The group finances its operations from both retained earnings and third-party borrowings, the majority of which are currently at fixed rates of interest.

As at 31 December 2008, the group had £257 million of committed facilities, which consists of £164 million of private placements maturing between September 2010 and October 2013, £90 million of revolving credit facilities, of which £50 million matures on 31 December 2009, and £3 million of bank loans secured on property of three of our businesses. £40 million of revolving credit facilities were undrawn at the year end. In addition, the group had a cash balance of £64.4 million and has £40.5 million of uncommitted facilities, mainly in the form of overdraft facilities for our local operations. £9.6 million of these facilities were drawn at the year end.

At the year end, 73% of group borrowings were at fixed interest rates (2007: 96%). The ageing profile at the year end showed that 15% of debt is due to mature within one year (2007: 3%) and 85% of debt is due to mature in between one and five years (2007: 31%).

Since the year end, an additional £50 million, five-year term facility was secured in January 2009 under covenant conditions in line with existing facilities.

The group has both translational and transactional currency exposures. Translational exposures arise on the consolidation of overseas company results into sterling. Transactional exposures arise where the currency of sale or purchase invoices differs from the functional currency in which each company prepares its local accounts. The transactional exposures include situations where foreign currency denominated trade debtor, trade creditor and cash balances are held.

The largest transactional exposures are to the US dollar and, to a lesser extent, the euro and the Japanese yen. The largest translational exposures are to the US dollar, euro and Danish krone. The table below shows the key average exchange rates during 2008 and 2007.

	2008 average	2007 average
US$	1.85	2.00
Euro	1.26	1.46
Yen	192	236

Translational currency exposures are not hedged.

Forward exchange contracts are used to hedge forecast sale transactions where there is reasonable certainty of an exposure. At 31 December 2008, approximately 65% of the estimated US dollar and Japanese yen exposures for 2009 were hedged using forward exchange contracts.

To demonstrate the currency exposure faced by the group, the table below shows the differences between the group?s consolidated revenues and costs for each of the major currencies in 2008 before reflecting the effect of transactional hedges taken out in the year.

	$*	€*	£	Yen	Other	Total
Total sales (£m)	273	322	63	56	73	787
% of sales	35%	41%	8%	7%	9%
Total costs (£m)**	(195)	(295)	(70)	(26)	(91)	(677)
PBT by currency (£m)	78	27	(7)	30	(18)	110
% of PBT	71%	24%	-6%	27%	-16%

* Dollar/euro categories include tracking currencies
** Costs include interest of £3.3 million in $, £5.2 million in ? and income of £(0.3) million in GBP

In 2009, the currency exposure is expected to change significantly following the decision to change the currency of invoicing in certain countries in Asia from US dollars to euros in order to better balance our euro cost base. If this decision had been fully effective at the beginning of 2008, the US dollar sales revenues would have been reduced by approximately £30 million and the euro sales revenues increased by a corresponding amount.

Operating profit includes a defined benefit pension scheme current service charge of £1.7 million (2007: £0.9 million). The net pension liability in the balance sheet (before taking account of the related deferred tax asset) has reduced to £8.5 million (2007: £11.1 million), largely as a consequence of the buy-out of the liability on the Brüel & Kjær pension scheme in full in the USA during the year and actuarial gains on the scheme liabilities.

During 2008, the group made cash contributions into the defined benefit pension scheme amounting to £5.4 million (2007: £3.1 million).

The group has identified the key potential strategic, operational and financial risks and uncertainties which could have a material impact on the group?s long-term performance. These potential risks, and the actions to manage and mitigate them, are described in detail on the following pages. The directors do not foresee any further specific risks in 2009.

Group finance director