of our HIV/AIDS medicines. By working to reduce the price of Combivir to 90 cents a day, we have again demonstrated our commitment to making vital medicines more affordable in the developing world.' STRONG SALES FROM BROAD PHARMACEUTICAL PRODUCT PORTFOLIO -- Overall pharmaceutical sales grew 9% to GBP4.5 billion. -- In the United States, which represented 53% of GSK's total pharmaceutical business, sales grew 12%. Major therapeutic franchises delivered double-digit percentage sales growth in the USA, except anti-bacterials owing to generic competition to Augmentin. US growth benefited from wholesaler stocking patterns on some products. Underlying US growth is estimated to be in the high single digit percentage range. -- In Europe, sales grew 1% reflecting weak performance in several markets including Germany where de-stocking ahead of healthcare reforms led to a 10% fall in sales. Sales in France were flat due to increased generic competition to Augmentin in the first quarter. However this was offset by good growth in Central & Eastern Europe (up 13%) and Southern Europe (up 9%). -- Sales in International markets increased by 9%, driven by the much improved performance in Latin America where sales increased 33% compared with the first quarter last year due in part to a recovery in trading conditions in Mexico. Growth was also strong in Japan (up 9%) and Canada (up 12%). KEY PRODUCTS DRIVING GROWTH -- Seretide/Advair continued to perform exceptionally well and is now GSK's number one product, with sales of GBP514 million in the first quarter. In the USA, Advair sales grew 71% to GBP292 million. Seretide also continued to perform well in Europe (up 17%) and International markets (up 52%). Seretide/Advair's superior efficacy profile continues to drive sales growth. Sales of Seretide/Advair, Flixotide/Flovent and Serevent combined grew by 22%. GSK continues to progress applications for the use of Seretide/Advair to treat Chronic Obstructive Pulmonary Disease (COPD), with EU approval expected shortly. In the USA, following an encouraging meeting with the FDA this quarter, GSK will submit additional data in the next few weeks. In addition, GSK expects to file for approval of a paediatric indication for Advair in the USA around mid-year. -- Seroxat/Paxil, GSK's leading product for depression and anxiety disorders, continued to drive growth in the CNS therapy area, with sales of GBP490 million, up 20% globally and 25% in the USA (helped by wholesaler stocking patterns). Successful conversion to Paxil CR continued, with the product now representing 35% of new prescriptions for Paxil in the US market. International sales of Seroxat grew 23%, helped by the product's continued success in the Japanese market. -- Avandia and Avandamet, GSK's oral anti-diabetes products, continued to grow well with global sales up 28% to GBP226 million in the quarter. In the USA, the launch of Avandamet has helped increase GSK's share of the oral diabetes market to approximately 10%. The use of Avandia in combination with insulin was approved in Q1 2003, which means Avandia now has the full range of indications in the US market. -- HIV products performed well, with sales growing 13% to GBP375 million. Sales of Trizivir, GSK's triple combination therapy, grew 43% to GBP94 million. -- Augmentin sales declined 42% to GBP218 million. In the USA sales declined by 64% due to generic competition from July last year. The decline has been mitigated by the strong performances of Augmentin ES and XR, which now represent more than 30% of the total number of prescriptions being written for branded and generic Augmentin. -- GSK has received positive news on several of its fastest growing products this quarter. An FDA approvable letter has been received for the use of Lamictal (sales of GBP130 million, up 37%) to treat bipolar disorder and approval is expected in the next few months. The FDA has also approved Valtrex (GBP110 million, up 23%) for the suppression of recurrent genital herpes in HIV-infected individuals and Coreg (GBP84 million, up 57%) for reducing the risk of death among heart attack patients with impaired cardiac function. -- Other key products that are performing well and contributing to growth include Wellbutrin (sales of GBP216 million, up 30%), and Zofran (GBP182 million, up 24%). NEW PRODUCT GROWTH OPPORTUNITIES -- Levitra. Following European approval, Levitra - the PDE-5 inhibitor for the treatment of erectile dysfunction being co- promoted by GSK and Bayer - was launched late in the quarter in several key markets, including the UK and Germany. GSK continues to work with the FDA with a view to launching in the USA later in the year. -- Avodart, a DHT inhibitor for the treatment of symptomatic benign prostatic hyperplasia was launched in the USA and some European markets in Q1. In the USA, Avodart has reached an 11% share of new prescriptions in the 5-alpha reductase inhibitor class. The first patients were enrolled in March for the REDUCE multi-national Phase III trial for the use of Avodart in reducing the risk of prostate cancer. -- Pediarix, the first 5-in-1 vaccine introduced in the USA, was launched in January. In February, the Centers for Disease Control and Prevention Advisory Committee on Immunisation Practices voted unanimously to include Pediarix in the Vaccine for Children program. -- Wellbutrin XL is on track for launch in the USA in the second half of 2003. GSK believes that XL's