R/A 2004 COVER A/W PLC 1 Financial Highlights 2005 2004 £000 £000 Turnover 313,012 260,595...

AnnualReport2003

AnnualReport2005

Growing Partnerships WorldwideRegistered office: Hesslewood Country Office Park,Hessle, East Yorkshire HU13 0PW, Telephone 01482 626511 Fax: 01482 626512Registered Number: 329377 www.fenner.com

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Annual R

eport 2005

Fenner is a world leader in reinforced polymertechnology.

Our strategy is to increase market share andtarget new value added product areas. We willcontinue to concentrate on growing thosebusinesses where we already demonstrateleadership through our skills in applications,design, materials technology and dedication tocustomer service as well as by carefully plannedacquisitions.

Advanced Sealing TechnologiesAdvanced Sealing Technologies

CHARLOTTETel: (1) 704 334 5353Fax: (1) 704 334 1733www.scandura.net

Tel: (44) 1482 781234Fax: (44) 1482 785438www.fennerdunlop.com/europe

Tel: (31) 512 585 555Fax: (31) 512 585 511www.fennerdunlop.com/europe

Tel: (86) 21 599 369 89Fax: (86) 21 599 367 34www.fennerdunlop.com/shanghai

Tel: (61) 3 9680 4500Fax: (61) 3 9689 9191www.apexfenner.com.au

Tel: (44) 1522 781800Fax: (44) 1522 510029www.james-dawson.com

Tel: (44) 113 249 3486Fax: (44) 113 248 9656www.fennerdrives.com

Tel: (44) 20 8941 2244Fax: (44) 20 8783 1669www.hallite.com

Tel: (49) 40 73 47 480Fax: (49) 40 73 47 48 49www.hallite.de

Tel: (27) 11 974 1902Fax: (27) 11 974 1900www.fenner.co.za

Tel: (27) 11 828 8950Fax: (27) 11 822 2013www. ksbpumps.co.za

ATLANTATel: (1) 404 294 5272Fax: (1) 404 296 5165www.gaduck.com


DETROITTel: 248 362 0170Fax: 248 362 4246www.hallite.com

HOUSTONTel: 281 446 6662Fax: 281 446 7034www.cdipolytek.com

Advanced Sealing Technologies

JamesD wsonaPANTONE 28060% TINT 280

Tel: (86) 21 599 369 89Fax: (86) 21 599 367 34www.james-dawson.com


C O N V E Y O R B E L T I N G E U R O P E


Tel: (91) 452 2464201Fax: (91) 452 2464204

C O N V E Y O R B E L T I N G A M E R I C A S

C O N V E Y O R B E L T I N G A U S T R A L I A

C O N V E Y O R B E L T I N G


Tel: (1) 705 645 4431Fax: (1) 705 645 3112www.scandura.net


AnnualReport2003

AnnualReport2005


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Annual R

eport 2005

























Tel: (91) 452 2464201Fax: (91) 452 2464204







AustraliaCONVEYOR BELTING

n Melbourne, AustraliaOver 20 stockholding branchesPrincipal products: Rubber ply beltsTechnical rubber products Conveyor services

n Sydney, AustraliaPrincipal products: Solid-woven PVC belts Conveyor services

ChinaCONVEYOR BELTING

n Shanghai, ChinaPrincipal products: Solid-woven PVC belts Nitrile covered PVC belts

PRECISION POLYMERS

n Shanghai, ChinaPrincipal products: Silicone hoses

IndiaCONVEYOR BELTING

n Madurai, IndiaPrincipal product: Solid-woven PVC belts

Southern AfricaCONVEYOR BELTING

n Johannesburg, South AfricaPrincipal products: Solid-woven PVC belts Nitrile covered PVC beltsRubber compound

KSB PUMPS


n Johannesburg, South AfricaEight branchesPrincipal product: Centrifugal pumps




Key:-Conveyor BeltingManufacturing facilitiesSales/service branches

Precision PolymersManufacturing facilitiesSales/service branches

Advanced SealingTechnologiesManufacturing facilitySales/service branches

PumpsManufacturing facilitySales/service branches

North America

n Atlanta, GeorgiaPrincipal products: Rubber ply beltsLightweight rubber belts

n Bracebridge, OntarioPrincipal products: Steel cord belts Rubber ply belts

n Charlotte, North CarolinaPrincipal product: Lightweight PVC belts

n Port Clinton, OhioPrincipal product: Rubber ply belts

n Toledo, OhioPrincipal products: Rubber ply belts Special profile belts

n Tlalnepantla, MexicoPrincipal product: Rubber ply belts

ADVANCED SEALS

n Detroit, MichiganPrincipal product: Hallite Dynamic Seals

n Houston, TexasPrincipal product: CDI Polytek Seals

EuropePRECISION POLYMERS

n Lincoln, UKPrincipal products: Precision beltsSilicone hosesIndustrial ductingIndustrial rubberproducts

n Poynton, UKPrincipal products: Silicone hoses

n Leeds, UKPrincipal products: Detachable link beltsExtruded belting

North AmericaPRECISION POLYMERS

n Manheim, PennsylvaniaPrincipal products: Precision beltsDetachable link beltsKeyless bushingsUrethane beltingHigh-tech fabrics

n Wilmington,North CarolinaPrincipal products: Composite pulleys, sprockets & couplingsBelt & chain guidesGuide rail systems

Europe

n Hull, UKPrincipal products: Solid-woven PVC beltsNitrile covered PVC belts

n Drachten, NetherlandsSales/service offices in France, Spain & UKPrincipal products: Rubber ply beltsPassenger conveyorbeltingRubber profiles & sheeting

ADVANCED SEALS

n Hampton, UKPrincipal products: Hallite &CDI Polytek Seals

n Hamburg, GermanyPrincipal product: Hallite Seals




CONVEYOR BELTING

CONVEYOR BELTING


Fenner PLC 1

Financial Highlights 2005 2004£000 £000

Turnover 313,012 260,595Operating profit before goodwill amortisation

and exceptional items 21,255 16,101Operating profit 15,849 8,738Profit before tax 12,025 6,395Adjusted earnings per share before goodwill amortisation,

exceptional items and profit on sale of operations 9.34p 7.67pBasic earnings per share 5.28p 2.19pDividends per share 5.825p 5.825p

Contents

1 Financial Highlights

2 Chairman’s Statement

4 Chief Executive Officer’s Review

1 0 Group Finance Director’s Review

1 2 The Board

1 3 Corporate Governance

1 7 Board Remuneration Report

2 3 Directors’ Report

2 5 Independent Auditors’ Report

2 6 Financial Accounts

5 9 Five Year Summary

6 0 Annual General MeetingAdvisorsFinancial Calendar

Chairman’s Statement2 Fenner PLC

Following a solid first half performance, Group profit before tax for the

year increased 88% to £12.0m. We have benefited from an

unprecedented worldwide demand for energy particularly in China.

Our capital expenditure and rationalisation programmes have created

opportunities for productivity improvements throughout our operations.

The acquisition of Wellington Holdings plc (“Wellington”) in May

has provided a valuable addition to our niche precision polymer

businesses. Our strengthened balance sheet leaves us well placed to

exploit these opportunities.

We are encouraged by our

strong start to the year and

by current positive

indications for the future.

Colin CookeChairman

TURNOVER AND

PROFITS

Group turnover increased

20% to £313.0m (2004

£260.6m) which includes £10.8m from the former Wellington businesses acquired on 20 May

2005. Turnover growth in our underlying businesses amounted to 16% reflecting the strong

recovery in the heavyweight belting market driven by global energy demands.

Group operating profit for the year before goodwill amortisation and exceptional items

amounted to £21.3m (2004 £16.1m) including £1.9m from the former Wellington businesses.

After goodwill amortisation and exceptional items, Group operating profit amounted to

£15.8m (2004 £8.7m).

Turnover for the second half year reached £171.7m (2004 £139.8m) generating an

operating profit before goodwill amortisation and exceptional items of £14.7m (2004 £10.6m)

reflecting a strong second half performance characteristic of the markets in which the Group

operates.

Following an improved first half performance, our heavyweight belting businesses made

further progress building on the significant volume recovery particularly in North America.

Despite intense raw material price pressures, profit margins have continued to improve.

The Precision Polymers businesses in both the UK and North America have performed

well, benefiting from a recovery in levels of industrial activity.

The former Wellington businesses outperformed our expectations during the final

quarter of our financial year.

Exceptional items of £3.5m (2004 £6.2m) principally arose from impairment costs,

giving a Group profit before tax of £12.0m (2004 £6.4m). As a result of the much improved

operating performance, Group earnings per share before goodwill amortisation and

exceptional items increased to 9.34p per share (2004 7.67p) and after goodwill amortisation

and exceptional items to 5.28p (2004 2.19p).

Improvementsthroughoutour operations

Fenner PLC 3

DIVIDENDS

The Board recommends a final dividend maintained at 3.85p, which, together with the

interim dividend of 1.975p, represents a total for the year of 5.825p (2004 5.825p). The

underlying dividend cover is 1.6 after adjusting for goodwill amortisation, exceptional items

and the element relating to shares that were only in issue for three months of the year.

CASH RESOURCES AND INVESTMENT

We have raised a net £56.3m from shareholders during the year. £45.7m was invested in the

Wellington acquisition. The balance was applied to reducing our

existing debt levels whilst we examine the opportunities available

for further investment. Net borrowings at the year end amounted

to £33.9m (2004 £39.4m).

PEOPLE

The progress in improving our margin returns is a demonstration of the commitment by all

our employees, whom I thank for their efforts in this regard.

Our AGM in January 2006 will mark the retirement from the Board of Tom Glucklich,

who has been a non-executive director of the Company for over 10 years. I would like to

take this opportunity to thank Tom for his support and intellectual contribution during that

period and to wish him every success for the future.

I am pleased to announce the appointment on 1 November 2005 of David Campbell as

a non-executive director of the Company. David was formerly Chief Executive of British Vita

PLC and following the retirement of Tom Glucklich in January 2006, will chair the Company’s

Remuneration Committee.

OUTLOOK

We have made a strong start to the new year with many of our markets showing continuing,

robust strength. A buoyant energy sector has been a significant factor

in our recent growth and the confidence of our customers in this area is

an encouraging sign. Asian demand has provided the opportunity for

further new developments as the region becomes a more significant

part of the Group. Overall we look forward to another year of healthy

progress as we consolidate the benefits of our acquisition strategy.

Colin Cooke Chairman

“...opportunities...for furtherinvestment.”

“...strong startto the newyear...”

A transformationalyear

Chief Executive Officer’s Review4 Fenner PLC

Fenner Advanced Sealing Technologies service a wide range ofindustries worldwide including mobile hydraulics, industrialprocessing, materials handling, well servicing, forestry, aircraft fuelsystems, oil and gas, earthmoving and mining.

2005 saw a transformation in the Group with the acquisition of

Wellington Holdings plc in May. As a result we have now increased

the high-margin Precision Polymer’s turnover to a third of the Group’s.

We believe this also improves our profit and cash generating ability

and provides a further platform for growth.

Since the acquisition, the Wellington business, now renamed

Fenner Advanced Sealing Technologies, has performed above our

initial expectations and has already started to deliver the synergies

envisaged.

During the year we saw many of our markets strengthen as the combination of Chinese

demand and surging energy prices benefited many of our operations, both directly and

indirectly. These developments have been particularly favourable to our Asia Pacific

businesses, encouraging us to expand further our operations in China with three additional

new major projects in progress, which are detailed below.

ASIA PACIFIC

Our Chinese conveyor belting operation continued to gain momentum with strong sales

growth. As China’s burgeoning economy surged ahead on the strength of its exports and

insatiable demand for energy, coal producers

endeavoured to match the requirements. The

ensuing drive for coal productivity

improvements has proved beneficial for our

heavy duty products, as existing and new

customers realise the value of utilising higher

performance belting. This upward trend has

supported our capital investment to date with

further plant expansion planned to service our broadening customer base in this

increasingly important territory for the Group.

The hose operation in Shanghai received additional investment during the year to

accommodate output levels which are increasing as new business is gained. Slow but

steady progress is being made towards tighter truck emissions

legislation that requires changes to be made to original equipment

manufacturers’ designs, which in turn increases demand for our

products. These positive developments underpin our capital expenditure

programme for the commissioning of a dedicated world-class

manufacturing hose facility capable of meeting market demand.

The acquisition of Wellington Holdings plc brought numerous new

and exciting opportunities to the Group. These included the identification of gaps in their

geographical coverage in locations where we have existing knowledge and expertise. To

exploit these distinctive competencies, plans are underway for further penetration of seals’

markets in China with the construction of a new plant.

Fenner PLC 5

Mark AbrahamsChief Executive Officer

“...dedicatedworld-classmanufacturinghose facility...”

Above: Manufactured at the Fenner Shanghai facility, this Fenaplast conveyor belt is in operation undergroundat the Shenhua Yujialiang mine in Inner Mongolia. Currently, over 100km of Fenner Chinese-manufacturedbelting is running underground and constantly setting new records of service life and coal output.

Production of computer peripherals has progressively migrated to South East Asia in recent

years, and the overwhelming majority of our mini-pitched timing belts are shipped into the

region. Accordingly, our presence has been strengthened in South East Asia to support

existing office equipment accounts and to identify and develop new business opportunities.

Australia recorded a solid return from both the heavyweight conveyor belting and

service operations. Strong coal market

conditions, enhanced by lower Chinese

coal exports in order to serve their

domestic demand, facilitated a year-on-

year improvement in this sector. The

performance was particularly

encouraging in our network of national

service operations where the focus is

on the provision of solutions tailored to

meet our customers’ existing and future

requirements. This network was further

strengthened during the year through the acquisition of L&K Conveyor Services which has

enhanced our presence in Western Australia and provides a strong foundation for further

penetration of this territory.

Our Indian conveyor belting operation enjoyed a successful first full year as a wholly

owned subsidiary, following the prior year’s restructuring of the Group’s interest.

NORTH AMERICA

Our conveyor belting operations experienced a continuation of the market and productivity

improvements from the latter part of the previous year although rising oil prices caused

upward pressure on input costs. Sales to the mining sector were particularly strong as

reinvestment programmes commenced, underpinned by the buoyant global demand for

energy which has held coal prices at near record levels. Sales to industrial markets

improved through a combination of the recovery in the economic conditions and the

increasing value of our organisational support structure. A dedication to solving all

conveying challenges, with the use of the latest technology,

has uniquely positioned the business to develop key

partnerships with our customers.

Precision polymer operations encountered more

volatile demand patterns as US markets faced rising oil prices and consequent raw material

price inflation. Despite these effects, the industrial products group successfully continued to

deploy their strategy of product line expansion and channel exploitation. The development

programme included the launch of two new products in the year. The T-Max range of belt

and chain tensioners was expanded through the launch of the innovative, light-duty RT-3000

rotary tensioner. A new, patented variant of PowerTwist link belt has been developed

specifically to meet the market demand for roller conveyor systems to carry higher loads,

faster and more quietly.

“...key partnerships with our customers...”

6 Fenner PLC Chief Executive Officer’s Review

Above: BHP Billiton iron ore blending and ship loading facility at Port Hedland, Western Australia, whereApex Fenner Conveyor Services are contracted for condition monitoring and cleaning solutions for theirentire conveyor system. The contract was won in 2005, following the L & K Conveyor Services acquisition,at a value A$6.8m

The markets have responded favourably to both

of these carefully targeted product launches.

These, together with our marketing alliances, have

contributed to incremental sales growth. Market

demand in the office equipment segment was

slow in the first few months of the year, but

recovered considerably in the second half. Our

continuous improvement programme increased

production yields, but nevertheless, capacity was

flexed to meet customer demand for mini-pitch

timing belts. Planning is now well advanced for a

building extension to accommodate an increase in capacity with completion scheduled for

2006.

