/raid1/www/Hosts/bankrupt/TCREUR_Public/030310.mbx             T R O U B L E D   C O M P A N Y   R E P O R T E R

                             E U R O P E

                 Monday, March 10, 2003, Vol. 4, No. 48


                              Headlines

* F R A N C E *

SUEZ SA: Posts EUR863MM Net Loss Despite Strong Operation
VIVENDI UNIVERSAL: Could Run Out of Cash Without Asset Sales
VIVENDI UNIVERSAL: Posts Net Loss of EUR23.3 Billion
VIVENDI UNIVERSAL: Entertainment Asset Is Worth US$24 Billion

* G E R M A N Y *

BAYER AG: Supervisory Board Backs EUR 0.90 Dividend Per Share C
BERTELSMANN AG: Cuts Number of Bidders for Publisher to Six
DEUTSCHE TELEKOM: Talks With Sistema Going Well Ahead
DEUTSCHE TELEKOM: To Narrow Fourth-Quarter Loss - Analysts
GROHE HOLDING: Outlook Revised to Negative, Ratings Affirmed
GRUNDIG AG: Sampo Shelves Plans to Purchase Controlling Stake
HVB GROUP: Ratings Assigned in Residential Mortgage Transaction

* H U N G A R Y *

UNIONTEXT KFT: Files for Bankruptcy Due to Accumulated Debts

* I T A L Y *

FIAT SPA: CNH Global to Issue Shares, Repay Loan to Parent

* N O R W A Y *

FOSEN MEK: Free of Fraud Charges, But Still in Trouble
SPONSOR SERVICE: Received Interest From a Number of Bidders
SPONSOR SERVICE: Auditors Under Investigation for Role in Fall

* P O L A N D *

BRE BANK: Agrees to Refinance Long-term Debt of ITI Holdings
BANK PEKAO: Members of Supervisory Board Step Down
DAEWOO-FSO: Hyundai/KAI Shows Interest in Investing

* S W I T Z E R L A N D *

BANCA DEL GOTTARDO: Swiss Life's 2002 Results to Cause Loss
CREDIT SUISSE: Winterthur Exits Insurance Operation in Singapore
SEZ GROUP: Warns of Net-loss of at Least CHF12 Million for 2002
SWISS LIFE: Expects Significant Loss for Financial Year 2002
SWISS LIFE: 'A' Long-Term Ratings Placed on Watch Negative

* U N I T E D   K I N G D O M *

ABBEY NATIONAL: Ratings Assigned in Latest Mortgages Transaction
AES DRAX: Fitch Downgrades Debt Ratings to 'D', Removes Watch Neg
NOVASIDE TIMBER: Calls in Receiver, Cuts 50 Employees
ORANGE SA: Posts First Full-Year Net Profit of EUR633 MM
ROYAL & SUNALLIANCE: Loss Attributable to Shareholders Widened
ROYAL & SUNALLIANCE: AM Best Comments on Royal & Sun Alliance
TXU ERUOPE: Fitch Rates TXU Energy's US$500MM Senior Notes 'BBB'
UK COAL: Posts Loss of GBP81.7 Million in Results for 2002


===========
F R A N C E
===========


SUEZ SA: Posts EUR863MM Net Loss Despite Strong Operation
---------------------------------------------------------
Strong operating performance in challenging times:

- 5.7% organic revenue growth, 3.3% organic growth in EBITDA
- 5.8% increase in cash flow on a constant exchange rate and
structural basis

Solid balance sheet:
- EUR 2 billion reduction in net debt (-7.2%)
- Net cash and cash equivalents of EUR 7.1 billion, plus EUR 2.7
billion in non-strategic liquid assets

Exceptional impact of external factors, leading to equity w rite
downs:
- Net loss for the year: EUR 863 million
- Net exceptional losses of EUR 1,733 million

Net dividend recommended to the Annual General Shareholders'
Meeting: EUR 0.71 (+0.355 for tax credit) per share. Dividend
payment date May 2, 2003.

The Board of Directors meeting March 5, 2003, chaired by G‚rard
Mestrallet, approved the results for financial year ended
December 31, 2002; to be submitted for approval by the Annual
General Shareholders Meeting April 25, 2003.

- Revenues*                             40,218 MEUR    + 4.5%
organic growth (on a constant structural,             + 5.7%
accounting method, and excluding natural
gas price variations)

- Gross operating income (EBITDA)       7,254 MEUR       - 4.1%
organic growth                                         + 3.3%

- Net current income, Group share       1,135 MEUR       - 1.7%
of businesses excluding Argentina                      + 4.9%

- Net exceptional loss, Group share     (1,733) MEUR

- Net loss                               (863) MEUR

- Cash flow organic growth               4,857 MEUR       + 0.8%
                                                        + 5.8%

- Net debt                                26,006 MEUR     -7.2%

* Excluding energy trading

Commenting these results, SUEZ Chairman and C.E.O. Gerard
Mestrallet summarized the Board's opinion:

"In a particularly challenging world economic environment, SUEZ
has proved the Group's solid operating performance and confirms
the strength of its positions. This past year saw the first
fruits of the Group's debt reduction program.

"Our priorities for 2003-2004 are clear: improve and protect the
Group's profitability, strengthen its financial soundness .We are
actively implementing the action plan announced January 9."

(1) Revenues: sustained activity, with organic growth at 5.7%
SUEZ revenues*, increased by 4.5%. This trend was based on
sustained organic growth (up 5.7%), which during the second half
benefited in particular from the growing importance of the Puerto
Rican contract (+ EUR 241 million). Revenues generated in Europe
and in North America increased by 8% and represent 89% of the
total. The commercial drive of SUEZ's Energy and Environment
activities is reflected in this revenue growth.

Revenues were negatively impacted, by foreign currency
fluctuations for a total of EUR 1,526 million, resulting from the
Argentine peso devaluation (- EUR 834 million), depreciations of
the Brazilian real (- EUR 305 million) and the U.S. dollar (- EUR
267 million), and the 1.5% fall in natural gas prices (-EUR 643
million) with but a limited impact on operating margins.

Revenue growth arising from acquisitions came to EUR 1,698
million (+ 4%), and corresponds to Group acquisitions in 2001and
2002.

* excluding energy trading

(2) Energy and Environment: Resilient EBITDA
EBITDA (Gross operating income) came to EUR 7,254 million, with
organic growth of 3.3%, but with an overall contraction of 4.1%
on an actual exchange rate and structural basis.

EBITDA for Energy was EUR 4,125 million, representing organic
growth of 1.4%. This rise is based mainly on an increase in the
Electricity & Gas International (EGI) EBITDA which jumped 21.6%,
offsetting the lower contribution of Electricity & Gas Europe
(EGE) which suffered from rate reductions carried out in Belgium
in conjunction with deregulation.

EBITDA for Environment was EUR 2,916 million, with an organic
growth rate of 2.8%. EBITDA for Environment Local Services (SELS)
was EUR 2,380 million, for an organic growth of 2.2%, sustained
by Ondeo Degr‚mont's strong advance and satisfactory performances
in France of Lyonnaise des Eaux and SITA. EBITDA for Environment
Industrial Services (SEIS) amounted to EUR 536 million, with
organic growth of 5.2%, supported by Ondeo Nalco's 6.7% organic
growth rate.

(3) Improved financial income
Financial income for 2002 (- EUR 976 million) showed a clear
improvement over the 2001 figure (- EUR 1,258 million. This
progress is explained by the growth in dividends from
unconsolidated companies (Fortis increased by EUR 119 million),
and reduced interest expense (down EUR 260 million) under the
combined effect of lower interest rates and a reduced level of
debt starting in the second half of 2002.

(4) Net loss resulting from exceptional items
Net current income, Group share, for the business lines was EUR
1,135 million (-1.7%). Excluding Argentina the increase was 4.9%.
The Group's net current income figure came to EUR 870 million,
mainly taking into account the Fortis deconsolidation, the drop
in cable income (Noos) and private equity activity and a less
fiscal integration with headquarters.

Net exceptional loss, Group share, impacted by the stock market
and Argentine crises, came to EUR 1,733 million. This result
includes EUR 500 million for the Argentine subsidiaries,
impairment of listed assets for a loss of EUR 795 million,
writedowns in the value of unlisted assets (EUR 564 million), and
provisions for cessation of or withdrawal from certain activities
(EUR 244 million). Also included are capital gains from disposals
for EUR 937 million.

Hard hit by these exceptional items, the Group recorded a net
loss of EUR 863 million for 2002.

(5) Net debt now below the year-end 2000 level
Net debt decreased by EUR 2 billion in relation to 2001, down
7.2%. At December 31, 2002, net debt came to EUR 26 billion,
below the year-end 2000 figure (EUR 26.4 billion).

The decline in net debt and improved cash flow has led to a
lowering of the ratio of net debt to cash flow from 5.9 to 5.3.
Cash flow was EUR 4.9 billion, with organic growth of 5.8% mainly
illustrating the impact of lower financial expenses. Net tangible
and intangible investments (capital expenditures) of businesses
were down 5.3% to EUR 4.2 billion.

Free cash flow from the business lines came to EUR 2.9 billion,
reflecting Group businesses' financial balance. This performance
was shared by every business line activity; Energy businesses
generated a positive free cash flow figure of EUR 2 billion, with
Environment generating EUR 0.9 billion.

At December 31, 2002, SUEZ had a net cash and cash equiv alents
position of EUR 7.1 billion, to which should be added EUR 2.7
billion in non-strategic liquid assets, and EUR 3.6 billion in
confirmed, undrawn, and available credit lines. This position may
be viewed in light of the Group's maturing debt in 2003 of EUR
6.1 billion, hence a liquidity surplus of EUR 7.3 billion.

(6) Action Plan progress
Implementation of the 2003-2004 Action Plan announced January 9
is already underway. The Executive Committee is in place and the
staff responsibilities of the joint head office have been set.

Cost reduction measures already implemented have begun to bear
fruit and will lead to savings of EUR 500 million in 2003 on a
full-year, pre-tax basis, plus an additional EUR 100 million in
2004. A systematic review of cost reduction measures is already
underway, with application planned for the second half of this
year.

The asset disposal program's objective is to concentrate efforts
and financial resources on assets and activities, which the Group
will develop and optimize. Its three equal assessment criteria
are net surplus liquidity, ROCE, and risk exposure. In this
respect SUEZ recently announced the termination of the Manila and
Atlanta contracts.

Disposals of non-strategic assets continue. On February 28, SUEZ
announced it had sold its remaining investments in AXA and Vinci
and had considerably reduced its Total Fina Elf investment.

(7) Dividend maintained
As a sign of its confidence in the Group's perspectives, the
Board of Directors decided to recommend to the April 25, 2003
Annual General Shareholders' Meeting that the SUEZ dividend be
maintained at its 2002 level, or EUR 0.71 which, with the French
dividend tax credit, means a total dividend per share of EUR
1.065 euro. Dividend payment will be made May 2, 2003.

(8) Outlook
The Group's priorities were reiterated at the January 9, 2003
presentation of the 2003-2004 Action Plan. They are to improve
and protect profitability and strengthen the financial soundness.

SUEZ has substantial resources for sustainable growth in Energy
and Environment, bolstered in particular by commercial
breakthroughs achieved serving both industrial and local
government customers.

In this context, SUEZ favors:
- profitability growth;
- organic development;
- accelerated refocusing on Energy and Environment;
- ongoing evaluations of the Energy and Environment business
portfolios
- emphasis on cost reduction programs;
- reduce debt and exposure to developing countries
- cash flow generated by business lines to finance all their
investments

2003 will be a year of consolidation for SUEZ

(9) Business review by activity
ENERGY: Strong gross operating income

                                  2002              2001
(in EUR millions)       Revenues  in%  EBITDA   Revenue EBITDA
EGE                     16 253   12,7% 2 375     14 424  2 600
EGI                     3 732    -6,0% 1 203      3 970  1 135
SEI                     9 562    19,8% 547 7        980    596
Total Energy            29 548   12,0% 4 125     26 374  4 331

Electricity & Gas Europe (EGE):
The EGE revenue uptrend (+12.7%) results mainly from the EUR 2
billion increase in energy trading revenues. Organic revenue
growth was EUR 293 million (+2.8%), arising principally from
electricity sales to industrial customers.

EBITDA fell EUR 225 million, EUR 58 million of which arose from
changes in Group structure. The EUR 130 million (or 6.5%) decline
in organic gross operating income resulted mainly from the
Belgian rate reductions in conjunction with that market's
deregulation efforts (- EUR 130 million).

Electricity & Gas International (EGI):
The EGI revenue downtrend (-6%) results from the combined effect
of a EUR 366 million increase in organic growth (+ 9.2%), and the
negative impacts (-EUR 529 million or -13%) of exchange rate
fluctuations, natural gas price variations (-2.4%, down EUR 95
million). The organic growth came mainly from the startup of two
new power stations in the United States (Red Hills, Mississippi
and Ennis, Texas), from increased volumes in Asia, and good
performance in Latin America. This latter region benefits from
price supplements granted by Brazilian authorities in connection
with energy rationing following that country's 2001 drought and
from the coming online of new production units.

EBITDA rose EUR 68 million despite the negative impact of
exchange rate fluctuations (EUR 204 million) related to the
Brazilian real, the Argentine peso, and the U.S. dollar. Organic
growth came to EUR 245 million, an increase of 21.6%.

The Brazilian subsidiary played a significant organic growth role
thanks to the favorable indexation of a portion of its contracts,
the startup of the Cana Brava plant during the first half of
2002, the full year contribution of the Ita power plant which was
put on stream in 2001, as well as the rationing products whose
benefits were increased by the local regulatory authorities
during the first half of 2002.

Moreover the Group has decided to stop in 2003 its "business
line" pure trading especially taking into account the development
of its direct sales to distributors and end customers.