sales will be driven by its differentiated profile as the first and only once-daily anti- depressant with a low incidence of sexual dysfunction and weight gain, two of the most common side effects of other anti- depressants. -- During the quarter, the FDA accepted filings for Ariflo, a new treatment for COPD, and 908, a new protease inhibitor for the treatment of HIV. CONSUMER HEALTHCARE IMPROVES PERFORMANCE Consumer Healthcare recorded sales of GBP756 million, up 6%, reflecting stronger demand for the Group's products and also helped by the acquisition of a number of dermatological products. Sales in North America rose 6%; Europe 3% and International 10%. Oral care sales were up 2% to GBP252 million, a 5% fall in Aquafresh sales being offset by sales growth from Macleans, Sensodyne, Polident and Corega. Nutritional healthcare products grew 2% to GBP135 million, driven by a 7% rise in Lucozade sales. Over-the-counter medicine sales were GBP369 million up 10%. EXCELLENT PROGRESS ON COST CONTROL Trading profit and earnings per share Business performance trading profit grew 23% to GBP1,807 million on turnover growth of 8%. The trading margin improved three percentage points to 34.6% compared with 31.6% in Q1 2002. This improvement came principally from cost of sales, which declined by 4%, and selling general and administration (S,G&A) costs, which increased 5% while turnover grew 8%. Cost of sales reduced by 1.5 percentage points on sales, this benefit coming from continued merger, manufacturing restructuring and other cost savings and a more favorable product mix than in the comparative period. S,G&A expenditure reduced by 0.9 percentage points on sales as a result of cost savings arising from merger implementation and the operational excellence cost saving program. Net other operating expense was GBP20 million in the period compared with GBP5 million in first quarter of 2002. This included the profit from the sale of GSK's holding in Affymetrix, which was more than offset by additional provisions for legal matters. Business performance EPS of 21.8 pence increased 26% in CER terms and 15% in sterling terms. The adverse currency impact on EPS of 11% in the period reflected the significant weakening of the US dollar relative to last year. Statutory results, which include merger and manufacturing restructuring costs, delivered a trading profit of GBP1,702 million on turnover of GBP5,222 million. Taken together with other expenses, taxation and product divestments this resulted in EPS of 20.5 pence compared with 17.1 pence in the first quarter of 2002. Merger and manufacturing restructuring costs were lower in the period than in Q1 2002, reflecting movement towards the completion of these programs. The sterling based growth in EPS of 20% was lower than the CER based growth in business performance EPS as a result of the overall negative impact of currencies. Merger and restructuring Costs of GBP99 million were incurred in the period in respect of merger and manufacturing restructuring compared with GBP165 million in the same quarter last year. GSK remains on track to deliver forecast total annual merger and manufacturing restructuring savings of GBP1.8 billion by the end of the year. These costs and benefits exclude the effect of the Block Drug acquisition. Currencies The first quarter 2003 results are based on average exchange rates of GBP1/$1.60 and GBP1/Euro 1.49 which compare with average rates for the first quarter of 2002 of GBP1/$1.43 and GBP1/Euro 1.64. Exchange rates at the end of the quarter were GBP1/$1.58 and GBP1/Euro 1.45. If exchange rates were to hold at March 31, 2003 levels for the remainder of 2003 the negative currency impact on earnings per share growth would be approximately 3-4% for the full year. Dividend The Board has declared a first interim dividend of 9 pence per share. This compares with a dividend of 9 pence per share for Q1 2002. The equivalent dividend receivable by ADR holders is 28.506 cents per ADS based on an exchange rate of GBP1/$1.58364. The dividend will have an ex-dividend date of May 7, 2003 and will be paid on July 3, 2003 to shareholders and to ADR holders of record on May 9, 2003. Earnings guidance for 2003 GSK's published earnings guidance for 2003 is for high single digit percentage growth in business performance earnings per share at constant exchange rates, assuming there is no generic competition to Paxil in the USA (see 'Legal proceedings' on page 15). If a generic launch became imminent, GSK would reassess this guidance. Share buy-back program In October 2002 GSK commenced a new GBP4 billion share buy-back program. Of this new program, GBP219 million was spent in 2002 and GBP262 million in the first quarter of 2003. The exact amount and timing of future purchases will be determined by the company and is dependent on market conditions and other factors. GSK's CONTINUING GLOBAL COMMITMENT TO IMPROVING ACCESS TO MEDICINES During the quarter, GSK published its 'Corporate and Social Responsibility Report 2002 - The Impact of Medicines' confirming the diverse and extensive contribution the company is making to meet the needs of society across the globe. Key highlights of progress noted in the Report include: -- GSK's global investment of GBP239 million in 2002 in community activities, product donations and charitable contributions - more than any other UK company. -- GSK's donation of 66 million tablets of albendazole to 31 