The newly-acquired seals operations benefited from buoyant energy markets. To

enhance growth further new applications, including the semi conductor processing industry,

were developed. The design of new sealing solutions, such as the patented SigmaSeal is

encouraging. This seal, which is generating interest in new markets, has unique

self-energising and low friction properties suitable to the control valve industry.

EUROPE

The environment for our UK based heavyweight conveyor belting operation became

increasingly difficult during the year with declining demand from both the UK and German

coal industries. Against this, the demand from our worldwide potash customers remained

robust and further penetration of Eastern European, Ukrainian and Russian coal markets was

achieved. Whilst raw material prices increased significantly during the year, sales pricing

action coupled with improved purchasing enabled margins to be maintained.

Weak economic conditions prevailed in most of our major European industrial markets,

which together with the threat from the competition

over an otherwise flat market, led to a difficult year for

our Dutch operation. As a consequence, action to

address the cost base was implemented in the

second half through a reduction in the workforce

whilst overall productivity improvements were

achieved through additional investment in new plant

and systems.

James Dawson at Lincoln built upon the solid

foundations established in recent years to record a

good performance overall. Demand from the speciality vehicle and business machine

markets was generally strong allowing the benefits from recent capital investment

programmes to be realised. Further recognition of the accomplishments of this operation

was gained in the year with the Queen’s Award for Enterprise in International Trade.

Fenner PLC 7

Top: Fenner Drives recently launched a new range of taper edge bands specially developed to meet therequirements of the wallboard industry. These taper edge bands last up to 12 times longer thanconventional PVC bands, reduce downtime and are capable of operation at temperatures up to 64°C.

Bottom: James Dawson are supplying charge air hoses on Volvo Truck vehicles. This business emphasisesthe Global position James Dawson has within the silicone hose supplier base.

8 Fenner PLC Chief Executive Officer’s Review

1 Artist’s impression of thePrecision Polymers facility to bebuilt in the new Industrial Park inJiading, Shanghai. The newfacility will be shared equally byFenner Advanced SealingTechnologies and James Dawson.

2 One of the new sealingdevelopments is the SigmaSealwhich has unique self-energisingand low friction properties suitablefor the control valve industry.

3 At the solid-woven conveyorbelting Centre of TechnicalExcellence based in Hull, thisair-bearing PVC rheometerprovides an understanding of thecomplex viscosity, flow and fusionchanges that take place during heat processing of a belt.

4 The conveyor belting facility in Atlanta has installed two new looms capable of weaving up to 2.2m widths. The looms operate at overtwice the speed of the previous looms and a further 10 are scheduled for commissioning by the end of the current year.

5 James Dawson Managing Director Rodney Barbour receiving the Queen’s Award for Enterprise from Mrs Bridget Carcroft-Eley, HerMajesty’s Lord-Lieutenant of Lincolnshire at the ceremony held at the Lincoln facility.

6 A consignment of solid-woven Fenaplast conveyor belting destined for underground use being loaded at the new Indian facility.

1 2

3

4

5

6

The Poynton (Cheshire) hose facility, which was acquired in February 2004, continued to

perform well. The projected market synergy between Poynton’s EPDM hose and Lincoln’s

silicone hose products is now beginning to be realised and is expected to lead to continued

steady growth of sales of Poynton products.

Fenner Drives Europe, formerly BTL in Leeds, experienced a continuing reduction in

demand from traditional markets, reflecting the general decline in UK manufacturing.

However, this decline was more than offset as programmes of innovative marketing, product

line expansion and increased activity in Europe took effect.

At the end of the year, the UK operations of both James Dawson and Fenner Drives

were restructured. James Dawson now operates exclusively in the world markets for

commercial and speciality vehicles, focusing upon capitalising on recent investments in the

specialist hose business. The industrial rubber and business machine products of James

Dawson have been brought under the responsibility of Fenner Drives Europe.

Sales from our European seals operations exceeded expectations in the period since

acquisition with strong demand from longwall mining

equipment and the oil and gas industry. As we enter the new

year, the planned relocation of the UK operation to a new

facility is progressing satisfactorily. The factory and offices

which are currently under construction at Hampton will

replace the existing network of 1920’s buildings. The benefits of the move will follow the

completion which is scheduled for the second half of 2006.

AFRICA

An increase in demand for energy in South Africa caused a heightened activity in the

region’s coal mining industry and the

commissioning of previously mothballed power

generation plants. This environment enabled the

achievement of a further successful year by our

conveyor belting operation, despite the keen

competition within the local market.

The Group’s other South African operation,

KSB, improved as the year progressed

following softer volumes into agricultural markets

in the early months and higher contract volumes

in the second half-year.

Significant progress has been made during the last year with an increasingly encouraging

trend in performance. As we enter the new financial year we do so with confidence that most

of our businesses are seeing healthy market conditions with opportunities for growth.

Mark Abrahams Chief Executive Officer

Fenner PLC 9

“...seals operationsexceededexpectations...”

Above: Fenner South Africa’s in-house splicing crew out in the fieldsplicing a solid-woven, high abrasion resistant conveyor belt on akey installation feeding coal to Lethabo, one of South Africa’snational power stations.

Group Finance Director’s Review10 Fenner PLC

The Group advanced significantly during the year with the acquisition

of Wellington Holdings plc. Our integration of the business has

progressed satisfactorily and an excellent performance has been

achieved in the initial period of ownership. With the improved

performance of our existing businesses, the overall result is most

encouraging.

OPERATING CASH FLOW

A robust operating profit before goodwill amortisation and exceptional

items of £21.3m (2004 £16.1m) facilitated a healthy operating cash

inflow. Working capital levels did increase with higher stock and debtors which reflected the

increase in trading activity, coupled with tighter credit terms arising from capacity constraints

in our supplier base.

Exceptional items of £3.5m (2004 £6.2m) largely related to property and plant

impairments. Of this amount, £1.0m resulted in a cash outflow in the period.

Overall the Group generated a cash inflow from operations of £21.3m (2004 £14.2m).

ACQUISITIONS AND GOODWILL

During 2005 the Group acquired the entire issued share capital of Wellington Holdings plc

for a consideration of £45.7m (including acquisition expenses) and made two smaller

acquisitions for £0.3m.

Goodwill arising on these transactions amounted to £41.6m.

FUNDING AND RESOURCES

During the year the Company raised £56.3m from shareholders in a placing and open offer

of new ordinary shares. The proceeds were principally used to fund the purchase of

Wellington Holdings plc.

The acquisition necessitated our having to formally anticipate the repayment of the

US$50m Private Placement Note in March 2006. This, together with the continuing capital

expenditure programme and potential for further bolt-on acquisitions, required us to secure a

new £60m five year committed Revolving Credit facility with three leading UK banks. This

has also replaced several uncommitted bank lines and gives us more flexibility for the

Company’s future debt financing options.

The Group’s gross borrowings at 31 August 2005 were £86.0m offset by cash and

deposits of £52.1m, giving net borrowings of £33.9m. Approximately 48% of the gross

borrowings is currently at a fixed interest rate.

PENSIONS

The Group has continued to account for pensions in accordance with SSAP 24. Following the

acquisition of Wellington Holdings plc, the Group has inherited further pension obligations.

The major scheme relates to the UK; a defined benefit arrangement which on 31 March 2000

was closed to new members. Existing members’ pensions continue to be accrued on a final

salary basis for the qualifying service up to 31 March 2000, with eligibility to participate in a

defined contribution scheme thereafter.

In accordance with the principles of FRS 7 “Fair Values in Acquisition Accounting” the deficit

Richard PerryGroup Finance Director

Fenner PLC 11

of £2.1m in this scheme has been included within the provisional fair value of net assets

acquired.

The manner in which pension arrangements are reflected in the Group’s accounts will

change when the substantive requirements of FRS 17 “Retirement Benefits” are adopted

under International Financial Reporting Standards. Note 27b of the accounts gives the

funding position and pension cost in accordance with FRS 17 principles.

TAXATION

The Group’s taxation charge for the year was £4.5m (2004 £3.1m) after offsetting a tax credit

of £0.4m in respect of exceptional items. Before exceptionals and goodwill amortisation, the

tax rate was 28% (2004 29%).

TREASURY POLICY

The Group has a central treasury function which operates in accordance with Board

approved policies. Its principal objective is to minimise financial risk. Where appropriate,

derivative transactions are undertaken to reduce interest rate and currency rate risks arising

from the Group’s operations and sources of finance. No speculative trading is undertaken.

The interest cost arising on borrowings is managed on a net basis through the use,

where appropriate, of swaps to reduce the interest rate risk.

Deposits of funds are made with banks and financial institutions approved by the Board

and within set credit limits. Bank and loan facilities are monitored on a regular basis and

maintained at a level which provides adequate funding for seasonal variations in borrowings

whilst allowing for acquisitions and organic expansion.

The Group’s principal foreign currency exposures arise on the translation of overseas

profits and net assets into sterling, the translation of intra-group lending (principally from the

UK to overseas subsidiaries) and from trading transactions in foreign currencies. The Group

normally only hedges the accounting exposure on the translation of overseas profits to the

extent that such profits are offset by interest charges on foreign currency borrowings.

Where cost effective, overseas net assets are hedged by foreign currency borrowings and

intra-group lending is matched by external borrowings in the same currency. Currency

exposures arising from trading transactions are continually monitored and material

exposures are hedged once cash flows can be identified with sufficient certainty.

During the year the derivatives used by the Group have been forward foreign exchange

contracts, options and interest rate swaps.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

For accounting periods commencing on or after 1 January 2005 all European listed

companies are required to use IFRS to prepare their consolidated financial statements. For

Fenner this means that the 2006 Interim Report, the 2006 Annual Report and all subsequent

reports including all comparative information will be prepared using IFRS. The Group has

continued its preparatory work to ensure full compliance with these requirements.

Richard Perry Group Finance Director

12 Fenner PLC

COLINCOOKE (65)* a r n

ChairmanJoined the Companyin May 1993 as non-executive Chairman.He is also a non-executive director ofAdvanced FluidConnections plc(formerly known asOystertec plc).

The Board

MARKABRAHAMS (50) n

Chief ExecutiveOfficerAppointed to theBoard as GroupFinance Director in1990, and becameChief ExecutiveOfficer in May 1994.He is also non-executive Chairmanof Inditherm plc.

RICHARDPERRY (55)Group FinanceDirectorAppointed to theBoard in September1994. He is also anon-executivedirector of ScapaGroup plc.

DAVID BUTTFIELD(59)* a r n

Appointed to theBoard in January2003, he is a formerexecutive directorof D S Smith Plc.

THOMASGLUCKLICH (69)* a r n

Appointed to theBoard in August 1995,he was formerly adirector of LazardBros & Co Limited.

DEBRABRADBURY (39)Company SecretaryJoined the Company in2001 and wasappointed CompanySecretary in July 2002.

DAVID CAMPBELL(55)* a r n

Appointed to theBoard in November2005, he wasformerly ChiefExecutive of BritishVita plc.

* Non executive a Audit Committeer Remuneration Committeen Nomination Committee

Fenner PLC 13

The Group is committed to comply with the Principles of Corporate Governance as set out in the 2003 FinancialReporting Council’s Combined Code as incorporated into the FSA Listing Rules (“Combined Code”) and continues torecognise the importance of high standards of corporate governance. This statement explains how the Principles ofCorporate Governance are applied within the Group and areas of non compliance are explained.

Directors & Directors’ IndependenceThe Board usually comprises the non-executive Chairman, two executive directors and two non-executive directors andis responsible to shareholders for the proper management of the Group. Specific matters are reserved for the Board’sconsideration under a formal schedule including Group strategy, reviewing trading performance, considering seniormanagement appointments, formulating policy on key issues including the approval of significant capital expenditure,acquisitions and disposals and reporting to shareholders.

The Board is headed by a non-executive Chairman who was independent upon appointment and whose role is distinctand separate from that of the Chief Executive Officer. The other non-executive directors are also independent. ThomasGlucklich, a non-executive director is the senior independent director of the company and is considered by the Boardto be independent in both character, judgement and contribution despite having served for 10 years. Thomas Glucklichwill be retiring from the Board at the forthcoming AGM. David Campbell was appointed to the Board on 1st November2005 and was independent upon appointment. The Chairman and the non-executive directors are independent ofmanagement and do not have any business relationships which could interfere with the exercise of their judgement.

Biographical details of the directors are set out on page 12.

Non-executive directors receive appropriate briefings on the Group and its operations when they are appointed to theBoard. They are encouraged to visit the Group’s offices and factories whenever the opportunity presents itself, wherethey are briefed on local business operations. All directors have access to the Company Secretary, who is responsiblefor ensuring that Board procedures are followed and that the Group complies with all applicable rules, regulations andobligations governing its operations. A procedure exists for directors to take independent professional advice, at theGroup’s expense, if necessary, in the furtherance of their duties. The Board is provided with timely and appropriateinformation prior to each Board, Committee or General Meeting covering the items on the agenda for such meetings.

The Board is in the process of identifying a suitable and meaningful board evaluation process. The NominationCommittee appraised the requirements of the Board during the year as part of the recruitment process for a new nonexecutive director.

All directors are subject to election by shareholders at the first Annual General Meeting following their appointment andto re-election thereafter at intervals of no more than three years.

The Board has a number of committees consisting of directors and senior executives. Details of their composition andpurpose are outlined below. In addition the Chairman and the non-executive directors meet from time to time withoutthe executive directors being present.

Group ExecutiveThe Executive Committee is chaired by Mark Abrahams. It consists of the two executive directors, the CompanySecretary and five members of the Group’s senior management. The Executive Committee meets at least 6 times a yearand deals with the daily management of the Group through powers delegated to it by the Board.

Audit CommitteeThe Audit Committee comprises the Chairman and the non-executive directors and is chaired by David Buttfield whohas recent and relevant financial experience. Due to the size of the Company and the number of non-executivedirectors, the Board has decided that the Chairman of the Company should remain a member of the Committee.

The terms of reference of the Audit Committee cover all the main points recommended by the Combined Code. Itsprincipal duties are to monitor the integrity of the financial statements, to review the internal controls and riskmanagement systems, to review the work of internal audit and to consider all aspects of the relationship with theexternal auditor. The Committee has the authority to obtain external legal or other professional advice on any matterwithin its terms of reference.

Corporate Governance

There is a policy on the provision of non-audit services by the external auditor. Certain services such as due diligencein relation to acquisitions and disposals, taxation and actuarial advice are permitted but others, for example, internalaudit, information technology and HR consultancy are generally considered inappropriate. Non-audit fees are reportedto the Committee.

The Committee has received and reviewed written confirmation from the external auditor on all relationships that in theirjudgement may bear on its independence. The external auditor has also confirmed that it considers itself independentwithin the meaning of UK regulatory and professional requirements.

Nomination CommitteeThe Nomination Committee, which consists of the Chairman, the non-executive directors and the Group ChiefExecutive Officer, is chaired by Colin Cooke. The duty of the Committee is to make recommendations to the Boardregarding the appointment of new Board members. Given the size of the Board and the Company, it is felt bothappropriate and prudent to have Mark Abrahams on the Committee to work with the Chairman and non-executivedirectors on senior recruitment issues. Written terms of reference were adopted during the year clearly setting out therole and scope of the Committee. There were three meetings during the year to identify and recruit a new non-executivedirector to replace Thomas Glucklich when he retires at the forthcoming AGM. The Committee was assisted bySpencer Stuart Consultants in identifying a short list of candidates who met the profile being sought by the Board.David Campbell was subsequently selected and joined the Board on 1 November 2005.

