Information furnished to the Securities and Exchange Commission on ~~May~~August 14, 2001

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 6-K
Report of Foreign Issuer

| [X|] QUARTERLY REPORT PURSUANT TO RULE 13(a)-16 OR 15(d)-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended ~~March~~June 3130, 2001

~~|_|~~ [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_________________ to~~ ________________to ________________

Commission file number 333-6200

INTERTEK TESTING SERVICES LIMITED
(Exact name of Registrant as specified in its charter)

ENGLAND
(Jurisdiction of incorporation or organization)

25 SAVILE ROW, LONDON, W1S 2ES, ENGLAND
(011) 44-20-7396-3400
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F)

Form 20-F ~~|X|~~ Form 40-F ~~|_|~~

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also
thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934)

Yes ~~|_|~~ No ~~|X|~~

Schedule of Information contained in this report

Intertek Testing Services Limited financial statements for the ~~three~~six months to ~~March~~June 3130, 2001

Pages 1 –- 3640

Intertek Testing Services Limited

Business description

We are a leading international organisation engaged in the testing, inspection and certification of manufactured goods and commodities. We are organised into four operating divisions, each focusing on the testing, inspection and certification of different manufactured goods and commodities. Our customer base is diverse and different in each division and includes retailers, distributors, manufacturers, petroleum companies, traders and governments. The majority of our work is on a job by job basis except in our Foreign Trade Standards (“FTS” ) division, where over 90% of revenues ~~are~~ is from term contracts. We currently employ over 910,~~500~~000 people and operate ~~486~~ 496 inspection offices and ~~255~~248 testing laboratories in 97 countries. A description of each operating division is given below:

~~We believe that the growth~~ of the internet offers significant opportunities to expand our business. Increasingly, our customers are demanding closer integration between their systems and ours. We are actively improving our information technology systems to answer these demands. A new ordering, inquiry and reporting system is now online in the Caleb ~~Brett~~ ~~division (“myCalebBrett.com”). Similar systems will be available~~Brett ~~in all our divisions in the near future. Other internet based IT initiatives are also underway which will allow our divisions to provide better and more tailored services to our customers.~~

Caleb ~~Although~~Brett ~~commodities~~was founded in 1885 and ~~products~~ ~~are~~is ~~increasingly~~a ~~being~~joint ~~traded~~global ~~via~~leader in the ~~internet~~market onfor ~~business-to-business~~ testing and ~~business-to-consumer~~inspecting ~~sites~~chemicals, ~~the~~petroleum ~~rate~~products isand ~~far~~crude ~~less~~oil. ~~than~~We ~~originally~~believe ~~expected. We~~that ~~provide~~Caleb ~~testing,~~Brett ~~inspection~~has ~~and~~strong ~~certification~~name ~~services~~recognition coupled with an international reputation for ~~many~~reliability and confidentiality. Caleb Brett’s primary business is providing independent verification of the ~~commodities~~ quality and ~~products~~quantity ~~traded~~of crude oil, ~~ensuring~~petroleum ~~that~~products ~~customers~~and chemicals and agricultural produce. Caleb Brett issues certificates that are ~~able~~internationally torecognized ~~buy~~as ~~products~~evidence ~~over~~of the ~~internet~~ ~~reliably~~quality and ~~with~~quantity ~~confidence~~of those shipments. WeCaleb ~~are~~Brett’s ~~working~~customers include oil and chemical companies and traders with ~~sites~~whom towe ~~ensure~~have well-established long-term relationships. Most of our customers purchase services from Caleb Brett on a global, regional or local basis. Increasingly we ~~are~~ ~~integrated~~provide ~~into~~added value to customers by taking over their ~~online~~internal ~~buying~~laboratory ~~and~~testing ~~trading~~operations ~~processes~~on ~~and~~an ~~our~~outsourcing ~~goal~~basis. isWe provide a testing service which meets tothe becustomers’ demands for high scientific quality and safety standards at a lower cost than the ~~service~~customer ~~partner~~can ofprovide ~~choice~~in-house.

Caleb ABrett’s ~~description~~activities ofin ~~each operating~~petroleum ~~division~~and ischemical ~~given~~testing ~~below~~are divided into three sub-divisions: Inspection, Inspection Related Testing and Free Standing Testing.

~~Caleb~~ Inspection ~~Brett~~of cargoes involves the physical checking, sampling and measuring of the quantity of a commodity at points of loading and unloading, such as seaports, storage tanker terminals and the ends of transportation pipelines.

~~Caleb Brett was founded~~ inInspection ~~1885~~Related ~~and~~Testing is alaboratory ~~joint leader in the market for~~ testing and inspecting crude oil, petroleum products and chemicals. We believe that Caleb Brett has strong name recognition coupled with an international reputation for reliability and confidentiality. Caleb Brett’s primary business is providing independent verification of ~~the~~samples ~~quality~~taken ~~and quantity of crude oil, petroleum products and chemicals and,~~ to aassess ~~lesser~~their ~~extent,~~composition ~~agricultural produce. Caleb Brett issues certificates that are internationally recognized as evidence of the quality~~ and ~~quantity~~whether ofthey ~~those~~comply ~~shipments. Caleb Brett’s customers include oil and chemical companies and traders~~ with ~~whom~~specifications wedemanded ~~have~~by ~~well-established long-term relationships. Most of our oil company~~ customers ~~purchase~~or ~~services from Caleb Brett on a job-~~by~~-job,~~ ~~port-by-port basis~~legislation. ~~Increasingly we are finding that~~ we can provide added value to certain customers by taking over their laboratory testing on an outsourcing basis. We can provide a testing service which meets the customers’ demands for high scientific quality and safety standards at a lower cost than the customer can provide in-house.

Free ~~Caleb~~Standing ~~Brett’s~~Testing ~~activities in~~involves ~~petroleum~~the ~~and~~analysis ~~chemical~~of ~~testing~~samples ~~are~~unrelated ~~divided~~to ~~into~~cargo ~~three~~shipments, ~~sub-divisions:~~including ~~Inspection, Inspection~~situations ~~Related~~where ~~Testing~~a ~~and~~chemical ~~Free~~or ~~Standing~~petrochemical ~~Testing~~manufacturer outsources its laboratory testing work to Caleb Brett.

~~Inspection~~ Caleb Brett also performs marine surveying and agricultural inspection. Marine surveying is the evaluation of ~~cargoes~~cargo ~~involves~~damage, primarily for insurance purposes. Agricultural inspection and testing is the physical ~~checking~~sampling, ~~sampling~~quantification, inspection and ~~measuring~~testing of ~~the quantity~~commodities, ofsuch aas ~~commodity~~cereals, atvegetable ~~points~~oils ofand ~~loading~~cotton for commercial organisations and ~~unloading,~~certifying food aid on behalf of government bodies such as ~~seaports, storage~~the ~~tanker~~European ~~terminals~~Commission and ~~the~~United ~~ends~~States Department of ~~transportation pipelines~~Agriculture.

~~Inspection Related~~ ~~Testing~~ETL ~~is laboratory testing of samples taken to assess their composition~~SEMKO ~~and whether they comply with specifications demanded by customers or by legislation.~~

~~Free~~ETL ~~Standing~~SEMKO ~~Testing~~tests and certifies electrical and electronic ~~involves~~products, telecommunication equipment, building products and heating, ventilation and air conditioning equipment. ETL SEMKO also certifies the ~~analysis~~quality of ~~samples~~management systems ~~unrelated~~ to ~~cargo~~standards ~~shipments,~~such ~~including~~as ~~situations~~ISO 9000 in North and Central America and Europe. ~~where~~ETL anis ~~oil~~a orlong ~~chemical~~established ~~company~~brand orname ~~trader~~which ~~outsources~~traces its ~~laboratory~~origins ~~testing~~back to Thomas ~~work~~Edison toin ~~Caleb~~the ~~Brett~~United States. SEMKO is the name of the former state owned certification body in Sweden that we acquired in 1994.

~~Caleb~~ETL ~~Brett~~SEMKO’s ~~also~~customers ~~performs~~include industrial companies ~~marine~~such ~~surveying~~as ~~and~~Adtran, ~~agricultural~~LG ~~inspection.~~Electronics, ~~Marine~~Hewlett ~~surveying~~Packard, isEricsson, ~~the~~Matsushita ~~evaluation~~and Electrolux. ofWe ~~cargo~~also ~~damage,~~have ~~primarily~~a ~~for~~number ~~insurance~~of ~~purposes.~~long-standing ~~Agricultural~~relationships ~~inspection~~with ~~and~~various industry organizations, ~~testing~~such isas the ~~physical~~Air ~~sampling,~~Conditioning ~~quantification~~and Refrigeration Institute, ~~inspection~~which ~~and~~has ~~testing~~been ofour ~~commodities,~~customer ~~such~~since as1956. ~~vegetable~~ETL ~~oils~~SEMKO’s activities are divided into the following three sub-divisions: Conformity Assessment, Performance and ~~cotton~~Quality Management Systems.

~~ETL~~ Conformity ~~SEMKO~~Assessment primarily involves the testing of electronic, electrical and building products and telecommunications equipment to allow manufacturers to mark their products with nationally or regionally recognized safety marks and to have their products certified as complying with a number of nationally or regionally recognized standards. These services facilitate the sale of products to markets around the world.

Safety ~~ETL~~marks ~~SEMKO~~owned ~~tests~~ and ~~certifies electrical~~issued ~~and~~by ~~electronic~~the ~~products,~~ETL ~~telecommunication~~SEMKO ~~equipment,~~division ~~building~~include ~~products~~ “ETL” (United States and ~~heating~~Canada), ~~ventilation~~“S” (Europe) and ~~air~~“WH” ~~conditioning~~(United ~~equipment~~States and Canada). ETL SEMKO is also ~~certifies the~~authorised ~~quality~~to ofapply ~~management~~the ~~systems~~“GS” tomark ~~standards~~(Germany). ~~such~~ETL asSEMKO ~~ISO~~has ~~9000~~Notified Body Status in ~~North~~the ~~and South~~European ~~America~~Union and ~~Europe.~~also ~~ETL~~has iselectro-magnetic acompatibility, ~~long~~telephone ~~established~~and ~~brand~~other ~~name~~accreditations ~~which~~required ~~traces its~~for ~~origins~~products ~~back~~it totests ~~Thomas~~and ~~Edison~~certifies. inThese ~~the~~safety ~~United~~marks ~~States.~~and ~~SEMKO~~certifications isare ~~the~~widely ~~name~~relied ~~of the~~upon ~~former~~by ~~state~~manufacturers, ~~owned~~retailers ~~certification~~and ~~body~~consumers into ~~Sweden~~ensure that weproducts ~~acquired~~conform into ~~1994~~the applicable standards. ~~ETL~~ ~~SEMKO’s customers~~In ~~include~~some ~~industrial~~countries ~~companies~~and ~~such~~for assome ~~Adtran~~products, LGthe ~~Electronics,~~safety ~~Ericsson, Matsushita~~marks and ~~Electrolux.~~certifications Weare ~~also~~a ~~have~~legal arequirement. ~~number~~Even ofwhen ~~long-standing~~not ~~relationships with~~required ~~various~~by ~~industry~~governmental ~~organizations~~regulation, ~~such~~many asmanufacturers ~~the~~continue ~~Air~~to ~~Conditioning~~use our safety marks and ~~Refrigeration Institute~~testing and certification services to ensure product quality. For example, the “S” mark, which has not been ~~our~~mandatory ~~customer~~in Sweden since ~~1956~~1990, continues to be widely used throughout that country and in other European countries, as evidence that a product complies with harmonised European safety standards. ETL SEMKO’s ~~activities~~ accreditations are ~~divided~~held ~~into~~by legal entities that are registered in the ~~following~~various ~~three~~countries ~~sub-divisions:~~in ~~Conformity~~which ~~Assessment,~~ETL ~~Performance and~~SEMKO ~~Quality~~offers ~~Management~~its ~~Systems~~services.

~~Conformity Assessment~~ ~~primarily~~Performance ~~involves~~testing ~~the~~is ~~testing~~demanded ofby ~~electronic,~~industry ~~electrical~~associations ~~and~~to ~~building~~guard against products ~~and~~ ~~telecommunications~~that ~~equipment~~might todamage ~~allow~~consumer ~~manufacturers~~confidence toin ~~mark~~a ~~their~~particular ~~products with~~industry. ~~nationally~~For orexample, ~~regionally~~we ~~recognized~~have ~~safety~~been ~~marks~~nominated ~~and~~by tothe ~~have~~Air ~~their~~Conditioning ~~products certified~~and asRefrigeration ~~complying~~Institute ~~with~~and athe ~~number~~Gas ofAppliance ~~nationally~~Manufacturers orAssociation ~~regionally~~in ~~recognized standards.~~the ~~These~~United ~~services~~States ~~facilitate~~to verify the ~~sale~~accuracy of information provided in the yellow “Energy Guide” labels found on many appliances. We also test individual manufacturers’ products to ~~markets~~provide ~~around the~~independent ~~world~~competitive performance data, which can then be used for marketing.

~~Safety marks owned and~~ ~~issued~~Quality byManagement ~~ETL~~Systems’ ~~SEMKO~~activities ~~include~~involve ~~“ETL”~~the ~~(United~~certification ~~States~~of ~~and~~the ~~Canada),~~business ~~“S” (Europe)~~processes and ~~“WH”~~services ~~(United~~of ~~States~~an ~~and~~organization ~~Canada). ETL SEMKO is also authorised~~ to ~~apply~~ISO ~~the~~9000 ~~“GS”~~and ~~mark~~similar ~~(Germany)~~standards. ~~ETL~~Certification ~~SEMKO~~involves ~~has~~a ~~Notified~~company ~~Body~~defining ~~Status in the European Union~~ and ~~also~~documenting ~~has~~its ~~electro-magnetic~~business ~~compatibility,~~processes ~~telephone~~ and ~~other~~standards ~~accreditations~~of ~~required for products it tests and certifies~~service. ~~These safety~~Companies ~~marks~~receiving ~~and~~ certifications are ~~widely~~subject ~~relied~~to ~~upon~~regular byaudits ~~manufacturers,~~over ~~retailers and~~time ~~consumers~~as toa ~~ensure~~condition ~~that~~of ~~products~~continuing ~~conform to the applicable standards~~certification. ~~In some~~ETL ~~countries~~SEMKO ~~and~~manages ~~for~~this ~~some~~activity ~~products,~~within the ~~safety marks and certifications are a legal requirement~~Americas. ~~Even~~In ~~when not required by governmental regulation~~Europe, ~~many manufacturers~~this ~~continue~~activity tois ~~use~~performed ~~our~~through ~~safety~~an ~~marks~~associate ~~and testing and certification services to ensure product quality. For example~~company, ~~the “S” mark~~Dekra, ~~which has not been mandatory~~ in ~~Sweden~~which ~~since~~we ~~1990,~~have ~~continues to be widely used throughout that country and in other European countries, as evidence that~~ a ~~product~~49% ~~complies with harmonised European safety standards~~holding. ~~ETL~~In ~~SEMKO’s~~Asia, ~~accreditations~~this ~~are held~~activity byis ~~legal~~carried ~~entities~~out ~~that~~within ~~are registered in~~ the ~~various~~Labtest ~~countries in which ETL SEMKO offers its services~~division.

~~Performance testing~~ ~~is demanded by industry associations to guard against products that might damage~~Labtest consumer confidence in a particular industry. For example, we have been nominated by the Air Conditioning and Refrigeration Institute and the Gas Appliance Manufacturers Association in the United States to verify the accuracy of information provided in the yellow “Energy Guide” labels found on many appliances. We also test individual manufacturers’ products to provide independent competitive performance data, which can then be used for marketing.

~~Quality Management~~ ~~Systems’~~Labtest ~~activities~~is ~~involve~~one ~~the certification~~ of the ~~business~~largest ~~processes and~~international ~~services~~providers of antesting ~~organization to ISO 9000~~ and ~~similar~~inspection ~~standards.~~services ~~Certification involves~~for atextiles, ~~company~~toys, ~~defining~~footwear, ~~and~~hardlines ~~documenting its business processes~~ and ~~standards of~~other ~~service~~consumer products. ~~Companies~~Labtest’s ~~receiving~~customers ~~certifications~~ are ~~subject~~retailers, tomainly ~~regular~~in ~~audits over time as a condition of continuing certification. ETL SEMKO manages this activity within~~ North ~~and South~~ America. Inand Europe, ~~this~~and ~~activity is performed through an associate company~~manufacturers, ~~Dekra,~~mainly in ~~which~~Asia. weCustomers ~~have~~include aMcDonalds ~~49%~~and ~~holding.~~retailers Insuch ~~Asia, this~~as ~~activity~~Gap isInc, ~~carried~~The ~~out~~Home ~~within~~Depot ~~the~~and ~~Labtest~~Tommy ~~division~~Hilfiger.

Labtest 3performs testing to ensure that products meet safety standards and the specifications of distributors and retailers. The purchasers typically specify their own quality and performance standards in addition to nationally recognized standards. Manufacturers operating in developing countries routinely seek such testing and inspection of consumer goods to assist them in selling their products to retailers and distributors in markets such as North America and Europe. Labtest divides its activities into the following sub-divisions:

~~Labtest~~ Textiles testing is principally an activity in which large textile and clothing retailers specify standards for the testing of products at the point of manufacture. Testing is mainly carried out for colourfastness,

Labtest is one of the largest international providers of testing and inspection services for textiles, toys, footwear, hardlines and other consumer products. Labtest’s customers are retailers, mainly in North America and Europe, and manufacturers, mainly in Asia. Customers include McDonalds and retailers such as Gap Inc, The Home Depot, Tommy and Hilfiger (HK) Ltd.3

abrasion ~~Labtest~~resistance, ~~performs~~size ~~testing to~~conformity, ~~ensure~~shrinkage ~~that products meet safety standards and the specifications of distributors~~resistance and ~~retailers~~flammability. ~~The~~Based ~~purchasers~~on ~~typically~~our ~~specify~~knowledge ~~their~~of ~~own~~the ~~quality~~textile ~~and performance standards, but may specify nationally recognized standards. Manufacturers operating in developing countries routinely seek such~~ testing ~~and~~market ~~inspection of consumer goods to assist them in selling their products to retailers~~ and ~~distributors~~our incompetitors, ~~markets~~we ~~such~~believe asthat ~~North America and Europe.~~ Labtest ~~divides~~is ~~its activities into~~ the ~~following~~world ~~sub-divisions,~~leader ~~Textiles,~~in ~~Toys,~~textile ~~Inspection, Code of Conduct,~~testing. ~~Quality Management Systems and Risk Analysis and Management:~~

Toys ~~Textiles~~ testing is ~~principally~~mainly anto ~~activity~~ensure inproducts ~~which~~conform ~~large~~to ~~textile~~national and ~~clothing~~international ~~retailers~~safety ~~specify~~ standards ~~for the testing of products at the point of manufacture~~. ~~Testing is~~ ~~mainly~~Services ~~carried~~include ~~out~~design ~~for~~and ~~colour~~packaging ~~fastness~~evaluation, ~~abrasion~~safety ~~resistance~~testing, ~~size conformity,~~durability ~~shrinkage resistance and flammability. Based on our knowledge of the textile~~ testing ~~market~~ and ~~our~~performance ~~competitors, we believe that Labtest is the world leader in textile~~ testing.

Inspection ~~Toys~~of ~~testing is~~consumer ~~mainly~~products toprimarily ~~ensure~~involves ~~products~~visual ~~conform~~inspection toof ~~national~~finished and ~~international~~half-finished ~~safety~~products ~~standards. Services~~at ~~include~~the ~~design~~manufacturer’s factory during production and ~~packaging~~prior ~~evaluation,~~to ~~safety~~shipment ~~testing~~for verification of quantity, ~~durability testing~~quality and ~~performance~~declared ~~testing~~specifications of the products to be shipped. Inspection may be carried out on behalf of the manufacturer or the buyer.

~~Inspection~~ Code of ~~consumer~~Conduct ~~products~~work ~~primarily~~has ~~involves~~resulted ~~visual~~from ~~inspection~~consumers ofand ~~finished products~~pressure atgroups being increasingly concerned about the ~~manufacturer’s~~social ~~factory~~conditions ~~prior~~and tosafety ~~shipment~~of toworkers ~~verify~~in ~~the quantity~~factories. Code of Conduct audit work includes factory tours, ~~quality~~document review and ~~basic~~employee ~~specification~~interviews. ofRetailers usually commission the ~~products~~audits and we work closely with both manufacturers and retailers to befind ~~shipped.~~solutions ~~Inspection may~~to beany ~~carried~~problems ~~out~~identified. onThe ~~behalf~~main focus of these audits is the ~~manufacturer~~review orof the ~~buyer~~use of child labour, involuntary labour, coercion and harassment, health and safety, working hours, compensation and environmental protection.

~~Code of Conduct~~ ~~work~~Quality ~~has~~Management ~~resulted~~Systems ~~from~~involves ~~consumers~~the ~~and~~certification ~~pressure~~of ~~groups being increasingly concerned about~~ the ~~social~~business ~~conditions~~processes and ~~safety~~services of ~~workers~~an inorganization ~~developed~~to ~~and~~ISO ~~developing countries.~~9000 ~~Code~~and ofrelated ~~Conduct~~standards. ~~audit~~In ~~work includes factory tours~~China, ~~document~~Hong ~~review~~ Kong and ~~employee~~Taiwan, ~~interviews.~~Quality ~~Retailers~~Management ~~usually~~Systems ~~commission~~work ~~the~~is ~~audits~~carried ~~and~~out wethrough ~~work closely~~a partnership with ~~both~~the ~~manufacturers~~British ~~and~~Standards ~~retailers~~Institute. toIn ~~find~~addition, ~~solutions~~Quality toManagement ~~any~~Systems’ ~~problems identified.~~activities ~~The~~include ~~main~~audits ~~focus~~to ofstandards ~~these~~issued ~~audits~~by isnational ~~the~~and ~~review~~legal ofhealth ~~child~~authorities ~~labour~~such ~~conditions, involuntary~~as ~~labour,~~the ~~coercion~~Food and ~~harassment,~~Drug ~~health~~Administration ~~and~~in ~~safety,~~the ~~working~~United ~~hours, compensation and environmental protection~~States.

~~Quality Management~~ ~~Systems~~Risk ~~involves~~Analysis ~~the~~and ~~certification~~Management ofworks ~~the~~with ~~business~~world ~~processes~~market ~~and~~leaders ~~services of an organization~~ to ~~ISO~~minimize ~~9000~~business ~~and~~risk ~~similar~~associated ~~standards. In China, Hong Kong and Taiwan, Quality Management Systems work is carried out through a partnership~~ with the ~~British~~safety ~~Standards~~of ~~Institute~~children. InThe ~~addition,~~division ~~Quality~~provides ~~Management~~a ~~Systems’ activities~~one-stop ~~include~~service ~~testing~~of toTotal ~~standards~~Quality ~~issued by national and legal health authorities such as the Food and Drug Administration in the United States~~Assurance.

~~Risk Analysis and~~ ~~Management~~Foreign ~~works~~Trade ~~with world market leaders to minimize the risk associated~~Standards ~~with toys, children’s clothes and other consumer products.~~

~~Foreign~~ FTS provides independent Fiscal Good Governance services to the governments of emerging countries to assist them in maximising customs duty revenues and supporting foreign exchange controls. In addition to the traditional pre-shipment inspection systems associated with this industry, FTS offers innovative solutions to meet the objectives of our clients using latest technologies and web-based services. Through ITS ADVANTAS (Advanced Trade ~~Standards~~Assessment System), FTS can provide client governments with integrated electronic solutions in modules or combinations including Valuation Information, Selectivity, Web-based Input and Status Facilities and secure, encrypted Electronic Certification.