countries in 2002, as part of the company's $1 billion commitment to eliminate lymphatic filariasis (elephantiasis). -- Increased shipments of Combivir HIV/AIDS treatment at preferential prices to the developing world to nearly 6 million tablets (up from 2.2 million in 2001). To date, GSK now has 131 arrangements to supply preferentially priced ARVs to 55 countries (49 of these arrangements were made during 2002). On April 28, 2003, GSK announced a further reduction of up to 47% on the not-for-profit prices of its HIV/AIDS medicines for the world's poorest countries. The latest reduction lowers the not- for-profit price of Combivir - the backbone of WHO-recommended HIV/AIDS treatment regimens - to 90 cents per day. GlaxoSmithKline - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For company information including a copy of this announcement and details of the company's updated product development pipeline, visit GSK at http://www.gsk.com ***** Brand names appearing in italics throughout this document are trade marks of GSK or associated companies with the exception of Levitra, a trade mark of Bayer AG, which is used under license by the Group. To See Financial Statement: http://bankrupt.com/misc/GlaxoSmithKline_Plc.htm CONTACT: European Analyst / Investor Duncan Learmouth Phone: (020) 8047 5540 Philip Thomson Phone: (020) 8047 5543 Anita Kidgell Phone: (020) 8047 5542 US Analyst / Investor Frank Murdolo Phone: (215) 751 7002 Tom Curry Phone: (215) 751 5419 INTERSHOP COMMUNICATIONS: Narrows Net Loss to EUR8.4 Million ------------------------------------------------------------ Intershop Communications AG announced financial results for the first quarter of 2003, ended March 31, 2003. First quarter 2003 revenue totaled Euro 6.4 million, compared with revenue of Euro 12.0 million in the fourth quarter of 2002 and Euro 12.2 million in the first quarter of 2002. First quarter 2003 license revenue totaled Euro 1.3 million, compared to Euro 6.5 million in the fourth quarter of 2002 and Euro 6.2 million in the first quarter of 2002. Service revenue totaled Euro 5.1 million in the first quarter of 2003, compared to Euro 5.5 million in the fourth quarter of 2002 and Euro 6.0 million in the first quarter of 2002. Intershop recorded first quarter 2003 total operational costs (cost of revenue and operating expense) of Euro 14.6 million, compared to Euro 13.5 million in the previous quarter and Euro 25.6 million in the first quarter of 2002. Intershop reported a first quarter 2003 net loss of Euro 8.4 million or a net loss of Euro 0.44 per share. This compares to a net loss of Euro 1.0 million or a net loss of Euro 0.05 per share in the fourth quarter of 2002 and a net loss of Euro 13.3 million or a net loss of Euro 0.75 in the first quarter of 2002. The Company reported a first quarter 2003 EBITDA loss (earnings before interest, taxes, depreciation, and amortization) of Euro 7.2 million, marginally higher than the Euro 6 million to 7 million forecasted by management on April 2, 2003. This compares to a positive fourth quarter 2002 EBITDA result of Euro 0.3 million and an EBITDA loss of Euro 9.4 million in the first quarter of 2002. As of March 31, 2003, Intershop recorded cash, cash equivalents, marketable securities, and restricted cash totaling Euro 16.7 million, as compared to Euro 22.5 million as of December 31, 2002. Against the backdrop of continuing weakness in global IT spending and weaker-than-expected first quarter 2003 results, Intershop now anticipates that total revenue for the full year of 2003 will be slightly lower than total revenue for the full year 2002. For fiscal year 2003, Intershop expects to incur an EBITDA loss of approximately Euro 5.0 million. Previously, Intershop had expected full year 2003 revenue to be flat year over year and EBITDA for fiscal year 2003 to break even with sales. About Intershop Communications Intershop Communications (Nasdaq: ISHP; Prime Standard: ISH1) is the market leader in Unified Commerce Management, which can create strategic differentiation for companies by integrating e- commerce processes across the extended enterprise. Intershop Enfinity, based on the best practices of Unified Commerce Management, enables companies to manage multiple business units from a single commerce platform, optimize their business relationships, improve business efficiencies and cut costs to increase profit margins. By streamlining business processes, companies can achieve a higher return on investment at a lower total cost of ownership, increasing the lifetime value of customers and partners. Intershop has more than 300 enterprise customers worldwide in a broad range of industries, including multichannel retail and high technology. Customers including Hewlett-Packard, Bosch, BMW, TRW, Bertelsmann, Otto and Homebase have selected Intershop's Enfinity as the cornerstone of their global e-commerce strategies. More information about Intershop can be found on the Web at http://www.intershop.com CONTACT: INTERSHOP COMMUNICATIONS Klaus F. Gruendel Phone: +49-40-23709-128 Fax: +49-40-23709-116 E-mail: k.gruendel@intershop.com MORGAN CRUCIBLE: Sells Superconductor Business to Bruker Biospin ---------------------------------------------------------------- The Morgan Crucible Company plc has agreed to dispose of the operations comprising its Superconductor Business, owned by Vacuumschmelze GmbH & Co. K.G, in Hanau, Germany, to Advanced SuperConductors Project