Remuneration CommitteeThe Remuneration Committee consists of the Chairman and non-executive directors and is chaired by ThomasGlucklich. David Campbell will become the Chairman of the Committee when Thomas Glucklich retires. The GroupChief Executive Officer also attends the meetings by invitation.

The Committee is responsible to the Board for determining the remuneration packages of the executive directors andother senior executives and advises on executive remuneration policy issues. It also approves the granting of shareoptions to employees within the Group and administers the Group’s Long Term Share Incentive Plan (LTIP).

The Remuneration Committee during the year received advice from MM&K Ltd who assisted the Committee inconsideration of matters relating to directors’ incentives and Mercer Human Resource Consulting, who conducted areview of executive directors’ remuneration.

Directors’ remunerationThe Board Remuneration Report is set out on pages 17 to 22.

Relations with shareholdersThe Company encourages regular dialogue with its institutional shareholders and also with private investors at theAnnual General Meeting. Update meetings are held with institutional shareholders following the announcement ofinterim and final results and as requested throughout the year. Similar meetings are held with private client brokers sothat the same information can be disseminated to private investors. Recent analyst presentations are also madeavailable on the www.fenner.com website. The Group website was revised during the year and now providescomprehensive investor relations information for shareholders to view. The website includes the current share price,regulatory announcements, financial performance information, shareholder information and an investor relationscontact address.

Corporate Governancecontinued

14 Fenner PLC

Number of meetings during the yearChairman C I Cooke

Executive directorsM S AbrahamsR J Perry

Non-executive directorsT C GlucklichD F Buttfield

* By invitation

Group Board

109

109

910

Meetings of the BoardAudit

Committee

32

3*3*

33

RemunerationCommittee

55

3*-

55

NominationCommittee

33

3-

33

Fenner PLC 15

Annual General MeetingIn relation to the Company’s Annual General Meeting:

- the proxy count in respect of each resolution is announced after it has been dealt with on a show of hands;- a separate resolution is proposed for each substantially separate issue, including the receipt of the annual

report and accounts;- all executive and non-executive Board members normally attend the Meeting; and- the Notice of the Meeting, the annual report and accounts and any other related papers are normally sent to

shareholders more than one month before the Meeting.

Accountability and auditDirectors’ responsibilities in respect of the financial statementsCompany law requires the directors to prepare financial statements for each financial year which give a true and fairview of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. Inpreparing those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;- make judgments and estimates that are reasonable and prudent;- state whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; and- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

Company and the Group will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at anytime the financial position of the Company and the Group and enable them to ensure that the financial statementscomply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and theGroup and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The maintenance and integrity of the Fenner PLC website is the responsibility of the directors; the work carried out bythe auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility forany changes that may have occurred to the financial statements since they were initially presented on the website.Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation inother jurisdictions.

Going concernAfter making enquiries, the directors have formed a judgment at the time of approving the financial statements thatthere is a reasonable expectation that the Company and Group have adequate resources to continue in operationalexistence for the foreseeable future. For this reason, the directors continue to adopt the going concern basis inpreparing the financial statements.

Internal controlThe Board continues to review the effectiveness of the Group’s system of internal control and evaluates the InternalControl report at least twice a year. This review covers all controls, including operational, financial, compliance and riskmanagement.

As required by the UK Listing Authority, the Group has complied with the Combined Code provisions on internal controlhaving established the procedures necessary to implement the guidance contained in “Guidance for Directors on theCombined Code” issued by the Institute of Chartered Accountants in England and Wales and by reporting inaccordance with that guidance.

The directors are responsible for the Group’s system of internal control which, like any system of internal control, canonly provide reasonable and not absolute assurance against material misstatement or loss.

The directors have reviewed the effectiveness of the system of internal control in operation during the year and up tothe date of approval of the annual report.

Corporate Governancecontinued

16 Fenner PLC

The key procedures within the control structure are:- the identification of major business and insurance risks faced by the Group’s operations, by both the Board and

senior management, and the determination of the most appropriate course of action to deal with these risks;- central review and approval procedures in respect of major areas of risk, such as acquisitions and disposals,

litigation, treasury management, taxation and environmental issues;- a clear management structure with well defined lines of responsibility and the appropriate levels of delegation;- regular review of the Group’s business units by operational and executive management;- a structured process for appraising and authorising capital projects. This process includes clearly defined

authorisation levels. Projects are subject to post investment appraisals;- well established consolidation and reporting systems for both the statutory and monthly management accounts,

with all Board members receiving a monthly statement of the financial results;- comprehensive budgeting systems with an annual budget approved by the Board. Monthly results are reported

against budget and revised forecasts for the year are prepared regularly; and- an internal programme of monitoring visits by the Internal Audit team was agreed with the Audit Committee,

which review the compliance of each business unit with standard internal financial control procedures adopted by the Group.

Compliance with the Combined CodeThe Group has complied with the main provisions of the Combined Code in force during the year ended 31 August2005 that are appropriate for a Group of this size. The Group has sought to explain non-compliance with the Boardevaluation process, the inclusion of the Chief Executive on the nomination committee and the inclusion of the Chairmanon the audit committee and will continue to work towards full compliance with the spirit of the Combined Code.

Board Remuneration Report

The Board presents its report on directors’ remuneration which has been prepared following the provisions ofSchedule B of the Combined Code issued in July 2003 and the provisions of the Directors’ Remuneration ReportRegulations 2002. Details of the Remuneration Committee’s responsibilities are given on page 14.

The parts of this report covering directors’ detailed emoluments, share schemes and pensions are audited.

Members of the remuneration committeeThe members of the remuneration committee during the year were: Thomas Glucklich (Chairman), Colin Cooke andDavid Buttfield

During the year the Remuneration Committee took advice from an independent external source, as noted on page 14.

Remuneration policyExecutive directorsThe Company’s policy on remuneration is to attract, retain and incentivise executives with the experience andnecessary skills to operate and develop the Company’s businesses to their maximum potential, thereby delivering thehighest level of return for shareholders.

Consistent with this policy, benefit packages awarded to executives are intended to be competitive and comprise amix of performance-related and non-performance related remuneration designed to incentivise them, but not to detractfrom the goals of Corporate Governance.

During the year, Mercer Human Resource Consulting was commissioned to produce a report on comparative pay forexecutive directors of companies similar to Fenner. The report confirmed that the pay levels of the executive directorswere not above those of their peers.

The Committee also takes account of the pay levels of senior management of the Fenner Group when establishing theexecutive directors’ remuneration.

It is the Committee’s current intention to continue to reward the executive directors with an annual performance relatedbonus plan, linked to operating profit, earnings per share and cash targets, and a long-term share incentive plan(LTIP). The shares allocated under the LTIP will be awarded to an executive after a period of three years and will bedependent on the comparative performance of the Company’s total shareholder return (TSR) against the TSR ofcompanies comprising the FTSE All Share Engineering and Machinery sector (The Peer Group) over the period fromthe provisional allocation date to the final award date. The Committee considers that TSR, which comprises of inter aliadividend yield and share price movement in comparison with The Peer Group, is the best measure of long termperformance as it aligns the interests of executives with shareholders and recognises market conditions in the Group’sindustrial sector.

The targeted composition of each director’s remuneration is as follows:

Non-performance related Performance related

Mark Abrahams 60% 40%Richard Perry 60% 40%

Chairman and Non-executive directorsThe Chairman and non-executive directors are usually appointed for a fixed three year term.

The remuneration of the non-executive directors is determined by the Board as a whole, having regard to thepackages awarded by other UK listed companies of similar size and complexity.

The non-executive directors do not participate in any of the Group’s bonus, share option or incentive schemes, nor dothey accrue any pension entitlement.

Fenner PLC 17

Board Remuneration Reportcontinued

18 Fenner PLC

Directors’ service contractsThe executive directors have rolling 12 month contracts, in addition the Company has agreed to the payment of aprescribed sum equivalent to 12 months salary and contractual benefits if there is a change of control or termination oftheir contracts by the company other than for cause.

The service contracts do not contain any provision for compensation on early termination other than the notice period,and the provision noted above, however the Committee will seek to mitigate cost to the Company whilst dealing fairlywith each individual case.

The details of the service contracts in relation to the executive directors and letters of appointment in relation to theChairman and non-executive directors, who served as directors during the year are:

Unexpiredterm at Notice

31 August 2005 period

Mark Abrahams - 1 yearRichard Perry - 1 yearColin Cooke* 28 months Fixed TermThomas Glucklich 4 months Fixed TermDavid Buttfield 4 months Fixed Term

* Colin Cooke’s services are provided by way of an agreement between the Company, Steels Management Limited andColin Cooke.

External appointmentsFenner recognises that its executive directors are likely to be invited to become non-executive directors of othercompanies and that such appointments can broaden experience and knowledge, which may benefit Fenner. Thereforeexecutive directors may, subject to approval by the Board and providing there is no conflict of interest, be allowed toaccept appointments as a non-executive director of another company and are normally allowed to retain the fees paidfrom such appointments. In normal circumstances, they may not accept more than one appointment. Currently theChief Executive Officer, Mark Abrahams, is non-executive Chairman of Inditherm plc and retained fees of £35,000 inrelation to Inditherm plc’s year ending 31 December 2004. The Group Finance Director, Richard Perry, was appointedas a non-executive director of Scapa Group plc on 1 June 2005 and will retain the fees.

Remuneration components for executive directorsThe major components of the executive directors’ remuneration are:

Basic annual salary and benefitsThe basic annual salary is subject to an annual review which takes into account the performance of the Group and theindividual and salary trends in comparable companies. In addition, a car allowance, healthcare insurance and otherbenefits are available in line with normal corporate practice.

Annual performance related bonusPerformance related cash bonuses are reviewed annually. Demanding performance targets are set, which must beachieved before the maximum bonus is payable. The confirmed criteria include targets linked to the Group’sperformance in terms of operating profit and earnings per share. The target bonus for achievement of the annualbudget for these measures is 35% of basic annual salary and the maximum potential payment for the annual bonus is60% of basic annual salary, excluding benefits in kind and pension contributions.

Long Term Share Incentive PlanThe Long Term Share Incentive Plan (LTIP) is designed to encourage its participants to deliver sustained long termperformance.

Rewards under the LTIP are linked to the Company’s performance over three year periods (Plan Cycles). As near aspracticable to the start of a Plan Cycle, the Remuneration Committee notifies each participant of the provisionalallocation of ordinary shares which could be distributed to him after the end of the Plan Cycle if the performance targetis met. The performance target is intended to be demanding. The provisional allocation of ordinary shares is based ona percentage (maximum 100%) of the participant’s basic annual salary and the value of the Company’s ordinary sharesat the start of the Plan Cycle.

The performance measurement for each of the Plan Cycles is the Company’s TSR which is compared with the TSR ofThe Peer Group. In the opinion of the Remuneration Committee, the FTSE All Share Engineering and Machinery Index isthe most appropriate index against which the TSR of the Company should be measured because it is an index ofbusinesses similar in nature to Fenner and which represent alternative investment options for our shareholders.

100% of the provisional allocation of ordinary shares may be distributed only if the Company’s performance places itwithin the top 16 per cent of the companies in The Peer Group. Participants will not receive any ordinary shares if theCompany’s ranking is below the median (i.e. the point which divides The Peer Group into two equal halves such that50% of the companies are above this point and 50% are below it). Between these two points there is a piecewise linearrelationship between the number of shares vesting and the percentile ranking of Fenner amongst the Peer Group.There have been no departures from the Company’s policy on awarding benefits under long-term incentive schemesduring the year. In the event that a director resigns, the awards will lapse.

The performance chart below illustrates the Company’s total shareholder return over the past five years compared tothe performance of The Peer Group. In addition to the statutory requirement to plot data over five financial year ends,the graph and table below reflect data for each of the Plan Cycle dates for the LTIP. The Plan Cycle dates are alignedwith the Group’s Preliminary Announcement, which the Remuneration Committee believes are the most appropriatepoints for benchmarking the LTIP. This is because at these dates there is full disclosure of relevant price sensitiveinformation to the market as a whole.

Share optionsSince the creation of the LTIP no options have been granted to the executive directors and they are no longer eligible toparticipate in the Share Option Scheme for new options.

PensionsThe executive directors participate in the defined benefits section of the Fenner Pension Scheme, an Inland Revenueapproved mixed benefits scheme, on the same terms as other senior executives. The Scheme provides for a maximumpension of two-thirds of remuneration at or near retirement age of 62. For both of the executive directors, pensionablesalary and benefits from the Fenner Pension Scheme are restricted by the Inland Revenue earnings cap, consequentlypayments are made to funded unapproved retirement benefit schemes (FURBS) to provide top-up pension benefits inexcess of the Inland Revenue limits.

FTSE All ShareEngineering

& Machinery Index

112100103898676

103109111124146

Fenner

86100111117115107107110150170214

Date

31 August 2000 9 November 2000

31 August 20018 November 2001




31 August 2005

Total Shareholder Return

31/08/00 31/08/01 31/08/02 31/08/03 31/08/04 31/08/05

120

100

80

60

140

160

180

200

220

Fenner FTSE All Share Engineering & Machinery Index

Fenner PLC 19


20 Fenner PLC

Directors’ detailed emoluments

Annual salary, Annual fees or performance Total Total

consultancy Benefits in related emoluments emolumentsservices kind* bonus** 2005 2004

£ £ £ £ £

ExecutiveMark Abrahams 258,742 29,125 129,372 417,239 346,789Richard Perry 162,750 26,820 81,375 270,945 223,073Non-executiveColin Cooke*** 90,100 - - 90,100 90,100Thomas Glucklich 34,000 - - 34,000 27,392David Buttfield 31,000 - - 31,000 24,974

576,592 55,945 210,747 843,284 712,328

*Benefits in kind include the provision of a car allowance and healthcare insurance for both executive directors.**The bonuses will be paid by way of additional Company contributions into the respective funded unapprovedretirement benefit schemes. ***By an agreement between the Company, Steels Management Limited and Colin Cooke dated 24 June 1993, asamended by subsequent supplemental agreements between the same parties the last one being dated 21 December2004, Steels Management Limited agreed to provide the services of Colin Cooke as a non-executive director and Chairman of the Company until the AGM 2008. Steels Management Limited may at any time terminate the agreement bygiving 12 months notice in writing to the Company. In the year ended 31 August 2005 £90,100 (2004 £90,100), includinga £5,100 car allowance, was payable under this agreement. No remuneration was paid directly to Colin Cooke, nor wereany pension contributions paid on his account. The non-executive directors do not participate in any Company pensionscheme, nor do they receive benefits in kind.No director waived emoluments in respect of the year ended 31 August 2005.

Share schemesInterests in share optionsDetails of options held by directors are set out below:

Earliest exercise Expiry Exercise August 2004 Exercised Lapsed August 2005

date date price Number in year in year Number

Mark Abrahams 27 July 1998 26 July 2005 144.00p 73,380 - 73,380 -

Richard Perry 15 November 1997 14 November 2004 132.05p 157,895 - 157,895 -27 July 1998 26 July 2005 144.00p 26,315 - 26,315 -

No options have been granted or exercised during the year. No other directors have been granted share options in theshares in the Company. None of the terms and conditions of the share options was varied during the year. All optionswere granted in respect of qualifying services and all have now lapsed.

The market price of the Company’s shares at the end of the financial year was 145.25p and the range of market pricesduring the year was between 103.9p and 163.0p.