~~FTS provides independent~~ ~~pre-shipment inspection services to the governments of developing countries to assist them in the enforcement of customs duties and exchange controls.~~ FTS also provides inspection, testing and ~~testing~~support services to government standards organizations to ensure that imports of specified products meet ~~safety and other~~ national ~~standards.~~ Inor ~~providing~~international ~~these~~safety services, FTS inspects, tests and reviews at source the quantity, quality and price of goods to be shipped, to check that import duties are correctly calculated and that such goods comply with the laws, standards ~~and relevant customs regulations of the importing country~~. ~~This division also~~ provides customs training services to customs departments. FTS’ customers include the governments of Argentina, Bangladesh, Ecuador, Georgia, Iran, Kenya, Mexico, Mozambique, Nigeria, Uganda and Uzbekistan and the Saudi Arabian Standards Organisation. Some of these contracts may be cancelled at short notice.

The 4provision of this variety of services can involve FTS in quality and quantity inspection, product testing, customs valuation and classification, import duty calculation and verification of shipment compliance with national laws and relevant customs regulations. FTS also provides customs training and modernisation services to national customs departments.

FTS’ Incustomers ~~addition~~include tothe ~~pre-shipment inspection~~governments ~~work~~of Argentina, ~~FTS~~Bangladesh, ~~also~~Ecuador, ~~provides~~Georgia, aIran, ~~wide~~Kenya, ~~range~~Mexico, ofMozambique, ~~inspection~~Nigeria, Uganda and ~~expediting activities~~Uzbekistan ~~focused~~and onthe ~~engineering~~Saudi ~~plants~~Arabian ~~and~~Standards ~~projects~~Organisation. Some of these contracts can be cancelled at short notice.

~~Discontinued~~ In ~~operation~~addition to government programmes, FTS provides a wide range of inspection and expediting activities focused on engineering plants, industrial projects and commercial consignment inspection.

We4 sold Bondar Clegg, our minerals testing division, in the first quarter of 2000. The operating results for this division up to the date of sale were reported as discontinued in the financial statements.

Operating 5and Financial Review and Prospects

~~Operating and Financial Review and Prospects~~ Introduction

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes, and the other financial information included elsewhere in this document. Our consolidated financial statements are prepared in accordance with U.K. GAAP and we discuss in note 8 to the financial statements the principal differences between U.K. and U.S. GAAP as they relate to us. This discussion contains forward-looking statements based on assumptions about our future business. Our actual results could materially differ from those ~~contained~~indicated in the forward-looking statements.

WeIn ~~set~~the ~~out~~following ~~below~~discussion awe ~~discussion of~~comment on our operating results and financial condition for the three months to ~~March 31~~June 30, 2001 (“Q1 Q2 01”) compared to the three months to ~~March 31~~June 30, 2000 (“Q2 00”) and the six months to June 30, 2001 (“HY 01”) compared to the six months to June 30, 2000 (“Q1 HY 00”), followed by a detailed review of the performance of each division. Our results for the six months to June 30, 2001 are not necessarily indicative of the expected results for the year to December 31, 2001.

Impact of exchange rates

Our financial statements are reported in pounds sterling (“sterling” or “£”). We have ~~144~~140 subsidiary companies, of which ~~133~~130 report in currencies other than sterling. Subsidiaries report in the currency of the country in which they are domiciled, apart from those based in countries where there is hyperinflation, which report in their functional currency, which is the U.S. ~~dollars~~dollar. We translate the results of overseas operations into sterling at the cumulative average exchange rates applicable for ~~the~~each period, ~~which~~therefore ~~causes~~fluctuations ~~our results to vary from period to period~~ in ~~line~~exchange ~~with~~rates ~~fluctuations~~will inimpact ~~exchange~~our ~~rates~~results.

The tables below show growth rates of Q1 Q2 01 over Q1 Q2 00 and HY 01 over HY 00 at actual exchange rates and at comparable exchange rates. The actual growth rate is the percentage change of one period over the prior period where each period is translated into ~~sterling~~GBP using the exchange rates applicable in that period. The comparable growth rate is the percentage change of one period over the prior period where both periods are translated into ~~sterling~~GBP using the prior period’s exchange rates. This reflects the underlying growth in revenues and operating income without the fluctuations caused by changes in translation rates. We do not hedge translation rate exposure.

Over 50% of our revenues and the majority of our borrowings, interest payments and debt repayments are denominated in U.S. dollars or currencies linked to the U.S. dollar, such as the Hong Kong dollar. Where there is material transaction exposure from currency rate movements, we take out forward foreign exchange contracts to minimise this exposure.

~~Summary~~ ~~of results of continuing operations for the three months to March 31, 2001 compared to the three months to March 31, 2000~~5

Summary ~~The~~of ~~table~~revenues ~~below~~for ~~compares revenues~~the bythree ~~division~~months ~~for~~to ~~Q1 00~~June ~~and~~30, ~~Q1 01~~2000 atcompared ~~actual~~to ~~and~~the ~~comparable exchange~~three ~~rates.~~months to June 30, 2001

Revenues by division	Q1 00	Q1 01	Growth	Actual	Comparable
	£m	£m	£m	%	%
Caleb Brett	34.8	42.6	7.8	22.4	16.4
ETL SEMKO	23.1	26.5	3.4	14.7	7.4
Labtest	19.6	22.8	3.2	16.3	10.2
Foreign Trade Standards	10.6	12.2	1.6	15.1	13.2
Total continuing operations	88.1	104.1	16.0	18.2	12.3

The table below compares revenues by division for the three months to June 30, 2000 and the three months to June 30, 2001 at actual and comparable exchange rates.

Revenues by division	Q2 00	Q2 01	Growth	Actual	Comparable
	£m	£m	£m	%	%

Caleb Brett	39.5	44.9	5.4	13.7	10.1
ETL SEMKO	25.6	29.0	3.4	13.3	8.2
Labtest	24.7	29.2	4.5	18.2	13.0
Foreign Trade Standards	10.8	14.6	3.8	35.2	34.3

Total continuing operations	100.6	117.7	17.1	17.0	12.9

At actual and comparable exchange rates, revenues increased in every division in Q2 01 over Q2 00. The higher growth rate at actual rates is due to translation gains arising from the strength of the U.S. dollar and currencies linked to the U.S. dollar, against sterling. ~~In Caleb~~ Brett, revenues from petroleum inspection and testing grew in the United States primarily due to a sustained period of economic growth that resulted in increased consumption of petroleum products. In Labtest there was continued growth in textiles and toys testing in Asia. FTS revenues in Q1 01 benefited from new pre-shipment inspection programmes in Bangladesh and Kenya which started after Q1 00 and an increased volume of inspections for the Saudi Arabian Standards Organisation in Q1 01. FTS revenues in Q1 00 included £0.7 million from its Technical Services division which was sold in February 2000. Acquisitions in Caleb Brett and ETL SEMKO completed after Q1 00 contributed to the revenue increase in Q1 01.

Major ~~Revenues~~contributors to growth in ~~Q1 00~~Q2 ~~and Q1~~ 01 were ~~generated~~petroleum bytesting ~~operations~~in ~~located~~the United States, textile testing in Asia, safety testing in China, a new pre-shipment inspection programme in Kenya and increased volumes of inspections in Saudi Arabia. The slow down in growth in the ~~following~~economy ~~geographic~~in ~~areas:~~the United States and other countries has affected certain markets in which we operate, but we have still achieved revenue growth.

Revenues by geographic area	Q1 00	Q1 01	Growth	Actual	Comparable
	£m	£m	£m	%	%
Americas	37.1	44.0	6.9	18.6	8.6
Europe, Africa and Middle East	28.1	31.0	2.9	10.3	11.7
Asia and Far East	22.9	29.1	6.2	27.1	19.7
Total continuing operations	88.1	104.1	16.0	18.2	12.3

Revenues in Q2 00 and Q2 01 were generated by operations located in the following geographic areas:

Revenues from the Americas increased primarily due to strong growth in Caleb Brett in the United States, where both volumes and prices increased.

Revenues by geographic area	Q2 00	Q2 01	Growth	Actual	Comparable
	£m	£m	£m	%	%

Americas	41.2	47.2	6.0	14.6	7.0
Europe, Africa and Middle East	30.1	34.9	4.8	15.9	16.3
Asia and Far East	29.3	35.6	6.3	21.5	17.7

Total continuing operations	100.6	117.7	17.1	17.0	12.9

Revenues from ~~Europe, Africa and~~ the ~~Middle~~Americas ~~East~~increased ~~grew~~primarily due to ~~acquisitions~~strong bygrowth ~~Caleb Brett~~ in ~~France and~~petroleum ~~Norway~~testing ~~made after Q1 00 and a major laboratory outsourcing contract~~ in the United ~~Kingdom that commenced in March 2000~~States. The revenue growth at actual rates was ~~reduced~~higher ~~due~~than toat comparable rates due the strength of ~~sterling~~the ~~against~~U.S. ~~other~~dollar ~~European~~against ~~currencies~~sterling.

The Ingrowth ~~Asia~~in revenues from Europe, Africa and the ~~Far~~Middle East~~, revenues~~ ~~increased~~was mainly due to ~~continued~~a ~~growth~~new pre-shipment inspection programme in ~~textiles~~Kenya and ~~toys~~an ~~testing~~increase in ~~Labtest, growth~~the volume of inspections in ~~ETL~~Saudi ~~SEMKO~~Arabia. An acquisition in ~~Hong~~France ~~Kong~~at ~~and~~the ~~China~~end ~~and~~of a2000 ~~new~~also ~~FTS~~added ~~inspection~~£0.5 ~~programme~~ million to revenue growth in ~~Bangladesh~~Q2 01. The revenue growth at actual rates was ~~increased~~lower than at comparable rates due to the strength of ~~the~~sterling ~~Hong~~against ~~Kong~~other ~~dollar~~European ~~against sterling~~currencies.

~~Operating~~ Revenues ~~costs~~in ~~before~~most ~~exceptional~~sectors ~~items~~grew well in Asia and the Far East. Textile testing and safety testing in China grew particularly strongly in Q2 01 over Q2 00. Revenues from petroleum inspections in Singapore, toy testing and Code of Conduct inspections also increased. The revenue growth at actual rates was higher than at comparable rates due the strength of the Hong Kong dollar against sterling.

~~Our~~6 operating costs principally comprise labour costs, property and equipment rental, depreciation and laboratory consumables. Operating costs on continuing operations increased by £13.9 million or 12.1% at comparable rates, to £91.0 million, in Q1 01 over Q1 00. Costs have increased broadly in line with growth in revenues.

~~Operating~~ Summary ~~income~~of ~~before~~revenues ~~exceptional~~for ~~items~~the six months to June 30, 2000 compared to the six months to June 30, 2001

The table below compares ~~operating~~ ~~income~~revenues ~~before exceptional items~~ by division for ~~Q1 00~~the six months to June 30, 2000 and ~~Q1 01~~the six months to June 30, 2001 at actual and comparable exchange rates.

Revenues by division	HY 00	HY 01	Growth	Actual	Comparable
	£m	£m	£m	%	%

Caleb Brett	74.3	87.5	13.2	17.8	13.1
ETL SEMKO	48.7	55.5	6.8	14.0	7.8
Labtest	44.3	52.0	7.7	17.4	10.8
Foreign Trade Standards	21.5	26.8	5.3	24.7	23.3

Total continuing operations	188.8	221.8	33.0	17.5	12.3

Operating income by division	Q1 00	Q1 01	Growth	Actual	Comparable
	£m	£m	£m	%	%
Caleb Brett	3.0	3.8	0.8	26.7	23.3
ETL SEMKO	3.6	3.6	—	—	(5.6)
Labtest	4.7	5.4	0.7	14.9	12.8
Foreign Trade Standards	0.7	1.3	0.6	85.7	85.7
Central overheads	(1.0)	(1.0)	—	—	—
Total continuing operations	11.0	13.1	2.1	19.1	15.5

Revenues increased in every division in HY01 over HY 00. Major contributors to growth were petroleum testing in the United States, textile and toy testing in Asia, safety testing in China, new pre-shipment inspection programmes in Bangladesh and Kenya, and increased volumes of inspections in Saudi Arabia. Businesses acquired in 2000 in France, Norway and Japan also contributed to the growth in revenues in HY 01.

~~Operating income in Caleb~~ ~~Brett~~Revenues ~~increased, primarily due to revenue growth and price increases~~ in ~~the United~~HY ~~States~~00 and ~~acquisitions~~HY in01 ~~Europe.~~were ~~Operating~~generated ~~income~~by inoperations ~~ETL~~located ~~SEMKO grew~~ in ~~Asia but declined slightly in Europe and~~ the ~~Americas,~~following ~~due~~geographic ~~to reduced activity~~areas: and delays in telecommunications equipment testing. Toy and textile testing and Code of Conduct inspections in Asia contributed to growth in Labtest. The increase in operating income in FTS was mainly attributable to higher revenues in Q1 01 over Q1 00.

Exceptional items

Revenues by geographic area	HY 00	HY 01	Growth	Actual	Comparable
	£m	£m	£m	%	%

Americas	78.3	91.2	12.9	16.5	7.8
Europe, Africa and Middle East	58.2	65.9	7.7	13.2	13.1
Asia and Far East	52.3	64.7	12.4	23.7	18.2

Total continuing operations	188.8	221.8	33.0	17.5	12.3

Operating exceptional items	Q1 00	Q1 01
	£m	£m
Continuing operations
Provision against Nigerian FTS invoices	(1.6)	—
Discontinued operation
Environmental EPA costs	(1.0)	—
Total operating exceptional items	(2.6)	—

Revenues from the Americas increased primarily due to strong growth in petroleum testing in the United States, where the demand for petroleum products remained strong, despite the slowdown in the economy.

The ~~exceptional~~growth ~~charge of~~in ~~£1.6 million~~revenues infrom ~~Q1 00~~Europe, ~~related~~Africa toand athe ~~provision~~Middle ~~against~~East ~~unpaid~~was ~~invoices issued~~attributable to ~~the~~a ~~Nigerian~~number ~~government~~of byfactors ~~our~~including ~~FTS~~a ~~division.~~new ~~Payment~~pre-shipment ~~for~~inspection ~~these~~programme ~~invoices was~~in ~~received~~Kenya ~~later~~which commenced in ~~2000~~February ~~and~~2001, ~~the~~an ~~provision~~increase ~~was~~in ~~subsequently~~the ~~reversed.~~volume ~~The Nigerian~~of ~~government~~inspections ~~made~~in ~~regular~~Saudi ~~payments~~Arabia, ~~throughout~~an ~~2000~~acquisition soin weFrance ~~stopped~~made ~~making full~~at ~~provision~~the ~~for~~end ~~unpaid~~of ~~invoices~~2000 ~~from~~and ~~July~~the ~~2000~~BP ~~onwards.~~outsourcing ~~Payments~~contract ~~received~~ in ~~January~~the ~~and~~United ~~March~~Kingdom ~~2001~~which ~~cleared~~started ~~invoices~~in ~~through~~March ~~October~~ 2000 ~~for the new contract~~.

Revenues ~~The~~from ~~exceptional~~Asia ~~charge of~~and ~~£1.0 million~~the Far East increased in ~~Q1 00~~HY ~~related~~01 toover ~~legal~~HY ~~costs~~00. ~~incurred~~Textile intesting, ~~connection with~~toy ~~the~~testing ~~ongoing~~and ~~investigation~~Code byof ~~the~~Conduct ~~Environmental~~inspections ~~Protection~~all ~~Agency~~grew ~~into~~significantly. ~~a discontinued~~Safety ~~operation~~testing in ~~Richardson,~~China ~~Texas.~~and ~~This~~petroleum ~~investigation~~inspection isand ~~discussed~~ testing in ~~detail~~Singapore ~~later~~also incontributed ~~this~~to ~~report~~the growth in revenues.

Non-operating exceptional items	Q1 00	Q1 01
	£m	£m
Losses on disposal on operations
Caleb Brett – loss adjusting business in Chile	(0.4)	—
FTS – Technical Services business in the United States	(2.6)	—
Total continuing businesses	(3.0)	—
Discontinued operation
Loss on disposal of Bondar Clegg division	(12.1)	—
Total non-operating exceptional items	(15.1)	—

Operating costs before exceptional items

Our 8operating costs principally comprise labour costs, property and equipment rental, depreciation and laboratory consumables. Operating costs increased by £15.0 million or 13.3% at comparable rates, to £99.3 million, in Q2 01 over Q2 00. In HY 01 over HY 00, operating costs increased by £28.9 million or 12.5% at comparable rates to £190.6 million. Overall, costs have increased broadly in line with the growth in revenues.

In7 Q1 00, Caleb Brett sold a small loss adjusting business in Chile for a profit of £0.1 million. Goodwill of £0.5 million that was previously written off to reserves was transferred to the profit and loss account, resulting in an exceptional charge of £0.4 million.

~~In Q1 00 FTS sold its~~ ~~Technical~~Summary ~~Services~~of ~~business~~operating inincome ~~the~~before ~~United~~exceptional ~~States~~items for ~~its~~the ~~net~~three ~~assets~~months ~~value~~to ~~of £1.0 million.~~June ~~Goodwill~~30, of2000 ~~£2.6 million~~compared ~~which was previously written off~~ to ~~reserves~~the ~~was~~three ~~charged~~months to ~~the~~June ~~profit and loss account~~30, ~~resulting in an~~2001 ~~exceptional charge of £2.6 million.~~

~~We sold our minerals testing~~ ~~division, Bondar Clegg, in Q1 00.~~ The ~~net~~table ~~assets~~below ofcompares ~~businesses~~operating inincome ~~North~~before ~~and South~~exceptional ~~America~~items ~~and~~by ~~Africa~~division ~~were sold~~ for ~~£1.7 million,~~the ~~which~~three ~~generated~~months ~~a net~~to ~~loss~~June ~~of £4.2 million. In addition~~30, we2000 ~~incurred termination~~ and ~~closure costs~~the ofthree ~~£1.0 million.~~months ~~After~~to ~~deducting~~June ~~goodwill~~30, of2001 ~~£6.9 million that~~at ~~was~~actual ~~previously~~and ~~written~~comparable ~~off~~exchange ~~to reserves, the total exceptional loss was £12~~rates.~~1 million.~~

Net interest expense

Operating income before	Q2 00		Q2 01		Growth/		Actual		Comparable
exceptional items by division					(decline)
	£m		£m		£m		%		%

Caleb Brett	4.8		4.5		(0.3	)	(6.2	)	(10.4	)
ETL SEMKO	4.0		4.3		0.3		7.5		5.0
Labtest	8.2		9.7		1.5		18.3		12.2
Foreign Trade Standards	0.9		1.5		0.6		66.7		55.6
Central overheads	(1.4	)	(1.4	)	—		—		7.1

Total continuing operations	16.5		18.6		2.1		12.7		7.9

Major ~~Net~~contributors ~~interest~~to ofgrowth ~~£9.3 million~~in ~~was~~operating ~~charged~~income in Q1 Q2 01, anover ~~increase~~Q2 of00 ~~£1.2 million~~were ~~over~~petroleum ~~the~~testing ~~charge~~ in ~~Q1 00.~~Caleb ~~This~~Brett ~~increase~~in ~~was attributable to~~ the ~~Parent~~United ~~Subordinated~~States, ~~PIK~~safety ~~debentures and~~testing toin ~~currency~~China, ~~differences.~~textile ~~New~~testing ~~Parent~~in ~~Subordinated~~Asia, ~~PIK~~and ~~debentures~~inspections ~~have~~in ~~been issued~~Saudi ~~each~~Arabia. ~~quarter~~Operating income in ~~lieu~~Caleb ofBrett ~~interest~~in ~~payments,~~Q2 ~~causing~~01 anwas ~~increase~~reduced inby the ~~interest~~ ~~charge.~~impact ~~The~~of ~~majority~~tropical ofstorm ~~our~~Allison ~~borrowings~~which ~~are~~hit inthe ~~currencies~~Texas ~~other~~Gulf ~~than sterling~~coast ~~therefore~~in ~~the~~June ~~interest~~2001 ~~charge~~and isclosed ~~affected~~shipping bychannels ~~fluctuations~~for intwo ~~exchange rates~~weeks.

~~Income~~ Summary ~~taxes~~of operating income before exceptional items for the six months to June 30, 2000 compared to the six months to June 30, 2001

The ~~income~~table ~~tax~~below ~~charge in~~compares ~~Q1 01~~operating ~~was £2.6 million, an increase of £0.8 million over the charge in Q1 00. This represented 68.4% of~~ income before ~~tax and~~ exceptional items inby ~~Q1 01~~division ~~and~~for ~~81.8% in Q1 00. The tax rate was higher than~~ the ~~underlying tax~~six ~~rate~~months ofto ~~the~~June ~~territories in which we operate~~30, ~~largely~~2000 ~~due to our inability to obtain full potential tax relief on interest expense in the United Kingdom~~ and the ~~United~~six ~~States~~months ~~and~~to onJune ~~operating~~30, ~~losses~~2001 inat ~~other~~actual ~~territories. The location of taxable profits~~ and ~~deductible~~comparable ~~expenses~~exchange ~~has a significant impact on the tax charge year by year~~rates.

Operating income before	HY 00		HY 01		Growth	Actual	Comparable
exceptional items by division
	£m		£m		£m	%	%

Caleb Brett	7.8		8.3		0.5	6.4	1.3
ETL SEMKO	7.6		7.9		0.3	3.9	—
Labtest	12.9		15.1		2.2	17.1	10.9
Foreign Trade Standards	1.6		2.8		1.2	75.0	68.8
Central overheads	(2.4	)	(2.4	)	—	—	4.2

Total continuing operations	27.5		31.7		4.2	15.3	9.8

~~Operating~~ The increase in operating income in HY 01 over HY 00 was mainly due to growth in petroleum testing in the United States, growth in textile testing in Asia, as well as the expansion of Code of Conduct business and ~~financial~~increased ~~review~~volume of inspections in Saudi Arabia. Operating income in ETL SEMKO in HY 01 was affected by ~~division~~instability in certain markets such as building products in the United States and telecommunications testing, especially in the United Kingdom.