Hanau GmbH & Co K.G, a subsidiary of Bruker Biospin GmbH located in Karlsruhe, Germany. The business produces and supplies low temperature superconducting wire and tape used in a variety of applications including medical and analytical equipment. It is also a leader in developing and supplying the emerging next generation higher temperature superconducting products, for which turnover in 2002 was approximately Euro 0.6million (GBP0.4million) The sale is made on a debt and cash free basis, for an initial consideration of Euro 28.0 million (GBP19.4 million) which will be paid in cash at closing. Further amounts would also be payable limited to 10 per cent of sales of higher temperature superconducting products made by the business, in each of the calendar years until 31 December 2010. The maximum amount of this additional and contingent consideration will be capped at Euro20 million (GBP13.8 million). As at 4 January 2003 the book value of assets being sold amounted to approximately Euro20.4 million (GBP14.1 million). The business generated an operating profit of Euro2.7 million (GBP1.9 million) in the year to 4 January 2003. This transaction is subject to regulatory clearance and a period of employee consultation as is standard under German Law and closing is expected to take place by 30 June 2003. The proceeds from the disposal will be used by Morgan to reduce Group net debt, which was GBP251.6 million at 4 January 2003. Warren Knowlton, Morgan's Chief Executive, commented: "Following the refinancing in March and disposal of six soft coatings businesses announced recently, our immediate focus remains on removing complexity, cost reduction, and cash management. This disposal is a further step in our programme of non-core business disposals, aimed at reducing group debt". CONTACT: MORGAN CRUCIBLE Nigel Young, CFO Phone: 01753 837 000 BRUNSWICK Jon Coles/Harry Chathli Phone: 020 7404 5959 SSL INTERNATIONAL: Expects Increased Sales for the Year to March ---------------------------------------------------------------- SSL International plc the manufacturer and distributor of healthcare products is issuing a trading statement ahead of the announcement of its preliminary results, which will be on June 5, 2003. SSL now expects sales for the year to March 31, 2003 to be GBP622 million. Consumer sales are GBP360 million, 6% ahead of last year. Underlying growth in consumer sales is close to 3% after adjusting for elimination of trade loading last year, with Durex and Scholl contributing a combined underlying sales growth of 4%. Medical sales are GBP197 million, 7% ahead of last year's reported numbers. On an underlying basis, surgical glove sales are just ahead of last year in a very tough pricing environment, resulting in underlying medical sales being held at last year's level. It is expected that the operating margin will be around 13% of sales, as cost cutting programs continue on track. Net debt is expected to be around GBP300 million. On March 31, 2003, SSL announced the conclusion of a strategic review undertaken by the Board. It concluded that the best way to create value for shareholders was to realise the value of the Medical division by means of disposal and to focus resources on the Consumer division. This process is now well under way and further information regarding the effects of the disposal will be given at the preliminary results announcement in June. CONTACT: SSL INTERNATIONAL PLC Phone: (020 7367 5760) Brian Buchan, Chief Executive Garry Watts, Group Finance Director Jan Young, Head of Investor Relations THE MAITLAND CONSULTANCY Phone: (020 7379 5151) William Clutterbuck or Brian Hudspith STODDARD INTERNATIONAL: Reports GBP5 MM Loss on Results ------------------------------------------------------- Preliminary results for the year ended December 31, 2002 -- Turnover down 10% at GBP32.3m due to difficult trading conditions and withdrawal from low margin business. -- Pre-exceptional operating loss before tax of GBP2.2m (2001 - GBP0.3m profit) due to lower sales and current inefficiencies of operating on three sites. -- Program to consolidate the company on to a single site moving forward with net exceptional costs of GBP1.9m incurred. Funding in place to complete the consolidation by end 2003. -- Loss on ordinary activities of GBP5.1m (2001 - GBP2.2m profit) * Property disposal programme progressing as anticipated with likely overall proceeds of GBP10 - GBP13m expected to be realised over next 12 - 18 months. CHAIRMAN'S STATEMENT As announced last year we have begun a major restructuring of the Company to consolidate three sites into one and thereby drive substantial costs from our business. We expect to complete this relocation to the Riverside site in Kilmarnock by the end of 2003. This move is essential for the Company's future as are the cash proceeds from the sale of the resultant surplus sites. Until this restructuring is complete the cost base of the Company will remain high and that coupled with the toughest trading conditions in recent years and exceptional costs incurred in the consolidation process itself resulted in the overall loss of GBP5.1m for 2002 (2001 - GBP2.2m profit). Turnover for 2002 fell by 10% at GBP32.3m (2001 - GBP36.0m) broadly in line with the decline reported for the first half of the year. Both our retail and contract businesses at home and overseas were affected. A pre-exceptional loss before tax for the year of GBP3.1m was