Interests in sharesThe interests of the directors in the 25p ordinary shares of the Company were:

31 August 2005 1 September 2004 Number Number

Mark Abrahams 394,840 360,255Richard Perry 327,032 290,173Colin Cooke 210,408 198,596Thomas Glucklich 1,000 1,000David Buttfield - -

All directors’ interests are beneficially held. There have been no changes in the interests set out above between31 August 2005 and 9 November 2005.

Long-term incentive schemesShares awarded to executive directors under the long-term incentive plan are as follows:

End of Plan Cycle 1 September Provisional Shares Shares 31 August Value & Award

Allocation 2004 allocation awarded lapsed 2005 awarded Determinationdate Number Number Number Number Number £ date

Mark Abrahams7 November 2001 161,296 161,296 38,598 122,698 - 46,318 16 November 20046 November 2002 196,569 200,559 200,559 6 November 20055 November 2003 212,623 216,939 216,939 5 November 200610 November 2004 155,046 155,046 10 November 2007

Richard Perry7 November 2001 104,667 104,667 25,047 79,620 - 30,056 16 November 20046 November 2002 127,390 129,976 129,976 6 November 20055 November 2003 136,925 139,704 139,704 5 November 200610 November 2004 97,524 97,524 10 November 2007

Total of awards in year 63,645 76,374

The number of shares provisionally allocated was adjusted under the rules of the long term incentive plan following theShare Placing and Open Offer.

The performance criteria attached to the shares that were awarded on 16 November 2004 and those provisionallyallocated on 10 November 2004 relate to the Company’s TSR, which is compared with the TSR of The Peer Group.

There have been no variations in the terms and conditions of scheme interests during the year. All awards under long-termincentive plans were in respect of qualifying services.

The Plan Cycle ending on 16 November 2004 was independently evaluated and an award of shares made representing24% of the original award of shares was made on 14 December 2004. The market value (as defined in the Rules of thePlan) of an Ordinary Share of the Company at the beginning of the Plan Cycle was 103.9p, at the end of the Plan Cyclewas 120.00p and the market value used on 16 November 2004 for the new Plan Cycle was 127.7p (125.16p afteradjustment for the Share Placing and Open Offer).

The Performance Graph on page 18 showing TSR gives an indication of whether each LTIP Plan Cycle will achieve theperformance criteria, based upon the share price at 31 August 2005.

Given the nature of the performance calculation, it could be misleading to indicate a likely outcome for future shareawards.

Fenner PLC 21

Signed on behalf of the Board of DirectorsT C Glucklich Chairman of the Remuneration Committee9 November 2005

Additional information as required by the Listing RulesTransfer value of additional accrued benefits

Additional accrued benefits earned in year earned in year less directors’ contributions£ £

Mark Abrahams 2,700 26,400Richard Perry 3,500 36,200

The accrued pension entitlement is the amount that the director would be paid annually on retirement based on serviceto 31 August 2005. The Listing Rules require the increase in this amount to be disclosed excluding inflation. Thebenefits do not allow for any retained benefits which the directors may have relating to previous employment. Thepension benefits exclude any additional pension purchased by additional voluntary contributions.

The increase in the accrued entitlement is the difference between the accrued entitlement at the year end (31 August2005) and the accrued entitlement at the previous year end (31 August 2004).

The pension benefits are based on the directors’ pensionable salaries which are limited to the Inland Revenue earningscap (currently £105,600 per annum).

All transfer values have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance NoteGN11. The transfer values of the accrued entitlement represent the value of assets that the pension scheme wouldneed to transfer to another pension provider on transferring the scheme’s liability in respect of the directors’ pensionbenefits. They do not represent sums payable to individual directors and, therefore, cannot be added meaningfully toannual remuneration.

The transfer value of the increase in accrued benefits, required by the Listing Rules, discloses the current value of theincrease in accrued benefits that the director has earned in the period, whereas the change in his transfer value,required by the Companies Act discloses the absolute increase or decrease in his transfer value and includes thechange in value of the accrued benefits that results from market volatility affecting the transfer value at the beginning ofthe period, as well as the additional value earned in the year.

The Company also makes contributions to funded unapproved retirement benefit schemes (FURBS) in respect of theexecutive directors. The contributions made by the Company, excluding the annual performance related bonus, were:

2005 2004£ £

Mark Abrahams 174,652 170,430Richard Perry 108,229 127,779

PensionsDirectors’ pension entitlementSet out below are details of the pension benefits to which each of the executive directors is entitled.

Accrued Increase in Accrued Transfer Transfer Increase inentitlement accrued entitlement value at value at transfer value31 August entitlement 31 August 31 August 31 August less directors’

2004 over the year 2005 2004 2005 contributions£ £ £ £ £ £

Mark Abrahams 35,900 4,000 39,900 304,200 397,900 93,700Richard Perry 34,000 4,700 38,700 378,200 495,500 109,140

22 Fenner PLC


The directors submit their report and the audited Group accounts for the financial year ended 31 August 2005.

Principal activities and review of businessFenner is a global manufacturer and distributor of conveyor belting and reinforced precision polymer products.

The trading year under review, future prospects and the Group’s research and development activities are covered inthe reports on pages 1 to 11.

Results and dividends £000

Group profit for the year 6,531

DividendsInterim 1.975p per share – payable 2,148Final 3.85p per share – proposed 6,028

8,176

Charitable donationsDuring the year the Group contributed £4,000 (2004 £6,000) to United Kingdom charitable organisations.

Substantial shareholdingsThe register maintained by the Company under Section 211 of the Companies Act 1985 records that on 9 November2005 interested parties with substantial individual interests were as follows:

% ofNumber of issued

Interested party shares capital

Brown, Shipley & Co. Ltd 11,781,965 7.53%Hermes Administration Services Limited 10,223,365 6.53%UBS Global Asset Management Life Limited 8,737,676 5.58%Legal & General Investment Management 5,289,079 3.38%

Directors and their interestsThe names of the directors of the Company who served during any part of the year are shown in the BoardRemuneration Report.

Details of the directors’ beneficial interests in the ordinary shares of the Company, in share options over the ordinary sharecapital of the Company and in the Fenner Long Term Share Incentive Plan are given in the Board Remuneration Report.

Save as disclosed in the Board Remuneration Report:a) no director has any interest (beneficial or non-beneficial) in any share or loan capital of the Company or any of its

subsidiaries;b) no change in the interests of directors has occurred between the end of the financial year and 9 November 2005;

andc) there were no contracts of significance subsisting during or at the end of the financial year in which a director of

the Company was materially interested.

There are no directors retiring by rotation at the forthcoming Annual General Meeting but Thomas Glucklich will retire atthat Meeting after 10 years service. David Buttfield will be recommended for re-election for a new three year term andDavid Campbell will be recommended for election following his appointment to the Board on 1 November 2005.

Directors’ Report

Fenner PLC 23

Supplier payment policyGiven the international nature of the Group’s operations, the Group does not operate a standard code in respect ofpayments to suppliers. Individual operating businesses are responsible for agreeing the terms and conditions underwhich transactions with their suppliers are conducted, including the terms of payment. It is the Group’s policy thatpayments to suppliers are made in accordance with these terms. The average creditor days for the Group during the yearended 31 August 2005 was 52 days (2004 54 days). The Company does not have any trade creditors.

Employment policyThe Group operates worldwide and its employment policies are designed to meet local conditions and requirements butare established on the basis of the best practices in each country. Wherever the Group operates, it encourages theprovision of equal employment opportunities regardless of sex, race, religion or age.

The Group’s policy is to secure good relations between management and all employees, to promote a betterunderstanding of all the issues, both internal and external, that influence the Group’s business performance and toimprove performance and productivity. Formal and informal meetings are used to consult employees and to keep theminformed about the performance of the Group. The practices of consultation and involvement vary from country tocountry according to local customs, legal considerations and the size of the operation. The regular worldwide issue of aGroup newspaper assists the process of communication, as do briefing meetings, information bulletins and meetingswith employee representatives.

The Group continues to recognise its social and statutory duty to employ disabled persons and does all that ispracticable to meet this responsibility. Full and fair consideration is given to the recruitment, training, careerdevelopment and promotion of disabled persons bearing in mind the aptitude and ability of the individual concerned.

If an employee becomes disabled while employed by the Group, wherever possible, he or she will continue to beemployed in the same job. If this action is not practicable or possible then every effort will be made to find suitablealternative employment. In these circumstances retraining would be made available using Group resources as well asby contact with the local disabilities employment adviser.

Environmental policyFenner PLC recognises and accepts that concern for the environment is an integral and fundamental part of theCompany's corporate business strategy.

The Company actively seeks to reduce its impact on the environment to the lowest practical level by ensuring that alloperations and activities within the Group exemplify best contemporary practice in respect of the environment. Anythreat of pollution from the Group’s activities is identified and either eliminated or controlled effectively.

Independent auditorsA resolution to re-appoint PricewaterhouseCoopers LLP as independent auditors to the Company will be proposed at theAnnual General Meeting.

Annual General MeetingAs special business at the forthcoming Annual General Meeting resolutions will be proposed to renew the directors’authority to allot relevant securities, to disapply the statutory pre-emption rights to a limited extent and to make marketpurchases of Ordinary Shares in the Company subject to defined limits. The proposed resolutions and further detailsregarding these proposals are set out in the Chairman’s explanatory letter accompanying the Notice of the AnnualGeneral Meeting.

Signed on behalf of the Board of DirectorsC I Cooke Chairman9 November 2005

Directors’ Reportcontinued

24 Fenner PLC

Independent Auditors' Report to the members of Fenner PLC

We have audited the financial statements which comprise the Group profit and loss account, the balance sheets,Group cash flow statement, the statement of total recognised gains and losses, and the note of historical cost profitsand losses, the reconciliation of movements in shareholders’ funds and the related notes. We have also audited thedisclosures required by part 3 of Schedule 7A to the Companies Act 1985 contained in the Board Remuneration Report(“the auditable part”).

Respective responsibilities of directors and auditorsThe directors’ responsibilities for preparing the annual report and the financial statements in accordance withapplicable United Kingdom law and accounting standards are set out in the statement of directors' responsibilities. Thedirectors are also responsible for preparing the Board Remuneration Report.

Our responsibility is to audit the financial statements and the auditable part of the Board Remuneration Report inaccordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards issued by theAuditing Practices Board. This report, including the opinion, has been prepared for and only for the Company’smembers as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose. We do not,in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financialstatements and the auditable part of the Board Remuneration Report have been properly prepared in accordance withthe Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with thefinancial statements, if the Company has not kept proper accounting records, if we have not received all the informationand explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors'remuneration and transactions is not disclosed.

We read the other information contained in the annual report and consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies with the financial statements. The other informationcomprises the Directors' Report, the financial highlights, the Chairman's Statement, the Chief Executive Officer'sReview, the Group Finance Director's Review, the Corporate Governance statement and the unaudited part of theBoard Remuneration Report

We review whether the Corporate Governance statement reflects the Company's compliance with the nine provisions ofthe 2003 FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and wereport if it does not. We are not required to consider whether the Board's statements on internal control cover all risksand controls, or to form an opinion on the effectiveness of the Company’s or Group's corporate governance proceduresor its risk and control procedures.

Basis of audit opinionWe conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An auditincludes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statementsand the auditable part of the Board Remuneration Report. It also includes an assessment of the significant estimatesand judgements made by the directors in the preparation of the financial statements, and of whether the accountingpolicies are appropriate to the Company and Group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statementsand the auditable part of the Board Remuneration Report are free from material misstatement, whether caused by fraudor other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation ofinformation in the financial statements.

OpinionIn our opinion:

l the financial statements give a true and fair view of the state of affairs of the Company and the Group at 31 August 2005 and of the profit and cash flows of the Group for the year then ended;

l the financial statements have been properly prepared in accordance with the Companies Act 1985; and

l those parts of the Board Remuneration Report required by Part 3 of the Schedule 7A to the Companies Act 1985 have been properly prepared in accordance with the Companies Act 1985.

PricewaterhouseCoopers LLPChartered Accountants and Registered AuditorsQueen Victoria House, Guildhall Road, Hull, HU1 1HH9 November 2005

Fenner PLC 25

313,012302,193

10,819

21,255(1,904)(3,502)

15,84914,775

1,074

(20)-

15,829(3,761)

(43)

12,025(4,514)

7,511(980)

6,531(8,174)

(1,643)

TurnoverContinuing operations

Acquisitions

Operating profit before goodwill amortisation and exceptional itemsGoodwill amortisation

Exceptional items

Operating profitContinuing operations

Acquisitions

Share of operating loss in associated undertaking

Profit on sale of associated undertaking

Profit on ordinary activities before interestNet interest payable

Share of net interest payable in associated undertaking

Profit on ordinary activities before taxationTaxation on profit on ordinary activities

Profit on ordinary activities after taxationMinority equity interests

Profit for the yearDividends

Retained loss for the year

Earnings per share*Adjusted - before goodwill amortisation, exceptional items and profit on sale of operations

Basic - after goodwill amortisation, exceptional items and profit on sale of operations

Diluted - after goodwill amortisation, exceptional items and profit on sale of operations

*Comparative figures have been restated following a placing and open offer on 20 May 2005 (note 22).

All of the Group’s activities are continuing operations.

The notes on pages 30 to 58 form part of these accounts.

260,595

260,595

-

16,101

(1,149)

(6,214)

8,738

8,738

-

489

695

9,922

(3,458)

(69)

6,395

(3,052)

3,343

(976)

2,367

(6,324)

(3,957)

7.67p

2.19p

2.17p

9.34p

5.28p

5.25p

2

10

5

2,3

6

7

8

21

9

9

9

Note

Group Profit and Loss Accountfor the financial year ended 31 August 2005

26 Fenner PLC

2005£000

2004£000

Fixed assets

Intangible assets - Goodwill

- Other

Tangible assets

Investments - Group undertakings

- Associated undertaking

- Other

Current assets

Stocks

Debtors

Cash at bank and in hand

Creditors - Amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors - Amounts falling due after more than one year

Provisions for liabilities and charges

Net assets

Capital and reserves

Called up share capital

Share premium account

Revaluation reserve

Other reserve

Profit and loss account

Shareholders’ funds - Equity interest

Minority equity interests

Total funds employed

The accounts were approved by the Board of Directors on 9 November 2005 and signed on its behalf by

CI Cooke Chairman

RJ Perry Group Finance Director


10

10

11

12

12

12

13

14

15

16

18

20

21

21

21

21

22

Note2004£000

2004£000

2005£000

20,676

5

57,513

-

344

262

78,800

43,391

55,456

32,229

131,076

(82,718)

48,358

127,158

(55,037)

(7,670)

64,451

27,150

4,238

3,991

16,758

8,602

60,739

3,712

64,451

60,422

26

62,851

-

233

262

123,794

54,922

70,255

52,091

177,268

(116,214)

61,054

184,848

(49,741)

(11,948)

123,159

39,141

49,088

3,985

1,122

25,489

118,825

4,334

123,159

-

-

4,046

114,697

-

-

118,743

-

39,671

19,622

59,293

(38,046)

21,247

139,990

-

(381)

139,609

39,141

49,088

1,413

11,449

38,518

139,609

-

139,609

2005£000

-

-

4,113

69,641

-

-

73,754

-

60,551

344

60,895

(43,615)

17,280

91,034

(25)

(401)

90,608

27,150

4,238

1,432

30,201

27,587

90,608

-

90,608

Group Company

Balance Sheetsat 31 August 2005

Fenner PLC 27

Net cash inflow from operating activities

Dividends received from associated undertaking

Returns on investments and servicing of finance

Interest received

Interest paid

Interest element of finance lease rental payments

Dividends paid to minority shareholders

Net cash outflow from returns on investments and servicing of finance

Taxation

Capital expenditure and financial investment

Purchase of tangible fixed assets

Purchase of investments and secured loans

Sale of tangible fixed assets

Net cash outflow on capital expenditure and financial investment

Acquisitions and disposals

Purchase of subsidiary undertakings

Sale of subsidiary undertakings

Net proceeds on disposal of associated undertaking and purchase of related subsidiary