We8 ~~set out below a discussion of the performance of each of our operating divisions for Q1 01 compared to Q1 00. The operating income by division given below is before exceptional items.~~

Caleb Brett
Exceptional income/(costs)
Operating results	Q1 00		Q1 01	Growth
Operating exceptional items	Q2 00		Q2 01	HY 00		HY 01
	£m		£m	£m		£m
Revenues	34.8		42.6	7.8
Foreign Trade Standards
Actual growth				22.4%
Provision against Nigerian invoices	(0.9	)	—	(2.5	)	—
Comparable growth				16.4%
Payments received	1.3		—	1.3		—
Operating income	3.0		3.8	0.8
Total continuing operations	0.4		—	(1.2	)	—
Actual growth				26.7%
Discontinued operation
Comparable growth				23.3%
Environmental EPA	(1.0	)	—	(2.0	)	—
Operating margin	8.6%		8.9%
Total operating exceptional items	(0.6	)	—	(3.2	)	—

~~Revenues increased in~~ ~~North~~The ~~America~~exceptional ~~primarily~~charges ~~due to a sustained period~~ of ~~economic~~£0.9 ~~growth~~million in ~~the United~~Q2 ~~States~~00 ~~that~~and ~~has~~£2.5 ~~resulted~~million in ~~increased~~HY ~~consumption~~00 ofrelated ~~petroleum~~to ~~products. Growth~~a inprovision ~~the~~against ~~United~~unpaid ~~States~~invoices isissued ~~slowing down, although~~ to ~~date~~the ~~this~~Nigerian ~~has~~government ~~not~~by ~~impacted~~ our ~~revenues~~FTS division. ~~European~~The ~~revenues~~exceptional incredit ~~Q1 01~~of ~~benefited~~£1.3 ~~from~~million awas ~~full~~for ~~quarter’s income~~cash received from the ~~outsourcing~~Nigerian ~~agreement~~government. ~~with~~The BPNigerian ingovernment ~~the~~made ~~United~~regular ~~Kingdom,~~payments ~~which~~throughout ~~commenced in March~~ 2000. ~~Revenues~~so ~~were~~we ~~also~~stopped ~~boosted~~making byfull ~~acquisitions~~provision ~~made~~for ~~after~~unpaid ~~Q1 00~~invoices raised from July 2000.

The ~~Operating~~exceptional ~~income~~charges ~~increased due~~of to£1.0 ~~increased~~million ~~activity,~~in ~~price~~Q2 ~~increases~~00 and £2.0 million in HY 00 related to legal costs incurred in connection with the ~~United~~ongoing ~~States~~investigation ~~and~~by the ~~impact of~~Environmental ~~acquisitions~~Protection Agency into a discontinued operation in Richardson, Texas. This investigation is discussed in detail later in this report.

ETL SEMKO
Non-operating exceptional items	Q2 00		Q2 01	HY 00		HY 01
Operating results	Q1 00		Q1 01	Growth
	£m		£m	£m		£m
	£m		£m	£m
Losses on disposal of operations
Revenues	23.1		26.5	3.4
Caleb Brett – loss adjusting business	—		—	(0.4	)	—
Actual growth				14.7%
FTS – Technical Services business	—		—	(2.6	)	—
Comparable growth				7.4%
Total continuing businesses	—		—	(3.0	)	—
Operating income	3.6		3.6	—
Discontinued operation
Actual growth				—
Loss on disposal of Bondar Clegg division	(0.1	)	—	(12.2	)	—
Comparable growth				(5.6)%
Total non-operating exceptional items	(0.1	)	—	(15.2	)	—
Operating margin	15.6%		13.6%

In ~~The~~HY ~~revenue~~00, ~~increase~~Caleb ~~was attributable~~Brett tosold ~~acquisitions~~a ~~made~~small ~~after~~loss ~~Q1 00,~~adjusting ~~expansion~~business in ~~Asia~~Chile, ~~additional work~~which ~~generated~~after bygoodwill ~~new~~of ~~electro-magnetic~~£0.5 ~~testing~~million ~~chambers~~that inwas ~~the~~previously ~~United~~written ~~States and~~off anto ~~increase~~reserves inwas ~~household~~transferred ~~and~~to ~~industrial~~the ~~testing~~profit inand ~~Sweden.~~loss ~~Revenues~~account, resulted in ~~Q1 00~~an ~~included~~exceptional ~~income~~charge ~~from~~of a£0.4 ~~business-to-customer electrical retailer that ceased trading in April 2000~~million.

In 10HY 00 FTS sold its Technical Services business in the United States for its net assets value of £1.0 million. Goodwill of £2.6 million which was previously written off to reserves was charged to the profit and loss account, resulting in an exceptional charge of £2.6 million.

~~Operating~~Also ~~income~~in ~~decreased at~~HY ~~comparable exchange rates~~00, ~~mainly~~we ~~due~~sold toBondar ~~the~~Clegg, ~~closure~~our ~~of the B2C customer~~minerals ~~but~~testing ~~also~~division. ~~due~~The tonet aassets ~~slow~~of ~~down~~businesses ~~or delay~~ in ~~demand~~North ~~for the testing of heating, ventilation~~ and ~~air~~South ~~conditioning~~America ~~equipment in the United States~~ and ~~telecommunications equipment~~ ~~testing,~~Africa ~~especially~~were onsold ~~mobile~~for ~~telephones in Europe~~£1.6 Wemillion, ~~also~~which ~~incurred~~generated ~~start~~a ~~up costs~~net inloss ~~Japan~~of ~~for an acquisition made in December 2000~~£4.3 million.

Labtest
Operating results	Q1 00	Q1 01	Growth
	£m	£m	£m
Revenues	19.6	22.8	3.2
Actual growth			16.3%
Comparable growth			10.2%
Operating income	4.7	5.4	0.7
Actual growth			14.9%
Comparable growth			12.8%
Operating margin	24.0%	23.7%

~~The~~In ~~growth in revenues in Labtest was driven by textile and toy testing in Asia and to a lesser extent in Europe. We attribute this growth to a number of factors~~addition, ~~including the growth~~we inincurred ~~consumer~~termination ~~demand, the migration of manufacturing from the West to Asia~~ and ~~other~~ ~~developing~~closure ~~countries,~~costs ~~the faster introduction~~ of ~~new products by manufacturers and the increasing demand by consumers for good quality and safe products~~£1.0 ~~Demand for toy testing and Code of Conduct inspections continued to grow strongly in Q1 01~~million. ~~Revenues~~After ~~from textile testing increased in Q1 01 over Q1 00 but compared~~deducting togoodwill ~~recent years, the rate~~ of ~~growth has slowed in Hong Kong because business is moving to China where we are expanding our laboratory network~~£6.9 ~~Whilst~~million ~~an economic~~that ~~downturn~~was inpreviously ~~the~~written ~~United~~off ~~States could lead~~ to ~~reduced imports of consumer goods~~reserves, ~~this has not yet started to have a significant impact on the Labtest~~ ~~business. We believe that~~ the ~~key~~total ~~business~~exceptional ~~drivers~~loss ~~continued~~was to£12.2 ~~be safety, quality consciousness of buyers, new fibres and more designs~~million.

~~The growth in operating~~ ~~income~~Interest ~~in Labtest was mainly from toy testing and Code of Conduct inspections.~~expense ~~Operating income in Q1 01 was impacted by start up costs incurred in Shanghai where a new toy testing laboratory was opened at the end of 2000.~~

Foreign Trade Standards
Operating results	Q1 00	Q1 01	Growth
	£m	£m	£m
Revenues	10.6	12.2	1.6
Actual growth			15.1%
Comparable growth			13.2%
Operating income	0.7	1.3	0.6
Actual growth			85.7%
Comparable growth			85.7%
Operating margin	6.6%	10.7%

Interest of £9.5 million was charged in Q2 01, an increase of £0.4 million over the charge in Q2 00. This increase was attributable to the Parent Subordinated PIK debentures and to currency differences. New Parent Subordinated PIK debentures have been issued each quarter in lieu of interest payments, causing an increase in the interest charge. The majority of our borrowings are in currencies other than sterling, therefore the interest charge is affected by fluctuations in exchange rates.

Interest 11of £18.8 million was charged in HY 01, an increase of £1.6 million over the charge in HY 00. The increase was attributable to the Parent Subordinated PIK debentures and to currency differences.

~~The volume of inspections~~ inIncome ~~Saudi Arabia increased in Q1 01 due to stricter enforcement of the pre-shipment~~taxes programme by the Saudi Arabian Standards Organisation. New pre-shipment inspection programmes in Bangladesh and Kenya that commenced after Q1 00 also contributed to the increase. Revenues in Q1 00 included £0.7 million from the Technical Services business that was sold in February 2000.

The ~~increase~~income tax charge in ~~FTS~~Q2 ~~operating income~~01 and Q2 00 was ~~mainly~~£3.7 ~~attributable~~million. toThis ~~higher~~represented ~~revenues~~40.7% ~~but~~of ~~also~~income abefore ~~reduction~~tax and exceptional items in ~~operating costs,~~Q2 ~~especially~~01 and 50.0% in ~~Argentina~~Q2 00. The ~~new~~tax ~~Kenyan~~rate ~~programme~~was ~~which~~higher ~~commenced~~than the underlying tax rate of the territories in ~~February 2001~~ iswhich ~~not~~we ~~yet~~operate, ~~fully~~largely ~~operational~~due to our inability to obtain full potential tax relief on interest expense in the United Kingdom and ~~start~~the upUnited ~~costs~~States ~~were~~and ~~incurred~~ on operating losses in ~~Q1 01~~other territories. The location of taxable profits and deductible expenses has a significant impact on the tax charge year by year.

~~Central~~ The ~~overheads~~income tax charge in HY 01 was £6.3 million (48.8 % of income before tax and exceptional items) and £5.5 million in HY 00 (57.3% of income before tax and exceptional items).

Central overheads comprise the costs of our corporate head office in London, our tax and human resources team in the United States and costs associated with non-trading holding companies. Central overheads include salaries, property rental, travel and legal and professional fees. They were constant at £1.0 million in Q1 01 and Q1 00.10

~~Effects~~ Operating ofand ~~U.S.~~financial ~~GAAP~~review ~~adjustments~~by ~~on operating income~~division

We ~~Our~~set ~~financial~~out ~~statements have~~below ~~been~~a ~~prepared~~discussion inof ~~accordance~~the ~~with~~performance ~~U.K.~~of ~~GAAP~~each ~~which~~of ~~differs~~our inoperating ~~certain~~divisions ~~significant respects~~for ~~from~~the ~~U.S.~~three ~~GAAP.~~months ~~The~~to ~~most~~June ~~significant~~30, ~~differences~~2000 ~~between~~compared ~~U.S.~~to ~~GAAP~~the three months to June 30, 2001 and ~~U.K.~~ ~~GAAP~~the ~~are~~six ~~described~~months into ~~note~~June 830, of2000 compared to the ~~financial~~six ~~statements~~months to June 30, 2001. The operating income by division given below is before exceptional items.

Financial condition and liquidity

Caleb Brett

Operating results	Q2 00		Q2 01		Growth/		HY 00		HY 01		Growth
					(decline)
	£m		£m		£m		£m		£m		£m

Revenues	39.5		44.9		5.4		74.3		87.5		13.2
Actual growth					13.7	%					17.8	%
Comparable growth					10.1	%					13.1	%


Operating income	4.8		4.5		(0.3	)	7.8		8.3		0.5
Actual growth/(decline)					(6.2	)%					6.4	%
Comparable growth/(decline)					(10.4	)%					1.3	%
Operating margin	12.2	%	10.0	%			10.5	%	9.5	%

The Atgrowth ~~March 31,~~in ~~2001~~Caleb weBrett ~~had cash~~revenues in Q2 01 over Q2 00 was attributable primarily to increased revenues in the United States, the acquisition of ~~£19~~a business in France in December 2000 and increased revenues in Singapore.~~3 million~~ ~~compared~~Although tothe ~~£21~~economy in the United States has slowed, it has not yet had a material impact on our revenues.~~3 million~~ atRevenues ~~December 31~~were reduced by the impact of tropical storm Allison, ~~2000~~ which hit the Texas Gulf Coast in June 2001 and halted shipping movements for two weeks. Revenues in Singapore increased as a result of a concentrated marketing and development drive which followed the relocation of the regional management team of Caleb Brett Asia from Australia to Singapore.

The ~~Net~~decline ~~cash~~in ~~inflow from~~ operating ~~activities~~ ~~includes~~income ~~operating~~before ~~income~~exceptional ~~after~~items ~~operating~~in ~~exceptionals,~~Q2 ~~before~~01 ~~depreciation and~~over ~~other~~Q2 ~~non-cash~~00 ~~items,~~was asprimarily ~~well~~due asto ~~working~~the ~~capital~~storm ~~movements.~~in ~~Our~~the ~~net~~United ~~cash inflow~~States ~~from~~which reduced operating ~~activities~~income ~~decreased~~ by £0.~~9 million~~3 ~~to £7.1~~ million in Q1 Q2 01, ~~compared~~costs toassociated ~~Q1 00,~~with ~~primarily~~the ~~due~~relocation toof ~~increased~~the ~~investment~~Asian regional office and a reduction in ~~working~~ ~~capital~~profit margin on the BP outsourcing contract.

~~We spent £1.1 million~~ onThe ~~legal~~growth ~~costs~~ in ~~Q1 01~~Caleb ~~(Q1 00:~~Brett ~~£1.1 million)~~revenues in ~~connection~~HY ~~with~~01 anover ~~Environmental Protection~~HY ~~Agency~~00 ~~investigation~~was inmainly ~~Richardson,~~due ~~Texas.~~to ~~Until~~increased ~~this~~revenues ~~investigation is~~in ~~concluded~~the weUnited ~~will continue to incur legal costs~~States, ~~and~~where weconsumption ~~anticipate~~of ~~spending a~~petroleum ~~further~~products ~~£4.7 million.~~continued Weto ~~also spent £0~~grow.~~3 million~~ onEuropean ~~legal~~revenues ~~fees~~ in Q1 HY 01 ~~(Q1 00:~~benefited ~~£nil)~~from ina ~~connection~~full ~~with~~six ~~the~~month’s ~~two~~income ~~Environmental~~from ~~Protection Agency~~a ~~investigations~~new business in ~~Linden,~~France ~~New~~which ~~Jersey~~was ~~and~~acquired ~~Puerto~~at ~~Rico. We have agreed to settle~~ the ~~Linden~~end ~~investigation~~of by2000 ~~paying~~and afrom ~~fine~~the ofBP ~~£0.7 million~~outsourcing ~~in instalments~~contract ofwhich ~~£0.3 million~~commenced in ~~April 2001,~~March £02000.~~2 million~~ inAlthough ~~October 2001~~revenues ~~and £0.2 million~~ in ~~April 2002.~~Singapore Weincreased, ~~also~~the ~~anticipate~~Asian ~~additional~~region ~~legal costs~~continues into ~~connection~~suffer ~~with~~from the ~~ongoing~~depressed ~~investigation~~economies in ~~Puerto~~Indonesia ~~Rico.~~and ~~The outcome of~~ the ~~investigations~~Philippines inwhich ~~Richardson~~has ~~and~~led ~~Puerto Rico is uncertain, and we are unable~~ to ~~estimate~~a ~~and~~decline ~~provide~~in ~~for~~the ~~any~~oil ~~potential settlement. The length of time it will take to conclude these investigations is also uncertain,~~ and wemarine ~~may incur~~industries ~~additional legal costs~~ in ~~excess of~~ those ~~currently provided~~countries.

The Weincrease ~~spent~~in ~~£5.2 million on~~operating ~~tangible~~income ~~fixed~~before ~~assets~~exceptional items in Q1 HY 01 ~~compared~~over HY 00 was due to ~~£3.1 million~~the inincreased ~~Q1 00.~~volume ~~This is~~of ~~mostly~~business ~~expenditure~~in onthe ~~laboratory~~United ~~and~~States, ~~computer~~reduced ~~equipment.~~by ~~Expenditure~~the incost ~~Q1 01~~of ~~included~~storm ~~£1.3 million~~Allison ~~for~~and the ~~ongoing~~cessation ~~Oracle~~of ~~computer~~a ~~project~~coal insampling ~~ETL SEMKO~~contract in ~~the United States~~Canada.

In11 ~~Q1 01 we paid deferred consideration of £0.5 million for an acquisition made in 2000 but made no new acquisitions in the quarter.~~

At March 31, 2001, our total borrowings were £343.8 million less unamortised debt issuance costs of £8.2 million. A detailed description of our borrowings is given in note 3 of our consolidated financial

ETL SEMKO

Operating results	Q2 00		Q2 01		Growth		HY 00		HY 01		Growth
	£m		£m		£m		£m		£m		£m

Revenues	25.6		29.0		3.4		48.7		55.5		6.8
Actual growth					13.3	%					14.0	%
Comparable growth					8.2	%					7.8	%


Operating income	4.0		4.3		0.3		7.6		7.9		0.3
Actual growth					7.5	%					3.9	%
Comparable growth					5.0	%					0.0	%
Operating margin	15.6	%	14.8	%			15.6	%	14.2	%

The 12revenue growth in ETL SEMKO in Q2 01 over Q2 00 was driven by the continued growth of safety testing in Hong Kong and China and an acquisition in Japan made in December 2000. Revenues in the United States grew in some sectors such as global semi-conductor testing and declined in others such as the certification of building materials and heating, ventilation and air conditioning equipment. The decline in these markets was due to the down turn in building activity, exacerbated by price competition in a declining market.

~~statements. Apart from~~ ~~the~~The ~~Revolving~~increase ~~Credit Facility, our borrowings are denominated~~ in ~~currencies other~~operating ~~than~~income ~~sterling,~~before ~~and~~exceptional ~~are~~items ~~therefore affected by exchange rate fluctuations. Our total borrowings increased by £13.2 million~~ in Q1 Q2 01 ~~and~~over ~~£7.9 million~~Q2 of00 ~~the increase~~ was primarily due to ~~currency~~expansion ~~translation.~~in ~~Our Parent Subordinated PIK Debentures~~Asia, ~~which~~where ~~are~~the ~~denominated~~cost inbase ~~U.S.~~is ~~dollars,~~relatively ~~increased by £5~~low.~~4 million~~ inA ~~Q1 01.~~cost ~~The~~cutting ~~increase~~programme was ~~due~~implemented ~~to new debentures issued~~ in ~~lieu of interest payments of £2.8 million and currency translation of £2.6 million. There were no scheduled repayments of~~ the ~~Senior~~United ~~Subordinated~~States ~~Notes~~to orimprove ~~Senior Term~~profitability ~~A and B Loans~~ in ~~Q1 01.~~under Weperforming ~~utilised a further £2~~sectors.~~0 million of our~~ Revolving Credit Facility in Q1 01, increasing our total drawings to £12.0 million at March 31, 2001. On May 1, 2001 we drew a further £8.0 million, primarily to fund the payment of interest on our Senior Subordinated Notes which fell due on that day. We currently have £9.0 million of the facility available to draw.

Revenue Ingrowth Q1 in HY 01, weover ~~paid~~HY ~~interest and~~00 ~~finance~~was ~~charges~~due to the continued expansion of ~~£1.4 million~~business ~~(Q1 00:~~in £2Asia, particularly in Hong Kong, China and Japan.~~0 million)~~ onThe ~~our borrowings~~market for telecommunications testing was volatile in HY 01. ~~These~~Revenues ~~figures~~in ~~exclude~~this ~~interest~~sector ~~relating~~increased toin the ~~Parent~~United ~~Subordinated PIK~~States ~~Debentures,~~and ~~which~~Sweden ~~was~~but ~~funded~~declined byin athe ~~further~~United ~~issue~~Kingdom ofin ~~debentures~~HY in01 ~~February 2001~~over HY 00. WeThe ~~paid~~global ~~dividends~~semi-conductor ofmarket ~~£0.6 million~~in tothe ~~minority~~United ~~shareholders~~States remained strong in Q1 HY 01 ~~compared~~and torevenues £0in this sector increased over HY 00.~~7 million~~ Revenues in Q1 HY 00 included revenues from a business-to-customer electrical retailer that ceased trading in April 2000.

At Wecomparable ~~anticipate~~exchange ~~that available cash~~rates, ~~cash~~operating ~~flows~~income ~~from~~before ~~operations~~exceptional ~~and~~items ~~borrowing~~remained ~~availability~~static ~~under~~in ~~our~~HY ~~Revolving Credit~~01 ~~Facility~~compared ~~will be sufficient~~ to ~~satisfy~~HY ~~our~~00. ~~working~~Operating ~~capital~~income ~~and~~increased ~~capital expenditure~~in ~~requirements~~Asia, ~~for~~particularly ~~the~~in ~~foreseeable~~Hong ~~future.~~Kong ~~However~~and China, tobut the ~~extent that~~new welaboratory ~~should~~in ~~desire~~Japan toincurred ~~increase~~costs ~~our~~associated ~~financial~~with ~~flexibility~~providing ~~and~~the ~~capital~~Hong ~~resources or~~Kong ~~choose~~laboratory orwith beaccreditation ~~required~~for exports to ~~fund~~Japan. ~~future~~Variances ~~capital~~in ~~commitments~~operating ~~from~~income ~~sources~~in ~~other than~~the ~~operating~~United ~~cash~~States orin ~~from~~HY ~~borrowings~~00 ~~under~~compared ~~our~~to ~~existing~~HY ~~credit~~01 ~~facility,~~varied ~~we may~~between ~~consider~~sectors ~~raising~~which ~~additional~~reflected ~~capital~~the bydifferent ~~increasing~~areas ~~the~~of ~~credit~~growth ~~facility~~and ~~or through~~contraction in the ~~raising~~United ofStates ~~additional equity~~economy. ~~There~~Operating ~~can~~income bein noEurope ~~assurance,~~remained ~~however~~flat, ~~that~~ ~~additional~~with ~~capital~~growth ~~will~~in beSweden ~~available~~and toGermany usoffset onby ~~acceptable~~a ~~terms~~decline in the United Kingdom, ifcaused atby ~~all~~a slow down in the telecommunications market.

~~Our~~12 ability to meet our debt repayments in the longer term will depend upon the achievement of our business plan. There can be no assurance that we will generate sufficient cash flow from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness, or make necessary capital expenditures.

In order to purchase the business from Inchcape plc, we raised finance in the form of Senior Subordinated Notes, Senior Term Loans and Parent Subordinated PIK Debentures. Subject to the provisions under which these Loans were made, and subject to certain exceptions and applicable law, there are no restrictions on the ability of: (a) the Company or any of its direct and indirect subsidiaries from paying dividends or making any other distributions or loans or advances to Intertek Finance plc, the subsidiary of the Company which issued the Notes, or (b) the direct and indirect subsidiaries of the Company from paying dividends or making any other distributions or loans or advances to the Company.

Labtest

Operating results	Q2 00		Q2 01		Growth		HY 00		HY 01		Growth
	£m		£m		£m		£m		£m		£m

Revenues	24.7		29.2		4.5		44.3		52.0		7.7
Actual growth					18.2	%					17.4	%
Comparable growth					13.0	%					10.8	%


Operating income	8.2		9.7		1.5		12.9		15.1		2.2
Actual growth					18.3	%					17.1	%
Comparable growth					12.2	%					10.9	%
Operating margin	33.2	%	33.2	%			29.1	%	29.0	%

The 13growth in revenues in Labtest in Q2 01 over Q2 00 was driven by textile testing in Asia and to a lesser extent in Europe. We attribute this growth to a number of factors, including the growth in consumer demand, the continued migration of manufacturing from the West to Asia and other developing countries, the faster introduction of new products by manufacturers and the increasing demand by consumers for good quality and safe products. The rate of revenue growth has slowed in Hong Kong compared with recent years because business is moving to China where we are expanding our laboratory network. Revenues from toy testing and Code of Conduct inspections also increased in Q2 01 over Q2 00. We opened a new toy testing laboratory in Germany in Q2 01.

~~Investigations~~ Whilst bythe economic downturn in the UUnited States could lead to reduced imports of consumer goods, this has not yet started to have a significant impact on the Labtest business.S. ~~Environmental~~We ~~Protection~~believe ~~Agency~~that the key business drivers continued to be safety, quality consciousness of buyers, new fibres and more designs.