recorded (2001 - GBP0.7m loss). In addition exceptional costs of GBP1.9m were incurred during the year in relation to the restructuring of our manufacturing operations. Total net debt at the year-end rose to GBP12.6m (2001 - GBP10.8m). The directors do not recommend the payment of any dividend. The decrease in sales was due primarily to two main factors. Firstly we experienced a continuing reduction in demand for traditional axminster products. This downward trend has been established for several years as consumer preference moves towards less patterned and cheaper tufted products and led to the decision in early 2002 to close our Elderslie factory and relocate a downsized axminster production facility to our Riverside plant in Kilmarnock. The other main reason for the fall in sales was the planned withdrawal from low margin unbranded business with certain large customers following the decision to rebalance our manufacturing capacity. However we have continued to invest in our key Colortec products during the year and we achieved further growth, especially in our UK retail business. The full cost benefits of the restructuring will be realised from 2004 once manufacturing on the two surplus sites ceases and closure is effected. Therefore we continue to carry most of the operating costs of the three sites at present. However, manufacturing at Elderslie has ceased recently and we anticipate the full consolidation onto one site by the end of 2003. The operating costs incurred in 2002 do not reflect therefore the underlying cost profile that we anticipate from 2004 onwards. We are progressing the disposal of the two surplus sites. The Mill Street site was sold to Safeway at the end of 2001 and as part of that arrangement we continue to operate on the site under licence. Outline planning consent for a food retail store was obtained in December 2002. This was the key condition of the disposal and the final net payment from Safeway of GBP2.9m will be due once the remaining consents are obtained and we vacate the site later this year. The outline planning application for the main part of the Elderslie site will be considered by the Council's Planning Committee shortly and has been recommended for approval by the Council planning officers. Subject to that approval the bulk of the proceeds for the site would be received in late 2003/early 2004. The expected proceeds from the sale of the entire site remain at between GBP7m and GBP10m. As previously highlighted we have taken action to address the under-funding position in our defined benefit pension scheme. The scheme was closed to new entrants in 2002 and a revised investment strategy put in place reducing the level of equity investment. Plans are being finalized currently to address future pension provision for employees, which will involve lower cost and risk to the company. The company is going through a major reorganization to reposition itself for the future by slimming down the cost base and reducing its substantial debt burden. Our banks remain supportive of the company's strategy and we have recently secured additional funding assistance related to the relocation from HBOS and Scottish Enterprise Ayrshire. This remains a challenging time for the company in a fast changing marketplace. We believe that the strategy adopted, namely developing key markets, investing in new manufacturing technology, achieving cost savings through site rationalization and reducing borrowings through surplus site disposals, represents the most appropriate response to those market conditions and will be for the long-term benefit of shareholders. I would like to thank our customers and employees for their support and understanding during this time of great change for the company. Alan Scott Chairman Operating Review 2002 was a difficult year not only in a trading sense but also as a result of major restructuring and rationalization work that began in the year and will complete later in 2003. The depressed trading position at the half year continued and the historically busy period prior to Christmas did not generate the sales level anticipated. TRADING Retail market conditions were weaker than expected, demand for hard flooring and textured plain carpets remained strong and the decline in patterned carpets continued. With overcapacity in the flooring sector, competition was fierce. We experienced some short-term difficulties in servicing our customers when implementing the new IT software system, although we are now achieving benefits of our investment in the integrated system. There was also some disruption to stock service levels associated with the restructuring and with external yarn supplies that resulted in delays to product launches. Our retail business overall fell by 9% at GBP26.1m although selling prices generally were maintained against last year. Following the trend of the last two years, axminster sales were 22% lower than 2001, however this decline was partly offset by an encouraging 18% growth in our key retail Colortec programs. The profile of our customer base also changed during the year with sales to independent buying groups and independent retailers up 6% and 2% respectively. Sales to the multiples were down 28% mainly through our planned exit from some low margin unbranded business. The Louis de Poortere program was significantly revamped during the first half of 2002. Although sales for the year were some 6% below 2001, customer