Net cash outflow on acquisitions and disposals

Equity dividends paid

Net cash outflow before financing

Financing

Issue of ordinary share capital

Loan repayment from associated undertaking

Capital element of finance lease repayments

Repayment of bank and other borrowings

New bank and other borrowings

Net cash inflow from financing

Increase in cash


14,191

77

(4,245)

(2,591)

(8,700)

(1,506)

(6,015)

(8,789)

1,689

(7,100)

1,142

(4,874)

(2)

(511)

(7,999)

(744)

43

(2,796)

11

1,279

4,684

68

(11)

(3,968)

916

21,315

-

(3,910)

(5,590)

(7,901)

(44,218)

(6,324)

(46,628)

75,200

28,572

1,142

(4,565)

(10)

(477)

(8,031)

-

130

(44,199)

(19)

-

56,340

70

(106)

(7,436)

26,332

Group Cash Flow Statementfor the financial year ended 31 August 2005

28 Fenner PLC

23

26(b)

24

Note £000 £000£000 £0002005 2004

(7,100)

3,063

(4,037)

9,117

-

-

5,080

(44,496)

(39,416)

28,572

(18,790)

9,782

234

(4,452)

(55)

5,509

(39,416)

(33,907)

64.9%28.5%

6,395

85

6,480

(3,875)

12,025

23

12,048

(1,623)

2,367

1,378

3,745

6,531

1,715

8,246

Increase in cash

Cash inflow from increase in loans and finance leases

Decrease in net debt resulting from cash flows

Effect of foreign exchange rate changes

Loans and finance leases acquired with subsidiaries

New finance leases

Decrease in net debt

Opening net debt

Closing net debt

Gearing (closing net debt / shareholders’ funds)


Statement of Total Recognised Gains and Lossesfor the financial year ended 31 August 2005

Reconciliation of Net Cash Flow to Movement in Net Debtfor the financial year ended 31 August 2005

Note of Historical Cost Profits and Lossesfor the financial year ended 31 August 2005

Fenner PLC 29

Profit for the year

Currency translation differences on foreign currency net investments

Total recognised gains and losses since last annual report

2005£000

2004£000

Group

Reported profit on ordinary activities before taxation

Difference between a historical cost depreciation charge and the actual

depreciation charge of the year calculated on the revalued amount

Historical cost profit on ordinary activities before taxation

Historical cost retained loss for the year after taxation, minority equity interests and dividends

2005£000

2004£000

Group

2005£000Note

2004£000

Group

24

Notes

1 Accounting policies

Basis of preparation

The accounts have been prepared in accordance with applicable accounting standards in the United Kingdom, the Companies Act 1985 and

under the historical cost convention, as modified by the revaluation of certain fixed assets, and have been applied consistently.

The disclosures required to comply with the transitional arrangements of Financial Reporting Standard (FRS) 17 Retirement Benefits are made in

note 27.

As allowed by Section 230 of the Companies Act 1985, a separate profit and loss account dealing with the results of the parent company has

not been presented.

Basis of consolidation

a) The Group accounts consolidate the accounts of Fenner PLC and its subsidiary undertakings.

b) In the Group balance sheet, investments in associated undertakings are stated at cost plus an appropriate share of post acquisition reserves

attributable to the Group, including the revaluation of land and buildings. An associated undertaking is an undertaking in which the Group has

a participating interest and exercises a significant influence over operating and financial policy and which is neither a subsidiary undertaking

of the parent company nor a joint venture accounted for by the gross equity method.

c) The results of businesses acquired during the year are incorporated from the date on which control passes.

d) The results of businesses sold during the year are incorporated up to the date on which control passes.

Goodwill

Prior to 1 September 1998, goodwill arising on consolidation, representing the excess of the fair value of the consideration over the fair value of

the net assets acquired, was written off directly to reserves. Subsequent to that date, in accordance with FRS10, Goodwill and Intangible

Assets, goodwill is capitalised and amortised through the profit and loss account over its estimated useful economic life.

Where a subsequent disposal occurs any goodwill which has not been amortised through the profit and loss account or which was previously

written off directly to reserves is taken into account in determining the profit or loss on disposal.

Tangible fixed assets

Fixed assets are stated at their cost (purchase price or production cost and any cost directly attributable to bringing the fixed asset into

working condition for its intended use) or at subsequent valuation less any provision for depreciation or diminution in value where required.

In prior years certain of the Group’s and the Company’s freehold and leasehold properties have been revalued by independent qualified

professional valuers on the basis of open market value for their existing use. As permitted by FRS15 Tangible Fixed Assets these valuations

have been frozen.

Freehold land is not depreciated. Depreciation is provided by reference to cost or valuation at rates estimated to write off the relevant assets by

equal instalments over their estimated useful economic lives. The lives most widely applied are:

Freehold buildings 40 years

Leasehold land and buildings Unexpired term of lease

Plant, machinery and equipment 3-10 years

Patents Unexpired life of patent

Properties

Where the Group disposes of properties, the difference between the carrying value and the net proceeds is dealt with through the profit and

loss account and any realised revaluation surplus is transferred from the revaluation reserve to the profit and loss account reserve.

Government grants

Grants in respect of capital expenditure are treated as deferred credits in the balance sheet. An annual transfer is made to the profit and loss

account reflecting the benefit over the useful lives of the assets concerned. Grants in respect of revenue expenditure are credited to the profit and

loss account in the period in which the related expenditure is incurred.

Research and development expenditure

All expenditure on research and development is charged against profits in the year incurred except expenditure of a capital nature which is

included in the balance sheet and depreciated as noted above.

Other investments

Other investments are stated at cost or valuation less provision for any diminution in value.

30 Fenner PLC

Stocks

Stocks and work in progress are valued at the lower of cost, including an addition for overheads where appropriate, and net realisable value.

Turnover

Turnover is recognised when goods are dispatched and represents amounts receivable for goods and services provided in the normal course

of business, net of trade discounts, VAT and other sales related taxes.

Foreign currencies

Transactions denominated in foreign currencies are translated at the rate of exchange on the day the transaction occurs or at the contracted

rate if the transaction is covered by a forward exchange contract. Assets and liabilities denominated in foreign currencies are translated at the

exchange rate ruling at the balance sheet date or if appropriate at the forward contract rate. Exchange differences arising in the accounts of

individual companies are included in the profit and loss account except that, where financial instruments have been used to finance equity

investments in foreign currencies, exchange differences arising on the instruments are dealt with through reserves to the extent that they are

covered by exchange differences arising on the net assets represented by the equity investments.

The accounts of overseas subsidiaries and associated undertakings are translated into sterling on the following bases:

- Assets and liabilities at the rate of exchange at the end of the financial year.

- Profit and loss account items at the average rate of exchange during the financial year.

- Exchange differences arising on the retranslation of opening net assets into sterling are recorded as movements on reserves in the Group

balance sheet.

Financial instruments

The Group uses derivative financial instruments to manage its exposures to fluctuations in interest and foreign currency exchange rates.

Receipts and payments on interest rate instruments are recognised on an accruals basis in the profit and loss account over the life of the

instrument. Changes in the fair value of derivative financial instruments used to manage foreign exchange exposures are dealt with in the profit

and loss account if they relate to trading exposures or deferred until the underlying transaction occurs. Any gain or loss on instruments used to

hedge an exposure on the net investment in overseas territories is dealt with through reserves.

Leased assets

For assets acquired under finance leases the amount representing the outright purchase price of such assets is included in tangible fixed

assets. Depreciation is provided at rates designed to write off the cost in equal annual amounts over the shorter of the estimated useful lives of

the assets (which are the same as those for assets purchased outright) and the period of the leases. Assets acquired under a hire purchase

contract which has the characteristics of a finance lease are depreciated over their estimated useful economic lives.

The capital element of future rentals is treated as a liability and the interest element is charged to the profit and loss account over the period of

the leases in proportion to the balances outstanding.

Operating lease rentals are charged to the profit and loss account when incurred.

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date and is

determined using the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse.

Timing differences are differences between the Group's taxable profits and its results as stated in the financial statements that arise from the

inclusion of gains and losses in tax assessments in the periods different from those in which they are recognised in the financial statements.

Deferred tax assets are recognised only when it can be regarded as more likely than not that there will be suitable taxable profits from which

the future reversal of the underlying timing differences can be deducted.

Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the

revalued assets. Deferred tax is measured on a non-discounted basis.

Pensions and other post-retirement benefits

Employees are provided with retirement and death benefits under pension schemes adapted to suit social conditions in the countries where the

Group operates. The schemes are subject to an actuarial review where appropriate.

Throughout the Group, for both defined benefit schemes and defined contribution schemes, contributions are charged to the profit and loss

account so as to spread the cost of pensions over the employees’ working lives with the particular operating company.

The cost of providing other post-retirement benefits, principally private healthcare, is charged to the profit and loss account so as to spread the

cost over the service lives of relevant employees in accordance with the advice of qualified actuaries.

Fenner PLC 31

2 Segmental reporting

2005Turnover by geographical origin

Total sales

Inter-segment sales

Sales to third parties

Operating profit

Operating profit before goodwill amortisation & exceptional items

Goodwill amortisation (note 10)

Exceptional items (note 5)

Operating profit after goodwill amortisation & exceptional items

Net assets

Segment net assets

Associated undertaking

Taxation and dividends payable

Net debt

Total net assets

2004Turnover by geographical origin

Total sales

Inter-segment sales

Sales to third parties

Operating profit

Operating profit before goodwill amortisation & exceptional items

Goodwill amortisation

Exceptional items (note 5)

Operating profit after goodwill amortisation & exceptional items

Net assets

Segment net assets


Taxation and dividends payable

Net debt

Total net assets

265,542

(4,947)

260,595

16,101

(1,149)

(6,214)

8,738

110,896

344

(7,373)

(39,416)

64,451

39,237

(307)

38,930

4,083

(135)

(80)

3,868

19,845

26,594

(182)

26,412

4,402

-

-

4,402

7,173

119,413

(1,020)

118,393

5,471

(729)

3,037

7,779

54,624

80,298

(3,438)

76,860

2,145

(285)

(9,171)

(7,311)

29,254

317,138

(4,126)

313,012

21,255

(1,904)

(3,502)

15,849

165,921

233

(9,088)

(33,907)

123,159

50,709

(779)

49,930

6,010

(314)

-

5,696

28,018

30,791

(132)

30,659

4,494

-

-

4,494

8,683

144,053

(1,126)

142,927

10,584

(946)

(444)

9,194

76,013

91,585

(2,089)

89,496

167

(644)

(3,058)

(3,535)

53,207

Group£000

Rest ofWorld£000

Africa£000

NorthAmerica

£000Europe

£000

Notes continued

32 Fenner PLC

It is not possible to analyse net interest payable by geographical segment as funding for the Group is managed centrally.

c) Operating profit is analysed as follows

Turnover

Cost of sales

Gross profit

Distribution costs

Administrative expenses

Operating profit

In the year ended 31 August 2005 exceptional items of £3,502,000 included £444,000 and £3,058,000 within cost of sales and

administrative expenses respectively (see note 5 for further detail). Within acquisitions are exceptional items of £328,000 which are included as

administrative expenses.

In the year ended 31 August 2004 exceptional items of £6,214,000, included £(1,479,000), £41,000 and £7,652,000 within cost of sales,

distribution costs and administrative expenses respectively.

10,819

(5,544)

5,275

(1,288)

(2,913)

1,074

260,595

(190,747)

69,848

(27,349)

(33,761)

8,738

Total

313,012

(229,726)

83,286

(30,457)

(36,980)

15,849

Total

260,595

(190,747)

69,848

(27,349)

(33,761)

8,738

-

-

-

-

-

-

302,193

(224,182)

78,011

(29,169)

(34,067)

14,775

2004£000

6,843

18

1,151

382

1,014

768

216

2,281

1,015

915

215

331

114

112

2005£000

8,213

35

1,908

58

1,214

880

149

2,087

1,231

-

187

463

464

68

2005£000

2004£000

3 Operating profit

a) Operating profit is after charging

Depreciation and impairments - owned assets

- leased assets

Amortisation - intangible assets

Foreign exchange losses

Operating lease rentals - plant and machinery

- other

Loss on disposal of fixed assets

Research and development expenditure

Severance costs

and crediting

Impairment reversal

Government grants

b) Auditors’ remuneration

Group audit fees

Non-audit fees - UK

Non-audit fees - overseas

Group audit fees includes £65,000 (2004 £41,000) in respect of the Company.

Non-audit fees in the UK payable to PricewaterhouseCoopers LLP principally comprise acquisition support costs of £382,000,

pension costs of £61,000 and tax advisory services of £8,000. Acquisition support costs of £344,000 were capitalised as

acquisition costs. Overseas non-audit fees principally comprise tax advisory services.

In addition £56,000 was borne by the Fenner Pension Scheme.

Fenner PLC 33

2 Segmental reporting continued

Turnover by geographical destination - sales to third parties

Group£000

313,012260,595

Rest ofWorld£000

64,58952,255

Africa£000

33,73228,199

NorthAmerica

£000

143,945116,451

Europe£000

70,74663,690

20052004

Turnover does not, in the opinion of the directors, represent significantly different business segments and as such no analysis by class of business

is presented.

AcquisitionsContinuingoperationsAcquisitions

Continuingoperations

5 Exceptional items

The exceptional charge of £3,502,000 (2004 £6,214,000) comprises:

- property and plant impairments of £2,574,000 (2004 £502,000);

- acquisition integration costs of £328,000 (2004 £2,175,000)

- other amounts of £600,000 (2004 £6,079,000) which principally comprise an asset impairment relating to the Group’s investment in United

Polymers Limited and professional costs relating to proceedings against the Welsh Development Agency (WDA) for damages in relation to the

provision by the WDA of defective manufacturing facilities.

During 2004 the re-commissioning of the Canadian facility, which was mothballed in the prior year, gave rise to a provision release of £2,542,000

The related tax credit amounts to £378,000 (2004 £735,000).

6 Net interest payable

Interest payable

Bank loans and overdrafts

Other loans

Finance leases

Interest receivable - on bank and other deposits

34 Fenner PLC

Notes continued

1,940

372

350

2,662

£000

65,134

4,741

5,407

75,282

2,190

363

396

2,949

£000

71,301

5,032

5,801

82,134

2005Number

2004Number

2005£000

2004£000

4 Employee information

The average number of employees and their total employment costs during the year were

Production

Selling and distribution

Administration

Average number of employees

Wages and salaries

Social security costs

Other pension costs (note 27)

Total employment costs

825

3,823

2

4,650

(1,192)

3,458

1,192

3,743

10

4,945

(1,184)

3,761

Fenner PLC 35

7 Taxation on profit on ordinary activities

a) Analysis of charge for the year

United Kingdom current taxation

Corporation tax at a rate of 30% (2004 30%)

Double taxation relief

Adjustments in respect of earlier years

Total UK current taxation

Overseas taxation

Overseas taxation adjustments in respect of earlier years

Group share of taxation on profits of associated undertaking

Total current taxation

Deferred taxation

Taxation on profit on ordinary activities

b) Factors affecting the tax charge for the year

The tax charge for the year is higher than the standard rate of corporation tax in the UK applied to the profit before taxation

as explained below

Profit on ordinary activities before taxation

Profit on ordinary activities before taxation multiplied by the standard

rate of corporation tax in the UK of 30%

Effects of

Expenses not deductible for tax purposes

Timing differences

Effect of overseas tax rates and overseas tax suffered

Adjustments in respect of earlier years

Current taxation charge for the year

c) Factors that may affect future tax charges

The taxation charge in future years may be affected by the utilisation of losses and other potential deferred tax assets, which in the current year

amount to an unrecognised deferred tax asset of £6.4m (2004 £4.6m). On the basis of current available evidence it is considered unlikely that

suitable taxable profits will be generated in the near future.