The ~~Two~~growth ofin ~~our~~operating ~~subsidiary corporations~~income ~~are~~before ~~currently~~exceptional ~~involved~~items in ~~investigations~~Q2 by01 ~~the~~over ~~U.S.~~Q2 ~~Environmental Protection~~00 ~~Agency~~was ~~(“EPA”).~~mainly ~~Details~~from textile testing and Code of ~~each~~Conduct ~~investigation~~inspections ~~are~~where ~~given~~we audit social practices and safety in factories. The new toy testing laboratory in Germany incurred start up costs and additional overhead costs were incurred in Hong Kong to support e-commerce development. ~~below:~~

~~Caleb~~ The ~~Brett~~growth ~~USA,~~in ~~Inc.~~revenues –in ~~Linden~~HY 01 over HY 00 was primarily due to textile testing, ~~New~~toy ~~Jersey~~testing and Code of Conduct inspections.

~~In February 1997, Caleb~~ ~~Brett,~~The ~~through~~growth ~~its~~in ~~routine~~operating ~~quality~~income ~~assurance~~before ~~and~~exceptional ~~quality~~items ~~control procedures, discovered evidence of false testing results at the Caleb Brett laboratory~~ in ~~Linden,~~ ~~New~~HY ~~Jersey,~~01 ~~which~~over ~~involved~~HY ~~testing~~00 ofwas ~~gasoline~~due to ~~certain~~textile ~~standards set~~testing byand ~~the~~Code ~~EPA. In September 1999, the Department~~ of ~~Justice~~Conduct ~~announced~~inspections. ~~that three~~Operating ~~laboratory~~income ~~supervisors~~from ~~pleaded~~toy ~~guilty~~testing todeclined ~~criminal~~slightly, ~~charges~~due ~~that they participated in a scheme~~ to ~~falsify chemical analyses of gasoline. Due to~~ the ~~fact~~start ~~that~~up ~~Caleb Brett~~costs ~~employees mislead federal investigators about the falsification~~ of ~~data during~~new ~~the~~laboratories ~~investigation,~~in ~~Caleb~~Shanghai ~~Brett~~and ~~as a corporation was prosecuted~~Germany. ~~Under~~ ~~applicable law, Caleb Brett is responsible for certain acts of its employees, even though such acts were not committed with the knowledge or permission of the company.~~

~~The case was concluded on April~~ 13, 2001, when Caleb Brett USA, Inc was sentenced and required to pay a fine of $1 million to the U.S. Government. Half of this sum was paid in April 2001, and the remainder is payable in two instalments at six month intervals thereafter. The full amount was fully provided in our financial statements for 2000.

~~Intertek~~ ~~Testing~~Foreign ~~Services~~Trade ~~Environmental~~Standards ~~Laboratories, Inc. – Richardson, Texas~~

In December 1997, Intertek Testing Services Environmental Laboratories, Inc. (“ITS Environmental”) discovered certain discrepancies in reported testing results at its facility in Richardson, Texas. ITS Environmental promptly reported this discrepancy to the EPA and to clients. Civil and criminal investigations are under way. A government investigation at the ITS Environmental facility uncovered further discrepancies beyond those initially discovered and disclosed by ITS Environmental.

Operating results	Q2 00		Q2 01		Growth		HY 00		HY 01		Growth
	£m		£m		£m		£m		£m		£m

Revenues	10.8		14.6		3.8		21.5		26.8		5.3
Actual growth					35.2	%					24.7	%
Comparable growth					34.3	%					23.3	%


Operating income	0.9		1.5		0.6		1.6		2.8		1.2
Actual growth					66.7	%					75.0	%
Comparable growth					55.6	%					68.8	%
Operating margin	8.3	%	10.3	%			7.4	%	10.4	%

The Inincrease ~~August 1998,~~in ~~ITS~~revenues ~~Environmental sold~~in ~~its~~Q2 ~~laboratory~~01 ~~business~~over inQ2 ~~Burlington,~~00 ~~Vermont~~was ~~U.S.A.~~due ~~and~~to ~~St.~~new ~~Helens,~~pre-shipment ~~U.K.~~ inspection programmes in Kenya and ~~stopped~~Bangladesh ~~commercial~~and ~~operations~~increased atvolumes ~~the~~of ~~laboratory~~inspections in ~~Richardson~~Saudi Arabia. ~~These~~The ~~actions resulted~~volume of inspections in ~~the~~Saudi ~~discontinuation~~Arabia increased due to stricter enforcement of ~~business~~the atpre-shipment ~~ITS~~standards ~~Environmental~~testing and inspection programme by the Saudi Arabian government. ~~This~~Revenues ~~sale has~~in ~~not~~Q2 ~~relieved~~00 ~~ITS~~included ~~Environmental~~£0.3 ofmillion ~~any~~from ~~liability~~the itpre-shipment ~~may~~inspection ~~face~~programme asin aGhana ~~result of~~which ~~these~~was ~~investigations~~cancelled orin ~~otherwise~~2000.

~~After commercial operations~~ ~~ceased in August 1998, the facility was used to reprocess the original data.~~ The ~~reprocessing~~increase isin ~~complete~~FTS ~~and~~operating ~~the~~income ~~facility~~in isQ2 ~~now~~01 ~~closed.~~over ~~ITS~~Q2 ~~Environmental developed~~00 ~~what~~was itmainly ~~believed~~attributable to behigher anrevenues ~~effective data screening~~ and ~~reprocessing method.~~a ~~The~~reduction ~~reprocessing~~in ~~effort~~operating ~~was~~costs, ~~aimed~~partly atdue ~~providing clients with data of known quality. The EPA have advised ITS Environmental that the reprocessing is not acceptable~~ to the ~~EPA~~development ~~for clean up or compliance purposes. Nevertheless, ITS Environmental believes that it can establish the scientific integrity~~ of ~~the~~ ~~reprocessing work, which ITS believes confirms that~~ the ~~original~~information ~~data~~technology ~~was accurate to within normally accepted limits~~platform. ~~This has been confirmed by an independent~~ ~~consultant which specialises in reprocessing of data.~~

The ~~ITS~~growth ~~Environmental~~in ~~continues~~ revenues in HY 01 over HY 00 was due to cothe new pre-~~operate~~shipment ~~fully~~inspection ~~with~~programmes in Kenya and Bangladesh which started in Q1 01, and increased volumes of inspections in Saudi Arabia. Revenues in HY 00 included £1.0 million from the ~~government~~pre-shipment ~~investigation~~inspection programme in Ghana which was cancelled in 2000 and £0.7 million from the Technical Services business which was sold in February 2000.

~~On December 9, 1999, a~~ ~~complaint~~The ~~was~~growth ~~filed by a customer~~ in ~~federal~~operating ~~court~~income in ~~Chicago,~~HY ~~Illinois~~01 ~~against Intertek~~over ~~Testing~~HY ~~Services~~00 ~~Environmental~~was ~~Laboratories,~~mainly ~~Inc.~~due ~~seeking~~to ~~declaratory judgement~~higher revenues and ~~damages~~improved ~~arising~~operating ~~from analyses performed between 1991 and 1997~~efficiencies. On ~~December 17,~~Operating ~~1999,~~income ~~a complaint was filed in state court in Kansas City, Missouri, against Intertek Testing Services Limited seeking damages~~ from ~~improper~~the ~~testing and~~new ~~analysis.~~Kenyan Onprogramme ~~January 12, 2000, a third complaint~~ was ~~filed~~offset inby ~~state~~start ~~court in~~up ~~Los Angeles, California, against Intertek Testing Services Limited and Intertek Testing Services Environmental Laboratories, Inc~~costs. ~~seeking damages arising for~~ ~~improper testing and analysis and alleging fraud.~~

Central 14overheads

Central Onoverheads ~~September 21,~~comprise ~~2000,~~ the ~~U.S.~~costs ~~Department~~ of ~~Justice~~our ~~announced~~corporate ~~that~~head aoffice ~~federal grand jury~~ in ~~Dallas~~London, ~~Texas~~ ~~returned~~our antax ~~indictment~~and ofhuman ~~thirty~~resources ~~counts~~team ~~against~~in ~~thirteen~~the ~~persons~~United ~~who~~States ~~were formerly~~and ~~employed~~costs atassociated ~~Intertek~~with ~~Testing~~non-trading ~~Services~~holding ~~Environmental Laboratories Inc in Richardson, Texas~~companies. ~~Charges~~Central ~~against~~overheads ~~the thirteen persons~~ include ~~conspiracy to~~salaries, ~~commit~~property ~~mail fraud~~rental, ~~conspiracy~~travel toand ~~present~~legal ~~false, fictitious~~ and ~~fraudulent claims~~professional ~~against~~fees. ~~the~~At ~~United~~actual ~~States~~exchange ~~and~~rates, ~~wire~~central ~~fraud.~~overheads ~~The~~remained ~~trial~~constant ~~date~~at ~~was~~£1.4 ~~adjourned from~~million ~~February 5,~~in ~~2001~~Q2 to00 ~~October 12,~~and ~~2001.~~Q2 To01 ~~date,~~and no£2.4 ~~criminal~~million ~~charges~~in ~~have been~~HY ~~filed~~00 ~~against~~and ~~ITS~~HY ~~Environmental~~01.

~~On March 23, 2001, a Complaint~~ ~~was~~Effects ~~filed~~of in state court in Marshall, Texas, by 418 individual plaintiffs against Intertek Testing Services Environmental Laboratories, Inc. and thirteen former employees seeking $80 million in damages. The individual defendants named in the lawsuit are the same people who were indicted in September 2000. The Complaint alleges common fraud, negligent misrepresentation and malice. Plaintiffs previously sued various suppliers to the Longhorn Army Ammunition Plant (“Longhorn”) for personal injury and property damage, and claim here that ITS Environmental’s understated environmental test results for Longhorn caused them to settle for that case for less than they otherwise would have. All defendants have sought to remove the case to Federal Court and have moved to dismiss the Complaint. Under U.S. ~~law,~~GAAP ~~the~~adjustments ~~plaintiffs can site any figure they wish for damages in their Complaint. We believe we have a meritorious defense and the outcome is unlikely to have a material adverse effect~~ on ~~our~~operating ~~business and our financial position.~~income

~~All these cases are in~~ ~~the~~Our ~~preliminary~~financial ~~stages~~statements ~~and~~have webeen ~~are~~prepared ~~unable~~in toaccordance ~~predict~~with ~~the outcome of these actions~~U. WeK. ~~are~~GAAP ~~unable~~which todiffers ~~estimate~~in ~~the~~certain ~~cost~~significant ofrespects ~~any civil or criminal penalties arising~~ from ~~this investigation~~U.S. ~~However, on the basis of currently available information, we consider that the outcome is unlikely to have a material adverse effect on our business and our financial position~~GAAP. WeThe ~~have~~most ~~notified~~significant ~~Inchcape~~differences ~~plc~~between ~~of the investigation and are pursuing possible rights of recovery against Inchcape plc under the Share Purchase Deed~~U.S. ~~Our~~GAAP ~~group professional indemnity insurance policy may respond at least to legal costs, civil damages~~ and ~~third party claims~~U. ~~With~~K. ~~our~~GAAP ~~broker,~~are wedescribed ~~are~~in ~~seeking~~note ~~acceptance~~8 of the ~~loss~~financial ~~by the insurer~~statements.

~~Caleb~~ ~~Brett~~14 ~~USA, Inc – Puerto Rico~~

~~Caleb Brett USA, Inc has~~ ~~been~~Financial ~~informed~~condition ~~that an investigation is underway by the U.S. Department of Justice Environmental Crime Section of certain practices at its Puerto Rico facility. The investigation, which relates to events in 1997~~ and ~~prior, is at a preliminary~~liquidity stage and we are unable to predict the outcome or estimate the cost of any civil or criminal penalties that may arise. However, on the basis of currently available information, we consider that the outcome is unlikely to have a material adverse effect on our business and our financial position. We have notified Inchcape plc of the investigation and are pursuing possible rights of recovery against Inchcape plc under the Share Purchase Deed. This event may give rise to a claim under our group professional indemnity insurance policy and our brokers have been notified.

At 15June 30, 2001 we had cash of £21.2 million compared to £21.3 million at December 31, 2000.

~~European~~ Net ~~Monetary~~cash ~~Union~~inflow –from ~~Euro~~operating activities includes operating income after operating exceptionals, before depreciation and other non-cash items, as well as working capital movements. Our net cash inflow from operating activities increased by £2.6 million to £26.1 million in HY 01 compared to HY 00, primarily due to increased operating income.

On We ~~January~~ spent £2.0 million on legal costs in HY 01 (HY 00: £1,.8 ~~1999~~million) in connection with an Environmental Protection Agency investigation in Richardson, ~~eleven of~~Texas. Until this investigation is concluded we will continue to incur legal costs. We also spent £1.0 million in HY 01 (HY 00: £nil) in connection with the ~~European~~two ~~Union~~Environmental ~~member~~Protection ~~states~~Agency investigations in Linden, ~~including~~New ~~seven~~Jersey ~~countries~~and Puerto Rico. We agreed to settle the Linden investigation by paying a fine of £0.7 million in ~~which~~instalments weof ~~operate~~£0.3 million in April 2001, ~~established~~ ~~fixed~~£0.2 ~~conversion~~million ~~rates~~in ~~between~~October ~~their~~2001 ~~existing~~and ~~currencies~~£0.2 million in April 2002. The outcome of the investigations in Richardson and ~~adopted one~~Puerto ~~common~~Rico ~~currency~~is uncertain, ~~the~~and ~~Euro~~we are unable to estimate and provide for any potential settlement. The ~~conversion~~length of time it will take to ~~the~~conclude ~~Euro~~these ~~eliminates~~investigations ~~currency exchange~~is ~~rate~~also ~~risk~~uncertain, ~~among~~and ~~the~~we ~~eleven~~may ~~member~~incur ~~countries~~additional legal costs in excess of those currently provided.

We ~~The~~spent ~~currencies~~£10.8 ofmillion ~~the eleven~~on ~~member~~tangible ~~states~~fixed ~~remain~~assets ~~legal tender~~ in ~~the~~HY ~~participating~~01 ~~countries~~compared ~~during a~~to ~~three-year~~£8.8 ~~transition~~million ~~period~~in ~~from~~HY ~~January 1, 1999 through January 1, 2002~~00. ~~Effective~~ ~~January 1,~~This ~~1999, the Euro~~ is ~~traded~~mostly expenditure on ~~currency~~laboratory ~~exchanges~~ and iscomputer ~~available for~~equipment. ~~non-cash~~Expenditure ~~transactions~~in ~~during~~HY ~~the~~01 ~~three-year~~included ~~transitional period~~£1.7 ~~Beginning on~~million ~~January 1,~~for ~~2002,~~ the ~~European~~ongoing ~~Central~~Oracle ~~Bank~~computer ~~will~~project ~~issue~~in ~~Euro-denominated~~ETL ~~bills and~~SEMKO ~~coins for use~~ in ~~cash transactions. On or before July 1, 2002,~~ the ~~participating countries~~United ~~will withdraw all bills and coins and use the Euro as their legal currency~~States.

~~Our operating units affected~~ byIn ~~the~~HY ~~Euro~~01 ~~have~~we ~~established~~acquired ~~plans~~a tosmall ~~address~~business ~~the~~in ~~issues~~Australia ~~raised~~for byconsideration ~~the~~of ~~conversion~~£0. ~~These~~1 ~~issues,~~million ~~among~~and ~~others,~~paid ~~include~~deferred ~~such~~consideration ~~matters as pricing, continuity~~ of ~~contracts, accounting and financial reporting, taxation, treasury activities and computer systems~~£0.5 Amillion ~~number~~for ofan ~~our~~acquisition ~~operating~~made ~~units~~ in ~~France~~2000. ~~and~~In ~~Portugal~~HY ~~have~~01 ~~converted their~~we ~~systems~~received ~~and~~deferred ~~began~~sale ~~reporting~~proceeds inof ~~Euros during Q1 00~~£0.1 ~~The~~million ~~remaining operating~~from ~~units will convert their local records to~~ the ~~Euro~~disposal ~~during~~of ~~2001~~Bondar Clegg.

In ~~Although~~HY 01, we ~~have~~paid ~~not~~interest ~~identified any~~and ~~immediate~~finance ~~problems,~~charges weof ~~cannot~~£12.0 bemillion ~~certain~~(HY ~~that~~00: £11.2 million) on our borrowings. These figures exclude interest relating to the ~~harmonisation~~Parent Subordinated PIK Debentures, which was funded by further issues of ~~currencies~~ debentures in ~~Europe~~February ~~will~~2001 ~~not~~and ~~have~~May a2001. ~~material~~We ~~adverse~~paid ~~impact~~dividends onof ~~the~~£1.2 ~~operating~~million ~~results, financial~~to ~~position~~minority orshareholders ~~liquidity~~in ofHY ~~our~~01 ~~European~~compared ~~businesses~~to £2.0 million in HY 00.

At 16June 30, 2001, our total borrowings were £352.9 million less unamortised debt issuance costs of £7.8 million. A detailed summary of our borrowings is given in note 3 of our consolidated financial statements. Apart from the Revolving Credit Facility, our borrowings are denominated in currencies other than sterling, and are therefore affected by exchange rate fluctuations. In the six months to June 30, 2001, our total borrowings increased by £22.7 million, of which £11.2 million was due to currency translation. Our Parent Subordinated PIK Debentures, which are denominated in U.S. dollars, increased by £9.7 million in HY 01. The increase was due to new debentures issued in lieu of interest payments of £5.6 million and currency translation of £4.1 million. We repaid £6.5 million of the Senior Term A loans in June 2001. There were no scheduled repayments of the Senior Subordinated Notes or Senior B Loans in HY 01. We utilised a further £11.0 million of our Revolving Credit Facility in HY 01, increasing our total drawings to £21.0 million at June 30, 2001. We drew a further £3.0 million in July 2001 and we currently have £5.0 million of the facility available to draw.

~~Intertek~~ Since ~~Testing~~June ~~Services~~30, ~~Limited~~2001, ~~Consolidated~~we ~~Statements~~have agreed new banking arrangements with our syndicate of ~~Operations~~senior banks. A new Senior Term C loan of up to £40.0 million has been made available for capital expenditure. The facility can be drawn in U.S. dollars, pounds sterling, Swedish kroner or Euros in tranches of at least £250,000 or the equivalent in non-sterling currencies. The terms of these new facilities also allow up to £10.0 million of the Senior Term C loan to be drawn down to repay the Senior Revolving Credit facility. The Senior Term C loan will be available until June 2004 and will become repayable in December 2005. It carries an interest rate cost of LIBOR plus 2.75% and a commitment fee of 0.75% per annum will be paid on the average amount of Senior Term C which is unused. The revised banking arrangements became effective on August 9, 2001 and to date, we have not used any of the Senior Term C facility.

	Unaudited
	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Revenues
Continuing operations	88.1	104.1
Discontinued operations	0.7	—
Group revenues	88.8	104.1
Operating costs	(81.3)	(91.3)
Group operating income	7.5	12.8
Share of operating profit in associates	0.2	0.3
Total operating income	7.7	13.1
Operating income/(loss) before exceptional items
Continuing operations	11.0	13.1
Discontinued operations	(0.7)	—
	10.3	13.1
Exceptional items charged to operating income
Continuing operations	(1.6)	—
Discontinued operations	(1.0)	—
Total operating income	7.7	13.1
Operating income/(loss) after exceptional items
Continuing operations	9.4	13.1
Discontinued operations	(1.7)	—
Total operating income	7.7	13.1
Non operating exceptional items
Continuing operations	(3.0)	—
Discontinued operations	(12.1)	—
Total non-operating exceptional items	(15.1)	—
(Loss)/income on ordinary activities before net interest	(7.4)	13.1
Net interest expense	(8.1)	(9.3)
(Loss)/income before taxation	(15.5)	3.8
Taxation	(1.8)	(2.6)
(Loss)/income after taxation	(17.3)	1.2
Minority interests	(0.6)	(0.8)
Net (loss)/income for the group and its share of associates	(17.9)	0.4

We ~~The~~anticipate ~~accompanying notes~~that onavailable ~~pages~~cash, Fcash -flows 5from operations and borrowing availability under our Revolving Credit Facility will be sufficient to Fsatisfy -our 20working ~~are~~capital anand ~~integral~~capital ~~part~~expenditure ofrequirements ~~these~~for the foreseeable future. However, to the extent that we should desire to increase our financial ~~statements~~flexibility and capital resources or choose or be required to fund future capital commitments from sources other than operating cash or from borrowings under our existing credit facility, we may consider raising additional capital by increasing the credit facility or through the raising of additional equity. There can be no assurance, however, that additional capital will be available to us on acceptable terms, if at all.

~~F-1~~ Our ability to meet our debt repayments in the longer term will depend upon the achievement of our business plan. There can be no assurance that we will generate sufficient cash flow from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness, or make necessary capital expenditures.

In order to purchase the business from Inchcape plc, we raised finance in the form of Senior Subordinated Notes, Senior Term Loans and Parent Subordinated PIK Debentures. Subject to the provisions under which these Loans were made, and subject to certain exceptions and applicable law, there are no restrictions on the ability of: (a) the Company or any of its direct and indirect subsidiaries from paying dividends or making any other distributions, loans or advances to Intertek ~~Testing~~Finance ~~Services~~plc, ~~Limited~~the ~~Consolidated~~subsidiary ~~Balance~~of ~~Sheets~~the Company which issued the Notes, or (b) the direct and indirect subsidiaries of the Company from paying dividends or making any other distributions, loans or advances to the Company.

			Unaudited
	Notes	December 31, 2000 £m	March 31, 2001 £m
ASSETS
Current assets
Cash	7	21.3	19.3
Trade receivables		81.6	83.5
Inventories		1.7	1.8
Other current assets		19.1	21.6
Total current assets		123.7	126.2
Goodwill		16.8	16.8
Property, plant and equipment, net		67.9	70.4
Investments		0.9	1.3
Total assets		209.3	214.7
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Borrowings (including current portion of long term borrowings)	3	22.1	25.0
Accounts payable, accrued liabilities and deferred income		80.5	80.7
Income taxes payable		6.9	6.0
Total current liabilities		109.5	111.7
Long term borrowings	3	300.3	310.6
Provisions for liabilities and charges		13.9	12.5
Minority interests		6.3	6.5
Shareholders’ deficit
Ordinary shares		0.8	0.8
Redeemable preference shares		105.5	105.5
Shares to be issued		2.8	2.8
Premium in excess of par value		3.6	3.6
Accumulated deficit		(333.4)	(339.3)
Total shareholders’ deficit		(220.7)	(226.6)
Total liabilities and shareholders’ deficit		209.3	214.7

~~The accompanying~~ ~~notes~~Investigations onby ~~pages~~the FU.S. -Environmental 5Protection ~~to F - 20 are an integral part of these financial statements.~~Agency

~~F-2~~ Two of our subsidiary corporations are currently involved in investigations by the U.S. Environmental Protection Agency (“EPA” ). Details of each investigation are given below:

Intertek Testing Services ~~Limited~~Environmental ~~Consolidated~~Laboratories, ~~Statements~~Inc. of— ~~Cash~~Richardson, ~~Flows~~Texas

		Unaudited
	Notes	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Total operating cash inflow	5	8.0	7.1
Returns on investments and servicing of finance	6	(2.7)	(2.0)
Taxation		(2.2)	(3.4)
Capital expenditure and financial investment	6	(3.1)	(5.2)
Acquisitions and disposals	6	0.5	(0.5)
Cash inflow/(outflow) before financing		0.5	(4.0)
Financing	6	(4.3)	2.0
Decrease in cash in the period		(3.8)	(2.0)
Reconciliation of net cash flow to movement in net debt	7
Decrease in cash in the period		(3.8)	(2.0)
Cash inflow/(outflow) from increase in debt		4.3	(2.0)
Change in net debt resulting from cash flows		0.5	(4.0)
Debt issued in lieu of interest payment		(2.3)	(2.8)
Acquisitions and disposals		(0.7)	—
Other non-cash movements		(0.5)	(0.5)
Exchange adjustments		(3.0)	(7.9)
Movement in net debt in the period		(6.0)	(15.2)
Net debt at the start of the period		(273.5)	(301.1)
Net debt at the end of the period		(279.5)	(316.3)

In ~~The~~August ~~accompanying notes~~1998, onITS ~~pages~~Environmental Fceased -carrying 5out toany Fcommercial -operations 20but ~~are~~this andiscontinuation ~~integral~~of ~~part~~business has not relieved ITS Environmental of any liability it may face as a result of these ~~financial~~investigations ~~statements~~or otherwise.