reaction to the relaunch was positive and, in the second half, sales were 7% higher than the equivalent period in 2001. At the end of the year we entered into an agreement with Gaskell plc, a business well established in the flooring sector, to share their warehouse facilities based in Kidderminster and their distribution network. This will provide an enhanced service to our customers including named-day deliveries. This agreement creates a cost effective solution for both our distribution and warehousing requirements and avoided the need for substantial investment in our own warehousing. The contract sector both at home and overseas was disappointing with many hotel groups slow to release refurbishment work during 2002, as budgets were restricted. As a result price competition was fierce. Turnover was down 13% at GBP6.3m with the economic downturn in the USA hitting in particular with a drop in sales of 23% to GBP2.4m in that market. Several initiatives are underway with product and market developments particularly around our Colortec wool pattern tufted technology where we remain the market leader. Despite market conditions there are opportunities both in the UK and overseas. We will continue to develop closer relationships with supply chain partners RESTRUCTURING The difficulties facing UK manufacturing are widely acknowledged. Within our sector we have seen further rationalisation as a response to market conditions. Those in the sector with a greater exposure to weaving have been hit harder than those in tufting vindicating our decision to substantially downsize our weaving operation. Our major short-term challenge during 2002 has been to fund the substantial restructuring program while at the same time continuing to develop and manage our business in tough trading conditions. Standing still is not an option. Substantial progress has been made already with the move. The Elderslie woven manufacturing operation ceased in April 2003 and we will complete the final closure of the whole site, including the head office and warehouse, by the end of 2003. We also expect to complete the relocation of the spinning mill in Kilmarnock and install the new dyehouse in 2003, which will be the final element of the restructuring program. Once established at Riverside, Kilmarnock we will employ a workforce of around 500. The substantial reduction in labour and overhead costs resulting from the restructuring will impact in full from 2004 onwards. 2003 will, however, be another transitional year with further one-off costs and inefficiencies being incurred before the company has been fully reshaped for the start of 2004. Alan Lawson Chief Executive Financial Review TRADING RESULTS Turnover in the year fell 10% from GBP36.0m to GBP32.3m due to the impact of lower axminster sales partly offset by growth in sales of Colortec tufted products. This decline in axminster was spread across domestic and overseas markets. Gross profit before exceptional items declined by GBP2.5m from the previous year and in percentage terms fell from 23% to 18% of sales. This was due partly to the lower axminster sales but also inevitable inefficiencies arising from the ongoing restructuring. A large element of these inefficiencies in 2002 related to labour costs, which we will reduce during the course of 2003. Our anticipated final employee numbers following the restructuring are expected to be around 500 compared to an average of 689 during 2002. Overheads were tightly controlled during the year. Selling and distribution costs were reduced by 8% to GBP6.6m while administrative expenses were down 7% at GBP1.4m. EXCEPTIONAL ITEM The exceptional operating cost of GBP1.9m (2001 - nil) related to costs incurred in the reorganization of the manufacturing facilities. GBP1.2m of this expenditure was redundancy costs from the closure of our Elderslie site. The post-operating exceptional item of GBP3.1m in the comparative period related to the profit on the disposal of the Kilmarnock properties to Safeway Stores plc. A final GBP2.9m of net proceeds from this disposal will become due to the company from Safeway when Safeway achieve all remaining consents for the properties and Stoddard give vacant possession. The board expects this to be achieved in the final quarter of 2003. Included within this final amount is GBP2.3m which was conditional on the anticipated consents and which will therefore be recognized in the accounts when payment is due. TAXATION AND DIVIDEND The company continues to carry forward substantial trading and capital tax losses, which are available to reduce future tax liabilities. The dividend charge of GBP124,500 (2001 - GBP124,500) represents the accrued dividends on the non-equity preference shares. No ordinary or preference dividends were paid during the year (2001 - nil). CASH FLOW AND FUNDING Net debt at the year-end increased to GBP12.6m (2001 - GBP10.8m) as a result of the losses incurred and the costs of relocation and restructuring partly offset by further property disposal proceeds. Capital expenditure at GBP1.6m (2001 - GBP3.5m) related mostly to setting up the new manufacturing facility in Kilmarnock and was partly funded by GBP0.8m of RSA grant received (2001 - GBP1.2m). A further GBP1.0m of the GBP2.5m term loan facility was drawn down during the year. EARNINGS PER SHARE The basic loss per ordinary share for the year including exceptional items was 7.8p (2001 - 3.1p earnings). There