NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Six months Ended 30 September 2005
 
 
(1) Basis of Preparation of Unaudited Interim Consolidated Financial Statements
 
 
These unaudited interim consolidated financial statements have been prepared
applying the accounting policies described on pages 24 to 26 of the published
accounts for the year ended 31 March 2005.
 
 
Funding and Restructuring
 
 
The Group has concluded a non-binding indicative heads of terms with all its
principal secured creditors, which sets out the principles for the financial
restructuring of the Group. In addition, the Group was granted a waiver from all
of the secured creditors of any existing covenant breaches to 31 March 2006.
 
 
As set out in the announcement of 1 December 2005 the main provisions of the
restructuring agreement are as follows:
 
 
• The secured creditors will convert circa €56m of their existing debt
to equity resulting in them owning 90% of the enlarged ordinary share capital.
The restructuring will significantly reduce the Group's gross secured
indebtedness (including swaps close out cost, make whole due under the private
placement loan notes and all deferred interest) from circa €121 million to €65
million. 10% of the enlarged ordinary share capital of the parent company will
be retained by the existing ordinary shareholders.
 
• A Cash-Out Alternative will be offered to existing ordinary
shareholders at a price of 3.5 cent per existing ordinary share.
 
• Ordinary shareholders who wish to retain their shares in the Company
may elect to do so. The secured creditors will waive any rights they may have to
compulsorily acquire shares held by existing ordinary shareholders if the
shareholder elects not to take the Cash-Out Alternative.
 
• Preference shareholders will have the opportunity to obtain cash for
their shares at nominal value plus accumulated unpaid dividend, amounting in
aggregate to €82,423.
 
• Post the restructuring, the €65 million debt remaining within the
group will be consolidated into two tranches of €35,000,000 ('Tranche A') and
€30,000,000 ('Tranche B'), respectively.
 
 • Tranche A will be repayable 5 years following completion of the
 restructuring and Tranche B will be repayable on the same date as Tranche A but
 can also be rolled forward should the Group decide to retain its investment in
 Jeyes Holdings Limited beyond the initial term of 5 years.
 
 • Tranche A will carry an interest rate of LIBOR +2.25% p.a., payable
 quarterly in arrears and Tranche B will carry an interest rate of 12.00% p.a.
 payable in kind and rolled up quarterly.
 
• The Group will apply for its shares to be de-listed from the Irish and
London Stock Exchanges as part of the restructuring.
 
 
 
The completion of the restructuring is conditional on:
 
 
• the completion of further legal and financial due diligence by the
secured creditors;
 
• securing adequate working capital facilities from April 2006;
 
• the receipt of all necessary board and secured creditors committee
approvals;
 
• the receipt of all necessary applicable regulatory approvals;
 
• the receipt of all necessary shareholder approvals;
 
• the negotiation, execution and delivery of definitive documentation.
 
 
A circular will be issued in early 2006, with the restructuring targeting to be
complete in the first quarter of 2006.
 
 
 
Whilst the negotiations are far advanced they are conditional and therefore
subject to potential uncertainty. The signed heads of terms provides a framework
for the future viability of the Group and as such the directors have prepared
the financial statements of the company on a going concern basis.
 
 
 
(2) Reconciliation of net cash flow to movements in net debt
 
  2005 2004
 €'000 €'000
 
Decrease in cash in the period (5,875) (9,356)
Cash outflow from change in debt financing  (6,687) (2,516)
 --------- ---------
 
Change in net debt resulting from cash flows (12,562) (11,872)
 
Translation adjustment (355) (588)
 --------- ---------
 
Movement in net debt in the period (12,917) (12,460)
 
Net debt at 1 April (80,131) (77,081)
 --------- ---------
 
Net debt at 30 September (93,048) (89,541)
 --------- ---------
 
 
 
(3) Net cash outflow from operating activities for the six months to 30
September 2005.
 
 2005 2004
 €'000 €'000
 
Operating Profit/(Loss) excluding financing fees* 1,701 1,788
Financing fees paid (2,089) (5,041)
Profit on Disposal of Fixed Assets (15) (34)
Depreciation  2,346 2,592
Amortisation of intangible assets 565 593
Increase in debtors (3,436) (1,293)
Decrease in stocks  (2,800) 1,369
Decrease in creditors (2,911) (8,024)
 --------- ---------
 
 (6,639)  (8,050)
 --------- ---------
 
 
*This comprises of an Operating Loss of (€1,037k) less accrued financing fees
incurred in current period of €2,738k; (2004: Operating Loss of (€1,603k),
financing fees €3,391k)
 
 
These financial statements do not constitute full accounts. Financial statements
for the year ended 31 March 2005, which received an unqualified audit report,
are available from the Company Secretary.