In addition, there are unprovided net capital losses of £0.7m (2004 £0.7m) which would arise if revalued properties we dispose of at their

revalued amounts, together with unprovided UK capital losses carried forward of £0.6m (2004 £0.8m). Such losses would only affect the tax

charge if suitable capital gains were available, and it is not envisaged such profits will be available in the foreseeable future.

508

(452)

(22)

34

3,403

150

161

3,748

(696)

3,052

6,395

1,919

1,841

(890)

750

128

3,748

1,121

(727)

(114)

280

5,312

(208)

-

5,384

(870)

4,514

12,025

3,607

664

810

625

(322)

5,384

2005£000

2004£000

8 Dividends

Ordinary shares

Dividend payable – interim 1.975p (2004 1.975p)

Dividend proposed – final 3.85p (2004 3.85p)

Adjustment to prior year final dividend

Amount due to the Employee Share Ownership Plan Trust

If approved, the final dividend of 3.85p per share (2004 3.85p) will be paid on 16 January 2006 to shareholders on the register on 16 December

2005. UK income tax at the lower rate of 10% is deemed to have been paid in respect of these dividends but will not in most cases be recoverable

by shareholders.

2004£000

2,145

4,181

6

6,332

(8)

6,324

2005£000

2,148

6,028

6

8,182

(8)

8,174

Notes continued

36 Fenner PLC

Earnings

Profit for the year

Goodwill amortisation, exceptional items and profit on sale of operations

Tax attributable to exceptional items and profit on sale of operations

Earnings for the year before goodwill amortisation, exceptional items and profit on sale of operations

Weighted average number of ordinary shares in issue during the year*

Weighted average number of shares in issue

Weighted average number of shares held by the Employee Share Ownership Plan Trust

Weighted average number of shares in issue - basic

Weighted average effect of share options and contingent long term incentive plan shares

Weighted average number of shares in issue - diluted

Earnings per share*

Basic - after goodwill amortisation, exceptional items and profit on sale of operations

Goodwill amortisation, exceptional items and profit on sale of operations

Tax attributable to exceptional items and profit on sale of operations

Adjusted - before goodwill amortisation, exceptional items and profit on sale of operations

Diluted earnings per share after goodwill amortisation, exceptional items and profit on sale of operations amount to 5.25p (2004 2.17p).

Diluted earnings per share before goodwill amortisation, exceptional items and profit on sale of operations amount to 9.28p (2004 7.60p).

*Comparative figures have been restated following a placing and open offer on 20 May 2005 (note 22).

2,367

6,668

(735)

8,300

Number

108,348,584

(134,684)

108,213,900

945,675

109,159,575

Pence

2.19

6.16

(0.68)

7.67

6,531

5,406

(378)

11,559

Number

123,908,805

(133,769)

123,775,036

735,681

124,510,717

Pence

5.28

4.37

(0.31)

9.34

2004£000

2005£000

9 Earnings per share

In view of the significance of the exceptional items, goodwill amortisation and profit on sale of operations, in the current and prior years, the

directors consider it appropriate to disclose earnings per share calculated both before and after these items.

10 Intangible fixed assets

GROUP

Cost

1 September 2004

Exchange adjustments

Additions

Subsidiaries acquired

31 August 2005

Accumulated amortisation

1 September 2004


Charge for year

31 August 2005

Net book value

31 August 2005

31 August 2004

Goodwill is amortised over its useful economic life of up to 20 years.

COMPANY

The Company has no intangible assets.

Total£000

23,529

5

41,652

22

65,208

2,848

4

1,908

4,760

60,448

20,681

Other£000

194

-

3

22

219

189

-

4

193

26

5

Goodwill£000

23,335

5

41,649

-

64,989

2,659

4

1,904

4,567

60,422

20,676

Fenner PLC 37

11 Tangible fixed assets

GROUP

Cost or valuation

1 September 2004


Additions

Subsidiaries acquired

Disposals

Reclassifications

31 August 2005

Accumulated depreciation

1 September 2004


Charge for year

Reclassifications

Disposals

31 August 2005

Net book value

31 August 2005

31 August 2004

Cost or valuation comprises

Cost

Valuation - 1997

- 1998

- 1999

Freehold land and buildings includes land at cost or valuation of £6,534,000 (2004 £6,444,000), which is not subject to depreciation.

The net book value of tangible fixed assets includes an amount of £618,000 (2004 £15,000) in respect of plant, machinery and equipment held

under finance leases.

Total£000

130,571

1,885

8,235

4,703

(849)

-

144,545

73,058

957

8,248

-

(569)

81,694

62,851

57,513

134,593

2,160

2,697

5,095

144,545

Plantmachinery &

equipment£000

100,452

1,500

7,652

3,608

(829)

(590)

111,793

66,873

884

6,768

(17)

(565)

73,943

37,850

33,579

111,793

-

-

-

111,793

Leasehold land &

buildings£000

621

16

463

249

-

-

1,349

93

4

15

-

-

112

1,237

528

1,349

-

-

-

1,349

Freeholdland &

buildings£000

29,498

369

120

846

(20)

590

31,403

6,092

69

1,465

17

(4)

7,639

23,764

23,406

21,451

2,160

2,697

5,095

31,403

Notes continued

38 Fenner PLC

11 Tangible fixed assets continued

COMPANY

Cost or valuation

1 September 2004 and 31 August 2005

Accumulated depreciation

1 September 2004

Charge for year

31 August 2005

Net book value

31 August 2005

31 August 2004

Cost or valuation comprises

Cost

Valuation - 1997

- 1998

- 1999

Freehold land and buildings includes land at cost or valuation of £1,733,000 (2004 £1,733,000) which is not subject to depreciation.

Revaluation of fixed assets

The historical cost and related accumulated depreciation of all fixed assets at 31 August 2005 is shown below.

Historical cost of fixed assets

Related accumulated depreciation

2004£000

129,885

75,871

Freeholdland &

buildings£000

5,060

947

67

1,014

4,046

4,113

938

410

1,197

2,515

5,060

Group Company2005£000

4,413

1,780

2004£000

4,413

1,732

2005£000

142,536

83,560

Fenner PLC 39

12 Fixed asset investments

GROUP

Cost or valuation

1 September


Share of retained loss

31 August 2005

Goodwill

1 September 2004

Amortisation

31 August 2005

Loans

1 September 2004

Movements

31 August 2005

Net book value

31 August 2005

31 August 2004

Notes continued

Other£000

262

-

-

262

-

-

-

-

-

-

262

262

Associate£000

46

21

(49)

18

119

(14)

105

179

(69)

110

233

344

Total£000

308

21

(49)

280

119

(14)

105

179

(69)

110

495

606

Details of interests in other investments are set out in note 31.

Company investments in Group undertakings of £114,697,000 (2004 £69,641,000) represent the value of shares in subsidiary undertakings (see

note 31).

40 Fenner PLC

14 Debtors

Amounts falling due within one year

Trade debtors

Amounts owed by Group undertakings

Amounts owed by associated undertaking

Other debtors

Prepayments and accrued income

Tax recoverable

Deferred taxation (note 19)

Amounts falling due after more than one year

Trade debtors

Other debtors

15 Creditors - Amounts falling due within one year

Bank overdrafts

Bank loans

Other loans

Obligations under finance leases

Borrowings (note 17)

Trade creditors

Amounts owed to Group undertakings

Amounts owed to associated undertaking

Tax on profits

Other taxes and social security

Other creditors

Accruals and deferred income

Dividends

Borrowings include an amount of £152,000 (2004 £136,000) which is secured on specific fixed assets.

2004£000

-

60,546

-

5

-

-

-

60,551

-

-

-

60,551

8,154

-

-

-

8,154

-

28,258

-

169

373

25

318

6,318

43,615

2005£000

-

39,547

-

124

-

-

-

39,671

-

-

-

39,671

-

-

-

-

-

-

29,326

-

86

141

126

205

8,162

38,046

2004£000

47,314

-

75

1,714

1,777

492

4,077

55,449

6

1

7

55,456

8,756

3,949

3,924

4

16,633

34,930

-

2

3,964

1,016

5,548

14,307

6,318

82,718

2005£000

59,217

-

-

1,291

3,079

693

5,926

70,206

31

18

49

70,255

206

4,701

31,296

198

36,401

41,602

-

-

5,195

1,742

7,171

15,935

8,168

116,214

Group Company

13 Stocks

GROUP

Raw materials

Work in progress

Finished goods

COMPANY

The Company has no stocks.

2004£000

17,218

7,005

19,168

43,391

2005£000

22,696

9,251

22,975

54,922

Fenner PLC 41

Notes continued

16 Creditors - Amounts falling due after more than one year

Other loans

Long and medium term bank loans


Borrowings (note 17)

Other creditors

Other loans include amounts due after more than five years repayable wholly or partly

by instalments

Other loans principally comprise US dollar private placements, the terms of which are disclosed in note 17.

Other loans amounting to £828,000 (2004 £719,000) are secured on specific fixed assets.

17 Financial assets and liabilities

The Treasury Policy section in the Group Finance Director’s Review on page 11 gives details of the Group’s policies in respect of foreign exchange

and interest rate risk management and the related use of financial instruments. The numerical disclosures in this note deal with financial assets and

liabilities as defined in FRS13, Derivatives and Other Financial Instruments: Disclosures. As permitted by FRS13, short term debtors and creditors

have been excluded from the disclosures, other than the currency risk disclosures.

Analysis of net financial assets and liabilities

Borrowings falling due within one year (note 15)

Borrowings falling due after more than one year (note 16)

Total borrowings


Net debt

Other financial assets

Other financial liabilities

Net financial liabilities

Maturity of financial liabilities

Within one year

Between one and two years

Between two and five years

In more than five years

Total borrowings and other financial liabilities

The Group had undrawn committed borrowing facilities at 31 August 2005 of £37.0m (2004 nil).

2005£000

36,401

49,597

85,998

(52,091)

33,907

(311)

144

33,740

36,401

4,360

37,654

7,727

86,142

2004£000

16,633

55,012

71,645

(32,229)

39,416

(270)

25

39,171

16,633

31,726

11,772

11,539

71,670

2005£000

-

-

-

-

-

-

-

2005£000

23,310

26,034

253

49,597

144

49,741

7,727

2004£000

-

-

-

-

25

25

-

2004£000

55,012

-

-

55,012

25

55,037

11,539

Group Company

42 Fenner PLC

17 Financial assets and liabilities continued

Currency and interest rate analysis of financial assets and liabilities

31 August 2005

Financial liabilities

Sterling

US dollar

Other currencies


Financial assets

Sterling

US dollar

Euro

Australian dollars

Other currencies

Total financial assets


46

32,700

11,787

44,533

23,788

14,900

1,828

6,531

5,044

52,091

(7,558)

46

73,104

12,992

86,142

24,099

14,900

1,828

6,531

5,044

52,402

33,740

31 August 2004

Financial liabilities

Sterling

US dollar

Other currencies


Financial assets

Sterling

US dollar

Euro

Other currencies

Total financial assets


Weightedaverage time

for which rate is fixed

Years

Weightedaverage

fixedinterest

rate %

Fixedrate

£000

Floatingrate

£000

NonInterestBearing

£000Total£000

3.397.1%

2.637.2%

-

44,192

-

44,192

-

-

-

-

-

44,192

-

23,042

4,411

27,453

12,824

8,690

2,046

8,669

32,229

(4,776)

25

-

-

25

262

-

-

8

270

(245)

-

-

144

144

311

-

-

-

-

311

(167)

-

40,404

1,061

41,465

-

-

-

-

-

-

41,465

25

67,234

4,411

71,670

13,086

8,690

2,046

8,677

32,499

39,171

Fenner PLC 43

Notes continued

44 Fenner PLC

Fair values of financial assets and liabilities

Primary financial instruments held or issued to finance the Group’s operations


Other financial assets - equity investments

Other financial assets - trade and other debtors

Other financial liabilities

Borrowings due within one year

Borrowings due after more than one year

Derivative financial instruments held to manage interest rate or currency profiles

Foreign currency forward contracts and options

Interest rate swap

Fair value method and assumptions

Cash at bank and in hand, trade and other debtors,

and other financial liabilities Approximates to book value in view of the short maturity of these assets or liabilities.

Equity investments Approximates to book value.

Floating rate borrowings Approximates to book value where rates are reset to market rates at intervals of less

than one year.

Fixed rate borrowings Represents the value of replacing the existing fixed rate liabilities at the balance sheet

date with borrowings with similar terms to the remaining life of the loans.

Forward foreign currency contracts Based on the contracts being terminated at the balance sheet date at spot exchange

rates.

Interest rate swap and currency options Market value of comparable instruments at the balance sheet date.


The table above takes into account any derivatives used to hedge financial assets and liabilities.

Financial assets of £262,000 (2004 £262,000) represent equity investments and £49,000 (2004 £8,000) trade and other debtors and as

such are not interest bearing. Sterling financial liabilities of £144,000 (2004 £25,000) represent other creditors falling due after more than

one year and are non interest bearing. The fixed rate debt relates to two US dollar private placements. The first is $50,000,000 of Senior

Notes which bear interest at 6.6% per annum and is repayable on 1 March 2006. The second relates to $47,727,272 (2004 $54,545,454)

of Senior Notes which bear interest at 7.29% per annum. $6,818,182 is repayable on June 1 each year until 2012. Interest on $25,000,000 of

this debt was swapped to a floating rate liability.

The interest rate on floating rate assets and liabilities is principally linked to either the local currency base rate or LIBOR.

Gains and losses on hedges

The Group enters into forward foreign exchange currency contracts to reduce the currency exposures that arise on sales and purchases

denominated in foreign currencies. It also enters into interest rate swaps to manage exposures to changes in interest rates. Changes in the

fair value of instruments used as hedges are not recognised in the financial statements until the hedged position matures. An analysis of

these unrecognised gains and losses is as follows

Unrecognised gains and losses on hedges at 1 September 2004

Gains and losses arising in previous years which were recognised in 2005

Gains and losses arising before 1 September 2004 which were not recognised in 2005

Gains and losses arising in 2005 which were not recognised in 2005

Unrecognised gains and losses on hedges at 31 August 2005

Of which: Gains and losses expected to be recognised in the year to 31 August 2006

Gains and losses expected to be recognised in the year to 31 August 2007 or later

Net£000

646

(413)

233

(216)

17

34

(17)

Losses£000

(67)

67

-

(146)

(146)

(129)

(17)

Gains£000

713

(480)

233

(70)

163

163

-

Fairvalue£000

32,229

262

8

(25)

(16,717)

(59,032)

(52)

698

Fairvalue£000

52,091

262

49

(144)

(36,610)

(51,388)

(131)

148

Bookvalue£000

32,229

262

8

(25)

(16,633)

(55,012)

-

-

Bookvalue£000

52,091

262

49

(144)

(36,401)

(49,597)

-

-

31 August 2005 31 August 2004

18 Provisions for liabilities and charges

GROUP

1 September 2004


Profit and loss account - created

Profit and loss account - released

Utilised

New subsidiaries - Acquisitions

Other balance sheet movements

31 August 2005

Provisions for liabilities and charges represent the best estimate of obligations at the balance sheet date. The majority, with the exception of

the amount relating to Pensions and similar obligations, are expected to be utilised within 10 years.

COMPANY

1 September 2004

Profit and loss account - released

31 August 2005

Total£000

7,670

70

2,950

(175)

(1,407)

2,887

(47)

11,948

Property andenvironmental

costs£000

2,785

3

1,331

(26)

-

-

-

4,093

Total£000

401

(20)

381

Restructuringcosts£000

574

30

1,474

(84)

(1,190)

-

-

804

Pensionsand similarobligations

£000

2,651

23

145

-

(217)

2,105

-

4,707

Deferredtaxation

£000

1,660

14

-

(65)

-

782

(47)

2,344

Deferredtaxation

£000

401

(20)

381


Currency exposures

The information below represents the Group’s currency exposures at 31 August 2005 and comprises the net monetary assets or liabilities that

are not denominated in the functional currency of the operating unit involved, other than borrowings treated as hedges of net investments in

overseas operations. These exposures give rise to net currency gains and losses recognised in the profit and loss account. The amounts

below take into account the effect of any hedging instruments used to manage the exposures. Non-monetary assets and liabilities are

excluded.

Functional currency of operating unit

31 August 2005

Sterling

US dollar

Other

31 August 2004

Sterling

US dollar

Other

Total£000

683

175

(2,992)

(2,134)

Other£000

291

155

(9)

437

Euro£000

522

2

(73)

451

US Dollar£000

(130)

-

(3,277)

(3,407)

Sterling£000

-

18

367

385

1,372

(348)

(1,540)

(516)

580

(353)

(27)

200

(73)

5

-

(68)

865

-

(1,918)

(1,053)

-

-

405

405

Net foreign currency monetary assets/(liabilities)

Fenner PLC 45

(593)

1,589

3,467

873

(1,754)

3,582

2,417

24

271

870

3,582

5,926

(2,344)

3,582

19 Deferred taxation

The major components of the net deferred taxation asset/(provision) are as follows

Accelerated tax depreciation

Taxation losses

Other short term timing differences

Pension liabilities

Goodwill

Net deferred tax asset/(provision)

1 September 2004


New subsidiaries acquired

Profit and loss account

31 August 2005

Deferred tax asset (note 14)

Deferred tax provision (note 18)

Net deferred tax asset/(provision)

2004£000

(1,087)

1,701

2,361

338

(896)

2,417

4,077

(1,660)

2,417

(381)

-

-

-

-

(381)

(401)

-

20

(381)

-

(381)

(381)

20 Called up share capital

The authorised, allotted, called up and fully paid share capital of Fenner PLC is as follows

Ordinary shares of 25p each

1 September 2004

Issued in year

31 August 2005

During the year 158,612 ordinary shares of 25p were issued to the Trustees of the Fenner PLC 1992 Employee Share Ownership Plan Trust in

accordance with the Fenner Long Term Share Incentive Plan for a total consideration of £203,000.

On 20 May £56,340,000 was raised from shareholders in a placing and open offer of 46,611,102 ordinary shares (note 22).

1,192,933 ordinary shares were issued to Wellington Holdings plc shareholders as part of the Wellington acquisition.

Number

108,600,627

47,962,647

156,563,274

Authorised£000

34,000

21,000

55,000

Notes continued

46 Fenner PLC

£000

27,150

11,991

39,141

Number

136,000,000

84,000,000

220,000,000

2004£000

(401)

-

-

-

-

(401)

-

(401)

(401)

2005£000

2005£000

Group Company

Issued

20 Called up share capital continued

Options over ordinary shares of 25p each

The following share options were outstanding at 31 August 2005

The Fenner PLC 1996 Executive Share Option Scheme

i) Exercisable between 1999 and 2006

ii) Exercisable between 2001 and 2008

iii) Exercisable between 2001 and 2008

iv) Exercisable between 2002 and 2009

v) Exercisable between 2004 and 2011

vi) Exercisable between 2005 and 2012

vii) Exercisable between 2006 and 2013

viii)Exercisable between 2007 and 2014

In addition the following provisional allocations of ordinary shares have been made through the Fenner Long Term Share Incentive Plan

Date provisionally allocated

6 November 2002

5 November 2003

10 November 2004

Three years after the provisional allocation, at the discretion of the Trustees of the Fenner PLC 1992 Employee Share Ownership Plan Trust,

some or all of these shares may be awarded to the employees concerned if performance targets are met by the Company.

The number and price of share options outstanding under the Fenner PLC 1996 Executive Share Option Scheme and the provisional

allocation of ordinary shares made through the Fenner Long Term Share Incentive Plan have been adjusted following the Share Placing and

Open Offer.

21 Reserves

GROUP

1 September 2004

Exchange adjustments (includes tax on exchange in reserves)

Share capital issued

UITF17 share award

UITF17 share award accrual


Transfers

31 August 2005

At 31 August 2005 cumulative goodwill written off directly to reserves prior to 1 September 1998 on the acquisition of subsidiary undertakings

still held by the Group amounted to £40,877,000 (2004 £40,877,000).

Exchange gains arising on foreign currency borrowings used to hedge equity investments in foreign currencies amounted to £391,000

(2004 £288,000) and have been added to reserves.

Subsequent to the placing and open offer on 20 May 2005, £16,758,000 has been transferred from the Other reserve to the Profit and Loss

reserve on the basis that this amount is now distributable.

Total£000

33,589

1,715

45,972

(203)

254

(1,643)

-

79,684

Profit andloss

£000

8,602

1,702

-

(203)

254

(1,643)

16,777

25,489

Other£000

16,758

-

1,122

-

-

-

(16,758)

1,122

Revaluation£000

3,991

13

-

-

-

-

(19)

3,985

Sharepremium

£000

4,238

-

44,850

-

-

-

-

49,088

Option price

143.10p

190.46p

99.80p

89.18p

100.95p

87.23p

83.30p

123.49p

Number of shares

858,850

920,094

626,050

Number of shares

211,708

127,132

306,089

81,623

45,913

204,060

61,218

158,146

Fenner PLC 47

Notes continued

48 Fenner PLC

22 Reconciliation of movements in shareholders’ funds

1 September 2004

Profit for the year

Dividends

Share capital issued*


Currency translation differences on foreign currency net investments

Net increase in shareholders’ funds

31 August 2005

*Share capital issued represents a placing and open offer of 46,611,102 ordinary shares and an issue of 1,192,933 ordinary shares to

Wellington Holdings plc shareholders as part of the Wellington acquisition.

2005£000

90,608

(839)

(8,174)

57,760

254

-

49,001

139,609

2004£000

91,670

372

(6,324)

4,684

206

-

(1,062)

90,608

2005£000

60,739

6,531

(8,174)

57,760

254

1,715

58,086

118,825

2004£000

58,428

2,367

(6,324)

4,684

206

1,378

2,311

60,739

Group Company

21 Reserves continued

COMPANY

1 September 2004

Share capital issued

UITF17 share award



Transfers

31 August 2005

Share premium, Revaluation and Other reserves are non-distributable.

Included in the profit and loss account for both Group and Company is £121,000 (2004 £121,000) of ‘own shares’ being the cost of 131,859

(2004 131,859) Fenner PLC ordinary shares of 25p each held by the Fenner PLC 1992 Employees Share Ownership Plan Trust. The market value

of the shares at 31 August 2005 was £192,000 (2004 £144,000). Dividend income has not been waived. The Trustees, who are based in Jersey

and are independent of the Company, have wide powers to invest the Trust Fund and to apply the income and capital of the fund for the benefit

of the beneficiaries, being the employees of the Group. Income from the Plan, net of operating costs, is included in the Group profit and loss

account on an accruals basis. At 31 August 2005 the Plan also had cash on deposit of £341,000 (2004 £326,000). As at that date there was no

loan from the Company to the Plan nor had the Company guaranteed any borrowings of the Plan.

Subsequent to the placing and open offer on 20 May 2005, £19,874,000 has been transferred from the Other reserve to the Profit and Loss

reserve on the basis that this amount is now distributable.

The Company has taken advantage of merger relief in respect of the share premium of £1,122,000 on the shares issued in part consideration

for the shares acquired in Wellington Holdings plc, and has consequently credited the premium to the other reserve.

Total£000

63,458

45,972

(203)

254

(9,013)

-

100,468

Profit andloss

£000

27,587

-

(203)

254

(9,013)

19,893

38,518

Other£000

30,201

1,122

-

-

-

(19,874)

11,449

Revaluation£000

1,432

-

-

-

-

(19)

1,413

Sharepremium

£000

4,238

44,850

-

-

-

-

49,088

24 Analysis of changes in net debt


Bank overdrafts

Bank loans

Other loans


31 August2005£000

52,091

(206)

51,885

(30,735)

(54,606)

(451)

(33,907)

1 September2004£000

32,229

(8,756)

23,473

(3,949)

(58,936)

(4)

(39,416)

Acquisitions£000

-

-

-

(3,965)

-

(487)

(4,452)

Non cash£000

-

-

-

-

-

(55)

(55)

Exchangemovements

£000

(179)

19

(160)

(108)

513

(11)

234

25 Contingent assets and liabilities

The Group has disposed of certain businesses in prior years, which included obligations under certain property leases and grants. Should the

purchasers of the businesses default on these commitments, the future obligation could revert to the Group.

In the normal course of business the Group has given guarantees and counter indemnities in respect of commercial transactions and has entered

into forward contracts for the sale and purchase of foreign currencies by reference to its forecast requirements.

Proceedings have continued against the Welsh Development Agency (“WDA”), claiming substantial damages in relation to the provision by the

WDA of defective manufacturing facilities. The proceedings are now the subject of litigation.

The Group is involved as defendant in a number of potential and actual litigation cases in connection with its business, primarily in North

America. The directors believe that the likelihood of a material liability arising from these cases is remote.

In early October 2004, our conveyor belt operations in Charlotte and Atlanta received notification from the Anti Trust Division of the US

Department of Justice of their intention to enquire into possible anti trust violations by Fenner. Every co-operation is being given in order to

clarify and expedite the process.

The Company has guaranteed the borrowings of certain subsidiary undertakings which at 31 August 2005 amounted to £89,229,000

(2004 £71,641,000).

Cashflows£000

20,041

8,531

28,572

(22,713)

3,817

106

9,782

23 Reconciliation of operating profit to net cash inflow from operating activities

Operating profit

Non cash items

Depreciation and amortisation

Others including the effect of foreign exchange rate changes

Working capital movements

Stocks

Debtors

Creditors

Provisions


2004£000

8,738

7,097

1,040

(119)

(1,898)

1,885

(2,552)

14,191

2005£000

15,849

10,156

278

(6,356)

(3,353)

3,259

1,482

21,315

Fenner PLC 49

50 Fenner PLC

Notes continued

26 Acquisitions

a) Acquisition of Wellington Holdings plc

Wellington Holdings plc was acquired during the year through the acquisition of its entire share capital for a total cash consideration of

£44,312,000 together with shares issued valued at £1,420,000. The acquisition was completed on 20 May 2005. The total provisional

adjustments required to the book values of the assets and liabilities of the operations acquired in order to present the net assets of the

companies at a fair value in accordance with Group accounting bases were £3,469,000, details of which are set out below together with the

amount of goodwill arising. This purchase has been accounted for as an acquisition.

The acquisition had the following effect on the Group’s cash flow in the year


Purchase of tangible fixed assets

Net cash inflow

From the date of acquisition to 31 August 2005 the acquired operations contributed £10,819,000 to turnover and £1,074,000 to operating profit.

The consolidated results of Wellington in the period before acquisition in accordance with UK GAAP were as follows

Turnover

Operating profit

Interest

Profit before taxation

The profit before taxation in the previous financial year to 31 December 2004 was £5,051,000 after exceptional costs of £848,000 in respect

of the Hampton site re-development project and a profit on the sale of the freehold land site of £1,594,000.

1 Januaryto 20 May

2005£000

14,356

201

(105)

96

£000

1,279

(723)

556

26 Acquisitions continued

At 20 May 2005 the book values and provisional fair values of the net assets Wellington were as follows

Intangible fixed assets


Stocks

Debtors

Taxation

-Current

-Deferred tax debtor


Creditors

Bank loans

Finance leases

Provisions

-Pensions

-Deferred tax

Dividend

Total net assets acquired

Goodwill arising

Consideration (including acquisition expenses of £2,222,000)

Net assets acquired are stated in accordance with UK GAAP.

The book value of the assets and liabilities have been taken from the accounts of Wellington Holdings plc at 20 May 2005 (the date of

acquisition) at actual exchange rates on that date.

The fair value adjustments for alignment of accounting policies reflect the restatement of assets and liabilities in accordance with the Group’s

policies including the write off of all tangible fixed assets to their recoverable amount (£1,052,000) and the write down of stock to net realisable

value (£833,000).

The other adjustments principally include a SSAP 24 Pension Costs adjustment (£2,105,000).

b) Other acquisition

The Group’s other acquisitions were the business and assets of L&K Conveyors and service branches of Rob Harvey.

The book values and fair values of the net assets of these acquisitions were as follows.

Bookvalue£000

107

6,070

5,119

7,419

(179)

114

292

(4,726)

(3,965)

(455)

-

(1,092)

(1,097)

7,607

Revaluation£000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fenner PLC 51

Provisionalfair

value£000

22

4,550

4,265

7,407

(189)

1,053

292

(4,858)

(3,965)

(455)

(2,105)

(782)

(1,097)

4,138

41,594

45,732

Otheritems£000

-

(468)

(21)

(78)

65

736

-

(132)

-

-

(2,105)

50

-

(1,953)

Accountingbases

alignment£000

(85)

(1,052)

(833)

66

(75)

203

-

-

-

-

-

260

-

(1,516)


Stocks

Debtors

Cash

Creditors

Finance leases


Goodwill arising

Consideration (including deferred consideration of £35,000)

Provisionalfair

value£000

153

144

103

2

(134)

(32)

236

55

291

Accountingpolicy

alignment£000

-

-

-

-

-

-

-

Bookvalue£000

153

144

103

2

(134)

(32)

236

The combined impact of these acquisitions and the substantial acquisition (Wellington Holdings plc) noted above was as follows

Intangible fixed assets


Stocks

Debtors

Taxation

Deferred tax debtor


Bank loans

Creditors

Finance leases

Provisions

-Pensions

-Deferred tax

Dividend


Goodwill arising

Consideration (including deferred consideration and acquisition expenses)

Deferred consideration

Accrued costs

Shares issued

Cash consideration

Cash at bank and in hand of operations acquired

Deferred consideration in respect of previous acquisitions

Cash outflow in respect of the acquisition of subsidiary undertakings

Total£000

22

4,703

4,409

7,510

(189)

1,053

294

(3,965)

(4,992)

(487)

(2,105)

(782)

(1,097)

4,374

41,649

46,023

(35)

(101)

(1,420)

44,467

(294)

26

44,199

Other£000

-

153

144

103

-

-

2

-

(134)

(32)

-

-

-

236

55

291

52 Fenner PLC

Substantialacquisition

£000

22

4,550

4,265

7,407

(189)

1,053

292

(3,965)

(4,858)

(455)

(2,105)

(782)

(1,097)

4,138

41,594

45,732

Provisional fair value

26 Acquisitions continued

Notes continued

b) The valuation on which the FRS17 disclosures are set out below, has been prepared by a qualified actuary and is based on the most

recent actuarial valuations of the UK schemes. Scheme assets are stated at their market value at 31 August 2005. During the year ended

31 August 2005, the Group paid contributions to the Fenner Scheme at the rate of 12% of the pensionable salaries together with an additional

payment of £1.25m and members contributed at the rate of 8.0% of pensionable salaries. In addition, contributions were paid to the Wellington

Scheme of £0.3m.

The main financial assumptions used to calculate the UK schemes liabilities under FRS17 were as follows

Price inflation

Rate of increase in salaries

Rate of increase of pensions in payment subject to Limited Price Indexation increases*

Rate of increase for deferred pensioners subject to statutory revaluation

Discount rate

* Some elements of pension increase at either 0% pa or 3% pa

The assets in the UK scheme and the expected rates of return were

Equities

Bonds

Cash

Total (excluding defined contribution)

Defined contribution section

Total†

†There are also some policies relating to insured pensioners which are excluded from this disclosure.

% pa

8.5

4.9

4.5

2003% pa

2.7

3.7

2.7

2.7

5.5

2004% pa

3.0

4.0

2.9

3.0

5.6

2005% pa

2.7

3.7

2.7

2.7

5.0

2003

£000

53,606

15,296

2,684

71,586

1,680

73,266

£000

50,880

14,408

2,006

67,294

1,308

68,602

% pa

8.5

4.7

3.5

2004

£000

66,866

16,895

7,787

91,548

3,423

94,971

% pa

8.0%

4.2%

4.5%

2005

27 Pensions and other post-retirement benefits

The Group has continued to account for pensions in accordance with Statement of Standard Accounting Practice 24 and the disclosures given in

a) below are those required by that accounting standard. The transitional disclosures required for FRS17, Retirement Benefits, to the extent not

given in a) are, for the UK pension schemes (the Group’s only significant defined benefit arrangements), set out in b) below.

a) The Group operates a number of post-retirement defined benefit arrangements, including pension schemes and post-retirement medical

plans, around the world. Some of the arrangements are funded and some are unfunded. The assets of these schemes are held in

separate trustee administered funds. Since the overseas arrangements are all relatively small compared with the UK pension schemes detailed

below, a more limited disclosure has been included.

The total pension cost for the Group in the year ended 31 August 2005 was £5,801,000 (2004 £5,407,000).

The pension cost relating to the UK amounted to £2,517,000 (2004 £2,460,000).

Following the acquisition of Wellington Holdings, there are now two UK defined benefit schemes - the Fenner Pension Scheme and the Wellington

Pension Scheme. The cost of these schemes is assessed in accordance with the advice of a qualified actuary, who is not an employee of the

Group, using the Projected Unit Credit method. The last actuarial valuations of the UK schemes were carried out as at 31 March 2005 and 5 April

2005.

The assumptions that have the most significant effect on the results of the valuation are those relating to the rate of return on investments and the

rates of increase in salaries and pensions. It was assumed that the investment return would on average exceed both salary increases by 2.05%

p.a. and future pensions, which are entitled to increases, by 3.8% p.a.

At the dates of the latest full actuarial valuations, the combined value of the assets of the UK schemes (excluding insured pensions and the

defined contribution section) was £89,800,000 and on the assumptions above, was sufficient to cover 87% of the benefits that had accrued to

members, after allowing for expected future increases in earnings.

The element of the total pension cost in the year ended 31 August 2005 relating to foreign schemes amounted to £3,284,000 (2004 £2,947,000).

This charge has been determined in accordance with local best practice and regulations.

Fenner PLC 53

27 Pensions and other post-retirement benefits continued

The notional balance sheet liability for the UK and overseas schemes

Market value of UK assets (excluding insured pensions and defined contribution)

Actuarial value of UK defined benefit liabilities (excluding insured pensions)

UK scheme deficit

UK related deferred tax asset

UK pension liability

Overseas schemes’ deficits

Related deferred tax asset

Overseas net pension liability

Group net pension liability

Net assets excluding pension liability and SSAP24 pension assets

Net pension liability

Net assets including FRS17 pension liability

Profit and loss reserve excluding pension liability and SSAP24 pension assets

Net pension liability

Profit and loss reserve including pension liability

The movements in the UK scheme’s deficit were

Deficit in the UK scheme at 1 September 2004

Additional deficit taken on at 20 May 2005 (Wellington Pension Scheme)

Current service cost (which would be included in operating profit)

Contributions paid

Other finance income

Settlements/curtailments

Actuarial gain/(loss)

Deficit in UK scheme at 31 August 2005

2005£000

91,548

(126,567)

(35,019)

10,506

(24,513)

(5,055)

631

(4,424)

(28,937)

127,367

(28,937)

98,430

29,697

(28,937)

760

54 Fenner PLC

Notes continued

2004£000

71,586

(103,062)

(31,476)

9,443

(22,033)

(4,598)

1,644

(2,954)

(24,987)

67,198

(24,987)

42,211

11,349

(24,987)

(13,638)

(33,706)

-

(948)

1,967

(479)

-

1,690

(31,476)

(31,476)

(4,662)

(963)

2,049

(362)

92

303

(35,019)

(13,678)

655

(15,392)

20.9%

0.8%

18.7%

27 Pensions and other post-retirement benefits continued

Analysis of amounts that would be charged to operating profit in respect of defined benefit schemes

UK current service

UK past service cost

Settlement

Total cost in respect of final salary members

Total cost in respect of money purchase members

Total that would be charged to operating profit in respect of all UK members

Analysis of the amount that would be credited to other finance income

Interest on UK pension scheme liabilities

Expected return on assets in the UK pension scheme

Net charge to other finance income

UK schemes profit and loss charge before deduction for deferred tax

UK deferred tax credit

UK schemes profit and loss charge after deduction for deferred tax

Overseas schemes profit and loss charge after deduction for deferred tax

Group total notional profit and loss charge after deduction for deferred tax

Analysis of amounts that would be recognised in statement of total recognised gains and losses in respect of the UK schemes

Actual return less expected return on assets

Experience gain on liabilities

Loss on change of assumptions (financial and demographic)

Actuarial gain/(loss)

History of experience gains and losses in respect of the UK schemes

Gain/(loss) on scheme assets

Amount

Percentage of scheme assets (excluding insured pensions and defined contribution)

Experience gain on scheme liabilities

Amount

Percentage of UK defined benefit liabilities

Total amount that would be recognised in statement of total recognised gains and losses

Amount

Percentage of UK defined benefit liabilities

2004£000

948

-

-

948

184

1,132

5,555

(5,076)

479

1,611

(483)

1,128

251

1,379

2,576

-

(886)

1,690

2005£000

963

-

(92)

871

220

1,091

5,899

(5,537)

362

1,453

(436)

1,017

681

1,698

10,448

645

(10,790)

303

Fenner PLC 55

2,576

3.5%

-

0.0%

1,690

1.6%

(2,021)

1,677

(13,167)

2.9%

1.6%

13.0%

2003£000

2002£000

2004£000

10,448

11.5%

645

0.5%

303

0.2%

2005£000

28 Commitments

At 31 August 2005 the Group had commitments to make the following payments in the year to 31 August 2006 in respect of non-cancellable

operating leases

Expiring within one year 178 456

Expiring between one and five years 418 974

Expiring in over five years 859 11

1,455 1,441

At 31 August 2005 the Company had no commitments under non-cancellable operating leases (2004 £Nil).

56 Fenner PLC

Notes continued

30 Related party transactions

During the year the Group made sales of £201,000 (2004 £339,000) to Rob Harvey Pty Ltd (an associated undertaking) and made purchases

of £nil (2004 £9,000) from Rob Harvey Pty Ltd in the normal course of business.

Loan interest of £10,000 (2004 £15,000) and loan repayment of £70,000 was received from Rob Harvey Pty Ltd in the year.

The amounts due to and from Rob Harvey Pty Ltd are set out in notes 12, 14 and 15 as amounts to and from associated undertakings.

29 Future capital expenditure

Contracted for but not provided

2005£000

4,311

2004£000

1,064

2004£000

-

2005£000

-

Group Company

Other£000

Land andbuildings

£000Other£000

294

676

-

970

Land andbuildings

£000

42

394

262

698

2005 2004

Fenner PLC 57

31 Principal operating subsidiaries, associated undertaking and other investments

Principal Subsidiary undertakings

J H Fenner & Co Ltd, Hull

Fenner Advanced Sealing Technologies Ltd, Hampton

Fenner Drives Ltd, Leeds

Fenner Dunlop Ltd, Farington

Fenner International Ltd, Hull

James Dawson & Son Ltd, Lincoln

Hallite Seals International Limited

Hallite France Limited

CDI Seals Inc.

Dynamic Seals Inc.

Fenner Inc, Pennsylvania

Fenner Dunlop (Atlanta) Inc.

Fenner Dunlop (Charlotte) Inc.

Fenner Dunlop (Port Clinton) Inc.

Fenner Dunlop (Bracebridge) Inc.

Hallite Seals (Canada) Limited

Enerka Apex Belting Pty Ltd, Melbourne

Fenner (Australia) Pty Ltd, Sydney

Hallite Seals Australia Pty Ltd.

Fenner (South Africa) (Pty) Ltd, Johannesburg

KSB Pumps (SA) (Pty) Ltd, Johannesburg

Shanghai Fenner Conveyor Belting Co Ltd, Shanghai

Dawson Polymer Products (Shanghai) Co Ltd, Shanghai

Fenner Dunlop BV, Drachten

Fenner Conveyor Belting Private Limited

Dichtelemente Hallite GmbH

Hallite Italia Srl

All of the subsidiary undertakings are consolidated within the Group accounts.

KSB Pumps (SA) (Pty) Ltd is included as a subsidiary undertaking because the Group exercises a dominant influence.

by subsidiariesof the Company

or theirnominees

%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

50

85

100

100

100

100

100

by theCompany

or itsnominees

%

100

100

100

100

Country ofincorporation

if outsideGreat Britain

USA

USA

USA

USA

USA

USA

Canada

Canada

Australia

Australia

Australia

South Africa

South Africa

China

China

Netherlands

India

Germany

Italy

Proportion of issued ordinary shares held

58 Fenner PLC

Notes continued

Other investment

Outils Pneumatiques Globe SA, Paris

Proportion of issuedordinary shares held

by subsidiariesof the Company

%

12.2


France


Rob Harvey Pty Ltd, Brisbane(Year end 30 June)

The result for Rob Harvey Pty Ltd included in the Group Results for the year to 31 August 2005 is based on the accounts of Rob Harvey Pty Ltd to

30 June 2005 and the management accounts for the subsequent period to 31 August 2005. Rob Harvey Pty Ltd is included as an associate

undertaking because the Group does not exercise a dominant influence. The Group’s share of the capital commitments was £nil. There were

£nil contingent liabilities at 31 August 2005.

All the above subsidiary and associated undertakings are involved directly or indirectly in the Group’s principal activities except for KSB Pumps

(SA) (Pty) Ltd, which is involved in the manufacture and distribution of pumps and valves.

Each of the subsidiary and associated undertakings operates principally in the country of incorporation.

A full list of the Company’s interests in subsidiary and associated undertakings is filed with the annual return to the Registrar of Companies.

Issuedordinary share

capital000

1,200

Currency

Australian dollar

Proportion ofissued ordinary

shares heldby subsidiaries

of the Company%

50


Australia

31 Principal operating subsidiaries, associated undertaking and other investments continued

Fenner PLC 59

Turnover

Operating profit before goodwill amortisation

and exceptional items

Goodwill amortisation

Exceptional items

Operating profit/(loss)

Share of operating (loss)/profit in associated undertakings

Profit on sale and termination of operations

Profit/(loss) on ordinary activities before interest

Net interest payable

Share of net interest payable in associated undertakings

Profit/(loss) on ordinary activities before taxation

Taxation on profit on ordinary activities

Minority equity interests

Earnings

Dividends

Retained loss

Earnings per share

Adjusted – before goodwill amortisation, exceptional items and profit on

sale of operations

Basic – after goodwill amortisation, exceptional items and profit on

sale of operations

Dividends per ordinary share

Capital expenditure

Shareholders’ funds – Equity interest

Net debt

Gearing

Average number of employees

Where applicable prior years have been restated following the adoption of FRS19 Deferred Tax, the implementation of UITF abstract 38, Accounting for

ESOP Trusts, the discounted share placement in 2004 and the placing and open offer in 2005.

2001£000

166,402

14,055

-

(849)

13,206

575

-

13,781

(1,415)

(58)

12,308

(3,449)

(273)

8,586

(5,801)

2,785

8.74p

8.22p

5.675p

3,431

70,059

9,706

-

1,840

2003£000

248,533

12,012

(993)

(12,470)

(1,451)

451

-

(1,000)

(4,139)

(33)

(5,172)

(1,074)

(631)

(6,877)

(6,025)

(12,902)

4.94p

(6.53)p

5.825p

6,500

58,428

(44,496)

76.2%

2,667

2004£000

260,595

16,101

(1,149)

(6,214)

8,738

489

695

9,922

(3,458)

(69)

6,395

(3,052)

(976)

2,367

(6,324)

(3,957)

7.67p

2.19p

5.825p

7,858

60,739

(39,416)

64.9%

2,662

2005£000

313,012

21,255

(1,904)

(3,502)

15,849

(20)

-

15,829

(3,761)

(43)

12,025

(4,514)

(980)

6,531

(8,174)

(1,643)

9.34

5.28

5.825p

8,235

118,825

(33,907)

28.5%

2,949

2002£000

232,187

16,563

(588)

(6,665)

9,310

467

-

9,777

(4,249)

(44)

5,484

(1,539)

(399)

3,546

(5,997)

(2,451)

8.40p

3.38p

5.825p

4,806

67,654

(39,981)

59.1%

2,545

Five Year Summary

60 Fenner PLC

Fenner, Fenner Drives, Hallite, BTL, Fenaplast and Powertwist are Registered Trademarks of the Fenner Group.

CDI, T-Max and SigmaSeal are trademarks of the Fenner Group.

KSB is a Registered Trademark of the KSB Group

Annual General Meeting

The sixty-ninth Annual General Meeting of the Company will be held at Marlborough Room, Oxford & Cambridge Club, Pall Mall, London

SW1Y 5HD, on 11th January 2006 at 10.30 am when the following business will be proposed:

Ordinary Business

1 To receive the directors’ report and financial statements of the Group for the financial year ended 31 August 2005 together with the

auditor’s report.

2 To approve the Board Remuneration Report contained in the Company’s Annual Report for 2005.

3 To declare a dividend.

4 Election of directors.

5 To re-appoint the auditors and to authorise the directors to determine their remuneration.

6 To transact any other ordinary business of an annual general meeting.

Special Business

7 To authorise the directors to allot shares.

8 To empower the directors to allot shares for cash.

9 To authorise the Company to buy back its own shares.

Note

This is a summary of the Notice of Meeting and shareholders should refer to the enclosed document which contains the full

text of the Notice of Meeting together with an explanatory letter from the Chairman of the Company.

Advisors

Registrars

Capita Registrars, Beckenham

Principal Solicitors

Addleshaw Goddard, Leeds

Nabarro Nathanson, London

Rollits, Hull

Shumaker, Loop & Kendrick, Charlotte, USA

Independent Auditors

PricewaterhouseCoopers LLP, Hull

Brokers

Collins Stewart Limited, London

Principal Bankers

Barclays Bank PLC, Leeds

Lloyds TSB Bank plc, Leeds

Bank of Scotland, Leeds

Wachovia Bank NA, Charlotte, USA

Merchant Bankers

N.M. Rothschild & Sons Limited, Leeds

Financial Calendar

Annual General Meeting – January

Half Year End – February

Half Year Announcement – May

Year End – August

Preliminary Announcement – November

Health and SafetyPlease note that in some of the illustrations featured in this annual report, safety guards have been removed for photographic purposes.

AnnualReport2003

AnnualReport2005


Fe

nn

er P

LC

Annual R

eport 2005

























Tel: (91) 452 2464201Fax: (91) 452 2464204







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