is no difference between the basic and diluted earnings per ordinary share. PENSION SCHEME The triennial actuarial valuation of the company's defined benefit pension scheme, due on 1 April 2003, is now underway but it is expected to show that, as a result of the substantial falls in equity markets over the last two years, the funding level of the scheme has reduced significantly. This is in line with many other schemes of this type across the UK. As a result it is likely that the company will recommence contributions to the scheme following confirmation of the valuation later this year. The scheme actuary has indicated that the scheme was 90% funded under the Government Minimum Funding Requirement ('MFR') regulations at 31 December 2002. If this remains the position it is intended that the contributions required to make good the MFR shortfall of GBP4.4m would be spread over 10 years as permitted under the regulations. Under the transitional arrangements of the new accounting standard FRS 17, the scheme had a deficit of GBP14.8m at 31 December 2002. This is an indication of the long term funding position of the scheme as at that date and reflects the particularly low levels of current equity markets. In the meantime it is intended that cash contributions to the scheme will be managed in line with the Government MFR regulations. Michael Stewart Finance Director CONTACT: STODDARD INTERNATIONAL Alan Lawson, Chief Executive Phone: 01505 577000 STODDARD INTERNATIONAL: Announce Major Plans to Restructure ----------------------------------------------------------- On April 16, 2002, we announced major plans to restructure and consolidate all operations onto one site in Kilmarnock and the closure of our Elderslie operation. This decision was the result of a 3 month strategic review of the business, instigated following very difficult market conditions for the whole carpet industry in 2001, which resulted in a particularly sharp decline in demand for woven products. We remain committed to our strategy, which is to focus on areas of technical innovation. We intent to strengthen our leading position in the world for wool-patterned tufting using the Colortec technology, which allows us to produce patterned carpet in a similar style to Axminster at a lower cost. We also intend to develop a modern yarn dyeing facility and build on our traditional reputation as a niche weaver of quality carpets for retail and commercial use. In this regard we have purchased new high speed Axminster looms. The restructured operations will concentrate on higher value manufacturing and at the same time generate significant overhead savings. Prospects 2002 will be a traditional year for Stoddard and while market conditions remain difficult the prospect of continued sales growth from Colortec tufted products remains encouraging, we believe the restructuring will have minimal impact on our customers. In the UK retail market we are currently launching seven new ranges, continuing our investment and refurbishment of our core programme. In the USA we remain focussed on the development of this key market in both retail and contract. In retail we are currently launching two new carefully researched ranges, produced exclusively for this market, the Brussels Wilton Edinburgh Collection and the Colortec range Stirling. At the heart of our strategy, we remain a design-led business committed to developing key market channels. The restructuring is an appropriate response to current trading conditions and the new base will have a bias towards new technologies and this, together with closer relationships with strategic partners, will create greater value for Stoddard in the long-term. THISTLE HOTELS: BIL Increases Offer To 130 P Per Share in Cash -------------------------------------------------------------- Introduction The board of BIL announces the terms of an increased* cash offer made by HSBC on behalf of BIL (UK), a wholly owned subsidiary of BIL, to acquire the whole of the issued and to be issued share capital of Thistle not already owned by the BIL Group. The Increased Offer The Increased Offer is made by HSBC on behalf of BIL (UK) on the following basis: for each Thistle Share 130 pence in cash** The Increased Offer values the whole of the existing issued ordinary share capital of Thistle at approximately GBP627.1 million. The Increased Offer Price represents approximately: -- a premium of 46.1 per cent. to Thistle's Closing Middle Market Price of 89 pence per share on 29 January 2003, the last business day prior to Investec re-rating Thistle based on 'potential for corporate action'; -- a premium of 30.0 per cent. to Thistle's Closing Middle Market Price of 100 pence per share on 20 February 2003, the last business day prior to the announcement by BIL that it was contemplating making an offer for Thistle; -- a premium of 7.9 per cent. to Thistle's Closing Middle Market Price of 120.5 pence per share on 29 April 2003, the last business day prior to the date of this announcement; -- a multiple of 9.4 times Thistle's 2002 pro-forma EBITDA; and -- a multiple of 30.7 times Thistle's 2002 pro-forma earnings. Save as set out in this announcement*, the Increased Offer is subject to the same terms and conditions as those set out in Appendix I to the Original Offer Document which shall be deemed to be incorporated in and form part of this announcement. General The Increased Offer remains open for acceptance until 3.00 