~~F-3~~ After commercial operations ceased in August 1998, the facility was used to reprocess the original data. The reprocessing is complete and the facility is now closed. ITS Environmental developed what it believed to be an effective data screening and reprocessing method. The reprocessing effort was aimed at providing clients with data of known quality. The EPA have advised ITS Environmental that the reprocessing is not acceptable to the EPA for clean up or compliance purposes. Nevertheless, ITS Environmental believes that it can establish the scientific integrity of the reprocessing work, which ITS believes confirms that the original data was accurate to within normally accepted limits. This has been confirmed by an independent consultant who specialises in the reprocessing of data.

~~Intertek~~ ITS ~~Testing~~Environmental ~~Services~~continues ~~Limited~~to co-operate fully with the government investigation.

~~Consolidated~~ On ~~Statements~~December of9, ~~Total~~1999, ~~Recognised~~a ~~Gains~~complaint was filed by a customer in Federal Court in Chicago, Illinois against Intertek Testing Services Environmental Laboratories, Inc. seeking declaratory judgement and ~~Losses~~damages arising from analyses performed between 1991 and 1997. On December 17, 1999, a complaint was filed in state court in Kansas City, Missouri, against Intertek Testing Services Limited seeking damages from improper testing and analysis. On January 12, 2000, a third complaint was filed in state court in Los Angeles, California, against Intertek Testing Services Limited and Intertek Testing Services Environmental Laboratories, Inc. seeking damages arising for improper testing and analysis and alleging fraud.

	Unaudited
	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Net (loss)/income from subsidiaries	(18.0)	0.2
Net income from associates	0.1	0.2
	(17.9)	0.4
Exchange adjustments	(3.0)	(6.3)
Total recognised gains and losses	(20.9)	(5.9)

On September 21, 2000, the U.S. Department of Justice announced that a Federal Grand Jury in Dallas, Texas returned an indictment of thirty counts against thirteen persons who were formerly employed at Intertek Testing Services Environmental Laboratories Inc in Richardson, Texas. Charges against the thirteen persons include conspiracy to commit mail fraud, conspiracy to present false, fictitious and fraudulent claims against the United States and wire fraud. The trial date was adjourned from February 5, 2001 to October 12, 2001. To date, no criminal charges have been filed against ITS Environmental.

~~There~~On isMarch no23, ~~material~~2001, ~~difference~~a Complaint was filed in state ~~between~~court ~~income~~in ~~before~~Marshall, ~~taxation~~Texas, by 418 individual plaintiffs against Intertek Testing Services Environmental Laboratories, Inc. and ~~net~~thirteen ~~income~~former ~~for~~employees seeking $80 million in damages. The individual defendants named in the ~~financial~~lawsuit ~~periods,~~are asthe ~~stated~~same people who were indicted in September 2000. The Complaint alleges common fraud, negligent misrepresentation and malice. Plaintiffs previously sued various suppliers to the ~~statements~~Longhorn ofArmy ~~operations~~Ammunition Plant (“Longhorn”) for personal injury and property damage, and claim here that ITS Environmental’s understated environmental test results for Longhorn caused them to settle that case for less than they otherwise would have. All defendants have sought to remove the case to the Federal Court and have moved to dismiss the Complaint. Under United States’ law, the plaintiffs can cite any figure they wish for damages in their ~~historical~~Complaint. ~~cost~~We ~~equivalents~~believe we have a meritorious defense and the outcome is unlikely to have a material adverse effect on our business and our financial position.

~~Consolidated~~ ~~Statements~~17 ~~of Changes in Shareholders’ Deficit~~

	Unaudited
	Ordinary shares £m	Redeemable preference shares £m	Shares to be issued £m	Premium in excess of par value £m	Accumulated deficit £m	Total £m
Balance at January 1, 2000	0.8	105.5	2.8	3.6	(315.2)	(202.5)
Net loss	—	—	—	—	(17.9)	(17.9)
Goodwill adjustments	—	—	—	—	10.1	10.1
Exchange adjustments	—	—	—	—	(3.0)	(3.0)
Balance at March 31, 2000	0.8	105.5	2.8	3.6	(326.0)	(213.3)
Balance at January 1, 2001	0.8	105.5	2.8	3.6	(333.4)	(220.7)
Net income	—	—	—	—	0.4	0.4
Exchange adjustments	—	—	—	—	(6.3)	(6.3)
Balance at March 31, 2001	0.8	105.5	2.8	3.6	(339.3)	(226.6)

We are unable to predict the outcome of these actions and we are unable to estimate the cost of any civil or criminal penalties arising from this investigation. However, on the basis of currently available information, we consider that the outcome is unlikely to have a material adverse effect on our business and our financial position. ITS Environmental has been engaged in discussions with the United States Government regarding a resolution of the criminal investigation and we believe that a satisfactory agreement should be reached within the next several months. We have notified Inchcape plc of the investigation and are pursuing possible rights of recovery against Inchcape plc under the Share Purchase Deed. Our group professional indemnity insurance policy may respond at least to third party claims, civil damages and associated legal costs. With our broker, we are seeking acceptance of the loss by the insurer.

~~Included in accumulated~~ ~~deficit~~Caleb isBrett ~~£294.3 million relating to goodwill (at March 31~~USA, ~~2000:~~ ~~£270.2 million).~~Inc ~~This~~— ~~comprises~~Puerto ~~goodwill of £291.7 written~~Rico off to reserves in relation to the acquisition of subsidiaries prior to December 1997 (at March 31, 2000: £268.8 million) and £2.6 million amortised goodwill in relation to acquisitions from January 1, 1998 (at March 31, 2000: £1.4 million).

Caleb Brett USA, Inc has been informed that an investigation is underway by the U.S. Department of Justice Environmental Crime Section of certain practices at its Puerto Rico facility. The ~~accompanying notes~~investigation relates to events in 1997 and prior, and we are unable to predict the outcome or estimate the cost of any civil or criminal penalties that may arise. However, on ~~pages~~the Fbasis -of 5currently available information, we consider that the outcome is unlikely to Fhave -a 20material adverse effect on our business and our financial position. We have notified Inchcape plc of the investigation and are anpursuing ~~integral~~possible ~~part~~rights of ~~these~~recovery ~~financial~~against ~~statements~~Inchcape plc under the Share Purchase Deed. This event may give rise to a claim under our group professional indemnity insurance policy and our brokers have been notified.

~~F-4~~ New Accounting Standards

~~Intertek~~ U.K. ~~Testing~~Accounting ~~Services Limited Notes To The Consolidated Financial Statements~~Standards

1 Financial Reporting Standard 17: Retirement benefits and Financial Reporting Standard 19: Deferred tax have been issued but are not effective until accounting periods ending on or after June 22, 2001 and January 23, 2002, respectively. ~~Basis~~We have not yet determined the effect of ~~presentation~~these new standards.

~~The accompanying consolidated~~ financial statements of the Company and its subsidiaries at March 31, 2001 and for the three months to March 31, 2001 are unaudited. In the opinion of the Directors, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of these periods are not necessarily indicative of results for the entire year and have been prepared in conformity with accounting principles generally accepted in the United Kingdom (“U.K. GAAP”) and are presented under the historical cost convention. These principles differ in certain material respects from generally accepted accounting principles in the United States (“U.S. ~~GAAP”)~~ –Accounting ~~see note 8.~~Standards

~~For~~In June 2001, the ~~purpose~~Financial ofAccounting ~~these~~Standards ~~condensed~~Board ~~consolidated~~issued ~~financial~~Statements ~~statements~~of Financial Accounting Standards No. 141, ~~certain~~Business ~~information~~Combinations (“SFAS 141” ) and ~~disclosures~~No. 142, Goodwill ~~normally~~and ~~included~~Other inIntangible ~~financial~~Assets ~~statements~~(“SFAS ~~prepared~~142” ). inSFAS ~~accordance~~141 ~~with~~applies ~~accounting~~to all business combinations initiated after June 30, 2001 ~~principles~~and ~~generally~~requires ~~accepted~~that insuch combinations be accounted for using the ~~United~~purchase ~~Kingdom~~method of ~~have~~accounting. ~~been~~Under ~~condensed~~SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or ~~omitted~~more frequently if impairment indicators arise) for impairment. Separable intangible assets ~~These~~that ~~unaudited~~are ~~statements~~not ~~should~~deemed to have indefinite lives will continue to be ~~read~~amortized inover their ~~conjunction~~useful ~~with~~lives. ~~the~~The ~~audited~~amortization ~~financial~~and non-amortization provisions of SFAS ~~statements~~142 apply to all goodwill and ~~notes~~intangible asassets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company is required to adopt SFAS 142 effective January 1, 2002. Because of the extensive effort needed to comply with adopting SFAS 141 and ~~for~~142, it is not practicable to reasonably estimate the ~~year~~impact ~~ended~~of ~~December 31~~adopting these Statements on the Company’s financial statements at the date of this report, ~~2000~~including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle.

2 In June 2001, the Financial Accounting Standards Board also issued Statement of Financial Accounting Standards No. 143, Accounting for ~~policies~~Asset Retirement Obligations (“SFAS 143” ). SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carry amount of the related long-lived asset. Over time, the liability is accreted to its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

~~The~~18 ~~significant accounting policies adopted by the Company and its subsidiaries are set out below.~~

~~Basis~~ The Company is required to adopt SFAS 143 effective January 1, 2003. We are currently evaluating the effect, if any, the adoption of ~~consolidation~~SFAS 143, including the transition provisions, will have on the results of operations and financial position.

~~The~~European ~~consolidated~~Monetary ~~financial statements~~Union of- ~~the~~Euro Company include the financial statements of the Company and its subsidiaries. The acquisition method of accounting has been adopted. Under this method, the results of subsidiaries acquired or sold are included in the consolidated statement of income of the Company from, or up to, the date control passes. The consolidated statements of income of the Company include their respective shares of income from associated undertakings. The consolidated balance sheets of the Company includes interests in associates at their respective shares of the net tangible assets.

~~Use~~ On January 1, 1999, eleven of ~~estimates~~the European Union member states, including seven countries in which we operate, established fixed conversion rates between their existing currencies and adopted one common currency, the Euro. The conversion to the Euro eliminates currency exchange rate risk among the eleven member countries. On January 1, 2000, Greece also established a fixed conversion rate between its national currency and the Euro.

The ~~Preparation~~currencies of ~~financial statements~~the intwelve ~~conformity~~member ~~with~~states ~~U.K.~~remain ~~GAAP~~legal ~~requires~~tender ~~management~~in tothe ~~make~~participating ~~estimates and~~countries ~~assumptions~~during ~~that~~a ~~affect~~three-year ~~the~~transition ~~reported~~period ~~amounts~~from ofJanuary ~~assets~~1, ~~and~~1999 ~~liabilities~~through ~~and disclosure~~January of1, ~~contingent~~2002. ~~assets~~Effective ~~and~~January ~~liabilities~~1, at1999, the ~~date~~Euro ofis ~~the~~traded ~~financial statements~~on currency exchanges and ~~the~~is ~~reported~~available ~~amounts~~for ofnon-cash ~~revenues~~transactions ~~and~~during ~~expenses~~the ~~for~~three-year antransitional ~~accounting~~ period. ~~Such~~Beginning ~~estimates~~on ~~and~~January ~~assumptions~~1, ~~could~~2002, ~~change~~the inEuropean ~~the~~Central ~~future~~Bank aswill ~~more~~issue ~~information becomes~~Euro-denominated ~~known~~bills orand ~~circumstances~~coins ~~alter,~~for ~~such~~use ~~that~~in ~~the~~cash ~~group’s~~transactions. ~~actual~~On ~~results may~~or ~~differ~~before ~~from~~July 1, 2002, the ~~amounts~~participating ~~reported~~countries will withdraw all bills and ~~disclosed~~coins inand use the ~~financial~~Euro ~~statements~~as their legal currency.

~~Foreign~~ Our ~~currencies~~operating units affected by the Euro have established plans to address the issues raised by the conversion. These issues, among others, include such matters as pricing, continuity of contracts, accounting and financial reporting, taxation, treasury activities and computer systems. A number of our operating units in Europe have converted their systems and are reporting in Euros. The remaining operating units will convert their local records to the Euro during 2001.

~~The results of operations~~ ~~and~~Although ~~cash~~we ~~flows~~have ofnot ~~overseas~~identified ~~subsidiaries~~any ~~and~~immediate ~~associated~~problems, ~~undertakings~~we ~~are~~cannot ~~translated into~~be ~~sterling~~certain atthat the ~~average~~harmonisation of ~~the month end rates of exchange for the period. Assets and liabilities in foreign~~ currencies are translated into sterling at closing rates of exchange except where rates are fixed under contractual arrangements. The difference between net income/(loss) translated at average and at closing rates of exchange is included in ~~the~~Europe ~~statement~~will ofnot ~~total~~have ~~recognised gains and losses as~~ a ~~movement~~material inadverse ~~shareholders’ equity/(deficit).~~impact ~~Exchange~~on ~~differences arising from~~ the ~~retranslation~~operating ~~to closing rates of exchange of opening shareholders’ equity~~results, ~~long-term~~financial ~~foreign~~position ~~currency borrowings~~or ~~used~~liquidity toof ~~finance~~our ~~foreign~~European ~~currency investments, and foreign currency borrowings that provide a hedge against shareholders’ equity are also reflected as movements in shareholders’ equity/(deficit)~~businesses. ~~All other exchange differences~~ ~~are dealt with in operations.~~

~~F-5~~ 19

Intertek Testing Services Limited Consolidated ~~Notes~~Statements Toof ~~The~~Operations ~~Consolidated Financial Statements~~

Accounting policies (continued)

	(Unaudited)

	Six months		Six months
	to June 30,		to June 30,
	2000		2001

	£m		£m

Revenues
Continuing operations	188.8		221.8
Discontinued operations	0.7		—

Group revenues	189.5		221.8
Operating costs	(166.3	)	(190.6	)

Group operating income	23.2		31.2
Share of operating profit in associates	0.4		0.5

Total operating income	23.6		31.7

Operating income/(loss) before exceptional items
Continuing operations	27.5		31.7
Discontinued operations	(0.7	)	—

	26.8		31.7
Exceptional items charged to operating income
Continuing operations	(1.2	)	—
Discontinued operations	(2.0	)	—

Total operating income	23.6		—


Operating income/(loss) after exceptional items
Continuing operations	26.3		31.7
Discontinued operations	(2.7	)	—

Total operating income	23.6		31.7


Non-operating exceptional items
Continuing operations	(3.0	)	—
Discontinued operations	(12.2	)	—

Total non-operating exceptional items	(15.2	)	—


Income on ordinary activities before interest	8.4		31.7
Interest expense	(17.2	)	(18.8	)

(Loss)/income before taxation	(8.8	)	12.9
Taxation	(5.5	)	(6.3	)

(Loss)/income after taxation	(14.3	)	6.6
Minority interests	(1.4	)	(2.0	)

Net (loss)/income for the group and its share of associates	(15.7	)	4.6

~~Property,~~ ~~plant~~The ~~and~~accompanying ~~equipment~~notes ~~and~~on ~~depreciation~~pages F-6 to F-21 are an integral part of these financial statements.

F-1 Property, plant and equipment are stated at cost less depreciation, which is provided, except for freehold land, on a straight line basis over the estimated useful lives of the assets, mainly at the following annual rates:

Freehold buildings and long leasehold land and buildings	2%
Short leasehold land and buildings	term of lease
Plant, machinery and equipment	10% – 33.3%

Intertek Testing Services Limited
Consolidated Statements of Operations

Leases

	(Unaudited)

	Three months		Three months
	to June 30,		to June 30,
	2000		2001

	£m		£m


Group revenues	100.6		117.7
Operating costs	(84.9	)	(99.3	)

Group operating income	15.7		18.4
Share of operating profit in associates	0.2		0.2

Total operating income	15.9		18.6


Operating income/(loss) before exceptional items	16.5		18.6

Exceptional items credited/(charged) to operating income
Continuing operations	0.4		—
Discontinued operations	(1.0	)	—

Total operating income	15.9		18.6


Operating income/(loss) after exceptional items
Continuing operations	16.9		—
Discontinued operations	(1.0	)	—

Total operating income	15.9		18.6


Non-operating exceptional items
Discontinued operations	(0.1	)	—

Income on ordinary activities before interest	15.8		18.6
Interest expense	(9.1	)	(9.5	)

Income before taxation	6.7		9.1
Taxation	(3.7	)	(3.7	)

Income after taxation	3.0		5.4
Minority interests	(0.8	)	(1.2	)

Net income for the group and its share of associates	2.2		4.2

Assets held under capital leases are treated as if they had been purchased at the present value of the minimum lease payments. This cost is included in property, plant and equipment, and depreciation is provided over the shorter of the lease term or the estimated useful life. The ~~corresponding~~accompanying ~~obligations~~notes ~~under~~on ~~these leases are included within~~pages ~~borrowings.~~F-6 ~~The finance charge element of rentals payable is charged~~ to ~~operations to~~F-21 ~~produce a constant rate of interest. Operating lease rentals~~ are ~~charged to~~an ~~operations~~integral onpart ~~a straight-line basis over the periods~~ of ~~the~~these ~~leases~~financial statements.

~~Inventories~~F-2

Intertek ~~Inventories~~Testing ~~are~~Services ~~stated~~Limited atConsolidated ~~the~~Balance ~~lower of cost and net realisable value. Cost comprises expenditure incurred in the normal course of business in bringing inventories and work in progress to their present location and condition.~~Sheets

Revenues

				(Unaudited)

	Notes	December 31,		June 30,
		2000		2001

		£m		£m

ASSETS
Current assets
Cash	7	21.3		21.2
Trade receivables		81.6		88.9
Inventories		1.7		1.8
Other current assets		19.1		22.6

Total current assets		123.7		134.5
Goodwill		16.8		16.3
Property, plant and equipment, net		67.9		72.3
Investments		0.9		1.2

Total assets		209.3		224.3


LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Borrowings (including current portion of long term borrowings)	3	22.1		33.8
Accounts payable, accrued liabilities and deferred income		80.5		81.8
Income taxes payable		6.9		6.6

Total current liabilities		109.5		122.2
Long term borrowings	3	300.3		311.3
Provisions for liabilities and charges		13.9		9.2
Minority interests		6.3		7.0
Shareholders' deficit
Ordinary shares		0.8		0.8
Redeemable preference shares		105.5		105.5
Shares to be issued		2.8		2.8
Premium in excess of par value		3.6		3.6
Accumulated deficit		(333.4	)	(338.1	)

Total shareholders' deficit		(220.7	)	(225.4	)


Total liabilities and shareholders' deficit		209.3		224.3

~~Revenues~~The ~~represent~~accompanying ~~the total~~notes ~~amount~~on ~~receivable for services provided and goods sold, excluding sales-related~~pages ~~taxes~~F-6 ~~and~~to ~~intra~~F-~~group~~21 ~~transactions.~~are ~~Revenue~~an isintegral ~~recognised~~part ~~when~~of ~~the~~these ~~relevant service~~financial ~~is completed or goods delivered~~statements.

~~Taxation~~F-3

Intertek ~~Deferred~~Testing ~~taxation~~Services isLimited ~~provided~~ ~~using~~Consolidated ~~the~~Statements ~~liability~~of ~~method~~Cash ~~at current taxation rates on timing differences to~~Flows ~~the extent that the directors consider that it is probable that a liability or asset will crystallise.~~

Pension benefits

		(Unaudited)

	Notes	Six months		Six months
		to June 30,		to June 30,
		2000		2001

		£m		£m


Total operating cash inflow	5	23.5		26.1
Returns on investments and servicing of finance	6	(13.2	)	(13.2	)
Taxation		(4.8	)	(6.2	)
Capital expenditure and financial investment	6	(8.7	)	(10.7	)
Acquisitions and disposals	6	0.6		(0.5	)


Cash outflow before financing		(2.6	)	(4.5	)


Financing	6	2.3		4.8


(Decrease)/increase in cash in the period		(0.3	)	0.3


Reconciliation of net cash flow to movement in net debt	7

(Decrease)/increase in cash in the period		(0.3	)	0.3

Cash outflow from movement in debt		(2.3	)	(4.8	)

Change in net debt resulting from cash flows		(2.6	)	(4.5	)
Debt issued in lieu of interest payment		(4.6	)	(5.6	)
Acquisitions and disposals		(0.7	)	—
Other non-cash movements		(1.0	)	(1.1	)
Exchange adjustments		(17.2	)	(11.6	)


Increase in net debt in the period		(26.1	)	(22.8	)
Net debt at the start of the period		(273.5	)	(301.1	)


Net debt at the end of the period		(299.6	)	(323.9	)

~~Liabilities~~The ~~under~~accompanying ~~defined contribution~~notes ~~pension~~on ~~schemes are charged to operations when incurred. ITS has~~pages aF-6 ~~number~~to ofF-21 ~~defined benefit pension schemes for which contributions~~ are ~~based on~~an ~~triennial~~integral ~~actuarial~~part ~~valuations. Pension charges in operations have been calculated at a substantially level percentage~~ of ~~current~~these ~~and~~financial ~~expected future pensionable payroll, with variations from regular cost spread over the expected remaining service lives of employees~~statements.

~~Goodwill~~F-4 ~~and other intangible assets~~

~~Purchased~~Intertek ~~goodwill~~Testing ~~in respect~~Services ~~of acquisitions since January 1, 1998 is capitalised in accordance~~Limited ~~with the requirements of FRS 10: Goodwill and Intangible Assets, and is~~ ~~amortised~~Consolidated onStatements ~~a straight line basis over its estimated useful life, which is up to 20 years. Other intangible assets, such as non compete covenants, are amortised over the term~~ of ~~the~~Total ~~agreement,~~Recognised ~~generally between two to five years.~~Gains Purchased goodwill in respect of acquisitions before January 1, 1998 was written off to reserves in the year of acquisition in accordance with the accounting standard then in force. When a subsequent disposal occurs any goodwill previously written off to reserves is written back through the profit and ~~loss~~Losses ~~account.~~

Cash and cash equivalents

	(Unaudited)

	Six months		Six months
	to June 30,		to June 30,
	2000		2001

	£m		£m


Net (loss)/income from group companies	(15.6	)	4.3
Net (loss)/income from associates	(0.1	)	0.3

	(15.7	)	4.6
Exchange adjustments	(14.8	)	(9.3	)

Total recognised gains and losses	(30.5	)	(4.7	)

There ~~Cash~~is ~~for~~no ~~the~~material ~~purposes of~~difference ~~the~~between ~~cash~~income ~~flow~~before ~~statement~~taxation, ~~comprise~~and ~~cash~~net inincome ~~hand~~for ~~and~~the ~~deposits~~financial ~~repayable on demand~~periods, ~~less~~as ~~overdrafts~~stated ~~payable~~in onthe ~~demand~~statements of operations and their historical cost equivalents.

~~F-6~~ Consolidated Statements of Changes in Shareholders' Deficit

Intertek Testing Services Limited Notes To The Consolidated Financial Statements

			(Unaudited)

	Ordinary	Redeemable	Shares to be	Premium in	Accumulated		Total
	shares	preference	issued	excess of par	deficit
		shares		value


	£m	£m	£m	£m	£m		£m


Balance at January 1, 2000	0.8	105.5	2.8	3.6	(315.2	)	(202.5	)
Net loss	—	—	—	—	(15.7	)	(15.7	)
Goodwill adjustments	—	—	—	—	10.1		10.1
Exchange adjustments	—	—	—	—	(14.8	)	(14.8	)

Balance at June 30, 2000	0.8	105.5	2.8	3.6	(335.6	)	(222.9	)


Balance at January 1, 2001	0.8	105.5	2.8	3.6	(333.4	)	(220.7	)
Net income	—	—	—	—	4.6		4.6
Exchange adjustments	—	—	—	—	(9.3	)	(9.3	)

Balance at June 30, 2001	0.8	105.5	2.8	3.6	(338.1	)	(225.4	)

Included ~~Accounting~~in ~~policies~~accumulated deficit is £297.0 million relating to goodwill (~~continued~~at June 30, 2000: £282.6 million). This comprises goodwill of £294.0 million written off to reserves in relation to the acquisition of subsidiaries prior to December 31, 1997 (at June 30, 2000: £280.9 million) and £3.0 million amortised goodwill in relation to acquisitions from January 1, 1998 (at June 30, 2000: £1.7 million).

~~Derivative~~ The accompanying notes on pages F-6 to F-21 are an integral part of these financial ~~instruments~~statements.

F-5 ITS uses various derivative financial instruments to manage its exposure to foreign exchange and interest rate risks. Derivative financial instruments are considered hedges if they meet certain criteria. A forward exchange contract is considered a hedge of an identifiable foreign currency commitment if such contract is designated as, and is effective as, a hedge of a firm foreign currency commitment. An interest rate swap agreement is considered a “synthetic alteration” (and accounted for like a hedge) when the agreement is designated with a specific liability and it alters the interest rate characteristics of such liability. An Interest rate cap agreement must also meet the same criteria as an interest rate swap to be considered hedge of a specific liability. Derivative financial instruments failing to meet the aforementioned criteria are accounted for at fair value with the resulting unrealised gains and losses included in the statement of operations.

~~Forward~~Intertek ~~exchange~~Testing ~~contracts. Forward~~Services ~~exchange contracts are designated as hedges of firm foreign currency~~Limited ~~commitments. Gains and losses on such contracts are deferred and recognised~~ inUnaudited ~~income~~Notes orTo asThe anConsolidated ~~adjustment of the carrying amount when the hedged transaction~~Financial ~~occurs.~~Statements

~~Interest rate cap agreements~~1. Basis ~~Interest rate cap agreements are accounted for under the accruals basis. Amounts receivable under the agreement are accrued when due as a reduction~~ of ~~interest~~ ~~charges.~~presentation ~~Premiums paid for purchased interest rate cap agreements are amortised to interest charges over the term of the caps.~~

~~Interest~~The ~~rate~~accompanying ~~swaps.~~consolidated ~~Interest~~financial ~~rate~~statements ~~swap~~of ~~agreements~~the ~~are~~Company ~~designated~~and its subsidiaries at June 30, 2001, for the six months to ~~change~~June 30, 2000 and the ~~interest~~six ~~rate~~months to June 30, 2001 and for ~~characteristics~~the ofthree ~~floating-rate~~months ~~borrowings.~~to ~~Accordingly~~June 30, ~~these~~2000 ~~agreements~~and the three months to June 30, 2001 are ~~accounted~~unaudited. In the opinion of the Directors, all adjustments (consisting of normal recurring adjustments) necessary for ~~under~~a fair presentation of the ~~settlement~~financial ~~basis~~statements have been included. The ~~interest~~results ~~differential~~of ~~between~~these periods are not necessarily indicative of results for the ~~amounts~~entire ~~received~~year and ~~amount~~have ~~paid~~been isprepared ~~recognised~~in asconformity anwith ~~adjustment~~accounting principles togenerally ~~interest~~accepted in the United Kingdom (“U.K. GAAP”) ~~charges~~and ~~over~~are presented under the ~~term~~historical ofcost convention. These principles differ in certain material respects from generally accepted accounting principles in the ~~swap~~United States (“U.S. GAAP”) — see note 8.

3 For the purpose of these condensed consolidated financial statements, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United Kingdom have been condensed or omitted. These ~~Borrowings~~unaudited statements should be read in conjunction with the audited financial statements and notes as of and for the year ended December 31, 2000.

	December 31, 2000 £m	March 31, 2001 £m
Due in less than one year:
Senior Term Loan A	12.1	13.0
Senior Revolver	10.0	12.0
	22.1	25.0
Due in more than one year:
Senior Term Loan A	46.0	47.1
Senior Term Loan B	34.7	34.7
Senior Subordinated Notes	133.5	137.3
Parent Subordinated PIK Debentures	86.1	91.5
	300.3	310.6

2. Accounting policies

~~F-7~~ The significant accounting policies adopted by the Company and its subsidiaries are set out below.

~~Intertek~~ ~~Testing~~Basis ~~Services~~of ~~Limited Notes To The Consolidated Financial Statements~~consolidation

~~Borrowings~~ ~~(continued)~~The consolidated financial statements of the Company include the financial statements of the Company and its subsidiaries. The acquisition method of accounting has been adopted. Under this method, the results of subsidiaries acquired or sold are included in the consolidated statement of income of the Company from, or up to, the date control passes. The consolidated statements of income of the Company include their respective shares of income from associated undertakings. The consolidated balance sheets of the Company include interests in associates at their respective shares of the net tangible assets.

~~Maturity~~ Use of ~~borrowings:~~estimates

	Senior Term Loan A £m	Senior Term Loan B £m	Senior Revolver £m	Senior Subordinated Notes £m	Parent Subordinated PIK Debentures £m	Total borrowings £m
Due in less than 1 year	13.1	—	12.0	—	—	25.1
Due in 1 to 2 years	15.7	—	—	—	—	15.7
Due in 2 and 5 years	32.6	35.5	—	—	—	68.1
Due in over 5 years	—	—	—	142.0	92.9	234.9
	61.4	35.5	12.0	142.0	92.9	343.8
Debt issuance costs	(1.3)	(0.8)	—	(4.7)	(1.4)	(8.2)
	60.1	34.7	12.0	137.3	91.5	335.6

Preparation of financial statements in conformity with U.K. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for an accounting period. Such estimates and assumptions could change in the future as more information becomes known or circumstances alter, such that the group’s actual results may differ from the amounts reported and disclosed in the financial statements.

4. Foreign ~~Reconciliation of movement in shareholders’ deficit~~currencies

	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Total recognised gains and losses for the period	(20.9)	(5.9)
Goodwill adjustments	10.1	—
	(10.8)	(5.9)
Opening shareholders’ deficit	(202.5)	(220.7)
Closing shareholders’ deficit	(213.3)	(226.6)

The results of operations and cash flows of overseas subsidiaries and associated undertakings are translated into sterling at the average of the month end rates of exchange for the period. Assets and liabilities in foreign currencies are translated into sterling at closing rates of exchange except where rates are fixed under contractual arrangements. The difference between net income/(loss) translated at average and at closing rates of exchange is included in the statement of total recognised gains and losses and as a movement in shareholders' equity/(deficit). Exchange differences arising from the retranslation to closing rates of exchange of opening shareholders' equity, and long-term foreign currency borrowings used to finance foreign currency investments are also reflected in the statement of total recognised gains and losses and as movements in shareholders' equity/(deficit). All other exchange differences are dealt with in the consolidated statement of operations.

F-86

Intertek Testing Services Limited Unaudited Notes To The Consolidated Financial Statements

5.Accounting ~~Reconciliation~~policies ~~of operating income to operating cash flows~~(continued)

	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Operating income	7.7	13.1
Depreciation charge	3.0	3.8
Goodwill amortisation	0.2	0.3
Loss on sale of fixed assets	0.2	—
Increase in receivables and prepayments	(3.4)	(3.5)
Increase/(decrease) in payables	0.4	(4.8)
Discontinued operating exceptional provisions – Environmental	1.0	—
Decrease in other provisions	(0.9)	(1.5)
	8.2	7.4
Equity income of associates	(0.2)	(0.3)
Total operating cash inflow	8.0	7.1

Property, plant and equipment and depreciation

6. Property, ~~Analysis~~plant and equipment are stated at cost less depreciation, which is provided, except for freehold land, on a straight line basis over the estimated useful lives of ~~cash~~the ~~flows~~assets, mainly at the following annual rates:

	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Freehold buildings and long leasehold land and buildings	2%
Returns on investment and servicing of finance
Short leasehold land and buildings	Term of lease
Net interest paid	(2.0)	(1.4)
Plant, machinery and equipment	10% - 33.3%
Dividends paid to minorities	(0.7)	(0.6)
	(2.7)	(2.0)
Capital expenditure and financial investment
Purchase of property, plant and equipment	(3.2)	(5.3)
Sale of property, plant and equipment	0.1	0.1
	(3.1)	(5.2)
Acquisitions and disposals
Purchase of subsidiary undertakings	(0.4)	—
Sale of subsidiary undertakings	0.9	—
Acquisition provision payments	—	(0.5)
	0.5	(0.5)
Financing
Repayment of short term debt	(3.9)	—
Repayment of other loans	(0.4)	—
Issue of debt	—	2.0
	(4.3)	2.0

~~F-9~~ Leases

~~Intertek~~ ~~Testing~~Assets ~~Services~~held ~~Limited~~under ~~Notes~~capital leases Toare treated as if they had been purchased at the present value of the minimum lease payments. This cost is included in property, plant and equipment, and depreciation is provided over the shorter of the lease term or the estimated useful life. The ~~Consolidated~~corresponding ~~Financial~~obligations ~~Statements~~under these leases are included within borrowings. The finance charge element of capital lease payments is charged to operations to produce a constant rate of interest. Operating lease rentals are charged to operations on a straight-line basis over the periods of the leases.

~~7. Analysis of net debt~~ Inventories

	At December 31, 2000 £m	Cash flow £m	Debt issued in lieu of interest payment £m	Other non- cash changes £m	Exchange adjustments £m	At March 31, 2001 £m
Net cash
Cash in hand and at bank	21.3	(2.0)	—	—	—	19.3
Debt
Debt due within one year	(22.1)	(2.0)	—	—	(0.9)	(25.0)
Debt due after one year	(300.3)	—	(2.8)	(0.5)	(7.0)	(310.6)
	(322.4)	(2.0)	(2.8)	(0.5)	(7.9)	(335.6)
Total net debt	(301.1)	(4.0)	(2.8)	(0.5)	(7.9)	(316.3)

Inventories are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred in the normal course of business in bringing inventories and work in progress to their present location and condition.

~~8. Summary of differences between U.K. and U.S. GAAP~~ Revenues

Revenues ~~The~~represent ~~consolidated~~the ~~financial statements~~total ~~are~~amount ~~prepared~~receivable infor ~~conformity~~services ~~with~~provided ~~U.K. GAAP.~~and ~~These~~goods ~~accounting principles~~sold, ~~differ~~excluding insales-related ~~certain~~taxes ~~material~~and ~~respects~~intra-group ~~from U~~transactions.~~S. GAAP.~~ ~~Described below~~Revenue ~~are~~is ~~the~~recognised ~~material~~when ~~differences between U.K. GAAP and U.S. GAAP affecting~~ the ~~net~~relevant ~~income/(loss)~~service ~~and~~is ~~shareholders’~~completed ~~equity/(deficit)~~or ~~which are~~goods ~~set forth in the tables that follow~~delivered.

~~Goodwill and other intangible assets~~ Taxation

~~Under U.K. GAAP,~~ ~~purchased~~Deferred ~~goodwill~~taxation inis ~~respect~~provided ofon ~~acquisitions~~timing ~~before~~differences ~~January 1,~~using ~~1998 was written off to reserves in~~ the ~~year~~liability ofmethod ~~acquisition.~~at ~~Purchased~~current ~~goodwill~~taxation ~~in respect of acquisitions since January 1~~rates, ~~1998~~to ~~is capitalised in accordance with~~ the ~~requirements~~extent ofthat ~~FRS 10, Goodwill and Intangible Assets. Other intangible assets, such as non compete covenants, are amortised over~~ the ~~term~~directors ofconsider ~~the~~that ~~agreement, generally~~it ~~between two to five years. Positive goodwill~~ is ~~amortised~~probable tothat ~~nil~~a ~~in equal~~liability ~~instalments~~or ~~over~~asset ~~its~~will ~~estimated useful life, generally not exceeding 20 years~~crystallise. ~~Under U.S. GAAP,~~ goodwill and identifiable intangibles are capitalised and are written off over their estimated useful lives, generally not exceeding 40 years. U.S. GAAP goodwill and identifiable intangibles are being written off over periods not exceeding 20 years.

~~Redeemable~~ Pension ~~preference shares~~benefits

~~Under U.K. GAAP,~~ ~~preference~~Liabilities ~~shares~~under ~~with~~defined ~~mandatory~~contribution ~~redemption~~pension ~~features~~schemes ~~or that~~ are ~~redeemable at~~charged ~~the~~to ~~option~~operations ofwhen ~~the~~incurred. ~~security~~ITS ~~holders~~has ~~are classified as~~ a ~~component~~number of ~~shareholders’ equity.~~defined ~~U.S. GAAP~~benefit ~~requires~~pension ~~such~~schemes ~~redeemable~~for ~~preference~~which ~~shares~~contributions toare bebased ~~classified outside~~on oftriennial ~~shareholders’~~actuarial ~~equity~~valuations. ~~Additionally,~~Pension ~~under~~charges ~~U.S. GAAP,~~in ~~the initial~~operations ~~carrying~~have ~~amount~~been ofcalculated ~~redeemable preferred stock is equal to its fair value~~ at ~~date~~a ofconstant ~~issuance.~~percentage ~~When the fair value~~ of ~~mandatorily~~current ~~redeemable~~and ~~preferred stock~~expected atfuture ~~the~~pensionable ~~time of its issuance is less than the mandatory redemption amount~~payroll, ~~the~~ ~~carrying~~with ~~amount~~variations isfrom ~~increased~~regular bycost ~~periodic~~spread ~~accretion,~~over ~~using~~ the ~~interest~~expected ~~method, such~~remaining ~~that~~service ~~the~~lives ~~carrying~~of ~~amount will equate mandatory redemption amount at the mandatory redemption date~~employees.

~~Disposal~~ Goodwill ofand ~~business~~other ~~segment~~intangible assets

Purchased ~~Under~~goodwill ~~U.K. GAAP~~in respect of acquisitions since January 1, ~~the~~ ~~profit~~1998 oris ~~loss~~capitalised ~~arising~~in onaccordance with the ~~disposal~~requirements of FRS 10: Goodwill and Intangible Assets, and is amortised on a ~~business~~straight ~~segment~~line ~~after~~basis ~~the~~over ~~year end~~its estimated useful life, ~~but~~which ~~before~~is ~~the~~limited ~~earlier~~to a maximum of ~~three~~20 ~~months~~years. ~~and~~Other ~~the~~intangible ~~date~~assets, ~~when~~such ~~the~~as ~~financial statements~~non ~~are~~compete ~~approved~~covenants, isare ~~not~~amortised ~~recognised~~over inthe term of the ~~financial~~respective ~~statements~~agreements, ~~but~~generally ~~is disclosed~~between astwo ato ~~post~~five ~~balance~~years. ~~sheet~~Purchased ~~event~~goodwill ~~and~~in ~~the~~respect ~~disposed~~of ~~business~~acquisitions ~~segment~~before ~~is classified~~January as1, a1998 ~~discontinued~~was ~~operation~~written off to reserves in the ~~financial~~year ~~statements.~~of ~~U.S. GAAP requires~~each ~~that~~acquisition ifin aaccordance ~~loss~~with isthe ~~expected~~accounting ~~from~~standard ~~such~~then in force. When a subsequent disposal occurs, ~~such~~any ~~loss~~goodwill bepreviously ~~recognised~~ written off to reserves is written back through the consolidated statement of operations and is considered in determining the ~~not~~gain ~~yet~~or ~~released~~loss ~~financial~~on ~~statements~~the disposal.

~~F-10~~ Cash and cash equivalents

~~Intertek~~ ~~Testing~~Cash ~~Services~~for ~~Limited~~the ~~Notes~~purposes Toof ~~The~~the ~~Consolidated~~cash ~~Financial~~flow ~~Statements~~statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.

F-7 ~~Summary of differences between U.K. and U.S. GAAP (continued)~~

~~Pension~~Intertek ~~costs~~Testing —Services ~~defined~~Limited ~~benefit~~ Unaudited ~~plans~~Notes To The Consolidated Financial Statements

~~Under~~Accounting ~~U.K. GAAP,~~policies ~~the cost of providing pension benefits is expensed over the average expected~~(continued) service lives of eligible employees on the basis of a constant percentage of current and estimated future earnings. Under U.S. GAAP, costs and surpluses are similarly spread over the remaining service lives but based on prescribed actuarial assumptions, cost allocation and valuation methods which differ in certain respects from those used for U.K. GAAP.

AsDerivative ~~a result of this difference~~financial ininstruments ~~methodology, the U.S. GAAP pension expense can be significantly different from that determined under U.K. GAAP and tends to be more sensitive to changing economic conditions.~~

~~Compensated~~ ~~absences~~The company uses various derivative financial instruments to manage its exposure to foreign exchange and interest rate risks. Derivative financial instruments are considered hedges if they meet certain criteria. A forward exchange contract is considered a hedge of an identifiable foreign currency commitment if such contract is designated as, and is effective as, a hedge of a firm foreign currency commitment. An interest rate swap agreement is considered a “synthetic alteration” (and accounted for like a hedge) when the agreement is designated with a specific liability and it alters the interest rate characteristics of such liability. An interest rate cap agreement must also meet the same criteria as an interest rate swap to be considered a hedge of a specific liability. Derivative financial instruments failing to meet the aforementioned criteria are accounted for at fair value, with the resulting unrealised gains and losses included in the statement of operations.

~~Under~~Forward Uexchange contracts.~~S. GAAP,~~ Forward exchange contracts are designated ~~compensated~~as ~~absences,~~hedges ~~being~~of anfirm ~~employee’s~~foreign ~~paid~~currency ~~holiday~~commitments. ~~entitlements,~~Gains ~~are~~and losses on such contracts ~~accrued~~are deferred and recognised in income or as ~~earned.~~an ~~U.K.~~adjustment ~~GAAP~~of ~~does~~the ~~not~~carrying ~~require~~amount when ~~provision~~the tohedged betransaction ~~made~~occurs.

~~Derivative~~ ~~instruments~~Interest ~~and~~rate ~~hedging~~cap agreements. ~~activities~~Interest rate cap agreements are accounted for under the accruals basis. Amounts receivable under the agreement are accrued when due as a reduction of interest charges. Premiums paid for purchased interest rate cap agreements are amortised to interest charges over the term of the caps.

~~Under~~Interest ~~U.K. GAAP, forward~~rate ~~exchange contracts are designed as hedges of firm foreign currency commitments~~swaps. ~~Gains and losses on such contracts are deferred and recognised in income or as an adjustment of the carrying amount when the hedged transaction occurs.~~ Interest rate swap agreements are ~~designed~~designated to change the interest rate characteristics of floating -rate borrowings. ~~Accordingly, these agreements are accounted for under the settlement basis.~~ The interest differential between the amounts received and amount paid is recognised as an adjustment to interest charges over the term of the swap.

Under U.S. GAAP, Statement of Financial Accounting Standards (‘SFAS’) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138 Accounting for Certain Derivative Instruments and Certain Hedging Activities – An Amendment to SFAS No. 133, requires that an entity recognises all derivatives in the consolidated balance sheet at fair value. The accounting for changes in the fair value of a derivative depends on the use of the derivative. Derivatives that are not designated as part of a hedging relationship must be adjusted to fair value through income. Changes in the fair value of derivatives designated as fair value hedges are recorded in income as well as the gain or loss on the hedged asset or liability. Changes in the fair value of derivatives designated as cash flow hedges are classified as other comprehensive income until the hedged item is recognised in income. The ineffective portions of derivatives that are hedges are immediately recognised in income.

3. Borrowings

	December 31,		June 30,
	2000		2001

	£m		£m

Due in less than one year:
Senior Term Loan A	12.8		14.5
Senior Revolver	10.0		21.0
Other borrowings	—		0.3

	22.8		35.8
Debt issuance costs	(0.7	)	(2.0	)

	22.1		33.8

Due in more than one year:
Senior Term Loan A	47.0		40.7
Senior Term Loan B	35.5		35.2
Senior Subordinated Notes	138.1		144.0
Parent Subordinated PIK Debentures	87.5		97.2

	308.1		317.1
Debt issuance costs	(7.8	)	(5.8	)

	300.3		311.3

~~Deferred~~ ~~taxation~~F-8

Intertek ~~Under~~Testing ~~U.K. GAAP, deferred~~Services ~~taxation~~Limited ~~is accounted for using the liability method to the extent~~ ~~that~~Unaudited itNotes isTo ~~considered~~The ~~probable~~Consolidated ~~that a liability or asset will crystallise in~~Financial the foreseeable future. Under U.S. GAAP, deferred taxation is provided on all temporary differences and carryforwards. Deferred tax assets are recognised to the extent that it is more likely than not that they will be realised. Where doubt exists as to whether a deferred tax asset will be realised, an appropriate valuation allowance is established. In addition, deferred taxes on other U.S. GAAP differences is provided.Statements

F-11

Borrowings (continued)

Maturity of borrowings:

	Senior		Senior		Senior	Senior		Parent		Other	Total
	Term		Term		Revolver	Subordinated		Subordinated		borrowings	borrowings
	Loan A		Loan B			Notes		PIK
								Debentures

	£m		£m		£m	£m		£m		£m	£m


Due in less than 1 year	14.5		—		21.0	—		—		0.3	35.8
Due in 1-2 years	24.3		—		—	—		—		—	24.3
Due in 2-3 years	16.4		17.6		—	—		—		—	34.0
Due in 3-4 years	—		17.6		—	—		—		—	17.6
Due in over 5 years	—		—		—	144.0		97.2		—	241.2

	55.2		35.2		21.0	144.0		97.2		0.3	352.9
Debt issuance costs	(1.1	)	(0.7	)	—	(4.6	)	(1.4	)	—	(7.8	)

	54.1		34.5		21.0	139.4		95.8		0.3	345.1

4. Reconciliation of movement in shareholders’ deficit

Intertek Testing Services Limited Notes To The Consolidated Financial Statements

	Six months			Six months
	to June 30,			to June 30,
	2000			2001

	£m			£m

Total recognised gains and losses for the period		(30.5	)	(4.7	)
Goodwill adjustments	10.1			—

	(20.4		)	(4.7	)
Opening shareholders’ deficit	(202.5		)	(220.7	)

Closing shareholders’ deficit	(222.9		)	(225.4	)

~~Summary of differences between U.K. and U.S. GAAP (continued)~~F-9

~~Effect~~ ofIntertek ~~material~~Testing ~~differences~~Services ~~between~~Limited Unaudited ~~U.K.~~Notes ~~and~~To ~~U.S.~~The ~~GAAP~~Consolidated ~~and additional disclosures~~Financial Statements

~~(a) Net~~5. Reconciliation of operating income~~/(loss)~~ to operating cash flows

	Three months to March 31, 2000 £m		Three months to March 31, 2001 £m
	Six months		Six months
Net (loss)/income reported under U.K. GAAP	(17.9)		0.4
	to June 30,		to June 30,
Goodwill amortisation	(1.5)		(3.0)
	2000		2001
Previously recognised loss on disposal and closure of discontinued operation	11.6		—
	£m		£m
Compensated absences	0.2		(0.1)
Operating income after exceptional items	23.6		31.7
Deferred taxes	—		—
Depreciation charge	6.1		7.6
Derivative instruments and hedging	—		(0.6)
Goodwill amortisation	0.5		0.7
Net loss in conformity with U.S. GAAP	(7.6)		(3.3)
Loss on sale of fixed assets	0.2		—
Continuing operations	(5.5)		(3.3)
Increase in receivables and other current assets	(9.3	)	(9.5	)
Discontinued operations	(2.1)		—
Increase in payables	2.5		0.1
Net loss in conformity with U.S. GAAP	(7.6)		(3.3)
Discontinued operating exceptional provision — Environmental	2.0		—
Decrease in provisions	(1.9	)	(4.2	)
	23.7		26.4
Equity income of associates	(0.4	)	(0.5	)
Dividends received from associates	0.2		0.2
Total operating cash inflow	23.5		26.1
6. Analysis of cash flows
	Six months		Six months
	to June 30,		to June 30,
	2000		2001
	£m		£m
Returns on investment and servicing of finance
Net interest paid	(11.2	)	(12.0	)
Dividends paid to minorities	(2.0	)	(1.2	)
	(13.2	)	(13.2	)
Capital expenditure and financial investment
Purchase of property, plant and equipment	(8.8	)	(10.8	)
Sale of property, plant and equipment	0.1		0.1
	(8.7	)	(10.7	)
Acquisitions and disposals
Purchase of subsidiary undertakings	(0.9	)	(0.1	)
Sale of subsidiary undertakings	1.5		0.1
Deferred consideration payments	—		(0.5	)
	0.6		(0.5	)
Financing
Issue of short term debt	5.9		11.0
Repayment of other loans	(3.7	)	(6.2	)
Cash subscribed by minorities	0.1		—
	2.3		4.8

~~(b) Shareholders’ deficit~~F-10

Intertek ~~The~~Testing ~~approximate~~Services ~~effects~~Limited onUnaudited ~~shareholders’~~Notes ~~deficit~~To ofThe ~~material~~Consolidated ~~differences between U.K. and U.S. GAAP~~Financial ~~are as follows:~~Statements

	December 31, 2000 £m		March 31, 2001 £m
7. Analysis of net debt
Shareholders’ deficit reported under U.K. GAAP	(220.7)		(226.6)
	At December		Cash flow		Debt issued		Other non-		Exchange		At June
Goodwill	188.2		189.5
	31, 2000				in lieu of		cash changes		adjustments		30, 2001
Redeemable preference shares	(30.0)		(31.1)
					interest
Pensions	0.3		0.3
					payment
Compensated absences	(0.6)		(0.8)
	£m		£m		£m		£m		£m		£m
Derivative instruments and hedging activities	—		(0.6)
Net cash
Shareholders’ deficit in conformity with U.S. GAAP	(62.8)		(69.3)
Cash in hand and at bank	21.3		0.3		—		—		(0.4	)	21.2
Debt
Debt due within one year	(22.1	)	(11.0	)	—		(0.1	)	(0.6	)	(33.8	)
Debt due after one year	(300.3	)	6.2		(5.6	)	(1.0	)	(10.6	)	(311.3	)
	(322.4	)	(4.8	)	(5.6	)	(1.1	)	(11.2	)	(345.1	)
Total net debt	(301.1	)	(4.5	)	(5.6	)	(1.1	)	(11.6	)	(323.9	)

~~F-12~~ 8. Summary of differences between U.K. and U.S. GAAP

~~Intertek~~ The ~~Testing~~consolidated ~~Services~~financial ~~Limited~~statements ~~Notes~~are Toprepared in conformity with U.K. GAAP. These accounting principles differ in certain material respects from U.S. GAAP. Described below are the material differences between U.K. GAAP and U.S. GAAP affecting the net income/(loss) and shareholders' equity/(deficit) which are set forth in the tables that follow. The ~~Consolidated~~results ~~Financial~~for ~~Statements~~the six months ended June 30, 2001 are not necessarily indicative of the expected results for the year to December 31, 2001.

~~Summary of differences between~~ ~~U.K.~~Goodwill and ~~U.S.~~other ~~GAAP~~intangible ~~(continued)~~assets

Under ~~The~~U.K. ~~following~~GAAP, ~~table~~purchased ~~reconciles shareholders’~~goodwill ~~deficit~~in ~~under~~respect of acquisitions before January 1, 1998 was written off to reserves in the year of acquisition. Purchased goodwill in respect of acquisitions since January 1, 1998 is capitalised in accordance with the requirements of FRS 10, Goodwill and Intangible Assets. Other intangible assets, such as non compete covenants, are amortised over the term of the agreement, generally between two to five years. Positive goodwill is amortised to nil in equal instalments over its estimated useful life, generally not exceeding 20 years. Under U.S. GAAP:, goodwill and identifiable intangibles are capitalised and are written off over their estimated useful lives, generally not exceeding 40 years. U.S. GAAP goodwill and identifiable intangibles are being written off over periods not exceeding 20 years.

	December 31, 2000 £m	March 31, 2001 £m
Shareholders’ deficit at beginning of period	(43.3)	(62.8)
Accretion of discount on redeemable preference shares	(3.9)	(1.1)
Net loss for the period	(6.0)	(3.3)
Exchange adjustments	(9.6)	(2.1)
Shareholders’ deficit at end of period	(62.8)	(69.3)

Redeemable preference shares

~~(c) Cash~~ ~~flows~~Under U.K. GAAP, preference shares with mandatory redemption features or redeemable at the option of the security holders are classified as a component of shareholders’ equity. U.S. GAAP requires such redeemable preference shares to be classified outside of shareholders’ equity. Additionally under U.S. GAAP, when the fair value of mandatorily redeemable preferred shares at the time of its issuance is less than the mandatory redemption amount, the carrying amount is increased by periodic accretion using the interest method, such that the carrying amount will equal the mandatory redemption amount at the mandatory redemption date. The periodic accretion would be shown as an additional dividend on the redeemable preference shares in U.S. GAAP financial statements and as a movement in shareholders' equity.

~~The statements of cash~~ ~~flows~~Disposal prepared in accordance with U.K. GAAP present substantially the same information as that required under U.S. GAAP. Under U.S. GAAP however, there are certain differences from U.K. GAAP with regard to classification of ~~items~~business ~~within the cash flow statement and with regard to the definition of~~segment ~~cash.~~

Under U.K. GAAP, ~~cash flows~~the ~~are~~profit ~~presented~~or ~~separately~~loss ~~for~~arising ~~operating activities, returns~~ on ~~investments~~the ~~and~~disposal ~~servicing~~ of ~~finance,~~a ~~taxation,~~business ~~capital~~segment ~~expenditure~~after ~~and~~the ~~financial~~year ~~investment~~end, ~~acquisitions~~ ~~and~~but ~~disposals,~~before ~~equity~~the ~~dividends~~earlier ~~paid, management~~ of ~~liquid resources~~ ~~and~~three ~~financing.~~months ~~Under~~and ~~U.S. GAAP,~~the ~~three~~date ~~categories~~when ofthe ~~cash~~financial ~~flow~~statements ~~activity~~ are ~~reported,~~ ~~those being operating activities~~approved, ~~investing~~is ~~activities and financing~~not ~~activities.~~recognised ~~Cash~~in ~~flows~~the ~~from~~financial ~~taxation~~statements ~~and returns on investments and servicing~~but ofis ~~finance~~disclosed ~~would, with the exception of dividends paid, be included~~ as ~~operating activities~~a ~~under~~post ~~U.S. GAAP.~~balance ~~Capital~~sheet ~~expenditure~~event and ~~financial~~the ~~investment, acquisitions~~disposed ~~and~~business ~~disposals and management of liquid resources would be included~~segment asis ~~investing~~classified ~~activities.~~as ~~The~~a ~~payment of dividends would be included under financing activities under U.S. GAAP.~~

~~Set~~ ~~out~~F-11 ~~below is a summary of the statements of cash flows under U.S. GAAP.~~

	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Net cash provided by operating activities	1.9	2.3
Net cash used in investing activities	(4.2)	(5.7)
Net cash (used in)/provided by financing activities	(0.1)	1.4
Net decrease in cash by continuing operations	(2.4)	(2.0)
Decrease in cash by continuing operations	(2.4)	(2.0)
Decrease in cash by discontinued operations	(2.2)	—
Cash at beginning of period	20.2	21.3
Cash at end of period	15.6	19.3

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

~~F-13~~Summary of differences between U.K. and U.S. GAAP (continued)

~~Intertek~~ discontinued ~~Testing~~operation ~~Services~~in ~~Limited~~the ~~Notes~~financial Tostatements. ~~The~~U.S. ~~Consolidated~~GAAP, ~~Financial~~requires ~~Statements~~that if a loss is expected from such disposal, such loss be recognised in the not yet released financial statements.

~~Summary of differences between~~ ~~U.K.~~Pension ~~and~~costs ~~U.S.~~— ~~GAAP~~defined ~~(continued)~~benefit plans

~~(d) Comprehensive~~ ~~income~~Under U.K. GAAP, the cost of providing pension benefits is expensed over the average expected service lives of eligible employees on the basis of a constant percentage of current and estimated future earnings. Under U.S. GAAP, costs and surpluses are similarly spread over the remaining service lives but based on prescribed actuarial assumptions, cost allocation and valuation methods, which differ in certain respects from those used for U.K. GAAP.

~~The company has adopted~~ ~~SFAS~~As ~~No.~~a ~~130,~~result ~~“Reporting Comprehensive Income”, which established standards for the reporting and presentation~~ of ~~comprehensive~~this ~~income/(loss) and~~difference ~~its components~~ in amethodology, ~~full~~the ~~set of financial statements~~U.S. ~~The~~GAAP ~~Company’s comprehensive~~pension ~~income/(loss)~~expense ~~differs~~can differ from ~~net~~that ~~income~~determined ~~only~~under byU.K. ~~the~~GAAP ~~amount~~and oftends ~~the foreign~~to ~~currency~~be ~~exchange~~more ~~adjustments~~sensitive ~~charged~~ to ~~shareholders’~~changing ~~deficit for~~economic ~~the period, the periodic accretion of the redeemable preference stock and the transitional adjustment for derivative instruments and hedging activities~~conditions.

~~The~~ ~~following~~Compensated ~~table reconciles~~absences ~~accumulated other comprehensive loss under U.S. GAAP:~~

	Three months to March 31, 2000 £m	Three months to March 31, 2001 £m
Other comprehensive loss at the beginning of period	(26.4)	(51.5)
Exchange adjustments	(3.0)	(6.3)
Redeemable preference share accretion	(0.9)	(1.1)
Derivative instruments and hedging activities	—	(0.4)
Other comprehensive loss at the end of period*	(30.3)	(59.3)

Under U.S. GAAP, compensated absences, being an employee's paid holiday entitlements, are accrued as earned. U.K. GAAP does not require such provision to be made.

Derivative *Otherinstruments ~~comprehensive income~~ and ~~the~~hedging ~~carrying value of the preference shares as of March 31, 2000 have been~~activities reduced by £13.7 million from amounts previously shown as of March 31, 2000 in order to reflect the carrying value of such shares as of that date at their initial carrying value plus cumulative accretion from date of original issue.

~~F-14~~ Under U.K. GAAP, forward exchange contracts are designed as hedges of firm foreign currency commitments. Gains and losses on such contracts are deferred and recognised in income or as an adjustment of the carrying amount when the hedged transaction occurs. Interest rate swap agreements are designed to change the interest rate characteristics of floating rate borrowings. Accordingly, under these agreements the interest differential between the amounts received and amount paid is recognised as an adjustment to interest charges over the terms of the respective swaps.

~~Intertek~~ Under ~~Testing~~U.S. ~~Services~~GAAP, ~~Limited~~Statement ~~Notes~~of ToFinancial Accounting Standards (‘SFAS’) No.133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No.138 Accounting for Certain Derivative Instruments and Certain Hedging Activities-An Amendment to SFAS No.133, requires that an entity recognises all derivatives in the consolidated balance sheet at fair value. The ~~Consolidated~~accounting ~~Financial~~for ~~Statements~~changes in the fair value of a derivative depends on the use of the derivative. Derivatives that are not designated as part of a hedging relationship must be adjusted to fair value through income. Changes in the fair value of derivatives designated as fair value hedges are recorded in income as well as the gain or loss on the hedged asset or liability. Changes in the fair value of derivatives designated as cash flow hedges are classified as other comprehensive income until the hedged item is recognised in income. The ineffective portions of derivatives that are hedges are immediately recognised in income.

9. Deferred ~~Issuer, guarantor and non-guarantor companies~~taxation

Under ~~Intertek~~U.K. ~~Finance~~GAAP, ~~plc~~deferred ~~(“the Issuer”)~~taxation is aaccounted ~~wholly~~for ~~owned~~using ~~direct subsidiary of~~ the ~~Company~~liability ~~and~~method ~~the~~to ~~Issuer has issued~~ the ~~Notes~~extent ~~which~~that ~~are~~it ~~fully~~is ~~and~~considered ~~unconditionally~~probable ~~guaranteed~~that on a ~~senior subordinated~~liability ~~basis~~or byasset ~~the~~will ~~Company~~crystallise ~~and~~in ~~certain~~the offoreseeable ~~its~~future. ~~wholly~~Under ~~owned direct subsidiaries: Intertek Testing Services~~ U.KS. ~~Limited~~GAAP, ~~Testing~~deferred ~~Holdings~~taxation ~~USA~~is ~~Inc.,~~provided ~~Yickson~~on ~~Enterprises Limited,~~all ~~Kite~~temporary ~~Overseas~~differences ~~Holdings~~and ~~BV,~~carryforwards. ~~ITS~~Deferred ~~Holding~~tax ~~Limited,~~assets ~~Testing~~are ~~Holdings~~recognised ~~Sweden AB,~~to ~~Testing Holdings France EURL, Testing Holdings Germany GmbH (collectively,~~ the ~~“Guarantor~~extent ~~subsidiaries”).~~that Init ~~addition, each of the Guarantor’s guarantee~~ is ~~itself~~more ~~guaranteed~~likely bythan ~~each~~not ~~other~~that ~~Guarantor,~~they ~~fully~~will ~~and~~be ~~unconditionally, on a senior subordinated basis~~realised. ~~Subject~~Where todoubt ~~the~~exists ~~provisions~~as ~~of the agreement under which the loans~~ to ~~finance~~whether ~~the~~a ~~acquisition~~deferred oftax ~~the~~asset ~~business~~will ~~were~~be ~~made~~realised, ~~certain exceptions~~an ~~and~~appropriate ~~applicable~~valuation ~~law,~~allowance ~~there~~is ~~are no restrictions on the ability of:~~established.

~~(a)~~ ~~the~~F-12 Company or any of its direct and indirect subsidiaries from paying dividends or making any other distributions or loans or advances to the Issuer or (b) the direct and indirect subsidiaries of the Company from paying dividends or making any other distribution or loans or advances to the Company.

Intertek ~~Separate~~Testing ~~financial~~Services ~~statements~~Limited ~~and other disclosures concerning the Issuer, the Company and the Guarantor subsidiaries~~ ~~are~~Unaudited ~~not~~Notes ~~presented~~To because management has determined that they are not material to the investors. In lieu of the separate guarantor financial statements, management has presented condensed consolidating financial information. The ~~condensed~~Consolidated ~~consolidating~~Financial ~~financial information presented below has been segregated between (a) the Issuer, (b) the Company, (c) the Guarantor subsidiaries and (d) the non-Guarantor subsidiaries.~~Statements

~~F-15~~Summary of differences between U.K. and U.S. GAAP (continued)

~~Intertek~~ (a) ~~Testing~~Net ~~Services Limited Notes To The Consolidated Financial Statements~~(loss)/income

Issuer, guarantor and non-guarantor companies (continued)

	Six months		Six months
	to June 30,		to June 30,
	2000		2001

	£m		£m


Net (loss)/income reported under U.K. GAAP	(15.7	)	4.6
Goodwill amortisation	(6.3	)	(6.1	)
Derivative instruments and hedging	—		(1.0	)
Previously recognised loss on disposal and closure of discontinued operation	11.6		—
Compensated absences	—		(0.2	)
Tax effect on U.S. GAAP reconciling adjustments	—		—

Net loss in conformity with U.S. GAAP	(10.4	)	(2.7	)


Continuing operations	4.5		(2.7	)
Discontinued operations	(14.9	)	—

Net loss in conformity with U.S. GAAP	(10.4	)	(2.7	)


(b) Shareholders’ deficit

The approximate effects on shareholders’ deficit of material differences between U.K. and U.S. GAAP are as follows:

	December 31,		June 30,
	2000		2001

	£m		£m


Shareholders’ deficit reported under U.K. GAAP	(220.7	)	(225.4	)
Goodwill	188.2		187.7
Redeemable preference shares, including cumulative accretion	(30.0	)	(32.2	)
Derivative instruments and hedging	—		(1.0	)
Pensions	0.3		0.3
Compensated absences	(0.6	)	(0.8	)

Shareholders’ deficit in conformity with U.S. GAAP	(62.8	)	(71.4	)

~~Statements~~ ofF-13 ~~Operations Three months to March 31, 2001~~

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
Total group revenue	—	—	—	115.7	(11.6)	104.1
Operating income/(costs)	—	0.1	—	(103.0)	11.6	(91.3)
Share of operating profit in associates	—	—	—	0.3	—	0.3
Operating income	—	0.1	—	13.0	—	13.1
Non-operating exceptional items	—	(0.6)	—	0.6	—	—
Income/(loss) before interest	—	(0.5)	—	13.6	—	13.1
Net interest expense	—	(2.4)	(2.0)	(4.9)	—	(9.3)
Income/(loss) before taxation	—	(2.9)	(2.0)	8.7	—	3.8
Taxation	—	—	0.3	(2.9)	—	(2.6)
Income/(loss) after taxation	—	(2.9)	(1.7)	5.8	—	1.2
Minority interests	—	—	—	(0.8)	—	(0.8)
Dividends from/(to) group companies	—	—	0.4	(0.4)	—	—
Net income/(loss)	—	(2.9)	(1.3)	4.6	—	0.4

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

~~Statements~~Summary of ~~Operations~~differences between U.K. ~~Three~~and ~~months~~U.S. toGAAP ~~March 31, 2000~~(continued)

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
Total group revenue	—	—	—	98.2	(9.4)	88.8
Operating income/(costs)	0.1	(0.1)	—	(90.7)	9.4	(81.3)
Share of operating profit in associates	—	—	—	0.2	—	0.2
Operating income/(loss)	0.1	(0.1)	—	7.7	—	7.7
Non-operating exceptional items	—	(0.8)	(4.3)	(10.0)	—	(15.1)
Income before interest	0.1	(0.9)	(4.3)	(2.3)	—	(7.4)
Net interest expense	—	(1.9)	(1.9)	(4.3)	—	(8.1)
Income/(loss) before taxation	0.1	(2.8)	(6.2)	(6.6)	—	(15.5)
Taxation	—	—	—	(1.8)	—	(1.8)
Income/(loss) after taxation	0.1	(2.8)	(6.2)	(8.4)	—	(17.3)
Minority interests	—	—	—	(0.6)	—	(0.6)
Dividends from/(to) group companies	—	—	0.6	(0.6)	—	—
Net income/(loss)	0.1	(2.8)	(5.6)	(9.6)	—	(17.9)

(c) Cash flows

~~F-16~~ The statements of cash flows prepared in accordance with U.K. GAAP present substantially the same information as that required under U.S. GAAP. Under U.S. GAAP however, there are certain differences from U.K. GAAP with regard to classification of items within the cash flow statement and with regard to the definition of cash.

~~Intertek~~ Under ~~Testing~~U.K. ~~Services~~GAAP, ~~Limited~~cash ~~Notes~~flows Toare presented separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, equity dividends paid, management of liquid resources and financing. Under U.S. GAAP, three categories of cash flow activity are reported, those being operating activities, investing activities and financing activities. Cash flows from taxation and returns on investments and servicing of finance would, with the exception of dividends paid, be included as operating activities under U.S. GAAP. Capital expenditure and financial investment, acquisitions and disposals and management of liquid resources would be included as investing activities. The ~~Consolidated~~payment ~~Financial~~of ~~Statements~~dividends would be included under financing activities under U.S. GAAP. Additionally, under U.K. GAAP overdrafts payable on demand are offset against cash, but are not offset against cash under U.S. GAAP.

Issuer, guarantor and non-guarantor companies (continued)

Set out below is a summary of the statements of cash flows under U.S. GAAP.

	Six months		Six months
	to June 30,		to June 30,
	2000		2001

	£m		£m


Net cash provided by operating activities	2.1		7.9
Net cash used in investing activities	(7.2	)	(11.2	)
Net cash provided by financing activities	1.0		3.6

	(4.1	)	0.3
Effect of exchange rate changes	0.8		(0.4	)

Net decrease in cash by continuing operations	(3.3	)	(0.1	)


Decrease in cash by continuing operations	(3.3	)	(0.1	)
Increase in cash by discontinued operations	3.1		—
Cash at beginning of period	20.1		21.3

Cash at end of period	19.9		21.2

~~Balance~~ ~~Sheets March~~F-14 ~~31, 2001~~

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
ASSETS
Current assets
Cash	—	(9.6)	0.6	28.3	—	19.3
Trade receivables	—	—	—	83.5	—	83.5
Inventories	—	—	—	1.8	—	1.8
Other current assets	153.7	98.9	228.4	327.5	(786.9)	21.6
Total current assets	153.7	89.3	229.0	441.1	(786.9)	126.2
Goodwill	—	—	—	16.8	—	16.8
Property, plant and equipment, net	—	—	—	70.4	—	70.4
Investments in subsidiary undertakings	—	128.6	222.2	74.3	(425.1)	—
Investments	—	—	—	1.3	—	1.3
Total assets	153.7	217.9	451.2	603.9	(1,212.0)	214.7
LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT)
Current liabilities
Borrowings (including current portion of long term borrowings)	—	12.0	13.1	(0.1)	—	25.0
Accounts payable, accrued liabilities and deferred income	15.0	46.7	233.8	572.1	(786.9)	80.7
Income taxes payable	—	(0.4)	(2.4)	8.8	—	6.0
Total current liabilities	15.0	58.3	244.5	580.8	(786.9)	111.7
Long term borrowings	138.3	91.5	82.5	(1.7)	—	310.6
Provisions for liabilities and charges	—	—	—	12.5	—	12.5
Minority interests	—	—	—	6.5	—	6.5
Shareholders’ equity/(deficit)
Ordinary shares	0.1	0.8	118.2	192.8	(311.1)	0.8
Redeemable preference shares	—	105.5	—	—	—	105.5
Shares to be issued	—	2.8	—	—	—	2.8
Premium in excess of par value	—	3.6	26.5	—	(26.5)	3.6
Accumulated earnings/(deficit)	0.3	(44.6)	(20.5)	(187.0)	(87.5)	(339.3)
Total shareholders’ equity/(deficit)	0.4	68.1	124.2	5.8	(425.1)	(226.6)
Total liabilities and shareholders’ equity/(deficit)	153.7	217.9	451.2	603.9	(1,212.0)	214.7

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

F9. Issuer, guarantor and non-17guarantor companies

Intertek Finance plc (“the Issuer” ) is a wholly owned direct subsidiary of the Company and the Issuer has issued the Notes which are fully and unconditionally guaranteed on a senior subordinated basis by the Company and certain of its wholly owned direct subsidiaries: Intertek Testing Services UK Limited, ~~Notes~~Testing ToHoldings ~~The~~USA ~~Consolidated~~Inc., ~~Financial~~Yickson ~~Statements~~Enterprises Limited, Kite Overseas Holdings BV, ITS Holding Limited, Testing Holdings Sweden AB, Testing Holdings France EURL, Testing Holdings Germany GmbH (collectively, the “Guarantor subsidiaries” and, together with the Company, the “Guarantors” ). In addition, each of the Guarantor’s guarantee is itself guaranteed by each other Guarantor, fully and unconditionally, on a senior subordinated basis. Subject to the provisions of the agreement under which the loans to finance the acquisition of the business were made, certain exceptions and applicable law, there are no restrictions on the ability of:

~~Issuer,~~(a) ~~guarantor~~the Company or any of its direct and ~~non-guarantor companies~~indirect subsidiaries from paying dividends or making any other distributions, loans or advances to the Issuer or (~~continued~~b) the direct and indirect subsidiaries of the Company from paying dividends or making any other distribution, loans or advances to the Company.

~~Balance Sheets~~ ~~December~~Separate 31financial statements and other disclosures concerning the Issuer and the Guarantors are not presented because management has determined that they are not material to the investors. In lieu of the separate guarantor financial statements, ~~2000~~management has presented condensed consolidating financial information. The condensed consolidating financial information presented below has been segregated between (a) the Issuer, (b) the Company, (c) the Guarantor subsidiaries and (d) the non-Guarantor subsidiaries.

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
ASSETS
Current assets
Cash	—	(11.2)	0.7	31.8	—	21.3
Trade receivables	—	—	—	81.6	—	81.6
Inventories	—	—	—	1.7	—	1.7
Other current assets	145.8	92.9	218.6	294.9	(733.1)	19.1
Total current assets	145.8	81.7	219.3	410.0	(733.1)	123.7
Goodwill	—	—	—	16.8	—	16.8
Property, plant and equipment, net	—	—	—	67.9	—	67.9
Investments in subsidiary undertakings	—	128.6	217.8	74.5	(420.9)	—
Investments	—	—	—	0.9	—	0.9
Total assets	145.8	210.3	437.1	570.1	(1,154.0)	209.3
LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT)
Current liabilities
Borrowings (including current portion of long term borrowings)	—	10.0	12.0	0.1	—	22.1
Accounts payable, accrued liabilities and deferred income	11.0	42.7	223.2	536.7	(733.1)	80.5
Income taxes payable	—	(0.4)	(2.3)	9.6	—	6.9
Total current liabilities	11.0	52.3	232.9	546.4	(733.1)	109.5
Long term borrowings	134.4	86.1	81.4	(1.6)	—	300.3
Provisions for liabilities and charges	—	—	—	13.9	—	13.9
Minority interests	—	—	—	6.3	—	6.3
Shareholders’ equity/(deficit)
Ordinary shares	0.1	0.8	115.1	195.9	(311.1)	0.8
Redeemable preference shares	—	105.5	—	—	—	105.5
Shares to be issued	—	2.8	—	—	—	2.8
Premium in excess of par value	—	3.6	25.8	0.6	(26.4)	3.6
Accumulated earnings/(deficit)	0.3	(40.8)	(18.1)	(191.4)	(83.4)	(333.4)
Total shareholders’ equity/(deficit)	0.4	71.9	122.8	5.1	(420.9)	(220.7)
Total liabilities and shareholders’ equity/(deficit)	145.8	210.3	437.1	570.1	(1,154.0)	209.3

F-15

~~F-18~~Intertek Testing Services Limited Unaudited Notes To The Consolidated Financial Statements

~~Intertek~~Issuer, ~~Testing~~guarantor ~~Services~~and ~~Limited~~non-guarantor ~~Notes To The Consolidated Financial Statements~~companies (continued)

Issuer, guarantor and non-guarantor companies (continued)

Statements of Operations
Six months to June 30, 2001
	Intertek	Intertek		Guarantor		Non -		Consolidation		Consolidated
	Finance plc	Testing		subsidiaries		Guarantor		adjustments		totals
		Services				subsidiaries
		Ltd
	£m	£m		£m		£m		£m		£m


Total group revenue	—	—		—		247.2		(25.4	)	221.8
Operating income/(costs)	—	1.2		—		(217.2	)	25.4		(190.6	)
Share of operating profit in associates	—	—		—		0.5		—		0.5

Operating income	—	1.2		—		30.5		—		31.7
Net interest expense	—	(4.9	)	(3.9	)	(10.0	)	—		(18.8	)

Income/(loss) before taxation	—	(3.7	)	(3.9	)	20.5		—		12.9
Taxation	—	—		(0.5	)	(5.8	)	—		(6.3	)

Income/(loss) after taxation	—	(3.7	)	(4.4	)	14.7		—		6.6
Minority interests	—	—		—		(2.0	)	—		(2.0	)
Dividends from/(to) group companies	—	—		0.5		(0.5	)	—		—

Net income/(loss)	—	(3.7	)	(3.9	)	12.2		—		4.6


Statements of Operations
Three months to June 30, 2001
	Intertek	Intertek		Guarantor		Non -		Consolidation		Consolidated
	Finance plc	testing		subsidiaries		Guarantor		adjustments		totals
		Services				subsidiaries
		Ltd
	£m	£m		£m		£m		£m		£m


Total group revenue	—	—		—		131.5		(13.8	)	117.7
Operating income/(costs)	—	1.7		—		(114.8	)	13.8		(99.3	)
Share of operating profit in associates	—	—		—		0.2		—		0.2

Operating income	—	1.7		—		16.9		—		18.6
Net interest expense	—	(2.5	)	(1.9	)	(5.1	)	—		(9.5	)

Income/(loss) before taxation	—	(0.8	)	(1.9	)	11.8		—		9.1
Taxation	—	—		(0.7	)	(3.0	)	—		(3.7	)

Income/(loss) after taxation	—	(0.8	)	(2.6	)	8.8		—		5.4
Minority interests	—	—		—		(1.2	)	—		(1.2	)
Dividends from/(to) group companies	—	—		0.1		(0.1	)	—		—

Net income/(loss)	—	(0.8	)	(2.5	)	7.5		—		4.2

~~Statements~~ ofF-16 ~~Cash Flows Three months to March 31, 2001~~

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
Total operating cash inflow	—	0.5	0.3	6.3	—	7.1
Returns on investments and servicing of finance	—	(0.3)	1.1	(2.8)	—	(2.0)
Taxation	—	—	(0.1)	(3.3)	—	(3.4)
Capital expenditure and financial investment	—	—	—	(5.2)	—	(5.2)
Acquisitions and disposals	—	—	—	(0.5)	—	(0.5)
Cash inflow/(outflow) before financing	—	0.2	1.3	(5.5)	—	(4.0)
Financing	—	1.4	(1.3)	1.9	—	2.0
Increase/(decrease) in cash in the period	—	1.6	—	(3.6)	—	(2.0)
Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash in the period	—	1.6	—	(3.6)	—	(2.0)
Cash outflow from increase in debt	—	(2.0)	—	—	—	(2.0)
Change in net debt resulting from cash flows	—	(0.4)	—	(3.6)	—	(4.0)
Debt issued in lieu of interest payment	—	(2.8)	—	—	—	(2.8)
Other non-cash movements	(0.2)	—	(0.1)	(0.2)	—	(0.5)
Exchange adjustments	(3.7)	(2.6)	(2.2)	0.6	—	(7.9)
Movement in net debt in the period	(3.9)	(5.8)	(2.3)	(3.2)	—	(15.2)
Net debt at the start of the period	(134.4)	(107.3)	(92.7)	33.3	—	(301.1)
Net debt at the end of the period	(138.3)	(113.1)	(95.0)	30.1	—	(316.3)

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

FIssuer, guarantor and non-19guarantor companies (continued)

Intertek Testing Services Limited Notes To The Consolidated Financial Statements

Statements of Operations
Six months to June 30, 2000
	Intertek		Intertek		Guarantor		Non -		Consolidation		Consolidated
	Finance plc		Testing		subsidiaries		Guarantor		adjustments		totals
			Services				subsidiaries
			Ltd
	£m		£m		£m		£m		£m		£m


Total group revenue	—		—		—		209.0		(19.5	)	189.5
Operating income/(costs)	—		(0.1	)	—		(185.7	)	19.5		(166.3	)
Share of operating profit in associates	—		—		—		0.4		—		0.4

Operating income/(loss)	—		(0.1	)	—		23.7		—		23.6
Non-operating exceptional items	—		(2.0	)	(4.4	)	(8.8	)	—		(15.2	)

Income/(loss) before interest	—		(2.1	)	(4.4	)	14.9		—		8.4
Net interest expense	0.5		(4.1	)	(3.9	)	(9.7	)	—		(17.2	)

Income/(loss) before taxation	0.5		(6.2	)	(8.3	)	5.2		—		(8.8	)
Taxation	(0.1	)	—		0.2		(5.6	)	—		(5.5	)

Income/(loss) after taxation	0.4		(6.2	)	(8.1	)	(0.4	)	—		(14.3	)
Minority interests	—		—		—		(1.4	)	—		(1.4	)
Dividends from/(to) group companies	—		—		0.9		(0.9	)	—		—

Net income/(loss)	0.4		(6.2	)	(7.2	)	(2.7	)	—		(15.7	)


Statements of Operations
Three months to June 30, 2000
	Intertek		Intertek		Guarantor		Non -		Consolidation		Consolidated
	Finance plc		Testing		subsidiaries		Guarantor		adjustments		totals
			Services				subsidiaries
			Ltd
	£m		£m		£m		£m		£m		£m


Total group revenue	—		—		—		110.7		(10.1	)	100.6
Operating income/(costs)	(0.1	)	(0.1	)	—		(94.8	)	10.1		(84.9	)
Share of operating profit in associates	—		—		—		0.2		—		0.2

Operating income/(loss)	(0.1	)	(0.1	)	—		16.1		—		15.9
Non-operating exceptional items	—		(1.1	)	(0.1	)	1.1		—		(0.1	)

Income/(loss) before interest	(0.1	)	(1.2	)	(0.1	)	17.2		—		15.8
Net interest expense	0.5		(2.2	)	(2.0	)	(5.4	)	—		(9.1	)

Income/(loss) before taxation	0.4		(3.4	)	(2.1	)	11.8		—		6.7
Taxation	—		—		0.1		(3.8	)	—		(3.7	)

Income/(loss) after taxation	0.4		(3.4	)	(2.0	)	8.0		—		3.0
Minority interests	—		—		—		(0.8	)	—		(0.8	)
Dividends from/(to) group companies	—		—		0.4		(0.4	)	—		—

Net income/(loss)	0.4		(3.4	)	(1.6	)	6.8		—		2.2

~~Issuer,~~ ~~guarantor and non~~F-~~guarantor companies~~17 ~~(continued)~~

~~Statements~~Intertek ofTesting ~~Cash~~Services ~~Flows~~Limited ~~Three~~Unaudited ~~months~~Notes toTo ~~March~~The ~~31,~~Consolidated ~~2000~~Financial Statements

	Intertek Finance plc £m	Intertek Testing Services Ltd £m	Guarantor subsidiaries £m	Non- Guarantor subsidiaries £m	Consolidation adjustments £m	Consolidated totals £m
Total operating cash inflow/(outflow)	0.1	(0.5)	(0.1)	8.5	—	8.0
Returns on investments and servicing of finance	4.3	0.1	(3.0)	(4.1)	—	(2.7)
Taxation	—	—	(0.1)	(2.1)	—	(2.2)
Capital expenditure and financial investment	—	—	—	(3.1)	—	(3.1)
Acquisitions and disposals	—	(1.3)	(0.7)	2.5	—	0.5
Cash inflow/(outflow) before financing	4.4	(1.7)	(3.9)	1.7	—	0.5
Financing	(4.4)	3.5	4.1	(7.5)	—	(4.3)
Increase/(decrease) in cash in the period	—	1.8	0.2	(5.8)	—	(3.8)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the period	—	1.8	0.2	(5.8)	—	(3.8)
Cash inflow/(outflow) from increase in debt	—	3.9	0.5	(0.1)	—	4.3
Change in net debt resulting from cash flows	—	5.7	0.7	(5.9)	—	0.5
Debt issued in lieu of interest payment	—	(2.3)	—	—	—	(2.3)
Acquisitions and disposals	—	—	—	(0.7)	—	(0.7)
Other non-cash movements	(0.1)	—	(0.2)	(0.2)	—	(0.5)
Exchange adjustments	(1.6)	(0.9)	(0.5)	—	—	(3.0)
Movement in net debt in the period	(1.7)	2.5	—	(6.8)	—	(6.0)
Net debt at the start of the period	(122.1)	(86.5)	(93.5)	28.6	—	(273.5)
Net debt at the end of the period	(123.8)	(84.0)	(93.5)	21.8	—	(279.5)

Issuer, guarantor and non-guarantor companies (continued)

F-20

Balance Sheets
June 30, 2001
	Intertek	Intertek		Guarantor		Non-		Consolidation		Consolidated
	Finance plc	Testing		subsidiaries		Guarantor		adjustments		totals
		Services Ltd				subsidiaries
	£m	£m		£m		£m		£m		£m

ASSETS
Current assets
Cash	—	(8.6	)	0.2		29.6		—		21.2
Trade receivables	—	—		—		88.9		—		88.9
Inventories	—	—		—		1.8		—		1.8
Other current assets	157.9	112.2		231.4		309.7		(788.6	)	22.6

Total current assets	157.9	103.6		231.6		430.0		(788.6	)	134.5
Goodwill	—	—		—		16.3		—		16.3
Property, plant and equipment, net	—	—		—		72.3		—		72.3
Investments in subsidiary undertakings	—	128.6		223.8		74.9		(427.3	)	—
Investments	—	—		—		1.2		—		1.2

Total assets	157.9	232.2		455.4		594.7		(1,215.9	)	224.3


LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities
Borrowings (including current portion of
long term borrowings)	—	21.0		12.5		0.3		—		33.8
Accounts payable, accrued liabilities and
deferred income	18.1	49.2		245.2		557.9		(788.6	)	81.8
Income taxes payable/(receivable)	—	(0.4	)	(1.8	)	8.8		—		6.6

Total current liabilities	18.1	69.8		255.9		567.0		(788.6	)	122.2
Long term borrowings	139.4	95.8		76.1		—		—		311.3
Provisions for liabilities and charges	—	—		—		9.2		—		9.2
Minority interests	—	—		—		7.0		—		7.0
Shareholders' equity/(deficit)
Ordinary shares	0.1	0.8		119.7		193.5		(313.3	)	0.8
Redeemable preference shares	—	105.5		—		—		—		105.5
Shares to be issued	—	2.8		—		—		—		2.8
Premium in excess of par value	—	3.6		26.8		2.6		(29.4	)	3.6
Accumulated earnings/(deficit)	0.3	(46.1	)	(23.1	)	(184.6	)	(84.6	)	(338.1	)

Total shareholders' equity/(deficit)	0.4	66.6		123.4		11.5		(427.3	)	(225.4	)

Total liabilities and shareholders'
equity/(deficit)	157.9	232.2		455.4		594.7		(1,215.9	)	224.3

F-18 ~~SIGNATURE~~

Intertek ~~Pursuant~~Testing toServices ~~the~~Limited ~~requirements~~ ofUnaudited ~~the~~Notes ~~Securities~~To ~~Exchange~~The ~~Act~~Consolidated ~~of 1934, the Registrant certifies that it meets~~Financial ~~all of the requirements for filing on Form 6-K and has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.~~Statements

Issuer, ~~INTERTEK~~guarantor ~~TESTING~~and ~~SERVICES~~non-guarantor companies ~~LIMITED~~ (~~Registrant~~continued)

By:	/s/ WILLIAM SPENCER
Balance Sheets
	Name:	William Spencer
December 31, 2000
	Title:	Director
	Intertek		Intertek		Guarantor		Non-		Consolidation		Consolidated
	Date:	May 14, 2001
	Finance plc		Testing		subsidiaries		Guarantor		adjustments		totals
			Services Ltd				subsidiaries
	£m		£m		£m		£m		£m		£m
ASSETS
Current assets
Cash	—		(11.2	)	0.7		31.8		—		21.3
Trade receivables	—		—		—		81.6		—		81.6
Inventories	—		—		—		1.7		—		1.7
Other current assets	145.8		92.9		218.6		294.9		(733.1	)	19.1
Total current assets	145.8		81.7		219.3		410.0		(733.1	)	123.7
Goodwill	—		—		—		16.8		—		16.8
Property, plant and equipment, net	—		—		—		67.9		—		67.9
Investments in subsidiary undertakings	—		128.6		217.8		74.5		(420.9	)	—
Investments	—		—		—		0.9		—		0.9
Total assets	145.8		210.3		437.1		570.1		(1,154.0	)	209.3
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities
Borrowings (including current portion of
long term borrowings)	—		10.0		12.0		0.1		—		22.1
Accounts payable, accrued liabilities and
deferred income	11.0		42.7		223.2		536.7		(733.1	)	80.5
Income taxes payable/(receivable)	—		(0.4	)	(2.3	)	9.6		—		6.9
Total current liabilities	11.0		52.3		232.9		546.4		(733.1	)	109.5
Long term borrowings	134.4		86.1		81.4		(1.6	)	—		300.3
Provisions for liabilities and charges	—		—		—		13.9		—		13.9
Minority interests	—		—		—		6.3		—		6.3
Shareholders' equity/(deficit)
Ordinary shares	0.1		0.8		115.1		195.9		(311.1	)	0.8
Redeemable preference shares	—		105.5		—		—		—		105.5
Shares to be issued	—		2.8		—		—		—		2.8
Premium in excess of par value	—		3.6		25.8		0.6		(26.4	)	3.6
Accumulated earnings/(deficit)	0.3		(40.8	)	(18.1	)	(191.4	)	(83.4	)	(333.4	)
Total shareholders' equity/(deficit)	0.4		71.9		122.8		5.1		(420.9	)	(220.7	)
Total liabilities and shareholders'
equity/(deficit)	145.8		210.3		437.1		570.1		(1,154.0	)	209.3

F-19

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

Issuer, guarantor and non-guarantor companies (continued)

Statements of Cash Flows
Six months to June 30, 2001
	Intertek		Intertek		Guarantor		Non-		Consolidation	Consolidated
	Finance plc		Testing		subsidiaries		Guarantor		adjustments	totals
			Services Ltd				subsidiaries
	£m		£m		£m		£m		£m	£m


Total operating cash inflow	—		0.4		0.5		25.2		—	26.1
Returns on investments and servicing of
finance	(5.4	)	(0.2	)	(1.5	)	(6.1	)	—	(13.2	)
Taxation	—		—		(0.2	)	(6.0	)	—	(6.2	)
Capital expenditure and financial
investment	—		—		—		(10.7	)	—	(10.7	)
Acquisitions and disposals	—		—		—		(0.5	)	—	(0.5	)

Cash (outflow)/inflow before financing	(5.4	)	0.2		(1.2	)	1.9		—	(4.5	)
Financing	5.4		2.4		0.7		(3.7	)	—	4.8

Increase/(decrease) in cash in the period	—		2.6		(0.5	)	(1.8	)	—	0.3


Reconciliation of net cash flow to movement in net debt

Increase/(decrease) in cash in the period	—		2.6		(0.5	)	(1.8	)	—	0.3

Cash (outflow)/inflow from increase in debt	—		(11.0	)	6.5		(0.3	)	—	(4.8	)

Change in net debt resulting from cash flows	—		(8.4	)	6.0		(2.1	)	—	(4.5	)
Debt issued in lieu of interest payment	—		(5.6	)	—		—		—	(5.6	)
Acquisitions and disposals	—		—		—		—		—	—
Other non-cash movements	—		(0.2	)	(0.6	)	(0.3	)	—	(1.1	)
Exchange adjustments	(5.0	)	(4.0	)	(1.4	)	(1.2	)	—	(11.6	)


Movement in net debt in the period	(5.0	)	(18.2	)	4.0		(3.6	)	—	(22.8	)
Net debt at the start of the period	(134.4	)	(107.3	)	(92.9	)	33.5		—	(301.1	)


Net debt at the end of the period	(139.4	)	(125.5	)	(88.9	)	29.9		—	(323.9	)

F-20

Intertek Testing Services Limited
Unaudited Notes To The Consolidated Financial Statements

Issuer, guarantor and non-guarantor companies (continued)

Statements of Cash Flows
Six months to June 30, 2000
	Intertek		Intertek		Guarantor		Non-		Consolidation	Consolidated
	Finance plc		Testing		subsidiaries		Guarantor		adjustments	totals
			Services Ltd				subsidiaries
	£m		£m		£m		£m		£m	£m


Total operating cash inflow/(outflow)	—		(0.3	)	(0.1	)	23.9		—	23.5
Return on investments and servicing of
finance	(0.1	)	0.5		(5.8	)	(7.8	)	—	(13.2	)
Taxation	—		—		(0.4	)	(4.4	)	—	(4.8	)
Capital expenditure and financial
investment	—		—		—		(8.7	)	—	(8.7	)
Acquisitions and disposals	—		(1.2	)	(0.5	)	2.3		—	0.6

Cash inflow/(outflow) before financing	(0.1	)	(1.0	)	(6.8	)	5.3		—	(2.6	)
Financing	0.1		3.2		7.0		(8.0	)	—	2.3

Increase/(decrease) in cash in the period	—		2.2		0.2		(2.7	)	—	(0.3	)


Reconciliation of net cash flow to movement in net debt

Increase/(decrease) in cash in the period	—		2.2		0.2		(2.7	)	—	(0.3	)

Cash (outflow)/inflow from increase in debt	—		(5.9	)	3.3		0.3		—	(2.3	)

Change in net debt resulting from cash flows	—		(3.7	)	3.5		(2.4	)	—	(2.6	)
Debt issued in lieu of interest payment	—		(4.6	)	—		—		—	(4.6	)
Acquisitions and disposals	—		—		—		(0.7	)	—	(0.7	)
Other non-cash movements	(0.3	)	(0.1	)	(0.3	)	(0.3	)	—	(1.0	)
Exchange adjustments	(8.3	)	(5.2	)	(4.6	)	0.9		—	(17.2	)


Movement in net debt in the period	(8.6	)	(13.6	)	(1.4	)	(2.5	)	—	(26.1	)
Net debt at the start of the period	(122.1	)	(86.5	)	(93.5	)	28.6		—	(273.5	)


Net debt at the end of the period	(130.7	)	(100.1	)	(94.9	)	26.1		—	(299.6	)

F-21

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 6-K and has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

INTERTEK TESTING SERVICES LIMITED
(Registrant)

By: /s/ WILLIAM SPENCER

       Name: William Spencer
       Title:   Director
       Date:   August 14, 2001

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