Energy and Industry Services:
Revenues from Energy and Industry Services came to EUR 9.6
billion, an advance of 19.8%, part of which EUR 1.2 billion,
accounting for a 14.7% increase, was due to changes in Group
structure following the GTI, Axima Winterthur, Treg and Restiani
acquisitions in 2001, together with the transfer of 50% of
Novergie to SITA.

The various activities of this sector experienced contrasting
trends in 2002:

- The Services activity (TES) experienced sustained growth in
revenues (+EUR 234 million or 6.5% in organic growth) as well as
in EBITDA (+ EUR 54 million or + 15.3% in organic growth).

This followed from Elyo's development in maintenance management,
facilities management, and industrial outsourcing, along with
urban heating and cooling with the startup of the new Vitry
cogeneration plant. This record was achieved despite losses to
completion experienced by Asima on contracts in Germany.

- The TIM installations maintenance activities recorded organic
growth of some EUR 114 million (+2.9%), while its EBITDA suffered
from a strained environment where its Dutch subsidiaries turned
in weak performances.

- Finally, Tractebel Engineering activity saw revenues increase
by EUR 112 million (+24%) over 2001, while its gross operating
income was down EUR 26 million due to losses on turnkey contracts
for which provisions had already been established.

ENVIRONMENT: Strong gross operating income

                                   2002               2001
(in EUR millions)          Revenues  EBITDA    Revenues EBITDA
SELS                       12,939    2,380     12,348   2,575
                           4.8%
SEIS                       2,959       536      3,026     549
                           (2.2)%

Total Environment          15,898    2,916     15,374   3,124
                           3.4%

Environment Local Services (SELS):
This business line generated revenues of EUR 12.9 billion, an
increase of + 4.8% over 2001. Exchange rate fluctuations had a
negative impact of EUR 822 million, EUR 643 million of which were
related to the Argentine peso devaluation. Excluding this impact,
revenues advanced + 10%. Changes in Group structure increased
revenues by EUR 450 million, mainly related to industrial
hazardous waste treatment activities (the buyout of Rhodia's
investment in Teris and Teris LLC). Revenues grew by 7.8% (+EUR
962 million) through organic growth, due to several factors:
principally the Puerto Rico contract (+EUR 241 million) which
started up July 1, 2002; sustained Waste Services activity (+EUR
228 million), largely in France, the U.K., Northern Europe, and
hazardous industrial waste treatment), Water activities in Europe
(+EUR 227 million), essentially in France and Spain); and finally
Ondeo Degremont (+EUR 105 million) which had activity sustained
by major contracts in Egypt and the United Arab Emirates, the
startup of Mexican BOT contracts, and new contracts obtained in
France, Spain, and Italy.

Organic growth for Water was 10.3% and for Waste Services 4.4%
EBITDA for the year was EUR 2.4 billion, down EUR 195 million or
- 7.6% in relation to 2001. This decline may be explained for the
most part by negative exchange rate fluctuations (-EUR 333
million, EUR 273 million of which related to the Argentine peso).
Changes in Group structure increased gross operating income by
EUR 80 million. Organic growth was 2.2%, contributing EUR 58
million and was sustained by a strong Ondeo Degr‚mont advance and
by operating improvements in France and the United Kingdom - both
in Water and in Waste Services.

Environment Industrial Services (SEIS):
This business line is made up of two operating entities, Ondeo
Nalco and Ondeo Industrial Services. They generated EUR 3 billion
in revenues, down 2.2% versus 2001, mainly due to the U.S.
dollar's depreciation against the euro (exchange rate
fluctuations reducing revenues by EUR 189 million). SEIS
generated 1.9% organic growth in revenues.

SEIS's EBITDA came to EUR 536 million, i.e. 2.4% down from 2001.
Excluding the impact of changes in Group structure, gross
operating income grew EUR 29 million (+5.2%), mainly from
continued reductions in the cost of procurements at Ondeo Nalco,
which were partially offset by OIS development costs.

To see financial statements: http://bankrupt.com/misc/Suez.pdf

CONTACT:  Antoine Lenoir: +331 4006 6650
          Fr‚d‚ric Michelland: +331 4006 6635
          Arnaud Erbin: +331 4006 6489
          For Belgium:
          Guy Dellicour: +322 507 0277
          Homepage: http://www.suez.com


VIVENDI UNIVERSAL: Could Run Out of Cash Without Asset Sales
------------------------------------------------------------
Investors warn of a shortage in cash this year at Vivendi
Universal unless the French company moves to stem that out by
reaching its target of EUR7 billion (US$7.7 billion) asset
disposals.

``Without further asset sales, Vivendi could trigger a liquidity
crisis as early as June of this year,'' analysts at Morgan
Stanley said.

Vivendi Universal, which recently made a record loss of EUR23.3
billion in French history, has bond repayment obligations, and
dues linked to acquisition that would need around EUR6.1 billion
this year.  Obligations that come due in September are worth
EUR5.3 billion.

Chief Executive Officer Jean-Rene Fourtou is currently mulling
over his decision about the company's entertainment division,
which includes Universal Studios.

Billion Marvin has offered US$15 billion for the assets,
according to people familiar with the matter.  Other companies,
including Viacom Inc., Liberty Media Corp. and General Electric
Co.'s NBC network, have said they're interested in buying parts
of the business.

Vivendi aims to lower its debt to below EUR11 billion this year,
and is planning to unload EUR16 billion in asset by the end of
2004.  With expected proceeds from asset sales and its EUR5
billion available cash from last year, Vivendi expects to have
EUR3.7 billion by year-end.

Jacques Tissier, who helps manage about $110 million at Stratege
Finance SA said ``There is a danger of a cash shortfall, but it's
not a lethal peril...The cash situation is difficult but it's
manageable.''

According to Bloomberg data, Vivendi has about EUR400 million of
payments in bond interest and principal repayments due this year.

CONTACT:  VIVENDI UNIVERSAL
          Headquarters
          42 Avenue de Friedland
          75380 Paris Cedex 08
          France
          Phone: +33 1 71 71 10 00
          Fax: +33 1 71 71 11 79
          Contact:
          Investor Relations
          E-mail: investor-relations@groupvu.com

          Daniel Scolan, Executive VP
          Investor Relations
          Phone: +33.1.71.71.12.33
          E-mail: daniel.scolan@groupvu.com
          Laurence DANIEL
          IR Director, Europe
          Phone: +33.1.71.71.12.33
          E-mail: laurence.daniel@groupvu.com
          Edouard LASSALLE
          Associate Director, Europe
          E-mail: edouard.lassalle@groupvu.com


VIVENDI UNIVERSAL: Posts Net Loss of EUR23.3 Billion
----------------------------------------------------
--  Net debt strongly reduced to E12.3 billion at December 31,
2002 compared with E37.1 billion at December 31, 2001.

--  Net loss (excluding exceptional items and goodwill):

  --  E94 million on recurring operations,

  --  E420 million of non-recurring restructuring costs (mainly
headquarters, Internet businesses and real estate),

  --  for total loss of E514 million.

--  Asset impairment charges:

--  goodwill impairment charge of E18.4 billion for 2002,

--  portfolio investments impairment charge of E2.9 billion.

--  Net loss of E23.3 billion

--  Strong and encouraging (pro forma(1)) operating results
reflect performance:

--  Operating cash flow(2) of E2.6 billion, up 115% compared with
2001,

--  Operating income for the six core business units on a 100%
basis (Cegetel-SFR, Universal Music Group, VUE, Canal+ Group,
Maroc Telecom and Vivendi Universal Games): E3.2 billion, up 18%
compared with 2001.

OUTLOOK 2003

-- Determined pursuit of asset disposal program: E7 billion in
2003.

-- Strong improvement (on a like-to-like basis) of 2003 operating
income and operating cash flow(2).

-- Return to profit (excluding exceptional items and goodwill).

Vivendi Universal today announced its financial results for 2002,
which are currently being audited and were reviewed today by the
Board of Directors. Jean-Rene Fourtou, Chairman and Chief
Executive Officer, said:

COMMENTS BY JEAN-RENE FOURTOU, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER

"2002 has been an extremely difficult year for Vivendi Universal.
2003 will be a year of transition and of financial and economic
progress. In 2004, we will see the results of the strategies and
actions we have taken.

"In 2002 we recorded losses amounting to E23.3 billion.

"This result includes in particular asset impairment charges made
necessary by the continued deterioration of the markets and the
value of some of our assets. Excluding exceptional items and
goodwill amortization, the recurring loss is E94 million, to
which is added E420 million of non-recurring costs relating
mainly to the headquarters, the Internet businesses and real
estate. The total loss is therefore E514 million.

"Operating income from all our core business units, on a 100%
basis, was up 18% (pro forma) compared with 2001, primarily owing
to Cegetel's good performance. It is a positive and encouraging
sign.

"Since July 2002, we have made some major achievements:

-- We pulled through a serious cash problem;
-- We lowered net debt from E35 billion to E12.3 billion;
-- We sold more than E8 billion of assets;
-- We won the battle for Cegetel, raising our interest from 44%
to 70% (and from 35% to 56% in SFR); and
-- We considerably improved operating cash flow.

2003 will be a year of transition and of financial and economic
progress.

"Our priorities remain unchanged. To improve the financial
structure and again create value for Vivendi Universal's
shareholders, we are determinedly carrying through our E7 billion
asset disposal plan for this year. As concerns our U.S. assets,
we have been approached by several potential partners. Keeping in
mind the two-fold aim of creating value for shareholders and
lowering our debt, we are examining all possible options in both
industrial and financial terms.

"Any disposals or partnerships, and the consequent strategy, will
only be made public as and when they are concluded.

"At the same time, we are continuing to improve the profitability
and management of the company by:

-- continuing to reduce cash drains
-- focusing on cash-flow-based management
-- stimulating the business units to improve their performance
-- reorganizing the VU, Canal+ Group and VUE headquarters
-- stepping up our cost reduction programs.

"The consequences will be that, for the first time in three
years, in 2003 we will return to a situation of net income
(before exceptional items and goodwill amortization) and a good
improvement in operating cash flow."

DEBT

Net debt was lowered by about E24.8 billion in 2002. At December
31, 2002, Vivendi Universal's net debt was E12.3 billion compared
with E37.1 billion at December 31, 2001.

Excluding Vivendi Environnement, net debt fell by about E9.1
billion.

Net debt does not include the November 2002 issue of E1 billion
of notes redeemable for shares, which is considered as quasi-
shareholders' equity, or the differential relating to the AOL
Europe total return swap, which matures in the second quarter of
2003.

In addition, Vivendi Universal is currently examining various
possibilities for extending its debt maturity.

Vivendi Universal confirms that it will meet the target announced
of net debt below E11 billion at the end of 2003, after the
acquisition of a 26% interest in Cegetel for E4 billion in
January 2003.

SHORT-TERM LIQUIDITY POSITION

On December 31, 2002, at the holding company level, Vivendi
Universal had cash of E5 billion and an unused back-up credit
facility of E1 billion. On February 28, 2003, after the
acquisition of a 26% interest in Cegetel, Vivendi Universal had
cash in the bank of E2.3 billion, E0.7 billion available in
credit facilities and a E1 billion back-up credit facility, for a
total amount of E4 billion.

UPDATE ON ASSET DISPOSALS

From July 1 to December 31, 2002, Vivendi Universal concluded
transactions worth E8.2 billion in asset sales and debt taken
over by the acquirers. Of this amount, E6.8 billion was finalized
at December 31.

The E6.8 billion is the sum of E6.4 billion received in cash and
E0.4 billion in debt taken over.

From the beginning of 2003 up until today, Vivendi Universal
finalized about E700 million of disposals: Canal+ Technologies
(E190 million), Express-Expansion (E200 million), half of the
USAi warrants held by Vivendi Universal ($276 million) and
various other assets (E50 million).

For 2003, Vivendi Universal reaffirms its target of asset
disposals of E7 billion. These disposals will significantly
change the company's landscape. As concerns the U.S. assets,
Vivendi Universal has been approached by several potential
partners. Keeping in mind the two-fold aim of creating value for
its shareholders and lowering its debt, Vivendi Universal is
examining all possible options in both industrial and financial
terms.

TREASURY STOCK

In compliance with the Board of Directors' decision of August 13,
2002, Vivendi Universal canceled 20.5 million treasury shares on
December 20, 2002. These shares represented 1.9% of the capital
stock and were available for stock option plans. As a result,
Vivendi Universal's capital stock comprised 1,068,558,994 units
of common stock at December 31, 2002. Following this
cancellation, Vivendi Universal now holds only 0.04% of its own
shares.

PRO FORMA OPERATING RESULTS

2002 (after the deconsolidation of Vivendi Environnement and of
the VUP businesses sold, and taking into account USA Networks,
Maroc Telecom and MP3.com at January 1, 2001)

    -- Revenues increased 4% to E28.7 billion, owing to growth in
all the business units except music
    -- Operating income was slightly down at E2.0 billion
    -- The operating income of the six core business units on a
100% basis (Cegetel-SFR, Universal Music Group, VUE, Canal+
Group, Maroc Telecom and Vivendi Universal Games) was up 18% to
E3.2 billion, driven mainly by Cegetel and VUE.

MAIN ELEMENTS OF THE 2002 INCOME STATEMENT

Interest expense, net: For full-year 2002, net interest expense
totaled E1.3 billion, an 8% decrease on the previous year's
amount. It should be taken into account that the strong reduction
in debt occurred at the end of the year -- principally through
the sale of Houghton Mifflin, VUP publishing businesses, Echostar
and Vivendi Environnement -- and that the first half of the year
included the cost of financing the VUE and Echostar acquisitions.
The cost of debt (excluding Vivendi Environnement) came to 4.1%.

Financial provisions: Financial provisions totaling E2.9 billion
were set aside for 2002. The most significant provisions related
to the USAi warrants and the Elektrim Telecommunikacja shares.

Exceptional items, net: Net exceptional income amounted to E1.0
billion compared with E2.4 billion in 2001.

Exceptional gains were primarily comprised of capital gains on
the disposal of and/or dilution of the company's interest in
other companies. They mainly include a capital gain of E1.6
billion on BSkyB, a contribution of E1.4 billion from the Vivendi
Environnement transaction and a capital gain of E329 million on
the sale of VUP's publishing assets sold to Natexis/Lagardere.

Exceptional losses offsetting the gains were a capital loss of
E822 million on the disposal of Houghton Mifflin and of E685
million on Echostar, and a provision of E360 million on the
upcoming sale of Telepiu.

Income tax expenses: income tax expense totaled E2.6 billion, of
which E2.1 billion excluding Vivendi Environnement. This was the
sum of E1.1 billion relating to recurring operations (in
particular, E544 million for Cegetel), and E1.0 billion of income
tax relating to exceptional elements (mainly use of deferred
tax), which did not generate any cash outflow. Income tax expense
was E1.6 billion in 2001.

Goodwill amortization: Goodwill continues to be amortized under
French GAAP. Goodwill amortization totaled E1.3 billion, a
decline on the 2001 amount of E1.7 billion, owing to goodwill
impairment charges previously taken.

Goodwill and intangible asset impairment: The continued
deterioration of economic conditions and of the book value of our
recently acquired core assets led to management's decision to
record further goodwill and intangible asset impairment charges
in 2002, resulting in an overall charge of E18.4 billion. This is
the sum of E6.5 billion relating to VUE, E5.4 billion relating to
Canal+, E5.3 billion relating to Universal Music Group and E1.2
billion relating to various other assets. This adjustment was
made on the basis of a valuation carried out by independent
experts of the fair value of Vivendi Universal's core assets.
Fair value was determined on the basis of commonly used methods:
discounted cash flow, for assets to be retained; and market value
(the amount that could be obtained under normal market
conditions) for other assets.

Net income (loss) and earnings (loss) per share: A net loss of
E23.3 billion was incurred in 2002, or E21.43 per basic share. In
2001, the net loss was E13.6 billion, or E13.53 per basic share.

BUSINESS UNIT RESULTS

Cegetel and SFR:

2002 Highlights:

Cegetel's revenues increased 11% to E7.1 billion and operating
income grew 56% to E1.4 billion.

For SFR, revenues increased 10% and operating income grew 40%.
SFR's customer base (including SRR, its subsidiary in Reunion, an
overseas department of France) grew to 13.5 million customers.
SFR's market share in gross additions increased 1.5 percentage
points to 35.5% from 34% in 2001. ARPU from prepaid customers
increased 13% to E22.2, and ARPU from postpaid customers slightly
increased to E58.3. Additionally, SFR was successful in
increasing profitability including a 9% reduction in acquisition
costs per gross addition (excluding promotions) in the same
period.

Results at Cegetel's fixed telephony services division continued
to improve during the year, resulting in revenue growth of 18%,
mainly due to local traffic being opened to competition on
January 1, 2002, and a 43% reduction in operating losses.


2003 Outlook:


In line with projections announced in November 2002, Cegetel-
SFR's revenues are expected to increase approximately 7% in 2003
on a like-for-like basis. Operating income is expected to grow by
more than 25%. Operating cash flow will remain steady, owing to
an increase in capital expenditures.

In 2003, Cegetel's priorities are to continue improving its
profitability and customer bases, to achieve the best customer
satisfaction rate in the French market, offer new voice and data
services, and merge Cegetel's fixed-line operations with Telecom
Developpement.

Universal Music Group

2002 Highlights:

With the adverse impact of currency translation, revenues were
down 4% from the previous year to approximately E6.3 billion. On
a constant currency basis, revenues were down only 1%. In 2002,
UMG increased its global market share despite difficult market
conditions with market share growing in all the world's major
music markets. The U.S. saw an industry decline of 10.8% as
measured by SoundScan while UMG's album share rose 2.5 points to
28.9%. In 2002, five albums sold more than 5 million units each
versus one album last year. The best-selling album in the world
was Eminem's The Eminem Show, and Eminem recordings (including
the 8 Mile Soundtrack) sold over 21 million copies during the
year. Other major sellers included albums from Shania Twain,
Nelly, U2, Ashanti, Nirvana, Enrique Iglesias and Bon Jovi.

Operating Income declined 23% (19% in constant currency)
reflecting the decline in sales, lower margins in the product
mix, higher provisions for returns and A&R (artists and
repertoire) costs offset by lower marketing expenses, lower
overheads and other income including the gain on the sale of
UMG's interest in MTV Asia to Viacom.

2003 Outlook:

UMG's revenues are expected to remain steady or to show a very
slight drop at constant exchange rates. UMG should therefore
continue to win market share. Operating margin is expected to
decline, while the cash flow from operations target is flat with
2002.

UMG's 2003 release schedule includes albums from 50 Cent,
Ashanti, Blink 182, Dr. Dre, Jay Z, Limp Bizkit, Nickelback,
Sting, Texas and U2.

In addition, UMG will continue to take active measures against
music pirating.

Vivendi Universal Entertainment (VUE):

2002 Highlights:

VUE revenues reached E6.3 billion, up 27% principally due to the
effect of the acquisition of USA Networks on May 7, 2002. On a
pro forma basis, (had USA Networks been acquired at January 1,
2001), VUE revenues increased 2%. However, on a constant currency
basis, VUE pro forma revenues increased 5% driven by Universal
Pictures and Universal Television, and partially offset by lower
revenues at Universal Parks & Resorts and Spencer Gifts.

VUE operating income reached E816 million, up 172% on an actual
basis. On a pro forma basis, (had USA Networks been acquired at
January 1, 2001), VUE's operating income increased 2%. However,
on a constant currency basis, VUE pro forma operating income
increased 6%. This was primarily a result of strong video sales
at Universal Pictures, which was partially offset by lower
results at Universal Television Networks, Universal Parks &
Resorts and Spencer Gifts. Universal Pictures benefited from
strong performance in home video, driven by such titles as The
Mummy Returns, The Fast and the Furious, and American Pie 2.
These results were partially offset by lower advertising sales
and increased programming costs at Universal Television Networks,
as well as lower management fees from theme park joint ventures,
land sales, and lower holiday sales at Spencer Gifts.

2003 Outlook:

VUE's revenues are expected to increase slightly (in dollars),
owing mainly to the theatrical release of Bruce Almighty, 2 Fast
2 Furious, The Hulk, Seabiscuit, American Wedding, Dr. Seuss' The
Cat in the Hat and Peter Pan and to development of television
channels.

Operating margin will be affected by increased amortization
expenses for films and is expected to fall by a few percentage
points. However, operating cash flow should increase by more than
30%.

VUE will continue to rationalize its operating expenses and
improve its cash management. Also, VUE is working to put in place
long-term financing for its $1.62 billion credit facility.

Canal+ Group:

2002 Highlights:

Canal+ Group reported 6% revenue growth in 2002, reaching E4.8
billion; on a pro forma basis, revenues were up 4%.

Canal+ Group improved its operating result in 2002 by 13%,
recording an operating loss for the year of E325 million compared
with E374 million in 2001. On a pro forma basis, Canal+ Group
reported an operating loss of E295 million in 2002. This positive
trend is mainly attributable to solid operational performances at
CanalSatellite and Media Overseas, while StudioCanal and Telepiu
significantly reduced their losses. The French premium channel
Canal+ slightly improved its churn rate at 10.6%, ending the year
with 4.48 million individual subscriptions (representing a net
decrease of 70,000 subscribers). CanalSatellite ended the year
with a net increase of 220,000 individual subscribers and the
lowest churn rates of any pay-TV in the world (8.4%).

2003 Outlook:

Revenues are expected to remain steady on a like-for-like basis.
Actual revenues will be lower, primarily because of changes under
way to the consolidation scope.

Canal+ Group is expected to generate operating income in 2003.
Operating cash flow will improve, but will remain negative.
    In 2003, Canal+ Group will continue the execution of its
restructuring plan aimed at reorganizing its activities around a
more coherent and profitable entity based on its core businesses,
mainly around its French assets. Another priority for 2003 is to
revitalize the editorial content of the premium channel.

Maroc Telecom:

2002 Highlights:

Actual revenues were up 47%. On a pro forma basis, Maroc Telecom
revenues increased to E1.49 billion, up 10% (13% in local
currency.) Its mobile customer base grew by 934,000 to
approximately 4.6 million customers. Fixed-line revenues
increased 1% (up 4% in local currency).

Operating income increased 21% (25% in local currency). On a pro
forma basis, Maroc Telecom operating income decreased 1%
(increased 1% in local currency) but operating expenses in 2002
include restructuring costs, and amortization on some intangible
assets (license) which was booked for the first time in 2002. At
constant accounting method, operating income increased 12% (16%
in local currency.)

2003 Outlook

Revenues are expected to remain stable. Maroc Telecom's operating
margin is expected to improve, benefiting fully from the
aftermath of the restructuring actions undertaken in 2001 and
2002. The operating cash flow is expected to remain stable.

Vivendi Universal Games:

2002 Highlights:

Vivendi Universal Games revenues increased to E794 million for
the year, an increase of 21% over prior year. On a constant
currency basis, revenues were up 25%. Growth was driven by the
company's continued strength in the PC games market, as well as
its rapidly escalating presence in the console games market.
Best-selling titles for 2002 included Warcraft III, Nascar 2002,
Crash Bandicoots: The Wrath of Cortex, The Thing, Barbie as
Rapunzel, Jumpstart Advanced, Bruce Lee, Outlaw Golf and Hunters:
The Reckoning.

Operating income was E63 million for the year, an increase of E45
million, or 250%, over the prior year. The increase was due to
the higher gross profit on sales growth, partially offset by
increased marketing and product development costs.

2003 Outlook:

Revenues are expected to increase more than 15%, principally
because of the strong line of product releases planned including
The Hulk, Warcraft III: The Frozen Throne, The Hobbit, Crash
Bandicoot, and Spyro the Dragon.

The operating margin will be more than 10% of expected 2003
revenues, and operating cash flow is expected to increase
considerably.

PROCEEDINGS AGAINST THE COMPANY

The investigation of the COB in France is principally examining
questions relating to the Vivendi Universal group's consolidation
scope, commitments and the values of certain intangible assets
recorded in the consolidated accounts. Vivendi Universal is also
being investigated by the SEC in the United States.

At this moment in time, Vivendi Universal's Board of Directors
has no knowledge of any elements of a nature liable to call into
question the decisions taken by the company's management on the
accounting principles and methods used to establish its accounts.
As a result, the 2002 full-year accounts have been established
according to the same principles and methods used in previous
years.

In the event that, by means of the investigations under way or by
any other means, Vivendi Universal should learn of elements that
may modify the above analysis of the situation, Vivendi Universal
will of course bring this information to the attention of the
general public.

ANNUAL SHAREHOLDERS MEETING

The Vivendi Universal Shareholders Meeting will be held, on
second notice, on April 29, 2003, in Paris, at the Palais des
Congres convention center (Porte Maillot).

The Board of Directors of Vivendi Universal has requested that a
proposal not to pay a dividend for 2002 be submitted to the vote
at the Shareholders Meeting.



NB: The actual 2002 income statement includes: the six main
business units (Cegetel, UMG, VUE, Canal+, Maroc Telecom, and VU
Games), non-core businesses, including Vivendi Environnement, the
holding company and corporate. The VUP businesses sold
(publishing, Houghton Mifflin and B2B/Health) appear only in the
item "share of net income in companies sold".

(1) After deconsolidation of Vivendi Environnement and of VUP
businesses sold, and taking into account USA Networks, Maroc
Telecom and MP3.com at January 1, 2001.

(2) Operating cash flow before interest expense and tax and after
restructuring costs.

To see Vivendi Universal's latest financial statements:
http://bankrupt.com/misc/VivendiUniversal.htm

CONTACT:  VIVENDI UNIVERSAL
          Inverstor Relations
          Paris
          Daniel Scolan
          Phone: +33 (1).71.71.3291
          Laurence Daniel
          Phone: +33 (1).71.71.1233
          New York
          Eileen McLaughlin
          Phone: +(1) 212/572-8961


VIVENDI UNIVERSAL: Entertainment Asset Is Worth US$24 Billion
-------------------------------------------------------------
The price of Vivendi Universal's entertainment asset is EUR22
billion (US$24 billion) as suggested by the company during a
conference call on its 2002 financial results, the Daily Deal
said.

After a EUR21.3 billion write-off in asset impairment charges,
Vivendi Universal Entertainment was valued at EUR15 billion and
Universal Music Group at EUR7 billion.

Vivendi Chief Jean-Rene Fourtou is currently mulling over his
decision for the asset, for which billionaire Marvin Davis has
offered US$20 billion.  Mr. Davis is being back by Bain Capial
Inc., Texas Pacific group, and recently The Carlyle Group in his
bid.

When asked why he has not yet accepted the offer, Mr. Fourtou
said he is still looking at "achieving the greatest possible
value for Vivendi Universal shareholders."

He is believed to be still in talks with other parties, including
Viacom Inc., whose chief Sumner Redstone Vivendi had met.

As for Davis' threat to withdraw the offer unless Mr. Fourtou
decides sooner, the company refused to be cowed.

Vivendi CFO Jacques Espinasse, without mentioning names said, "We
now have sufficient financial capital to pursue asset disposals
in a deliberate and effective manner without undue pressure from
financial buyers."


=============
G E R M A N Y
=============


BAYER AG: Supervisory Board Backs EUR 0.90 Dividend Per Share C
-------------------------------------------------------------
Supervisory Board backs stance in Lipobay proceedings

Bayer AG's Supervisory Board accepted the proposal of the Board
of Management to recommend to the Annual Stockholders' Meeting on
April 25, 2003, a dividend for fiscal 2002 of EUR 0.90 per share.
The dividend would thus be unchanged compared to 2001. With some
730 million shares, this would represent a payout of EUR 657
million.

"We were able to increase net income primarily through proceeds
generated by our divestment program," Chairman of the Board of
Management Werner Wenning commented immediately after the
Supervisory Board meeting. "We want our stockholders to have a
share of this. The decision is also in line with Bayer's policy
of dividend continuity. We are confident that we will be able to
improve the operating result in the current year."

The Group's annual financial statements will be presented and
discussed at the Spring Financial News Conference on March 13.

The Supervisory Board endorsed the Bayer Management Board's
action with regard to the claims and lawsuits in connection with
Lipobay/Baycol, a medicine Bayer voluntarily withdrew from the
market in 2001. Bayer will continue to demonstrate that the Group
acted responsibly, expeditiously and appropriately. The company
will answer specific allegations in detail in court, supporting
its arguments with facts.


BERTELSMANN AG: Cuts Number of Bidders for Publisher to Six
-----------------------------------------------------------
Debt-laden German media group Bertelsmann AG narrowed down the
number of potential buyers for its professional publishing
division, BertelsmannSpringer, from 14 to 6.

Bertelsmann has reportedly decided to sell the business in one
parcel rather than break it up.

International bidders left in the race included George Soros
Private Equity, which paid EUR235m for a polymer latex venture
jointly owned by Bayer and Degussa; Apax Partners, the venture
capital group which has linked with Taylor & Francis, a
U.K.publisher; and Blackstone, the U.S.  buy-out group which is
thought to have linked with CVC Capital partners.

Cinven and Candover also made a joint approach.  The two
companies paid EUR600 million last year for Kluwer Academic
Publishers, formerly part of Wolters Kluwer of the Netherlands.

Still in the running are U.K.private equity groups BC Partners
and Charterhouse.

Bertelsmann is hoping to sell the non-core division for around
EUR1 billion in order to lower debt, speculated at around EUR4
billion at the end of 2002.

The company's debt ballooned after Zomba exercised a 'put' option
worth US$3 billion for Bertelsmann to acquire the remaining
shares in Zomba in 2001.

In June it dropped a planned EUR1 billion bond sale due to market
conditions.

Bertelsmann is due to receive second round bids by the middle of
next month, before opening a third round with only two bidders.

Springer has a complex business that requires exhaustive due
diligence as it comprises 70 science and business publishing
companies in 18 countries.

To this effect, bidders were given a detailed package of
financial information on the business, prepared by auditors at
KPMG.

Vendor due diligence, meanwhile, will include a draft sale and
purchase agreement, management presentations and access to a
"data room."

CONTACT:  BERTELSMANN AG
          Carl-Bertelsmann-Strasse 270
          D-33311 GA,Atersloh, Germany
          Phone: +49-5241-80-0
          Fax: +49-5241-80-9662
          Homepage: http://www.bertelsmann.de


DEUTSCHE TELEKOM: Talks With Sistema Going Well Ahead
-----------------------------------------------------
Talks between Deutsche Telekom and Sistema group regarding
Deutsche's sell-off of a stake in no.1 cellular operator Mobile
Telesystems is making progress, according to people close to
Deutsche Telekom.

Under the plan, Deutsche Telekom, which holds 40 per cent of MTS,
would sell 10% to the Russian investment group.  The transaction
would give the latter slightly over 50% in the operator.
Afterwards, Deutsche Telecom will sell another 5% on the stock
exchange.

The deal, which is expected to raise EUR500 million for the
group, would bring the company's total disposals to EUR4.5
billion since the end of September.  The group has pledged to
sell between EUR6.5 billion and EUR8.5 billion of assets by the
end of the year.

The transaction would come as a good news after DT's involvement
in issues that tend to ruin the company's image ahead of its
third share offering (share placement by the state).  Two weeks
ago, Deutsche Telekom was reported to have overvalued assets in
the offering prospectus.

Kai-Uwe Ricke, chief executive assured employees this is not
true.  To keep the company in its right track, the executive said
it "should therefore be kept out of potential party-political
debates."

The issue on the prospectus previously provoked Friedrich Merz,
the CDU's deputy parliamentary leader, to say"[Finance minister
Hans] Eichel and Deutsche Telecom had better provide clarity very
quickly about the machinations of the share offering if they want
to avoid repercussions in Parliament."

Insiders believe disputes such as this could overshadow the
company's pending announcement of a good result for 2002.

CONTACT:  DEUTSCHE TELEKOM AG
          53113 Bonn, Germany
          Phone: +49-228-181-0
          Fax: +49-228-181-8872
          Home Page: http://www.telekom.de
          Contact:
          Hans-Dietrich Winkhaus, Chairman Supervisory Board


DEUTSCHE TELEKOM: To Narrow Fourth-Quarter Loss - Analysts
----------------------------------------------------------
Investors expect phone company Deutsche Telekom AG to post a
narrower fourth-quarter loss and to announce further asset sales
to trim down its EUR64 billion (US$70.3 billion) debt.  The Bonn-
based company will report 2002 earnings Monday.

Deutsche Telekom's loss is expected down at EUR585 million in the
fourth quarter from EUR2.45 billion in the year-earlier quarter
after Chief Executive Kai-Uwe Ricke was able to raise more than
EUR4 billion from his cost cutting drive.

For the full year, Deutsche Telekom is expected to report the
biggest corporate loss in European history when it reports net
loss of more than EUR25 billion after writing down EUR22 billion
in the first nine months.

The German company is seen boosting earnings before interest,
taxes, depreciation and amortization 13% to EUR4.32 billion in
the fourth quarter as a result of a 54% jump in Ebitda at the
wireless unit T-Mobile International AG, according to Bloomberg.

Mr.Ricke aims to raise about EUR6 billion from asset sales and
raise the same in free cash flow to reduce debt to about EUR52
billion.  He will be helped by asset sales and free cash flow
along with the drop in the dollar against the euro, according to
analysts at Dresdner Kleinwort Wasserstein.

CONTACT:  DEUTSCHE TELEKOM AG
          53113 Bonn, Germany
          Phone: +49-228-181-0
          Fax: +49-228-181-8872
          Home Page: http://www.telekom.de
          Contact:
          Hans-Dietrich Winkhaus, Chairman Supervisory Board


GROHE HOLDING: Outlook Revised to Negative, Ratings Affirmed
------------------------------------------------------------
Standard & Poor's Ratings Services said that it had revised its
outlook on Germany-based Grohe Holding GmbH (Grohe) to negative
from positive. At the same time, the 'BB-' long-term corporate
credit and 'B' senior unsecured debt ratings were affirmed.

The outlook revision follows the projected EUR200 million debt-
financed repayment of part of existing shareholder loans by Grohe
Holding GmbH
(Grohe), for which the company is seeking the approval of a
majority of the holders of its high-yield notes. The revision
reflects the substantial increase in leverage that the projected
repayment would generate and the expectation that credit measures
would likely be weak for the rating category in the near term,
compared with the strong level of credit measures achieved in
2002.

"We assume, however, that Grohe will likely consistently improve
credit quality in the future, which mitigates the negative impact
of the proposed transaction," said Standard & Poor's credit
analyst Xavier Buffon.

The projected repayment of EUR200 million out of EUR305 million
in shareholder loans outstanding at year-end 2002, according to
management estimates, through secured bank facilities, will
directly increase the group's net indebtedness by EUR226 million,
including the financing of heavy transaction costs (EUR26
million). "It will also lead Standard & Poor's to treat the
remaining EUR105 million in shareholder loans as having increased
debt-like characteristics (rather than equity) and thus further
increase leverage," added Mr. Buffon.

The negative outlook reflects Grohe's increased sensitivity to
rating pressures stemming from unexpected adverse economic or
competitive events.

Such negative credit events could include, for example, a further
deterioration in the German market, or increased competitive
pressures in relation to the recent acquisition of a majority
stake in its domestic competitor HansGrohe by the large U.S.-
based Masco Corp. (BBB+/Stable/--).

In particular, the additional debt burden resulting from the
projected shareholder loan repayment could reduce Grohe's ability
to resume its historically solid free cash flow generation in the
near term. In Standard & Poor's opinion, these eventualities are
possible, but are not viewed as the most likely scenario.


GRUNDIG AG: Sampo Shelves Plans to Purchase Controlling Stake
-------------------------------------------------------------
Sampo Corp., Taiwan's largest home-appliance maker abandoned
plans to purchase a 75% stake in German home-electronics giant
Grundig AG.

The planned takeover ran into financial difficulties as the two
parties failed to reach a final agreement because of fears that
Grundig would not be able to secure a EUR180 million loan from
German banks to cover its debts.  Grundig has pensions
liabilities of EUR200m and EUR45 million loan for capital
equipment.

Sampo's financial division directory Kanty Wu said: "The deal
can't be closed because of Grundig's unsolved debt. But we do not
rule out future negotiations."

The German company currently has EUR200 million in pension
liability and EUR45 million loan for capital equipment, he added.

Felix Chen, Sampo chairman, also said Sampo still hopes to revive
the deal after Grundig has "sorted out its financial
difficulties," adding that it is, however, prepared to search for
other partners if the takeover does not materialize.

Both Sampo and Grundig had aimed to complete the takeover by the
end of last month, with Grudig being on the verge of bankruptcy.

It is known that Grundig has EUR31m (US$33.6m) of equity capital
left, or 4.6% of the balance sheet total. Only a EUR45m working-
capital loan, guaranteed by the German state of Bavaria, is
keeping the company afloat. The guarantee will run out at the end
of this month.

Some of Sampo's competitors in Taiwan have called the planned
deal a mismatch from the beginning.

On a positive note, Grundig said in a statement that it was in
talks to be taken over by Turkish rival Beko Elektonik AS after
discussions with Sampo stalled.

CONTACT:  GRUNDIG AG
          Beuthener Strabe 43
          D-90471 Nurnberg
          Contact:
          Holm Kilbert, Public Relations
          Phone: ++49 911/7 03-86 29
          Fax: ++49 911/7 03-85 00
          E-mail: holm.kilbert@grundig.com


HVB GROUP: Ratings Assigned in Residential Mortgage Transaction
---------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its
preliminary credit ratings to the EUR225 million floating-rate
amortizing credit-linked notes to be issued by Bayerische Hypo-
und Vereinsbank AG (HVB) under its Building Comfort 2003-1
securitization (see list below).

The transaction, which includes an unfunded credit default swap
and funded notes, is structured as a synthetic residential
mortgage transaction, not a cash flow transaction in which all
the assets are transferred to a bankruptcy-remote special-purpose
entity (SPE). The issuer is HVB itself, not an SPE, and the notes
are, therefore, direct obligations of HVB.

To delink the ratings on the notes from the rating on HVB, the
notes will be secured by cash deposits corresponding to the
principal amounts of the notes and adequate amounts of interest
held by an 'A-1+' rated account bank. These amounts will be
pledged to an independent auditor for the benefit of the
noteholders.

The aim of the transaction is to provide regulatory capital
relief for HVB by transferring to noteholders the credit risk
associated with a reference portfolio of residential mortgage
loans originated by HVB.

The performance of the notes is therefore linked to the
performance of the reference portfolio.

The preliminary credit ratings reflect the adequate amount of
cash collateral for the class A, B, C, and D notes, and the
ability of HVB to service the loans.


=============
H U N G A R Y
=============


UNIONTEXT KFT: Files for Bankruptcy Due to Accumulated Debts
------------------------------------------------------------
The management of Uniontext Textilipari Kft, a textile
manufacturer based in Gyor, had advised its 430 workers that the
company has filed for bankruptcy.

Uniontext has accumulated debts totaling several hundred million
forints to banks and suppliers.  Aggravating the negative impact
of the debt load to the company's finances is the fact that the
firm has no real assets of its own.

Gitta Fertetits, trade union leader, assured that the management
said it would be working on a debt guarantee plan to save the
company from liquidation.

FGM Kft owns 74.9% of Uniontext, while Graboplast Rt owns 25.1%.

Uniontext is one of the most significant representatives of the
Hungarian cotton industry with its professional knowledge of a
rich past, almost as rich as 100 years of its predecessors, with
its accumulated knowledge, successes and troubles and as the
result of the work of today's successors.

CONTACT:  UNIONTEXT TEXTILIPARI KFT.
          9023 Gyor, Feh‚rv ri u. 3.
          Phone: 36-96-319-666
          Fax: 36-96-314-550
          Contact: Katalin Erdos
          E-mail:erdosk@leonell.hu


=========
I T A L Y
=========


FIAT SPA: CNH Global to Issue Shares, Repay Loan to Parent
----------------------------------------------------------
CNH Global N.V. (BB/Stable/-) announced that it will issue $2
billion of convertible preferred shares to Italy-based parent
company Fiat SpA (BB+/Negative/B) to repay $2 billion owed in
intercompany loans to Fiat.

CNH will not pay dividends on the preferred shares until 2005 and
will save about $100 million in interest expense in 2003 and
2004. Standard & Poor's Ratings Services said that this action
would not affect its ratings or outlook on CNH Global. The
transaction is further evidence of Fiat's strong commitment to
CNH Global, an important determinant in the ratings on CNH
Global.

As a stand-alone entity, ratings on CNH Global would likely be
significantly lower. Currently, Fiat is an 85% owner of CNH
Global, guarantees or is a joint borrower of CNH Global's bank
lines, and will still have about $1.8 billion of outstanding
intercompany loans following completion of the equity for debt
swap. CNH still has a weak financial profile, but over the next
two to three years credit measures should strengthen to levels
compatible with the 'BB' rating, as the firm benefits from
continued cost reduction and gradual recovery of its markets.


===========
N O R W A Y
===========


FOSEN MEK: Free of Fraud Charges, But Still in Trouble
------------------------------------------------------
Troubled Fosen Mek shipyard escaped fraud charges after Norwegian
crime unit Oekokrim decided against the move due to weak
evidences on allegations that the company abused subsidies.

Investigators launched the inquiry into the Troendelag shipyard
in September after state officials suspected the company misled
the state export finance agency into granting it subsidies of
around NOK35 million (US$5 million).  The subsidies are in
exchange for the construction of nine vessels built during the
past decade.

Fosen Mek specializes in arranging ferry- and cruiseship hull
construction overseas, and then finishing the vessels at its yard
in Rissa, outside Trondheim.

It ran into troubles when orders fell down, and losses mount in
relation to the construction of the condominium cruise ship.

It is set to lay off nearly all its remaining 160 workers after
its last vessel sails from dock this month.  The dismissals will
be on top of the 130 made in recent months, according to
Aftenposten.

Personnel chief Reidar Gullesen said the yard has registered
interest and inquiries from several shipowners and shipbrokers,
but it has not received new contracts to build new vessels.


SPONSOR SERVICE: Received Interest From a Number of Bidders
-----------------------------------------------------------
Bankrupt Sponsor Service has received an interest from at least
one bidder, lawyers handling the bankruptcy of the firm said
without giving the exact number of bids or the purchase offer.

According to Aftenposten, both U.S.  media company Clear Channel
and Norwegian investor Svein Erik Bakke confirmed they submitted
bids for the remains of the company.

The Norwegian head of Clear Channel, however, refused to reveal
whether he's bidding for the entire company or for parts of
Sponsor Service only.

According to newspaper Dagens Naeringsliv, the sale price could
amount to less than NOK100 million, which means big losses to the
firm's creditors such as Nordea Bank.

Administrators of the company are confident they have the legal
right to sell the firm's assets despite opposition from founder
Terje Bogen, who is reportedly appealing the bankruptcy.

Sponsor Service was declared bankrupt after Nordea and Sponsor
Service investors failed to agree on payback terms of an
emergency short-term loan sought by Nordea investor.

Sponsor Service owes Nordea around NOK250 million (US$35
million).


SPONSOR SERVICE: Auditors Under Investigation for Role in Fall
--------------------------------------------------------------
State regulator Kredittilsynet are investigating Ernst & Young's
role as auditor in the collapse of Norway's high-profile sports-
and culture-funding firm Sponsor Service.

The auditor is being questioned on how it could approve accounts
from a company now suspected of fabricating contracts, inflating
income and building up huge debts, according to Aftenposten.

Newspaper Dagens Naeringsliv reported Anne Merethe Bellamy of
Kredittilsynet saying: "All of the accounting firm's papers and
all sides of its work will be evaluated, to determine just what
Ernst & Young has done in relation to the accounts of Sponsor
Service."

Two top accountants who audited the company are under fire over
conflict of interests by accepting questionable favors from the
company.

Accountants Jan Olav Korsmo and Erland Stenberg must account for
their participation in Sponsor Service social events, both in and
outside of Norway, according to the report.

Ernst & Young is also answerable to the issue that it was
consulting work done for Sponsor Service when it was auditing its
books.

Ernst & Young officials in Oslo remained silent to protect
Sponsor Service, but managing director Torstein Hokholt promised
to answer all questions from Kredittilsynet or other regulatory
agencies.

Sponsor Service founder Terje Bogen, who had left the company
before its troubles emerged, insisted he had no wrongdoing in
relation to the collapse of the company.

Mr. Bogen reportedly charged the company NOK 150,000 a year for
use of his private homes for business entertaining.  This is in
addition to the NOK38 million (US$5.4 million) he took out as
salary, bonuses, and dividends since 1993.

CONTACT:  ERNST & YOUNG OSLO
          Tullins gt 2
          Postboks 6834 St. Olavs plass
          0130 Oslo
          Phone: 22 03 60 00
          Fax: 22 11 00 95

          Skoyen:
          Drammensveien 165
          Postboks 228 Skoyen
          0213 Oslo
          Phone: 22 92 80 00
          Fax: 22 92 89 00


===========
P O L A N D
===========


BRE BANK: Agrees to Refinance Long-term Debt of ITI Holdings
------------------------------------------------------------
The Board of Management of BRE Bank informs that on March 2, 2003
BRE Bank SA and ITI Holdings SA signed a letter of intent
concerning the principles of refinancing long-term debt of ITI
Holdings SA. The purpose of the agreement is to reduce the debt
of ITI Holdings SA through a conversion of 1,689 ITI Holdings SA
bonds now held by BRE Bank SA (total nominal value USD 84.5
million) into: shares of TVN Sp. z o.o.; 4 series of short-term
and mid-term bonds with maturity of 6 months, 12 months, 18
months, and 24 months; secured long-term bonds with maturity of 4
years.

The said agreement is in line with actions planned by BRE Bank SA
to gradually change the structure of the Bank's equity
investment.

Once finalized, the transaction will reduce the debt investment
in the ITI Holdings SA Group and will lead to equity investment
in TVN Sp. z o.o.

All binding agreements with ITI Holdings SA concerning the
refinancing are expected to be signed not later than by the end
of June 2003.


BANK PEKAO: Members of Supervisory Board Step Down
--------------------------------------------------
Management Board of Bank Polska Kasa Opieki S.A. informs that
Messrs
Fausto Galmarini and Leszek Pawlowicz resigned from the positions
of Member of the Supervisory Board of Bank Polska Kasa Opieki
S.A. effective on the date of holding of the General Meeting
approving the financial statements for the financial year 2002.

In connection with the expiry of mandates of 7 members of the
Supervisory Board at this year's General Meeting Messrs Fausto
Galmarini and Leszek Pawlowicz, who were appointed during the
term of office of other Members, would like to make it possible
for the General Meeting to appoint the full composition of the
Supervisory Board for the new joint term of office, according to
(S) 14 section 1 of the Bank's Statute.


DAEWOO-FSO: Hyundai/KAI Shows Interest in Investing
---------------------------------------------------
Korean concern Hyundai/KIA has once again expressed its interest
in troubled carmaker Daewoo-FSO Motor Polska, according to
unofficial information circulating in the press.

Daewoo-FSO vice-president Janusz Woyniak has denied the reports;
although Labor Economy Minister Jerzy Hausner recently announced
that the government is considering other offers since recent
proposals of MG Rover are not very reliable.

British carmaker MG Rover had hoped to take the controlling stake
in the plant for USD125 million by the end of 2001.

However, talks between creditors of the Polish carmaker and MG
broke down last month when MG demanded that the Polish side
shoulder the whole financial burden with a special guarantee
given to the British, letting them escape the risks associated in
the deal.

Hausner said talks with the British company are still under way.

Daewoo-FSO has suffered losses and has laid off workers. In 2001,
the company lost PLN1.1 billion after losing PLN2 billion in
2000. It is presently carrying a PLN4.8 billion (USD1.17 billion)
debt burden.

CONTACT:  DAEWOO-FSO MOTOR CORPORATION
          Ul. Jagielloivska 88
          03-215 Warszawa
          Phone: +48-22-676-3955
          Fax: +4822-676-1501
          Homepage: http://www.daewoo.com.pl


=====================
S W I T Z E R L A N D
=====================


BANCA DEL GOTTARDO: Swiss Life's 2002 Results to Cause Loss
-----------------------------------------------------------
Standard & Poor's Rating Services said that its ratings on
Switzerland-based Banca del Gottardo (Gottardo;
'BBB+/Developing/A-2'), a wholly owned subsidiary of Swiss Life/
Schweizerische Lebensversicherungs- und Rentenanstalt AG, remain
unchanged following an announcement by the Swiss Life group of
its anticipated 2002 results.

Gottardo is expected to report a loss of SFr160 million for 2002,
due to extraordinary adjustments and provisions of SFr200
million. Gottardo's ratings were lowered on July 26, 2002, and no
longer factor in implied parental support.

If the bank were sold, its rating could be dependent on those of
the acquiring group and its prospective strategic importance to
that group. Standard & Poor's will continue to monitor Gottardo's
strategic response to its deteriorating results of the past two
years and to continuing poor market conditions. While Gottardo's
ongoing restructuring process is expected to yield a significant
improvement in costs and risk control, revenues have continued to
be pressurized by the harsh operating environment. In the absence
of a significant recovery in the bank's earnings and capital
ratios, the ratings could be lowered.


CREDIT SUISSE: Winterthur Exits Insurance Operation in Singapore
----------------------------------------------------------------
Winterthur Insurance, a subsidiary of the Credit Suisse Group,
quietly sold out due to the tough conditions facing the general
insurance industry in Singapore, Channel NewsAsia reports.

Its business is believed to have gone to Canada's Fairfax
Financial Holdings.

According to the report, the exit was expected in Singapore's
already saturated market, which at the same time is suffering
from the negative effects of the September 11 attacks in the US.
Singapore currently has about 35 general insurers.

Some insurers scaled back after experiencing low sales when they
increased insurance premiums by as much as 500% after the
disaster.

In February, Witerthur announced that it is realigning its
organizational structure.

It said that the two Winterthur units Insurance (property and
liability business) and Life & Pensions (life insurance and
retirement provision) will be combined within Germany, Italy,
Spain and Belgium

CONTACT:  CREDIT SUISSE GROUP
          Investor Relations Telephone
          Phone: +41 1 333 4570


SEZ GROUP: Warns of Net-loss of at Least CHF12 Million for 2002
---------------------------------------------------------------
The SEZ Group announced that it has taken steps to refocus its
resources on single-wafer wet surface preparation technology.
This move includes the closing of its wet bench production
facility in Donaueschingen, Germany, referred to as SEZ Germany,
formally known as HMReinraumtechnik GmbH, which was acquired by
the SEZ Group in February 2001. The second step in this
prioritization is the shift of resources to SEZ's core business,
patented single-wafer equipment for microchip production. To
further facilitate this refinement the SEZ Group reduced its
global workforce by 20-percent from 750 to 600 employees
worldwide. The SEZ Group's staff reduction includes the
Donaueschingen facility but will not affect the company's
service, process and sales support.

Additionally, SEZ's decision will not negatively affect the IP
and products developed by its California Research Center (CRC),
which was acquired as L-Tech technologies last year. In fact, the
elimination of the burdens associated with the commodity product
line, wet benches, will provide new opportunities for SEZ to
expand its customer base without having to compete in the low-
margin wet bench equipment market.

Restructuring affects business years 2002 and 2003
As part of the withdrawal from the wet bench business, the SEZ
Group will be required to depreciate assets (primary property,
plant and equipment, inventories and goodwill), which will be
charged back to business year 2002. Therefore, the SEZ Group will
show a net-loss in the range of CHF 12 to 15 million for business
year 2002 instead of the originally expected net-profit of more
than CHF 10 million. Additional operating costs and consequences
from the worldwide workforce reduction will be charged against
the half-year result for 2003. The business restructuring refocus
on single-wafer technology product development will lower the SEZ
Group's breakeven level significantly, starting in the third-
quarter of 2003. SEZ's financial plan is to lower the company's
breakeven from CHF 45 million to below CHF 40 million per quarter
beginning in the ensuing third-quarter. By implementing these
cost reductions SEZ expects to build upon its current cash
position.

Condition for sustainable growth strengthened

In fiscal year 2002, under the pressure of the continuing
downturn, the total wet surface preparation market shrank by
nearly 40-percent to USD 1 billion (Dataquest: January, 2003).
This drastic decline has caused extreme pricing pressure,
especially in the wet bench segment. During the same time period
the SEZ Group increased its market share in the wet surface
preparation market from 9.6 to more than 12 percent. This gain
was solely due to single-wafer technology product line sales,
which is dominated by SEZ with a market share of 70 percent.

About SEZ
The SEZ Group is a leading supplier of wet wafer surface
preparation equipment to the global semiconductor manufacturing
industry. The company's breakthrough proprietary Spin-Processor
technology forms the basis of a broad portfolio of single wafer
backside and frontside wafer surface conditioning products for
semiconductor chipmakers worldwide. SEZ maintains development,
manufacturing, sales, marketing and service operations in Europe,
Japan, Asia-Pacific and North America. Registered in Zurich,
Switzerland, SEZ Holding AG is listed on the Swiss Exchange under
the symbol (SWX: SEZN) since 1996.


SWISS LIFE: Expects Significant Loss for Financial Year 2002
------------------------------------------------------------
The Swiss Life Group anticipates a loss of approximately CHF 1.7
billion for 2002, a financial year that featured a disappointing
financial result, a negative result from business in Switzerland
and extraordinary write-downs. However, the enterprise still has
sufficient core capital at its disposal. The implementation of
the new strategy is proceeding according to plan. The targeted
cost reductions of CHF 170 million by the end of 2002 have been
achieved. The Swiss Life Group will present the report on its
2002 annual results on 8 April 2003. The company has set its
sights on a return to the profit zone in the current year.

The Swiss Life Group anticipates a loss of approximately CHF 1.7
billion for 2002, a financial year marked by a disappointing
financial result, because the reduction of our equity exposure
from 16% at the start of the year to less than 2% (net) as of 31
December 2002, undertaken to safeguard the capital base, involved
the realization of losses; a loss on business in Switzerland,
where falling interest rates caused a further deterioration in
underlying conditions; a loss by Banca del Gottardo of CHF 160
million in its local closing (after extraordinary adjustments and
provisions totalling CHF 200 million); the reduced valuation of
Banca del Gottardo in the Swiss Life Group consolidated balance
sheet to CHF 1.4 billion, and restructuring costs totalling
approximately CHF 130 million.

Rolf D”rig, Chief Executive Officer of the Swiss Life Group, on
the look ahead at the annual figures: "Despite the negative
result, there were also positive aspects to 2002, a watershed
year. With our decision to concentrate on core business, the
measures introduced to boost efficiency and the successful
capital increase we have taken our first steps in the right
direction. The implementation of the new strategic course is
proceeding according to plan. However, considerable effort is
still required if we are to achieve lasting success with our
ambitious goals in this very challenging market environment."

Stable premiums - noticeably lower costs
Premium volume remained stable compared to the previous year. The
targeted CHF 170 million reduction in operating costs for 2002,
i.e. one-third of the overall CHF 515 million cost economies
which the enterprise aims to make by 2004, was achieved. Staff
cuts were also as planned.

Banca del Gottardo makes extraordinary valuation adjustments
After extraordinary adjustments and provisions totalling CHF 200
million, Banca del Gottardo posted a loss of CHF 160 million. The
bank anticipates a return on equity of over 10% for the 2003
financial year, which is equivalent to a profit of more than CHF
80 million. The measures to boost efficiency and reduce risk have
created the prerequisites that will enable the bank to be sold at
a good price once market conditions improve. Bruno Pfister, Chief
Financial Officer of the Swiss Life Group, will take a seat on
the Board of Directors.

CHF 4 billion in equity
Thanks to the successful capital increase at the end of last
year, the Swiss Life Group has sufficient financial leeway to
pursue its new strategic direction. Consolidated capital and
reserves are estimated at CHF 4 billion as of the end of 2002,
taking into account the anticipated loss. Since the equity
exposure on investments was reduced early on last year, we were
largely able to counteract the impact of persistently negative
stock market trends on our capital base and to maintain a high
degree of solvency. At the end of February 2003 the equity
exposure on investments was less than 2%.

Implementation of strategy proceeds according to plan
The implementation of the strategic realignment is proceeding
according to schedule. The new management is single-mindedly
pressing ahead with the concentration on core business. Each
country has adopted a programme to step up efficiency.

Since the announcement of the new strategic direction last
September it has been necessary to revise some earlier decisions.
At that point in time, the Swiss insurance company ®La Suisse¯,
which generates two-thirds of its premium income from life
insurance, was not classified as core business. This decision
will be reviewed in the next few months in the context of a
general analysis of Swiss Life's positioning in the Swiss market.
In France, as has been announced, property and casualty insurance
no longer belongs to core business, while health insurance will
be maintained in order to build up business in the life sector
and with the goal of better exploiting synergies in distribution.

Pulling the group pensions business in Switzerland out of the red
is an important objective for Swiss Life. Despite the lowering of
the minimum required rate of interest to 3.25% with effect from 1
January 2003, there has been a further deterioration in
underlying conditions in this area due both to the steep rise in
disability insurance claims, induced by economic trends, and to
historically low interest rate levels. For this reason, in
addition to the ongoing cost-reduction programs, premiums were
adjusted at the start of the year. Premiums increased by an
average 13% for customers. The corresponding premium rate changes
have been examined and approved by the Federal Office of Private
Insurance (FOPI). Swiss Life will continue to campaign for
realistic terms of reference in the group life business, in the
interests of creating an occupational benefits system which is
secure and stable in the long term.

Continually challenging market environment
The continually unfavorable market environment with negative
trends on the stock markets and, in particular, the historic lows
in interest rates present life insurers with great challenges.
Rolf Dorig, Chief Executive Officer of the Swiss Life Group:
"2003 will be another very challenging year for Swiss Life and
for the industry as a whole. By introducing measures addressing
revenue and costs, as well as clearly lowering the risks, we have
created the necessary conditions for once again generating a
profit in the current year."

Swiss Life
The Swiss Life Group is one of Europe's leading providers of
long-term savings and protection and life insurance. Swiss Life
offers comprehensive advice across a broad range of products via
agents, brokers and banks in both its domestic market,
Switzerland, where the company is market leader, and selected
European markets. Multinational companies are serviced with
tailor-made solutions by a network of partners in over fifty
countries.

Swiss Life Holding, registered in Zurich, was founded in 1857 as
the Swiss Life Insurance and Pension Company. The shares of Swiss
Life Holding are listed on the SWX Swiss Exchange (SLHN). The
company employs around 12,000 staff members.


SWISS LIFE: 'A' Long-Term Ratings Placed on Watch Negative
----------------------------------------------------------
Standard & Poor's Ratings Services said it placed its 'A' long-
term counterparty credit and insurer financial strength ratings
on Switzerland-based life insurer Swiss Life/Schweizerische
Lebensversicherungs- und Rentenanstalt AG (Swiss Life) on
CreditWatch with negative implications. This follows the group's
announcement that it expects to report a bottom-line loss of
Swiss franc 1.7 billion ($1.3 billion) for the year ended Dec.
31, 2002, mainly as a result of deepened losses in the group's
domestic business, realized capital losses, and significant asset
impairments.

At the same time, Standard & Poor's placed its 'BBB' long-term
counterparty credit rating on Swiss Life Holding and its 'BBB'
long-term senior unsecured debt rating on the mandatory
convertible securities issued by Swiss Life Cayman Finance Ltd.
and guaranteed by Swiss Life Holding on CreditWatch with negative
implications.

"The CreditWatch placement reflects Standard & Poor's concerns
about the further deterioration in Swiss Life's domestic book of
business and the potential negative effect that full-year 2002
results may have on the group's capitalization," said Standard &
Poor's credit analyst Rowena Potter. "In addition, the current
low interest rate environment, combined with continued weak
equity markets, will delay the expected improvement in the
group's underlying operating performance, in particular for the
group life insurance business." This may also challenge Swiss
Life's ability to maintain capitalization at a level consistent
with the ratings.

Standard & Poor's currently does not expect that, should the
ratings be lowered, they would be lowered by more than one or two
notches. Standard & Poor's will meet with Swiss Life management
in order to discuss the impact of the 2002 results on the group's
credit profile and its ability to achieve a sustained turnaround
in earnings, supportive of the current rating level. Standard &
Poor's expects to resolve the CreditWatch placement following the
results announcements on April 8.


===========================
U N I T E D   K I N G D O M
===========================


ABBEY NATIONAL: Ratings Assigned in Latest Mortgages Transaction
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
preliminary credit ratings to the series 1 to 4 floating-rate
notes to be issued under Abbey National PLC's latest RMBS
transaction, Holmes Financing (No. 7) PLC (see list below).

The transaction involves the securitization of a pool of first-
ranking mortgages secured over freehold and leasehold properties
located in
England, Scotland, and Wales. This is the seventh issuance of
notes by
Abbey National out of its mortgages trust structure, which was
set up in July 2000.

The preliminary ratings reflect the sound payment structure and
cash flow mechanics of the transaction, and a cash flow analysis
to verify that the notes will be repaid under stress test
scenarios.

Further key considerations in the rating analysis include the
strong protection for noteholders provided by a combination of
class subordination, the œ25 million funding liquidity facility,
the two reserve funds, and excess spread to cover credit losses
and income shortfalls.

RATINGS LIST
Holmes Financing (No. 7) PLC
US$2.662 billion, EUR597 million, and GBP285 million floating-
rate notes
Class                   Preliminary      Preliminary
                        Rating           Amount (Mil.)
Series 1 class A        A-1+            US$750.00
Series 1 class B        AA              US$22.50
Series 1 class M        A               US$38.25
Series 2 class A        AAA             US$1,250.00
Series 2 class B        AA               US$37.50
Series 2 class M        A                US$63.75
Series 3 class A        AAA              US$500.00
Series 3 class B        AA                GBP15.00
Series 3 class M        A                 GBP20.00
Series 4 class A1       AAA              EUR500.00
Series 4 class A2       AAA              GBP250.00
Series 4 class B        AA                EUR41.00
Series 4 class M        A                 EUR56.00


AES DRAX: Fitch Downgrades Debt Ratings to 'D', Removes Watch Neg
-----------------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded
the senior notes issued by AES Drax Energy Limited to 'D' from
'C', and removed this rating from Rating Watch Negative. At the
same time, Fitch has maintained the Rating Watch Negative on the
'CC' rating of the senior secured bonds issued by AES Drax
Holdings Limited, and the 'DD' senior secured bank loan rating of
its related company, Inpower Limited.

This action follows the non-payment of interest on the DrxEn
notes, which was due on 28 February 2003. Under the DrxEn note
documentation, the non-payment of interest will constitute an
event of default after a 15 days cure period and Fitch does not
expect the default to be cured within that time. Nevertheless,
the intercreditor agreement includes provisions preventing DrxEn
noteholders enforcing their security for a period of 90 days
following a default. Last December, the senior creditors to the
project, which include lenders to Inpower and DrxHold
bondholders, entered into a standstill agreement, which expires
on 31 May 2003. DrxEn noteholders will not be able to enforce
their security before the end of this standstill agreement.

The current rating reflects the non-payment of interest, as well
as Fitch's expectation of a low recovery rate for the DraxEn's
noteholders. As part of the standstill agreement, Drax must
present a restructuring proposal to the creditors by 15 March
2003, which will help clarify recovery potential for all
creditors.


NOVASIDE TIMBER: Calls in Receiver, Cuts 50 Employees
-----------------------------------------------------
A Cumberland company was placed in receivership with the loss of
50 jobs after a slump in turnover made it impossible for the firm
to operate normally.

Novaside Timber, which also has a subsidiary, Novaside Homes, had
a turnover of GBP5 million last year and currently has an order
book worth GBP4 million.  The numbers are lower than what the
group expected, prompting company directors to call in a
receiver.

Ten'on's director of recovery services for Glasgow and the West
of Scotland, Kenny Craig, was quoted saying: "Novaside is a
company with good premises and modern equipment. There have
already been some expressions of interest and I'm confident of
selling the company as a going concern."

It is known that Novaside was the subject of a management buyout
only two years ago.

Novaside offers both standard designs and oneoffs. It offers help
with plot finding, design services, project management, full
client support and provide its own serviced plots to clients with
full build if required.

CONTACT:  Novaside Timber Systems Ltd
          Castlecary, Cumbernauld
          Cumbernauld
          G68 0DT
          Phone: 01324 840909
          Fax: 01324 840907

          Novaside Timber Frame Ltd
          Castlecary, Cumbernauld
          Glasgow, G68 0DT
          Phone: 01324 840909
          Fax: 01324 840907
          Homepage: http://www.novaside.co.uk


ORANGE SA: Posts First Full-Year Net Profit of EUR633 MM
--------------------------------------------------------
Gathering momentum and increasing financial strength

- EBITDA grew 51% to EUR5,146 million, substantially ahead of
target

- First full year net profit (before exceptional items), a profit
of EUR633 million, equivalent to EUR 0.13 per share

- EUR 1.5 billion improvement in earnings

- Positive net cashflow generated in Q4 2002

- Positive ARPU trends established

- On track to deliver TOP plan savings and accelerated financial
targets

Group financial highlights (1)(2)
- Recurring network revenues increased 14% to EUR 15.5 billion.
Total revenues were EUR 17.1 billion, up 11% on 2001.

- EBITDA increased 51% to EUR 5.1 billion, well ahead of
expectations.

- EBITDA margin on Group recurring network revenues was 33% (25%
in 2001).

- Operating profit increased 85% to EUR 2,782 million, a margin
on recurring network revenues of 18% (11% in 2001).

- First full year net profit (before exceptional items), a profit
of EUR 633 million. This reflects a EUR 1.5 billion improvement
on the EUR 885 million loss in 2001, and positive earnings per
share of EUR 0.13 (2001: loss per share of EUR 0.19).

- Exceptional items totaled EUR 5,169 million in 2002. These
comprised impairment and other related charges of EUR 4,730
million, and other non-recurring items of EUR 439 million. Of the
latter, EUR 252 million related to the exceptional closure costs
of the Group's Swedish operation and EUR 254 million to other
exceptional restructuring items, offset by a tax credit of EUR 67
million.

- Funds generated from operations increased 65% to EUR 4,035
million.

- After vendor financing receipts and securitization of
receivables, net debt reduced 6% to EUR 5,870 million (2001: EUR
6,214 million). Including the draw-downs of vendor financing and
securitization, total indebtedness at the year end was EUR 6,983
million (2001: EUR 6,448 million).

- The Group generated positive net cashflow in Q4 2002, leading
Orange to believe that it has probably passed the point of peak
funding.

Exceeding previous targets
Orange has exceeded, or is well on track to exceed, all of its
previous financial targets.

- Orange France(3) had been targeted a 40% EBITDA margin(22) by
2003 or 2004. At 41%, the 2002 results are already beyond this.

- Orange U.K.had been targeted a 35% EBITDA margin by 2003 or
2004. Its EBITDA margin jumped from 28% in 2001 to 34% in 2002.

- For Orange's Rest of World operations, the established
businesses (in Slovakia, Romania and Belgium) had been targeted a
collective EBITDA margin of 35% by 2003. Their EBITDA margin in
2002 was well over 40%, a substantial increase from the 31% in
2001. Including Egypt for the second half of 2002, the collective
EBITDA margin for the established businesses was 43%.

- The developing businesses (Switzerland, Netherlands and
Denmark) also beat expectations with a very strong performance.
They had been targeted to be collectively EBITDA positive by
2003, but achieved this in 2002, with a collective EBITDA
contribution of EUR32 million (negative ?330 million in 2001).

TOP - Total Operating Performance

In December, Orange announced its strategic review program,
building upon and accelerating the restructuring initiatives
begun during the first half of 2002. Orange is confident this
will generate between EUR 5 billion and EUR 7 billion of
additional cashflow between 2003 and 2005. The early stages of
this program are progressing well, and focus on maximizing the
operating performance of our existing footprint; securing the
full benefits of integration; leveraging and maintaining our
network advantage; taking advantage of the full potential of 2«G;
and reinforcing financial discipline and accountability.

Jean-Fran‡ois Pontal said:
"Orange continues its record of outperformance. Our financials
are ahead of all forecasts made at the time of our flotation only
two years ago - and they are ahead by a long way. We are
gathering momentum and increasing financial strength. The plans
we have announced will reinforce this."

Graham Howe said:
"Orange has already largely achieved the margin targets it set
for 2003 to 2004, and reached peak funding two years earlier than
forecast, at a substantially lower level than expected. On
current trends, by 2005, Orange could be debt free. We are now
focussed on driving our advantage of scale as an integrated
group, and through our relationship with France Telecom."

Sol Trujillo, who became Chief Executive Officer on Monday, said:
"I have nothing but praise for Orange, the team and what it has
achieved. I am arriving at a business with an impressive record,
an impressive performance and an impressive potential. I intend
to build on that to deliver even greater strength - both
financial and strategic.

"The future's bright, the future's Orange."

To see Orange's financial statements:
http://bankrupt.com/misc/ORANGE.htm

To see Financial Details(1) (2):
http://bankrupt.com/misc/FinancialDetails.htm

CONTACT:  Orange SA
          Phone: +44 (0) 20 7984 1691
          David Smyth
          Group Director of Strategic and Investor Services

          France Telecom
          Phone: +33 1 44 44 93 93
          Bruno Janet
          Senior Vice President Group Corporate Information

          Citigate Dewe Rogerson
          Phone: +44 (0) 20 7638 9571
          Anthony Carlisle
          Phone: +44 (0) 7973 611 888


ROYAL & SUNALLIANCE: Loss Attributable to Shareholders Widened
--------------------------------------------------------------
-  Group operating result* GBP226m (2001: GBP 16m) reflecting
prior year claims and adverse weather
-  Underwriting excluding prior year achieving target combined
ratio of 102%
-  Capital release plans announced in November, including IPO, on
track
-  Life result boosted by one off release of Danish surplus
amounting to GBP 50m
-  Pension funds reviewed and actions agreed
-  Loss attributable to shareholders of GBP 940m (2001: loss of
GBP 889m) reflects goodwill write off and reduction in investment
values.

                                         12 Months   Restated2
                                         2002        12 Months
                                                     2001
Revenue
General business net premiums written (after impact of quota
share - see page 10)                   GBP 8,635m    GBP 8,813m
Group operating result (based on longer term investment return
(LTIR)) 1                              GBP 226m      GBP 16m
Group operating loss (based on LTIR) 1,3 GBP (655)m  GBP 293)m
Loss for the financial year attributable to shareholders
                                         GBP (940)m   GBP (889)m
Balance sheet at 31 December
Shareholders' funds                      GBP 3,043m   GBP 4,691m
Net asset value per share (adding back equalisation provisions
net of tax)                                  217p       333p
Tangible net asset value per share           199p       261p
Dividend for the year per ordinary share     6.0p      16.0p

1 For more details on longer term investment return see note 2 on
page 13 2 See note 1 on page 13 3 For more details on Group
operating loss see page 5

BUSINESS OVERVIEW
Group Operating Result*
The Group operating result* was GBP 226m (2001: GBP 16m). There
were a number of factors affecting this result. The major feature
is the development in the underwriting loss attributable to prior
years amounting to GBP 595m (2001: GBP 342m). It also reflects
record levels of weather claims in the U.K.during the year, a
number of significant weather events in Europe and an exceptional
number of large losses in Scandinavia.

Adverse developments in prior year claims have affected a number
of our businesses and the Group has taken strong action to
strengthen provisions where necessary. At the nine months results
we indicated that losses in respect of prior years was œ121m. We
also advised our intention to increase reserves at the fourth
quarter by an estimated GBP 380m (net of discount). The actual
amounts charged to the fourth quarter were, GBP 72m for U.S.
workers' compensation, GBP 75m for U.S.  asbestos and
environmental, GBP 20m for U.K.asbestos, GBP 145m for motor
bodily injury worldwide and GBP 103m for other areas. Other prior
year movements of GBP 84m have also been charged in the fourth
quarter. We have assessed our asbestos liabilities at a detailed
level.

Combined operating ratios (COR's) in most of the Group's major
markets have been adversely affected by prior year claims
strengthening. The comparison of the accident year combined
ratios with those reported as follows:-
                        12 Months       12 Months    12 Months
                        2002            2002         2001
                        Accident Year   Reported     Reported
                            %              %             %
UK personal              109.5           110.4         102.8
UK commercial             94.0            98.2         125.0
EMEA                     105.1           110.9         106.6
USA                      103.0           122.8         122.1
Canada                   104.7           116.4         107.1
LA&C                      95.2            96.0         102.7
Asia Pacific              96.6            98.2          99.6
Total                    102.1           109.4         112.6

Bob Gunn, Acting Group Chief Executive, commented, "While 2002
was not a year of strong performance for the Group, we have some
excellent lines of business that produced another year of good
profitable results and we believe that we have taken actions to
address those businesses where performance has been
disappointing. We firmly believe that our longstanding strategy
of focussing on general insurance is correct, the outlook for the
general insurance industry is very good at the moment and we are
determined to capitalise upon it.

"At the third quarter results we laid out a programme of actions
to refocus the Group. We have made good progress in a number of
areas already.

As we announced on 4 March 2003, the IPO of our Australian and
New Zealand general insurance and financial services businesses,
recently rebranded as the Promina Group, continues on track for
completion in the first half of 2003. A number of Australian and
international investment banks have been selected to form a
syndicate.

As part of the proposed IPO, Promina Group will seek listing on
the Australian (ASX) and New Zealand (NZSE) stock exchanges. The
IPO will be executed as an offering to institutional and retail
investors, including offers to customers and employees in
Australia and New Zealand. The pre-registration program for the
retail offer will begin in Australia and New Zealand on 9 March
2003.

Due to the size of the proposed transaction relative to the Royal
& SunAlliance Group, we will be seeking the approval of the Royal
& SunAlliance shareholders for this transaction. Further details
on the IPO and the Promina Group will be released shortly (See
important note on page 14.)

-  Elsewhere, we anticipate a number of other sale agreements
will be announced in the first half of the year.
-  We have reduced our exposure to some under-performing lines in
the U.K. , U.S.  and Canada.
-  We announced last month the outsourcing of the administration
of our U.K.Life business with the transfer of 1,700 jobs. Under
the terms of the ten-year deal the costs are directly related to
the number of policies remaining in force. It has significantly
reduced the risks of controlling fixed overheads inherent in
running off a portfolio of business.
-  In the November announcement we indicated that we expected
worldwide head count reductions of around 6,000 over and above
the 6,000 that will result from the IPO. To date we have actioned
4,700 of that reduction, including 140 at our corporate center.

Improving the Capital Position
"The capital position of the Group remains a primary focus. Using
the risk based capital assessment approach of comparing current
tangible capital with the requirements based on projections of
net written premium for the forthcoming year, there was a
shortfall at the year end of around GBP 700m. This is consistent
with the position set out in November 2002. The improvements in
the capital position will arise from four elements:
-  Reduction in general business capital requirements following
disposal and discontinuance
-  Release of capital from life operations
-  Profits on the disposal of operations
-  Retained earnings from ongoing operations, including
investment returns

Before taking into account retained earnings, we expect that
these actions will produce a projected surplus of around œ800m.

"On a regulatory capital basis the Group continued to meet its
capital requirements throughout the year.

"The recent announcement by the FSA of the move to realistic
balance sheets for life solvency is welcomed as a practical and
sensible development. The impact for the Group is likely be
positive. We will continue to manage the run off of the U.K.Life
funds to maximize the release of capital, while meeting
regulatory requirements.

Summary
"During 2002, we took a fundamental look at our Group. We made
decisions, some of them hard and some of them requiring time to
execute. We determined where and how we wanted to compete. We now
have to show that we can deliver going forward."

OPERATIONS REVIEW
General Business Result*
The general business result* is a profit of œ89m (2001: loss
œ11m). The underwriting result shows an underlying improvement
both pre and post the charge for WTC. The investment return has
declined as a result of our decision to reduce the general
insurance capital requirement to 40% of net written premium and
to move to a lower proportion of funds invested in equities. The
corollary is that the charge for the shortfall of capital,
reflected in the 'other activities' line, also reduces.

The U.K.is the Group's biggest market, and will continue to be
key to its success going forward. It produced a solid result for
the year with a COR of 103.9%, nearly 10 points better than in
2001. This is despite the impact of a record level of weather
related claims as floods, storms and high rainfall levels
occurred throughout the year. The U.S.  is also a significant
market. The COR of 122.8% for 2002 includes nearly 20 points
attributable to prior year adverse development. While recognizing
that the current performance of our Canadian company is
disappointing, we do believe that it is strategically well
positioned and that we are taking the right actions to improve
results. In EMEA, a sound underlying performance has been
affected by a number of major weather events, prior year reserve
strengthening and a high incidence of large commercial losses.
With CORs of 96.0% and 98.2% respectively, Latin America &
Caribbean and Asia Pacific produced very good results.
Personal Lines

Our direct operations, particularly AAMI and AAI in Australia,
produced very strong results in 2002. In the U.K. , MORE TH>NTM
continues to perform well, although this is partly offset by the
œ21m investment in building the new brand. Product holdings have
increased significantly to an average of over two products per
customer with over 35% of sales now coming from existing
customers.

Most of our intermediated personal lines of business have
produced consistently poor results throughout the year. This has
been particularly true of U.K. motor and Canadian auto, although
other broker motor accounts are also facing stiff pricing
competition. Claims provisions for prior year developments in
intermediated motor were increased by œ94m during the year; the
equivalent number for Canada was œ27m. 2002 has continued the
trend of the last few years towards significantly higher awards
for bodily injury claims worldwide. In the U.K. we have withdrawn
from business with a number of branded brokers and are actively
reducing our exposure to other intermediated business. In Canada,
we have reduced our exposure to third party intermediated
business. At the same time in Canada we have been developing the
profitable Johnson Corporation and Agilon channels.

While the U.K. household result deteriorated as a result of a
œ82m year on year increase in weather related claims, including
four large scale weather events, the Canadian household account
benefited from better weather in 2002 and produced an
underwriting profit both for the year and for the fourth quarter.

US personal lines continue to perform well, producing a combined
ratio of 104.7%. The underwriting loss in the fourth quarter was
in large part a result of GBP 16m of strengthening in auto
reserves.

The EMEA result was adversely affected by a deterioration in
bodily injury claims experience, the storms and flooding that
occurred throughout the year in Europe and a number of large
losses, particularly in Scandinavia in the fourth quarter.

Commercial Lines
UK commercial had an excellent year and rating continues to be
very positive, producing an underwriting profit for the year and
a COR of 98.2%. Commercial property has been particularly strong
with a GBP 140m improvement in the underwriting result, despite
GBP 33m higher weather related costs than in 2001.

The deterioration in the U.S.  workers' compensation result is
due to significant claims provision increases for prior years.
The account has benefited from its low exposure to the poorly
performing Californian market but continues to face challenges.
The 2002 account has shown a strong improvement although further
real rate increases will be necessary in 2003. In line with the
rest of the U.S.  market, other liability lines were the focus of
remedial actions throughout 2002. We announced in November 2002
that claims provisions for asbestos and environmental pollution
would be increased in the fourth quarter following the further
review of exposures.

In the U.S.  we are discontinuing our World Assurance business,
have exited our ProFin business and are selling or exiting a
number of other businesses.

The Canadian commercial result worsened with underwriting profits
in the property and speciality accounts more than offset by GBP
33m of claims provision strengthening in auto and general
liability and two large losses in the fourth quarter arising from
prior years. We have reduced some commercial lines such as long
haul trucking and segments of middle market.

Storms and floods in the first, third and fourth quarters have
adversely affected the EMEA results, particularly for Germany.
The Region also saw an unprecedented number of large losses
throughout the year notably in Scandinavia and Benelux (Germany
and Benelux were both sold during 2002).

Scandinavia produced a poor fourth quarter result reflecting
these large losses and also prior year provision strengthening
for motor liability, workers' compensation and personal accident.

Life Business Result
The life business result of GBP 227m shows a GBP 41m increase on
2001. The principal item is a one off release of surplus in
respect of the Danish operation where the Regulator has changed
the way in which it requires companies to recognize the value of
surplus as a result of which Codan made a one off release to
profit of œ50m, of which GBP 6m had been accrued by the third
quarter. Australia continues to benefit from improved performance
in its risk business. These improvements have been partially
offset by a decrease in the U.K. contribution following the
closure of the remaining U.K. Life funds to new business in
September and the continued lower levels of equity markets.

Other Activities Result
The analysis of the other activities result is as follows:

                                   12 months           12 Months
                                   2002                2001
                                   (audited)           (audited)
                                   GBP m                  GBP m

Development expenses                  (12)               (19)
Other non insurance                   (9)                 14
Non insurance activities              (21)                (5)
Associates                             17                  7
Central expenses                      (48)                (37)
Investment expenses                   (29)                (26)
Loan interest                         (65)                (50)
Balance of LTIR                        56                 (48)
Other activities result               (90)                (159)

The non insurance activities result has deteriorated due to the
sale of Royal & SunAlliance Investments and from a number of
asset write downs in the Australian fund management companies.

The associates result has benefited from a good year from Mutual
& Federal in South Africa, helped by the strength of the rand.
Central expenses have increased due to costs arising from the
Operating and Financial Review, announced in November 2002 and
ongoing work on restructuring.

The other activities result also includes a surplus of œ56m in
respect of the balance of LTIR. This comprises a number of items,
including a surplus representing the excess of actual equities
held over those assumed in the risk based capital calculation,
offset by a charge in respect of the shortfall between actual
capital deployed in the general insurance business and the
Group's risk based capital target of 40%. The effect of the
surplus equities in 2002 reflects the period of realignment of
the Group's portfolio in line with the previously announced
change in investment policy.

Group Operating Loss*
The difference of GBP 881m between Group operating result* and
Group operating loss* was comprised of a number of items outlined
below.

An appraisal of the value of goodwill carried on the Group's
balance sheet has been made in respect of the U.S.  operations
and the Australian life operation. This gave rise to impairments
of œ549m and œ92m respectively in addition to GBP 12m in other
territories, which has been charged to Group operating profit.
Other movements comprise amortisation of goodwill of GBP 60m,
amortisation of goodwill in acquired claims provisions of GBP
25m, amortisation of the present value of acquired in force
business of GBP 13m, charges in respect of interest on dated loan
capital of GBP 52m and reorganisation costs of GBP 79m less the
reduction in equalisation provisions of GBP 1m.

Other Profit & Loss Movements
The main difference between Group operating loss* and loss for
the financial year attributable to shareholders is short term
investment fluctuations. U.K. accounting rules require us to
reflect in profit before tax (PBT) the full market value movement
in our investment portfolio. This volatility can distort each
year's PBT and is one of the main reasons that we use Group
operating result* based on the longer-term investment return as
our primary measure of performance. Short term investment
fluctuations for the year were a charge of GBP 551m reflecting
the poor investment market conditions during the year. The impact
in the second half of the year was considerably reduced by the
equity disposal program.

Other movements also include the profit on disposal of
subsidiaries of GBP 184m, which is mainly in respect of Royal &
SunAlliance Investments.

We now make full provision for deferred tax on a discounted
basis. The underlying rate of tax on the Group operating result*
was 31% (2001 restated: 31%).

After a tax credit of GBP 91m and eliminating minority interests
of GBP 9m, the loss for the period attributable to shareholders
was GBP 940m (2001 restated^ : loss of GBP 889m).

Movement in Total Capital
Total capital has decreased from GBP 5,874m at 31 December 2001
(as restated for deferred tax - see note 1 on page 13) to GBP
4,221m at 31 December 2002. The movement in shareholders funds
comprises the after tax loss attributable to shareholders of GBP
940m, ordinary dividend of GBP 86m, preference dividend of GBP
9m, a reduction in embedded value of GBP 351m, an exchange loss
of GBP 265m, primarily attributable to a weakening in the U.S.
dollar, offset by other movements of GBP 3m. Dated loan capital
has decreased due to foreign exchange movements of œ11m and
minority interests have increased by GBP 6m.

Capital Position
On a regulatory basis, the overall regulated entity and its
overseas subsidiaries had an estimated required minimum margin at
the end of 2002 of around GBP 1,800m. The estimated excess
capital over this minimum at the end of 2002 was more than GBP
600m.

On a risk based capital basis, the actual and projected position
was as follows:
                                                           GBP m
Available capital (tangible)                            4,100
Less current life requirements                          1,700
Less discontinued business requirements                   100
Available for general business                         2,300
Current general business requirement (@40% of projected 2003 NWP)
3,000
Indicated current shortfall                            (700)
Projected reduction in general business requirement / projected
release from life capital                              1,500
Projected capital surplus                                800


Inevitably our current capital position is subject to the
uncertainties in preparing the accounts for an insurance company
which are set out on page A5 to A9. In addition the overall
capital projection is subject to uncertainty, because of factors
such as investment markets, regulatory change and the execution
risk of our planned actions.

Pension and Post Retirement Commitments
The Group has assessed its pension and post retirement
commitments in accordance with FRS 17. This methodology compares
the market value of the pension fund assets with the discounted
value of the projected liabilities, using a corporate bond
discount rate of 5.5% in the U.K. The aggregate net of tax
shortfall for the Group as at the end of 2002 amounted to GBP
494m of which GBP 88m was accrued at 31 December 2002, giving a
net shortfall of GBP 406m. Of this the majority, GBP 300m arises
in the U.K. The U.K. defined benefit schemes were effectively
closed to new members in April 2002. The investment policies of
the main funds were also changed during 2002 and the investment
holdings adjusted accordingly.

The shortfall in the U.K. will be initially reduced by the
payment into the fund during 2003 of GBP 70m of the accrual
already established on the balance sheet.

As it is a long term liability the Group intends funding the
shortfall over the next 10 years at the rate of around œ30m pa.

The position will also benefit from the proposed introduction of
employee contributions, which would contribute GBP 15m pa from
2005. The full FRS 17 charge for pensions benefits will be taken
through the profit & loss account from 2003. Allowance was made
for this in our business plans. A significantly higher charge
under SSAP 24 was introduced mid way through 2002 and is
reflected in the result.

Net Asset Value Per Share
The net asset value per share, after adding back claims
equalisation provisions net of tax, decreased to 217p (31
December 2001 restated^: 333p). At 4 March 2003 the net asset
value per share (adding back equalisation provisions net of tax)
was estimated at 227p.

Dividend
The directors will recommend to shareholders at the Annual
General Meeting to be held on 14 May 2003 that a final dividend
of 2.0p per ordinary share be paid on 30 May 2003. The dividend
will be payable to shareholders on the register at the close of
business on 2 May 2003. This, together with the interim dividend
of 4.0p already paid, will make a total distribution for the year
of 6.0p (2001: 16.0p).

Shareholders will be offered a dividend reinvestment plan.

BUSINESS DEVELOPMENTS 2002

January
-  Announced agreement to sell our Italian direct motor insurer
to Direct Line for GBP 12m - deal completed in March

March
-  Duncan Boyle appointed U.K. Chief Executive

April
-  Announced agreement to sell Royal & SunAlliance Investments to
ISIS for GBP 240m - deal completed in July

May
-  Steve Mulready appointed U.S.  Chief Executive
-  Announced agreement to sell Benelux operation to Achmea for
GBP 77m - deal completed in July

June
-  Announced agreement to sell Isle of Man offshore life company
to Friends Provident for GBP 133m - deal completed in July

July
-  Announced agreement to sell U.K. Group Risk business to Canada
Life for GBP 60m - deal completed in

October
August
-  U.K. put in place a reinsurance of its financial enhancement
products with Berkshire Hathaway
-  Announced outcome of U.K. Life review including the transfer
of the unit linked life funds to the Phoenix non participating
fund to release capital which was completed in October

September
-  Bob Gunn appointed Acting Group Chief Executive

October
-  Announced agreement to sell Bahamas to SunStar Ensure Ltd for
$7m

November
-  Announced Operating and Financial Review and radical plan of
actions for the future
-  Announced reduction of shareholding in Global Aerospace from
50% to 10.1% and reduction in 2003 Aviation Pool from 28.125% to
9.25%, reducing net premium income in 2003 by around GBP 110m
-  Announced agreement to sell German operations to Baloise for
GBP 58m - deal completed in December
-  Announced deal for transfer of renewal rights on parts of
Quebec personal lines (with around C$25m of premium income) to
CGU

December
-  Named Andy Haste as new CEO and John Napier as Chairman
designate
-  Agreed deal for transfer of renewal rights on U.S.
Professional and Financial Risks (ProFin) portfolio of business
(with around $125m of premium income) to St Paul Companies
-  Announced agreement to sell Guardian Trust Australia to JP
Morgan Holdings Australia for GBP 8m

To see financial statements:
http://bankrupt.com/misc/RoyalSunAlliance.pdf


ROYAL & SUNALLIANCE: AM Best Comments on Royal & Sun Alliance
-------------------------------------------------------------
A.M. Best Co. has commented that the financial strength rating of
A- (Excellent) of The Royal & Sun Alliance Insurance Group plc
(R&SA), United Kingdom and the "bbb" and "bbb-" ratings of its
subordinated debt and preferred stock remain unchanged following
the company's announcement of the 2002 year-end results. The
outlook remains stable.

As expected, 2002 year-end results reflect the company's
improving operating performance while maintaining an excellent
business position in its key markets. R&SA continues to execute
its risk reduction program, ceasing to write certain lines of
business and further divesting and closing non-core operations.

The sale of Royal Specialty Underwriting Inc. (RSUI) and the IPO
of the Australian and New Zealand operations -- significant
sources of capital release -- are likely to be completed before
June 2003. The decline in net premium will lead to a reduction in
risk capital requirements, enabling R&SA to focus on growing its
priority lines in the United Kingdom and the United States.

After discussions with R&SA, A.M. Best believes that the
estimated deficit on the company's own pension fund is unlikely
to negatively affect the rating. Although the company's defined
pension benefit scheme is now closed, A.M. Best will continue to
monitor any potential deterioration.

A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at
http://www.ambest.com

CONTACT:  A.M. BEST CO., OLDWICK
          Jim Peavy, Public Relations
          Phone: +(1)908/439-2200, ext. 5644
          E-mail: james.peavy@ambest.com
          or
          Rachelle Striegel, Public Relations
          Phone: +(1)908/439-2200, ext. 5378
          E-mail: rachelle.striegel@ambest.com
          or
          Jose Sanchez-Crespo, Analysts
          Phone: +(44) 20 7626 6264
          E-mail: jose.sanchez-crespo@ambest.com


TXU ERUOPE: Fitch Rates TXU Energy's US$500MM Senior Notes 'BBB'
----------------------------------------------------------------
Fitch Ratings assigns a 'BBB' rating to TXU Energy Company LLC's
(TXU Energy) $500 million senior notes. Affirmed are TXU Energy's
'BBB' rating on outstanding senior unsecured bonds (including
pollution control bonds issued through the Trinity River
Authority, Brazos River Authority, and Sabine River Authority),
and the short-term rating of 'F3'. Also affirmed are TXU Corp's
(TXU) ratings of 'BBB-', 'BB+', for its senior notes, and
preference stock, respectively and its short-term rating of 'F3'.
The Rating Outlook on all ratings is Stable. Proceeds will be
used to paydown inter-company loans and for general corporate
purposes. The notes are expected to price this week with Lehman
Brothers, and Salomon Smith Barney as joint lead managers.
The rating reflects TXU Energy's capital structure of
approximately 2.83 times (x) net debt-to-EBITDA, sufficient
liquidity to meet refinancing needs, solid cash flow interest
coverage of 6.7x, and a currently low retail churn ratio in
Texas. However, the rating also takes into account Fitch's view
that currently high margins earned by retail power suppliers in
Texas are likely to moderate over time if price competition
becomes more prevalent in that market, though this is not an
immediate concern. An additional concern is the current over-
supply of generation in Texas that has placed pressure on the
energy spot market and has limited the profitability of TXU
Energy's favorable generation portfolio.

TXU's ratings and Stable Outlook takes into account the existence
of sufficient liquidity to meet expected company wide refinancing
and potential collateral requirements, as well as a recent
favorable settlement, with parties who had appealed a Public
Utilities Commission of Texas order approving TXU regulatory
settlement plan, that should pave the way for Oncor Electric
Delivery Co. to issue securitization bonds (totaling $1.3
billion). The Stable Outlook for TXU also factors in Fitch's view
that TXU will not have a material liability for TXU Europe
obligations (the obligations of TXU Europe are currently rated
'D').

Factors that could result in higher future ratings for TXU and
its affiliates are: the TXU group's ability to reduce
consolidated debt and leverage measures during 2003-2004;
sustained improvement in operating performance of TXU Gas and TXU
Australia; and stable operating performance and margins
continuing at TXU Energy despite the constrained credit and
business environment. Ratings could be lowered from the current
levels in the event of substantial, unanticipated erosion in TXU
Energy's margins, possibly as a result of more aggressive price
competition evolving in the retail supply market, or an
unexpected liability for material obligations of TXU Europe.


UK COAL: Posts Loss of GBP81.7 Million in Results for 2002
----------------------------------------------------------
UK COAL PLC, the U.K. 's leading coal-mining company, today
announces its preliminary audited results for the year ended
December 31, 2002.

-  Final dividend maintained at 5 pence per share giving total
dividend for the year of 10 pence per share

-  Underlying improvement in deep mines performance, despite
geological difficulties at Daw Mill

-  Cost cutting initiatives progressing well

-  Cash flow reduced by stock build and turmoil in generator
market

-  Latest property portfolio value increased to GBP174.0 million,
GBP95.6 million above book value

-  Good progress at Daw Mill in the first two months of 2003

2002 2001
GBP         GBP
Turnover                                     596.6m    662.5m
Profit/(Loss) before tax and exceptionals      8.4m**  (10.7)m*
Loss for the year after tax and exceptionals (81.7)m** (18.3)m*
Dividend for the year                         10.0p     10.0p
Earnings/(loss) per share pre exceptionals     4.6p     (1.7p)
Loss per share after tax and exceptionals    (56.0p)   (12.5p)

* Includes Operating Aid income GBP21.7 million.
**Includes net provision release of GBP 21.1 million.

Commenting on the results, Gordon McPhie, Chief Executive of U.K.
COAL, said:

"Turmoil in the U.K. electricity generating industry, low
international coal prices, a weakening U.S.  dollar, closure
costs and unexpected adverse geological conditions, particularly
at the Daw Mill and Selby collieries, all impacted on U.K. COAL's
performance and results in 2002.

"In 2003 we should benefit from the initiatives we have taken in
the last two years to improve efficiency and reduce costs in all
our mines. We are making good progress towards achieving the
target of 105 pence per gigajoule by the end of 2003. This
together with our substantial property interests should provide
the basis for a long-term successful future.

"Increased coal sales and output improvements at Daw Mill have
improved cash flow in the first two months of 2003."

To see U.K. Coal Plc's Financial Statements:
http://bankrupt.com/misc/UKCoal.htm

CONTACT:  U.K. COAL PLC
          Gordon McPhie, Chief Executive
          Phone: 01302 751 751

         Financial
         Gavin Anderson & Company
         Liz Morley
         Phone: 020 7554 1400

         Ken Cronin
         Operational
         Stuart Oliver
         Phone: 01525 381 759
                07774 231 178


                                 ************

      S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Trenton, NJ
USA, and Beard Group, Inc., Washington, DC USA. Kimberly
MacAdam, Larri-Nil Veloso, Ma. Cristina Canson, and Laedevee
Gonzales, Editors.

Copyright 2003.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Christopher Beard at 240/629-3300.


                  * * * End of Transmission * * *