p.m. (BST) on 2 May 2003. Thistle Shareholders who have not already done so should complete and return their Form of Acceptance as soon as possible. The Increased Offer is being made by this announcement and by the Increased Offer Document, which will be dispatched to Thistle Shareholders shortly, and by means of an advertisement to be placed in a national newspaper shortly. Thistle Shareholders who have already validly accepted the Original Offer need take no further action - their acceptances are deemed to be acceptances of the Increased Offer and, subject to the Increased Offer becoming or being declared unconditional in all respects, they will receive the Increased Offer Price for their Thistle Shares. The procedure for acceptance of the Increased Offer is set out in the Original Offer Document and the Form of Acceptance and will also be set out in the Increased Offer Document. Thistle Shareholders wishing to accept the Increased Offer before they receive the Increased Offer Document may do so by completing and returning one of the Forms of Acceptance that they have already received (together with the relevant share certificate(s) and/or other documents of title), in accordance with the procedure set out therein and on pages 17 to 20 of the Original Offer Document. Commenting on the announcement, Arun Amarsi, Chief Executive of BIL, said: 'The Increased Offer, at a premium of 46.1 per cent. to Thistle's January 29, share price, provides Thistle Shareholders with an excellent opportunity to realize the value of their investment in Thistle at a very attractive price. Our all-cash offer represents certain value for Thistle Shareholders, compared with the risk of retaining an investment in Thistle with its historic underperformance, compounded by a deteriorating competitive environment against a backdrop of increased geopolitical risk and economic uncertainty.' ***** *BIL (UK) reserves the right to extend, revise, amend, renew and/or increase the Increased Offer. ** (a) Under the Increased Offer, Thistle Shares will be acquired by BIL (UK) fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and other third party rights or interests and together with all rights attaching thereto including, without limitation, the right to receive and retain all dividends and other distributions (if any), announced, declared, made or paid after 4 March 2003, including the final dividend declared for the year ending 29 December 2002. (b) The Increased Offer will extend to any Thistle Shares unconditionally allotted or issued while the Increased Offer remains open for acceptance (or during such earlier period as BIL (UK) may, subject to the Code, determine) as a result of the exercise of options granted under the Thistle Share Option Schemes. Appropriate proposals will be made in due course to participants in the Thistle Share Option Schemes. The directors of BIL and BIL (UK) accept responsibility for the information contained in this announcement, save that the only responsibility accepted by them in respect of the information in this announcement relating to Thistle or the Thistle Group (which has been compiled from published sources) is to ensure that such information has been correctly and fairly reproduced and presented. Subject as aforesaid, to the best of the knowledge and belief of the directors of BIL and BIL (UK) (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. To See Conditions And Further Terms Of The Increased Offer: http://bankrupt.com/misc/APPENDIX_I.htm CONTACT: BIL Arun Amarsi Phone: +65 6228 1427 HSBC Neil Goldie-Scot Phone: +44 (0)20 7991 8888 Jan Sanders Marcus Ayre BRUNSWICK Jonathan Glass Phone: +44 (0)20 7404 5959 Simon Sporborg THISTLE HOTELS: Considers Response to Increased Offer from BIL -------------------------------------------------------------- The Board of Thistle* notes today's [Wednesday's] announcement by BIL International Limited of an increased offer for the shares in Thistle it does not own. The Board of Thistle* is consulting with its advisers to consider its response and will make a further announcement shortly. In the meantime, the Board of Thistle* recommends that shareholders take no action in relation to their Thistle shares. ***** * The Board of Thistle for these purposes comprises all of the directors of Thistle other than Tan Sri Quek Leng Chan and Mr Arun Amarsi, who in view of their positions as Chairman and CEO, respectively, of BIL have not participated in the deliberations of the board in relation to BIL's offer to acquire all of the shares in Thistle not already owned by BIL. Merrill Lynch International and Deutsche Bank AG are acting for Thistle Hotels Plc and for no-one else in connection with BIL's offer for Thistle Hotels Plc and will not be responsible to anyone other than Thistle Hotels Plc for providing the protections afforded to clients of Merrill Lynch International or Deutsche Bank AG or for providing advice in relation to such offer. CONTACT: THISTLE HOTELS PLC Phone: 020 7895 2304 Ian Burke, Chief Executive Officer MERRILL LYNCH INTERNATIONAL Phone: 020 7995 2000 Simon Mackenzie-Smith, Managing Director Richard Nourse, Managing Director DEUTSCHE BANK Phone: 020 7545 8000 Charles Wilkinson, Managing Director FINANCIAL DYNAMICS Phone: 020 7831 3113 Andrew Dowler Ben Foster S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee Gonzales, Editors. Copyright 2003. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *